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Lou Dobbs Tonight

Bush and Kerry See Different Iraqs; Abizaid Believes Iraqi Troops Will Be Strong Enough Soon

Aired September 23, 2004 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


LOU DOBBS, CNN ANCHOR: It's 40 days until the presidential election, and, today, President Bush and the Iraqi prime minister declared they stand firm against terrorism and insurgents in Iraq.
(BEGIN VIDEO CLIP)

AYAD ALLAWI, IRAQI PRIME MINISTER: We are succeeding in Iraq.

(END VIDEO CLIP)

DOBBS: Senator John Kerry, as you might expect, sees things differently. He says American troops in Iraq face rising violence and rising casualties.

(BEGIN VIDEO CLIP)

SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL CANDIDATE: We need to change the course to protect our troops and to win.

(END VIDEO CLIP)

DOBBS: Do we need more troops in Iraq? Do we need to reintroduce the draft? General David Grange joins me tonight.

The presidential candidates are avoiding a critical issue in this election campaign. Of course, it's only critical to middle-class Americans. That is the massive invasion of illegal aliens into this country this year. Critics say both candidates, in fact, favor the same policy.

(BEGIN VIDEO CLIP)

ROY BECK, AMERICANS FOR BETTER IMMIGRATION: Both Kerry and Bush are telling the poor workers in the world come on in.

(END VIDEO CLIP)

DOBBS: Not only do we have a massive trade deficit with China, China is stealing American intellectual property. We'll have a special report for you from Akron, Ohio, where I'll be talking with Michael Wessel, a leading member of the U.S. China Economic Commission.

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, September 23. Here now for an hour of news, debate and opinion is Lou Dobbs.

DOBBS: Good evening.

President Bush and the interim Iraqi Prime Minister Ayad Allawi today declared they are determined to defeat terrorism in Iraq. Prime Minister Allawi insisted elections will be held on time next January as planned. President Bush warned that a U.S. withdrawal from Iraq would lead to new terrorist attacks against this country.

Senior White House Correspondent John King has our report -- John.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: And, Lou, after their talks, President Bush said he was even more optimistic than before that Iraq is on a steady path toward democracy. The two leaders had discussions in the Oval Office, then emerged for a remarkable noontime event in the Rose Garden. The president of the United States standing with, as you see here, Iraq's interim prime minister.

In essence, the two leaders delivered a point-by-point rebuttal of the criticism from Senator John Kerry and other administration critics of Mr. Bush's Iraq policy. Senator Kerry calls it a colossal failure. Mr. Bush made the case that things are getting better, that Iraq is on the road to stability and democracy.

One of the charges he's rebutted is Senator Kerry's case that Mr. Bush has been misleading the American people by painting far too rosy a picture of the situation on the ground in Iraq. Mr. Bush says that's not so.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: You can understand it's and still be optimistic. You can understand how hard it is and believe we'll succeed. I remember when some were talking about the possibilities of success in Afghanistan in pretty stark terms.

(END VIDEO CLIP)

KING: Now Senator Kerry says Iraq is not central to the war on terrorism. Mr. Bush made crystal clear he disagrees, that he believes the fight in Iraq is critical to the global war against terrorism. He also suggested that by criticizing administration policy and specifically by criticizing Mr. Allawi publicly today that perhaps Senator Kerry was sending the wrong signal to U.S. troops and to the enemy as well.

(BEGIN VIDEO CLIP)

BUSH: But I understand that -- what mixed messages do. You can embolden an enemy by sending a mixed message. You can dispirit the Iraqi people by sending mixed messages. You send the wrong message to our troops by sending mixed messages. That's why I will continue to lead with clarity and in a resolute way.

(END VIDEO CLIP) KING: Now no surprise, of course, that the president would be rebutting his opponent in this presidential election. What made this event in the Rose Garden so remarkable is that it appeared Mr. Allawi, an international leader, was joining in, if you will, the point-by- point rebuttal of Senator Kerry.

Senator Kerry says it is chaos in Iraq. Mr. Allawi said that 14 or 15 of Iraq's 18 provinces are now safe and secure. Senator Kerry also says there is a dismal track record of training Iraqi police and security forces. Mr. Allawi saying that is not the case and also saying that that training would accelerate.

Essentially, Mr. Allawi's message to his critics was: Think and look again.

(BEGIN VIDEO CLIP)

ALLAWI: I understand, while faced with the daily headlines, there are those doubts. I know, too, that there are -- there will be many more setbacks and obstacles to overcome, but these doubters underestimate our country and they risk fueling the hopes of terrorism.

(END VIDEO CLIP)

KING: Prior to his appearance at the White House, Mr. Allawi also delivering a speech to a joint session of Congress sounding very much the same optimistic themes he sounded at Mr. Bush's side.

He thanked the people of the United States for their sacrifice in the war on Iraq. He said he knew the war was controversial, but he said, in his view, it was in the right decision to remove Saddam, and he also vowed to hold those elections in January despite the security problems, saying the most powerful message and the most powerful weapon against the insurgency was to hold those elections in January as scheduled -- Lou.

DOBBS: John, thank you.

John King, our senior White House correspondent.

Senator Kerry today said Prime Minister Allawi's optimistic comments do not reflect the true situation in Iraq. Senator Kerry also accused the Bush administration of sending contradictory messages about Iraq. Senator Kerry spoke to reporters in Columbus, Ohio, today, despite suffering from a cold.

Bob Franken has the report.

(BEGIN VIDEOTAPE)

BOB FRANKEN, CNN NATIONAL CORRESPONDENT (voice-over): He had canceled the Iowa part of the day's schedule when he could only speak in a raspy whisper, but John Kerry had kept this appointment in Ohio, and his voice recovered enough to let him take care of some pressing business, a response to the upbeat address by Iraq's interim prime minister before the U.S. Congress.

KERRY: The prime minister and the president are here, obviously, to put their best face on the policy, but the fact is that the CIA estimates, the reporting, the ground operations and the troops all tell a different story.

FRANKEN: The setting was a firehouse, familiar territory, where Kerry could give voice to his recurring theme.

KERRY: America needs leadership that tells the truth.

FRANKEN: Truth and leadership about Iraq, Kerry says again and again, that has been lacking in this administration. From here, he traveled to the neighboring battleground of Pennsylvania for a few other events, larynx willing.

KERRY: Who is this little firecracker?

UNIDENTIFIED MALE: This is Nick.

UNIDENTIFIED MALE: He's going to be campaigning actively as he has been for more than a year now, and I expect, you know, we'll be seeing a lot of him on the campaign trail right to the end.

FRANKEN: Actually, we'll be seeing a lot less of him in the next several days. He'll be hunkering down at home in Boston and then in Wisconsin. He'll somehow combine resting his vocal chords with intense preparation for the first debate.

(on camera): Of course, it could have been worse. At least the throat problems hit him a week before the debate.

Bob Franken, CNN, Columbus, Ohio.

(END VIDEOTAPE)

DOBBS: Vice President Cheney tonight accused Senator Kerry of showing a complete lack of respect for Prime Minister Allawi. At a campaign stop in Missouri, Vice President Cheney said he is appalled by Senator Kerry's remarks.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: John Kerry's trying to tear down all of the good that has been accomplished, and his words are destructive to our effort in Iraq and in the global war on terror.

(END VIDEO CLIP)

DOBBS: Senator John Edwards said President Bush "needs to come out of fantasy land on Iraq." Speaking in Iowa, Senator Edwards declared Senator Kerry "will crush and destroy terrorists."

In Iraq today, insurgents killed a U.S. Marine in Al Anbar Province west of Baghdad. Heavy fighting also continued in Baghdad today. American troops supported by aircraft and helicopters fought gunmen in Sadr City for a second straight day. A rocket destroyed an American Bradlee fighting vehicle. There is no word on casualties.

As the violence in Iraq continues to escalate, there are new concerns that the United States does not have enough troops in Iraq. The head of Central Command, General John Abizaid says he cannot discount the possibility that more American troops will go to Iraq before the January Iraq elections, but General Abizaid believes Iraq's armed forces will soon be strong enough to fight the insurgents without additional American troops.

Senior Pentagon Correspondent Jamie McIntyre reports -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Lou, the Pentagon says that about 100,000 Iraqi troops are fully trained and equipped, security forces that is, that could help in the election, although, today before Congress, Iraq's Interim Prime Minister Allawi put the number at 50,000 that were battle-ready.

He did, however, predict that by January, he'd have three times as many, about 145,000 troops, but both the Pentagon and Prime Minister Allawi said today that even if Iraqi troops are not up to snuff by then, the elections will go ahead no matter what.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: Let's say you tried to have an election and you could have it in three-quarters or four- fifths of the country, but some places you couldn't because the violence was too great. Well, that's -- so be it. Nothing's perfect in life. So you have an election that's not quite perfect. Is it better than not having an election? You bet.

(END VIDEO CLIP)

MCINTYRE: Prime Minister Allawi said that the elections might not be perfect, but not holding them would be a huge victory for the insurgents, something that he's not willing to do.

The Pentagon's own estimates, by the way, put the Iraqi force at the time of the elections somewhere between 110,000 and 140,000, slightly less than what prime minister said, and, today, Defense Secretary Rumsfeld and President Bush both said that if General John Abizaid, the top U.S. commander, needs more American troops, all he needs to do is ask for them, and he'll get them.

(BEGIN VIDEO CLIP)

GEN. JOHN ABIZAID, HEADS CENTRAL COMMAND: I think we will need more troops than we currently have to secure the election's process in Iraq that will probably take place in the end of January, but it is our belief that those troops will be Iraqi troops, and they may be additional international troops that arrive to help out as well as part of the United Nations' mission, and so I don't foresee a need for more American troops, but we can't discount it.

(END VIDEO CLIP)

MCINTYRE: Today, both Defense Secretary Rumsfeld and the Joint Chief Chairman General Myers faced some sharp questions about not just the troop numbers but how well they're equipped, delays in getting ammunition, getting vehicles, getting communications equipment to those troops. General Myers said that because of contracting problems, that had been a problem, but he said he thinks they're on the right track now and that more equipment is pouring into the country now. He thinks that the troops by January will be pretty well equipped -- Lou.

DOBBS: Jamie, thank you very much.

Jamie McIntyre, senior Pentagon correspondent.

With the violence escalating and National Guard recruiting down, I'll be talking with General David Grange about many of the challenges now facing the U.S. military in Iraq.

Also on Capitol Hill today, the House will be voting to extend President Bush's tax cut plan for another five years. The multibillion-dollar extension comes despite a swelling record federal budget deficit. It's expected to hit a half-trillion dollars this year. Democrats and moderate Republicans gave up, trying to stop the tax-cut extension. The reason, as you might guess, this is an election year.

Joe Johns reports from Capitol Hill.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Extending the so-called family friendly tax cuts would be a victory for the president and his allies in Congress and a potential crowd pleaser during an election year, even with record-setting deficits.

If you give people more of their money to invest in their own future, that's going to grow the economy, and that's the way to work out of the deficit.

JOHNS: The bill extends the $1,000-a-child tax credit, keeps tax breaks for married couples in place and preserves the 10 percent tax bracket for low-income couples. The bill would cost $146 billion over five years. Democrats released an analysis they requested from the Congressional Budget Office, adding in administration tax and spending proposals, plus the cost of the war. The total: a 10-year deficit of $3.3 trillion.

Republicans dismissed the analysis as politically motivated. Still, some Democrats fought and lost a battle to pay for the tax cut extensions.

REP. CHARLES RANGEL (D), NEW YORK: One of the most important things that Americans are missing and the majority doesn't care about is who pays for these tax cuts. JOHNS: But Democrats also face the political reality that it can be risky to oppose tax cuts for the middle class weeks from an election.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: This is political. You know that. My advice to my colleagues is: When they're dealing politically on the floor, you deal with it any way you need to deal with it.

(END VIDEOTAPE)

JOHNS: This would be the fourth major tax cut of the Bush administration, and it looks as though it's going to reach the president's desk very quickly. Both the House and the Senate are moving to debate on it this evening -- Lou.

DOBBS: And there is no stopping this particular piece of legislation is there, Joe?

JOHNS: It certainly does not appear that way. The only question is when the president will sign it, and that, of course, is up to him and the people on his staff.

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

When we continue, General David Grange on Point. The rising violence in Iraq calls for more troops on the ground. Will the United States even contemplate bringing back the draft? General David Grange on Point next.

Also ahead, a critically important issue facing this country and middle-class Americans all over this country has been all but ignored by our presidential candidates. We'll have a special report tonight on the glaring lack of a national immigration policy and a glaring lack of concrete proposals from both the Democrats and the Republicans.

And Stealing America. Chinese piracy of our ideas and technology is rampant, costing this country hundreds of billions of dollar, countless American jobs, and -- oh, yes -- we also have a record trade deficit with China. We'll have that special report and a great deal more still ahead here.

(COMMERCIAL BREAK)

DOBBS: In Grange on Point tonight, the escalating violence in Iraq. Military officials admit the insurgency is rising, that the initiative is going to the insurgents. There are concerns that the United States, in fact, may need to send more troops to Iraq. That would place even more stress on an already stressed, all-voluntary military, and it raises questions about whether a draft should be reinstated.

General David Grange joins me now.

General, let's start with the National Guard, the head of which says for the first time in a decade they've come up short on their recruiting goals. Is that tied directly to the stress that's been put on our National Guard and Reserves?

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, Lou, I think a little bit to the stress. The other part of it is that you have those serving in the active forces that decide to get out, and they say, well, hey, if I get in the National Guard, I may get mobilized and go right back where I came from. So I think that has a little bit of effect on the current situation. I think if you look in the out-years, it will be even a little tougher.

DOBBS: And meanwhile, all throughout this year, the National Guard, the head of the Reserves have said that they face difficulties. The Pentagon has continued to say they don't. Here we are. The facts speak for themselves. Why in the world can't we get straightforward honest talk out of the Pentagon on something so straightforward and easy as recruiting levels?

GRANGE: Well, the recruiting levels -- they're meeting the recruiting levels. I think the real question -- except for the National Guard. I think the real question is the sustained fight. What do we need to sustain the fight? And it's not as simple as just saying, well, I would just add 40,000 people. Who's going to pay for those people -- the VA benefits, the medical costs? Who's going to trade-off other things?

DOBBS: Well, the same people who always pay for it. We the American taxpayers.

GRANGE: Well, that's right, and Congress would have to authorize it. So, in other words, it's a big deal to do it, and I believe we have to do it, but it's a big deal and whoever makes a statement has to come forward and say, in order to raise the size of the Army, this is what it will cost because you can't trade readiness for people. You have to have both, and so that's the issue that's really not being debated.

DOBBS: Yes, it's not being debated, and I don't think that the American people would be too pleased to learn that there was even a discussion on that issue in the Pentagon because they would expect both adequate force and adequate training contemporaneously, would not see that there should be ever in the richest nation on the face of the earth a choice between those two, don't you think?

GRANGE: That's right. It's the moral responsibility of the president and of Congress to do both of those things simultaneously.

DOBBS: This administration, Dave, has embarked on -- whether one is a Republican or Democrat, in agreement or disagreement with the policy -- a bold course in the Middle East, and that course requires troops and military strength. Why is there such apparent reticence on the part of the Pentagon to raise troop levels and to add to that budget?

GRANGE: Well, if you take Iraq by itself, the current level of U.S. troops is, I believe, adequate, but it all depends on how long you're going to have that size of force there. To train the Iraqi military, which we have to...

DOBBS: Well, the cynic would say, Dave, it looks like in perpetuity right now, given the security level. The optimist would say within perhaps four years.

GRANGE: That's what I think. I think it will take that long. You can't train the Iraqi army overnight. You won't get the quality of leadership.

I wouldn't want 200,000 Iraqi soldiers that were -- had poor leadership, were ill equipped and weren't trained. I'd rather have 100 well trained, and I could do a lot more with them.

But that's what's going to drive the troop levels of the coalition, is how fast, how well those Iraqi military personnel are trained.

DOBBS: The Kerry campaign has suggested that there is consideration of reinstituting the draft. Do you put any credence to that suggestion?

GRANGE: I don't believe we should have a draft -- and, oh, by the way, whoever makes a comment, a president doesn't make a decision on a draft. Congress does. Full mobilization, a draft is a congressional decisions, but I do -- whoever makes the decision, I just don't think that will happen. I really don't think that we need a draft.

I think we do need to reorganize. We do need to work the benefits, so it's still appealing. We need to restructure how we move overseas and fight fights in certain areas with a larger force but not one that requires an entire draft. I don't think we need to go that far.

DOBBS: General David Grange, as always, thank you.

GRANGE: My pleasure.

DOBBS: Still ahead here, millions of illegal aliens are crossing the border into this country, three million this year by a number of estimates, but neither of the presidential candidates, the major party presidential candidates, is even talking about what is being styled as simply an invasion. We'll have that special report for you next.

And then, American ideals, American ideas, American products stolen in China. It's a problem that's costing us hundreds of billions of dollars. We'll have that story and a desperate situation worsening in Haiti, after the destruction of the path of Tropical Storm Jeanne.

Those stories, a great deal more, including your thoughts on the issues of the day still ahead here tonight.

(COMMERCIAL BREAK)

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

DOBBS: The presidential candidates are failing to address in concrete terms the millions of illegal aliens who are swarming into this country. Neither candidate has talked about the need for a national immigration policy. Yet both support giving legal status to millions of illegal aliens who are in this country.

Casey Wian reports from Los Angeles.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): President Bush can talk tough on immigration.

BUSH: I oppose amnesty because it would encourage further illegal immigration and unfairly reward those who break our laws.

WIAN: So can Senator Kerry.

KERRY: This president hasn't done what's necessary to tighten the border, fix the immigration process, and particularly never attempted to do the immigration reform that he promised before.

WIAN: But listen more closely and it's clear both candidates favor allowing more illegal aliens to live and work in the United States. They even use similar language.

KERRY: Border control reform, reform with respect to how you bring people out of the shadows who are here now, who have children who are American, who've lived here for many years, stayed out of trouble, paid their taxes, have jobs. For those folks, you need a program of earned legalization so they begin to transfer into full citizenship. You need a guest worker program.

BUSH: My temporary worker program will preserve the citizenship path for those who respect the law. While bringing millions of hard working men and women out from the shadows of American life.

WIAN: President Bush's proposal would give illegal aliens a renewable work permit for at least three years. He says it's not amnesty because it doesn't provide a direct path to citizenship. Senator Kerry's guest worker plan would lead to citizenship, the only significant difference between the two.

BECK: Both Kerry and Bush are telling the poor workers of the world come on in. If you can run the gauntlet and get here, we'll reward you in some way, we'll probably never make you go home, and that's why -- one of the reasons why we just have an accelerating level of illegal immigration across our borders.

WIAN: Beck says the fact that neither candidate mentioned illegal immigration during the conventions was a relief because it shows that they understand a majority of American voters are opposed to legalizing illegal aliens.

(on camera): Senator Kerry promises, if he's elected, he'll convince Congress to pass his amnesty plan within his first 100 days in office. President Bush may not be so hasty. His plan is already 229 days old and counting.

Casey Wian, CNN, Los Angeles.

(END VIDEOTAPE)

DOBBS: And that is the subject of our poll tonight. The question: Do you believe there is a clear difference between President Bush and Senator Kerry -- their positions on immigration policy? Yes or no. Please cast your vote at cnn.com/lou. We'll have the results, of course, coming up here later.

A mounting backlash tonight in California on the issue of driver's licenses for illegal aliens there. Those in favor of licenses for illegal aliens are vowing to fight on, despite a setback delivered by Governor Arnold Schwarzenegger. Governor Schwarzenegger yesterday vetoed a bill that would have allowed up to two million illegal aliens in California to drive legally. Governor Schwarzenegger said the bill did not address national security issues.

And in the State of Oregon, eight people have been charged with helping thousands of illegal aliens there obtain driver's licenses illegally. The group has been arraigned, with bail for one member set at $10 million. Charges range from racketeering to tampering with public records.

Also in Oregon, the state supreme court has ruled that Ralph Nader will be removed from Oregon's presidential ballot. The court ruled Nader failed to turn in enough signatures to qualify for the ballot. Oregon is one of many states. More recent polls have shown President Bush and Senator Kerry in a statistical dead heat.

Joining me now for more on the presidential campaign, three of the country's top political journalists: Ron Brownstein, national political correspondent for the "Los Angeles Times"; Roger Simon, political editor for "U.S. News & World Report," who is in San Francisco -- Ron in Washington, D.C.; Karen Tumulty, also in Washington, D.C., national political correspondent for "TIME" magazine.

Quite a display today, Karen. The press corps got a little testy with President Bush today, a little more aggressive than we've seen in recent days. What do you make of it?

KAREN TUMULTY, "TIME" MAGAZINE: Well, maybe it was just that 45 minutes in the hot sun, but the sense you got, the basic theme of all the questions was essentially trying to square President Bush's portrayal of how things are going in Iraq with basically what we're seeing in the media.

The president, of course, and Prime Minister Allawi doing their very best to put an optimistic face on it and the reporters and the press corps repeatedly raising, again, the violence that has really been dominating the headlines in the last few weeks. DOBBS: What struck you, Roger, about that relatively rare press conference by President Bush with Prime Minister Allawi, in accompaniment?

SIMON: It struck me if you were alive back in the '60s, it sounded like Lyndon Johnson's press conferences. We have to stay the course. This band of ruffians will never defeat the might of U.S. military power. If we don't fight them overseas, we will be fighting them on our own soil. And basically the generals are going to get whatever they want.

If you were one of the persuadable voters out there, and the Bush campaign estimates are there 10 to 12 percent of the electorate is persuadable, I don't think you are reassured by President Bush's performance today. This is the President Bush that John Kerry hopes shows up next Thursday in Miami. A president to I think was irritated and slightly off his game.

DOBBS: You agree, Ron?

BROWNSTEIN: Well, I thought he was a little testy, but I don't think it was necessarily quite as bad for him as Roger suggested. I know some really telling, though, indications of whether their strategy is going. First, the president on several in response to three separate questions, basically said, if you don't believe me, trust the guy standing next to me, Prime Minister Allawi. He's on the ground. He has a closer view.

In effect, he was enlisting him as an expert witness in this argument with John Kerry. And you saw Kerry forced into, I think very unusual position today, of being compelled to pick a fight with a friendly foreign leader during the campaign.

I think what Kerry people feel is that the Bush people -- the White House is trying to use Prime Minister Allawi's visit to buttress the president's credibility on this issue. Allawi, in fact, is making the same arguments as the president. And that to challenge the president's credibility, they also had to challenge Allawi's.

DOBBS: Karen, do you think the president went too far in suggesting that perhaps what he was calling mixed signals from Senator Kerry would be -- would diminish morale amongst our troops, would give effectively aid and comfort to the enemy?

TUMULTY: Well, I do think that if that is being read as, you know, any suggestion of criticism to U.S. policy in Iraq is basically giving aid and comfort to the enemy, yes, I think that is going over the top. But the White House of course will argue, no, it's Senator Kerry's inconsistency. But certainly I thought that the message, the message that came through again was a suggestion that president -- that President Bush believes Senator Kerry is essentially unpatriotic in criticizing the policy and in criticizing, particularly, Allawi.

DOBBS: Let's turn to another issue that critically important, and that of course are tax breaks. Another -- one can argue, the amount of money, but a multibillion dollar tax break, a fourth for this administration, sailing through Congress without much care on the part of either party, frankly, as to the impact on a record of budget deficit. Is this what we're in for the remaining 40 days before the election, Roger?

SIMON: I'm afraid we are. It's amazing -- well, not amazing, but a little surprising how the deficit has disappeared as an issue. It was probably Ross Perot's lasting contribution to American politics. That he put it on the table as an issue when he ran for president twice, and it was certainly an issue with President Clinton. But now, at a time of a record deficit and a truly stunning deficit, it is not part of the political discussion and the American public seems to be just fine with that.

DOBBS: Ron, Senator Kerry horse, from a cold, certainly from all the campaigning, one has to imagine. Senator Kerry's being supplanted by Senator Edwards in many places picking up over the next few days. Has Senator Edwards picked up? Are you hearing less criticism of his reticence to attack, to go for the juggler?

BROWNSTEIN: Well, certainly he has sharpened his rhetoric in the last couple weeks, along with more importantly the principle sharpening his rhetoric. Really since that midnight speech after President Bush's acceptance speech a couple of weeks ago, Senator Kerry has been out there trying very aggressively to make a case against the president, particularly on Iraq. He will give another -- he is scheduled to give another speech tomorrow in the -- the war on terror.

Yes, I do think Senator Edwards as part of that, has clear picked up the language, mess in Iraq he talks about and so forth. I want to point out what Roger said, politics is very easy when you don't have to make it add up, you know? And that is, unfortunately, what we are seeing increasingly in American politics. The deficit has gotten so big that both parties sort of feel like it has become am abstraction for voters and you can simply pile more on to it in a way that you probably couldn't if we were closer to balance.

DOBBS: Well, needing no motivation or encouragement, Vice President Cheney hardly reticent in criticizing Senator Kerry, and showing disrespect for Prime Minister Allawi. Is the vice president being effective in role, Karen?

TUMULTY: Oh, I think absolutely. In his role, which is stirring up the base and keeping them motivated. The downside, of course, is that in all of the polls, the vice president's own negatives are pretty high there.

But he has a role. I think he's playing it very effectively. And more importantly, the president of the United States seems to think that he's playing it very effectively.

DOBBS: Karen?

TUMULTY: He really enjoys that role, it's clear.

DOBBS: Karen, Roger, Ron, thank you all for being here. Look forward to talking to you, soon.

SIMON: Thanks, Lou.

DOBBS: Tonight's thought is on democracy. "If liberty and equality, as is thought by some, are chiefly to be found in democracy, they will be best detained when all persons alike share in the government in the utmost." Those the words of Aristotle.

Taking a look now at some of your thoughts. Tina Huddleson of Terre Haute, Indiana wrote in to say, "Dear Mr. Dobbs, I thought the whole idea of electing politicians to office was to represent the American people. Instead, we get politicians that want to give away our country to illegal aliens and foreign trade. Whatever happened to American citizenship? Does it only count for the rich?"

And Linda Fisher in San Antonio, Texas, "My solution to the overwhelming cost of social services for illegal aliens is to send the bill to President Fox and the Mexican government. Maybe then, the Mexican government would find another way of putting its people to work, rather than sending them to the United States."

Sandi Buley in Ventura, California, "Lou, what more can we give away to illegal aliens? This is insane. I'm beginning to wonder what the benefits for being a legal upstanding citizen is here."

We love hearing from you. Send us your thoughts at loudobbs@CNN.com. Send us your name and address as well. Each of your e-mail is that is read on this broadcast, receives a free copy of my new book on the assault on the middle class in this country, "Exporting America."

Coming up next, "Stealing America." One idea at a time, our most prized technologies and many of our best innovations being ripped off by the Chinese. A special report tonight.

And the real impact of unfair trade practices on this country and the middle class. Hundreds of thousands of jobs lost. We'll have a live report tonight from Ohio, one of the hardest hit states in the country in one of the most important battlegrounds in this presidential election. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The death toll from the flooding in Haiti now stands at more than 1,000. Another 1,200 people are still listed as missing. The death toll is expected to rise. Officials concerned about the spread of disease now, as conditions are worsening.

Six days after Tropical Storm Jeanne hit the island, water and food supplies are short. Panic has erupted in some areas where residents are becoming increasingly desperate. A quarter of a million people are now homeless as a result of the flooding.

A hurricane watch is in effect for the northwest Bahamas tonight. Hurricane Jeanne is now moving west/northwest. It's expected to hit Florida as early as Sunday. It currently packs 105-mile-an-hour winds. Forecasters predict Hurricane Jeanne could become a major hurricane by tomorrow.

And a top tropical storm warning is in effect now from Louisiana to Texas, as Hurricane Ivan has returned in a somewhat distinguished form. Tropical storm now, Ivan, is expected to hit that area later this evening.

Turning now to the latest threat to American workers, and entrepreneurs from foreign competitors, Chinese companies are simply stealing America one idea at a time. Intellectual property theft is rampant among Chinese firms and it is one reason the Chinese have gained an unfair trading advantage with the United States. Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Bill Clinton's book, "My Life" is a hit in China, at least the counterfeit version is selling well. It was available only days after the real bestseller hit the U.S. market. Nothing is off-limits for Chinese counterfeiters. Nike shoes for $3. A Britney Spears' CD for $1.50. Even an entire General Motor's car was allegedly copied by a Chinese automaker. The rampant rip-off was the focus of a congressional hearing today.

REP. ROB SIMMONS (R), CONNECTICUT: It's clear that over 50 percent of the counterfeits identified in America today are coming from China, and this has to stop! This is not competing. This is cheating.

SYLVESTER: The U.S. Trade Representative's office estimates at least $200 billion was lost by U.S. companies in 2003 because of piracy in global counterfeiting. China's laws make it difficult to prosecute intellectual property thieves but there are other hurdles facing U.S. manufacturers who try to compete with Chinese businesses. Chinese companies do not have to pay for health insurance or fund pension plans. The Chinese government controls water and electricity rates for businesses, and environmental regulations are lacking. On top of this, China has kept its currency artificially low to make its exports more globally competitive. This added up to a $124 billion trade deficit in 2003 between the United States and China.

JIM SCHOLLAERT, AMERICAN MANUF. TRADE ACTION COUNCIL: China has massive cost of production advantages across the board as a nonmarket economy. We seem to forget we're dealing with a communist country here.

SYLVESTER: Many U.S. multinational corporations have decided, if you can't beat them, join them.

MYRON BRILLIANT, U.S. CHAMBER OF COMMERCE: Global sourcing is a benefit to the world economy. We insource as well as outsource jobs and we certainly see the value in engaging China in manufacturing in there, getting closer to the customer base.

SYLVESTER: But while China surges on the world economy, U.S. workers are being left behind. (END VIDEOTAPE)

SYLVESTER: China has been invited to the Group of Seven meeting with the world's largest industrialized countries next week. The Bush administration is expected to pressure China to stop manipulating its currency to boost its exports -- Lou.

DOBBS: I'm sure the Chinese government is quivering as we speak. Lisa, thank you very much. Lisa Sylvester.

China's unfair trade practices sometimes called free trade in this country are simply devastating American workers. We'll hear some of their personal stories and a great deal more from a very important state in this presidential election next. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: In Ohio today, an important battleground state in this presidential election, workers and business owners had the opportunity to speak out against trade practices and policies that give Chinese companies an unfair advantage at the expense of American workers and American business. The bipartisan U.S.-China Economic and Security Review Commission held a hearing on the impact of our trade policies with China. Today's hearing focused on manufacturing. Bill Tucker has the story from Akron, Ohio.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): They came from all over Ohio, and the commission came from Washington to listen. What they heard from business owners, workers and economists added up to the single message...

DON HONECK, POLICY MATTERS: I think the future is rather bleak unless we can turn the situation around.

TUCKER: There was plenty of anger and a feeling of betrayal in the room.

WILLIAM BURGA, PRESIDENT, OHIO AFL-CIO: I don't think our trade negotiators really understand working people's plight about losing jobs. I really wonder about it.

TUCKER: David Johnson who runs Summitvile Tile, his family's 100-year-old business couldn't agree more. His company was forced into bankruptcy trying to compete with the Chinese. His managers have taken 30-percent pay cuts, his workers haven't had a raise in three years.

DAVID JOHNSON, PRES. & CEO, SUMMITVILLE TILE: I think all of them in Washington are out of touch and I would like them to come out to my factory and into my clay mines and look into the eyes of the people, the workers in my factory that are three generations of people that have worked in that plant, husbands and wives and their kids. And it's all in jeopardy.

TUCKER: The plant where Mike Sears works closes this week. The jobs? Going to China.

MIKE SAYERS, PRESIDENT, LOCAL 2887 STEELWORKERS: It's killing us. It's killing this country. It's tearing the basic root of family apart. Manufacturing is gone. We cannot compete with the outsourcing that's going on. In my opinion we have been done in by our own government.

TUCKER: But it would be a mistake to think that manufacturers are going down without a fight.

DOUG BARTLETT, U.S. PRINTED CIRCUIT ALLIANCE: I tell you what, if not moving my company to China because I want to do everything I can to protect my worker, if that's what being a protectionist is, I am damn happy to be one.

(END VIDEOTAPE)

TUCKER: This is the commission's first hearing outside of Washington, Lou, since it issued its report in June. Field trips to Seattle and New York are planned later this fall -- Lou.

DOBBS: It's encouraging at least to see that the government is trying to stick its nose into this and try to actually find out what's happening as a result of the practices by government and business in this country. Bill, thank you very much. Bill Tucker reporting from Akron, Ohio.

In its most recent report to Congress, the U.S.-China Trade Commission found that, quote, "a number of the current trends in U.S.- China relations have negative implications for our long-term economic and national security interests, and therefore that U.S. policies are in need of urgent attention and course corrections."

Michael Wessel is a member of the commission joining me tonight as well from Akron. Michael, good to have you here.

You have obviously, as Bill Tucker just reported, learned something more about the personal pain that working men and women in this country are feeling, and in particular obviously in Ohio. What else have you learned as a result of being there?

MICHAEL WESSEL, U.S.-CHINA ECON. & SECURITY COMMISSION: Well, you learn firsthand the impact that the trade policies and the -- actually the inaction in Washington is having on them. And actually the betrayal that most of these people feel, not just the businesses but the workers as well in terms of a government that's not standing up for their interests.

DOBBS: When you say a government's not standing up for their interests, we're talking about a Democratic administration under Bill Clinton, a Republican administration under George Bush. And the effect has been so-called free trade and we have seen nothing but abject devastation of American jobs as a result of the so-called free trade policies. What do you think needs to be done? And your own commission found exactly the same thing. WESSEL: Found exactly the same thing. You've seen the trends accelerate in the last couple of years since China became a member of the WTO four years ago. You have seen a wholesale slashing and burning of corporate America as they take their jobs and move them over to China. And it's not just the manufacturing jobs now that we're seeing. We're seeing high-tech jobs all across the board.

DOBBS: What in the world are we going to do? Do you have a solution?

Because both parties frankly seem indifferent to the trade practices that have gotten us into this mess. Perhaps indifferent because they're simply writing off middle-class Americans who don't have representation in Washington.

WESSEL: Well, you know, there's no silver bullet to solve this problem. But the first thing that has to happen is trade enforcement. We heard virtually from every witness here today that they're frustrated by currency manipulation that the Chinese are engaged in, which the Bush administration last week said, they have no real intention of responding to. There were three cases, one of the witnesses today talked about where he went to the government, the FTC, the major arbiter of all of this, found unanimously that they had been injured. And the Bush White House turns their back on them. They're confused. They don't know what to do. They follow the law. They follow the rules. They work hard. And at the end of the day, their government, this administration is doing nothing for them.

DOBBS: What should they do? There's got to be an answer. You said there's not a silver bullet. This democracy has worked pretty well. What is the silver bullet? There's got to be!

WESSEL: Well, again, no silver bullet but the first thing you've got to do is restore confidence that the government is on their side and that means trade enforcement. Going after trade manipulation which amounts it a roughly 40 percent tax all of our products going to China, and a 40 percent subsidy for their products coming here. It means that when foreign country like China dumps their products, predatory practices to put our companies out of business, at the government says we're not going it take it, we're going to stand by your side, then it's a whole host of others things. Education, budget policy, you name it.

DOBBS: Michael Wessel, we thank you for taking the time. And importantly, we thank you for continuing to find out what the real Americans in this country are going through. I've got one silver bullet, and that is, this country needs to wise up and take care of its own. I thank you, Michael Wessel.

WESSEL: I agree. (UNINTELLIGIBLE)

DOBBS: Coming up next, we'll tell you why one company born of the American dream is now betting a good part of its future on a place called, yep, China. We'll have that story. Stay with us.

(COMMERCIAL BREAK) DOBBS: With oil price near $50 a barrel, the White House says it will allow refiners to borrow oil from the Strategic Petroleum Reserve. On Wall Street, the Dow fell another 70 points today, the S&P down 5. Oil prices rose. Jobless claims rose as well about up to 350,000. While the American dream is under assault for so many here, some American CEOs are trying to replace the American dream with what is nothing other than a Chinese fantasy. Christine Romans is here with that.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, John Chamber is the CEO of Cisco System and he has lived the American dream. Raised in West Virginia, educated there, and Indiana, and now he says, he wants Cisco Systems to be a truly Chinese company.

He says, quote, "China will become the center of the information technology world." And he says "China will be the largest economy in the world."

Cisco founded by Stanford University students over 20-years-ago is investing $32 million in Shanghai, and the company is training tens of thousands of Chinese universities students. Cisco's not alone. Captains of American industry are salivating at a chance for their Chinese dream. China now leads the world of foreign direct investment, unseeding the United States. And American consumers by $150 billion more from China than China buys from us making this country even more dependent on China and Japan to finance our massive trade deficits. Now, the CEOs who say they are investing in China and other cheap overseas markets, they can't blame the owner tax structure in this country. A new study shows 82 major American companies paid no federal income tax for at least one year from 2001 to 2003. The average effective tax rates on American companies fell to just about 17 percent. That's less than half of what they're supposed to pay. At the same time, more American workers have exhausted their unemployment benefits than at any time since 1941, Lou.

DOBBS: Remarkable! And point in fact, corporate tax pays for about 6 percent of total government expenditures. Now, it's dropped that low.

ROMANS: Still shrinking.

DOBBS: How amazing. Christine Romans, thank you.

ROMANS: You are welcome.

DOBBS: Still ahead here, we'll have the results of our poll. Please star stay with us.

(COMMERCIAL BREAK)

DOBBS: The results now of your poll, two thirds of you say there is a clear difference between President Bush and Senator Kerry on the issue of immigration.

Thanks for being with us tonight. Please join us here tomorrow. For all us, 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 September 23, 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: It's 40 days until the presidential election, and, today, President Bush and the Iraqi prime minister declared they stand firm against terrorism and insurgents in Iraq.
(BEGIN VIDEO CLIP)

AYAD ALLAWI, IRAQI PRIME MINISTER: We are succeeding in Iraq.

(END VIDEO CLIP)

DOBBS: Senator John Kerry, as you might expect, sees things differently. He says American troops in Iraq face rising violence and rising casualties.

(BEGIN VIDEO CLIP)

SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL CANDIDATE: We need to change the course to protect our troops and to win.

(END VIDEO CLIP)

DOBBS: Do we need more troops in Iraq? Do we need to reintroduce the draft? General David Grange joins me tonight.

The presidential candidates are avoiding a critical issue in this election campaign. Of course, it's only critical to middle-class Americans. That is the massive invasion of illegal aliens into this country this year. Critics say both candidates, in fact, favor the same policy.

(BEGIN VIDEO CLIP)

ROY BECK, AMERICANS FOR BETTER IMMIGRATION: Both Kerry and Bush are telling the poor workers in the world come on in.

(END VIDEO CLIP)

DOBBS: Not only do we have a massive trade deficit with China, China is stealing American intellectual property. We'll have a special report for you from Akron, Ohio, where I'll be talking with Michael Wessel, a leading member of the U.S. China Economic Commission.

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, September 23. Here now for an hour of news, debate and opinion is Lou Dobbs.

DOBBS: Good evening.

President Bush and the interim Iraqi Prime Minister Ayad Allawi today declared they are determined to defeat terrorism in Iraq. Prime Minister Allawi insisted elections will be held on time next January as planned. President Bush warned that a U.S. withdrawal from Iraq would lead to new terrorist attacks against this country.

Senior White House Correspondent John King has our report -- John.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: And, Lou, after their talks, President Bush said he was even more optimistic than before that Iraq is on a steady path toward democracy. The two leaders had discussions in the Oval Office, then emerged for a remarkable noontime event in the Rose Garden. The president of the United States standing with, as you see here, Iraq's interim prime minister.

In essence, the two leaders delivered a point-by-point rebuttal of the criticism from Senator John Kerry and other administration critics of Mr. Bush's Iraq policy. Senator Kerry calls it a colossal failure. Mr. Bush made the case that things are getting better, that Iraq is on the road to stability and democracy.

One of the charges he's rebutted is Senator Kerry's case that Mr. Bush has been misleading the American people by painting far too rosy a picture of the situation on the ground in Iraq. Mr. Bush says that's not so.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: You can understand it's and still be optimistic. You can understand how hard it is and believe we'll succeed. I remember when some were talking about the possibilities of success in Afghanistan in pretty stark terms.

(END VIDEO CLIP)

KING: Now Senator Kerry says Iraq is not central to the war on terrorism. Mr. Bush made crystal clear he disagrees, that he believes the fight in Iraq is critical to the global war against terrorism. He also suggested that by criticizing administration policy and specifically by criticizing Mr. Allawi publicly today that perhaps Senator Kerry was sending the wrong signal to U.S. troops and to the enemy as well.

(BEGIN VIDEO CLIP)

BUSH: But I understand that -- what mixed messages do. You can embolden an enemy by sending a mixed message. You can dispirit the Iraqi people by sending mixed messages. You send the wrong message to our troops by sending mixed messages. That's why I will continue to lead with clarity and in a resolute way.

(END VIDEO CLIP) KING: Now no surprise, of course, that the president would be rebutting his opponent in this presidential election. What made this event in the Rose Garden so remarkable is that it appeared Mr. Allawi, an international leader, was joining in, if you will, the point-by- point rebuttal of Senator Kerry.

Senator Kerry says it is chaos in Iraq. Mr. Allawi said that 14 or 15 of Iraq's 18 provinces are now safe and secure. Senator Kerry also says there is a dismal track record of training Iraqi police and security forces. Mr. Allawi saying that is not the case and also saying that that training would accelerate.

Essentially, Mr. Allawi's message to his critics was: Think and look again.

(BEGIN VIDEO CLIP)

ALLAWI: I understand, while faced with the daily headlines, there are those doubts. I know, too, that there are -- there will be many more setbacks and obstacles to overcome, but these doubters underestimate our country and they risk fueling the hopes of terrorism.

(END VIDEO CLIP)

KING: Prior to his appearance at the White House, Mr. Allawi also delivering a speech to a joint session of Congress sounding very much the same optimistic themes he sounded at Mr. Bush's side.

He thanked the people of the United States for their sacrifice in the war on Iraq. He said he knew the war was controversial, but he said, in his view, it was in the right decision to remove Saddam, and he also vowed to hold those elections in January despite the security problems, saying the most powerful message and the most powerful weapon against the insurgency was to hold those elections in January as scheduled -- Lou.

DOBBS: John, thank you.

John King, our senior White House correspondent.

Senator Kerry today said Prime Minister Allawi's optimistic comments do not reflect the true situation in Iraq. Senator Kerry also accused the Bush administration of sending contradictory messages about Iraq. Senator Kerry spoke to reporters in Columbus, Ohio, today, despite suffering from a cold.

Bob Franken has the report.

(BEGIN VIDEOTAPE)

BOB FRANKEN, CNN NATIONAL CORRESPONDENT (voice-over): He had canceled the Iowa part of the day's schedule when he could only speak in a raspy whisper, but John Kerry had kept this appointment in Ohio, and his voice recovered enough to let him take care of some pressing business, a response to the upbeat address by Iraq's interim prime minister before the U.S. Congress.

KERRY: The prime minister and the president are here, obviously, to put their best face on the policy, but the fact is that the CIA estimates, the reporting, the ground operations and the troops all tell a different story.

FRANKEN: The setting was a firehouse, familiar territory, where Kerry could give voice to his recurring theme.

KERRY: America needs leadership that tells the truth.

FRANKEN: Truth and leadership about Iraq, Kerry says again and again, that has been lacking in this administration. From here, he traveled to the neighboring battleground of Pennsylvania for a few other events, larynx willing.

KERRY: Who is this little firecracker?

UNIDENTIFIED MALE: This is Nick.

UNIDENTIFIED MALE: He's going to be campaigning actively as he has been for more than a year now, and I expect, you know, we'll be seeing a lot of him on the campaign trail right to the end.

FRANKEN: Actually, we'll be seeing a lot less of him in the next several days. He'll be hunkering down at home in Boston and then in Wisconsin. He'll somehow combine resting his vocal chords with intense preparation for the first debate.

(on camera): Of course, it could have been worse. At least the throat problems hit him a week before the debate.

Bob Franken, CNN, Columbus, Ohio.

(END VIDEOTAPE)

DOBBS: Vice President Cheney tonight accused Senator Kerry of showing a complete lack of respect for Prime Minister Allawi. At a campaign stop in Missouri, Vice President Cheney said he is appalled by Senator Kerry's remarks.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: John Kerry's trying to tear down all of the good that has been accomplished, and his words are destructive to our effort in Iraq and in the global war on terror.

(END VIDEO CLIP)

DOBBS: Senator John Edwards said President Bush "needs to come out of fantasy land on Iraq." Speaking in Iowa, Senator Edwards declared Senator Kerry "will crush and destroy terrorists."

In Iraq today, insurgents killed a U.S. Marine in Al Anbar Province west of Baghdad. Heavy fighting also continued in Baghdad today. American troops supported by aircraft and helicopters fought gunmen in Sadr City for a second straight day. A rocket destroyed an American Bradlee fighting vehicle. There is no word on casualties.

As the violence in Iraq continues to escalate, there are new concerns that the United States does not have enough troops in Iraq. The head of Central Command, General John Abizaid says he cannot discount the possibility that more American troops will go to Iraq before the January Iraq elections, but General Abizaid believes Iraq's armed forces will soon be strong enough to fight the insurgents without additional American troops.

Senior Pentagon Correspondent Jamie McIntyre reports -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Lou, the Pentagon says that about 100,000 Iraqi troops are fully trained and equipped, security forces that is, that could help in the election, although, today before Congress, Iraq's Interim Prime Minister Allawi put the number at 50,000 that were battle-ready.

He did, however, predict that by January, he'd have three times as many, about 145,000 troops, but both the Pentagon and Prime Minister Allawi said today that even if Iraqi troops are not up to snuff by then, the elections will go ahead no matter what.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: Let's say you tried to have an election and you could have it in three-quarters or four- fifths of the country, but some places you couldn't because the violence was too great. Well, that's -- so be it. Nothing's perfect in life. So you have an election that's not quite perfect. Is it better than not having an election? You bet.

(END VIDEO CLIP)

MCINTYRE: Prime Minister Allawi said that the elections might not be perfect, but not holding them would be a huge victory for the insurgents, something that he's not willing to do.

The Pentagon's own estimates, by the way, put the Iraqi force at the time of the elections somewhere between 110,000 and 140,000, slightly less than what prime minister said, and, today, Defense Secretary Rumsfeld and President Bush both said that if General John Abizaid, the top U.S. commander, needs more American troops, all he needs to do is ask for them, and he'll get them.

(BEGIN VIDEO CLIP)

GEN. JOHN ABIZAID, HEADS CENTRAL COMMAND: I think we will need more troops than we currently have to secure the election's process in Iraq that will probably take place in the end of January, but it is our belief that those troops will be Iraqi troops, and they may be additional international troops that arrive to help out as well as part of the United Nations' mission, and so I don't foresee a need for more American troops, but we can't discount it.

(END VIDEO CLIP)

MCINTYRE: Today, both Defense Secretary Rumsfeld and the Joint Chief Chairman General Myers faced some sharp questions about not just the troop numbers but how well they're equipped, delays in getting ammunition, getting vehicles, getting communications equipment to those troops. General Myers said that because of contracting problems, that had been a problem, but he said he thinks they're on the right track now and that more equipment is pouring into the country now. He thinks that the troops by January will be pretty well equipped -- Lou.

DOBBS: Jamie, thank you very much.

Jamie McIntyre, senior Pentagon correspondent.

With the violence escalating and National Guard recruiting down, I'll be talking with General David Grange about many of the challenges now facing the U.S. military in Iraq.

Also on Capitol Hill today, the House will be voting to extend President Bush's tax cut plan for another five years. The multibillion-dollar extension comes despite a swelling record federal budget deficit. It's expected to hit a half-trillion dollars this year. Democrats and moderate Republicans gave up, trying to stop the tax-cut extension. The reason, as you might guess, this is an election year.

Joe Johns reports from Capitol Hill.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Extending the so-called family friendly tax cuts would be a victory for the president and his allies in Congress and a potential crowd pleaser during an election year, even with record-setting deficits.

If you give people more of their money to invest in their own future, that's going to grow the economy, and that's the way to work out of the deficit.

JOHNS: The bill extends the $1,000-a-child tax credit, keeps tax breaks for married couples in place and preserves the 10 percent tax bracket for low-income couples. The bill would cost $146 billion over five years. Democrats released an analysis they requested from the Congressional Budget Office, adding in administration tax and spending proposals, plus the cost of the war. The total: a 10-year deficit of $3.3 trillion.

Republicans dismissed the analysis as politically motivated. Still, some Democrats fought and lost a battle to pay for the tax cut extensions.

REP. CHARLES RANGEL (D), NEW YORK: One of the most important things that Americans are missing and the majority doesn't care about is who pays for these tax cuts. JOHNS: But Democrats also face the political reality that it can be risky to oppose tax cuts for the middle class weeks from an election.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: This is political. You know that. My advice to my colleagues is: When they're dealing politically on the floor, you deal with it any way you need to deal with it.

(END VIDEOTAPE)

JOHNS: This would be the fourth major tax cut of the Bush administration, and it looks as though it's going to reach the president's desk very quickly. Both the House and the Senate are moving to debate on it this evening -- Lou.

DOBBS: And there is no stopping this particular piece of legislation is there, Joe?

JOHNS: It certainly does not appear that way. The only question is when the president will sign it, and that, of course, is up to him and the people on his staff.

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

When we continue, General David Grange on Point. The rising violence in Iraq calls for more troops on the ground. Will the United States even contemplate bringing back the draft? General David Grange on Point next.

Also ahead, a critically important issue facing this country and middle-class Americans all over this country has been all but ignored by our presidential candidates. We'll have a special report tonight on the glaring lack of a national immigration policy and a glaring lack of concrete proposals from both the Democrats and the Republicans.

And Stealing America. Chinese piracy of our ideas and technology is rampant, costing this country hundreds of billions of dollar, countless American jobs, and -- oh, yes -- we also have a record trade deficit with China. We'll have that special report and a great deal more still ahead here.

(COMMERCIAL BREAK)

DOBBS: In Grange on Point tonight, the escalating violence in Iraq. Military officials admit the insurgency is rising, that the initiative is going to the insurgents. There are concerns that the United States, in fact, may need to send more troops to Iraq. That would place even more stress on an already stressed, all-voluntary military, and it raises questions about whether a draft should be reinstated.

General David Grange joins me now.

General, let's start with the National Guard, the head of which says for the first time in a decade they've come up short on their recruiting goals. Is that tied directly to the stress that's been put on our National Guard and Reserves?

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, Lou, I think a little bit to the stress. The other part of it is that you have those serving in the active forces that decide to get out, and they say, well, hey, if I get in the National Guard, I may get mobilized and go right back where I came from. So I think that has a little bit of effect on the current situation. I think if you look in the out-years, it will be even a little tougher.

DOBBS: And meanwhile, all throughout this year, the National Guard, the head of the Reserves have said that they face difficulties. The Pentagon has continued to say they don't. Here we are. The facts speak for themselves. Why in the world can't we get straightforward honest talk out of the Pentagon on something so straightforward and easy as recruiting levels?

GRANGE: Well, the recruiting levels -- they're meeting the recruiting levels. I think the real question -- except for the National Guard. I think the real question is the sustained fight. What do we need to sustain the fight? And it's not as simple as just saying, well, I would just add 40,000 people. Who's going to pay for those people -- the VA benefits, the medical costs? Who's going to trade-off other things?

DOBBS: Well, the same people who always pay for it. We the American taxpayers.

GRANGE: Well, that's right, and Congress would have to authorize it. So, in other words, it's a big deal to do it, and I believe we have to do it, but it's a big deal and whoever makes a statement has to come forward and say, in order to raise the size of the Army, this is what it will cost because you can't trade readiness for people. You have to have both, and so that's the issue that's really not being debated.

DOBBS: Yes, it's not being debated, and I don't think that the American people would be too pleased to learn that there was even a discussion on that issue in the Pentagon because they would expect both adequate force and adequate training contemporaneously, would not see that there should be ever in the richest nation on the face of the earth a choice between those two, don't you think?

GRANGE: That's right. It's the moral responsibility of the president and of Congress to do both of those things simultaneously.

DOBBS: This administration, Dave, has embarked on -- whether one is a Republican or Democrat, in agreement or disagreement with the policy -- a bold course in the Middle East, and that course requires troops and military strength. Why is there such apparent reticence on the part of the Pentagon to raise troop levels and to add to that budget?

GRANGE: Well, if you take Iraq by itself, the current level of U.S. troops is, I believe, adequate, but it all depends on how long you're going to have that size of force there. To train the Iraqi military, which we have to...

DOBBS: Well, the cynic would say, Dave, it looks like in perpetuity right now, given the security level. The optimist would say within perhaps four years.

GRANGE: That's what I think. I think it will take that long. You can't train the Iraqi army overnight. You won't get the quality of leadership.

I wouldn't want 200,000 Iraqi soldiers that were -- had poor leadership, were ill equipped and weren't trained. I'd rather have 100 well trained, and I could do a lot more with them.

But that's what's going to drive the troop levels of the coalition, is how fast, how well those Iraqi military personnel are trained.

DOBBS: The Kerry campaign has suggested that there is consideration of reinstituting the draft. Do you put any credence to that suggestion?

GRANGE: I don't believe we should have a draft -- and, oh, by the way, whoever makes a comment, a president doesn't make a decision on a draft. Congress does. Full mobilization, a draft is a congressional decisions, but I do -- whoever makes the decision, I just don't think that will happen. I really don't think that we need a draft.

I think we do need to reorganize. We do need to work the benefits, so it's still appealing. We need to restructure how we move overseas and fight fights in certain areas with a larger force but not one that requires an entire draft. I don't think we need to go that far.

DOBBS: General David Grange, as always, thank you.

GRANGE: My pleasure.

DOBBS: Still ahead here, millions of illegal aliens are crossing the border into this country, three million this year by a number of estimates, but neither of the presidential candidates, the major party presidential candidates, is even talking about what is being styled as simply an invasion. We'll have that special report for you next.

And then, American ideals, American ideas, American products stolen in China. It's a problem that's costing us hundreds of billions of dollars. We'll have that story and a desperate situation worsening in Haiti, after the destruction of the path of Tropical Storm Jeanne.

Those stories, a great deal more, including your thoughts on the issues of the day still ahead here tonight.

(COMMERCIAL BREAK)

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

DOBBS: The presidential candidates are failing to address in concrete terms the millions of illegal aliens who are swarming into this country. Neither candidate has talked about the need for a national immigration policy. Yet both support giving legal status to millions of illegal aliens who are in this country.

Casey Wian reports from Los Angeles.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): President Bush can talk tough on immigration.

BUSH: I oppose amnesty because it would encourage further illegal immigration and unfairly reward those who break our laws.

WIAN: So can Senator Kerry.

KERRY: This president hasn't done what's necessary to tighten the border, fix the immigration process, and particularly never attempted to do the immigration reform that he promised before.

WIAN: But listen more closely and it's clear both candidates favor allowing more illegal aliens to live and work in the United States. They even use similar language.

KERRY: Border control reform, reform with respect to how you bring people out of the shadows who are here now, who have children who are American, who've lived here for many years, stayed out of trouble, paid their taxes, have jobs. For those folks, you need a program of earned legalization so they begin to transfer into full citizenship. You need a guest worker program.

BUSH: My temporary worker program will preserve the citizenship path for those who respect the law. While bringing millions of hard working men and women out from the shadows of American life.

WIAN: President Bush's proposal would give illegal aliens a renewable work permit for at least three years. He says it's not amnesty because it doesn't provide a direct path to citizenship. Senator Kerry's guest worker plan would lead to citizenship, the only significant difference between the two.

BECK: Both Kerry and Bush are telling the poor workers of the world come on in. If you can run the gauntlet and get here, we'll reward you in some way, we'll probably never make you go home, and that's why -- one of the reasons why we just have an accelerating level of illegal immigration across our borders.

WIAN: Beck says the fact that neither candidate mentioned illegal immigration during the conventions was a relief because it shows that they understand a majority of American voters are opposed to legalizing illegal aliens.

(on camera): Senator Kerry promises, if he's elected, he'll convince Congress to pass his amnesty plan within his first 100 days in office. President Bush may not be so hasty. His plan is already 229 days old and counting.

Casey Wian, CNN, Los Angeles.

(END VIDEOTAPE)

DOBBS: And that is the subject of our poll tonight. The question: Do you believe there is a clear difference between President Bush and Senator Kerry -- their positions on immigration policy? Yes or no. Please cast your vote at cnn.com/lou. We'll have the results, of course, coming up here later.

A mounting backlash tonight in California on the issue of driver's licenses for illegal aliens there. Those in favor of licenses for illegal aliens are vowing to fight on, despite a setback delivered by Governor Arnold Schwarzenegger. Governor Schwarzenegger yesterday vetoed a bill that would have allowed up to two million illegal aliens in California to drive legally. Governor Schwarzenegger said the bill did not address national security issues.

And in the State of Oregon, eight people have been charged with helping thousands of illegal aliens there obtain driver's licenses illegally. The group has been arraigned, with bail for one member set at $10 million. Charges range from racketeering to tampering with public records.

Also in Oregon, the state supreme court has ruled that Ralph Nader will be removed from Oregon's presidential ballot. The court ruled Nader failed to turn in enough signatures to qualify for the ballot. Oregon is one of many states. More recent polls have shown President Bush and Senator Kerry in a statistical dead heat.

Joining me now for more on the presidential campaign, three of the country's top political journalists: Ron Brownstein, national political correspondent for the "Los Angeles Times"; Roger Simon, political editor for "U.S. News & World Report," who is in San Francisco -- Ron in Washington, D.C.; Karen Tumulty, also in Washington, D.C., national political correspondent for "TIME" magazine.

Quite a display today, Karen. The press corps got a little testy with President Bush today, a little more aggressive than we've seen in recent days. What do you make of it?

KAREN TUMULTY, "TIME" MAGAZINE: Well, maybe it was just that 45 minutes in the hot sun, but the sense you got, the basic theme of all the questions was essentially trying to square President Bush's portrayal of how things are going in Iraq with basically what we're seeing in the media.

The president, of course, and Prime Minister Allawi doing their very best to put an optimistic face on it and the reporters and the press corps repeatedly raising, again, the violence that has really been dominating the headlines in the last few weeks. DOBBS: What struck you, Roger, about that relatively rare press conference by President Bush with Prime Minister Allawi, in accompaniment?

SIMON: It struck me if you were alive back in the '60s, it sounded like Lyndon Johnson's press conferences. We have to stay the course. This band of ruffians will never defeat the might of U.S. military power. If we don't fight them overseas, we will be fighting them on our own soil. And basically the generals are going to get whatever they want.

If you were one of the persuadable voters out there, and the Bush campaign estimates are there 10 to 12 percent of the electorate is persuadable, I don't think you are reassured by President Bush's performance today. This is the President Bush that John Kerry hopes shows up next Thursday in Miami. A president to I think was irritated and slightly off his game.

DOBBS: You agree, Ron?

BROWNSTEIN: Well, I thought he was a little testy, but I don't think it was necessarily quite as bad for him as Roger suggested. I know some really telling, though, indications of whether their strategy is going. First, the president on several in response to three separate questions, basically said, if you don't believe me, trust the guy standing next to me, Prime Minister Allawi. He's on the ground. He has a closer view.

In effect, he was enlisting him as an expert witness in this argument with John Kerry. And you saw Kerry forced into, I think very unusual position today, of being compelled to pick a fight with a friendly foreign leader during the campaign.

I think what Kerry people feel is that the Bush people -- the White House is trying to use Prime Minister Allawi's visit to buttress the president's credibility on this issue. Allawi, in fact, is making the same arguments as the president. And that to challenge the president's credibility, they also had to challenge Allawi's.

DOBBS: Karen, do you think the president went too far in suggesting that perhaps what he was calling mixed signals from Senator Kerry would be -- would diminish morale amongst our troops, would give effectively aid and comfort to the enemy?

TUMULTY: Well, I do think that if that is being read as, you know, any suggestion of criticism to U.S. policy in Iraq is basically giving aid and comfort to the enemy, yes, I think that is going over the top. But the White House of course will argue, no, it's Senator Kerry's inconsistency. But certainly I thought that the message, the message that came through again was a suggestion that president -- that President Bush believes Senator Kerry is essentially unpatriotic in criticizing the policy and in criticizing, particularly, Allawi.

DOBBS: Let's turn to another issue that critically important, and that of course are tax breaks. Another -- one can argue, the amount of money, but a multibillion dollar tax break, a fourth for this administration, sailing through Congress without much care on the part of either party, frankly, as to the impact on a record of budget deficit. Is this what we're in for the remaining 40 days before the election, Roger?

SIMON: I'm afraid we are. It's amazing -- well, not amazing, but a little surprising how the deficit has disappeared as an issue. It was probably Ross Perot's lasting contribution to American politics. That he put it on the table as an issue when he ran for president twice, and it was certainly an issue with President Clinton. But now, at a time of a record deficit and a truly stunning deficit, it is not part of the political discussion and the American public seems to be just fine with that.

DOBBS: Ron, Senator Kerry horse, from a cold, certainly from all the campaigning, one has to imagine. Senator Kerry's being supplanted by Senator Edwards in many places picking up over the next few days. Has Senator Edwards picked up? Are you hearing less criticism of his reticence to attack, to go for the juggler?

BROWNSTEIN: Well, certainly he has sharpened his rhetoric in the last couple weeks, along with more importantly the principle sharpening his rhetoric. Really since that midnight speech after President Bush's acceptance speech a couple of weeks ago, Senator Kerry has been out there trying very aggressively to make a case against the president, particularly on Iraq. He will give another -- he is scheduled to give another speech tomorrow in the -- the war on terror.

Yes, I do think Senator Edwards as part of that, has clear picked up the language, mess in Iraq he talks about and so forth. I want to point out what Roger said, politics is very easy when you don't have to make it add up, you know? And that is, unfortunately, what we are seeing increasingly in American politics. The deficit has gotten so big that both parties sort of feel like it has become am abstraction for voters and you can simply pile more on to it in a way that you probably couldn't if we were closer to balance.

DOBBS: Well, needing no motivation or encouragement, Vice President Cheney hardly reticent in criticizing Senator Kerry, and showing disrespect for Prime Minister Allawi. Is the vice president being effective in role, Karen?

TUMULTY: Oh, I think absolutely. In his role, which is stirring up the base and keeping them motivated. The downside, of course, is that in all of the polls, the vice president's own negatives are pretty high there.

But he has a role. I think he's playing it very effectively. And more importantly, the president of the United States seems to think that he's playing it very effectively.

DOBBS: Karen?

TUMULTY: He really enjoys that role, it's clear.

DOBBS: Karen, Roger, Ron, thank you all for being here. Look forward to talking to you, soon.

SIMON: Thanks, Lou.

DOBBS: Tonight's thought is on democracy. "If liberty and equality, as is thought by some, are chiefly to be found in democracy, they will be best detained when all persons alike share in the government in the utmost." Those the words of Aristotle.

Taking a look now at some of your thoughts. Tina Huddleson of Terre Haute, Indiana wrote in to say, "Dear Mr. Dobbs, I thought the whole idea of electing politicians to office was to represent the American people. Instead, we get politicians that want to give away our country to illegal aliens and foreign trade. Whatever happened to American citizenship? Does it only count for the rich?"

And Linda Fisher in San Antonio, Texas, "My solution to the overwhelming cost of social services for illegal aliens is to send the bill to President Fox and the Mexican government. Maybe then, the Mexican government would find another way of putting its people to work, rather than sending them to the United States."

Sandi Buley in Ventura, California, "Lou, what more can we give away to illegal aliens? This is insane. I'm beginning to wonder what the benefits for being a legal upstanding citizen is here."

We love hearing from you. Send us your thoughts at loudobbs@CNN.com. Send us your name and address as well. Each of your e-mail is that is read on this broadcast, receives a free copy of my new book on the assault on the middle class in this country, "Exporting America."

Coming up next, "Stealing America." One idea at a time, our most prized technologies and many of our best innovations being ripped off by the Chinese. A special report tonight.

And the real impact of unfair trade practices on this country and the middle class. Hundreds of thousands of jobs lost. We'll have a live report tonight from Ohio, one of the hardest hit states in the country in one of the most important battlegrounds in this presidential election. Please stay with us.

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DOBBS: The death toll from the flooding in Haiti now stands at more than 1,000. Another 1,200 people are still listed as missing. The death toll is expected to rise. Officials concerned about the spread of disease now, as conditions are worsening.

Six days after Tropical Storm Jeanne hit the island, water and food supplies are short. Panic has erupted in some areas where residents are becoming increasingly desperate. A quarter of a million people are now homeless as a result of the flooding.

A hurricane watch is in effect for the northwest Bahamas tonight. Hurricane Jeanne is now moving west/northwest. It's expected to hit Florida as early as Sunday. It currently packs 105-mile-an-hour winds. Forecasters predict Hurricane Jeanne could become a major hurricane by tomorrow.

And a top tropical storm warning is in effect now from Louisiana to Texas, as Hurricane Ivan has returned in a somewhat distinguished form. Tropical storm now, Ivan, is expected to hit that area later this evening.

Turning now to the latest threat to American workers, and entrepreneurs from foreign competitors, Chinese companies are simply stealing America one idea at a time. Intellectual property theft is rampant among Chinese firms and it is one reason the Chinese have gained an unfair trading advantage with the United States. Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Bill Clinton's book, "My Life" is a hit in China, at least the counterfeit version is selling well. It was available only days after the real bestseller hit the U.S. market. Nothing is off-limits for Chinese counterfeiters. Nike shoes for $3. A Britney Spears' CD for $1.50. Even an entire General Motor's car was allegedly copied by a Chinese automaker. The rampant rip-off was the focus of a congressional hearing today.

REP. ROB SIMMONS (R), CONNECTICUT: It's clear that over 50 percent of the counterfeits identified in America today are coming from China, and this has to stop! This is not competing. This is cheating.

SYLVESTER: The U.S. Trade Representative's office estimates at least $200 billion was lost by U.S. companies in 2003 because of piracy in global counterfeiting. China's laws make it difficult to prosecute intellectual property thieves but there are other hurdles facing U.S. manufacturers who try to compete with Chinese businesses. Chinese companies do not have to pay for health insurance or fund pension plans. The Chinese government controls water and electricity rates for businesses, and environmental regulations are lacking. On top of this, China has kept its currency artificially low to make its exports more globally competitive. This added up to a $124 billion trade deficit in 2003 between the United States and China.

JIM SCHOLLAERT, AMERICAN MANUF. TRADE ACTION COUNCIL: China has massive cost of production advantages across the board as a nonmarket economy. We seem to forget we're dealing with a communist country here.

SYLVESTER: Many U.S. multinational corporations have decided, if you can't beat them, join them.

MYRON BRILLIANT, U.S. CHAMBER OF COMMERCE: Global sourcing is a benefit to the world economy. We insource as well as outsource jobs and we certainly see the value in engaging China in manufacturing in there, getting closer to the customer base.

SYLVESTER: But while China surges on the world economy, U.S. workers are being left behind. (END VIDEOTAPE)

SYLVESTER: China has been invited to the Group of Seven meeting with the world's largest industrialized countries next week. The Bush administration is expected to pressure China to stop manipulating its currency to boost its exports -- Lou.

DOBBS: I'm sure the Chinese government is quivering as we speak. Lisa, thank you very much. Lisa Sylvester.

China's unfair trade practices sometimes called free trade in this country are simply devastating American workers. We'll hear some of their personal stories and a great deal more from a very important state in this presidential election next. Please stay with us.

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DOBBS: In Ohio today, an important battleground state in this presidential election, workers and business owners had the opportunity to speak out against trade practices and policies that give Chinese companies an unfair advantage at the expense of American workers and American business. The bipartisan U.S.-China Economic and Security Review Commission held a hearing on the impact of our trade policies with China. Today's hearing focused on manufacturing. Bill Tucker has the story from Akron, Ohio.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): They came from all over Ohio, and the commission came from Washington to listen. What they heard from business owners, workers and economists added up to the single message...

DON HONECK, POLICY MATTERS: I think the future is rather bleak unless we can turn the situation around.

TUCKER: There was plenty of anger and a feeling of betrayal in the room.

WILLIAM BURGA, PRESIDENT, OHIO AFL-CIO: I don't think our trade negotiators really understand working people's plight about losing jobs. I really wonder about it.

TUCKER: David Johnson who runs Summitvile Tile, his family's 100-year-old business couldn't agree more. His company was forced into bankruptcy trying to compete with the Chinese. His managers have taken 30-percent pay cuts, his workers haven't had a raise in three years.

DAVID JOHNSON, PRES. & CEO, SUMMITVILLE TILE: I think all of them in Washington are out of touch and I would like them to come out to my factory and into my clay mines and look into the eyes of the people, the workers in my factory that are three generations of people that have worked in that plant, husbands and wives and their kids. And it's all in jeopardy.

TUCKER: The plant where Mike Sears works closes this week. The jobs? Going to China.

MIKE SAYERS, PRESIDENT, LOCAL 2887 STEELWORKERS: It's killing us. It's killing this country. It's tearing the basic root of family apart. Manufacturing is gone. We cannot compete with the outsourcing that's going on. In my opinion we have been done in by our own government.

TUCKER: But it would be a mistake to think that manufacturers are going down without a fight.

DOUG BARTLETT, U.S. PRINTED CIRCUIT ALLIANCE: I tell you what, if not moving my company to China because I want to do everything I can to protect my worker, if that's what being a protectionist is, I am damn happy to be one.

(END VIDEOTAPE)

TUCKER: This is the commission's first hearing outside of Washington, Lou, since it issued its report in June. Field trips to Seattle and New York are planned later this fall -- Lou.

DOBBS: It's encouraging at least to see that the government is trying to stick its nose into this and try to actually find out what's happening as a result of the practices by government and business in this country. Bill, thank you very much. Bill Tucker reporting from Akron, Ohio.

In its most recent report to Congress, the U.S.-China Trade Commission found that, quote, "a number of the current trends in U.S.- China relations have negative implications for our long-term economic and national security interests, and therefore that U.S. policies are in need of urgent attention and course corrections."

Michael Wessel is a member of the commission joining me tonight as well from Akron. Michael, good to have you here.

You have obviously, as Bill Tucker just reported, learned something more about the personal pain that working men and women in this country are feeling, and in particular obviously in Ohio. What else have you learned as a result of being there?

MICHAEL WESSEL, U.S.-CHINA ECON. & SECURITY COMMISSION: Well, you learn firsthand the impact that the trade policies and the -- actually the inaction in Washington is having on them. And actually the betrayal that most of these people feel, not just the businesses but the workers as well in terms of a government that's not standing up for their interests.

DOBBS: When you say a government's not standing up for their interests, we're talking about a Democratic administration under Bill Clinton, a Republican administration under George Bush. And the effect has been so-called free trade and we have seen nothing but abject devastation of American jobs as a result of the so-called free trade policies. What do you think needs to be done? And your own commission found exactly the same thing. WESSEL: Found exactly the same thing. You've seen the trends accelerate in the last couple of years since China became a member of the WTO four years ago. You have seen a wholesale slashing and burning of corporate America as they take their jobs and move them over to China. And it's not just the manufacturing jobs now that we're seeing. We're seeing high-tech jobs all across the board.

DOBBS: What in the world are we going to do? Do you have a solution?

Because both parties frankly seem indifferent to the trade practices that have gotten us into this mess. Perhaps indifferent because they're simply writing off middle-class Americans who don't have representation in Washington.

WESSEL: Well, you know, there's no silver bullet to solve this problem. But the first thing that has to happen is trade enforcement. We heard virtually from every witness here today that they're frustrated by currency manipulation that the Chinese are engaged in, which the Bush administration last week said, they have no real intention of responding to. There were three cases, one of the witnesses today talked about where he went to the government, the FTC, the major arbiter of all of this, found unanimously that they had been injured. And the Bush White House turns their back on them. They're confused. They don't know what to do. They follow the law. They follow the rules. They work hard. And at the end of the day, their government, this administration is doing nothing for them.

DOBBS: What should they do? There's got to be an answer. You said there's not a silver bullet. This democracy has worked pretty well. What is the silver bullet? There's got to be!

WESSEL: Well, again, no silver bullet but the first thing you've got to do is restore confidence that the government is on their side and that means trade enforcement. Going after trade manipulation which amounts it a roughly 40 percent tax all of our products going to China, and a 40 percent subsidy for their products coming here. It means that when foreign country like China dumps their products, predatory practices to put our companies out of business, at the government says we're not going it take it, we're going to stand by your side, then it's a whole host of others things. Education, budget policy, you name it.

DOBBS: Michael Wessel, we thank you for taking the time. And importantly, we thank you for continuing to find out what the real Americans in this country are going through. I've got one silver bullet, and that is, this country needs to wise up and take care of its own. I thank you, Michael Wessel.

WESSEL: I agree. (UNINTELLIGIBLE)

DOBBS: Coming up next, we'll tell you why one company born of the American dream is now betting a good part of its future on a place called, yep, China. We'll have that story. Stay with us.

(COMMERCIAL BREAK) DOBBS: With oil price near $50 a barrel, the White House says it will allow refiners to borrow oil from the Strategic Petroleum Reserve. On Wall Street, the Dow fell another 70 points today, the S&P down 5. Oil prices rose. Jobless claims rose as well about up to 350,000. While the American dream is under assault for so many here, some American CEOs are trying to replace the American dream with what is nothing other than a Chinese fantasy. Christine Romans is here with that.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, John Chamber is the CEO of Cisco System and he has lived the American dream. Raised in West Virginia, educated there, and Indiana, and now he says, he wants Cisco Systems to be a truly Chinese company.

He says, quote, "China will become the center of the information technology world." And he says "China will be the largest economy in the world."

Cisco founded by Stanford University students over 20-years-ago is investing $32 million in Shanghai, and the company is training tens of thousands of Chinese universities students. Cisco's not alone. Captains of American industry are salivating at a chance for their Chinese dream. China now leads the world of foreign direct investment, unseeding the United States. And American consumers by $150 billion more from China than China buys from us making this country even more dependent on China and Japan to finance our massive trade deficits. Now, the CEOs who say they are investing in China and other cheap overseas markets, they can't blame the owner tax structure in this country. A new study shows 82 major American companies paid no federal income tax for at least one year from 2001 to 2003. The average effective tax rates on American companies fell to just about 17 percent. That's less than half of what they're supposed to pay. At the same time, more American workers have exhausted their unemployment benefits than at any time since 1941, Lou.

DOBBS: Remarkable! And point in fact, corporate tax pays for about 6 percent of total government expenditures. Now, it's dropped that low.

ROMANS: Still shrinking.

DOBBS: How amazing. Christine Romans, thank you.

ROMANS: You are welcome.

DOBBS: Still ahead here, we'll have the results of our poll. Please star stay with us.

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DOBBS: The results now of your poll, two thirds of you say there is a clear difference between President Bush and Senator Kerry on the issue of immigration.

Thanks for being with us tonight. Please join us here tomorrow. For all us, 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