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Lou Dobbs Tonight

Kerry Accuses Bush Surrogates of Dirty Work, Intelligence Reform Dominates D.C.

Aired August 19, 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.


LOU DOBBS, CNN ANCHOR: Tonight, Senator John Kerry fires back against Republican attack ads. Senator Kerry accuses President Bush of using surrogates to do what he calls dirty work.
(BEGIN VIDEO CLIP)

SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL NOMINEE: If he wants to have a debate about our service in Vietnam, here is my answer: Bring it on.

Here's what happens...

(END VIDEO CLIP)

DOBBS: The White House says Senator Kerry's charges are baseless. Tonight, I'll talk with one of Senator Kerry's harshest critics, swift boat veteran John O'Neill, author of the book "Unfit for Command."

Several top Republicans appear ready to defy President Bush on the critical issue of intelligence reform. One of those Republicans, the highly-respected chairman of the Senate Intelligence Committee, Senator Pat Roberts, is my guest.

American and Iraqi troops tonight are bombarding insurgent positions in Najaf. We'll have a live report. And military analyst General David Grange is here to assess the attack on Najaf.

Public fury and protests in Colorado, after a school not only displays the flag of Mexico, but gives the Mexican flag equal prominence with the U.S. flag.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's not a school which is a joint effort and enterprise of the Mexican government and the American government.

(END VIDEO CLIP)

DOBBS: And an astonishing fraud by illegal aliens and criminals, a threat to our national security. Officials could suspend hundreds of thousands of driver's licenses in New York. We'll have a special report.

CNN ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, August 19. Here now for an hour of news, debate and opinion is Lou Dobbs. DOBBS: Good evening.

Senator John Kerry today struck back in the increasingly bitter fight over his military service in Vietnam. Senator Kerry accused President Bush of relying on front groups to challenge Kerry's record in Vietnam. For its part, the White House declared Senator Kerry's attack to be false and baseless. At issue, Republican ads that accuse Senator Kerry of lying to win two of his combat decorations.

Dan Lothian reports.

(BEGIN VIDEOTAPE)

KERRY: The first definition of "patriotism" is keeping faith with those who wear the uniform.

DAN LOTHIAN, CNN BOSTON BUREAU CHIEF (voice-over): In an all-out effort to defend his war record, Senator John Kerry launched an attack on the group Swift Boat Veterans for Truth, which has been running a television ad in key battleground states and speaking out publicly, questioning his service and medals.

KERRY: This group isn't interested in the truth. They're not telling the truth.

LOTHIAN: Speaking in Boston to some 5,000 members of the International Association of Firefighters, Kerry took the offensive, saying in public what his press releases and campaign have said in response for months.

KERRY: Bring it on

LOTHIAN: Kerry also went after President Bush for not denouncing the ads.

KERRY: He wants them to do his dirty work.

LOTHIAN: The Bush campaign calls that claim false and insists the president has always considered Kerry's service in Vietnam noble.

But last week on "LARRY KING LIVE," Bush passed up the opportunity to call on his supporters to back down.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Well, I haven't seen the ad, but I do condemn is these unregulated soft money expenditures by very wealthy people.

LOTHIAN: Kerry's war record has been questioned throughout his political career, but the controversy has intensified in the presidential campaign. The Kerry campaign is firing back with another 30-second ad.

LARRY THURLOW, VIETNAM VETERAN: I expected I'd be shot when he pulled me out of the river. He risked his life to save mine.

LOTHIAN: This aggressive response comes as the credibility of the leading veteran behind the critical Kerry ad is being questioned. Larry Thurlow had disputed Kerry's claim of a battle that led to a Bronze Star.

But now in documents obtained by CNN, Thurlow's own military record shows that, in fact, there was "weapons fired" directed at "all units in the area that day." Thurlow now says his record reflects an account written up by Kerry and calls it "a lie."

(on camera): The new Kerry counter ad will run in Ohio, Wisconsin and West Virginia. That means the Kerry campaign is deviating from cost-saving plans not to buy any television ads until September, a sign that despite the official line, there is pressure to end this controversy.

Dan Lothian, CNN, Derry, New Hampshire.

(END VIDEOTAPE)

DOBBS: The White House today said Senator Kerry appears to be in favor of negative ads as long as they benefit Senator Kerry's campaign. Press Secretary Scott McClellan said President Bush has condemned all advertisements by shadowy groups.

Jill Dougherty reports from Crawford, Texas -- Jill.

JILL DOUGHERTY, CNN CORRESPONDENT: Well, Lou, we've been hearing this on the campaign, off the campaign trail for several days back and forth, this sniping from both campaigns, and now the rhetoric is heating up.

As you mentioned, here in Crawford, Texas, the president's press secretary, Scott McClellan, getting numerous questions from reporters precisely about those attack ads. McClellan's calling the charges by Senator Kerry false, and he says that the president and the White House, in fact, have not and will not question the military record of John Kerry.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: Senator Kerry knows that his latest attack is false and baseless. The president has condemned all of the ads by the shadowy groups.

We have called on Senator Kerry to join us in calling for an end to all the unregulated soft money activity that is going on in this campaign, and the president has stayed focused on the issues and the choices that the voters face.

That's what this ought to be about. There are some clear choices that the voters face for the future. This should not be about the past.

(END VIDEO CLIP)

DOUGHERTY: And, once again, McClellan was pressed by reporters to say would the president actually disown or criticize this individual ad? He wouldn't go there. He would not say that, but he repeated what they have been saying now for days, which is President Bush has condemned all of these attack ads that are funded by soft money.

In fact, McClellan said that $62 million has been spent and President Bush has been the recipient of those ads and that the White House, the campaign, has been urging Senator Kerry to join them and condemn the ads. Kerry hasn't, they say.

And so they argue that there's really tacit approval by the Kerry campaign for those ads -- Lou.

DOBBS: Jill, just to be clear, you said the recipient of those ads. Subject or victim? Would those words be as appropriate?

DOUGHERTY: Victim, we should say. The quote actually has been "He's been on the receiving end of those ads." So he's been the -- they would say the victim of those ads.

DOBBS: I think it would be fair, Jill, to say that both men have reason to abhor the attack ads that have been launched against them in this campaign. It would be interesting to see one or both of these candidates step up and simply end this bitterness in attack ads that are flying against both candidates.

Later here in the show, I'll be talking with one of Senator Kerry's strongest critics, swift vote veteran John O'Neill. He's the author of "Unfit for Command."

I'll also be talking with "Washington Post" reporter Michael Dobbs. He broke the story uncovering conflicting information about one of the veterans relied upon by John O'Neill in his book.

One of the key issues in this campaign, of course, is the war in Iraq, and, tonight, American troops and aircraft joining with Iraqis are bombarding insurgent positions in Najaf. American soldiers and Marines have been battling enemy gunmen in Najaf for more than two weeks. More than a thousand supporters of the anti-American cleric Muqtada al Sadr are defying Iraqi government demands that he surrender.

Joining me now from Baghdad is "TIME" magazine correspondent Brian Bennett.

Brian, tonight, what are your sources? What do you know about the extent of the fighting in Najaf?

BRIAN BENNETT, "TIME" MAGAZINE: Well, tonight, there's been a large amount of fighting in the neighborhood just around the shrine, between U.S. -- U.S. forces and the Mehdi Army.

What we've seen is -- over the last several days, is an on-again- off-again battle. There have been certain cease-fires after negotiations began, and, again today, there were different overtures from both Muqtada and from the Iraqi government to try to quiet down the situation. But that has not stopped the bombardments, the air bombardment of the area around the shrine in Najaf, and also the attacks from the Mehdi Army on the American positions.

DOBBS: Brian, yesterday, Muqtada al Sadr apparently accepted the terms of a truce and, shortly afterwards, rejected those terms and then said he would seek martyrdom, a death in this battle. What, in your best judgment and the judgment of those you talk with, is al Sadr trying to accomplish here?

BENNETT: Well, it seems certainly that he is just trying to better his negotiating position. What I think the Iraqi government has discovered over the last couple of week is that every time that Muqtada and his militia fight and engage the government and stand up to them, he is able to bring -- have more leverage -- to bring more leverage to the negotiating table.

For example, just this week, he was able to dominate -- the issue of Muqtada being in Najaf and occupying the shrine totally dominated the issues in the national conference that was held here in Baghdad, and, instead of focusing solely on establishing new government and moving towards elections, a lot of the energy during that conference here in Baghdad was spent on trying to resolve the Najaf crisis and talking about Muqtada al Sadr.

DOBBS: Brian, has the Iraqi government finally -- has its patience come to end with al Sadr?

BENNETT: It seems just in the last 48 hours that a lot of moves have been made by the Iraqi government that seem to suggest that they're trying -- they're about to call Muqtada al Sadr's bluff.

Trained Iraqi Army soldiers have moved into the area around the shrine, according to sources of mine in Najaf, and a lot of the action is just getting into the neighborhoods much closer to the shrine than it was before.

It seems like it's -- the situation's coming to a head, and Muqtada al Sadr doesn't have many more chances to stall the inevitable.

DOBBS: "TIME" magazine correspondent Brian Bennett reporting tonight from Najaf.

We thank you, Brian.

Still ahead, the battle to reform our intelligence agencies. I'll be talking with a highly respected senator who chairs the Senate Intelligence Committee, Senator Pat Roberts. He's our guest.

And is Senator Ted Kennedy a threat to national security? It seems some airport screeners in at least Boston believe he is. We'll have a report.

An outrage and protest after a public school in Colorado displays the flag of Mexico side by side with the American flag. We'll have that special report for you as well.

(COMMERCIAL BREAK)

DOBBS: The issue of intelligence reform has dominated Washington since the September 11 commission recommendations of a massive overhaul for intelligence agencies.

The highly respected chairman of the Senate Intelligence Committee, Senator Pat Roberts, wants the White House to appoint a powerful national intelligence director with full budget authority.

But the White House, to this point at least, has not endorsed Senator Roberts' proposals. Senator Roberts joins me now from Capitol Hill.

Senator, good to have you with us.

SEN. PAT ROBERTS (R), CHAIRMAN, INTELLIGENCE COMMITTEE: It's always a pleasure to be with you, Lou. Thank you.

DOBBS: Senator, you're calling for legislation to create an NID, a national intelligence director, with full budgetary authority. Is the White House actively resisting, or what is the posture with the White House on this issue?

ROBERTS: We're in full cooperation with the White House. In talking with the national security folks, they are going to be sending us what they call mechanisms in regards to what they think is appropriate and not appropriate. I don't know what that is yet. They're still working on it.

Lou, I would just say this is very hard work. We have an urgent need to get this done. We have a window of opportunity. We must seize that opportunity. But we have to get it right. And so we've -- even on our staff as Senator Rockefeller -- and we have 22 professional staff members who are quite good to make sure that this really works. You know, that's the key thing.

So we are working with the White House. They are not obstructing us. I have had no input from the White House that they are objecting to a national -- a national intelligence director with full budget authority.

DOBBS: You mentioned Senator Rockefeller, the vice chairman of the committee that you chair. The two of you, Democrat and Republican, aligned on this issue. Is there any way that you can see in which the creation of a very powerful NID with full budgetary authority and sweeping powers across all agencies could be withstood at this point?

ROBERTS: I don't know about withstood. I just hope we're able to reach a consensus. I know that Jay and I -- or let me rephrase that. My colleague and the distinguished vice chairman -- I know we agree that in terms of a national intelligence director, you have to give that person the authority to get the job done. We also agree -- and I think Jay said on your show the other night -- that we're not going to interfere at all with the tactical intelligence that the warfighter needs or some related intelligence. It's the rest of the intelligence package that would fall to the NID, the national intelligence director. So we're working hard together.

You know if you would have asked me, what, six months ago with all the differences of opinion that were being expressed if the Senate Intelligence Committee would vote 17-0 in a bipartisan effort on the report we issued on the prewar intelligence, whether or not the WMD was there, you would probably have said, oh, Pat, you can't do that.

But both Jay and I put aside differences. We know that national security and the mission is primary. We're not wedded to any particular agency. I think this whole situation is moving rather fast, and I hope we can build a consensus for it because it's so important.

DOBBS: In point of fact, you and Senator Rockefeller at the head of the Senate Intelligence Committee are setting the standard for bipartisan efforts in Washington right now in a Congress that is not always cooperative and certainly not on a partisan level.

Nonetheless, within your own party, Senator John Warner wants to go slow, questions the need for an NID at all. Is it your judgment that you will be able to work successfully with Senator Warner to reach, as you put it, consensus?

ROBERTS: Senator Warner is an outstanding chairman of the Armed Services Committee. I'm also privileged to serve on that committee. I'm chairman of the Emerging Threats and Capabilities Subcommittee. I think what he said in the hearings -- or at least, you know, what I heard him say in the hearings -- is that if you have a national intelligence director, make sure he works in a commensurate fashion, a partnership effort, with the secretary of defense. I have no quarrel with that whatsoever.

So I think there's been probably too much made of some kind of a difference of opinion here in regards to Chairman Warner and myself.

DOBBS: One other issue on which you and your committee is at forefront, and that is the question of Senator Kerry's attendance at Senate Intelligence Committee hearings, the subject of ads by the Bush-Cheney campaign. Are you prepared, have you been asked to, and are your colleagues on the Senate committee willing to release the attendance records of all senators on that committee?

ROBERTS: Well, I think it's untoward, if that -- you know, there's a good Senate word for you. I think it is untoward really. You know, for the chairman and the vice chairman of the committee to start revealing the attendance records of virtually all members, whether or not it's John Kerry or John Edwards or not, there's a very simple answer here.

All John Kerry has to do and all that John Edwards has to do is write us or pick up the phone and call me, say, hey, Pat, hey, Jay, hey, Senator Rockefeller, hey, Senator Roberts, please release my records, not only the public records, but the closed records. Then the matter's over. Everybody knows. And so if he will do that, we will follow through.

But we are hesitant to start in on this business of who's there and who isn't. But let me say this attendance is very, very important. Attendance is where you gain the experience and the expertise to do the job. That's why we are repealing the term limits on the service on the Intelligence Committee, which is one of the strongest recommendations by the 9/11 commission.

DOBBS: Senator Pat Roberts, chairman of the Senate Intelligence Committee.

We thank you, sir, for being with us.

ROBERTS: Thank you, Lou. Always a pleasure.

DOBBS: A leading senator, one of the most recognizable figures in American politics has been mistaken, apparently, for a possible security risk in his own hometown airport. Senator Ted Kennedy of Massachusetts stopped at Boston's Logan International Airport when a name similar to his apparently appeared on a security watch list. Senator Kennedy was put through additional screening before he was ultimately allowed to board a flight to Washington, D.C.

This is not the first time this has occurred. Homeland Security Secretary Tom Ridge called to apologize to the senator about the confusion. Senator Kennedy, of course, was never on a so-called no- fly list of any kind.

Still ahead here, an outspoken critic of Senator Kerry calls him unfit for command. That's the title of his new book that says Senator Kerry lied about part of his service in Vietnam. Author, swift boat veteran John O'Neill joins me here next.

But his accusations are launched at Senator Kerry. New questions tonight about the record and credibility of one of his accusers. "Washington Post" reporter Michael Dobbs joins us.

And a Denver public school displays the Mexican flag alongside that of the U.S. flag sparking a controversy that has bitterly divided the community.

Stay with us.

(COMMERCIAL BREAK)

CNN ANNOUNCER: LOU DOBBS TONIGHT continues with more news, debate and opinion. Here now, Lou Dobbs.

DOBBS: Returning to the top story of the day, Senator John Kerry fighting back over the controversy of his military service in Vietnam. Senator Kerry has accused President Bush now of using critics of his record to "do his dirty work." My guest tonight is certainly one those critics. John O'Neill has written a book called, "Unfit for Command." In it, he and other swift boat veterans accuse Senator Kerry of lying about his service in the war. John O'Neill joins me now from Washington, D.C.

One note that we do want to make: The national director of Veterans for Kerry, John Hurley, was scheduled to be with us tonight and to debate with John O'Neill, but the Kerry campaign canceled his appearance at the -- almost the last moment.

John O'Neill, good to have you with us.

JOHN O'NEILL, AUTHOR, "UNFIT FOR COMMAND": Thank you very much, Lou. It's an honor to be on your show.

DOBBS: As you are keenly aware, you are now at the center of a controversy, and, today, "The Washington Post" reporter Michael Dobbs pointed out that one of the people that you relied upon in your book accusing Senator Kerry of lying about his service -- it turns out that the facts actually substantiate Senator Kerry and -- in that episode. What are your thoughts?

O'NEILL: I believe exactly the opposite, Lou. Although the article is rather cleverly worded, this relates to the so-called no- man-left-behind episode where Kerry claimed that five swift boats fled after mine, and he went back and picked up Jim Rassman.

We claim that Mr. Kerry fled, sure enough, but that four swift boats stayed to rescue the three boat and that when Kerry finally came back, he picked up Rassman. There was no fire. It's interesting because that article admits that Kerry fled and the other guys stayed.

What is under discussion is: Was there fire when he finally chose to come back to where the other boats were? We disagree with Mr. Dobbs, and I could outline the reasons why. We believe the piece of evidence he relies on is very tangential, and he refused to interview the four officers that were involved and the three additional swift boat sailors, all who were involved directly in the incident, who say there was no fire.

He also didn't examine the fact that there was -- is absolutely not a bullet hole anywhere, nobody was wounded, and the boats were there for an hour and a half. So we think it's a very one-sided treatment of the matter.

DOBBS: John, at the same time, the citations for both Senator Kerry and for -- thoroughly, absolutely, clearly and unequivocally state that there was fire, and those are parts of the citations in which both men won Bronze Stars.

O'NEILL: Yes, but they're based on Kerry's report, the same report that says that there was 5,000 meters of fire, Lou. Kerry's report that day describes something like the Battle of Gettysburg. He says there was 3.2 miles of heavy fire on both banks.

Lou, there wasn't a boat hit by a bullet that day. The sailors didn't hear anything -- a single bullet, and there's no physical evidence. There would be no reason for people to come up and say there was no fire.

In addition, Kerry has now admitted that he left the scene and came back. Why would a guy get a medal for leaving where the other boats were and coming back to where they were all along?

DOBBS: This also raises the question, John, does it not, as to why Thurlow then would not say that his -- that he was not deserving of the decoration for valor in combat?

O'NEILL: Well, what...

DOBBS: If there were no combat.

O'NEILL: Oh, well, let me explain what Larry Thurlow did. The three boat blew up in the air, Lou. There were swimmers in the water. Kerry fled. Thurlow didn't flee. The boat was out of control. Thurlow kept jumping on the boat, was almost ground up by the engines when he -- by the propellers when he fell in the water, climbed back up again, finally got on the boat, brought the boat to a halt, climbed in the hull of the boat where it was sinking.

Keep in mind people would have drowned, and he actually managed to plug them, and that's reflected in the citation. It was an incredibly gallant act in saving that boat. There'd be a lot of people dead today if it wasn't from Larry Thurlow, and Kerry had nothing to do with that. Kerry did leave, and he did return to pick up Rassman who was about 40 or 50 yards from the other people and who had fallen off of Kerry's boat.

DOBBS: And Rassman, a key subject of this conflict, whether in the midst of small arms fire at least or not, embraced Senator Kerry as his rescuer, and he certainly has nothing but the highest accommodation for the senator and for his rescue.

O'NEILL: Yes, And I would, too, if Senator Kerry had picked me up out of the water. The fact is, though, when he claimed that it was no man left behind, that all the boats fled and he came back, it's just not what happened. When he claimed that there was heavy fire, the whole way, 5,000 meters, it didn't happen. It's just not what happened.

He did return after it was clear there was no fire, and he did pick up Rassman who had fallen off of his boat, and that's fine. We simply point out that the episode that occurred at the Democratic National Convention was one created in Hollywood. It's not what happened in the real world at all.

DOBBS: And your concerns about being dubbed a propagandist for the Bush-Cheney campaign?

O'NEILL: We have -- Lou, we have 254 people that served in swift boats in our unit. We have 17 of the 23 guys that would bunk right there with Kerry in the officers' quarters most nights. We have 60 of the sailors there. We have 60 people who won the Purple Heart. We're not Republicans or Democrats. Most of the people are totally nonpolitical. The problem is it's our unit. We're very, very concerned with what he said about our unit. It was harmful to say those people fled when they didn't. We're also very concerned about his record.

So we're committed to simply telling the truth, letting the chips fall where they may. If he gets elected, that's great. If he gets defeated, that's great, too. We think he'd be terrible as a commander in chief based on our experience with him both in Vietnam and after Vietnam.

DOBBS: Paul O'Neill, as you reference the citations of those in your organization, I think it's important that we remind everybody that Senator Kerry received both the Bronze and Silver Star and three Purple Hearts, much of that under the -- in dispute by John O'Neill, but, nonetheless, those are the decorations he received as well.

John O'Neill, who served the country admirably and with distinction in Vietnam, we thank you for being with us.

O'NEILL: Thank you very much, Lou.

Our website is Swiftvets.com. Thank you very much.

DOBBS: Joining me now is the reporter who broke the story. Michael Dobbs, "The Washington Post," who wrote the article today questioning a veteran who criticizes Senator Kerry in both John O'Neill's book and the Swift Boat Veterans for Truth advertisement. Joining us tonight from Washington, D.C., Michael, good to have you with us.

MICHAEL DOBBS, "WASHINGTON POST": Pleased to be with you.

DOBBS: And I suppose we should state at the outset that you and I are not related. Lest there be some suggestion of nepotism here.

M. DOBBS: Not so far as I know, perhaps we are.

DOBBS: Actually, I should be a little reserved in making that statement but as far as I know as well. But it's good of you to be here. You just heard John O'Neill. He said, point blank, that you refused to talk with four of the veterans the Swift vote -- of the Swift Boat. Your reaction to that?

M. DOBBS: I might have missed that particular passage but I didn't refuse to talk anybody. In fact I've talked extensively to the members of Mr. O'Neill's organization. And three of the five skippers in addition to Mr. Kerry who were on that river that day, when Mr. Kerry received the Bronze Star, who belonged to Mr. O'Neill's organization and oppose -- strongly oppose Mr. Kerry.

DOBBS: The issue as to whether or not there was gunfire, Larry Thurlow says absolutely not. Obviously the commendations as you report for both men, reference fire. John O'Neill just said that's because Senator John Kerry wrote the action report and recommendations. Is that correct in your best -- to your best knowledge?

M. DOBBS: Well, Mr. O'Neill is referring to an after-action report, which was filed to both Mr. Thurlow's and Mr. Kerry's commander. He claims, and his supporters claim that that after-action report was written by John Kerry. I've found no evidence that it was written by John Kerry. He may have written it, somebody else may have written it, Mr. Thurlow may have written it. Any of the skippers who were on the river that day may have contributed to it.

But it's not proven that that after-action report was written by Mr. Kerry. It's also difficult to assert that Mr. Kerry could have been responsible for everything that was written in Mr. Thurlow's citation, because he was in a different part of the river for at least some of that episode. His boat had gone on ahead so he didn't observe Mr. Thurlow's actions.

So I don't think you can fairly accuse Kerry of writing the entire citation for John Thurlow. For Larry Thurlow, rather.

DOBBS: Larry Thurlow. His military records, the release of them, would they settle many of the questions that surround this issue and others? In your judgment?

M. DOBBS: Who's? The release of...?

DOBBS: Larry Thurlow, Larry Thurlow's records.

M. DOBBS: Well, Larry Thurlow's records, we have the citation and the recommendation for the bronze medal. We don't have other records for Larry Thurlow. I doubt if it would shed all that much light on it. We're also pressing for the full release of all of John Kerry's records. The campaign says that they've put all of his records up on the website, but we haven't independently been able to go to the military records center and ask for the records ourself, for full copies of the records.

DOBBS: And how long ago did you ask for that full release?

M. DOBBS: We have been pressing the Kerry campaign for a long time, for full release of his records. I asked earlier this week for the release of Mr. Thurlow's citation and the recommendation for the Bronze Star.

DOBBS: Under the freedom of information?

M. DOBBS: Exactly.

DOBBS: Who are the -- you heard me, I asked -- I hope you heard me ask John O'Neill about the accusations that he is part of a Bush- Cheney attack campaign apparatus. Those are the charges obviously from the Kerry campaign. Who are the principal financial contributors to the Swift Boat Veterans group? What affiliation do they have?

M. DOBBS: I haven't investigated that myself but I did talk to Mr. O'Neill last night and he mentioned that one of the contributors is a man called William Perry, who's a well-known Republican contributor. He's contributed to the George Bush campaign. He also contributed several -- I think $200,000 now to Swift Boat Veterans For Truth. But of course the Bush campaign says that these contributions have got nothing to do with them.

DOBBS: And Michael Dobbs, we thank you for both a splendid job of reporting and for sharing your time with us here this evening. Thank you.

M. DOBBS: Thanks very much.

DOBBS: Michael Dobbs, "Washington Post."

Taking a look now at some of your thoughts. Many of you writing in about whether military service is a primary qualification to serve as president, which was the subject of a poll earlier this week.

Ann Einsenstein of Columbia, South Carolina said, "should a surgeon have experience in the operating room before taking out your appendix? Should a teacher have experience in a classroom before teaching your child?

Dave Nelson of Torrance, California. "Military service is not a requirement to be president but common sense, integrity, and truthfulness is."

And Regina in Upper Marlboro, Maryland wrote in to talk about negative campaign advertising. "I can't remember a time when our country was more divided. Why can't our candidates promote what we need most: a united people. I feel like I have to vote based on who has convinced me the best that the other guy is the bad one."

Send us your thoughts at loudobbs@CNN.com.

Coming up next here, an American public school displaying a foreign flag, the Mexican flag sparking public outrage and threats against the administrators of the school.

Then, a threat to national security. Hundreds and thousands of illegal aliens carrying phony driver's licenses. Tonight, one state is cracking down on widespread fraud.

And a deadly battle is ragging tonight for control of the Iraqi city of Najaf. I'll be joined by General David Grange on point, next.

(COMMERCIAL BREAK)

DOBBS: There is considerable outrage in the city of Denver, Colorado, tonight after a newspaper published a photograph of a Mexican flag hanging alongside the American flag in a Denver public school. School officials when first confronted about it, at first they denied, and first rather they defended that display of the Mexican flag. But then intense public pressure apparently soon changed many minds. Peter Viles has the report from Denver.

(BEGIN VIDEOTAPE) PETER VILES, CNN CORRESPONDENT (voice-over): What's wrong with this picture? The Pulitzer prize winning photographer who took it didn't think it was controversial at all.

MARIA AVILA, "ROCKY MOUNTAIN NEWS": All I saw was a Mexican flag and an American flag side by side same level, you know, it made a beautiful backdrop.

VILES: But many in Denver saw a scandal, not only as the American flag hung incorrectly, why is the Mexican flag receiving equal billing inside an American school?

MIKE ROSEN, RADIO TALK SHOW HOST: This is a school in Denver, Colorado, U.S.A. It's financed by tax dollars from people in Denver and people in the state of Colorado. It's an American government school. It's not a school which is a joint effort and enterprise of the Mexican government and the American government.

VILES: School officials at first said nothing was wrong that teachers are within their rights to display Mexican flags.

LUCIA GUZMAN, DENVER SCHOOL BOARD: It's a sign of goodwill. It's a gesture meant to be a gesture of goodwill. Bringing positive significance to the diversity that we have within the school district.

VILES: Officials also pointed out the school's official flags on the flag pole outside and inside are the flags of Denver, the United States, and Colorado. But when the school was inundated with criticism and some threats, the two Mexican flags came down.

GUZMAN: People threatening and giving you the information that they are coming, as a group of people to physically remove an object from your schoolroom. Then that is a huge threat.

VILES: Eighty-four percent of the school's students are Hispanic and most of them are Mexican-American.

ERICK CASTANON, NORTH HIGH SENIOR: I don't think it's violating any law or any code. But of course when people are offended by, it I'm personally not offended. I'm with the Hispanic background obviously. I wouldn't mind.

VILES: (on camera): The flag controversy at North High School touched a raw nerve in Denver, and the underlying issue is immigration, both legal and illegal. More than half the students in Denver public schools are now of Hispanic origin and roughly 1 in 5 comes to the school's system speaking little or no English.

Peter Viles, CNN, Denver.

(END VIDEOTAPE)

DOBBS: That brings us to the subject of "Tonight's Poll." The question is -- what is your reaction to the display of the Mexican Flag in American classrooms?

What's the problem, outrage, or indifference?

Cast your vote at cnn.com/lou. We'll have the results later in the broadcast here.

Tonight, another state is cracking down on another growing controversy, illegal aliens with fraudulent driver's licenses. New York state is now crosschecking millions of licenses against social security numbers. And the state of New York may suspend as many as 1.5 million licenses as a result. Kitty Pilgrim, reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Out of 10 million driver's licenses in New York, more than 600,000 did not crosscheck with valid social security numbers. Many of them may be fake numbers or stolen. Many of those drivers in the country illegally. New York officials say the licenses that don't check out will be suspended.

MATTHEW MIRONES, NEW YORK STATE ASSEMBLY: Driving is not a right, it's a privilege. And I think that, you know, assimilating into a society, we'll also have its hurdles. And I would encourage individuals to become legal citizens, and abide by the American way of life.

PILGRIM: New Yorkers already terminated 600 licenses so far. And letters are being sent out, saying basically, prove you have a valid social security or face the consequences. The data is shocking, up to 100,000 people in New York State have their social security number being used by someone else without their knowledge. Several hundred taxi drivers were discovered with two or three licenses under different names. The commissioner of motor vehicles says it is it's an issue of national security.

RAYMOND MARTINEZ, COMM., N.Y. DEPT. OF MOTOR VEHICLES: As we learned from the events of 9/11, 18 of the 19 hijackers held valid driver's licenses from other states, including Florida, Virginia, and New Jersey. Many of which were obtained through fraudulent means.

PILGRIM: But some immigrant groups today were protesting the crackdown, saying it unfairly targets them, and won't solve the problem.

RICHARD MCNIGHT, IMMIGRANTS RIGHTS ACTIVIST: The only thing that this policy will contribute to is to people without proper driver's license, being on the road because they have a necessity to provide for their family. They will have no choice but to continue to drive. Which will not be a good thing for anyone.

(END VIDEOTAPE)

PILGRIM: Now, are there 190 million licensed drivers in the United States. Thirty six states are now participating in the verification system to check social security on the spot when the person applies for a license -- Lou.

DOBBS: We have reached quite a stage in this country. Where illegal aliens in California and other states can be demanding the right to have driver's licenses issued by state governments. And illegal aliens in New York who already have fraudulently obtained driver's license demand that they keep them.

PILGRIM: I know, Lou, it's a little bit shocking. The good news, though, many of the states are on it.

DOBBS: Well, congratulations to the state of New York, thank you very much.

Kitty Pilgrim.

DOBBS: Next here, American forces bombarding insurgents fighting for anti-American cleric Muqtada Al Sadr. In Najaf, holed up in a holy shrine. General David Grange joins us next on "Grange on Point." Stay with us.

(COMMERCIAL BREAK)

DOBBS: U.S. and Iraqi forces tonight are preparing to attack insurgent positions in Najaf. Certain attacks are under way already. That is of course Najaf, where gunmen loyal to anti-American cleric Muqtada Al Sadr have defied an Iraqi order to surrender. The battle in Najaf is the tonight's focus tonight's "Grange on Point."

Joining me here in New York, General David Grange. Good to have you in New York.

BRIG. GEN. DAVID GRANGE, CNN MILITARY ANALYST: Thank you.

DOBBS: Situation in Najaf, we've talked about it for some time, Brian Bennett, correspondent for "Time" magazine, it says looks to him like this is the conclusion.

What is your sense?

GRANGE: Well, I feel it is. I don't think the prime minister can put up with many more deals. He's tried. He's given the effort and Sadr does not want peace, especially with the United States or the interim government of Iraq. He wants a fundamentalist state. He's not a team player with the state. And so he needs to fight. And plus remember in his army, it's a bunch of unemployed thugs. They have no future.

DOBBS: Unemployed thugs, they may be, but also Shia that have the support of other groups throughout Iraq, perhaps abroad as well. And that is -- do you believe that they are in point of fact a proxy for a broader radical Islamic force?

GRANGE: Absolutely, especially Sadr. I think he's manipulated by Iran. Iran's involved with weaponry, with the moral support, political support, intelligence. He works with them, I believe.

DOBBS: General, we all understand that there's great sensibilities here when the U.S. is moving against the shrine. Some several thousand of Al-Sadr's followers there. There's great concern on the part of the U.S., the Pentagon in the way its perceived. But at the same time, the fact that the U.S. military command has said several times that they will kill or capture Al-Sadr, that they're going to root him out of Najaf. That they and still no resolution. How do you think that is playing in the Arab world, that he is successfully deifying both the Iraqi government and the U.S. Government?

GRANGE: Well, it builds his prestige. He gained support that way. And you can say the longer time goes on the more support he will garner. But there's a big group of Iraqi people, especially in this town, Najaf, that are tired of him and his thugs. And I believe that the action will happen in a few days and they'll take him down.

DOBBS: Let me ask you a question that a number of our viewers have asked, which frankly I think is an interesting question. Why not use some sort of harmless gas, but effective gas against them?

Why not secondarily simply starve them out, since they can be isolated and resolve this so that we don't put American troops at risk?

GRANGE: Yes, I think the issue is more than a point target. It's more than a mosque. It's also the neighborhood, and there's enclaves of Mehdi Army fighters throughout that area, not just in the mosque. So it's a broader target than we're focused on.

DOBBS: And one last question, Wes Clark, General Wes Clark out today. Senator Kerry saying that President Bush's plan to redeploy 70,000 American troops overseas, bring many of them home. Is simply not an appropriate move, in point of fact suggesting create greater stress.

What's your reaction to General Clark?

GRANGE: I disagree with General Clark. I think it's well over time to bring the soldiers and their families home. I was in Germany when General Clark was in Germany, and while I was there, I was gone almost the entire time, and when I wasn't in Germany I trained in sites that had restrictions on them, because of the German government. And so it was difficult to train. In Korea, you're fixed on a DMZ. You will fight till you die. It's better to redeploy south or elsewhere and be able to deliver the army, the U.S. military's punch to the center of gravity, the key areas for success and not defend on the DMZ. I think it's a brilliant move and it's well over do.

DOBBS: To give the U.S. troops room to maneuver. And you were -- when you were in Europe and Germany, Bosnia was where you spent much of your time?

GRANGE: Bosnia, Kuwait, Macedonia, Russia, Ukraine, you name it, we were all over the place. And I also must think of the American families. When they're home in the United States most of them, their spouses can pursue their careers as well. Very important for their morale.

DOBBS: General David Grange, foursquare behind the Bush administration's decision to redeploy 70,000 troops. We thank you very much for being here. Good to have you in the studio.

Still ahead our nation's so-called thought leaders, the think tanks. They have what is simply extraordinary influence on our lawmakers and ultimately public policy. We'll have our special report next. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: This week, our special reports are focusing on so-called thought leaders in this country, and certainly the think tanks that influence policy and public opinion to a far greater extent than most assume. Many of the largest think tanks openly disclose their political leanings and their agendas, but there are more than 1,500 smaller groups that choose not to disclose their agendas nor the sources of their funding. Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): A think tank called the Mercatus Center invited Congressional staff members to attend a luncheon to hear the benefits of lower corporate taxes. Mercatus, associated with George Mason University was founded and is still heavily funded by oil and gas billionaire Charles Koch who sits on the board.

ALEX KNOTT, PUBLIC CITIZEN: They want deregulation and they want less taxes. They basically want the government to step back. And that's basically an ideology but it also is very helpful to Koch Industries, the second largest private company in the country.

SYLVESTER: Think tanks arguing on issues to tax cuts to prescription drugs have become a form of lobbying by other means. Lobbyist representing corporations have to register with the Senate but non-profit groups do not have to disclose who is bankrolling their work. Citizens For A Sound Economy, another Koch think tank, opposed the Justice Department's antitrust lawsuit against Microsoft in 2000. Later it was revealed that CSC had received nearly $400,000 from Microsoft.

GARY RUSKIN, CONG. ACCOUNTABILITY PROJECT: Citizens For A Sound Economy is sort of notorious in Washington for being the preeminent rent-a-mouth piece. They received large contributions from a number of major large corporations and do basically exactly what those corporations want.

SYLVESTER: CSC has since changed its name but has consistently denied tailoring its message to suit its donor base.

MATT KIBBE, FREEDOM WORKS: We have a board of directors and we have a mission statement and a combined 30-year history that frankly doesn't allow us to deviate.

SYLVESTER: Critics say until there is more disclosure, the public needs to ask more questions.

JEFF KRENELY, NATL. CMTE. FOR RESPONSIVE PHIL.: When they hear about a report or something that's out there that it came from a non- profit, that they think about who supported that non-profit? Who funded that report? And you know, are they conveniently leaving out facts that impact me as a citizen, me as a consumer?

SYLVESTER: These think tanks also have enormous clout Washington, D.C., even though they're not as well known as the larger think-tanks. One example, the Bush administration is in the process of changing 23 major federal standards including everything from environmental emission regulations to accept low levels of arsenic in the water. More than half of the regulatory changes were suggestions adopted from the Mercatus Center -- Lou.

DOBBS: Lisa Sylvester, thank you very much.

Tonight's thought is on politics and Washington, D.C. "For the people in government, rather than the people who pester it, Washington is an early-rising, hard-working city. It is a popular delusion that the government wastes vast amounts of money through inefficiency and sloth. Enormous effort and elaborate planning are required to waste this much money." That from American humorist and journalist P.J. O'Rourke.

Still ahead here, the results of tonight's poll, a preview of what we will have for you tomorrow. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Results now of our poll. The question, what is your reaction to the display of the Mexican flag in American classrooms? 21 percent of you said what's the problem? 61 percent said outraged. 18 percent said indifference.

Thanks for being with us. Please join us tomorrow. A soldier challenges the military's controversial "stop-loss" in court. Michael Sorgen, attorney, for that soldier, suing as John Doe. He is our guest and also tomorrow, Paul Roberts, the author of the book "The End Of Oil. A Warning About This World's Diminishing Oil Supplies."

We hope you'll be with us. Thanks for being with us tonight. 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 19, 2004 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, CNN ANCHOR: Tonight, Senator John Kerry fires back against Republican attack ads. Senator Kerry accuses President Bush of using surrogates to do what he calls dirty work.
(BEGIN VIDEO CLIP)

SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL NOMINEE: If he wants to have a debate about our service in Vietnam, here is my answer: Bring it on.

Here's what happens...

(END VIDEO CLIP)

DOBBS: The White House says Senator Kerry's charges are baseless. Tonight, I'll talk with one of Senator Kerry's harshest critics, swift boat veteran John O'Neill, author of the book "Unfit for Command."

Several top Republicans appear ready to defy President Bush on the critical issue of intelligence reform. One of those Republicans, the highly-respected chairman of the Senate Intelligence Committee, Senator Pat Roberts, is my guest.

American and Iraqi troops tonight are bombarding insurgent positions in Najaf. We'll have a live report. And military analyst General David Grange is here to assess the attack on Najaf.

Public fury and protests in Colorado, after a school not only displays the flag of Mexico, but gives the Mexican flag equal prominence with the U.S. flag.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's not a school which is a joint effort and enterprise of the Mexican government and the American government.

(END VIDEO CLIP)

DOBBS: And an astonishing fraud by illegal aliens and criminals, a threat to our national security. Officials could suspend hundreds of thousands of driver's licenses in New York. We'll have a special report.

CNN ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, August 19. Here now for an hour of news, debate and opinion is Lou Dobbs. DOBBS: Good evening.

Senator John Kerry today struck back in the increasingly bitter fight over his military service in Vietnam. Senator Kerry accused President Bush of relying on front groups to challenge Kerry's record in Vietnam. For its part, the White House declared Senator Kerry's attack to be false and baseless. At issue, Republican ads that accuse Senator Kerry of lying to win two of his combat decorations.

Dan Lothian reports.

(BEGIN VIDEOTAPE)

KERRY: The first definition of "patriotism" is keeping faith with those who wear the uniform.

DAN LOTHIAN, CNN BOSTON BUREAU CHIEF (voice-over): In an all-out effort to defend his war record, Senator John Kerry launched an attack on the group Swift Boat Veterans for Truth, which has been running a television ad in key battleground states and speaking out publicly, questioning his service and medals.

KERRY: This group isn't interested in the truth. They're not telling the truth.

LOTHIAN: Speaking in Boston to some 5,000 members of the International Association of Firefighters, Kerry took the offensive, saying in public what his press releases and campaign have said in response for months.

KERRY: Bring it on

LOTHIAN: Kerry also went after President Bush for not denouncing the ads.

KERRY: He wants them to do his dirty work.

LOTHIAN: The Bush campaign calls that claim false and insists the president has always considered Kerry's service in Vietnam noble.

But last week on "LARRY KING LIVE," Bush passed up the opportunity to call on his supporters to back down.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Well, I haven't seen the ad, but I do condemn is these unregulated soft money expenditures by very wealthy people.

LOTHIAN: Kerry's war record has been questioned throughout his political career, but the controversy has intensified in the presidential campaign. The Kerry campaign is firing back with another 30-second ad.

LARRY THURLOW, VIETNAM VETERAN: I expected I'd be shot when he pulled me out of the river. He risked his life to save mine.

LOTHIAN: This aggressive response comes as the credibility of the leading veteran behind the critical Kerry ad is being questioned. Larry Thurlow had disputed Kerry's claim of a battle that led to a Bronze Star.

But now in documents obtained by CNN, Thurlow's own military record shows that, in fact, there was "weapons fired" directed at "all units in the area that day." Thurlow now says his record reflects an account written up by Kerry and calls it "a lie."

(on camera): The new Kerry counter ad will run in Ohio, Wisconsin and West Virginia. That means the Kerry campaign is deviating from cost-saving plans not to buy any television ads until September, a sign that despite the official line, there is pressure to end this controversy.

Dan Lothian, CNN, Derry, New Hampshire.

(END VIDEOTAPE)

DOBBS: The White House today said Senator Kerry appears to be in favor of negative ads as long as they benefit Senator Kerry's campaign. Press Secretary Scott McClellan said President Bush has condemned all advertisements by shadowy groups.

Jill Dougherty reports from Crawford, Texas -- Jill.

JILL DOUGHERTY, CNN CORRESPONDENT: Well, Lou, we've been hearing this on the campaign, off the campaign trail for several days back and forth, this sniping from both campaigns, and now the rhetoric is heating up.

As you mentioned, here in Crawford, Texas, the president's press secretary, Scott McClellan, getting numerous questions from reporters precisely about those attack ads. McClellan's calling the charges by Senator Kerry false, and he says that the president and the White House, in fact, have not and will not question the military record of John Kerry.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: Senator Kerry knows that his latest attack is false and baseless. The president has condemned all of the ads by the shadowy groups.

We have called on Senator Kerry to join us in calling for an end to all the unregulated soft money activity that is going on in this campaign, and the president has stayed focused on the issues and the choices that the voters face.

That's what this ought to be about. There are some clear choices that the voters face for the future. This should not be about the past.

(END VIDEO CLIP)

DOUGHERTY: And, once again, McClellan was pressed by reporters to say would the president actually disown or criticize this individual ad? He wouldn't go there. He would not say that, but he repeated what they have been saying now for days, which is President Bush has condemned all of these attack ads that are funded by soft money.

In fact, McClellan said that $62 million has been spent and President Bush has been the recipient of those ads and that the White House, the campaign, has been urging Senator Kerry to join them and condemn the ads. Kerry hasn't, they say.

And so they argue that there's really tacit approval by the Kerry campaign for those ads -- Lou.

DOBBS: Jill, just to be clear, you said the recipient of those ads. Subject or victim? Would those words be as appropriate?

DOUGHERTY: Victim, we should say. The quote actually has been "He's been on the receiving end of those ads." So he's been the -- they would say the victim of those ads.

DOBBS: I think it would be fair, Jill, to say that both men have reason to abhor the attack ads that have been launched against them in this campaign. It would be interesting to see one or both of these candidates step up and simply end this bitterness in attack ads that are flying against both candidates.

Later here in the show, I'll be talking with one of Senator Kerry's strongest critics, swift vote veteran John O'Neill. He's the author of "Unfit for Command."

I'll also be talking with "Washington Post" reporter Michael Dobbs. He broke the story uncovering conflicting information about one of the veterans relied upon by John O'Neill in his book.

One of the key issues in this campaign, of course, is the war in Iraq, and, tonight, American troops and aircraft joining with Iraqis are bombarding insurgent positions in Najaf. American soldiers and Marines have been battling enemy gunmen in Najaf for more than two weeks. More than a thousand supporters of the anti-American cleric Muqtada al Sadr are defying Iraqi government demands that he surrender.

Joining me now from Baghdad is "TIME" magazine correspondent Brian Bennett.

Brian, tonight, what are your sources? What do you know about the extent of the fighting in Najaf?

BRIAN BENNETT, "TIME" MAGAZINE: Well, tonight, there's been a large amount of fighting in the neighborhood just around the shrine, between U.S. -- U.S. forces and the Mehdi Army.

What we've seen is -- over the last several days, is an on-again- off-again battle. There have been certain cease-fires after negotiations began, and, again today, there were different overtures from both Muqtada and from the Iraqi government to try to quiet down the situation. But that has not stopped the bombardments, the air bombardment of the area around the shrine in Najaf, and also the attacks from the Mehdi Army on the American positions.

DOBBS: Brian, yesterday, Muqtada al Sadr apparently accepted the terms of a truce and, shortly afterwards, rejected those terms and then said he would seek martyrdom, a death in this battle. What, in your best judgment and the judgment of those you talk with, is al Sadr trying to accomplish here?

BENNETT: Well, it seems certainly that he is just trying to better his negotiating position. What I think the Iraqi government has discovered over the last couple of week is that every time that Muqtada and his militia fight and engage the government and stand up to them, he is able to bring -- have more leverage -- to bring more leverage to the negotiating table.

For example, just this week, he was able to dominate -- the issue of Muqtada being in Najaf and occupying the shrine totally dominated the issues in the national conference that was held here in Baghdad, and, instead of focusing solely on establishing new government and moving towards elections, a lot of the energy during that conference here in Baghdad was spent on trying to resolve the Najaf crisis and talking about Muqtada al Sadr.

DOBBS: Brian, has the Iraqi government finally -- has its patience come to end with al Sadr?

BENNETT: It seems just in the last 48 hours that a lot of moves have been made by the Iraqi government that seem to suggest that they're trying -- they're about to call Muqtada al Sadr's bluff.

Trained Iraqi Army soldiers have moved into the area around the shrine, according to sources of mine in Najaf, and a lot of the action is just getting into the neighborhoods much closer to the shrine than it was before.

It seems like it's -- the situation's coming to a head, and Muqtada al Sadr doesn't have many more chances to stall the inevitable.

DOBBS: "TIME" magazine correspondent Brian Bennett reporting tonight from Najaf.

We thank you, Brian.

Still ahead, the battle to reform our intelligence agencies. I'll be talking with a highly respected senator who chairs the Senate Intelligence Committee, Senator Pat Roberts. He's our guest.

And is Senator Ted Kennedy a threat to national security? It seems some airport screeners in at least Boston believe he is. We'll have a report.

An outrage and protest after a public school in Colorado displays the flag of Mexico side by side with the American flag. We'll have that special report for you as well.

(COMMERCIAL BREAK)

DOBBS: The issue of intelligence reform has dominated Washington since the September 11 commission recommendations of a massive overhaul for intelligence agencies.

The highly respected chairman of the Senate Intelligence Committee, Senator Pat Roberts, wants the White House to appoint a powerful national intelligence director with full budget authority.

But the White House, to this point at least, has not endorsed Senator Roberts' proposals. Senator Roberts joins me now from Capitol Hill.

Senator, good to have you with us.

SEN. PAT ROBERTS (R), CHAIRMAN, INTELLIGENCE COMMITTEE: It's always a pleasure to be with you, Lou. Thank you.

DOBBS: Senator, you're calling for legislation to create an NID, a national intelligence director, with full budgetary authority. Is the White House actively resisting, or what is the posture with the White House on this issue?

ROBERTS: We're in full cooperation with the White House. In talking with the national security folks, they are going to be sending us what they call mechanisms in regards to what they think is appropriate and not appropriate. I don't know what that is yet. They're still working on it.

Lou, I would just say this is very hard work. We have an urgent need to get this done. We have a window of opportunity. We must seize that opportunity. But we have to get it right. And so we've -- even on our staff as Senator Rockefeller -- and we have 22 professional staff members who are quite good to make sure that this really works. You know, that's the key thing.

So we are working with the White House. They are not obstructing us. I have had no input from the White House that they are objecting to a national -- a national intelligence director with full budget authority.

DOBBS: You mentioned Senator Rockefeller, the vice chairman of the committee that you chair. The two of you, Democrat and Republican, aligned on this issue. Is there any way that you can see in which the creation of a very powerful NID with full budgetary authority and sweeping powers across all agencies could be withstood at this point?

ROBERTS: I don't know about withstood. I just hope we're able to reach a consensus. I know that Jay and I -- or let me rephrase that. My colleague and the distinguished vice chairman -- I know we agree that in terms of a national intelligence director, you have to give that person the authority to get the job done. We also agree -- and I think Jay said on your show the other night -- that we're not going to interfere at all with the tactical intelligence that the warfighter needs or some related intelligence. It's the rest of the intelligence package that would fall to the NID, the national intelligence director. So we're working hard together.

You know if you would have asked me, what, six months ago with all the differences of opinion that were being expressed if the Senate Intelligence Committee would vote 17-0 in a bipartisan effort on the report we issued on the prewar intelligence, whether or not the WMD was there, you would probably have said, oh, Pat, you can't do that.

But both Jay and I put aside differences. We know that national security and the mission is primary. We're not wedded to any particular agency. I think this whole situation is moving rather fast, and I hope we can build a consensus for it because it's so important.

DOBBS: In point of fact, you and Senator Rockefeller at the head of the Senate Intelligence Committee are setting the standard for bipartisan efforts in Washington right now in a Congress that is not always cooperative and certainly not on a partisan level.

Nonetheless, within your own party, Senator John Warner wants to go slow, questions the need for an NID at all. Is it your judgment that you will be able to work successfully with Senator Warner to reach, as you put it, consensus?

ROBERTS: Senator Warner is an outstanding chairman of the Armed Services Committee. I'm also privileged to serve on that committee. I'm chairman of the Emerging Threats and Capabilities Subcommittee. I think what he said in the hearings -- or at least, you know, what I heard him say in the hearings -- is that if you have a national intelligence director, make sure he works in a commensurate fashion, a partnership effort, with the secretary of defense. I have no quarrel with that whatsoever.

So I think there's been probably too much made of some kind of a difference of opinion here in regards to Chairman Warner and myself.

DOBBS: One other issue on which you and your committee is at forefront, and that is the question of Senator Kerry's attendance at Senate Intelligence Committee hearings, the subject of ads by the Bush-Cheney campaign. Are you prepared, have you been asked to, and are your colleagues on the Senate committee willing to release the attendance records of all senators on that committee?

ROBERTS: Well, I think it's untoward, if that -- you know, there's a good Senate word for you. I think it is untoward really. You know, for the chairman and the vice chairman of the committee to start revealing the attendance records of virtually all members, whether or not it's John Kerry or John Edwards or not, there's a very simple answer here.

All John Kerry has to do and all that John Edwards has to do is write us or pick up the phone and call me, say, hey, Pat, hey, Jay, hey, Senator Rockefeller, hey, Senator Roberts, please release my records, not only the public records, but the closed records. Then the matter's over. Everybody knows. And so if he will do that, we will follow through.

But we are hesitant to start in on this business of who's there and who isn't. But let me say this attendance is very, very important. Attendance is where you gain the experience and the expertise to do the job. That's why we are repealing the term limits on the service on the Intelligence Committee, which is one of the strongest recommendations by the 9/11 commission.

DOBBS: Senator Pat Roberts, chairman of the Senate Intelligence Committee.

We thank you, sir, for being with us.

ROBERTS: Thank you, Lou. Always a pleasure.

DOBBS: A leading senator, one of the most recognizable figures in American politics has been mistaken, apparently, for a possible security risk in his own hometown airport. Senator Ted Kennedy of Massachusetts stopped at Boston's Logan International Airport when a name similar to his apparently appeared on a security watch list. Senator Kennedy was put through additional screening before he was ultimately allowed to board a flight to Washington, D.C.

This is not the first time this has occurred. Homeland Security Secretary Tom Ridge called to apologize to the senator about the confusion. Senator Kennedy, of course, was never on a so-called no- fly list of any kind.

Still ahead here, an outspoken critic of Senator Kerry calls him unfit for command. That's the title of his new book that says Senator Kerry lied about part of his service in Vietnam. Author, swift boat veteran John O'Neill joins me here next.

But his accusations are launched at Senator Kerry. New questions tonight about the record and credibility of one of his accusers. "Washington Post" reporter Michael Dobbs joins us.

And a Denver public school displays the Mexican flag alongside that of the U.S. flag sparking a controversy that has bitterly divided the community.

Stay with us.

(COMMERCIAL BREAK)

CNN ANNOUNCER: LOU DOBBS TONIGHT continues with more news, debate and opinion. Here now, Lou Dobbs.

DOBBS: Returning to the top story of the day, Senator John Kerry fighting back over the controversy of his military service in Vietnam. Senator Kerry has accused President Bush now of using critics of his record to "do his dirty work." My guest tonight is certainly one those critics. John O'Neill has written a book called, "Unfit for Command." In it, he and other swift boat veterans accuse Senator Kerry of lying about his service in the war. John O'Neill joins me now from Washington, D.C.

One note that we do want to make: The national director of Veterans for Kerry, John Hurley, was scheduled to be with us tonight and to debate with John O'Neill, but the Kerry campaign canceled his appearance at the -- almost the last moment.

John O'Neill, good to have you with us.

JOHN O'NEILL, AUTHOR, "UNFIT FOR COMMAND": Thank you very much, Lou. It's an honor to be on your show.

DOBBS: As you are keenly aware, you are now at the center of a controversy, and, today, "The Washington Post" reporter Michael Dobbs pointed out that one of the people that you relied upon in your book accusing Senator Kerry of lying about his service -- it turns out that the facts actually substantiate Senator Kerry and -- in that episode. What are your thoughts?

O'NEILL: I believe exactly the opposite, Lou. Although the article is rather cleverly worded, this relates to the so-called no- man-left-behind episode where Kerry claimed that five swift boats fled after mine, and he went back and picked up Jim Rassman.

We claim that Mr. Kerry fled, sure enough, but that four swift boats stayed to rescue the three boat and that when Kerry finally came back, he picked up Rassman. There was no fire. It's interesting because that article admits that Kerry fled and the other guys stayed.

What is under discussion is: Was there fire when he finally chose to come back to where the other boats were? We disagree with Mr. Dobbs, and I could outline the reasons why. We believe the piece of evidence he relies on is very tangential, and he refused to interview the four officers that were involved and the three additional swift boat sailors, all who were involved directly in the incident, who say there was no fire.

He also didn't examine the fact that there was -- is absolutely not a bullet hole anywhere, nobody was wounded, and the boats were there for an hour and a half. So we think it's a very one-sided treatment of the matter.

DOBBS: John, at the same time, the citations for both Senator Kerry and for -- thoroughly, absolutely, clearly and unequivocally state that there was fire, and those are parts of the citations in which both men won Bronze Stars.

O'NEILL: Yes, but they're based on Kerry's report, the same report that says that there was 5,000 meters of fire, Lou. Kerry's report that day describes something like the Battle of Gettysburg. He says there was 3.2 miles of heavy fire on both banks.

Lou, there wasn't a boat hit by a bullet that day. The sailors didn't hear anything -- a single bullet, and there's no physical evidence. There would be no reason for people to come up and say there was no fire.

In addition, Kerry has now admitted that he left the scene and came back. Why would a guy get a medal for leaving where the other boats were and coming back to where they were all along?

DOBBS: This also raises the question, John, does it not, as to why Thurlow then would not say that his -- that he was not deserving of the decoration for valor in combat?

O'NEILL: Well, what...

DOBBS: If there were no combat.

O'NEILL: Oh, well, let me explain what Larry Thurlow did. The three boat blew up in the air, Lou. There were swimmers in the water. Kerry fled. Thurlow didn't flee. The boat was out of control. Thurlow kept jumping on the boat, was almost ground up by the engines when he -- by the propellers when he fell in the water, climbed back up again, finally got on the boat, brought the boat to a halt, climbed in the hull of the boat where it was sinking.

Keep in mind people would have drowned, and he actually managed to plug them, and that's reflected in the citation. It was an incredibly gallant act in saving that boat. There'd be a lot of people dead today if it wasn't from Larry Thurlow, and Kerry had nothing to do with that. Kerry did leave, and he did return to pick up Rassman who was about 40 or 50 yards from the other people and who had fallen off of Kerry's boat.

DOBBS: And Rassman, a key subject of this conflict, whether in the midst of small arms fire at least or not, embraced Senator Kerry as his rescuer, and he certainly has nothing but the highest accommodation for the senator and for his rescue.

O'NEILL: Yes, And I would, too, if Senator Kerry had picked me up out of the water. The fact is, though, when he claimed that it was no man left behind, that all the boats fled and he came back, it's just not what happened. When he claimed that there was heavy fire, the whole way, 5,000 meters, it didn't happen. It's just not what happened.

He did return after it was clear there was no fire, and he did pick up Rassman who had fallen off of his boat, and that's fine. We simply point out that the episode that occurred at the Democratic National Convention was one created in Hollywood. It's not what happened in the real world at all.

DOBBS: And your concerns about being dubbed a propagandist for the Bush-Cheney campaign?

O'NEILL: We have -- Lou, we have 254 people that served in swift boats in our unit. We have 17 of the 23 guys that would bunk right there with Kerry in the officers' quarters most nights. We have 60 of the sailors there. We have 60 people who won the Purple Heart. We're not Republicans or Democrats. Most of the people are totally nonpolitical. The problem is it's our unit. We're very, very concerned with what he said about our unit. It was harmful to say those people fled when they didn't. We're also very concerned about his record.

So we're committed to simply telling the truth, letting the chips fall where they may. If he gets elected, that's great. If he gets defeated, that's great, too. We think he'd be terrible as a commander in chief based on our experience with him both in Vietnam and after Vietnam.

DOBBS: Paul O'Neill, as you reference the citations of those in your organization, I think it's important that we remind everybody that Senator Kerry received both the Bronze and Silver Star and three Purple Hearts, much of that under the -- in dispute by John O'Neill, but, nonetheless, those are the decorations he received as well.

John O'Neill, who served the country admirably and with distinction in Vietnam, we thank you for being with us.

O'NEILL: Thank you very much, Lou.

Our website is Swiftvets.com. Thank you very much.

DOBBS: Joining me now is the reporter who broke the story. Michael Dobbs, "The Washington Post," who wrote the article today questioning a veteran who criticizes Senator Kerry in both John O'Neill's book and the Swift Boat Veterans for Truth advertisement. Joining us tonight from Washington, D.C., Michael, good to have you with us.

MICHAEL DOBBS, "WASHINGTON POST": Pleased to be with you.

DOBBS: And I suppose we should state at the outset that you and I are not related. Lest there be some suggestion of nepotism here.

M. DOBBS: Not so far as I know, perhaps we are.

DOBBS: Actually, I should be a little reserved in making that statement but as far as I know as well. But it's good of you to be here. You just heard John O'Neill. He said, point blank, that you refused to talk with four of the veterans the Swift vote -- of the Swift Boat. Your reaction to that?

M. DOBBS: I might have missed that particular passage but I didn't refuse to talk anybody. In fact I've talked extensively to the members of Mr. O'Neill's organization. And three of the five skippers in addition to Mr. Kerry who were on that river that day, when Mr. Kerry received the Bronze Star, who belonged to Mr. O'Neill's organization and oppose -- strongly oppose Mr. Kerry.

DOBBS: The issue as to whether or not there was gunfire, Larry Thurlow says absolutely not. Obviously the commendations as you report for both men, reference fire. John O'Neill just said that's because Senator John Kerry wrote the action report and recommendations. Is that correct in your best -- to your best knowledge?

M. DOBBS: Well, Mr. O'Neill is referring to an after-action report, which was filed to both Mr. Thurlow's and Mr. Kerry's commander. He claims, and his supporters claim that that after-action report was written by John Kerry. I've found no evidence that it was written by John Kerry. He may have written it, somebody else may have written it, Mr. Thurlow may have written it. Any of the skippers who were on the river that day may have contributed to it.

But it's not proven that that after-action report was written by Mr. Kerry. It's also difficult to assert that Mr. Kerry could have been responsible for everything that was written in Mr. Thurlow's citation, because he was in a different part of the river for at least some of that episode. His boat had gone on ahead so he didn't observe Mr. Thurlow's actions.

So I don't think you can fairly accuse Kerry of writing the entire citation for John Thurlow. For Larry Thurlow, rather.

DOBBS: Larry Thurlow. His military records, the release of them, would they settle many of the questions that surround this issue and others? In your judgment?

M. DOBBS: Who's? The release of...?

DOBBS: Larry Thurlow, Larry Thurlow's records.

M. DOBBS: Well, Larry Thurlow's records, we have the citation and the recommendation for the bronze medal. We don't have other records for Larry Thurlow. I doubt if it would shed all that much light on it. We're also pressing for the full release of all of John Kerry's records. The campaign says that they've put all of his records up on the website, but we haven't independently been able to go to the military records center and ask for the records ourself, for full copies of the records.

DOBBS: And how long ago did you ask for that full release?

M. DOBBS: We have been pressing the Kerry campaign for a long time, for full release of his records. I asked earlier this week for the release of Mr. Thurlow's citation and the recommendation for the Bronze Star.

DOBBS: Under the freedom of information?

M. DOBBS: Exactly.

DOBBS: Who are the -- you heard me, I asked -- I hope you heard me ask John O'Neill about the accusations that he is part of a Bush- Cheney attack campaign apparatus. Those are the charges obviously from the Kerry campaign. Who are the principal financial contributors to the Swift Boat Veterans group? What affiliation do they have?

M. DOBBS: I haven't investigated that myself but I did talk to Mr. O'Neill last night and he mentioned that one of the contributors is a man called William Perry, who's a well-known Republican contributor. He's contributed to the George Bush campaign. He also contributed several -- I think $200,000 now to Swift Boat Veterans For Truth. But of course the Bush campaign says that these contributions have got nothing to do with them.

DOBBS: And Michael Dobbs, we thank you for both a splendid job of reporting and for sharing your time with us here this evening. Thank you.

M. DOBBS: Thanks very much.

DOBBS: Michael Dobbs, "Washington Post."

Taking a look now at some of your thoughts. Many of you writing in about whether military service is a primary qualification to serve as president, which was the subject of a poll earlier this week.

Ann Einsenstein of Columbia, South Carolina said, "should a surgeon have experience in the operating room before taking out your appendix? Should a teacher have experience in a classroom before teaching your child?

Dave Nelson of Torrance, California. "Military service is not a requirement to be president but common sense, integrity, and truthfulness is."

And Regina in Upper Marlboro, Maryland wrote in to talk about negative campaign advertising. "I can't remember a time when our country was more divided. Why can't our candidates promote what we need most: a united people. I feel like I have to vote based on who has convinced me the best that the other guy is the bad one."

Send us your thoughts at loudobbs@CNN.com.

Coming up next here, an American public school displaying a foreign flag, the Mexican flag sparking public outrage and threats against the administrators of the school.

Then, a threat to national security. Hundreds and thousands of illegal aliens carrying phony driver's licenses. Tonight, one state is cracking down on widespread fraud.

And a deadly battle is ragging tonight for control of the Iraqi city of Najaf. I'll be joined by General David Grange on point, next.

(COMMERCIAL BREAK)

DOBBS: There is considerable outrage in the city of Denver, Colorado, tonight after a newspaper published a photograph of a Mexican flag hanging alongside the American flag in a Denver public school. School officials when first confronted about it, at first they denied, and first rather they defended that display of the Mexican flag. But then intense public pressure apparently soon changed many minds. Peter Viles has the report from Denver.

(BEGIN VIDEOTAPE) PETER VILES, CNN CORRESPONDENT (voice-over): What's wrong with this picture? The Pulitzer prize winning photographer who took it didn't think it was controversial at all.

MARIA AVILA, "ROCKY MOUNTAIN NEWS": All I saw was a Mexican flag and an American flag side by side same level, you know, it made a beautiful backdrop.

VILES: But many in Denver saw a scandal, not only as the American flag hung incorrectly, why is the Mexican flag receiving equal billing inside an American school?

MIKE ROSEN, RADIO TALK SHOW HOST: This is a school in Denver, Colorado, U.S.A. It's financed by tax dollars from people in Denver and people in the state of Colorado. It's an American government school. It's not a school which is a joint effort and enterprise of the Mexican government and the American government.

VILES: School officials at first said nothing was wrong that teachers are within their rights to display Mexican flags.

LUCIA GUZMAN, DENVER SCHOOL BOARD: It's a sign of goodwill. It's a gesture meant to be a gesture of goodwill. Bringing positive significance to the diversity that we have within the school district.

VILES: Officials also pointed out the school's official flags on the flag pole outside and inside are the flags of Denver, the United States, and Colorado. But when the school was inundated with criticism and some threats, the two Mexican flags came down.

GUZMAN: People threatening and giving you the information that they are coming, as a group of people to physically remove an object from your schoolroom. Then that is a huge threat.

VILES: Eighty-four percent of the school's students are Hispanic and most of them are Mexican-American.

ERICK CASTANON, NORTH HIGH SENIOR: I don't think it's violating any law or any code. But of course when people are offended by, it I'm personally not offended. I'm with the Hispanic background obviously. I wouldn't mind.

VILES: (on camera): The flag controversy at North High School touched a raw nerve in Denver, and the underlying issue is immigration, both legal and illegal. More than half the students in Denver public schools are now of Hispanic origin and roughly 1 in 5 comes to the school's system speaking little or no English.

Peter Viles, CNN, Denver.

(END VIDEOTAPE)

DOBBS: That brings us to the subject of "Tonight's Poll." The question is -- what is your reaction to the display of the Mexican Flag in American classrooms?

What's the problem, outrage, or indifference?

Cast your vote at cnn.com/lou. We'll have the results later in the broadcast here.

Tonight, another state is cracking down on another growing controversy, illegal aliens with fraudulent driver's licenses. New York state is now crosschecking millions of licenses against social security numbers. And the state of New York may suspend as many as 1.5 million licenses as a result. Kitty Pilgrim, reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Out of 10 million driver's licenses in New York, more than 600,000 did not crosscheck with valid social security numbers. Many of them may be fake numbers or stolen. Many of those drivers in the country illegally. New York officials say the licenses that don't check out will be suspended.

MATTHEW MIRONES, NEW YORK STATE ASSEMBLY: Driving is not a right, it's a privilege. And I think that, you know, assimilating into a society, we'll also have its hurdles. And I would encourage individuals to become legal citizens, and abide by the American way of life.

PILGRIM: New Yorkers already terminated 600 licenses so far. And letters are being sent out, saying basically, prove you have a valid social security or face the consequences. The data is shocking, up to 100,000 people in New York State have their social security number being used by someone else without their knowledge. Several hundred taxi drivers were discovered with two or three licenses under different names. The commissioner of motor vehicles says it is it's an issue of national security.

RAYMOND MARTINEZ, COMM., N.Y. DEPT. OF MOTOR VEHICLES: As we learned from the events of 9/11, 18 of the 19 hijackers held valid driver's licenses from other states, including Florida, Virginia, and New Jersey. Many of which were obtained through fraudulent means.

PILGRIM: But some immigrant groups today were protesting the crackdown, saying it unfairly targets them, and won't solve the problem.

RICHARD MCNIGHT, IMMIGRANTS RIGHTS ACTIVIST: The only thing that this policy will contribute to is to people without proper driver's license, being on the road because they have a necessity to provide for their family. They will have no choice but to continue to drive. Which will not be a good thing for anyone.

(END VIDEOTAPE)

PILGRIM: Now, are there 190 million licensed drivers in the United States. Thirty six states are now participating in the verification system to check social security on the spot when the person applies for a license -- Lou.

DOBBS: We have reached quite a stage in this country. Where illegal aliens in California and other states can be demanding the right to have driver's licenses issued by state governments. And illegal aliens in New York who already have fraudulently obtained driver's license demand that they keep them.

PILGRIM: I know, Lou, it's a little bit shocking. The good news, though, many of the states are on it.

DOBBS: Well, congratulations to the state of New York, thank you very much.

Kitty Pilgrim.

DOBBS: Next here, American forces bombarding insurgents fighting for anti-American cleric Muqtada Al Sadr. In Najaf, holed up in a holy shrine. General David Grange joins us next on "Grange on Point." Stay with us.

(COMMERCIAL BREAK)

DOBBS: U.S. and Iraqi forces tonight are preparing to attack insurgent positions in Najaf. Certain attacks are under way already. That is of course Najaf, where gunmen loyal to anti-American cleric Muqtada Al Sadr have defied an Iraqi order to surrender. The battle in Najaf is the tonight's focus tonight's "Grange on Point."

Joining me here in New York, General David Grange. Good to have you in New York.

BRIG. GEN. DAVID GRANGE, CNN MILITARY ANALYST: Thank you.

DOBBS: Situation in Najaf, we've talked about it for some time, Brian Bennett, correspondent for "Time" magazine, it says looks to him like this is the conclusion.

What is your sense?

GRANGE: Well, I feel it is. I don't think the prime minister can put up with many more deals. He's tried. He's given the effort and Sadr does not want peace, especially with the United States or the interim government of Iraq. He wants a fundamentalist state. He's not a team player with the state. And so he needs to fight. And plus remember in his army, it's a bunch of unemployed thugs. They have no future.

DOBBS: Unemployed thugs, they may be, but also Shia that have the support of other groups throughout Iraq, perhaps abroad as well. And that is -- do you believe that they are in point of fact a proxy for a broader radical Islamic force?

GRANGE: Absolutely, especially Sadr. I think he's manipulated by Iran. Iran's involved with weaponry, with the moral support, political support, intelligence. He works with them, I believe.

DOBBS: General, we all understand that there's great sensibilities here when the U.S. is moving against the shrine. Some several thousand of Al-Sadr's followers there. There's great concern on the part of the U.S., the Pentagon in the way its perceived. But at the same time, the fact that the U.S. military command has said several times that they will kill or capture Al-Sadr, that they're going to root him out of Najaf. That they and still no resolution. How do you think that is playing in the Arab world, that he is successfully deifying both the Iraqi government and the U.S. Government?

GRANGE: Well, it builds his prestige. He gained support that way. And you can say the longer time goes on the more support he will garner. But there's a big group of Iraqi people, especially in this town, Najaf, that are tired of him and his thugs. And I believe that the action will happen in a few days and they'll take him down.

DOBBS: Let me ask you a question that a number of our viewers have asked, which frankly I think is an interesting question. Why not use some sort of harmless gas, but effective gas against them?

Why not secondarily simply starve them out, since they can be isolated and resolve this so that we don't put American troops at risk?

GRANGE: Yes, I think the issue is more than a point target. It's more than a mosque. It's also the neighborhood, and there's enclaves of Mehdi Army fighters throughout that area, not just in the mosque. So it's a broader target than we're focused on.

DOBBS: And one last question, Wes Clark, General Wes Clark out today. Senator Kerry saying that President Bush's plan to redeploy 70,000 American troops overseas, bring many of them home. Is simply not an appropriate move, in point of fact suggesting create greater stress.

What's your reaction to General Clark?

GRANGE: I disagree with General Clark. I think it's well over time to bring the soldiers and their families home. I was in Germany when General Clark was in Germany, and while I was there, I was gone almost the entire time, and when I wasn't in Germany I trained in sites that had restrictions on them, because of the German government. And so it was difficult to train. In Korea, you're fixed on a DMZ. You will fight till you die. It's better to redeploy south or elsewhere and be able to deliver the army, the U.S. military's punch to the center of gravity, the key areas for success and not defend on the DMZ. I think it's a brilliant move and it's well over do.

DOBBS: To give the U.S. troops room to maneuver. And you were -- when you were in Europe and Germany, Bosnia was where you spent much of your time?

GRANGE: Bosnia, Kuwait, Macedonia, Russia, Ukraine, you name it, we were all over the place. And I also must think of the American families. When they're home in the United States most of them, their spouses can pursue their careers as well. Very important for their morale.

DOBBS: General David Grange, foursquare behind the Bush administration's decision to redeploy 70,000 troops. We thank you very much for being here. Good to have you in the studio.

Still ahead our nation's so-called thought leaders, the think tanks. They have what is simply extraordinary influence on our lawmakers and ultimately public policy. We'll have our special report next. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: This week, our special reports are focusing on so-called thought leaders in this country, and certainly the think tanks that influence policy and public opinion to a far greater extent than most assume. Many of the largest think tanks openly disclose their political leanings and their agendas, but there are more than 1,500 smaller groups that choose not to disclose their agendas nor the sources of their funding. Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): A think tank called the Mercatus Center invited Congressional staff members to attend a luncheon to hear the benefits of lower corporate taxes. Mercatus, associated with George Mason University was founded and is still heavily funded by oil and gas billionaire Charles Koch who sits on the board.

ALEX KNOTT, PUBLIC CITIZEN: They want deregulation and they want less taxes. They basically want the government to step back. And that's basically an ideology but it also is very helpful to Koch Industries, the second largest private company in the country.

SYLVESTER: Think tanks arguing on issues to tax cuts to prescription drugs have become a form of lobbying by other means. Lobbyist representing corporations have to register with the Senate but non-profit groups do not have to disclose who is bankrolling their work. Citizens For A Sound Economy, another Koch think tank, opposed the Justice Department's antitrust lawsuit against Microsoft in 2000. Later it was revealed that CSC had received nearly $400,000 from Microsoft.

GARY RUSKIN, CONG. ACCOUNTABILITY PROJECT: Citizens For A Sound Economy is sort of notorious in Washington for being the preeminent rent-a-mouth piece. They received large contributions from a number of major large corporations and do basically exactly what those corporations want.

SYLVESTER: CSC has since changed its name but has consistently denied tailoring its message to suit its donor base.

MATT KIBBE, FREEDOM WORKS: We have a board of directors and we have a mission statement and a combined 30-year history that frankly doesn't allow us to deviate.

SYLVESTER: Critics say until there is more disclosure, the public needs to ask more questions.

JEFF KRENELY, NATL. CMTE. FOR RESPONSIVE PHIL.: When they hear about a report or something that's out there that it came from a non- profit, that they think about who supported that non-profit? Who funded that report? And you know, are they conveniently leaving out facts that impact me as a citizen, me as a consumer?

SYLVESTER: These think tanks also have enormous clout Washington, D.C., even though they're not as well known as the larger think-tanks. One example, the Bush administration is in the process of changing 23 major federal standards including everything from environmental emission regulations to accept low levels of arsenic in the water. More than half of the regulatory changes were suggestions adopted from the Mercatus Center -- Lou.

DOBBS: Lisa Sylvester, thank you very much.

Tonight's thought is on politics and Washington, D.C. "For the people in government, rather than the people who pester it, Washington is an early-rising, hard-working city. It is a popular delusion that the government wastes vast amounts of money through inefficiency and sloth. Enormous effort and elaborate planning are required to waste this much money." That from American humorist and journalist P.J. O'Rourke.

Still ahead here, the results of tonight's poll, a preview of what we will have for you tomorrow. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Results now of our poll. The question, what is your reaction to the display of the Mexican flag in American classrooms? 21 percent of you said what's the problem? 61 percent said outraged. 18 percent said indifference.

Thanks for being with us. Please join us tomorrow. A soldier challenges the military's controversial "stop-loss" in court. Michael Sorgen, attorney, for that soldier, suing as John Doe. He is our guest and also tomorrow, Paul Roberts, the author of the book "The End Of Oil. A Warning About This World's Diminishing Oil Supplies."

We hope you'll be with us. Thanks for being with us tonight. For all of us here, good night from New York. "ANDERSON COOPER 360" is next.

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