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Lou Dobbs Tonight
China Pursuing Own Interest In Foreign Policy, Often At Expense Of United States; Chinese Government Did Not Block An Attempt To Smuggle Anti-Aircraft Missiles Into United States; Department of Homeland Security Says Yesterday's Roundup Of Illegal Aliens Is Part Of New Initiative; Entire House of Representatives Up For election In November; Ted Fishman Interview; China Black Market; Congressman Bernie Sanders And Congressman Pete DeFazio Interviews
Aired April 20, 2006 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KITTY PILGRIM, CNN ANCHOR: Good evening. I'm Kitty Pilgrim, sitting in for Lou Dobbs. Lou is on assignment tonight.
President Hu Jintao finally arrived in Washington, D.C., today after a trip to Washington State. The Chinese president met with President Bush at the White House, and they discussed many strategic, political and economic issues. But President Hu is making no concessions.
Suzanne Malveaux reports from the White House.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Kitty, as you know, of course...
PILGRIM: We appear to have lost Suzanne for the moment. We'll get her back.
Now, we did talk about in that report heckling. Heckling was not the only thing that went wrong at the White House ceremony for President Hu. The Chinese national anthem was introduced as the "Anthem of the Republic of China," not the People's Republic of China.
Now, the Republic of China is the formal name of Taiwan. And later, President Bush had to literally grab President Hu by the sleeve to stop him from leaving the ceremony before it was finished. Well, it was an apt symbol, perhaps, of U.S. efforts to restrain China's global ambitions.
Communist China has been pursuing its own interest in foreign policy and trade, often at the expense of the United States. Yet, the Bush administration appears reluctant to call China to task.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: And to the bright future...
PILGRIM (voice over): Toasting together, yet worlds apart. One a communist system. The other the world's leading democracy. But to hear the Chinese president tell it, China is a democratic, open society with free trade. HU JINTAO, CHINESE PRESIDENT (through translator): We always believe in China that, if there is no democracy, there will be no modernization.
PILGRIM: In reality, China is rife with trade abuses, intellectual property theft, repressions on free speech, the press, the media, and human rights violations. So why do China's claims go unchallenged? Because there is no single cohesive voice directing U.S. foreign policy.
KENNETH LIEBERTHAL, UNIVERSITY OF MICHIGAN: What they are being subject to is a good cop-bad cop routine, where the White House always goes to the Chinese and say, boy, you better move on this, because otherwise we have no way to protect from you those folks up on the Hill who will really do a lot of damage.
PILGRIM: Currency reform is needed, yet the U.S. Treasury has delayed a report expecting to be critical of China.
President Bush today referenced China's meager acknowledgment of the $200 billion trade gap with something in the line of praise.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He recognizes that a trade deficit with the United States is substantial as it is unsustainable.
PILGRIM: For China, it's constantly a mixed message from Washington.
JEFFREY BADER, BROOKINGS INSTITUTION: You have the president referring to it as a complex and significant relationship, tending to emphasize the positive. You have people in the State Department who have emphasized working with the Chinese on issues like Korea and Iran. And then you've got mostly civilians at the Defense Department and at the office of the vice president who have a more skeptical view of China.
PILGRIM: With good reason. The Chinese have opposed sanctions on Iran's nuclear ambitions and do commercial deals with the Sudan and North Korea.
(END VIDEOTAPE)
PILGRIM: Now, for the past decade, the theory was to engage China to make it a responsible member of the world community. Well, now it is increasingly clear China also will continue to follow its own agenda based on self-interest.
Well, the Chinese president arrived at the White House today with many issues to discuss with President Bush, and Suzanne Malveaux joins us now from the White House -- Suzanne.
(BEGIN VIDEOTAPE)
MALVEAUX (voice over): On a bright, sunny south lawn, East met West, as President Bush welcomed Chinese President Hu Jintao to the White House. The carefully-orchestrated and negotiated opening ceremony was meant to prop up U.S.-China relations.
UNIDENTIFIED FEMALE: President Bush, stop him! Stop him!
MALVEAUX: But the pomp and circumstance was abruptly interrupted when a credential visiting journalist began screaming, shouting for President Bush to stop Hu from killing and persecuting the Falun Gong, a spiritual movement banned by the Chinese government.
Mr. Bush whispered to his guest, "You're OK," as uniformed Secret Service agents hauled the demonstrator away. Later, Mr. Bush privately apologized to Hu, calling it unfortunate.
But hundreds massed outside the White House continued their protest of China's human rights policies. The public embarrassment comes at a delicate time for both leaders, who are trying to cool tensions over numerous issues, starting with America's $200 billion strayed deficit with China, which critics say has cost the U.S. millions of manufacturing jobs. Mr. Bush insists he's pressing Hu to turn that around.
BUSH: And I want to remind our citizens, as the president said earlier, exports to China are up by 21 percent. And that means jobs.
MALVEAUX: Amid calls from Congress to punish China with tariffs, Hu is pledging greater cooperation.
HU (through translator): We understand the American concerns over the trading balances, the protection of the intellectual property rights, and market access. We have taken measures and will continue to take steps to properly resolve the issues.
MALVEAUX: But they are far from close. Senior administration officials did say they were heartened by China's plan to encourage its people to save less and spend more, which the U.S. hopes will mean a more robust market for American goods.
President Bush also called for greater cooperation from China on addressing the nuclear ambitions of Iran and North Korea.
(END VIDEOTAPE)
MALVEAUX: But Kitty, there were no breakthroughs when it comes to how to get Iran or North Korea to comply. And also, senior administration officials acknowledging that there really is no quick fix when it comes to try to deal with that imbalance of trade between the United States and China -- Kitty.
PILGRIM: Thanks very much.
Suzanne Malveaux.
Well, American voters seem unsure of what to make of communist China. And it appears voters do not yet understand the true nature of the Chinese threat to the United States.
Bill Schneider reports. (BEGIN VIDEOTAPE)
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice over): Is China with us or against us? It's not clear, even to a China expert.
JEFFREY BADER, BROOKINGS INSTITUTION: China is for China. China isn't for or against the United States.
SCHNEIDER: Americans agree. In a poll taken earlier this year, people were asked their opinion of 22 different countries. The public was closely split on China, 44 percent favorable, 49 percent unfavorable. China was the only country about which a majority of Americans did not feel either favorable or unfavorable.
Is China with us or against us on trade? Leaders of both countries paint a rosy picture.
HU (through translator): Win-win outcome that China and the United States have achieved from trading with each other.
SCHNEIDER: It's a mixed picture. U.S. manufacturing jobs are disappearing, but China is also America's fastest growing export market. It's just not growing as fast as it should.
BADER: Right now they save too much. They're saving 40-45 percent of their income. They should be saving less, they should be buying more, including American products. And that won't happen until they have a decent pension system, until they have a decent health insurance system.
SCHNEIDER: Is China with or against the U.S. on Iran?
BADER: They're on the fence.
SCHNEIDER: China does not want to see a nuclear Iran. But would China support a U.S. policy of sanctions or military action against Iran?
BADER: They would feel that it would throw the Persian Gulf into turmoil and threaten their access to oil and gas from that region.
SCHNEIDER: The U.S. calls China a stakeholder in the international system.
BUSH: As stakeholders in the international system, our two nations share many strategic interests.
SCHNEIDER: It's a way of urging China to see a larger interest.
BADER: That means not taking a selfish or narrow approach to secure the economic issues.
SCHNEIDER: In other words, China can't be only for China.
(END VIDEOTAPE) SCHNEIDER: There's no question that China is for China. But a lot of people wonder whether, in its China policy, the United States is really for the United States -- Kitty.
PILGRIM: Thanks very much, Bill Schneider.
And that does bring us to our poll tonight. Now, do you believe the United States is protecting its own interests when it comes to its China policy? That's a yes or no vote tonight.
Cast your vote at LouDobbs.com. We'll bring you the results a little bit later in the broadcast.
Well, there's more evidence of American companies actively collaborating with communist China's secret police. Papers from a Beijing court show Yahoo! gave Chinese authorities e-mails written by a pro-democracy activist, and they were used as evidence to send the man to prison. This is the third case that's come to light of Yahoo! cooperating with Chinese authorities.
And now eBay acknowledges its Chinese subsidiary censors text messages that include words such as "Dalai Lama," banned words in China.
China's Internet censorship was on some people's minds in Washington State yesterday. At a luncheon with President Hu yesterday, Microsoft chairman Bill Gates said, "Industry and government around the world should work to protect the privacy and security of Internet users while respecting legitimate government considerations." Gates didn't say what he meant by "legitimate government considerations."
Microsoft's Chinese affiliate blocks the words "human rights," "democracy" and "freedom of speech" from blogs in China.
Now, the communist Chinese government did not block an attempt to smuggle anti-aircraft missiles into the United States, and one reason, perhaps, the Chinese military may have been involved in the plot.
Casey Wian has the report.
(BEGIN VIDEOTAPE)
BUSH: And he tells me what he thinks. And I tell him what I think. And we do so with respect.
CASEY WIAN, CNN CORRESPONDENT (voice over): Presidents Bush and Hu made nice at the White House just one day after a Chinese-born U.S. citizen pleaded guilty in a case involving a Chinese government-owned military contractor and a sinister plot to bring hundreds of Chinese anti-aircraft missiles into the United States.
THOM MROZEK, U.S. ATTORNEY'S OFFICE: It wasn't charged as a terrorism case. However, the law that we use is an anti-terrorism law implemented after 9/11 that makes it a very serious felony offense with a mandatory 25-year sentence to bring into the U.S. anything designed to take down an aircraft.
WIAN: LOU DOBBS TONIGHT first reported the suspected Chinese military connection in November. Then, Chao Tung Woo (ph) and an alleged accomplice were charged with conspiring to smuggle 200 QW2 surface-to-air missiles into the United States through shipping containers at the Port of Long Beach, California.
According to Woo's plea agreement, the men met with an undercover FBI agent and agreed to arrange the importation of hundreds of missile from China with the help of a Chinese man known as "The General." They would-be smugglers were told the missiles were for paramilitary use in another country.
MATT SCHROEDER, FED. OF AMERICAN SCIENTISTS: These missiles have been used for 30 years by terrorists and insurgents, along with militaries, to target aircraft of different types. Unlike many of the would-be missile traffickers that have been arrested over the years by U.S. law enforcement, these individuals appeared to be very sophisticated, very experienced traffickers.
WIAN: Their plot was first discovered as part of a major smuggling bust involving so-called supernote counterfeit $100 bills, counterfeit cigarettes, illegal drugs and weapons.
UNIDENTIFIED MALE: Silenced pistols, silenced submachine-guns, assault rifles and other weapons, including rocket launchers.
WIAN: After Woo and his partner were in custody, Chinese accomplices continued to contact the undercover FBI agent to try to complete the missile sale, which fortunately never took place.
(END VIDEOTAPE)
WIAN: There is no proof at this point that the Chinese military was involved. Woo's attorney tells The Associated Press he will cooperate in the continuing investigation in hopes of receiving a lesser sentence. And that is certainly one of the questions that U.S. officials are trying to answer -- Kitty.
PILGRIM: Thanks very much.
Casey Wian.
Well, communist China says it will work with the United States on Iran's nuclear program, but that does not seem to be deterring Iran at all. Iran's defense minister today said Iran is not afraid of the United States. He said U.S. threats to take action are "just talk."
And Russia is helping Iran strengthen its air defenses. That's despite the nuclear standoff. Russia says it will go ahead with a deal to sell Iran 29 sophisticated air defense systems. Iran says it will use the systems to protect its nuclear sites and other facilities.
Still to come, the federal government announces a so-called crackdown on employers who hire illegal aliens. We'll have a special report on that.
Two congressmen demand the White House tackle soaring gasoline prices. And those congressmen will join me.
And as President Hu visits Washington, I'll be talking with an author who says China is destabilizing the entire world.
(COMMERCIAL BREAK)
PILGRIM: The Bush administration announced today that it is finally ready to crack down on companies who hire illegal aliens. The Department of Homeland Security says yesterday's cross-country roundup of more than a thousand illegal aliens and their employers is part of this new initiative.
Louise Schiavone reports.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice over): IFCO Systems makes wooden crates. This week, they also made immigration news, as the Department of Homeland Security busted workers and employers at IFCO sites across the nation.
MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: We arrested 1,187 people on administrative immigration charges, and seven criminal complaints were brought against managers or former managers for alleged criminal violations in connection with the hiring of illegal undocumented aliens.
SCHIAVONE: The charge...
GLENN SUDDABY, U.S. ATTORNEY FOR NEW YORK: The conspiracy to transport, harbor and encourage unlawful aliens to reside in the U.S. for commercial advantage and private financial gain.
SCHIAVONE: The reaction from immigration hawks...
DAN STEIN, FEDERATION FOR AMERICAN IMMIGRATION REFORM: No big deal. This administration has a six-year track record of not enforcing immigration law. One raid, regardless of how large it is, doesn't create a trend.
SCHIAVONE: Critics say the raids are a good start but long overdue and need to become a regular occurrence.
JAMES CARAFANO, HERITAGE FOUNDATION: This is less than a drop in the bucket. I mean, we all know there are about somewhere between 12 million to 15 million people living unlawfully inside the United States. Most of them are here because they can get a job every day, work, and pick up a paycheck without ever fearing that they or their employer will ver suffer any recriminations for breaking the law.
SCHIAVONE: Homeland Security Secretary Chertoff vows the government will prosecute illegal hiring in the same way that it prosecutes organized crime, with a relentless campaign to arrest and imprison employers and seize assets. And he pointed to recent prosecutions of restaurant owners in Baltimore and temporary employment agency operators in New Jersey, Ohio, and Pennsylvania.
(END VIDEOTAPE)
SCHIAVONE: And Kitty, Chertoff is calling on Congress to give his department greater access to Social Security data to identify illegal aliens who use phony documents -- Kitty.
PILGRIM: Thanks very much.
Louise Schiavone.
IFCO said in a statement today, "IFCO Systems is proud to be an equal opportunity employer. It is our policy to comply with all federal and state employee requirements. We are cooperating fully with representatives from ICE and hope to have this matter resolved as soon as possible."
Now, it must be noted, however, that the federal government is charging IFCO officials with openly urging illegal aliens to work at IFCO. The government contends that IFCO officials told illegal aliens how to falsify data to pass themselves off as U.S. citizens. And after an investigation of almost 6,000 IFCO employee records last year, 53 percent of IFCO employees were found to have faulty Social Security numbers.
Well, there are as many as 20 million illegal aliens living in the United States right now, and it is unrealistic to think the U.S. could or would successfully deport them all. So tonight, border security advocates have come up with a new approach.
Lisa Sylvester reports.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice over): The question, what to do with as many as 20 million illegal aliens living in the United States? Give them amnesty? Or kick them out?
Both options are economically costly and not politically viable. But there is a third option being offered by policy analysts: attrition through enforcement.
JESSICA VAUGHAN, CENTER FOR IMMIGRATION STUDIES: The idea is, rather than rounding up people, to instead make it more likely that they're going to return to their home country on their own.
SYLVESTER: A new study by the Center for Immigration Studies says if the United States were to vigorously enforce its immigration laws, illegal aliens would self-deport. The center's recommendations? Mandate employers check workers' legal status against Social Security records, stop the IRS from issuing tax I.D. numbers that illegal aliens use to open up bank accounts and get home mortgages, expand the U.S. visit program to include Mexicans and Canadians, and implement exit reporting at the border, and step up interior enforcement. UNIDENTIFIED FEMALE: My research shows that we could reduce the size of the illegal alien population by about half in five years if we pursued a policy of attrition through enforcement. And that would cost only an additional $2 billion over five years.
SYLVESTER: Critics say the federal government has actually been encouraging illegal immigration with years of neglecting U.S. laws.
BILL LAUDERBACK, AMERICAN CONSERVATIVE UNION: If we were enforcing our immigration laws we have on the books, we wouldn't have the problem that we have today.
SYLVESTER: A self-deportation policy would cost significantly less than amnesty. And while amnesty sends a message that invites more illegal aliens, proponents say enforcement would have the opposite effect.
(END VIDEOTAPE)
SYLVESTER: Now, some immigration analysts argue that there are illegal aliens who will never voluntarily leave the United States because of the poor conditions in their home countries. But CIS says that illegal workers came to the United States for the jobs, and if you take away the magnet, that will not only reduce the numbers, but also deter future illegal immigration -- Kitty.
PILGRIM: Some of this, as you say, is just pure common sense.
SYLVESTER: And it's just a matter if they have the political will to do this. It wouldn't be difficult to do many of these things that they suggest, but Congress and the administration so far has not been willing to.
PILGRIM: Thanks very much.
Lisa Sylvester.
Thanks, Lisa.
Still ahead, the war at home over the war in Iraq. Some Republicans are fearing for their jobs this November. We'll have a special report ahead.
And Chinese President Hu today refused to agree to any economic concessions to help save U.S. middle class jobs.
And I'll speak to the author of the book "China Inc." about today's summit meeting in Washington.
(COMMERCIAL BREAK)
PILGRIM: The entire House of Representatives is up for election in November, and lawmakers have been going back to their home districts to listen to voters' concerns and answer their questions. They're finding many of those questions are about Iraq.
Dana Bash reports.
(BEGIN VIDEOTAPE)
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): A campaign breakfast at the local Rotary Club, but Jim Gerlach's slideshow was about a trip to a far away place, causing him trouble at home.
REP. JIM GERLACH (R), PENNSYLVANIA: We then flew to Baghdad. And as you can see, it's a very sprawling city.
BASH: The congressman is high on the list of endangered Republicans in the battle over control of the House. In part, because even his party's loyal supporters have questions like this.
UNIDENTIFIED MALE: How do you feel about the general's criticisms, the former retired general's criticisms of Rumsfeld?
BASH: He doesn't agree, not based on his military briefing.
GERLACH: Thus far what they've said hasn't caused me to question the leadership of Secretary Rumsfeld.
BASH: Still he is challenging the White House. Gerlach tells us when he goes back to Washington, he'll call for Iraq's governments to meet certain goals in six months. If it doesn't, he says, Congress should step in and consider withdrawing troops.
GERLACH: I think that would bring about a very healthy and productive debate in this country to then finally resolve that issue of how long we should be there.
BASH: The district just outside Philadelphia is a mix of rolling farmland and suburbia. At Ruby's Diner, you can hear why Republicans are worried and taking a more active stand on Iraq. The war has made Lori Lewis an extremely disappointed GOP voter.
LORI LEWIS, VOTER: I don't see that there's an end because I don't know how they're going to stop the war.
BASH: Her mother Audry didn't anticipate the high price.
AUDRY WASSERMAN, MOTHER OF LORI: Too many people are losing their lives and limbs and things like that. Yes, that's what I expected, but I don't think they expected it would be this bad, either.
UNIDENTIFIED FEMALE: Have you guys taken any phone calls today or anything I should know about?
BASH: Likely Democratic challenger Lois Murphy lost to Gerlach by just 6,000 votes two years ago. This time, she ties anxiety about Iraq into a broader critique of the president and the Republican Congress.
LOIS MURPHY (D), PENNSYLVANIA CONGRESSIONAL CANDIDATE: It's made people frustrated and it's made people alarmed and it's made people concerned that there's a failure of leadership.
BASH: As for Gerlach, he acknowledges it's hard to get attention on issues like a growing economy because voters are so worried about the war.
GERLACH: That is an overreaching, overshadowing issue that really affects all the other issues that are out there in this political spectrum.
(END VIDEOTAPE)
BASH: People in Pennsylvania's sixth district are dissatisfied about the war, but it was increasingly clear they're becoming downright mad about something much closer to home, and that is the high price of gas.
Kitty, you could just feel that people are getting much more angry about how much they have to pay for gas. And if that continues, an already bad year for Republican incumbents could be getting worse.
PILGRIM: That's very right.
Thanks very much.
Dana Bash.
Well, still ahead, the latest on the Chinese president's visit to the White House.
And does China Incorporated mean insolvency for America? We'll find out from my next guest.
Also, we'll go on a tour of Beijing's shops where knockoffs are on open sale.
And gasoline topping $3 a gallon. We'll speak with two congressmen calling for an emergency energy summit.
(COMMERCIAL BREAK)
PILGRIM: President Bush welcomed President Hu of China to the White House today. But the welcome ceremony was disrupted by a protester inside the White House grounds.
Suzanne Malveaux reports from the White House -- Suzanne.
MALVEAUX: Well, Kitty, as you know, of course, it is the complicated relationship between the United States and China, and this event, of course, really was significant, Hu Jintao's visit here to the White House, because it wasn't just about substance of these talks, but just as much about image, as well as a sign, a show of respect between these two leaders.
That's why it was so embarrassing and disappointing on both ends here because that incident, as you mentioned, there was a visiting credential journalists who was at the event who basically started screaming in Chinese and English, saying essentially for President Bush to stop Hu from killing, from persecuting the Falun Gong, a spiritual movement banned by the Chinese government. President Bush, we learned later, privately apologized to Mr. Hu about this whole incident.
Now, of course, it comes at a time when these two leaders are trying to promote a sense of unity on various tense issues, one of them, of course, the $200 billion trade deficit between the two countries. And, of course, also President Bush today pushing forward for the Chinese leader to become more actively involved in getting Iran and North Korea to comply when it comes to giving up their nuclear weapons programs.
I can tell you from senior administration officials, no major breakthroughs on that issue. There was one issue they were encouraged by, that, of course, the Chinese government saying they were going to encourage less savings, more spending, hopefully from that spending on the U.S. markets and U.S. goods -- Kitty.
PILGRIM: Thanks so much, Suzanne Malveaux. Thanks, Suzanne.
Now, Ted Fishman is the author of the book "China Inc." and he joins me now. And he says China's rapid economic growth has become a destabilizing force not only in this country, but around the world.
And thanks very much for being us.
TED FISHMAN, AUTHOR, "CHINA INC.": Oh, I'm so glad to be here, Kitty.
PILGRIM: I'm sure you were watching this -- all the events this week today with great interest. Was there anything that really struck you about President Hu's comments that showed some kind of break- through, some kind of movement?
FISHMAN: Well, he's willing to tell Americans that China is going to make positive steps on issues that are very important to us, particularly intellectual property and also strategic issues.
PILGRIM: How much of this is rhetoric?
FISHMAN: You know, they are going to take some steps and they're going to look like -- publicly like very good steps but they're going to move very slowly, because China is a successful place. It's grown at 10 percent for 20 years.
Its intellectual property regime is part of its success. It's transferred quite a bit of the world's wealth to China at no cost. And we benefit from it in ways because it created the industrial dynamo which sells us a quarter of a trillion-dollars worth of goods.
PILGRIM: But the premise of your book is that it's very destabilizing. Why?
FISHMAN: Yes, well, because you have the lives of one out of five people on the planet changing radically, 1.5 to 2 million people moving into factories every month -- that's the population of Iowa every month going into a factory -- and the world's supply of capital stayed roughly the same. So when you look left and you look right, the price of goods is dropping. And the people who are making them are changing.
PILGRIM: And also earning a good bit less.
You know, we heard today about the win-win business manual language from President Hu. He clearly has picked up a lot from U.S. business manuals. He also made a trip through Seattle and spread a lot of money around. He's wooing the business community, isn't he? And yet we are sending a lot of our valuable technology to China. What's the risk in that?
FISHMAN: You know, it's so interesting that the place he wanted to be most of all was at Bill Gates' dinner table. You know, and Microsoft is one of the most deeply challenged companies when it comes to China, but President Hu knows that his biggest advocates in the United States are businesses that hope for a long-term and prosperous relationship with the country, and if can he get them on his side, then can he turn the political atmosphere around.
PILGRIM: Why are we letting foreign policy being dictated by U.S. multinationals?
FISHMAN: Isn't that interesting? You know, our country itself is split between the companies that can go to China, spend the time, be patient, do well there -- and they are doing well if they're big.
But for medium and small-sized businesses, China is very, very challenging. And intellectual property is one instance in which the Chinese system provides a huge, non-tariff trade barrier to businesses that want to go there, because if you go there, you may give away the store.
PILGRIM: How much are we at risk on this in giving away all of our R&D, all of our knowledge-based economy to China?
FISHMAN: Well, you know, the United States is like the OPEC of the knowledge economy, right? We have the monopoly position at the very top. We made the deal to cast low-cost manufacturing away if we can move up, but we can't sell that technology to China.
And it does gut out some of our top, top industries and keep them from getting top dollar in China. You know, we sell technology everywhere else in the world for top dollar. But if we're going to succeed as a knowledge economy, we have to be able to sell to the world's largest and fastest growing economy.
PILGRIM: Ted, you've spent a lot of time on this. You are probably one of the best people to ask. What can we do about this $200 billion trade deficit? What can we do about the impact on the lives of Americans that will be felt in the coming decades?
FISHMAN: The number one thing we have to do is protect our style of economy. We have to be able to sell the immaterial goods we create, which are ideas and innovation. Without a solution to that problem, we don't have a solution to long-term prosperity with China.
PILGRIM: Should we take a tougher line? Should the administration be taking a tougher line with China
FISHMAN: Well, one that I would is that, Kitty, it doesn't hurt to play good cop and bad cop. You know, we have our bad cops that go over there and say, look, unless you clean up your act, we're going to take tough action and yet we can talk nice at the same time.
The problem is, China doesn't know where we stand and don't have a really unified policy. And without a China policy, we don't have a prospect for a long-term, solid outlook for our relationship with China.
PILGRIM: What kind of leverage do we have with China? What can we do?
FISHMAN: Well, one out of $8 in the Chinese economy cycles through the American economy. It's what you and I buy when we go to the store. We are a very, very important partner with China and I would say everything that the Chinese do and everything that we complain about, we have the solution to at home.
And it's really saying look, if you want to do business with us, then here are the conditions and we do business. It's part of our trade policy, it's part of our education policy, it's what we're going to do in our geopolitical stance and they should all be interrelated. The Chinese separate none of those things, and we shouldn't either.
PILGRIM: Thanks very much. Ted Fishman, always a pleasure. And may we point out that your book is now being printed in the Chinese -- in Chinese, so we'll see how that plays in Beijing. Thanks very much.
FISHMAN: Thanks so much.
PILGRIM: OK, in communist China tonight, the black market in counterfeit merchandise is out of control. Virtually everything is unchecked. China says it is cracking down on the blatant piracy of brand named goods, but a shopping tour of Beijing tells a pretty different story. Stan Grant reports.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: You want a watch? We have watches.
STAN GRANT, CNN CORRESPONDENT: Watch, Rolex?
(voice-over): Hunting bargains in Beijing, from shoes to designer handbags. Whatever you're looking for you can buy at basement prices.
(on camera): This is Nike?
UNIDENTIFIED FEMALE: Yes.
GRANT: How much? UNIDENTIFIED FEMALE: We do 380.
GRANT (voice-over): You can outfit yourself in a pair of my Nikes, a North Face jacket, and pick up a handbag or briefcase, all for a total of less than $100 U.S. But buyer beware -- they may look convincing but they are fakes.
China's black market in counterfeit goods run into the billions of dollars. The Chinese government claims it is cracking down.
BO XILAI, CHINESE COMMERCE MINISTER (through translator): From 2000 to 2005, the public prosecuting agency has handled more than 3,370 cases, during which suspects have been arrested and another 3,530 cases which have been prosecuted.
GRANT: Pirated books, pencils, cigarette lighters, even counterfeit drugs like Viagra, have been confiscated, pirate DVDs regularly destroyed -- the manufactures fined, sometimes jailed. But is it enough?
CARLOS GUTIERREZ, U.S. COMMERCE SECY.: If China wants to become an innovation society, and they clearly have that vision, they're going to have to have an environment that is friendly to intellectual property.
CHARLIE MARTIN, AMERICAN CHAMBER OF COMMERCE: There's no doubt that it's not enough. The problem of infringement, copyright infringement, DVDs, across the board, software, it's all increasing.
GRANT: In China, rubbing the out the pirates is clearly an uphill battle. You close one outlet, another takes its place.
Stan Grant, CNN, Beijing.
(END VIDEOTAPE)
PILGRIM: Coming up, more pressure on the middle class as gasoline prices soar. I'll talk with two Congressmen calling for an emergency White House energy summit.
And you'll be surprised to see what Americans are doing when they get behind the wheel. "Driven to Distraction," coming up.
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PILGRIM: Gasoline prices continue to climb, that's further battering our struggling middle class. AAA reports that Americans are paying $2.83 a gallon, 61 cents higher than a year ago, and also higher in certain places. That's an average. In California, prices are even higher, over $3 a gallon. Prices expected to go even higher with the onset of the summer and peak driving season.
Now, soaring gas prices have prompted two congressmen to call on the White House to convene an emergency energy summit. In a letter to President Bush, Congressmen Bernie Sanders and Pete DeFazio write, "the skyrocketing price of gas poses a crisis not only to commuters going to work, especially in rural areas, but family farmers, small businesses, truckers, airlines, and indeed our entire economy."
Congressman Bernie Sanders and Congressman Pete DeFazio join me now. And thanks very much for being with us, gentlemen.
REP. BERNIE SANDERS (I), VERMONT: Thank you.
REP. PETE DEFAZIO (D), OREGON: Hi, Kitty.
PILGRIM: You know, an emergency energy summit. I think that most Americans would say it's about time. That price at the pump is absolutely punitive right now. What do you hope to accomplish with a summit?
SANDERS: Well, I think if we bring the White House and the oil executive executives and the leaders of Congress and the opposition party together, what I hope will happen is that we can force the president of the United States to look his friends in the oil industry right in the eye and say, "gentleman, stop ripping off the American people. Lower the price of gas."
It is an obscenity, and it is an obscenity that at a time when the profits of the oil industry are at an all-time high, when they're laughing at the American people, when Exxon Mobil gives a $398 million retirement package to their CEO, I think it's time that the president of the United States and the congressional leadership said, enough is enough, lower gas prices!
PILGRIM: Do you think, Congressman DeFazio, that the president can actually beat up the oil industry? Do you think he has the clout to do that or can they just turn their back?
DEFAZIO: I mean, Kitty, here we are, the greatest nation on earth, and we do not have a national energy policy. We need a short- term policy that squeezes out the price gouging. Yeah, he could stand up to them if he wanted to, and given the way his numbers are, maybe he wants to stand up to somebody, and help himself and help his party.
I mean, $100 million a day for Exxon Mobil. Profits in the refining sector are up 255 percent in two years. This industry keeps merging and merging, closing down refineries, and then they say, whoops, we don't have enough refineries, there's a crisis, and they start gouging people at the pump.
I'm on the West Coast. Our gas went over $3 after Katrina. Guess what? We're not even in the same supply chain. It had no impact out here, except for prices.
This is plain and simple price gouging. OPEC is colluding and violating the WTO. The president is a big free trade guy, and he's a big rules-based trade guy. Well, six of those countries are in the WTO. Let's file a trade complaining at the WTO against OPEC for price fixing, and then let's get a long-term strategy to become energy efficient and not be dependent upon imported oil in the future.
PILGRIM: Let's take a glimpse at your letter. It's fairly hard- hitting, and it reads, "there's no good reason for gas prices to be this high, especially when oil companies continue to receive record- breaking profits, OPEC continues to receive increased revenue, oil executives continue to receive obscene levels of compensation."
But let's talk about some of the tax breaks the oil companies get. Should we be addressing this? The...
SANDERS: Of course we should.
(CROSSTALK)
PILGRIM: ... giveaways to oil companies?
SANDERS: Look, you asked Peter the question, can the president do it? Of course he can do it. If he brought these guys into the oil industry and says, guess what? If you do not lower the price of gas, we're going to repeal, which we should in any case, this giveaway that you have, by which you can extract $65 billion worth of oil from public lands without paying any royalty.
We're going to take away all of the corporate welfare that taxpayers give you. We're going to impose on you a windfall profits tax. We're going to have Congress give the president the authority to impose temporary price controls on the price of oil.
Do you think if the president said that, you do not think that the next day gas prices would go down?
These guys are doing it because they can do it. They are getting away with murder, because we're allowing them to get away with murder, and it's high time that the White House stood up for the American people, rather than their buddies in the oil industry.
PILGRIM: Well, you guys are laying it out pretty starkly. Have you received support from your colleagues on this? How are you gathering support on this?
SANDERS: Well, as soon as we get back -- I'm sorry, Peter, go ahead.
DEFAZIO: No, I mean, Kitty, remember, this is the do-nothing Congress, 11 fewer days than Harry Truman's do-nothing Congress in 1948. They're keeping us out of Washington so we can't raise issues like this in the national media. Thank you for giving us an audience. And I think after our colleagues have been home, if they're hearing what I'm hearing, they're going to be very eager to sign onto our letter and to do something for the people.
PILGRIM: Congressman Sanders, last word, and you know it has to be pretty tough going in the home front these days with the consumers being so hurt in the pocketbook.
SANDERS: Absolutely. This is part of the destruction of the middle class. Money is coming right out of the pockets of working people. I think when Peter and I get back on Tuesday, you're going to find not only many Democrats but a lot of Republicans saying, hey, we have got to do something. There's an election coming in six and a half months, and a lot of these guys want to get reelected.
PILGRIM: Well, a subject close to our hearts. Thank you very much for bringing it up with us, and we appreciate your efforts. Congressman Bernie Sanders and Congressman Pete DeFazio, thank you, gentlemen, for being with us tonight.
SANDERS: Thank you.
DEFAZIO: Thanks, Kitty.
PILGRIM: Now, with longer commutes and increasing sprawl, Americans are spending more time in the car. They're doing more than driving when they're behind the wheel. Kathleen Koch reports.
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KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): It's become such a part of daily driving that Americans don't even try to hide their bad habits behind the wheel.
UNIDENTIFIED MALE: I use my cell phone, I'll read, I'll do crossword puzzles.
UNIDENTIFIED MALE: One hand on the wheel, one hand looking down, dialing.
UNIDENTIFIED MALE: When they start screaming, you know, if you're driving down the highway, you've got to do something for them.
KOCH: But new research has found nearly 80 percent of crashes involve just such types of distracted driving, within three seconds before the incident.
CHARLIE KLAUER, VIRGINIA TECH TRANS. INST.: Most of the studies that have been done in the past, nearly all of them, deal with just looking at how driving behavior or how different types of distractions actually degrades driving performance. This is the first study that actually links those types of behaviors to crashes and near crashes.
KOCH: It was a mammoth study. One hundred cars packed with cameras and sensors, driven by 241 people in the Northern Virginia and Washington, D.C. area for more than a year. Researchers caught one driver on a cell phone nearly striking a child on a tricycle. Another driver putting in a CD almost loses control of his car. Later this same man, very drowsy, runs off the road.
In another case, the driver looks down at something in the car, swerves to miss the vehicle in front of her that stops, and then hits a telephone pole.
All together, the cameras captured 82 crashes, 761 near crashes, and more than 8,000 close calls.
Researchers for the first time were able to quantify which bad habits were the riskiest. They found reaching for a moving object increases the risk of a crash by a factor of nine. Drowsiness by four. Reading or applying makeup by three times, and dialing a handheld device like a cell phone by nearly three times.
(on camera): The most common distraction, not surprisingly, was the cell phone. Researchers found the identical number of crashes were caused whether dialing, talking or listening.
(voice-over): Most easily distracted, younger drivers. The study found those age 18 to 20 were four times more likely to have an inattention-related crash than those over 35.
Researchers hope proving a direct link between bad behavior behind the wheel and crashes might persuade drivers to change their ways. Others believe drivers have to be forced to behave by more laws banning distractions like cell phones.
Kathleen Koch, CNN, Washington.
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PILGRIM: Here's a reminder now to vote in tonight's poll. Do you believe the United States is protecting its own interests when it comes to China policy? Yes or no. Cast your vote at LouDobbs.com. We'll bring you the results in just a few minutes.
Well, coming up at the top of the hour here on CNN is "THE SITUATION ROOM" with Wolf Blitzer -- Wolf.
WOLF BLITZER, CNN ANCHOR: Kitty, thanks very much. President interrupted, the protester seen around the world except in China. She disrupted the formal arrival ceremony over at the White House. We're going to tell you why. And a CNN exclusive, what happened behind the scenes over at the White House after the heckling. We'll hear about the exchange between the two presidents from the president's -- U.S. president's national security adviser, Stephen Hadley.
Plus Donald Trump here in "THE SITUATION ROOM." Does he think anyone in the Bush administration should be fired? I'll ask. All of that coming up right here at the top of the hour. Kitty?
PILGRIM: We look forward to it, Wolf.
History was made in Atlantic City as a nickel slot machine paid out $10 million. That's the biggest slot jackpot ever in Atlantic City. The lucky winner is an 84-year-old great grandmother, Josephine Crawford. She was about to call it quits for the night when she hit the big jackpot. And Crawford says she will spend the money on her family and a trip to Italy.
Coming up, these trailers were supposed to house Hurricane Katrina victims but are they being sold for a profit? We'll have a special report from the Gulf Coast.
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PILGRIM: On the hurricane-ravaged Gulf Coast tonight, a federal emergency management contractor is under arrest on corruption charges. Now he is charged with abusing his position and trying to profit from the Katrina disaster. Susan Roesgen reports from New Orleans.
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SUSAN ROESGEN, CNN GULF COAST CORRESPONDENT (voice-over): For many people in Louisiana, these trailers on a FEMA lot might as well be gold bricks.
Thousands who lost their homes in Katrina have waited months to get one. And police say two guys from Texas saw that as an opportunity. The police in Slidell, Louisiana got a tip that Rolando Aquilar (ph) and James Kyle Wigginton (ph) were offering to sell a stolen FEMA trailer for $5,000. How did they manage to steal one from a FEMA lot? Simple. Police say Wigginton worked there.
CAPT. ROB CALLAHAN, SLIDELL POLICE: One of the two gentleman is actually a FEMA contractor. His job is to deliver these trailers to people who are the victims of Katrina in the Slidell area. And I guess on his off job, he was actually selling these trailers to make a profit for himself.
ROESGEN: Michael Chertoff, the head of homeland security, which oversees FEMA, calls the arrest disheartening.
MICHAEL CHERTOFF, SECRETARY, HOMELAND SECURITY: So we will occasionally find bad apples at FEMA or in other institutions. All we can do is be vigorous in trying to weed them out and make sure that they get punished when they do.
ROESGEN: The police don't know yet if other trailers were stolen but they say the FBI is involved and more arrests could be coming. Susan Roesgen, CNN, New Orleans.
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PILGRIM: In the Northern Plains tonight, officials are trying to restore power after an unusual spring blizzard. But it could be days before power is back on for everyone. Two feet of snow hit parts of Wyoming, North Dakota, and Montana. Four people died.
And more torrential rain is deepening the flood emergency in southeast Europe tonight. Heavy rainfall and melting snow have triggered severe flooding along the Danube River. Thousands of homes have been destroyed. Officials are trying to shore up levees that are in danger of breaking.
Still ahead, we'll share some of your thoughts. We'll also have the results of tonight's poll. Stay with us.
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PILGRIM: Now the results of tonight's poll, 94 percent of you believe the United States is not protecting its own interests when it comes to its China policy.
Let's look at some of your thoughts. Thomas in Oregon writes: Bush is responsible for the mess we are in, not Hu. Hu is just taking advantage of a good thing. This administration could learn from him.
Bruce in Delaware writes: It is mind-boggling that a communist leader would first meet with the biggest capitalist before seeing Bush. It shows who has the real power in the United States, not the government. But we already knew that.
And Richard in Oregon: What happens to Abraham Lincoln's concept of a government of the people, by the people, for the people? Is that now politically incorrect?
Marti in Georgia writes: It's so easy to fix the trade deficit. Buy American, problem solved. We are the people. We are the government. At least we were in the beginning.
Tom in Arkansas writes: I believe on May 1st if the illegals do try to boycott work, business, school and other things, we should also act if a person does not go to work, fire them. If they skip school, expel them and if they close their business, picket them and close them down. Sincerely fed one all political parties and government officials.
We love hearing from you. Send us your thoughts at LouDobbs.com. And each of you whose e-mail is read on the broadcast will receive a copy of Lou's book "Exporting America."
Thanks for being with us tonight. Please join us tomorrow. Among our guests, Congressman Dana Rohrabacher of California. He's a strong supporter of the Sensenbrenner border security bill. For all of us here, good night from New York. "THE SITUATION ROOM" starts right now with Wolf Blitzer -- Wolf.
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