Return to Transcripts main page

Lou Dobbs Tonight

Interview With Congresswoman Ellen Tauscher; Palestinians Accuse United States of Bias

Aired April 15, 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, CNN ANCHOR (voice-over): Tonight, Defense Secretary Donald Rumsfeld acknowledges he's surprised at the rising number of American deaths in Iraq.

DONALD RUMSFELD, SECRETARY OF DEFENSE: A small band of terrorists are not going to be permitted to determine the fate of the 25 million Iraqi people.

DOBBS: Congresswoman Ellen Tauscher has been calling for a sharp increase in our armed forces for years. She's our guest tonight.

Also tonight, we look at the fairness of the U.S. government employing highly paid civilian contractors to work alongside relatively low-paid men and women in uniform. Is this the American way?

The Palestinians accuse the United States of bias. The PLO's legal adviser, Diana Buttu, is our guest.

In "Making the Grade," our special report on education in America, overmedicated students.

UNIDENTIFIED FEMALE: They basically said, if you don't opt for medication, we are going to transfer your son out of school.

DOBBS: And tonight in "Middle Class Squeeze," American families paying a bigger share of this country's taxes, corporations paying a smaller share. We'll have a special report.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, April 15. Here now for an hour of news, debate and opinion, Lou Dobbs.

DOBBS: Good evening.

Defense Secretary Donald Rumsfeld today said he regrets having to extend the tours of duty of 20,000 American troops in Iraq. Secretary Rumsfeld also said he's also surprised at the high level of recent American combat deaths. Nearly 90 U.S. troops have been killed in Iraq since the beginning of this month.

Senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT (voice-over): With the U.S. taking casualties at a higher rate than when the war began and the Pentagon forced to cancel the return of 20,000 troops needed to deal with a growing insurgency, U.S. Defense Secretary Donald Rumsfeld made what, for him, is a rare admission. He was wrong about how stable Iraq would be after a year's occupation.

RUMSFELD: If you had said to me a year ago, describe the situation you'll be in today one year later, I don't know many people who would have described it -- I would not have described it the way it happens to be today.

MCINTYRE: April has been the deadliest month of the war with nearly 90 Americans killed and more than 540 wounded, more than half of the deaths coming in the past week.

RUMSFELD: I certainly would not have estimated that we would have had the number of individuals lost that we have had lost in the last week.

MCINTYRE: The Pentagon estimates during the same time between 1,500 and 2,000 enemy fighters have been killed, but those figures are not released, to avoid the mistake of Vietnam when body counts were cited as a measure of success. The decision to hold 20,000 troops in Iraq for three more months will affect some 40 Army units, including 11,000 soldiers from the 1st Armored Division, 3,200 from the 2nd Armored Cavalry Regiment, and about 6,000 Guard and Reserve troops.

And despite the strain on the forces, the Pentagon continues to reject the argument the U.S. military is too small.

GEN. PETER PACE, VICE CHAIRMAN, JOINT CHIEFS OF STAFF: We have the capacity with 2.4 million individuals available to us active Guard and Reserve to handle this ongoing war and anything that I can think of that's on the horizon.

(END VIDEOTAPE)

MCINTYRE: Rumsfeld said he regretted having to extend the stay of troops who had already served in Iraq in a year. He stopped short of promising they would come home after three more months, but he did say the current plan is to replace them with fresh troops if commanders decide that higher troop levels are still required in the summer -- Lou.

DOBBS: Jamie, you've covered the secretary of defense for some time. Were you surprised today when the secretary of defense acknowledged misperceptions, perhaps misconceptions and even mistakes today?

MCINTYRE: Well, he was very careful in what he said. In fact, it was difficult for the Pentagon reporters to pin him down exactly what he was admitting to.

But it is unusual for him. He does admit he makes mistakes. He doesn't usually admit what they are, and he's usually pretty confident that even when he's questioned that he's right. So for him to come out and say that he didn't realize that the situation would essentially be this difficult one year afterwards was a significant admission from the secretary.

DOBBS: And, if I may say simply speaking for myself, I think to his credit. Jamie McIntyre, thank you very much, our senior Pentagon correspondent.

American's top general today said U.S. Marines surrounding Fallujah could resume their offensive against Iraqi insurgents at any time. During a visit to Baghdad, the chairman of the joint chiefs, General Richard Myers, said regime elements and foreign fighters are attacking American Marines. Also today, there was no word about the fate of nine missing Americans. But there was good news about some Japanese hostages.

Karl Penhaul reports.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN CORRESPONDENT (voice-over): A kiss from a cleric, the seal of safety for these three Japanese hostages. Last week, the scene was very difficult, kneeling, blindfolded, as their kidnappers threatened to burn them alive unless Japanese troops pull out of Iraq. Japan's troops stayed. The two humanitarian workers and freelance journalist are free.

MOHAMMED BASHAR AL-FAVDI, MUSLIM SCHOLARS ASSOCIATION (through translator): We received a call at midnight from the group holding the hostages. They said they wanted to release them and there had been an agreement.

MCINTYRE: They were taken here to Baghdad's Japanese Embassy. This French journalist was also fortunate. His four-day kidnap ordeal began Sunday.

ALEX JORDANOV, JOURNALIST: They were screaming jihad and they blindfolded me and threw me in the back of the car with a blade under my throat.

MCINTYRE: He says he was moved to 10 different locations before being released Wednesday.

A very different end for Italian hostage Fabrizio Quattrocchi. This tape was sent late Wednesday by a previously unknown insurgent group called the Green Brigade to Arabic broadcast Al-Jazeera. Minutes later, Quattrocchi, a private security guard, was murdered. Three colleagues seized at the same time are still being held.

Earlier this week, coalition authorities said 40 international hostages from 12 different countries were in insurgent hands. And on Baghdad streets, the killing continued. The wreck of an Iranian diplomats car. Unidentified gunmen pumped bullets into Khalil Naimi, Iran's first secretary to Baghdad. The drive-by shooting came as an Iranian delegation was here to mediate between the coalition forces and Shiite cleric Muqtada al-Sadr's militia, a standoff that's threatening to become a battle.

Karl Penhaul, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: Osama bin Laden has offered a truce to any European country that withdraws its troops from Muslim nations in a new audiotape released today, but the al Qaeda leader vowed to continue attacks against the United States. Leading European countries immediately responded, rejecting Osama bin Laden's offer, saying they will not negotiate with terrorists.

National security correspondent David Ensor reports -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Well, Lou, after conducting a technical analysis of this latest al Qaeda tape, a CIA official says his agency assesses the voice is indeed likely that of Osama bin Laden.

Officials say that technical analysis was done quickly pretty, partly because the quality of the recording was good. And the officials says the recording was probably made within the past few weeks since it refers to the assassination of -- by the Israelis of Sheik Yassin.

And the official says that, as you noted, that bin Laden's remarks appear to have been an attempt to drive a wedge between Europe and the United States, because in it bin Laden addresses himself to European governments.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): I offer a truce to them with a commitment to stop operations against any state which vows to stop attacking Muslims or interfere in their affairs, including participating in the American conspiracy against the wider Muslim world.

(END VIDEO CLIP)

ENSOR: Bin Laden's message on the tape is also a propaganda ploy, U.S. intelligence officials say, intended to bolster the morale of the al Qaeda rank and file.

And the White House spokesman said the tape is a clear reminder to Americans that -- quote -- "We are still at war" -- Lou.

DOBBS: David, thank you very much -- David Ensor, our national security correspondent reporting.

The United Kingdom, France, Germany and Italy quickly denounced the tape and rejected any offer of negotiation.

That audiotape from bin Laden specifically names Halliburton as a company that is profiting in Iraq. The release of that audiotape comes as seven employees of Halliburton are known to be held captive or to be missing in Iraq. Two others escaped an insurgent attack against their convoy and decided that the situation in Iraq is simply too dangerous to stay.

Ed Lavandera reports from Houston, Texas.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT (voice-over): Steve Heering and Stacy Clark feel safe again. Four months as civilian Halliburton contractors driving fuel trucks in Iraq was too much to handle. Heering and Clark say the mood in Iraq started changing three week ago. Rocks, road side explosions and mortar fire were already common. Then last Friday, their convoy was ambushed.

STACY CLARK, TRUCK DRIVER: I seen a guy come across from the left side of the road. He come across. He threw a grenade underneath his -- Steven's rear trailer tires. Well, it just ignited. It just, boom, you know, and flames everywhere.

LAVANDERA: Heering and Clark never drove another route. They quit.

(on camera): Halliburton says 30 of its employees have been killed in Iraq and Kuwait. Civilian workers aren't allowed to carry weapons and many don't have military training. But they are lured to the jobs by the promise of an $80,000 a year paycheck.

(voice-over): In Houston, thousands of people are still applying for civilian jobs in Iraq. This training seminar is the last chance for perspective employees to back out.

UNIDENTIFIED MALE: The rocket that went through the side of the trailer. They made it. He didn't.

LAVANDERA: Despite the warnings, John Bolam is ready for his second trip back to Iraq.

JOHN BOLAM, TRUCK DRIVER: I'm going more for the fact that I'm too old to go into the military. I am ex-military, and I want to do my part. This is one of the ways I can help take care of our guys over there in Iraq.

LAVANDERA: Since returning from Iraq, Heering and Clark have been urging people to think hard before signing up.

STEPHEN HEERING, TRUCK DRIVER: Especially if you are going to drive up and down the roads in Iraq, really rethink it. Is the money really worth dying for?

LAVANDERA: For Steve Heering and Stacy Clark, the answer to that question was simple.

Ed Lavandera, CNN, Houston.

(END VIDEOTAPE) DOBBS: There are an estimated 15,000 civilian contract security guards working now in Iraq, many of them from the United States. They are the second largest international force in the coalition, in fact, and they face many of the same dangers as the much more heavily armed U.S. troops. Private security guards, however,earn as much as $500 a day.

Joining me now is General David Grange, on point tonight.

General, the fact that we have that large a contingent in Iraq receiving that kind of pay level, how does that square up, how does that play, if you will, to the men and women in uniform there working for, if you will, considerably less?

RETIRED BRIG. GEN. DAVID GRANGE, CNN MILITARY ANALYST: Well, I really don't think that the military -- you know, those in uniform get that concerned about that. They know they make more money.

When you're in the military, you're really not in it for a big paycheck, I can assure you. And so that doesn't bother them as much. And I also think that most of the troops know that without these civilian contractors, a lot of the logistical, the transportation, and some of the other stationary security requirements could not be met in Iraq.

DOBBS: That is quite a statement, General, because those have been historically the purview of the U.S. military. Why not so in Iraq today?

GRANGE: Well, I would say it's not just Iraq. If you look back at the Balkans, anything except for maneuver warfare, in other words, except for something like the attack on Baghdad, when you've transitioned to the phase of stability and support operations or peace operations, for instance, in the Balkans, the majority of the logistics, mess halls, where they're providing food, bringing in water, sanitary support, the transportation is all contracted out to reduce the number of soldiers or Marines or whatever needed for that particular mission.

And so if the requirement was in these operations you needed G.I.s to do everything, the size of the military would increase quite a bit.

DOBBS: And the problem with that?

GRANGE: Well, the problem is that -- I never had a problem with support. They're very good. They're very good.

Can they say I'm not going to go into a combat area if you're deploying somewhere? Yes, they can. Can you order them to go? No, you cannot. And so that may be an issue. Most of them don't display that type of attitude, but it could in fact happen. And it frees up more troops to do combat-type missions instead of support missions. But if there was an issue, they could not be depended upon if they denied support. DOBBS: I want to turn in just the few seconds we have left, General, Secretary of Defense Rumsfeld acknowledged that this is not a situation that he would have envisioned a year ago in Iraq.

What is your reaction, General, to the secretary of defense acknowledging a misperception, a misconception, if you will, a mistake?

GRANGE: Well, I've never seen any plan go as initially it was laid on the table.

DOBBS: Right.

GRANGE: I'm glad that the secretary of defense stated that. Things change. They change all the time. And I think the expectations was going to be that the transition would be a lot smoother than obviously happened. And as we get close to June 30, there's a lot of people that don't want that to happen. I shouldn't say a lot, but a good piece of them that don't want it to happen. And, of course, they're trying to spoil those efforts.

DOBBS: Do you think the secretary of defense deserves some significant credit for his acknowledgement today?

GRANGE: Absolutely. Truth changes. The situation changes. And, as his position with the military, he's accepting that fact that things don't remain the same.

DOBBS: General David Grange, good to have you here. Thank you.

Next, Congresswoman Ellen Tauscher will be talking about the urgent need to raise the size of our U.S. armed forces. And I'll be talking with former CIA Director James Woolsey about the need for better intelligence.

Also, angry protests in Palestinian territories over Israel's planned withdrawal from Gaza and its attempt to retain settlements on the West Bank. I'll be joined by the PLO's legal adviser Diana Buttu.

And middle-class Americans paying a rising share of this country's tax burden, big corporations paying less. We'll have a special report.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: As we reported, the Pentagon today said it will keep 20,000 American troops in Iraq 90 days longer than their expected year-long tour as had been promised.

My next guest has for months has been calling for more U.S. troops in Iraq and a higher level of force for the U.S. military.

Congresswoman Ellen Tauscher is a member of the Armed Services Committee and joins us tonight from San Francisco. Congresswoman, first, your reaction by the decision to the Pentagon to keep those additional 20,000 troops in Iraq?

REP. ELLEN TAUSCHER (D), CALIFORNIA: Well, I think that's more evidence, Lou.

We already have 200,000 troops that have been stop-lossed and who have contracts that are up, that have served their time, hopefully returned home safely and are prevented from leaving the military, because we just don't have enough active-duty forces for what is apparently now a very, very labor-intensive war on terror in Iraq.

And I think that the final recognition today by the secretary, late as it is, that we don't really have a plan to turn over political control, and that we don't have enough soldiers on the ground, Army and Marines, to deal with this big counterinsurgency that is escalating every day, is finally appreciated, I think, by many of us, but we still don't have a plan to do it right.

DOBBS: As you know, and up on the screen, most troops from the 1st Armored Division, some 11,000 men and women in the 1st Armored will be held over. But about 25 percent of the troops are Reserves and National Guard who are having their tours extended, primarily because they're providing support, logistical and operational support to the combat troops. How seriously do you take that extension of their tour as well?

TAUSCHER: My concern for a very long time is that we're breaking our military, both the active duty, the Guard and Reserve. Not only are 25 percent of the troops that are being held over -- this 20,000 being held over from the Guard and Reserve, but 40 percent of the troops going in, in this rotation that will be in Iraq at least for a year are going to be from the Guard and Reserve, which is the largest since the Korean War. That's just way too high.

Not only are they basically hollowing out our homeland force, because they come disproportionately from sheriff's departments, police departments, fire departments, EMTs, but we just don't have a hedge in our military right now in case we should have another major theater conflict or some other reason we would need to deploy troops. So I believe we need to increase the size of at least the Army by 10,000 troops this year, perhaps the Marines. But my bill that's about seven months old hasn't even gotten a hearing in my own Armed Services Committee.

DOBBS: That legislation calling for an increase of about 8 percent in the level of force for the U.S. military force over the course of five years. Why is that? Why is there -- it's counterintuitive that the Pentagon would not want more men and women in uniform, would not want them because of the huge, numerous challenges faced by the United States around the world and by the demands we're putting on our men and women now in uniform?

TAUSCHER: Well, I'm afraid it's because Secretary Rumsfeld and the Pentagon wants it both ways. They want to basically have no sacrifice in this budget coming forward for the Pentagon. As you know, the president's budget that was submitted months ago doesn't have a farthing, a penny, a dollar for the war in Iraq and Afghanistan, for the war on terror. We have funded it by borrowing about $160 billion on a credit card. So this is a separate set of books for this war, and the Pentagon doesn't want to have to have any sacrifices. They don't want to have to pay for troops which are, by the way, very expensive currently and in the future.

Just to deploy that 10,000, one new division, in the Army would cost about $1.6 billion this year. And they don't want to make any sacrifices in their ongoing weapons programs or other parts of the Pentagon to pay for what we vitally need to secure a successful strategy in Iraq.

DOBBS: And to provide security for Americans in Iraq in combat.

Congresswoman Ellen Tauscher, we thank you very much.

TAUSCHER: Which is a real issue. Thank you.

DOBBS: Absolutely. Thank you, Congresswoman, for being here.

TAUSCHER: Thank you.

DOBBS: Congresswoman Ellen Tauscher of the House Armed Services Committee.

That brings us to the topic of tonight's poll. The question: Do you believe the Pentagon's decision to hold over another 20,000 troops in Iraq is sufficient the U.S. military needs more soldiers and Marines, yes or no? Please cast your vote at CNN.com/Lou. We'll have the results coming up here later.

Still ahead, former CIA Director James Woolsey, he'll be here to talk about his analysis of the new bin Laden tape, the situation in Iraq and who the real enemies are in the war on terror.

Also, crisis in the Middle East. Palestinians now say the new White House policy threatens the peace process. We'll be talking with legal adviser Diana Buttu.

Also, tax day in America, it's today, and the middle class, well, they say their refunds are somewhat smaller than they thought. The "Middle Class Squeeze" continues. We'll have a special report for you.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: We know it's not news to you that our taxes are due today. You probably also realize that middle-class families continuing to pay more than their fair of this nation's tax burden, despite recent tax cuts. In fact, corporations have been paying less and less taxes over the past several decades, while middle-class families have been paying more and more. Lisa Sylvester reports on the middle-class squeeze.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): President Bush, visiting a rural development conference in Iowa, said his tax cuts put more money in the pockets of Americans.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The economy is stronger for it.

SYLVESTER: Under President Bush, the child tax credit was doubled, the marriage penalty eliminated for most middle-class families and tax brackets reduced across the board, but many middle- income taxpayers are still not feeling the benefits.

UNIDENTIFIED FEMALE: There was no difference in my taxes.

UNIDENTIFIED MALE: I actually got less money back this year.

SYLVESTER: Many middle-class families are having to pay what's known as the alternative minimum tax, a tax that was supposed to close loopholes for the ultra-rich. But because the AMT was never adjusted for inflation, many middle-income wage earners are have to pay this tax. Meantime, the corporate share of taxes has been declining overt last four decades, from just over 20 percent to less than 8 percent.

PETE SEPP, NATIONAL TAXPAYERS UNION: Our tax systems puts the biggest squeeze on the middle class and upwardly mobile Americans, because it doesn't allow them to employ the same tax strategies that the super-wealthy can afford to employ and have employed year after year.

SYLVESTER: Democratic presidential candidate John Kerry has proposed rolling back the tax cuts for the wealthiest Americans, while adding higher education tax credits. He's also promising to close corporate loopholes, but he plan also does not address the problem of alternative minimum tax.

(END VIDEOTAPE)

SYLVESTER: Middle-class families are also being pinched by payroll taxes. In fact, according to the Council on Budget and Policy Priorities, about 75 of American families pay more in Social Security and Medicare taxes than in income taxes -- Lou.

DOBBS: And they pay most of those taxes as well.

SYLVESTER: They do, indeed.

DOBBS: Lisa, thank you very much -- Lisa Sylvester reporting tonight from Washington.

Well, the middle class squeezed again on the subject of gasoline prices. AAA tonight says gasoline prices hit a new record, $1.78 a gallon. Much debate has recently focused on Democratic proposals to raise the federal gas tax. President Bush, in fact, released political ads last month attacking Senator Kerry for once favoring a 50-cent-a-gallon increase, saying it would damage the economy.

But we should point out it was just five years ago the chairman of the president's Council of Economic Advisers thought the very same proposal was a marvelous idea. Dr. Gregory Mankiw, the president's chairman of the Council of Economic Advisers, wrote an article for "Fortune" magazine in May of 1999 that we found. In that article, he recommended a 50-cent hike of the gasoline tax. In fact, that argument was titled -- quote -- "Gas Tax Now."

Mankiw outlined several benefits of cutting income taxes, while raising gasoline taxes. Those benefits, he noted, included safer roads, a reduced risk of global warming and stronger economic growth. The White House tells LOU DOBBS TONIGHT tonight that -- quote -- "Greg Mankiw does not support a gasoline tax now." And neither does Senator Kerry, by the way.

Still ahead, former CIA Director James Woolsey, he'll be here with his analysis of the new Osama bin Laden tape, what it means in Europe and the global war on terror, the situation in Iraq, and the challenges facing the CIA.

And the crisis in the Middle East. I'll be joined by the PLO's legal adviser, Diana Buttu. She's or guest.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: As the war in Iraq escalates there are disturbing signs that the U.S. military and intelligence community still don't have much information about the enemy's organization, capabilities, intentions and in many cases even its identity. Troops are facing a rising number of attacks from a combination of former Ba'athist regime loyalist, foreign terrorists, and Shiite and Sunni gunmen.

Joining me is former CIA director James Woolsey.

James good to have you with us.

JAMES WOOLSEY, FORMER CIA DIRECTOR: Good to be with you, Lou.

DOBBS: As you watch the excruciation in many cases of the CIA for lapses in pre-9/11 as this commission hearings continue, what's your reaction?

WOOLSEY: I think there's too much finger pointing. People need to tie specific solutions to specific problems. Maybe they will do that. Maybe they're beginning to, but there's been an awful lot of posturing for the cameras.

DOBBS: A lot of rear-view mirror, unquestionably necessary for all of us to understand what should be done going forward, but to hear CIA Director George Tenet say it will be another five years before what he calls an effective clandestine force, isn't that somewhat chilling?

WOOLSEY: I don't think he meant it was going to be completely ineffective before then. I think he meant the way he wants it will be five years. It takes a long time to built a capability of a number of people to speak a language and be immersed in a culture. We tried on my watch in '93 and '94 to get substantially increased funds for Arabic interpreters and translators and instruction in fatwa for Iran and so forth, and the Senate Intelligence Committee fought it hard. Senator (UNINTELLIGIBLE) the chairman. The other committees were in favor, but we failed, we didn't get the money we needed.

DOBBS: You know, I can remember 40 years ago, if I may say, Jim, when the CIA funded centers, research centers and academic centers, not only in the United States, but all around Europe, and parts of Asia, where they assembled speakers and cultural experts and that funding was clandestine, certainly covert.

Why in the world would we not bed doing that, and availing the resources rather than being so linear in the thinking?

WOOLSEY: An awful lot of that could be done, a lot more than is, could be done overtly. There's a lot of things we could do to win the war -- the so-called soft-power war of influence. I think it's amazing that in Iraq still the principal broadcasters are either Arabic language from Iran, which are very hostile to is, or Al Jazeera. We invented mass media, we invented radio for Europe and we're not doing nearly as well as we should in those areas.

DOBBS: Speaking of mass media, Al Jazeera, the Secretary of Defense Donald Rumsfeld today lashed out at Al Jazeera. Effectively calling it a tool of the Islamists and Sunni Ba'athist loyalists in Iraq.

What should be done?

WOOLSEY: I think there's a lot to that. Occasionally they'll put somebody on with a different point of view. I've been on there once or twice and other people are occasionally, but generally speaking, it really is a propaganda organ for the Islamists, that is I think the totalitarian point of view.

DOBBS: Well, help me out. Al Jazeera is owned by the government of Qatar, which are allies, at least presumptively of the United States.

Why in the world should that be going on as if the United States were indifferent in that relationship?

WOOLSEY: Because some rulers like to have it both ways.

DOBBS: But it's our choice, is it not? This president said he wanted democratization in the Middle East.

Why not be straightforward and insist upon it? WOOLSEY: I would think particularly given how bad it's gotten, pointing out rather forcefully for the government of Qatar what a service it is doing for terrorism. By the way Al Jazeera broadcasts would be something the United States government should have done some time ago, but certainly should do now.

DOBBS: Turning back to the 9/11 Commission, there's been little discussion of who the enemy actually is by this commission, none at all in the staff reports a couple questions and answers within it, in which Senator Bob Kerrey referred to radical Islamist terrorist. Vice Chairman Lee Hamilton asked Condoleezza Rice at one point who the enemy was, referring to radical extreme Muslim terrorists. You have focused on who the enemy is, writing in a paper that was published by Aspen, what, last month?

WOOLSEY: Probably last month. I wrote it last August.

DOBBS: What has been the reaction?

WOOLSEY: Well, not a great deal. I say the same thing in speeches and so forth. I get head nodding from people who agree with me. I think there are three movements that we're at war with and they've been at war with us in the Middle East and they've been at war with us for sometime. First of all there are the fascists, those are the Ba'athists and a few similar Arab nationalist movements that really model themselves after the fascist parties of the '30s, the Ba'athist in particular. Then the two other groups of totalitarians, Islamists from the Shiite side of division. And by Islamist, I mean a totalitarian movement masking as a religion. The Mullahs in Texan and Hezbollah and so on. And Islamists from the Sunni side of the divide within Islam, such as al Qaeda, and to a great extent, many of the Wahhabis in Saudi Arabia that support them and provide kind of the ideological underpinning.

These are all three totalitarian movements essentially. And the Shiites Islamists have been at war with us since 1979, since they seized our hostages. The Sunnis for a decade or so, and the fascist -- the Ba'athists maybe 12, 14 years. So, they've been at war with us for a long time, but we didn't notice.

DOBBS: And for some reason, there is a reticence in Washington to even acknowledge who the enemy is even in broader terms.

WOOLSEY: People have a terribly naive idea that they don't work together. Just because they hate each other, and the insult each other and kill each other from time to time doesn't mean they won't cooperate against with us. And that gives rise to the denial that the Sunni Islamist, al Qaeda ever worked with Iraq, for example. George Tenet wrote it clearly in early October of 2002, the Iraqi intelligence, trained al Qaeda in "poison gases and conventional explosives" And had senior-level contacts going back a decade. And the Islamists from the Sunni side, from the al Qaeda, work with people like Hezbollah. They're perfectly happy to work together against us. It's sort of like three Mafia families, but they insult each other, but can still cooperate. DOBBS: In point in fact, today we learned from the French journalist who was held hostage and released today, that there was a conglomeration of interests and factions among his captures, including cooperation between Sunnis and Shiites there.

WOOLSEY: Well, I don't think it's real Sunnis and real Shiites. I think it's Islamists totalitarian masquerading as part of a religion. Certainly if anybody in the intelligence community is surprised by this, the really surprising thing would be that they are really surprised. Some of them have had a idea fix for a long time, that al Qaeda would never work with the Ba'athist and the Shiite Islamist would never work with the Sunni. It's just nuts. They work together on important things. It's not that one necessarily controls the other. It's not sort of like state sponsorship, but cooperation, support here and there against us, sure, they've been doing it for years and years and years.

DOBBS: Thank you very much, James Woolsey, we thank you.

WOOLSEY: Good to be with you, Lou.

DOBBS: "Tonight's Thought" is on war. "War is a blessing compared with national degradation." Those words of Andrew Jackson.

A reminder to vote in tonight's poll question. "Do you believe the Pentagon's decision to hold over another 20,000 troops in Iraq is sufficient evidence the U.S. military needs more soldiers and marines? Yes or No." We ask you to cast your vote at cnn.com/lou. And we'll have the results for you a little later in the show.

Still ahead, "Making the Grade." Tonight we'll tell you the side effects of overmedicating this country's children. Why the debate has made it into the public classrooms and soon on to Capitol Hill. We continue in just a moment. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight in our series of special reports, "Making the Grade," we focus on the overmedication of many of our nation's students. Millions of children, in fact, are taking prescription drugs every day, and that's produced a controversy that has now worked its way into classrooms themselves. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: The Indians in South America...

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): 13-year-old Michael Mozer has come a long way since first grade, that's when his teachers believed he had attention deficit hyperactivity disorder or ADHD. Michael's mother said school officials presented her with a choice.

PATRICIA WEATHERS, MOTHER: They basically said if you don't opt for medication, we are going to transfer your son out of school. PILGRIM: Reluctantly, she put him on medications, including Ritalin and the antidepressant Paxil. For a short time, his behavior improved, then Michael said the side effects began. Hallucinations and dramatic mood swings.

After two years, Michale's mom stopped giving him the medication, and said three weeks later he was dismissed from school. He's been home-schooled ever since.

MICHAEL MOZER, STUDENT: I really didn't know what was happening, because I didn't know which side to believe, my mom or the school. Thinking that I did have a problem, or I didn't, I was just a normal boy.

PILGRIM: An estimated six million children in the United States take Ritalin every day. That's up 500 percent since 1990, the fastest-growing segment for antidepressants is preschoolers five and under. Critics argue some drugs have not been fully tested on children, and their effects on developing brains are not fully known. Many diagnoses originate in school.

GLEN ELLIOTT, UNIV. OF CAIF. SAN FRANCISCO: They don't have the resources necessarily to provide some of the other non-medication strategies that might also work, such as small classroom sizes, more one to one instruction, things that potentially pretty effective, but also expensive.

PILGRIM: Last year the House approved a bill that would ban schools from forcing drugs on children.

REP. MAX BURNS, (R) GEORGIA: We look to medication as the first answer, wherein reality it should be the last option. So there are any number of academic ways to provide learning opportunities without the negative side effects that would come from medications.

(END VIDEOTAPE)

PILGRIM: Now, Senator John Ensign is sponsoring the Senate version of the bill that already passed in the House. And he's asking for a GAO study of the problem of overmedication of children in schools -- Lou.

DOBBS: Let me see if i've got this right. Most schools cannot enforce discipline, but they can order the medication of their students?

PILGRIM: That's right. It varies from state to state. And what they're looking for is some kind of federal rule on just what and what cannot be done in the school systems. And that's why Congress is involved. That's why they're asking for the study.

DOBBS: You would think they would set the standard for them.

PILGRIM: It's quite an issue.

DOBBS: Thank you very much, Kitty. Kitty Pilgrim. PILGRIM: Still ahead. France's leader says the latest meeting between President Bush and Israeli Prime Minister Sharon has produced a dangerous result. I'll be joined by the legal adviser to the Palestinian Liberation Organization Diana Buttu. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: New predictions tonight about the next big earthquake in California. A UCLA professor says a magnitude 6.4 quake will hit southern California between now and September 5. The professor says he can predict earthquakes by tracking tremblers and looking at historical data. If, in fact, this proves to be the case, it would be a major breakthrough in geophysical science. Many other researchers, however, remain skeptical of his conclusions.

Now, a look at tonight's news in brief. The liberal radio network, Air America, is not broadcasting tonight in Chicago and Los Angeles for a second straight day, Air America is not on the air. The network was taken off the air because of a contract dispute.

British prime minister Tony Blair tonight will meet at the United Nations with Secretary General Kofi Annan. Blair will visit the White House tomorrow where he'll hold a joint news conference with President Bush.

The State Department tonight is ordering all private American citizens and nonessential U.S. diplomats to leave Saudi Arabia. The State Department says there are new credible threats of terror against Americans in Saudi Arabia.

Sharp reaction tonight concerning the latest U.S. policy decisions in the Middle East. After meeting with Israeli Prime Minister Ariel Sharon, President Bush said yesterday Israel would not have to turn over control of the entire West Bank to Palestinians. French president Jacques Chirac today called Israel's plans to keep control of some settlements on the West Bank dangerous. That view is shared by my guest tonight. Diana Buttu is a legal adviser to the Palestinian Liberation Organization. She's joining us tonight from Washington, D.C.. Good to have you with us.

DIANA BUTTU, LEGAL ADVISER, PLO: Thank you, Lou.

DOBBS: The decision to support Ariel Sharon and his plan to withdraw from Gaza, to retain settlements on the West Bank, obviously rejected by your organizations and others, in point of fact, immediately. What would you have liked to have seen instead?

DIANA BUTTU, LEGAL ADVISER, PALESTINIAN LIBERATION ORGANIZATION: What I would have liked to see is President Bush upholding U.S. foreign policy. For 36 years, U.S. foreign policy has fallen in line with international law, which says that these settlements are all illegal and that Israel shouldn't be rewarded for having these settlements but instead should have been punished for these settlements.

I would have preferred to have seen President Bush demand that Israel withdraw from the territories that it occupied in 1967 and say to Ariel Sharon that it's time for the Palestinians to be able to live freely in that territory. But instead, he did the opposite. Instead he's now said he's now said to Ariel Sharon that he is going to reward him for his violations of international law and more importantly, for his violations of American foreign policy.

DOBBS: I presume that the PLO could have accepted easily, at least, half of the Sharon proposition, that is the unilateral withdrawal from Gaza, and then leave the issue of the West Bank future and its configuration to negotiation. Is that correct?

BUTTU: What should have happened is that Israel should have withdrawn from the Gaza Strip completely, but what it's going to do is it's not going to withdraw completely from the Gaza Strip. They're going to retain the military installations in that area and Palestinians will still be living under military rule. Most importantly, Israel will maintain a buffer zone between the Gaza Strip and Egypt, a buffer zone that has already led to the destruction of more than 2,500 homes in the Gaza Strip, leaving more than 10,000 Palestinians homeless. I would have liked to have seen Ariel Sharon simply uproot those settlements, send them back to Israel, and follow international law but instead we're not seeing that.

DOBBS: Secretary of State Colin Powell said that the Bush decision yesterday is simply a recognition of reality on the ground and does not go so far as to recognize the Israeli settlements in the West Bank. Is that comforting to you at all?

BUTTU: Not at all because the realities on the ground have been created through power and through force and what it's teaching the Palestinians is that might makes right and it's also teaching Israel that it can simply continue to fly in the face of international law, fly in the face of U.S. foreign policy and rather than being punished for it, the U.S. foreign policy itself will change. It's an alarming progression, it's a very alarming change in U.S. foreign policy, and it's going to lead to a situation in which the United States will have very little credibility in the Middle East.

DOBBS: In point of fact, the U.S. credibility is somewhat less important, is it not, after 50 years of strife and violence than simply the absolute necessity, the Palestinians and Israelis lay out a future for the region. Critics are suggesting that the PLO and the PLA resist the straightforward statement by the U.S. government of a viable contiguous sovereign and independent Palestinian state. Is that where the emphasis should be placed now and leave these negotiations as a matter of post-condition to establishing that Palestinian state?

BUTTU: Well, I think that it's important to look at what it is that the Palestinians have been asking for for the past 37 years. They've already recognized Israel's right to exist on 78 percent of their historic -- of historic Palestine. All that they ask is for the remaining 22 percent to be given to them, but even that 22 percent Israel is now eating up through its policy of settlements. I think you'll start seeing a different strategy on the part of Palestinians, you may start seeing instead of Palestinians talking about equal statehood then talking about equal citizenship. It's been made very clear that this idea of statehood is not one that's going to come to fruition.

DOBBS: Would that new condition also include a resistance to terror?

BUTTU: Well, Palestinians for the past have always said that they denounce and that they condemn these suicide bombings, but the suicide bombings are born of the occupation. If you imagine the United States, if the United States had been subject to foreign occupation, let's assume that China came into the United States and was -- and the Americans were living under Chinese rule, I think that Americans would very much resist that, and whether the means chosen are the correct ones is up for debate, but nonetheless Palestinians do have a right to resist.

DOBBS: Terror would continue in your judgment, then?

BUTTU: I think the situation will certainly get much worse. When you demonstrate to people that there's no reason for any hope, then of course it's going to get much worse, and people will end up resorting to acts of violence.

DOBBS: Diana Buttu, thank you very much for being with us.

BUTTU: Thank you.

DOBBS: Turning to Wall Street, a mixed session for stocks, as if that is the most important thing after discussing critical issues such as peace in the Middle East. And we turn now to Christine Romans.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, for some reason stock investors keep fretting about higher interest rates, but if the Fed were to raise interest rates half a point these will still be the lowest since 1961. And the news this week has not been universally good. Jobless claims spiked in the latest week up 30,000 and wages fell 7/10 of a percent in March. Wage growth essentially flat over the past year.

Now, sure there are profit gains but companies are just doing more with fewer workers, and moving jobs overseas. Case in point, Dupont. This week it slashed 3,500 jobs and then raised its earnings targets. Bad news for employees, great news for shareholders. Which brings me to Dell. Dell for the first time has more employees outside the United States than in it. 22,000 here, almost 24,000 abroad. It has new technical and customer support centers in India, Panama, Morocco, Slovakia, and China. While the majority of Dell's workforce is abroad, the majority of its revenue still here.

DOBBS: Christine, thank you very much. Christine Romans.

Still ahead here, we'll have the results of tonight's poll, but first a reminder to check our website for the complete list of companies we've confirmed to be exporting American jobs to cheap foreign labor markets. CNN.com/lou. We continue in just a moment. Please stay with us. (COMMERCIAL BREAK)

DOBBS: The results now of tonight's poll. 89 percent of you said the Pentagon's decision to hold over another 20,000 troops in Iraq is sufficient evidence the United States military needs more soldiers and marines. 11 percent of you say no.

That is our show for tonight. We thank you for being with us. Please be with us tomorrow when 9/11 commission member John Lehman is our guest. Former Pentagon adviser Michael Rubin, we'll talk to him about his work with the authority in Baghdad and Pulitzer Prize- winning writer Rick Atkinson will be with us to talk about his new book on Iraq, "In the Company of Soldiers." Please be with us. For all of us here, 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 15, 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, CNN ANCHOR (voice-over): Tonight, Defense Secretary Donald Rumsfeld acknowledges he's surprised at the rising number of American deaths in Iraq.

DONALD RUMSFELD, SECRETARY OF DEFENSE: A small band of terrorists are not going to be permitted to determine the fate of the 25 million Iraqi people.

DOBBS: Congresswoman Ellen Tauscher has been calling for a sharp increase in our armed forces for years. She's our guest tonight.

Also tonight, we look at the fairness of the U.S. government employing highly paid civilian contractors to work alongside relatively low-paid men and women in uniform. Is this the American way?

The Palestinians accuse the United States of bias. The PLO's legal adviser, Diana Buttu, is our guest.

In "Making the Grade," our special report on education in America, overmedicated students.

UNIDENTIFIED FEMALE: They basically said, if you don't opt for medication, we are going to transfer your son out of school.

DOBBS: And tonight in "Middle Class Squeeze," American families paying a bigger share of this country's taxes, corporations paying a smaller share. We'll have a special report.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, April 15. Here now for an hour of news, debate and opinion, Lou Dobbs.

DOBBS: Good evening.

Defense Secretary Donald Rumsfeld today said he regrets having to extend the tours of duty of 20,000 American troops in Iraq. Secretary Rumsfeld also said he's also surprised at the high level of recent American combat deaths. Nearly 90 U.S. troops have been killed in Iraq since the beginning of this month.

Senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT (voice-over): With the U.S. taking casualties at a higher rate than when the war began and the Pentagon forced to cancel the return of 20,000 troops needed to deal with a growing insurgency, U.S. Defense Secretary Donald Rumsfeld made what, for him, is a rare admission. He was wrong about how stable Iraq would be after a year's occupation.

RUMSFELD: If you had said to me a year ago, describe the situation you'll be in today one year later, I don't know many people who would have described it -- I would not have described it the way it happens to be today.

MCINTYRE: April has been the deadliest month of the war with nearly 90 Americans killed and more than 540 wounded, more than half of the deaths coming in the past week.

RUMSFELD: I certainly would not have estimated that we would have had the number of individuals lost that we have had lost in the last week.

MCINTYRE: The Pentagon estimates during the same time between 1,500 and 2,000 enemy fighters have been killed, but those figures are not released, to avoid the mistake of Vietnam when body counts were cited as a measure of success. The decision to hold 20,000 troops in Iraq for three more months will affect some 40 Army units, including 11,000 soldiers from the 1st Armored Division, 3,200 from the 2nd Armored Cavalry Regiment, and about 6,000 Guard and Reserve troops.

And despite the strain on the forces, the Pentagon continues to reject the argument the U.S. military is too small.

GEN. PETER PACE, VICE CHAIRMAN, JOINT CHIEFS OF STAFF: We have the capacity with 2.4 million individuals available to us active Guard and Reserve to handle this ongoing war and anything that I can think of that's on the horizon.

(END VIDEOTAPE)

MCINTYRE: Rumsfeld said he regretted having to extend the stay of troops who had already served in Iraq in a year. He stopped short of promising they would come home after three more months, but he did say the current plan is to replace them with fresh troops if commanders decide that higher troop levels are still required in the summer -- Lou.

DOBBS: Jamie, you've covered the secretary of defense for some time. Were you surprised today when the secretary of defense acknowledged misperceptions, perhaps misconceptions and even mistakes today?

MCINTYRE: Well, he was very careful in what he said. In fact, it was difficult for the Pentagon reporters to pin him down exactly what he was admitting to.

But it is unusual for him. He does admit he makes mistakes. He doesn't usually admit what they are, and he's usually pretty confident that even when he's questioned that he's right. So for him to come out and say that he didn't realize that the situation would essentially be this difficult one year afterwards was a significant admission from the secretary.

DOBBS: And, if I may say simply speaking for myself, I think to his credit. Jamie McIntyre, thank you very much, our senior Pentagon correspondent.

American's top general today said U.S. Marines surrounding Fallujah could resume their offensive against Iraqi insurgents at any time. During a visit to Baghdad, the chairman of the joint chiefs, General Richard Myers, said regime elements and foreign fighters are attacking American Marines. Also today, there was no word about the fate of nine missing Americans. But there was good news about some Japanese hostages.

Karl Penhaul reports.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN CORRESPONDENT (voice-over): A kiss from a cleric, the seal of safety for these three Japanese hostages. Last week, the scene was very difficult, kneeling, blindfolded, as their kidnappers threatened to burn them alive unless Japanese troops pull out of Iraq. Japan's troops stayed. The two humanitarian workers and freelance journalist are free.

MOHAMMED BASHAR AL-FAVDI, MUSLIM SCHOLARS ASSOCIATION (through translator): We received a call at midnight from the group holding the hostages. They said they wanted to release them and there had been an agreement.

MCINTYRE: They were taken here to Baghdad's Japanese Embassy. This French journalist was also fortunate. His four-day kidnap ordeal began Sunday.

ALEX JORDANOV, JOURNALIST: They were screaming jihad and they blindfolded me and threw me in the back of the car with a blade under my throat.

MCINTYRE: He says he was moved to 10 different locations before being released Wednesday.

A very different end for Italian hostage Fabrizio Quattrocchi. This tape was sent late Wednesday by a previously unknown insurgent group called the Green Brigade to Arabic broadcast Al-Jazeera. Minutes later, Quattrocchi, a private security guard, was murdered. Three colleagues seized at the same time are still being held.

Earlier this week, coalition authorities said 40 international hostages from 12 different countries were in insurgent hands. And on Baghdad streets, the killing continued. The wreck of an Iranian diplomats car. Unidentified gunmen pumped bullets into Khalil Naimi, Iran's first secretary to Baghdad. The drive-by shooting came as an Iranian delegation was here to mediate between the coalition forces and Shiite cleric Muqtada al-Sadr's militia, a standoff that's threatening to become a battle.

Karl Penhaul, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: Osama bin Laden has offered a truce to any European country that withdraws its troops from Muslim nations in a new audiotape released today, but the al Qaeda leader vowed to continue attacks against the United States. Leading European countries immediately responded, rejecting Osama bin Laden's offer, saying they will not negotiate with terrorists.

National security correspondent David Ensor reports -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Well, Lou, after conducting a technical analysis of this latest al Qaeda tape, a CIA official says his agency assesses the voice is indeed likely that of Osama bin Laden.

Officials say that technical analysis was done quickly pretty, partly because the quality of the recording was good. And the officials says the recording was probably made within the past few weeks since it refers to the assassination of -- by the Israelis of Sheik Yassin.

And the official says that, as you noted, that bin Laden's remarks appear to have been an attempt to drive a wedge between Europe and the United States, because in it bin Laden addresses himself to European governments.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): I offer a truce to them with a commitment to stop operations against any state which vows to stop attacking Muslims or interfere in their affairs, including participating in the American conspiracy against the wider Muslim world.

(END VIDEO CLIP)

ENSOR: Bin Laden's message on the tape is also a propaganda ploy, U.S. intelligence officials say, intended to bolster the morale of the al Qaeda rank and file.

And the White House spokesman said the tape is a clear reminder to Americans that -- quote -- "We are still at war" -- Lou.

DOBBS: David, thank you very much -- David Ensor, our national security correspondent reporting.

The United Kingdom, France, Germany and Italy quickly denounced the tape and rejected any offer of negotiation.

That audiotape from bin Laden specifically names Halliburton as a company that is profiting in Iraq. The release of that audiotape comes as seven employees of Halliburton are known to be held captive or to be missing in Iraq. Two others escaped an insurgent attack against their convoy and decided that the situation in Iraq is simply too dangerous to stay.

Ed Lavandera reports from Houston, Texas.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT (voice-over): Steve Heering and Stacy Clark feel safe again. Four months as civilian Halliburton contractors driving fuel trucks in Iraq was too much to handle. Heering and Clark say the mood in Iraq started changing three week ago. Rocks, road side explosions and mortar fire were already common. Then last Friday, their convoy was ambushed.

STACY CLARK, TRUCK DRIVER: I seen a guy come across from the left side of the road. He come across. He threw a grenade underneath his -- Steven's rear trailer tires. Well, it just ignited. It just, boom, you know, and flames everywhere.

LAVANDERA: Heering and Clark never drove another route. They quit.

(on camera): Halliburton says 30 of its employees have been killed in Iraq and Kuwait. Civilian workers aren't allowed to carry weapons and many don't have military training. But they are lured to the jobs by the promise of an $80,000 a year paycheck.

(voice-over): In Houston, thousands of people are still applying for civilian jobs in Iraq. This training seminar is the last chance for perspective employees to back out.

UNIDENTIFIED MALE: The rocket that went through the side of the trailer. They made it. He didn't.

LAVANDERA: Despite the warnings, John Bolam is ready for his second trip back to Iraq.

JOHN BOLAM, TRUCK DRIVER: I'm going more for the fact that I'm too old to go into the military. I am ex-military, and I want to do my part. This is one of the ways I can help take care of our guys over there in Iraq.

LAVANDERA: Since returning from Iraq, Heering and Clark have been urging people to think hard before signing up.

STEPHEN HEERING, TRUCK DRIVER: Especially if you are going to drive up and down the roads in Iraq, really rethink it. Is the money really worth dying for?

LAVANDERA: For Steve Heering and Stacy Clark, the answer to that question was simple.

Ed Lavandera, CNN, Houston.

(END VIDEOTAPE) DOBBS: There are an estimated 15,000 civilian contract security guards working now in Iraq, many of them from the United States. They are the second largest international force in the coalition, in fact, and they face many of the same dangers as the much more heavily armed U.S. troops. Private security guards, however,earn as much as $500 a day.

Joining me now is General David Grange, on point tonight.

General, the fact that we have that large a contingent in Iraq receiving that kind of pay level, how does that square up, how does that play, if you will, to the men and women in uniform there working for, if you will, considerably less?

RETIRED BRIG. GEN. DAVID GRANGE, CNN MILITARY ANALYST: Well, I really don't think that the military -- you know, those in uniform get that concerned about that. They know they make more money.

When you're in the military, you're really not in it for a big paycheck, I can assure you. And so that doesn't bother them as much. And I also think that most of the troops know that without these civilian contractors, a lot of the logistical, the transportation, and some of the other stationary security requirements could not be met in Iraq.

DOBBS: That is quite a statement, General, because those have been historically the purview of the U.S. military. Why not so in Iraq today?

GRANGE: Well, I would say it's not just Iraq. If you look back at the Balkans, anything except for maneuver warfare, in other words, except for something like the attack on Baghdad, when you've transitioned to the phase of stability and support operations or peace operations, for instance, in the Balkans, the majority of the logistics, mess halls, where they're providing food, bringing in water, sanitary support, the transportation is all contracted out to reduce the number of soldiers or Marines or whatever needed for that particular mission.

And so if the requirement was in these operations you needed G.I.s to do everything, the size of the military would increase quite a bit.

DOBBS: And the problem with that?

GRANGE: Well, the problem is that -- I never had a problem with support. They're very good. They're very good.

Can they say I'm not going to go into a combat area if you're deploying somewhere? Yes, they can. Can you order them to go? No, you cannot. And so that may be an issue. Most of them don't display that type of attitude, but it could in fact happen. And it frees up more troops to do combat-type missions instead of support missions. But if there was an issue, they could not be depended upon if they denied support. DOBBS: I want to turn in just the few seconds we have left, General, Secretary of Defense Rumsfeld acknowledged that this is not a situation that he would have envisioned a year ago in Iraq.

What is your reaction, General, to the secretary of defense acknowledging a misperception, a misconception, if you will, a mistake?

GRANGE: Well, I've never seen any plan go as initially it was laid on the table.

DOBBS: Right.

GRANGE: I'm glad that the secretary of defense stated that. Things change. They change all the time. And I think the expectations was going to be that the transition would be a lot smoother than obviously happened. And as we get close to June 30, there's a lot of people that don't want that to happen. I shouldn't say a lot, but a good piece of them that don't want it to happen. And, of course, they're trying to spoil those efforts.

DOBBS: Do you think the secretary of defense deserves some significant credit for his acknowledgement today?

GRANGE: Absolutely. Truth changes. The situation changes. And, as his position with the military, he's accepting that fact that things don't remain the same.

DOBBS: General David Grange, good to have you here. Thank you.

Next, Congresswoman Ellen Tauscher will be talking about the urgent need to raise the size of our U.S. armed forces. And I'll be talking with former CIA Director James Woolsey about the need for better intelligence.

Also, angry protests in Palestinian territories over Israel's planned withdrawal from Gaza and its attempt to retain settlements on the West Bank. I'll be joined by the PLO's legal adviser Diana Buttu.

And middle-class Americans paying a rising share of this country's tax burden, big corporations paying less. We'll have a special report.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: As we reported, the Pentagon today said it will keep 20,000 American troops in Iraq 90 days longer than their expected year-long tour as had been promised.

My next guest has for months has been calling for more U.S. troops in Iraq and a higher level of force for the U.S. military.

Congresswoman Ellen Tauscher is a member of the Armed Services Committee and joins us tonight from San Francisco. Congresswoman, first, your reaction by the decision to the Pentagon to keep those additional 20,000 troops in Iraq?

REP. ELLEN TAUSCHER (D), CALIFORNIA: Well, I think that's more evidence, Lou.

We already have 200,000 troops that have been stop-lossed and who have contracts that are up, that have served their time, hopefully returned home safely and are prevented from leaving the military, because we just don't have enough active-duty forces for what is apparently now a very, very labor-intensive war on terror in Iraq.

And I think that the final recognition today by the secretary, late as it is, that we don't really have a plan to turn over political control, and that we don't have enough soldiers on the ground, Army and Marines, to deal with this big counterinsurgency that is escalating every day, is finally appreciated, I think, by many of us, but we still don't have a plan to do it right.

DOBBS: As you know, and up on the screen, most troops from the 1st Armored Division, some 11,000 men and women in the 1st Armored will be held over. But about 25 percent of the troops are Reserves and National Guard who are having their tours extended, primarily because they're providing support, logistical and operational support to the combat troops. How seriously do you take that extension of their tour as well?

TAUSCHER: My concern for a very long time is that we're breaking our military, both the active duty, the Guard and Reserve. Not only are 25 percent of the troops that are being held over -- this 20,000 being held over from the Guard and Reserve, but 40 percent of the troops going in, in this rotation that will be in Iraq at least for a year are going to be from the Guard and Reserve, which is the largest since the Korean War. That's just way too high.

Not only are they basically hollowing out our homeland force, because they come disproportionately from sheriff's departments, police departments, fire departments, EMTs, but we just don't have a hedge in our military right now in case we should have another major theater conflict or some other reason we would need to deploy troops. So I believe we need to increase the size of at least the Army by 10,000 troops this year, perhaps the Marines. But my bill that's about seven months old hasn't even gotten a hearing in my own Armed Services Committee.

DOBBS: That legislation calling for an increase of about 8 percent in the level of force for the U.S. military force over the course of five years. Why is that? Why is there -- it's counterintuitive that the Pentagon would not want more men and women in uniform, would not want them because of the huge, numerous challenges faced by the United States around the world and by the demands we're putting on our men and women now in uniform?

TAUSCHER: Well, I'm afraid it's because Secretary Rumsfeld and the Pentagon wants it both ways. They want to basically have no sacrifice in this budget coming forward for the Pentagon. As you know, the president's budget that was submitted months ago doesn't have a farthing, a penny, a dollar for the war in Iraq and Afghanistan, for the war on terror. We have funded it by borrowing about $160 billion on a credit card. So this is a separate set of books for this war, and the Pentagon doesn't want to have to have any sacrifices. They don't want to have to pay for troops which are, by the way, very expensive currently and in the future.

Just to deploy that 10,000, one new division, in the Army would cost about $1.6 billion this year. And they don't want to make any sacrifices in their ongoing weapons programs or other parts of the Pentagon to pay for what we vitally need to secure a successful strategy in Iraq.

DOBBS: And to provide security for Americans in Iraq in combat.

Congresswoman Ellen Tauscher, we thank you very much.

TAUSCHER: Which is a real issue. Thank you.

DOBBS: Absolutely. Thank you, Congresswoman, for being here.

TAUSCHER: Thank you.

DOBBS: Congresswoman Ellen Tauscher of the House Armed Services Committee.

That brings us to the topic of tonight's poll. The question: Do you believe the Pentagon's decision to hold over another 20,000 troops in Iraq is sufficient the U.S. military needs more soldiers and Marines, yes or no? Please cast your vote at CNN.com/Lou. We'll have the results coming up here later.

Still ahead, former CIA Director James Woolsey, he'll be here to talk about his analysis of the new bin Laden tape, the situation in Iraq and who the real enemies are in the war on terror.

Also, crisis in the Middle East. Palestinians now say the new White House policy threatens the peace process. We'll be talking with legal adviser Diana Buttu.

Also, tax day in America, it's today, and the middle class, well, they say their refunds are somewhat smaller than they thought. The "Middle Class Squeeze" continues. We'll have a special report for you.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: We know it's not news to you that our taxes are due today. You probably also realize that middle-class families continuing to pay more than their fair of this nation's tax burden, despite recent tax cuts. In fact, corporations have been paying less and less taxes over the past several decades, while middle-class families have been paying more and more. Lisa Sylvester reports on the middle-class squeeze.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): President Bush, visiting a rural development conference in Iowa, said his tax cuts put more money in the pockets of Americans.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The economy is stronger for it.

SYLVESTER: Under President Bush, the child tax credit was doubled, the marriage penalty eliminated for most middle-class families and tax brackets reduced across the board, but many middle- income taxpayers are still not feeling the benefits.

UNIDENTIFIED FEMALE: There was no difference in my taxes.

UNIDENTIFIED MALE: I actually got less money back this year.

SYLVESTER: Many middle-class families are having to pay what's known as the alternative minimum tax, a tax that was supposed to close loopholes for the ultra-rich. But because the AMT was never adjusted for inflation, many middle-income wage earners are have to pay this tax. Meantime, the corporate share of taxes has been declining overt last four decades, from just over 20 percent to less than 8 percent.

PETE SEPP, NATIONAL TAXPAYERS UNION: Our tax systems puts the biggest squeeze on the middle class and upwardly mobile Americans, because it doesn't allow them to employ the same tax strategies that the super-wealthy can afford to employ and have employed year after year.

SYLVESTER: Democratic presidential candidate John Kerry has proposed rolling back the tax cuts for the wealthiest Americans, while adding higher education tax credits. He's also promising to close corporate loopholes, but he plan also does not address the problem of alternative minimum tax.

(END VIDEOTAPE)

SYLVESTER: Middle-class families are also being pinched by payroll taxes. In fact, according to the Council on Budget and Policy Priorities, about 75 of American families pay more in Social Security and Medicare taxes than in income taxes -- Lou.

DOBBS: And they pay most of those taxes as well.

SYLVESTER: They do, indeed.

DOBBS: Lisa, thank you very much -- Lisa Sylvester reporting tonight from Washington.

Well, the middle class squeezed again on the subject of gasoline prices. AAA tonight says gasoline prices hit a new record, $1.78 a gallon. Much debate has recently focused on Democratic proposals to raise the federal gas tax. President Bush, in fact, released political ads last month attacking Senator Kerry for once favoring a 50-cent-a-gallon increase, saying it would damage the economy.

But we should point out it was just five years ago the chairman of the president's Council of Economic Advisers thought the very same proposal was a marvelous idea. Dr. Gregory Mankiw, the president's chairman of the Council of Economic Advisers, wrote an article for "Fortune" magazine in May of 1999 that we found. In that article, he recommended a 50-cent hike of the gasoline tax. In fact, that argument was titled -- quote -- "Gas Tax Now."

Mankiw outlined several benefits of cutting income taxes, while raising gasoline taxes. Those benefits, he noted, included safer roads, a reduced risk of global warming and stronger economic growth. The White House tells LOU DOBBS TONIGHT tonight that -- quote -- "Greg Mankiw does not support a gasoline tax now." And neither does Senator Kerry, by the way.

Still ahead, former CIA Director James Woolsey, he'll be here with his analysis of the new Osama bin Laden tape, what it means in Europe and the global war on terror, the situation in Iraq, and the challenges facing the CIA.

And the crisis in the Middle East. I'll be joined by the PLO's legal adviser, Diana Buttu. She's or guest.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: As the war in Iraq escalates there are disturbing signs that the U.S. military and intelligence community still don't have much information about the enemy's organization, capabilities, intentions and in many cases even its identity. Troops are facing a rising number of attacks from a combination of former Ba'athist regime loyalist, foreign terrorists, and Shiite and Sunni gunmen.

Joining me is former CIA director James Woolsey.

James good to have you with us.

JAMES WOOLSEY, FORMER CIA DIRECTOR: Good to be with you, Lou.

DOBBS: As you watch the excruciation in many cases of the CIA for lapses in pre-9/11 as this commission hearings continue, what's your reaction?

WOOLSEY: I think there's too much finger pointing. People need to tie specific solutions to specific problems. Maybe they will do that. Maybe they're beginning to, but there's been an awful lot of posturing for the cameras.

DOBBS: A lot of rear-view mirror, unquestionably necessary for all of us to understand what should be done going forward, but to hear CIA Director George Tenet say it will be another five years before what he calls an effective clandestine force, isn't that somewhat chilling?

WOOLSEY: I don't think he meant it was going to be completely ineffective before then. I think he meant the way he wants it will be five years. It takes a long time to built a capability of a number of people to speak a language and be immersed in a culture. We tried on my watch in '93 and '94 to get substantially increased funds for Arabic interpreters and translators and instruction in fatwa for Iran and so forth, and the Senate Intelligence Committee fought it hard. Senator (UNINTELLIGIBLE) the chairman. The other committees were in favor, but we failed, we didn't get the money we needed.

DOBBS: You know, I can remember 40 years ago, if I may say, Jim, when the CIA funded centers, research centers and academic centers, not only in the United States, but all around Europe, and parts of Asia, where they assembled speakers and cultural experts and that funding was clandestine, certainly covert.

Why in the world would we not bed doing that, and availing the resources rather than being so linear in the thinking?

WOOLSEY: An awful lot of that could be done, a lot more than is, could be done overtly. There's a lot of things we could do to win the war -- the so-called soft-power war of influence. I think it's amazing that in Iraq still the principal broadcasters are either Arabic language from Iran, which are very hostile to is, or Al Jazeera. We invented mass media, we invented radio for Europe and we're not doing nearly as well as we should in those areas.

DOBBS: Speaking of mass media, Al Jazeera, the Secretary of Defense Donald Rumsfeld today lashed out at Al Jazeera. Effectively calling it a tool of the Islamists and Sunni Ba'athist loyalists in Iraq.

What should be done?

WOOLSEY: I think there's a lot to that. Occasionally they'll put somebody on with a different point of view. I've been on there once or twice and other people are occasionally, but generally speaking, it really is a propaganda organ for the Islamists, that is I think the totalitarian point of view.

DOBBS: Well, help me out. Al Jazeera is owned by the government of Qatar, which are allies, at least presumptively of the United States.

Why in the world should that be going on as if the United States were indifferent in that relationship?

WOOLSEY: Because some rulers like to have it both ways.

DOBBS: But it's our choice, is it not? This president said he wanted democratization in the Middle East.

Why not be straightforward and insist upon it? WOOLSEY: I would think particularly given how bad it's gotten, pointing out rather forcefully for the government of Qatar what a service it is doing for terrorism. By the way Al Jazeera broadcasts would be something the United States government should have done some time ago, but certainly should do now.

DOBBS: Turning back to the 9/11 Commission, there's been little discussion of who the enemy actually is by this commission, none at all in the staff reports a couple questions and answers within it, in which Senator Bob Kerrey referred to radical Islamist terrorist. Vice Chairman Lee Hamilton asked Condoleezza Rice at one point who the enemy was, referring to radical extreme Muslim terrorists. You have focused on who the enemy is, writing in a paper that was published by Aspen, what, last month?

WOOLSEY: Probably last month. I wrote it last August.

DOBBS: What has been the reaction?

WOOLSEY: Well, not a great deal. I say the same thing in speeches and so forth. I get head nodding from people who agree with me. I think there are three movements that we're at war with and they've been at war with us in the Middle East and they've been at war with us for sometime. First of all there are the fascists, those are the Ba'athists and a few similar Arab nationalist movements that really model themselves after the fascist parties of the '30s, the Ba'athist in particular. Then the two other groups of totalitarians, Islamists from the Shiite side of division. And by Islamist, I mean a totalitarian movement masking as a religion. The Mullahs in Texan and Hezbollah and so on. And Islamists from the Sunni side of the divide within Islam, such as al Qaeda, and to a great extent, many of the Wahhabis in Saudi Arabia that support them and provide kind of the ideological underpinning.

These are all three totalitarian movements essentially. And the Shiites Islamists have been at war with us since 1979, since they seized our hostages. The Sunnis for a decade or so, and the fascist -- the Ba'athists maybe 12, 14 years. So, they've been at war with us for a long time, but we didn't notice.

DOBBS: And for some reason, there is a reticence in Washington to even acknowledge who the enemy is even in broader terms.

WOOLSEY: People have a terribly naive idea that they don't work together. Just because they hate each other, and the insult each other and kill each other from time to time doesn't mean they won't cooperate against with us. And that gives rise to the denial that the Sunni Islamist, al Qaeda ever worked with Iraq, for example. George Tenet wrote it clearly in early October of 2002, the Iraqi intelligence, trained al Qaeda in "poison gases and conventional explosives" And had senior-level contacts going back a decade. And the Islamists from the Sunni side, from the al Qaeda, work with people like Hezbollah. They're perfectly happy to work together against us. It's sort of like three Mafia families, but they insult each other, but can still cooperate. DOBBS: In point in fact, today we learned from the French journalist who was held hostage and released today, that there was a conglomeration of interests and factions among his captures, including cooperation between Sunnis and Shiites there.

WOOLSEY: Well, I don't think it's real Sunnis and real Shiites. I think it's Islamists totalitarian masquerading as part of a religion. Certainly if anybody in the intelligence community is surprised by this, the really surprising thing would be that they are really surprised. Some of them have had a idea fix for a long time, that al Qaeda would never work with the Ba'athist and the Shiite Islamist would never work with the Sunni. It's just nuts. They work together on important things. It's not that one necessarily controls the other. It's not sort of like state sponsorship, but cooperation, support here and there against us, sure, they've been doing it for years and years and years.

DOBBS: Thank you very much, James Woolsey, we thank you.

WOOLSEY: Good to be with you, Lou.

DOBBS: "Tonight's Thought" is on war. "War is a blessing compared with national degradation." Those words of Andrew Jackson.

A reminder to vote in tonight's poll question. "Do you believe the Pentagon's decision to hold over another 20,000 troops in Iraq is sufficient evidence the U.S. military needs more soldiers and marines? Yes or No." We ask you to cast your vote at cnn.com/lou. And we'll have the results for you a little later in the show.

Still ahead, "Making the Grade." Tonight we'll tell you the side effects of overmedicating this country's children. Why the debate has made it into the public classrooms and soon on to Capitol Hill. We continue in just a moment. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight in our series of special reports, "Making the Grade," we focus on the overmedication of many of our nation's students. Millions of children, in fact, are taking prescription drugs every day, and that's produced a controversy that has now worked its way into classrooms themselves. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: The Indians in South America...

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): 13-year-old Michael Mozer has come a long way since first grade, that's when his teachers believed he had attention deficit hyperactivity disorder or ADHD. Michael's mother said school officials presented her with a choice.

PATRICIA WEATHERS, MOTHER: They basically said if you don't opt for medication, we are going to transfer your son out of school. PILGRIM: Reluctantly, she put him on medications, including Ritalin and the antidepressant Paxil. For a short time, his behavior improved, then Michael said the side effects began. Hallucinations and dramatic mood swings.

After two years, Michale's mom stopped giving him the medication, and said three weeks later he was dismissed from school. He's been home-schooled ever since.

MICHAEL MOZER, STUDENT: I really didn't know what was happening, because I didn't know which side to believe, my mom or the school. Thinking that I did have a problem, or I didn't, I was just a normal boy.

PILGRIM: An estimated six million children in the United States take Ritalin every day. That's up 500 percent since 1990, the fastest-growing segment for antidepressants is preschoolers five and under. Critics argue some drugs have not been fully tested on children, and their effects on developing brains are not fully known. Many diagnoses originate in school.

GLEN ELLIOTT, UNIV. OF CAIF. SAN FRANCISCO: They don't have the resources necessarily to provide some of the other non-medication strategies that might also work, such as small classroom sizes, more one to one instruction, things that potentially pretty effective, but also expensive.

PILGRIM: Last year the House approved a bill that would ban schools from forcing drugs on children.

REP. MAX BURNS, (R) GEORGIA: We look to medication as the first answer, wherein reality it should be the last option. So there are any number of academic ways to provide learning opportunities without the negative side effects that would come from medications.

(END VIDEOTAPE)

PILGRIM: Now, Senator John Ensign is sponsoring the Senate version of the bill that already passed in the House. And he's asking for a GAO study of the problem of overmedication of children in schools -- Lou.

DOBBS: Let me see if i've got this right. Most schools cannot enforce discipline, but they can order the medication of their students?

PILGRIM: That's right. It varies from state to state. And what they're looking for is some kind of federal rule on just what and what cannot be done in the school systems. And that's why Congress is involved. That's why they're asking for the study.

DOBBS: You would think they would set the standard for them.

PILGRIM: It's quite an issue.

DOBBS: Thank you very much, Kitty. Kitty Pilgrim. PILGRIM: Still ahead. France's leader says the latest meeting between President Bush and Israeli Prime Minister Sharon has produced a dangerous result. I'll be joined by the legal adviser to the Palestinian Liberation Organization Diana Buttu. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: New predictions tonight about the next big earthquake in California. A UCLA professor says a magnitude 6.4 quake will hit southern California between now and September 5. The professor says he can predict earthquakes by tracking tremblers and looking at historical data. If, in fact, this proves to be the case, it would be a major breakthrough in geophysical science. Many other researchers, however, remain skeptical of his conclusions.

Now, a look at tonight's news in brief. The liberal radio network, Air America, is not broadcasting tonight in Chicago and Los Angeles for a second straight day, Air America is not on the air. The network was taken off the air because of a contract dispute.

British prime minister Tony Blair tonight will meet at the United Nations with Secretary General Kofi Annan. Blair will visit the White House tomorrow where he'll hold a joint news conference with President Bush.

The State Department tonight is ordering all private American citizens and nonessential U.S. diplomats to leave Saudi Arabia. The State Department says there are new credible threats of terror against Americans in Saudi Arabia.

Sharp reaction tonight concerning the latest U.S. policy decisions in the Middle East. After meeting with Israeli Prime Minister Ariel Sharon, President Bush said yesterday Israel would not have to turn over control of the entire West Bank to Palestinians. French president Jacques Chirac today called Israel's plans to keep control of some settlements on the West Bank dangerous. That view is shared by my guest tonight. Diana Buttu is a legal adviser to the Palestinian Liberation Organization. She's joining us tonight from Washington, D.C.. Good to have you with us.

DIANA BUTTU, LEGAL ADVISER, PLO: Thank you, Lou.

DOBBS: The decision to support Ariel Sharon and his plan to withdraw from Gaza, to retain settlements on the West Bank, obviously rejected by your organizations and others, in point of fact, immediately. What would you have liked to have seen instead?

DIANA BUTTU, LEGAL ADVISER, PALESTINIAN LIBERATION ORGANIZATION: What I would have liked to see is President Bush upholding U.S. foreign policy. For 36 years, U.S. foreign policy has fallen in line with international law, which says that these settlements are all illegal and that Israel shouldn't be rewarded for having these settlements but instead should have been punished for these settlements.

I would have preferred to have seen President Bush demand that Israel withdraw from the territories that it occupied in 1967 and say to Ariel Sharon that it's time for the Palestinians to be able to live freely in that territory. But instead, he did the opposite. Instead he's now said he's now said to Ariel Sharon that he is going to reward him for his violations of international law and more importantly, for his violations of American foreign policy.

DOBBS: I presume that the PLO could have accepted easily, at least, half of the Sharon proposition, that is the unilateral withdrawal from Gaza, and then leave the issue of the West Bank future and its configuration to negotiation. Is that correct?

BUTTU: What should have happened is that Israel should have withdrawn from the Gaza Strip completely, but what it's going to do is it's not going to withdraw completely from the Gaza Strip. They're going to retain the military installations in that area and Palestinians will still be living under military rule. Most importantly, Israel will maintain a buffer zone between the Gaza Strip and Egypt, a buffer zone that has already led to the destruction of more than 2,500 homes in the Gaza Strip, leaving more than 10,000 Palestinians homeless. I would have liked to have seen Ariel Sharon simply uproot those settlements, send them back to Israel, and follow international law but instead we're not seeing that.

DOBBS: Secretary of State Colin Powell said that the Bush decision yesterday is simply a recognition of reality on the ground and does not go so far as to recognize the Israeli settlements in the West Bank. Is that comforting to you at all?

BUTTU: Not at all because the realities on the ground have been created through power and through force and what it's teaching the Palestinians is that might makes right and it's also teaching Israel that it can simply continue to fly in the face of international law, fly in the face of U.S. foreign policy and rather than being punished for it, the U.S. foreign policy itself will change. It's an alarming progression, it's a very alarming change in U.S. foreign policy, and it's going to lead to a situation in which the United States will have very little credibility in the Middle East.

DOBBS: In point of fact, the U.S. credibility is somewhat less important, is it not, after 50 years of strife and violence than simply the absolute necessity, the Palestinians and Israelis lay out a future for the region. Critics are suggesting that the PLO and the PLA resist the straightforward statement by the U.S. government of a viable contiguous sovereign and independent Palestinian state. Is that where the emphasis should be placed now and leave these negotiations as a matter of post-condition to establishing that Palestinian state?

BUTTU: Well, I think that it's important to look at what it is that the Palestinians have been asking for for the past 37 years. They've already recognized Israel's right to exist on 78 percent of their historic -- of historic Palestine. All that they ask is for the remaining 22 percent to be given to them, but even that 22 percent Israel is now eating up through its policy of settlements. I think you'll start seeing a different strategy on the part of Palestinians, you may start seeing instead of Palestinians talking about equal statehood then talking about equal citizenship. It's been made very clear that this idea of statehood is not one that's going to come to fruition.

DOBBS: Would that new condition also include a resistance to terror?

BUTTU: Well, Palestinians for the past have always said that they denounce and that they condemn these suicide bombings, but the suicide bombings are born of the occupation. If you imagine the United States, if the United States had been subject to foreign occupation, let's assume that China came into the United States and was -- and the Americans were living under Chinese rule, I think that Americans would very much resist that, and whether the means chosen are the correct ones is up for debate, but nonetheless Palestinians do have a right to resist.

DOBBS: Terror would continue in your judgment, then?

BUTTU: I think the situation will certainly get much worse. When you demonstrate to people that there's no reason for any hope, then of course it's going to get much worse, and people will end up resorting to acts of violence.

DOBBS: Diana Buttu, thank you very much for being with us.

BUTTU: Thank you.

DOBBS: Turning to Wall Street, a mixed session for stocks, as if that is the most important thing after discussing critical issues such as peace in the Middle East. And we turn now to Christine Romans.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, for some reason stock investors keep fretting about higher interest rates, but if the Fed were to raise interest rates half a point these will still be the lowest since 1961. And the news this week has not been universally good. Jobless claims spiked in the latest week up 30,000 and wages fell 7/10 of a percent in March. Wage growth essentially flat over the past year.

Now, sure there are profit gains but companies are just doing more with fewer workers, and moving jobs overseas. Case in point, Dupont. This week it slashed 3,500 jobs and then raised its earnings targets. Bad news for employees, great news for shareholders. Which brings me to Dell. Dell for the first time has more employees outside the United States than in it. 22,000 here, almost 24,000 abroad. It has new technical and customer support centers in India, Panama, Morocco, Slovakia, and China. While the majority of Dell's workforce is abroad, the majority of its revenue still here.

DOBBS: Christine, thank you very much. Christine Romans.

Still ahead here, we'll have the results of tonight's poll, but first a reminder to check our website for the complete list of companies we've confirmed to be exporting American jobs to cheap foreign labor markets. CNN.com/lou. We continue in just a moment. Please stay with us. (COMMERCIAL BREAK)

DOBBS: The results now of tonight's poll. 89 percent of you said the Pentagon's decision to hold over another 20,000 troops in Iraq is sufficient evidence the United States military needs more soldiers and marines. 11 percent of you say no.

That is our show for tonight. We thank you for being with us. Please be with us tomorrow when 9/11 commission member John Lehman is our guest. Former Pentagon adviser Michael Rubin, we'll talk to him about his work with the authority in Baghdad and Pulitzer Prize- winning writer Rick Atkinson will be with us to talk about his new book on Iraq, "In the Company of Soldiers." Please be with us. For all of us here, 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