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Lou Dobbs Tonight
Republican Revolt Over Skyrocketing Budget?; Congress Seeks Inquiry Into WMD
Aired January 30, 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.
JOHN KING, CNN ANCHOR: Tonight: President Bush faces a revolt in his own party. Conservative Republicans are angry about the budget deficit and the rising costs of the president's new prescription drug plan. Suzanne Malveaux will report from the White House.
The president is also under fire from Congress tonight over the failure to find weapons of mass destruction in Iraq. Several leading senators want an independent inquiry. So far, the president says no.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I, too, want to know the facts.
(END VIDEO CLIP)
KING: In "Exporting America" tonight, competition from cheap overseas labor market becomes an issue in the presidential campaign. We will have a special report.
And in "Heroes," 200 Marines and sailors today became American citizens. It was one of the largest military naturalizations in history. Casey Wian will report.
ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, January 30. Sitting in for the vacationing Lou Dobbs, John King.
KING: Good evening.
Tonight, President Bush is putting the finishing touches on his election-year budget. That budget will be sent up to Congress on Monday. But the president faces a growing rebellion in his own party. Conservative Republicans are angry about some of the president's big spending proposals, in particular his plan to introduce a Medicare prescription drug benefit costing $535 billion, a significantly higher price tag than the White House originally had predicted.
White House correspondent Suzanne Malveaux reports -- Suzanne.
SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, John, it was considered a huge political victory for President Bush when he pushed through the Medicare reform bill in Congress late last year. It only passed by five votes in the House.
The deal was sealed only after the administration reassured fiscally conservative Republicans that the administration could afford it. They said it was a 10-year plan that would cost nearly $490 billion, that as estimated by the Congressional Budget Office. The CBO is still maintaining -- standing by those figures.
Now the White House's Office of Management and Budget estimates it will cost nearly 30 percent more, around $535 billion. Now, White House officials are trying to reassure some angry Republicans they did not mean to intentionally mislead the Congress in any way, the president today saying that he only found out about these new figures just a couple weeks ago. But he does put the onus on Congress to adjust.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Now, it is going to require Congress to be wise with the taxpayers' money. Now, the Medicare reform we did is a good reform, fulfills a longstanding problem to our seniors. Congress is now going to have to work with us to make sure that we set priorities and are fiscally wise with the taxpayers' money.
(END VIDEO CLIP)
MALVEAUX: Now, the White House is going to say that it's about $520 billion, the projected federal deficit, when they introduce the budget on Monday. But White House aides insist that they will keep discretionary spending at 1 percent. They say they believe that they can go ahead and afford this.
But, of course, the concern here, John, is whether or not this becomes a political liability. Already, they are hearing from Democrats and Republicans alike who are criticizing the administration. And then, of course, there are some aides who are concerned that this might actually put at risk some of the priorities of the president and of the administration, making those tax cuts permanent, as well as some of those other spending measures -- John.
KING: And we are still early in the election year. Suzanne Malveaux at the White House, thank you.
And, as Suzanne reported, conservative Republicans are alarmed by the growing deficit and the rising cost of the president's prescription drug benefit plan. They worry, in this election year, that voters may come to believe that Republicans are losing their commitment to small government and fiscal responsibility.
Louise Schiavone reports from Washington.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): A half trillion dollar deficit is a lot for a conservative Republican to choke down, especially with news of Medicare's latest cost overruns. "This is exactly what conservatives feared," declared Arizona Republican Jeff Flake. "The bill is incredibly expensive, lacks substantive reform. And it was irresponsible for Congress to heap this burden on the taxpayer" -- end quote. "We must put our fiscal house in order," said Indiana Republican Mike Pence, "by holding the line on spending, renewing our commitment to limited government and fiscal discipline, which are true Republican values of the majority" -- end quote.
The Bush administration's aggressive tax cut program may be reminiscent of former President Reagan's agenda, but this former Reagan Treasury official says there's a key difference.
BRUCE BARTLETT, NATIONAL CENTER FOR POLICY ANALYSIS: Reagan had big deficits, but he was trying to reduce the size of government. He was at least trying to cut spending. And he may not have been as successful as he wanted to be. But this president is not making even the slightest effort to cut spending.
SCHIAVONE: One congressional source said of President Bush, "He's making it difficult to be a Republican right now. We have to carry the water and the blame for all of his spending." Emblematic of the problem for conservatives, the president's proposal to go to the moon and Mars.
BILL BEACH, HERITAGE FOUNDATION: It's a noble objective to go to Mars and to go to the moon, but I'm not to sure that I want my billfold sent up to Mars anytime soon or do I know too many people that want that.
SCHIAVONE: Even now, the 96-member conservative Republican caucus is preparing a counterproposal to the Bush budget.
(END VIDEOTAPE)
SCHIAVONE: John, gaining growing recognition, a constitutional amendment proposed by Congressman Chris Cox of California to base spending on inflation and population growth. But analysts say, the nation may have a new president or higher taxes or both before that happens -- John.
KING: Louise, we are in an election year. You are talking about conservative Republicans proposing an alternative to a Republican president's budget, talk of perhaps a constitutional amendment to rein in spending. Is the Republican leadership going to lean on these conservatives and say, shut it down, don't fight the president?
SCHIAVONE: Well, that's how they got that Medicare bill through to begin with. There's some question as to whether or not these 96 Republicans -- there's a caucus of them -- there's 96 of them -- can stand up to someone as strong as Tom DeLay. We'll have to see what happens.
KING: Fascinating issue this election year. Louise Schiavone in Washington, thank you so much.
The new budget debate is just one major controversy facing the president. He is also confronted by growing calls from Congress for an independent inquiry into the failure to find any weapons of mass destruction in Iraq. (BEGIN VIDEOTAPE)
KING (voice-over): The president would not answer directly when asked if there should be a new independent investigation of U.S. intelligence gathering.
BUSH: I want the American people to know that I, too, want to know the facts. I want to be able to compare what the Iraqi survey group has found with what we thought prior to going into Iraq.
KING: The administration is conducting an internal review, but momentum for an independent investigation is growing.
Democratic Senator Dianne Feinstein, a member of the Intelligence Committee, said in a statement Friday, "It is critical that every effort is made to find out what went wrong and why." Months of searching in Iraq have turned up no weapons of mass destruction. And the man who led that search, David Kay, is urging Congress to push for an independent investigation into why U.S. intelligence agencies were so certain that Iraq did have banned weapons.
Senator John McCain of Arizona embraced Kay's proposal and says he believes an independent review is both inevitable and the best way to handle the controversy in a presidential election year.
SEN. JOHN MCCAIN (R), ARIZONA: The time is up. Dr. Kay was appointed to find these weapons of mass destruction. He's a highly credible, respected weapons inspector and scientist. And when he says we all failed, and that's all the world's intelligence services, not just the United States, then it calls for an investigation. We're out of time.
(END VIDEOTAPE)
KING: Administration and congressional sources tell CNN tonight that Senator McCain is among several members of Congress Vice President Dick Cheney has called in event days to discuss this issue. The administration officials say it is routine for Mr. Cheney to keep track of key congressional debates. But some on Capitol Hill think the vice president might be exploring a potential compromise.
On the campaign trail today, John Kerry today won the endorsement of a major union, the Communication Workers of America. The 700,000- member union said it is becoming increasingly clear that Senator Kerry is the strongest candidate. The endorsement is a sign that labor's confidence in the candidacy of Howard Dean may be eroding.
Kelly Wallace is with the Kerry campaign in Columbia, South Carolina.
(BEGIN VIDEOTAPE)
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: This afternoon, John Kerry will be in Delaware, part of his six-day, seven-state tour, with Kerry spending time in all seven states holding contests on Tuesday. Earlier, he was in South Carolina, trying to win the support of some of the state's 415,000 veterans. While Kerry was speaking, also in South Carolina, retired General Wesley Clark was criticizing Kerry on the issue of affirmative action, saying, in last night's debate, Kerry did not take responsibility for at one time calling affirmative action divisive.
We caught up with the senator, who said his position was the same as then-President Clinton, that affirmative action should not be ended, but mended. The senator went on to accuse Wesley Clark of -- quote -- "playing politics."
Before leaving here, the senator received another major endorsement, the backing of the large and influential union, the Communication Workers of America.
Kelly Wallace, CNN, reporting from Columbia, South Carolina.
(END VIDEOTAPE)
KING: Former Vermont Governor Howard Dean today stepped up his attacks on Senator Kerry. Dean accused Kerry of failing to accomplish much during his 20-year career in the Senate. The candidate was aggressive, but there is more evidence the Dean campaign is losing momentum. Senior advisers met in Vermont today to discuss ways to cut costs.
Candy Crowley reports.
(BEGIN VIDEOTAPE)
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: From South Carolina, the Dean campaign is headed West to Missouri, New Mexico, and overnighting in Arizona. While it holds out little chance that Dean can really make a showing in Missouri, they believe that, in the Southwest, they do have a chance.
They've been up there with ads, although they have all been taken down since then. The Dean campaign clearly floundering at this point. Their money has gone from about $41 million raised last year to an estimated $5 million cash on hand. As a result, there may be some staff cuts.
But right now, what Howard Dean needs more than anything else is some momentum. They're considering here a visit by Al Gore, who endorsed Dean early on. There was talk earlier he might come to South Carolina and campaign. Now there is a consideration of a joint appearance.
Candy Crowley, CNN, Columbia, South Carolina.
(END VIDEOTAPE)
KING: Senator John Edwards, meanwhile, is spending his whole day in South Carolina, where polls show him running neck-and-neck with Senator Kerry. Frank Buckley is with the Edwards campaign in Columbia, South Carolina.
(BEGIN VIDEOTAPE)
FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Senator John Edwards is spending the day in the state that he considers a must-win state for him, the state in which he was born, South Carolina. Here at a candidates forum, he emphasized poverty and jobs, but he was asked how, as a wealthy trial attorney, he could relate.
SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: I grew up the way you grew up. I come from the same place. I spent 20 years in courtrooms fighting for you against big corporate America, against big insurance companies. I will never forget where I come from. And you can take that to the bank.
BUCKLEY: The senator is spending the day in South Carolina, ending it with a benefit concert by Hootie and the Blowfish. Tonight, he'll be continuing on to Missouri, New Mexico and Oklahoma.
Frank Buckley, CNN, Columbia, South Carolina.
(END VIDEOTAPE)
KING: Coming up next, South Carolina is still up for grabs. We'll talk to the head of the state's Democratic Party, Joe Erwin.
And then, the exporting of America, an issue on this program for many months, now it's become a key issue in the fight for the Democratic nomination. We'll have a special report.
Plus, the growing controversy over whether there should be an independent investigation into intelligence failures in Iraq. We'll talk with weapons expert Joseph Cirincione.
And new concerns tonight about the al Qaeda link in Iraq -- those stories and a great deal more.
Stay with us.
(COMMERCIAL BREAK)
KING: The loss of American jobs to cheaper foreign labor markets is emerging as an issue in the presidential campaign. It's an issue that resonates in South Carolina, a state hit hard by the loss of manufacturing and textile jobs.
Peter Viles reports.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): How many times have you heard John Kerry trot out this line?
SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: I will close every loophole, every benefit, every reward for any Benedict Arnold company or CEO that decides to take American jobs and money overseas and stick that American people with the bill. That's over.
VILES: We asked the Kerry campaign, which companies is he talking about? They picked an easy target, Tyco, which is based in Bermuda and has been rocked by scandals. OK, which loopholes and which benefits? The Kerry campaign cited the same benefit John Edwards wants to cut off, the tax credits multinational companies receive here for paying taxes on their operations overseas.
In other words, Kerry and Edwards would effectively raise corporate taxes on multinationals like IBM and Motorola. Candidates Kerry, Edwards and Wesley Clark all propose tax breaks for companies that create new manufacturing jobs in America. Edwards and Clark would also require companies to publicly disclose jobs they have shipped overseas.
Howard Dean, meanwhile, pushing for global labor and environmental standards, he says that would drive up the cost of business overseas.
HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: First, the bad news. When you go to Wal-Mart, you're going to pay for that stuff that is all made in China, because their cost of production is going to go up. The good news is, we're going to slow the flow of jobs dramatically. Because their cost of production is going to go up, it is not going to pay companies to move all their productions.
VILES: The real hard-line positions among Democrats come from the struggling campaigns of Al Sharpton and Dennis Kucinich. Both maintain, America's trade policy is fundamentally wrong, that's why the jobs are leaving, and that's what needs to change.
REP. DENNIS KUCINICH (D-OH), PRESIDENTIAL CANDIDATE: That's why I've said my first act in office will be to cancel NAFTA and the WTO.
(END VIDEOTAPE)
VILES: To date, the Bush administration has maintained the exporting of American jobs is not a series economic problem. But the administration has laid out a plan to boost manufacturing in the United States, largely through lowering the cost of doing business in this country -- John.
KING: They say it's not a serious economic problem.
VILES: Right.
KING: What about a political problem? More than two million manufacturing jobs lost during this presidency.
VILES: Sure. They have addressed the loss of manufacturing jobs directly with this manufacturing plan. They haven't addressed this idea that the jobs are moving overseas and there is something wrong with that. What the administration maintains is, we have the right trade policies, and international trade has been good for this country, drives down the cost of goods in this country, frees up Americans to do more valuable jobs. They have maintained that this exporting thing is not a significant economic issue.
KING: Peter Viles, thank you.
VILES: Sure.
KING: Thank you.
And my guest tonight says the race for the Democratic primary in South Carolina is still wide open, with about a fifth of the voters still undecided.
Joe Erwin is the chairman of the South Carolina Democratic Party. He joins us now from Greenville, South Carolina.
Thank you for joining us, sir. Welcome to the program.
JOE ERWIN, CHAIRMAN, SOUTH CAROLINA DEMOCRATIC PARTY: It's great to be with you.
KING: If the race is so tight, turnout, of course, is a dominant factor, Senator Kerry, who came out of Iowa and New Hampshire with wins, now has the endorsement of perhaps your state's most prominent African-American politician, Congressman Jim Clyburn. Is that something that could make the difference?
ERWIN: I think it's big.
Jim Clyburn is -- as the only African-American elected to federal office from our state, he is much revered. He's been on the political scene in this state for 25 years. And so he's popular with black people and white voters in the state. And that endorsement is pretty big for Kerry. And I know the Edwards folks would have liked to have gotten that. So we'll just have to see how big it was.
KING: Senator Edwards has made no bones about the fact that, being from North Carolina, originally born in your state, South Carolina, that he has to win to go on. Does he have the organization in place? Do you see evidence that he can and even will he win, do you think?
ERWIN: I think the Edwards organization is very, very strong.
I have been following all the campaigns since the spring, actually, John. And they have got a terrific team. And I think they are going to be in mix on Tuesday for sure. You know, I won't predict the race. We can all look foolish doing that. But I know this. I think he's got the type of investment here in South Carolina that Dick Gephardt did in Iowa. So it's really, really important for the Edwards campaign to do well on Tuesday.
KING: Your state, sir, is the third major contest. Many criticize this system, starts in Iowa, moves on to New Hampshire, largely white populations, not large urban areas, like you have there. In your state, I believe maybe 40 percent or more of the vote could come from African-Americans. Do you think the system should be changed?
ERWIN: Well, you know, it has been changed, John.
And I think us, South Carolina, being the first-in-the-South primary and having a Southern state early in the process like this is a positive change that the national party has made. And for these candidates to get tested early in the process, after just one caucus and one primary state, is significant. And I think that's why you saw all the Democrats in the field here last night in Greenville, South Carolina.
And they were again in Columbia today. And it is very important to show that they can compete with African-American voters, who, of course, are a very important part of our constituency.
KING: I hope, Mr. Chairman, you heard at least some of Peter Viles' report just a moment ago, talking about the Democrats promising to do more to help the manufacturing base, to stop jobs from being shipped overseas.
Do you worry at all, sir, in a state like yours, where the textile industry, in particular, has been so hard hit, that people might get their hopes up, that even if one of these Democrats win, you are likely to still have a Republican Congress and these proposals will not become law?
ERWIN: Well, yes, that's a very valid consideration.
It's always in season and in vogue to make promises to correct ills. And textile job losses, manufacturing job losses, our state has lost more jobs per capita than any state in America since President Bush was elected. I don't know that any one person in the presidency can overturn that. But we do have to do something to stop the outflow and to create new jobs here, because the recession in South Carolina just has not ended.
And so it's going to be tough not to overpromise to South Carolina Democrats and voters as a whole in the November election.
KING: And, Chairman Erwin, as your state enjoys so much attention this week, with all of the time from the candidate, is this a sense for you enjoy it while you can? Jimmy Carter was the last Democrat to win South Carolina. Hard to believe we will many of the Democrats back in the general election. Is there a prayer for a Democratic in South Carolina in November?
ERWIN: Well, you know, there's always a possibility. You never know for sure. But, you know, realistically, this is our time to have the attention. This is our time to shape national issues in a primary that is important. So South Carolina's time is now. We don't know what will happen in the general election. A lot will depend on who our nominee is and on what he says. But, traditionally, this has been a Republican state in presidential elections. And I don't see that changing dramatically, unless there are more events that change dramatically. But we all know events in politics can change dramatically.
KING: You just mentioned, sir, it depends on who the nominee is. Do you believe, as a Southerner, that it is critical that, if the nominee is, say, Senator Kerry or someone from the North, that they turn to a Senator Edwards or someone from the South? Does there need to be regional balance on the ticket?
ERWIN: Well, yes.
I think some geographic balance is always important. It's always an important consideration. And I think, for the national Democratic Party, it's one thing that is being discussed right now, even while we don't have a nominee. So I know that's going to be a high-level consideration, because, clearly, when we don't win states in the South, we do not win the White House.
KING: Joe Erwin, chairman of the South Carolina Democratic Party, thank you, sir. I know you're busy this week. We appreciate your time.
ERWIN: A pleasure. Good to be with you.
KING: Take care.
And tonight's thought is on debate. "It is better to debate a question without settling it than to settle a question without debating it" -- those words from the French philosopher Joseph Joubert.
And coming up next, intelligence fallout. The White House is rejecting calls for an independent investigation into prewar intelligence in Iraq. We'll talk to weapons expert Joseph Cirincione -- that and much more ahead.
Stay with us.
(COMMERCIAL BREAK)
KING: My guest tonight has been one of the most vocal critics of the White House in its handling prewar intelligence of Iraq. Joseph Cirincione is the author of a study released last month that found that Iraq had no weapons of mass destruction by the late 1990s. He is the director of the Nonproliferation Project at the Carnegie Endowment and joins us now from Washington.
Joe, you were up on Capitol Hill today. There is this debate now about whether to have an independent investigation into all of this. Is the tide turning on Capitol Hill?
JOSEPH CIRINCIONE, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: Well, the tide is actually just beginning on Capitol Hill. And several prominent Democratic senators have come out in favor of an independent commission, a recommendation we made in the Carnegie report. And today, of course, Republican Senator John McCain came out. I think the president is in a tough spot. And, as you showed at the top of your hour, he's not completely ruling it out now.
I frankly think it's almost inevitable that we're going to have an independent commission looking into this to build the kind of independent, nonpartisan consensus we need to first understand what went wrong with this massive intelligence failure and how do we fix it so it won't happen again.
KING: When your report, Joe Cirincione, came out from the Carnegie Endowment, the administration, forget about it, written by a whole bunch of people who are from the Clinton administration, critical of this administration. So there is an obvious political element to this. If there is an independent investigation, should all agree that the reporting date be after the presidential election?
CIRINCIONE: Well, actually, I think that's an excellent idea.
We released the Carnegie report on January 8, at the beginning of this month. It's just amazing how much the understanding and consensus on this issue has changed since then. Now, at the end of this month, it's clear to almost everyone that there were no weapons of mass destruction in Iraq of any significant quantities. There were no ongoing weapons program.
Almost every individual major claim the administration made has proven to be wrong. And we didn't want to go a gotcha report. We're looking at wrong went, how do we fix it. And I think one of the ways to prevent this from becoming political is to say, yes, the commission should report after the election. Let's take the politics out of it. Let's try to understand what went wrong, what is the best way to stop it from happening again.
KING: I traveled with the vice president to Europe last week. And a senior official on that trip told the reporters in the traveling party that no one in the administration cooked up this intelligence, that it was acting simply on the findings of the CIA.
Do you accept that, that, if there was a problem, if the intelligence was just dead wrong, that the problem lies at the CIA, not at the White House?
CIRINCIONE: No, we do not accept that.
And we detailed why in the Carnegie report, which we put up on our Web site. We think there was a two-part intelligence failure. One was this NIE, which was wildly off the mark and very different from all previous intelligence assessments, went much farther. But, second, we found that administration officials went beyond the existing intelligence in a number of major issues, in a number of ways, and actually systematically misrepresented the nature of the threat to the American people. There is culpability here on all sides and not just with the administration, not just with the intelligence agencies. Congress didn't do a very good job of investigating this. There was a little too much war drum beating from the media. There's a lot of blame to go around.
KING: Let's step back from Iraq and look at the broader question of the quality of U.S. intelligence. There is a nuclear standoff with North Korea.
CIRINCIONE: Yes.
KING: There are questions about what Iran is doing. Libya recently came forward. There have been, since the end of the Cold War, questions about, are there -- quote, unquote -- "loose nukes" getting out of the former Soviet Union. How confident should be the American people, given what we are now looking at, the possibility that the intelligence about Iraq was just wrong, how confident should the American people be and how confident should the president of the United States be in the briefings he's getting?
CIRINCIONE: Well, this is a very serious problem.
And this is why David Kay says and I say that this may be one of the most serious problems we have in government today. Clearly, something is wrong with our threat assessment process. We wildly overexaggerated the threat from Iraq, but we also underestimated the threat from Iran. That program was much farther along than we thought.
We didn't understand how far Libya had gotten in its nuclear problem. So we have a problem here. And, at this point, the American public cannot have confidence in the threat assessments that are coming out from the United States on these weapons of mass destruction issues.
KING: In your view, Joe Cirincione, should the president of the United States and the American people have confidence, as you put it, in George Tenet, the director of the central intelligence?
CIRINCIONE: We don't want to point the finger at anybody. We don't think any one individual is to blame here.
The vice president played a very large role in shaping the intelligence. The secretary of defense set up his own intelligence operation. The secretary of state got his briefing at the U.N. completely wrong on all his major points.
It's not just George Tenet's fault. That's why we have to step back, take a nonpartisan objective view of all this, understanding exactly what went wrong and how to fix it.
KING: Some Democrats say this is proof there should not have been a war in Iraq. Other Democrats say Saddam Hussein was a threat anyway regardless of whether he had weapons of mass destruction ready to deploy, how would you weigh in on that question? CIRINCIONE: The very first finding we have in that report is that Saddam's weapons of mass destruction programs at whatever stage represented a threat that could not be ignored or allowed to fester. There was a problem there.
It was not an immediate threat, however, that threatened the national security of the United States. And we were taking action to stop it. A year ago we had 100,000 men around, and women, around Iraq surrounding him. We had hundreds of inspectors going into Iraq able to go everywhere, search everything, we were gaining new intelligence that was indicating the programs were not in production.
We had a workable containment program underway. The war was not necessary, at least at that time. We had to give the inspections a chance to work and everything we now know is the inspections were working far better than we not. The U.N. intelligence it turns, out was better than the U.S. intelligence.
KING: The administration would, of course, disagree. On that point we'll call it a night. Joseph Cirincione, the Carnegie Endowment, thank you very much for your time, sir. This debate will continue.
This brings us to tonight's poll question. "Do you believe there should be an independent investigation into prewar intelligence in Iraq? yes or no." Cast your vote at CNN.com/lou. We'll bring you the results later in the show.
And coming up, growing concerns about al Qaeda terrorism in Iraq as the coalition prepares to hand over power to the Iraqi people. We will have a report from Baghdad.
And tonight in "Heroes," they've been called Marines and sailors, now they can also be called Americans.
The buzz has begun even though the Super Bowl is still two days away. We'll have the latest in new trends in advertising for the big game as companies pay more than $2 million for 30 seconds of airtime.
(COMMERCIAL BREAK)
KING: Potentially troubling information just into CNN. New intelligence tonight suggesting possible attacks using foreign airplanes. Justice Correspondent, Kelli Arena joins us with the latest.
KELLI ARENA, CNN JUSTICE CORRESPONDENT: Hi, John. Government officials tell CNN that there is new intelligence that's come in over the past 48 hours suggesting possible terror attacks against the United States using aircraft.
Those sources would not get very specific, but one of them said the intelligence did at least involve Air France. Air France flights obviously from France to the United States.
Officials have described this intelligence as very similar to the intelligence that they received heading into the Christmas holidays. You remember that intelligence led the government to raise the threat level to orange. It has since gone back down to yellow and there's no indication that that is being discussed at this time.
But officials say that the level of concern over this new intelligence is not nearly as high as it was back in December. Now, whether that's due to lack of credibility or specifics is unclear at this time. But it is new intelligence not recycled intelligence, John, and it's come in within the last 48 hours.
KING: And Kelli, maybe an unfair question as this develops, but you say the concern is not as high as we saw around the holiday period, any indication flights are canceled or flights have been delayed or just intelligence sharing with the French at this point and others.
ARENA: Nothing at all in terms of action, John. I have heard nothing that rises to the level of specificity that we heard heading into the Christmas holidays. As you remember, there were what was thought to be flight numbers and specific airlines mentioned.
Last time it involved British Airways, as well. I have not heard that this time around. The only thing that we've been able to nail down so far is that it in some way involves Air France flights to the United States.
The usual targets were mentioned: Washington, D.C., Los Angeles, again not that, of course, always comes up in discussions like this, so it is unclear at this point whether this new intelligence specifically mentions those cities or if that is just what usually comes up when new information is brought in. Where they need to share that information which officials they need to share it with.
KING: Kelli Arena in Washington keeping track of this developing story. Thank you very much.
ARENA: Your welcome, John.
KING: There are just five months to go before now before the hand-over of power in Iraq. The United States and coalition forces are bracing for a possible rise in violence.
The warning comes just days after an arrest in Iraq has added to fears about al Qaeda's possible presence there. Michael Holmes has the report from Baghdad.
(BEGIN VIDEOTAPE)
MICHAEL HOLMES, CNN CORRESPONDENT (voice-over): U.S. officials say large scale attacks like the bombing of U.N. headquarters in Iraq last year, the attack on Italian soldiers and the bombing of the Imamali (ph) mosque in Najaf all bear the fingerprints of this man, Abu Mussab Zaqawi, a man they say is linked to al Qaeda.
The officials say they believe Zaqawi moved into Iraq to plan the attacks. That and the recent capture of Hasan Guhl (ph), a key al Qaeda member, as he tried to enter Iraq from Iran, adds to what those officials and military chiefs believe is evidence of a mounting threat from al Qaeda and foreign fighters in general inside Iraq.
LT. GEN. RICARDO SANCHEZ, COALITION FORCES COMMANDER: Of course the capture of Guhl is pretty strong proof al Qaeda is trying to gain a foot hold here to continue the murderous campaigns. Guhl's capture is great news for both Iraqis, coalition and for the international community's war against terror.
HOLMES: Part of the rationale for believing there is a growing influence of al Qaeda in Iraq is the way the U.S. military says insurgents are changing, refining their tactics.
BRIG. GEN. MARK KIMMITT, COALITION SPOKESMAN: Any time you have a car bombing, a suicide bombing you don't typically associate that with what is happening inside of Iraq, or homegrown. That gives us an indicator that that's is probably somebody from abroad or somebody who has had some training from abroad. That kind of extremism, we don't typically see here in country.
HOLMES: The arrest of one al Qaeda member is hardly compelling proof of a large scale offensive by the group, but analysts say proof of any presence of al Qaeda in Iraq will be of great concern to the U.S.
DR. DAVID CLARIDGE, AEGIS DEFENCE SERVICES: My view is that al Qaeda has in its rhetoric has talked about going to Iraq and fighting the Americans. I think that al Qaeda sees Iraq as a potential crucible for confrontation with American forces.
HOLMES (on camera): One problem facing coalition and Iraqi security forces is Iraq's pourous borders. Foreign fighters are known to have cross over into the country from neighbors like Turkey, Iran and Syria. Right now there's very little that can be done to stop them. Michael Holmes, CNN, Baghdad.
(END VIDEOTAPE)
KING: Coming up next, our feature series, "Heroes," the United States is rewarding more than 200 marines and soldiers to fought for a country that wasn't even theirs before today.
(COMMERCIAL BREAK)
KING: In "Heroes" tonight we feature an extraordinary group of men and women serving in the United States armed forces. 207 sailors and marines who are proud to serve this country and as of today proud to call this country home. Casey Wian reports from Camp Pendleton, California.
(BEGIN VIDEOTAPE)
CPL. PHONEXAI SIPHANTHONG, U.S. MARINE CORPS: I was born in a refugee camp in Bangkok, Thailand.
CASEY WIAN, CNN CORRESPONDENT (voice-over): 22-year-old, Phonexai Siphanthong, the son of refugees from Laos has come a long way.
SIPHANTHONG: I came to the U.S. when I was three years old. We arrived in San Diego and I grew up in National city, kind of like, you know, crime infested neighborhood and my mother was on welfare, living off food stamps and stuff like that. It was a sad childhood.
WIAN: But now he's in the Marine Corps, a veteran of Operation Iraqi Freedom and today a United States citizen.
SIPHANTHONG: It's my way of sealing the deal and making it official. In my heart I have always considered myself an American.
WIAN: 207 marines and sailors became citizens in one of the largest military naturalizations in history.
UNIDENTIFIED MALE: I hereby declare on oath...
WIAN: Sergeant Andre 's parents brought him to the United States as a 7-year-old child from Ecuador.
SGT. ANDRES CRESPO, U.S. MARINE CORPS: I came to this country, basically, my parents with nothing. Now my mom has a house, I got my family, I got my kids, I got my house and I'm like, free school, the government give us a lot of stuff. The only way to pay this country back is let me serve some time and pay it back.
WIAN: In Iraq he put his life on the line for his new country.
CRESPO: It was the longest 15 minutes I ever had in my life.
WIAN: Tell me what happened.
CRESPO: One of my guys, one of my platoon sergeants was in the back of my vehicle, he was out doing a watch and we got ambushed going down highway 1. He got -- took a shot to his face...
WIAN: And didn't make it back.
Corporal Glenys Rivas leaves for Iraq next month and leaves her infant daughter behind. Rivas came to Miami at age 8 from Nicaragua. Now she is an American who wants to become a Marine Corps officer.
CPL. GLENYS RIVAS, U.S. MARINE CORPS: It's honor, it's integrity that I learned. It's something amazing.
WIAN: A sentiment echoed by another naturalized U.S. citizen.
GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: By choice you came to this land and by choice you're fighting for this country and that is extraordinary.
WIAN: Noncitizens now make up about 4 percent of the U.S. armed forces since July 2002, when President Bush made it easier for servicemen and women to become U.S. citizens, more than 13,000 have applied. Casey Wian, CNN, Camp Pendleton, California.
(END VIDEOTAPE)
KING: Coming up, this week's "Newsmakers." Then time and benefits are running out for millions of unemployed Americans. Is real job creation on the way?
And Disney is hoping there really are other fish in the sea after a crushing blow that could cost the mouse house a bundle.
Plus powerful winds were too much to keep this tractor trailer firmly on the road. We'll have that remarkable story and much more just ahead. Stay with us.
(COMMERCIAL BREAK)
KING: Now for a look at the news in brief. China said the deadly bird flu virus has struck three more provinces. The virus is blamed for at least ten deaths and the slaughter of millions of poultry.
NASA's Mars rover Opportunity is set to roll off its lander, possibly as soon as tonight. And Opportunity's twin Spirit is expected to be up and running again this weekend.
And a remarkable escape for a truck driver in Washington state today. Strong winds forced this tractor trailer on its side. The driver was not injured.
On Wall Street, stocks closed (UNINTELLIGIBLE) the week with modest losses. The Dow fell 22 points, the Nasdaq lost two, the S&P 500 dropped almost three. Mary Snow is here with "The Market" and more -- Mary.
MARY SNOW, CNN CORRESPONDENT: John, stocks weren't strong today but they did end the month higher. And market watchers say if history is any indicator, January's performance could predict a trend for the rest of the year, predicting the aftermath of a big Hollywood divorce though was the buzz on Wall Street today.
Pixar Animation Studios is splitting up with Disney and ending their distribution partnership. Hits like "Finding Nemo" have brought $1 billion in profits for the house of mouse. Disney stock fell 2 percent. Shares of Pixar gained more than $2 as speculation swirled over potential suitors.
From a break-up to a much watched match-up this Sunday as the New England Patriots and Carolina Panthers square off. The price of Super Bowl ads this year hit a record. Among some of the featured ads Muhammad Ali appears in one for IBM. From a boxer to Britney Spears, Beyonce hawking Pepsi with the soft drink company, one of the biggest customers for Super Bowl ad time.
The price of a 30 second spot this year, a cool $2.2 million. Compare that to 42,000 bucks in 1967. The first Super Bowl. A seat to the game costs a lot less but the percentage price in the same time span is about the same. 5,000 percent with the average ticket in 1967 costing $10 compared to $500 today. KING: I take a seat to the game. Thank you, Mary. Mary Snow.
Discouraging news tonight for the millions of people who are jobless in America. A new study finds almost 2 million Americans will run out of state unemployment benefits between now and June. Congress has extended those benefits in the past but now says another extension is not needed. Kitty Pilgrim reports.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT: Jacene Pratt was married two weeks ago. She and her husband, Troy, are spending their honeymoon at this job center. She has been out of a job for more than a year and her unemployment benefits have run out.
JACENE PRATT, UNEMPLOYED: You don't know how you're going to get up and go on a train today to look for a job. You know, it's hard. It's hard. You don't know how you're going to pay your bills.
PILGRIM: This Manhattan employment center is filled with people desperate for a job. When people are laid off four out of five people have less than two months savings to live on. They are usually out of money by the time unemployment benefits run out. In most states, that is typically 26 weeks. Federal benefits used to kick in for another 13 weeks but that program began to be phased out last month.
43-year-old Bernard Ottley's benefits ran out a month ago. He's living off his retirement savings but replacing his retail job has not been possible.
BERNARD OTTLEY, UNEMPLOYED: I had to go into my 401(k) just to be able to pay my rent. I didn't realize it was going to be that tough out here to find work.
PILGRIM: Many states are near new records of people running out of benefits each month. Politically important states like Michigan, Pennsylvania, Indiana, North Carolina, and South Carolina are posting record highs.
ISAAC SHAPIRO, CNTR. ON BUDGET & POLICY PRIORITIES: Most people become unemployed; they were middle class families before -- while they were working -- and without unemployment benefits, it really accelerates their descent, unfortunately, into an impoverished situation.
PILGRIM: And with that hanging over them, they continue to look for work.
(END VIDEOTAPE)
PILGRIM: The next six months is shaping up to be one of the worst periods ever. An estimated two million people will find themselves with their unemployment benefits running out -- John.
KING: Kitty Pilgrim, thank you very much. The new frontrunner in the race for the Democratic nomination picked up two key endorsements today. Senator John Kerry now has the backing of a major union and African-American Congressman Jim Clyburn of South Carolina. But will those endorsements make a big enough difference on February 3, when seven states hold primaries or caucuses? Joining us now for this week's "Newsmakers," Steve Forbes, editor in chief of "Forbes," Rik Kirkland, managing editor of "Fortune," and Steve Shepard, managing editor of "BusinessWeek."
Steve, let me start with you. You've been through this process. Is John Kerry the Democratic nominee?
STEVE FORBES, FORBES: I think so. It's for him to lose. But as you know, presidential politics is really a process of death and resurrection. Six weeks ago, Kerry was one of the losers. And now he's a winner. But it's for him to lose. If he wins Missouri, I think he's going to be very hard to stop.
KING: Rik, Steve mentions death and resurrection. Governor Dean is certainly hoping for resurrection, but it's a dangerous strategy. He's all but skipping the states this week, at least not putting any money into them, hoping he can come back after that. Any reason to believe that can happen?
RIK KIRKLAND, FORTUNE: I don't think so. I think it makes sense, but it's a hail Mary pass. Sort of a desperate strategy. When you start talking about we're playing for delegate count, we're not playing to be a frontrunner or to win, it means you probably don't have a shot.
KING: You agree with that?
STEVE SHEPARD, BUSINESSWEEK: Yeah, basically. But let me just throw out another scenario. We get fragmentation on February 3. Edwards wins in South Carolina, Kerry wins in Missouri, Clark wins in Oklahoma and Dean picks up New Mexico, let just say. You get fragmentation. Kerry stays the frontrunner, but it isn't over and Dean lives to fight another day.
KING: Reporters would like that. I don't know if the Democrats would like that. But want to turn to the president's budget. It is coming out this week. And I am going to start with you, again, Steve, because I remember you giving speeches about how Washington needs to get its act in order when it comes to fiscal discipline. $500 billion deficit -- and oh, sorry, the Medicare bill is a lot more expensive than we said it was two months ago. Can this president stand before the American people and say he's a fiscal conservative?
FORBES: I think he is going to stand before the American people and say he's slowing the growth of spending. I think the American people really don't care about the deficit, if the economy is doing well. If the economy is doing well, as we saw in the Reagan years, deficits are just numbers. But if the economy falters, then that -- as Perot did in '92, use that as a stick to say, this is why we have our problems. KING: Are deficits just numbers, Rik? Because, you know, Bob Rubin is out with a new book, others say deficits eventually will lead to higher interest rates and all sorts of problems.
KIRKLAND: They are just numbers, but they eventually matter. You know, it's not a short-term problem. But if we run $500 billion deficits as far as the eye can see, I think you're going to get a scare in the bond market and you're going to get a weaker dollar.
KING: Can the Democrats benefit politically from this?
SHEPARD: Absolutely. And they are going to get help by the Republican backbenchers in the House who are already very upset about the size of the deficit and the increases in federal spending. So it isn't going to hurt them in the end from his own party, but it will limit what he can do with his own agenda this year, on making the tax cuts permanent, on getting retirement savings accounts and that sort of thing. So I think he's going to pay a price for it, yeah.
KING: Any one of the three think the president can win a vote in both chambers of Congress this year on making the tax cuts permanent?
KIRKLAND: No.
KING: No? No? No? OK.
FORBES: He'' got to get the election out of the way, and then it will happen. But the real thing that really happened this week was the Federal Reserve hinting that it will raise interest rates. Actually, that will be good for long-term interest rates, because it means inflation won't kick in, thanks to the weak dollar, after the general election. That's the good news.
KING: The other big debate is this whole weapons of mass destruction controversy, and where to go with an investigation. The administration says it's looking internally. Congress says this is our prerogative, we do oversight. Senator McCain now joining. Some Democrats. And of course the weapons inspector David Kay. He says, put it outside, another independent investigation. Is that going to happen?
SHEPARD: Yeah, probably. The president has a lot of explaining to do, and he needs somebody to provide political cover. He does have to explain things. I mean, we went to a preemptive war on the grounds that there were weapons of mass destruction there. Turns out there are no weapons of mass destruction. People will ask the question, is a preemptive war justified without weapons there?
KIRKLAND: I think you're going to find, though, if CIA Director George Tenet were a stock, you'd want to short him.
KING: OK.
KIRKLAND: Well, they've got to find -- in other words, I think...
(CROSSTALK)
KIRKLAND: ... for the administration, the best course is to say the CIA messed up. We were misinformed, we didn't manipulate this stuff. And I think that's looking like something that might happen.
FORBES: The CIA needs reform, but to be fair, Saddam Hussein thought he had weapons of mass destruction, his generals thought he had weapons of mass destruction. And I think at the end of the day, you're going to find that Syria has some of the stuff that Saddam was trying to do. It wasn't that he didn't try. He didn't get as far as he thought he had. And then the in terms of preemption, clearly, Saddam was going to stir trouble whenever he could.
KING: The Democrats say Dick Cheney doesn't want anyone looking into the energy task force. The administration doesn't want to extend the deadline of the 9/11 commission a few months more, and now they don't want an independent review into this. This is an administration that maybe has something to hide and certainly seems very secretive. Is there a political traction in that? Is it a fair point?
SHEPARD: Yeah, it could be. Depends on the effectiveness of the Democrats at hammering away at that issue. But it looks like they have something to hide on more than one front. So I think you're right.
KIRKLAND: It's part of this -- we're so polarized right now in the country, so split. It will appeal to the Democrats who think Bush, you know, can do no right. And I think the Republicans will probably circle the wagons. So I don't know where that leads us.
(CROSSTALK)
SHEPARD: At the margin, it might make a difference in a close race.
FORBES: So far the Democrats have not been able to turn national security into an issue that works for them, because they have come up with no good alternatives. Kerry, after all, did vote for the war. And why did he vote for it? He can't say, well, I was misled. Reminds people (UNINTELLIGIBLE) brainwashing back in 1967.
KING: Quickly to each of you, is there any economic impact in this budget from the president, for better or worse, increases defense spending, increases homeland security spending? Pretty much tries to crimp down on everything else?
KIRKLAND: I mean, I think the fiscal stimulus is not going to be the way it's been the last couple of years. I think the good news for him is you have got the tax cuts, will continue to put some money into the economy. But I think the economy doesn't need a big boost from the government spending.
SHEPARD: The die is cast for the rest of this year already. So whatever happens is not going to affect this year. The question will be '05 and beyond. FORBES: The big stimulus came from the tax cuts of last year. Reducing those tax rates added over $2 trillion in stock market value. That's going to provide real juice for the economy this year.
KING: We'll let be the last word for tonight. Steve Forbes, Rik Kirkland, Steve Shepard, thank you all very much. Enjoy the weekend.
Coming up, David Bradley decides it's time to restart. You may not know his name, but he's probably bailed you out of a computer catastrophe more than once.
But first, an update on the list of companies our staff has confirmed to be exporting America. These are U.S. companies either sending American jobs overseas or choosing to employ cheap foreign labor instead of American workers. Tonight's additions include Kwikset, maker of locks and other hardware. And LioNBRIDGE Technologies.
Please keep sending us the names of companies you know to be exporting America that are not already on our list. And for the complete list, log on to cnn.com/lou. We'll be right back.
(COMMERCIAL BREAK)
KING: Now the results of tonight's poll question. Ninety-four percent of you believe there should be an independent investigation into pre-war intelligence on Iraq. Six percent of you do not.
Finally tonight, if you've ever used a computer, chances are you have used David Bradley's code at least once. Maybe just more than once today. He's the computer genius behind control alt delete. That's the code that forces even the most stubborn computers to restart when all else has failed. Bradley retired today after more than 28 years with IBM. He says he never expected a code that took him five minutes to write to become so famous.
He also says one of his proudest moments was being featured in the final round of the TV game show "Jeopardy."
That's our show tonight. Thanks for being with us. For all of us here, good night from New York. Anderson Cooper is next.
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Aired January 30, 2004 - 18:00 ET
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JOHN KING, CNN ANCHOR: Tonight: President Bush faces a revolt in his own party. Conservative Republicans are angry about the budget deficit and the rising costs of the president's new prescription drug plan. Suzanne Malveaux will report from the White House.
The president is also under fire from Congress tonight over the failure to find weapons of mass destruction in Iraq. Several leading senators want an independent inquiry. So far, the president says no.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I, too, want to know the facts.
(END VIDEO CLIP)
KING: In "Exporting America" tonight, competition from cheap overseas labor market becomes an issue in the presidential campaign. We will have a special report.
And in "Heroes," 200 Marines and sailors today became American citizens. It was one of the largest military naturalizations in history. Casey Wian will report.
ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, January 30. Sitting in for the vacationing Lou Dobbs, John King.
KING: Good evening.
Tonight, President Bush is putting the finishing touches on his election-year budget. That budget will be sent up to Congress on Monday. But the president faces a growing rebellion in his own party. Conservative Republicans are angry about some of the president's big spending proposals, in particular his plan to introduce a Medicare prescription drug benefit costing $535 billion, a significantly higher price tag than the White House originally had predicted.
White House correspondent Suzanne Malveaux reports -- Suzanne.
SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, John, it was considered a huge political victory for President Bush when he pushed through the Medicare reform bill in Congress late last year. It only passed by five votes in the House.
The deal was sealed only after the administration reassured fiscally conservative Republicans that the administration could afford it. They said it was a 10-year plan that would cost nearly $490 billion, that as estimated by the Congressional Budget Office. The CBO is still maintaining -- standing by those figures.
Now the White House's Office of Management and Budget estimates it will cost nearly 30 percent more, around $535 billion. Now, White House officials are trying to reassure some angry Republicans they did not mean to intentionally mislead the Congress in any way, the president today saying that he only found out about these new figures just a couple weeks ago. But he does put the onus on Congress to adjust.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Now, it is going to require Congress to be wise with the taxpayers' money. Now, the Medicare reform we did is a good reform, fulfills a longstanding problem to our seniors. Congress is now going to have to work with us to make sure that we set priorities and are fiscally wise with the taxpayers' money.
(END VIDEO CLIP)
MALVEAUX: Now, the White House is going to say that it's about $520 billion, the projected federal deficit, when they introduce the budget on Monday. But White House aides insist that they will keep discretionary spending at 1 percent. They say they believe that they can go ahead and afford this.
But, of course, the concern here, John, is whether or not this becomes a political liability. Already, they are hearing from Democrats and Republicans alike who are criticizing the administration. And then, of course, there are some aides who are concerned that this might actually put at risk some of the priorities of the president and of the administration, making those tax cuts permanent, as well as some of those other spending measures -- John.
KING: And we are still early in the election year. Suzanne Malveaux at the White House, thank you.
And, as Suzanne reported, conservative Republicans are alarmed by the growing deficit and the rising cost of the president's prescription drug benefit plan. They worry, in this election year, that voters may come to believe that Republicans are losing their commitment to small government and fiscal responsibility.
Louise Schiavone reports from Washington.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): A half trillion dollar deficit is a lot for a conservative Republican to choke down, especially with news of Medicare's latest cost overruns. "This is exactly what conservatives feared," declared Arizona Republican Jeff Flake. "The bill is incredibly expensive, lacks substantive reform. And it was irresponsible for Congress to heap this burden on the taxpayer" -- end quote. "We must put our fiscal house in order," said Indiana Republican Mike Pence, "by holding the line on spending, renewing our commitment to limited government and fiscal discipline, which are true Republican values of the majority" -- end quote.
The Bush administration's aggressive tax cut program may be reminiscent of former President Reagan's agenda, but this former Reagan Treasury official says there's a key difference.
BRUCE BARTLETT, NATIONAL CENTER FOR POLICY ANALYSIS: Reagan had big deficits, but he was trying to reduce the size of government. He was at least trying to cut spending. And he may not have been as successful as he wanted to be. But this president is not making even the slightest effort to cut spending.
SCHIAVONE: One congressional source said of President Bush, "He's making it difficult to be a Republican right now. We have to carry the water and the blame for all of his spending." Emblematic of the problem for conservatives, the president's proposal to go to the moon and Mars.
BILL BEACH, HERITAGE FOUNDATION: It's a noble objective to go to Mars and to go to the moon, but I'm not to sure that I want my billfold sent up to Mars anytime soon or do I know too many people that want that.
SCHIAVONE: Even now, the 96-member conservative Republican caucus is preparing a counterproposal to the Bush budget.
(END VIDEOTAPE)
SCHIAVONE: John, gaining growing recognition, a constitutional amendment proposed by Congressman Chris Cox of California to base spending on inflation and population growth. But analysts say, the nation may have a new president or higher taxes or both before that happens -- John.
KING: Louise, we are in an election year. You are talking about conservative Republicans proposing an alternative to a Republican president's budget, talk of perhaps a constitutional amendment to rein in spending. Is the Republican leadership going to lean on these conservatives and say, shut it down, don't fight the president?
SCHIAVONE: Well, that's how they got that Medicare bill through to begin with. There's some question as to whether or not these 96 Republicans -- there's a caucus of them -- there's 96 of them -- can stand up to someone as strong as Tom DeLay. We'll have to see what happens.
KING: Fascinating issue this election year. Louise Schiavone in Washington, thank you so much.
The new budget debate is just one major controversy facing the president. He is also confronted by growing calls from Congress for an independent inquiry into the failure to find any weapons of mass destruction in Iraq. (BEGIN VIDEOTAPE)
KING (voice-over): The president would not answer directly when asked if there should be a new independent investigation of U.S. intelligence gathering.
BUSH: I want the American people to know that I, too, want to know the facts. I want to be able to compare what the Iraqi survey group has found with what we thought prior to going into Iraq.
KING: The administration is conducting an internal review, but momentum for an independent investigation is growing.
Democratic Senator Dianne Feinstein, a member of the Intelligence Committee, said in a statement Friday, "It is critical that every effort is made to find out what went wrong and why." Months of searching in Iraq have turned up no weapons of mass destruction. And the man who led that search, David Kay, is urging Congress to push for an independent investigation into why U.S. intelligence agencies were so certain that Iraq did have banned weapons.
Senator John McCain of Arizona embraced Kay's proposal and says he believes an independent review is both inevitable and the best way to handle the controversy in a presidential election year.
SEN. JOHN MCCAIN (R), ARIZONA: The time is up. Dr. Kay was appointed to find these weapons of mass destruction. He's a highly credible, respected weapons inspector and scientist. And when he says we all failed, and that's all the world's intelligence services, not just the United States, then it calls for an investigation. We're out of time.
(END VIDEOTAPE)
KING: Administration and congressional sources tell CNN tonight that Senator McCain is among several members of Congress Vice President Dick Cheney has called in event days to discuss this issue. The administration officials say it is routine for Mr. Cheney to keep track of key congressional debates. But some on Capitol Hill think the vice president might be exploring a potential compromise.
On the campaign trail today, John Kerry today won the endorsement of a major union, the Communication Workers of America. The 700,000- member union said it is becoming increasingly clear that Senator Kerry is the strongest candidate. The endorsement is a sign that labor's confidence in the candidacy of Howard Dean may be eroding.
Kelly Wallace is with the Kerry campaign in Columbia, South Carolina.
(BEGIN VIDEOTAPE)
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: This afternoon, John Kerry will be in Delaware, part of his six-day, seven-state tour, with Kerry spending time in all seven states holding contests on Tuesday. Earlier, he was in South Carolina, trying to win the support of some of the state's 415,000 veterans. While Kerry was speaking, also in South Carolina, retired General Wesley Clark was criticizing Kerry on the issue of affirmative action, saying, in last night's debate, Kerry did not take responsibility for at one time calling affirmative action divisive.
We caught up with the senator, who said his position was the same as then-President Clinton, that affirmative action should not be ended, but mended. The senator went on to accuse Wesley Clark of -- quote -- "playing politics."
Before leaving here, the senator received another major endorsement, the backing of the large and influential union, the Communication Workers of America.
Kelly Wallace, CNN, reporting from Columbia, South Carolina.
(END VIDEOTAPE)
KING: Former Vermont Governor Howard Dean today stepped up his attacks on Senator Kerry. Dean accused Kerry of failing to accomplish much during his 20-year career in the Senate. The candidate was aggressive, but there is more evidence the Dean campaign is losing momentum. Senior advisers met in Vermont today to discuss ways to cut costs.
Candy Crowley reports.
(BEGIN VIDEOTAPE)
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: From South Carolina, the Dean campaign is headed West to Missouri, New Mexico, and overnighting in Arizona. While it holds out little chance that Dean can really make a showing in Missouri, they believe that, in the Southwest, they do have a chance.
They've been up there with ads, although they have all been taken down since then. The Dean campaign clearly floundering at this point. Their money has gone from about $41 million raised last year to an estimated $5 million cash on hand. As a result, there may be some staff cuts.
But right now, what Howard Dean needs more than anything else is some momentum. They're considering here a visit by Al Gore, who endorsed Dean early on. There was talk earlier he might come to South Carolina and campaign. Now there is a consideration of a joint appearance.
Candy Crowley, CNN, Columbia, South Carolina.
(END VIDEOTAPE)
KING: Senator John Edwards, meanwhile, is spending his whole day in South Carolina, where polls show him running neck-and-neck with Senator Kerry. Frank Buckley is with the Edwards campaign in Columbia, South Carolina.
(BEGIN VIDEOTAPE)
FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Senator John Edwards is spending the day in the state that he considers a must-win state for him, the state in which he was born, South Carolina. Here at a candidates forum, he emphasized poverty and jobs, but he was asked how, as a wealthy trial attorney, he could relate.
SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: I grew up the way you grew up. I come from the same place. I spent 20 years in courtrooms fighting for you against big corporate America, against big insurance companies. I will never forget where I come from. And you can take that to the bank.
BUCKLEY: The senator is spending the day in South Carolina, ending it with a benefit concert by Hootie and the Blowfish. Tonight, he'll be continuing on to Missouri, New Mexico and Oklahoma.
Frank Buckley, CNN, Columbia, South Carolina.
(END VIDEOTAPE)
KING: Coming up next, South Carolina is still up for grabs. We'll talk to the head of the state's Democratic Party, Joe Erwin.
And then, the exporting of America, an issue on this program for many months, now it's become a key issue in the fight for the Democratic nomination. We'll have a special report.
Plus, the growing controversy over whether there should be an independent investigation into intelligence failures in Iraq. We'll talk with weapons expert Joseph Cirincione.
And new concerns tonight about the al Qaeda link in Iraq -- those stories and a great deal more.
Stay with us.
(COMMERCIAL BREAK)
KING: The loss of American jobs to cheaper foreign labor markets is emerging as an issue in the presidential campaign. It's an issue that resonates in South Carolina, a state hit hard by the loss of manufacturing and textile jobs.
Peter Viles reports.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): How many times have you heard John Kerry trot out this line?
SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: I will close every loophole, every benefit, every reward for any Benedict Arnold company or CEO that decides to take American jobs and money overseas and stick that American people with the bill. That's over.
VILES: We asked the Kerry campaign, which companies is he talking about? They picked an easy target, Tyco, which is based in Bermuda and has been rocked by scandals. OK, which loopholes and which benefits? The Kerry campaign cited the same benefit John Edwards wants to cut off, the tax credits multinational companies receive here for paying taxes on their operations overseas.
In other words, Kerry and Edwards would effectively raise corporate taxes on multinationals like IBM and Motorola. Candidates Kerry, Edwards and Wesley Clark all propose tax breaks for companies that create new manufacturing jobs in America. Edwards and Clark would also require companies to publicly disclose jobs they have shipped overseas.
Howard Dean, meanwhile, pushing for global labor and environmental standards, he says that would drive up the cost of business overseas.
HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: First, the bad news. When you go to Wal-Mart, you're going to pay for that stuff that is all made in China, because their cost of production is going to go up. The good news is, we're going to slow the flow of jobs dramatically. Because their cost of production is going to go up, it is not going to pay companies to move all their productions.
VILES: The real hard-line positions among Democrats come from the struggling campaigns of Al Sharpton and Dennis Kucinich. Both maintain, America's trade policy is fundamentally wrong, that's why the jobs are leaving, and that's what needs to change.
REP. DENNIS KUCINICH (D-OH), PRESIDENTIAL CANDIDATE: That's why I've said my first act in office will be to cancel NAFTA and the WTO.
(END VIDEOTAPE)
VILES: To date, the Bush administration has maintained the exporting of American jobs is not a series economic problem. But the administration has laid out a plan to boost manufacturing in the United States, largely through lowering the cost of doing business in this country -- John.
KING: They say it's not a serious economic problem.
VILES: Right.
KING: What about a political problem? More than two million manufacturing jobs lost during this presidency.
VILES: Sure. They have addressed the loss of manufacturing jobs directly with this manufacturing plan. They haven't addressed this idea that the jobs are moving overseas and there is something wrong with that. What the administration maintains is, we have the right trade policies, and international trade has been good for this country, drives down the cost of goods in this country, frees up Americans to do more valuable jobs. They have maintained that this exporting thing is not a significant economic issue.
KING: Peter Viles, thank you.
VILES: Sure.
KING: Thank you.
And my guest tonight says the race for the Democratic primary in South Carolina is still wide open, with about a fifth of the voters still undecided.
Joe Erwin is the chairman of the South Carolina Democratic Party. He joins us now from Greenville, South Carolina.
Thank you for joining us, sir. Welcome to the program.
JOE ERWIN, CHAIRMAN, SOUTH CAROLINA DEMOCRATIC PARTY: It's great to be with you.
KING: If the race is so tight, turnout, of course, is a dominant factor, Senator Kerry, who came out of Iowa and New Hampshire with wins, now has the endorsement of perhaps your state's most prominent African-American politician, Congressman Jim Clyburn. Is that something that could make the difference?
ERWIN: I think it's big.
Jim Clyburn is -- as the only African-American elected to federal office from our state, he is much revered. He's been on the political scene in this state for 25 years. And so he's popular with black people and white voters in the state. And that endorsement is pretty big for Kerry. And I know the Edwards folks would have liked to have gotten that. So we'll just have to see how big it was.
KING: Senator Edwards has made no bones about the fact that, being from North Carolina, originally born in your state, South Carolina, that he has to win to go on. Does he have the organization in place? Do you see evidence that he can and even will he win, do you think?
ERWIN: I think the Edwards organization is very, very strong.
I have been following all the campaigns since the spring, actually, John. And they have got a terrific team. And I think they are going to be in mix on Tuesday for sure. You know, I won't predict the race. We can all look foolish doing that. But I know this. I think he's got the type of investment here in South Carolina that Dick Gephardt did in Iowa. So it's really, really important for the Edwards campaign to do well on Tuesday.
KING: Your state, sir, is the third major contest. Many criticize this system, starts in Iowa, moves on to New Hampshire, largely white populations, not large urban areas, like you have there. In your state, I believe maybe 40 percent or more of the vote could come from African-Americans. Do you think the system should be changed?
ERWIN: Well, you know, it has been changed, John.
And I think us, South Carolina, being the first-in-the-South primary and having a Southern state early in the process like this is a positive change that the national party has made. And for these candidates to get tested early in the process, after just one caucus and one primary state, is significant. And I think that's why you saw all the Democrats in the field here last night in Greenville, South Carolina.
And they were again in Columbia today. And it is very important to show that they can compete with African-American voters, who, of course, are a very important part of our constituency.
KING: I hope, Mr. Chairman, you heard at least some of Peter Viles' report just a moment ago, talking about the Democrats promising to do more to help the manufacturing base, to stop jobs from being shipped overseas.
Do you worry at all, sir, in a state like yours, where the textile industry, in particular, has been so hard hit, that people might get their hopes up, that even if one of these Democrats win, you are likely to still have a Republican Congress and these proposals will not become law?
ERWIN: Well, yes, that's a very valid consideration.
It's always in season and in vogue to make promises to correct ills. And textile job losses, manufacturing job losses, our state has lost more jobs per capita than any state in America since President Bush was elected. I don't know that any one person in the presidency can overturn that. But we do have to do something to stop the outflow and to create new jobs here, because the recession in South Carolina just has not ended.
And so it's going to be tough not to overpromise to South Carolina Democrats and voters as a whole in the November election.
KING: And, Chairman Erwin, as your state enjoys so much attention this week, with all of the time from the candidate, is this a sense for you enjoy it while you can? Jimmy Carter was the last Democrat to win South Carolina. Hard to believe we will many of the Democrats back in the general election. Is there a prayer for a Democratic in South Carolina in November?
ERWIN: Well, you know, there's always a possibility. You never know for sure. But, you know, realistically, this is our time to have the attention. This is our time to shape national issues in a primary that is important. So South Carolina's time is now. We don't know what will happen in the general election. A lot will depend on who our nominee is and on what he says. But, traditionally, this has been a Republican state in presidential elections. And I don't see that changing dramatically, unless there are more events that change dramatically. But we all know events in politics can change dramatically.
KING: You just mentioned, sir, it depends on who the nominee is. Do you believe, as a Southerner, that it is critical that, if the nominee is, say, Senator Kerry or someone from the North, that they turn to a Senator Edwards or someone from the South? Does there need to be regional balance on the ticket?
ERWIN: Well, yes.
I think some geographic balance is always important. It's always an important consideration. And I think, for the national Democratic Party, it's one thing that is being discussed right now, even while we don't have a nominee. So I know that's going to be a high-level consideration, because, clearly, when we don't win states in the South, we do not win the White House.
KING: Joe Erwin, chairman of the South Carolina Democratic Party, thank you, sir. I know you're busy this week. We appreciate your time.
ERWIN: A pleasure. Good to be with you.
KING: Take care.
And tonight's thought is on debate. "It is better to debate a question without settling it than to settle a question without debating it" -- those words from the French philosopher Joseph Joubert.
And coming up next, intelligence fallout. The White House is rejecting calls for an independent investigation into prewar intelligence in Iraq. We'll talk to weapons expert Joseph Cirincione -- that and much more ahead.
Stay with us.
(COMMERCIAL BREAK)
KING: My guest tonight has been one of the most vocal critics of the White House in its handling prewar intelligence of Iraq. Joseph Cirincione is the author of a study released last month that found that Iraq had no weapons of mass destruction by the late 1990s. He is the director of the Nonproliferation Project at the Carnegie Endowment and joins us now from Washington.
Joe, you were up on Capitol Hill today. There is this debate now about whether to have an independent investigation into all of this. Is the tide turning on Capitol Hill?
JOSEPH CIRINCIONE, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: Well, the tide is actually just beginning on Capitol Hill. And several prominent Democratic senators have come out in favor of an independent commission, a recommendation we made in the Carnegie report. And today, of course, Republican Senator John McCain came out. I think the president is in a tough spot. And, as you showed at the top of your hour, he's not completely ruling it out now.
I frankly think it's almost inevitable that we're going to have an independent commission looking into this to build the kind of independent, nonpartisan consensus we need to first understand what went wrong with this massive intelligence failure and how do we fix it so it won't happen again.
KING: When your report, Joe Cirincione, came out from the Carnegie Endowment, the administration, forget about it, written by a whole bunch of people who are from the Clinton administration, critical of this administration. So there is an obvious political element to this. If there is an independent investigation, should all agree that the reporting date be after the presidential election?
CIRINCIONE: Well, actually, I think that's an excellent idea.
We released the Carnegie report on January 8, at the beginning of this month. It's just amazing how much the understanding and consensus on this issue has changed since then. Now, at the end of this month, it's clear to almost everyone that there were no weapons of mass destruction in Iraq of any significant quantities. There were no ongoing weapons program.
Almost every individual major claim the administration made has proven to be wrong. And we didn't want to go a gotcha report. We're looking at wrong went, how do we fix it. And I think one of the ways to prevent this from becoming political is to say, yes, the commission should report after the election. Let's take the politics out of it. Let's try to understand what went wrong, what is the best way to stop it from happening again.
KING: I traveled with the vice president to Europe last week. And a senior official on that trip told the reporters in the traveling party that no one in the administration cooked up this intelligence, that it was acting simply on the findings of the CIA.
Do you accept that, that, if there was a problem, if the intelligence was just dead wrong, that the problem lies at the CIA, not at the White House?
CIRINCIONE: No, we do not accept that.
And we detailed why in the Carnegie report, which we put up on our Web site. We think there was a two-part intelligence failure. One was this NIE, which was wildly off the mark and very different from all previous intelligence assessments, went much farther. But, second, we found that administration officials went beyond the existing intelligence in a number of major issues, in a number of ways, and actually systematically misrepresented the nature of the threat to the American people. There is culpability here on all sides and not just with the administration, not just with the intelligence agencies. Congress didn't do a very good job of investigating this. There was a little too much war drum beating from the media. There's a lot of blame to go around.
KING: Let's step back from Iraq and look at the broader question of the quality of U.S. intelligence. There is a nuclear standoff with North Korea.
CIRINCIONE: Yes.
KING: There are questions about what Iran is doing. Libya recently came forward. There have been, since the end of the Cold War, questions about, are there -- quote, unquote -- "loose nukes" getting out of the former Soviet Union. How confident should be the American people, given what we are now looking at, the possibility that the intelligence about Iraq was just wrong, how confident should the American people be and how confident should the president of the United States be in the briefings he's getting?
CIRINCIONE: Well, this is a very serious problem.
And this is why David Kay says and I say that this may be one of the most serious problems we have in government today. Clearly, something is wrong with our threat assessment process. We wildly overexaggerated the threat from Iraq, but we also underestimated the threat from Iran. That program was much farther along than we thought.
We didn't understand how far Libya had gotten in its nuclear problem. So we have a problem here. And, at this point, the American public cannot have confidence in the threat assessments that are coming out from the United States on these weapons of mass destruction issues.
KING: In your view, Joe Cirincione, should the president of the United States and the American people have confidence, as you put it, in George Tenet, the director of the central intelligence?
CIRINCIONE: We don't want to point the finger at anybody. We don't think any one individual is to blame here.
The vice president played a very large role in shaping the intelligence. The secretary of defense set up his own intelligence operation. The secretary of state got his briefing at the U.N. completely wrong on all his major points.
It's not just George Tenet's fault. That's why we have to step back, take a nonpartisan objective view of all this, understanding exactly what went wrong and how to fix it.
KING: Some Democrats say this is proof there should not have been a war in Iraq. Other Democrats say Saddam Hussein was a threat anyway regardless of whether he had weapons of mass destruction ready to deploy, how would you weigh in on that question? CIRINCIONE: The very first finding we have in that report is that Saddam's weapons of mass destruction programs at whatever stage represented a threat that could not be ignored or allowed to fester. There was a problem there.
It was not an immediate threat, however, that threatened the national security of the United States. And we were taking action to stop it. A year ago we had 100,000 men around, and women, around Iraq surrounding him. We had hundreds of inspectors going into Iraq able to go everywhere, search everything, we were gaining new intelligence that was indicating the programs were not in production.
We had a workable containment program underway. The war was not necessary, at least at that time. We had to give the inspections a chance to work and everything we now know is the inspections were working far better than we not. The U.N. intelligence it turns, out was better than the U.S. intelligence.
KING: The administration would, of course, disagree. On that point we'll call it a night. Joseph Cirincione, the Carnegie Endowment, thank you very much for your time, sir. This debate will continue.
This brings us to tonight's poll question. "Do you believe there should be an independent investigation into prewar intelligence in Iraq? yes or no." Cast your vote at CNN.com/lou. We'll bring you the results later in the show.
And coming up, growing concerns about al Qaeda terrorism in Iraq as the coalition prepares to hand over power to the Iraqi people. We will have a report from Baghdad.
And tonight in "Heroes," they've been called Marines and sailors, now they can also be called Americans.
The buzz has begun even though the Super Bowl is still two days away. We'll have the latest in new trends in advertising for the big game as companies pay more than $2 million for 30 seconds of airtime.
(COMMERCIAL BREAK)
KING: Potentially troubling information just into CNN. New intelligence tonight suggesting possible attacks using foreign airplanes. Justice Correspondent, Kelli Arena joins us with the latest.
KELLI ARENA, CNN JUSTICE CORRESPONDENT: Hi, John. Government officials tell CNN that there is new intelligence that's come in over the past 48 hours suggesting possible terror attacks against the United States using aircraft.
Those sources would not get very specific, but one of them said the intelligence did at least involve Air France. Air France flights obviously from France to the United States.
Officials have described this intelligence as very similar to the intelligence that they received heading into the Christmas holidays. You remember that intelligence led the government to raise the threat level to orange. It has since gone back down to yellow and there's no indication that that is being discussed at this time.
But officials say that the level of concern over this new intelligence is not nearly as high as it was back in December. Now, whether that's due to lack of credibility or specifics is unclear at this time. But it is new intelligence not recycled intelligence, John, and it's come in within the last 48 hours.
KING: And Kelli, maybe an unfair question as this develops, but you say the concern is not as high as we saw around the holiday period, any indication flights are canceled or flights have been delayed or just intelligence sharing with the French at this point and others.
ARENA: Nothing at all in terms of action, John. I have heard nothing that rises to the level of specificity that we heard heading into the Christmas holidays. As you remember, there were what was thought to be flight numbers and specific airlines mentioned.
Last time it involved British Airways, as well. I have not heard that this time around. The only thing that we've been able to nail down so far is that it in some way involves Air France flights to the United States.
The usual targets were mentioned: Washington, D.C., Los Angeles, again not that, of course, always comes up in discussions like this, so it is unclear at this point whether this new intelligence specifically mentions those cities or if that is just what usually comes up when new information is brought in. Where they need to share that information which officials they need to share it with.
KING: Kelli Arena in Washington keeping track of this developing story. Thank you very much.
ARENA: Your welcome, John.
KING: There are just five months to go before now before the hand-over of power in Iraq. The United States and coalition forces are bracing for a possible rise in violence.
The warning comes just days after an arrest in Iraq has added to fears about al Qaeda's possible presence there. Michael Holmes has the report from Baghdad.
(BEGIN VIDEOTAPE)
MICHAEL HOLMES, CNN CORRESPONDENT (voice-over): U.S. officials say large scale attacks like the bombing of U.N. headquarters in Iraq last year, the attack on Italian soldiers and the bombing of the Imamali (ph) mosque in Najaf all bear the fingerprints of this man, Abu Mussab Zaqawi, a man they say is linked to al Qaeda.
The officials say they believe Zaqawi moved into Iraq to plan the attacks. That and the recent capture of Hasan Guhl (ph), a key al Qaeda member, as he tried to enter Iraq from Iran, adds to what those officials and military chiefs believe is evidence of a mounting threat from al Qaeda and foreign fighters in general inside Iraq.
LT. GEN. RICARDO SANCHEZ, COALITION FORCES COMMANDER: Of course the capture of Guhl is pretty strong proof al Qaeda is trying to gain a foot hold here to continue the murderous campaigns. Guhl's capture is great news for both Iraqis, coalition and for the international community's war against terror.
HOLMES: Part of the rationale for believing there is a growing influence of al Qaeda in Iraq is the way the U.S. military says insurgents are changing, refining their tactics.
BRIG. GEN. MARK KIMMITT, COALITION SPOKESMAN: Any time you have a car bombing, a suicide bombing you don't typically associate that with what is happening inside of Iraq, or homegrown. That gives us an indicator that that's is probably somebody from abroad or somebody who has had some training from abroad. That kind of extremism, we don't typically see here in country.
HOLMES: The arrest of one al Qaeda member is hardly compelling proof of a large scale offensive by the group, but analysts say proof of any presence of al Qaeda in Iraq will be of great concern to the U.S.
DR. DAVID CLARIDGE, AEGIS DEFENCE SERVICES: My view is that al Qaeda has in its rhetoric has talked about going to Iraq and fighting the Americans. I think that al Qaeda sees Iraq as a potential crucible for confrontation with American forces.
HOLMES (on camera): One problem facing coalition and Iraqi security forces is Iraq's pourous borders. Foreign fighters are known to have cross over into the country from neighbors like Turkey, Iran and Syria. Right now there's very little that can be done to stop them. Michael Holmes, CNN, Baghdad.
(END VIDEOTAPE)
KING: Coming up next, our feature series, "Heroes," the United States is rewarding more than 200 marines and soldiers to fought for a country that wasn't even theirs before today.
(COMMERCIAL BREAK)
KING: In "Heroes" tonight we feature an extraordinary group of men and women serving in the United States armed forces. 207 sailors and marines who are proud to serve this country and as of today proud to call this country home. Casey Wian reports from Camp Pendleton, California.
(BEGIN VIDEOTAPE)
CPL. PHONEXAI SIPHANTHONG, U.S. MARINE CORPS: I was born in a refugee camp in Bangkok, Thailand.
CASEY WIAN, CNN CORRESPONDENT (voice-over): 22-year-old, Phonexai Siphanthong, the son of refugees from Laos has come a long way.
SIPHANTHONG: I came to the U.S. when I was three years old. We arrived in San Diego and I grew up in National city, kind of like, you know, crime infested neighborhood and my mother was on welfare, living off food stamps and stuff like that. It was a sad childhood.
WIAN: But now he's in the Marine Corps, a veteran of Operation Iraqi Freedom and today a United States citizen.
SIPHANTHONG: It's my way of sealing the deal and making it official. In my heart I have always considered myself an American.
WIAN: 207 marines and sailors became citizens in one of the largest military naturalizations in history.
UNIDENTIFIED MALE: I hereby declare on oath...
WIAN: Sergeant Andre 's parents brought him to the United States as a 7-year-old child from Ecuador.
SGT. ANDRES CRESPO, U.S. MARINE CORPS: I came to this country, basically, my parents with nothing. Now my mom has a house, I got my family, I got my kids, I got my house and I'm like, free school, the government give us a lot of stuff. The only way to pay this country back is let me serve some time and pay it back.
WIAN: In Iraq he put his life on the line for his new country.
CRESPO: It was the longest 15 minutes I ever had in my life.
WIAN: Tell me what happened.
CRESPO: One of my guys, one of my platoon sergeants was in the back of my vehicle, he was out doing a watch and we got ambushed going down highway 1. He got -- took a shot to his face...
WIAN: And didn't make it back.
Corporal Glenys Rivas leaves for Iraq next month and leaves her infant daughter behind. Rivas came to Miami at age 8 from Nicaragua. Now she is an American who wants to become a Marine Corps officer.
CPL. GLENYS RIVAS, U.S. MARINE CORPS: It's honor, it's integrity that I learned. It's something amazing.
WIAN: A sentiment echoed by another naturalized U.S. citizen.
GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: By choice you came to this land and by choice you're fighting for this country and that is extraordinary.
WIAN: Noncitizens now make up about 4 percent of the U.S. armed forces since July 2002, when President Bush made it easier for servicemen and women to become U.S. citizens, more than 13,000 have applied. Casey Wian, CNN, Camp Pendleton, California.
(END VIDEOTAPE)
KING: Coming up, this week's "Newsmakers." Then time and benefits are running out for millions of unemployed Americans. Is real job creation on the way?
And Disney is hoping there really are other fish in the sea after a crushing blow that could cost the mouse house a bundle.
Plus powerful winds were too much to keep this tractor trailer firmly on the road. We'll have that remarkable story and much more just ahead. Stay with us.
(COMMERCIAL BREAK)
KING: Now for a look at the news in brief. China said the deadly bird flu virus has struck three more provinces. The virus is blamed for at least ten deaths and the slaughter of millions of poultry.
NASA's Mars rover Opportunity is set to roll off its lander, possibly as soon as tonight. And Opportunity's twin Spirit is expected to be up and running again this weekend.
And a remarkable escape for a truck driver in Washington state today. Strong winds forced this tractor trailer on its side. The driver was not injured.
On Wall Street, stocks closed (UNINTELLIGIBLE) the week with modest losses. The Dow fell 22 points, the Nasdaq lost two, the S&P 500 dropped almost three. Mary Snow is here with "The Market" and more -- Mary.
MARY SNOW, CNN CORRESPONDENT: John, stocks weren't strong today but they did end the month higher. And market watchers say if history is any indicator, January's performance could predict a trend for the rest of the year, predicting the aftermath of a big Hollywood divorce though was the buzz on Wall Street today.
Pixar Animation Studios is splitting up with Disney and ending their distribution partnership. Hits like "Finding Nemo" have brought $1 billion in profits for the house of mouse. Disney stock fell 2 percent. Shares of Pixar gained more than $2 as speculation swirled over potential suitors.
From a break-up to a much watched match-up this Sunday as the New England Patriots and Carolina Panthers square off. The price of Super Bowl ads this year hit a record. Among some of the featured ads Muhammad Ali appears in one for IBM. From a boxer to Britney Spears, Beyonce hawking Pepsi with the soft drink company, one of the biggest customers for Super Bowl ad time.
The price of a 30 second spot this year, a cool $2.2 million. Compare that to 42,000 bucks in 1967. The first Super Bowl. A seat to the game costs a lot less but the percentage price in the same time span is about the same. 5,000 percent with the average ticket in 1967 costing $10 compared to $500 today. KING: I take a seat to the game. Thank you, Mary. Mary Snow.
Discouraging news tonight for the millions of people who are jobless in America. A new study finds almost 2 million Americans will run out of state unemployment benefits between now and June. Congress has extended those benefits in the past but now says another extension is not needed. Kitty Pilgrim reports.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT: Jacene Pratt was married two weeks ago. She and her husband, Troy, are spending their honeymoon at this job center. She has been out of a job for more than a year and her unemployment benefits have run out.
JACENE PRATT, UNEMPLOYED: You don't know how you're going to get up and go on a train today to look for a job. You know, it's hard. It's hard. You don't know how you're going to pay your bills.
PILGRIM: This Manhattan employment center is filled with people desperate for a job. When people are laid off four out of five people have less than two months savings to live on. They are usually out of money by the time unemployment benefits run out. In most states, that is typically 26 weeks. Federal benefits used to kick in for another 13 weeks but that program began to be phased out last month.
43-year-old Bernard Ottley's benefits ran out a month ago. He's living off his retirement savings but replacing his retail job has not been possible.
BERNARD OTTLEY, UNEMPLOYED: I had to go into my 401(k) just to be able to pay my rent. I didn't realize it was going to be that tough out here to find work.
PILGRIM: Many states are near new records of people running out of benefits each month. Politically important states like Michigan, Pennsylvania, Indiana, North Carolina, and South Carolina are posting record highs.
ISAAC SHAPIRO, CNTR. ON BUDGET & POLICY PRIORITIES: Most people become unemployed; they were middle class families before -- while they were working -- and without unemployment benefits, it really accelerates their descent, unfortunately, into an impoverished situation.
PILGRIM: And with that hanging over them, they continue to look for work.
(END VIDEOTAPE)
PILGRIM: The next six months is shaping up to be one of the worst periods ever. An estimated two million people will find themselves with their unemployment benefits running out -- John.
KING: Kitty Pilgrim, thank you very much. The new frontrunner in the race for the Democratic nomination picked up two key endorsements today. Senator John Kerry now has the backing of a major union and African-American Congressman Jim Clyburn of South Carolina. But will those endorsements make a big enough difference on February 3, when seven states hold primaries or caucuses? Joining us now for this week's "Newsmakers," Steve Forbes, editor in chief of "Forbes," Rik Kirkland, managing editor of "Fortune," and Steve Shepard, managing editor of "BusinessWeek."
Steve, let me start with you. You've been through this process. Is John Kerry the Democratic nominee?
STEVE FORBES, FORBES: I think so. It's for him to lose. But as you know, presidential politics is really a process of death and resurrection. Six weeks ago, Kerry was one of the losers. And now he's a winner. But it's for him to lose. If he wins Missouri, I think he's going to be very hard to stop.
KING: Rik, Steve mentions death and resurrection. Governor Dean is certainly hoping for resurrection, but it's a dangerous strategy. He's all but skipping the states this week, at least not putting any money into them, hoping he can come back after that. Any reason to believe that can happen?
RIK KIRKLAND, FORTUNE: I don't think so. I think it makes sense, but it's a hail Mary pass. Sort of a desperate strategy. When you start talking about we're playing for delegate count, we're not playing to be a frontrunner or to win, it means you probably don't have a shot.
KING: You agree with that?
STEVE SHEPARD, BUSINESSWEEK: Yeah, basically. But let me just throw out another scenario. We get fragmentation on February 3. Edwards wins in South Carolina, Kerry wins in Missouri, Clark wins in Oklahoma and Dean picks up New Mexico, let just say. You get fragmentation. Kerry stays the frontrunner, but it isn't over and Dean lives to fight another day.
KING: Reporters would like that. I don't know if the Democrats would like that. But want to turn to the president's budget. It is coming out this week. And I am going to start with you, again, Steve, because I remember you giving speeches about how Washington needs to get its act in order when it comes to fiscal discipline. $500 billion deficit -- and oh, sorry, the Medicare bill is a lot more expensive than we said it was two months ago. Can this president stand before the American people and say he's a fiscal conservative?
FORBES: I think he is going to stand before the American people and say he's slowing the growth of spending. I think the American people really don't care about the deficit, if the economy is doing well. If the economy is doing well, as we saw in the Reagan years, deficits are just numbers. But if the economy falters, then that -- as Perot did in '92, use that as a stick to say, this is why we have our problems. KING: Are deficits just numbers, Rik? Because, you know, Bob Rubin is out with a new book, others say deficits eventually will lead to higher interest rates and all sorts of problems.
KIRKLAND: They are just numbers, but they eventually matter. You know, it's not a short-term problem. But if we run $500 billion deficits as far as the eye can see, I think you're going to get a scare in the bond market and you're going to get a weaker dollar.
KING: Can the Democrats benefit politically from this?
SHEPARD: Absolutely. And they are going to get help by the Republican backbenchers in the House who are already very upset about the size of the deficit and the increases in federal spending. So it isn't going to hurt them in the end from his own party, but it will limit what he can do with his own agenda this year, on making the tax cuts permanent, on getting retirement savings accounts and that sort of thing. So I think he's going to pay a price for it, yeah.
KING: Any one of the three think the president can win a vote in both chambers of Congress this year on making the tax cuts permanent?
KIRKLAND: No.
KING: No? No? No? OK.
FORBES: He'' got to get the election out of the way, and then it will happen. But the real thing that really happened this week was the Federal Reserve hinting that it will raise interest rates. Actually, that will be good for long-term interest rates, because it means inflation won't kick in, thanks to the weak dollar, after the general election. That's the good news.
KING: The other big debate is this whole weapons of mass destruction controversy, and where to go with an investigation. The administration says it's looking internally. Congress says this is our prerogative, we do oversight. Senator McCain now joining. Some Democrats. And of course the weapons inspector David Kay. He says, put it outside, another independent investigation. Is that going to happen?
SHEPARD: Yeah, probably. The president has a lot of explaining to do, and he needs somebody to provide political cover. He does have to explain things. I mean, we went to a preemptive war on the grounds that there were weapons of mass destruction there. Turns out there are no weapons of mass destruction. People will ask the question, is a preemptive war justified without weapons there?
KIRKLAND: I think you're going to find, though, if CIA Director George Tenet were a stock, you'd want to short him.
KING: OK.
KIRKLAND: Well, they've got to find -- in other words, I think...
(CROSSTALK)
KIRKLAND: ... for the administration, the best course is to say the CIA messed up. We were misinformed, we didn't manipulate this stuff. And I think that's looking like something that might happen.
FORBES: The CIA needs reform, but to be fair, Saddam Hussein thought he had weapons of mass destruction, his generals thought he had weapons of mass destruction. And I think at the end of the day, you're going to find that Syria has some of the stuff that Saddam was trying to do. It wasn't that he didn't try. He didn't get as far as he thought he had. And then the in terms of preemption, clearly, Saddam was going to stir trouble whenever he could.
KING: The Democrats say Dick Cheney doesn't want anyone looking into the energy task force. The administration doesn't want to extend the deadline of the 9/11 commission a few months more, and now they don't want an independent review into this. This is an administration that maybe has something to hide and certainly seems very secretive. Is there a political traction in that? Is it a fair point?
SHEPARD: Yeah, it could be. Depends on the effectiveness of the Democrats at hammering away at that issue. But it looks like they have something to hide on more than one front. So I think you're right.
KIRKLAND: It's part of this -- we're so polarized right now in the country, so split. It will appeal to the Democrats who think Bush, you know, can do no right. And I think the Republicans will probably circle the wagons. So I don't know where that leads us.
(CROSSTALK)
SHEPARD: At the margin, it might make a difference in a close race.
FORBES: So far the Democrats have not been able to turn national security into an issue that works for them, because they have come up with no good alternatives. Kerry, after all, did vote for the war. And why did he vote for it? He can't say, well, I was misled. Reminds people (UNINTELLIGIBLE) brainwashing back in 1967.
KING: Quickly to each of you, is there any economic impact in this budget from the president, for better or worse, increases defense spending, increases homeland security spending? Pretty much tries to crimp down on everything else?
KIRKLAND: I mean, I think the fiscal stimulus is not going to be the way it's been the last couple of years. I think the good news for him is you have got the tax cuts, will continue to put some money into the economy. But I think the economy doesn't need a big boost from the government spending.
SHEPARD: The die is cast for the rest of this year already. So whatever happens is not going to affect this year. The question will be '05 and beyond. FORBES: The big stimulus came from the tax cuts of last year. Reducing those tax rates added over $2 trillion in stock market value. That's going to provide real juice for the economy this year.
KING: We'll let be the last word for tonight. Steve Forbes, Rik Kirkland, Steve Shepard, thank you all very much. Enjoy the weekend.
Coming up, David Bradley decides it's time to restart. You may not know his name, but he's probably bailed you out of a computer catastrophe more than once.
But first, an update on the list of companies our staff has confirmed to be exporting America. These are U.S. companies either sending American jobs overseas or choosing to employ cheap foreign labor instead of American workers. Tonight's additions include Kwikset, maker of locks and other hardware. And LioNBRIDGE Technologies.
Please keep sending us the names of companies you know to be exporting America that are not already on our list. And for the complete list, log on to cnn.com/lou. We'll be right back.
(COMMERCIAL BREAK)
KING: Now the results of tonight's poll question. Ninety-four percent of you believe there should be an independent investigation into pre-war intelligence on Iraq. Six percent of you do not.
Finally tonight, if you've ever used a computer, chances are you have used David Bradley's code at least once. Maybe just more than once today. He's the computer genius behind control alt delete. That's the code that forces even the most stubborn computers to restart when all else has failed. Bradley retired today after more than 28 years with IBM. He says he never expected a code that took him five minutes to write to become so famous.
He also says one of his proudest moments was being featured in the final round of the TV game show "Jeopardy."
That's our show tonight. Thanks for being with us. For all of us here, good night from New York. Anderson Cooper is next.
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Seeks Inquiry Into WMD>
