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Lou Dobbs Tonight

Warning That al Qaeda Plans Another Attack; Race for President Is Tight

Aired July 23, 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.


KITTY PILGRIM, CNN ANCHOR: Chilling warning that al Qaeda is planning another attack against the United States. Now this warning come as the September 11 commission says the United States is still at risk of catastrophic attack.
(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: Because of the urgency of this task, we will begin work right away.

(END VIDEO CLIP)

PILGRIM: Also tonight, is the government doing enough to protect us from another terrorist attack? Stephen Flynn, author of "America the Vulnerable," says this country is still dangerously unprepared.

President Bush and Senator Kerry launch new offenses in their election campaigns. As Democrats prepare for their convention, the polls are breathtaking. Three leading journalists will give me their assessment of the race for the White House.

And the inspiring story of a U.S. Marine starting a new life after being severely wounded in Iraq.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I can't imagine finding a better group of people than working around these young Marines.

(END VIDEO CLIP)

PILGRIM: Tonight, Heroes, a special report.

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, July 23. Here now for an hours of news, debate and opinion, sitting in for Lou Dobbs who is on vacation, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight, a warning that al Qaeda plans another attack against the United States. A senior CIA official says the intelligence community has "fairly specific information that al Qaeda is preparing an attack." Yesterday, the September 11 commission warned Americans are still not safe from terrorism.

Justice Correspondent Kelli Arena has the report -- Kelli?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Kitty, as you know, we've heard for more than a month about the very real possibility of an attack on U.S. soil between now and the presidential election.

But senior intelligence officials are now saying that it's more than just chatter. They say, as you said earlier, there is credible and fairly specific information that al Qaeda is poised to attack." It's just not specific enough.

(BEGIN VIDEO CLIP)

TOM RIDGE, SECRETARY OF HOMELAND SECURITY: Although we know not the time and the place and the method, credible reports indicate that al Qaeda is moving forward with its plans to carry out a large-scale attack against the United States.

(END VIDEO CLIP)

ARENA: Al Qaeda operatives recently captured in countries, including Saudi Arabia, Pakistan and Afghanistan, are providing useful information, according to officials. That information in part suggests that the attack is being coordinated by Osama bin Laden himself.

But intelligence is not just coming from detainees, it's coming from multiple sources, and it is consistent. Officials say the threat is a serious as it was in the summer of 2001. That was just before the September 11 attack.

And the concern is not only focused on al Qaeda, but splinter groups that have emerged all around the globe. FBI agents continue to search for clues and for people. Just this week, yesterday, in fact, the FBI asked Mexican authorities to be on the lookout for alleged al Qaeda operative Adnan El Shukrijumah.

Officials are very concerned about the porous Mexican and Canadian borders. An even bigger fear, though, is that there is a cell already here in the United States, Kitty.

Back to you.

PILGRIM: All right. Thanks very much.

Kelli Arena.

Now two leading senators today promised quick action to implement the recommendations of the September 11 commission. Yesterday, the commission warned that this country could face another catastrophic attack if there are not sweeping reforms in the intelligence community.

Sean Callebs reports from Washington.

(BEGIN VIDEOTAPE)

SEAN CALLEBS, CNN CORRESPONDENT (voice-over): Hot off the presses and a hot topic: 9/11 commission members don't want their urgent recommendations ending up on a shelf collecting dust.

BOB KERREY, 9/11 COMMISSION: I'm hopeful the Congress will deal with it, but, in the examination of what's going on right now in Congress and my own experience down there, I'm just not optimistic that it's going to happen anytime soon.

CALLEBS: Across the country, a call for action.

UNIDENTIFIED MALE: As soon as they can. I mean, you can't wait any longer.

CALLEBS: Some congressional leaders have said not so fast.

REP. DENNIS HASTERT (R-IL), HOUSE SPEAKER: Well, let me say we're not going to rush through anything. We're going to make sure that we look at this carefully.

CALLEBS: In a letter to Hastert, Nancy Pelosi, the ranking Democrat in the House, is urging Congress to vote on the recommendations before adjournment in October.

Pelosi says, "The sense of urgency conveyed by the commission's report and the responsibility we have to the victims of the 9/11 attacks and their families compels us to act now."

Commissioners contend the United States is still at risk, and, unless intelligence gathering is vastly improved, al Qaeda could successfully target the nation again. In what amounts to reaction at light speed by Washington standards, Senate leaders from both parties went to the floor hours after the report was released, calling for legislation by October 1.

COLLINS: Because of the urgency of this task, we will begin work right away.

CALLEBS: Senators are pledging to bring lawmakers back for rare August hearings on the recommendations. Commission members say the upcoming general election and congressional recess are no reasons to derail calls for a national intelligence director and a national counterterrorism center to better protect the country.

(END VIDEOTAPE)

CALLEBS: And in the past few minutes, we have received some information from Speaker Hastert as well as Majority Leader Tom DeLay. The two are calling for August hearings, and they would like the committees to have that information in a proposal by September so Congress can consider the measure before they adjourn in October.

Kitty, back to you.

PILGRIM: Thanks very much. Sean Callebs.

Now federal and local law-enforcement agencies are taking extraordinary measures to protect the Democratic convention in Boston which starts on Monday, and, today, there was word that Qaeda may not be the only terrorist group considering an attack.

Bob Franken reports from Boston.

(BEGIN VIDEOTAPE)

BOB FRANKEN, CNN NATIONAL CORRESPONDENT (voice-over): The fondest hope for Democrats is that their message from inside the FleetCenter is not overwhelmed by what happens outside, and there is massive security to make sure that the big story is the political one. On occasion, it gets real strict.

UNIDENTIFIED MALE: I went to the hotel, sir.

FRANKEN: Thousands of police -- local, state and federal -- visible and invisible are turning Boston into Fortress Boston. Much of Boston will simply be shut down.

The major highway that has become the city's in and out artery will be closed to traffic around and during convention hours because it passes right by the FleetCenter. In fact, workers are being asked to stay home for the duration, and a lot of business people are not happy about that at all.

The various protest groups are infuriated over what they call their holding pen, a fenced-in area across the street from the FleetCenter. The subway station at the site will be closed. Fences are going up around critical buildings and officials are working feverishly to identify threats before they become attacks.

One of the latest, says the FBI, is unconfirmed intelligence that someone may be planning to attack the large camp of media trailers with incendiary devices.

(END VIDEOTAPE)

FRANKEN: In any case, it's going to oftentimes be hard times getting from here to there, and there are going to be some hard feelings along the way. Security officials hope, Kitty, that that's the biggest problem they have -- Kitty.

PILGRIM: All right. Thanks very much.

Bob Franken.

Ahead of the Democratic convention, Senator Kerry today began a tour of battleground states with a visit to an Army hospital in Colorado. Senator Kerry is hoping his military record will convince veterans and those now in service to support him.

Elaine Quijano reports from Denver, Colorado. (BEGIN VIDEOTAPE)

ELAINE QUIJANO, CNN CORRESPONDENT: Senator John Kerry and his running mate, Senator John Edwards, kicked off a multistate pre- convention campaign swing not far from Senator Kerry's birthplace, an Army medical senator in Aurora, Colorado.

Now, speaking to a crowd of more than 3,000 people here in Denver, Senator Kerry said that the idea of service was fundamental to him and the reason he is running for president. The senator used the rally to announce a proposal, one that he says will benefit society on the whole and help make college accessible to individuals.

SEN. JOHN F. KERRY (D), MASSACHUSETTS: As president, I will offer a half a million Americans a year an opportunity to give back to our country, and I'll do so by giving four years of college tuition for two years of service to America. That's what we're going to do.

QUIJANO: The senator also touched on a number of other issues: among them, jobs, education, and security. Senator Kerry now heads to a number of key battleground states, including Iowa, Ohio and Pennsylvania, before finally making his way to his hometown of Boston to formally accept the Democrats' nomination for president on Thursday night.

Elaine Quijano, CNN, Denver, Colorado.

(END VIDEOTAPE)

PILGRIM: President Bush was also on the campaign trail today. Now the president traveled to Michigan to launch a new effort to win over African-American voters.

White House Correspondent Suzanne Malveaux joins us now from Crawford, Texas -- Suzanne?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Kitty, it was considered a bold political move by the president. This is an address that he gave before the National Urban League earlier today.

Now the president received a courteous reception by that organization. He tried to use humor in the beginning to warm up the crowd, acknowledging important members of the organization in the audience, Reverend Jesse Jackson, making a joke with Reverend Al Sharpton, saying it's harder to run for president than you think.

But he received tepid of applause from the audience when he highlighted his administration's accomplishments with the black community increases in small businesses, home ownership, money for historically black colleges.

But nearly 40 minutes into his speech, he surprised the audience. He addressed what so many were thinking, but too polite to say. The president talked about his relationship and the Republican Party's relationship with the black community.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm here to ask for your vote.

(APPLAUSE)

BUSH: You know, I know. I know. Listen, the Republican Party's got a lot of work to do. I understand that.

I'm here to say that there is an alternative this year. There's an alternative that has had a record that is easy to see. If you dream of starting a small business and building a nest egg and passing something of value to your children, take a look at my agenda.

(END VIDEO CLIP)

MALVEAUX: Now, without mentioning his Democratic opponent, Senator John Kerry, he suggested that the Democratic Party is taking the black vote for granted.

This, of course, comes as the administration tries to reach out to the black community. This comes, of course, in a political backdrop of polls showing nine out of 10 black voters voted for Gore back in 2000. Nine out of 10 likely to vote for the Kerry-Edwards ticket.

Also, it comes at a time when it was -- the president received quite a bit of criticism over his refusal to address the NAACP at their convention last week, after receiving some criticism from their leadership. The political calculus here, Kitty, is that every vote counts. It is worth it. Why not go for the black vote?

PILGRIM: Suzanne, another issue. The Pentagon tonight says it found the president's military payroll records from his Air National Guard service in July through September of '72. Now, originally, the Pentagon says that it lost those records. So what is the White House saying about that tonight?

MALVEAUX: Well, what those records are showing is that this is a gap essentially in flying time. It is a five-month gap, but the White House today saying that really does not make a difference.

You may remember back in February, that is when the White House released the president's National Guard records. They say that what that shows is that the president in the third quarter of 1972 did not perform service. What they say, however, it shows is that he completed all of his service between October of '72 and May of '73.

The bottom line here, they say, is that these records simply support what they have been saying all along, that he completed his 12 months, his required service, that he was honorably discharged.

Of course, Kitty, there are some who still want a more detailed accounting of where the president was during that time.

PILGRIM: OK. Thanks very much. Suzanne Malveaux.

Still to come, a major new development tonight in the investigation into security lapses at the Los Alamos National Laboratory. We'll have the story.

One day after the release of the 9/11 report, author Stephen Flynn says this country is still dangerously unprepared for a terrorist attack. Stephen Flynn is my guest.

President Bush and Senator Kerry are in a statistical dead heat less than four months before the election. Three leading journalists will give me their assessment of the very tight race for the White House.

And in Broken Borders, I'll be joined by two congressmen with opposing views on whether Mexicans living in this country should use Mexican government identity cards.

(COMMERCIAL BREAK)

PILGRIM: There's new fallout tonight from the investigation at the Los Alamos nuclear lab. Now the Energy Department today ordered all of its employees to stop using removable data drives like the ones reported missing from Los Alamos last week.

Energy Secretary Spencer Abraham announced that order today. It includes such removable drives as computer disks and Zip drives. The Energy Department did not say how long the order will last, but it does plan weekly inventories of the removable drives.

Now this announcement comes a day after Los Alamos said it suspended 19 employees as part of the investigation into security breaches.

The September 11 commission says terrorists will be able to launch another major attack in this country without -- that's if there are no major reforms in our intelligence community.

And my guest is Stephen Flynn. He's the author of "America the Vulnerable," and he says the United States is still dangerously unprepared for another terrorist attack. Stephen Flynn joins me now.

Your book is chilling, but I have to say, very well grounded in fact. You yourself served in the coast guard for a considerable period of time and have had a distinguished career in defending the borders of this country. What do you think is the biggest problem we face right now?

STEPHEN FLYNN, AUTHOR, "AMERICA THE VULNERABLE": Well, I have written a bit of a scary book in that it basically says that we remain a very soft target to terrorism, but it also -- about two-thirds of the book, I think, is dimensions of hope, that is there are practical things we can do right now that we must do with a greater sense of urgency that can make us much less of a target and much more resilient as a society, should the terrorists strike again. I think the biggest reason why we haven't had much -- as much effort as should be applied to dealing with our vulnerability here at home is because we're falling into the trap of treating this threat, the war on terrorism, as something we do overseas. That's how we've dealt with national security problems for almost two centuries -- certainly, the last century -- as an away game.

And our whole national security apparatus, our intelligence services and our armed forces are all geared towards warfighting overseas and not about protecting us here at home.

PILGRIM: All right. Let's refer to the 9/11 report, and I have a quote that I'd like to read. It says, "Since 9/11, about 90 percent of the nation's $5 billion in annual investment in transportation security has gone to aviation to fight the last war." What do you think we should do? How should we shift our focus, or should we just beef it up all around?

FLYNN: Well, we really need to focus on the other elements of our transportation system, like our ships and the maritime containers that come in on them, as well as our rail and truck sectors here.

You know, aviation security was really on September 10 Fort Knox compared to these other sectors. These sectors are wide open because security never was a priority. We lived in the most peaceful corner of the world for two centuries, with friendly neighbors to the north and south and big oceans to the east and west.

What I'm calling for is a step back to look at the transportation system as a system -- it's a global one -- and layering measures across.

One big suggestion I try to advocate for is what are called smart box. Moving from a container that we have today, a 40-foot by 8-foot by 8-foot box, that moves through the system virtually unchecked and unmonitored, putting technology in it to tell us where it's been and where it is and also what's going on inside of it.

It's about a $300- to $500-per-box technology, but the box is used five times a year. So it would cost about $20 a container to use.

Now that would not be a perfect cure. There is no silver bullet on this. But it begins a process of knowing where things are so that when you have intelligence, you can act on it without shutting the whole system down, and, if God forbid, something goes wrong, you can figure what part went wrong so you don't have to keep the whole thing shut down.

This will let people know what the stakes are here. If we had a terrorist incident involving a container -- and I write about this in my Chapter 2, the sort of next attack scenario -- involved in three, let's say, ports at the same time and our response is to close our ports down for a period of two to three weeks, we'll shut down the global trade system. And that's just not an abstract idea. That's the shelves in Wal- Mart go bare in two or three days. That's prescription drugs you can't get. That's assembly lines going idle virtually overnight because we live in a just-in-time world.

PILGRIM: Well, that's, in fact, the goal, is to shut down the economy, isn't it? The World Trade Center attack.

FLYNN: Well, this is a great source, I think, of my frustration, is warfare changed with the September 11 attack. Our current and future enemies are not going to take on our conventional forces toe- to-toe. We're so powerful there.

What they're doing is they're finding our weaknesses, and our weaknesses are these open economic networks that underpin our power. That's where they're coming.

But we're leaving them wide open and we're hoping to nip them in the bud somehow by using military force. I'm afraid it's not going to work.

PILGRIM: Yes. One last thing. Do you think that anything should be restructured in terms of the hierarchy of the intelligence systems? And that has been much discussed in the 9/11 report and elsewhere in Congress.

FLYNN: The intelligence, the problem with sharing intelligence amongst the federal agents, certainly has been long-standing.

But here's my biggest, I guess, call in the book here, which is to mobilize the rest of us and particularly the private sector that owns and operates this critical infrastructure. That's where, in fact, a lot of the new intelligence is going to come from.

Bring in private-sector industry representatives and giving them the clearances for participating in these groups. We have too much of keeping these issues close to the chest, while the American people are told to shop and travel.

You know, we all have got to be a part of this war effort. We all have to be because we're the targets, and our infrastructure is the targets, and focusing on this with great urgency is something that I really hope this book helps encourage Americans to do.

PILGRIM: What better than American business ingenuity.

FLYNN: Absolutely.

PILGRIM: Stephen Flynn.

Thank you so much for being here tonight.

FLYNN: Thank you for having me tonight.

PILGRIM: That brings us to the topic of tonight's poll: Do you believe the United States is better prepared for terrorist attack? Yes or no? Cast your vote at cnn.com/lou. We'll bring you the results later in the broadcast.

Coming up next, the presidential election could be a photo finish if the latest polls are any indication. We'll have the details on those polls, and we'll talk about it with a panel of newsmakers.

In Heroes, we'll introduce you to one of the Marines who fired one of the first shots of the war in Iraq. Just a few months later, he paid a heavy price for his country.

And thousands of people greeted the USS Ronald Reagan today as it arrived in its new home port with a very special passenger on board.

We'll have that and more coming up next.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Less than four months before the election, a number of new polls show that the race for the White House is too close to call, but, if history is any guide, that could all change next week with the Democratic convention.

Joining me now for more on the campaign and other news of the week are our newsmakers. Ron Brownstein is the national political correspondent for the "Los Angeles Times," and he joins us from Washington. CNN Senior Political Analyst Bill Schneider joins us from outside the FleetCenter in Boston where the convention begins on Monday. And joining me in New York is Mark Morrison, the managing editor of "BusinessWeek."

And thank you all for being here.

Bill, let's start with you in Boston. Now all the latest polls showing the race for the White House in a dead heat. Let's talk about this poll, a CNN/"USA Today"/Gallup poll, likely voters' choice for president, Kerry 49 percent, Bush 47 percent, but the sampling error is 3.5 percent. So it's prettying neck and neck, right?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Neck and neck, right, but let me tell you something. We've seen about a dozen polls coming out in the last week, all of them too close to call, but all of them showing Kerry slightly ahead. So, statistically, if you put them all together, what you come up with is a conclusion: Kerry really must be slightly ahead, when you've got a dozen polls all showing the same thing.

PILGRIM: OK. That's your interpretation of it. Let's get everyone else in on this, and let's start with Ron Brownstein because he's so remote.

Ron, what's your analysis of this neck-and-neck situation?

RON BROWNSTEIN, "LOS ANGELES TIMES": Well, I agree. You know, I agree with Bill. We have a poll out today in the "L.A. Times" also with a two-point lead for John Kerry in a three-way race including Ralph Nader.

The key point that comes out to me from my poll -- our poll as well as these other polls is that, Kitty, right now, the audience for change is slightly larger than the audience for John Kerry, and what I mean by that is that when you ask people if the country is on the right track or the wrong track, you have the majority saying wrong track. You have a narrow majority in most polls now saying the war in Iraq was a mistake.

President Bush's approval rating is right at 50 percent or below. There does seem to be a tentative majority out there open to the idea of changing directions. The question is whether Kerry can sell himself to those voters as an acceptable alternative, and that really frames, I think, the task at the Democratic convention ahead for him next week.

PILGRIM: OK. Let's get Mark in on this.

MARK MORRISON, "BUSINESSWEEK": Well, as Ron suggests, Iraq keeps eating away at the president's popularity. I think the effort there keeps getting more unpopular, and, of course, the economy, which just a month or six weeks ago looked like a slam dunk for the president and for the administration's side, is now looking a little wobbly. And you saw the stock market break below 10,000 today. Investors are pretty grumpy, and a lot of them are voters.

PILGRIM: All right. You know, the poll that I find absolutely fascinating is one about enthusiasm over voting, and it shows that 60 percent of people are now very enthusiastic about voting, more than usual, and, in October 2000, that was only 38 percent. So it does show that things are -- that people are very, very connected to this election.

Bill, what's your analysis on it?

SCHNEIDER: It means everything has changed since 2000, even though then it was 50-50 and now it's 50-50. But, you know, there are two kinds of 50-50s. There's a 50-50 result where people say I don't know, whatever, Bush, Gore, Gore, Bush, I could live with either one of them. That was October 2000 three weeks before the election.

Now we're three-and-a-half months before the election, but it's a different kind of 50-50. Now people are saying we're pumped, we're ready to vote tomorrow, we are really energized by this election. This is a real intense division that really wasn't there four years ago.

PILGRIM: Ron, we've barely had a summer. It doesn't look like we'll get one. How about that?

BROWNSTEIN: Well, you know, Kitty, these numbers really reflect what we've been seeing all year. They're another manifestation of, as Bill said, the intensity of feeling. The fact that George Bush has raised more money than any presidential candidate ever and then John Kerry came out and raised, you know, nearly $200 million himself, more than any Democrat ever is also a reflection of the fact. We have a country in which there are a lot of people who feel deeply about this on one side or the other, reflected in the polarization of the opinion polls on Bush's job approval. The intriguing thing is that, in the end, it probably comes down to those -- the last 10 percent or 8 percent who don't feel as intensely, and part of the challenge for these candidates is to present themselves in a way that is still acceptable to that last sliver of less ideological voters who will decide this thing, while maintaining and responding to that intense emotion in the base.

PILGRIM: Well, let's -- Mark, I just want to bring up this other poll, which shows that people have made up their mind. The poll on voting intentions shows mind made up 83 percent, and 13 percent could change their mind. It seems very heavily skewed to people who...

MORRISON: Right. Well, people have very strong feelings, and I think the negatives on Bush are what's driving the whole process. There's just a lot of feeling -- negative feelings about the war, and that is driving people's interests, I think, and showing up in the polls.

And it presents a huge opportunity for Senator Kerry, if he can step up to opportunity that he has in this convention to show that he really is a strong enough person, individual to be a leader in a wartime situation. This is an area where Bush still polls stronger, is in the area of who is the best security guy.

PILGRIM: All right. While we're -- go ahead.

BROWNSTEIN: I just wanted to make a quick point. This isn't 1992 or 1980 where you have an overwhelming consensus for change and a clear majority saying they believe the president has failed. But what you do see in the polls is a slight tilt on many of these questions against President Bush. He seems to hover below 50 percent in his vote, just 50 percent in his approval. Slight majority saying the war was a mistake. A larger majority saying that we're on the wrong track. All of these really underscore what Mark was just saying.

There is an opportunity there for Kerry. It's not a slam dunk, but there is a crack in the door in the sense there is a constituency out there open to the idea of change. Now, whether he can convince them that he is acceptable change is something else. Bush is putting a lot of effort trying to disqualify Kerry. They have a lot of money left over that they have to spend before their convention in September. The Democrats are bracing for another big ad assault in August around the message that John Kerry is not someone you can entrust with the presidency in these kind of times.

PILGRIM: Bill, I can see you're dying to say something. Go ahead.

SCHNEIDER: In this hall behind me, next week there are going to be 5,000 Democrats who are defined as being furious at George Bush, angry about the war, and they want to shout and they want to scream and they want to vent. That is something John Kerry really can't afford. He can't afford a Howard Dean convention. Democrats figured out very quickly last winter, they weren't going to nominate Dean because he couldn't get elected.

Kerry has to be very careful to tell those delegates and the speakers, put a lid on it. Don't be too harsh, too shrill in attacking President Bush. Because the voters are not going to want to trade a president who is dividing the country from the right for another president who's going to divide the country from the left. So the speakers are getting the message, be moderate. We're going to present ourselves as people who can unify the country. That's going to be very tough in this convention hall.

PILGRIM: Mark, what do you think about it?

MORRISON: I think Bill's exactly right. I think if a very negative convention shows up on the air for people to watch, it's going to be a big turnoff. And Kerry's challenge here is to be very positive and come up with parts of his economic plan that will really commit to growth, to opportunity for people, and instead of -- and get away from the perception that he's just bashing the Bush tax cuts, and he's going to reverse that, and redistribute a lot of income to the middle and lower classes.

PILGRIM: It's going to be a great week. Can't wait. And thanks very much for joining us to sort it out in advance. Mark Morrison, Ron Brownstein and Bill Schneider, thank you very much.

The USS Ronald Reagan sailed into the home port of San Diego for the first time, and thousands of people cheered the new aircraft carrier as it arrived at the naval station. A former first Lady Nancy Reagan was helicoptered to the ship just before it arrived. And she said the ceremony just seven weeks after her husband's death was bittersweet.

(BEGIN VIDEO CLIP)

NANCY REAGAN, WIFE OF RONALD REAGAN: Ronnie would have loved the sight of this great ship coming into his beloved California. I know how proud he was to have this ship named after him. And in my heart, I know he's looking down on us today and smiling.

(END VIDEO CLIP)

PILGRIM: The USS Ronald Reagan is nearly 1100 feet long, rises 20 stories out of the water. Now, the nuclear powered ship also has an on board museum, it's dedicated to the late president.

Let's turn now to our feature series, "Heroes." Tonight the story of Major Jason Frei. He lost a hand and most of his forearm in Iraq. Now, Major Frei returned home and faced the most difficult decision of his life.

Casey Wian has the story from Oceanside, California.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT, (voice-over): Major Jason Frei's 10-year Marine Corps career is winding down at a desk. But part of him literally remains on an Iraqi battlefield when he lost his right hand and most of his forearm.

MAJOR FREI, U.S. MARINES: Anybody in the marine corps would rather get out in the field and do stuff out there, than get stuck typing.

WIAN: Then Captain Frei was part of the 1st Battalion 11th Marines. His artillery brigade known as the Cannon Cockers fired the first shots of the war. In March of last year, five minutes after Frei snapped his photo, his unit was ambushed during a sandstorm.

MAJOR FREI, U.S. MARINES: I was sitting in the front seat reading a map. The RPG came you can see here from the back, and hit the door here, and that set it off. Now, my arm stops about here. It came through, hit me there. It was a little bit of a shock. Imagine if you're sitting and somebody sucker punches you. There was concussion, and I looked down. And I can't remember if I saw it first, or felt it first. Or, you know, some combination in between. And I could see, you know, could look down and see that your hand -- my hand was gone.

WIAN: Frei tide a radio cord around his arm to stop the bleeding, took cover and was pinned down for an hour and a half before the enemy was subdued. Because of the sandstorm, it took 28 hours for Frei to be evacuated to a surgical station. In the past year, Frei has fought to stay a Marine, But ultimately deciding it would be best for his family to retire.

FREI: If it was up to me, if it was you know, Captain Frei alone and unafraid, I would stay in for 35 years until they drug me out. You can't -- I can't imagine finding a better group of people than working around these young Marines. You've got 18, 19-year-old kids who are doing absolutely amazing things. In the civilian world, they wouldn't be trusted to run a copier, and they're out there making life and death situations and doing it well.

WIAN: Promoted Major this month, Frei starts a new career this fall, pursuing a masters at the University of Notre Dame.

Casey Wian, CNN, Oceanside, California.

(END VIDEOTAPE)

PILGRIM: "Tonight's Thought" is on heroes. "We must be prepared to make heroic sacrifices for the cause of peace that we make ungrudgingly for the cause of war. There is no task that is more important or closer to my heart." Those are the words of Albert Einstein.

Still ahead here tonight, "Broken Borders," Congress debates whether Mexican immigrants and illegal aliens should be allowed to open bank accounts using identification cards from Mexico. And we'll talk to two Congressmen on either side of the issue next.

Plus, our special report on space, "Mission Critical." We'll look at the most profit al segments of the space industry. Revenue has nearly tripled in less than 10 years. And then controversy, a federal judge orders a potato chip company to stop making some claims about its products.

Those stories and much more still ahead tonight.

(COMMERCIAL BREAK)

PILGRIM: In "Broken Borders" tonight, the controversy over whether immigrants and illegal aliens should be allowed to use Mexican identification cards to open bank accounts in this country. Now, this week the House Appropriations Committee upheld a measure that would prevent banks from accepting the Matricula Consular cards.

I'm joined now by two members of Congress with sharply different views on the matter. Congressman John Culbertson of Texas introduced the House amendment. And he says, accepting Mexican I.D. cards in this country could threaten our national security.

But Congressman Xavier Becerra of California says without the cards, many immigrants would have no identification at all.

Now both of them join us from Washington. And thanks very much for being with us.

Congressman Culbertson, let's start with you. You do think it's a threat to national security. Why?

REP. JOHN CULBERTSON, (R) TEXAS: Well, the FBI, the Department of Justice, and the Department of Homeland Security have all concluded that the matriculate consular is not a reliable form of identification, because it is based on an unreliable Mexican birth certificate which cannot be verified. They're easy to forge. And there's no central data base in Mexico.

And we're at war. And you cannot win the war on terror until we protect our borders and know who's coming into the country. And I know my colleague from California shares my focus on winning the war on terror and properly identifying people coming into the United States. So my amendment is designed to eliminate this regulation, eliminate this form of identification that all the federal law enforcement authorities say is unreliable.

And I filed this amendment because I was informed by federal law enforcement authorities in the Houston area that there's a growing number of Middle Eastern, very suspicious people coming over from -- with Islamic surnames, changing their surnames to Hispanic surnames, entering the country under a false Hispanic surname.

These are from Islamic countries with known terrorist connections. And these individuals, using these false Hispanic names are disappearing in small rural areas in South Texas and across the country. And that's a real source of concern. And we've got to flush them out.

PILGRIM: Congressman Becerra, compelling argument. And many do say these are documents of low reliability, these Mexican birth certificates, because they can be forged. What's your answer to this?

REP. XAVIER BECERRA, (D) CALIFORNIA: Kitty, I think what John is trying to do is -- he has the right intent, unfortunately, it has the wrong application. Because rather than make us safer, it will probably make us less safe, because these are individuals who are getting these consular I.D.s, which by the way, is about as good as any I.D. we get in any state, it relies on a birth certificate, for example, to be able to secure that I.D.

If we don't give them I.D.s and, therefore, they walk around this country without any form of legitimate I.D., then we can't track them at all. And they go further underground. What we need to do is understand what the L.A. Police Department, in fact, about 800 police departments around the nation has said, along with this Secretary of Treasury in the Treasury Department have said, and that is, let's get these folks to get some I.D.s. that way we don't have to worry about the fraudulent I.D.s.

Remember that the 9/11 terrorists didn't have a Mexican I.D., they had U.S. I.D.s. So, the problem with fraudulent documents exists whether it's a Mexican birth certificate that's used, or an American birth certificate that's used.

We have to if focus on trying stopping the terrorists. And this actually diverts resources from treasury, from justice, from FBI to doing something that really is not going to make us any safer, because if folks were trying to harm us, are not these folks who are trying to open up a savings, a passbook savings account, or open up a checkbook -- checking account for the first time. We really should target those who are trying to infiltrate our borders.

We inspect 2 percent of all the cargo containers that come into this country. These are massive containers. Who knows what they could contain. And we only inspect 2 percent of those that are filled. Those that are empty don't even get opened. We have a lot to do. This is going to divert resources and really not make us any safer.

CULBERSTON: The issue today is, we are at war with individuals trying to sneak into the country under false identities. And I have new information from federal law enforcement officials in Texas who are very alarmed by a growing trend of Islamic individuals coming into the country, changing their Islamic surnames to Hispanic surnames, blending into the thousands of illegal aliens coming into the country.

BECERRA: John, that's...

CULBERTSON: It's a real source of concern. And in a time of war, we've got to identify who these people are and make sure that law enforcement can find them.

And the choice is really, we have to decide whether we come down on the side of the bankers, or we go with law enforcement. When it comes to what is a valid I.D., to open a bank account. And I come down on the side of law enforcement.

BECERRA: The difficulty with the argument there is law enforcement has actually said, please let us have these I.D.s.

CULBERTSON: Local law enforcement.

BECERRA: By the way, the Treasury Department and the White House came out opposed to John's idea, because they believe it will make it more difficult for them not just to enforce regular law enforcement activities, but it also would make it more difficult for them to enforce banking laws.

PILGRIM: Let's talk about this whole issue, because a lot of these people are forced to walk around with cash, because they simply cannot have access to banks. Is that a huge problem?

BECERRA: Not only do they walk around with cash, and are prey to those who wish to abuse them to begin with, but they stay out of the mainstream. We can't track them. Local law enforcement can't identify them very well.

And certainly the FBI can't identify them if they don't have any type of I.D. At least if they're carrying some I.D., we have a basis to track who they really are.

CULBERTSON: A phony I.D...

BECERRA: Without it, you're going to give yourself no chance to really track these folks. And quite honestly, they're not the folks that are trying to infiltrate our power plants, our nuclear power plants, our ports...

(CROSSTALK)

PILGRIM: Let's get Congressman Culbertson in on this.

CULBERTSON: The danger is, the terrorists are hiding among these people. The terrorists we know from law enforcement officials in Texas, we now know that they're seeing a growing number of these individuals who are changing their Islamic surnames to Hispanic, blending into the population.

A phony I.D. and a false name is worse -- is a really dangerous situation. And it's important to realize that the United States Department of Homeland Security, the United States Department of Justice and the FBI are all strenuously opposed to the use of this I.D. It's only the Treasury Department and the banks that want to accept this I.D. The White House is split. The administration is split on this, because you've got...

BERCERRA: John, John...

CULBERTSON: Because you've got federal law enforcement on one side and the banks on the others. And I choose to come down on the side of law enforcement in the time of war. We cannot win the war on terror until we protect our borders. And we've simply got to deal with this serious problem.

(CROSSTALK) BERCERRA: I trust the local law enforcement -- I trust those who are telling me that we need to enforce the law every day. The FBI may say they have concerns, but they say they have concerns with all sorts of I.D.s. We don't make ourselves safer by going after folks who are not going to be holding bombs.

CULBERTSON: Well, the bottom line is, we need to get the federal law enforcement officials in the loop on this treasury regulation and we need to repeal this regulation in order to make sure...

(CROSSTALK)

PILGRIM: Gentlemen, I wish we could sort this out...

(CROSSTALK)

PILGRIM: Thank you so much.

We are totally out of time. Not an easy issue. And thank you for helping us consider it. Congressman John Culbertson and Congressman Xavier Becerra, thank you.

A reminder now to vote in tonight's poll, "Do you believe the United States is better prepared for a terrorist attack?" Yes or No. Cast your vote at CNN.com/lou. We'll bring the results later in the broadcast.

Turning now to a lighter topic, Frito Lay has been ordered to stop saying that its Lay's brand is preferred -- the preferred potato chip for the people in the Chicago area. A federal judge says the company cannot prove that Frito Lay engage in a form of chip cheating.

In taste tests, the company labeled its chips, classic and named rival brand Jay's Chips Unflavored. Now, chip testers were not allowed -- were also not asked if they're Chicago residents.

Now, the judge said Lay's appeared to be motivated by greed and deceived the public.

All right, when we return: Mission Critical, the future of the space of industry. The space industry is becoming more profitable. And American firms are finding more competition overseas. We'll have our special report next.

(COMMERCIAL BREAK)

PILGRIM: Now "Mission Critical," our series of special reports on the future of space exploration. And tonight, we focus on one aspect of the space industry where there is growing competition and revenue. Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): An American-built satellite launched in South America on a European rocket to bring high-speed Internet access and telephone service to remote parts of the United States and Canada. Total cost to build, launch and insure? $600 million.

The cost will pay off quickly. That's because it's the largest communication services satellite ever launched. And communications services are where the money is in space.

DAVID CAVOSSA, SATELLITE INDUSTRY ASSOCIATION; That's almost 60 percent of the revenues. Perhaps even 65 percent of the total revenues for the satellite industry. Total revenues, global for the satellite industry, are about $90 billion for 2003. And of that, about $60 billion of that is the services sector.

TUCKER: Direct broadcast services like Echo Star and Direct TV produce nearly $50 billion of that revenue. Business networks, like the ones which connect Wal-Mart stores to its headquarters in Benton, Arkansas, or the ATM at a gas station to a bank account for another roughly $7 billion.

And then there are satellites which provide us with the now ubiquitous GPS services. The military is another big buyer of commercial services. Being in space is financially worthwhile. But building and launching satellites is not.

JOHN DOUGLASS, AEROSPACE INDUSTRIES ASSOCIATION: It's an industry that's turned out to be more cyclic than we thought it would be. Satellites last longer than we thought they were going to last. The demand globally has been lower than we thought it would be.

TUCKER: Since 1996, revenue in the satellite sector has nearly tripled from $38 billion to $91 billion. The U.S. satellite industry accounts for about half that revenue. Bill Tucker, CNN, New York.

(END VIDEOTAPE)

PILGRIM: Still ahead, we'll share some of your thoughts and many of you wrote in about a joint declaration between the United States and Mexico.

Plus, Microsoft is creating thousands of new jobs. But only some of them are in the United States. We'll have the details next.

(COMMERCIAL BREAK)

PILGRIM: On Wall Street, the Dow closed below 10,000 for the first time in two months. The Dow fell 88 points to 9962. The Nasdaq lost almost 40 and the S&P dropped more than ten. Christine Romans is here with that.

CHRISTINE ROMANS, CNN CORRESPONDENT: Kitty, it's turning out to be a cruel summer for stocks. The longest losing streak now for stocks in almost two years, weekly losing streak. The Nasdaq closed at the lowest today in ten months. Oil spent an eighth day above $40 per barrel. Earnings growth 23 percent is great, but it's probably peaked. And there are concerns about the pace of jobs growth.

Now, one company adding to its 57,000-strong workforce, Microsoft, hiring up to 7,000 workers this year to fill vacant spots and to fill new spots. The company plans to add about 3,000 workers in the Redmond, Washington area. Microsoft said it is committed to that region, and its well-being. It is the company's headquarters.

It's also committed, though, to India. Microsoft will be hiring there. It won't say exactly how many. But it says it is exploring and evaluating the opportunities in India. Kitty, Microsoft is already on the list of companies exporting American jobs to cheap overseas labor markets. But today a milestone we crossed. 900, the number of companies we have confirmed to be shipping jobs overseas.

PILGRIM: Thanks very much. Christine Romans.

ROMANS: You're welcome.

PILGRIM: Let's take a look at some of your thoughts. And many of you wrote in about the joint declaration between the U.S. Department of Labor and Mexico which is aimed at protecting immigrants and illegal aliens working in this country.

Now George Pilleri of Middletown, New Jersey writes, "Vincente Fox is concerned about improving the quality of life of Mexicans in the U.S. he should be that concerned about citizens in his own country."

Bill Kiker of Henderson, Nevada. "Is there any chance that we can get the Mexican secretary of labor to come to the United States and protect American workers?"

And Christia of Louisville, Kentucky wrote the following -- the White House suggestion that education is the answer to outsourcing. And this is what she writes. "The White House needs a dose of reality. I have three degrees, $40,000 in school loans, a son in college, and no job. Their answer is still re-train. My question is, for what? I can't re-train faster than the jobs go overseas."

Robert Floden of New Hampton, Iowa. "Isn't it double jeopardy? We export jobs overseas at the same time we import illegal aliens to fill jobs here." Do e-mail us at loudobbs@CNN.com.

Still ahead, we have the results of tonight's poll.

(COMMERCIAL BREAK)

PILGRIM: Now the results of tonight's poll. "Do you believe the United States is better prepared for a terrorist attack?" 13 percent of you said yes. 87 percent said no.

Thanks for joining us tonight. Please join us Monday. Presidential candidate Ralph Nader is our guest and I'll also be joined by Terry McAuliffe, chairman of the Democratic National Committee and former New York governor Mario Cuomo.

We begin a new series of special reports, "Middle Class Squeeze."

For all of us here, good night from New York. Have a great weekend. "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 July 23, 2004 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KITTY PILGRIM, CNN ANCHOR: Chilling warning that al Qaeda is planning another attack against the United States. Now this warning come as the September 11 commission says the United States is still at risk of catastrophic attack.
(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: Because of the urgency of this task, we will begin work right away.

(END VIDEO CLIP)

PILGRIM: Also tonight, is the government doing enough to protect us from another terrorist attack? Stephen Flynn, author of "America the Vulnerable," says this country is still dangerously unprepared.

President Bush and Senator Kerry launch new offenses in their election campaigns. As Democrats prepare for their convention, the polls are breathtaking. Three leading journalists will give me their assessment of the race for the White House.

And the inspiring story of a U.S. Marine starting a new life after being severely wounded in Iraq.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I can't imagine finding a better group of people than working around these young Marines.

(END VIDEO CLIP)

PILGRIM: Tonight, Heroes, a special report.

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, July 23. Here now for an hours of news, debate and opinion, sitting in for Lou Dobbs who is on vacation, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight, a warning that al Qaeda plans another attack against the United States. A senior CIA official says the intelligence community has "fairly specific information that al Qaeda is preparing an attack." Yesterday, the September 11 commission warned Americans are still not safe from terrorism.

Justice Correspondent Kelli Arena has the report -- Kelli?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Kitty, as you know, we've heard for more than a month about the very real possibility of an attack on U.S. soil between now and the presidential election.

But senior intelligence officials are now saying that it's more than just chatter. They say, as you said earlier, there is credible and fairly specific information that al Qaeda is poised to attack." It's just not specific enough.

(BEGIN VIDEO CLIP)

TOM RIDGE, SECRETARY OF HOMELAND SECURITY: Although we know not the time and the place and the method, credible reports indicate that al Qaeda is moving forward with its plans to carry out a large-scale attack against the United States.

(END VIDEO CLIP)

ARENA: Al Qaeda operatives recently captured in countries, including Saudi Arabia, Pakistan and Afghanistan, are providing useful information, according to officials. That information in part suggests that the attack is being coordinated by Osama bin Laden himself.

But intelligence is not just coming from detainees, it's coming from multiple sources, and it is consistent. Officials say the threat is a serious as it was in the summer of 2001. That was just before the September 11 attack.

And the concern is not only focused on al Qaeda, but splinter groups that have emerged all around the globe. FBI agents continue to search for clues and for people. Just this week, yesterday, in fact, the FBI asked Mexican authorities to be on the lookout for alleged al Qaeda operative Adnan El Shukrijumah.

Officials are very concerned about the porous Mexican and Canadian borders. An even bigger fear, though, is that there is a cell already here in the United States, Kitty.

Back to you.

PILGRIM: All right. Thanks very much.

Kelli Arena.

Now two leading senators today promised quick action to implement the recommendations of the September 11 commission. Yesterday, the commission warned that this country could face another catastrophic attack if there are not sweeping reforms in the intelligence community.

Sean Callebs reports from Washington.

(BEGIN VIDEOTAPE)

SEAN CALLEBS, CNN CORRESPONDENT (voice-over): Hot off the presses and a hot topic: 9/11 commission members don't want their urgent recommendations ending up on a shelf collecting dust.

BOB KERREY, 9/11 COMMISSION: I'm hopeful the Congress will deal with it, but, in the examination of what's going on right now in Congress and my own experience down there, I'm just not optimistic that it's going to happen anytime soon.

CALLEBS: Across the country, a call for action.

UNIDENTIFIED MALE: As soon as they can. I mean, you can't wait any longer.

CALLEBS: Some congressional leaders have said not so fast.

REP. DENNIS HASTERT (R-IL), HOUSE SPEAKER: Well, let me say we're not going to rush through anything. We're going to make sure that we look at this carefully.

CALLEBS: In a letter to Hastert, Nancy Pelosi, the ranking Democrat in the House, is urging Congress to vote on the recommendations before adjournment in October.

Pelosi says, "The sense of urgency conveyed by the commission's report and the responsibility we have to the victims of the 9/11 attacks and their families compels us to act now."

Commissioners contend the United States is still at risk, and, unless intelligence gathering is vastly improved, al Qaeda could successfully target the nation again. In what amounts to reaction at light speed by Washington standards, Senate leaders from both parties went to the floor hours after the report was released, calling for legislation by October 1.

COLLINS: Because of the urgency of this task, we will begin work right away.

CALLEBS: Senators are pledging to bring lawmakers back for rare August hearings on the recommendations. Commission members say the upcoming general election and congressional recess are no reasons to derail calls for a national intelligence director and a national counterterrorism center to better protect the country.

(END VIDEOTAPE)

CALLEBS: And in the past few minutes, we have received some information from Speaker Hastert as well as Majority Leader Tom DeLay. The two are calling for August hearings, and they would like the committees to have that information in a proposal by September so Congress can consider the measure before they adjourn in October.

Kitty, back to you.

PILGRIM: Thanks very much. Sean Callebs.

Now federal and local law-enforcement agencies are taking extraordinary measures to protect the Democratic convention in Boston which starts on Monday, and, today, there was word that Qaeda may not be the only terrorist group considering an attack.

Bob Franken reports from Boston.

(BEGIN VIDEOTAPE)

BOB FRANKEN, CNN NATIONAL CORRESPONDENT (voice-over): The fondest hope for Democrats is that their message from inside the FleetCenter is not overwhelmed by what happens outside, and there is massive security to make sure that the big story is the political one. On occasion, it gets real strict.

UNIDENTIFIED MALE: I went to the hotel, sir.

FRANKEN: Thousands of police -- local, state and federal -- visible and invisible are turning Boston into Fortress Boston. Much of Boston will simply be shut down.

The major highway that has become the city's in and out artery will be closed to traffic around and during convention hours because it passes right by the FleetCenter. In fact, workers are being asked to stay home for the duration, and a lot of business people are not happy about that at all.

The various protest groups are infuriated over what they call their holding pen, a fenced-in area across the street from the FleetCenter. The subway station at the site will be closed. Fences are going up around critical buildings and officials are working feverishly to identify threats before they become attacks.

One of the latest, says the FBI, is unconfirmed intelligence that someone may be planning to attack the large camp of media trailers with incendiary devices.

(END VIDEOTAPE)

FRANKEN: In any case, it's going to oftentimes be hard times getting from here to there, and there are going to be some hard feelings along the way. Security officials hope, Kitty, that that's the biggest problem they have -- Kitty.

PILGRIM: All right. Thanks very much.

Bob Franken.

Ahead of the Democratic convention, Senator Kerry today began a tour of battleground states with a visit to an Army hospital in Colorado. Senator Kerry is hoping his military record will convince veterans and those now in service to support him.

Elaine Quijano reports from Denver, Colorado. (BEGIN VIDEOTAPE)

ELAINE QUIJANO, CNN CORRESPONDENT: Senator John Kerry and his running mate, Senator John Edwards, kicked off a multistate pre- convention campaign swing not far from Senator Kerry's birthplace, an Army medical senator in Aurora, Colorado.

Now, speaking to a crowd of more than 3,000 people here in Denver, Senator Kerry said that the idea of service was fundamental to him and the reason he is running for president. The senator used the rally to announce a proposal, one that he says will benefit society on the whole and help make college accessible to individuals.

SEN. JOHN F. KERRY (D), MASSACHUSETTS: As president, I will offer a half a million Americans a year an opportunity to give back to our country, and I'll do so by giving four years of college tuition for two years of service to America. That's what we're going to do.

QUIJANO: The senator also touched on a number of other issues: among them, jobs, education, and security. Senator Kerry now heads to a number of key battleground states, including Iowa, Ohio and Pennsylvania, before finally making his way to his hometown of Boston to formally accept the Democrats' nomination for president on Thursday night.

Elaine Quijano, CNN, Denver, Colorado.

(END VIDEOTAPE)

PILGRIM: President Bush was also on the campaign trail today. Now the president traveled to Michigan to launch a new effort to win over African-American voters.

White House Correspondent Suzanne Malveaux joins us now from Crawford, Texas -- Suzanne?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Kitty, it was considered a bold political move by the president. This is an address that he gave before the National Urban League earlier today.

Now the president received a courteous reception by that organization. He tried to use humor in the beginning to warm up the crowd, acknowledging important members of the organization in the audience, Reverend Jesse Jackson, making a joke with Reverend Al Sharpton, saying it's harder to run for president than you think.

But he received tepid of applause from the audience when he highlighted his administration's accomplishments with the black community increases in small businesses, home ownership, money for historically black colleges.

But nearly 40 minutes into his speech, he surprised the audience. He addressed what so many were thinking, but too polite to say. The president talked about his relationship and the Republican Party's relationship with the black community.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm here to ask for your vote.

(APPLAUSE)

BUSH: You know, I know. I know. Listen, the Republican Party's got a lot of work to do. I understand that.

I'm here to say that there is an alternative this year. There's an alternative that has had a record that is easy to see. If you dream of starting a small business and building a nest egg and passing something of value to your children, take a look at my agenda.

(END VIDEO CLIP)

MALVEAUX: Now, without mentioning his Democratic opponent, Senator John Kerry, he suggested that the Democratic Party is taking the black vote for granted.

This, of course, comes as the administration tries to reach out to the black community. This comes, of course, in a political backdrop of polls showing nine out of 10 black voters voted for Gore back in 2000. Nine out of 10 likely to vote for the Kerry-Edwards ticket.

Also, it comes at a time when it was -- the president received quite a bit of criticism over his refusal to address the NAACP at their convention last week, after receiving some criticism from their leadership. The political calculus here, Kitty, is that every vote counts. It is worth it. Why not go for the black vote?

PILGRIM: Suzanne, another issue. The Pentagon tonight says it found the president's military payroll records from his Air National Guard service in July through September of '72. Now, originally, the Pentagon says that it lost those records. So what is the White House saying about that tonight?

MALVEAUX: Well, what those records are showing is that this is a gap essentially in flying time. It is a five-month gap, but the White House today saying that really does not make a difference.

You may remember back in February, that is when the White House released the president's National Guard records. They say that what that shows is that the president in the third quarter of 1972 did not perform service. What they say, however, it shows is that he completed all of his service between October of '72 and May of '73.

The bottom line here, they say, is that these records simply support what they have been saying all along, that he completed his 12 months, his required service, that he was honorably discharged.

Of course, Kitty, there are some who still want a more detailed accounting of where the president was during that time.

PILGRIM: OK. Thanks very much. Suzanne Malveaux.

Still to come, a major new development tonight in the investigation into security lapses at the Los Alamos National Laboratory. We'll have the story.

One day after the release of the 9/11 report, author Stephen Flynn says this country is still dangerously unprepared for a terrorist attack. Stephen Flynn is my guest.

President Bush and Senator Kerry are in a statistical dead heat less than four months before the election. Three leading journalists will give me their assessment of the very tight race for the White House.

And in Broken Borders, I'll be joined by two congressmen with opposing views on whether Mexicans living in this country should use Mexican government identity cards.

(COMMERCIAL BREAK)

PILGRIM: There's new fallout tonight from the investigation at the Los Alamos nuclear lab. Now the Energy Department today ordered all of its employees to stop using removable data drives like the ones reported missing from Los Alamos last week.

Energy Secretary Spencer Abraham announced that order today. It includes such removable drives as computer disks and Zip drives. The Energy Department did not say how long the order will last, but it does plan weekly inventories of the removable drives.

Now this announcement comes a day after Los Alamos said it suspended 19 employees as part of the investigation into security breaches.

The September 11 commission says terrorists will be able to launch another major attack in this country without -- that's if there are no major reforms in our intelligence community.

And my guest is Stephen Flynn. He's the author of "America the Vulnerable," and he says the United States is still dangerously unprepared for another terrorist attack. Stephen Flynn joins me now.

Your book is chilling, but I have to say, very well grounded in fact. You yourself served in the coast guard for a considerable period of time and have had a distinguished career in defending the borders of this country. What do you think is the biggest problem we face right now?

STEPHEN FLYNN, AUTHOR, "AMERICA THE VULNERABLE": Well, I have written a bit of a scary book in that it basically says that we remain a very soft target to terrorism, but it also -- about two-thirds of the book, I think, is dimensions of hope, that is there are practical things we can do right now that we must do with a greater sense of urgency that can make us much less of a target and much more resilient as a society, should the terrorists strike again. I think the biggest reason why we haven't had much -- as much effort as should be applied to dealing with our vulnerability here at home is because we're falling into the trap of treating this threat, the war on terrorism, as something we do overseas. That's how we've dealt with national security problems for almost two centuries -- certainly, the last century -- as an away game.

And our whole national security apparatus, our intelligence services and our armed forces are all geared towards warfighting overseas and not about protecting us here at home.

PILGRIM: All right. Let's refer to the 9/11 report, and I have a quote that I'd like to read. It says, "Since 9/11, about 90 percent of the nation's $5 billion in annual investment in transportation security has gone to aviation to fight the last war." What do you think we should do? How should we shift our focus, or should we just beef it up all around?

FLYNN: Well, we really need to focus on the other elements of our transportation system, like our ships and the maritime containers that come in on them, as well as our rail and truck sectors here.

You know, aviation security was really on September 10 Fort Knox compared to these other sectors. These sectors are wide open because security never was a priority. We lived in the most peaceful corner of the world for two centuries, with friendly neighbors to the north and south and big oceans to the east and west.

What I'm calling for is a step back to look at the transportation system as a system -- it's a global one -- and layering measures across.

One big suggestion I try to advocate for is what are called smart box. Moving from a container that we have today, a 40-foot by 8-foot by 8-foot box, that moves through the system virtually unchecked and unmonitored, putting technology in it to tell us where it's been and where it is and also what's going on inside of it.

It's about a $300- to $500-per-box technology, but the box is used five times a year. So it would cost about $20 a container to use.

Now that would not be a perfect cure. There is no silver bullet on this. But it begins a process of knowing where things are so that when you have intelligence, you can act on it without shutting the whole system down, and, if God forbid, something goes wrong, you can figure what part went wrong so you don't have to keep the whole thing shut down.

This will let people know what the stakes are here. If we had a terrorist incident involving a container -- and I write about this in my Chapter 2, the sort of next attack scenario -- involved in three, let's say, ports at the same time and our response is to close our ports down for a period of two to three weeks, we'll shut down the global trade system. And that's just not an abstract idea. That's the shelves in Wal- Mart go bare in two or three days. That's prescription drugs you can't get. That's assembly lines going idle virtually overnight because we live in a just-in-time world.

PILGRIM: Well, that's, in fact, the goal, is to shut down the economy, isn't it? The World Trade Center attack.

FLYNN: Well, this is a great source, I think, of my frustration, is warfare changed with the September 11 attack. Our current and future enemies are not going to take on our conventional forces toe- to-toe. We're so powerful there.

What they're doing is they're finding our weaknesses, and our weaknesses are these open economic networks that underpin our power. That's where they're coming.

But we're leaving them wide open and we're hoping to nip them in the bud somehow by using military force. I'm afraid it's not going to work.

PILGRIM: Yes. One last thing. Do you think that anything should be restructured in terms of the hierarchy of the intelligence systems? And that has been much discussed in the 9/11 report and elsewhere in Congress.

FLYNN: The intelligence, the problem with sharing intelligence amongst the federal agents, certainly has been long-standing.

But here's my biggest, I guess, call in the book here, which is to mobilize the rest of us and particularly the private sector that owns and operates this critical infrastructure. That's where, in fact, a lot of the new intelligence is going to come from.

Bring in private-sector industry representatives and giving them the clearances for participating in these groups. We have too much of keeping these issues close to the chest, while the American people are told to shop and travel.

You know, we all have got to be a part of this war effort. We all have to be because we're the targets, and our infrastructure is the targets, and focusing on this with great urgency is something that I really hope this book helps encourage Americans to do.

PILGRIM: What better than American business ingenuity.

FLYNN: Absolutely.

PILGRIM: Stephen Flynn.

Thank you so much for being here tonight.

FLYNN: Thank you for having me tonight.

PILGRIM: That brings us to the topic of tonight's poll: Do you believe the United States is better prepared for terrorist attack? Yes or no? Cast your vote at cnn.com/lou. We'll bring you the results later in the broadcast.

Coming up next, the presidential election could be a photo finish if the latest polls are any indication. We'll have the details on those polls, and we'll talk about it with a panel of newsmakers.

In Heroes, we'll introduce you to one of the Marines who fired one of the first shots of the war in Iraq. Just a few months later, he paid a heavy price for his country.

And thousands of people greeted the USS Ronald Reagan today as it arrived in its new home port with a very special passenger on board.

We'll have that and more coming up next.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Less than four months before the election, a number of new polls show that the race for the White House is too close to call, but, if history is any guide, that could all change next week with the Democratic convention.

Joining me now for more on the campaign and other news of the week are our newsmakers. Ron Brownstein is the national political correspondent for the "Los Angeles Times," and he joins us from Washington. CNN Senior Political Analyst Bill Schneider joins us from outside the FleetCenter in Boston where the convention begins on Monday. And joining me in New York is Mark Morrison, the managing editor of "BusinessWeek."

And thank you all for being here.

Bill, let's start with you in Boston. Now all the latest polls showing the race for the White House in a dead heat. Let's talk about this poll, a CNN/"USA Today"/Gallup poll, likely voters' choice for president, Kerry 49 percent, Bush 47 percent, but the sampling error is 3.5 percent. So it's prettying neck and neck, right?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Neck and neck, right, but let me tell you something. We've seen about a dozen polls coming out in the last week, all of them too close to call, but all of them showing Kerry slightly ahead. So, statistically, if you put them all together, what you come up with is a conclusion: Kerry really must be slightly ahead, when you've got a dozen polls all showing the same thing.

PILGRIM: OK. That's your interpretation of it. Let's get everyone else in on this, and let's start with Ron Brownstein because he's so remote.

Ron, what's your analysis of this neck-and-neck situation?

RON BROWNSTEIN, "LOS ANGELES TIMES": Well, I agree. You know, I agree with Bill. We have a poll out today in the "L.A. Times" also with a two-point lead for John Kerry in a three-way race including Ralph Nader.

The key point that comes out to me from my poll -- our poll as well as these other polls is that, Kitty, right now, the audience for change is slightly larger than the audience for John Kerry, and what I mean by that is that when you ask people if the country is on the right track or the wrong track, you have the majority saying wrong track. You have a narrow majority in most polls now saying the war in Iraq was a mistake.

President Bush's approval rating is right at 50 percent or below. There does seem to be a tentative majority out there open to the idea of changing directions. The question is whether Kerry can sell himself to those voters as an acceptable alternative, and that really frames, I think, the task at the Democratic convention ahead for him next week.

PILGRIM: OK. Let's get Mark in on this.

MARK MORRISON, "BUSINESSWEEK": Well, as Ron suggests, Iraq keeps eating away at the president's popularity. I think the effort there keeps getting more unpopular, and, of course, the economy, which just a month or six weeks ago looked like a slam dunk for the president and for the administration's side, is now looking a little wobbly. And you saw the stock market break below 10,000 today. Investors are pretty grumpy, and a lot of them are voters.

PILGRIM: All right. You know, the poll that I find absolutely fascinating is one about enthusiasm over voting, and it shows that 60 percent of people are now very enthusiastic about voting, more than usual, and, in October 2000, that was only 38 percent. So it does show that things are -- that people are very, very connected to this election.

Bill, what's your analysis on it?

SCHNEIDER: It means everything has changed since 2000, even though then it was 50-50 and now it's 50-50. But, you know, there are two kinds of 50-50s. There's a 50-50 result where people say I don't know, whatever, Bush, Gore, Gore, Bush, I could live with either one of them. That was October 2000 three weeks before the election.

Now we're three-and-a-half months before the election, but it's a different kind of 50-50. Now people are saying we're pumped, we're ready to vote tomorrow, we are really energized by this election. This is a real intense division that really wasn't there four years ago.

PILGRIM: Ron, we've barely had a summer. It doesn't look like we'll get one. How about that?

BROWNSTEIN: Well, you know, Kitty, these numbers really reflect what we've been seeing all year. They're another manifestation of, as Bill said, the intensity of feeling. The fact that George Bush has raised more money than any presidential candidate ever and then John Kerry came out and raised, you know, nearly $200 million himself, more than any Democrat ever is also a reflection of the fact. We have a country in which there are a lot of people who feel deeply about this on one side or the other, reflected in the polarization of the opinion polls on Bush's job approval. The intriguing thing is that, in the end, it probably comes down to those -- the last 10 percent or 8 percent who don't feel as intensely, and part of the challenge for these candidates is to present themselves in a way that is still acceptable to that last sliver of less ideological voters who will decide this thing, while maintaining and responding to that intense emotion in the base.

PILGRIM: Well, let's -- Mark, I just want to bring up this other poll, which shows that people have made up their mind. The poll on voting intentions shows mind made up 83 percent, and 13 percent could change their mind. It seems very heavily skewed to people who...

MORRISON: Right. Well, people have very strong feelings, and I think the negatives on Bush are what's driving the whole process. There's just a lot of feeling -- negative feelings about the war, and that is driving people's interests, I think, and showing up in the polls.

And it presents a huge opportunity for Senator Kerry, if he can step up to opportunity that he has in this convention to show that he really is a strong enough person, individual to be a leader in a wartime situation. This is an area where Bush still polls stronger, is in the area of who is the best security guy.

PILGRIM: All right. While we're -- go ahead.

BROWNSTEIN: I just wanted to make a quick point. This isn't 1992 or 1980 where you have an overwhelming consensus for change and a clear majority saying they believe the president has failed. But what you do see in the polls is a slight tilt on many of these questions against President Bush. He seems to hover below 50 percent in his vote, just 50 percent in his approval. Slight majority saying the war was a mistake. A larger majority saying that we're on the wrong track. All of these really underscore what Mark was just saying.

There is an opportunity there for Kerry. It's not a slam dunk, but there is a crack in the door in the sense there is a constituency out there open to the idea of change. Now, whether he can convince them that he is acceptable change is something else. Bush is putting a lot of effort trying to disqualify Kerry. They have a lot of money left over that they have to spend before their convention in September. The Democrats are bracing for another big ad assault in August around the message that John Kerry is not someone you can entrust with the presidency in these kind of times.

PILGRIM: Bill, I can see you're dying to say something. Go ahead.

SCHNEIDER: In this hall behind me, next week there are going to be 5,000 Democrats who are defined as being furious at George Bush, angry about the war, and they want to shout and they want to scream and they want to vent. That is something John Kerry really can't afford. He can't afford a Howard Dean convention. Democrats figured out very quickly last winter, they weren't going to nominate Dean because he couldn't get elected.

Kerry has to be very careful to tell those delegates and the speakers, put a lid on it. Don't be too harsh, too shrill in attacking President Bush. Because the voters are not going to want to trade a president who is dividing the country from the right for another president who's going to divide the country from the left. So the speakers are getting the message, be moderate. We're going to present ourselves as people who can unify the country. That's going to be very tough in this convention hall.

PILGRIM: Mark, what do you think about it?

MORRISON: I think Bill's exactly right. I think if a very negative convention shows up on the air for people to watch, it's going to be a big turnoff. And Kerry's challenge here is to be very positive and come up with parts of his economic plan that will really commit to growth, to opportunity for people, and instead of -- and get away from the perception that he's just bashing the Bush tax cuts, and he's going to reverse that, and redistribute a lot of income to the middle and lower classes.

PILGRIM: It's going to be a great week. Can't wait. And thanks very much for joining us to sort it out in advance. Mark Morrison, Ron Brownstein and Bill Schneider, thank you very much.

The USS Ronald Reagan sailed into the home port of San Diego for the first time, and thousands of people cheered the new aircraft carrier as it arrived at the naval station. A former first Lady Nancy Reagan was helicoptered to the ship just before it arrived. And she said the ceremony just seven weeks after her husband's death was bittersweet.

(BEGIN VIDEO CLIP)

NANCY REAGAN, WIFE OF RONALD REAGAN: Ronnie would have loved the sight of this great ship coming into his beloved California. I know how proud he was to have this ship named after him. And in my heart, I know he's looking down on us today and smiling.

(END VIDEO CLIP)

PILGRIM: The USS Ronald Reagan is nearly 1100 feet long, rises 20 stories out of the water. Now, the nuclear powered ship also has an on board museum, it's dedicated to the late president.

Let's turn now to our feature series, "Heroes." Tonight the story of Major Jason Frei. He lost a hand and most of his forearm in Iraq. Now, Major Frei returned home and faced the most difficult decision of his life.

Casey Wian has the story from Oceanside, California.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT, (voice-over): Major Jason Frei's 10-year Marine Corps career is winding down at a desk. But part of him literally remains on an Iraqi battlefield when he lost his right hand and most of his forearm.

MAJOR FREI, U.S. MARINES: Anybody in the marine corps would rather get out in the field and do stuff out there, than get stuck typing.

WIAN: Then Captain Frei was part of the 1st Battalion 11th Marines. His artillery brigade known as the Cannon Cockers fired the first shots of the war. In March of last year, five minutes after Frei snapped his photo, his unit was ambushed during a sandstorm.

MAJOR FREI, U.S. MARINES: I was sitting in the front seat reading a map. The RPG came you can see here from the back, and hit the door here, and that set it off. Now, my arm stops about here. It came through, hit me there. It was a little bit of a shock. Imagine if you're sitting and somebody sucker punches you. There was concussion, and I looked down. And I can't remember if I saw it first, or felt it first. Or, you know, some combination in between. And I could see, you know, could look down and see that your hand -- my hand was gone.

WIAN: Frei tide a radio cord around his arm to stop the bleeding, took cover and was pinned down for an hour and a half before the enemy was subdued. Because of the sandstorm, it took 28 hours for Frei to be evacuated to a surgical station. In the past year, Frei has fought to stay a Marine, But ultimately deciding it would be best for his family to retire.

FREI: If it was up to me, if it was you know, Captain Frei alone and unafraid, I would stay in for 35 years until they drug me out. You can't -- I can't imagine finding a better group of people than working around these young Marines. You've got 18, 19-year-old kids who are doing absolutely amazing things. In the civilian world, they wouldn't be trusted to run a copier, and they're out there making life and death situations and doing it well.

WIAN: Promoted Major this month, Frei starts a new career this fall, pursuing a masters at the University of Notre Dame.

Casey Wian, CNN, Oceanside, California.

(END VIDEOTAPE)

PILGRIM: "Tonight's Thought" is on heroes. "We must be prepared to make heroic sacrifices for the cause of peace that we make ungrudgingly for the cause of war. There is no task that is more important or closer to my heart." Those are the words of Albert Einstein.

Still ahead here tonight, "Broken Borders," Congress debates whether Mexican immigrants and illegal aliens should be allowed to open bank accounts using identification cards from Mexico. And we'll talk to two Congressmen on either side of the issue next.

Plus, our special report on space, "Mission Critical." We'll look at the most profit al segments of the space industry. Revenue has nearly tripled in less than 10 years. And then controversy, a federal judge orders a potato chip company to stop making some claims about its products.

Those stories and much more still ahead tonight.

(COMMERCIAL BREAK)

PILGRIM: In "Broken Borders" tonight, the controversy over whether immigrants and illegal aliens should be allowed to use Mexican identification cards to open bank accounts in this country. Now, this week the House Appropriations Committee upheld a measure that would prevent banks from accepting the Matricula Consular cards.

I'm joined now by two members of Congress with sharply different views on the matter. Congressman John Culbertson of Texas introduced the House amendment. And he says, accepting Mexican I.D. cards in this country could threaten our national security.

But Congressman Xavier Becerra of California says without the cards, many immigrants would have no identification at all.

Now both of them join us from Washington. And thanks very much for being with us.

Congressman Culbertson, let's start with you. You do think it's a threat to national security. Why?

REP. JOHN CULBERTSON, (R) TEXAS: Well, the FBI, the Department of Justice, and the Department of Homeland Security have all concluded that the matriculate consular is not a reliable form of identification, because it is based on an unreliable Mexican birth certificate which cannot be verified. They're easy to forge. And there's no central data base in Mexico.

And we're at war. And you cannot win the war on terror until we protect our borders and know who's coming into the country. And I know my colleague from California shares my focus on winning the war on terror and properly identifying people coming into the United States. So my amendment is designed to eliminate this regulation, eliminate this form of identification that all the federal law enforcement authorities say is unreliable.

And I filed this amendment because I was informed by federal law enforcement authorities in the Houston area that there's a growing number of Middle Eastern, very suspicious people coming over from -- with Islamic surnames, changing their surnames to Hispanic surnames, entering the country under a false Hispanic surname.

These are from Islamic countries with known terrorist connections. And these individuals, using these false Hispanic names are disappearing in small rural areas in South Texas and across the country. And that's a real source of concern. And we've got to flush them out.

PILGRIM: Congressman Becerra, compelling argument. And many do say these are documents of low reliability, these Mexican birth certificates, because they can be forged. What's your answer to this?

REP. XAVIER BECERRA, (D) CALIFORNIA: Kitty, I think what John is trying to do is -- he has the right intent, unfortunately, it has the wrong application. Because rather than make us safer, it will probably make us less safe, because these are individuals who are getting these consular I.D.s, which by the way, is about as good as any I.D. we get in any state, it relies on a birth certificate, for example, to be able to secure that I.D.

If we don't give them I.D.s and, therefore, they walk around this country without any form of legitimate I.D., then we can't track them at all. And they go further underground. What we need to do is understand what the L.A. Police Department, in fact, about 800 police departments around the nation has said, along with this Secretary of Treasury in the Treasury Department have said, and that is, let's get these folks to get some I.D.s. that way we don't have to worry about the fraudulent I.D.s.

Remember that the 9/11 terrorists didn't have a Mexican I.D., they had U.S. I.D.s. So, the problem with fraudulent documents exists whether it's a Mexican birth certificate that's used, or an American birth certificate that's used.

We have to if focus on trying stopping the terrorists. And this actually diverts resources from treasury, from justice, from FBI to doing something that really is not going to make us any safer, because if folks were trying to harm us, are not these folks who are trying to open up a savings, a passbook savings account, or open up a checkbook -- checking account for the first time. We really should target those who are trying to infiltrate our borders.

We inspect 2 percent of all the cargo containers that come into this country. These are massive containers. Who knows what they could contain. And we only inspect 2 percent of those that are filled. Those that are empty don't even get opened. We have a lot to do. This is going to divert resources and really not make us any safer.

CULBERSTON: The issue today is, we are at war with individuals trying to sneak into the country under false identities. And I have new information from federal law enforcement officials in Texas who are very alarmed by a growing trend of Islamic individuals coming into the country, changing their Islamic surnames to Hispanic surnames, blending into the thousands of illegal aliens coming into the country.

BECERRA: John, that's...

CULBERTSON: It's a real source of concern. And in a time of war, we've got to identify who these people are and make sure that law enforcement can find them.

And the choice is really, we have to decide whether we come down on the side of the bankers, or we go with law enforcement. When it comes to what is a valid I.D., to open a bank account. And I come down on the side of law enforcement.

BECERRA: The difficulty with the argument there is law enforcement has actually said, please let us have these I.D.s.

CULBERTSON: Local law enforcement.

BECERRA: By the way, the Treasury Department and the White House came out opposed to John's idea, because they believe it will make it more difficult for them not just to enforce regular law enforcement activities, but it also would make it more difficult for them to enforce banking laws.

PILGRIM: Let's talk about this whole issue, because a lot of these people are forced to walk around with cash, because they simply cannot have access to banks. Is that a huge problem?

BECERRA: Not only do they walk around with cash, and are prey to those who wish to abuse them to begin with, but they stay out of the mainstream. We can't track them. Local law enforcement can't identify them very well.

And certainly the FBI can't identify them if they don't have any type of I.D. At least if they're carrying some I.D., we have a basis to track who they really are.

CULBERTSON: A phony I.D...

BECERRA: Without it, you're going to give yourself no chance to really track these folks. And quite honestly, they're not the folks that are trying to infiltrate our power plants, our nuclear power plants, our ports...

(CROSSTALK)

PILGRIM: Let's get Congressman Culbertson in on this.

CULBERTSON: The danger is, the terrorists are hiding among these people. The terrorists we know from law enforcement officials in Texas, we now know that they're seeing a growing number of these individuals who are changing their Islamic surnames to Hispanic, blending into the population.

A phony I.D. and a false name is worse -- is a really dangerous situation. And it's important to realize that the United States Department of Homeland Security, the United States Department of Justice and the FBI are all strenuously opposed to the use of this I.D. It's only the Treasury Department and the banks that want to accept this I.D. The White House is split. The administration is split on this, because you've got...

BERCERRA: John, John...

CULBERTSON: Because you've got federal law enforcement on one side and the banks on the others. And I choose to come down on the side of law enforcement in the time of war. We cannot win the war on terror until we protect our borders. And we've simply got to deal with this serious problem.

(CROSSTALK) BERCERRA: I trust the local law enforcement -- I trust those who are telling me that we need to enforce the law every day. The FBI may say they have concerns, but they say they have concerns with all sorts of I.D.s. We don't make ourselves safer by going after folks who are not going to be holding bombs.

CULBERTSON: Well, the bottom line is, we need to get the federal law enforcement officials in the loop on this treasury regulation and we need to repeal this regulation in order to make sure...

(CROSSTALK)

PILGRIM: Gentlemen, I wish we could sort this out...

(CROSSTALK)

PILGRIM: Thank you so much.

We are totally out of time. Not an easy issue. And thank you for helping us consider it. Congressman John Culbertson and Congressman Xavier Becerra, thank you.

A reminder now to vote in tonight's poll, "Do you believe the United States is better prepared for a terrorist attack?" Yes or No. Cast your vote at CNN.com/lou. We'll bring the results later in the broadcast.

Turning now to a lighter topic, Frito Lay has been ordered to stop saying that its Lay's brand is preferred -- the preferred potato chip for the people in the Chicago area. A federal judge says the company cannot prove that Frito Lay engage in a form of chip cheating.

In taste tests, the company labeled its chips, classic and named rival brand Jay's Chips Unflavored. Now, chip testers were not allowed -- were also not asked if they're Chicago residents.

Now, the judge said Lay's appeared to be motivated by greed and deceived the public.

All right, when we return: Mission Critical, the future of the space of industry. The space industry is becoming more profitable. And American firms are finding more competition overseas. We'll have our special report next.

(COMMERCIAL BREAK)

PILGRIM: Now "Mission Critical," our series of special reports on the future of space exploration. And tonight, we focus on one aspect of the space industry where there is growing competition and revenue. Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): An American-built satellite launched in South America on a European rocket to bring high-speed Internet access and telephone service to remote parts of the United States and Canada. Total cost to build, launch and insure? $600 million.

The cost will pay off quickly. That's because it's the largest communication services satellite ever launched. And communications services are where the money is in space.

DAVID CAVOSSA, SATELLITE INDUSTRY ASSOCIATION; That's almost 60 percent of the revenues. Perhaps even 65 percent of the total revenues for the satellite industry. Total revenues, global for the satellite industry, are about $90 billion for 2003. And of that, about $60 billion of that is the services sector.

TUCKER: Direct broadcast services like Echo Star and Direct TV produce nearly $50 billion of that revenue. Business networks, like the ones which connect Wal-Mart stores to its headquarters in Benton, Arkansas, or the ATM at a gas station to a bank account for another roughly $7 billion.

And then there are satellites which provide us with the now ubiquitous GPS services. The military is another big buyer of commercial services. Being in space is financially worthwhile. But building and launching satellites is not.

JOHN DOUGLASS, AEROSPACE INDUSTRIES ASSOCIATION: It's an industry that's turned out to be more cyclic than we thought it would be. Satellites last longer than we thought they were going to last. The demand globally has been lower than we thought it would be.

TUCKER: Since 1996, revenue in the satellite sector has nearly tripled from $38 billion to $91 billion. The U.S. satellite industry accounts for about half that revenue. Bill Tucker, CNN, New York.

(END VIDEOTAPE)

PILGRIM: Still ahead, we'll share some of your thoughts and many of you wrote in about a joint declaration between the United States and Mexico.

Plus, Microsoft is creating thousands of new jobs. But only some of them are in the United States. We'll have the details next.

(COMMERCIAL BREAK)

PILGRIM: On Wall Street, the Dow closed below 10,000 for the first time in two months. The Dow fell 88 points to 9962. The Nasdaq lost almost 40 and the S&P dropped more than ten. Christine Romans is here with that.

CHRISTINE ROMANS, CNN CORRESPONDENT: Kitty, it's turning out to be a cruel summer for stocks. The longest losing streak now for stocks in almost two years, weekly losing streak. The Nasdaq closed at the lowest today in ten months. Oil spent an eighth day above $40 per barrel. Earnings growth 23 percent is great, but it's probably peaked. And there are concerns about the pace of jobs growth.

Now, one company adding to its 57,000-strong workforce, Microsoft, hiring up to 7,000 workers this year to fill vacant spots and to fill new spots. The company plans to add about 3,000 workers in the Redmond, Washington area. Microsoft said it is committed to that region, and its well-being. It is the company's headquarters.

It's also committed, though, to India. Microsoft will be hiring there. It won't say exactly how many. But it says it is exploring and evaluating the opportunities in India. Kitty, Microsoft is already on the list of companies exporting American jobs to cheap overseas labor markets. But today a milestone we crossed. 900, the number of companies we have confirmed to be shipping jobs overseas.

PILGRIM: Thanks very much. Christine Romans.

ROMANS: You're welcome.

PILGRIM: Let's take a look at some of your thoughts. And many of you wrote in about the joint declaration between the U.S. Department of Labor and Mexico which is aimed at protecting immigrants and illegal aliens working in this country.

Now George Pilleri of Middletown, New Jersey writes, "Vincente Fox is concerned about improving the quality of life of Mexicans in the U.S. he should be that concerned about citizens in his own country."

Bill Kiker of Henderson, Nevada. "Is there any chance that we can get the Mexican secretary of labor to come to the United States and protect American workers?"

And Christia of Louisville, Kentucky wrote the following -- the White House suggestion that education is the answer to outsourcing. And this is what she writes. "The White House needs a dose of reality. I have three degrees, $40,000 in school loans, a son in college, and no job. Their answer is still re-train. My question is, for what? I can't re-train faster than the jobs go overseas."

Robert Floden of New Hampton, Iowa. "Isn't it double jeopardy? We export jobs overseas at the same time we import illegal aliens to fill jobs here." Do e-mail us at loudobbs@CNN.com.

Still ahead, we have the results of tonight's poll.

(COMMERCIAL BREAK)

PILGRIM: Now the results of tonight's poll. "Do you believe the United States is better prepared for a terrorist attack?" 13 percent of you said yes. 87 percent said no.

Thanks for joining us tonight. Please join us Monday. Presidential candidate Ralph Nader is our guest and I'll also be joined by Terry McAuliffe, chairman of the Democratic National Committee and former New York governor Mario Cuomo.

We begin a new series of special reports, "Middle Class Squeeze."

For all of us here, good night from New York. Have a great weekend. "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