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Lou Dobbs Tonight

Condoleezza Rice to Testify Before 9/11 Commission; U.S. Allies Crack Down on Terror

Aired March 30, 2004 - 18:00   ET

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

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


(BEGIN VIDEOTAPE)
JOHN KING, CNN ANCHOR (voice-over): Tonight, a dramatic reversal by the White House. Condoleezza Rice will give public testimony to the 9/11 Commission.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I consider it necessary to gaining a complete picture of the months and years that proceeded the murder of our fellow citizens.

KING: I will be joined by two members of that commission, Republican Slade Gorton and Democrat Timothy Roemer. I'll also discuss the political fallout with Democratic Charles Schumer and Congressman Peter King.

In the global war on terror, three key U.S. allies crack down on suspected radical Islamists. Police in Britain find a half-ton of bombmaking material.

Gasoline prices hit a record high. Energy prices now a major political issue.

And a Washington lobby group says overseas outsourcing actually creates jobs in this country. But Congresswoman Marcy Kaptur says outsourcing is outrageous. She will be my guest tonight.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, March 30. Sitting in for Lou Dobbs for an hour of news, debate and opinion, John King.

KING: Good evening.

The White House today bowed to intense public pressure and said National Security Adviser Condoleezza Rice can testify under oath and in public to the 9/11 Commission. The commission also will receive a joint session with President Bush and Vice President Cheney, all part of an urgent administration initiative designed to quiet critics and rebut the allegation that perhaps the Bush White House could have prevented the 9/11 attacks.

(BEGIN VIDEOTAPE)

KING (voice-over): The president cast the compromise as no big deal. BUSH: I have ordered this level of cooperation because I consider it necessary to gaining a complete picture of the months and years that preceded the murder of our fellow citizens on September the 11th, 2001.

KING: But it was a dramatic turnaround for a White House that for months said National Security Adviser Condoleezza Rice would answer the commission's questions only in private and that the president and vice president would meet only with the panel chairman and vice chairman.

Now Rice will testify at a public hearing under oath and the president and vice president will meet jointly with the full 9/11 Commission in private and answer any and all questions. White House counsel Alberto Gonzales negotiated the deal and told the commission the president recognizes the truly unique and extraordinary circumstances the panel faces in finding out whether the government missed clues the 9/11 attacks were in the works.

But that recognition game only after many Republicans complained to the White House and only after a weeklong focus on former White House official Richard Clarke's explosive allegation that Mr. Bush and Rice warned warnings that al Qaeda was planning major attacks.

SEN. BILL FRIST (R-TN), MAJORITY LEADER: She will have the opportunity to come forward with what I know will be a very powerful testimony and one that will set the record straight.

KING: Rice now will take the high-stakes public challenge of rebutting her former deputy and defending the president's handling of the terror threat both before and after 9/11.

THOMAS KEAN, CHAIRMAN, 9/11 COMMISSION: We have got to try and clear up those discrepancies as best we can. Some of those questions may be important to the fact-finding of our report.

(END VIDEOTAPE)

KING: Now, there are some strings attached to Rice's testimony. Both the commission and congressional leaders went on record saying this was a unique case, not a new legal precedent. And the commission agreed that Rice will be the only White House official asked to testify in public.

The commission chairman, Thomas Kean, welcomed the White House decision to allow Condoleezza Rice to testify. Kean said her testimony is vital to helping the commission understand the development of the counterterrorism policy in the first eight months of the Bush administration.

But to the Bush team, as White House correspondent Dana Bash reports, this was a decision dictated more by political than policy concerns.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): Dug in for weeks, then a sudden reversal.

BUSH: Dr. Rice will participate in an open public hearing.

BASH: The president told aides he now needed to find a way to let Condoleezza Rice appear before the 9/11 Commission. The process he said was getting in the way of substance, process sometimes euphemism for politics.

UNIDENTIFIED MALE: Which is true?

BASH: Even from sometimes helpful Republican commission members, a drumbeat of pressure.

JAMES THOMPSON, 9/11 COMMISSIONER: This commission has voted unanimously to ask Dr. Rice to appear.

JOHN LEHMAN, 9/11 COMMISSION MEMBER: The White House is making a political blunder, an important miscalculation of the political impact of this.

SCOTT REED, REPUBLICAN CONSULTANT: This was a classic instance of -- this was boiling and gaining more momentum and the White House recognized it's time to do something about it and shut this down.

BASH: The latest CNN/"USA Today"/Gallup poll shows the president's overall approval up. But there were danger signs for Mr. Bush; 53 percent of Americans said they think the Bush administration is covering up how it handled intelligence information before 9/11. And 53 percent also believe the president has misled the public for political reasons.

This for a commander in chief whose reelection theme is strength and leadership against terrorism. Democrats saw the opening and were mounting a Senate floor offensive to pressure Dr. Rice just as the White House changed course. They quickly claimed victory, even if they may have lost one election-year issue.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: Well, it wasn't only good politics. I think it is a good policy. I don't think that in this case they had any choice but to do what the American people are clamoring for.

(END VIDEOTAPE)

BASH: Some Republicans strategists argued to hold out on Dr. Rice testifying, saying that they thought Democrats could overplay their hand and show that they are politicizing the issue, perhaps. But Bush aides said they had to move on the issue and diffuse the issue and end this once and for all -- John.

KING: And, Dana, some irony, is there not, here? Sure, there's a legal debate, there is a political debate, but behind the scenes, now that Dr. Rice will testify, what's the White House saying?

BASH: Well, it's interesting. Talking to officials here at the White House, at the campaign, in and around town, Republicans are all saying that Dr. Rice is really the best spokesman on these issues, on national security issues. That's why you saw her out so much on television trying to rebut Richard Clarke's argument that they weren't ready for 9/11.

That of course got her into a little bit of trouble because it helped the Democrats' argument, saying, why is she doing that and not testifying? But it really is a good example of the rub here between what they needed to do they thought legally and what they needed to do politically. That is why it took quite a long time to get to this compromise, although get to this change in course today, John.

KING: Dana Bash on a dramatic day attention White House, thank you very much.

And I'm joined now by two members of the 9/11 Commission. Slade Gorton is a former Republican senator from Washington State, Timothy Roemer a former Democratic congressman from Indiana.

Gentlemen, thank you both for taking your time on what is an enormously busy day.

Senator, let me start with you. You are a Republican, a supporter of this president, I assume, when you cast your ballot in November. Why? Why did they wait so long?

SLADE GORTON, FORMER U.S. SENATOR: I'm not sure why they did so, but I think we are probably fairly sure why they changed their minds. They certainly needed someone to balance what Dick Clarke said last week, and they decided to put their best foot forward.

Condoleezza Rice is very bright, very articulate. I think she'll be a very good witness. But it is really important for us to hear what she has to say and to lay it out before the public. We were absolutely unanimous on that, all 10 members, five Republicans, five Democrats.

KING: And so you have heard Mr. Clarke. He says this president and this national security adviser said, go away, essentially, that they weren't that interested, terrorism was not an urgent priority. What is your first question for Dr. Rice?

TIMOTHY ROEMER, 9/11 COMMISSIONER: Well, there are a number of questions here, John.

I believe that we need to talk to Dr. Rice in public, as we did in private, about such issues as, was this an urgent priority? Mr. Clarke says no. The staff paper that we put out in a bipartisan way says it didn't move fast enough. We also need to ask Dr. Rice about was there a plan handed over by this previous administration, the Clinton administration, to the new administration? What was in this plan? What was in Mr. Clarke's January 25 memo?

And we need to ask Dr. Rice about the September 4 principals meeting. Was that justifiable in terms of the new things that she claims were in it, in the military funding and so forth to justify a bottom-up review and taking seven months to put that forward? KING: In his testimony and more so in the public interviews Mr. Clarke has given around promoting his book and then dealing with the controversy he has caused, he says we will never know, but his hunch is that if the president had paid closer attention, if Dr. Rice had held the same meetings that he says Sandy Berger held around the millennium plot time, that he thinks perhaps 9/11 could have been prevented. Based on everything you know, public and private, is that a fair assessment?

GORDON: In fact, in answer to a question that I put to him, Dick Clarke said exactly the opposite just last week.

When I asked him whether or not, if the administration had accepted all of his recommendations January 25 to Condi Rice on the next day, would 9/11 have been prevented? His answer was, no. And I think that is the correct answer.

Now, I believe that it was possible to prevent 9/11, but I think, if we were to prevent 9/11, it would have taken place here in the United States by better coordination between the FBI and the CIA, by more sharing of information, by the kind of breakdown on our internal security that we hope have started to be cured already, but need a greater cure than they've received thus far.

KING: The focus is on Dr. Rice and her decision today to give the public testimony under oath, but the full commission will now get access to the president and the vice president in a private session.

If you had one question -- my understanding is they will give you as much time as you need. But if you had one question, what is it? What nags you that you need to hear from the president?

ROEMER: I think, John, what I need to hear, but more importantly what the American people deserve to hear, 270 million people really won out today with this decision to hear how government works at the highest level and get this extraordinary look.

The president was quoted in Mr. Woodward's book, "Bush At War," as saying that, in effect, terrorism wasn't the highest priority and it didn't make his blood boil, I think was the quote. How might we organize the National Security Council in the future so that we make sure that we get this right, so that we make sure that this jihadist movement that's coming at us, that's trying to get dirty bombs, that's trying to get chemical weapons, how do we work in a bipartisan way in the future to make this country safer, to change the paradigm of a government tasked to fight the Soviet Union in the Cold War to now take on a 20- or 30-year struggle against terrorism and jihadism?

GORTON: Tim's right. Tim's right. And that's where I think we can be entirely bipartisan. We have got to help the country do better in the future than it has done in the past.

KING: And quickly to each of you, what is left? You now have an agreement with the White House that the chairman and vice chairman said settled most or at least all of the major problems in their view. Is there anything the commission is missing that will keep it from finishing its work?

GORTON: We believe that we can finish our work by the new deadline date that we've received. And we've worked together, I think, in a magnificently bipartisan fashion. And all of us hope that we're going to not only come up with a good report, but it's going to be a unanimous report.

KING: A good report that will be released around the conventions. Do you worry about that?

ROEMER: I do worry about that. Slade and I had worked for a long time to try to get this outside the window of these conventions and the political process, the presidential campaigning.

I would just add to Slade's, I think, articulate comments and say Chairman Kean and Mr. Hamilton have really worked hard and provided leadership to try to get us moving forward. What's missing, John, that you asked, I think what's missing is that we need at the end of the day to not just make a good set of substantive recommendations to make this country safer. That, I think, we can do. We need to pass them into law. We need to be standing out apart from what other commissions have done and failed to do, and that is pass these through the Congress in a bipartisan way, get the president to sign them, and start to move this process forward in a positive way.

GORTON: Tim's 100 percent correct.

(CROSSTALK)

KING: Gentlemen, we need to end it there. On this dramatic day, we thank you both. Democrat Tim Roemer, Republican Slade Gorton, thank you for your time very much.

And we'd like to hear from you on this very important issue in tonight's poll question. Do you believe the testimony of Condoleezza Rice will reduce the political atmosphere now surrounding the 9/11 Commission, yes or no? Cast your vote at CNN.com/Lou. We'll bring you the results a bit later in the show.

Also still to come, massive police raids today in Britain. Officers find a half a ton of bombmaking materials. We'll have a report on terrorist plots aimed at several U.S. allies.

Average gasoline prices approach $2 a gallon. Energy prices today became a hot election issue. We'll have a special report.

And a new twist tonight in the debate over the export of American jobs. A lobby group says overseas outsourcing actually creates jobs in this country. How can they say that? We'll tell you.

Stay with us.

(COMMERCIAL BREAK)

KING: In Iraq today, insurgents killed a coalition soldier and wounded another near Ramadi, west of Baghdad. The Army said a bomb exploded near their patrol. The military did not disclose the nationality of the soldiers.

In Najaf, Spanish troops and Iraqi police fought with unemployed people demanding government jobs. Protesters threw stones, smashed windows and burned a guard house. At least three police and two protesters were injured.

The CIA's new chief weapons hunter, Charles Duelfer, today he does not rule out finding weapons of mass destruction in Iraq. Duelfer today gave a report today to the Senate Armed Services and Intelligence Committees.

(BEGIN VIDEO CLIP)

CHARLES DUELFER, CHIEF U.S. WEAPONS INSPECTOR: In an odd way, I have found it more likely that there will be weapons there. I'm not saying that there is a high probability we will find them, but what I have found is that the reluctance on the part of Iraqi scientists to come forward is much stronger than I'd anticipated.

(END VIDEO CLIP)

KING: Major developments tonight for three key U.S. allies in the global war on terror. Police in Britain arrested eight terrorist suspects after the biggest anti-terror operation there in years. Authorities in the Philippines and Uzbekistan have also been running up radical Islamist terrorists.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): In Britain today, a raid today turned up half a ton of bombmaking materials.

Near London, police raided houses, rounding up eight British men of Pakistani origin being held for questioning. In Manila today, the Philippine president said they managed to stop what could have been -- quote -- "Madrid-like" attack. Radical Islamists were planning to blow up trains and shopping malls.

Uzbekistan another place of terror. Tashkent police and military try to round up suspected terrorists. The government blames Islamists for two bombings in the last two days. Uzbekistan helped in the war on terror. The United States has hundreds of troops there.

Government officials in Spain blame the massive train bombings on two Moroccan groups believed to be linked to al Qaeda. Experts say all kinds of Islamist groups are becoming comrades in arms.

ERICK STAKELBACK, INVESTIGATIVE PROJECT: Now we're seeing around the world is al Qaeda breaking off into subgroups or franchises, almost regional franchises, where they share the same ideology as al Qaeda but they are almost operating independently.

PILGRIM: Radical Islamists are widening their war against the West, basically striking any country that is not Islamist. But U.S. allies in the Iraq war are prime targets.

DAVID HEYMAN, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: If you look at the recent terrorist attacks in Russia, in Jordan, in Iraq, they were led not by the top tier of al Qaeda, not by those who are known to us, but really by the next generation of fighters or terrorists.

PILGRIM: And no country has immunity. Turkey has suffered a devastating attack in its capital city. And France last week found bombs along its rail lines.

Kitty Pilgrim, CNN, New York.

(END VIDEOTAPE)

KING: Still ahead, sticker shock at gas pumps all around the nation tonight. Record high prices became a hot campaign issue today.

(BEGIN VIDEO CLIP)

BUSH: There's some in the other party in Washington who would like to raise gas taxes.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Those aren't Exxon prices. Those are Halliburton prices, ladies and gentlemen.

(END VIDEO CLIP)

KING: We'll have a special report coming up.

Plus, a new twist in another big campaign issue, the exporting of American jobs. Now a powerful Washington lobby is joining the debate. We'll have that story. And Congresswoman Marcy Kaptur will join us.

Stay with us.

(COMMERCIAL BREAK)

KING: Gas prices today hit record highs for a sixth day in a row, a national average of $1.75 a gallon. With numbers like that, Americans are now taking the issue more seriously than they have in the past.

In a new CNN/"USA Today"/Gallup poll, nearly three-quarters of those polled say rising gasoline prices are a problem or even a crisis.

As Bill Tucker now reports, few things, it seems, get a political fight going like the price of a gallon of gas.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): With gasoline prices headed well north of $2 gallon in some places, voter anger is rising and the political rhetoric is getting interesting. REP. ED MARKEY (D), MASSACHUSETTS: The Christians had a better chance against the lions than the American consumer has against the OPEC cartel.

TUCKER: Gasoline stations have become the backdrop of campaign moments with demands of action to bring prices down.

KERRY: We should be putting pressure on OPEC to raise the supply and not allow those countries to undermine the economies of the world.

TUCKER: The Republicans have their own response.

(BEGIN VIDEO CLIP, AD)

NARRATOR: If Kerry's gas tax increase were law, the average family would pay $657 more a year.

(END VIDEO CLIP)

TUCKER: In the House, a bipartisan group has sent the Bush administration a letter asking that they file a case with the World Trade Organization against OPEC for restricting production and colluding to raise prices, none of which addresses the real problem, our ever increasing demand for energy.

Over the last 20 years, demand has risen an average of 1 percent a year. Refining capacity has not.

JOHN FELMY, AMERICAN PETROLEUM INSTITUTE: We consume about 20 million barrels as day of petroleum. And we only have refining capacity to supply around 16.7 million barrels a day. So we need more refineries or we at least more refining capacity.

TUCKER: But building refineries is never a popular idea. It seems we would rather drive our cars, blame OPEC and avoid the real issue.

PAUL ROBERTS, AUTHOR, "THE END OF OIL": Wondering what OPEC is going to do at this meeting, this is all window dressing on a much larger question, which is a lack of an energy policy. You know, we have a patchwork energy policy and we have never really been willing to attack it in a comprehensive, long-term way.

TUCKER: They would rather yell about it.

(on camera): Ignore the fact despite the recent run-up in prices, Americans still pay considerably less than consumers in, say, Britain, where the price is about $5.25 per gallon.

Bill Tucker, CNN, New York.

(END VIDEOTAPE)

KING: Coming up next, an about-face from the White House over executive privilege and the 9/11 Commission. Senator Charles Schumer and Congressman Peter King will join us with their very different views on the subject.

And then the growing battle over the exporting of American jobs. Now a Washington lobby group claims offshore outsourcing actually creates jobs in this country. We'll have the story.

And the controversy over Muslim head scarves in public schools comes to America.

That story and much more still ahead. Stay with us.

(COMMERCIAL BREAK)

KING: The White House today reversed itself and said National Security Adviser Condoleezza Rice will testify publicly before the 9/11 Commission. In a moment, I'll talk to Republican Congressman Peter King, who says Rice's appearance could help the White House politically.

But first, Democratic Senator Charles Schumer says the about-face proves the White House was only using the executive privilege as an excuse to keep Rice from testifying.

Senator Schumer joins us now from Capitol Hill.

Senator, you said a bit earlier today the stonewalling over or there's no more room for stonewalling. What do you think is the biggest discrepancy that you want resolved between what Richard Clarke told this commission and what you think Dr. Rice knows?

SEN. CHARLES SCHUMER (D), NEW YORK: Well, the bottom line is how carefully the administration listened to people like Dr. Clarke, who said that the focus ought to be on al Qaeda, rather than Iraq.

And there are two different stories here. None of us know which is true. Clarke stated his under oath. Condoleezza Rice has not been either public under oath or under questioning from the commission. And I'm glad that now we'll find out the real truth. Whatever it is, we ought to know it. The whole impetus, John, for this commission came from the families. They are not political.

They walk around with a hole in their heart every day for their lost ones but they have the nobility to say we want to figure out what happened so it doesn't happen again. And the truth is what we want to get at. It should be complete. It should be unvarnished and I'm glad it's going to come out.

KING: Glad it's going to come out. Is this a good deal, in your view, top to bottom? Rice testifies. The president and vice president meet jointly with the full commission now in private. Is that acceptable to you, this entire deal?

SCHUMER: I haven't read it yet. I do hope the commission will be able to follow up with questions with Condoleezza Rice, with the president and vice president after they get to digest what they have said in the initial interview. If those questions are in writing, I suppose, answered in writing, I suppose that's OK. We don't want to make this a circus.

We do want to give the commission, which is bipartisan, seems to be filled with very reputable people on both sides of the aisle, the ability to get at the whole truth and nothing but.

KING: And there's still a debate over whether previous briefings or testimony by Richard Clarke to the joint committee, the congressional committee, should be declassified and made public. Is that a moot point now that the White House provide this extra testimony or should the Congress and the commission still move ahead with that?

SCHUMER: Well, Clarke has said that he would like all of his stuff declassified. And I think that's probably to the good. He says that he was giving constant warnings about al Qaeda, that these warnings were ignored. There probably are two sides to this story. But we ought to get Clarke's side to it fully.

And the fact that the White House will declassify certain documents for its own purposes but then not declassify others that have the same security level shows that they are not approaching this in an evenhanded way.

KING: We are in a political season, Senator. You know that all well. Did the Democrats lose an issue today?

SCHUMER: Well, I don't think it matters whether we lost an issue or not. I think the truth of the commission is what is important. If you look at it politically, the White House has stonewalled this from the get-go. They stonewalled the commission. Then they stonewalled who should be its membership. Then they stonewalled who should come before it.

I think that they are trying to do damage control today, but it won't do much good. The overall impression of the American people, that they really weren't fully for what the families wanted, the whole truth coming out, has been made.

KING: I want to ask you quickly in closing, Senator, about another issue, rising gas prices.

SCHUMER: Yes.

KING: You were among the senators that wrote a letter to OPEC today, saying the cartels should increase production, put more oil on the markets. What is it that this administration, this country, can do in the short term...

SCHUMER: In the long term, of course, there's both conservation and more production. We have to do that.

But in the short term I've been advocating we release some oil from the strategic petroleum reserve, if and only if OPEC won't release more oil itself.

If we were to even threaten to use the strategic petroleum reserve, I bet my bottom dollar that OPEC itself would release the oil, because they'd rather make the money than have us make the money. And that's what's happened in the past.

The administration seems to feel that the only answer when gas prices are high is to beat up on John Kerry. That's not going make prices come down. It's not going to make lives easier on any families.

They ought to come up with a solution. If they say there's no solution, then there ought to be a debate between Kerry's solution, which is the SPRO, which I've been advocating for years, releasing the SPRO. And their view that there's none.

But this constant, you know, just attack, attack, attack and not solve our problems I don't think is going to win them reelection on gasoline prices or on anything else.

KING: Senator Charles Schumer, Democrat of New York. Sir, we thank you for your time tonight on these two very important issues. Thank you very much.

And Republican Congressman Peter King of New York says nothing will come out of Rice's testimony, in his view, that hasn't come out already. Congressman King joins me now from Capitol Hill, as well.

Congressman, let's start with the simple issue of the White House reversing itself, and dramatically. They lost control of this one politically, didn't they?

REP. PETER KING (R), NEW YORK: I actually wish that the White House had not given in on this. I think executive privilege is something worth preserving, especially since, as far as I'm concerned, Richard Clarke did not raise any substantive point whatsoever regarding September 11 in his testimony.

KING: So you say the president is wrong, Dr. Rice should not testify?

P. KING: I can understand why the president did it. If it was up to me I would prefer she not testify, only because I think it's going to come back to haunt us as far as executive privilege.

On the other hand the president, also, as commander and chief realizes he has to have the country behind him. And since he realizes that there's nothing to hide here at all, he wanted Dr. Rice to come on, testify as to what she knows and to show that basically there was nothing, no substance whatsoever to Mr. Clarke's allegations.

KING: Don't you also think, though, as the Republican nominee and a candidate for reelection, he is seeing the polling, in which our latest poll yesterday, the American people split down the middle as to whether they believe Richard Clarke or believe a president of the United States.

That is a pretty damning conclusion when half of the American people believe, as one Democrat put it to us yesterday, a bureaucrat over their president.

P. KING: Yes, but again, in that poll for the first time in awhile President Bush pulled ahead of John Kerry.

And also this is the media swirl involving Dick Clarke. And the media has given him such a free ride, because he has not made one factual allegation that backs up his case whatsoever. I think it's really been pretty disgraceful the way the media has given him this free ride.

But Dr. Rice, listen, she's absolutely brilliant. She will do a great job.

And I have no doubt at all that when all is said and done, we're going to show the Bush administration did what had to be done. They did respond. They had the country on the highest alert during the summer of 2001.

And Mr. Clarke himself admitted under oath that if everything he had asked for had been done, it would not have prevented September 11. And that's worth considering, especially when he had the same job for eight years under President Clinton.

KING: A dust-up now in March. The report of the commission will come out right around the convention time. One of those conventions, of course, is in your city in New York City, not far from your district.

Do you worry that this political fight we have had now in March will simply come back again, perhaps even with more volume when that report is released right in the heart of the political season?

P. KING: John, it may. And that's a danger.

But on the other hand I think the American people are smarter than all of us. I think they see through this, and they realize how difficult this issue is. They realize what President Bush has done.

And one thing I would say, you know, the talk is out there the families want this. The families want that. The fact is I lost well over 100 people in my district, well over 400 in the immediate area of my district. And large numbers, I say the overwhelming majority of families that I've spoken to support the president or understand the president.

And very few want to point the finger either at President Clinton or at President Bush. They realize the enemy here is al Qaeda.

KING: Congressman Peter King, I want to be bipartisan and give you quickly an opportunity to answer the same question I put to Senator Schumer about what can the government do short term about gas prices?

P. KING: I agree that we should do more negotiating with OPEC. I would oppose right now, though, going into the strategic reserves, because it is strategic, and we should only use that in cases of emergency.

The fact is the price of gasoline in this country is still well less than half of what it is in Europe. We shouldn't panic and go to the strategic reserves. I think we can get the prices back down.

And that also we should get Democrats to start approving the president's energy plan, including drilling in the Arctic, be more concerned about gasoline prices than about the tundra.

KING: A bit of a political subplot to both debates over the 9/11 commission and the price of gas. Congressman Peter King, Republican of New York, thank you, sir, for your time tonight.

P. KING: Thank you, John.

KING: And we'd still like to hear more of what you think of this issue in tonight's poll question. "Do you believe the testimony of Condoleezza Rice will reduce the political atmosphere now surrounding the 9/11 commission? Yes or no."

Cast your vote at CNN.com/lou. We'll bring you the results a little later.

And coming up Congresswoman Marcy Kaptur says the exporting of U.S. government work to overseas labor markets is an outrage. She will join us.

And a new claim that outsourcing is actually creating jobs for Americans. Peter Viles will have that report and some reaction from critics, up next.

(COMMERCIAL BREAK)

KING: The economy has lost more than two million jobs in the last three years. Some argue the export of American jobs to cheaper foreign labor markets is one significant factor. Others, including a powerful technology lobbying group, claim outsourcing is actually creating new jobs for Americans.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): In Chicago, engineers protest at Boeing, which they claim has shipped American jobs to Asia.

Exporting jobs now such a hot political issue that the technology industry, companies like Hewlett-Packard, IBM and Microsoft, is fighting back. Their Washington lobby commissioned a report defending outsourcing as nothing new and nothing bad for the American economy.

NARIMAN BEHRAVESH, GLOBAL INSIGHT: But if you really look at the history of the U.S., we have benefited tremendously from all kinds of free trade. This is just one more kind of free trade. People say this is different. It's not. It's exactly the same. VILES: The report for the Information Technology Association claims outsourcing of I.T. jobs actually helped create 90,000 jobs in the United States last year and will create 317,000 new jobs in 2008.

Critics dismiss the report, saying it fails to explain huge job losses in recent years.

LEE PRICE, ECONOMIC POLICY INSTITUTE: They say that we have created jobs in this economy because of offshoring. That cannot be justified by the facts. We've lost three million private sector jobs in the last three years.

VILES: Economists are still puzzled by weak hiring amid strong growth. Now Goldman Sachs has a new theory. Maybe the growth numbers are wrong, because the government is under estimating the amount of work that is outsourced and then imported back into the United States.

JAN HATZIUS, GOLDMAN SACHS: For example in 2002 the government recorded about $660 million of service imports, professional service imports from India, but some of the Indian statistics organizations are showing numbers of as much as $6 billion or so.

(END VIDEOTAPE)

VILES: Another analysis of outsourcing by Morgan Stanley concludes that economists and policy makers are, quote, "flying blind" on this issue because there is so little good information on how many jobs have been sent out of this country -- John.

KING: And Pete, give me a little bit more on how they believe this works. Economics 101, if you will. How does outsourcing create jobs here?

VILES: In theory, they get the job done cheaper. That saves them money. Then the products come back. It's cheaper; that saves consumers money. In theory the companies and the consumers take that savings and reinvest it in the economy, giving you economic growth.

It's very hard to test that theory in the short term here, particularly when we're not getting the kind of job growth the economy -- the other numbers would indicate we should be getting -- John.

KING: Peter Viles in New York. Thank you very much.

And as we reported earlier this month, the overseas outsourcing of work even extends to the U.S. government's food stamp program. Forty states and the District of Columbia currently outsource help desk work to cheaper overseas labor markets.

My next guest has called this practice outrageous, considering that nine million Americans are unemployed and looking for work. Democratic congressman Marcy Kaptur of Ohio joins me now from Capitol Hill.

Outrageous that practice, Congresswoman. Is there anything that Congress can do about it and convince the administration to join you? REP. MARCY KAPTUR (D), OHIO: Absolutely. We can pass an amendment here in Congress that does not permit the Department of Agriculture to allow our taxpayer dollars to be used to create jobs in India and to displace U.S. workers with our own money.

KING: Will the administration sign that bill?

KAPTUR: The representative of the administration who is before our committee this past week stated that he would not support such an effort. So Congress is going to have to take action on its own.

KING: Let's step back and look more broadly at the outsourcing debate. The treasury secretary, John Snow, was in, I believe, your state yesterday. And he said this. Quote, "Outsourcing is one aspect of trade and there can't be any doubt about the fact that trade makes our economy stronger."

Your reaction to that?

KAPTUR: My reaction is that if you look at the old worn out NAFTA philosophy, they told us it would create jobs. It's cost us almost three quarter of million jobs now in this country. And we have seen a slide to the bottom in terms of our workers' ability to have middle class jobs and benefits that they can hang on to.

I don't agree with Mr. Snow. He actually is from Ohio. He worked for CFX, which outsourced a major shipping facility to Hong Kong and took our jobs there in a facility with 16 miles of roads inside to bring imports from China into our country.

We don't have a trade balance with China. We've lost jobs to China. We've lost jobs to Mexico. We're now losing jobs to India. Our trade deficit this year will be at an all-time high of over $550 billion. Half a trillion dollars. This knocks a third or more off of our GDP.

Let them look at the net. Let them look at the balance sheet. Their policies are a failure for the workers of this country. That's what jobless recoveries are all about: outsourcing our jobs elsewhere.

KING: No Republican has won the presidency ever without carrying your state, Ohio. President Bush is campaigning now, saying the economy is getting better. Yes, he says there's a problem with manufacturing, but he says it's getting better. He says trade is one of the reasons and that those who oppose him on that issue are, quote, "economic isolationists."

Will that sell in Ohio?

KAPTUR: It won't sell in Ohio. In fact, the president was in my district the day after the State of the Union. And he appeared at a college which has just raised tuition nine percent because we aren't getting as much revenue into the state. It's broke. And therefore our students are having their tuition raised.

The day he appeared to support job training for jobs that aren't there, the college had laid off the people in their job training division. Think about it.

KING: We've had some of your colleagues on, Republicans and Democrats, tonight. Let me ask you this question in closing as I did them. What should the government do in the short term to deal with these gas prices?

KAPTUR: This is such an important question. No. 1, America needs an Apollo Project or a Manhattan Project in ten years to make us energy independent and cut our cord to OPEC and all these other undemocratic places that are controlling our futures.

We need to invest in biofuels here at home, in bio diesel, ethanol, hydrogen, fuel cells, photovoltaics, wind turbines, geothermal, all the sources of power we have ignored all these years.

If we can go to Mars, surely we can make America energy independent here at home within ten years. It's within our power to do it.

KING: And it is an issue more and more in debate in this election season. Congresswoman Marcy Kaptur of Ohio, thank you for your time tonight.

KAPTUR: Thank you.

KING: And still to come, Condoleezza Rice is set to testify before the 9/11 commission. After a dramatic White House reversal. We'll talk about that and much more with two of this nation's leading political journalists.

And the U.S. government takes sides on the controversial issue of Muslim headscarves in public schools. We'll have that story when we continue.

(COMMERCIAL BREAK)

KING: The U.S. government is taking sides in the debate over whether Muslim students should be allowed to wear headscarves in public schools.

Federal civil rights lawyers will support the case of an 11-year- old Oklahoma girl who was ordered to remove her headscarf. School officials said it violated the dress code.

The U.S. government's position is precisely the opposite from the French government's view. France banned Muslim headscarves in public schools earlier this year.

Now a look at tonight's news in brief.

The Statue of Liberty is expected to reopen to visitors this summer for the first time since the September 11 attacks. Visitors won't actually be allowed inside the statue, just the pedestal which houses a museum and an observation deck.

Michael Jackson made a special visit to Capitol Hill today to speak with Congressman Chaka Fattah of Pennsylvania. The Jackson spokesman says the singer is in Washington to promote his charitable works.

And the jury in the Tyco trial resumed deliberations today, as the judge denied the mistrial motion from the defense in two days. The judge said declaring a mistrial would be, quote, "inappropriate" and said the jury should just keep trying.

On Wall Street, stocks rose for the second straight session. The Dow jumped 52 points; the NASDAQ gained eight. The S&P added 4.5. However, a new report shows Americans are not much more confident about the economy than they were earlier this year.

Christine Romans is in New York with the report -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: John, consumers are spooked by high gas prices and a weak jobs market.

The conference boards, consumer confidence index fell slightly again in March. And the number of consumers saying jobs were hard to get rose in March to 30 percent. Consumers' opinion of the future also dimmed, and other retail reports show a fragile consumer outlook.

The International Council of Shopping Centers blamed high gas prices for a drop in sales in the past week.

Now as consumers grapple with a weak jobs market, consultants, though, benefiting from outsourcing American jobs. Accenture, a consulting company, reported a strong first quarter, thanks to outsourcing revenue. Outsourcing consulting sales rose 39 percent.

The company's CEO will step down but Accenture assured Wall Street, John, it's new CEO will be committed to outsourcing as a key company strategy.

Also, John, only one day to go in the first quarter. For the Dow it's on track for the first down quarter in six. But there are some widely held stocks that did quite well. AT&T Wireless up 70 percent in the quarter. Lucent, Avaya, Wal-Mart, among the other big winners.

More on the markets performance tomorrow, John, when we officially close the book on the first quarter.

KING: And I didn't buy any of those. Thank you, Christine.

A young woman from Denver is learning an expensive -- we hope learning an expensive lesson tonight. Alissa Walters (ph) rang up a $2,500 phone bill using America Online.

Walters uses a new computer to sign into AOL but left the computer connected online for a very long time. Walters inadvertently used a long distance number to sign on instead of a local one.

Fortunately for Walters, the phone company decided to strike a deal, agreeing to charge only $375. Alissa's (ph) dad thinks that's a fair amount that will teach her to be a bit more careful. A reminder now to check our web site for the complete list of companies we've confirmed to be exporting America. CNN.com/Lou.

And when we return we'll talk to two of the nation's leading political journalists about the White House reversal after days of intense pressure. We continue in just a moment. Please stay with us.

(COMMERCIAL BREAK)

KING: Now the results of tonight's poll question. Fourteen percent of you believe the testimony of Condoleezza Rice will reduce the political atmosphere now surrounding the 9/11 commission. An overwhelming 86 percent of you do not.

And joining me now for more on this White House reversal and the other issues in the campaign is our panel of leading political journalists. Ron Brownstein is national political correspondent for the "Los Angeles times." Karen Tumulty, the national political correspondent for "TIME" magazine. Thank you both for being here.

Let's just start. You had called it a clash of personalities, Condi versus Clarke. She will testify. The political ramifications are?

RON BROWNSTEIN, "L.A. TIMES": Well, clearly, look, every time the White House has been in this situation it almost always ends this way. You don't want to be in the story where the process is dominating the coverage day after day.

The assumption of the American people rightly or wrongly, is if you have nothing to hide you would go testify. So I think it was inevitable that it ended up this way.

The commission is an ongoing process, John, that moves this beyond just Condi and the administration versus Dick Clarke. The commission has a life of its own. The administration is going to have to deal with this for quite some time now.

KING: Inevitable, Karen, because of this? CNN/"USA Today"/Gallup poll yesterday, who are you more likely to believe, the Bush administration, 46 percent; Richard Clarke, 44 percent. A person most of the country did not know two weeks ago breaks even with the president on believability.

KAREN TUMULTY, "TIME" MAGAZINE: I think, too, that some of the other numbers in the poll were even more telling. The fact is that the public's trust of the president to handle terrorism, the issue that is going to be the centerpiece of his presidential campaign has declined dramatically.

The numbers -- over half the public now thinks that, while 9/11 couldn't have been prevented, there were things that this White House could have done that it didn't do. And those are the numbers that I think really started to bite.

KING: Why do administrations -- and we've seen this before; it's not just this administration -- stand behind executive privilege when you see the tornado on the horizon?

TUMULTY: They always lose. I mean, I remember back to Iran- Contra, where Ronald Reagan ended up turning over his personal diaries to Congress. They always lose.

KING: This is supposed to be a smart political team.

BROWNSTEIN: Well, you know, they also, though, they're very aggressive in their attempt to control information. They've had a very consistent posture from the beginning, whether it's on the Cheney task force on energy, the vice president's task force, or their attitudes on the Freedom of Information Act.

They generally believe that they want to have control over information to Congress and the public.

I think they ran into a situation here in which, as Karen said, just that the stakes are so large, 9/11, the most serious attack on American soil in our history. I think the American people clearly want answers, and whether Condi Rice says anything different to the commission that she didn't say to "60 Minutes" and all the other interviews is another question. But clearly, I think, on a procedural issue there was no ground to stand on.

KING: Let's follow that. I assume it's a safe bet they will get a bounce out of this. The American people will say thank you. She's going to testify publicly. What's the greatest risk for Condoleezza Rice?

BROWNSTEIN: Well, I think the greatest risk for the administration is that Dick Clarke is supported in some of the particulars. What you have in that poll, the 46-44 that you mentioned, on whether you believe President Bush or Dick Clarke is an enormous partisan divide.

There may not be any source of information, even the 9/11 commission itself, that can convince people on both sides of the red- blued divide.

But I think the advice to the administration is that other voices like some of those that were reflected in the commission reports or some of the individual commissioners themselves end up agreeing that the administration could have done more while criticizing Clinton, as well, I think, in all likelihood.

KING: And I assume if we all agree, there's roughly eight to 12 percent of the American people who are truly in the middle that the worst thing that the White House could do is to be perceived as hiding.

TUMULTY: Absolutely. And what's going to be different about this than all these other interviews that Condi Rice has done, is that the commission has actual access to things like the memo that Richard Clarke wrote in January. It's got access to the directives that the administration decided on in September of 2001.

They've got a lot more information to be asking her about to be finding inconsistencies about than...

BROWNSTEIN: And some of the commission members have suggested already that they see inconsistencies in some of the things she's written or said and the information they've collected.

For example, on the content of the plan that was agreed to in early September of 2001, whether that had a military component or not. She says it did. Dick Armitage in the hearing last week basically said, no it didn't.

So there are going so be some tough questions for her.

KING: And the president and the vice president will appear in private.

TUMULTY: Together.

KING: Together, which is an interesting dynamic.

TUMULTY: Unusual, yes.

I think that the way it's being handled is they are doing their best to keep it as casual as possible. They are not going to be under oath. They will be testifying together. I don't -- I would be surprised if there's anything that comes out of that that hurts them.

BROWNSTEIN: I still think overall, John, events matter more on how the public assesses the president on terrorism than these arguments or even memos or finger pointing.

I mean, the root, the foundation of his support is the fact that we haven't been attacked again since 9/11. We did overthrow the Taliban. We did overthrow Saddam. He has taken a hit on his terrorism ratings, but they're still much more robust than almost any other -- any other issue across the board. And I think they will remain strong so long as events allow that.

KING: We have about a minute left. Let me give you 30 seconds each on the pocketbook issue in the news today: gas prices. How does that play into campaigns?

BROWNSTEIN: I think it just fits into the overall question of whether people feel like they're better off economically than they were when President Bush took office, because the dynamic is interesting between the Bush campaign and the Kerry campaign.

The Kerry campaign wants to focus whether the issue is jobs or gas or health care, on the record under Bush, what's happened. The Bush campaign wants to focus on ideas Kerry has talked about over the years, often earlier in his career, shifting the focus basically on how he would make things worse.

TUMULTY: But, considering that the top two people in this administration both come from the oil industry, it just doesn't -- it doesn't help that it costs a mortgage payment these days to fill your gas tank. KING: Is that part of their strategy: go after Kerry before he can come after them and...

BROWNSTEIN: I think that's consistently their strategy. We look at the jobs issue, you look at this issue and I think as we go down the road, they're basically going to argue, sort of infer, whatever you think about what we're doing, he's going to make it worse.

And certainly that is the purpose of this gas tax ad they have out there, trying to turn it around, saying it would be even more expensive at the pump under John Kerry.

John Kerry trying to say, look, they've had their chance and they haven't delivered, much as George Bush did in 2000.

KING: All right. Ron Brownstein, Karen Tumulty, thank you both very much.

And that's our show for tonight. Thanks for being with us. Tomorrow, protesting the loss of American jobs to overseas labor markets. A national tour called the Show Us the Jobs Tour will end up right here in Washington. Please join us for that special report.

And for all of us here, good night from Washington.

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 30, 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, a dramatic reversal by the White House. Condoleezza Rice will give public testimony to the 9/11 Commission.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I consider it necessary to gaining a complete picture of the months and years that proceeded the murder of our fellow citizens.

KING: I will be joined by two members of that commission, Republican Slade Gorton and Democrat Timothy Roemer. I'll also discuss the political fallout with Democratic Charles Schumer and Congressman Peter King.

In the global war on terror, three key U.S. allies crack down on suspected radical Islamists. Police in Britain find a half-ton of bombmaking material.

Gasoline prices hit a record high. Energy prices now a major political issue.

And a Washington lobby group says overseas outsourcing actually creates jobs in this country. But Congresswoman Marcy Kaptur says outsourcing is outrageous. She will be my guest tonight.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, March 30. Sitting in for Lou Dobbs for an hour of news, debate and opinion, John King.

KING: Good evening.

The White House today bowed to intense public pressure and said National Security Adviser Condoleezza Rice can testify under oath and in public to the 9/11 Commission. The commission also will receive a joint session with President Bush and Vice President Cheney, all part of an urgent administration initiative designed to quiet critics and rebut the allegation that perhaps the Bush White House could have prevented the 9/11 attacks.

(BEGIN VIDEOTAPE)

KING (voice-over): The president cast the compromise as no big deal. BUSH: I have ordered this level of cooperation because I consider it necessary to gaining a complete picture of the months and years that preceded the murder of our fellow citizens on September the 11th, 2001.

KING: But it was a dramatic turnaround for a White House that for months said National Security Adviser Condoleezza Rice would answer the commission's questions only in private and that the president and vice president would meet only with the panel chairman and vice chairman.

Now Rice will testify at a public hearing under oath and the president and vice president will meet jointly with the full 9/11 Commission in private and answer any and all questions. White House counsel Alberto Gonzales negotiated the deal and told the commission the president recognizes the truly unique and extraordinary circumstances the panel faces in finding out whether the government missed clues the 9/11 attacks were in the works.

But that recognition game only after many Republicans complained to the White House and only after a weeklong focus on former White House official Richard Clarke's explosive allegation that Mr. Bush and Rice warned warnings that al Qaeda was planning major attacks.

SEN. BILL FRIST (R-TN), MAJORITY LEADER: She will have the opportunity to come forward with what I know will be a very powerful testimony and one that will set the record straight.

KING: Rice now will take the high-stakes public challenge of rebutting her former deputy and defending the president's handling of the terror threat both before and after 9/11.

THOMAS KEAN, CHAIRMAN, 9/11 COMMISSION: We have got to try and clear up those discrepancies as best we can. Some of those questions may be important to the fact-finding of our report.

(END VIDEOTAPE)

KING: Now, there are some strings attached to Rice's testimony. Both the commission and congressional leaders went on record saying this was a unique case, not a new legal precedent. And the commission agreed that Rice will be the only White House official asked to testify in public.

The commission chairman, Thomas Kean, welcomed the White House decision to allow Condoleezza Rice to testify. Kean said her testimony is vital to helping the commission understand the development of the counterterrorism policy in the first eight months of the Bush administration.

But to the Bush team, as White House correspondent Dana Bash reports, this was a decision dictated more by political than policy concerns.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): Dug in for weeks, then a sudden reversal.

BUSH: Dr. Rice will participate in an open public hearing.

BASH: The president told aides he now needed to find a way to let Condoleezza Rice appear before the 9/11 Commission. The process he said was getting in the way of substance, process sometimes euphemism for politics.

UNIDENTIFIED MALE: Which is true?

BASH: Even from sometimes helpful Republican commission members, a drumbeat of pressure.

JAMES THOMPSON, 9/11 COMMISSIONER: This commission has voted unanimously to ask Dr. Rice to appear.

JOHN LEHMAN, 9/11 COMMISSION MEMBER: The White House is making a political blunder, an important miscalculation of the political impact of this.

SCOTT REED, REPUBLICAN CONSULTANT: This was a classic instance of -- this was boiling and gaining more momentum and the White House recognized it's time to do something about it and shut this down.

BASH: The latest CNN/"USA Today"/Gallup poll shows the president's overall approval up. But there were danger signs for Mr. Bush; 53 percent of Americans said they think the Bush administration is covering up how it handled intelligence information before 9/11. And 53 percent also believe the president has misled the public for political reasons.

This for a commander in chief whose reelection theme is strength and leadership against terrorism. Democrats saw the opening and were mounting a Senate floor offensive to pressure Dr. Rice just as the White House changed course. They quickly claimed victory, even if they may have lost one election-year issue.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: Well, it wasn't only good politics. I think it is a good policy. I don't think that in this case they had any choice but to do what the American people are clamoring for.

(END VIDEOTAPE)

BASH: Some Republicans strategists argued to hold out on Dr. Rice testifying, saying that they thought Democrats could overplay their hand and show that they are politicizing the issue, perhaps. But Bush aides said they had to move on the issue and diffuse the issue and end this once and for all -- John.

KING: And, Dana, some irony, is there not, here? Sure, there's a legal debate, there is a political debate, but behind the scenes, now that Dr. Rice will testify, what's the White House saying?

BASH: Well, it's interesting. Talking to officials here at the White House, at the campaign, in and around town, Republicans are all saying that Dr. Rice is really the best spokesman on these issues, on national security issues. That's why you saw her out so much on television trying to rebut Richard Clarke's argument that they weren't ready for 9/11.

That of course got her into a little bit of trouble because it helped the Democrats' argument, saying, why is she doing that and not testifying? But it really is a good example of the rub here between what they needed to do they thought legally and what they needed to do politically. That is why it took quite a long time to get to this compromise, although get to this change in course today, John.

KING: Dana Bash on a dramatic day attention White House, thank you very much.

And I'm joined now by two members of the 9/11 Commission. Slade Gorton is a former Republican senator from Washington State, Timothy Roemer a former Democratic congressman from Indiana.

Gentlemen, thank you both for taking your time on what is an enormously busy day.

Senator, let me start with you. You are a Republican, a supporter of this president, I assume, when you cast your ballot in November. Why? Why did they wait so long?

SLADE GORTON, FORMER U.S. SENATOR: I'm not sure why they did so, but I think we are probably fairly sure why they changed their minds. They certainly needed someone to balance what Dick Clarke said last week, and they decided to put their best foot forward.

Condoleezza Rice is very bright, very articulate. I think she'll be a very good witness. But it is really important for us to hear what she has to say and to lay it out before the public. We were absolutely unanimous on that, all 10 members, five Republicans, five Democrats.

KING: And so you have heard Mr. Clarke. He says this president and this national security adviser said, go away, essentially, that they weren't that interested, terrorism was not an urgent priority. What is your first question for Dr. Rice?

TIMOTHY ROEMER, 9/11 COMMISSIONER: Well, there are a number of questions here, John.

I believe that we need to talk to Dr. Rice in public, as we did in private, about such issues as, was this an urgent priority? Mr. Clarke says no. The staff paper that we put out in a bipartisan way says it didn't move fast enough. We also need to ask Dr. Rice about was there a plan handed over by this previous administration, the Clinton administration, to the new administration? What was in this plan? What was in Mr. Clarke's January 25 memo?

And we need to ask Dr. Rice about the September 4 principals meeting. Was that justifiable in terms of the new things that she claims were in it, in the military funding and so forth to justify a bottom-up review and taking seven months to put that forward? KING: In his testimony and more so in the public interviews Mr. Clarke has given around promoting his book and then dealing with the controversy he has caused, he says we will never know, but his hunch is that if the president had paid closer attention, if Dr. Rice had held the same meetings that he says Sandy Berger held around the millennium plot time, that he thinks perhaps 9/11 could have been prevented. Based on everything you know, public and private, is that a fair assessment?

GORDON: In fact, in answer to a question that I put to him, Dick Clarke said exactly the opposite just last week.

When I asked him whether or not, if the administration had accepted all of his recommendations January 25 to Condi Rice on the next day, would 9/11 have been prevented? His answer was, no. And I think that is the correct answer.

Now, I believe that it was possible to prevent 9/11, but I think, if we were to prevent 9/11, it would have taken place here in the United States by better coordination between the FBI and the CIA, by more sharing of information, by the kind of breakdown on our internal security that we hope have started to be cured already, but need a greater cure than they've received thus far.

KING: The focus is on Dr. Rice and her decision today to give the public testimony under oath, but the full commission will now get access to the president and the vice president in a private session.

If you had one question -- my understanding is they will give you as much time as you need. But if you had one question, what is it? What nags you that you need to hear from the president?

ROEMER: I think, John, what I need to hear, but more importantly what the American people deserve to hear, 270 million people really won out today with this decision to hear how government works at the highest level and get this extraordinary look.

The president was quoted in Mr. Woodward's book, "Bush At War," as saying that, in effect, terrorism wasn't the highest priority and it didn't make his blood boil, I think was the quote. How might we organize the National Security Council in the future so that we make sure that we get this right, so that we make sure that this jihadist movement that's coming at us, that's trying to get dirty bombs, that's trying to get chemical weapons, how do we work in a bipartisan way in the future to make this country safer, to change the paradigm of a government tasked to fight the Soviet Union in the Cold War to now take on a 20- or 30-year struggle against terrorism and jihadism?

GORTON: Tim's right. Tim's right. And that's where I think we can be entirely bipartisan. We have got to help the country do better in the future than it has done in the past.

KING: And quickly to each of you, what is left? You now have an agreement with the White House that the chairman and vice chairman said settled most or at least all of the major problems in their view. Is there anything the commission is missing that will keep it from finishing its work?

GORTON: We believe that we can finish our work by the new deadline date that we've received. And we've worked together, I think, in a magnificently bipartisan fashion. And all of us hope that we're going to not only come up with a good report, but it's going to be a unanimous report.

KING: A good report that will be released around the conventions. Do you worry about that?

ROEMER: I do worry about that. Slade and I had worked for a long time to try to get this outside the window of these conventions and the political process, the presidential campaigning.

I would just add to Slade's, I think, articulate comments and say Chairman Kean and Mr. Hamilton have really worked hard and provided leadership to try to get us moving forward. What's missing, John, that you asked, I think what's missing is that we need at the end of the day to not just make a good set of substantive recommendations to make this country safer. That, I think, we can do. We need to pass them into law. We need to be standing out apart from what other commissions have done and failed to do, and that is pass these through the Congress in a bipartisan way, get the president to sign them, and start to move this process forward in a positive way.

GORTON: Tim's 100 percent correct.

(CROSSTALK)

KING: Gentlemen, we need to end it there. On this dramatic day, we thank you both. Democrat Tim Roemer, Republican Slade Gorton, thank you for your time very much.

And we'd like to hear from you on this very important issue in tonight's poll question. Do you believe the testimony of Condoleezza Rice will reduce the political atmosphere now surrounding the 9/11 Commission, yes or no? Cast your vote at CNN.com/Lou. We'll bring you the results a bit later in the show.

Also still to come, massive police raids today in Britain. Officers find a half a ton of bombmaking materials. We'll have a report on terrorist plots aimed at several U.S. allies.

Average gasoline prices approach $2 a gallon. Energy prices today became a hot election issue. We'll have a special report.

And a new twist tonight in the debate over the export of American jobs. A lobby group says overseas outsourcing actually creates jobs in this country. How can they say that? We'll tell you.

Stay with us.

(COMMERCIAL BREAK)

KING: In Iraq today, insurgents killed a coalition soldier and wounded another near Ramadi, west of Baghdad. The Army said a bomb exploded near their patrol. The military did not disclose the nationality of the soldiers.

In Najaf, Spanish troops and Iraqi police fought with unemployed people demanding government jobs. Protesters threw stones, smashed windows and burned a guard house. At least three police and two protesters were injured.

The CIA's new chief weapons hunter, Charles Duelfer, today he does not rule out finding weapons of mass destruction in Iraq. Duelfer today gave a report today to the Senate Armed Services and Intelligence Committees.

(BEGIN VIDEO CLIP)

CHARLES DUELFER, CHIEF U.S. WEAPONS INSPECTOR: In an odd way, I have found it more likely that there will be weapons there. I'm not saying that there is a high probability we will find them, but what I have found is that the reluctance on the part of Iraqi scientists to come forward is much stronger than I'd anticipated.

(END VIDEO CLIP)

KING: Major developments tonight for three key U.S. allies in the global war on terror. Police in Britain arrested eight terrorist suspects after the biggest anti-terror operation there in years. Authorities in the Philippines and Uzbekistan have also been running up radical Islamist terrorists.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): In Britain today, a raid today turned up half a ton of bombmaking materials.

Near London, police raided houses, rounding up eight British men of Pakistani origin being held for questioning. In Manila today, the Philippine president said they managed to stop what could have been -- quote -- "Madrid-like" attack. Radical Islamists were planning to blow up trains and shopping malls.

Uzbekistan another place of terror. Tashkent police and military try to round up suspected terrorists. The government blames Islamists for two bombings in the last two days. Uzbekistan helped in the war on terror. The United States has hundreds of troops there.

Government officials in Spain blame the massive train bombings on two Moroccan groups believed to be linked to al Qaeda. Experts say all kinds of Islamist groups are becoming comrades in arms.

ERICK STAKELBACK, INVESTIGATIVE PROJECT: Now we're seeing around the world is al Qaeda breaking off into subgroups or franchises, almost regional franchises, where they share the same ideology as al Qaeda but they are almost operating independently.

PILGRIM: Radical Islamists are widening their war against the West, basically striking any country that is not Islamist. But U.S. allies in the Iraq war are prime targets.

DAVID HEYMAN, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: If you look at the recent terrorist attacks in Russia, in Jordan, in Iraq, they were led not by the top tier of al Qaeda, not by those who are known to us, but really by the next generation of fighters or terrorists.

PILGRIM: And no country has immunity. Turkey has suffered a devastating attack in its capital city. And France last week found bombs along its rail lines.

Kitty Pilgrim, CNN, New York.

(END VIDEOTAPE)

KING: Still ahead, sticker shock at gas pumps all around the nation tonight. Record high prices became a hot campaign issue today.

(BEGIN VIDEO CLIP)

BUSH: There's some in the other party in Washington who would like to raise gas taxes.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Those aren't Exxon prices. Those are Halliburton prices, ladies and gentlemen.

(END VIDEO CLIP)

KING: We'll have a special report coming up.

Plus, a new twist in another big campaign issue, the exporting of American jobs. Now a powerful Washington lobby is joining the debate. We'll have that story. And Congresswoman Marcy Kaptur will join us.

Stay with us.

(COMMERCIAL BREAK)

KING: Gas prices today hit record highs for a sixth day in a row, a national average of $1.75 a gallon. With numbers like that, Americans are now taking the issue more seriously than they have in the past.

In a new CNN/"USA Today"/Gallup poll, nearly three-quarters of those polled say rising gasoline prices are a problem or even a crisis.

As Bill Tucker now reports, few things, it seems, get a political fight going like the price of a gallon of gas.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): With gasoline prices headed well north of $2 gallon in some places, voter anger is rising and the political rhetoric is getting interesting. REP. ED MARKEY (D), MASSACHUSETTS: The Christians had a better chance against the lions than the American consumer has against the OPEC cartel.

TUCKER: Gasoline stations have become the backdrop of campaign moments with demands of action to bring prices down.

KERRY: We should be putting pressure on OPEC to raise the supply and not allow those countries to undermine the economies of the world.

TUCKER: The Republicans have their own response.

(BEGIN VIDEO CLIP, AD)

NARRATOR: If Kerry's gas tax increase were law, the average family would pay $657 more a year.

(END VIDEO CLIP)

TUCKER: In the House, a bipartisan group has sent the Bush administration a letter asking that they file a case with the World Trade Organization against OPEC for restricting production and colluding to raise prices, none of which addresses the real problem, our ever increasing demand for energy.

Over the last 20 years, demand has risen an average of 1 percent a year. Refining capacity has not.

JOHN FELMY, AMERICAN PETROLEUM INSTITUTE: We consume about 20 million barrels as day of petroleum. And we only have refining capacity to supply around 16.7 million barrels a day. So we need more refineries or we at least more refining capacity.

TUCKER: But building refineries is never a popular idea. It seems we would rather drive our cars, blame OPEC and avoid the real issue.

PAUL ROBERTS, AUTHOR, "THE END OF OIL": Wondering what OPEC is going to do at this meeting, this is all window dressing on a much larger question, which is a lack of an energy policy. You know, we have a patchwork energy policy and we have never really been willing to attack it in a comprehensive, long-term way.

TUCKER: They would rather yell about it.

(on camera): Ignore the fact despite the recent run-up in prices, Americans still pay considerably less than consumers in, say, Britain, where the price is about $5.25 per gallon.

Bill Tucker, CNN, New York.

(END VIDEOTAPE)

KING: Coming up next, an about-face from the White House over executive privilege and the 9/11 Commission. Senator Charles Schumer and Congressman Peter King will join us with their very different views on the subject.

And then the growing battle over the exporting of American jobs. Now a Washington lobby group claims offshore outsourcing actually creates jobs in this country. We'll have the story.

And the controversy over Muslim head scarves in public schools comes to America.

That story and much more still ahead. Stay with us.

(COMMERCIAL BREAK)

KING: The White House today reversed itself and said National Security Adviser Condoleezza Rice will testify publicly before the 9/11 Commission. In a moment, I'll talk to Republican Congressman Peter King, who says Rice's appearance could help the White House politically.

But first, Democratic Senator Charles Schumer says the about-face proves the White House was only using the executive privilege as an excuse to keep Rice from testifying.

Senator Schumer joins us now from Capitol Hill.

Senator, you said a bit earlier today the stonewalling over or there's no more room for stonewalling. What do you think is the biggest discrepancy that you want resolved between what Richard Clarke told this commission and what you think Dr. Rice knows?

SEN. CHARLES SCHUMER (D), NEW YORK: Well, the bottom line is how carefully the administration listened to people like Dr. Clarke, who said that the focus ought to be on al Qaeda, rather than Iraq.

And there are two different stories here. None of us know which is true. Clarke stated his under oath. Condoleezza Rice has not been either public under oath or under questioning from the commission. And I'm glad that now we'll find out the real truth. Whatever it is, we ought to know it. The whole impetus, John, for this commission came from the families. They are not political.

They walk around with a hole in their heart every day for their lost ones but they have the nobility to say we want to figure out what happened so it doesn't happen again. And the truth is what we want to get at. It should be complete. It should be unvarnished and I'm glad it's going to come out.

KING: Glad it's going to come out. Is this a good deal, in your view, top to bottom? Rice testifies. The president and vice president meet jointly with the full commission now in private. Is that acceptable to you, this entire deal?

SCHUMER: I haven't read it yet. I do hope the commission will be able to follow up with questions with Condoleezza Rice, with the president and vice president after they get to digest what they have said in the initial interview. If those questions are in writing, I suppose, answered in writing, I suppose that's OK. We don't want to make this a circus.

We do want to give the commission, which is bipartisan, seems to be filled with very reputable people on both sides of the aisle, the ability to get at the whole truth and nothing but.

KING: And there's still a debate over whether previous briefings or testimony by Richard Clarke to the joint committee, the congressional committee, should be declassified and made public. Is that a moot point now that the White House provide this extra testimony or should the Congress and the commission still move ahead with that?

SCHUMER: Well, Clarke has said that he would like all of his stuff declassified. And I think that's probably to the good. He says that he was giving constant warnings about al Qaeda, that these warnings were ignored. There probably are two sides to this story. But we ought to get Clarke's side to it fully.

And the fact that the White House will declassify certain documents for its own purposes but then not declassify others that have the same security level shows that they are not approaching this in an evenhanded way.

KING: We are in a political season, Senator. You know that all well. Did the Democrats lose an issue today?

SCHUMER: Well, I don't think it matters whether we lost an issue or not. I think the truth of the commission is what is important. If you look at it politically, the White House has stonewalled this from the get-go. They stonewalled the commission. Then they stonewalled who should be its membership. Then they stonewalled who should come before it.

I think that they are trying to do damage control today, but it won't do much good. The overall impression of the American people, that they really weren't fully for what the families wanted, the whole truth coming out, has been made.

KING: I want to ask you quickly in closing, Senator, about another issue, rising gas prices.

SCHUMER: Yes.

KING: You were among the senators that wrote a letter to OPEC today, saying the cartels should increase production, put more oil on the markets. What is it that this administration, this country, can do in the short term...

SCHUMER: In the long term, of course, there's both conservation and more production. We have to do that.

But in the short term I've been advocating we release some oil from the strategic petroleum reserve, if and only if OPEC won't release more oil itself.

If we were to even threaten to use the strategic petroleum reserve, I bet my bottom dollar that OPEC itself would release the oil, because they'd rather make the money than have us make the money. And that's what's happened in the past.

The administration seems to feel that the only answer when gas prices are high is to beat up on John Kerry. That's not going make prices come down. It's not going to make lives easier on any families.

They ought to come up with a solution. If they say there's no solution, then there ought to be a debate between Kerry's solution, which is the SPRO, which I've been advocating for years, releasing the SPRO. And their view that there's none.

But this constant, you know, just attack, attack, attack and not solve our problems I don't think is going to win them reelection on gasoline prices or on anything else.

KING: Senator Charles Schumer, Democrat of New York. Sir, we thank you for your time tonight on these two very important issues. Thank you very much.

And Republican Congressman Peter King of New York says nothing will come out of Rice's testimony, in his view, that hasn't come out already. Congressman King joins me now from Capitol Hill, as well.

Congressman, let's start with the simple issue of the White House reversing itself, and dramatically. They lost control of this one politically, didn't they?

REP. PETER KING (R), NEW YORK: I actually wish that the White House had not given in on this. I think executive privilege is something worth preserving, especially since, as far as I'm concerned, Richard Clarke did not raise any substantive point whatsoever regarding September 11 in his testimony.

KING: So you say the president is wrong, Dr. Rice should not testify?

P. KING: I can understand why the president did it. If it was up to me I would prefer she not testify, only because I think it's going to come back to haunt us as far as executive privilege.

On the other hand the president, also, as commander and chief realizes he has to have the country behind him. And since he realizes that there's nothing to hide here at all, he wanted Dr. Rice to come on, testify as to what she knows and to show that basically there was nothing, no substance whatsoever to Mr. Clarke's allegations.

KING: Don't you also think, though, as the Republican nominee and a candidate for reelection, he is seeing the polling, in which our latest poll yesterday, the American people split down the middle as to whether they believe Richard Clarke or believe a president of the United States.

That is a pretty damning conclusion when half of the American people believe, as one Democrat put it to us yesterday, a bureaucrat over their president.

P. KING: Yes, but again, in that poll for the first time in awhile President Bush pulled ahead of John Kerry.

And also this is the media swirl involving Dick Clarke. And the media has given him such a free ride, because he has not made one factual allegation that backs up his case whatsoever. I think it's really been pretty disgraceful the way the media has given him this free ride.

But Dr. Rice, listen, she's absolutely brilliant. She will do a great job.

And I have no doubt at all that when all is said and done, we're going to show the Bush administration did what had to be done. They did respond. They had the country on the highest alert during the summer of 2001.

And Mr. Clarke himself admitted under oath that if everything he had asked for had been done, it would not have prevented September 11. And that's worth considering, especially when he had the same job for eight years under President Clinton.

KING: A dust-up now in March. The report of the commission will come out right around the convention time. One of those conventions, of course, is in your city in New York City, not far from your district.

Do you worry that this political fight we have had now in March will simply come back again, perhaps even with more volume when that report is released right in the heart of the political season?

P. KING: John, it may. And that's a danger.

But on the other hand I think the American people are smarter than all of us. I think they see through this, and they realize how difficult this issue is. They realize what President Bush has done.

And one thing I would say, you know, the talk is out there the families want this. The families want that. The fact is I lost well over 100 people in my district, well over 400 in the immediate area of my district. And large numbers, I say the overwhelming majority of families that I've spoken to support the president or understand the president.

And very few want to point the finger either at President Clinton or at President Bush. They realize the enemy here is al Qaeda.

KING: Congressman Peter King, I want to be bipartisan and give you quickly an opportunity to answer the same question I put to Senator Schumer about what can the government do short term about gas prices?

P. KING: I agree that we should do more negotiating with OPEC. I would oppose right now, though, going into the strategic reserves, because it is strategic, and we should only use that in cases of emergency.

The fact is the price of gasoline in this country is still well less than half of what it is in Europe. We shouldn't panic and go to the strategic reserves. I think we can get the prices back down.

And that also we should get Democrats to start approving the president's energy plan, including drilling in the Arctic, be more concerned about gasoline prices than about the tundra.

KING: A bit of a political subplot to both debates over the 9/11 commission and the price of gas. Congressman Peter King, Republican of New York, thank you, sir, for your time tonight.

P. KING: Thank you, John.

KING: And we'd still like to hear more of what you think of this issue in tonight's poll question. "Do you believe the testimony of Condoleezza Rice will reduce the political atmosphere now surrounding the 9/11 commission? Yes or no."

Cast your vote at CNN.com/lou. We'll bring you the results a little later.

And coming up Congresswoman Marcy Kaptur says the exporting of U.S. government work to overseas labor markets is an outrage. She will join us.

And a new claim that outsourcing is actually creating jobs for Americans. Peter Viles will have that report and some reaction from critics, up next.

(COMMERCIAL BREAK)

KING: The economy has lost more than two million jobs in the last three years. Some argue the export of American jobs to cheaper foreign labor markets is one significant factor. Others, including a powerful technology lobbying group, claim outsourcing is actually creating new jobs for Americans.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): In Chicago, engineers protest at Boeing, which they claim has shipped American jobs to Asia.

Exporting jobs now such a hot political issue that the technology industry, companies like Hewlett-Packard, IBM and Microsoft, is fighting back. Their Washington lobby commissioned a report defending outsourcing as nothing new and nothing bad for the American economy.

NARIMAN BEHRAVESH, GLOBAL INSIGHT: But if you really look at the history of the U.S., we have benefited tremendously from all kinds of free trade. This is just one more kind of free trade. People say this is different. It's not. It's exactly the same. VILES: The report for the Information Technology Association claims outsourcing of I.T. jobs actually helped create 90,000 jobs in the United States last year and will create 317,000 new jobs in 2008.

Critics dismiss the report, saying it fails to explain huge job losses in recent years.

LEE PRICE, ECONOMIC POLICY INSTITUTE: They say that we have created jobs in this economy because of offshoring. That cannot be justified by the facts. We've lost three million private sector jobs in the last three years.

VILES: Economists are still puzzled by weak hiring amid strong growth. Now Goldman Sachs has a new theory. Maybe the growth numbers are wrong, because the government is under estimating the amount of work that is outsourced and then imported back into the United States.

JAN HATZIUS, GOLDMAN SACHS: For example in 2002 the government recorded about $660 million of service imports, professional service imports from India, but some of the Indian statistics organizations are showing numbers of as much as $6 billion or so.

(END VIDEOTAPE)

VILES: Another analysis of outsourcing by Morgan Stanley concludes that economists and policy makers are, quote, "flying blind" on this issue because there is so little good information on how many jobs have been sent out of this country -- John.

KING: And Pete, give me a little bit more on how they believe this works. Economics 101, if you will. How does outsourcing create jobs here?

VILES: In theory, they get the job done cheaper. That saves them money. Then the products come back. It's cheaper; that saves consumers money. In theory the companies and the consumers take that savings and reinvest it in the economy, giving you economic growth.

It's very hard to test that theory in the short term here, particularly when we're not getting the kind of job growth the economy -- the other numbers would indicate we should be getting -- John.

KING: Peter Viles in New York. Thank you very much.

And as we reported earlier this month, the overseas outsourcing of work even extends to the U.S. government's food stamp program. Forty states and the District of Columbia currently outsource help desk work to cheaper overseas labor markets.

My next guest has called this practice outrageous, considering that nine million Americans are unemployed and looking for work. Democratic congressman Marcy Kaptur of Ohio joins me now from Capitol Hill.

Outrageous that practice, Congresswoman. Is there anything that Congress can do about it and convince the administration to join you? REP. MARCY KAPTUR (D), OHIO: Absolutely. We can pass an amendment here in Congress that does not permit the Department of Agriculture to allow our taxpayer dollars to be used to create jobs in India and to displace U.S. workers with our own money.

KING: Will the administration sign that bill?

KAPTUR: The representative of the administration who is before our committee this past week stated that he would not support such an effort. So Congress is going to have to take action on its own.

KING: Let's step back and look more broadly at the outsourcing debate. The treasury secretary, John Snow, was in, I believe, your state yesterday. And he said this. Quote, "Outsourcing is one aspect of trade and there can't be any doubt about the fact that trade makes our economy stronger."

Your reaction to that?

KAPTUR: My reaction is that if you look at the old worn out NAFTA philosophy, they told us it would create jobs. It's cost us almost three quarter of million jobs now in this country. And we have seen a slide to the bottom in terms of our workers' ability to have middle class jobs and benefits that they can hang on to.

I don't agree with Mr. Snow. He actually is from Ohio. He worked for CFX, which outsourced a major shipping facility to Hong Kong and took our jobs there in a facility with 16 miles of roads inside to bring imports from China into our country.

We don't have a trade balance with China. We've lost jobs to China. We've lost jobs to Mexico. We're now losing jobs to India. Our trade deficit this year will be at an all-time high of over $550 billion. Half a trillion dollars. This knocks a third or more off of our GDP.

Let them look at the net. Let them look at the balance sheet. Their policies are a failure for the workers of this country. That's what jobless recoveries are all about: outsourcing our jobs elsewhere.

KING: No Republican has won the presidency ever without carrying your state, Ohio. President Bush is campaigning now, saying the economy is getting better. Yes, he says there's a problem with manufacturing, but he says it's getting better. He says trade is one of the reasons and that those who oppose him on that issue are, quote, "economic isolationists."

Will that sell in Ohio?

KAPTUR: It won't sell in Ohio. In fact, the president was in my district the day after the State of the Union. And he appeared at a college which has just raised tuition nine percent because we aren't getting as much revenue into the state. It's broke. And therefore our students are having their tuition raised.

The day he appeared to support job training for jobs that aren't there, the college had laid off the people in their job training division. Think about it.

KING: We've had some of your colleagues on, Republicans and Democrats, tonight. Let me ask you this question in closing as I did them. What should the government do in the short term to deal with these gas prices?

KAPTUR: This is such an important question. No. 1, America needs an Apollo Project or a Manhattan Project in ten years to make us energy independent and cut our cord to OPEC and all these other undemocratic places that are controlling our futures.

We need to invest in biofuels here at home, in bio diesel, ethanol, hydrogen, fuel cells, photovoltaics, wind turbines, geothermal, all the sources of power we have ignored all these years.

If we can go to Mars, surely we can make America energy independent here at home within ten years. It's within our power to do it.

KING: And it is an issue more and more in debate in this election season. Congresswoman Marcy Kaptur of Ohio, thank you for your time tonight.

KAPTUR: Thank you.

KING: And still to come, Condoleezza Rice is set to testify before the 9/11 commission. After a dramatic White House reversal. We'll talk about that and much more with two of this nation's leading political journalists.

And the U.S. government takes sides on the controversial issue of Muslim headscarves in public schools. We'll have that story when we continue.

(COMMERCIAL BREAK)

KING: The U.S. government is taking sides in the debate over whether Muslim students should be allowed to wear headscarves in public schools.

Federal civil rights lawyers will support the case of an 11-year- old Oklahoma girl who was ordered to remove her headscarf. School officials said it violated the dress code.

The U.S. government's position is precisely the opposite from the French government's view. France banned Muslim headscarves in public schools earlier this year.

Now a look at tonight's news in brief.

The Statue of Liberty is expected to reopen to visitors this summer for the first time since the September 11 attacks. Visitors won't actually be allowed inside the statue, just the pedestal which houses a museum and an observation deck.

Michael Jackson made a special visit to Capitol Hill today to speak with Congressman Chaka Fattah of Pennsylvania. The Jackson spokesman says the singer is in Washington to promote his charitable works.

And the jury in the Tyco trial resumed deliberations today, as the judge denied the mistrial motion from the defense in two days. The judge said declaring a mistrial would be, quote, "inappropriate" and said the jury should just keep trying.

On Wall Street, stocks rose for the second straight session. The Dow jumped 52 points; the NASDAQ gained eight. The S&P added 4.5. However, a new report shows Americans are not much more confident about the economy than they were earlier this year.

Christine Romans is in New York with the report -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: John, consumers are spooked by high gas prices and a weak jobs market.

The conference boards, consumer confidence index fell slightly again in March. And the number of consumers saying jobs were hard to get rose in March to 30 percent. Consumers' opinion of the future also dimmed, and other retail reports show a fragile consumer outlook.

The International Council of Shopping Centers blamed high gas prices for a drop in sales in the past week.

Now as consumers grapple with a weak jobs market, consultants, though, benefiting from outsourcing American jobs. Accenture, a consulting company, reported a strong first quarter, thanks to outsourcing revenue. Outsourcing consulting sales rose 39 percent.

The company's CEO will step down but Accenture assured Wall Street, John, it's new CEO will be committed to outsourcing as a key company strategy.

Also, John, only one day to go in the first quarter. For the Dow it's on track for the first down quarter in six. But there are some widely held stocks that did quite well. AT&T Wireless up 70 percent in the quarter. Lucent, Avaya, Wal-Mart, among the other big winners.

More on the markets performance tomorrow, John, when we officially close the book on the first quarter.

KING: And I didn't buy any of those. Thank you, Christine.

A young woman from Denver is learning an expensive -- we hope learning an expensive lesson tonight. Alissa Walters (ph) rang up a $2,500 phone bill using America Online.

Walters uses a new computer to sign into AOL but left the computer connected online for a very long time. Walters inadvertently used a long distance number to sign on instead of a local one.

Fortunately for Walters, the phone company decided to strike a deal, agreeing to charge only $375. Alissa's (ph) dad thinks that's a fair amount that will teach her to be a bit more careful. A reminder now to check our web site for the complete list of companies we've confirmed to be exporting America. CNN.com/Lou.

And when we return we'll talk to two of the nation's leading political journalists about the White House reversal after days of intense pressure. We continue in just a moment. Please stay with us.

(COMMERCIAL BREAK)

KING: Now the results of tonight's poll question. Fourteen percent of you believe the testimony of Condoleezza Rice will reduce the political atmosphere now surrounding the 9/11 commission. An overwhelming 86 percent of you do not.

And joining me now for more on this White House reversal and the other issues in the campaign is our panel of leading political journalists. Ron Brownstein is national political correspondent for the "Los Angeles times." Karen Tumulty, the national political correspondent for "TIME" magazine. Thank you both for being here.

Let's just start. You had called it a clash of personalities, Condi versus Clarke. She will testify. The political ramifications are?

RON BROWNSTEIN, "L.A. TIMES": Well, clearly, look, every time the White House has been in this situation it almost always ends this way. You don't want to be in the story where the process is dominating the coverage day after day.

The assumption of the American people rightly or wrongly, is if you have nothing to hide you would go testify. So I think it was inevitable that it ended up this way.

The commission is an ongoing process, John, that moves this beyond just Condi and the administration versus Dick Clarke. The commission has a life of its own. The administration is going to have to deal with this for quite some time now.

KING: Inevitable, Karen, because of this? CNN/"USA Today"/Gallup poll yesterday, who are you more likely to believe, the Bush administration, 46 percent; Richard Clarke, 44 percent. A person most of the country did not know two weeks ago breaks even with the president on believability.

KAREN TUMULTY, "TIME" MAGAZINE: I think, too, that some of the other numbers in the poll were even more telling. The fact is that the public's trust of the president to handle terrorism, the issue that is going to be the centerpiece of his presidential campaign has declined dramatically.

The numbers -- over half the public now thinks that, while 9/11 couldn't have been prevented, there were things that this White House could have done that it didn't do. And those are the numbers that I think really started to bite.

KING: Why do administrations -- and we've seen this before; it's not just this administration -- stand behind executive privilege when you see the tornado on the horizon?

TUMULTY: They always lose. I mean, I remember back to Iran- Contra, where Ronald Reagan ended up turning over his personal diaries to Congress. They always lose.

KING: This is supposed to be a smart political team.

BROWNSTEIN: Well, you know, they also, though, they're very aggressive in their attempt to control information. They've had a very consistent posture from the beginning, whether it's on the Cheney task force on energy, the vice president's task force, or their attitudes on the Freedom of Information Act.

They generally believe that they want to have control over information to Congress and the public.

I think they ran into a situation here in which, as Karen said, just that the stakes are so large, 9/11, the most serious attack on American soil in our history. I think the American people clearly want answers, and whether Condi Rice says anything different to the commission that she didn't say to "60 Minutes" and all the other interviews is another question. But clearly, I think, on a procedural issue there was no ground to stand on.

KING: Let's follow that. I assume it's a safe bet they will get a bounce out of this. The American people will say thank you. She's going to testify publicly. What's the greatest risk for Condoleezza Rice?

BROWNSTEIN: Well, I think the greatest risk for the administration is that Dick Clarke is supported in some of the particulars. What you have in that poll, the 46-44 that you mentioned, on whether you believe President Bush or Dick Clarke is an enormous partisan divide.

There may not be any source of information, even the 9/11 commission itself, that can convince people on both sides of the red- blued divide.

But I think the advice to the administration is that other voices like some of those that were reflected in the commission reports or some of the individual commissioners themselves end up agreeing that the administration could have done more while criticizing Clinton, as well, I think, in all likelihood.

KING: And I assume if we all agree, there's roughly eight to 12 percent of the American people who are truly in the middle that the worst thing that the White House could do is to be perceived as hiding.

TUMULTY: Absolutely. And what's going to be different about this than all these other interviews that Condi Rice has done, is that the commission has actual access to things like the memo that Richard Clarke wrote in January. It's got access to the directives that the administration decided on in September of 2001.

They've got a lot more information to be asking her about to be finding inconsistencies about than...

BROWNSTEIN: And some of the commission members have suggested already that they see inconsistencies in some of the things she's written or said and the information they've collected.

For example, on the content of the plan that was agreed to in early September of 2001, whether that had a military component or not. She says it did. Dick Armitage in the hearing last week basically said, no it didn't.

So there are going so be some tough questions for her.

KING: And the president and the vice president will appear in private.

TUMULTY: Together.

KING: Together, which is an interesting dynamic.

TUMULTY: Unusual, yes.

I think that the way it's being handled is they are doing their best to keep it as casual as possible. They are not going to be under oath. They will be testifying together. I don't -- I would be surprised if there's anything that comes out of that that hurts them.

BROWNSTEIN: I still think overall, John, events matter more on how the public assesses the president on terrorism than these arguments or even memos or finger pointing.

I mean, the root, the foundation of his support is the fact that we haven't been attacked again since 9/11. We did overthrow the Taliban. We did overthrow Saddam. He has taken a hit on his terrorism ratings, but they're still much more robust than almost any other -- any other issue across the board. And I think they will remain strong so long as events allow that.

KING: We have about a minute left. Let me give you 30 seconds each on the pocketbook issue in the news today: gas prices. How does that play into campaigns?

BROWNSTEIN: I think it just fits into the overall question of whether people feel like they're better off economically than they were when President Bush took office, because the dynamic is interesting between the Bush campaign and the Kerry campaign.

The Kerry campaign wants to focus whether the issue is jobs or gas or health care, on the record under Bush, what's happened. The Bush campaign wants to focus on ideas Kerry has talked about over the years, often earlier in his career, shifting the focus basically on how he would make things worse.

TUMULTY: But, considering that the top two people in this administration both come from the oil industry, it just doesn't -- it doesn't help that it costs a mortgage payment these days to fill your gas tank. KING: Is that part of their strategy: go after Kerry before he can come after them and...

BROWNSTEIN: I think that's consistently their strategy. We look at the jobs issue, you look at this issue and I think as we go down the road, they're basically going to argue, sort of infer, whatever you think about what we're doing, he's going to make it worse.

And certainly that is the purpose of this gas tax ad they have out there, trying to turn it around, saying it would be even more expensive at the pump under John Kerry.

John Kerry trying to say, look, they've had their chance and they haven't delivered, much as George Bush did in 2000.

KING: All right. Ron Brownstein, Karen Tumulty, thank you both very much.

And that's our show for tonight. Thanks for being with us. Tomorrow, protesting the loss of American jobs to overseas labor markets. A national tour called the Show Us the Jobs Tour will end up right here in Washington. Please join us for that special report.

And for all of us here, good night from Washington.

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