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Lou Dobbs Tonight

Congress Probes Iraq War; Arab Hatred for United States Deepening?

Aired April 20, 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, Congress is asking the tough questions about the escalating war in Iraq and the rising number of American combat deaths.

PAUL WOLFOWITZ, DEPUTY DEFENSE SECRETARY: The enemy that we are facing is an enemy that rests on killing and death and terror.

DOBBS: Senator Chuck Hagel is our guest. Senator Hagel is asking whether it might not be the time to resume the draft.

One of America's closest allies says Arabs hate Americans more than ever before. We'll have a report from the White House.

Senator John Kerry's campaign is raising money almost twice as fast as the Bush-Cheney campaign. We'll have that story.

And retraining may do little to help American workers who have lost their jobs to cheap overseas labor markets.

JANE MCDONALD-PINES, POLICY ANALYST, AFL-CIO: It is extremely discouraging for workers who are used to good pay and good benefits.

DOBBS: Tonight, our special report on "Exporting America."

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, April 20. Here now for an hour of news, debate and opinion, Lou Dobbs.

DOBBS: Good evening.

Congress today began hearings on the war in Iraq and the June 30 transfer of power to the Iraqis. Lawmakers are increasingly concerned about the escalation in fighting and the rising number of American deaths. Today, insurgents wounded five American soldiers in a bomb attack near Mosul in Northern Iraq. And insurgents killed 22 Iraqi prisoners in a mortar attack on a jail near Baghdad.

We begin our coverage tonight on Capitol Hill, where congressional correspondent Joe Johns reports -- Joe.

JOE JOHNS, CNN CAPITOL HILL CORRESPONDENT: Lou, most of the attention today was on the Senate Arms Services Committee, where Deputy Secretary of defense Paul Wolfowitz testified. He was asked just about across the board, what about troop strength, what about morale, what about the numbers of the troops, and when will the U.N. step in?

But, over at the Senate Foreign Relations Committee today, there was irritation because so far the administration has not offered up a top Department of Defense official to discuss transfer of power. This is the second time that committee has held hearings on Iraq reconstruction and related matters. The Republican chair of the committee, Richard Lugar, was critical of the administration.

(BEGIN VIDEO CLIP)

SEN. RICHARD LUGAR (R), INDIANA: The Bush administration must recognize that its domestic credibility on Iraq will have a great impact on its efforts to succeed. On some occasions during the past year and a half, the administration has failed to communicate its Iraq plans and cost estimates to Congress and to the American people.

(END VIDEO CLIP)

JOHNS: Meanwhile, Senate appropriators and others continued to search and beat at the bushes in fact to try to find out whether there is any truth to the assertion by "Washington Post" writer Bob Woodward that the administration took $700 million intended for Afghanistan and used it in planning for the war in Iraq. The administration has vigorously denied that assertion, in fact two days in a row.

But the search continues, particularly among Democrats, to find out whether, in fact, it happened -- Lou.

DOBBS: Joe, thank you -- Joe Johns from Capitol Hill.

Defense Secretary Donald Rumsfeld today said insurgents in Iraq are making a final stand before the transfer of power. Secretary Rumsfeld said Iraqi dead-enders, as he put it, are badly mistaken if they believe they can drive the coalition from Iraq.

Senior Pentagon correspondent Jamie McIntyre reports -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: A note of skepticism from Donald Rumsfeld, who said there's only a remote possibility that the negotiations in Fallujah would result in the turnover of the people responsible for attacks on the U.S. contractors and other U.S. personnel there.

Rumsfeld says he never rules anything out and that the Governing Council members of the Iraqi Governing Council are continuing to meet with Fallujah's town elders and will continue so long as they're fruitful. But Rumsfeld today signaled his impatience with how things were going.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: The current state of affairs in Fallujah will not continue indefinitely. Thugs and assassins and former Saddam henchmen will not be allowed to carve out portions of that city and to oppose peace and freedom. The dead- enders threatened by Iraq's progress to self government may believe they can drive the coalition out through terror and intimidation and foment civil war among Sunnis and Shias or block the path to Iraqi self-rule, but they're badly mistaken.

(END VIDEO CLIP)

MCINTYRE: U.S. Marines remain on the outskirts of the city prepared to resume offensive operations if the negotiations drop down. Today, U.S. officials and Pentagon officials acknowledged that Fallujah is the toughest problem in Iraq, because the Sunni population there feels somewhat disenfranchised and the Sunni Muslim fighters who are there who remain part of the old regime are using the most sophisticated tactics.

As one official said today, they are the one place where the enemy is standing and fighting and sometimes using sophisticated military techniques. Nevertheless, Defense Secretary Rumsfeld today said he's not planning to send any more troops to Iraq, while acknowledging, Lou, that they are drawing up contingency plans to send more troops if General Abizaid, the U.S. central commander, requests them -- Lou.

DOBBS: Jamie, the Pentagon is saying the Sunnis in Fallujah feel disenfranchised?

MCINTYRE: Well, the Sunnis are the minority. And they acknowledge that one of the things they need to do is make the Sunnis, even as they have an anti-U.S. sentiment, is to give them the feeling that they have a future in Iraq, so that they have a motivation to stop fighting or at least stop supporting some of the virulent anti- forces there.

They believe that that's part of the key to getting the situation back on the right footing. The other one is giving the Iraqi forces a reason to fight. They think it is important in that case that the military feels they're fighting for Iraqis and Iraq, not for American occupiers. That's why they believe the transfer to sovereignty is so important on June 30.

DOBBS: Jamie, we've just learned in the past our that the Iraqis have established a tribunal to try Saddam Hussein. What more can you tell us?

MCINTYRE: Well, just about that.

In Iraq, an announcement today from Salem Chalabi, a spokesman for the Iraqi National Congress, says that a U.S.-educated lawyer will head tribunal. No date has been set for a trial. Seven judges and four prosecutors have been named to serve alongside Salem Chalabi, who is the tribunal's general director. And, apparently, Saddam Hussein will be represented by a French attorney who has a reputation for representing notorious clients -- Lou.

DOBBS: Jamie, thank you very much -- Jamie McIntyre, our senior Pentagon correspondent. Halliburton today confirmed that three bodies found near the side of a fuel convoy attacked near Baghdad indeed are American civilian contractors. The fourth body has not yet been identified. Halliburton now says 33 of its employees has been killed in Iraq and Kuwait since the beginning of the war against Saddam Hussein.

More American troops have been killed in Iraq this month than in any other month since the beginning of the war; 101 American troops have died so far this month. The coalition says 10 times that many insurgents have been killed.

Jim Clancy reports from Baghdad.

(BEGIN VIDEOTAPE)

JIM CLANCY, CNN CORRESPONDENT (voice-over): America's casualty count surged past the century mark in a hail of fire from assault rifles and rocket- propelled grenades. Eleven months after declaring the major combat over, U.S. troops are fighting for their lives against an insurgency on multiple fronts.

BRIG. GEN. MARK KIMMITT, U.S. ARMY: Part of the increase is due to the fact that we have picked up our pace of offensive operations, and clearly the recent spike in violence has brought about some of those casualties.

CLANCY: The coalition is under pressure to respond to the shocking killing of four U.S. security contractors and scenes of their bodies being dragged and desecrated in the streets of Fallujah. The Iraqi police in the town utterly failed to control or confront the threat.

Shia Muslim militant Muqtada al-Sadr saw the shutdown of his newspaper and the arrest of a trusted aide as evidence the coalition was taking action that would deprive him of any hold on power as Iraq moved toward sovereignty. Al-Sadr, who had been setting up a parallel government of his own for the last year, counterattack, sent his paid militia to take over police stations and ambush U.S. troops in his Baghdad stronghold of Sadr City.

In the first week of April, U.S. troops were fully engaged on multiple fronts. Fallujah, Ramadi, and the suburb of Abu Ghraib saw battles with Sunni insurgents. After killing eight U.S. soldiers in Baghdad, Sadr's militia would be badly mauled and forced to retreat south. His Mahdi Army attacked coalition forces and Iraqi police in the Shia Muslim cities of Najaf, Karbala, Kut and Nasiriyah.

U.S. casualties weren't rising only due to the widespread nature of the fighting, but also the tactics employed by insurgents. Near Fallujah and Ramadi, as in the south, Iraqi fighters attacked in much larger numbers, using rocket-propelled grenades that set fuel tankers alight and rammed through U.S. armor. Employing tactics seen in Vietnam, Iraqi insurgents hit U.S. patrols, then set up ambushes for troops coming to their aid.

(on camera): April has been a bloody month for both sides. And Iraqi civilians have Also paid a high price. The talks have paused the violence for now. but many of the underlying problems remain. Coalition commanders say, too, does the military option to solve Those problems and all the risks that go with it.

Jim Clancy, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: Another member of the coalition Today said it may withdraw its members from Iraq. Thailand said it will withdraw its 450 medical and engineering troops if they're attacked by Iraqi insurgents. The Thai troops withdrew to their base in Karbala south of Baghdad when the fighting escalated at the beginning of this month. Spain and Honduras have already said they will be pulling their soldiers from Iraq.

One of this country's closest allies in the Middle East, President Mubarak of Egypt, today said Arabs said hate America more than ever before. During a visit to Paris, Mubarak told a French newspaper that Arabs are more hostile to the United States because of the war in Iraq. Mubarak also said Arabs dislike the United States because of the strong U.S. support for Israel in the conflict with Palestinians.

Another Middle East leader unhappy with Sunday policy is King Abdullah of Jordan, who postponed a visit, as we reported to you, to this country because of his concerns about the president's strong support for Israel, part of an increasingly negative view of the United States coming from the Arab world.

Senior White House correspondent John King reports.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): As a candidate for reelection, introductions like this are viewed as a major plus.

GOV. GEORGE PATAKI (R), NEW YORK: There has never been a president who's a stronger supporter of the state of Israel.

KING: But such a boast only adds to the administration's perception problem in the Arab world.

COLIN POWELL, SECRETARY OF STATE: I think that people will see over time that the United States is committed to the welfare, benefit, and the hopes and dreams and aspirations of the Arab nations and especially the hopes and dreams and aspirations of the Palestinian people.

KING: Secretary Powell acknowledges what calls difficulties now. Jordan's King Abdullah postponed a White House meeting planned for this week, saying he needs assurance the administration is committed to Middle East peace. The question stemmed from the president's embrace of Israel's plan to withdraw from Gaza and parts of the West Bank. Mr. Bush calls it a bold way to revive the peace process. Palestinians call it an illegal land grab by Israel and a betrayal by the United States. The Bush-Abdullah meeting will now be in two weeks and Jordan's foreign minister says relations are fine. The postponement was clear evidence Mr. Bush's solidarity with Israel's Sharon leaves moderate Arab allies in a tough spot.

AARON DAVID MILLER, PRESIDENT, SEEDS OF PEACE: I think the Jordanian king is concerned about his own domestic credibility and his credibility in the region if he were to be seen to be meeting with the U.S. president in the immediate aftermath.

KING: It is a challenge as well on the Arab street and on the Arab airways. Iraq, of course, is the other major challenge. And even officials who predict things will be far better soon acknowledge problems now.

WOLFOWITZ: Want to be sure not to put on rose-colored glasses. There is a lot of broad dissatisfaction, especially in the Sunni Arab community, partly with the pace of progress. And the terrorists have done their best to slow down the pace of progress.

KING: The administration believes transferring sovereignty in Iraq in just 10 weeks will help reduce anti-American sentiment.

(END VIDEOTAPE)

KING: And the White House is promising new efforts to answer those Arab complaints that the administration favors Israel. But, Lou, that challenge is complicated by the fact that the White House issues statements supporting Israel when it targets Hamas leaders, and by the president's adamant refusal to do any business with Yasser Arafat because Mr. Bush believes the Palestinian leader actively undermines reforms and actively encourages terrorism -- Lou.

DOBBS: John, thank you very much -- John King, senior White House correspondent.

In the Middle East, former pop singer Jermaine Jackson today said Muslims are -- quote -- "the new Negroes in America" -- end quote. The former Jackson Five member, brother of Michael Jackson, made that comment while touring Muslim cultural centers in Bahrain. Jackson said Muslims are mistreated everywhere in this country, including airports. Jackson also accused the U.S. government of spreading anti- Muslim propaganda.

Still ahead here, growing anxiety in Congress about the war in Iraq and transfer of power to Iraqis. Senator Chuck Hagel is my guest and says it may be time to consider reintroducing the draft.

The White House defends itself against charges from two best- selling authors with lots to say about the war on terror and the war in Iraq.

And the Bush administration scales back its plans to change the rules for overtime pay in this country. That's coming up next. (COMMERCIAL BREAK)

DOBBS: Two Senate committees today began hearings on the war in Iraq and the planned transfer of power to the Iraqis June 30. Those hearings reflect rising anxiety in Congress about the U.S. strategy in the war and the rising number of American combat deaths and the strain on the U.S. military.

Senator Chuck Hagel took part in today's Foreign Relations Committee hearings. He joins us tonight from Washington, D.C.

Senator, Senator Lugar, the chairman, was very critical of the Bush administration for not providing being more forthcoming with administration, both officials as well as information. Is this a breach with the Bush administration?

SEN. CHUCK HAGEL (R), NEBRASKA: Lou, I think it's very frustrating for all of us here when the administration continues to push back the Congress on an issue that is as important as any issue that we've dealt with and will continue to deal with in years to come. And that's war.

The administration not only constitutionally has some responsibilities here to reach out to the Congress. We the Congress, have constitutional responsibilities to be part of this. But it seems to me the administration would want an opportunity to come up with their senior people, explain what they're doing, make us partners, get us in the boat, use these forums as opportunities to explain to the American people what we're trying to do, how we're doing it.

Yes, it's complicated. Yes, it's difficult. But I am baffled by the administration's continuing pushing away of the Congress, and I think that, as much as anything else, it frustrates Chairman Lugar and Republicans and Democrats.

DOBBS: Well, Senator, it is your responsibility as a member of that committee, it is the committee's responsibility to take part in the setting of policy. Do you think that the committee and others within Congress, both in the Senate and in the House, are subject to some and deserving of some criticism that you haven't been outspoken enough to this point and involved enough in policy?

HAGEL: Well, if you read my mail, Lou, that charge is never leveled against me, that I'm not outspoken enough, that my mouth goes too often.

But, yes, as a matter of fact, it is our responsibility. We shouldn't be whiners and crybabies about it. We are Article I of the Constitution of the United States. I was not elected, nor any of my colleagues, to serve under a president. We serve with a president. We do have a constitutional responsibility to probe, to question, be part of setting of policy. And, certainly, the appropriations process for all policy comes through us, and we have the one responsibility to declare war, which means, obviously, when you commit young men and women to war and some will die and we're almost at 700 thousand now, almost 3,000 wounded in Iraq, we all have to take some responsibility. So, yes, we can't blame this on the president. We need to be more assertive.

DOBBS: Senator, let me ask you just straightforwardly, a long- serving, distinguished member of the Senate, one of the most important members of the committee. Do you have a clear understanding of the Bush administration's strategy in Iraq, its plans and its visions -- its vision for Iraq for the next 12 months?

HAGEL: I do not. I don't think anyone up here does. That doesn't necessarily mean that the Bush administration is wrong or off course. This is a very

(CROSSTALK)

DOBBS: How would one know?

(LAUGHTER)

HAGEL: Well, yes, that's exactly the point that I made a minute ago, why it's important for the administration to be on Hill, not only just in the context of hearings to explain to the American people what their policies are, but enlist the Congress into a partnership, because we have a long way to go here.

It is very uncertain, Lou, how all this is going to come out. The one objective we should have, I think the Bush administration does have, and that is to move the Iraqi people as quickly as we can into a position where they can self-govern and self-defend. And that means elections. And how we get there is that big gap. And we need to hear from the administration.

DOBBS: And, today, you raised the possibility that now is the time to consider reinstating the draft, 30,000 troops being effectively identified for rotation into Iraq, 135,000 troops to be retained, a tremendous burden on the U.S. military, an obvious strain, which, to this point, the Pentagon has not exactly been receptive to considering. What do you think the outlook is?

HAGEL: Well, I raised that issue this morning during the committee on the basis of two points.

One is the first you mention. That is the manpower, the force structure that is going to be required to confront a generational war. The president has said that, most members of Congress, this war against terrorism, proliferation of weapons of mass destruction. We're making commitments for future years that we cannot fulfill.

Over 40 percent of our commitments already in place on the ground in Iraq are National Guard and Reserves. So we're talking about that component. But we're also talking about another component here. Lou, if, in fact this is a generational war that the president has noted, all of us I think have noted, then why should we ask very few people in our society to bear the heavy price, to carry the heavy burden and not ask everybody to carry some burden? There's a societal implication here. It's the middle-class, lower-middle-class that's always the rifleman in the field that is always on the line, not the sons and daughters of the wealthy and the powerful. If we have got a generational war, then all of us should take some responsibility for this country, if it's a nation at war.

DOBBS: Senator Chuck Hagel, thanks for being here.

HAGEL: Thank you.

That brings us to the subject of tonight's poll. The question: Do you believe the United States should reinstate the draft, yes or no? Cast your vote at CNN.com/Lou. We'll have the results later in the broadcast.

Tonight's thought is on authority. "Lawful and settled authority is very seldom resisted when it is well employed" -- those the words of English author Samuel Johnson.

Still ahead here tonight, the first overhaul of overtime pay in this country in more than half-a-century, critics say it is just another squeeze in this country's middle class. And some changing attitudes in Washington on the subject. We'll have a special report for you next.

And "Exporting America." Tonight, a new reality for millions of Americans who have lost their jobs. Fast-track training programs are helping those who have lost jobs to cheap overseas labor markets find new careers. But many are making major sacrifices. That story and a great deal more still ahead here.

(COMMERCIAL BREAK)

DOBBS: The defenders of outsourcing often point to job retraining as the solution for American workers who have lost their jobs to cheap foreign labor markets.

Community colleges across the country have launched retraining programs. And the newest kind of training is so-called fast-track training, short programs aimed at specific jobs. But far too often, we're finding, workers are losing out again.

Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Fifty-eight- year-old Sharon Keith is in a new phase of her life, working an optometry assistant. Up until 2.5 years ago, she worked in the textile mills for two decades. But the plant closed down, like many in South Carolina, when the jobs moved to Mexico and China.

SHARON KEITH, OPTOMETRY ASSISTANT: It was tough to start with. You know, I was scared. But I had people behind me telling I could do it and supporting me, and so I just got in there and worked and I'm thankful for it. SYLVESTER: Sharon went to Greenville Technical College's quick jobs programs for three months. The community college offers classes that last between three weeks to 90 days, just enough time to give displaced workers basic new skills.

THOMAS BARTON, PRESIDENT, GREENVILLE TECHNICAL COLLEGE: They have families to feed, and they have debts to pay and medical bills and rent and all the kind of things that these people have to have, but they didn't have a job and they didn't have these skills.

SYLVESTER: Fast-track job training and is a trend that's picking up around the country. The American Association of Community Colleges estimates most vocational schools have started such programs in the last three years. But critics say these programs only solve a short- term emergency and displaced workers may end up shortchanged.

MCDONALD-PINES: It is extremely discouraging for workers who are used to good pay and good benefits, a middle-class life, to have to look at a short-term training program and know that, at the end, they will probably get a low-wage job with no benefits.

SYLVESTER: Sharon Keith gets paid an average of $1.75 an hour less than what she was making at the factory. But, at this point, she's just grateful to have a job.

(END VIDEOTAPE)

SYLVESTER: About 85 percent of the students who complete Greenville Tech's fast training program find work after they graduate. The most popular courses are for jobs that cannot be easily sent overseas like nursing assistants and construction -- Lou.

DOBBS: Lisa, thank you -- Lisa Sylvester from Washington.

The National Foundation for American Policy just released a study, a study that alleges legislation to block the shipment of American jobs to cheap foreign labor markets and a number of states is outright unconstitutional. The board of the group include former aides to Vice President Cheney, President Reagan, and President Bush.

Stuart Anderson is the director of the foundation. He's written that state and federal legislation to restrict outsourcing is a rising threat to American competitiveness. He joins us tonight from Washington, D.C.

Sir, good to have you with us.

STUART ANDERSON, DIRECTOR, NATIONAL FOUNDATION FOR AMERICAN POLICY: Thank you, Lou.

DOBBS: Now, states are reacting, many states are reacting to the outsourcing of jobs, using taxpayer money to in fact ship jobs in their states to cheap overseas labor markets. And you think that's unconstitutional? Why?

ANDERSON: Well, essentially, Lou, what courts have found is that states don't have the right to make their own foreign policy or make their own trade agreements or trade policies.

Essentially, there's something called the Foreign Commerce Clause in the Constitution. And courts have found that that, along the foreign affairs powers that are reserved for the federal government, generally make it unconstitutional for states to do their own thing when it comes to trade. For example, in the case of sanctions against companies involved in Burma in Massachusetts, Supreme Court struck down that law in Massachusetts.

DOBBS: This is somewhat different, is it not, Stuart, because they're exercising authority and control over taxpayer dollars?

ANDERSON: Well, it's somewhat different but, again, essentially, what you're talking about is the state is making their own foreign commerce decision, and particularly in cases where there could be retaliation for foreign countries.

DOBBS: What in the world would a country do in retaliation for the state of Indiana, for example, or the state of California, deciding they're not going to send their money overseas and take away the jobs of hard-working Indianians or Californians.

ANDERSON: Well, if you look at California, which is such a large part of the U.S. economy, they would essentially say the U.S. companies and U.S. citizens aren't going to be able to bid on contracts in their country. And that could cut off a lot of the market.

DOBBS: That's a little different, isn't it, bidding on a contract. What we might do, I guess, retaliation quid pro quo would be that India or Thailand or the Philippines or Romania wouldn't permit -- wouldn't come here to outsource their jobs. Wouldn't that be quid pro quo?

ANDERSON: Well, At the federal level, and the states are generally obligated to this, the U.S. signed the government procurement agreement which says the U.S. won't discriminate based on where something is done for services for procurement for the government. And so the U.S. has used that to open up markets. And allows U.S. citizens to be selling their know-how to other countries. It is a good thing.

DOBBS: But when you're exporting an American job overseas purely on a wage price basis, killing an American job, laying off an American, and giving that job to a worker overseas for export back into this country, that, certainly, wouldn't apply, would it?

ANDERSON: Well, it depends what the situation is, Lou. Well, certainly, if it involved a particular state making what a court decided was their own trade policy, it would apply.

DOBBS: It's trade policy, I suppose, and some far extension and reason, it's better, to seems to me, exercising authority over its own treasury and taxpayer money within its own state. But let me ask you this, if you are concerned about the constitutionality of the states taking action, how concerned are you about the abrogation of the sovereignty of the United States and giving up its constitutional responsibilities to tribunals of NAFTA or of the World Trade Organization?

Because that's a clear, clear contravenes of the U.S. Constitution and powers of sovereignty.

ANDERSON: Well, I mean, clearly, that's one these issues that's going to continue to be controversial. So far, there haven't been a lot of constraints in that area.

DOBBS: What are you talking about?

We lost 88 percent cases where the United States was a defendant before the World Trade Organization.

ANDERSON: Yes, I understand that, Lou. In many cases, the U.S. consumers are going to benefit from some of these decisions.

DOBBS: I see. How do they benefit, Stuart? How do they benefit?

ANDERSON: Well, if you're benefiting there's lower prices.

DOBBS: Lower prices. I see. We can kill millions of jobs just so a trinket comes down a few cents. Is that the idea?

ANDERSON: That's probably not the way I would put it.

DOBBS: I suspect not. But that is the effect, is it not?

ANDERSON: No, not necessarily, Lou. Markets go both ways. Unless the U.S. is going to engage in belligerent activity every time there's a trade dispute, instead it's better have these decisions made in a multilateral way.

DOBBS: Sir, I know you have a philosophy at your think tank and ideology if you will. But let me ask you this, isn't it about time to get belligerent? We have 5 percent of our GDP in deficit that mounts each year. We are outsourcing American jobs. We're killing middle class American jobs, high value jobs and we're not creating new ones. Isn't it time for people to get belligerent?

ANDERSON: Well, when you talk about the trade deficit, it's interesting, because when you look at France and Germany, they have a trade surplus. And because of the inflexible labor markets they have twice the unemployment rate as the U.S. Also, on services you end up -- the U.S. actually has a surplus in white collar services we sell abroad. So, we have actually more to lose in retaliation.

DOBBS: And what has been happening to that surplus in technology and service jobs over the last three years, Stuart?

ANDERSON: It's -- it's still a $50 billion surplus. So still...

DOBBS: Well, the fact is, the surplus had decline 36 percent. That surplus is declining while our deficits and trade and general current account are declining. Isn't it time -- I appreciate ideological position, your political position. But isn't it time for people to start looking at this honestly? Putting away the scales of ideology and partisanship and say what is the best thing for the men and women who work in this country?

ANDERSON: Well, I think the best thing is to move to a more positive job approach in job creation which would involve improving some of the things you pointed out on your show, which is education and job training. But also look at what California did in a worker's compensation form. These are positive measure that could actually help create jobs in the country.

DOBBS: And it takes so much longer than outsourcing an American job overseas. Stuart Anderson, I hope you'll come back, because this is an important and critical debate. We appreciate you participating.

ANDERSON: Thank you for having me.

DOBBS: Stuart Anderson, thank you.

Still ahead, a controversial change in the way millions of Americans will be qualifying for overtime pay. We'll have that special report is next.

Also, the White House versus two best-selling authors on the war on terror and the war against Saddam Hussein. Tonight, we examine those allegations and what the White House says really happened.

Also tonight, a legal controversy over hundred of foreign combatants in U.S. custody in Cuba. The Supreme Court will decide whether they can fight their cases in U.S. Court. All of that, and a great deal more, please stay with us.

(COMMERCIAL BREAK)

DOBBS: The White House announced changes to overtime rules that critics say will squeeze the middle class. The final draft of the overhaul reflects the competing pressures of workplace anxieties and election year politics.

Louis Schiavone, reports from Washington.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The Bush administration says under new labor regulations almost no one earning less than $100,000 would lose their overtime privileges.

ELAINE CHAO, LABOR SECRETARY: This change alone will ensure that 1.3 million workers who did not have the right to overtime, will gain that right under the new rules.

SCHIAVONE: The Labor Department is backtracking from plans announced a year ago, but critics complained the proposal still goes too far.

SEN. TOM HARKIN (D), IOWA: You can put lipstick on a pig, but guess what, it's still a pig.

SCHIAVONE: The plan is a significant retreat from the first draft where nobody making more than $65,000 was guaranteed overtime and there no specific protections for nonexecutive workers who, who thanks to overtime pay, routinely break that ceiling. Under the new Bush plan starting in August, blew collar workers, police officers, firefighters, paramedics, emergency medical technicians and licensed practical workers are guaranteed overtime. Labor Secretary Elaine Chao says it didn't play a part in the revision, angrily rejecting a suggestion that she consulted with her husband, Senate Republican Whip Mitch Mcconnell.

CHAO: I find that question insults. I hope you didn't mean it that way. You know, I'm a leader in my own right.

SCHIAVONE: Democrats and organized labor both concede the new proposal is an improvement. But warn depending on job description, many workers earning more than $24,000 could yet lose their overtime. The business community isn't completely satisfied either.

RANDEL JOHNSON, U.S. CHAMBER OF COMMERCE: This is no slam dunk win for the employer community despite what the unions might be saying.

SCHIAVONE: Certain workers the administration estimates 107,000 could lose overtime guarantees. As they have for a year, Democrats stand ready to try to block any new regulation that would take overtime pay away from workers who now have it -- Lou.

DOBBS: This effort to overhaul overtime pay isn't taking place in a vacuum. Who brought it? Who has the greatest investment in this? It is obviously not workers who receive overtime pay?

SCHIAVONE: What's interesting is that at first blush, especially the first proposal that came out of the Bush administration 13 months ago, it was perceived as a gift to the business community that has stood so loyally by the Bush administration. However, this second draft could cost the business community $375 million in additional wages, another $700 million to implement these new regulations. So it's said sometimes that a compromise is something that doesn't please anybody. And in this case, maybe the Bush administration got it right.

DOBBS: At any rate, we'll have some time for public discussion before it becomes final. Public discussion is always a good thing. Louise, thanks a lot.

When we continue, the Bush administration defends itself against criticism from two best-selling authors about the preparations for the war in Iraq and the conduct of the war on terror.

And a new development in the argument over whether Senator John Kerry should release his military records from the Vietnam war. That story is next. Please stay with us.

(COMMERCIAL BREAK) DOBBS: The Kerry campaign tonight said it would make public the records of Senator Kerry's military service during the Vietnam war. This comes after Republicans demanded Senator Kerry release those records. A Kerry spokesman told CNN the campaign will post the Kerry records on its website within a day. The campaign denied it's simply responding to pressure from Republicans. Meanwhile, the Kerry campaign is now raising more money for the election than the Bush- Cheney campaign. The Kerry campaign along with Democratic groups supporting his candidacy have raised an estimated $93 million so far this year. The Bush campaign says it's raised only about $50 million.

The White House today continued to cast out on certain accounts in a new best-selling book on Iraq. It is the second time in recent weeks that the White House has had to deflect political damage from a blockbuster book. Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT: Round two in the White House versus the bestseller list. First was Richard Clarke's "Against All Enemies." Now Bob Woodward's "Plan of Attack" which portrays a Saudi secret that Saudi Prince Bandar was briefed on a classified Iraq war plan before even the secretary of state knew that war was certain. Not true, says the administration. Yes, there was a briefing. But it was before the president decided to wage war.

DONALD RUMSFELD, U.S. SECRETARY OF DEFENSE: I hate to use the word certain because no one's memory is perfect but I can't believe the decision had been made by the president during that period. If it had been, I didn't know it had been.

VILES: And Secretary of State Powell maintains he was in the loop.

COLIN POWELL, U.S. SECRETARY OF STATE: I was intimately familiar with those deployment plans. I worked on them. I was consulted on them. They were presented to the national security council. I was present whenever the plans were presented.

VILES: Another blockbuster, this so-called Saudi pledge. The Saudis stated hope to drive oil prices down during an election year. The administration and the Saudis deny there was a secret deal. That's not what Woodward reported. Prince Bandar confirmed on CNN that Saudis would like low prices and would like to see the president reelected. The White House is fresh off another damage control mission against the Clarke book which argues the president didn't take the terrorist threat seriously before 9/11 and was preoccupied with Iraq. Not true, the administration has argued.

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: It was the very first major national security policy directive of the Bush administration, not Russia, not missile defense, not Iraq, but the elimination of al Qaeda.

VILES: Unlike the Woodward debate, the Clarke attack was personal and bitter. The White House called him, quote, "deeply irresponsible."

(END VIDEOTAPE)

VILES: All of this a far cry from three months ago from the Paul O'Neill book came out critical of the president. The White House barely responded saying at the time, quote, "we don't do book reviews." Apparently, Lou, they do now.

DOBBS: Do we have allegations by Woodward and Clarke versus denials by the White House on this ultimately? A truce squad on this ultimately?

VILES: I don't know if there is a truce squad on it but the White House has denied most of the damaging things in both books. But in the case of the Woodward book, the White House has denied some things that aren't in the book, for example, that there was some secret deal on oil. Bob Woodward doesn't write that there was. He just says that the Saudis want to lower prices in time for the reelection. Nobody would doubt that.

DOBBS: Peter Viles. Thank you, sir.

It is unclear whether the Woodward book will have any impact at all on the president's poll numbers, his popularity. And as we reported last night, the latest CNN/USA Today/Gallup poll shows the president leading Senator Kerry by a margin of 51 to 46 percent. The poll was taken after the president's widely criticized news conference last weekend during the deadliest month of this war in Iraq for American troops.

Joining me now for more on the campaign, CNN political analyst Carlos Watson. Carlos, these numbers, 51, 46, after all that has transpired, this is going to be a resounding resurgent reassurance for the White House.

CARLOS WATSON, CNN POLITICAL ANALYST: Good news. Not as good news as President Clinton had in '96 when he was running for reelection at this time or that Reagan had in '84. It is not unequivocally good news. You will hear some carping from Democrats who feel like Kerry is not going on the offensive. Since he wrapped up the nomination in early March he's seen a lead that was once 12 points, 55-43, now he is down by five. You're going to start to see some worrying even as they raise money and launch new ads.

DOBBS: What in the world could he do?

WATSON: I think you're going to hear them say two things. One, they're going to say that he needs more comprehensive plans. They're saying you need big ideas on three or four issues. Obviously, the war. Obviously terrorism. Obviously, the economy. (UNINTELLIGIBLE) people can attach themselves to understand easily and actually believe. The second thing is, he's actually got to offer a little more passion, a little more excitement and get not only his own base but Independents, if you will, and moderate Republicans. Those folks that Bill Clinton wanted in '92 to start thinking about his candidacy seriously. DOBBS: Does he have the capacity for that passion, for that excitement within him?

WATSON: I think that's a great question. I think the honest truth is that at 60 years of age he is unlikely to become a different person. He's not Bill Clinton as an orator. Frankly, in some ways, I don't even think that as an orator, he's as good as some of the other people who ran for the nomination this time but the political ads that he ran during the primary actually tell a story in some ways better than he does. These ads, these bio ads, I think, will be very important.

DOBBS: Now the administration is defending itself against the Woodward book as Peter Viles just reported. The first allegation that Prince Bandar bin Sultan heard about the decision to go to war before Colin Powell. Your thoughts? How damaging? How likely?

WATSON: Embarrassing. No two ways about it. Secretary Powell up there looked painful for him to have to respond to these questions. He's one of the most popular American figures around. How damaging, we won't know yet. We have seen these other books have impact probably in the 2 to 3 percentage point range. Technically what will happen with the Woodward book, the White House campaign has actually put this on their site as a book to read.

I think that offers an opportunity for John Kerry. If John Kerry wanted to seem more aggressive, if you will, take a testosterone pill on the Iraq question and not simply talk about more international cooperation which right now does not seem to be selling with Independents and moderate Republicans, he could criticize the Bush team aggressively for cooperating with the Saudis too much, for saying that you cooperated with them too much before 9/11, you're cooperating with them too much right after 9/11, and even now there are conversations that may not be in America's best interest.

Whether or not he'll do that is unclear. But this may be a Sister Souljah moment, if you remember what Bill Clinton did in '92. A symbolic moment.

DOBBS: Carlos Watson, as always, thank you.

WATSON: Good to see you.

And a reminder, Carlos will have more on the political beat tonight. He joins Paula Zahn at 8 p.m. Eastern, kicking off his special segment, "The American Polls," tonight on PAULA ZAHN, 8:00 Eastern.

Still ahead here, the Supreme Court considers the rights of detainees held at Guantanamo Bay. We'll have the report for you from Washington next.

(COMMERCIAL BREAK)

DOBBS: The Supreme Court today began considering whether 600 prisoners at Guantanamo Bay have legal rights in the United States. And attorneys for several of those detainees argued the U.S. naval base where the prisoners are held is nothing more than a lawless enclave.

Bob Franken in Washington with a report -- Bob.

BOB FRANKEN, CNN CORRESPONDENT: And Lou, this is one of a series of three cases that are going to be argued before the Supreme Court on the limitations of presidential power in times of war. Is he able to act with enemy combatants with very little scrutiny by the U.S. courts? But this one was about possible limitations of the courts. Do they have jurisdiction beyond the borders of the United States when it involves non-U.S. citizens?

The venue, Guantanamo Bay, Cuba. Yes, it is a U.S. naval base. But it is part of the sovereign nation of Cuba. And the administration argues that, as a result, the courts do not have any power whatsoever.

Now, the lawyer for the detainees said that is effectively a U.S. government operation and the court should have power there, but the Supreme Court justices were very skeptical. Every time the lawyer tried to claim there was a possibility of mistreatment on the part of the detainees, some justice would interfere, would interrupt to say, no, the question is jurisdiction.

But when it came time for the Bush administration to present its point of view in the person of Solicitor General Theodore Olson, the justices also gave him quite a going-over. One of the justices asked if the same rules would apply for U.S. citizens that were held at Guantanamo, and Olson said, no, they would have different treatment. The justices then said that undermined the argument the administration was making, that their jurisdiction did not extend there.

As I said, Lou, it is the first of three cases. The first ones where the Supreme Court is deciding how much involvement the judiciary should have in the war on terror. It is a basic separation of powers discussion that is going on at the Supreme Court right now -- Lou.

DOBBS: Bob, thank you. Bob Franken from Washington.

Elsewhere in Washington today, remarks, scary remarks from Fed Chairman Alan Greenspan on interest rates sent stock prices tumbling. The Dow fell 123 points; the Nasdaq plummeted 42 points, almost, and the S&P down almost 18.

Christine Romans here now with the markets -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: It sounds obvious. Higher interest rates are inevitable. But that fear sent the stock and the bond markets tumbling today. Alan Greenspan said companies are more able to raise prices. The long period of worry about deflation is over, and the markets fell.

The average Big Board stock fell 1.5 percent. Eighty percent of the trades at lower prices. And yields on a 10-year note soared, Lou, to just shy of 4.5 percent. That's the highest since last summer. Two-year yields now at the highest in 18 months. Those higher yields boosted appeal of the dollar. It rallied to the highest this year versus the euro -- Lou.

DOBBS: Thank you very much, Christine Romans.

Still ahead here, results of our poll tonight. But first, a reminder to check out our Web site for the complete list of companies we've confirmed to be exporting America. The list is large. It's growing. Cnn.com/lou. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of tonight's poll. Forty-three percent of you said the United States should reinstate the draft; 50 percent do not.

That's our show for tonight. We thank you for being with us. Please join us tomorrow. Senate hearings on Iraq continue. The ranking Democrat on the Senate Foreign Relations Committee, Senator Joe Biden, will be with us. And in "Face-Off," insourcing versus outsourcing. We separate fact from fiction when it comes to the debate over exporting American jobs to cheap overseas labor markets. We'll have that debate and a great deal more. 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 20, 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, Congress is asking the tough questions about the escalating war in Iraq and the rising number of American combat deaths.

PAUL WOLFOWITZ, DEPUTY DEFENSE SECRETARY: The enemy that we are facing is an enemy that rests on killing and death and terror.

DOBBS: Senator Chuck Hagel is our guest. Senator Hagel is asking whether it might not be the time to resume the draft.

One of America's closest allies says Arabs hate Americans more than ever before. We'll have a report from the White House.

Senator John Kerry's campaign is raising money almost twice as fast as the Bush-Cheney campaign. We'll have that story.

And retraining may do little to help American workers who have lost their jobs to cheap overseas labor markets.

JANE MCDONALD-PINES, POLICY ANALYST, AFL-CIO: It is extremely discouraging for workers who are used to good pay and good benefits.

DOBBS: Tonight, our special report on "Exporting America."

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, April 20. Here now for an hour of news, debate and opinion, Lou Dobbs.

DOBBS: Good evening.

Congress today began hearings on the war in Iraq and the June 30 transfer of power to the Iraqis. Lawmakers are increasingly concerned about the escalation in fighting and the rising number of American deaths. Today, insurgents wounded five American soldiers in a bomb attack near Mosul in Northern Iraq. And insurgents killed 22 Iraqi prisoners in a mortar attack on a jail near Baghdad.

We begin our coverage tonight on Capitol Hill, where congressional correspondent Joe Johns reports -- Joe.

JOE JOHNS, CNN CAPITOL HILL CORRESPONDENT: Lou, most of the attention today was on the Senate Arms Services Committee, where Deputy Secretary of defense Paul Wolfowitz testified. He was asked just about across the board, what about troop strength, what about morale, what about the numbers of the troops, and when will the U.N. step in?

But, over at the Senate Foreign Relations Committee today, there was irritation because so far the administration has not offered up a top Department of Defense official to discuss transfer of power. This is the second time that committee has held hearings on Iraq reconstruction and related matters. The Republican chair of the committee, Richard Lugar, was critical of the administration.

(BEGIN VIDEO CLIP)

SEN. RICHARD LUGAR (R), INDIANA: The Bush administration must recognize that its domestic credibility on Iraq will have a great impact on its efforts to succeed. On some occasions during the past year and a half, the administration has failed to communicate its Iraq plans and cost estimates to Congress and to the American people.

(END VIDEO CLIP)

JOHNS: Meanwhile, Senate appropriators and others continued to search and beat at the bushes in fact to try to find out whether there is any truth to the assertion by "Washington Post" writer Bob Woodward that the administration took $700 million intended for Afghanistan and used it in planning for the war in Iraq. The administration has vigorously denied that assertion, in fact two days in a row.

But the search continues, particularly among Democrats, to find out whether, in fact, it happened -- Lou.

DOBBS: Joe, thank you -- Joe Johns from Capitol Hill.

Defense Secretary Donald Rumsfeld today said insurgents in Iraq are making a final stand before the transfer of power. Secretary Rumsfeld said Iraqi dead-enders, as he put it, are badly mistaken if they believe they can drive the coalition from Iraq.

Senior Pentagon correspondent Jamie McIntyre reports -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: A note of skepticism from Donald Rumsfeld, who said there's only a remote possibility that the negotiations in Fallujah would result in the turnover of the people responsible for attacks on the U.S. contractors and other U.S. personnel there.

Rumsfeld says he never rules anything out and that the Governing Council members of the Iraqi Governing Council are continuing to meet with Fallujah's town elders and will continue so long as they're fruitful. But Rumsfeld today signaled his impatience with how things were going.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: The current state of affairs in Fallujah will not continue indefinitely. Thugs and assassins and former Saddam henchmen will not be allowed to carve out portions of that city and to oppose peace and freedom. The dead- enders threatened by Iraq's progress to self government may believe they can drive the coalition out through terror and intimidation and foment civil war among Sunnis and Shias or block the path to Iraqi self-rule, but they're badly mistaken.

(END VIDEO CLIP)

MCINTYRE: U.S. Marines remain on the outskirts of the city prepared to resume offensive operations if the negotiations drop down. Today, U.S. officials and Pentagon officials acknowledged that Fallujah is the toughest problem in Iraq, because the Sunni population there feels somewhat disenfranchised and the Sunni Muslim fighters who are there who remain part of the old regime are using the most sophisticated tactics.

As one official said today, they are the one place where the enemy is standing and fighting and sometimes using sophisticated military techniques. Nevertheless, Defense Secretary Rumsfeld today said he's not planning to send any more troops to Iraq, while acknowledging, Lou, that they are drawing up contingency plans to send more troops if General Abizaid, the U.S. central commander, requests them -- Lou.

DOBBS: Jamie, the Pentagon is saying the Sunnis in Fallujah feel disenfranchised?

MCINTYRE: Well, the Sunnis are the minority. And they acknowledge that one of the things they need to do is make the Sunnis, even as they have an anti-U.S. sentiment, is to give them the feeling that they have a future in Iraq, so that they have a motivation to stop fighting or at least stop supporting some of the virulent anti- forces there.

They believe that that's part of the key to getting the situation back on the right footing. The other one is giving the Iraqi forces a reason to fight. They think it is important in that case that the military feels they're fighting for Iraqis and Iraq, not for American occupiers. That's why they believe the transfer to sovereignty is so important on June 30.

DOBBS: Jamie, we've just learned in the past our that the Iraqis have established a tribunal to try Saddam Hussein. What more can you tell us?

MCINTYRE: Well, just about that.

In Iraq, an announcement today from Salem Chalabi, a spokesman for the Iraqi National Congress, says that a U.S.-educated lawyer will head tribunal. No date has been set for a trial. Seven judges and four prosecutors have been named to serve alongside Salem Chalabi, who is the tribunal's general director. And, apparently, Saddam Hussein will be represented by a French attorney who has a reputation for representing notorious clients -- Lou.

DOBBS: Jamie, thank you very much -- Jamie McIntyre, our senior Pentagon correspondent. Halliburton today confirmed that three bodies found near the side of a fuel convoy attacked near Baghdad indeed are American civilian contractors. The fourth body has not yet been identified. Halliburton now says 33 of its employees has been killed in Iraq and Kuwait since the beginning of the war against Saddam Hussein.

More American troops have been killed in Iraq this month than in any other month since the beginning of the war; 101 American troops have died so far this month. The coalition says 10 times that many insurgents have been killed.

Jim Clancy reports from Baghdad.

(BEGIN VIDEOTAPE)

JIM CLANCY, CNN CORRESPONDENT (voice-over): America's casualty count surged past the century mark in a hail of fire from assault rifles and rocket- propelled grenades. Eleven months after declaring the major combat over, U.S. troops are fighting for their lives against an insurgency on multiple fronts.

BRIG. GEN. MARK KIMMITT, U.S. ARMY: Part of the increase is due to the fact that we have picked up our pace of offensive operations, and clearly the recent spike in violence has brought about some of those casualties.

CLANCY: The coalition is under pressure to respond to the shocking killing of four U.S. security contractors and scenes of their bodies being dragged and desecrated in the streets of Fallujah. The Iraqi police in the town utterly failed to control or confront the threat.

Shia Muslim militant Muqtada al-Sadr saw the shutdown of his newspaper and the arrest of a trusted aide as evidence the coalition was taking action that would deprive him of any hold on power as Iraq moved toward sovereignty. Al-Sadr, who had been setting up a parallel government of his own for the last year, counterattack, sent his paid militia to take over police stations and ambush U.S. troops in his Baghdad stronghold of Sadr City.

In the first week of April, U.S. troops were fully engaged on multiple fronts. Fallujah, Ramadi, and the suburb of Abu Ghraib saw battles with Sunni insurgents. After killing eight U.S. soldiers in Baghdad, Sadr's militia would be badly mauled and forced to retreat south. His Mahdi Army attacked coalition forces and Iraqi police in the Shia Muslim cities of Najaf, Karbala, Kut and Nasiriyah.

U.S. casualties weren't rising only due to the widespread nature of the fighting, but also the tactics employed by insurgents. Near Fallujah and Ramadi, as in the south, Iraqi fighters attacked in much larger numbers, using rocket-propelled grenades that set fuel tankers alight and rammed through U.S. armor. Employing tactics seen in Vietnam, Iraqi insurgents hit U.S. patrols, then set up ambushes for troops coming to their aid.

(on camera): April has been a bloody month for both sides. And Iraqi civilians have Also paid a high price. The talks have paused the violence for now. but many of the underlying problems remain. Coalition commanders say, too, does the military option to solve Those problems and all the risks that go with it.

Jim Clancy, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: Another member of the coalition Today said it may withdraw its members from Iraq. Thailand said it will withdraw its 450 medical and engineering troops if they're attacked by Iraqi insurgents. The Thai troops withdrew to their base in Karbala south of Baghdad when the fighting escalated at the beginning of this month. Spain and Honduras have already said they will be pulling their soldiers from Iraq.

One of this country's closest allies in the Middle East, President Mubarak of Egypt, today said Arabs said hate America more than ever before. During a visit to Paris, Mubarak told a French newspaper that Arabs are more hostile to the United States because of the war in Iraq. Mubarak also said Arabs dislike the United States because of the strong U.S. support for Israel in the conflict with Palestinians.

Another Middle East leader unhappy with Sunday policy is King Abdullah of Jordan, who postponed a visit, as we reported to you, to this country because of his concerns about the president's strong support for Israel, part of an increasingly negative view of the United States coming from the Arab world.

Senior White House correspondent John King reports.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): As a candidate for reelection, introductions like this are viewed as a major plus.

GOV. GEORGE PATAKI (R), NEW YORK: There has never been a president who's a stronger supporter of the state of Israel.

KING: But such a boast only adds to the administration's perception problem in the Arab world.

COLIN POWELL, SECRETARY OF STATE: I think that people will see over time that the United States is committed to the welfare, benefit, and the hopes and dreams and aspirations of the Arab nations and especially the hopes and dreams and aspirations of the Palestinian people.

KING: Secretary Powell acknowledges what calls difficulties now. Jordan's King Abdullah postponed a White House meeting planned for this week, saying he needs assurance the administration is committed to Middle East peace. The question stemmed from the president's embrace of Israel's plan to withdraw from Gaza and parts of the West Bank. Mr. Bush calls it a bold way to revive the peace process. Palestinians call it an illegal land grab by Israel and a betrayal by the United States. The Bush-Abdullah meeting will now be in two weeks and Jordan's foreign minister says relations are fine. The postponement was clear evidence Mr. Bush's solidarity with Israel's Sharon leaves moderate Arab allies in a tough spot.

AARON DAVID MILLER, PRESIDENT, SEEDS OF PEACE: I think the Jordanian king is concerned about his own domestic credibility and his credibility in the region if he were to be seen to be meeting with the U.S. president in the immediate aftermath.

KING: It is a challenge as well on the Arab street and on the Arab airways. Iraq, of course, is the other major challenge. And even officials who predict things will be far better soon acknowledge problems now.

WOLFOWITZ: Want to be sure not to put on rose-colored glasses. There is a lot of broad dissatisfaction, especially in the Sunni Arab community, partly with the pace of progress. And the terrorists have done their best to slow down the pace of progress.

KING: The administration believes transferring sovereignty in Iraq in just 10 weeks will help reduce anti-American sentiment.

(END VIDEOTAPE)

KING: And the White House is promising new efforts to answer those Arab complaints that the administration favors Israel. But, Lou, that challenge is complicated by the fact that the White House issues statements supporting Israel when it targets Hamas leaders, and by the president's adamant refusal to do any business with Yasser Arafat because Mr. Bush believes the Palestinian leader actively undermines reforms and actively encourages terrorism -- Lou.

DOBBS: John, thank you very much -- John King, senior White House correspondent.

In the Middle East, former pop singer Jermaine Jackson today said Muslims are -- quote -- "the new Negroes in America" -- end quote. The former Jackson Five member, brother of Michael Jackson, made that comment while touring Muslim cultural centers in Bahrain. Jackson said Muslims are mistreated everywhere in this country, including airports. Jackson also accused the U.S. government of spreading anti- Muslim propaganda.

Still ahead here, growing anxiety in Congress about the war in Iraq and transfer of power to Iraqis. Senator Chuck Hagel is my guest and says it may be time to consider reintroducing the draft.

The White House defends itself against charges from two best- selling authors with lots to say about the war on terror and the war in Iraq.

And the Bush administration scales back its plans to change the rules for overtime pay in this country. That's coming up next. (COMMERCIAL BREAK)

DOBBS: Two Senate committees today began hearings on the war in Iraq and the planned transfer of power to the Iraqis June 30. Those hearings reflect rising anxiety in Congress about the U.S. strategy in the war and the rising number of American combat deaths and the strain on the U.S. military.

Senator Chuck Hagel took part in today's Foreign Relations Committee hearings. He joins us tonight from Washington, D.C.

Senator, Senator Lugar, the chairman, was very critical of the Bush administration for not providing being more forthcoming with administration, both officials as well as information. Is this a breach with the Bush administration?

SEN. CHUCK HAGEL (R), NEBRASKA: Lou, I think it's very frustrating for all of us here when the administration continues to push back the Congress on an issue that is as important as any issue that we've dealt with and will continue to deal with in years to come. And that's war.

The administration not only constitutionally has some responsibilities here to reach out to the Congress. We the Congress, have constitutional responsibilities to be part of this. But it seems to me the administration would want an opportunity to come up with their senior people, explain what they're doing, make us partners, get us in the boat, use these forums as opportunities to explain to the American people what we're trying to do, how we're doing it.

Yes, it's complicated. Yes, it's difficult. But I am baffled by the administration's continuing pushing away of the Congress, and I think that, as much as anything else, it frustrates Chairman Lugar and Republicans and Democrats.

DOBBS: Well, Senator, it is your responsibility as a member of that committee, it is the committee's responsibility to take part in the setting of policy. Do you think that the committee and others within Congress, both in the Senate and in the House, are subject to some and deserving of some criticism that you haven't been outspoken enough to this point and involved enough in policy?

HAGEL: Well, if you read my mail, Lou, that charge is never leveled against me, that I'm not outspoken enough, that my mouth goes too often.

But, yes, as a matter of fact, it is our responsibility. We shouldn't be whiners and crybabies about it. We are Article I of the Constitution of the United States. I was not elected, nor any of my colleagues, to serve under a president. We serve with a president. We do have a constitutional responsibility to probe, to question, be part of setting of policy. And, certainly, the appropriations process for all policy comes through us, and we have the one responsibility to declare war, which means, obviously, when you commit young men and women to war and some will die and we're almost at 700 thousand now, almost 3,000 wounded in Iraq, we all have to take some responsibility. So, yes, we can't blame this on the president. We need to be more assertive.

DOBBS: Senator, let me ask you just straightforwardly, a long- serving, distinguished member of the Senate, one of the most important members of the committee. Do you have a clear understanding of the Bush administration's strategy in Iraq, its plans and its visions -- its vision for Iraq for the next 12 months?

HAGEL: I do not. I don't think anyone up here does. That doesn't necessarily mean that the Bush administration is wrong or off course. This is a very

(CROSSTALK)

DOBBS: How would one know?

(LAUGHTER)

HAGEL: Well, yes, that's exactly the point that I made a minute ago, why it's important for the administration to be on Hill, not only just in the context of hearings to explain to the American people what their policies are, but enlist the Congress into a partnership, because we have a long way to go here.

It is very uncertain, Lou, how all this is going to come out. The one objective we should have, I think the Bush administration does have, and that is to move the Iraqi people as quickly as we can into a position where they can self-govern and self-defend. And that means elections. And how we get there is that big gap. And we need to hear from the administration.

DOBBS: And, today, you raised the possibility that now is the time to consider reinstating the draft, 30,000 troops being effectively identified for rotation into Iraq, 135,000 troops to be retained, a tremendous burden on the U.S. military, an obvious strain, which, to this point, the Pentagon has not exactly been receptive to considering. What do you think the outlook is?

HAGEL: Well, I raised that issue this morning during the committee on the basis of two points.

One is the first you mention. That is the manpower, the force structure that is going to be required to confront a generational war. The president has said that, most members of Congress, this war against terrorism, proliferation of weapons of mass destruction. We're making commitments for future years that we cannot fulfill.

Over 40 percent of our commitments already in place on the ground in Iraq are National Guard and Reserves. So we're talking about that component. But we're also talking about another component here. Lou, if, in fact this is a generational war that the president has noted, all of us I think have noted, then why should we ask very few people in our society to bear the heavy price, to carry the heavy burden and not ask everybody to carry some burden? There's a societal implication here. It's the middle-class, lower-middle-class that's always the rifleman in the field that is always on the line, not the sons and daughters of the wealthy and the powerful. If we have got a generational war, then all of us should take some responsibility for this country, if it's a nation at war.

DOBBS: Senator Chuck Hagel, thanks for being here.

HAGEL: Thank you.

That brings us to the subject of tonight's poll. The question: Do you believe the United States should reinstate the draft, yes or no? Cast your vote at CNN.com/Lou. We'll have the results later in the broadcast.

Tonight's thought is on authority. "Lawful and settled authority is very seldom resisted when it is well employed" -- those the words of English author Samuel Johnson.

Still ahead here tonight, the first overhaul of overtime pay in this country in more than half-a-century, critics say it is just another squeeze in this country's middle class. And some changing attitudes in Washington on the subject. We'll have a special report for you next.

And "Exporting America." Tonight, a new reality for millions of Americans who have lost their jobs. Fast-track training programs are helping those who have lost jobs to cheap overseas labor markets find new careers. But many are making major sacrifices. That story and a great deal more still ahead here.

(COMMERCIAL BREAK)

DOBBS: The defenders of outsourcing often point to job retraining as the solution for American workers who have lost their jobs to cheap foreign labor markets.

Community colleges across the country have launched retraining programs. And the newest kind of training is so-called fast-track training, short programs aimed at specific jobs. But far too often, we're finding, workers are losing out again.

Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Fifty-eight- year-old Sharon Keith is in a new phase of her life, working an optometry assistant. Up until 2.5 years ago, she worked in the textile mills for two decades. But the plant closed down, like many in South Carolina, when the jobs moved to Mexico and China.

SHARON KEITH, OPTOMETRY ASSISTANT: It was tough to start with. You know, I was scared. But I had people behind me telling I could do it and supporting me, and so I just got in there and worked and I'm thankful for it. SYLVESTER: Sharon went to Greenville Technical College's quick jobs programs for three months. The community college offers classes that last between three weeks to 90 days, just enough time to give displaced workers basic new skills.

THOMAS BARTON, PRESIDENT, GREENVILLE TECHNICAL COLLEGE: They have families to feed, and they have debts to pay and medical bills and rent and all the kind of things that these people have to have, but they didn't have a job and they didn't have these skills.

SYLVESTER: Fast-track job training and is a trend that's picking up around the country. The American Association of Community Colleges estimates most vocational schools have started such programs in the last three years. But critics say these programs only solve a short- term emergency and displaced workers may end up shortchanged.

MCDONALD-PINES: It is extremely discouraging for workers who are used to good pay and good benefits, a middle-class life, to have to look at a short-term training program and know that, at the end, they will probably get a low-wage job with no benefits.

SYLVESTER: Sharon Keith gets paid an average of $1.75 an hour less than what she was making at the factory. But, at this point, she's just grateful to have a job.

(END VIDEOTAPE)

SYLVESTER: About 85 percent of the students who complete Greenville Tech's fast training program find work after they graduate. The most popular courses are for jobs that cannot be easily sent overseas like nursing assistants and construction -- Lou.

DOBBS: Lisa, thank you -- Lisa Sylvester from Washington.

The National Foundation for American Policy just released a study, a study that alleges legislation to block the shipment of American jobs to cheap foreign labor markets and a number of states is outright unconstitutional. The board of the group include former aides to Vice President Cheney, President Reagan, and President Bush.

Stuart Anderson is the director of the foundation. He's written that state and federal legislation to restrict outsourcing is a rising threat to American competitiveness. He joins us tonight from Washington, D.C.

Sir, good to have you with us.

STUART ANDERSON, DIRECTOR, NATIONAL FOUNDATION FOR AMERICAN POLICY: Thank you, Lou.

DOBBS: Now, states are reacting, many states are reacting to the outsourcing of jobs, using taxpayer money to in fact ship jobs in their states to cheap overseas labor markets. And you think that's unconstitutional? Why?

ANDERSON: Well, essentially, Lou, what courts have found is that states don't have the right to make their own foreign policy or make their own trade agreements or trade policies.

Essentially, there's something called the Foreign Commerce Clause in the Constitution. And courts have found that that, along the foreign affairs powers that are reserved for the federal government, generally make it unconstitutional for states to do their own thing when it comes to trade. For example, in the case of sanctions against companies involved in Burma in Massachusetts, Supreme Court struck down that law in Massachusetts.

DOBBS: This is somewhat different, is it not, Stuart, because they're exercising authority and control over taxpayer dollars?

ANDERSON: Well, it's somewhat different but, again, essentially, what you're talking about is the state is making their own foreign commerce decision, and particularly in cases where there could be retaliation for foreign countries.

DOBBS: What in the world would a country do in retaliation for the state of Indiana, for example, or the state of California, deciding they're not going to send their money overseas and take away the jobs of hard-working Indianians or Californians.

ANDERSON: Well, if you look at California, which is such a large part of the U.S. economy, they would essentially say the U.S. companies and U.S. citizens aren't going to be able to bid on contracts in their country. And that could cut off a lot of the market.

DOBBS: That's a little different, isn't it, bidding on a contract. What we might do, I guess, retaliation quid pro quo would be that India or Thailand or the Philippines or Romania wouldn't permit -- wouldn't come here to outsource their jobs. Wouldn't that be quid pro quo?

ANDERSON: Well, At the federal level, and the states are generally obligated to this, the U.S. signed the government procurement agreement which says the U.S. won't discriminate based on where something is done for services for procurement for the government. And so the U.S. has used that to open up markets. And allows U.S. citizens to be selling their know-how to other countries. It is a good thing.

DOBBS: But when you're exporting an American job overseas purely on a wage price basis, killing an American job, laying off an American, and giving that job to a worker overseas for export back into this country, that, certainly, wouldn't apply, would it?

ANDERSON: Well, it depends what the situation is, Lou. Well, certainly, if it involved a particular state making what a court decided was their own trade policy, it would apply.

DOBBS: It's trade policy, I suppose, and some far extension and reason, it's better, to seems to me, exercising authority over its own treasury and taxpayer money within its own state. But let me ask you this, if you are concerned about the constitutionality of the states taking action, how concerned are you about the abrogation of the sovereignty of the United States and giving up its constitutional responsibilities to tribunals of NAFTA or of the World Trade Organization?

Because that's a clear, clear contravenes of the U.S. Constitution and powers of sovereignty.

ANDERSON: Well, I mean, clearly, that's one these issues that's going to continue to be controversial. So far, there haven't been a lot of constraints in that area.

DOBBS: What are you talking about?

We lost 88 percent cases where the United States was a defendant before the World Trade Organization.

ANDERSON: Yes, I understand that, Lou. In many cases, the U.S. consumers are going to benefit from some of these decisions.

DOBBS: I see. How do they benefit, Stuart? How do they benefit?

ANDERSON: Well, if you're benefiting there's lower prices.

DOBBS: Lower prices. I see. We can kill millions of jobs just so a trinket comes down a few cents. Is that the idea?

ANDERSON: That's probably not the way I would put it.

DOBBS: I suspect not. But that is the effect, is it not?

ANDERSON: No, not necessarily, Lou. Markets go both ways. Unless the U.S. is going to engage in belligerent activity every time there's a trade dispute, instead it's better have these decisions made in a multilateral way.

DOBBS: Sir, I know you have a philosophy at your think tank and ideology if you will. But let me ask you this, isn't it about time to get belligerent? We have 5 percent of our GDP in deficit that mounts each year. We are outsourcing American jobs. We're killing middle class American jobs, high value jobs and we're not creating new ones. Isn't it time for people to get belligerent?

ANDERSON: Well, when you talk about the trade deficit, it's interesting, because when you look at France and Germany, they have a trade surplus. And because of the inflexible labor markets they have twice the unemployment rate as the U.S. Also, on services you end up -- the U.S. actually has a surplus in white collar services we sell abroad. So, we have actually more to lose in retaliation.

DOBBS: And what has been happening to that surplus in technology and service jobs over the last three years, Stuart?

ANDERSON: It's -- it's still a $50 billion surplus. So still...

DOBBS: Well, the fact is, the surplus had decline 36 percent. That surplus is declining while our deficits and trade and general current account are declining. Isn't it time -- I appreciate ideological position, your political position. But isn't it time for people to start looking at this honestly? Putting away the scales of ideology and partisanship and say what is the best thing for the men and women who work in this country?

ANDERSON: Well, I think the best thing is to move to a more positive job approach in job creation which would involve improving some of the things you pointed out on your show, which is education and job training. But also look at what California did in a worker's compensation form. These are positive measure that could actually help create jobs in the country.

DOBBS: And it takes so much longer than outsourcing an American job overseas. Stuart Anderson, I hope you'll come back, because this is an important and critical debate. We appreciate you participating.

ANDERSON: Thank you for having me.

DOBBS: Stuart Anderson, thank you.

Still ahead, a controversial change in the way millions of Americans will be qualifying for overtime pay. We'll have that special report is next.

Also, the White House versus two best-selling authors on the war on terror and the war against Saddam Hussein. Tonight, we examine those allegations and what the White House says really happened.

Also tonight, a legal controversy over hundred of foreign combatants in U.S. custody in Cuba. The Supreme Court will decide whether they can fight their cases in U.S. Court. All of that, and a great deal more, please stay with us.

(COMMERCIAL BREAK)

DOBBS: The White House announced changes to overtime rules that critics say will squeeze the middle class. The final draft of the overhaul reflects the competing pressures of workplace anxieties and election year politics.

Louis Schiavone, reports from Washington.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The Bush administration says under new labor regulations almost no one earning less than $100,000 would lose their overtime privileges.

ELAINE CHAO, LABOR SECRETARY: This change alone will ensure that 1.3 million workers who did not have the right to overtime, will gain that right under the new rules.

SCHIAVONE: The Labor Department is backtracking from plans announced a year ago, but critics complained the proposal still goes too far.

SEN. TOM HARKIN (D), IOWA: You can put lipstick on a pig, but guess what, it's still a pig.

SCHIAVONE: The plan is a significant retreat from the first draft where nobody making more than $65,000 was guaranteed overtime and there no specific protections for nonexecutive workers who, who thanks to overtime pay, routinely break that ceiling. Under the new Bush plan starting in August, blew collar workers, police officers, firefighters, paramedics, emergency medical technicians and licensed practical workers are guaranteed overtime. Labor Secretary Elaine Chao says it didn't play a part in the revision, angrily rejecting a suggestion that she consulted with her husband, Senate Republican Whip Mitch Mcconnell.

CHAO: I find that question insults. I hope you didn't mean it that way. You know, I'm a leader in my own right.

SCHIAVONE: Democrats and organized labor both concede the new proposal is an improvement. But warn depending on job description, many workers earning more than $24,000 could yet lose their overtime. The business community isn't completely satisfied either.

RANDEL JOHNSON, U.S. CHAMBER OF COMMERCE: This is no slam dunk win for the employer community despite what the unions might be saying.

SCHIAVONE: Certain workers the administration estimates 107,000 could lose overtime guarantees. As they have for a year, Democrats stand ready to try to block any new regulation that would take overtime pay away from workers who now have it -- Lou.

DOBBS: This effort to overhaul overtime pay isn't taking place in a vacuum. Who brought it? Who has the greatest investment in this? It is obviously not workers who receive overtime pay?

SCHIAVONE: What's interesting is that at first blush, especially the first proposal that came out of the Bush administration 13 months ago, it was perceived as a gift to the business community that has stood so loyally by the Bush administration. However, this second draft could cost the business community $375 million in additional wages, another $700 million to implement these new regulations. So it's said sometimes that a compromise is something that doesn't please anybody. And in this case, maybe the Bush administration got it right.

DOBBS: At any rate, we'll have some time for public discussion before it becomes final. Public discussion is always a good thing. Louise, thanks a lot.

When we continue, the Bush administration defends itself against criticism from two best-selling authors about the preparations for the war in Iraq and the conduct of the war on terror.

And a new development in the argument over whether Senator John Kerry should release his military records from the Vietnam war. That story is next. Please stay with us.

(COMMERCIAL BREAK) DOBBS: The Kerry campaign tonight said it would make public the records of Senator Kerry's military service during the Vietnam war. This comes after Republicans demanded Senator Kerry release those records. A Kerry spokesman told CNN the campaign will post the Kerry records on its website within a day. The campaign denied it's simply responding to pressure from Republicans. Meanwhile, the Kerry campaign is now raising more money for the election than the Bush- Cheney campaign. The Kerry campaign along with Democratic groups supporting his candidacy have raised an estimated $93 million so far this year. The Bush campaign says it's raised only about $50 million.

The White House today continued to cast out on certain accounts in a new best-selling book on Iraq. It is the second time in recent weeks that the White House has had to deflect political damage from a blockbuster book. Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT: Round two in the White House versus the bestseller list. First was Richard Clarke's "Against All Enemies." Now Bob Woodward's "Plan of Attack" which portrays a Saudi secret that Saudi Prince Bandar was briefed on a classified Iraq war plan before even the secretary of state knew that war was certain. Not true, says the administration. Yes, there was a briefing. But it was before the president decided to wage war.

DONALD RUMSFELD, U.S. SECRETARY OF DEFENSE: I hate to use the word certain because no one's memory is perfect but I can't believe the decision had been made by the president during that period. If it had been, I didn't know it had been.

VILES: And Secretary of State Powell maintains he was in the loop.

COLIN POWELL, U.S. SECRETARY OF STATE: I was intimately familiar with those deployment plans. I worked on them. I was consulted on them. They were presented to the national security council. I was present whenever the plans were presented.

VILES: Another blockbuster, this so-called Saudi pledge. The Saudis stated hope to drive oil prices down during an election year. The administration and the Saudis deny there was a secret deal. That's not what Woodward reported. Prince Bandar confirmed on CNN that Saudis would like low prices and would like to see the president reelected. The White House is fresh off another damage control mission against the Clarke book which argues the president didn't take the terrorist threat seriously before 9/11 and was preoccupied with Iraq. Not true, the administration has argued.

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: It was the very first major national security policy directive of the Bush administration, not Russia, not missile defense, not Iraq, but the elimination of al Qaeda.

VILES: Unlike the Woodward debate, the Clarke attack was personal and bitter. The White House called him, quote, "deeply irresponsible."

(END VIDEOTAPE)

VILES: All of this a far cry from three months ago from the Paul O'Neill book came out critical of the president. The White House barely responded saying at the time, quote, "we don't do book reviews." Apparently, Lou, they do now.

DOBBS: Do we have allegations by Woodward and Clarke versus denials by the White House on this ultimately? A truce squad on this ultimately?

VILES: I don't know if there is a truce squad on it but the White House has denied most of the damaging things in both books. But in the case of the Woodward book, the White House has denied some things that aren't in the book, for example, that there was some secret deal on oil. Bob Woodward doesn't write that there was. He just says that the Saudis want to lower prices in time for the reelection. Nobody would doubt that.

DOBBS: Peter Viles. Thank you, sir.

It is unclear whether the Woodward book will have any impact at all on the president's poll numbers, his popularity. And as we reported last night, the latest CNN/USA Today/Gallup poll shows the president leading Senator Kerry by a margin of 51 to 46 percent. The poll was taken after the president's widely criticized news conference last weekend during the deadliest month of this war in Iraq for American troops.

Joining me now for more on the campaign, CNN political analyst Carlos Watson. Carlos, these numbers, 51, 46, after all that has transpired, this is going to be a resounding resurgent reassurance for the White House.

CARLOS WATSON, CNN POLITICAL ANALYST: Good news. Not as good news as President Clinton had in '96 when he was running for reelection at this time or that Reagan had in '84. It is not unequivocally good news. You will hear some carping from Democrats who feel like Kerry is not going on the offensive. Since he wrapped up the nomination in early March he's seen a lead that was once 12 points, 55-43, now he is down by five. You're going to start to see some worrying even as they raise money and launch new ads.

DOBBS: What in the world could he do?

WATSON: I think you're going to hear them say two things. One, they're going to say that he needs more comprehensive plans. They're saying you need big ideas on three or four issues. Obviously, the war. Obviously terrorism. Obviously, the economy. (UNINTELLIGIBLE) people can attach themselves to understand easily and actually believe. The second thing is, he's actually got to offer a little more passion, a little more excitement and get not only his own base but Independents, if you will, and moderate Republicans. Those folks that Bill Clinton wanted in '92 to start thinking about his candidacy seriously. DOBBS: Does he have the capacity for that passion, for that excitement within him?

WATSON: I think that's a great question. I think the honest truth is that at 60 years of age he is unlikely to become a different person. He's not Bill Clinton as an orator. Frankly, in some ways, I don't even think that as an orator, he's as good as some of the other people who ran for the nomination this time but the political ads that he ran during the primary actually tell a story in some ways better than he does. These ads, these bio ads, I think, will be very important.

DOBBS: Now the administration is defending itself against the Woodward book as Peter Viles just reported. The first allegation that Prince Bandar bin Sultan heard about the decision to go to war before Colin Powell. Your thoughts? How damaging? How likely?

WATSON: Embarrassing. No two ways about it. Secretary Powell up there looked painful for him to have to respond to these questions. He's one of the most popular American figures around. How damaging, we won't know yet. We have seen these other books have impact probably in the 2 to 3 percentage point range. Technically what will happen with the Woodward book, the White House campaign has actually put this on their site as a book to read.

I think that offers an opportunity for John Kerry. If John Kerry wanted to seem more aggressive, if you will, take a testosterone pill on the Iraq question and not simply talk about more international cooperation which right now does not seem to be selling with Independents and moderate Republicans, he could criticize the Bush team aggressively for cooperating with the Saudis too much, for saying that you cooperated with them too much before 9/11, you're cooperating with them too much right after 9/11, and even now there are conversations that may not be in America's best interest.

Whether or not he'll do that is unclear. But this may be a Sister Souljah moment, if you remember what Bill Clinton did in '92. A symbolic moment.

DOBBS: Carlos Watson, as always, thank you.

WATSON: Good to see you.

And a reminder, Carlos will have more on the political beat tonight. He joins Paula Zahn at 8 p.m. Eastern, kicking off his special segment, "The American Polls," tonight on PAULA ZAHN, 8:00 Eastern.

Still ahead here, the Supreme Court considers the rights of detainees held at Guantanamo Bay. We'll have the report for you from Washington next.

(COMMERCIAL BREAK)

DOBBS: The Supreme Court today began considering whether 600 prisoners at Guantanamo Bay have legal rights in the United States. And attorneys for several of those detainees argued the U.S. naval base where the prisoners are held is nothing more than a lawless enclave.

Bob Franken in Washington with a report -- Bob.

BOB FRANKEN, CNN CORRESPONDENT: And Lou, this is one of a series of three cases that are going to be argued before the Supreme Court on the limitations of presidential power in times of war. Is he able to act with enemy combatants with very little scrutiny by the U.S. courts? But this one was about possible limitations of the courts. Do they have jurisdiction beyond the borders of the United States when it involves non-U.S. citizens?

The venue, Guantanamo Bay, Cuba. Yes, it is a U.S. naval base. But it is part of the sovereign nation of Cuba. And the administration argues that, as a result, the courts do not have any power whatsoever.

Now, the lawyer for the detainees said that is effectively a U.S. government operation and the court should have power there, but the Supreme Court justices were very skeptical. Every time the lawyer tried to claim there was a possibility of mistreatment on the part of the detainees, some justice would interfere, would interrupt to say, no, the question is jurisdiction.

But when it came time for the Bush administration to present its point of view in the person of Solicitor General Theodore Olson, the justices also gave him quite a going-over. One of the justices asked if the same rules would apply for U.S. citizens that were held at Guantanamo, and Olson said, no, they would have different treatment. The justices then said that undermined the argument the administration was making, that their jurisdiction did not extend there.

As I said, Lou, it is the first of three cases. The first ones where the Supreme Court is deciding how much involvement the judiciary should have in the war on terror. It is a basic separation of powers discussion that is going on at the Supreme Court right now -- Lou.

DOBBS: Bob, thank you. Bob Franken from Washington.

Elsewhere in Washington today, remarks, scary remarks from Fed Chairman Alan Greenspan on interest rates sent stock prices tumbling. The Dow fell 123 points; the Nasdaq plummeted 42 points, almost, and the S&P down almost 18.

Christine Romans here now with the markets -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: It sounds obvious. Higher interest rates are inevitable. But that fear sent the stock and the bond markets tumbling today. Alan Greenspan said companies are more able to raise prices. The long period of worry about deflation is over, and the markets fell.

The average Big Board stock fell 1.5 percent. Eighty percent of the trades at lower prices. And yields on a 10-year note soared, Lou, to just shy of 4.5 percent. That's the highest since last summer. Two-year yields now at the highest in 18 months. Those higher yields boosted appeal of the dollar. It rallied to the highest this year versus the euro -- Lou.

DOBBS: Thank you very much, Christine Romans.

Still ahead here, results of our poll tonight. But first, a reminder to check out our Web site for the complete list of companies we've confirmed to be exporting America. The list is large. It's growing. Cnn.com/lou. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of tonight's poll. Forty-three percent of you said the United States should reinstate the draft; 50 percent do not.

That's our show for tonight. We thank you for being with us. Please join us tomorrow. Senate hearings on Iraq continue. The ranking Democrat on the Senate Foreign Relations Committee, Senator Joe Biden, will be with us. And in "Face-Off," insourcing versus outsourcing. We separate fact from fiction when it comes to the debate over exporting American jobs to cheap overseas labor markets. We'll have that debate and a great deal more. Please be with us.

For all of us here, good night from New York. "ANDERSON COOPER 360" is next.

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