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Lou Dobbs Tonight

Leaders of Terrorist Money-Laundering Operation Arrested; North Korea May Be Developing Nuclear Weapons to Hit the U.S.

Aired August 05, 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: Tonight, the government says it has smashed a terrorist money-laundering operation and arrested two leaders of a mosque.
(BEGIN VIDEO CLIP)

JAMES COMEY, U.S. DEPUTY ATTORNEY GENERAL: We are not playing games. This is a very serious time.

(END VIDEO CLIP)

PILGRIM: U.S. troops fight fierce battles with radical Islamists in Iraq. Insurgents shoot down a U.S. helicopter.

North Korea tries to build a nuclear missile that can hit the entire United States.

In Broken Borders, Border Patrol agents under assault, attacked and injured for simply doing their job.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The harder we press against the smugglers, the harder they push back against us -- and violently.

(END VIDEO CLIP)

PILGRIM: And Is Anybody Out There? Tonight, a special report on the search for life on other planets.

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, August 5. Here now for an hour of news, debate and opinion, sitting in for Lou Dobbs who is on vacation, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight, a major success for the government's efforts to crack down on the terrorist money trail. Authorities say they have broken up a terrorist money-laundering operation after an FBI sting. Government agents arrested the leader and the founder of a mosque in Albany, New York.

Alina Cho has the report.

ALINA CHO, CNN CORRESPONDENT: Kitty, good evening to you. In fact, within the hour, Albany's Muslim community is expected to hold a rally and news conference in the mosque behind me, the very mosque that was targeted in an FBI raid overnight. Earlier in a statement, Albany Muslims said they are against all forms of terrorists -- terrorism, rather, and urged the media to exercise restraint.

A little bit about what happened today: 49-year-old Mohammed Hossain, a U.S. citizen from Bangladesh, and his alleged accomplice, 34-year-old Yassin Aref, an Iraqi citizen with asylum status here -- they were led away in handcuffs immediately following their arraignment hearing at the federal courthouse in Albany.

The two men -- the charges were read against them. Both asked for a lawyer, Aref through an interpreter. About a dozen family members were there, including supporters. They were crying, hugging, consoling each other. The two men, we can tell you, were arrested overnight after FBI agents raided this downtown mosque where the two served as leaders. They were caught following a year-long investigation and sting operation.

Law-enforcement sources say that the men tried to help an FBI informant posing as a terrorist launder money from the sale of a shoulder-fired missile, that they wanted to fire that missile, which was, of course, part of the sting operation and actually a decoy, that, according to the complaint, they wanted to fire it at Pakistan's ambassador for Pakistan's support on the war on terror.

New York's governor earlier, George Pataki called the arrest an example of government acting proactively.

(BEGIN VIDEO CLIP)

GOV. GEORGE PATAKI, NEW YORK: The fact is there are terrorists among us who want to engage in acts to attack us again and to take way our freedom, and I just want to reassure the public here in Albany and in New York and across America that our government, our administration in Washington, this state government and local officials are taking this threat to our freedom very seriously and will continue to be aggressive and proactive in going after those who would look to do us harm.

(END VIDEO CLIP)

CHO: Justice Department officials called this a real and serious threat. Yet it is important to stress that this is not at all connected, they believe, to the recent terror warnings in New York, Newark and Washington, D.C. Justice Department officials called this a good case, a solid case, but not the case of the century. The suspects, we should mention, are being held without bail until a detention hearing is held here in Albany on Tuesday.

Meanwhile, a little bit more about the suspects and their personal background. Hussein, the elder suspect at 49, a longtime resident of Albany, owned a pizzeria here, lived here his wife and five children. In fact, said in a recent interview with an Albany paper that he was proud to be an American. Aref was also a longtime resident here, lived with his wife and three children -- Kitty.

PILGRIM: Thanks very much.

Alina Cho.

U.S. Deputy Attorney General James Comey today said the government is working very hard to infiltrate terrorist groups in this country and around the world. Comey said the government is not "playing games over terrorism."

Justice Correspondent Kelli Arena reports from Washington -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Good evening, Kitty.

Well, with each day comes a new development in this terror front. Today, we learned more about the arrests made in Britain earlier this week. Now one of the men is described as a senior al Qaeda operative.

Intelligence sources tell CNN that his name is Abu Eisa al-Hindi. U.S. officials say that he's a major player who moved operational information between key components of al Qaeda in Britain, Pakistan and the United States.

(BEGIN VIDEO CLIP)

EVAN KOHLMANN, GLOBALTERRORALERT.COM: He's someone with military experience. He's someone who's perfectly fluent in English, in Urdu, in Arabic. He's a transnational al Qaeda operative who has his fingers in many pots.

(END VIDEO CLIP)

ARENA: Terrorism experts say that al-Hindi is a Muslim convert and former commander of an al Qaeda training camp in Afghanistan. Investigators believe he was plotting to attack London's Heathrow Airport based on intelligence from Pakistan, including pictures and maps of that airport. In fact, it was arrests made in Pakistan that sources say led to the arrests in Britain.

The ongoing global investigation has led to multiple intelligence leads, not just in Pakistan and Britain, but in the United States as well.

(BEGIN VIDEO CLIP)

COMEY: We have, as we've said before, reason to believe that we are in a very serious threat environment, and we're working like crazy to try and make sure that threat -- that it does not come to fruition.

(END VIDEO CLIP)

ARENA: As you know, sources had confirmed for us a communication between alleged al Qaeda operatives in Pakistan and an individual or individuals in the United States. Part of the search for al Qaeda operatives here in the U.S. continues to focus on who may have conducted surveillance of several potential financial targets. Investigators say that they have evidence to suggest that some of that surveillance was an inside job -- Kitty.

PILGRIM: All right. Thanks very much.

Kelli Arena.

Federal agents investigating the anthrax attacks three years go today searched homes in New York and New Jersey. The agents went to Wellsville in New York and Dover Township in New Jersey. Now the FBI said no one was arrested at either location. Three years go, anthrax sent through the mail killed five people.

Turning to Iraq, U.S., British and Iraqi troops today fought fierce battles with gunmen loyal to the radical Islamist cleric, and the insurgents killed one American soldier, wounded at least 12 U.S. troops.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): Radical cleric Muqtada al-Sadr called for a national uprising against American and coalition forces. That call ignited a fierce battle in and around the holy city of Najaf. Al-Sadr insurgents shot down an American Marine helicopter. The firefight left one American soldier dead. Seven Iraqi civilians and seven of the insurgents were also killed.

FALAH AL-NAKIB, IRAQI INTERIOR MINISTER (through translator: What happened in Mosul yesterday and what happened yesterday in Najaf and still going in Najaf and in other parts in Iraq signifies that there is an organized plan to dismember Iraq and kill the Iraqi people.

PILGRIM: Iraq's interior minister vowed to defend the Iraqi people and stop the insurgents no matter what the price.

The intense fighting this week is the worst flare-up in two months. Al-Sadr had made a truce of sorts with the U.S. military, but that apparently has crumbled. In April, the last time al-Sadr mounted a fierce offensive, that caused one of the bloodiest months in the Iraq conflict so far.

ALLEN KEISWETTER MIDDLE EAST INSTITUTE: It's really now a question of whether it will spread and does have broader resonance. This time around, there's an added factor, and that's the fact that we have Iraqi sovereignty, the interim government, and so the Iraqis will have a role to play.

(END VIDEOTAPE)

PILGRIM: Now the renewed violence in Najaf comes as fighting in other parts of Iraq flared. In Baghdad, insurgents fired on U.S. forces, and, in Basra, they clashed with British troops.

Well, Pakistan is a key U.S. ally in the global war on terror, but the Pakistani government has faced serious problems controlling the mountainous area on the border with Afghanistan. There are now indications that al Qaeda has reactivated training camps in that area.

Senior Pentagon correspondent Jamie McIntyre reports.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, if not reactivated, then at least perhaps attempting to reactivate it. That's the question facing U.S. intelligence analysts as they review intelligence and overhead imagery gathered along the Afghan/Pakistan border.

According to defense and intelligence sources who have talked to CNN, there are indications based on that overhead imagery that some people, vehicles and other movement have been detected in areas that were known to have been used by al Qaeda as training areas in the past.

This has raised a question about whether this increased activity is an indication that al Qaeda is trying to reestablish or reactivate some of those training facilities located in the semiautonomous region of Pakistan along the southeastern border of Afghanistan.

Again, the U.S. is sharing this intelligence with the Pakistan government, which the U.S. applauds for being very aggressive in targeting both al Qaeda and Taliban forces in that border region, and, again, U.S. forces stress that if any military action is warranted by this intelligence, it would be taken by the Pakistani military, not the U.S. which has been careful to stay on the Afghan side of the border -- Kitty.

PILGRIM: All right. Thanks very much.

Jamie McIntyre.

Still to come, the nuclear threat to the United States, not from al Qaeda but from North Korea.

Plus, what could be the most vicious attack of the campaign so far? The target: Senator Kerry and his service in Vietnam.

And former presidential candidate Gary Hart will join me it talk about his new book, "The Fourth Power: A Road Map for U.S. foreign policy in the 21st century.

(COMMERCIAL BREAK)

PILGRIM: As the United States focuses on al Qaeda, the country faces a potentially much more serious threat from North Korea.

Now the North Koreans already have a limited missile capability, and the CIA says the North Koreans have a small number of nuclear weapons. Now the authoritative magazine "Jane's Defense Weekly" says North Korea is working on developing new missiles for ships and submarines that could potentially strike the continental United States.

And joining me now is the journalist who wrote that article in "Jane's," Joseph Bermudez, and he joins us tonight from Colorado. And, Joe, thank you for being with us.

JOSEPH BERMUDEZ, "JANE'S DEFENSE WEEKLY": You're most welcome. Thank you for having me.

PILGRIM: Let's just be clear about exactly what we have, what we're worried about in North Korea. They know that they have nukes. They know that they have tested land-based missiles. But what are you worried about now going forward?

BERMUDEZ: Recently, in the past several years, we've seen the development of a new class of missile. It's based on former Soviet technology, and it has greater range and great accuracy.

What's disconcerting -- most disconcerting is the fact that if these missiles have the range which they possibly or potentially could, they could reach Hawaii. Even more disconcerting is the fact that there are some preliminary indications that they're trying to take this missile system and either mount it in a submarine or on top -- or inside, I should say, a merchant vessel.

PILGRIM: Now the last North Korean land-based test was not successful. Doesn't that mean that they may be a little bit farther behind in their technology than we may fear, or is that a false security?

BERMUDEZ: It's really difficult to say. The last test was actually a launch of a satellite, and it was unsuccessful in the third stage. A space launch vehicle to launch satellites is different than a ballistic missile. It was successful in multistaging and separation of a payload, which are very important things to do if you're building a ballistic missile.

It's hard to gauge the technology. It's really dependent upon the amount of resources they've put into it and also what foreign assistance they've received.

PILGRIM: Yes. It's almost impossible to gauge what they're doing because it is a closed society. There is also the discussion that a ship-based missile is way too optimistic, that they are nowhere near getting close to doing that. What do you think of that?

BERMUDEZ: There is a tremendous amount of discussion about that. You know, we know that there's some interest in mounting a ballistic missile either on a submarine or a merchant vessel. The technology mounted on a merchant vessel is actually quite old.

Back in the early days, late '50s, mid '50s, the United States and Russia could not reach each other with their ballistic missiles. So both nations initiated design projects to mount their ballistic missiles on merchant vessels or on warships.

Unfortunately or fortunately, whichever way you want to look at it, the U.S. and Soviet Union developed longer-range missiles shortly after which -- so none of these projects actually went to complete fruition. PILGRIM: One last question -- and we're almost out of time -- Korea spends 40 percent of their GDP on military, and that's just a guess because no one actually knows. Is it targeted exclusively to a nuclear project and is that our biggest worry?

BERMUDEZ: It's targeted towards the nuclear program and the ballistic missile program and, to a lesser degree, to electronic warfare. All three are of great concern to us, great concern.

PILGRIM: Thanks very much for joining us and explaining it.

Joseph Bermudez.

Thank you.

Coming up, taking aim at Senator Kerry, a new attack ad goes so far that even the Bush campaign wants no part of it.

Also ahead, he warned of a major terrorist attack on U.S. soil years before September 11. Former Senator Gary Hart joins us to talk about his latest concerns.

And the war on illegal aliens causes a violent backlash at the border.

We'll have that and much more ahead. Stay with us.

(COMMERCIAL BREAK)

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

In tonight's Campaign Journal, controversy over an attack ad that calls into question Senator Kerry's service in Vietnam. Now the ad, sponsored by an independent group called Swift Boat Veterans for Truth, accuses Senator Kerry of lying to win two of his medals. Another Vietnam veteran, Senator John McCain, today strongly condemned the ad. He called it "dishonest and dishonorable." Senator McCain called on the Bush administration to specifically denounce it.

Well, the Bush campaign spokesman today said the Bush campaign is never and will never question Senator Kerry's service in Vietnam.

Jill Dougherty is traveling with the president tonight in Saginaw, Michigan -- Jill.

JILL DOUGHERTY, CNN CORRESPONDENT: Well, Kitty, the Bush -- the White House is not specifically saying that it wants that ad pulled from the airwaves. But it is condemning very strongly that type of ad which is funded by what's called soft money.

We spoke with Scott McClellan, the president's press secretary, and he said that he wants both the Kerry campaign and the Bush campaign to join forces to put an end to ads like that.

(BEGIN VIDEO CLIP) SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: Well, what the president is doing is calling for a stop to all the unregulated soft money activity, and we hope the Kerry campaign will join us.

The president deplores all the soft money activity that's going on. He's been on the receiving end of more than $62 million in negative attacks from these shadowy groups, and he thought that we'd put an end to this activity when he signed the bipartisan campaign finance reforms into law.

(END VIDEO CLIP)

DOUGHERTY: So the president now here in Saginaw, Michigan, addressing the crowd at a big rally here. Earlier he was in Columbus, Ohio, and both of those states very, very tight races. Back in 2000, President Bush won Ohio, lost Michigan, but both by very, very small margins. And it's the same today.

The big subject, of course, in this area: jobs. And President Bush has been pretty explicit in talking about the concerns of people. He said in Ohio he understands that people are "skittish" about it, but he said things are improving.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We've been through a lot. Ohio's been through a lot. Listen, when you go through a recession, corporate scandal, emergency and war, you've been through a lot in a quick period of time. If you really think about it, think about what we have been through as an economy and as a nation, and yet we're strong.

(END VIDEO CLIP)

DOUGHERTY: So this is the end of a three-day swing by President Bush through the battleground states, and he's obviously looking for independent, undecided voters, and there certainly are not many of those left -- Kitty.

PILGRIM: All right. Thanks very much, Jill Dougherty.

After a day of campaigning just blocks away from President Bush, Senator John Kerry is touring the nation's political battleground making stops in several cities in the Midwest today.

And CNN's Dana Bash is traveling with Senator Kerry.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: The Senators John hooked back up today, day seven of their crosscountry tour here in St. Louis after campaigning separately for four days. Now the team appeared quite happy to be back together and talked up their message of the day, which is helping military families they say President Bush has not done enough for. Now earlier today, Senator Kerry made a detour back to Washington, spoke to a conference of minority journalists. There he was asked if he had been president on the morning of September 11, what would he have done? Here's how he responded.

SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL NOMINEE: First of all, had I been reading to children and had my top aide whispered in my ear, "America is under attack," I would have told those kids very politely and nicely that the president of the United States had something that he needed to attend to, and I would have attended to it.

BASH: Remember,, of course, the president, after being told by White House Chief of Staff Andy Card, about the attack continued to read for about five to seven minutes to children. The White House says he didn't want to scare the children.

Now the Bush campaign has called this another attack by what they call a candidate who doesn't know what he stands for. Now, of course, hindsight is 20/20, but Senator Kerry has been trying to combat attacks from the Bush campaign that he does not have what it takes to be commander in chief because he is indecisive.

Meanwhile, back here in the Show Me State, Senator Kerry is trying to fight hard to break out of the dead heat he is in with President Bush to try to capture the 11 electoral votes here in Missouri. Very important electoral votes. No president has gotten the White House in 100 years except for one election year without winning this state.

KERRY: The middle class of the United States of America is playing by the rules, people are working two jobs, three jobs, and they're still not getting ahead, and I'm running for president because the middle class deserves a champion, and the people struggling to get in it deserve one.

BASH: The senators pulled into this rally on a bus, but are leaving on a train. They're trying to capture the magic of Harry Truman's Whistle Stop Tour in 1948, just like Bill Clinton and Al Gore before them. They are going to get on the very same car that Harry Truman himself rode, hoping to capture votes from Missouri on to Ohio and Arizona.

Dana Bash, CNN, St. Louis.

PILGRIM: Well, tonight's thought is on democracy.

"Democracy is not only service, action, brotherhood; it is spirit, spirit-free, indefinable, all-pervasive, that holds us to its revelations even when we seek to escape them."

And those are the words of American journalist Agnes E. Meyer.

My next guest warned as early as 1999 of a major terrorist attack on American soil. Former Senator Gary Hart led a commission on national security. Now the commission's report warned of a large- scale terrorist attack in the United States, and that report was released in early 2001, just months before the September 11 attacks. Now Gary Hart lays out what he calls a grand strategy for the United States in the 21st century. His new book is titled "The Fourth Power."

Gary Hart joins me tonight from Denver, Colorado. And thank you very much for joining us, sir.

GARY HART (D), FORMER U.S. SENATOR: It's a great pleasure. Thank you.

PILGRIM: I must ask you with terrorism dominating the headlines every night, where do you think we stand in this country in terms of preparedness?

HART: Overall, I would say on a scale of 1 to 10 we're probably at 3 or 4. We -- there are ports, and the unavailability of our National Guard, which is deployed in Iraq, the absence of common databases and communication systems and the list goes on -- there is much, work to be done, and even in the private sector, I think, we've only begun to have companies step up to the plate and do what they need to do to help protect this country.

PILGRIM: There's been an entire readjustment in the intelligence community, talk about an intelligence czar. Where do you stand on that?

HART: I think we ought to have very urgent hearings in the Congress this fall and put off final action on major reforms in the intelligence community until next year after the election.

The big issue that needs to be resolved has not been addressed, I think, either by the 9/11 commission or by the White House, and that is who will control the total intelligence budget. And control over the intelligence community is directly tied to control of the dollars. The president doesn't address that issue, and I don't think the 9/11 commission does either.

Eight percent or 85 percent of all the intelligence budget is in the Pentagon, and, unless the director of Central Intelligence or the proposed national intelligence director is given control over that budget, we're back where we started from.

PILGRIM: Perfectly understandable.

Many in Congress came back to address the issue of terrorism during their break, during their vacations. Do you think that much can be accomplished in this interim period, given the level of worry that's going on?

HART: I think very much -- a great deal can be accomplished in terms of creating a record upon which to legislate, but I don't think, with the backs of these members of Congress to the wall, all members of the House running for reelection and a third of the Senate and the president himself, that's the time to be legislating major reorganization of government intelligence that will be with us for the next 50 years.

PILGRIM: And yet not something to rush, but yet isn't there a great deal of urgency because all indications are that before the election we may be in serious jeopardy?

HART: Oh, absolutely. I think there is a chance of attack. But if this reorganization takes place, as proposed by the 9/11 commission, it will still be months, if not years, before any new hierarchy takes control of intelligence and makes a difference. So any quick fix that's legislated this fall will not in the short-term protect this country.

PILGRIM: Let's broaden this out a bit. In 1993, you wrote a memo to President Clinton to reorganize the military. Based on post- Cold War thinking, you thought that we should be fighting a different battle, which now has emerged. Do you think we're doing enough in that arena to reorganize the military?

HART: Well, whatever Secretary Rumsfeld had in mind to do -- and I think he did come into office with an idea of how to reorganize the military -- was sidetracked both by 9/11 and by the, in my judgment, unnecessary invasion of Iraq, and I think the harm being done to our regular and Reserve forces now will take years to correct, let alone reform.

PILGRIM: Let's talk about your book for a second. And it's really wonderful. It talks about the qualities of America, and they are sterling qualities.

But they have to be re-established, you say. What would you like to see done on an individual level to re-establish the qualities of America?

HART: Well, the idea of a grand strategy is simply a systematic application of our nation's powers to our large purposes. And our powers, traditionally, have been economic, political and military. We're far ahead of every other country in the world in all three categories.

What we haven't done as a nation is define what our large purposes are post-Cold War. And I hypothesize that those should be achieving security, expansion of opportunity, and promotion of liberal democracy.

But I also say that our greatest power, are our constitutional principles, and that when we set those aside for expedient reasons, we undercut our greatest moral authority and our greatest power in the world.

And until we re-establish some strategy for America for the 21st century that employs all of our powers, including our principles and ideals, we will not have a direct course that we can follow.

PILGRIM: Thank you very much for explaining it to us. Gary Hart, thank you, sir.

HART: Great pleasure. Thank you.

PILGRIM: That brings us to the topic of tonight's poll: do the recent terror warnings make you feel safer? Yes or no? Do cast your vote at cnn.com/Lou and we'll bring you the results later in the show.

Now, many of you wrote us about our face-off last night. Is Wal- Mart good for America?

And Harold LaFountain of Battle Creek, Michigan writes: "I believe Wal-Mart is a blessing to us as Americans. My sister is employed by Wal-Mart and couldn't be happier. We shop there often and find the savings a much needed help in these difficult times."

Jamie of Rogers, Arkansas writes: "Hasn't Wal-Mart lowered the cost of living for Americans, if not the entire world? I'm confused as to why Wal-Mart is a target when all they are doing is satisfying their customers."

Michael Adams of Columbus, Ohio writes: "Wal-Mart stores are not the best jobs that people can find. Most of the time it's the only jobs people can find due to outsourcing of better paying jobs to other countries."

And we'll share more of your thoughts on Wal-Mart later a little bit later in the show. E-mail at LouDobbs@cnn.com.

Now, with we have reported extensively on a disturbing trend along our nation's borders; the increasing violence against border patrol agents.

In "Broken Borders" tonight, the Department of Homeland Security is cracking down on drug and illegal alien smugglers at the border. And the violent backlash is escalating. Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): It may be undeclared, but there's a war going on in the Arizona desert. The number of violent attacks on border patrol agents by illegal alien and drug smugglers is up sharply.

The border patrol's new chief says there have been 89 attacks on agents so far this year. If that pace continues, it would mean a 27 percent increase in violent assaults over 2003.

It's one consequence of the ongoing Arizona Border Control Initiative. The government is trying to regain control of a section of the border that's become the main crossing point for drugs and illegal aliens.

T.J. BONNER, PRESIDENT, NATIONAL BORDER PATROL COUNCIL: This is extremely predictable. When we launched various initiatives such as Gatekeeper in San Diego, we saw exactly the same thing. The harder we press against the smugglers, the harder they push back against us, and violently. WIAN: Bonner says part of the problem lies in border patrol tactics. Agents sometimes are stationed in fixed positions along the border where they're often sitting ducks for illegal aliens and smugglers, armed with everything from rocks to machine guns.

But even undercover agents on the move face the constant threat of violence. As we reported in April, Douglas Immigration and Customs agents lost four vehicles to shootouts and crashes with smugglers in just one week.

LEE MORGAN, ICE AGENT: Dope smugglers and human traffickers are probably the meanest, cruelest criminals on the border or in the United States. They're unparalleled in their viciousness.

WIAN: The border patrol plans to add 260 agents in Arizona, and they can't come soon enough. Already this week there have been two more gun battles between agents and smugglers.

Meanwhile, the hunt for potential terrorists continues. This week 12 congressmen asked the Department of Homeland Security for a detailed breakdown of non-Mexicans who've been arrested illegally crossing the border.

Casey Wian, CNN, Los Angeles.

(END VIDEOTAPE)

PILGRIM: Coming up: General David Grange on Point: hundreds of billions of dollars approved for our national defense and a bold new plan for the Army.

Also ahead, is there anybody out there? Scientists believe they have the answer to one of life's great mysteries.

And asleep at the switch. In a life and death matter, an audiotape you simply won't believe.

(COMMERCIAL BREAK)

PILGRIM: In Grange on Point tonight, President Bush today signed a massive Defense Appropriations Bill into law. The wartime spending bill provides more than $417 billion for the military.

Now in another sign, the nation's on a war footing. The Army is radically changing its basic training for recruits and all recruits, not just those in combat arms, will receive intensive weapons training.

And joining us now is General David Grange to talk about these developments. The Defense Bill, General Grange, do you think that's sufficient?

GENERAL DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, I'll tell you, there's never enough money. There is always going to have to be prioritization on certain programs, and it's going to have to be give and take. And, you know, the infantry, the troops on the ground, they should have the priority but you're going to need some monies for other programs.

PILGRIM: $25 billion for the wars in Iraq and Afghanistan. Just having crunched numbers on this for now more than a year myself, I know that this is pretty modest.

GRANGE: Well, it is. $25 billion doesn't really go too far, but if you take the whole program, it's still a good amount of monies. But, again, how much do you put on the ground? How much do you put in the air and at sea? All of the services are important.

Right now we're focused and we can understand and see Iraq. But there's going to be other wars in the future and they're always different.

PILGRIM: General Grange, on that point, it includes money for guided-missile destroyers and other high tech equipment. Are we allocating our resources in the right direction, according to your estimates?

GRANGE: Well, I think the preponderance goes to the troops on the ground. They carry the heaviest burden, and they're the ones, right now, that are up front with the enemies that we're encountering.

But, again, the monies for air and for sea platforms is not just to fight a battle against another high tech military, it's to provide support to those on the ground depending on the location geographically.

So, I think that you've got to watch yourself and not just preparing for the current fight, but the future fight. And that means other systems and other services as well.

PILGRIM: Let's talk about the basic training program and it's being somewhat adjusted. What's your estimate of how they're doing it and what exactly are they doing for us lay people who don't understand all this?

GRANGE: Well, in modern history, the U.S. Army in particular, you broke down the training where combat-oriented forces received a certain kind of training and support troops received another type of training.

Now, like the United States Marine Corps, where everyone is a rifleman first, the Army, everyone is a warrior first. And since there are no front lines in many of the fights today and you're in a 360-degree environment, it is important that everybody is a worrier first.

PILGRIM: Do you think that this is the way we should go, going forward?

GRANGE: Absolutely. I love it.

PILGRIM: OK. What about recruiting? How are we doing in terms of recruiting new people to go into the Army these days?

GRANGE: Well, recruiting is interesting because it's up against some requirements. Many advocate that right now the military, we're at peak for commitments.

But if that's not correct, if this is a plateau, where we have sustained commitment around the world for some time to come, which I believe it is myself, then how you recruit and retain those in the military. It's not just new recruits, it's that midterm sergeant, that young officer that's already trained, that's already whetted to military operations that you want to keep in the force.

And so a lot of effort has to go into this. People are your most important resource. That's where the money really needs to go. Now the military has some very good programs for short-term. The concern is going to be long-term, especially with certain elements like National Guard.

PILGRIM: All right. Thanks very much. General David Grange.

GRANGE: My pleasure.

PILGRIM: A reminder now to vote in tonight's poll. Do the recent terror warnings make you feel safer? Yes or no. Cast your vote at cnn.com/lou. We'll bring you the results later in the show.

Here's a story we have for you. A Maryland woman who called 911 in the middle of the night was alarmed by the sound of someone breaking into her home. But she was also shocked by the response of the 911 operator.

(BEGIN VIDEO CLIP)

CALLER: I didn't see anything.

(Sound of snoring)

CALLER: Hello?

(END VIDEO CLIP)

PILGRIM: Yes, you heard it correctly. The 911 operator was snoring. Now, authorities are investigating the incident, and the employee, a 10-year veteran of the night shift, is on a preplanned vacation, pending the outcome of that investigation.

Still ahead, we'll tell you why these people are digging in the dirt in a quest for life on another planet.

And then: who is the real Manchurian candidate? A new movie points the finger at multinational corporations.

And speak for yourself, Mr. President. Another Bushism that is very hard to beat. We'll tell you when we come back.

(COMMERCIAL BREAK) PILGRIM: Scientists hoping to find evidence of life on mars instead found mysterious layers of volcanic rock. Scientists today said a lava flow buried any possible signs of lakes or rivers in the Gusev Crater. That's an area of intense interest for NASA scientists.

Well, according to scientists, the latest evidence suggests that there is life on other planets. It's just a matter of finding it. And this Sunday, CNN Space Correspondent Miles O'Brien goes searching for signs of life in the universe, and here's a preview.

(BEGIN VIDEOTAPE)

MILES O'BRIEN, CNN SPACE CORRESPONDENT: Greetings from the deadest place on earth: Chile's Atacama Desert.

These researchers are probing the limits of life, trying to understand why there is nothing living in the dirt they're digging, while just over the hill life is thriving.

The big question is: are we alone in the universe? Is there life anywhere other than earth? And the scientists tell me mapping the limits of life here makes it easier to chart a clever course to troll for it out there, on Mars and possibly other planets. And this is why scientists in this field are so excited right now.

The more they look for life in all the wrong places, the more they find it. In the scalding hot acid springs of Yellowstone; in the deepest, darkest depths of the ocean; in the cold, dry valleys of the Antarctic; even in radioactive waste pools.

We now know all of these places are home to some hail hardy critters. Life is much more tenacious than we once assumed.

STEVE SOUYRES, MARS ROVER PROJECT LEADER: There used to be this idea that life really only could take hold in a very narrow range of conditions, sort of like a Goldilocks kind of thing, where it can't be too warm, it can't be too cold, it's got to be just right.

But what you find is, as long as you can get liquid water there and some source of energy, life is happy on this planet.

O'BRIEN: And this has fundamentally changed the way scientists look at the universe.

PAUL DAVIES, AUSTRALIAN CENTER FOR ASTROLOGY: People have speculated about life beyond earth for centuries that it's become a scientific venture only relatively recently.

KELLY SMITH, CLEMSON UNIVERSITY DEPARTMENT OF PHILOSOPHY AND RELIGION: Well, I think the universe is such an incredibly huge place that the chances that there isn't life anywhere out there are virtually zero.

How frequent intelligent life is, is another question.

DAVIES: If we were to discover just a single microbe on another planet and if we could be sure it didn't get there from our planet or vice versa, if we discovered a second sample of life, somewhere where life has began from scratch, even just a microbe, it would transform our world view beyond the discoveries of Copernicus and Galileo, Darwin and Einstein put together.

(END VIDEOTAPE)

PILGRIM: Now this Sunday, a special television event, Miles O'Brien goes in search of life out in the universe, and that's when CNN presents "Is Anybody Out There? That's CNN, Sunday, 8:00 p.m. Eastern.

Still ahead, who's your favorite candidate? "The Manchurian candidate"? The latest version of the movie, with a new twist.

And investors were rattled on Wall Street. We'll tell you why when we come back.

(COMMERCIAL BREAK)

PILGRIM: The original 1962 version of the film "The Manchurian Candidate" played on fears of Communism at the height of the Cold War. The current remake of the film updates those fears for the post-Cold War era and a new set of concerns. Senior Political Analyst Bill Schneider reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Who is the real Manchurian candidate? That's become the big guessing game ever since a remake of the 1962 movie was released last week.

The original portrayed a Communist conspiracy bent on subverting the American political system.

ANGELA LANSBURY AS MRS. ISELIN IN "MANCHURIAN CANDIDATE": I served them. I fought for them. I'm on the point of winning for them the greatest foothold they will ever have in this country.

SCHNEIDER: But with a twist. The communists were using her husband, a Joe McCarthy-like politician as a front man.

UNIDENTIFIED MALE: I have here a list of the names of 207 persons who are known by the secretary of defense as being members of the Communist Party!

SCHNEIDER: Cut to 2004.

MERYL STREEP, ACTRESS: I think this is a very different kind of thing, concerned with different fears, different kinds of paranoia.

SCHNEIDER: In the remake, the scheme to subvert the American political system is masterminded by a powerful shadow of multinational corporations.

JON VOIGHT AS SENATOR THOMAS JORDAN IN "MANCHURIAN CANDIDATE": Among the shareholders in Manchurian Global, were they to ever publish a list, which they won't, you would find former presidents, deposed kings, trust fund terrorists, fallen Communist dictators, ayatollahs, African warlords and retired prime ministers.

SCHNEIDER: Modeled on Halliburton, the company Dick Cheney used to run? Ask the film's director.

JONATHAN DEMME, DIRECTOR: We are once again being terrified by our leaders into giving them carte blanche to conduct our affairs around the globe however they personally see fit, at great profit, by the way, to the multinational corporations that they have so much involvement in.

SCHNEIDER: On the web, some indignant conservatives say the film is John Kerry, a wholly-owned and operated subsidiary of George Soros, one of his wealthy backers.

There is no end to the speculation about the villain, played by Meryl Streep.

STREEP: Make no mistake, the American people are terrified, they know something is coming, they can feel it. And we can either shovel them the same old sugar or we can arm them. We can arm them with a young, vibrant vice president.

SCHNEIDER: Notice the haircut. One conservative Web site asks: a cold, diabolical manipulative member of the U.S. Senate. Any thoughts on a real life middle-aged blonde who might fit the description?

Bill Schneider, CNN, Washington.

(END VIDEOTAPE)

PILGRIM: President Bush today gave a short speech after signing the $417 billion Defense Spending Bill. And one line from that speech stands out, but not for the reasons the White House would have liked. Listen closely.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our enemies are innovative and resourceful and so are we. They never stop thinking about new ways to harm our country and our people and neither do we.

(END VIDEO CLIP)

PILGRIM: White House Spokesman Scott McClellan says the president's mistake "shows even the most straightforward and plain spoken people can misspeak."

And pretty straightforward on Wall Street today. Stocks tumbled as oil prices hit a new record. The Dow fell more than 163 points, the NASDAQ lost more than 33 points and the S&P 500 down nearly 18.

Meanwhile, oil prices jumped another 4 percent to close at $44.41 a barrel, and Christine Romans is here with the markets.

CHRISTINE ROMANS, CNN CORRESPONDENT: The record high oil prices, again and the worst sell-off for the Dow since the beginning of March. Light sweet crude at the highest level in the history of the New York Mercantile Exchange.

Demand is red hot, and there are concerns that world supplies just can't keep up. Today the focus is Russia. Its biggest oil company, Yukos, on the verge of bankruptcy; its CEO is in jail; and the government won't let Yukos access its bank accounts.

That could take 1.7 million barrels a day off the market and that's more than OPEC's spare capacity right now. Oil veterans say next stop for oil, $50 and stock traders worry that will hurt the economy.

We've already seen consumers pulling back at the mall this summer and heating oil will cost an extra $250 to $400 for American families this winter. About the only thing more important to the market than oil is jobs, and we'll know more about that tomorrow with the July jobs report. Kitty?

PILGRIM: Christine, it's amazing we're still worrying about Russia in one form or another; it just goes around and around and around.

The thing about jobs, though, that's absolutely critical. How much focus in the markets is on that?

ROMANS: A lot of focus and they're going to be looking at wage numbers. Don't forget that June was a disappointment both for wage numbers and jobs growth. June was sort of a swoon in the economy and a lot of people, including Alan Greenspan, said they thought that that was just a temporary thing.

So July, a lot of people are banking on July. You've got to see improvement in the jobs situation and hopefully some better wages. Otherwise, we're going to continue to talk about what happened to the economy in the summer?

PILGRIM: All right, riveting week. Thanks very much, Christine.

All right. Let's look at some of the e-mails on Wal-Mart.

And Tom of Rock Island, Illinois wrote us: "Has anyone looked at the impact on other retailers after Wal-Mart moves in and destroys their business? The tactics Wal-Mart uses sends hundreds of other workers to the unemployment line."

And Wayne Strauss of New York, New York says: "People chose to work at Wal-Mart because there's no other place to work because Wal- Mart ran everyone else out of business."

And Jeffrey Harrison of Crossett, Arkansas writes: "I've worked for Wal-Mart for 20 years. If not for the benefits afforded to me by Wal-Mart, I would be in a financial crisis today. I think the American public votes everyday by shopping at our stores because they value our low prices as well as the great customer service we offer."

Well, we love hearing from you. E-mail us at loudobbs@cnn.com.

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

(COMMERCIAL BREAK)

PILGRIM: Now the results of tonight's poll: 92 percent of you say the recent terror warnings do not make you feel safer.

Well, thanks for joining us tonight. Please join us tomorrow. We'll be joined by Ivan Eland of the Independent Institute who says a new counterterrorism agency would be just more bureaucracy.

And we'll also be joined by our panel of journalists for a wrap- up of the week's headlines.

For all of us here, good night from New York.

"ANDERSON COOPER 360" is next.

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


Aired August 5, 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: Tonight, the government says it has smashed a terrorist money-laundering operation and arrested two leaders of a mosque.
(BEGIN VIDEO CLIP)

JAMES COMEY, U.S. DEPUTY ATTORNEY GENERAL: We are not playing games. This is a very serious time.

(END VIDEO CLIP)

PILGRIM: U.S. troops fight fierce battles with radical Islamists in Iraq. Insurgents shoot down a U.S. helicopter.

North Korea tries to build a nuclear missile that can hit the entire United States.

In Broken Borders, Border Patrol agents under assault, attacked and injured for simply doing their job.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The harder we press against the smugglers, the harder they push back against us -- and violently.

(END VIDEO CLIP)

PILGRIM: And Is Anybody Out There? Tonight, a special report on the search for life on other planets.

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, August 5. Here now for an hour of news, debate and opinion, sitting in for Lou Dobbs who is on vacation, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight, a major success for the government's efforts to crack down on the terrorist money trail. Authorities say they have broken up a terrorist money-laundering operation after an FBI sting. Government agents arrested the leader and the founder of a mosque in Albany, New York.

Alina Cho has the report.

ALINA CHO, CNN CORRESPONDENT: Kitty, good evening to you. In fact, within the hour, Albany's Muslim community is expected to hold a rally and news conference in the mosque behind me, the very mosque that was targeted in an FBI raid overnight. Earlier in a statement, Albany Muslims said they are against all forms of terrorists -- terrorism, rather, and urged the media to exercise restraint.

A little bit about what happened today: 49-year-old Mohammed Hossain, a U.S. citizen from Bangladesh, and his alleged accomplice, 34-year-old Yassin Aref, an Iraqi citizen with asylum status here -- they were led away in handcuffs immediately following their arraignment hearing at the federal courthouse in Albany.

The two men -- the charges were read against them. Both asked for a lawyer, Aref through an interpreter. About a dozen family members were there, including supporters. They were crying, hugging, consoling each other. The two men, we can tell you, were arrested overnight after FBI agents raided this downtown mosque where the two served as leaders. They were caught following a year-long investigation and sting operation.

Law-enforcement sources say that the men tried to help an FBI informant posing as a terrorist launder money from the sale of a shoulder-fired missile, that they wanted to fire that missile, which was, of course, part of the sting operation and actually a decoy, that, according to the complaint, they wanted to fire it at Pakistan's ambassador for Pakistan's support on the war on terror.

New York's governor earlier, George Pataki called the arrest an example of government acting proactively.

(BEGIN VIDEO CLIP)

GOV. GEORGE PATAKI, NEW YORK: The fact is there are terrorists among us who want to engage in acts to attack us again and to take way our freedom, and I just want to reassure the public here in Albany and in New York and across America that our government, our administration in Washington, this state government and local officials are taking this threat to our freedom very seriously and will continue to be aggressive and proactive in going after those who would look to do us harm.

(END VIDEO CLIP)

CHO: Justice Department officials called this a real and serious threat. Yet it is important to stress that this is not at all connected, they believe, to the recent terror warnings in New York, Newark and Washington, D.C. Justice Department officials called this a good case, a solid case, but not the case of the century. The suspects, we should mention, are being held without bail until a detention hearing is held here in Albany on Tuesday.

Meanwhile, a little bit more about the suspects and their personal background. Hussein, the elder suspect at 49, a longtime resident of Albany, owned a pizzeria here, lived here his wife and five children. In fact, said in a recent interview with an Albany paper that he was proud to be an American. Aref was also a longtime resident here, lived with his wife and three children -- Kitty.

PILGRIM: Thanks very much.

Alina Cho.

U.S. Deputy Attorney General James Comey today said the government is working very hard to infiltrate terrorist groups in this country and around the world. Comey said the government is not "playing games over terrorism."

Justice Correspondent Kelli Arena reports from Washington -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Good evening, Kitty.

Well, with each day comes a new development in this terror front. Today, we learned more about the arrests made in Britain earlier this week. Now one of the men is described as a senior al Qaeda operative.

Intelligence sources tell CNN that his name is Abu Eisa al-Hindi. U.S. officials say that he's a major player who moved operational information between key components of al Qaeda in Britain, Pakistan and the United States.

(BEGIN VIDEO CLIP)

EVAN KOHLMANN, GLOBALTERRORALERT.COM: He's someone with military experience. He's someone who's perfectly fluent in English, in Urdu, in Arabic. He's a transnational al Qaeda operative who has his fingers in many pots.

(END VIDEO CLIP)

ARENA: Terrorism experts say that al-Hindi is a Muslim convert and former commander of an al Qaeda training camp in Afghanistan. Investigators believe he was plotting to attack London's Heathrow Airport based on intelligence from Pakistan, including pictures and maps of that airport. In fact, it was arrests made in Pakistan that sources say led to the arrests in Britain.

The ongoing global investigation has led to multiple intelligence leads, not just in Pakistan and Britain, but in the United States as well.

(BEGIN VIDEO CLIP)

COMEY: We have, as we've said before, reason to believe that we are in a very serious threat environment, and we're working like crazy to try and make sure that threat -- that it does not come to fruition.

(END VIDEO CLIP)

ARENA: As you know, sources had confirmed for us a communication between alleged al Qaeda operatives in Pakistan and an individual or individuals in the United States. Part of the search for al Qaeda operatives here in the U.S. continues to focus on who may have conducted surveillance of several potential financial targets. Investigators say that they have evidence to suggest that some of that surveillance was an inside job -- Kitty.

PILGRIM: All right. Thanks very much.

Kelli Arena.

Federal agents investigating the anthrax attacks three years go today searched homes in New York and New Jersey. The agents went to Wellsville in New York and Dover Township in New Jersey. Now the FBI said no one was arrested at either location. Three years go, anthrax sent through the mail killed five people.

Turning to Iraq, U.S., British and Iraqi troops today fought fierce battles with gunmen loyal to the radical Islamist cleric, and the insurgents killed one American soldier, wounded at least 12 U.S. troops.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): Radical cleric Muqtada al-Sadr called for a national uprising against American and coalition forces. That call ignited a fierce battle in and around the holy city of Najaf. Al-Sadr insurgents shot down an American Marine helicopter. The firefight left one American soldier dead. Seven Iraqi civilians and seven of the insurgents were also killed.

FALAH AL-NAKIB, IRAQI INTERIOR MINISTER (through translator: What happened in Mosul yesterday and what happened yesterday in Najaf and still going in Najaf and in other parts in Iraq signifies that there is an organized plan to dismember Iraq and kill the Iraqi people.

PILGRIM: Iraq's interior minister vowed to defend the Iraqi people and stop the insurgents no matter what the price.

The intense fighting this week is the worst flare-up in two months. Al-Sadr had made a truce of sorts with the U.S. military, but that apparently has crumbled. In April, the last time al-Sadr mounted a fierce offensive, that caused one of the bloodiest months in the Iraq conflict so far.

ALLEN KEISWETTER MIDDLE EAST INSTITUTE: It's really now a question of whether it will spread and does have broader resonance. This time around, there's an added factor, and that's the fact that we have Iraqi sovereignty, the interim government, and so the Iraqis will have a role to play.

(END VIDEOTAPE)

PILGRIM: Now the renewed violence in Najaf comes as fighting in other parts of Iraq flared. In Baghdad, insurgents fired on U.S. forces, and, in Basra, they clashed with British troops.

Well, Pakistan is a key U.S. ally in the global war on terror, but the Pakistani government has faced serious problems controlling the mountainous area on the border with Afghanistan. There are now indications that al Qaeda has reactivated training camps in that area.

Senior Pentagon correspondent Jamie McIntyre reports.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, if not reactivated, then at least perhaps attempting to reactivate it. That's the question facing U.S. intelligence analysts as they review intelligence and overhead imagery gathered along the Afghan/Pakistan border.

According to defense and intelligence sources who have talked to CNN, there are indications based on that overhead imagery that some people, vehicles and other movement have been detected in areas that were known to have been used by al Qaeda as training areas in the past.

This has raised a question about whether this increased activity is an indication that al Qaeda is trying to reestablish or reactivate some of those training facilities located in the semiautonomous region of Pakistan along the southeastern border of Afghanistan.

Again, the U.S. is sharing this intelligence with the Pakistan government, which the U.S. applauds for being very aggressive in targeting both al Qaeda and Taliban forces in that border region, and, again, U.S. forces stress that if any military action is warranted by this intelligence, it would be taken by the Pakistani military, not the U.S. which has been careful to stay on the Afghan side of the border -- Kitty.

PILGRIM: All right. Thanks very much.

Jamie McIntyre.

Still to come, the nuclear threat to the United States, not from al Qaeda but from North Korea.

Plus, what could be the most vicious attack of the campaign so far? The target: Senator Kerry and his service in Vietnam.

And former presidential candidate Gary Hart will join me it talk about his new book, "The Fourth Power: A Road Map for U.S. foreign policy in the 21st century.

(COMMERCIAL BREAK)

PILGRIM: As the United States focuses on al Qaeda, the country faces a potentially much more serious threat from North Korea.

Now the North Koreans already have a limited missile capability, and the CIA says the North Koreans have a small number of nuclear weapons. Now the authoritative magazine "Jane's Defense Weekly" says North Korea is working on developing new missiles for ships and submarines that could potentially strike the continental United States.

And joining me now is the journalist who wrote that article in "Jane's," Joseph Bermudez, and he joins us tonight from Colorado. And, Joe, thank you for being with us.

JOSEPH BERMUDEZ, "JANE'S DEFENSE WEEKLY": You're most welcome. Thank you for having me.

PILGRIM: Let's just be clear about exactly what we have, what we're worried about in North Korea. They know that they have nukes. They know that they have tested land-based missiles. But what are you worried about now going forward?

BERMUDEZ: Recently, in the past several years, we've seen the development of a new class of missile. It's based on former Soviet technology, and it has greater range and great accuracy.

What's disconcerting -- most disconcerting is the fact that if these missiles have the range which they possibly or potentially could, they could reach Hawaii. Even more disconcerting is the fact that there are some preliminary indications that they're trying to take this missile system and either mount it in a submarine or on top -- or inside, I should say, a merchant vessel.

PILGRIM: Now the last North Korean land-based test was not successful. Doesn't that mean that they may be a little bit farther behind in their technology than we may fear, or is that a false security?

BERMUDEZ: It's really difficult to say. The last test was actually a launch of a satellite, and it was unsuccessful in the third stage. A space launch vehicle to launch satellites is different than a ballistic missile. It was successful in multistaging and separation of a payload, which are very important things to do if you're building a ballistic missile.

It's hard to gauge the technology. It's really dependent upon the amount of resources they've put into it and also what foreign assistance they've received.

PILGRIM: Yes. It's almost impossible to gauge what they're doing because it is a closed society. There is also the discussion that a ship-based missile is way too optimistic, that they are nowhere near getting close to doing that. What do you think of that?

BERMUDEZ: There is a tremendous amount of discussion about that. You know, we know that there's some interest in mounting a ballistic missile either on a submarine or a merchant vessel. The technology mounted on a merchant vessel is actually quite old.

Back in the early days, late '50s, mid '50s, the United States and Russia could not reach each other with their ballistic missiles. So both nations initiated design projects to mount their ballistic missiles on merchant vessels or on warships.

Unfortunately or fortunately, whichever way you want to look at it, the U.S. and Soviet Union developed longer-range missiles shortly after which -- so none of these projects actually went to complete fruition. PILGRIM: One last question -- and we're almost out of time -- Korea spends 40 percent of their GDP on military, and that's just a guess because no one actually knows. Is it targeted exclusively to a nuclear project and is that our biggest worry?

BERMUDEZ: It's targeted towards the nuclear program and the ballistic missile program and, to a lesser degree, to electronic warfare. All three are of great concern to us, great concern.

PILGRIM: Thanks very much for joining us and explaining it.

Joseph Bermudez.

Thank you.

Coming up, taking aim at Senator Kerry, a new attack ad goes so far that even the Bush campaign wants no part of it.

Also ahead, he warned of a major terrorist attack on U.S. soil years before September 11. Former Senator Gary Hart joins us to talk about his latest concerns.

And the war on illegal aliens causes a violent backlash at the border.

We'll have that and much more ahead. Stay with us.

(COMMERCIAL BREAK)

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

In tonight's Campaign Journal, controversy over an attack ad that calls into question Senator Kerry's service in Vietnam. Now the ad, sponsored by an independent group called Swift Boat Veterans for Truth, accuses Senator Kerry of lying to win two of his medals. Another Vietnam veteran, Senator John McCain, today strongly condemned the ad. He called it "dishonest and dishonorable." Senator McCain called on the Bush administration to specifically denounce it.

Well, the Bush campaign spokesman today said the Bush campaign is never and will never question Senator Kerry's service in Vietnam.

Jill Dougherty is traveling with the president tonight in Saginaw, Michigan -- Jill.

JILL DOUGHERTY, CNN CORRESPONDENT: Well, Kitty, the Bush -- the White House is not specifically saying that it wants that ad pulled from the airwaves. But it is condemning very strongly that type of ad which is funded by what's called soft money.

We spoke with Scott McClellan, the president's press secretary, and he said that he wants both the Kerry campaign and the Bush campaign to join forces to put an end to ads like that.

(BEGIN VIDEO CLIP) SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: Well, what the president is doing is calling for a stop to all the unregulated soft money activity, and we hope the Kerry campaign will join us.

The president deplores all the soft money activity that's going on. He's been on the receiving end of more than $62 million in negative attacks from these shadowy groups, and he thought that we'd put an end to this activity when he signed the bipartisan campaign finance reforms into law.

(END VIDEO CLIP)

DOUGHERTY: So the president now here in Saginaw, Michigan, addressing the crowd at a big rally here. Earlier he was in Columbus, Ohio, and both of those states very, very tight races. Back in 2000, President Bush won Ohio, lost Michigan, but both by very, very small margins. And it's the same today.

The big subject, of course, in this area: jobs. And President Bush has been pretty explicit in talking about the concerns of people. He said in Ohio he understands that people are "skittish" about it, but he said things are improving.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We've been through a lot. Ohio's been through a lot. Listen, when you go through a recession, corporate scandal, emergency and war, you've been through a lot in a quick period of time. If you really think about it, think about what we have been through as an economy and as a nation, and yet we're strong.

(END VIDEO CLIP)

DOUGHERTY: So this is the end of a three-day swing by President Bush through the battleground states, and he's obviously looking for independent, undecided voters, and there certainly are not many of those left -- Kitty.

PILGRIM: All right. Thanks very much, Jill Dougherty.

After a day of campaigning just blocks away from President Bush, Senator John Kerry is touring the nation's political battleground making stops in several cities in the Midwest today.

And CNN's Dana Bash is traveling with Senator Kerry.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: The Senators John hooked back up today, day seven of their crosscountry tour here in St. Louis after campaigning separately for four days. Now the team appeared quite happy to be back together and talked up their message of the day, which is helping military families they say President Bush has not done enough for. Now earlier today, Senator Kerry made a detour back to Washington, spoke to a conference of minority journalists. There he was asked if he had been president on the morning of September 11, what would he have done? Here's how he responded.

SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL NOMINEE: First of all, had I been reading to children and had my top aide whispered in my ear, "America is under attack," I would have told those kids very politely and nicely that the president of the United States had something that he needed to attend to, and I would have attended to it.

BASH: Remember,, of course, the president, after being told by White House Chief of Staff Andy Card, about the attack continued to read for about five to seven minutes to children. The White House says he didn't want to scare the children.

Now the Bush campaign has called this another attack by what they call a candidate who doesn't know what he stands for. Now, of course, hindsight is 20/20, but Senator Kerry has been trying to combat attacks from the Bush campaign that he does not have what it takes to be commander in chief because he is indecisive.

Meanwhile, back here in the Show Me State, Senator Kerry is trying to fight hard to break out of the dead heat he is in with President Bush to try to capture the 11 electoral votes here in Missouri. Very important electoral votes. No president has gotten the White House in 100 years except for one election year without winning this state.

KERRY: The middle class of the United States of America is playing by the rules, people are working two jobs, three jobs, and they're still not getting ahead, and I'm running for president because the middle class deserves a champion, and the people struggling to get in it deserve one.

BASH: The senators pulled into this rally on a bus, but are leaving on a train. They're trying to capture the magic of Harry Truman's Whistle Stop Tour in 1948, just like Bill Clinton and Al Gore before them. They are going to get on the very same car that Harry Truman himself rode, hoping to capture votes from Missouri on to Ohio and Arizona.

Dana Bash, CNN, St. Louis.

PILGRIM: Well, tonight's thought is on democracy.

"Democracy is not only service, action, brotherhood; it is spirit, spirit-free, indefinable, all-pervasive, that holds us to its revelations even when we seek to escape them."

And those are the words of American journalist Agnes E. Meyer.

My next guest warned as early as 1999 of a major terrorist attack on American soil. Former Senator Gary Hart led a commission on national security. Now the commission's report warned of a large- scale terrorist attack in the United States, and that report was released in early 2001, just months before the September 11 attacks. Now Gary Hart lays out what he calls a grand strategy for the United States in the 21st century. His new book is titled "The Fourth Power."

Gary Hart joins me tonight from Denver, Colorado. And thank you very much for joining us, sir.

GARY HART (D), FORMER U.S. SENATOR: It's a great pleasure. Thank you.

PILGRIM: I must ask you with terrorism dominating the headlines every night, where do you think we stand in this country in terms of preparedness?

HART: Overall, I would say on a scale of 1 to 10 we're probably at 3 or 4. We -- there are ports, and the unavailability of our National Guard, which is deployed in Iraq, the absence of common databases and communication systems and the list goes on -- there is much, work to be done, and even in the private sector, I think, we've only begun to have companies step up to the plate and do what they need to do to help protect this country.

PILGRIM: There's been an entire readjustment in the intelligence community, talk about an intelligence czar. Where do you stand on that?

HART: I think we ought to have very urgent hearings in the Congress this fall and put off final action on major reforms in the intelligence community until next year after the election.

The big issue that needs to be resolved has not been addressed, I think, either by the 9/11 commission or by the White House, and that is who will control the total intelligence budget. And control over the intelligence community is directly tied to control of the dollars. The president doesn't address that issue, and I don't think the 9/11 commission does either.

Eight percent or 85 percent of all the intelligence budget is in the Pentagon, and, unless the director of Central Intelligence or the proposed national intelligence director is given control over that budget, we're back where we started from.

PILGRIM: Perfectly understandable.

Many in Congress came back to address the issue of terrorism during their break, during their vacations. Do you think that much can be accomplished in this interim period, given the level of worry that's going on?

HART: I think very much -- a great deal can be accomplished in terms of creating a record upon which to legislate, but I don't think, with the backs of these members of Congress to the wall, all members of the House running for reelection and a third of the Senate and the president himself, that's the time to be legislating major reorganization of government intelligence that will be with us for the next 50 years.

PILGRIM: And yet not something to rush, but yet isn't there a great deal of urgency because all indications are that before the election we may be in serious jeopardy?

HART: Oh, absolutely. I think there is a chance of attack. But if this reorganization takes place, as proposed by the 9/11 commission, it will still be months, if not years, before any new hierarchy takes control of intelligence and makes a difference. So any quick fix that's legislated this fall will not in the short-term protect this country.

PILGRIM: Let's broaden this out a bit. In 1993, you wrote a memo to President Clinton to reorganize the military. Based on post- Cold War thinking, you thought that we should be fighting a different battle, which now has emerged. Do you think we're doing enough in that arena to reorganize the military?

HART: Well, whatever Secretary Rumsfeld had in mind to do -- and I think he did come into office with an idea of how to reorganize the military -- was sidetracked both by 9/11 and by the, in my judgment, unnecessary invasion of Iraq, and I think the harm being done to our regular and Reserve forces now will take years to correct, let alone reform.

PILGRIM: Let's talk about your book for a second. And it's really wonderful. It talks about the qualities of America, and they are sterling qualities.

But they have to be re-established, you say. What would you like to see done on an individual level to re-establish the qualities of America?

HART: Well, the idea of a grand strategy is simply a systematic application of our nation's powers to our large purposes. And our powers, traditionally, have been economic, political and military. We're far ahead of every other country in the world in all three categories.

What we haven't done as a nation is define what our large purposes are post-Cold War. And I hypothesize that those should be achieving security, expansion of opportunity, and promotion of liberal democracy.

But I also say that our greatest power, are our constitutional principles, and that when we set those aside for expedient reasons, we undercut our greatest moral authority and our greatest power in the world.

And until we re-establish some strategy for America for the 21st century that employs all of our powers, including our principles and ideals, we will not have a direct course that we can follow.

PILGRIM: Thank you very much for explaining it to us. Gary Hart, thank you, sir.

HART: Great pleasure. Thank you.

PILGRIM: That brings us to the topic of tonight's poll: do the recent terror warnings make you feel safer? Yes or no? Do cast your vote at cnn.com/Lou and we'll bring you the results later in the show.

Now, many of you wrote us about our face-off last night. Is Wal- Mart good for America?

And Harold LaFountain of Battle Creek, Michigan writes: "I believe Wal-Mart is a blessing to us as Americans. My sister is employed by Wal-Mart and couldn't be happier. We shop there often and find the savings a much needed help in these difficult times."

Jamie of Rogers, Arkansas writes: "Hasn't Wal-Mart lowered the cost of living for Americans, if not the entire world? I'm confused as to why Wal-Mart is a target when all they are doing is satisfying their customers."

Michael Adams of Columbus, Ohio writes: "Wal-Mart stores are not the best jobs that people can find. Most of the time it's the only jobs people can find due to outsourcing of better paying jobs to other countries."

And we'll share more of your thoughts on Wal-Mart later a little bit later in the show. E-mail at LouDobbs@cnn.com.

Now, with we have reported extensively on a disturbing trend along our nation's borders; the increasing violence against border patrol agents.

In "Broken Borders" tonight, the Department of Homeland Security is cracking down on drug and illegal alien smugglers at the border. And the violent backlash is escalating. Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): It may be undeclared, but there's a war going on in the Arizona desert. The number of violent attacks on border patrol agents by illegal alien and drug smugglers is up sharply.

The border patrol's new chief says there have been 89 attacks on agents so far this year. If that pace continues, it would mean a 27 percent increase in violent assaults over 2003.

It's one consequence of the ongoing Arizona Border Control Initiative. The government is trying to regain control of a section of the border that's become the main crossing point for drugs and illegal aliens.

T.J. BONNER, PRESIDENT, NATIONAL BORDER PATROL COUNCIL: This is extremely predictable. When we launched various initiatives such as Gatekeeper in San Diego, we saw exactly the same thing. The harder we press against the smugglers, the harder they push back against us, and violently. WIAN: Bonner says part of the problem lies in border patrol tactics. Agents sometimes are stationed in fixed positions along the border where they're often sitting ducks for illegal aliens and smugglers, armed with everything from rocks to machine guns.

But even undercover agents on the move face the constant threat of violence. As we reported in April, Douglas Immigration and Customs agents lost four vehicles to shootouts and crashes with smugglers in just one week.

LEE MORGAN, ICE AGENT: Dope smugglers and human traffickers are probably the meanest, cruelest criminals on the border or in the United States. They're unparalleled in their viciousness.

WIAN: The border patrol plans to add 260 agents in Arizona, and they can't come soon enough. Already this week there have been two more gun battles between agents and smugglers.

Meanwhile, the hunt for potential terrorists continues. This week 12 congressmen asked the Department of Homeland Security for a detailed breakdown of non-Mexicans who've been arrested illegally crossing the border.

Casey Wian, CNN, Los Angeles.

(END VIDEOTAPE)

PILGRIM: Coming up: General David Grange on Point: hundreds of billions of dollars approved for our national defense and a bold new plan for the Army.

Also ahead, is there anybody out there? Scientists believe they have the answer to one of life's great mysteries.

And asleep at the switch. In a life and death matter, an audiotape you simply won't believe.

(COMMERCIAL BREAK)

PILGRIM: In Grange on Point tonight, President Bush today signed a massive Defense Appropriations Bill into law. The wartime spending bill provides more than $417 billion for the military.

Now in another sign, the nation's on a war footing. The Army is radically changing its basic training for recruits and all recruits, not just those in combat arms, will receive intensive weapons training.

And joining us now is General David Grange to talk about these developments. The Defense Bill, General Grange, do you think that's sufficient?

GENERAL DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, I'll tell you, there's never enough money. There is always going to have to be prioritization on certain programs, and it's going to have to be give and take. And, you know, the infantry, the troops on the ground, they should have the priority but you're going to need some monies for other programs.

PILGRIM: $25 billion for the wars in Iraq and Afghanistan. Just having crunched numbers on this for now more than a year myself, I know that this is pretty modest.

GRANGE: Well, it is. $25 billion doesn't really go too far, but if you take the whole program, it's still a good amount of monies. But, again, how much do you put on the ground? How much do you put in the air and at sea? All of the services are important.

Right now we're focused and we can understand and see Iraq. But there's going to be other wars in the future and they're always different.

PILGRIM: General Grange, on that point, it includes money for guided-missile destroyers and other high tech equipment. Are we allocating our resources in the right direction, according to your estimates?

GRANGE: Well, I think the preponderance goes to the troops on the ground. They carry the heaviest burden, and they're the ones, right now, that are up front with the enemies that we're encountering.

But, again, the monies for air and for sea platforms is not just to fight a battle against another high tech military, it's to provide support to those on the ground depending on the location geographically.

So, I think that you've got to watch yourself and not just preparing for the current fight, but the future fight. And that means other systems and other services as well.

PILGRIM: Let's talk about the basic training program and it's being somewhat adjusted. What's your estimate of how they're doing it and what exactly are they doing for us lay people who don't understand all this?

GRANGE: Well, in modern history, the U.S. Army in particular, you broke down the training where combat-oriented forces received a certain kind of training and support troops received another type of training.

Now, like the United States Marine Corps, where everyone is a rifleman first, the Army, everyone is a warrior first. And since there are no front lines in many of the fights today and you're in a 360-degree environment, it is important that everybody is a worrier first.

PILGRIM: Do you think that this is the way we should go, going forward?

GRANGE: Absolutely. I love it.

PILGRIM: OK. What about recruiting? How are we doing in terms of recruiting new people to go into the Army these days?

GRANGE: Well, recruiting is interesting because it's up against some requirements. Many advocate that right now the military, we're at peak for commitments.

But if that's not correct, if this is a plateau, where we have sustained commitment around the world for some time to come, which I believe it is myself, then how you recruit and retain those in the military. It's not just new recruits, it's that midterm sergeant, that young officer that's already trained, that's already whetted to military operations that you want to keep in the force.

And so a lot of effort has to go into this. People are your most important resource. That's where the money really needs to go. Now the military has some very good programs for short-term. The concern is going to be long-term, especially with certain elements like National Guard.

PILGRIM: All right. Thanks very much. General David Grange.

GRANGE: My pleasure.

PILGRIM: A reminder now to vote in tonight's poll. Do the recent terror warnings make you feel safer? Yes or no. Cast your vote at cnn.com/lou. We'll bring you the results later in the show.

Here's a story we have for you. A Maryland woman who called 911 in the middle of the night was alarmed by the sound of someone breaking into her home. But she was also shocked by the response of the 911 operator.

(BEGIN VIDEO CLIP)

CALLER: I didn't see anything.

(Sound of snoring)

CALLER: Hello?

(END VIDEO CLIP)

PILGRIM: Yes, you heard it correctly. The 911 operator was snoring. Now, authorities are investigating the incident, and the employee, a 10-year veteran of the night shift, is on a preplanned vacation, pending the outcome of that investigation.

Still ahead, we'll tell you why these people are digging in the dirt in a quest for life on another planet.

And then: who is the real Manchurian candidate? A new movie points the finger at multinational corporations.

And speak for yourself, Mr. President. Another Bushism that is very hard to beat. We'll tell you when we come back.

(COMMERCIAL BREAK) PILGRIM: Scientists hoping to find evidence of life on mars instead found mysterious layers of volcanic rock. Scientists today said a lava flow buried any possible signs of lakes or rivers in the Gusev Crater. That's an area of intense interest for NASA scientists.

Well, according to scientists, the latest evidence suggests that there is life on other planets. It's just a matter of finding it. And this Sunday, CNN Space Correspondent Miles O'Brien goes searching for signs of life in the universe, and here's a preview.

(BEGIN VIDEOTAPE)

MILES O'BRIEN, CNN SPACE CORRESPONDENT: Greetings from the deadest place on earth: Chile's Atacama Desert.

These researchers are probing the limits of life, trying to understand why there is nothing living in the dirt they're digging, while just over the hill life is thriving.

The big question is: are we alone in the universe? Is there life anywhere other than earth? And the scientists tell me mapping the limits of life here makes it easier to chart a clever course to troll for it out there, on Mars and possibly other planets. And this is why scientists in this field are so excited right now.

The more they look for life in all the wrong places, the more they find it. In the scalding hot acid springs of Yellowstone; in the deepest, darkest depths of the ocean; in the cold, dry valleys of the Antarctic; even in radioactive waste pools.

We now know all of these places are home to some hail hardy critters. Life is much more tenacious than we once assumed.

STEVE SOUYRES, MARS ROVER PROJECT LEADER: There used to be this idea that life really only could take hold in a very narrow range of conditions, sort of like a Goldilocks kind of thing, where it can't be too warm, it can't be too cold, it's got to be just right.

But what you find is, as long as you can get liquid water there and some source of energy, life is happy on this planet.

O'BRIEN: And this has fundamentally changed the way scientists look at the universe.

PAUL DAVIES, AUSTRALIAN CENTER FOR ASTROLOGY: People have speculated about life beyond earth for centuries that it's become a scientific venture only relatively recently.

KELLY SMITH, CLEMSON UNIVERSITY DEPARTMENT OF PHILOSOPHY AND RELIGION: Well, I think the universe is such an incredibly huge place that the chances that there isn't life anywhere out there are virtually zero.

How frequent intelligent life is, is another question.

DAVIES: If we were to discover just a single microbe on another planet and if we could be sure it didn't get there from our planet or vice versa, if we discovered a second sample of life, somewhere where life has began from scratch, even just a microbe, it would transform our world view beyond the discoveries of Copernicus and Galileo, Darwin and Einstein put together.

(END VIDEOTAPE)

PILGRIM: Now this Sunday, a special television event, Miles O'Brien goes in search of life out in the universe, and that's when CNN presents "Is Anybody Out There? That's CNN, Sunday, 8:00 p.m. Eastern.

Still ahead, who's your favorite candidate? "The Manchurian candidate"? The latest version of the movie, with a new twist.

And investors were rattled on Wall Street. We'll tell you why when we come back.

(COMMERCIAL BREAK)

PILGRIM: The original 1962 version of the film "The Manchurian Candidate" played on fears of Communism at the height of the Cold War. The current remake of the film updates those fears for the post-Cold War era and a new set of concerns. Senior Political Analyst Bill Schneider reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Who is the real Manchurian candidate? That's become the big guessing game ever since a remake of the 1962 movie was released last week.

The original portrayed a Communist conspiracy bent on subverting the American political system.

ANGELA LANSBURY AS MRS. ISELIN IN "MANCHURIAN CANDIDATE": I served them. I fought for them. I'm on the point of winning for them the greatest foothold they will ever have in this country.

SCHNEIDER: But with a twist. The communists were using her husband, a Joe McCarthy-like politician as a front man.

UNIDENTIFIED MALE: I have here a list of the names of 207 persons who are known by the secretary of defense as being members of the Communist Party!

SCHNEIDER: Cut to 2004.

MERYL STREEP, ACTRESS: I think this is a very different kind of thing, concerned with different fears, different kinds of paranoia.

SCHNEIDER: In the remake, the scheme to subvert the American political system is masterminded by a powerful shadow of multinational corporations.

JON VOIGHT AS SENATOR THOMAS JORDAN IN "MANCHURIAN CANDIDATE": Among the shareholders in Manchurian Global, were they to ever publish a list, which they won't, you would find former presidents, deposed kings, trust fund terrorists, fallen Communist dictators, ayatollahs, African warlords and retired prime ministers.

SCHNEIDER: Modeled on Halliburton, the company Dick Cheney used to run? Ask the film's director.

JONATHAN DEMME, DIRECTOR: We are once again being terrified by our leaders into giving them carte blanche to conduct our affairs around the globe however they personally see fit, at great profit, by the way, to the multinational corporations that they have so much involvement in.

SCHNEIDER: On the web, some indignant conservatives say the film is John Kerry, a wholly-owned and operated subsidiary of George Soros, one of his wealthy backers.

There is no end to the speculation about the villain, played by Meryl Streep.

STREEP: Make no mistake, the American people are terrified, they know something is coming, they can feel it. And we can either shovel them the same old sugar or we can arm them. We can arm them with a young, vibrant vice president.

SCHNEIDER: Notice the haircut. One conservative Web site asks: a cold, diabolical manipulative member of the U.S. Senate. Any thoughts on a real life middle-aged blonde who might fit the description?

Bill Schneider, CNN, Washington.

(END VIDEOTAPE)

PILGRIM: President Bush today gave a short speech after signing the $417 billion Defense Spending Bill. And one line from that speech stands out, but not for the reasons the White House would have liked. Listen closely.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our enemies are innovative and resourceful and so are we. They never stop thinking about new ways to harm our country and our people and neither do we.

(END VIDEO CLIP)

PILGRIM: White House Spokesman Scott McClellan says the president's mistake "shows even the most straightforward and plain spoken people can misspeak."

And pretty straightforward on Wall Street today. Stocks tumbled as oil prices hit a new record. The Dow fell more than 163 points, the NASDAQ lost more than 33 points and the S&P 500 down nearly 18.

Meanwhile, oil prices jumped another 4 percent to close at $44.41 a barrel, and Christine Romans is here with the markets.

CHRISTINE ROMANS, CNN CORRESPONDENT: The record high oil prices, again and the worst sell-off for the Dow since the beginning of March. Light sweet crude at the highest level in the history of the New York Mercantile Exchange.

Demand is red hot, and there are concerns that world supplies just can't keep up. Today the focus is Russia. Its biggest oil company, Yukos, on the verge of bankruptcy; its CEO is in jail; and the government won't let Yukos access its bank accounts.

That could take 1.7 million barrels a day off the market and that's more than OPEC's spare capacity right now. Oil veterans say next stop for oil, $50 and stock traders worry that will hurt the economy.

We've already seen consumers pulling back at the mall this summer and heating oil will cost an extra $250 to $400 for American families this winter. About the only thing more important to the market than oil is jobs, and we'll know more about that tomorrow with the July jobs report. Kitty?

PILGRIM: Christine, it's amazing we're still worrying about Russia in one form or another; it just goes around and around and around.

The thing about jobs, though, that's absolutely critical. How much focus in the markets is on that?

ROMANS: A lot of focus and they're going to be looking at wage numbers. Don't forget that June was a disappointment both for wage numbers and jobs growth. June was sort of a swoon in the economy and a lot of people, including Alan Greenspan, said they thought that that was just a temporary thing.

So July, a lot of people are banking on July. You've got to see improvement in the jobs situation and hopefully some better wages. Otherwise, we're going to continue to talk about what happened to the economy in the summer?

PILGRIM: All right, riveting week. Thanks very much, Christine.

All right. Let's look at some of the e-mails on Wal-Mart.

And Tom of Rock Island, Illinois wrote us: "Has anyone looked at the impact on other retailers after Wal-Mart moves in and destroys their business? The tactics Wal-Mart uses sends hundreds of other workers to the unemployment line."

And Wayne Strauss of New York, New York says: "People chose to work at Wal-Mart because there's no other place to work because Wal- Mart ran everyone else out of business."

And Jeffrey Harrison of Crossett, Arkansas writes: "I've worked for Wal-Mart for 20 years. If not for the benefits afforded to me by Wal-Mart, I would be in a financial crisis today. I think the American public votes everyday by shopping at our stores because they value our low prices as well as the great customer service we offer."

Well, we love hearing from you. E-mail us at loudobbs@cnn.com.

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

(COMMERCIAL BREAK)

PILGRIM: Now the results of tonight's poll: 92 percent of you say the recent terror warnings do not make you feel safer.

Well, thanks for joining us tonight. Please join us tomorrow. We'll be joined by Ivan Eland of the Independent Institute who says a new counterterrorism agency would be just more bureaucracy.

And we'll also be joined by our panel of journalists for a wrap- up of the week's headlines.

For all of us here, good night from New York.

"ANDERSON COOPER 360" is next.

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