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Lou Dobbs Tonight

U.S. Soldiers Missing in Iraq?; Interview With Senator Carl Levin

Aired April 09, 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)
LOU DOBBS, HOST: Tonight, Shiite militias in Iraq continue to battle American troops, and more American soldiers and Marines are killed in combat.

UNIDENTIFIED MALE: I will tell the American people (UNINTELLIGIBLE) to be proud of their sons and daughters who are here.

DOBBS: Senator Carl Levin, the ranking Democrat on the Armed Services Committee, is our guest tonight. He says the United States should consider extending the June 30 deadline.

In "Broken Borders" tonight, you won't believe how easy it is for illegal aliens to stay in this country buying phony green cards.

UNIDENTIFIED MALE: We don't want to enforce all of the laws.

DOBBS: And dramatic new poll numbers tonight on President Bush. How the president is handling the war in Iraq, and what Americans think of Condoleezza Rice's testimony.

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, April 9. Here now, for an hour of news, debate and opinion, Lou Dobbs.

(END VIDEOTAPE)

DOBBS: Good evening. Tonight, one year after the fall of Saddam Hussein, U.S. troops in Iraq again on the offensive, engaged tonight in heavy combat with the enemy. More than 1,000 troops are battling Shiite militias in Kut, and U.S. Marines tonight have surrounded Fallujah.

In Baghdad, a U.S. soldier was killed when insurgents attacked a fuel convoy. Just a short time ago, the Pentagon said two American solders are now missing after that attack. A number of civilian contractors are also unaccounted for, and five other American troops were killed in fighting throughout Iraq.

(BEGIN VIDEOTAPE)

DOBBS (voice-over): In Fallujah, the coalition called for a unilateral halt in the fighting. U.S. administrator Paul Bremer said the pause was to allow talks between the coalition and local Iraqi leaders. Humanitarian aid also arrived, but U.S. military officials said the halt is only temporary if progress is not made.

BRIG. GEN. MARK KIMMITT, U.S. ARMY: Should these discussions break down, the coalition military forces are prepared to go back on the offensive operations, and at no time during this suspension of offensive operations do soldiers forget the inherent right of self- defense. If fired upon, they will fire back.

DOBBS: The head of Central Command, General John Abizaid, in Fallujah said the resistance facing the troops isn't surprising.

GEN. JOHN ABIZAID, CMDR., U.S. CENTRAL COMMAND: It was a military and special intelligence organization center for the previous regime. And we just have failed to receive the amount of cooperation that we hope for from the Iraqis in this area. And they have chosen to work not only against us, but against the future of Iraq.

DOBBS: Iraqi insurgents attacked a Red Crescent convoy leaving Fallujah after it delivered aid supplies.

In Baghdad, a fuel tanker in another convoy was hit by a rocket- propelled grenade. And a mortar round landed near the Sheraton Hotel. NO casualties were reported. In Kut, coalition forces regained control of three bridges and a government compound. Brigadier General Mark Kimmitt said he expects all the major government facilities to be in coalition control by tomorrow morning.

And in Sadr City, coalition forces retook control of the city from radical Shiite cleric Muqtada al-Sadr's fighter, that same location where one year ago the world watches as U.S. military forces toppled the statue of former Iraqi leader Saddam Hussein.

(END VIDEOTAPE)

DOBBS: More now on reports that two American soldiers are now confirmed missing in Iraq. The Pentagon says a number of civilians are also unaccounted for.

Senior Pentagon correspondent Jamie McIntyre with the report -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, of course, the big question is, are captured American soldiers in the hands of the insurgents? We don't know the answer to that question tonight.

But what we can say is that two U.S. soldiers are missing and unaccounted for, as well as several American civilians identified as contract workers. This came after this deadly attack on a fuel convoy of four trucks which -- in which one soldier was killed and 12 others were wounded, including some other civilian contractors.

The Pentagon reacting to reports all day that there may have been some U.S. personnel captured, initially said they couldn't confirm it. Now they are telling us simply that two soldiers are missing, as well as some others. And a search is under way. Today, Dan Senor, who is the coalition spokesman, reacting to this new tactic of kidnapping people, said that the message to any hostage takers was that the U.S. would not tolerate it, they would not negotiate with anyone taking a hostage. Instead, they would seek to capture or kill them -- Lou.

DOBBS: Jamie, the military is repositioning troops in Iraq so they can use maximum force, obviously, against the insurgents. What more can you tell us about this repositioning?

MCINTYRE: Well, CNN has learned that elements of the 1st Armored Division which were dispatched from Baghdad south to retake the of Kut will be told that they will have to stay in Iraq for another three months. They were scheduled to begin leaving Iraq in April and May, but they are one of the most combat-ready and experienced units.

As I said, they were just employed to help retake the town of al- Kut. And they will be staying, according to Pentagon sources. Meanwhile, General Abizaid is reviewing what other forces he might need. But, at this point, that's been the only decision.

(BEGIN VIDEO CLIP)

ABIZAID: I think that there is sufficient force on the ground now to deal with the problem. If that means we may have to extend some troops here in order to get the mission accomplished, that's what we'll do.

(END VIDEO CLIP)

MCINTYRE: And, Lou, there was a published report in "The Washington Post" today suggesting that some elements of the 3rd Infantry Division might be sent back to Iraq early. Pentagon officials are telling us that that is not the case -- Lou.

DOBBS: Thank you, Jamie -- Jamie McIntyre, our senior Pentagon correspondent.

Two coalition countries, New Zealand and Kazakhstan, plan to withdraw their troops from Iraq. Those countries have only a small contingent of soldiers in Iraq, but some of the larger coalition countries are also facing rising pressure at home to withdraw their troops.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Protesters in Tokyo call for the withdrawal of Japanese troops in Iraq. Despite pictures of bound hostages, Japan's government said Friday withdrawing their more than 500 troops would be -- quote -- "playing into the hands of terrorists."

A dozen foreign nationals have been kidnapped in the last two days, including three Japanese, seven South Korean missionaries, now freed, one Arab resident of Jerusalem, one Canadian. Fadi Fadel, a Canadian citizen, works with Iraqi children for the International Rescue Committee. He was abducted two days ago in Najaf and is still not free. The IRC temporarily suspended operations in the south of Iraq.

HEIDI WAGNER, INTERNATIONAL RESCUE COMMITTEE: We don't shut down. We're just -- stop operations for a period of time. But everything remains in place. It doesn't indicate that we're leaving. It's just closing up shop for a few days until the situation stabilizes.

PILGRIM: The United States has 34 allies in the coalition, providing 22,000 of the more than 150,000 troops in Iraq. Hundreds more foreign nationals work with humanitarian organizations. Despite the recent upsurge in violence, including the targeting of civilians, the U.S. State Department Friday said the coalition is intact.

J. ADAM ERELI, STATE DEPARTMENT SPOKESMAN: They recognize the importance of staying the course. I think Korea, Japan, Ukraine, Uzbekistan, have all said that they are not thinking of cutting and running.

(END VIDEOTAPE)

PILGRIM: And the United States is asking for even more help from allies. It's asking a dozen countries to provide additional security for the U.N. when it resumes operations in Iraq -- Lou.

DOBBS: Additional security for the United Nations, but if these coalition members are withdrawing right now, after what has been a bloody, terrible week, it could also get worse. What's the expectation?

PILGRIM: It really could. They are even asking countries who didn't contribute troops. So there is a sort of counterforce going on, the reality on the ground vs. the desire to protect the U.N. when it goes in.

DOBBS: Kitty, thank you very much.

President Bush today talked to the leaders of key U.S. allies about the fighting in Iraq. President Bush also discussed Iraq with members of the national security team, including his U.S. civil administrator, Paul Bremer.

Suzanne Malveaux now reports from near the president's ranch in Crawford, Texas -- Suzanne

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Lou, White House officials today say this is really a time of reflection, but also determination. President Bush reaching out to allies today. He made phone calls to the leaders of Poland, Italy, and El Salvador.

We're told by White House spokesman Scott McClellan that all three of those leaders repledged their commitment, their resources and their troops to bring democracy to Iraq, also to go after what the administration is calling a small radical element inside the country led by the Muslim cleric Muqtada al-Sadr. They say that this is something that he is engaged in a dangerous and violent power play with the United States. (BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: We can't let these individuals determine the future of a country or determine the future of 25 million people. And so we will go after them and we are going to encourage Iraqi citizens to help us identify who these people are, get them under control, bring them to justice and destroy them.

(END VIDEO CLIP)

MALVEAUX: Lou, a new poll released today from CNN/"TIME" shows that support for the president's performance in Iraq may be slipping. Here are the numbers here.

When asked how Mr. Bush is handling Iraq, 44 percent say they approve -- that's down from 51 percent in late March; 51 percent say they disapprove. That is up from 47 percent. Should also let you know, Lou, that the president is preparing to host the president of Egypt, Hosni Mubarak, at the Crawford ranch, a very important ally. He is also going to be meeting with British Prime Minister Tony Blair at the White House on Friday -- Lou.

DOBBS: Suzanne, thank you very much.

We'll have a great deal more here on Iraq in just moments. Senator Carl Levin, the ranking Democrat on the Armed Services Committee, joins us. We'll be talking about the escalating violence in Iraq, U.S. troop strength and the transfer of power to Iraqis.

In "Heroes" tonight, the remarkable story of a U.S. Army Ranger who was wounded in Iraq and wants to return to the battlefield as soon as possible.

And I'll be joined by an outspoken critic of our extensive reporting here on the exporting of American jobs to cheap overseas labor markets, former Citicorp CEO Walter Wriston.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Marines tonight are heavily engaged fighting insurgents in the Sunni Triangle. And the U.S. Army is fighting to retake cities controlled now by Shiite militias.

Senator Carl Levin, the ranking Democratic on the Armed Services Committee, says the United States should be flexible about the June 30 deadline, amongst other things.

Senator Levin joins us tonight from Washington.

Senator, this -- the latest report that we just received from the Pentagon and our Jamie McIntyre, that Americans have been confirmed to be missing and likely taken hostage, the escalating violence, what is your thought tonight? SEN. CARL LEVIN (D), MICHIGAN: Well, that there was a lack clearly from the beginning of a plan for a violent aftermath to Saddam. And we are going to have to rely, I believe, on some of the thoughts and the plans now of our uniformed guys and less on the civilian guys in the Pentagon, because the civilians have always underestimated what -- how difficult this aftermath would be.

But the uniform leadership, including the chief of staff of the Army, General Shinseki, before this war, when he talked about the need for several hundred thousands of troops, perhaps, after the war, was right on target and the civilians were much too optimistic going in, and still are, as far as I'm concerned, in their current rhetoric.

DOBBS: Well, General Abizaid, the commander of CENTCOM responsible for all of Iraq, today said again, as we reported here to our viewers, that he did not believe he needed more troops right now. That is the top-ranking officer. What do you say?

LEVIN: I'll continue to rely on him. And I hope that the Pentagon will as well and not in way suggest to him that he should not ask for more troops if he needs them because of any possible political fallout for the administration.

We have to listen very carefully to the uniform military leadership. I wish they had been allowed to be involved in the planning for this aftermath instead of being cut out of that planning, as they were for the most part. And we ought to put great stock in what they say now.

DOBBS: Senator, that's a very serious charge. You are suggesting that the general staff was not involved in the planning for the military operations and positioning of troops and force in Iraq, eliminated by the civilian leadership at the Pentagon?

LEVIN: What I'm saying is that in the prewar planning for what would happen after the defeat of Saddam, that our uniformed military, who were told that they should basically let the civilians do that and stay out of it, basically, and I was told that by no less a person than General Franks.

DOBBS: Well, Senator, at this point, we're watching coalition and a number of coalition partners say straightforwardly that they are withdrawing now under the pressure of the onslaught that has been unleashed by the Iraqis over this past week. Do you have any counsel for the White House and for the secretary of defense here?

LEVIN: I've urged them from the beginning to involve the international community to the extent that they possibly can now. I hope it's not too late to reach out to the United Nations and to tell the United Nations, look, what will it take to get you involved in supporting the shift to an Iraqi interim government, to whom we want to transfer sovereignty?

It's going to be very difficult to transfer sovereignty to an Iraqi government unless two things are true, one, that there's greater security there at the moment, at the time, and, two, that you have the support of the groups inside of Iraq for any interim government. And that's all going to be a lot easier if the international community acting through the U.N. gives support to us. And we have not reached out to the United Nations for that support.

We didn't even ask them whether they supported the setting of that date of June 30 for the transfer of sovereignty. We don't even invite people for their comment and for their advice. And we ought to do that.

DOBBS: Senator, as you well know, the United Nations withdrew after its headquarters were destroyed by a bomb by Iraqi insurgents. The United Nations has been unsuccessful in providing security both for the Iraqis that have been trained to this point, for our own forces over the course of this past week. Without that ability to provide that kind of security, what are they prospects?

LEVIN: I think it would be difficult to get the U.N. in physically, but what we need is the political support of the United Nations in New York for a process which would create that interim government to whom we want to transfer sovereignty.

We have not asked the United Nations, do you support the setting of that date on June 30? And without the U.N.'s support of that date, it seems to me it's going to be very difficult to persuade anybody that that is the time, that is the moment that we have to transfer sovereignty. We need to reach out to that international community, at least politically. They can't help us much at the U.N. in terms of our security.

DOBBS: Senator Carl Levin, thank you for being here.

LEVIN: Sure, Lou.

DOBBS: Tonight's thought is on foreign policy. "No foreign policy, no matter how ingenious, has any chance of success if it is born in the minds of a few and carried in the hearts of none" -- that from former Secretary of State Henry Kissinger. And, by the way, Dr. Kissinger will be one of our guests here this coming Monday.

When we continue, tonight's "Heroes," a soldier who overcame injury in Iraq and betrayal at home, we'll have his story.

And Senator Kerry and the Bush administration, split views on Iraq and the direction of the economy. And voters are paying very close attention. We'll have the results of the latest polls and CNN political analyst Bill Schneider and Carlos Watson join us.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Army Staff Sergeant Chris Shelton spent a year in Iraq. He was wounded in combat and received the Purple Heart. But Sergeant Shelton had a very different kind of challenge to face when he returned to his home base.

Bill Tucker has the story.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): He doesn't shoot basketball like a hero, but he does do a mean grill. Staff Sergeant Shelton is an Army Ranger. Last June, he was leading a 180-vehicle convoy just north of Baghdad.

STAFF SGT. CHRIS SHELTON, U.S. ARMY: As soon as I took that left, gunfire erupted from all around us. We were in a near ambush. I was hit in the shoulder. I felt my arm go numb a little bit, tingling, a hot sensation in my shoulder. And I wasn't really worried about that. I was worried about getting out of there.

TUCKER: Chris' worse hit, though, wasn't on the battlefield. A soldier staying at Chris's apartment back at his home base in Italy stole his Chris' identity and emptied his bank account of $13,000. The experienced shocked Chris.

What happened next has left him stunned. Back home in Washington state, after hearing of his story from Chris' mom, his hometown started a campaign. It took on a life of its own. And checks came pouring in from all over the world.

SHELTON: This is my time to thank them. All those people that didn't leave a name or an address that I can thank, this is my time to say, thank you, I really appreciate it. It is really nice.

TUCKER: As for being awarded the Purple Heart...

SHELTON: When I got pinned with my Purple Heart, what can I say about that? It's a million-dollar wound. Some of my buddies aren't around to read their citation. So it's one medal that I never wanted, but I did get it.

TUCKER: Sergeant Shelton is eager to report back to his unit.

SHELTON: It might be a hard job sometimes, but, you know, I get to lead men into combat.

TUCKER: Next year, he plans to reenlist.

Bill Tucker, CNN.

(END VIDEOTAPE)

DOBBS: Still ahead here, the political fallout from Condoleezza Rice's appearance before the 9/11 Commission. Political analyst Bill Schneider and Carlos Watson tell us what it could mean for this presidential campaign.

And thousands of illegal aliens enter the country every day, but the government has all but given up finding the companies that hire them. We'll have a special report.

(COMMERCIAL BREAK)

DOBBS: The latest poll on the race for the White House shows the candidates in a statistical dead heat, at least, but with the president with an edge in the numbers.

The Gallup polls show President Bush with the support of 48 percent of Americans, Senator Kerry with 45 percent. This poll was taken before and after National Security Adviser Condoleezza Rice testified before the 9/11 Commission.

Joining me now for more on the political implications, senior political analyst Bill Schneider, political analyst Carlos Watson.

Gentlemen, good to have you with us.

CARLOS WATSON, CNN POLITICAL ANALYST: Good to see you.

DOBBS: Bill, let's start with you.

This suggests, it seems at least, that Condoleezza Rice performed how?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: She performed very well, according to this poll. Americans found her quite credible. They have a very favorable attitude towards Condoleezza Rice. In fact, she is slightly more favorably regarded and more credible than Richard Clarke, who -- and this has been a test of the two persons' credibility.

But here is the key finding from that poll that was taken on Thursday night after her testimony. We asked people, did the Bush administration do all it could have been expected to do before 9/11? And what you see there is 10 days ago at the end of March, 54 percent of Americans said, no, the administration did not do all that could be expected before 9/11. And that has dropped to 40 percent, a 14 percent drop. Now, by a slight plurality, 48 to 40, Americans say, yes, the administration did do all it can be expected to do. I think that's a testimony to Dr. Rice's credibility.

DOBBS: Remarkable numbers. What does, in your mind, Carlos, at least, these poll numbers show us about the attitude on the part of the president's handling of Iraq?

WATSON: I think you are still seeing that people have great reservations.

And certainly with all that's happened this past week in terms of hostage taking, in terms of the events in Fallujah, etcetera, the president has got a very difficult job not just overseas in Iraq, but here in the U.S. What is not clear is that John Kerry will automatically benefit from doubts that people may or may not have about the president's handling of Iraq.

He still is yet to define himself and offer a compelling plan. I think many Americans are going to wait and reserve judgment until they hear more. DOBBS: The president has to be doing well, Carlos, on the polling, on the economy, given the job numbers. At least that's what one would assume. How does the assumption hold up?

WATSON: Surprise, surprise. The president's lowest numbers are not on Iraq and not on how he is handling terrorism, but still on the economy, still in the low 40s.

I think for a lot of people, at least one issue is that we have heard bad news over the last 36 months on this economy, that an economy that was once roaring and that frankly got used to different set of expectations during the booming '90s, hasn't been doing as well. And so one month of good numbers, I think a lot of people hesitate.

And the other thing, Lou, as you know, is that there's been conflicting data or at least data that on the surface seems conflicting. On the one hand, you have fewer people who are -- quote, unquote -- job -- more jobs created. But, on the other hand, you have a higher unemployment rate. You and I know the reason for that, but I think a lot of people are still waiting in reservation. Another issue, as Bill Schneider will point out, has to do with the pump.

DOBBS: Well, tell us about the pump.

SCHNEIDER: The pump, gas prices.

Lou, Americans have a constitutional right -- it must be in there somewhere, Amendment 54 or something -- a constitutional right to cheap gas. And now they are angry.

DOBBS: By the way, I want you to know, I think that I probably would be one of those that would be looking for that constitutional right.

SCHNEIDER: It must be in there somewhere, because the whole American way of life is organized around cheap gasoline. People live in far-flung suburbs, commute long distances, ferry their kids around in what look like armored personnel carriers that use a lot of gas.

DOBBS: Now, now, Bill, Bill, Bill, Bill, Bill.

SCHNEIDER: And they spend a lot of money on gas.

So, when gas prices go up, it hits everybody very, very hard. And what we are finding in these polls is that Americans are paying an enormous amount of attention to gasoline prices, even though economists will tell you, relatively speaking, relatively speaking, they're cheaper than they were back in 1980 or 1979.

The fact is, it's hitting $2 a gallon in a lot of places, higher than that in California. Americans are angry about that. So, they balance that against the good news on the jobs front. For most Americans the bad news on gas prices is real bad.

DOBBS: General, I'd like you both in just the short time we have remaining. And Carlos, if I may begin with you. These numbers show President Bush and Senator Kerry basically even, statistically. Is that where you would expect them to be at this point? How significant is that for both Kerry and for the president?

WATSON: So the good news for the president is that six weeks ago you were down by 12 and now you are up by three or four. So there's been a major swing. The bad news for the president is that at this time in 1996 when Bill Clinton was running for reelection he was already up by double digits, roughly 14 points. When Ronald Reagan was running for reelection in 1984 he was up by eight to ten points, depending on which poll you looked.

In some ways it's good news for the president, he seems to be slightly ahead, although it's within the margin of error. The bad news is you are not as far ahead as you would like to be. So, conflicting messages there.

I would continue to look at the midwest where Kerry was this week and will continue to be. In places like Iowa, the individual state polls are still showing that Kerry has a slight lead in Iowa and Michigan. Some of the other battleground states like Arizona and Florida, though, it looks like the president may have a slight edge.

DOBBS: Bill Schneider?

SCHNEIDER: Well, what the president is doing may be working. It's called preemptive action. He's doing the same thing in politics that he did in Iraq, namely, he didn't allow himself to go on the defensive on gas prices. Look he's from Texas. He has ties to the oil industry. This issue should knock him out of the water. The fact that it's still a statistical dead heat says he is doing something right.

What he's doing is hitting Kerry hard on the issue of gas taxes. Everybody's seen that ad, people are talking about it, it's a humorous ad. The first he thing did he when gas priced started to skyrocket, was hit Kerry with an ad, saying this man said ten years ago to the "Boston Globe" would he support a 50 cent a gallon gas tax.

All Americans know that now, or everybody who watches television, a lot of people. And that means he's under taking a campaign of preemptive strikes in his political campaign and it may be paying off.

DOBBS: Bill Schneider, Carlos Watson, gentlemen, thank you for being here.

WATSON: Have a great weekend.

DOBBS: Still ahead, in "Broken Borders," millions of illegal aliens are working in this country. Some critics say the government isn't doing enough to stop American companies from hiring them. We'll have a special report next.

(COMMERCIAL BREAK)

DOBBS: As many as 12 million illegal aliens live in this country. Many are working in some of the country's largest businesses and corporations. Now the Bush administration has a new proposal that would crackdown on employers who hire illegals. Critics say that plan doesn't go far enough. Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The hard part is crossing the border, but once illegal aliens enter the United States, it's relatively easy to stay here. With a phony green card purchased for a couple hundred dollars, illegal aliens can find work. Employers looking for cheap labor are all too willing to hire them.

DEBORAH MEYERS, MIGRATION POLICY INSTITUTE: Despite a tremendous increase in resources at the border, we still continue to have a flow of undocumented person into the United States because they are drawn to the jobs that are available.

SYLVESTER: Last October, federal agents raided 61 Wal-Mart stores arresting 250 illegal workers. The retail giant now faces stiff penalties, but these raids are more the exception than the rule. In 1990 more than 14,000 employers were fined for hiring illegal workers. By 2000 only 178 faced fines.

The Bush administration has proposed spending $23 million more next year for immigration and customs enforcement to verify worker documentation. But still, fewer than 2,500 agents will be assigned to interior enforcement to track more than 10 million illegal aliens. While employers are required to check documents, they are not obligated to be experts.

JULIE PEARL, IMMIGRATION ATTORNEY: There was a court case many years back where a judge looked at a document that was counterfeit that an employer had thought was a real document. The judge said, look, I can't tell the difference, I'm not going to require the employer.

SYLVESTER: There is a federal pilot program that provides employers to check a database. But the program is currently available in only six states, and is voluntary.

(END VIDEOTAPE)

SYLVESTER: The pilot program was scheduled to expire last December but Congress passed legislation to extend it for another five years and to include employers in all 50 states by the end of this year.

DOBBS: Why is it a pilot program? Haven't they had time to figure out that it works?

SYLVESTER: Well they have, and that is why they are extending it for another five years. But I think have you to get the will behind this. As many critics said, it doesn't do much good if you have these laws on the books if no one is actually enforcing it.

DOBBS: Thank you very much. Lisa Sylvester report everything Washington.

Taking a look now at some of your thoughts, many of you writing in about our "Exporting America."

Suzanne Cook of Cupertino, California, "thank you, Lou, for you insightful commentary on the exporting of jobs from the United States to other countries. We need to find a middle ground between free trade and protectionism, a balanced trade policy in the national interest."

Mitchell Caylor of Enterprise, Alabama, "the administration keeps talking about the robust ecomony. Apparently, they do not live in a real world, because gas prices are soaring, insurance costs are rising, crude prices are up and thousands of jobs are being outsourced to foreign countries."

Mike in Bridgeport, Connecticut, "Lou, almost 2 years after being laid off from my tech job, I finally had some luck and gained employment. My pay is 50 percent less, my health insurance tripled, minus eye and dental coverage. As for vacation time, now I have to work a year to receive 1 week."

And James St. John of Payson, Utah, "I am only a simple minded taxpayer, but let me try to understand the global economy. I lose a $19 an hour job to someone who makes $5 an hour. He buys products made in China by a worker that makes $.75 an hour. I then retrain for a job that pays $6.57 an hour which I soon lose to an undocumented worker."

And John in Austin, Texas, "Lou, please stop pointing out the holes in our border, we'll need those holes in the future to find work in Mexico."

We love hearing from you. E-mail us at loudobbs@CNN.com.

Sill ahead here, former Citigroup CEO Walt Wriston, says the shipment overseas isn't the problem. He's our guest next.

And the president and the senator, both promising to create millions of new jobs. We talk to our panel of newsmakers about whether we should be paying any attention to what they say about job creation, and a lot more. Stay with us.

(COMMERCIAL BREAK)

DOBBS: My next guest takes issue with our extensive reporting here on the exporting of American jobs to cheap overseas labor markets. Walter Wriston says this country imports more jobs than he exports. Besides multinational corporations such as Honda, (UNINTELLIGIBLE), which he says create millions of jobs in America.

Walt Wriston served as chairman and CEO of Citibank and then CityCorp for 17 years and joins us tonight from Boynton Beach, Florida and I should, in full disclosure, admit, at least, from my side that we're friends. Walt, it's great to see you. Even if we're in some mild disagreement over this issue. You said in your op-ed piece in the "Wall Street Journal," the outsourcing issue is a result of politicians and the mainstream media whipping up perception. We have a problem of exporting jobs. You think it is simply a perception issue?

WALTER WRISTON, FMR. CHAIRMAN & CEO, CITICORP, CITIBANK: It's basically a perception issue. We've lost, in the manufacturing sector as you reported many times, about 2.7 million jobs. But at the same time the output per person or per man hour in the last 20 years in manufacturing has gone up 103 percent. So basically the job shrinkage has been due to productivity. Give you one example in 1900, more than 40 percent of the American workforce were on American farms. There were 20 million people there. Today, there's about a million and a half people and we feed the entire world. The difference is productivity.

DOBBS: Right, productivity I don't think anyone would argue has not been a significant part of the labor and employment market. But at the same time, we're losing over a half trillion dollars in the trade wars, if you will, over a half trillion dollars in the current account deficit. We haven't run a surplus in trade in this country since 1976. That doesn't concern you at all?

WRISTON: No, that doesn't bother me in the slightest. Because the imports of manufacturing goods have only gone up 0.6 percent, which is very little.

DOBBS: Let me interrupt and ask you this, Walt. If that doesn't concern you, we're losing a half trillion on the balance of trade and the current account, how in the world are we being so productive? How are we going to judge just how smart and clever we are if we can't even compete on a balance basis in trade?

WRISTON: Well, trade never balances. Never has since 1776. What we have done is -- I'll give you another example. I remember articles written weren't enough women in America to man the switchboards of the telephone company. Today it's very hard to find anybody who is a human in the telephone company because we learned how to make dial phones and digital switching.

DOBBS: But we didn't, Walt, we didn't shift those jobs to the Philippines or Romania and then send back those services and products to this $11 trillion economy, did we?

WRISTON: No, what we did was that we imported more jobs in 2001, we imported 6.4 million jobs. And that represents -- 20 percent of them were in the manufacturing business. They had a total payroll to Americans workers of $650 billion.

DOBBS: Walt, and, you know, I love you, Walt, the fact is, that the reason those plants are here and those jobs are here is because those companies whether it's Honda or Novartis (ph), they are here to gain access to an $11 trillion economy.

WRISTON: They are also here because our productivity is much higher than theirs.

DOBBS: If our productivity is so much higher than theirs why are we shipping other jobs to the Philippines, to India?

WRISTON: Because the oldest thing in the world is comparative advantage. And I remember -- I think it was Ross Perot, the great sucking sound went down to Mexico. Now, Mexico is investing in our country and creating dozens of jobs here. So...

DOBBS: That's because there's a $30 billion deficit with Mexico but at the same time with Mexico Ross Perot, I think you have to say had one part of it right. We have as a result of NAFTA over the course of the past decade lost jobs in this country. Mexico has lost 20 percent in terms of manufacturing wages and its GDP growth rate is half its historic level.

WRISTON: That was because the IMF had been devalued. That's a totally different subject. But an open trade, we tried restrictions and the (UNINTELLIGIBLE) tariff when our labor force was 50 million people and there were 20 million people unemployed from 1930 to 1939. So we know that that doesn't work.

DOBBS: The only thing I agree with you there, Walt, it's not good to have that many people unemployed. We have 15 million of them almost unemployed. And discouraged workers are marginally attached to the labor force.

WRISTON: Let me give you two numbers.

DOBBS: Walt, I would love to. Can you give them to me in 15 or 20 seconds.

WRISTON: You got it. In the last decade we have lost 309 million jobs. We have also created 328 million jobs. And that is the normal spin in a dynamic economy. And the jobs that have gone overseas have been low pay jobs. The jobs we're creating at home due to globalization are much higher paying jobs because of the desire for middle managers that are very difficult to find at the moment.

DOBBS: Walt, since you did the historical smooth holly shot I have to conclude. It's part of the fun of being in this seat rather than yours. It is also, I think, fair to point out since you are referring to this issue in the smooth holly terms you would not be comfortable, would you, having this president be the only president since Herbert Hoover to have lost jobs during his tenure?

WRISTON: No, he hasn't lost jobs.

DOBBS: No. Walt, we're down.

WRISTON: I'm sorry. We created 17.8 million jobs in the last decade.

DOBBS: No, I'm referring to President Bush since he was elected.

WRISTON: You are just referring to manufacturing.

DOBBS: Just to -- well, actually, to total job creation since the president took office. Walt Wriston, I wish I could sit here and argue with you.

WRISTON: All right. I'd be delighted.

DOBBS: I know you would. I'm going to extend you the invitation to do so again. It's great to see you, Walt.

WRISTON: OK. Bye.

DOBBS: When we continue, this week's newsmakers but first a reminder to check our website for the complete list of companies we confirmed to be exporting America, CNN.com/lou. We'll continue in just a moment. Stay with us.

(COMMERCIAL BREAK)

DOBBS: In the first three months of this year, the economy has created 500,000 new jobs, that's the strongest start to a year since 2000. It is, however, still a long way from the bold predictions of the Bush administration, millions of new jobs to be created this year. Joining me now for more on the prospects for employment, the strength of this economy and what lies ahead, Steve Forbes, editor in chief of "Forbes" magazine, Steve Shepard, editor in chief of "BusinessWeek," and Shawn Tully, senior writer for "Fortune" magazine. Good to have you with us, gentlemen.

Let's start with this market looks -- this labor market looks like it improved. Are concerns about employment misplaced now?

STEVE FORBES, "FORBES": Well, I think the economy is finally showing some real strength, and as businesses start to invest more, I think you'll see more job creation. Businesses have been very reluctant up to now, given the cost cutting they have been through. Cash flows are exceeding what they have been spending on capital. That's beginning to change. So I think in the next 12 months it will be a much better picture than it was in the previous 12 months, by a wide margin.

DOBBS: What about the quality of these jobs, Steve?

STEVE SHEPARD, BUSINESSWEEK: Well, it will be mixed. But I think it's interesting that the 308,000 jobs in March equals the total of number of jobs that were outsourced over the last three years.

DOBBS: According to -- wait, wait, wait, wait.

SHEPARD: One month, Forrester statistics.

DOBBS: Oh, come on. Forrester -- you can take any number of statistics. The issue -- the ranges go from 300,000 to three million.

SHEPARD: No, not three million.

DOBBS: Excuse me, to three million. Trust me. We know these figures and these figures suggest to us one thing, and one thing only. No one knows the number of jobs outsourced, period. Not Forrester, not the University of California Berkeley. SHEPARD: I never heard a number, a credible number anywhere near three million. But in any case, I agree that we're going to have more job creation, although not at that level. We'll probably average somewhere around 175,000 jobs per month, more or less for the rest of the year. Which is good, not great. But good.

DOBBS: And Steve's returned from India here. He's gung ho on outsourcing, we can tell that one. Shawn, your thoughts?

SHAWN TULLY, FORTUNE: Yeah, I think job growth will be relatively sluggish despite -- even if we do have high growth rates. And one of the reasons -- and people are really overlooking this -- is that benefit costs in the U.S. are just going crazy, especially health care costs. And the higher the price of something, the less companies or people consume of it, and companies are consuming a lot less labor. It's getting a lot more expensive, especially on the benefit side.

You look at the increases in wages, they are tiny, they are barely keeping up with inflation, but benefits costs are going up very, very rapidly, especially health care costs. And you have a lot of anti-business legislation in certain states, especially California, of course that was the reason why Schwarzenegger was able to get in. But for example, the Family Leave Act coming in, paid leave for six weeks off. You can take it in days and weeks and chunks. Everyone is going to take it. It's just going to raise the cost of training employees to fill the gaps of people who are going to leave. So we have got to work on keeping labor costs down, especially benefits cost.

DOBBS: Labor costs down. That's the big problem? You have got productivity at historical highs in this country. You have got amazing performance in the economy, and now the big problem is labor costs?

(CROSSTALK)

TULLY: Health care costs.

DOBBS: Oh, I thought you -- when you said labor costs, I thought, my God!

SHEPARD: But the point of it is -- it's very interesting to compare what is happening in the United States and what's happening in Britain. Britain's creating a lot of jobs and they are growing very strongly. The reason they are is their productivity growth rate is half the level of the United States. So we're able to do more with less. And they have to hire more people, because they don't have the productivity growth rates that we have. And this problem of job creation is a productivity issue, not an outsourcing issue.

DOBBS: I would say that, whether one calls it a productivity issue, or an outsourcing issue, Steve, the fact of the matter is, that this giant job engine isn't creating them. And I would say further, that because we don't have either the statistical data from government sources or from corporate America, it's very difficult to make a judgment about the scope of it. Other than anecdotal. TULLY: But how can you say that?

DOBBS: Just like that. Just watch, just watch, Shawn.

TULLY: Because the free flow of jobs, the free flow of capital across borders always creates more problems. What basis are you using to say that historically...

DOBBS: Wait, wait. No, no, we should be concerned about free flow of capital and trade and its relationship to outsourcing. Let's be clear, outsourcing of jobs in this country is not about trade, irrespective of what any economist with a political agenda has to say. It is about taking an American job, shipping it to a cheap labor market overseas to send back a service or a good to this market. It's that straightforward.

TULLY: How about the manufacturing Japanese cars in Alabama? How about...

DOBBS: How about it? How about it?

TULLY: ... making French pharmaceuticals in New Jersey...

DOBBS: Why is that Japanese plant sitting in Alabama employing American workers to sell into this market, why is that?

TULLY: There are advantages to...

DOBBS: That's free trade, right?

TULLY: Yeah.

DOBBS: No, it's not free trade.

(CROSSTALK)

DOBBS: It's a requirement by the Reagan administration for entry into this market. It is absolutely not free trade. It's (UNINTELLIGIBLE).

FORBES: That was 25 years ago. Our workers are more productive than the workers in Europe, even with our benefit problems, which are very real, we're still able to do it more productively here. And that's why the jobs come here. Otherwise, they would go to Mexico, or Brazil or China.

DOBBS: No, they would go there because they are cheaper. Productive is a different issue.

FORBES: Productivity, labor is part of productivity.

TULLY: Yes, it's part of the equation for total cost of producing a good or a service.

SHEPARD: The point of it is is that we are importing an awful lot of jobs that doesn't get discussed enough, particularly on this show.

DOBBS: Well, let's talk about some of the jobs that we're importing. Let's talk about, for example, Toyota.

SHEPARD: Sony...

DOBBS: Well, let's start with -- let's be very specific.

(CROSSTALK)

DOBBS: Toyota. OK? Is that a fair example? With its plants here, producing a variety...

SHEPARD: That's a good example, yes.

DOBBS: OK. They employ 13,000 Americans. Do you know what percentage of their total corporate profits worldwide earned right here in this country? Thirty percent of their total profits. The point that -- the only reason they are here is for access to this market. When we outsource...

(CROSSTALK)

FORBES: So we shouldn't have access to other markets by putting plants there?

DOBBS: Oh, no, no, no, but we shouldn't get confused. Why would we then try to rationalize the shipment of American jobs overseas, to India, the Philippines, Rumania, Ireland, wherever it may be, Eastern Europe, to simply re-enter our own market? You know why. That is simply to lower wages. It has nothing to do with productivity. Period.

FORBES: Productivity? Wages are part of productivity. And if you are not productive, you don't make a profit. Without profits, you don't create jobs. Every generation, there's some boogeyman out there, Japan, Germany, Mexico, now India and China, and somehow when American ingenuity comes through...

DOBBS: No, no, no, that's not fair, Steve.

FORBES: When American ingenuity comes through...

DOBBS: Steve...

FORBES: ... we always come out ahead.

DOBBS: Steve, they are not boogeymen at all.

FORBES: And we have the higher-paying jobs here.

DOBBS: Let me be clear about who the boogeymen are. Those are the companies that are making competitive decisions and using the words productivity and competitiveness as code words for low cost labor. Come on. FORBES: And in the 1980s, we had all the talk about hollowing out of America, de-industrialization of America, and today America is stronger than ever before.

DOBBS: Do you think it is?

FORBES: Of course it is.

DOBBS: Then what would you say the total national debt is?

FORBES: Total national debt?

DOBBS: Total national debt, total trade deficit.

FORBES: Whatever number you want to use...

DOBBS: And I will use all of them.

FORBES: ... is less than that of every major European country and a fraction of that of Japan.

(CROSSTALK)

DOBBS: We're going to have to wrap it. Do it quickly.

SHEPARD: Just going to say, Europe has a trade surplus, but they have a much higher unemployment rate than the United States. Who's better off?

DOBBS: We'll leave that question unanswered until next week. Steve Shepard, good to have you back. Shawn Tully, thanks for being here.

FORBES: Thank you.

DOBBS: Even you, Steve Forbes, with that rotten article in this week's edition. Thanks.

That's our show for tonight. We thank you for being with us. Monday, we'll be joined by former Secretary of State Henry Kissinger. We'll be talking about obviously Iraq and the challenges facing American power around the world. For all of us here, have a very pleasant weekend. Good night from New York. "ANDERSON COOPER 360" is next.

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


Aired April 9, 2004 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
LOU DOBBS, HOST: Tonight, Shiite militias in Iraq continue to battle American troops, and more American soldiers and Marines are killed in combat.

UNIDENTIFIED MALE: I will tell the American people (UNINTELLIGIBLE) to be proud of their sons and daughters who are here.

DOBBS: Senator Carl Levin, the ranking Democrat on the Armed Services Committee, is our guest tonight. He says the United States should consider extending the June 30 deadline.

In "Broken Borders" tonight, you won't believe how easy it is for illegal aliens to stay in this country buying phony green cards.

UNIDENTIFIED MALE: We don't want to enforce all of the laws.

DOBBS: And dramatic new poll numbers tonight on President Bush. How the president is handling the war in Iraq, and what Americans think of Condoleezza Rice's testimony.

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, April 9. Here now, for an hour of news, debate and opinion, Lou Dobbs.

(END VIDEOTAPE)

DOBBS: Good evening. Tonight, one year after the fall of Saddam Hussein, U.S. troops in Iraq again on the offensive, engaged tonight in heavy combat with the enemy. More than 1,000 troops are battling Shiite militias in Kut, and U.S. Marines tonight have surrounded Fallujah.

In Baghdad, a U.S. soldier was killed when insurgents attacked a fuel convoy. Just a short time ago, the Pentagon said two American solders are now missing after that attack. A number of civilian contractors are also unaccounted for, and five other American troops were killed in fighting throughout Iraq.

(BEGIN VIDEOTAPE)

DOBBS (voice-over): In Fallujah, the coalition called for a unilateral halt in the fighting. U.S. administrator Paul Bremer said the pause was to allow talks between the coalition and local Iraqi leaders. Humanitarian aid also arrived, but U.S. military officials said the halt is only temporary if progress is not made.

BRIG. GEN. MARK KIMMITT, U.S. ARMY: Should these discussions break down, the coalition military forces are prepared to go back on the offensive operations, and at no time during this suspension of offensive operations do soldiers forget the inherent right of self- defense. If fired upon, they will fire back.

DOBBS: The head of Central Command, General John Abizaid, in Fallujah said the resistance facing the troops isn't surprising.

GEN. JOHN ABIZAID, CMDR., U.S. CENTRAL COMMAND: It was a military and special intelligence organization center for the previous regime. And we just have failed to receive the amount of cooperation that we hope for from the Iraqis in this area. And they have chosen to work not only against us, but against the future of Iraq.

DOBBS: Iraqi insurgents attacked a Red Crescent convoy leaving Fallujah after it delivered aid supplies.

In Baghdad, a fuel tanker in another convoy was hit by a rocket- propelled grenade. And a mortar round landed near the Sheraton Hotel. NO casualties were reported. In Kut, coalition forces regained control of three bridges and a government compound. Brigadier General Mark Kimmitt said he expects all the major government facilities to be in coalition control by tomorrow morning.

And in Sadr City, coalition forces retook control of the city from radical Shiite cleric Muqtada al-Sadr's fighter, that same location where one year ago the world watches as U.S. military forces toppled the statue of former Iraqi leader Saddam Hussein.

(END VIDEOTAPE)

DOBBS: More now on reports that two American soldiers are now confirmed missing in Iraq. The Pentagon says a number of civilians are also unaccounted for.

Senior Pentagon correspondent Jamie McIntyre with the report -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, of course, the big question is, are captured American soldiers in the hands of the insurgents? We don't know the answer to that question tonight.

But what we can say is that two U.S. soldiers are missing and unaccounted for, as well as several American civilians identified as contract workers. This came after this deadly attack on a fuel convoy of four trucks which -- in which one soldier was killed and 12 others were wounded, including some other civilian contractors.

The Pentagon reacting to reports all day that there may have been some U.S. personnel captured, initially said they couldn't confirm it. Now they are telling us simply that two soldiers are missing, as well as some others. And a search is under way. Today, Dan Senor, who is the coalition spokesman, reacting to this new tactic of kidnapping people, said that the message to any hostage takers was that the U.S. would not tolerate it, they would not negotiate with anyone taking a hostage. Instead, they would seek to capture or kill them -- Lou.

DOBBS: Jamie, the military is repositioning troops in Iraq so they can use maximum force, obviously, against the insurgents. What more can you tell us about this repositioning?

MCINTYRE: Well, CNN has learned that elements of the 1st Armored Division which were dispatched from Baghdad south to retake the of Kut will be told that they will have to stay in Iraq for another three months. They were scheduled to begin leaving Iraq in April and May, but they are one of the most combat-ready and experienced units.

As I said, they were just employed to help retake the town of al- Kut. And they will be staying, according to Pentagon sources. Meanwhile, General Abizaid is reviewing what other forces he might need. But, at this point, that's been the only decision.

(BEGIN VIDEO CLIP)

ABIZAID: I think that there is sufficient force on the ground now to deal with the problem. If that means we may have to extend some troops here in order to get the mission accomplished, that's what we'll do.

(END VIDEO CLIP)

MCINTYRE: And, Lou, there was a published report in "The Washington Post" today suggesting that some elements of the 3rd Infantry Division might be sent back to Iraq early. Pentagon officials are telling us that that is not the case -- Lou.

DOBBS: Thank you, Jamie -- Jamie McIntyre, our senior Pentagon correspondent.

Two coalition countries, New Zealand and Kazakhstan, plan to withdraw their troops from Iraq. Those countries have only a small contingent of soldiers in Iraq, but some of the larger coalition countries are also facing rising pressure at home to withdraw their troops.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Protesters in Tokyo call for the withdrawal of Japanese troops in Iraq. Despite pictures of bound hostages, Japan's government said Friday withdrawing their more than 500 troops would be -- quote -- "playing into the hands of terrorists."

A dozen foreign nationals have been kidnapped in the last two days, including three Japanese, seven South Korean missionaries, now freed, one Arab resident of Jerusalem, one Canadian. Fadi Fadel, a Canadian citizen, works with Iraqi children for the International Rescue Committee. He was abducted two days ago in Najaf and is still not free. The IRC temporarily suspended operations in the south of Iraq.

HEIDI WAGNER, INTERNATIONAL RESCUE COMMITTEE: We don't shut down. We're just -- stop operations for a period of time. But everything remains in place. It doesn't indicate that we're leaving. It's just closing up shop for a few days until the situation stabilizes.

PILGRIM: The United States has 34 allies in the coalition, providing 22,000 of the more than 150,000 troops in Iraq. Hundreds more foreign nationals work with humanitarian organizations. Despite the recent upsurge in violence, including the targeting of civilians, the U.S. State Department Friday said the coalition is intact.

J. ADAM ERELI, STATE DEPARTMENT SPOKESMAN: They recognize the importance of staying the course. I think Korea, Japan, Ukraine, Uzbekistan, have all said that they are not thinking of cutting and running.

(END VIDEOTAPE)

PILGRIM: And the United States is asking for even more help from allies. It's asking a dozen countries to provide additional security for the U.N. when it resumes operations in Iraq -- Lou.

DOBBS: Additional security for the United Nations, but if these coalition members are withdrawing right now, after what has been a bloody, terrible week, it could also get worse. What's the expectation?

PILGRIM: It really could. They are even asking countries who didn't contribute troops. So there is a sort of counterforce going on, the reality on the ground vs. the desire to protect the U.N. when it goes in.

DOBBS: Kitty, thank you very much.

President Bush today talked to the leaders of key U.S. allies about the fighting in Iraq. President Bush also discussed Iraq with members of the national security team, including his U.S. civil administrator, Paul Bremer.

Suzanne Malveaux now reports from near the president's ranch in Crawford, Texas -- Suzanne

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Lou, White House officials today say this is really a time of reflection, but also determination. President Bush reaching out to allies today. He made phone calls to the leaders of Poland, Italy, and El Salvador.

We're told by White House spokesman Scott McClellan that all three of those leaders repledged their commitment, their resources and their troops to bring democracy to Iraq, also to go after what the administration is calling a small radical element inside the country led by the Muslim cleric Muqtada al-Sadr. They say that this is something that he is engaged in a dangerous and violent power play with the United States. (BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: We can't let these individuals determine the future of a country or determine the future of 25 million people. And so we will go after them and we are going to encourage Iraqi citizens to help us identify who these people are, get them under control, bring them to justice and destroy them.

(END VIDEO CLIP)

MALVEAUX: Lou, a new poll released today from CNN/"TIME" shows that support for the president's performance in Iraq may be slipping. Here are the numbers here.

When asked how Mr. Bush is handling Iraq, 44 percent say they approve -- that's down from 51 percent in late March; 51 percent say they disapprove. That is up from 47 percent. Should also let you know, Lou, that the president is preparing to host the president of Egypt, Hosni Mubarak, at the Crawford ranch, a very important ally. He is also going to be meeting with British Prime Minister Tony Blair at the White House on Friday -- Lou.

DOBBS: Suzanne, thank you very much.

We'll have a great deal more here on Iraq in just moments. Senator Carl Levin, the ranking Democrat on the Armed Services Committee, joins us. We'll be talking about the escalating violence in Iraq, U.S. troop strength and the transfer of power to Iraqis.

In "Heroes" tonight, the remarkable story of a U.S. Army Ranger who was wounded in Iraq and wants to return to the battlefield as soon as possible.

And I'll be joined by an outspoken critic of our extensive reporting here on the exporting of American jobs to cheap overseas labor markets, former Citicorp CEO Walter Wriston.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Marines tonight are heavily engaged fighting insurgents in the Sunni Triangle. And the U.S. Army is fighting to retake cities controlled now by Shiite militias.

Senator Carl Levin, the ranking Democratic on the Armed Services Committee, says the United States should be flexible about the June 30 deadline, amongst other things.

Senator Levin joins us tonight from Washington.

Senator, this -- the latest report that we just received from the Pentagon and our Jamie McIntyre, that Americans have been confirmed to be missing and likely taken hostage, the escalating violence, what is your thought tonight? SEN. CARL LEVIN (D), MICHIGAN: Well, that there was a lack clearly from the beginning of a plan for a violent aftermath to Saddam. And we are going to have to rely, I believe, on some of the thoughts and the plans now of our uniformed guys and less on the civilian guys in the Pentagon, because the civilians have always underestimated what -- how difficult this aftermath would be.

But the uniform leadership, including the chief of staff of the Army, General Shinseki, before this war, when he talked about the need for several hundred thousands of troops, perhaps, after the war, was right on target and the civilians were much too optimistic going in, and still are, as far as I'm concerned, in their current rhetoric.

DOBBS: Well, General Abizaid, the commander of CENTCOM responsible for all of Iraq, today said again, as we reported here to our viewers, that he did not believe he needed more troops right now. That is the top-ranking officer. What do you say?

LEVIN: I'll continue to rely on him. And I hope that the Pentagon will as well and not in way suggest to him that he should not ask for more troops if he needs them because of any possible political fallout for the administration.

We have to listen very carefully to the uniform military leadership. I wish they had been allowed to be involved in the planning for this aftermath instead of being cut out of that planning, as they were for the most part. And we ought to put great stock in what they say now.

DOBBS: Senator, that's a very serious charge. You are suggesting that the general staff was not involved in the planning for the military operations and positioning of troops and force in Iraq, eliminated by the civilian leadership at the Pentagon?

LEVIN: What I'm saying is that in the prewar planning for what would happen after the defeat of Saddam, that our uniformed military, who were told that they should basically let the civilians do that and stay out of it, basically, and I was told that by no less a person than General Franks.

DOBBS: Well, Senator, at this point, we're watching coalition and a number of coalition partners say straightforwardly that they are withdrawing now under the pressure of the onslaught that has been unleashed by the Iraqis over this past week. Do you have any counsel for the White House and for the secretary of defense here?

LEVIN: I've urged them from the beginning to involve the international community to the extent that they possibly can now. I hope it's not too late to reach out to the United Nations and to tell the United Nations, look, what will it take to get you involved in supporting the shift to an Iraqi interim government, to whom we want to transfer sovereignty?

It's going to be very difficult to transfer sovereignty to an Iraqi government unless two things are true, one, that there's greater security there at the moment, at the time, and, two, that you have the support of the groups inside of Iraq for any interim government. And that's all going to be a lot easier if the international community acting through the U.N. gives support to us. And we have not reached out to the United Nations for that support.

We didn't even ask them whether they supported the setting of that date of June 30 for the transfer of sovereignty. We don't even invite people for their comment and for their advice. And we ought to do that.

DOBBS: Senator, as you well know, the United Nations withdrew after its headquarters were destroyed by a bomb by Iraqi insurgents. The United Nations has been unsuccessful in providing security both for the Iraqis that have been trained to this point, for our own forces over the course of this past week. Without that ability to provide that kind of security, what are they prospects?

LEVIN: I think it would be difficult to get the U.N. in physically, but what we need is the political support of the United Nations in New York for a process which would create that interim government to whom we want to transfer sovereignty.

We have not asked the United Nations, do you support the setting of that date on June 30? And without the U.N.'s support of that date, it seems to me it's going to be very difficult to persuade anybody that that is the time, that is the moment that we have to transfer sovereignty. We need to reach out to that international community, at least politically. They can't help us much at the U.N. in terms of our security.

DOBBS: Senator Carl Levin, thank you for being here.

LEVIN: Sure, Lou.

DOBBS: Tonight's thought is on foreign policy. "No foreign policy, no matter how ingenious, has any chance of success if it is born in the minds of a few and carried in the hearts of none" -- that from former Secretary of State Henry Kissinger. And, by the way, Dr. Kissinger will be one of our guests here this coming Monday.

When we continue, tonight's "Heroes," a soldier who overcame injury in Iraq and betrayal at home, we'll have his story.

And Senator Kerry and the Bush administration, split views on Iraq and the direction of the economy. And voters are paying very close attention. We'll have the results of the latest polls and CNN political analyst Bill Schneider and Carlos Watson join us.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Army Staff Sergeant Chris Shelton spent a year in Iraq. He was wounded in combat and received the Purple Heart. But Sergeant Shelton had a very different kind of challenge to face when he returned to his home base.

Bill Tucker has the story.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): He doesn't shoot basketball like a hero, but he does do a mean grill. Staff Sergeant Shelton is an Army Ranger. Last June, he was leading a 180-vehicle convoy just north of Baghdad.

STAFF SGT. CHRIS SHELTON, U.S. ARMY: As soon as I took that left, gunfire erupted from all around us. We were in a near ambush. I was hit in the shoulder. I felt my arm go numb a little bit, tingling, a hot sensation in my shoulder. And I wasn't really worried about that. I was worried about getting out of there.

TUCKER: Chris' worse hit, though, wasn't on the battlefield. A soldier staying at Chris's apartment back at his home base in Italy stole his Chris' identity and emptied his bank account of $13,000. The experienced shocked Chris.

What happened next has left him stunned. Back home in Washington state, after hearing of his story from Chris' mom, his hometown started a campaign. It took on a life of its own. And checks came pouring in from all over the world.

SHELTON: This is my time to thank them. All those people that didn't leave a name or an address that I can thank, this is my time to say, thank you, I really appreciate it. It is really nice.

TUCKER: As for being awarded the Purple Heart...

SHELTON: When I got pinned with my Purple Heart, what can I say about that? It's a million-dollar wound. Some of my buddies aren't around to read their citation. So it's one medal that I never wanted, but I did get it.

TUCKER: Sergeant Shelton is eager to report back to his unit.

SHELTON: It might be a hard job sometimes, but, you know, I get to lead men into combat.

TUCKER: Next year, he plans to reenlist.

Bill Tucker, CNN.

(END VIDEOTAPE)

DOBBS: Still ahead here, the political fallout from Condoleezza Rice's appearance before the 9/11 Commission. Political analyst Bill Schneider and Carlos Watson tell us what it could mean for this presidential campaign.

And thousands of illegal aliens enter the country every day, but the government has all but given up finding the companies that hire them. We'll have a special report.

(COMMERCIAL BREAK)

DOBBS: The latest poll on the race for the White House shows the candidates in a statistical dead heat, at least, but with the president with an edge in the numbers.

The Gallup polls show President Bush with the support of 48 percent of Americans, Senator Kerry with 45 percent. This poll was taken before and after National Security Adviser Condoleezza Rice testified before the 9/11 Commission.

Joining me now for more on the political implications, senior political analyst Bill Schneider, political analyst Carlos Watson.

Gentlemen, good to have you with us.

CARLOS WATSON, CNN POLITICAL ANALYST: Good to see you.

DOBBS: Bill, let's start with you.

This suggests, it seems at least, that Condoleezza Rice performed how?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: She performed very well, according to this poll. Americans found her quite credible. They have a very favorable attitude towards Condoleezza Rice. In fact, she is slightly more favorably regarded and more credible than Richard Clarke, who -- and this has been a test of the two persons' credibility.

But here is the key finding from that poll that was taken on Thursday night after her testimony. We asked people, did the Bush administration do all it could have been expected to do before 9/11? And what you see there is 10 days ago at the end of March, 54 percent of Americans said, no, the administration did not do all that could be expected before 9/11. And that has dropped to 40 percent, a 14 percent drop. Now, by a slight plurality, 48 to 40, Americans say, yes, the administration did do all it can be expected to do. I think that's a testimony to Dr. Rice's credibility.

DOBBS: Remarkable numbers. What does, in your mind, Carlos, at least, these poll numbers show us about the attitude on the part of the president's handling of Iraq?

WATSON: I think you are still seeing that people have great reservations.

And certainly with all that's happened this past week in terms of hostage taking, in terms of the events in Fallujah, etcetera, the president has got a very difficult job not just overseas in Iraq, but here in the U.S. What is not clear is that John Kerry will automatically benefit from doubts that people may or may not have about the president's handling of Iraq.

He still is yet to define himself and offer a compelling plan. I think many Americans are going to wait and reserve judgment until they hear more. DOBBS: The president has to be doing well, Carlos, on the polling, on the economy, given the job numbers. At least that's what one would assume. How does the assumption hold up?

WATSON: Surprise, surprise. The president's lowest numbers are not on Iraq and not on how he is handling terrorism, but still on the economy, still in the low 40s.

I think for a lot of people, at least one issue is that we have heard bad news over the last 36 months on this economy, that an economy that was once roaring and that frankly got used to different set of expectations during the booming '90s, hasn't been doing as well. And so one month of good numbers, I think a lot of people hesitate.

And the other thing, Lou, as you know, is that there's been conflicting data or at least data that on the surface seems conflicting. On the one hand, you have fewer people who are -- quote, unquote -- job -- more jobs created. But, on the other hand, you have a higher unemployment rate. You and I know the reason for that, but I think a lot of people are still waiting in reservation. Another issue, as Bill Schneider will point out, has to do with the pump.

DOBBS: Well, tell us about the pump.

SCHNEIDER: The pump, gas prices.

Lou, Americans have a constitutional right -- it must be in there somewhere, Amendment 54 or something -- a constitutional right to cheap gas. And now they are angry.

DOBBS: By the way, I want you to know, I think that I probably would be one of those that would be looking for that constitutional right.

SCHNEIDER: It must be in there somewhere, because the whole American way of life is organized around cheap gasoline. People live in far-flung suburbs, commute long distances, ferry their kids around in what look like armored personnel carriers that use a lot of gas.

DOBBS: Now, now, Bill, Bill, Bill, Bill, Bill.

SCHNEIDER: And they spend a lot of money on gas.

So, when gas prices go up, it hits everybody very, very hard. And what we are finding in these polls is that Americans are paying an enormous amount of attention to gasoline prices, even though economists will tell you, relatively speaking, relatively speaking, they're cheaper than they were back in 1980 or 1979.

The fact is, it's hitting $2 a gallon in a lot of places, higher than that in California. Americans are angry about that. So, they balance that against the good news on the jobs front. For most Americans the bad news on gas prices is real bad.

DOBBS: General, I'd like you both in just the short time we have remaining. And Carlos, if I may begin with you. These numbers show President Bush and Senator Kerry basically even, statistically. Is that where you would expect them to be at this point? How significant is that for both Kerry and for the president?

WATSON: So the good news for the president is that six weeks ago you were down by 12 and now you are up by three or four. So there's been a major swing. The bad news for the president is that at this time in 1996 when Bill Clinton was running for reelection he was already up by double digits, roughly 14 points. When Ronald Reagan was running for reelection in 1984 he was up by eight to ten points, depending on which poll you looked.

In some ways it's good news for the president, he seems to be slightly ahead, although it's within the margin of error. The bad news is you are not as far ahead as you would like to be. So, conflicting messages there.

I would continue to look at the midwest where Kerry was this week and will continue to be. In places like Iowa, the individual state polls are still showing that Kerry has a slight lead in Iowa and Michigan. Some of the other battleground states like Arizona and Florida, though, it looks like the president may have a slight edge.

DOBBS: Bill Schneider?

SCHNEIDER: Well, what the president is doing may be working. It's called preemptive action. He's doing the same thing in politics that he did in Iraq, namely, he didn't allow himself to go on the defensive on gas prices. Look he's from Texas. He has ties to the oil industry. This issue should knock him out of the water. The fact that it's still a statistical dead heat says he is doing something right.

What he's doing is hitting Kerry hard on the issue of gas taxes. Everybody's seen that ad, people are talking about it, it's a humorous ad. The first he thing did he when gas priced started to skyrocket, was hit Kerry with an ad, saying this man said ten years ago to the "Boston Globe" would he support a 50 cent a gallon gas tax.

All Americans know that now, or everybody who watches television, a lot of people. And that means he's under taking a campaign of preemptive strikes in his political campaign and it may be paying off.

DOBBS: Bill Schneider, Carlos Watson, gentlemen, thank you for being here.

WATSON: Have a great weekend.

DOBBS: Still ahead, in "Broken Borders," millions of illegal aliens are working in this country. Some critics say the government isn't doing enough to stop American companies from hiring them. We'll have a special report next.

(COMMERCIAL BREAK)

DOBBS: As many as 12 million illegal aliens live in this country. Many are working in some of the country's largest businesses and corporations. Now the Bush administration has a new proposal that would crackdown on employers who hire illegals. Critics say that plan doesn't go far enough. Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The hard part is crossing the border, but once illegal aliens enter the United States, it's relatively easy to stay here. With a phony green card purchased for a couple hundred dollars, illegal aliens can find work. Employers looking for cheap labor are all too willing to hire them.

DEBORAH MEYERS, MIGRATION POLICY INSTITUTE: Despite a tremendous increase in resources at the border, we still continue to have a flow of undocumented person into the United States because they are drawn to the jobs that are available.

SYLVESTER: Last October, federal agents raided 61 Wal-Mart stores arresting 250 illegal workers. The retail giant now faces stiff penalties, but these raids are more the exception than the rule. In 1990 more than 14,000 employers were fined for hiring illegal workers. By 2000 only 178 faced fines.

The Bush administration has proposed spending $23 million more next year for immigration and customs enforcement to verify worker documentation. But still, fewer than 2,500 agents will be assigned to interior enforcement to track more than 10 million illegal aliens. While employers are required to check documents, they are not obligated to be experts.

JULIE PEARL, IMMIGRATION ATTORNEY: There was a court case many years back where a judge looked at a document that was counterfeit that an employer had thought was a real document. The judge said, look, I can't tell the difference, I'm not going to require the employer.

SYLVESTER: There is a federal pilot program that provides employers to check a database. But the program is currently available in only six states, and is voluntary.

(END VIDEOTAPE)

SYLVESTER: The pilot program was scheduled to expire last December but Congress passed legislation to extend it for another five years and to include employers in all 50 states by the end of this year.

DOBBS: Why is it a pilot program? Haven't they had time to figure out that it works?

SYLVESTER: Well they have, and that is why they are extending it for another five years. But I think have you to get the will behind this. As many critics said, it doesn't do much good if you have these laws on the books if no one is actually enforcing it.

DOBBS: Thank you very much. Lisa Sylvester report everything Washington.

Taking a look now at some of your thoughts, many of you writing in about our "Exporting America."

Suzanne Cook of Cupertino, California, "thank you, Lou, for you insightful commentary on the exporting of jobs from the United States to other countries. We need to find a middle ground between free trade and protectionism, a balanced trade policy in the national interest."

Mitchell Caylor of Enterprise, Alabama, "the administration keeps talking about the robust ecomony. Apparently, they do not live in a real world, because gas prices are soaring, insurance costs are rising, crude prices are up and thousands of jobs are being outsourced to foreign countries."

Mike in Bridgeport, Connecticut, "Lou, almost 2 years after being laid off from my tech job, I finally had some luck and gained employment. My pay is 50 percent less, my health insurance tripled, minus eye and dental coverage. As for vacation time, now I have to work a year to receive 1 week."

And James St. John of Payson, Utah, "I am only a simple minded taxpayer, but let me try to understand the global economy. I lose a $19 an hour job to someone who makes $5 an hour. He buys products made in China by a worker that makes $.75 an hour. I then retrain for a job that pays $6.57 an hour which I soon lose to an undocumented worker."

And John in Austin, Texas, "Lou, please stop pointing out the holes in our border, we'll need those holes in the future to find work in Mexico."

We love hearing from you. E-mail us at loudobbs@CNN.com.

Sill ahead here, former Citigroup CEO Walt Wriston, says the shipment overseas isn't the problem. He's our guest next.

And the president and the senator, both promising to create millions of new jobs. We talk to our panel of newsmakers about whether we should be paying any attention to what they say about job creation, and a lot more. Stay with us.

(COMMERCIAL BREAK)

DOBBS: My next guest takes issue with our extensive reporting here on the exporting of American jobs to cheap overseas labor markets. Walter Wriston says this country imports more jobs than he exports. Besides multinational corporations such as Honda, (UNINTELLIGIBLE), which he says create millions of jobs in America.

Walt Wriston served as chairman and CEO of Citibank and then CityCorp for 17 years and joins us tonight from Boynton Beach, Florida and I should, in full disclosure, admit, at least, from my side that we're friends. Walt, it's great to see you. Even if we're in some mild disagreement over this issue. You said in your op-ed piece in the "Wall Street Journal," the outsourcing issue is a result of politicians and the mainstream media whipping up perception. We have a problem of exporting jobs. You think it is simply a perception issue?

WALTER WRISTON, FMR. CHAIRMAN & CEO, CITICORP, CITIBANK: It's basically a perception issue. We've lost, in the manufacturing sector as you reported many times, about 2.7 million jobs. But at the same time the output per person or per man hour in the last 20 years in manufacturing has gone up 103 percent. So basically the job shrinkage has been due to productivity. Give you one example in 1900, more than 40 percent of the American workforce were on American farms. There were 20 million people there. Today, there's about a million and a half people and we feed the entire world. The difference is productivity.

DOBBS: Right, productivity I don't think anyone would argue has not been a significant part of the labor and employment market. But at the same time, we're losing over a half trillion dollars in the trade wars, if you will, over a half trillion dollars in the current account deficit. We haven't run a surplus in trade in this country since 1976. That doesn't concern you at all?

WRISTON: No, that doesn't bother me in the slightest. Because the imports of manufacturing goods have only gone up 0.6 percent, which is very little.

DOBBS: Let me interrupt and ask you this, Walt. If that doesn't concern you, we're losing a half trillion on the balance of trade and the current account, how in the world are we being so productive? How are we going to judge just how smart and clever we are if we can't even compete on a balance basis in trade?

WRISTON: Well, trade never balances. Never has since 1776. What we have done is -- I'll give you another example. I remember articles written weren't enough women in America to man the switchboards of the telephone company. Today it's very hard to find anybody who is a human in the telephone company because we learned how to make dial phones and digital switching.

DOBBS: But we didn't, Walt, we didn't shift those jobs to the Philippines or Romania and then send back those services and products to this $11 trillion economy, did we?

WRISTON: No, what we did was that we imported more jobs in 2001, we imported 6.4 million jobs. And that represents -- 20 percent of them were in the manufacturing business. They had a total payroll to Americans workers of $650 billion.

DOBBS: Walt, and, you know, I love you, Walt, the fact is, that the reason those plants are here and those jobs are here is because those companies whether it's Honda or Novartis (ph), they are here to gain access to an $11 trillion economy.

WRISTON: They are also here because our productivity is much higher than theirs.

DOBBS: If our productivity is so much higher than theirs why are we shipping other jobs to the Philippines, to India?

WRISTON: Because the oldest thing in the world is comparative advantage. And I remember -- I think it was Ross Perot, the great sucking sound went down to Mexico. Now, Mexico is investing in our country and creating dozens of jobs here. So...

DOBBS: That's because there's a $30 billion deficit with Mexico but at the same time with Mexico Ross Perot, I think you have to say had one part of it right. We have as a result of NAFTA over the course of the past decade lost jobs in this country. Mexico has lost 20 percent in terms of manufacturing wages and its GDP growth rate is half its historic level.

WRISTON: That was because the IMF had been devalued. That's a totally different subject. But an open trade, we tried restrictions and the (UNINTELLIGIBLE) tariff when our labor force was 50 million people and there were 20 million people unemployed from 1930 to 1939. So we know that that doesn't work.

DOBBS: The only thing I agree with you there, Walt, it's not good to have that many people unemployed. We have 15 million of them almost unemployed. And discouraged workers are marginally attached to the labor force.

WRISTON: Let me give you two numbers.

DOBBS: Walt, I would love to. Can you give them to me in 15 or 20 seconds.

WRISTON: You got it. In the last decade we have lost 309 million jobs. We have also created 328 million jobs. And that is the normal spin in a dynamic economy. And the jobs that have gone overseas have been low pay jobs. The jobs we're creating at home due to globalization are much higher paying jobs because of the desire for middle managers that are very difficult to find at the moment.

DOBBS: Walt, since you did the historical smooth holly shot I have to conclude. It's part of the fun of being in this seat rather than yours. It is also, I think, fair to point out since you are referring to this issue in the smooth holly terms you would not be comfortable, would you, having this president be the only president since Herbert Hoover to have lost jobs during his tenure?

WRISTON: No, he hasn't lost jobs.

DOBBS: No. Walt, we're down.

WRISTON: I'm sorry. We created 17.8 million jobs in the last decade.

DOBBS: No, I'm referring to President Bush since he was elected.

WRISTON: You are just referring to manufacturing.

DOBBS: Just to -- well, actually, to total job creation since the president took office. Walt Wriston, I wish I could sit here and argue with you.

WRISTON: All right. I'd be delighted.

DOBBS: I know you would. I'm going to extend you the invitation to do so again. It's great to see you, Walt.

WRISTON: OK. Bye.

DOBBS: When we continue, this week's newsmakers but first a reminder to check our website for the complete list of companies we confirmed to be exporting America, CNN.com/lou. We'll continue in just a moment. Stay with us.

(COMMERCIAL BREAK)

DOBBS: In the first three months of this year, the economy has created 500,000 new jobs, that's the strongest start to a year since 2000. It is, however, still a long way from the bold predictions of the Bush administration, millions of new jobs to be created this year. Joining me now for more on the prospects for employment, the strength of this economy and what lies ahead, Steve Forbes, editor in chief of "Forbes" magazine, Steve Shepard, editor in chief of "BusinessWeek," and Shawn Tully, senior writer for "Fortune" magazine. Good to have you with us, gentlemen.

Let's start with this market looks -- this labor market looks like it improved. Are concerns about employment misplaced now?

STEVE FORBES, "FORBES": Well, I think the economy is finally showing some real strength, and as businesses start to invest more, I think you'll see more job creation. Businesses have been very reluctant up to now, given the cost cutting they have been through. Cash flows are exceeding what they have been spending on capital. That's beginning to change. So I think in the next 12 months it will be a much better picture than it was in the previous 12 months, by a wide margin.

DOBBS: What about the quality of these jobs, Steve?

STEVE SHEPARD, BUSINESSWEEK: Well, it will be mixed. But I think it's interesting that the 308,000 jobs in March equals the total of number of jobs that were outsourced over the last three years.

DOBBS: According to -- wait, wait, wait, wait.

SHEPARD: One month, Forrester statistics.

DOBBS: Oh, come on. Forrester -- you can take any number of statistics. The issue -- the ranges go from 300,000 to three million.

SHEPARD: No, not three million.

DOBBS: Excuse me, to three million. Trust me. We know these figures and these figures suggest to us one thing, and one thing only. No one knows the number of jobs outsourced, period. Not Forrester, not the University of California Berkeley. SHEPARD: I never heard a number, a credible number anywhere near three million. But in any case, I agree that we're going to have more job creation, although not at that level. We'll probably average somewhere around 175,000 jobs per month, more or less for the rest of the year. Which is good, not great. But good.

DOBBS: And Steve's returned from India here. He's gung ho on outsourcing, we can tell that one. Shawn, your thoughts?

SHAWN TULLY, FORTUNE: Yeah, I think job growth will be relatively sluggish despite -- even if we do have high growth rates. And one of the reasons -- and people are really overlooking this -- is that benefit costs in the U.S. are just going crazy, especially health care costs. And the higher the price of something, the less companies or people consume of it, and companies are consuming a lot less labor. It's getting a lot more expensive, especially on the benefit side.

You look at the increases in wages, they are tiny, they are barely keeping up with inflation, but benefits costs are going up very, very rapidly, especially health care costs. And you have a lot of anti-business legislation in certain states, especially California, of course that was the reason why Schwarzenegger was able to get in. But for example, the Family Leave Act coming in, paid leave for six weeks off. You can take it in days and weeks and chunks. Everyone is going to take it. It's just going to raise the cost of training employees to fill the gaps of people who are going to leave. So we have got to work on keeping labor costs down, especially benefits cost.

DOBBS: Labor costs down. That's the big problem? You have got productivity at historical highs in this country. You have got amazing performance in the economy, and now the big problem is labor costs?

(CROSSTALK)

TULLY: Health care costs.

DOBBS: Oh, I thought you -- when you said labor costs, I thought, my God!

SHEPARD: But the point of it is -- it's very interesting to compare what is happening in the United States and what's happening in Britain. Britain's creating a lot of jobs and they are growing very strongly. The reason they are is their productivity growth rate is half the level of the United States. So we're able to do more with less. And they have to hire more people, because they don't have the productivity growth rates that we have. And this problem of job creation is a productivity issue, not an outsourcing issue.

DOBBS: I would say that, whether one calls it a productivity issue, or an outsourcing issue, Steve, the fact of the matter is, that this giant job engine isn't creating them. And I would say further, that because we don't have either the statistical data from government sources or from corporate America, it's very difficult to make a judgment about the scope of it. Other than anecdotal. TULLY: But how can you say that?

DOBBS: Just like that. Just watch, just watch, Shawn.

TULLY: Because the free flow of jobs, the free flow of capital across borders always creates more problems. What basis are you using to say that historically...

DOBBS: Wait, wait. No, no, we should be concerned about free flow of capital and trade and its relationship to outsourcing. Let's be clear, outsourcing of jobs in this country is not about trade, irrespective of what any economist with a political agenda has to say. It is about taking an American job, shipping it to a cheap labor market overseas to send back a service or a good to this market. It's that straightforward.

TULLY: How about the manufacturing Japanese cars in Alabama? How about...

DOBBS: How about it? How about it?

TULLY: ... making French pharmaceuticals in New Jersey...

DOBBS: Why is that Japanese plant sitting in Alabama employing American workers to sell into this market, why is that?

TULLY: There are advantages to...

DOBBS: That's free trade, right?

TULLY: Yeah.

DOBBS: No, it's not free trade.

(CROSSTALK)

DOBBS: It's a requirement by the Reagan administration for entry into this market. It is absolutely not free trade. It's (UNINTELLIGIBLE).

FORBES: That was 25 years ago. Our workers are more productive than the workers in Europe, even with our benefit problems, which are very real, we're still able to do it more productively here. And that's why the jobs come here. Otherwise, they would go to Mexico, or Brazil or China.

DOBBS: No, they would go there because they are cheaper. Productive is a different issue.

FORBES: Productivity, labor is part of productivity.

TULLY: Yes, it's part of the equation for total cost of producing a good or a service.

SHEPARD: The point of it is is that we are importing an awful lot of jobs that doesn't get discussed enough, particularly on this show.

DOBBS: Well, let's talk about some of the jobs that we're importing. Let's talk about, for example, Toyota.

SHEPARD: Sony...

DOBBS: Well, let's start with -- let's be very specific.

(CROSSTALK)

DOBBS: Toyota. OK? Is that a fair example? With its plants here, producing a variety...

SHEPARD: That's a good example, yes.

DOBBS: OK. They employ 13,000 Americans. Do you know what percentage of their total corporate profits worldwide earned right here in this country? Thirty percent of their total profits. The point that -- the only reason they are here is for access to this market. When we outsource...

(CROSSTALK)

FORBES: So we shouldn't have access to other markets by putting plants there?

DOBBS: Oh, no, no, no, but we shouldn't get confused. Why would we then try to rationalize the shipment of American jobs overseas, to India, the Philippines, Rumania, Ireland, wherever it may be, Eastern Europe, to simply re-enter our own market? You know why. That is simply to lower wages. It has nothing to do with productivity. Period.

FORBES: Productivity? Wages are part of productivity. And if you are not productive, you don't make a profit. Without profits, you don't create jobs. Every generation, there's some boogeyman out there, Japan, Germany, Mexico, now India and China, and somehow when American ingenuity comes through...

DOBBS: No, no, no, that's not fair, Steve.

FORBES: When American ingenuity comes through...

DOBBS: Steve...

FORBES: ... we always come out ahead.

DOBBS: Steve, they are not boogeymen at all.

FORBES: And we have the higher-paying jobs here.

DOBBS: Let me be clear about who the boogeymen are. Those are the companies that are making competitive decisions and using the words productivity and competitiveness as code words for low cost labor. Come on. FORBES: And in the 1980s, we had all the talk about hollowing out of America, de-industrialization of America, and today America is stronger than ever before.

DOBBS: Do you think it is?

FORBES: Of course it is.

DOBBS: Then what would you say the total national debt is?

FORBES: Total national debt?

DOBBS: Total national debt, total trade deficit.

FORBES: Whatever number you want to use...

DOBBS: And I will use all of them.

FORBES: ... is less than that of every major European country and a fraction of that of Japan.

(CROSSTALK)

DOBBS: We're going to have to wrap it. Do it quickly.

SHEPARD: Just going to say, Europe has a trade surplus, but they have a much higher unemployment rate than the United States. Who's better off?

DOBBS: We'll leave that question unanswered until next week. Steve Shepard, good to have you back. Shawn Tully, thanks for being here.

FORBES: Thank you.

DOBBS: Even you, Steve Forbes, with that rotten article in this week's edition. Thanks.

That's our show for tonight. We thank you for being with us. Monday, we'll be joined by former Secretary of State Henry Kissinger. We'll be talking about obviously Iraq and the challenges facing American power around the world. For all of us here, have a very pleasant weekend. Good night from New York. "ANDERSON COOPER 360" is next.

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