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Lou Dobbs Tonight
Interview With Gregory Mankiw; Martha Stewart Convicted
Aired March 05, 2004 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
JOHN KING, CNN ANCHOR (voice-over): Tonight: Martha Stewart is a convicted felon. A jury finds her guilty of obstructing justice and lying to the government. One juror calls it a victory for the little guys.
DAVID KELLEY, U.S. ATTORNEY: If you are John Q. Citizen or Martha Stewart or Peter Bacanovic, we're going to go after you if you make these types of lies.
KING: The heat is on the White House after the latest employment report. Just 21,000 new jobs were created last month, hundreds of thousands short of the White House' own forecast. The man who made that forecast, President Bush's chief economic adviser, Gregory Mankiw, will be my guest.
March on Washington. Today, Americans who lost their jobs to cheap overseas labor marked rallied with lawmakers to keep jobs in this country.
RAYMOND GLOCK, RETIRED BETHLEHEM STEEL WORKER: We just pledged our allegiance to that flag. How come our corporations don't? They pledge our allegiance overseas.
KING: President Bush and Mexican President Vicente Fox are tackling immigration and border security in a two-day summit. President Fox wants to make it easier for Mexican immigrants to enter this country. We'll talk with a member of the Congressional Hispanic Caucus.
And taking the shock out of shock jocks. The FCC considers tougher penalties against radio shows that test the limits of decency.
(END VIDEOTAPE)
ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, March 5. Sitting in for Lou Dobbs for an hour of news, debate and opinion, John King.
KING: Good evening.
Tonight, Martha Stewart says she will appeal a verdict that could send her to prison for 20 years. A jury in New York today found Stewart guilty of conspiracy, making false statements and obstruction of justice.
Mary Snow is live now outside the courthouse in Lower Manhattan -- Mary.
MARY SNOW, CNN CORRESPONDENT: John, Martha Stewart appearing stoic, showing no emotion as the jury convicted her on four counts, all four counts against her. Her daughter did cry, though, after that verdict came in, the jury convicting Martha Stewart of conspiracy, two counts of false statements and obstruction of justice, each carrying a maximum penalty of five years in prison and a $250,000 fine.
The jury convicting her stockbroker and co-defendant, Peter Bacanovic, on four of the five counts against him, conspiracy, making false statements, perjury and obstruction. The penalties for these charges the same, maximum five years in prison and a $250,000 fine. The sentencing date has been set for June 17.
U.S. attorney David Kelley speaking to reporters, saying part of the message here is that honesty -- dishonesty and corruption will not be tolerated, saying the convictions send out a strong message.
(BEGIN VIDEO CLIP)
KELLEY: Let this case, as all of those cases, send an important message that we will not and frankly cannot tolerate dishonesty and corruption in any sort of official proceeding, especially ones such as these that can affect such a wide range of interests, both business and personal, throughout the country.
(END VIDEO CLIP)
SNOW: The defense team all along had contended that the government's case was a circumstantial case and wasted no time in saying that they will appeal the convictions.
(BEGIN VIDEO CLIP)
ROBERT MORVILLO, ATTORNEY FOR MARTHA STEWART: We are disappointed at the outcome. We look at this as having lost the first round. We look at this as an opportunity for us to go to the next rounds and to explain to the court of appeals what we think went wrong in this case and why the case came out the way it did.
(END VIDEO CLIP)
SNOW: One of the jurors, Chappell Hartridge, speaking to reporters about how the jurors came to their decision, saying that he felt this could perhaps be a victory for the little guy. It was a message to bigwigs that they have to abide by the law.
This particular juror also when asked said that it didn't really make a difference in the end the fact that Martha Stewart did not take the stand. Both Martha Stewart and Peter Bacanovic are scheduled to be back here on Monday for processing -- John.
KING: Mary, a high-profile celebrity trial, a circus to some. Give us a sense of the flavor what it was like outside of the courthouse after this news broke. SNOW: Certainly, so much activity, John, and there really was a feeling of anticipation when there were signals being sent that the jurors had reached a verdict. They had broken for lunch and then there was increased police activity. Not only is there a small army of reporters out here, but also the crowds came to gather, waiting for Martha Stewart to come out of the courthouse.
And you did hear a cheer or noise coming up as she left the courthouse. She really appeared emotionless as she left and got into her car, but certainly so much activity -- John.
KING: Mary snow, thank you. Great work on a very busy day.
And now let's get more from CNN senior legal analyst Jeffrey Toobin. He was inside the courtroom for the entire trial and he joins us now.
And Jeff, No. 1, were you surprised by today's verdict?
JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Well, John, you know, if you had asked me at the beginning of the case, I would have been surprised to see any sort of conviction. I didn't believe this was a strong case.
But sitting through five weeks of trial, by the verdict today, I was not surprised, because the government put on an excellent case, a very persuasive case, lots of new evidence that had not been disclosed publicly before. So it's always shocking to see a celebrity, a person of that kind of renown, brought low. But, specifically, was I surprised that she was convicted? No, I wasn't.
KING: Well, Jeff, you heard the defense team. It's routine for the defense team to come out and say we're going to appeal the next round, as Mr. Stewart's lawyer called it. You're our great counselor in the courtroom. Do you hear anything in there that gives you reason to see significant grounds for appeal?
TOOBIN: Absolutely not.
In fact, remember, Judge Cedarbaum is the judge who ruled fairly consistently for the defense throughout this case. She is the judge who threw out the securities fraud case. She limited the securities frauds count. She limited the government from putting in some telephone records that I thought were clearly admissible. Many of the important rulings in the case went against the government. So I think the chances for a successful appeal are slim and none.
KING: A long time to wait for that decision on appeal. But give us your best guess; 20 years the maximum Martha Stewart could face. What is your sense of how long she would actually go to jail if she loses an appeal and actually has to serve the time.
TOOBIN: Federal sentencing guidelines apply in this case and there is some room for play. But my best guess is, she would be looking at a sentence of 12 to 18 months, 18 months to 24 months. Those are the increments in which the sentencing guidelines work. Judge Cedarbaum is not known as an especially tough sentencer. But given the fact that the white-collar crime guidelines are tougher than they have been, given the fact that she was convicted of all the counts against her, I think a prison sentence, some kind of prison sentence, is close to an absolute certainty.
KING: A case still worth paying attention to as it goes on. Jeff Toobin, thanks again for your fine work today and throughout the trial.
TOOBIN: OK, John.
KING: And that brings us to tonight's poll question: Do you believe Martha Stewart should be sent to jail, yes or no? Cast your vote at CNN.com/Lou. We'll bring you the results a bit later in the show.
We'll have much more on today's guilty verdict for Martha Stewart, including how the news went over on the floor of the New York Stock Exchange. And we'll see what the nation's leading business editors think of the verdict, when we're joined by tonight's "Newsmakers."
Turning now to today's shocking news about jobs. The White House was hoping for a strong jobs report in February, something to boost the president's reelection efforts, but that was not what the numbers showed.
(BEGIN VIDEOTAPE)
KING (voice-over): The new jobs numbers are a major blow to a president counting on a strong election year economy. The unemployment rate held flat at 5.6 percent last month, by historical standards not bad for an incumbent president. But the economy added only 21,000 new jobs, way below Wall Street's estimates.
And the government also scaled back January's job numbers, saying the economy added just 97,000 new positions in January, not the 112,000 initially reported. Democratic presidential candidate John Kerry called it proof it is past time to put President Bush out of work.
SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Now, George Bush has been promising America for almost four years now that he was going to create four million jobs. He's lost three million.
KING: Another warning sign for the president, the manufacturing sector reported job losses for the 43rd consecutive month, more evidence of tough times in the industrial states critical to presidential politics.
ED SARPOLUS, REPUBLICAN POLLSTER: They're hearing the president say things are getting better and then there's a story about job loss or job closing, so it begins to create the whole character issue for the president. Can you trust the person for what he says? KING: The White House had already backed away from a prediction in this February report that the economy would add 2.6 million new jobs this year. The administration insists job growth will pick up in the months ahead.
STEPHEN FRIEDMAN, WHITE HOUSE ECONOMIC ADVISER: Most of the economic signs are extremely positive. This is one that is unsatisfactory.
(END VIDEOTAPE)
KING: Now, that jobs report, again, found the manufacturing sector lost jobs for the 43rd month in a row. As we have reported for more than a year on this program, hundreds of thousands of those manufacturing jobs have been exported to cheap foreign labor markets.
Today, hundreds of Americans who have lost their jobs to overseas competition joined a rally organized by congressional Democrats.
Louise Schiavone has that report.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): A couple of hundred union workers and retirees stood elbow to elbow with Senate Democrats railing against the flow of good U.S. jobs to lower-paid workers overseas. This Electrolux worker's job in Greenville, Michigan, is moving to Mexico.
DAVID DOOLITTLE, ELECTROLUX WORKER: The corporate representatives explained how the company could operate for $81 million less in Mexico. That's because the hourly wage in Mexico is at $1.57.
SCHIAVONE: The factory's U.S. wages are $15 an hour. From manufacturing to high tech to customer call centers, businesses are moving U.S. jobs to lower-wage nations.
GLOCK: We just pledged our allegiance to that flag. How come our corporations don't? They pledge our allegiance overseas. That upsets me.
SCHIAVONE: The Democratic forum was conducted one day after the Senate voted to restrict federal contractors from using tax dollars to relocate work abroad. And while the Bush administration has downplayed outsourcing, Democrats call the trend a real threat to the nation's standard of living.
ELAINE CHAO, LABOR SECRETARY: There is really no data that shows that outsourcing, that this is accelerating. In fact, the America work force numbers 146 million people. And the white-collar outsourcing is about 300,000.
SEN. BYRON DORGAN (D), NORTH DAKOTA: This is not some idle political debate. The question of whether the American people have good jobs that pay well that provide security is central to the question of whether this American economy works for everybody.
SCHIAVONE: These workers are finding that there is nothing in the job market today to replace, for example, a $27-an-hour Lucent Technology job.
TERRANCE ANTISDEL, FORMER LUCENT WORKER: I'll never be able to make that again, I'm sure.
SCHIAVONE: Universally, they express anxiety and wonder what sorts of jobs will be left for their children.
(END VIDEOTAPE)
SCHIAVONE: With the economic recovery so far slow to create new jobs, the pressure is on for Washington to address the outsourcing issue -- John.
KING: The Democrats were addressing it, Louise, but they obviously don't control Congress, the House, nor the Senate. Are they doing this to think they can get something passed this year or is this more about election-year politics?
SCHIAVONE: Well, interestingly enough, John, this is an issue that resonates. And, indeed, yesterday, around 70 members of the U.S. Senate -- and that includes half of the Senate Republicans -- did endorse this move to restrict outsourcing jobs when it involves federal contractors. So, Republicans are hearing this from their constituents, too, which shows that, whether you are a Democrat or a Republican, when you have lost your job, it stings.
KING: Louise Schiavone, thank you very much.
Exporting American jobs to cheap foreign labor markets is now some of the curriculum in some American business schools. We'll have a special report.
Plus, the White House defends its job growth predictions after another disappointing employment report. The president's chief economic adviser, Gregory Mankiw, will be our guest.
And "Broken Borders." Mexican President Vicente Fox arrives in Texas tonight to ask President Bush for more rights for migrant Mexican immigrants in this country -- that report and a great deal more ahead.
Stay with us.
(COMMERCIAL BREAK)
KING: We've been reporting on the exporting of American jobs to cheap overseas labor markets on this program for well over a year now. The president's top economic adviser recently drew sharp criticism for saying the practice was, in some ways, good for the American economy.
Gregory Mankiw is the chairman of the president's Council of Economic Advisers. And he joins me now here on the set in Washington. Greg Mankiw, let's start with today's job report. The unemployment rate stayed flat, only 21,000 new jobs created. In that document published by the White House just a month ago, you spoke of 2.6 million jobs. Even after that, people thought maybe that was a bit much, but maybe two million new jobs. Where are the jobs?
GREGORY MANKIW, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: This jobs report was not satisfactory. We're not satisfied at all with the job creation that we saw today.
Since the summer, the labor market has turned. The employment rate has falling from a peak of 6.3 down to 5.6. The number of jobs created has been 360,000, as judged by the payroll survey, and 980,000 as judged by the household survey. That's a movement in the right direction, but not nearly far enough. We want a lot more jobs. And we think we have the policies in place to create a lot more jobs. I think you'll see that in the months to come.
KING: Another beacon, if you will, in this report is, for the 43rd consecutive month, the manufacturing sector has lost jobs. Now, you're an economist, but the president is a politician running for reelection. In the big states, in the industrial belt, that's tough news for a president seeking reelection.
And something you said recently is being used by the Democrats and others in this campaign. I want to read this quote from you: "The definition of what constitutes a manufacturing employee is far from clear. For example, when a fast-food restaurant sell as hamburger, is it providing a service of combining inputs to manufacture a product?"
McDonald's is manufacturing?
MANKIW: We were just pointing out that the definition of manufacturing is somewhat arbitrary. There's a certain blurriness to the nature of the definitions. We weren't suggesting reclassification at all. We weren't suggesting that what is going on in manufacturing is not significant.
Manufacturing has been hit very hard over the past few years. There's no doubt about it. We understand why that is. It's been a hard time for business investment. It's been a hard time for exports. And those are goods that are produced in the manufacturing sector. So it's been a tough time in manufacturing.
We are starting to see good signs in manufacturing, though. The purchasing managers index came out a few days ago suggesting that manufacturing is starting to turn around. We see durable goods orders and shipments turning up. We see exports turning up. So I think manufacturing is starting to get better.
KING: Turning up fast enough for there to be a recognizable result before the November election?
MANKIW: I think you will see results in the coming months. I'm not going to point to any particular month. But I think things are turning around for manufacturing and for the economy overall. KING: One of the debates, of course, about jobs is outsourcing. And, again, we appreciate your coming in tonight. You're in the hot seat for a number of things you've said in the past month.
I want to read you another one here: "When a good or service is produced more cheaply abroad, it makes more sense to import it than to make or provide it domestically."
Those who have lost their jobs to cheap markets overseas might read that quote and say, what are you doing working in the White House?
MANKIW: A job loss is painful for a family. It causes hardship for a worker and his loved ones. There's no doubt about that. And that's true whether the job loss comes from a recession, whether it comes from trade, whether it comes from changes in technology.
And we are oriented, economic policy, to create jobs. Creating jobs is one of the paramount goals. I have heard this president say this to me many times and said it publicly many times. We have the policies to do that. Now, the question is, what should do you do when you see jobs being lost? Some people would say, you should erect barriers, erect trade barriers, retreat into economic isolationism. That's not right.
What we want to do is promote economic growth, because with economic growth comes job creation.
KING: What about you're seeing on this issue on Capitol Hill? Mostly Democrats, but some Republicans say, let's give tax incentives to companies that build and grow jobs here at home and let's take away any incentives in the tax code that allow a corporation to actually get a benefit from the United States government for taking a job in the United States and moving it somewhere else. Reasonable?
MANKIW: I think the goal should be to create growth and jobs in the United States. Prosperity is not zero-sum.
Prosperity in another country does not threaten prosperity here. The nature of international trade is that it is win-win. Other countries can grow and we can grow. Creating jobs here is absolutely important. But retreating into economic isolation, as some would have us do, is a mistake. Raising taxes, as some would have us do, is a mistake. The president has the right policies, free and open markets, opening markets abroad for our products, keeping tax rates low. That is how we're going to increase growth and that's how we're going to create jobs.
KING: You work in a tough profession. You're getting beat up a bit politically for publishing a book that said 2.6 million new jobs. Granted, that data was from late last year.
So help us out. The economy created 97,000 jobs in January, 21,000 jobs last month. What is your best hunch now? What can you tell the American people in terms of job growth this year and what your bet is where the unemployment will be, let's say Labor Day? MANKIW: Well, there's no official administration forecast since December 2. We only do it as part of the budget process. And we haven't put the forecasting team together for several months.
But we do look at the numbers. We do follow the private sector forecasts. And if you look at what the private sector forecasters are saying, is they are saying that 2004 will be a good year. GDP growth will be well above the historical average, as it was in 2003. You will see the unemployment rate continuing down. As I said, it has come from 6.3 to 5.6.
And the private sector forecasters are saying it is going to continue coming down over the course of this year.
KING: Gregory Mankiw, the president's top economic adviser, we appreciate you coming in and joining us tonight.
MANKIW: Thank you very much.
KING: Thank you very much.
And coming up, lawmakers may be squabbling over its merits, but students of business are studying up on outsourcing.
Plus, taming the shock jocks. An FCC crackdown could mean major changes to radio as we know it.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We are going to recapture the public airways for the American public.
(END VIDEO CLIP)
KING: And Martha Stewart guilty on all counts. We'll have much more on today's stunning verdict with tonight's "Newsmakers."
And now reaction to the news from the streets of New York.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I'm shocked. I am surprised at the verdict. I'm a huge fan. I did not think this at all. I thought she would be free on all counts.
UNIDENTIFIED MALE: Well, yes, she is probably a nice person. She just got greedy.
UNIDENTIFIED FEMALE: She made a lot of money on something that was illegal, so she should have to give up a bunch of money.
UNIDENTIFIED MALE: I think the punishment should fit the crime.
(END VIDEO CLIP)
(COMMERCIAL BREAK) KING: The debate over exporting American work to cheap overseas labor markets continues to gain momentum in Congress. But while lawmakers debate the pros and cons of outsourcing, business school students at one university have accepted it as a fact of modern life.
Kitty Pilgrim reports.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Twenty-one graduate business students at Indiana University are trying to figure out the phenomenon of international outsourcing, what some call offshoring. They are going to India next week to see offshore operations of American companies firsthand. They debate the pros and cons of sending jobs to India.
UNIDENTIFIED MALE: Fifteen thousand dollars for a Ph.D. in India vs. six figures in the U.S.
PILGRIM: PowerPoint presentations, global maps, and discussions over whether the talent pool in India will draw even more American jobs overseas.
UNIDENTIFIED FEMALE: India, for example, graduates nearly 250,000 engineers per year.
PILGRIMS: But some students point out companies that have resisted moving facilities overseas.
UNIDENTIFIED MALE: Novartis, they could have built a new research facility anywhere in the world, but they decided to build it in Boston. And the reason for that is the talent pool.
PILGRIMS: Their professor defends the curriculum, saying it's part of business reality these days.
SREENIVAS KAMMA, PROFESSOR, INDIANA UNIVERSITY: The students realize, I think, that you ignore India only at your peril.
PILGRIMS: Outside of class, some students defend the practice, saying outsourcing is not the main reason for the jobless recovery in the U.S. economy.
BRIAN MATTINGLY, STUDENT: What we seen in the last couple years is a flattening of the economy, a recession, if you will, but this is not due in any way to India.
PILGRIMS: Some are just practical about gaining job skills for when they graduate.
DERICUS HARVEY, STUDENT: I think it would help me to be a global manager in the future, because that's where we're going to be. We're not going to be just U.S. managers anymore.
PILGRIMS: And some are just plain open to the new experience. TODD TRACY, STUDENT: Now, I want to see where so much of what I have read about was taking place and really get an idea for what the country was like. Plus, I like the food.
PILGRIMS: Kitty pilgrim, CNN.
(END VIDEOTAPE)
KING: Coming up, "Broken Borders." Mexican President Fox arrives in the United States to push for a more lenient immigration policy. We'll have that report from the president's ranch in Crawford, Texas.
Then, the president's reelection campaign kicks off in a big way. I'll speak with Bush-Cheney strategist Matthew Dowd about the countdown to November.
And guilty as charged. But will Martha Stewart ever see the inside of a jail cell? That and much more coming up in this week's "Newsmakers."
(COMMERCIAL BREAK)
KING: The Federal Communications Commission is planning a major crackdown on radio stations that allow controversial shock jocks to go too far. Officials are reviewing several complaints regarding obscenity and lawmakers are moving quickly to provide regulators with even more ammunition.
Eric Philips has the report.
(BEGIN VIDEOTAPE)
HOWARD STERN, RADIO TALK SHOW HOST: I'd like to take this opportunity to say...
ERIC PHILIPS, CNN CORRESPONDENT (voice-over): Howard Stern says he feels like a sacrificial lamb with the FCC now considering stiffer penalties for radio companies that feature so-called shock jocks.
STERN: We have lost. We have lost our airwaves. We've lost your freedoms. We will be a religious state within 20 years.
There is a nightmare going on. I'm about to be served up my head on a platter because all I wanted to do was make people laugh.
PHILIPS: The FCC has not commented on its action against Stern or any others, but lawmakers are talking. This week, a House panel voted to increase the maximum fine for broadcast companies that air obscenity for more than $27,000 to half a million.
REP. JOE BARTON (R), TEXAS: We are also saying that the FCC can, for the first time, fine an individual entertainer for the first offense, up to $500,000. We are going to again recapture the public air waves for decency for the American people. PHILLIPS: Congressman Barton says the Janet Jackson Super Bowl halftime show was what reignited a move to act against questionable material on TV and Radio. Since then, Stern's show was kicked off six Clear Channel stations. The company also fire a controversial D.J. known as "Bubba the Love Sponge" and just this week paid $755,000 in fines associated with that D.J..
BONO, SINGER: That is really, really (EXPLETIVE DELETED) brilliant.
PHILLIPS: Part of the fall-out, the FCC is planning to reverse an earlier decision, now saying that Bono's use of profanity during the live 2003 Golden Globe Awards was profanity.
(END VIDEOTAPE)
PHILLIPS: The bill to increase fines will now go before the full House. The Senate is expected to pass similar legislation and lawmakers hope to have a final bill on the president's desk by late spring, early summer -- John.
KING: Eric Phillips in New York, thank you very much.
Mexican president Vincente Fox has just arrived at President Bush's Texas ranch for a two-day meeting. At the top of the agenda, immigration. President Fox is pushing President Bush to make it easier for Mexican immigrants to cross the border into this country. White House correspondent Dana Bash joins us now from Crawford, Texas, with the report -- Dana.
DANA BASH, CNN WHITE HOUSE CORRESPONDENT: And John, President Fox was supposed to come for this meeting about a year and a half ago but he canceled in part because of protests over the execution here in Texas of a Mexican man. And that was just one of many reasons why the relations between the 2 men have been frayed over the past couple of years, relations that were have close.
So, high on the agenda will be to try to continue to repairs the ties especially as President Bush heads into the election year as he courts Hispanic voters.
Now, in terms of policy high on the list will be the president's immigration plan. It's something that he proposed before heading to Mexico in January, and that, you remember, would give temporary legal status to illegal immigrants, many who are Mexican as long as they can find a job here.
That plan landed with a thug among conservatives in Congress. And Republican leadership sources say that they don't expect this plan to come up this year. You can expect President Fox to press Mr. Bush to continue to make the case to Congress and get this done.
Now, also on the agenda is the whole question of border security. President Fox has been quite unhappy that photographing and fingerprinting of regular crossings of the border have made it very difficult for routine border crossings. And we understand from administration officials that perhaps some of the requirements will be rolled back.
Now aside from that, certainly NAFTA will be on the agenda and water (ph). But administration officials are saying don't expect a lot of new policy statements ought of this two-day summit. They are really just trying to repair and get together old friends and their wives get together.
And John, I should tell you the president in the arrival with president Fox told reporters that he actually caught the fish that they are going to eat tonight for dinner.
KING: Caught the fish.
Dana, President Fox in the past has been publicly quite grumpy, even worse, if you will, about the failure of the president to push these legislation especially immigration through Congress. He seems, though, before this trip to have accepted the reality of American politics, is that a fair statement?
BASH: It certainly seems that way. Even when President Bush was in Mexico, President Fox says he understand things are quite difficult in an election year in terms of American politics. But, certainly, he is somebody who is politically pragmatic, and while he will probably press the president, maybe even in public tomorrow to get this done for his folks back home, understanding perfectly well that it probably won't happen this year.
KING: Dana Bash near the president's ranch in Texas, thank you very much.
Now, my next guest says President Bush has effectively turned his back on Mexico and Latin American. And an election year meeting with President Fox will not fix that. Congressman Robert Menendez is chairman of the House Democratic Caucus and a member of the Congressional Hispanic Caucus. He joins me now tonight from New York.
Congressman, thanks for joining us. Let me just start with this table setter, this meeting that is now getting underway at the president's ranch with President Fox, is it show or substance?
REP. ROBERT MENENDEZ, (D) NEW JERSEY: Oh, I think it's primarily a political photo opportunity for both presidents, for President Fox and President Bush. President Bush's numbers in the Hispanic community have dropped dramatically in terms of his approval ratings. They believe he has not kept his words on things like education and his relationships with Mexico and Latin America. So this is clearly going to help the president, or at least be an attempt to help the president but if it is just two days of photo ops and nothing of substance at the end of two days, I'm not quite sure how much it's going to help him politically.
KING: You heard Dana Bash in that report say the president's proposal which would include this temporary guest worker program, at least asking those illegally in this country to come forward and join a temporary guest worker program. Dana Bash says the Republican -- her Republican sources on Capitol Hill say, thud, dead with a thud. You are a leading Democrat on this issue, sir. What do you think of the president's plan? Is there any chance to deal with meaningful immigration reform this year?
MENENDEZ: I don't believe so. I think the president's proposal is a thud in a variety of ways, it didn't only go bad with Republicans it really is a political ploy in an election year to reach out to the immigrant community in this country and those that are U.S. citizens and looking to reunify themselves with family members.
The reality is the president's proposal is simply a pathway to deportation not a pathway to the American dream. And so it really won't, even if it were to receive Republican support, which it has not, or to be accepted by Democrats, which it has not, would actually bring no one out of the darkness into the light.
So this is really between this meetings today and, also, the proposal the president earlier this year, it's just really a rather veiled political attempt to try to appease a constituency that he is not doing well with.
KING: Well congressman, let me ask you, we are watching photograph of the president greeting President Fox and his wife at the ranch. It's the one place in the United States of America where the president actually gets to drive, which is a big deal for him.
Let me ask you, Congressman, though, you would go even further. You would give, I believe, amnesty to those in this country illegally now. Correct me if I'm wrong on that point, but also, how would you explain giving any benefit to those in this country illegally now on a day when we you look at the jobs report and you see only 21,000 new jobs created. 43 months in a row, the manufacturing sector declining in jobs.
MENENDEZ: Well John, first of all, we don't believe in amnesty and we have never advocated that. We do believe in earned legalization, which is a whole different process. And secondly, we're first and foremost for Americans that want to do the jobs that immigrants are doing. If anybody wants to be hunched over and picking the fruits and vegetables that are on our table every day.
If anybody wants to be on the knees cleaning the bathrooms of homes and hotels across this country, I'm for an American doing the job first. But the reality is that millions of immigrants are doing those jobs and other jobs that Americans don't wan to do. The reality is we have a fair number of people in this country unless we're willing to deport 10 million people, which I don't see the United States doing, we need to move this to a process that regularizes border crossing for both the benefit of the United States and Mexico, that improves the security in that process and at the same time that realizes that there's an enormous human capital being put to work in the American economy and how do we bring people into the darkness and into light for both economic purposes as well as security purposes.
As long as we deny the reality, we're not only going to improve the security we're also not going to deal with a question of how we deal with this human capital that we're all taking advantage of. KING: Congressman Robert Menendez, in New Jersey, we appreciate your thoughts tonight sir. Thank you very much.
MENENDEZ: Thank you.
KING: On Wall Street today, stocks finished little changed. The Dow rose 7.5 points. The Nasdaq lost 7.5. The S&P rose 2. A relatively quiet day on the market, but the Martha Stewart news rocked the floor of the New York Stock Exchange. Christine Romans joins us with that -- Christine.
CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: Whoops from the trading floor as each count was read. Martha Stewart stock had rallied 20 percent on speculation she'd be found innocent and then tumbled 25 percent when the company's founder became a convicted felon. Then Kmart shares fell 3 percent in sympathy of the Martha Stewart brand is sold in the stores.
Martha Stewart Living Omnimedia's board will meet immediately to determine its next step. Even before this conviction, her legal woes had badly hurt that company. Last year it lost money for first time. Advertising in the flagship magazine fell 35 percent last year. Now, her company's board will meet immediately, John, to decide its next move.
KING: So, Christine, the Martha Stewart verdict dominating the floor. What about the jobs report, a pretty big deal.
ROMANS: That's right. By all accounts a terrible jobs report, John. The only saving grace for stocks, the jobs picture is so bad it prevents the Fed from raising interest rates any time soon.
Factories laid off 3,000 more workers. 24,000 construction jobs vanished and 9,000 restaurant jobs disappeared. Where were the jobs? lower paid retail jobs and government jobs grew by 21,000. John, 392,000 American workers simply abandoned the work force. We're down to 66 percent labor force participation. That's the lowest in 15 years. 8.2 million Americans are unemployed, and most troubling for investors, not only was February weak, January and December job growths both scaled back. John, workers are consumers and they are investors too. And that's got Wall Street's attention.
KING: Tough numbers for the economy. Tough numbers for a president seeking reelection as well. Thank you very much.
Coming up, we'll talk with a top strategy for the Bush-Cheney campaign. He says much of the country has already made up its mind about the presidential election, but there are still some voters that can be easily swayed.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We are in a very settled, divided nature of the country with very few people in the middle and that's why 1 event can quickly swing those people that are undecided.
(END VIDEO CLIP)
KING: And Martha Stewart plans to appeal today's guilty verdict. We'll talk about that and much more with tonight's "Newsmakers."
(COMMERCIAL BREAK)
KING: In the last 48 hours the race for the White House has increased dramatically in intensity now that it's clear that the main event will come down to a choice between President Bush and Senator John Kerry. Earlier I spoke to Matthew Dowd, a strategist and pollster for the Bush/Cheney campaign. I began by asking him if the candidates and the country can possibly stand another eight months of such intense campaigning.
(BEGIN VIDEOTAPE)
MATTHEW DOWD, STRATEGIST & POLLSTER, BUSH-CHENEY CAMPAIGN: I think it's a very good question. I think we're in a day today we have obviously 24-hour cables and the news cycles are not day to day but half hour to half hour. It's something as a campaign that you have to deal with and it's gotten broader and broader and how much you have to deal with, what one candidate says and the other candidate says. But there are windows of opportunity in the country of when the vast majority of the country pays attention and then they go back to doing the things, and their jobs and playing with their families and doing the things in their neighborhood.
We think right now is a very good window of opportunity. The country is focused. They now are getting introduced to John Kerry really in a formal way as a Democratic nominee. They expect us to begin the process but there will be times it won't be as fast and furious every moment of every day in the next 242 days as it is now.
But we are cognizant of that. This is a marathon. We obviously keep in mind that a series of sprints doesn't help us. We have to plan this out. But there are moments when we have to concentrate our efforts.
KING: This is part of your job here -- perhaps the biggest part of your job is to try to understand what is going on out in the country. We have seen some pretty wild swings. If you remember when Saddam Hussein was captured, the president's approval rating shot up instantly and then you had the Democratic campaign of the president came down. Is that what we're having, now the country sort of swinging event by event because they haven't locked in yet? How much of the country is actually decided, I know what I'm going to do?
DOWD: I think events have tremendous effect because of the divided nature of this country and how split we are. One event can sort of tip seven or eight or 10 percent of this country in a quick dramatic way. I think events that we obviously -- no one can anticipate could have an effect that's good or bad. We obviously have to be aware of that, that could happen. Obviously we don't know what those are.
But it does show how divided the country is and how easily it's tipped. Though I do think a major portion of the country has already sort of made up their mind, Democrats by and large are going to support John Kerry overwhelmingly. Republicans are going to support the president overwhelmingly. There are some people in the middle soft on each side that will ultimately -- the campaigns are going to communicate to and obviously try to motivate those bases. We are in a very settled, divided nature of the country with very few people in the middle. That's why one event can swing the people that are undecided.
(END VIDEOTAPE)
KING: A recent political cartoon captured the issue of job creation and the Bush administration's bold predictions, we thought, quite well. On the left President Bush predicting 2.6 million jobs by the end of this year. On the right a White House spokesman clarifies that statement stands minus the word million. Our thanks to cartoonist Mike Luckovich at the "Atlanta Journal Constitution."
A reminder now to vote on tonight's poll question. "Do you believe Martha Stewart should be sent to jail? Yes or no." Cast your vote at CNN.com/lou. We'll bring you the results a little later in the show.
When we return we'll talk about the surprising verdict in the Martha Stewart trial with tonight's news makers and tonight's hero inspires young marines to serve their country at home when their tours overseas are over. We'll be right back.
(COMMERCIAL BREAK)
KING: Now a look at tonight's news in brief, a federal grand jury investigating the leak of a CIA officer's identity has subpoenaed some telephone records from Air Force One. The subpoenas also call for records from an internal task force created to publicize the threat posed by Saddam Hussein. The Justice Department today said Attorney General John Ashcroft is in an intensive care at a Washington-area hospital. Ashcroft is suffering from a severe case of gallstone pancreatitis.
Iraq's governing counsel will not be signing a new interim constitution today. Shortly before that scheduled signing, Shiite members of the council said they had objections. The council says it hopes now to sign the constitution on Monday.
Joining me now to talk about the Martha Stewart verdict and much more are tonight's newsmakers. Steve Forbes, editor-in-chief of "Forbes" magazine. Mark Morrison, managing editor at "Businessweek," and Rik Kirkland, editor-in-chief of "Fortune." We have to begin, gentlemen, with the Martha Stewart verdict. Steve Forbes, I'll begin with you, were you surprised? Is she going to prison?
STEVE FORBES, "FORBES": A week ago I would have been surprised but after the weak defense of Martha Stewart. I think having four counts, that, I think, was a bit of surprise. I think it was a reflection of the winter of discontent we're in. People are not in a good mood and I think that hurt her as well. KING: Mark Morrison, is there some bigger meaning to the trial?
MARK MORRISON, "BUSINESSWEEK": I think it's very good news in a way, because when brokers and people with inside information, basically, cheat on the average investor, the investor class, it destroys confidence in the markets and you just shouldn't be able to get away with that. The legal system should deal with it, in this case, it has, and very effectively so I think it's good news.
KING: Rik Kirkland, one of the jurors came out and said this is proof that the little guys can get the big guys if they do wrong. Is there some class breakdown here, even class warfare in this?
RIK KIRKLAND, "FORTUNE": There may be an element of that, given Martha's personality. I also think though she broke the cardinal rule that your mama told you years ago, which is not to tell a lie. While we talk about the markets here, the truth is she wasn't charged with insider trading, if she had not engaged in the cover-up charges which they found her guilty on, she would be a free woman today.
KING: Rik, let me stay with you and we'll move back around.
You mentioned your mama told you not to tell a lie. It certainly wasn't meant as an lie, but the administration just a month ago said this economy would create 2.6 million new jobs this year. 21,000 jobs created last month, nowhere on a pace for 2.6 million. How big of a political problem, Rik, for this president?
KIRKLAND: I think it's a big problem. Right now they are in sort of the faith based economic forecasting mode where every month they say, come on, we have faith the jobs are going to be there and they are not there. I mean eventually all the signs elsewhere in the economy point to a few months here, sometime down the road, some decent job growth. But in the meantime it is a serious problem for the president. And we just -- its going to be probably half of the number that he was looking for a month ago.
KING: Half of the number, Mark Morrison, do you accept that about right? Maybe a million a million and half new jobs this year. And what is your sense, at some point, the voters decide whether the president is engaged on the economy, whether he's doing the right thing. That is one of the things that doomed this president's father. What is your sense where the trigger point might be for this president?
MORRISON: The number you mention is about right. I think he's got a huge political problem building, if this job number doesn't start picking up some momentum. Now, we all expect it to give the very healthy growth in the global economy and in the U.S. economy. But, coming out of a bubble when there was really overemployment, it's taking a long time for business people to get their confidence back to actually put new people on the payroll.
So, he is working against the clock on this and, of course, got more bad news this week on the price of oil. We now have disruptions down in Venezuela. We never did get the dividend in lower oil prices that Iraq was supposed to bring.
KING: Steve Forbes, this is not anything a president, any president can do this year to do -- he is stuck with the policy, right, his policy in place either creates jobs or it doesn't. He can't do anything else, can he?
FORBES: Short term, absolutely not. The federal reserve may be able to do a little tweaking, but overall the cards are in place. I think the economy is going to improve. Job creation will come with capital spending, capital spending is growing at double digit rates. And I'll say it again, the household survey I think is a much more accurate job picture and that shows much more progress than the survey of payrolls.
But the White House has made a really poor case of not having the right job number out there. And so they are stuck with the one that puts it in the worst light possible.
KING: Well, Alan Greenspan disagrees with you on the household survey. But Steve, I remember from years ago, it wouldn't be the first time you and Alan Greenspan are not on the same page.
Let me turn to the Democratic...
FORBES: If it did, something would be dreadfully wrong.
KING: That would be news. We would fire up the breaking news animation.
KING: Let me turn to the Democratic race here. We're talking about the president and his problem when it comes to creating jobs. But Mark, let me begin with you, Senator Kerry says the Bush plan stinks but has he given any coherent plan as to what he would do differently in terms of creating jobs?
MORRISON: Well, you are starting to hear some pieces of it. But I think the key is he has a big opportunity here, because Bush is on the defensive in part because the administration has done such a poor job of communicating and on expressing itself on this jobs issue.
Kerry, I think, has come out, you know, he's gained strength as a candidate going through this primary, worked very well to focus the -- his candidacy and the Democrats on the job at hand.
KING: Rik Kirkland, does John Kerry the political skills as Bill Clinton had in 1992 to run an election in which he says, yes, I'm going to raise some taxes as Bill Clinton did back in 1992. He said he was going to raise on the rich, but cut them in the middle class. John Kerry says he's essentially going to take away the tax cuts on wealthy Americans. The president will say, a liberal, he's going to raise your taxes. Does John Kerry have the political skills to pull that off?
KIRKLAND: That's the ultimate test. I think based on the way he's performed in the primaries so far, you have to take him very seriously if you are the Bush camp. You have to figure you've got a really tough campaign ahead of you.
So far, so good. Another thing that Kerry has got going for him. I think he had sort of -- he is at a peak right now after this primary. He is coming out of this process. It was such short and relatively benign process, that he's in a stronger position than I any of his Democratic predecessors: Gore, Clinton the first time, Dukakis, Mondale, in terms of the polls. So he really is at a strong point. He's probably got to be prepared for some erosion here.
KING: We'll see how it goes. Gentlemen, we need to call it quits for tonight there. Thank you very much. Rik Kirkland, editor- in-chief of "Fortunes," Mark Morrison, managing editor of "Newswork" (sic) and Steve Forbes, of "Forbes" magazine. Gentlemen, thank you very much.
And a reminder to check our Web site for the complete list of companies we've confirmed to be exporting of America. CNN.com/lou.
Coming up next in "Heroes," the story of Ryan White who has served his country, from the streets of Los Angeles to the streets of Baghdad and back. And we'll be right back.
(COMMERCIAL BREAK)
KING: Now the results of tonight's poll question. 41 percent believe Martha Stewart should be sent to jail. 59 percent of you do not.
In "Heroes" tonight a marine, police officer and an inspiration to many other young marines. Bill Tucker has his story.
(COMMERCIAL BREAK)
RYAN WHITE, LAPD: There's a 9 step hiring process in becoming a police officer.
BILL TUCKER, CNN CORRESPONDENT (voice-over): Ryan White is the Los Angeles Police Department's recruiting liaison with the military.
WHITE: Now, I got probably the best job in the whole world in my opinion.
TUCKER: He wants young marines to join the department when their days on active duty are over.
WHITE: That's the type of person I want to work with back when I get to the streets with LAPD.
TUCKER: White is both a cop and a marine and done both jobs in the past year. He rolled into Baghdad with the 1st Marine Expeditionary Force and got injured the day Saddam's statue fell.
WHITE: Somebody was tacking popshots and one of the rounds ricocheted off the deck and struck me in the left foot.
TUCKER: It wasn't a life threatening injury, but enough to take him out of battle.
WHITE: My years in law enforcement, my many years in the Marine Corps, you know, you train with weapons all the time and for the first time, I was helpless. I couldn't even stand up without my buddy helping me.
TUCKER: White came home to wife Mindy and daughter Savannah in May. By August, he'd recovered and went back to work. In October, he was awarded the Purple Heart and a Marine Medal for Achievement, but dismisses the idea that he is a hero.
WHITE: It's gals like my wife that stick with a man like me through my whole life -- those are the 2 heroes.
TUCKER: Now, young Marines listen as White tells them how valuable their military experience to the LAPD, and about the rewards of a life combining military service overseas, with law enforcement at home. Bill Tucker, CNN.
(END VIDEOTAPE)
KING: That's our show tonight. Thanks for being with us.
Monday, Lou is back and he'll be talking with Senator Chris Dodd, sponsor about an amendment to block the use of taxpayer money for exporting American jobs overseas.
And, Ed Yingling (ph), of the Coalition for Economic Growth and American Jobs, an organization of influential business leaders, defending outsourcing.
For all of us here, good night from Washington. "ANDERSON COOPER" is next.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired March 5, 2004 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
JOHN KING, CNN ANCHOR (voice-over): Tonight: Martha Stewart is a convicted felon. A jury finds her guilty of obstructing justice and lying to the government. One juror calls it a victory for the little guys.
DAVID KELLEY, U.S. ATTORNEY: If you are John Q. Citizen or Martha Stewart or Peter Bacanovic, we're going to go after you if you make these types of lies.
KING: The heat is on the White House after the latest employment report. Just 21,000 new jobs were created last month, hundreds of thousands short of the White House' own forecast. The man who made that forecast, President Bush's chief economic adviser, Gregory Mankiw, will be my guest.
March on Washington. Today, Americans who lost their jobs to cheap overseas labor marked rallied with lawmakers to keep jobs in this country.
RAYMOND GLOCK, RETIRED BETHLEHEM STEEL WORKER: We just pledged our allegiance to that flag. How come our corporations don't? They pledge our allegiance overseas.
KING: President Bush and Mexican President Vicente Fox are tackling immigration and border security in a two-day summit. President Fox wants to make it easier for Mexican immigrants to enter this country. We'll talk with a member of the Congressional Hispanic Caucus.
And taking the shock out of shock jocks. The FCC considers tougher penalties against radio shows that test the limits of decency.
(END VIDEOTAPE)
ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, March 5. Sitting in for Lou Dobbs for an hour of news, debate and opinion, John King.
KING: Good evening.
Tonight, Martha Stewart says she will appeal a verdict that could send her to prison for 20 years. A jury in New York today found Stewart guilty of conspiracy, making false statements and obstruction of justice.
Mary Snow is live now outside the courthouse in Lower Manhattan -- Mary.
MARY SNOW, CNN CORRESPONDENT: John, Martha Stewart appearing stoic, showing no emotion as the jury convicted her on four counts, all four counts against her. Her daughter did cry, though, after that verdict came in, the jury convicting Martha Stewart of conspiracy, two counts of false statements and obstruction of justice, each carrying a maximum penalty of five years in prison and a $250,000 fine.
The jury convicting her stockbroker and co-defendant, Peter Bacanovic, on four of the five counts against him, conspiracy, making false statements, perjury and obstruction. The penalties for these charges the same, maximum five years in prison and a $250,000 fine. The sentencing date has been set for June 17.
U.S. attorney David Kelley speaking to reporters, saying part of the message here is that honesty -- dishonesty and corruption will not be tolerated, saying the convictions send out a strong message.
(BEGIN VIDEO CLIP)
KELLEY: Let this case, as all of those cases, send an important message that we will not and frankly cannot tolerate dishonesty and corruption in any sort of official proceeding, especially ones such as these that can affect such a wide range of interests, both business and personal, throughout the country.
(END VIDEO CLIP)
SNOW: The defense team all along had contended that the government's case was a circumstantial case and wasted no time in saying that they will appeal the convictions.
(BEGIN VIDEO CLIP)
ROBERT MORVILLO, ATTORNEY FOR MARTHA STEWART: We are disappointed at the outcome. We look at this as having lost the first round. We look at this as an opportunity for us to go to the next rounds and to explain to the court of appeals what we think went wrong in this case and why the case came out the way it did.
(END VIDEO CLIP)
SNOW: One of the jurors, Chappell Hartridge, speaking to reporters about how the jurors came to their decision, saying that he felt this could perhaps be a victory for the little guy. It was a message to bigwigs that they have to abide by the law.
This particular juror also when asked said that it didn't really make a difference in the end the fact that Martha Stewart did not take the stand. Both Martha Stewart and Peter Bacanovic are scheduled to be back here on Monday for processing -- John.
KING: Mary, a high-profile celebrity trial, a circus to some. Give us a sense of the flavor what it was like outside of the courthouse after this news broke. SNOW: Certainly, so much activity, John, and there really was a feeling of anticipation when there were signals being sent that the jurors had reached a verdict. They had broken for lunch and then there was increased police activity. Not only is there a small army of reporters out here, but also the crowds came to gather, waiting for Martha Stewart to come out of the courthouse.
And you did hear a cheer or noise coming up as she left the courthouse. She really appeared emotionless as she left and got into her car, but certainly so much activity -- John.
KING: Mary snow, thank you. Great work on a very busy day.
And now let's get more from CNN senior legal analyst Jeffrey Toobin. He was inside the courtroom for the entire trial and he joins us now.
And Jeff, No. 1, were you surprised by today's verdict?
JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Well, John, you know, if you had asked me at the beginning of the case, I would have been surprised to see any sort of conviction. I didn't believe this was a strong case.
But sitting through five weeks of trial, by the verdict today, I was not surprised, because the government put on an excellent case, a very persuasive case, lots of new evidence that had not been disclosed publicly before. So it's always shocking to see a celebrity, a person of that kind of renown, brought low. But, specifically, was I surprised that she was convicted? No, I wasn't.
KING: Well, Jeff, you heard the defense team. It's routine for the defense team to come out and say we're going to appeal the next round, as Mr. Stewart's lawyer called it. You're our great counselor in the courtroom. Do you hear anything in there that gives you reason to see significant grounds for appeal?
TOOBIN: Absolutely not.
In fact, remember, Judge Cedarbaum is the judge who ruled fairly consistently for the defense throughout this case. She is the judge who threw out the securities fraud case. She limited the securities frauds count. She limited the government from putting in some telephone records that I thought were clearly admissible. Many of the important rulings in the case went against the government. So I think the chances for a successful appeal are slim and none.
KING: A long time to wait for that decision on appeal. But give us your best guess; 20 years the maximum Martha Stewart could face. What is your sense of how long she would actually go to jail if she loses an appeal and actually has to serve the time.
TOOBIN: Federal sentencing guidelines apply in this case and there is some room for play. But my best guess is, she would be looking at a sentence of 12 to 18 months, 18 months to 24 months. Those are the increments in which the sentencing guidelines work. Judge Cedarbaum is not known as an especially tough sentencer. But given the fact that the white-collar crime guidelines are tougher than they have been, given the fact that she was convicted of all the counts against her, I think a prison sentence, some kind of prison sentence, is close to an absolute certainty.
KING: A case still worth paying attention to as it goes on. Jeff Toobin, thanks again for your fine work today and throughout the trial.
TOOBIN: OK, John.
KING: And that brings us to tonight's poll question: Do you believe Martha Stewart should be sent to jail, yes or no? Cast your vote at CNN.com/Lou. We'll bring you the results a bit later in the show.
We'll have much more on today's guilty verdict for Martha Stewart, including how the news went over on the floor of the New York Stock Exchange. And we'll see what the nation's leading business editors think of the verdict, when we're joined by tonight's "Newsmakers."
Turning now to today's shocking news about jobs. The White House was hoping for a strong jobs report in February, something to boost the president's reelection efforts, but that was not what the numbers showed.
(BEGIN VIDEOTAPE)
KING (voice-over): The new jobs numbers are a major blow to a president counting on a strong election year economy. The unemployment rate held flat at 5.6 percent last month, by historical standards not bad for an incumbent president. But the economy added only 21,000 new jobs, way below Wall Street's estimates.
And the government also scaled back January's job numbers, saying the economy added just 97,000 new positions in January, not the 112,000 initially reported. Democratic presidential candidate John Kerry called it proof it is past time to put President Bush out of work.
SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Now, George Bush has been promising America for almost four years now that he was going to create four million jobs. He's lost three million.
KING: Another warning sign for the president, the manufacturing sector reported job losses for the 43rd consecutive month, more evidence of tough times in the industrial states critical to presidential politics.
ED SARPOLUS, REPUBLICAN POLLSTER: They're hearing the president say things are getting better and then there's a story about job loss or job closing, so it begins to create the whole character issue for the president. Can you trust the person for what he says? KING: The White House had already backed away from a prediction in this February report that the economy would add 2.6 million new jobs this year. The administration insists job growth will pick up in the months ahead.
STEPHEN FRIEDMAN, WHITE HOUSE ECONOMIC ADVISER: Most of the economic signs are extremely positive. This is one that is unsatisfactory.
(END VIDEOTAPE)
KING: Now, that jobs report, again, found the manufacturing sector lost jobs for the 43rd month in a row. As we have reported for more than a year on this program, hundreds of thousands of those manufacturing jobs have been exported to cheap foreign labor markets.
Today, hundreds of Americans who have lost their jobs to overseas competition joined a rally organized by congressional Democrats.
Louise Schiavone has that report.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): A couple of hundred union workers and retirees stood elbow to elbow with Senate Democrats railing against the flow of good U.S. jobs to lower-paid workers overseas. This Electrolux worker's job in Greenville, Michigan, is moving to Mexico.
DAVID DOOLITTLE, ELECTROLUX WORKER: The corporate representatives explained how the company could operate for $81 million less in Mexico. That's because the hourly wage in Mexico is at $1.57.
SCHIAVONE: The factory's U.S. wages are $15 an hour. From manufacturing to high tech to customer call centers, businesses are moving U.S. jobs to lower-wage nations.
GLOCK: We just pledged our allegiance to that flag. How come our corporations don't? They pledge our allegiance overseas. That upsets me.
SCHIAVONE: The Democratic forum was conducted one day after the Senate voted to restrict federal contractors from using tax dollars to relocate work abroad. And while the Bush administration has downplayed outsourcing, Democrats call the trend a real threat to the nation's standard of living.
ELAINE CHAO, LABOR SECRETARY: There is really no data that shows that outsourcing, that this is accelerating. In fact, the America work force numbers 146 million people. And the white-collar outsourcing is about 300,000.
SEN. BYRON DORGAN (D), NORTH DAKOTA: This is not some idle political debate. The question of whether the American people have good jobs that pay well that provide security is central to the question of whether this American economy works for everybody.
SCHIAVONE: These workers are finding that there is nothing in the job market today to replace, for example, a $27-an-hour Lucent Technology job.
TERRANCE ANTISDEL, FORMER LUCENT WORKER: I'll never be able to make that again, I'm sure.
SCHIAVONE: Universally, they express anxiety and wonder what sorts of jobs will be left for their children.
(END VIDEOTAPE)
SCHIAVONE: With the economic recovery so far slow to create new jobs, the pressure is on for Washington to address the outsourcing issue -- John.
KING: The Democrats were addressing it, Louise, but they obviously don't control Congress, the House, nor the Senate. Are they doing this to think they can get something passed this year or is this more about election-year politics?
SCHIAVONE: Well, interestingly enough, John, this is an issue that resonates. And, indeed, yesterday, around 70 members of the U.S. Senate -- and that includes half of the Senate Republicans -- did endorse this move to restrict outsourcing jobs when it involves federal contractors. So, Republicans are hearing this from their constituents, too, which shows that, whether you are a Democrat or a Republican, when you have lost your job, it stings.
KING: Louise Schiavone, thank you very much.
Exporting American jobs to cheap foreign labor markets is now some of the curriculum in some American business schools. We'll have a special report.
Plus, the White House defends its job growth predictions after another disappointing employment report. The president's chief economic adviser, Gregory Mankiw, will be our guest.
And "Broken Borders." Mexican President Vicente Fox arrives in Texas tonight to ask President Bush for more rights for migrant Mexican immigrants in this country -- that report and a great deal more ahead.
Stay with us.
(COMMERCIAL BREAK)
KING: We've been reporting on the exporting of American jobs to cheap overseas labor markets on this program for well over a year now. The president's top economic adviser recently drew sharp criticism for saying the practice was, in some ways, good for the American economy.
Gregory Mankiw is the chairman of the president's Council of Economic Advisers. And he joins me now here on the set in Washington. Greg Mankiw, let's start with today's job report. The unemployment rate stayed flat, only 21,000 new jobs created. In that document published by the White House just a month ago, you spoke of 2.6 million jobs. Even after that, people thought maybe that was a bit much, but maybe two million new jobs. Where are the jobs?
GREGORY MANKIW, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: This jobs report was not satisfactory. We're not satisfied at all with the job creation that we saw today.
Since the summer, the labor market has turned. The employment rate has falling from a peak of 6.3 down to 5.6. The number of jobs created has been 360,000, as judged by the payroll survey, and 980,000 as judged by the household survey. That's a movement in the right direction, but not nearly far enough. We want a lot more jobs. And we think we have the policies in place to create a lot more jobs. I think you'll see that in the months to come.
KING: Another beacon, if you will, in this report is, for the 43rd consecutive month, the manufacturing sector has lost jobs. Now, you're an economist, but the president is a politician running for reelection. In the big states, in the industrial belt, that's tough news for a president seeking reelection.
And something you said recently is being used by the Democrats and others in this campaign. I want to read this quote from you: "The definition of what constitutes a manufacturing employee is far from clear. For example, when a fast-food restaurant sell as hamburger, is it providing a service of combining inputs to manufacture a product?"
McDonald's is manufacturing?
MANKIW: We were just pointing out that the definition of manufacturing is somewhat arbitrary. There's a certain blurriness to the nature of the definitions. We weren't suggesting reclassification at all. We weren't suggesting that what is going on in manufacturing is not significant.
Manufacturing has been hit very hard over the past few years. There's no doubt about it. We understand why that is. It's been a hard time for business investment. It's been a hard time for exports. And those are goods that are produced in the manufacturing sector. So it's been a tough time in manufacturing.
We are starting to see good signs in manufacturing, though. The purchasing managers index came out a few days ago suggesting that manufacturing is starting to turn around. We see durable goods orders and shipments turning up. We see exports turning up. So I think manufacturing is starting to get better.
KING: Turning up fast enough for there to be a recognizable result before the November election?
MANKIW: I think you will see results in the coming months. I'm not going to point to any particular month. But I think things are turning around for manufacturing and for the economy overall. KING: One of the debates, of course, about jobs is outsourcing. And, again, we appreciate your coming in tonight. You're in the hot seat for a number of things you've said in the past month.
I want to read you another one here: "When a good or service is produced more cheaply abroad, it makes more sense to import it than to make or provide it domestically."
Those who have lost their jobs to cheap markets overseas might read that quote and say, what are you doing working in the White House?
MANKIW: A job loss is painful for a family. It causes hardship for a worker and his loved ones. There's no doubt about that. And that's true whether the job loss comes from a recession, whether it comes from trade, whether it comes from changes in technology.
And we are oriented, economic policy, to create jobs. Creating jobs is one of the paramount goals. I have heard this president say this to me many times and said it publicly many times. We have the policies to do that. Now, the question is, what should do you do when you see jobs being lost? Some people would say, you should erect barriers, erect trade barriers, retreat into economic isolationism. That's not right.
What we want to do is promote economic growth, because with economic growth comes job creation.
KING: What about you're seeing on this issue on Capitol Hill? Mostly Democrats, but some Republicans say, let's give tax incentives to companies that build and grow jobs here at home and let's take away any incentives in the tax code that allow a corporation to actually get a benefit from the United States government for taking a job in the United States and moving it somewhere else. Reasonable?
MANKIW: I think the goal should be to create growth and jobs in the United States. Prosperity is not zero-sum.
Prosperity in another country does not threaten prosperity here. The nature of international trade is that it is win-win. Other countries can grow and we can grow. Creating jobs here is absolutely important. But retreating into economic isolation, as some would have us do, is a mistake. Raising taxes, as some would have us do, is a mistake. The president has the right policies, free and open markets, opening markets abroad for our products, keeping tax rates low. That is how we're going to increase growth and that's how we're going to create jobs.
KING: You work in a tough profession. You're getting beat up a bit politically for publishing a book that said 2.6 million new jobs. Granted, that data was from late last year.
So help us out. The economy created 97,000 jobs in January, 21,000 jobs last month. What is your best hunch now? What can you tell the American people in terms of job growth this year and what your bet is where the unemployment will be, let's say Labor Day? MANKIW: Well, there's no official administration forecast since December 2. We only do it as part of the budget process. And we haven't put the forecasting team together for several months.
But we do look at the numbers. We do follow the private sector forecasts. And if you look at what the private sector forecasters are saying, is they are saying that 2004 will be a good year. GDP growth will be well above the historical average, as it was in 2003. You will see the unemployment rate continuing down. As I said, it has come from 6.3 to 5.6.
And the private sector forecasters are saying it is going to continue coming down over the course of this year.
KING: Gregory Mankiw, the president's top economic adviser, we appreciate you coming in and joining us tonight.
MANKIW: Thank you very much.
KING: Thank you very much.
And coming up, lawmakers may be squabbling over its merits, but students of business are studying up on outsourcing.
Plus, taming the shock jocks. An FCC crackdown could mean major changes to radio as we know it.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We are going to recapture the public airways for the American public.
(END VIDEO CLIP)
KING: And Martha Stewart guilty on all counts. We'll have much more on today's stunning verdict with tonight's "Newsmakers."
And now reaction to the news from the streets of New York.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I'm shocked. I am surprised at the verdict. I'm a huge fan. I did not think this at all. I thought she would be free on all counts.
UNIDENTIFIED MALE: Well, yes, she is probably a nice person. She just got greedy.
UNIDENTIFIED FEMALE: She made a lot of money on something that was illegal, so she should have to give up a bunch of money.
UNIDENTIFIED MALE: I think the punishment should fit the crime.
(END VIDEO CLIP)
(COMMERCIAL BREAK) KING: The debate over exporting American work to cheap overseas labor markets continues to gain momentum in Congress. But while lawmakers debate the pros and cons of outsourcing, business school students at one university have accepted it as a fact of modern life.
Kitty Pilgrim reports.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Twenty-one graduate business students at Indiana University are trying to figure out the phenomenon of international outsourcing, what some call offshoring. They are going to India next week to see offshore operations of American companies firsthand. They debate the pros and cons of sending jobs to India.
UNIDENTIFIED MALE: Fifteen thousand dollars for a Ph.D. in India vs. six figures in the U.S.
PILGRIM: PowerPoint presentations, global maps, and discussions over whether the talent pool in India will draw even more American jobs overseas.
UNIDENTIFIED FEMALE: India, for example, graduates nearly 250,000 engineers per year.
PILGRIMS: But some students point out companies that have resisted moving facilities overseas.
UNIDENTIFIED MALE: Novartis, they could have built a new research facility anywhere in the world, but they decided to build it in Boston. And the reason for that is the talent pool.
PILGRIMS: Their professor defends the curriculum, saying it's part of business reality these days.
SREENIVAS KAMMA, PROFESSOR, INDIANA UNIVERSITY: The students realize, I think, that you ignore India only at your peril.
PILGRIMS: Outside of class, some students defend the practice, saying outsourcing is not the main reason for the jobless recovery in the U.S. economy.
BRIAN MATTINGLY, STUDENT: What we seen in the last couple years is a flattening of the economy, a recession, if you will, but this is not due in any way to India.
PILGRIMS: Some are just practical about gaining job skills for when they graduate.
DERICUS HARVEY, STUDENT: I think it would help me to be a global manager in the future, because that's where we're going to be. We're not going to be just U.S. managers anymore.
PILGRIMS: And some are just plain open to the new experience. TODD TRACY, STUDENT: Now, I want to see where so much of what I have read about was taking place and really get an idea for what the country was like. Plus, I like the food.
PILGRIMS: Kitty pilgrim, CNN.
(END VIDEOTAPE)
KING: Coming up, "Broken Borders." Mexican President Fox arrives in the United States to push for a more lenient immigration policy. We'll have that report from the president's ranch in Crawford, Texas.
Then, the president's reelection campaign kicks off in a big way. I'll speak with Bush-Cheney strategist Matthew Dowd about the countdown to November.
And guilty as charged. But will Martha Stewart ever see the inside of a jail cell? That and much more coming up in this week's "Newsmakers."
(COMMERCIAL BREAK)
KING: The Federal Communications Commission is planning a major crackdown on radio stations that allow controversial shock jocks to go too far. Officials are reviewing several complaints regarding obscenity and lawmakers are moving quickly to provide regulators with even more ammunition.
Eric Philips has the report.
(BEGIN VIDEOTAPE)
HOWARD STERN, RADIO TALK SHOW HOST: I'd like to take this opportunity to say...
ERIC PHILIPS, CNN CORRESPONDENT (voice-over): Howard Stern says he feels like a sacrificial lamb with the FCC now considering stiffer penalties for radio companies that feature so-called shock jocks.
STERN: We have lost. We have lost our airwaves. We've lost your freedoms. We will be a religious state within 20 years.
There is a nightmare going on. I'm about to be served up my head on a platter because all I wanted to do was make people laugh.
PHILIPS: The FCC has not commented on its action against Stern or any others, but lawmakers are talking. This week, a House panel voted to increase the maximum fine for broadcast companies that air obscenity for more than $27,000 to half a million.
REP. JOE BARTON (R), TEXAS: We are also saying that the FCC can, for the first time, fine an individual entertainer for the first offense, up to $500,000. We are going to again recapture the public air waves for decency for the American people. PHILLIPS: Congressman Barton says the Janet Jackson Super Bowl halftime show was what reignited a move to act against questionable material on TV and Radio. Since then, Stern's show was kicked off six Clear Channel stations. The company also fire a controversial D.J. known as "Bubba the Love Sponge" and just this week paid $755,000 in fines associated with that D.J..
BONO, SINGER: That is really, really (EXPLETIVE DELETED) brilliant.
PHILLIPS: Part of the fall-out, the FCC is planning to reverse an earlier decision, now saying that Bono's use of profanity during the live 2003 Golden Globe Awards was profanity.
(END VIDEOTAPE)
PHILLIPS: The bill to increase fines will now go before the full House. The Senate is expected to pass similar legislation and lawmakers hope to have a final bill on the president's desk by late spring, early summer -- John.
KING: Eric Phillips in New York, thank you very much.
Mexican president Vincente Fox has just arrived at President Bush's Texas ranch for a two-day meeting. At the top of the agenda, immigration. President Fox is pushing President Bush to make it easier for Mexican immigrants to cross the border into this country. White House correspondent Dana Bash joins us now from Crawford, Texas, with the report -- Dana.
DANA BASH, CNN WHITE HOUSE CORRESPONDENT: And John, President Fox was supposed to come for this meeting about a year and a half ago but he canceled in part because of protests over the execution here in Texas of a Mexican man. And that was just one of many reasons why the relations between the 2 men have been frayed over the past couple of years, relations that were have close.
So, high on the agenda will be to try to continue to repairs the ties especially as President Bush heads into the election year as he courts Hispanic voters.
Now, in terms of policy high on the list will be the president's immigration plan. It's something that he proposed before heading to Mexico in January, and that, you remember, would give temporary legal status to illegal immigrants, many who are Mexican as long as they can find a job here.
That plan landed with a thug among conservatives in Congress. And Republican leadership sources say that they don't expect this plan to come up this year. You can expect President Fox to press Mr. Bush to continue to make the case to Congress and get this done.
Now, also on the agenda is the whole question of border security. President Fox has been quite unhappy that photographing and fingerprinting of regular crossings of the border have made it very difficult for routine border crossings. And we understand from administration officials that perhaps some of the requirements will be rolled back.
Now aside from that, certainly NAFTA will be on the agenda and water (ph). But administration officials are saying don't expect a lot of new policy statements ought of this two-day summit. They are really just trying to repair and get together old friends and their wives get together.
And John, I should tell you the president in the arrival with president Fox told reporters that he actually caught the fish that they are going to eat tonight for dinner.
KING: Caught the fish.
Dana, President Fox in the past has been publicly quite grumpy, even worse, if you will, about the failure of the president to push these legislation especially immigration through Congress. He seems, though, before this trip to have accepted the reality of American politics, is that a fair statement?
BASH: It certainly seems that way. Even when President Bush was in Mexico, President Fox says he understand things are quite difficult in an election year in terms of American politics. But, certainly, he is somebody who is politically pragmatic, and while he will probably press the president, maybe even in public tomorrow to get this done for his folks back home, understanding perfectly well that it probably won't happen this year.
KING: Dana Bash near the president's ranch in Texas, thank you very much.
Now, my next guest says President Bush has effectively turned his back on Mexico and Latin American. And an election year meeting with President Fox will not fix that. Congressman Robert Menendez is chairman of the House Democratic Caucus and a member of the Congressional Hispanic Caucus. He joins me now tonight from New York.
Congressman, thanks for joining us. Let me just start with this table setter, this meeting that is now getting underway at the president's ranch with President Fox, is it show or substance?
REP. ROBERT MENENDEZ, (D) NEW JERSEY: Oh, I think it's primarily a political photo opportunity for both presidents, for President Fox and President Bush. President Bush's numbers in the Hispanic community have dropped dramatically in terms of his approval ratings. They believe he has not kept his words on things like education and his relationships with Mexico and Latin America. So this is clearly going to help the president, or at least be an attempt to help the president but if it is just two days of photo ops and nothing of substance at the end of two days, I'm not quite sure how much it's going to help him politically.
KING: You heard Dana Bash in that report say the president's proposal which would include this temporary guest worker program, at least asking those illegally in this country to come forward and join a temporary guest worker program. Dana Bash says the Republican -- her Republican sources on Capitol Hill say, thud, dead with a thud. You are a leading Democrat on this issue, sir. What do you think of the president's plan? Is there any chance to deal with meaningful immigration reform this year?
MENENDEZ: I don't believe so. I think the president's proposal is a thud in a variety of ways, it didn't only go bad with Republicans it really is a political ploy in an election year to reach out to the immigrant community in this country and those that are U.S. citizens and looking to reunify themselves with family members.
The reality is the president's proposal is simply a pathway to deportation not a pathway to the American dream. And so it really won't, even if it were to receive Republican support, which it has not, or to be accepted by Democrats, which it has not, would actually bring no one out of the darkness into the light.
So this is really between this meetings today and, also, the proposal the president earlier this year, it's just really a rather veiled political attempt to try to appease a constituency that he is not doing well with.
KING: Well congressman, let me ask you, we are watching photograph of the president greeting President Fox and his wife at the ranch. It's the one place in the United States of America where the president actually gets to drive, which is a big deal for him.
Let me ask you, Congressman, though, you would go even further. You would give, I believe, amnesty to those in this country illegally now. Correct me if I'm wrong on that point, but also, how would you explain giving any benefit to those in this country illegally now on a day when we you look at the jobs report and you see only 21,000 new jobs created. 43 months in a row, the manufacturing sector declining in jobs.
MENENDEZ: Well John, first of all, we don't believe in amnesty and we have never advocated that. We do believe in earned legalization, which is a whole different process. And secondly, we're first and foremost for Americans that want to do the jobs that immigrants are doing. If anybody wants to be hunched over and picking the fruits and vegetables that are on our table every day.
If anybody wants to be on the knees cleaning the bathrooms of homes and hotels across this country, I'm for an American doing the job first. But the reality is that millions of immigrants are doing those jobs and other jobs that Americans don't wan to do. The reality is we have a fair number of people in this country unless we're willing to deport 10 million people, which I don't see the United States doing, we need to move this to a process that regularizes border crossing for both the benefit of the United States and Mexico, that improves the security in that process and at the same time that realizes that there's an enormous human capital being put to work in the American economy and how do we bring people into the darkness and into light for both economic purposes as well as security purposes.
As long as we deny the reality, we're not only going to improve the security we're also not going to deal with a question of how we deal with this human capital that we're all taking advantage of. KING: Congressman Robert Menendez, in New Jersey, we appreciate your thoughts tonight sir. Thank you very much.
MENENDEZ: Thank you.
KING: On Wall Street today, stocks finished little changed. The Dow rose 7.5 points. The Nasdaq lost 7.5. The S&P rose 2. A relatively quiet day on the market, but the Martha Stewart news rocked the floor of the New York Stock Exchange. Christine Romans joins us with that -- Christine.
CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: Whoops from the trading floor as each count was read. Martha Stewart stock had rallied 20 percent on speculation she'd be found innocent and then tumbled 25 percent when the company's founder became a convicted felon. Then Kmart shares fell 3 percent in sympathy of the Martha Stewart brand is sold in the stores.
Martha Stewart Living Omnimedia's board will meet immediately to determine its next step. Even before this conviction, her legal woes had badly hurt that company. Last year it lost money for first time. Advertising in the flagship magazine fell 35 percent last year. Now, her company's board will meet immediately, John, to decide its next move.
KING: So, Christine, the Martha Stewart verdict dominating the floor. What about the jobs report, a pretty big deal.
ROMANS: That's right. By all accounts a terrible jobs report, John. The only saving grace for stocks, the jobs picture is so bad it prevents the Fed from raising interest rates any time soon.
Factories laid off 3,000 more workers. 24,000 construction jobs vanished and 9,000 restaurant jobs disappeared. Where were the jobs? lower paid retail jobs and government jobs grew by 21,000. John, 392,000 American workers simply abandoned the work force. We're down to 66 percent labor force participation. That's the lowest in 15 years. 8.2 million Americans are unemployed, and most troubling for investors, not only was February weak, January and December job growths both scaled back. John, workers are consumers and they are investors too. And that's got Wall Street's attention.
KING: Tough numbers for the economy. Tough numbers for a president seeking reelection as well. Thank you very much.
Coming up, we'll talk with a top strategy for the Bush-Cheney campaign. He says much of the country has already made up its mind about the presidential election, but there are still some voters that can be easily swayed.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We are in a very settled, divided nature of the country with very few people in the middle and that's why 1 event can quickly swing those people that are undecided.
(END VIDEO CLIP)
KING: And Martha Stewart plans to appeal today's guilty verdict. We'll talk about that and much more with tonight's "Newsmakers."
(COMMERCIAL BREAK)
KING: In the last 48 hours the race for the White House has increased dramatically in intensity now that it's clear that the main event will come down to a choice between President Bush and Senator John Kerry. Earlier I spoke to Matthew Dowd, a strategist and pollster for the Bush/Cheney campaign. I began by asking him if the candidates and the country can possibly stand another eight months of such intense campaigning.
(BEGIN VIDEOTAPE)
MATTHEW DOWD, STRATEGIST & POLLSTER, BUSH-CHENEY CAMPAIGN: I think it's a very good question. I think we're in a day today we have obviously 24-hour cables and the news cycles are not day to day but half hour to half hour. It's something as a campaign that you have to deal with and it's gotten broader and broader and how much you have to deal with, what one candidate says and the other candidate says. But there are windows of opportunity in the country of when the vast majority of the country pays attention and then they go back to doing the things, and their jobs and playing with their families and doing the things in their neighborhood.
We think right now is a very good window of opportunity. The country is focused. They now are getting introduced to John Kerry really in a formal way as a Democratic nominee. They expect us to begin the process but there will be times it won't be as fast and furious every moment of every day in the next 242 days as it is now.
But we are cognizant of that. This is a marathon. We obviously keep in mind that a series of sprints doesn't help us. We have to plan this out. But there are moments when we have to concentrate our efforts.
KING: This is part of your job here -- perhaps the biggest part of your job is to try to understand what is going on out in the country. We have seen some pretty wild swings. If you remember when Saddam Hussein was captured, the president's approval rating shot up instantly and then you had the Democratic campaign of the president came down. Is that what we're having, now the country sort of swinging event by event because they haven't locked in yet? How much of the country is actually decided, I know what I'm going to do?
DOWD: I think events have tremendous effect because of the divided nature of this country and how split we are. One event can sort of tip seven or eight or 10 percent of this country in a quick dramatic way. I think events that we obviously -- no one can anticipate could have an effect that's good or bad. We obviously have to be aware of that, that could happen. Obviously we don't know what those are.
But it does show how divided the country is and how easily it's tipped. Though I do think a major portion of the country has already sort of made up their mind, Democrats by and large are going to support John Kerry overwhelmingly. Republicans are going to support the president overwhelmingly. There are some people in the middle soft on each side that will ultimately -- the campaigns are going to communicate to and obviously try to motivate those bases. We are in a very settled, divided nature of the country with very few people in the middle. That's why one event can swing the people that are undecided.
(END VIDEOTAPE)
KING: A recent political cartoon captured the issue of job creation and the Bush administration's bold predictions, we thought, quite well. On the left President Bush predicting 2.6 million jobs by the end of this year. On the right a White House spokesman clarifies that statement stands minus the word million. Our thanks to cartoonist Mike Luckovich at the "Atlanta Journal Constitution."
A reminder now to vote on tonight's poll question. "Do you believe Martha Stewart should be sent to jail? Yes or no." Cast your vote at CNN.com/lou. We'll bring you the results a little later in the show.
When we return we'll talk about the surprising verdict in the Martha Stewart trial with tonight's news makers and tonight's hero inspires young marines to serve their country at home when their tours overseas are over. We'll be right back.
(COMMERCIAL BREAK)
KING: Now a look at tonight's news in brief, a federal grand jury investigating the leak of a CIA officer's identity has subpoenaed some telephone records from Air Force One. The subpoenas also call for records from an internal task force created to publicize the threat posed by Saddam Hussein. The Justice Department today said Attorney General John Ashcroft is in an intensive care at a Washington-area hospital. Ashcroft is suffering from a severe case of gallstone pancreatitis.
Iraq's governing counsel will not be signing a new interim constitution today. Shortly before that scheduled signing, Shiite members of the council said they had objections. The council says it hopes now to sign the constitution on Monday.
Joining me now to talk about the Martha Stewart verdict and much more are tonight's newsmakers. Steve Forbes, editor-in-chief of "Forbes" magazine. Mark Morrison, managing editor at "Businessweek," and Rik Kirkland, editor-in-chief of "Fortune." We have to begin, gentlemen, with the Martha Stewart verdict. Steve Forbes, I'll begin with you, were you surprised? Is she going to prison?
STEVE FORBES, "FORBES": A week ago I would have been surprised but after the weak defense of Martha Stewart. I think having four counts, that, I think, was a bit of surprise. I think it was a reflection of the winter of discontent we're in. People are not in a good mood and I think that hurt her as well. KING: Mark Morrison, is there some bigger meaning to the trial?
MARK MORRISON, "BUSINESSWEEK": I think it's very good news in a way, because when brokers and people with inside information, basically, cheat on the average investor, the investor class, it destroys confidence in the markets and you just shouldn't be able to get away with that. The legal system should deal with it, in this case, it has, and very effectively so I think it's good news.
KING: Rik Kirkland, one of the jurors came out and said this is proof that the little guys can get the big guys if they do wrong. Is there some class breakdown here, even class warfare in this?
RIK KIRKLAND, "FORTUNE": There may be an element of that, given Martha's personality. I also think though she broke the cardinal rule that your mama told you years ago, which is not to tell a lie. While we talk about the markets here, the truth is she wasn't charged with insider trading, if she had not engaged in the cover-up charges which they found her guilty on, she would be a free woman today.
KING: Rik, let me stay with you and we'll move back around.
You mentioned your mama told you not to tell a lie. It certainly wasn't meant as an lie, but the administration just a month ago said this economy would create 2.6 million new jobs this year. 21,000 jobs created last month, nowhere on a pace for 2.6 million. How big of a political problem, Rik, for this president?
KIRKLAND: I think it's a big problem. Right now they are in sort of the faith based economic forecasting mode where every month they say, come on, we have faith the jobs are going to be there and they are not there. I mean eventually all the signs elsewhere in the economy point to a few months here, sometime down the road, some decent job growth. But in the meantime it is a serious problem for the president. And we just -- its going to be probably half of the number that he was looking for a month ago.
KING: Half of the number, Mark Morrison, do you accept that about right? Maybe a million a million and half new jobs this year. And what is your sense, at some point, the voters decide whether the president is engaged on the economy, whether he's doing the right thing. That is one of the things that doomed this president's father. What is your sense where the trigger point might be for this president?
MORRISON: The number you mention is about right. I think he's got a huge political problem building, if this job number doesn't start picking up some momentum. Now, we all expect it to give the very healthy growth in the global economy and in the U.S. economy. But, coming out of a bubble when there was really overemployment, it's taking a long time for business people to get their confidence back to actually put new people on the payroll.
So, he is working against the clock on this and, of course, got more bad news this week on the price of oil. We now have disruptions down in Venezuela. We never did get the dividend in lower oil prices that Iraq was supposed to bring.
KING: Steve Forbes, this is not anything a president, any president can do this year to do -- he is stuck with the policy, right, his policy in place either creates jobs or it doesn't. He can't do anything else, can he?
FORBES: Short term, absolutely not. The federal reserve may be able to do a little tweaking, but overall the cards are in place. I think the economy is going to improve. Job creation will come with capital spending, capital spending is growing at double digit rates. And I'll say it again, the household survey I think is a much more accurate job picture and that shows much more progress than the survey of payrolls.
But the White House has made a really poor case of not having the right job number out there. And so they are stuck with the one that puts it in the worst light possible.
KING: Well, Alan Greenspan disagrees with you on the household survey. But Steve, I remember from years ago, it wouldn't be the first time you and Alan Greenspan are not on the same page.
Let me turn to the Democratic...
FORBES: If it did, something would be dreadfully wrong.
KING: That would be news. We would fire up the breaking news animation.
KING: Let me turn to the Democratic race here. We're talking about the president and his problem when it comes to creating jobs. But Mark, let me begin with you, Senator Kerry says the Bush plan stinks but has he given any coherent plan as to what he would do differently in terms of creating jobs?
MORRISON: Well, you are starting to hear some pieces of it. But I think the key is he has a big opportunity here, because Bush is on the defensive in part because the administration has done such a poor job of communicating and on expressing itself on this jobs issue.
Kerry, I think, has come out, you know, he's gained strength as a candidate going through this primary, worked very well to focus the -- his candidacy and the Democrats on the job at hand.
KING: Rik Kirkland, does John Kerry the political skills as Bill Clinton had in 1992 to run an election in which he says, yes, I'm going to raise some taxes as Bill Clinton did back in 1992. He said he was going to raise on the rich, but cut them in the middle class. John Kerry says he's essentially going to take away the tax cuts on wealthy Americans. The president will say, a liberal, he's going to raise your taxes. Does John Kerry have the political skills to pull that off?
KIRKLAND: That's the ultimate test. I think based on the way he's performed in the primaries so far, you have to take him very seriously if you are the Bush camp. You have to figure you've got a really tough campaign ahead of you.
So far, so good. Another thing that Kerry has got going for him. I think he had sort of -- he is at a peak right now after this primary. He is coming out of this process. It was such short and relatively benign process, that he's in a stronger position than I any of his Democratic predecessors: Gore, Clinton the first time, Dukakis, Mondale, in terms of the polls. So he really is at a strong point. He's probably got to be prepared for some erosion here.
KING: We'll see how it goes. Gentlemen, we need to call it quits for tonight there. Thank you very much. Rik Kirkland, editor- in-chief of "Fortunes," Mark Morrison, managing editor of "Newswork" (sic) and Steve Forbes, of "Forbes" magazine. Gentlemen, thank you very much.
And a reminder to check our Web site for the complete list of companies we've confirmed to be exporting of America. CNN.com/lou.
Coming up next in "Heroes," the story of Ryan White who has served his country, from the streets of Los Angeles to the streets of Baghdad and back. And we'll be right back.
(COMMERCIAL BREAK)
KING: Now the results of tonight's poll question. 41 percent believe Martha Stewart should be sent to jail. 59 percent of you do not.
In "Heroes" tonight a marine, police officer and an inspiration to many other young marines. Bill Tucker has his story.
(COMMERCIAL BREAK)
RYAN WHITE, LAPD: There's a 9 step hiring process in becoming a police officer.
BILL TUCKER, CNN CORRESPONDENT (voice-over): Ryan White is the Los Angeles Police Department's recruiting liaison with the military.
WHITE: Now, I got probably the best job in the whole world in my opinion.
TUCKER: He wants young marines to join the department when their days on active duty are over.
WHITE: That's the type of person I want to work with back when I get to the streets with LAPD.
TUCKER: White is both a cop and a marine and done both jobs in the past year. He rolled into Baghdad with the 1st Marine Expeditionary Force and got injured the day Saddam's statue fell.
WHITE: Somebody was tacking popshots and one of the rounds ricocheted off the deck and struck me in the left foot.
TUCKER: It wasn't a life threatening injury, but enough to take him out of battle.
WHITE: My years in law enforcement, my many years in the Marine Corps, you know, you train with weapons all the time and for the first time, I was helpless. I couldn't even stand up without my buddy helping me.
TUCKER: White came home to wife Mindy and daughter Savannah in May. By August, he'd recovered and went back to work. In October, he was awarded the Purple Heart and a Marine Medal for Achievement, but dismisses the idea that he is a hero.
WHITE: It's gals like my wife that stick with a man like me through my whole life -- those are the 2 heroes.
TUCKER: Now, young Marines listen as White tells them how valuable their military experience to the LAPD, and about the rewards of a life combining military service overseas, with law enforcement at home. Bill Tucker, CNN.
(END VIDEOTAPE)
KING: That's our show tonight. Thanks for being with us.
Monday, Lou is back and he'll be talking with Senator Chris Dodd, sponsor about an amendment to block the use of taxpayer money for exporting American jobs overseas.
And, Ed Yingling (ph), of the Coalition for Economic Growth and American Jobs, an organization of influential business leaders, defending outsourcing.
For all of us here, good night from Washington. "ANDERSON COOPER" is next.
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