Return to Transcripts main page

Lou Dobbs Tonight

Rumsfeld Defends White House Iraq War Policies; Bush's Battles; Republican Divide Over Immigration; White House Promotes Foreign Investment To Create American Jobs; China Does Business With Rogue Regimes; Shopping Overseas For California's Bay Bridge; Calls For Rumsfeld To Resign Grow Stronger

Aired March 23, 2006 - 18:00   ET


ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Thursday, March 23.
Live in New York, Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening.

Tonight, Iraqi insurgents have launched new attacks against Iraqi government targets as the U.S. military concedes that sectarian violence is spiking once again across Iraq. We'll be live at Pentagon, have the latest from Iraq.

The Democratic Party leadership is now willing to sacrifice national security to win new protections for illegal aliens. We'll have a special report tonight on a promised Democratic filibuster, threats of a filibuster, religious appeals as the U.S. Senate begins its immigration debate.

And the growing nuclear threat from the East. Communist China and North Korea's military and nuclear buildup putting America at risk. Tonight, I'll be joined by three of the nation's most prominent military and geopolitical experts who'll be discussing this very serious threat.

All of that and a great deal more coming up here tonight.

We begin with the Bush administration, which is stepping up its defense of its Iraq war policies as sectarian violence in Iraq surges. It was embattled Defense Secretary Donald Rumsfeld's turn to defend White House strategy today even as calls continue for his resignation.

The Bush administration's difficulty in selling its Iraq policies comes as it now faces new opposition to immigration reform proposals. President Bush tonight is calling for a civil debate in the Senate on immigration reform. A civil debate may be the last thing possible.

We have three reports tonight. We begin with Jamie McIntyre, live at the Pentagon, on the Bush administration's new Iraq war defense.

Dana Bash, from the White house, on the president's new immigration reform push.

Lisa Sylvester, from Washington, on the growing GOP resistance to the president's embattled immigration agenda.

We begin tonight with Jamie McIntyre -- Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Lou, Defense Secretary Donald Rumsfeld not only had to defend the strategy in Iraq, he had to defend himself as well.


MCINTYRE (voice over): For the third consecutive day insurgent forces attacked a major police and jail facility in Iraq. This time, a suicide car bomber hit the Interior Ministry's major crime unit in central Baghdad. It's part of what the U.S. military says has been a growing trend since the bombing of a Shiite shrine a month ago, an effort to drive a wedge between Iraq's ethnic groups.

MAJ. GEN. RICK LYNCH, MULTINATIONAL FORCE-IRAQ: And there is, indeed, a spike in what ethno-sectarian incidents. During this reporting period, 12 to 19 March, we found across Iraq about 100 events that we would label as an ethno-sectarian incident.

MCINTYRE: At the Pentagon, Defense Secretary Donald Rumsfeld admitted the failure of Iraq to form a new unity government was helping to fuel the violence.

DONALD RUMSFELD, SECRETARY OF DEFENSE: To the extent that isn't happening, obviously the level of violence is continuing and people are being killed. And that's unfortunate. And they need to get about the task.

MCINTYRE: And while President Bush has acknowledged that U.S. troops will be in Iraq past the end of his term in 2008, Rumsfeld steadfastly refuses to make any predictions about troop levels or even to acknowledge the Pentagon's plans for possible troop cuts later this year.

And the defense secretary brushed aside the recent criticism of his tenure, insisting he doesn't feel embattled nor plans to resign.

(on camera): Aside from the retired two two-star general calling you "incompetent" and asking you to step down in an op-ed over the weekend, you also had a column from Maureen Dowd in which she quoted an unnamed administration official saying that you don't hold the same sway in meetings and that you're treated as "an eccentric old uncle who's ignored."

RUMSFELD: You like to repeat all that stuff don't you -- on camera? Did you get it? Let's make sure you got it. He love that is stuff. It's a sure way to get on camera.

He'll be on the evening news.

MCINTYRE: I know you like to have the facts in the premise of the question.

RUMSFELD: Yes, I do. And you did it very well. No. UNIDENTIFIED MALE: You can do one-arm pushups and put all this to rest.

RUMSFELD: The answer is no.

MCINTYRE: Do you hold the same sway in meetings?

RUMSFELD: Oh, come on. I'm not going to get into that -- Pam.

QUESTION: Sir, in your opening statement you said...

RUMSFELD: If you believe everything you read from Maureen Dowd, you'd better get a life.


MCINTYRE: Rumsfeld said his critics have been calling for his head for years, something that he dismissed today as simply politics -- Lou.

DOBBS: Did you get the feeling, Jamie, that the defense secretary was steadfast and a regular reader of Maureen Dowd's columns?

MCINTYRE: I did not.

DOBBS: Nor did I.

Jamie, thank you very much.

Jamie McIntyre from the Pentagon.

In Iraq today, coalition troops freed Western aid workers who had been held hostage for almost four months. Troops raided a house in western Baghdad early this morning and freed three members of a Christian aid group. Two of the hostage are from Canada, one from Britain.

No kidnappers were at the house at the time of their rescue. The hostages were bound but left unguarded.

The release of the workers comes three weeks after kidnappers tortured and murdered American Tom Fox, the fourth person taken hostage in that group.

President Bush turned his attention today from the war in Iraq to the upcoming battle in Congress over immigration reform. President Bush hopes that he still has enough political capital remaining to push through his plan to give protections to illegal aliens, his so- called guest worker program.

Dana Bash reports.


DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): Knowing how divisive the immigration issue is, the president tried to lower the already intensely heated rhetoric in advance of next week's Senate debate. Make it civil, he said.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It must be done in a way that brings dignity to the process. It must be done in a way that doesn't pit one group of people against another.

BASH: But Mr. Bush also used his short statement to advocate the very position that many in his own party say is akin to amnesty for illegal immigrants and vowed to defeat.

BUSH: Part of enforcing our borders is to have a guest worker program that encourages people to register their presence so that we know who they are.

BASH: The president's support for allowing illegal workers the chance to obtain temporary visas and stay in the U.S. has always pitted him against many Republicans. Yet, not long after his 2004 re- election, a visibly confident president argued he could use his self- described political capital to fight GOP opponents on the issue.

BUSH: Legislation and I look forward to working. You asked me what my tactics are. I'm going to find supporters on The Hill and move it.

BASH: But back then he had a 55 percent approval rating. Now it is nearly 20 points lower. The ports controversy showed many Republicans are now not afraid of challenging the struggling president. Immigration threatens to be another internal GOP mine field.

NORMAN ORNSTEIN, AMERICAN ENTERPRISE INSTITUTE: Difficult as the immigration bill is to bring up at any time, this is not a good time for the president. His leverage is at its low point probably in his presidency with his own party. He's got a group of nervous Republicans looking ahead to a possibly disastrous election.

BASH: A senior official said the president had been eager to fight conservatives for a measure he's pushed since coming to office. But now that aide admits the White House is in no position to "agitate."


BASH: And one big political concern here and at the Republican National Committee is that GOP opposition to the president's guest worker program will anger Hispanic voters that the Bush team has worked very hard to court and actually made significant gains with in the last election -- Lou.

DOBBS: Of course that is one of the difficult issues with the presidential strategy, the assumption that Hispanic U.S. citizens are the -- of exactly the same view as Hispanic non-citizens.

BASH: Certainly, that is absolutely not the case -- it's not in all cases, as you -- as you just alluded to. But I think the feeling among Republicans, particularly those who have been working to court Hispanic voters, is that more often than not, they do agree with the president on this immigration issue -- Lou.

DOBBS: And to put it in clearer and what is obviously stark contrast, the president's position, the president's program puts in absolutely an antithetical position to the House leadership, controlled by the Republican Party, obviously, and the Senate leadership, controlled obviously by the president's party.

We thank you very much, Dana Bash, from the White House.

Despite the president's efforts today to push Congress toward his guest worker program proposals, the immigration divide among Republican leaders is widening. Republicans are now fighting over competing bills and it is a party seriously divided.

Lisa Sylvester reports.


LISA SYLVESTER, CNN CORRESPONDENT (voice over): There are as many as 20 million illegal aliens in the United States. The Senate Judiciary Committee has been weighing what to do about them. But time is up on Monday. That's when Senate Majority Leader Bill Frist expects the committee to send a proposal to the full floor.

If not, Frist is waiting in the wings with his own legislation.

SEN. BILL FRIST (R-TN), MAJORITY LEADER: A country that cannot secure its borders cannot secure its destiny.

SYLVESTER: Frist's bill was originally touted as an enforcement- only plan. It has border security measures, but it doubles the number of green cards from one million to two and significantly expands the number of skilled foreign workers allowed in under the H-1B visa program. Frist's bill has left immigration reformist like Bay Buchanan dismayed.

BAY BUCHANAN, PRESIDENT, AMERICAN CAUSE: And he has a bill that is almost as bad as Kennedy's, to be quite honest. It is -- it's doubling illegal immigration every single year.

SYLVESTER: The McCain-Kennedy bill would grant amnesty to illegal aliens and puts them on the path to citizenship. It sets up a guest worker program for new workers with little on the enforcement side.

Indications are that this week Judiciary Committee staffers have merged this bill with one offered by Senator Arlen Specter. His plan includes amnesty, allowing illegal aliens to live and work indefinitely in the United States, a guest worker program, and a 750,000 increase in the number of green cards.

All of the versions have one thing in common. They would bring in more workers to compete for American jobs. ROY BECK, NUMBERSUSA: Of course the working class suffers the most, not so much due to taxes, but due to the fact that the -- that these foreign workers are competing the most directly in their job market. So their wages are depressed, maybe even going down in real terms.


SYLVESTER: And there is an effort by some Republicans to get the McCain-Kennedy-Specter compromise through the Judiciary Committee on Monday and to the full Senate as soon as possible. But assuming it even gets to the floor, no one knows then what is going to happen next. Some Democrats, as you mentioned, are threatening to filibuster if amnesty is not included. Republicans, on the other hand, are threatening to filibuster if it is included -- Lou.

DOBBS: And the fact is that Senator Frist and the House legislation, should the senator -- the Senate majority leader decide to bring forward his legislation, those would be the only two bills, the Sensenbrenner legislation in the House and the Frist proposed legislation, that would move toward border security. It promises to be an extraordinary week.

Thank you very much.

Lisa Sylvester from Washington.

Thousands of protesters descended on downtown Milwaukee today to protest Congressman Jim Sensenbrenner's bill on border security and illegal immigration. Organizers called their march "A Day Without Latinos." Not a day without illegal aliens, but rather "A Day Without Latinos."

That, despite the fact that Sensenbrenner's proposed law doesn't single out Latinos or any racial or ethnic group. Sensenbrenner's bill penalizes employers who hire illegal aliens. The legislation adds funding for border security. Milwaukee is in Congressman Sensenbrenner's district.

Still ahead here, filibuster threats, religious appeals. Senate Democrats taking on the issues of border security and illegal immigration, sort of.

And the fight in California to save U.S. steel-making jobs appears to be already lost. Why a San Francisco bridge project will be using steel from communist China.

And all of this as Treasury Secretary John Snow today defended foreign investment in the United States as good for America and its workers. We'll tell you why and what we think about it next.

Stay with us.


DOBBS: Well, the Senate is set to begin debate on illegal immigration and immigration reform. Senate Democratic leaders are making it now clear they will fight any legislation that does not include amnesty protections for illegal aliens. Senate Democrats have now declared that they can advance their cause by bringing religion as well into this debate.

Bill Schneider has the report -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Lou, on immigration reform, Republicans are all over the place. So where are the Democrats? It looks like, same place.


SCHNEIDER (voice over): The Democrats' approach to immigration reform can be summarized in one word: comprehensive.

SEN. HARRY REID (D-NV), MINORITY LEADER: America needs comprehensive immigration reform.

SCHNEIDER: What does that mean? This Democratic leader says three things.

REID: Immigration is not one problem. It's not a guest worker program only. It's not enforcement only. It's not only dealing with 11 million people here who are undocumented. It's all of them.

SCHNEIDER: Enforcement? In December, House Republicans passed a bill that adds guards and fencing along the border and makes it a crime to employ or assist illegal aliens. A similar bill may come before the Senate.

A leading Democrat's response?

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: This bill would literally criminalize the good Samaritan and probably even Jesus himself.

SCHNEIDER: President Bush has called for a guest worker program. But many Republicans refuse to endorse it, while Democrats criticize it because it does not include...

REID: A program of legalization for these 11 million people who we have to take care of it.

SCHNEIDER: Meaning illegal aliens already in the U.S. A bipartisan bill does hold out that prospect.

SEN. JOHN MCCAIN (R), ARIZONA: It gives people who have come here, whether they came yesterday or 50 or 60 years ago, a chance to earn citizenship in the greatest nation in the world.

SCHNEIDER: That's where President Bush draws the line...

BUSH: We shouldn't have amnesty.

SCHNEIDER: ... even though critics say President Bush's guest worker program is a form of temporary amnesty. Democrats have tried to seize the advantage on immigration reform by focusing on the security implications.

SEN. MARIA CANTWELL (D), WASHINGTON: Strengthening our borders is critical to the component of ensuring our nation's homeland security.

SCHNEIDER: For example...

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: I was surprised to find out there was no law on the federal books to make it a federal crime to build an illegal tunnel under the border.


SCHNEIDER: That certainly an urgent problem. But the question is, will holding out for a comprehensive solution make it easier or harder to solve -- Lou.

DOBBS: Well, a couple of things occur, Bill. One is, "comprehensive" is now a code word for doing nothing because comprehensive is politically impossible.


DOBBS: Secondly, the idea that there would be no amnesty is just -- it's a (INAUDIBLE). The fact is the president is calling for amnesty. The Democrats are calling for amnesty. And you can dress it up anyway you want.

And the American people on every poll that we have reported on this broadcast by a margin of just about 70 percent do not want to see anything approaching that.

SCHNEIDER: That is certainly true. Democrats say they're for -- they won't say amnesty. They say they're for legalization. That's the word. Sometimes citizenship, but not amnesty.

But they also say, but we are also for tougher enforcement. And the Republicans will say, well, we're for enforcement but we're not for amnesty. And that's where the debate is. A lot of usage of words that are very explosive, but certainly amnesty is the most explosive and it's not a popular word.

DOBBS: Not a popular word and not a popular concept no matter what you call it.


DOBBS: Bill Schneider, thank you very much.


DOBBS: That brings us to the subject of our poll tonight. Which do you believe Senator Hillary Clinton is most out of touch with, illegal immigration, border security, the American people, all of the above, perhaps none of the above?

Cast your vote at We'll have the results coming up here later.

Vice President Dick Cheney has been busy delivering speeches all around the country on, of course, behalf of the Bush administration and GOP candidates. And the vice president apparently knows what he wants when he's on the road.

The Web site obtained the vice president's backstage demands for his hotel downtime suites. That's actually what they're called, downtime suites.

First, all of the lights in the suite, should you want to take notes, must be turned on before the vice president arrives. You may remember the administration is urging energy conservation.

Next, there must be a microwave oven in the suite. No word on whether it should be properly shielded for the vice president's pacemaker.

He also wants the thermostat set at 68 degrees. Four to six bottles of water must be on hand. And if Mrs. Cheney is there, she requires two bottles of sparkling water, either Calistoga or that popular French import Perrier.

And the vice president requires that all televisions in his suite be preset to FOX News. The vice president watches nothing but FOX News on all the sets in his downtime suite.

We found that at least interesting. We hope you did as well.

Coming up next here, the star -- the war on the middle class. The war on the middle class continues as GM tries to eliminate its entire unionized workforce.

The Bush administration seeks more foreign investment.

And as China secures its supply of energy and raw materials, it is forging closer ties with the enemies of the United States. And does Washington notice?

We'll have that special report coming up next.

Stay with us.


DOBBS: It's hard to say whether the Bush administration is unconcerned about the war on our middle class or determined to contribute to it. While an entire generation of American manufacturing workers in this country faces extinction, the White House is promoting foreign investment as a way to create American jobs.

This administration actually insists that things are improving for American workers.

Christine Romans has the report.


CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): Even as America's manufacturing base is being decimated, the Bush administration this week touting the economy.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: A growing economy is the result of the hard work of the American people and good policies here in Washington.

ROMANS: And the Treasury secretary stressing the importance of foreign investors building the U.S. economy just a day after ailing General Motors offered one of the largest buyouts of manufacturing workers in American history. An administration on message and critics say absolutely tone deaf.

PETER MORICI, UNIVERSITY OF MARYLAND: If this is such a great environment the Bush administration has created, why is General Motors contracting in the United States while it builds out car production in China? The answer is the Bush administration has pursued a flawed trade policy, mollycoddled China, put up with an undervalued currency and unfairly traded exports into the United States.

ROMANS: The president says incomes for American workers are rising. And the Treasury secretary says we have good, healthy, strong labor markets, and he claims the inequality between America's richest and poorest workers is narrowing.

What the White House calls a strong economy overall critics call a winner-take-all society.

LEONARD BURMAN, URBAN INSTITUTE: There's been this steady shift of income from the vast majority of Americans to a small group of big winners.

ROMANS: For middle class workers, wages have not kept up with inflation for several years.


ROMANS: And by almost every measure, the gauges of success for middle income folks have not improved -- Lou.

DOBBS: Well, I think we can say even more directly that it's -- it's actually declining. And in part, it's declining, straightforwardly, because of the administration's policies and the decisions that are being taken.

And I find it remarkable that Treasury Secretary John Snow says that divide is improving. A week ago -- a week ago Treasury Secretary John Snow was telling everyone that the reason for the divide between those wealthiest workers and wealthiest investors and people who would simply like to make a living in this country and who thought as Americans they were entitled to that opportunity is because of the highly productive wealthy people and CEOs in the country.

I mean that's incredible!

ROMANS: An efficient market rewarding the -- the wealthiest already, the most productive, and leaving the others behind. But now he says that gap is narrowing.

DOBBS: A week later.

ROMANS: Right.

DOBBS: A week later.

This is by any definition the most -- I could use a lot of words, so I'll be as gentle as I can. This administration can come up with most inventive language to obscure and obfuscate reality that I have ever seen.

ROMANS: Several people pointed out to me today it is an election year, midterm election year. If they say it loud enough and long enough, maybe people, the voters will believe it, that it is strong.

DOBBS: But let's be absolutely comprehensive here. This administration has been doing this on economic and social policy from the day they walked in. Election year or not. But a good point.

Thanks for the reminder. Christine Romans, thank you.

Homeland Security Secretary Michael Chertoff now. He says U.S. ports would have been safer had they been controlled by Dubai Ports World.

Chertoff supported the sale all along, saying security concerns must be balanced with a robust global trading system. A rather remarkable statement from a man responsible for homeland security to get so focused on globalization and trade.

Nonetheless, today Chertoff said stopping similar deals in the future could hurt the U.S. economy. And Michael Chertoff still believes any opposition to the Dubai ports deal is due to misconception.

Chertoff said, "It's clear to me from a public messaging standpoint, we dropped the ball."

Chertoff said the deal was killed because of people who had the facts failed to communicate them to the public.

Mr. Secretary, the reason the deal died is people found out the facts. And unlike you, a lot of other people care about the facts and the national security.

Tonight, the Treasury Department is taking the unusual step of opening an investigation into another Dubai ports deal three months after that deal went through. Treasury officials are now investigating whether a Dubai-owned firm tried to avoid a CFIUS, Committee on Foreign Investments in the United States, national security review before its purchase of British shipping services firm Inchcape earlier this year.

Under that deal, Inchcape, the Dubai-owned firm, is now providing maritime services at more than a dozen U.S. ports. This investigation is said to be only one of a number of now sensitive foreign purchases in the United States receiving a brand new look from our Treasury Department in the wake of the failed Dubai ports deal.

Turning now to some of your thoughts -- and believe me, I could use the respite -- Thomas in New York: "Dear Lou, instead of adding more guest workers, how about if we start adding guest taxpayers?"

Great idea.

E. G. Lee in Tennessee: "Mr. Dobbs, can someone in the media explain to me exactly what an amnesty is? If the guest worker program is not an amnesty, then what is it?"

And D. in Missouri, "If American employers paid their workers like they play their do-nothing elected representatives, there would be no jobs for people coming across our borders."

That sounds like quite a double solution.

And Eugene in California, "Lou, I'm going to move to Mexico illegally, demand a driver's license and speak English only. I'll also demand my children attend school for free and demand my children be taught in English. I'll also demand free medical care for my family and myself. I wonder how President Fox would put with that."

And Dan in Pennsylvania, "When I was a child in school we snickered when we were taught that American Indians traded Manhattan for some simple beads and trinkets. Now we're prepared to trade our whole country for just trinkets. History really does repeat itself."

Unless we learn from it, it certainly does. We love hearing from you. Send your thoughts to us at We'll have more of your thoughts later here in the program.

Coming up next, economic developments supposed to make Communist China into an ally. So why is it making friends with some of the worst regimes on the planet?

And California's bridges are supposed to be made of American steel. As a matter of fact, there are laws. But contractors could be shopping overseas at the expense of American working men and women. We'll tell you about that and we'll examine current and emerging military threats to this country with some of the nation's leading geo-political and security analysts. All of that and more, coming right up. Stay with us.


DOBBS: China's economy continues to grow at a furious pace, so does its demand for energy and natural resources. And to meet that demand, China is making friends with some of the worst enemies of the United States, some of the most repressive, reprehensible regimes in all the world. Kitty Pilgrim reports.


KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Deal after deal after deal. China does business with some of the worst rogue regimes in the world, yet brushes off criticism with platitudes.

QIN GANG, CHINESE FOREIGN MINISTRY (through translator): The U.S. side can raise question of their interests and the Chinese side can raise our question of interest. We can promote our relationship through talks and exchanges.

PILGRIM: But those talks are going nowhere, especially at the U.N., China throws up obstructions and conditions to action on Iran. Meanwhile, China has embraced the terrorist regime and signed a $100 million energy deal.

And Chinese companies are already working in Iran. China is helping Sudan develop its energy supplies, even as the world recoils from their regime-supported genocide in Darfur.

KENNETH LIEBERTHAL, UNIV. OF MICHIGAN: Chinese diplomacy follows development of China's own economic needs. So where Chinese firms see good investment opportunities, you can be sure that the Chinese ministry of foreign affairs and the Chinese government will try to cement good relations. And that again, as in Zimbabwe, gets them involved in some regimes that frankly are very obnoxious regimes to deal with.

PILGRIM: Zimbabwe's Robert Mugabe, a pariah in the West, is a celebrity guest in Beijing. And Venezuela's President Chavez, who engages in tirades against the United States, has now opened up its vast oil fields to Chinese firms.

The ties between Russia and China have also been growing in the last 18 months. Despite Russia's trend away from Democratic freedoms, China has declared this year the year of Russia. China even now aligning with Russia in the security council. China is Russia's largest buyer of military equipment. The two now conduct joint military exercises and this week signed a joint energy deal. Kitty Pilgrim, CNN.


DOBBS: In California tonight, state officials there about to accept a bid to complete the Bay Bridge, which connects San Francisco and Oakland. The company with a winning bid plans to use foreign steel to rebuild the critical piece of American infrastructure, and that decision leaves hundreds of American jobs at risk. Casey Wian has the report.


CASEY WIAN, CNN CORRESPONDENT (voice-over): California transportation officials say they're thrilled after receiving two bids from American companies to finish the $6 billion reconstruction of the earthquake-damaged Bay Bridge. The largest bridge of its kind is designed to withstand a massive earthquake.

WILL KEMPTON, DIRECTOR, CA DEPT OF TRANSPORTATION: The public is going to get a great deal for this project. Today's low bidder is American Bridge for Enterprises Incorporated.

WIAN: Earlier California Governor Arnold Schwarzenegger solicited bids from communist Chinese companies, but they were no- shows. Even so, most of the steel used by the preliminary winning bidder will come from either China or Japan. American Bridge says American steel is too expensive and there's not enough U.S. steel- making capacity to meet California's deadlines.

KEMPTON: We will be looking at every opportunity to hold to budget in schedule.

WIAN: The American steel workers and lawmakers this week protested California's maneuvering around the Federal by America Act. It requires states accepting federal money for transportation projects to use American subcontractors and workers.

REP. BRIAN BAIRD (D), WASHINGTON: In China, there are no labor protections. There are no environmental protections. They don't have OSHA. They don't have all the things that we think are absolutely essential and most importantly, they pay their workers a pittance. It is not realistic to expect American workers and American corporations and companies to compete when workers are paid $4 or $5 a day.

WIAN: Baird wrote President Bush this week, saying outsourcing critical infrastructure jobs "has the potential to devastate our domestic steel industry and jeopardize our national security."

The congressman wants the administration to require California to forfeit nearly a quarter of a billion federal transportation dollars for refusing to follow the By America Law.

California denies its violating By America because it's not using federal funds for this portion of the bridge project.


WIAN: California is eager to complete the bridge as quickly and cheaply as possible. It's already years behind schedule and billions of dollars over budget. Buying foreign steel will save an estimated $400 million, about six percent of the total cost of the project, Lou.

DOBBS: Six percent of the total cost of the project. I was just talking with Christine Romans about the word games that are being played by the government in Washington. It seems California isn't immune to the same artful language, irrespective of the American jobs they destroy.

WIAN: Absolutely. Critics say that they maybe going along with the letter of the By America Law, being able to get around it by dividing this project up into sections, but they're not going along with the spirit of it and they're going for expediency and low costs over the national interest, Lou.

DOBBS: Along with all together too many other people in this country, we should point out. Casey, thank you very much -- Casey Wian.

DOBBS: Joining me now to discuss the national security issues and threats that this country now faces in this rapidly changing world, Arthur Waldron, professor of international relations at the University of Pennsylvania.

Gordon Chang, author of "Nuclear Showdown: North Korea Takes on the World," and Richard Fisher, vice president of the International Assessment and Strategy Center. Good to have you with us.

Gordon, let's turn to the issue first, the assessment by the congressman talking about something as simple of a bridge, in terms of key infrastructure. That the country seems committed to destroy its capacity for defense and to erode its capacity, to present any kind of a national security imperative.

GORDON CHANG, AUTHOR: Well, there's been a free trade consensus that has underlined our policy toward China for more than a decade and perhaps even longer than that. But that consensus can break down because China now is doing things that make itself a threat. The whole idea was that we were supposed to engage China to make it a more benign state. But instead its become more assertive and its become more uncooperative. And so therefore I think we're going to see this consensus break down and eventually over time and hopefully in time, we will see a more responsible and sensible policy in Washington.

DOBBS: When you say the consensus is breaking down, you're talking about reason for hope that the State Department, the Department of Defense, and lord all mighty, the White House, are awakening to the possibility that something else is going on on this planet besides commerce and trade.

CHANG: Well, I think that's right because it we look at U.S.- India nuclear deal, for instance, really what this has been is an attempt to sort of reorient American policy away from depending on China and more towards the Democratic nations in Asia. You know, I hope that this process continues. I think it will because the whole assumptions that we've been working with are proving not to be true.

DOBBS: When Chinese President Hu sits down with the president here next month, is there any real hope that there could be an adjustment in a trade relationship, any real hope that we could see any -- let me say intelligent approach to U.S. strategy in the southern hemisphere and dealing with China? Its relationship with Russia, with Iran -- what other prospects are there?

ARTHUR WALDRON, PROF., UNIV. OF PENN.: Well, I think that there's no logical reason that we couldn't get everybody in Washington together to come up with a strategy and a set of negotiating points that would serve our interests. As I understand it, there's a lot of disagreement right now.

DOBBS: Within the administration.

WALDRON: Within the administration about what to do.

DOBBS: In Washington, you could come up with just about anything. Just watch Congress.

WALDRON: No, but we -- I mean, at our best, we are coordinated but I think in policy particularly, we're really at war with ourselves. Mr. Hu is just going to want photo opportunities, the broad red carpet, 21 gun salute, and he can then take that back to China and say, well, you might not have elected me president but the president of the United States gives me a far more warmer welcome than he gives to lots of leaders of embattled democratic states, so he must think I'm pretty good.

DOBBS: Well, aside from the symbolic, if you will, face that'll be put on all of this, Rick, are there huge issues here. And correct the impression, if you will, but this State Department marches out a spokesman nearly every day to address issues, does not put forward Secretary Rice, an undersecretary, an assistant secretary but a spokesman, a public relation's person.

And how difficult is it for you to divine exactly what this administration, this government is doing on critical, critical issues of national security in a very complicated world?

RICHARD FISHER, VP, IASC: Well, the spokesmen, of course, have to play nice. They're diplomats.

DOBBS: Exactly.

FISHER: But I believe, Lou, that there is a growing new defense consensus that China is becoming a real threat. It's not transparent. It conceals its plans and its intentions. It is developing its own military technology very quickly as it buys it from Russia and other places.

DOBBS: Or steals it from the United States, right.

FISHER: And it's Forcing the United States to take moves to, as we say, hedge. And that's expensive.

DOBBS: Gordon, let me say something. I mean, one of the things we refer to China as what it is, communist China. And when we did that -- began doing this well over a year ago on this broadcast -- actually about a year and a half ago, some our viewers said why are you calling it communist China?

They literally did not believe it should be called communist China, because of the artful elimination of the word by the message mixers and makers in Washington. Don't you find that incredible?

CHANG: Well, it is incredible. But for a long time, we've been looking at China the way we wanted it to be, not the way that it actually is. And that's been a problem.

DOBBS: We haven't done that in any other part the world, have we?

CHANG: But it's especially a problem in China and I think it's largely because people don't realize that the government there still is a Leninist regime which has changed very little in terms of its politics.

On economics, they have moved and they've loosened up the economy but not to the extent that people think. China has a great image and I think the problem for China is that as it becomes more intransigent, people are going to see the reality of it and they will see that it's a communist China.

DOBBS: The United States with more than a $200 billion deficit with China, a trade deficit -- with the purchase of all of these goods that we bring in, is there any geopolitical lever that the United States has with China?

WALDRON: Well, I think that we should insist that they make their currency convertible. Our currency is convertible.

DOBBS: Well, no, we can huff and puff. I'm not talking about that. Is there any way in any which the United States can exert its will short of militarily?

WALDRON: Well, I think that if we begin to link access to our markets to a variety of things, including currency and national security, nuclear proliferation, proliferation of conventional weapons, sales of conventional weapons, human right, you name it, I think we can get somewhere, but we have to show we're serious.

DOBBS: Well, that would be a novel approach, wouldn't it?

WALDRON: But I think it's a desirable one.

DOBBS: Highly desirable, because your conventional weapons, all of it being ignored, the build-up by this military in some quarters. How serious is it? And what should be the U.S. response?

FISHER: Well, in my opinion, Lou, within about five years, there will be an opportunity for local Chinese military superiority in the Taiwan Strait area that could tempt them to actually use force in a way in which they might win.

That would be a disaster for the United States, a disaster for the people on Taiwan and, of course, there would be reverberations around the world. We must pay close attention to this. It's getting serious now.

DOBBS: And Gordon gives us hope, at least, that the consensus is at least breaking down. What that sounds like to me is that perhaps another high-bound orthodoxy is dissolving and I'll take it. I think it's -- you would agree it's all over the country.

WALDRON: Well, the challenge is going to be putting something in its place.

DOBBS: Yes, with a government that's challenged in so many quarters and directions and ways. Thank you very much.

WALDRON: Thank you.

CHANG: Thank you.

FISHER: Thank you, Lou.

DOBBS: Arthur, Gordon, Rick, thank you.

DOBBS: Still ahead here, Secretary Rumsfeld is under fire. Is his reputation permanently damaged? Is he permanently under fire? What does General David Grange think? We'll find out.

And Duke Cunningham's freedom and reputation are already gone. Now the ill gotten gains of his bribery scheme go on auction. We'll tell you about that briefly, and a great deal more with some greater attention to time and detail. Stay with us.


DOBBS: Defense Secretary Rumsfeld today bristled at talk of his resignation, but calls for Rumsfeld to step down have gotten stronger.

Joining me now, General David Grange. General, you have heard all of the calls, and most of the reasons for them. What do you think? Should he step down?

GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, I don't think so because I don't know as much about the situation as someone like Paul Eaton, who I know very well -- the comments that he made. He may have some inside information that I don't have, but I don't have enough information myself to say yes.

DOBBS: Well, let's share what General Eaton did say ...

GRANGE: Please.

DOBBS: In the "New York Times," outlining the failures of Secretary Rumsfeld. If we could show our readers that -- there it is.

"He has shown" -- referring to Rumsfeld -- "himself incompetent strategically, operationally and tactically, and is far more than anybody else responsible for what has happened to our important mission in Iraq. Mr. Rumsfeld must step down."

He wrote that in an editorial this week in the "Times," as I said. You know Eaton. He's a reasonable and distinguished general, isn't he?

GRANGE: Good soldier, a good officer. He used to work for me in Germany, and I think the world of him. Something drove him to write that and maybe he has some good points there. I just don't have enough information to agree with those points. DOBBS: Let me add a little more information. I was talking with General Bernard Trainor, who you also know, U.S. Marine general, now retired, the new book, "Cobra II." The fact is, he says, point blank that the decision to pull back, or I believe the thing is off ramp is the Pentagon's quaint expression, for not sending out the first cavalry, Army's first cavalry, was Rumsfeld at a time when General Trainor and others thought it was critically important to have those folks. What do you think?

GRANGE: Well I agree with General Trainor on that. I don't believe we had enough troops, especially right after April 9th. I think more soldiers should have been there. And I think that is a flaw of the plan. And consequently, the insurgency in its stages that it is now, is probably because of that.

DOBBS: You followed Operation Swarmer that was announced and Joe Klein, who's often on this broadcast, one of our political panelists here and contributor, and of course columnist, renown columnist for "Time" magazine said point blank, he was disgusted by the media for getting fooled by that operation. Do you think we were idiots?

GRANGE: I think actually the operation did prove a lot. It's not so much just how many weapons caches they found, how many enemy they killed or captured, it's really showing that the coalition forces with Iraqi forces, which is very tough to do as you well know, had the momentum and went where they wanted to go at that time. So it had a lot of psychological effect, probably more important than anything else.

DOBBS: Well, like you, like everyone else, I want a lot of good news and hopefully that good news will be forthcoming. It's always good news to have you here. General David Grange, thank you.

GRANGE: Thank you, Lou.

DOBBS: Appreciate it, Dave.

Coming up at the top of the hour here, more good news from "THE SITUATION ROOM" and Wolf Blitzer. Wolf?

WOLF BLITZER, CNN ANCHOR: Thank you very much, Lou. We're hearing for the first time now from friends and family of the cruise ship passengers killed in Chile. We're going to have their moving comments, plus the latest on a second cruise ship disaster, a massive fire on another ship. This one in the Caribbean.

And Bill Clinton's has long battled his own weight. Tonight, he's talking about that struggle with our CNN medical correspondent Dr. Sanjay Gupta. Make a house call here in "THE SITUATION ROOM."

And Lou, an issue you and your viewers have been focusing on, we have as well, the Dubai ports controversy. Is the United Arab Emirates a friend or a foe of the United States? We're going to be joined by a top UAE official right here in "THE SITUATION." That's coming up.

DOBBS: Looking forward to it, thank you very much, Wolf.

Also ahead, we're going to have more of your thoughts tonight and candelabras, lingerie closets and a former Top Gun pilot. A corrupt congressman's ill-gotten gains up for auction. We'll tell you about it and a great deal more, still ahead, stay with us.


DOBBS: Bidding today brisk as the Internal Revenue Service auctioned off disgraced Congressman -- former Congressman Duke Cunningham's property. Congressman Cunningham -- former Congressman Cunningham serving eight years in prison for taking $2.5 million in bribes from defense contractors. He helped them land lucrative government contracts.

Bidders and the merrily curious could see what Cunningham bought with that bribe money, which apparently took a lot of people some time to notice. The one-time top-gun pilot had a taste for European antiques, many of them, we're told, apparently fakes. He also owned dozens of Persian rugs. Bidding today was, as I said, brisk.

The companies that bribed the Congressman won contracts in counterterrorism and intelligence. Some of those contracts were even with the federal government. They head of one of those companies pleaded guilty to bribery. The company, however, still holds those federal contracts.

Now the results of our poll. Nine percent of you say Senator Hillary Clinton is most out of touch with illegal immigration, one percent of you said border security, five percent said the American people, 47 percent said all of the above, 38 percent said none.

Now, more of your thoughts.

Doug in Wisconsin: "I'm a Democrat and I was appalled at the comments of Senator Reid. Now the casinos need cheap labor? I wonder who butters his bread. Then Senator Hillary Clinton saying it's all right to commit a crime and in the same breath, she uses the name of our Lord. I wonder what he would have said about that."

Glenda in Connecticut: "Why is it that this country seems intimidated by a strong woman like Hillary Clinton? Seems like we as a nation are so backwards when it comes to anyone showing intelligence and strength when wearing a skirt." It may be that you're overestimated the reaction to strong women. It seems to me there are far more strong ones than otherwise, and they seem to be doing pretty well.

Jayda in Washington, D.C.: "Lou, you are anti-immigrant. All Americans are immigrants." Well, Jayda, actually that's not true. Most Americans aren't immigrants. I'm not anti-immigrant. I'm anti- illegal immigration.

And Stew in New York: "After this last news conference, the naysayers have been put to shame. The president does have a clear exit strategy for Iraq. He's going to bail out at the end of his term and leave it to someone else to clean up the mess that he's made in Iraq and the shambles he's left our foreign policy in."

Gayle in North Carolina saying, "Lou, since Mr. Bush has freely admitted that it will be up to the next president to get us out of Iraq and solve the deficit problem, why can't we take a page from GM's playbook and simply buy out his contract?"

Harold in Alaska: "Mr. Rumsfeld is doing a fine job," said the president, "where have we heard those words before?"

And Sheila in California: "It is the truth, not the media, that's turning the American people against this war."

Thanks for your thoughts. Thanks for being with us here tonight. Please join us tomorrow. For all of us, thanks for watching. Good night from New York. "THE SITUATION ROOM" with Wolf Blitzer begins now -- Wolf.