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Lou Dobbs Tonight

Carnage in Iraq; Iraq Study Group Report Calls for Major Shift in U.S. Strategy; Damage Control

Aired December 06, 2006 - 18:00   ET


LOU DOBBS, HOST: Tonight we're reporting to you from Buffalo, New York, where we're preparing for a special town hall meeting, "War on the Middle Class," as we continue our coverage around the nation.
Turning now to the day's top stories, another 13 of our troops have been killed in Iraq. Ten of them today, the very same day the Iraq Study Group released its report and called for a major shift in U.S. strategy.

We'll have a live report from Baghdad on the escalating number of American casualties.

And the Iraq Study Group says U.S. policy in Iraq is simply not working.

We'll have complete coverage, and I'll be talking with two leading members of the study group.

All of that and a great deal more straight ahead here tonight.

ANNOUNCER: This is a special edition of LOU DOBBS TONIGHT, news, debate and opinion for Wednesday, December 6th.

Live from Buffalo, New York, Lou Dobbs.

DOBBS: Good evening, everybody.

The Iraq Study Group today strongly criticized President Bush's conduct of the war in Iraq, a war that has cost the lives of another 13 of our troops. The bipartisan study group said the situation in Iraq is grave and deteriorating after nearly four years of war, a war that has now lasted longer than World War II. The study group recommended many changes in U.S. military strategy, new diplomatic efforts to reach out to Iraq's neighbors, Syria and Iran.

In Iraq, 10 of our troops were killed in four separate incidents today. The U.S. military said another three of our troops were killed earlier in the week.

Nic Robertson reports from Iraq on the insurgents' deadly attacks against our troops.

John Roberts reporting tonight from Washington on the Iraq Study Group's grim assessment of this war.

And Ed Henry reports from the White House on the Bush administration's efforts to limit the political damage as a result of the Iraq Study Group's report.

We turn first to Nic Robertson in Baghdad -- Nic.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Well, Lou, military spokesmen have announced that there were three deaths, U.S. military deaths on Monday. They told us just a few hours ago about 10 U.S. service members who were killed here today, three separate roadside bombs killing nine of them.

One of the soldiers -- and we don't know the details, the cause of his death precisely, but we're told it was not combat-related. That brings a death toll just for the month of December so far to 30 U.S. servicemen killed so far, a very deadly toll already this month.

Iraqis today dying in mortar attacks at a market, 10 killed, 54 wounded at a big attack there. A suicide bomber on a bus in the Shia neighborhood of Baghdad killed three, wounded 16. And a mortar landed on a mosque in the Sunni part of Baghdad today. A Sunni imam there among the five injured -- Lou.

DOBBS: Nic, thank you very much.

Nic Robertson reporting from Baghdad.

The latest American casualties in Iraq bring the number of our troops killed in this war to 2,920. Those rising casualties, of course, the principal reason for the formation of the Iraq Study Group more than eight months ago. Six hundred eight of our troops have been killed since the Iraq Study Group was announced on the 15th of March.

These are the principal recommendations of the Iraq Study Group: The primary mission of U.S. troops should move to training and support of the Iraqi army; the U.S. military should withdraw most combat brigades from Iraq by the first quarter of 2008; the United States should launch a diplomatic offensive to engage Syria, Iran and insurgent leaders, with the exception of al Qaeda; the United States should set milestones for the Iraqi government for progress in security, governance and reconciliation.

John Roberts reports -- John.

JOHN ROBERTS, CNN SR. NATIONAL CORRESPONDENT: Lou, the ground really shifted here in Washington today, and across the nation, for that matter. After all of the spin and the rosy pronouncements about progress in Iraq, it's pretty much accepted now that the place is chaos on the verge of catastrophe.


ROBERTS (voice over): If there were any lingering doubts about how bad things are in Iraq, they were pretty much erased today.

LEE HAMILTON, IRAQ STUDY GROUP CO-CHAIR: We believe that the situation in Iraq today is very, very serious. We do not know if it can be turned around. ROBERTS: The Iraq Study Group, in perhaps the most anticipated report since the 9/11 Commission, issued a harsh critique of administration policy.

JAMES BAKER, IRAQ STUDY GROUP CO-CHAIR: We do not recommend a stay- the-course solution. In our opinion, that approach is no longer viable.

ROBERTS: Instead, the 10-member bipartisan committee offered up some alternatives; 79, in fact. One of the top recommendations is a version of what the White House ridiculed as "cut and run," to pull back most U.S. combat troops by early 2008, and instead focus on accelerated training for Iraqi forces.

Another big idea, launch an intense diplomatic mission to find a political solution, including unconditional talks with Iran and Syria.

HAMILTON: You cannot look at this area of the world and pick and choose among the countries that you're going to deal with.

ROBERTS: It's a notion that President Bush has rejected but one his father's former secretary of state suggests he should embrace for the sake of trying to save Iraq.

BAKER: For 40 years, we talked to the Soviet Union during a time when they were committed to wiping us off the face of the earth. So you talk to your enemies, not just your friends.

ROBERTS: The study group acknowledged their plans aren't perfect, but in another apparent shot at the White House's Iraq policy, insisted, "There is a better way forward."

BAKER: If we do what we recommend in this report, it will certainly improve our chances for success.

ROBERTS: While there's nothing to suggest the president will adopt any of the recommendations, the Iraq Study Group cautioned him against cherry-picking the report. "If Iraq is to be pulled back from the brink of failure," they said, "it needs a comprehensive rescue mission and one with bipartisan political support here at home."

LEON PANETTA, IRAQ STUDY GROUP MEMBER: We have made a terrible commitment in Iraq in terms of our blood and our treasure. And I think we owe it to them to try to take one last chance at making Iraq work. And more importantly, to take one last chance at unifying this country on this war.


ROBERTS: Now, as much as the Iraq Study Group disagreed with the current administration policy on Iraq, there was common ground on one important issue, no immediate withdrawal of U.S. troops. Lee Hamilton put it bluntly when he said a precipitous withdrawal of U.S. forces would likely result in a bloodbath -- Lou.

DOBBS: John, thank you very much. John Roberts reporting from Washington.

President Bush today promised to treat each and every proposal from the Iraq Study Group seriously and to act in what he called a timely fashion. But President Bush did not commit to introduce any of those recommendations. The White House rejected any suggestion that the Baker-Hamilton report is a repudiation of the Bush administration's policies in Iraq.

Ed Henry reports from the White House.


ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice over): His back against the wall, President Bush tried to put the best face on the Iraq Study Group's report.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This report will give us all an opportunity to find common ground for the good of the country.

HENRY: But make no mistake, this was a stinging rebuke.

HAMILTON: The current approach is not working.

HENRY: It came just one day after a startling admission from the president's own nominee for defense secretary.

UNIDENTIFIED MALE: Do you believe that we are currently winning in Iraq?


HENRY: How does the president turn the corner? He was careful not to endorse any of the panel's 79 recommendations.

BUSH: We will take every proposal seriously and we will act in a timely fashion.

HENRY: How timely depends on when the Pentagon and National Security Council finish separate reviews of Iraq policy ordered by the president. He had been expected to use these internal reports to cherry-pick more favorable options, but the weight of the bipartisan report may be too much to ignore.

DAVID GERGEN, FMR. PRESIDENTIAL ADVISER: I think that puts enormous pressure on the president. You know, we're going to have to do it another way, a different way.

HENRY: Panel member Leon Panetta, a veteran of crisis management in the Clinton White House, had some advice for Mr. Bush.

PANETTA: Ultimately, you can find consensus here. This country cannot be at war and be as divided as we are today. You've got to unify this country. And I'd suggest to the president that what we did in this group can perhaps serve as an example. HENRY: But Bush intimates insists the president has to put defending the country above finding unity.

ANDREW CARD, FMR. WHITE HOUSE CHIEF OF STAFF: So I would ask the president to step back, take a good objective look at all of these recommendations, ask his advisers to take a good look at them, get the fresh eyes of a secretary of defense, Bob Gates, and let him participate in making recommendations. But then have the courage to make decisions that he thinks are right, not based on whether or not there's a political consensus.


HENRY: But the president's critics charge that sticking to his guns amounts to a status quo policy and, if anything, the Iraq Study Group made clear today that won't cut it anymore -- Lou.

DOBBS: Ed, the sense there in the White House, the president obviously being strongly rebuffed, his policies in Iraq, by the Iraq Study Group. Is there some concern that the White House will go into some sort of bunker mentality and simply be resistant to the reality that has been known and reported, for example, on this network for sometime, but at the same time, seemingly ignored by this administration?

HENRY: Well, Democrats have been charging he's been in a bunker for a long time. I think that now it's pretty clear we're starting to hear words from the president himself and some of his top advisers, like finding common ground, bipartisanship, things that we hadn't really heard from them in terms of the war. Instead, right before the midterm elections we actually heard obviously charges like "cut and run."

So it may finally be time that the president is realizing he does need a new course. And this plan, while he is unlikely to embrace all of it, if he embraces some of it, it may be a way out for him -- Lou.

DOBBS: Thank you very much.

Ed Henry from the White House.

Democratic leaders on Capital Hill welcomed the Iraq Study Group report. They said it confirmed many of their own conclusions about the direction of this war. At the same time, Democrats promised to step up their scrutiny of the president's conduct of the war.

Dana Bash reports from Capitol Hill.


DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice over): Just the image the Iraq Study Group says the country needs: Democrats and Republicans confronting the Iraq crisis side by side. But the first reflex of Democrats poised to take control of Congress was, "I told you so." SEN. HARRY REID (D-NV), MAJORITY LEADER-DESIGNATE: The Iraq Study Group is a rejection of the policies of the Bush administration and the war in Iraq.

REP. NANCY PELOSI (D-CA), SPEAKER-DESIGNATE: I salute this working group, the Iraq working group, for agreeing that the present Bush policy in Iraq has been a failure.

BASH: Democratic leaders even used the occasion to promise not only to have aggressive oversight of future Iraq policy, but to revisit the debate over going to war in the first place.

REID: We are going to look at how the intelligence was manipulated prior to going to war.

BASH: Senator Harry Reid called the Iraq Study Group's report vindication, and Democrats said the recommendations are a good first step, noting some ideas mirror their own.

PELOSI: We've written to the president on more than one occasion to say the mission in Iraq must be changed from combat to training.

BASH: But most were careful not to immediately embrace the commission's recommendations. Democrats may have seized congressional power on a wave of antiwar sentiment, but their goal is to make clear Iraq is still the president's war and it's his responsibility to change course.

SEN. DICK DURBIN (D), ILLINOIS: Quite frankly, it is a call on the president, our commander in chief, to move forward with new leadership and with a new candor in dealing with the people of Iraq.

BASH: As for Republicans, most were quick to offer cautious praise for the bipartisan panel's work. But in another sign firmly- established positions won't easily change, House Republican leader John Boehner rejected the study group's controversial proposal to engage with Iran and Syria. "We will not accomplish victory by setting arbitrary deadlines or negotiating with hostile governments," Boehner said.


BASH: And the debate over the Iraq Study Group's recommendations will continue here tomorrow morning. Members of the commission are going to appear before the Senate Armed Services Committee.

But, Lou, if there is bipartisan agreement, it is on this: they can debate and talk about these recommendations, other policy changes in Iraq all they want, but Republicans and Democrats agree here that it is really up to the president to change course in Iraq. They certainly are going to try to pressure him, though.

DOBBS: Dana, thank you.

Dana Bash reporting from Capitol Hill. Robert Gates, just moments ago, overwhelmingly confirmed by the U.S. Senate to become this country's defense secretary. The vote was 95-2. Gates nominated by the president after Donald Rumsfeld resigned, following the Democratic victory in the November midterm elections.

Gates, when asked at his confirmation hearings if he thought the United States was winning in Iraq, answered with a direct "No." Gates was previously director of the CIA under the first President Bush.

Two leading members of the Iraq Study Group will join us here later in the broadcast, former defense secretary William Perry, former senator Alan Simpson. We'll be talking with them.

And the United States Congress could be on the verge of a deal to give India our nuclear technology in return for mangos and a few other products. What in the world is this administration thinking? What in the world is this Congress thinking?

We'll have that report.

And the Bush administration seems determined to sign yet another so- called free trade agreement that is anything but mutual, balanced and fair. A deal with South Korea that could destroy thousands more American jobs.

That report upcoming.

And we'll have continuing coverage of the war on the middle class as we report to you tonight live from Buffalo, New York.


DOBBS: Welcome back.

We're reporting to you tonight from Buffalo, New York. It's a city at the very center of the war on our middle class.

We're here in Buffalo preparing for a special town hall meeting that will air on CNN tomorrow evening, 7:00 p.m. Eastern. We'll be introducing you to the remarkable working men and women here living through the war on the middle class. We'll hear how they're fighting back.

Please join us tomorrow at 7:00 p.m. Eastern on CNN.

Free trade agreements were supposed to help this country's middle class. Instead, they've killed millions of good-paying American jobs and creating even more disparity in wages between the poor and the wealthy.

Despite all of that, the Bush administration and corporate lobbyists, and now apparently members of both political parties in Congress, are embracing a trade deal that would be the largest since NAFTA. This week the United States is negotiating with South Korea about a free trade agreement that we're once again told will create jobs by boosting American exports. Guess who's lying and guess who loses again?

Kitty Pilgrim reports.


KITTY PILGRIM, CNN CORRESPONDENT (voice over): The U.S. beef industry is outraged at Korean behavior on trade. South Korea stopped U.S. beef shipments completely three years ago on the theoretical premise that any U.S. beef with bones in it might carry mad cow disease.

Trade was supposedly restored in September. But now the South Koreans rejected two shipments because they found bone fragments in it.

J. PATRICK BOYLE, AMERICAN MEAT INSTITUTE: The Koreans found bone fragments in one shipment of 20,000 pounds. They found a bone particle about the size of my pinky fingernail after looking for it for three weeks and subjecting the product to repeated x-rays. I mean, this is not indicative of a good-faith trading partner.

PILGRIM: On top of this, South Korea is pushing for a free trade agreement that would boost its exports to the United States.

There is currently $72 billion in trade between the two nations. But the Koreans ship $16 billion more to American consumers than the United States exports to them. That imbalance could get every worse.

THEA LEE, DIRECTOR, PUBLIC POLICY, AFL-CIO: Our negotiators always tell us they're trying to increase U.S. exports and increase the number of jobs here in the United States every time they negotiate a new free trade agreement. And we often find out after the fact that we've just increased the ability for American companies, multinational corporations to ship jobs off shore.

PILGRIM: Another industry also at a disadvantage, autos. South Korea last year sent $11 billion worth of vehicles here, compared to less than a billion dollars worth the U.S. sent to South Korea.

U.S. negotiators in talks right now are pushing for a deal.

SUSAN SCHWAB, U.S. TRADE REPRESENTATIVE: I am still confident that an agreement is within reach. But for an agreement to be sealed, we must work hard, be creative and make tough political decisions.

PILGRIM: Decisions that may not help American workers in the long run.


PILGRIM: Now, the fear is a future free trade agreement with South Korea would put U.S. industries such as auto manufacturing, apparel, and electronics under even more pressure -- Lou.

DOBBS: And yet, the administration presses on, despite the fact that this country is now running 30 consecutive years of trade deficits.

Thank you very much. Kitty Pilgrim, from New York.

Still ahead here tonight, the war on our middle class. Scam artists preying on families hit hard by rising mortgage interest rates and falling values for their homes.

And we'll tell you about another community picking up the slack from the federal government by taking action on illegal immigration.

We'll also be talking with two members of the Iraq Study Group. The study group today delivered Iraq recommendations to both the president and the Congress.

Stay with us.


DOBBS: The bipartisan Iraq Study Group today declared that "stay the course" is no longer an option. The group made 79 recommendations that it believes will improve American chances of success in Iraq.

Two leading members of the Iraq Study Group join us now from Washington, D.C., Alan Simpson, former Republican senator from Wyoming; William Perry, secretary of defense in the Clinton administration.

Gentlemen, good to have you here.



DOBBS: When you embarked -- when you embarked on this project just about eight months ago, were you -- did you learn something in that interim that surprised or shocked you, or was it, for the most part, evident to you when you began?

PERRY: Well, the problems were worse than we had imagined. We learned that. We also learned we had a military in Iraq which was performing brilliantly but against very, very adverse conditions. And we also learned that the Iraq army, which was presumably trained and designed to take over the security situation, was very far from being able to do that.

All of those things led us to believe we really had to change the course very, very profoundly.

DOBBS: In changing the course, Alan Simpson, the idea that we could get our combat brigades out of Iraq, as your study group recommends, by 2008, how is that different than a -- than a timetable?

SIMPSON: Well, we say that if -- that that's our objective, that the combat, the combat -- the combat forces will be reduced. It doesn't mean that we reduce all forces. It means we leave Special Forces, we leave the Rangers, we leave the impact people, the rapid response team people. We're not abandoning, but we're just saying that we will remove, subject to conditions on the ground -- and that will be determined by the military -- that we would be, could be out of Iraq with the combat forces in the first quarter of 2008. People can call it whatever they want. We're just saying that we're going to turn it over to the people of Iraq.

DOBBS: Right.

SIMPSON: It's a democracy, or it's a government, anyway. It's the only government we can deal with.

And I guess just say we started with goodwill, but didn't realize the confluence of events would lead to this commission or this study group being, you know, the end-all, be-all. It's not. It's recommendations.

DOBBS: Right. It's recommendations.

And Bill Perry, one of the recommendations calling for reconciliation as one of the tests of the progress of the al-Maliki government, reconciliation, security and governance.

Without success in those three areas, can the United States make a significant difference in the outcome?

PERRY: We were very clear in our report that there are three different kinds of recommendations, the military, the internal- political, and the diplomatic, and that we needed success in all three of those in order to really say -- in order to believe we were going to be able to accomplish our mission there. It's very important that they not pull one of these aside.

In particular, Lou, we were -- we were convinced that the U.S. military by itself cannot solve the problems in Iraq. It requires a political solution as well. And so we had to put maximum pressure on the Iraqi government to move forward in the political changes, including reconciliation.

DOBBS: Right.

This afternoon, Senator Simpson, Tony Snow, the White House spokesman, said the administration was ruling out one-on-one talks with Iran as recommended in the study group's report.

Your reaction?

SIMPSON: Lou, you've been around the -- around the track as long as Bill Perry and I. There isn't anything in this report that won't be savaged by somebody, the right, the left...

DOBBS: Right.

SIMPSON: ... you know, the Congress, the administration. Everybody has to play CYA and do what they have to do and cover themselves. We have no quarrel with that. We're just saying -- I'll tell you what I'm saying. I've heard all the bitching and whining and moaning now for months that we could never do anything in American in a bipartisan way, too much savagery, can't get it done on the issues that confront us, immigration, Iraq, Social Security.

Well, gang, 10 of us got together and in good will, and good faith, and with friendship involved, too, put something to the American people. They can do whatever they want with it.

We're going home. It was a good effort. I feel very pleased with it. And I'm very proud to have been part of it.

Let them rip.

DOBBS: Senator Simpson, you're one of the people who makes it a pleasure to have gone around the track. And I'm delighted you haven't lost any of your candor.

Nor you, Bill Perry.

I know this -- we all know this has to be amongst the most frustrating projects you've undertaken.

I'm going to give you the last word, Bill Perry, if I may.

Your prognosis, your expectation, as realistic as you can be about what you expect the situation to be one year from now.

PERRY: I think it is likely that the administration will move forward and accept most of our recommendations. That may not be true, but if it does happen, if it does happen, then I think we've got a good chance of significantly improving the situation and getting the bulk of our combat forces out of Iraq.

One other point I want to make, Lou, is that we have other security problems in the world besides Iraq.

DOBBS: Right.

PERRY: And we cannot afford to have our troops tied up there forever on this one mission. So we've got to get them back.

DOBBS: Bill Perry, thank you very much.

PERRY: Thank you.

DOBBS: Alan Simpson...

SIMPSON: Thank you.

DOBBS: It's -- we often look at so many of the problems and so much that detracts in this country, it is nice to -- I will say to you both -- to have some wise men in this country who are still willing to lend their minds, experience and talent to a horrible, horrible issue that we must all confront. PERRY: Thank you, Lou.

SIMPSON: Thank you very much.

DOBBS: Time now for some of your thoughts.

Bill in Arizona: "Members of the Iraq Study Group said one of their key goals was for our politicians to work together in a bipartisan manner. Wow, rocket science. Isn't it sad that we need a study group to tell politicians to act like responsible, ethical, mature adults? But at least we've got somebody to turn to for precisely that."

John in Montana: "Lou, I listened to the Iraq Study Group this morning. And I have one question to them: what the heck are we even doing in Iraq? I'd like to hear the real answer to that."

Rodney in New York asked -- said, rather: "Can someone please report on how much this Iraq commission cost tax payers? If billions of dollars had been invested in real homeland security issues, then all this rhetoric about keeping American safe would actually come to fruition instead of the window dressing that has been done to date."

We thank you for sending us your thoughts. E-mail your thoughts any time at We'll have more of your thoughts here later. Each of you whose e-mail is read here receives a copy of my book, "War on the Middle Class".

And for more on the war in Iraq and U.S. strategy, please, if you are interested, go to my column on the CNN website. Go to

Coming up next, Congress trying to push through a nuclear trade deal with India. You remember this one. We trade American nuclear technology for mangos from India. We'll have more.

And it is the fastest growing white collar crime in the country, mortgage fraud threatening millions of American homeowners already struggling to pay bills and hold on to their homes.

That special report and a massive recall at Taco Bell after an e. coli outbreak sickened dozens of people.

Stay with us.


DOBBS: The top stories tonight. Thirteen more of our troops have been killed in Iraq, ten killed in four separate incidents today. The U.S. military said another three of our troops were killed Monday. 2,920 of our troops have been killed since this war began.

The Iraq Study Group today delivered its long-awaited report on U.S. strategy in Iraq, recommending a gradual withdrawal of most of American combat brigades from Iraq by the first quarter of 2008, a diplomatic effort to engage Iraq's neighbors, Syria and Iran. And the Bush administration seems determined to push ahead with the free trade agreement with South Korea that is anything but fair, mutual and balanced. The deal would destroy thousands more middle class jobs in this country. Members of both political parties in Congress appear to be ready to go ahead.

In other important news tonight, federal investigators are to examine the site of a massive explosion in a Wisconsin industrial plant. At least three people were killed, dozens more injured. It's believed at this hour a huge propane tank exploded, demolishing two buildings and rocking downtown Milwaukee. People smelled gas and had begun to evacuate the building before the explosion. The resulting fire lasted for hours before it could be controlled.

And two food scares tonight. Taco Bell has pulled green onions from all of its outlets nationwide. Taco Bell suspected an e. coli outbreak in New Jersey, New Jersey and Pennsylvania. Now, company officials say this action is precautionary while they determine the exact source of the e. coli.

Several dozen people fell ill, nine people remain hospitalized. Two of them are in serious condition. Tainted green onions from Mexico were blamed for a 2003 outbreak of hepatitis A in western Pennsylvania. Four people died in that outbreak.

And Jamba Juice has stopped putting strawberries in smoothies in Arizona, southern Nevada and southern California. Jamba Juice says it knows of no infections or contaminations, but the strawberries sold the week of November 26th may have been tainted with listeria.

On our southern border, drugs are pouring in from Mexico more than ever. Mexico, the principal source of heroin, marijuana, cocaine and methamphetamines. Just the Tucson sector of the Border Patrol in Arizona seized more than 131,000 pounds of marijuana since October 1st.

That is, by any definition, a lot of marijuana. But it pales in comparison to what border agents are catching coming across the border -- the entire border each year. For example, in the fiscal year ending in October, the Border Patrol confiscated 1.3 million pounds of marijuana, 13 percent, by the way, more than the previous fiscal year.

This past May, President Bush ordered National Guard troops to Arizona, New Mexico, California and Texas to bolster the Border Patrol and to help them keep drugs from coming across that border.

We checked to see what they're doing now. Six thousand National Guard troops remain deployed. They're helping the Border Patrol. They're building access roads, fences and other security infrastructure. They're also observing and monitoring, we're told.

But they don't make arrests; they're not allowed to. And for legal reasons, they can't apprehend illegal aliens who cross our border with Mexico.

The Bush administration pressuring Congress to pass a trade deal with India, a free trade deal that dates back to the summer of 2005. This deal, you may recall, gives India access to American nuclear technology, while the United States receives goods from India such as mangos.

Lisa Sylvester has the report.


LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The lame duck 109th Congress is trying to squeak through a nuclear trade deal with India in the final hours of this session that critics call a sweetheart deal. It would give India access to civilian nuclear technology, even though the country has not signed the Nuclear Nonproliferation Treaty.

REP. ED MARKEY, (D) MASSACHUSETTS: The Bush administration has a very high hypocrisy co-efficient. On the one hand, the Bush administration is telling India it can have nuclear materials without signing the Nuclear Nonproliferation Treaty. At the same time, it's preaching to Pakistan, to Iran, to North Korea and other countries in the world that nuclear weapons are bad.

SYLVESTER: The Bush administration negotiated deal opens U.S. markets for goods, including Indian mangos, and would allow nuclear commerce and technology to flow to India.

India would come out a clear winner. So would U.S. defense contractors. In a letter to lawmakers, Secretary of State Condoleezza Rice said the initiative is "integral to promote energy security, prosperity, democracy and nonproliferation."

The White House has been pressuring Congress to pass the deal as is and to drop language that asks India to actively work to dissuade, sanction and contain Iran's nuclear ambitions, another point of contention for critics.

DARYL KIMBALL, ARMS CONTROL ASSOCIATION: It is disgraceful that the Bush administration tried to remove any reference to India's performance with respect to containing Iran's nuclear program. This is the biggest proliferation problem we have today. If India is going to be a true partner, we need India's full and active support.

SYLVESTER: Congress is not the only group that has to sign off on this deal. Forty-five nations that make up the Nuclear Suppliers Group would have to OK it, and that could be a tall order.


SYLVESTER (on camera): Proponents were hoping to get the deal through Congress this week before lawmakers adjourn. A compromise has been reached, but it may not be voted on because of attempts to add on unrelated legislation to the final bill, Lou?

DOBBS: Lisa, thank you much. Lisa Sylvester from Washington.

Turning to our poll question tonight, "do you believe the new Democratically controlled Congress will be effective in solving the lack of border security, illegal immigration, free trade giveaways and the war in Iraq? Yes or no." Please cast your vote at We'll have the results here later.

In last night's poll, we asked a question. The question is, "do you believe as the Department of Homeland Security suggests, the answer to the immigration/border security crisis in this country is a guest worker program? 93 percent of you responded, no. As promised, we did send those results, your Answers to the Department of Homeland Security, and here is the response.

"Based on the numbers provided, it means DHS has to continue to make the case and reinforce the benefits of a temporary guest worker program and how it will help us secure our borders."

Well first, I'm delighted that the department decided to respond to those overwhelming poll results. I'm also glad that they understand they haven't yet explained that one. And I can't wait for that one. I know you can't either.

Well, there's a war over water between the United States and Mexico tonight. The U.S. government wants a federal court to allow it to plug a water leak in a canal that separates California and Mexico. Millions of gallons of water are seeping into Mexico from the canal that provides water to farm land on both sides of the border under a 1944 treaty. The seepage is not covered under that agreement. A Mexican business group filed the lawsuit saying stopping the leak would have a negative impact on the Mexican side of the border.

Up next, scam artists are squeezing America's middle class, taking advantage of rising mortgage interest rates and falling home prices. We'll have that special report.

And what will President Bush do now that the Iraq study group has presented its report? I'll be talking with three of the country's best political analysts about that and a great deal more. That straight ahead. Stay with us.


DOBBS: Welcome back. We're reporting to you tonight from Buffalo, New York, a city on the front lines on the war against our middle class. We're here preparing for a special town hall meeting that will air tomorrow evening on CNN, 7:00 p.m. Eastern. We hope you'll join us.

American's middle class homeowners tonight are finding themselves under assaults not only from rising interest rates on their adjustable rate mortgages, but also from scam artists. Christine Romans reports.


CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): The equity built up in this house is irresistible to scam artists. The FBI says that a cost of a billion dollars a year mortgage fraud is the fastest growing white collar crime, hitting these five states the hardest. Homeowners conned out of their hard-earned equity and even their home.

The Arizona attorney general is prosecuting so-called foreclosure rescue fraud.

UNIDENTIFIED MALE: The sharks are circled.

ROMANS: In one version of the scam, homeowners desperate to avoid foreclosure, are tricked into signing over their deed for a year or two to save their home only to find when they get their mortgage back, the equity is gone.

TERRY GODDARD, ARIZONA ATTORNEY GENERAL: Hearing from attorney generals literally all across the country that they're seeing more and more of this and they believe it's just the first robin, that they're going to have many more cases as the adjustable rates are adjusted upward.

ROMANS: Because as those monthly mortgage payments get 20 to 50 more expensive, millions of Americans struggle to hold on to their homes. Foreclosure rates already spiking triple digits in some areas.

Record homeownership rates and a cooling market are breeding scams.

CREOLA JOHNSON, OHIO STATE UNIVERSITY: Because of this great market we've had for the last five years, these homeowners are sitting on sizable equity. So they're very good targets for these companies who claim to rescue them.

ROMANS: She says at least ten states are writing laws against foreclosure rescue scams but she worries they may not go far enough.


ROMANS: Meanwhile, state and federal authorities are moving ahead with prosecutions and have begun scoring some convictions. Arizona's attorney general says this is the downside of record homeownership. Easy lending put people into homes during the boom, often with exotic loans who may not be able to hold on now. And that's exactly what scam artists are betting on -- Lou.

DOBBS: And to what degree are they being successfully prosecuted, these scam artists, Christine?

ROMANS: They're just starting now. In Arizona, they've got a rash of cases they're looking at here. One in particular, they're watching closely around the country as well -- you've got different attorneys general taking a look at it. But they say we're at the leading edge of it now. They're worried, Lou, that just the prosecutions and the few convictions they've seen so far, is just the very, very beginning.

DOBBS: Well, let's hope that they're doing more than trying to scare somebody. This is a real critical issue that needs real law enforcement. Thanks a lot, Christine Romans. Just ahead, the Iraq study group says U.S. policy in Iraq is definitely not working, no stay the course. Three of the country's sharpest political minds join us. We'll be talking about the report, Iraq and the likely direction that Congress and this president will take. Stay with us.


DOBBS: Coming up shortly here on CNN, "THE SITUATION ROOM" with Wolf Blitzer -- Wolf?

WOLF BLITZER, CNN ANCHOR: Thanks very much, Lou. Coming up, we're going to have more on that long-awaited report from the Iraq Study Group. Will it actually make any difference or is it too little, too late? I'll talk about it with Senator Barack Obama, a possible presidential contender in 2008. He's here in "THE SITUATION ROOM."

Plus, we have some gripping video of how U.S. troops are preparing to train their Iraqi counterparts. We're going to take you to Fort Riley, Kansas for an inside look.

And baby makes three. Mary Cheney, the vice president's openly gay daughter, is pregnant. We'll tell you how her family and the religious right are reacting.

All that Lou, coming up in "THE SITUATION ROOM."

DOBBS: Wolf, thank you very much.

Joining me now, James Taranto of the "Wall Street Journal," Robert Zimmerman, Democratic strategist, Democratic national committeeman, Errol Louis, columnist, "New York Daily News," member of the editorial board. And James, of course the editor of

Let me ask you that question, James, will this Iraq Study Group have much of an impact?

JAMES TARANTO, WALL STREET JOURNAL: I suspect not. I think we won't be talking about this for very long because its recommendations are pretty unremarkable on the military side. They didn't go with the pull out right now and go to Okinawa/Jack Murtha plan. They said a careful withdrawal, partial withdrawal beginning more than a year from now, conditioned on what happens on the ground.

And on the diplomatic side, I think some of the recommendations are just so naive that as to be ridiculous. The idea that Syria and Iran have an interest in stability in Iraq, I think is just crazy. And the idea that oh gee, if only we could solve the Israeli/Palestinian problem, everything would be fine. You know, people have been saying that for decades and it hasn't happened because it's a very difficult problem to solve, but it's at the root at a lot of the other problems.

DOBBS: Errol Louis, do you have a sunnier outlook? ERROL LOUIS, NEW YORK DAILY NEWS: Not necessarily sunnier, maybe a little bit different. I mean, the reason people say that you've got to solve this on a regional basis is that it happens to be true.

The loss of shuttle diplomacy going and talking -- I mean, when they released the report today, one of the lines that made a lot of sense was from James Baker. You don't make peace with your friends, you make peace with your enemies. That you've got to Iraq, Iran, you've got to talk to Syria, you've got to get some kind of regional coalition going to try and put things in order.

DOBBS: Robert Zimmerman, the reaction that I heard today as I watched the leaders of the Democratic Party respond was highly partisan and not particularly helpful, despite the fact that the Iraq Study Group was absolutely a bipartisan effort.

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: Well I think what makes the Iraq Study Group's report so significant and where I differ a bit with Errol and certainly with James, is that for the first time, we have a fact-based discussion about the situation there.

And I think that's very critical in terms of building a bipartisan coalition. What's most significant about this report is that we have now in the Congress, amongst Democrats and Republicans, a bipartisan coalition developing. Yet the question is will the White House listen? After the Iraq Study Group came out and maybe James thinks they're naive, but I wouldn't call any of those individuals naive. After that study group came out, it's hard for the White House to ignore the facts they've put forward. And it's hard for the White House to hide behind campaign rhetoric that truly misled the American people.

DOBBS: Let me ask you this, Robert Zimmerman. As this moves forward, it's a bipartisan effort, the Democratic Party, at least the leadership in Congress, responded in a very partisan way, at least in my opinion. What in the world are we going to see result in Congress? You have Silvestre Reyes, soon to be the chairman of the House Intelligence Committee calling for an increase in groups of 20,000 to 30,000. What's going to be the Democratic position here?

ZIMMERMAN: It's interesting. I don't necessarily concur with you that it was a partisan response. I think there was some frustration by Democrats that when they were proposing many of the same ideas that this Iraq Study Group ...

DOBBS: ... Oh come on, it was -- Robert, you and I know each other too well. That was partisan clucking by these folks rather than dealing substantively with the report.

ZIMMERMAN: But I think in fact you've found a substantive response when they pointed out that they recognized the need to put in place many of those recommendations, many of which Democrats implemented.

So I don't accept the notion that it was all just partisan politics. I think what you see in Congress today, Lou, that's significant is you've got Chuck Hagel joining with people like Joe Biden. You've got certainly Richard Lugar joining John McCain and other Democrats like Senator Levin in a bipartisan search for an answer.

DOBBS: Absolutely and that would be a helpful thing. And James, forgive me, but when I was talking about partisan clucking, you're suggesting that these members were naive. They may not have been able to come up with a magic solution. But the idea of talking to Iran, to Syria, to whomever in the region, why is that naive? Why would you resist that idea? Why would any Republican resist it?

TARANTO: Well, I just think it's naive to expect that Iran and Syria are going to want to be helpful in this. I think they have every interest -- the regimes in those countries have every interest in fomenting chaos in Iraq because they want us to be tied down. They certainly don't want a regime change to happen ever again. So they want to increase the cost as much as possible.

ZIMMERMAN: But you know, it's naive not to talk with them. And I think that's the more important point. You can't solve this without a regional problem.

DOBBS: Errol Louis?

LOUIS: You know Lou, bipartisan is not nonpartisan. They didn't put their politics aside. They just decided to sort of meld their competing political agendas. There are some real shockers in this report, by the way, and neither of the Democrats nor the Republicans nor the news media should ignore them.

DOBBS: What's shocker No. 1?

LOUIS: Page 92, I think it was. We have 1,000 people in the embassy in Iraq, 33 of them speak Arabic and only six are fluent. Now this is you think would have been taken care of a couple of years ago.

DOBBS: You would have thought so. You would have also thought that the FBI could have come up with more than 33 fluent folks of the tone, which his also astonishing.

LOUIS: Six fluent.

DOBBS: Let me say this. We did see one act of nonpartisan, bipartisanship, however you want to say it -- 95 to two, Robert Gates to be the new secretary of defense. Is that impressive, gentlemen?

ZIMMERMAN: Especially when you consider who voted against him. Anytime Rick Santorum votes against Robert Gates, it just raises Gates' stature.

LOUIS: And he was a member of the Iraq Study Group.

TARANTO: True enough and good luck to Secretary Gates.

DOBBS: Gentlemen, thank you very much. James Taranto, thank you very much, Robert Zimmerman, and Errol Louis as always, thank you. Coming up next, we'll have the results of our poll. Stay with us.


DOBBS" The results of our poll, 75 percent of you say you don't believe the new democratically-controlled Congress will be effective in solving the lack of border security, illegal immigration, free- trade giveaways and the war in Iraq. Perhaps you're just managing expectations for this new Congress.

Time for one last e-mail. Joan in Arizona wrote to say: "Is there any way of contacting the Democratic leadership, with copies to all members, of the Senate and House? I would like them to know they will lose my vote if they continue to support amnesty for illegal aliens."

Go to our Web site,, they'll show you how right there. For all of us, thanks for watching. Good night from Buffalo, New York. "THE SITUATION ROOM" begins right now with Wolf Blitzer -- Wolf?