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Lou Dobbs Tonight

Interview With Governor Ed Rendell; President Bush's Poll Numbers Plunge

Aired May 14, 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, President Bush's poll numbers plunge. Support for his Iraq policy tumbles. Is it time for Defense Secretary Rumsfeld to resign? We'll have reports from the White House and the Pentagon. And top political journalists assess what has been a tumultuous week.

In Iraq, heavy fighting today in Najaf, American tanks advancing into the city center.

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: We're taking this fight to the enemy and we will prevail.

DOBBS: Our "Middle-Class Squeeze." Working Americans face soaring costs, everything from gasoline to college tuition.

SARAH RAUSCHELBACH, STUDENT: We can't just pay the prices straight up.

DOBBS: "Exporting America." Tonight, I talk with Governor Ed Rendell of Pennsylvania about his battle to stop jobs in his state from being exported to cheap overseas labor markets.

UNIDENTIFIED MALE: We have our lost our Mexicans.

DOBBS: Is it a comedy or a controversy? Hispanics, the fastest growing ethnic group in this country, a new film making fun of Americans and our dependence on Hispanic workers. We'll have a live report from Los Angeles.

And tonight, I'll have a few thoughts on what this week seemed to be the impotence of the world's only superpower.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, May 14. Here now for an hour of news, debate and opinion is Lou Dobbs.

DOBBS: Good evening.

Tonight, shocking news for President Bush in the latest polling numbers. After a week dominated by negative headlines about Iraq, the death of a young American at the hands of radical Islamist terrorists and the policies of Defense Secretary Donald Rumsfeld, a new CNN/"TIME" poll says support for the president's Iraq policy has simply tumbled.

There are rising doubts as well about the president's performance in the war on terror. President Bush began the week with a very public display of support for his defense secretary at the Pentagon, amid rising calls for Rumsfeld to resign. Rumsfeld tried to ease concerns about the Bush administration's Iraq policy and speculation about his own future with a surprise visit to Baghdad yesterday.

The White House says Rumsfeld should stay in his job, but the latest polling numbers suggest the Pentagon's Iraq policy has left the president on shaky political ground.

Suzanne Malveaux at the White House has details on the new polling numbers and their potential fallout. Jamie McIntyre at the Pentagon following new developments tonight in the Iraq prison abuse scandal.

We go first to Suzanne Malveaux at the White House -- Suzanne.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Lou, there is really no doubt this has been a very difficult week for the Bush administration and White House aides acknowledge that those poll numbers are low, the approval numbers there.

But they say they believe this is a reflection of events that really were not in their control when you look at the Iraqi abuse scandal and when you also look at the beheading of American Nicholas Berg. All of those things, of course, taking a toll on how Americans feel about being inside of Iraq, but they do not believe that it is too late now. And they particularly think that after that June 30 deadline, turning power back to the Iraqi people, they will have a chance to turn things around.

But here's what those poll numbers are showing. The latest CNN/"TIME" poll shows that now 51 percent of voters are likely to choose Kerry for president, as over 46 percent for Bush. In terms of the president's job performance and how Mr. Bush is handling terrorism, it is evenly split; 46 percent say they believe he is doing a good job. But 47 percent say that he is doing a poor job.

When it comes specifically to Iraq, the numbers are lower here; 39 percent say that he's doing a good job; 55 percent say that he is doing a poor job.

But, Lou, what is really important here, despite the fact that you have these low numbers when it comes to job approval, political strategists say, look at the numbers that are coming out of those swing states, like Missouri and Wisconsin. Those are two states the president visited today. Those are the kinds of numbers that are really going to truly reflect who it is who actually takes this election.

If you look at those poll numbers, it still says that Bush and Kerry are pretty much neck and neck -- Lou.

DOBBS: Suzanne, how can the White House say events not in their control this week? They're in charge, the Pentagon in charge of the Abu Ghraib prison. The U.S. State Department, its representatives, were aware that Nick Berg was in custody at least of the Iraqis and at least arguably in the control of the United States.

MALVEAUX: Well, it's part of the argument the Bush administration make when they say, look, there are individuals that are responsible for this type of prison abuse, that this is not something that reflected widely either the policy of the United States or either the overall behavior of most of U.S. forces.

They also say as well that war is difficult, that you are going to have these type of event itself, as tragic as they are, the beheading of Nicholas Berg, and that this is not something necessarily that the Bush administration can control. Having said that, however, they say it is difficult. It's going to be a hard job. But they believe they can turn things around. And they're specifically looking at that turnover of power, that June 30 deadline, to try to give an international cover to this, so it is not so much an American face.

DOBBS: Suzanne Malveaux, thank you, from the White House.

General Ricardo Sanchez, the commander of U.S. troops in Iraq, has revised the military's interrogation practices after the Abu Ghraib scandal. Today, new details about what happened at the prison and the military filed criminal charges against another soldier.

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

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, those charges are against Charles Graner, a specialist who's been accused of being one of the ringleaders of the abuse at the prison, those charges formally now being referred to court-martial.

Graner is one of the accused who insists that higher-ups were well aware of the cooperation between military interrogators and military intelligence. His lawyer has distributed a photograph which he says shows that inside the prison, you can see in the photograph not just Charles Graner, but also members of the military intelligence, enlisted members, four of them, participating in what appears to be an interrogation.

But his account that higher-ups were well aware of what's going on is someone disputed by someone who is going to be testifying against him. And that's another accused soldier who is Specialist Jeremy Sivits. He has agreed to plead guilty. And he has told investigators -- quote -- "Our command would have slammed us," he said. "They believe in doing the right thing. If they saw what was going on, there would have been hell to pay."

Now, in the wake of the controversy about the interrogation techniques, Lieutenant General Ricardo Sanchez just yesterday now has taken off the table several controversial tactics or approaches which the Pentagon says were not supposed to be used in Iraq anyway and had not been permitted. Now they're taking them off the table. They include some of the things including sleep adjustment, sensory deprivation, and stress positions. The one at the top there, isolation, that's the one that's still going to be permitted. In fact, the Pentagon says there have been about 25 cases in which commanders have asked to isolate prisoners and they have been granted permission in those cases.

That's the only technique that is going to be still permitted. But it requires a very high level of approval -- Lou.

DOBBS: Jamie, thank you very much -- Jamie McIntyre, our senior Pentagon correspondent.

In Iraq today, American troops pushed deep into the city Najaf and bombarded positions held my militia loyal to Muqtada al-Sadr. Troops supported by tanks and helicopter gunships fought a fierce battle with the gunmen in the city's main cemetery. American troops today killed at least 17 gunmen in Najaf. There is no word on U.S. casualties.

That fighting lasted more than six hours, the U.S. attack the most aggressive assault yet in the campaign against al-Sadr's supporters in Najaf.

This latest military offensive just one component of the U.S. strategy to defeat al-Sadr. American officials are also negotiating with moderate Shiite clerics to try to end that fighting.

Joining me now from Baghdad is "Newsweek" special correspondent Babak Dehghanpisheh.

Babak, let me ask you, first, the United States, as it pursues a political strategy, as well as a military strategy, is it succeeding?

BABAK DEHGHANPISHEH, "NEWSWEEK": Well, it would appear that this is the end of the political strategy, really.

The military incursion this far into Najaf would seem that the military option is the one that's been chosen at this point. And, you know, it's tough to blame the U.S. military. Sadr has pretty much blocked every effort at mediation, whether from clerics or whether there were overtures from the CPA.

DOBBS: Ayatollah Sistani has called upon both al-Sadr and the United States to cease fighting in Najaf. That represents sending of a shift, because he had earlier simply called upon al-Sadr unilaterally. Does that represent any significant change?

DEHGHANPISHEH: Well, I think all of the senior clerics in Najaf really just want to stop the fighting, in particular to prevent damage to the shrine, because the danger there is that Shiites who so far may not have been involved in this conflict, who don't support Sadr, are in danger been of being drawn in if the shrine is damaged and especially if it is perceived that the Americans have damaged the shrine. DOBBS: The amount of, the level of anti-American feeling there following the revelation of abuses at Abu Ghraib, is it your judgment that there is any way in which the United States can reconstruct, if you will, a positive image and a far better relationship with the Iraqi people, whether Shia, Sunni, after the events at Abu Ghraib?

DEHGHANPISHEH: It's possible, but it certainly is going to take time. It's definitely not going to happen overnight. It is not -- sort of things like Mr. Rumsfeld's visit to Abu Ghraib are seen -- the Iraqis look upon that very cynically.

And those kind of Band-Aid fixes aren't going to solve this issue overnight.

DOBBS: The expectations are hardly for overnight, Babak, as you know, but there is definitely an expectation that was established by this administration that democracy would be installed in Iraq.

Is there any sign and, if so, what are the signs, that the country is receptive to the idea of democracy and that it is a realistic possibility over the course of the next 12 months?

DEHGHANPISHEH: Well, certainly, there's a large number of Iraqis both in the Kurdish north and the Shiite areas in the south and in the center, the predominantly Sunni area, that do want democracy, that did embrace the fall of Saddam and are ready to move toward a new government and, again, democracy.

But, you know, the road ahead is definitely going to be bumpy. There's no clear path. Even at this late hour, the U.N. is sort of scrambling to make the necessary plans, the steps to get toward this transition and what's going to happen after with the interim administration that's going to come into power. But, definitely, there are many, many Iraqis that would like to have democracy.

DOBBS: We thank you very much, Babak, for being with us. Thank you very much.

DEHGHANPISHEH: Thank you.

DOBBS: Later in the broadcast, my thoughts on this country's apparent unwillingness to act at times like the world's only superpower. Also, the French don't want to send troops to Iraq, but they do want to share still in the reconstruction of Iraq. We'll have a special report on French interest in Iraq, or self-interest, however you prefer.

And in "Heroes" tonight, Semper Fi, always faithful, the remarkable story of four Marines who displayed extraordinary courage and bravery on the battlefield.

And middle-class Americans still under siege from soaring costs for everything from gasoline to milk to college tuition. What can be done about it? What should be done? Is there any possibility of relief?

Stay with us.

(COMMERCIAL BREAK)

DOBBS: France did everything possible to prevent the United States from removing Saddam Hussein as Iraq's leader. It also was significantly involved in contravening U.S. policies in the United Nations and refused to contribute forces to the coalition military campaign and it refused to provide peacekeeping troops after the fall of Saddam Hussein.

But in a remarkable display of self-interests, apparently motivated by a desire to win large reconstruction contracts, France now says it wants to help rebuild Iraq, so long as the United States is paying the price.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): They're at it again. A new French foreign minister, a new set of conditions. French Foreign Minister Michel Barnier had quite a lot to say about how Iraq should be run after June 30. He also flat-out declared France would never send troops, not even peacekeepers, not even after the transfer of sovereignty.

MICHEL BARNIER, FRENCH FOREIGN MINISTER (through translator): The question of sending or not sending French troops is no longer irrelevant. And I can say it once again. There will be no troops, no French troops in Iraq. What we are concerned about is the political and economic reconstruction of Iraq. We are ready to train police officers or law enforcement officials, to deal with the Iraqi debt issue, and to be involved in economic development.

PILGRIM: The latest French conditions, before they are willing to help, include a new U.N. resolution before the June 30 handover by the United States, the U.N. to set a time limit on a U.S.-led multinational force. Baghdad should have authority over Iraqi forces. Baghdad should have a say over if, when, and how long multinational forces are to be used.

Barnier was on his first official visit to the United States, replacing Dominique de Villepin, the French envoy who came to personify France's opposition of the war at the United Nations last year. Hopes for a more cooperative postwar relies relationship have faded.

PHILIP GORDON, BROOKINGS INSTITUTION: I wish it were true that we could say that we have now turned a new page with our European allies and we're all set to work together on Iraq and other issues. But my sense is actually quite the opposite. Until we can really convince them that we have a plan that we're going to move forward with, I think that this is going to be a burden for the United States for the foreseeable future.

(END VIDEOTAPE) PILGRIM: Now, although France says it may help in reconstruction, the country is not willing to spend money so far and no troops ever. It may be after Iraq is stabilized, France will be ready to partake in the economy -- Lou.

DOBBS: So, France would be willing to participate in the reconstruction of Iraq so long as those contracts were provided by the United States?

PILGRIM: They want U.N. control over Iraq and they want the United States to bow out militarily and then they would like to participate in the reconstruction.

DOBBS: I think we may see the building of a potential consensus. Thanks very much, Kitty Pilgrim.

Tonight in "Heroes," the story of four Marines who displayed extraordinary courage and bravery in combat in Iraq.

Casey Wian now reports from the Marine Corps combat center in 29 Palms, California.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): It has been more than a year since then 1st Lieutenant Brian Chontosh's Marine platoon was ambushed by Iraqis firing mortars, rocket-propelled grenades and machine guns. Trapped, Chontosh ordered his driver, Lance Corporal Armand McCormick, to turn directly into a heavily armed enemy trench.

Their machine gunner bought them a few seconds. Then Chontosh and Lance Corporal Robert Kerman came out firing with small arms and pistols and quickly ran out of ammunition.

UNIDENTIFIED MALE: First Lieutenant Chontosh, without complete disregard for his safety, twice picked up discarded enemy rifles and continued his ferocious attack. When his audacious attack ended, he had cleared over 200 meters of enemy trench, killing more than 20 enemy soldiers and wounding several others.

LANCE CPL. ARMAND MCCORMICK, U.S. MARINE CORPS: To tell you the truth, I couldn't even remember what I was feeling. It was just second nature to pick up enemy rifles.

CAPT. BRIAN CHONTOSH, U.S. MARINE CORPS: Just reacting to the good training that we have, true compassion and love for the Marines and the battalion. The job needed to get done. Just went and did it.

WIAN: General Michael Hagee, commandant of the Marine Corps, awarded Chontosh the Navy Cross for Extraordinary Heroism and the two corporals the Silver Star, the Corps' second and third highest honors. Also receiving the Navy Cross for a different battle, Lance Corporal Joseph Perez. He was shot in the shoulder and torso, yet continued to lead his squad, which destroyed an enemy position.

LANCE CPL. JOSEPH PEREZ, U.S. MARINE CORPS: I'm not really big on getting awards and stuff like that. But I just feel like the award that I'm getting reflects the job of all the Marines that serve with me.

GEN. MICHAEL HAGEE, U.S. MARINE CORPS COMMANDANT: Thank you very much for what you were doing and also for what you're about to do.

WIAN: To underscore that, Marines headed from the awards ceremony directly to a grueling live-fire training exercise. It prepares them for battles they may soon face, some very soon. Corporal McCormick returned to Iraq the next day.

Casey Wian, CNN, 29 Palms, California.

(END VIDEOTAPE)

DOBBS: Our thought is on heroes. "True heroism consists of being superior to the ills of life, in whatever shape they may challenge us to combat" -- that from Napoleon Bonaparte.

Still ahead, the United States is the world's only superpower. The problem is, we're not behaving like one at all times, certainly. I'll have a few thoughts about that later.

And the wage and price squeeze, why many hard-working Americans don't believe in what is an economic recovery. We'll have that story.

And also coming up, certainly a bad week for the White House. This turned even worse tonight. Three of this country's leading journalists join us to discuss the economy, the fallout from Iraq and what it could mean for the president's reelection bid.

And "Making the Grade," our special report on education, the choices for families who are unable to afford the mounting cost of college education for their children. We'll have that special report coming up.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Oil prices today hit an all-time high, closing above $41 a barrel. Consumers across the country paying record prices at the gas pump as well. Those rising prices just one part of the financial squeeze on the middle-class in this country.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): In the bond pits in the oil markets, rising inflation has traders in a tizzy. And they don't know the half of it. Ask people paying those record gas prices.

UNIDENTIFIED MALE: It is pretty ridiculous how bad the prices are getting right now.

VILES: Or ask a college student or, better yet, their parents.

UNIDENTIFIED FEMALE: Prices have gone up. And funding has gone down. So we have two in college right now. So definitely we can tell the difference as far as the tuition.

VILES: The government now says prices rose at an annual rate of 4.4 percent in the first four months of the year, more than double last year's rate. Energy costs now rising at an annual rate of 28 percent. And with wages flat, the middle-class is stuck in a wage price squeeze. A major reason, polls show concern about the economy and the president's handling of it.

LEE PRICE, ECONOMIC POLICY INSTITUTE: The squeeze on prices and wages is the primary driver for people feeling that the economy is not going in the right direction. The GDP growth doesn't translate into pocketbooks. Wages have not done very well. Profits have done quite well.

VILES: Those rising energy prices hit consumers first at the pump and then again and again.

BILL CHENEY, MFC GLOBAL INVESTMENT MANAGEMENT: Anything which is shipped anywhere is subject to the cost of fuel for shipping it, whether it's air, road, whatever. And every time a UPS truck pulls up, you got have a few more dollars going into fuel prices. And somebody is going to be paying that.

VILES: This wage price squeeze shows's up in America's anemic savings rate. It was 10 percent back in 1980, 7 percent in 1990, fell to just 1.9 percent in the first quarter of this year.

(END VIDEOTAPE)

VILES: So if Americans are not saving, but the government is spending more than it takes in, where is that money coming from? Much of it is coming from foreign investors, namely, the Chinese and Japanese, who are, essentially, loaning us money by the hundreds of billions of dollars -- Lou.

DOBBS: And holding some very impressive IOUs.

VILES: Yes. They'll get that money back.

DOBBS: Against U.S. assets.

Thank you very much, Pete.

Well, the cost of a college education, you can add that as well to the middle-class squeeze in this country. It has nearly quadrupled over the past two decades. Tens of millions of middle-class Americans can no longer afford to pay for a college education. But because of government rule that make little, if any sense, those very same families often make too much money to qualify for federal help and can't save enough of their own.

Bill Tucker reports. (BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): It's the goal of most parents, to give their children a good education, a goal that is getting harder to pay for.

SCOTT PRINCE, MASSACHUSETTS EDUCATIONAL FINANCING AUTHORITY: When you look at college financial aid, on average, about 60 percent of the money that's given out is in the form of loans.

TUCKER: Low-interest loans, but debt just the same. Grants are much harder to come by. To qualify for a federal Pell grant, a family of four must earn roughly less than $40,000 a year. Federal tax records show that a quarter of all tax returns filed fall in the $50,000 to $200,000 income range, putting all those people out of running for grants.

RAUSCHELBACH: Being in the middle is the usual story. You don't qualify for, like, absolutely everything that you would if you were from a lower income bracket but, then again, my family still needs quite a bit of help for me to be here.

TUCKER: That's not to say a student can't or won't qualify for help. Sarah, for example, does have a work study allotment. It doesn't cover the cost of tuition by any stretch, but it helps. And not every state treats parents and students equally. The Georgia Hope Scholarship Fund is the most friendly. To qualify, a student must have a B average in high school and maintain it in college.

SHELLEY NICKEL, GEORGIA STUDENT FINANCE COMM.: Georgia has been ranked No. 1 for six years in a row for the amount of funding that we provide for undergraduate students.

TUCKER: The state of Florida has the longest operating prepay program. It is open to every resident and 60 percent of the people participating earn less than $70,000 a year.

(END VIDEOTAPE)

TUCKER: And there's a very simple reason for that. Today, a parent with a newborn can buy a contract for a four-year tuition plan for as little as $68 a month -- Lou.

DOBBS: Well, it's not entirely the answer, but for a lot of people very deserving it could be certainly an important answer.

Bill, let's go to the question tonight in our poll. And that question is, should the federal government provide financial support to needy students who are in the top 10 percent of high school graduates, yes or no? Cast your vote at CNN.com/Lou. We'll have the results later in the broadcast.

A majority of Americans say President Bush is doing a poor job handling the economy and the war in Iraq, according to our CNN/"TIME" poll. As we reported tonight, this latest poll shows Senator Kerry has gained a five-point lead over the president. Joining me now, Jim Ellis, chief of correspondents for "BusinessWeek," Alexis Simendinger, White House correspondent for "The National Journal," and CNN political analyst Carlos Watson.

Let me start with you, Jim, if I may.

These polls, this has to be devastating for the White House, even at this early stage.

JIM ELLIS, "BUSINESSWEEK": Right. This is not what they expected.

Early on, people always thought that national defense was going to be the savior for the Bush administration. And now they not only are in a bad position defense-wise, but they also are in a pretty bad position from the economy. Even though the economy is coming back, job growth is there, but the types of jobs that are coming back are not the types of jobs a lot of people want to see. And also wage growth isn't going up.

So a lot of people feel that they're not sharing in the recovery. The recovery is going to corporate profits, but it's not going to people.

DOBBS: Alexis, how much trouble is the president in? how Much of an advantage does Senator Kerry have right now?

ALEXIS SIMENDINGER, WHITE HOUSE CORRESPONDENT, "NATIONAL JOURNAL": Well, you know, it's interesting.

Covering the White House, as I do, it was a week in which you wanted to watch closely not only what they were saying, but of course the expressions on their faces. And it was clear, I think, from an interview that I did for a story I did about damage control this week that the White House and the campaign are very worried. And they're worried for good reasons, which has to do with the elements of current events that they can't control.

We were just talking about the economy. That's an element that they would like to have sink in as an improvement indicator to the American public. But there's a big question whether by October or November the public will feel that way.

And of course, Iraq could be a testament to the president that he doesn't like, unsteady leadership in times of chaos as opposed to steady leadership in times of change.

So, the White House was talking about emphasizing the glass half full. And when I was talking to them, they were trying to emphasize that things could actually be worse. So, when you have a White House and a campaign telling you things could be worse as opposed to how good things are, you know you're in trouble.

DOBBS: Carlos, the Senator -- Senator Kerry's lead here is just beyond the margin of error, but it is obviously in conformity with other polls and the trend that we have seen in this one. In your judgment, is Senator Kerry looking as good as this would initially suggest?

CARLOS WATSON, CNN POLITICAL ANALYST: Well, you know, not as good, Lou, as it would initially suggest. It certainly -- probably can't take credit for driving this lead. Instead, obviously, the events in Iraq and the events that have been in the news regarding Iraq have, obviously, taken the president lower.

But here's what he could say. He could say that even without really my campaign hitting full year, I already have a four, maybe five-point lead. I've got a lead, also, in key state polls like Ohio and Florida. And now as my bio ads start to sink in, as I start to drive home key policy positions on healthcare, the economy, and even the war on terror, maybe I have an opportunity to stretch it to a ten- point lead. So, that would be the optimistic spin that you would put on it if you were on Kerry team.

DOBBS: Alexis, should Donald Rumsfeld resign? Is he a big problem right now for the president?

SIMENDINGER: You know, the White House and the president feel very, very confident about Donald Rumsfeld. It was interesting this week when I was doing an interview with the president's communication director. He was saying the one thing that made the president mad, really mad in the last week was to see anonymous quotes in the newspaper suggesting that Rumsfeld's job was in jeopardy. And the president told his aides, I don't want to see anymore quotes like that. And he turned around and made sure he gave Rumsfeld a big bear hug to say that he would stay.

I have no idea whether Donald Rumsfeld will feel, in the weeks to come, that he can lead the department. That's a question that he said that he would be paying close attention to. But if you listen to the president and his aides, the president feels very close to Don Rumsfeld. There is no daylight between them to policy. And he wants Rumsfeld to stay.

DOBBS: Jim, do you agree with Alexis?

WATSON: Unfortunately, I think that Mr. Rumsfeld's time has come and gone. We think that if he was a CEO, he would be out to pasture now with a pretty good compensation contract to match probably.

But this is a man who's been responsible for a series of management blunders. Whether it was going in with the force that was too small, whether it was deciding that we could win this thing alone without a lot of help from our overseas allies, whether it was deciding that -- the issue here was one of we could have a small targeted that could go in and not really expect the Iraqis to sort of resist in this the situation we have now.

There have been a lot of questions about leadership there and a lot of questions about the assumption that is we used in going into the war. And I think that somebody has to be held accountable for that. Usually the top of the command is the person who falls on their sword. DOBBS: Carlos, let me turn to you on another subject. There are times, and particular over -- particularly over the past month or so, that at least to me, it seemed that both Senator Kerry and President Bush are, for the first time in my experience, two candidates for a high office who don't really want to communicate with their constituencies. Do you ever have that sense? It is a strange, strange period.

WATSON: You know, both sides, I think, feel this is a polarized electorate. I think on the president side, he feels like, particularly on a number of social issues, frankly although they don't talk about it a lot, including gay marriage and abortion, they helped hold down his base. And they don't feel the base will go away.

I think on the Kerry said, there's a sense that a lot of hardcore Democrats are opposed to the president, the phrase A.B.B., that's not where they have to talk. And consequently, as you said, there is a lot of interest in talking to the center, talking to the so-called swing voters.

I do think, though, for the first time, Lou, over the next couple weeks you could see some cracking in the president's base, particularly, among Republican women. Remember, that was a critical group in the 90's that often voted for Bill Clinton in states like Louisiana, and Florida and even Arizona and gave Clinton some unusual Democratic victories.

So, while they have been talking to the center, if you will, I think, at least on the president's side, you will see him returning to his base, to some extent, particularly Republican women, given that their new photos, the court-martial hearings and other things that are going to come up that frankly could challenge him in his core.

DOBBS: Alexis, we have about 30 seconds. If you will take 15 and leave Jim whatever you choose.

SIMENDINGER: The one thing I know is behind the scenes, the White House and the campaign are very, very careful about their base. They think if don't get that base in November, they will lose.

In Kerry's case this week, it was interesting, because he was hearing from African-Americans who were saying you need to speak more to us. And his campaign was trying to be responsive to that.

DOBBS: Jim, you get the last word.

ELLIS: I think the Kerry campaign is in a good position from their stand point, but they have to be very careful not to come across as sort of beating up on the president at a time when there's more at stake here than just the president. And there's a lot more at stake than just the election.

So, I think that they, right now, could stand to step back and just let the bad news come out. It's going to do the job more than anything he can say will do.

DOBBS: Jim Ellis, Alexis Simendinger Carlos Watson, thank you.

Turning now to a few thoughts on my thoughts on Iraq policy and rising uncertainty around the world about what appear to be American missteps and perhaps misjudgments.

Congress is holding hearings on the prisoner abuse scandal. There are mounting calls for the defense secretary to resign and Senator Kerry, like President Bush says, we must stay the course. And our troops continue to die in Iraq. And not one elected official with whom I've talked this week says that he or she knows what our strategy is to resolve our involvement in Iraq.

Our military that once said it would kill or capture Muqtada al- Sadr now plans to use his followers to quell the uprising in Najaf. Terrorists cut off the head of Nick Berg and we're told that killers of this young American will be brought to justice.

At least the Pentagon had the decency not to say the noose was tightening, as it has before, that the terrorist are running out of time, as they've said of Osama bin Laden and the Iraqi insurgents now for more than a year.

Few Arab states condemned the beheading of Nick Berg, or, for that matter, few nations around the world expressed their revulsion. The U.N. Secretary General's remarks were tepid, at best.

We hardly need their regrets, nor frankly, their support. But we do need to understand why we lack it. Our need to assess our policies, our position in the world and challenges we face is now critical. In terms of Iraq, the war on terror, and our traditional alliances.

A lack of clarity and our national direction and ambiguous policies are also contributing to uncertainty in world markets. That ambiguity offered by both President Bush and Senator Kerry. Our markets are becoming increasing volatile of late.

The stock market this week hit the lows of the year as our economy exploded with growth. Oil prices are now at new highs, so our gasoline prices, and the U.S. trade deficit has soared to a new record. In short, it is time for honesty, straight talk and real leadership from both parties and both candidates.

With the cost of the war in Iraq now nearing $200 billion, we thought that you might like to see what else $200 billion might buy. $200 billion would pay the salaries of nearly half a million public schoolteachers for the next decade, assuming you paid each $45,000 a year. For many that would be a significant raise.

With $200 billion you could pay the governments budget for cancer research for the next 40 years. And that same $200 billion could be used to fully fund NASA for 13 years, including several manned missions to the moon.

Coming up next, fighting for American workers and against the Bush administration's trade policies. I'm joined by Governor Edward Rendell of Pennsylvania. He has stood up to protect jobs in his state from being exported to cheap foreign labor markets. He's our guest next.

And workers at 1 Ohio company tonight, have good reason to question the Bush administrations economic forecasting a year after the President visited their company in Ohio. And 14 million Hispanics disappear from California. That's the plot of a controversial new comedy. We'll be right back. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight, "Exporting America." My guest tonight just made a decision to keep jobs in his state and away from cheap overseas labor markets. Other states are following suit. They include Iowa, Minnesota, Missouri and other states are ready to sign on as well. The governors of those four states have refused to sign a trade deal that would take away their right to choose American workers over foreign workers when awarding contracts. Governor Ed Rendell of Pennsylvania is actively trying to protect the workers in his state. He joins us now from Washington, Pennsylvania. Good to have you with us.

Your decision to pull back from the agreement that the U.S. trade representative said was necessary to future free trade agreements, what prompted your decision?

GOV. ED RENDELL (D), PENNSYLVANIA: Well, simply just seeing what's gone on in the last three or four months with the outsourcing or offshoring of American jobs, jobs that Americans are, in fact, qualified to do. And then I got together with two legislators, Mike Diven and Representative McGeehan you've had on your show and we put in legislation creating a social responsibility section of our contracts where any bidder has to state whether they're going to use domestic workers on foreign workers to fulfill a contract.

It is not an automatic that the company that says they're going to use domestic workers gets the contract but it creates preference in the evaluation process. One thing I want to make clear, when we pulled out of the agreement, we only pulled out of the agreement -- the trade rep sent us a letter saying, send me a letter agreeing to allow African countries and Latin American countries that we're negotiating with to have access to your state contracts. And in the country of Australia.

I sent a letter back saying, no, we won't do it for the African nations and for the Latin American nations but we have agreed to do it for Australia. The difference is Australia has agreed to live by International Labor Organization standards. So they've agreed to put their workers, in terms of labor conditions and some salaries and benefits on equal plane with American workers. We're not against free trade. We just want it to be fair. We want it to be a level playing field. Australia is playing by the same rules. All we're asking for is that the ILO standards be adopted by all these countries who want to bid against American workers. We'll take Australia and we'll take any country that will agree to abide by the ILO standards. DOBBS: Of all the agreements that Robert Zoellick and his people at the U.S. trade representative's office have negotiated, Australia comes closest to making sense out of nearly three years in discussing a level playing field, an expression that has little serviceability usually in connection with trade agreements between this country and others.

But you've got big issues. You've lost a lot of jobs in Pennsylvania. What has been the reaction of the big, multinationals in Pennsylvania because they have been supporting, as the president, the outsourcing of jobs? Have you had a lot of, let's put it this way, plain old heat?

RENDELL: No. It's interesting. I had a meeting with Unisys one of the great Pennsylvania companies. Unisys does a lot of work for the government. One of the reasons I had the meeting is because they announced they were offshoring 3,000 new jobs. The line of differentiation there was that Unisys was not taking American jobs or an open American contract and moving them offshore. They were just expanding their international operation by 3,000 jobs.

Look, we understand that our multinationals and, certainly, Pennsylvania has a ton of multinationals are going to create jobs all over the world. By the way, Americans should realize that foreign companies employ a lot of people here. Pennsylvania has almost 400,000 people employed by foreign owned companies. We're not against that. We're against taking our jobs to countries that don't compete under the same standards. That's why we specifically, in my letter to U.S.T.R. Rep. Zoellick, I specifically only pulled us out of the African and Latin American agreements not out of the Australian agreement.

DOBBS: You are amongst the most experienced and talented political observers and analysts as well as governor. Governor Rendell, let me ask you, is it your sense that this is going to be a battle royal because we have the agreements with Australia, with CAFTA coming forward, Congress is going to have to approve it in 40 states. There's outsourcing by state governments of jobs from those states to cheap labor markets, 35 states have legislation to oppose it. Is this going to be a battle royal in your judgment in the next six months?

RENDELL: I hope not, although my guess is it might be. We, as you know, Governor Granholm of Michigan and Governor Doyle of Wisconsin and I spent a day in Washington seeing both congressmen and senators but also seeing administration officials. We had a very nice talk with Secretary Evans, secretary of commerce and we told him quite frankly that we thought that the administration had not done a good job representing American interests in front of the WTO, unlike the Clinton administration which had fought back and filed petition after petition in the WTO. In three and a half years, the Bush administration has only filed ten complaints. We gave as an example, intellectual piracy. We know it's going on in China and India. We have yet to file one complaint in front of the WTO. Secretary Evans told us they're going to step it up and really enforce and we're waiting. DOBBS: Against that partisan assertion you made, remind everybody it was President Clinton who signed off NAFTA, the WTO and move forward to some rather problematic, at best, and in other cases just outright unfavorable labor agreements in those trade deals.

RENDELL: And there's no question about that, Lou. We're hopeful. I don't want this to be an election issue. I want Secretary Evans' words to ring true. He says they've hired some experienced prosecutors, they've hired new deputies...

DOBBS: Governor, you are a terrific politician, you're a smart guy and so is our audience here. Let's talk straight. This is about American jobs who for 30 years we've had static wages in this country, corporate interests are just overpowering every other segment of our society and our economy. There's got to be, doesn't there, some balance here?

RENDELL: No question. I think the balance comes from us asserting the power that we have. Look, we've got this huge trade deficit. The world relies on our trade. There's no question about it. Their economies are based on American trade. We have leverage. I mean, take the treaty that was negotiated by the Carter administration where we get killed on the VAT tax and you know what I'm talking about, Lou, of foreign companies get to deduct the VAT tax from what they can sell their products for here. American companies get the VAT tax added in Europe.

DOBBS: It is the European subsidy of their entire exporting...

RENDELL: Of their entire economy. We should just say no more. No more. We're not going to do this anymore.

DOBBS: Governor, I'm sure working men and women in your state are very supportive of the action you've taken. Congratulations. Thanks for being here.

RENDELL: My pleasure.

DOBBS: Massive job cuts today in the battleground state of Ohio. These job cuts come from a company whose performance was lauded and praised one year ago by President Bush standing right at their plant. The president visited the Timken company in Canton, Ohio last April as part of his "Big Jobs and Growth" tour. President Bush pointed to Timken's remarkable productivity. Productivity at Timken had risen 10 percent from the previous year. Today, Timken announced plans to close three plants in Canton, Ohio, cutting 1,300 jobs despite the productivity, of their labor force. As many as 20 percent of those jobs could go overseas.

Since the president's visit last April, Timken has laid off more than a quarter of its hio workforce. President Bush, by the way, said high productivity, quote, raises the standard of living for the American people. 1,300 people at those plants in Ohio tonight probably disagree with the president's assessment now.

Still ahead, a new movie that looks at what would happen to California if the entire Latino population up and disappeared. We'll have the story next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: A surprising billboard has attracted a lot of attention and some controversy in Southern California in recent days. The billboard says, "On May 14 there will be no Mexicans in California." The sign part of an advertising campaign for a new movie that out today called "A Day Without a Mexican." Sibila Vargas has the story for us from Los Angeles.

(BEGIN VIDEOTAPE)

ANNOUNCER: We have lost our Mexicans.

SIBILA VARGAS, CNN CORRESPONDENT (voice-over): What would happen if the entire Latino population in California suddenly disappeared? Mexican director Sergio Arau and his wife Yareli Arizmendi explored that topic in a new film, "A Day Without a Mexican."

YARELI ARIZMENDI, CO-WRITER, ACTRESS: There's a lot of humor. And humor allows you to talk very deeply about very difficult issues.

ANNOUNCER: Why is the government calling them aliens if they did not think that they were from somewhere else?

Here is Jose. Othership. Jose. Mothership.

ARIZMENDI: This is a dialogue opener, that's what it is.

VARGAS: The film has opened dialogue, but not the way the filmmakers expected. One of the billboards advertising the movie was taken down after just one day, because some found it to be offensive.

UNIDENTIFIED MALE: Anybody takes a look at that, if they don't know what the reasoning behind it or what the idea behind it is, they get a very bad impression.

UNIDENTIFIED FEMALE: Kind of rude and offensive. But then, when you think about it a little bit, you think maybe there's something behind it. You hope there's something behind it.

UNIDENTIFIED MALE: This is some discrimination about the Latino people.

ARIZMENDI: Thank god people reacted to it. Because it would be horrible to think that you would live in California with people that won't react to a statement like that.

VARGAS: While there may have been initial confusion. They film makers hope audiences go home with a clear understanding that the Latino contribution to California is invaluable.

ARIZMENDI: How do you make the invisible visible? You take it back.

UNIDENTIFIED MALE: Please come back. UNIDENTIFIED MALE: Pour Favor.

(END VIDEOTAPE)

VARGAS: Very funny and thought-provoking stuff. But "A Day Without a Mexican" opens in select theaters here in Southern California today. It will open in Northern California and parts of Mexico next week. And the producers are just hoping that it gets enough buzz that people start talking about it, so they could distribute it to other markets. Back to you.

DOBBS: Sibila, did you like the movie?

VARGAS: I did. I thought it was funny. You know, it is just a thought-provoking question. What would the community be without the Latino population?

DOBBS: Thought-provoking and funny. You can't bet the combination. Sibila Vargas, thank you.

DOBBS: Still ahead, the results of our poll tonight. Stay with us.

(COMMERCIAL BREAK)

DOBBS: 88 percent of you say the federal government provide financial support to needy students in the top 10 percent of their graduating classes.

That's our show for tonight, thanks for being with us. Have a very pleasant weekend. Good night from New York. "ANDERSON COOPER 360" is next.

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


Aired May 14, 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, President Bush's poll numbers plunge. Support for his Iraq policy tumbles. Is it time for Defense Secretary Rumsfeld to resign? We'll have reports from the White House and the Pentagon. And top political journalists assess what has been a tumultuous week.

In Iraq, heavy fighting today in Najaf, American tanks advancing into the city center.

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: We're taking this fight to the enemy and we will prevail.

DOBBS: Our "Middle-Class Squeeze." Working Americans face soaring costs, everything from gasoline to college tuition.

SARAH RAUSCHELBACH, STUDENT: We can't just pay the prices straight up.

DOBBS: "Exporting America." Tonight, I talk with Governor Ed Rendell of Pennsylvania about his battle to stop jobs in his state from being exported to cheap overseas labor markets.

UNIDENTIFIED MALE: We have our lost our Mexicans.

DOBBS: Is it a comedy or a controversy? Hispanics, the fastest growing ethnic group in this country, a new film making fun of Americans and our dependence on Hispanic workers. We'll have a live report from Los Angeles.

And tonight, I'll have a few thoughts on what this week seemed to be the impotence of the world's only superpower.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, May 14. Here now for an hour of news, debate and opinion is Lou Dobbs.

DOBBS: Good evening.

Tonight, shocking news for President Bush in the latest polling numbers. After a week dominated by negative headlines about Iraq, the death of a young American at the hands of radical Islamist terrorists and the policies of Defense Secretary Donald Rumsfeld, a new CNN/"TIME" poll says support for the president's Iraq policy has simply tumbled.

There are rising doubts as well about the president's performance in the war on terror. President Bush began the week with a very public display of support for his defense secretary at the Pentagon, amid rising calls for Rumsfeld to resign. Rumsfeld tried to ease concerns about the Bush administration's Iraq policy and speculation about his own future with a surprise visit to Baghdad yesterday.

The White House says Rumsfeld should stay in his job, but the latest polling numbers suggest the Pentagon's Iraq policy has left the president on shaky political ground.

Suzanne Malveaux at the White House has details on the new polling numbers and their potential fallout. Jamie McIntyre at the Pentagon following new developments tonight in the Iraq prison abuse scandal.

We go first to Suzanne Malveaux at the White House -- Suzanne.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Lou, there is really no doubt this has been a very difficult week for the Bush administration and White House aides acknowledge that those poll numbers are low, the approval numbers there.

But they say they believe this is a reflection of events that really were not in their control when you look at the Iraqi abuse scandal and when you also look at the beheading of American Nicholas Berg. All of those things, of course, taking a toll on how Americans feel about being inside of Iraq, but they do not believe that it is too late now. And they particularly think that after that June 30 deadline, turning power back to the Iraqi people, they will have a chance to turn things around.

But here's what those poll numbers are showing. The latest CNN/"TIME" poll shows that now 51 percent of voters are likely to choose Kerry for president, as over 46 percent for Bush. In terms of the president's job performance and how Mr. Bush is handling terrorism, it is evenly split; 46 percent say they believe he is doing a good job. But 47 percent say that he is doing a poor job.

When it comes specifically to Iraq, the numbers are lower here; 39 percent say that he's doing a good job; 55 percent say that he is doing a poor job.

But, Lou, what is really important here, despite the fact that you have these low numbers when it comes to job approval, political strategists say, look at the numbers that are coming out of those swing states, like Missouri and Wisconsin. Those are two states the president visited today. Those are the kinds of numbers that are really going to truly reflect who it is who actually takes this election.

If you look at those poll numbers, it still says that Bush and Kerry are pretty much neck and neck -- Lou.

DOBBS: Suzanne, how can the White House say events not in their control this week? They're in charge, the Pentagon in charge of the Abu Ghraib prison. The U.S. State Department, its representatives, were aware that Nick Berg was in custody at least of the Iraqis and at least arguably in the control of the United States.

MALVEAUX: Well, it's part of the argument the Bush administration make when they say, look, there are individuals that are responsible for this type of prison abuse, that this is not something that reflected widely either the policy of the United States or either the overall behavior of most of U.S. forces.

They also say as well that war is difficult, that you are going to have these type of event itself, as tragic as they are, the beheading of Nicholas Berg, and that this is not something necessarily that the Bush administration can control. Having said that, however, they say it is difficult. It's going to be a hard job. But they believe they can turn things around. And they're specifically looking at that turnover of power, that June 30 deadline, to try to give an international cover to this, so it is not so much an American face.

DOBBS: Suzanne Malveaux, thank you, from the White House.

General Ricardo Sanchez, the commander of U.S. troops in Iraq, has revised the military's interrogation practices after the Abu Ghraib scandal. Today, new details about what happened at the prison and the military filed criminal charges against another soldier.

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

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, those charges are against Charles Graner, a specialist who's been accused of being one of the ringleaders of the abuse at the prison, those charges formally now being referred to court-martial.

Graner is one of the accused who insists that higher-ups were well aware of the cooperation between military interrogators and military intelligence. His lawyer has distributed a photograph which he says shows that inside the prison, you can see in the photograph not just Charles Graner, but also members of the military intelligence, enlisted members, four of them, participating in what appears to be an interrogation.

But his account that higher-ups were well aware of what's going on is someone disputed by someone who is going to be testifying against him. And that's another accused soldier who is Specialist Jeremy Sivits. He has agreed to plead guilty. And he has told investigators -- quote -- "Our command would have slammed us," he said. "They believe in doing the right thing. If they saw what was going on, there would have been hell to pay."

Now, in the wake of the controversy about the interrogation techniques, Lieutenant General Ricardo Sanchez just yesterday now has taken off the table several controversial tactics or approaches which the Pentagon says were not supposed to be used in Iraq anyway and had not been permitted. Now they're taking them off the table. They include some of the things including sleep adjustment, sensory deprivation, and stress positions. The one at the top there, isolation, that's the one that's still going to be permitted. In fact, the Pentagon says there have been about 25 cases in which commanders have asked to isolate prisoners and they have been granted permission in those cases.

That's the only technique that is going to be still permitted. But it requires a very high level of approval -- Lou.

DOBBS: Jamie, thank you very much -- Jamie McIntyre, our senior Pentagon correspondent.

In Iraq today, American troops pushed deep into the city Najaf and bombarded positions held my militia loyal to Muqtada al-Sadr. Troops supported by tanks and helicopter gunships fought a fierce battle with the gunmen in the city's main cemetery. American troops today killed at least 17 gunmen in Najaf. There is no word on U.S. casualties.

That fighting lasted more than six hours, the U.S. attack the most aggressive assault yet in the campaign against al-Sadr's supporters in Najaf.

This latest military offensive just one component of the U.S. strategy to defeat al-Sadr. American officials are also negotiating with moderate Shiite clerics to try to end that fighting.

Joining me now from Baghdad is "Newsweek" special correspondent Babak Dehghanpisheh.

Babak, let me ask you, first, the United States, as it pursues a political strategy, as well as a military strategy, is it succeeding?

BABAK DEHGHANPISHEH, "NEWSWEEK": Well, it would appear that this is the end of the political strategy, really.

The military incursion this far into Najaf would seem that the military option is the one that's been chosen at this point. And, you know, it's tough to blame the U.S. military. Sadr has pretty much blocked every effort at mediation, whether from clerics or whether there were overtures from the CPA.

DOBBS: Ayatollah Sistani has called upon both al-Sadr and the United States to cease fighting in Najaf. That represents sending of a shift, because he had earlier simply called upon al-Sadr unilaterally. Does that represent any significant change?

DEHGHANPISHEH: Well, I think all of the senior clerics in Najaf really just want to stop the fighting, in particular to prevent damage to the shrine, because the danger there is that Shiites who so far may not have been involved in this conflict, who don't support Sadr, are in danger been of being drawn in if the shrine is damaged and especially if it is perceived that the Americans have damaged the shrine. DOBBS: The amount of, the level of anti-American feeling there following the revelation of abuses at Abu Ghraib, is it your judgment that there is any way in which the United States can reconstruct, if you will, a positive image and a far better relationship with the Iraqi people, whether Shia, Sunni, after the events at Abu Ghraib?

DEHGHANPISHEH: It's possible, but it certainly is going to take time. It's definitely not going to happen overnight. It is not -- sort of things like Mr. Rumsfeld's visit to Abu Ghraib are seen -- the Iraqis look upon that very cynically.

And those kind of Band-Aid fixes aren't going to solve this issue overnight.

DOBBS: The expectations are hardly for overnight, Babak, as you know, but there is definitely an expectation that was established by this administration that democracy would be installed in Iraq.

Is there any sign and, if so, what are the signs, that the country is receptive to the idea of democracy and that it is a realistic possibility over the course of the next 12 months?

DEHGHANPISHEH: Well, certainly, there's a large number of Iraqis both in the Kurdish north and the Shiite areas in the south and in the center, the predominantly Sunni area, that do want democracy, that did embrace the fall of Saddam and are ready to move toward a new government and, again, democracy.

But, you know, the road ahead is definitely going to be bumpy. There's no clear path. Even at this late hour, the U.N. is sort of scrambling to make the necessary plans, the steps to get toward this transition and what's going to happen after with the interim administration that's going to come into power. But, definitely, there are many, many Iraqis that would like to have democracy.

DOBBS: We thank you very much, Babak, for being with us. Thank you very much.

DEHGHANPISHEH: Thank you.

DOBBS: Later in the broadcast, my thoughts on this country's apparent unwillingness to act at times like the world's only superpower. Also, the French don't want to send troops to Iraq, but they do want to share still in the reconstruction of Iraq. We'll have a special report on French interest in Iraq, or self-interest, however you prefer.

And in "Heroes" tonight, Semper Fi, always faithful, the remarkable story of four Marines who displayed extraordinary courage and bravery on the battlefield.

And middle-class Americans still under siege from soaring costs for everything from gasoline to milk to college tuition. What can be done about it? What should be done? Is there any possibility of relief?

Stay with us.

(COMMERCIAL BREAK)

DOBBS: France did everything possible to prevent the United States from removing Saddam Hussein as Iraq's leader. It also was significantly involved in contravening U.S. policies in the United Nations and refused to contribute forces to the coalition military campaign and it refused to provide peacekeeping troops after the fall of Saddam Hussein.

But in a remarkable display of self-interests, apparently motivated by a desire to win large reconstruction contracts, France now says it wants to help rebuild Iraq, so long as the United States is paying the price.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): They're at it again. A new French foreign minister, a new set of conditions. French Foreign Minister Michel Barnier had quite a lot to say about how Iraq should be run after June 30. He also flat-out declared France would never send troops, not even peacekeepers, not even after the transfer of sovereignty.

MICHEL BARNIER, FRENCH FOREIGN MINISTER (through translator): The question of sending or not sending French troops is no longer irrelevant. And I can say it once again. There will be no troops, no French troops in Iraq. What we are concerned about is the political and economic reconstruction of Iraq. We are ready to train police officers or law enforcement officials, to deal with the Iraqi debt issue, and to be involved in economic development.

PILGRIM: The latest French conditions, before they are willing to help, include a new U.N. resolution before the June 30 handover by the United States, the U.N. to set a time limit on a U.S.-led multinational force. Baghdad should have authority over Iraqi forces. Baghdad should have a say over if, when, and how long multinational forces are to be used.

Barnier was on his first official visit to the United States, replacing Dominique de Villepin, the French envoy who came to personify France's opposition of the war at the United Nations last year. Hopes for a more cooperative postwar relies relationship have faded.

PHILIP GORDON, BROOKINGS INSTITUTION: I wish it were true that we could say that we have now turned a new page with our European allies and we're all set to work together on Iraq and other issues. But my sense is actually quite the opposite. Until we can really convince them that we have a plan that we're going to move forward with, I think that this is going to be a burden for the United States for the foreseeable future.

(END VIDEOTAPE) PILGRIM: Now, although France says it may help in reconstruction, the country is not willing to spend money so far and no troops ever. It may be after Iraq is stabilized, France will be ready to partake in the economy -- Lou.

DOBBS: So, France would be willing to participate in the reconstruction of Iraq so long as those contracts were provided by the United States?

PILGRIM: They want U.N. control over Iraq and they want the United States to bow out militarily and then they would like to participate in the reconstruction.

DOBBS: I think we may see the building of a potential consensus. Thanks very much, Kitty Pilgrim.

Tonight in "Heroes," the story of four Marines who displayed extraordinary courage and bravery in combat in Iraq.

Casey Wian now reports from the Marine Corps combat center in 29 Palms, California.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): It has been more than a year since then 1st Lieutenant Brian Chontosh's Marine platoon was ambushed by Iraqis firing mortars, rocket-propelled grenades and machine guns. Trapped, Chontosh ordered his driver, Lance Corporal Armand McCormick, to turn directly into a heavily armed enemy trench.

Their machine gunner bought them a few seconds. Then Chontosh and Lance Corporal Robert Kerman came out firing with small arms and pistols and quickly ran out of ammunition.

UNIDENTIFIED MALE: First Lieutenant Chontosh, without complete disregard for his safety, twice picked up discarded enemy rifles and continued his ferocious attack. When his audacious attack ended, he had cleared over 200 meters of enemy trench, killing more than 20 enemy soldiers and wounding several others.

LANCE CPL. ARMAND MCCORMICK, U.S. MARINE CORPS: To tell you the truth, I couldn't even remember what I was feeling. It was just second nature to pick up enemy rifles.

CAPT. BRIAN CHONTOSH, U.S. MARINE CORPS: Just reacting to the good training that we have, true compassion and love for the Marines and the battalion. The job needed to get done. Just went and did it.

WIAN: General Michael Hagee, commandant of the Marine Corps, awarded Chontosh the Navy Cross for Extraordinary Heroism and the two corporals the Silver Star, the Corps' second and third highest honors. Also receiving the Navy Cross for a different battle, Lance Corporal Joseph Perez. He was shot in the shoulder and torso, yet continued to lead his squad, which destroyed an enemy position.

LANCE CPL. JOSEPH PEREZ, U.S. MARINE CORPS: I'm not really big on getting awards and stuff like that. But I just feel like the award that I'm getting reflects the job of all the Marines that serve with me.

GEN. MICHAEL HAGEE, U.S. MARINE CORPS COMMANDANT: Thank you very much for what you were doing and also for what you're about to do.

WIAN: To underscore that, Marines headed from the awards ceremony directly to a grueling live-fire training exercise. It prepares them for battles they may soon face, some very soon. Corporal McCormick returned to Iraq the next day.

Casey Wian, CNN, 29 Palms, California.

(END VIDEOTAPE)

DOBBS: Our thought is on heroes. "True heroism consists of being superior to the ills of life, in whatever shape they may challenge us to combat" -- that from Napoleon Bonaparte.

Still ahead, the United States is the world's only superpower. The problem is, we're not behaving like one at all times, certainly. I'll have a few thoughts about that later.

And the wage and price squeeze, why many hard-working Americans don't believe in what is an economic recovery. We'll have that story.

And also coming up, certainly a bad week for the White House. This turned even worse tonight. Three of this country's leading journalists join us to discuss the economy, the fallout from Iraq and what it could mean for the president's reelection bid.

And "Making the Grade," our special report on education, the choices for families who are unable to afford the mounting cost of college education for their children. We'll have that special report coming up.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Oil prices today hit an all-time high, closing above $41 a barrel. Consumers across the country paying record prices at the gas pump as well. Those rising prices just one part of the financial squeeze on the middle-class in this country.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): In the bond pits in the oil markets, rising inflation has traders in a tizzy. And they don't know the half of it. Ask people paying those record gas prices.

UNIDENTIFIED MALE: It is pretty ridiculous how bad the prices are getting right now.

VILES: Or ask a college student or, better yet, their parents.

UNIDENTIFIED FEMALE: Prices have gone up. And funding has gone down. So we have two in college right now. So definitely we can tell the difference as far as the tuition.

VILES: The government now says prices rose at an annual rate of 4.4 percent in the first four months of the year, more than double last year's rate. Energy costs now rising at an annual rate of 28 percent. And with wages flat, the middle-class is stuck in a wage price squeeze. A major reason, polls show concern about the economy and the president's handling of it.

LEE PRICE, ECONOMIC POLICY INSTITUTE: The squeeze on prices and wages is the primary driver for people feeling that the economy is not going in the right direction. The GDP growth doesn't translate into pocketbooks. Wages have not done very well. Profits have done quite well.

VILES: Those rising energy prices hit consumers first at the pump and then again and again.

BILL CHENEY, MFC GLOBAL INVESTMENT MANAGEMENT: Anything which is shipped anywhere is subject to the cost of fuel for shipping it, whether it's air, road, whatever. And every time a UPS truck pulls up, you got have a few more dollars going into fuel prices. And somebody is going to be paying that.

VILES: This wage price squeeze shows's up in America's anemic savings rate. It was 10 percent back in 1980, 7 percent in 1990, fell to just 1.9 percent in the first quarter of this year.

(END VIDEOTAPE)

VILES: So if Americans are not saving, but the government is spending more than it takes in, where is that money coming from? Much of it is coming from foreign investors, namely, the Chinese and Japanese, who are, essentially, loaning us money by the hundreds of billions of dollars -- Lou.

DOBBS: And holding some very impressive IOUs.

VILES: Yes. They'll get that money back.

DOBBS: Against U.S. assets.

Thank you very much, Pete.

Well, the cost of a college education, you can add that as well to the middle-class squeeze in this country. It has nearly quadrupled over the past two decades. Tens of millions of middle-class Americans can no longer afford to pay for a college education. But because of government rule that make little, if any sense, those very same families often make too much money to qualify for federal help and can't save enough of their own.

Bill Tucker reports. (BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): It's the goal of most parents, to give their children a good education, a goal that is getting harder to pay for.

SCOTT PRINCE, MASSACHUSETTS EDUCATIONAL FINANCING AUTHORITY: When you look at college financial aid, on average, about 60 percent of the money that's given out is in the form of loans.

TUCKER: Low-interest loans, but debt just the same. Grants are much harder to come by. To qualify for a federal Pell grant, a family of four must earn roughly less than $40,000 a year. Federal tax records show that a quarter of all tax returns filed fall in the $50,000 to $200,000 income range, putting all those people out of running for grants.

RAUSCHELBACH: Being in the middle is the usual story. You don't qualify for, like, absolutely everything that you would if you were from a lower income bracket but, then again, my family still needs quite a bit of help for me to be here.

TUCKER: That's not to say a student can't or won't qualify for help. Sarah, for example, does have a work study allotment. It doesn't cover the cost of tuition by any stretch, but it helps. And not every state treats parents and students equally. The Georgia Hope Scholarship Fund is the most friendly. To qualify, a student must have a B average in high school and maintain it in college.

SHELLEY NICKEL, GEORGIA STUDENT FINANCE COMM.: Georgia has been ranked No. 1 for six years in a row for the amount of funding that we provide for undergraduate students.

TUCKER: The state of Florida has the longest operating prepay program. It is open to every resident and 60 percent of the people participating earn less than $70,000 a year.

(END VIDEOTAPE)

TUCKER: And there's a very simple reason for that. Today, a parent with a newborn can buy a contract for a four-year tuition plan for as little as $68 a month -- Lou.

DOBBS: Well, it's not entirely the answer, but for a lot of people very deserving it could be certainly an important answer.

Bill, let's go to the question tonight in our poll. And that question is, should the federal government provide financial support to needy students who are in the top 10 percent of high school graduates, yes or no? Cast your vote at CNN.com/Lou. We'll have the results later in the broadcast.

A majority of Americans say President Bush is doing a poor job handling the economy and the war in Iraq, according to our CNN/"TIME" poll. As we reported tonight, this latest poll shows Senator Kerry has gained a five-point lead over the president. Joining me now, Jim Ellis, chief of correspondents for "BusinessWeek," Alexis Simendinger, White House correspondent for "The National Journal," and CNN political analyst Carlos Watson.

Let me start with you, Jim, if I may.

These polls, this has to be devastating for the White House, even at this early stage.

JIM ELLIS, "BUSINESSWEEK": Right. This is not what they expected.

Early on, people always thought that national defense was going to be the savior for the Bush administration. And now they not only are in a bad position defense-wise, but they also are in a pretty bad position from the economy. Even though the economy is coming back, job growth is there, but the types of jobs that are coming back are not the types of jobs a lot of people want to see. And also wage growth isn't going up.

So a lot of people feel that they're not sharing in the recovery. The recovery is going to corporate profits, but it's not going to people.

DOBBS: Alexis, how much trouble is the president in? how Much of an advantage does Senator Kerry have right now?

ALEXIS SIMENDINGER, WHITE HOUSE CORRESPONDENT, "NATIONAL JOURNAL": Well, you know, it's interesting.

Covering the White House, as I do, it was a week in which you wanted to watch closely not only what they were saying, but of course the expressions on their faces. And it was clear, I think, from an interview that I did for a story I did about damage control this week that the White House and the campaign are very worried. And they're worried for good reasons, which has to do with the elements of current events that they can't control.

We were just talking about the economy. That's an element that they would like to have sink in as an improvement indicator to the American public. But there's a big question whether by October or November the public will feel that way.

And of course, Iraq could be a testament to the president that he doesn't like, unsteady leadership in times of chaos as opposed to steady leadership in times of change.

So, the White House was talking about emphasizing the glass half full. And when I was talking to them, they were trying to emphasize that things could actually be worse. So, when you have a White House and a campaign telling you things could be worse as opposed to how good things are, you know you're in trouble.

DOBBS: Carlos, the Senator -- Senator Kerry's lead here is just beyond the margin of error, but it is obviously in conformity with other polls and the trend that we have seen in this one. In your judgment, is Senator Kerry looking as good as this would initially suggest?

CARLOS WATSON, CNN POLITICAL ANALYST: Well, you know, not as good, Lou, as it would initially suggest. It certainly -- probably can't take credit for driving this lead. Instead, obviously, the events in Iraq and the events that have been in the news regarding Iraq have, obviously, taken the president lower.

But here's what he could say. He could say that even without really my campaign hitting full year, I already have a four, maybe five-point lead. I've got a lead, also, in key state polls like Ohio and Florida. And now as my bio ads start to sink in, as I start to drive home key policy positions on healthcare, the economy, and even the war on terror, maybe I have an opportunity to stretch it to a ten- point lead. So, that would be the optimistic spin that you would put on it if you were on Kerry team.

DOBBS: Alexis, should Donald Rumsfeld resign? Is he a big problem right now for the president?

SIMENDINGER: You know, the White House and the president feel very, very confident about Donald Rumsfeld. It was interesting this week when I was doing an interview with the president's communication director. He was saying the one thing that made the president mad, really mad in the last week was to see anonymous quotes in the newspaper suggesting that Rumsfeld's job was in jeopardy. And the president told his aides, I don't want to see anymore quotes like that. And he turned around and made sure he gave Rumsfeld a big bear hug to say that he would stay.

I have no idea whether Donald Rumsfeld will feel, in the weeks to come, that he can lead the department. That's a question that he said that he would be paying close attention to. But if you listen to the president and his aides, the president feels very close to Don Rumsfeld. There is no daylight between them to policy. And he wants Rumsfeld to stay.

DOBBS: Jim, do you agree with Alexis?

WATSON: Unfortunately, I think that Mr. Rumsfeld's time has come and gone. We think that if he was a CEO, he would be out to pasture now with a pretty good compensation contract to match probably.

But this is a man who's been responsible for a series of management blunders. Whether it was going in with the force that was too small, whether it was deciding that we could win this thing alone without a lot of help from our overseas allies, whether it was deciding that -- the issue here was one of we could have a small targeted that could go in and not really expect the Iraqis to sort of resist in this the situation we have now.

There have been a lot of questions about leadership there and a lot of questions about the assumption that is we used in going into the war. And I think that somebody has to be held accountable for that. Usually the top of the command is the person who falls on their sword. DOBBS: Carlos, let me turn to you on another subject. There are times, and particular over -- particularly over the past month or so, that at least to me, it seemed that both Senator Kerry and President Bush are, for the first time in my experience, two candidates for a high office who don't really want to communicate with their constituencies. Do you ever have that sense? It is a strange, strange period.

WATSON: You know, both sides, I think, feel this is a polarized electorate. I think on the president side, he feels like, particularly on a number of social issues, frankly although they don't talk about it a lot, including gay marriage and abortion, they helped hold down his base. And they don't feel the base will go away.

I think on the Kerry said, there's a sense that a lot of hardcore Democrats are opposed to the president, the phrase A.B.B., that's not where they have to talk. And consequently, as you said, there is a lot of interest in talking to the center, talking to the so-called swing voters.

I do think, though, for the first time, Lou, over the next couple weeks you could see some cracking in the president's base, particularly, among Republican women. Remember, that was a critical group in the 90's that often voted for Bill Clinton in states like Louisiana, and Florida and even Arizona and gave Clinton some unusual Democratic victories.

So, while they have been talking to the center, if you will, I think, at least on the president's side, you will see him returning to his base, to some extent, particularly Republican women, given that their new photos, the court-martial hearings and other things that are going to come up that frankly could challenge him in his core.

DOBBS: Alexis, we have about 30 seconds. If you will take 15 and leave Jim whatever you choose.

SIMENDINGER: The one thing I know is behind the scenes, the White House and the campaign are very, very careful about their base. They think if don't get that base in November, they will lose.

In Kerry's case this week, it was interesting, because he was hearing from African-Americans who were saying you need to speak more to us. And his campaign was trying to be responsive to that.

DOBBS: Jim, you get the last word.

ELLIS: I think the Kerry campaign is in a good position from their stand point, but they have to be very careful not to come across as sort of beating up on the president at a time when there's more at stake here than just the president. And there's a lot more at stake than just the election.

So, I think that they, right now, could stand to step back and just let the bad news come out. It's going to do the job more than anything he can say will do.

DOBBS: Jim Ellis, Alexis Simendinger Carlos Watson, thank you.

Turning now to a few thoughts on my thoughts on Iraq policy and rising uncertainty around the world about what appear to be American missteps and perhaps misjudgments.

Congress is holding hearings on the prisoner abuse scandal. There are mounting calls for the defense secretary to resign and Senator Kerry, like President Bush says, we must stay the course. And our troops continue to die in Iraq. And not one elected official with whom I've talked this week says that he or she knows what our strategy is to resolve our involvement in Iraq.

Our military that once said it would kill or capture Muqtada al- Sadr now plans to use his followers to quell the uprising in Najaf. Terrorists cut off the head of Nick Berg and we're told that killers of this young American will be brought to justice.

At least the Pentagon had the decency not to say the noose was tightening, as it has before, that the terrorist are running out of time, as they've said of Osama bin Laden and the Iraqi insurgents now for more than a year.

Few Arab states condemned the beheading of Nick Berg, or, for that matter, few nations around the world expressed their revulsion. The U.N. Secretary General's remarks were tepid, at best.

We hardly need their regrets, nor frankly, their support. But we do need to understand why we lack it. Our need to assess our policies, our position in the world and challenges we face is now critical. In terms of Iraq, the war on terror, and our traditional alliances.

A lack of clarity and our national direction and ambiguous policies are also contributing to uncertainty in world markets. That ambiguity offered by both President Bush and Senator Kerry. Our markets are becoming increasing volatile of late.

The stock market this week hit the lows of the year as our economy exploded with growth. Oil prices are now at new highs, so our gasoline prices, and the U.S. trade deficit has soared to a new record. In short, it is time for honesty, straight talk and real leadership from both parties and both candidates.

With the cost of the war in Iraq now nearing $200 billion, we thought that you might like to see what else $200 billion might buy. $200 billion would pay the salaries of nearly half a million public schoolteachers for the next decade, assuming you paid each $45,000 a year. For many that would be a significant raise.

With $200 billion you could pay the governments budget for cancer research for the next 40 years. And that same $200 billion could be used to fully fund NASA for 13 years, including several manned missions to the moon.

Coming up next, fighting for American workers and against the Bush administration's trade policies. I'm joined by Governor Edward Rendell of Pennsylvania. He has stood up to protect jobs in his state from being exported to cheap foreign labor markets. He's our guest next.

And workers at 1 Ohio company tonight, have good reason to question the Bush administrations economic forecasting a year after the President visited their company in Ohio. And 14 million Hispanics disappear from California. That's the plot of a controversial new comedy. We'll be right back. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight, "Exporting America." My guest tonight just made a decision to keep jobs in his state and away from cheap overseas labor markets. Other states are following suit. They include Iowa, Minnesota, Missouri and other states are ready to sign on as well. The governors of those four states have refused to sign a trade deal that would take away their right to choose American workers over foreign workers when awarding contracts. Governor Ed Rendell of Pennsylvania is actively trying to protect the workers in his state. He joins us now from Washington, Pennsylvania. Good to have you with us.

Your decision to pull back from the agreement that the U.S. trade representative said was necessary to future free trade agreements, what prompted your decision?

GOV. ED RENDELL (D), PENNSYLVANIA: Well, simply just seeing what's gone on in the last three or four months with the outsourcing or offshoring of American jobs, jobs that Americans are, in fact, qualified to do. And then I got together with two legislators, Mike Diven and Representative McGeehan you've had on your show and we put in legislation creating a social responsibility section of our contracts where any bidder has to state whether they're going to use domestic workers on foreign workers to fulfill a contract.

It is not an automatic that the company that says they're going to use domestic workers gets the contract but it creates preference in the evaluation process. One thing I want to make clear, when we pulled out of the agreement, we only pulled out of the agreement -- the trade rep sent us a letter saying, send me a letter agreeing to allow African countries and Latin American countries that we're negotiating with to have access to your state contracts. And in the country of Australia.

I sent a letter back saying, no, we won't do it for the African nations and for the Latin American nations but we have agreed to do it for Australia. The difference is Australia has agreed to live by International Labor Organization standards. So they've agreed to put their workers, in terms of labor conditions and some salaries and benefits on equal plane with American workers. We're not against free trade. We just want it to be fair. We want it to be a level playing field. Australia is playing by the same rules. All we're asking for is that the ILO standards be adopted by all these countries who want to bid against American workers. We'll take Australia and we'll take any country that will agree to abide by the ILO standards. DOBBS: Of all the agreements that Robert Zoellick and his people at the U.S. trade representative's office have negotiated, Australia comes closest to making sense out of nearly three years in discussing a level playing field, an expression that has little serviceability usually in connection with trade agreements between this country and others.

But you've got big issues. You've lost a lot of jobs in Pennsylvania. What has been the reaction of the big, multinationals in Pennsylvania because they have been supporting, as the president, the outsourcing of jobs? Have you had a lot of, let's put it this way, plain old heat?

RENDELL: No. It's interesting. I had a meeting with Unisys one of the great Pennsylvania companies. Unisys does a lot of work for the government. One of the reasons I had the meeting is because they announced they were offshoring 3,000 new jobs. The line of differentiation there was that Unisys was not taking American jobs or an open American contract and moving them offshore. They were just expanding their international operation by 3,000 jobs.

Look, we understand that our multinationals and, certainly, Pennsylvania has a ton of multinationals are going to create jobs all over the world. By the way, Americans should realize that foreign companies employ a lot of people here. Pennsylvania has almost 400,000 people employed by foreign owned companies. We're not against that. We're against taking our jobs to countries that don't compete under the same standards. That's why we specifically, in my letter to U.S.T.R. Rep. Zoellick, I specifically only pulled us out of the African and Latin American agreements not out of the Australian agreement.

DOBBS: You are amongst the most experienced and talented political observers and analysts as well as governor. Governor Rendell, let me ask you, is it your sense that this is going to be a battle royal because we have the agreements with Australia, with CAFTA coming forward, Congress is going to have to approve it in 40 states. There's outsourcing by state governments of jobs from those states to cheap labor markets, 35 states have legislation to oppose it. Is this going to be a battle royal in your judgment in the next six months?

RENDELL: I hope not, although my guess is it might be. We, as you know, Governor Granholm of Michigan and Governor Doyle of Wisconsin and I spent a day in Washington seeing both congressmen and senators but also seeing administration officials. We had a very nice talk with Secretary Evans, secretary of commerce and we told him quite frankly that we thought that the administration had not done a good job representing American interests in front of the WTO, unlike the Clinton administration which had fought back and filed petition after petition in the WTO. In three and a half years, the Bush administration has only filed ten complaints. We gave as an example, intellectual piracy. We know it's going on in China and India. We have yet to file one complaint in front of the WTO. Secretary Evans told us they're going to step it up and really enforce and we're waiting. DOBBS: Against that partisan assertion you made, remind everybody it was President Clinton who signed off NAFTA, the WTO and move forward to some rather problematic, at best, and in other cases just outright unfavorable labor agreements in those trade deals.

RENDELL: And there's no question about that, Lou. We're hopeful. I don't want this to be an election issue. I want Secretary Evans' words to ring true. He says they've hired some experienced prosecutors, they've hired new deputies...

DOBBS: Governor, you are a terrific politician, you're a smart guy and so is our audience here. Let's talk straight. This is about American jobs who for 30 years we've had static wages in this country, corporate interests are just overpowering every other segment of our society and our economy. There's got to be, doesn't there, some balance here?

RENDELL: No question. I think the balance comes from us asserting the power that we have. Look, we've got this huge trade deficit. The world relies on our trade. There's no question about it. Their economies are based on American trade. We have leverage. I mean, take the treaty that was negotiated by the Carter administration where we get killed on the VAT tax and you know what I'm talking about, Lou, of foreign companies get to deduct the VAT tax from what they can sell their products for here. American companies get the VAT tax added in Europe.

DOBBS: It is the European subsidy of their entire exporting...

RENDELL: Of their entire economy. We should just say no more. No more. We're not going to do this anymore.

DOBBS: Governor, I'm sure working men and women in your state are very supportive of the action you've taken. Congratulations. Thanks for being here.

RENDELL: My pleasure.

DOBBS: Massive job cuts today in the battleground state of Ohio. These job cuts come from a company whose performance was lauded and praised one year ago by President Bush standing right at their plant. The president visited the Timken company in Canton, Ohio last April as part of his "Big Jobs and Growth" tour. President Bush pointed to Timken's remarkable productivity. Productivity at Timken had risen 10 percent from the previous year. Today, Timken announced plans to close three plants in Canton, Ohio, cutting 1,300 jobs despite the productivity, of their labor force. As many as 20 percent of those jobs could go overseas.

Since the president's visit last April, Timken has laid off more than a quarter of its hio workforce. President Bush, by the way, said high productivity, quote, raises the standard of living for the American people. 1,300 people at those plants in Ohio tonight probably disagree with the president's assessment now.

Still ahead, a new movie that looks at what would happen to California if the entire Latino population up and disappeared. We'll have the story next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: A surprising billboard has attracted a lot of attention and some controversy in Southern California in recent days. The billboard says, "On May 14 there will be no Mexicans in California." The sign part of an advertising campaign for a new movie that out today called "A Day Without a Mexican." Sibila Vargas has the story for us from Los Angeles.

(BEGIN VIDEOTAPE)

ANNOUNCER: We have lost our Mexicans.

SIBILA VARGAS, CNN CORRESPONDENT (voice-over): What would happen if the entire Latino population in California suddenly disappeared? Mexican director Sergio Arau and his wife Yareli Arizmendi explored that topic in a new film, "A Day Without a Mexican."

YARELI ARIZMENDI, CO-WRITER, ACTRESS: There's a lot of humor. And humor allows you to talk very deeply about very difficult issues.

ANNOUNCER: Why is the government calling them aliens if they did not think that they were from somewhere else?

Here is Jose. Othership. Jose. Mothership.

ARIZMENDI: This is a dialogue opener, that's what it is.

VARGAS: The film has opened dialogue, but not the way the filmmakers expected. One of the billboards advertising the movie was taken down after just one day, because some found it to be offensive.

UNIDENTIFIED MALE: Anybody takes a look at that, if they don't know what the reasoning behind it or what the idea behind it is, they get a very bad impression.

UNIDENTIFIED FEMALE: Kind of rude and offensive. But then, when you think about it a little bit, you think maybe there's something behind it. You hope there's something behind it.

UNIDENTIFIED MALE: This is some discrimination about the Latino people.

ARIZMENDI: Thank god people reacted to it. Because it would be horrible to think that you would live in California with people that won't react to a statement like that.

VARGAS: While there may have been initial confusion. They film makers hope audiences go home with a clear understanding that the Latino contribution to California is invaluable.

ARIZMENDI: How do you make the invisible visible? You take it back.

UNIDENTIFIED MALE: Please come back. UNIDENTIFIED MALE: Pour Favor.

(END VIDEOTAPE)

VARGAS: Very funny and thought-provoking stuff. But "A Day Without a Mexican" opens in select theaters here in Southern California today. It will open in Northern California and parts of Mexico next week. And the producers are just hoping that it gets enough buzz that people start talking about it, so they could distribute it to other markets. Back to you.

DOBBS: Sibila, did you like the movie?

VARGAS: I did. I thought it was funny. You know, it is just a thought-provoking question. What would the community be without the Latino population?

DOBBS: Thought-provoking and funny. You can't bet the combination. Sibila Vargas, thank you.

DOBBS: Still ahead, the results of our poll tonight. Stay with us.

(COMMERCIAL BREAK)

DOBBS: 88 percent of you say the federal government provide financial support to needy students in the top 10 percent of their graduating classes.

That's our show for tonight, thanks for being with us. Have a very pleasant weekend. Good night from New York. "ANDERSON COOPER 360" is next.

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