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Lou Dobbs Tonight

Former President Gerald Ford's Career Was Lifetime Of Public Service; Presence Of National Guard Has Contributed To Drop-Off In Number Of Illegal Aliens Crossing Border; Shift In Power On Capitol Hill Expected To Create New Breed Of Corporate Lobbyists; Two Iranians Detained by U.S. In Iraq May Have Posed Serious Threat To U.S. Troops; Peter Navarro Discusses New Book

Aired December 27, 2006 - 18:00   ET


CHRISTINE ROMANS, CNN ANCHOR: Tonight, remembering former president Gerald Ford, who has died at the age of 93. President Bush said he was a true gentleman who reflected the best in America's character.
We'll have complete coverage and the rest of the day's news ahead.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Wednesday, December 27th.

Live in New York, sitting in for Lou Dobbs, Christine Romans.

ROMANS: Good evening.

This nation tonight is remembering former president Gerald Ford, who died at his home in California. President Ford's death was announced by his wife Betty last night. She did not give a cause of death, but President Ford had been suffering from poor health for sometime.

Gerald Ford's presidency is probably best known for his decision to pardon President Nixon after the Watergate scandal. President Ford faced strong criticism for that decision, but it was characteristic of a president who declared that "our long national nightmare is over."

Dan Simon reports from near President Ford's home in Palm Desert, California.

Elaine Quijano, with President Bush, reports from Crawford, Texas.

And Bill Schneider reports from Los Angeles on the unassuming personality of this nation's 38th president, a man who once called himself "a Ford, not a Lincoln."

But first, a look at President Ford's career: a lifetime of public service.



ROMANS (voice-over): For a country weary from two years of Watergate scandal...

FORD: My fellow Americans, our long national nightmare is over.

ROMANS: ... a new president, sworn into office under the most unusual circumstances.

FORD: I am acutely aware that you have not elected me as your president by your ballots.

ROMANS: Gerald R. Ford, the only president to serve without first being elected president or vice president, appointed to the vice presidency by Richard Nixon to replace a corruption-scarred Spiro Agnew, and then succeeding a disgraced Nixon. This plainspoken Midwestern restored public trust in the presidency but put a controversial end to this ugly period in American history.

FORD: I do grant a full, free and absolute pardon unto Richard Nixon for all offenses against the United States.

ROMANS: That in just the first month of a tumultuous 29-month presidency, a period marked by an energy crisis and double-digit inflation. With the fall of South Vietnam, Ford presided over the end of another painful period in American history.

Just a month later, Ford himself sent U.S. forces to recapture an American merchant ship seized by Cambodian gunboats. Forty-one Americans lost their lives in the rescue.

Ford survived two assassination attempts in 1975, one bullet just feet from the president.

FORD: I am honored by your nomination, and I accept it.

ROMANS: He won the 1976 Republican nomination, with Bob Dole as his running mate, but was defeated by Jimmy Carter in one of the closest presidential elections in history.

In his nearly three decades in politics, Ford brought a humble touch to Washington. He turned down offers to play professional football to attend Yale Law School instead. He served on an aircraft carrier in the Navy during World War II, married the former Betty Bloomer, and was elected to Congress in 1948, representing his home state of Michigan.

Re-elected 12 times, he rose to become Republican leader in a Democratically-controlled House, where he learned the now lost art of bipartisanship. That respect from his colleagues invaluable to a man who accidentally ascended to the White House but ultimately helped heal a nation.


ROMANS: College athlete, naval officer, congressman, vice president and president, Ford famously remarked once that he had long thought Congress was the seat of power in this country. His stint as president convinced him otherwise and he exercised his right to veto some 66 times.

President Ford is survived by his wife Betty, three sons and a daughter. The former first lady said President Ford's life was filled with love of God, his family and his country.

Dan Simon reports from near the Fords' home in Palm Desert, California. A news conference on the funeral arrangements has just begun -- Dan.

DAN SIMON, CNN CORRESPONDENT: Well, Christine, we have the basic framework in terms of how things are supposed to proceed over the next few days.

First of all, there will be a viewing here in the Palm Desert community. Of course, he is much beloved here in this community. They're members of an Episcopalian church here, and there will be a viewing, we are told, sometime on Friday.

And then on Saturday, we are hearing that Mr. Ford's body will be flown to Washington, D.C., where he will lie in state. Then a service at the National Cathedral. And ultimately, Mr. Ford will be buried at his museum in Grand Rapids, Michigan.

Mr. Ford passed away at 6:45 p.m. local time last night. He was surrounded by his family, including his wife, Betty.

No cause of death has been given yet. But 2006 was an especially challenging year for Mr. Ford in terms of his health issues. He suffered a couple of bouts of pneumonia and had a couple of heart procedures.

Meanwhile, we are waiting on this press conference, which I'm told has just started. We're trying to get some more details in terms of the specifics. But in terms of how things will proceed over the next few days, again, there will be this viewing on Friday. And ultimately, Mr. Ford will be buried back in Grand Rapids, Michigan.

Christine, back to you.

ROMANS: All right. Dan Simon in California.

Thank you, Dan.

President Bush led the nation's tributes to President Ford today. President Bush said the 38th president displayed quiet integrity, common sense and kind instincts.

Elaine Quijano reports from near President Bush's ranch in Crawford, Texas -- Elaine.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: And Christine, President Bush did not mention Watergate by name, but he certainly referred to the climate of division that existed in the wake of the Watergate scandal. He said during that period, the American people came to know President Ford as a man who led with common sense and kind instincts.


QUIJANO (voice-over): President Bush remembered former President Gerald Ford as a great man who helped lead the nation through a period of division and turmoil after Richard Nixon's resignation in the wake of the Watergate scandal.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: For a nation that needed healing and for an office that needed a calm and steady hand, Gerald Ford came along when we needed him most.

QUIJANO: Speaking from his ranch in Crawford, Texas, the president offered his condolences to former first lady Betty Ford and the Ford family.

BUSH: President Ford was a great man who devoted the best years of his life in serving the United States. He was a true gentleman who reflected the best in America's character.

QUIJANO: It was just before 11:00 p.m. Eastern Tuesday when President Bush's chief of staff, Josh Bolten, called him with the news. President Bush then tried unsuccessfully to contact Betty Ford. About an hour later in an arranged call, the president expressed to her his personal condolences.

The ties between George W. Bush's White House and the Ford administration run deep. Vice President Dick Cheney once served as President Ford's chief of staff. And in a written statement, Cheney said he was proud to have done so.

Of Ford's leadership during the troubled post-Watergate era, Cheney said, "America needed strength, wisdom, and good judgment, and those qualities came to us in the person of Gerald R. Ford."


QUIJANO: And President Bush today ordered all flags on U.S. government buildings to be flown at half-staff for 30 days in honor of former President Ford. At the same time, the White House, even before the announcement which is taking place at this hour on the funeral arrangements, the White House announced that President Bush does in fact plan to attend the funeral services -- Christine.

ROMANS: All right. Elaine Quijano.

Thank you very much, Elaine.

President Ford never intended to become president. In fact, he had no ambitions outside the Congress. President Ford's unassuming personality and his humor were on full display when he declared that he was "a Ford, not a Lincoln."

Bill Schneider has our report -- Bill. WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Christine, how did Gerald Ford leave his stamp on the presidency? By showing his human side.


SCHNEIDER (voice-over): Gerald Ford worked hard to present himself as a reassuring and comfortable figure, someone who we learned early on made his own English muffins for breakfast.

HENRY KISSINGER, FMR. SECRETARY OF STATE: He did what he needed to do. He was calm. What you saw was what you got.

SCHNEIDER: Ford followed Richard Nixon and Lyndon Johnson, two intensely complicated and devious presidents. That's why it was important for Ford to be reassuring.

FORD: Our long national nightmare is over.

SCHNEIDER: Inheriting Watergate and Vietnam, Ford aimed to be a healer. He saw the Nixon pardon as a healing gesture, a way to avoid the trauma of a long criminal trial.

FORD: It would have been a traumatic incident in the country for three to five years.

UNIDENTIFIED MALE: He came down the steps...

SCHNEIDER: They say laughter is the best medicine. President Ford's clumsiness became a national joke.

Comedian Chevy Chase made his name portraying the president as a stumble bum. Jokes about the pratfall president didn't come across as nasty, they were sort of endearing...

CHEVY CHASE, ACTOR: I just want to thank you for having me here. And I'm kind of embarrassed. And I hope you pardon me.

SCHNEIDER: ... especially when Ford was in on the joke.

Ford was actually an accomplished athlete and avid skier and golfer, a former college football player who was recruited by the pros.

FORD: When I got through Michigan, I was offered opportunities at the Green Bay Packers and the Detroit Lions.

SCHNEIDER: Gerald Ford aimed to be the antidote to Richard Nixon's imperial presidency. It worked. Perhaps too well.

The American public rates Ford the most average president in modern times. Sixty percent of Americans rate his presidency as average. More than any president since Franklin Roosevelt.

(END VIDEOTAPE) SCHNEIDER: Gerald Ford once called himself "a Ford, not a Lincoln." He wanted to showcase his humility, and it turned out to be an apt description. One historian called him "Not a Lincoln, but a pretty good Ford" -- Christine.

ROMANS: All right. Bill Schneider.

Thank you very much, Bill.

When we return, more on the death of President Ford. How will history treat President Ford's legacy? Three of the country's finest political analysts will join us.

Also, thousands of National Guard troops are patrolling our southern border with Mexico. We'll report on the impact of those troops on our illegal immigration and border security crisis.

And dozens of former lawmakers and their staffers are signing up for lucrative jobs as lobbyists representing corporate interests. We'll have a special report, "The Best Government Money Can Buy."


ROMANS: New evidence tonight that the use of National Guard troops to patrol the border with Mexico may be paying off. The Border Patrol says the presence of the Guard has contributed to a drop-off in the number off illegal aliens attempting to cross the border.

Casey Wian reports.


CASEY WIAN, CNN CORRESPONDENT (voice-over): It's a simple formula: 6,000 National Guard boots on the ground at the border, a handful of highly-publicized raids of illegal alien employers, and the end of the disastrous practice of catching then releasing non-Mexican illegal aliens. The result? A dramatic reduction in illegal crossings of our southern border.

Border Patrol apprehensions are the best available indicator of attempted illegal entries into the United States. Since National Guard troops arrived at the border in a support role in June, southwest border apprehensions have plunged 34 percent, compared to the same five-month period last year.

President Bush ordered the National Guard deployed to the border as a two-year stop gap until 6,000 new Border Patrol agents could be hired. New Mexico governor Bill Richardson criticized that move but now admits it's a success.

TIM MANNING, NEW MEXICO HOMELAND SECURITY DIRECTOR: The governor has been saying all along that increased border patrol, increased people on the ground at the border, is the solution to the border security issue. It's the job of the Border Patrol and the National Guard as a temporary solution until the Border Patrol can be brought on, is something that's needed and is working. WIAN: Illegal aliens and smugglers caught near the border tell agents they're well aware of the military presence. Although Guard troops aren't permitted to make arrests, illegal aliens perceive them to be more of a threat than the Border Patrol, according to a Homeland Security Department report. Still, some border security activists remain skeptical.

MICHAEL CUTLER, CENTER FOR IMMIGRATION STUDIES: Right now the National Guard on the border is nothing more than a Band-Aid, and it's a very flimsy one at that. I think it's more a matter of window dressing, and I don't think it's deterring as many illegal aliens as the president would like us to believe.

WIAN: But other signs indicate crossing is more difficult, including a 50 percent increase in fees charged by smugglers and complaints from farmers and others that they're struggling to find workers.


WIAN: The Department of Homeland Security says it deployed 1,500 new Border Patrol agents in 2006, 4,500 more are scheduled to be added in the next two years. Until then, National Guard troops will remain on the border -- Christine.

ROMANS: OK. Casey Wian.

Thank you very much, Casey.


ROMANS: The new Congress begins work next month. The shift in power on Capitol Hill is expected to create a whole new breed of, what else, corporate lobbyists. Many Republicans now out of work are shifting sides to working for big business instead of overseeing it.

Lisa Sylvester reports.


LISA SYLVESTER, CNN CORRESPONDENT (voice-over): K Street in Washington, D.C., is the home to the nation's largest lobbying firms. It's just a few miles from the Capitol, but the distance seems a lot shorter thanks to the revolving door. Lawmakers and their staffers switching sides from overseeing the industries to being a major player for the industries.

ALEX KNOTT, CENTER FOR PUBLIC INTEGRITY: Well, it basically gives money to interests more clout. Basically creates a megaphone for them to be heard with these other members of Congress.

SYLVESTER: When the Medicare bill was before Congress, then chairman of the House Energy and Commerce Committee, Billy Tozan, helped shepherd it though. He now heads the pharmaceutical industry's lobbying group. That revolving door is set to swing again. With the Democratic sweep in November, Republican lawmakers and their staffers are shopping their resumes around town, much the way Democrats did in 1994 when they were booted out of office as part of the Republican revolution.

At least 39 members of Congress who left office that year later registered as lobbyists, according to Public Citizen. The president of the watchdog group says the public good may be put on the back burner for personal gain.

JOAN CLAYBROOK, PUBLIC CITIZEN: Both members of Congress and staff, if they're thinking of leaving and they're seeking a job after they go, they're going to be careful not to insult and also to help those firms that they want to go to.

SYLVESTER: Democrats are vowing to clean up Washington. Under one proposed change, lawmakers and their staffers would have to disclose if they're negotiating for a new job with an industry that they are now in charge of regulating.


SYLVESTER: There's also a proposal to extend the so-called cooling off period. Right now, lawmakers and their staff cannot have any direct lobbying contact for one year after they leave the government. That ban could be extended to two years -- Christine.

ROMANS: All right. Lisa Sylvester in Washington.

Thank you, Lisa.

And that brings us to our poll question tonight.

Do you believe a one-year cooling off period is adequate before lawmakers and their staff become lobbyists? Yes or no?

Cast your vote at We'll bring you the results later on in the broadcast.

Coming up, two Iranians detained by U.S. forces in Iraq may have posed a serious threat to our troops. We'll have a special report.

Denver braces for a repeat of last week's blizzard that dropped some two feet of snow on the city. Another blast of severe winter weather is headed its way.

We'll have the latest.

And remembering the 38th president. We'll have more on the life and public service of President Gerald Ford.

Stay with us.

(COMMERCIAL BREAK) ROMANS: Three more of our troops have been killed in separate incidents in Iraq, and one soldier has died at a military hospital in Germany.

Ninety-two of our troops have been killed or have died in Iraq so far this month. 2,981 of our troops have been killed or died in Iraq since the war began. 22,565 of our troops have been wounded, 10,107 of them so seriously they could not return to duty within three days.

And in other violence today in Iraq, a car bomb near an Iraqi army checkpoint in Baghdad killed eight people and wounded at least 10 others. And more than 40 bodies, all victims of sectarian violence, have been found in the Iraqi capital.

Two Iranians tonight are being linked to attacks against American troops in Iraq. The two were detained by U.S. forces during raids in Baghdad last week.

Barbara Starr has our report.


BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): CNN has learned there is evidence that two Iranians the U.S. military is now holding in Iraq are involved in bringing deadly IED technology into the country, including the type of armor-piercing bombs that have killed hundreds of American troops.

The Iranians may have been in Iraq at the invitation of President Jalal Talabani. They were seized in an early-morning raid at a Baghdad compound, along with others on December 21st.

MAJ. GEN. WILLIAM CALDWELL, SPOKESMAN, MULTINATIONAL FORCE, IRAQ: We did seize on the site additional items such as documents, maps, photographs and videos.

STARR: In a written statement, the U.S. military said some of the material seized directly linked the Iranians to attacks on U.S. forces. The statement said that "Debriefing of the detainees and investigation of the seized materials has yielded evidence linking some of the individuals being detained to weapons shipments to illegal armed groups in Iraq."

The U.S. says Iran is providing advanced IED technology to Iraqi Shia militia groups. Recently, the top U.S. commander directly accused Tehran.

GEN. JOHN ABIZAID, U.S. CENTRAL COMMAND: It's clear that money is coming in through their intelligence services. Training is probably being conducted inside Iran through various surrogates and proxies. But I think it's very clear that the Iranian revolutionary guard force is trying to destabilize the situation in Iraq.

STARR: December already is the second deadliest month of the year for U.S. troops, with at least 90 killed in action. Military sources tell CNN the sophistication of the attacks continues to grow. Even before a strategy change is announced, commanders say they are pressing the Iraqis to make changes.

CALDWELL: The one significant difference that is occurring here is you're going to see the government of Iraq in the lead.

STARR: But there is great caution.

CALDWELL: There are still significant shortcomings in the Iraqi security forces. Iraqi security forces suffer from deficiencies in logistics, leadership and, in some cases, loyalty.


STARR: And U.S. commanders say they do expect the levels of violence in Iraq to remain high for sometime to come -- Christine.

ROMANS: All right. Barbara Starr.

Thank you, Barbara.

A vote by Iran's parliament today is likely to result in Iran reducing its already limited cooperation with the International Atomic Energy Agency. Iran's move comes just days after the U.N. Security Council decided to impose sanctions for Iran's refusal to stop its uranium enrichment program. Some Security Council members, including the United States, believe Iran is using that nuclear program as a cover while it develops nuclear weapons.

Ethiopian and Somali government troops today are advancing toward Mogadishu. Radical Islamist forces have been withdrawing as the government troops -- as government troops near the Somali capital.

Somali government officials believe the Islamist forces will collapse and no assault on Mogadishu will be necessary. The radical Islamic Courts movement had gained strength in Somalia in recent months. But since Ethiopian troops entered the conflict on the side of the Somali government last week, the Islamists have been withdrawing. The United States is voicing support for the Ethiopian operation, saying that Ethiopia has genuine security concerns with the rise of radical Islamist forces in neighboring Somalia.

Turning now to some of your thoughts. .

Mike in Kentucky, "The passing of Gerald Ford is a sad day for our country. I know of no other Republican president who deserved and earned more respect from both parties. This country needs more honorable men like President Ford today."

Dawn in West Virginia, "Neither party seems to understand what illegal immigration and our pathetic trade policies are doing and will continue to do to our nation. The slide to third world status is coming sooner than most Americans can conceive of."

E-mail us at We'll have more of your thoughts later on in the broadcast. Each of you whose e-mail is read here on the program will receive a copy of Lou's best-selling new book, "War on the Middle Class."

Coming up, a look back at the life and legacy of President Ford. Three of the nation's top political minds will join me with their thoughts about our 38th president.

Then, he says China's rapid economic growth is a threat to the entire world. Peter Navarro, the author of "The Coming China Wars," will join us.

And the West braces for another winter storm. We'll have a full report, including the forecast for Denver, which is still digging out from last week's blizzard.

Stay with us.


ROMANS: In the last half hour, the family of former President Gerald Ford has announced details of his funeral arrangements.

Dan Simon, in Palm Desert, California, reports from near President Ford's home and has the latest for us -- Dan.

SIMON: Well, Christine, we just learned that there are going to be five services between Friday and Wednesday in California, Washington and Michigan. There will be ample opportunity for the public to pay their respects in all three locations. The first, beginning here Friday afternoon at the Ford's family church here in Palm Desert, California.

Just a short time ago, a family spokesperson read a letter written by Betty Ford.


GREGORY D. WILLARD, FORD FUNERAL REPRESENTATIVE: My family and I are touched beyond words by the outpouring of affection and the many wonderful tributes we have received following the death of my husband.


SIMON: Christine, in terms of the basic chronology, what's going to take place is on Friday, there will be a public viewing at the Fords' Episcopalian church here in Palm Desert, California. And then on Saturday, his body will be flown to Washington, D.C., where he will lie in state. There will also be a service at the National Cathedral. And then he will be flown to Michigan, where Mr. Ford will be buried at his museum in Grand Rapids, Michigan.

So a lot happening between now and on Wednesday. It's all going to be taking place with military precision. And we are told the family, of course, was actively involved in how everything is going to proceed. And again, those details now just emerging -- Christine.

ROMANS: All right.

Dan Simon in California.

Thank you, Dan.

President Ford entered office at a time of great national turmoil over the Watergate Scandal and the war in Vietnam. President Ford's mission was to heal those divisions. In doing so, he defined his own political legacy.

Jeff Greenfield is here with our report -- Jeff.


Well, most of the focus on Gerald Ford's presidency will be on Watergate, for obvious reasons. That is what brought Ford to the White House. It was the wound that required, as Ford put it, a time to heal.

But there are some significant political legacies to Ford's public career. For instance:


GREENFIELD (voice-over): When Richard Nixon chose House Minority Leader Ford to replace Vice President Agnew, who had resigned in the wake of a bribery scandal, he thought it was a masterstroke, that it would gain him approval in the Congress. In fact, the choice doomed Nixon. Had the polarizing Agnew remained a heartbeat away, it is highly unlikely the Democratic Congress would have pushed Nixon out and put Agnew in the Oval Office.


GREENFIELD: Here's another. When Ronald Reagan challenged Ford for the Republican nomination in '76, Ford barely survived. No incumbent president in modern times came that close to losing his party's nod.

Ford was forced to dump Vice President Rockefeller, the symbol of the Eastern liberal, elite Republican, and replace him on the ticket with Senator Bob Dole. And while Reagan's half-hearted backing of Ford may have Ford politically, the increasingly conservative base of the GOP never held this against Reagan when he won the White House four years later.

Some of the political fallout from the Ford years continues to this day in very significant ways. Ford's chief of staff, the youngest ever, was Dick Cheney. Ford's defense secretary was Donald Rumsfeld. Both saw the Congress respond to President Nixon's use, or misuse, of executive authority by sharply curbing presidential power.

The Congress cut off funding for South Vietnam. Its hearings into CIA abuses put sharp limits on intelligence agencies. Cheney, in particular, saw this as a dangerous incursion into presidential power. And, as vice president, he, along with Rumsfeld, in his second tenure as defense chief, pushed executive power to the limit. GEORGE H.W. BUSH: No policy bias.

GREENFIELD: Ford's CIA director was George Bush, the first one. He responded to conservative complaints about CIA intelligence gaffes by appointing the so-called Team B, which produced grave warnings about Soviet power, warnings whose accuracy has been much debated.

But the controversy produced a strong belief, particularly among so-called neoconservatives, that the CIA was risk-averse, unwilling to properly spot danger.

This was one reason why Rumsfeld and Cheney were so involved in the run-up to the Iraq war in intelligence matters. Their critics charge that this led to an eagerness to accept the idea that Saddam had weapons of mass destruction.


GREENFIELD (on camera): In his later life, Gerry Ford teamed up with his old adversary Jimmy Carter to push a variety of political and civic and reforms, which is just another reason why Gerald Ford was held in such unusual affection on both sides of the political aisle.

ROMANS: Well, a real bipartisan spirit, right?

GREENFIELD: Yes, it was -- you know, he often joked that he and his adversaries would fight all day and go out and have a beer. And you do not see that in the House of Representatives in the last decade or so. It's a much more poisonous place.

ROMANS: All right.

Jeff Greenfield.

Thank you very much, Jeff.


ROMANS: In other news tonight, another powerful winter storm is barreling across the West. The High Sierra and Western Nevada are picking up after this system toppled trucks and snarled flights.

Denver, meanwhile, is still digging out from last week's winter blast. Emergency services say they're preparing for up to another two feet of snow. They want no repeat of last week's airport shutdown that stranded thousands of holiday travelers.

More controversy tonight over a new airport x-ray screener capable of revealing intimate body parts. The machine has now been modified so it only shows cartoon-like black and white images of passengers. Critics, including the ACLU, complained that use of the machine would constitute an invasion of privacy.

But now there are new complaints. Experts say the modified machines would miss plastic explosives, a small amount of which could blow up a jet. A top Russian prosecutor says the poisoning death of a former spy may have been the work of a fugitive oil company executive. That executive is Leonid Nevzlin, former manager of the Russian Yukos oil firm. That company is bankrupt and its owner is in jail.

Nevzlin now lives in Israel, but a spokesperson says the charge is fabricated. He also says that Alexander Litvinenko was investigating alleged wrongdoing by Russian authorities in connection with Yukos.

The former Russian agent died November 23rd from a lethal dose of radiation.

Still to come, a sinister look at the threat posed by communist China. Our guest tonight says it's a threat every bit as dangerous as al Qaeda.

And the legacy of Gerald Ford. A very special political round table includes a member of the Ford White House.

Stay with us.


ROMANS: My next guest says China is a threat to the U.S. and the entire world. In his new book, "The Coming China Wars," Peter Navarro outlines the devastating impact, potentially, of China's rapid economic growth on our financial markets, our jobs and our wages.

Peter Navarro joins me now.

Welcome to the program.

PETER NAVARRO, AUTHOR: Great to be here, Christine.

ROMANS: The book opens in the introduction with sort of a mock press release from the year 2012, where you sort of outline, basically, a worst case scenario of the United States and China at economic loggerheads, with China saying they're not going to support our spend-thrift ways anymore, they're not going to buy our debt, they're selling our assets on the open market. It would be catastrophic.

Is that a worst case scenario? Is that just something to get attention?

NAVARRO: I think 2012 may be too far away. It may happen sooner. And basically what the Chinese is are doing now, is as we buy things in Wal-Marts and Costcos, that money goes abroad to China. It comes right back. And they use it to buy our government bonds. They're basically financing our budget and trade deficits. And that keeps their currency artificially low so they can drive their export machine, ours high.

And as soon as there's going to be conflict between China and the U.S., what they can do is threaten us by dumping those dollars on the market. That will drive down the value of the dollar, inflation goes up, interest rates go up. We've got big trouble.

And there's all sorts of areas where conflict can manifest itself right now.

ROMANS: Sure. Because with China, it's never sort of a one- dimensional kind of issue. When you're talking about China, you're talking about politics and economics and military. And all kinds of issues are all tied up into one. With those dollars that are being recycled, they're also modernizing their military in a way that is not transparent. We've had different issues of corporate espionage, of all kinds of issues that really don't seem to be getting the attention in Washington they should.

NAVARRO: And I think the -- we have to start with what's called the China price. The China price is the ability of Chinese manufacturers to undercut the U.S. and global competitors by 50 percent or more. And the question is how do they do that? And some of it is fair trade. Some of it is the fact that they have a well- disciplined labor force and they have a huge amount of labor so it keeps wages low.

But the fact of the matter is, my research clearly indicates that on four different fronts, they're flagrantly engaging in unfair trade practices. The currency issue is the one which I think we're all familiar with, but five years after they've gotten into the World Trade Organization, they continue to flagrantly violate those rules with massive export subsidies and dumping.

Counterfeiting and piracy is a huge issue. You know what? If you're a manufacturer and you steal intellectual property, you don't have to pay R&D, you don't have to pay marketing expenses to promote brands. That's a cost advantage as well.

And, of course, the worst environmental and health and safety standards of any big country in the world, all these add up to cost advantages. It's costing the United States. And this administration, since it's taken office, has been totally focused on the Middle East. There's problems there, yes, but I believe that the economic threat from China can be worse over time and we, as a country, are not dealing with it.

ROMANS: Now, why are we told time and again by -- well, the past administration, this administration for a long time now -- that China is a strategic partner and that we don't have to fear China, that we should engage them on multiple levels and we just don't understand the relationship?

NAVARRO: Because they're funding our budget and trade deficits and we don't want to rock the China boat, but let's just look at some recent events. Iran, we have an Iran that's bent on developing nuclear weapons, which it threatens to use in the state of Israel. And even if they don't use it on Israel, it's destabilizing because it's forcing the Saudis to contemplate the same kind of thing.

What's going on? The Chinese have been working with the Iranians for over a decade, giving them sophisticated weapons, nuclear technology. What do they get in exchange? They get access to oil resources. The Chinese are going in with the Saudis trying to get oil from the Saudis. They're one of the U.S.' main suppliers. They're going down to Venezuela, working with Hugo Chavez, the dictator who's anti-American.

These are the kind of things that are going on and the politicians, both on Capitol Hill and in the White House, are distracted and not paying attention.

ROMANS: What about this most recent -- not a trade mission, we're told by the Treasury Department. It was not a trade mission, but this big conversation, strategic dialogue between half a dozen of the president's cabinet members, top officials on trade and the environment from the Bush administration in China? What do you make of that?

NAVARRO: Well, Christine, the big thing was the fact that the Federal Reserve chairman, Ben Bernanke, went along. That's highly unusual because the Fed is supposed to be independent. You look at the press leading up to that trade summit -- and that's exactly what it was -- they were supposed to bring home the bacon.

Hank Paulison told Chuck Schumer in the Congress back in September, don't pass protectionist trade legislation because we're going to take care of the problem. They went over in December and they got nothing. That was an absolute failure.

And what's going to happen in '07, I think it's -- I call it kind of comically the year of the protectionist wrath, because what the administration and Hank Paulison have done is basically said to Congress, hey, we can't deal with the Chinese, now it's your turn. And that means protectionist tariffs, and that -- and then what does China do? They start dumping the dollar.

ROMANS: When -- a great quote and I wish I could remember who said it, but "One man's protectionism is another's economic survival." And who really is the protectionist here? I mean, is China an economic protectionist but we're so afraid in this country of being called a protectionist that we allow trade policies just to perpetuate the problem?

NAVARRO: China is a classic example of what we call in economics a mercantilist. They thrive on an export-driven economy. That's their whole mission. And my research clearly shows that half of the China price advantage, half of that advantage is pure, unfair trade practices that violate every international norm and standard.

And the U.S., the Treasury Department says oh, they're not a currency manipulator. The Treasury Department says oh, they're not dumping. And in fact, they're doing all these things. Why? It's because the Treasury Department is worried about funding the budget deficit and they don't want to rock the China boat.

ROMANS: And last quick question. We're also told over and over again by people who watch this, by people who are -- I guess you could call them China apologists or you could call them people who are bullish about...

NAVARRO: The panda huggers. There you go.

ROMANS: ... a democratic China, but they say we need to help shape China's rise and we need to do that with them, and that by doing business with them and being with them, it's going to be better in the long run.

NAVARRO: Look, there's a way for the U.S. and China to have a wonderful, prosperous future. There's no question about that. But the way isn't the way of unsustainable growth. China's own leadership has admitted to the fact that the rate of growth in China is unsustainable.

And to the extent that the U.S. fuels that unsustainable development by refusing to deal with all the unfair trade practices doesn't do either side any good. So what we need is courage on both sides. We need fair trade and free trade. We don't need what we have know. We need to pay attention to this.

ROMANS: OK, courage, fair trade and free trade. We'll leave it there.

NAVARRO: Thank you.

ROMANS: Peter Navarro, thank you so much. The book is called "The Coming China Wars." It's an excellent read. Thank you, sir.

Coming up, with the death of former President Gerald Ford, it's a time for reflection. When we come back, we'll be joined by our political panel. One member of that panel worked in the Ford administration. Stay with us.


ROMANS: It is a significant day in our presidential history. Joining us tonight with some insight, former member of the Ford administration and political director for President Reagan, Ed Rollins, syndicated columnist Miguel Perez, and author of the book "Building Red America," Thomas Edsall.

Welcome to you all.

I want to first start with you, Ed, because you knew this man, worked for him. You were on the Hill during his administration. Can you give me any kind of sense of what kind of man he was? Maybe an anecdote to help illustrate?

ED ROLLINS, REPUBLICAN STRATEGIST: He was a very decent man. There aren't any Gerry Fords around today. Probably a Denny Hastert comes the closest in the sense of someone who is well-loved by both sides. He was not -- he was a partisan, but not a partisan in the sense that he fought you day and night.

He was more in the Bob Michael, John Rhodes and Ford was certainly the leader of that. We fought all day and at night you went out and you socialized and you didn't make enemies. I think he's one of the most beloved men that I've known around Washington and I think decency is the word that most people would use.

He was a man of real courage and integrity. I don't think anybody ever questioned -- his word was his bond. And on the Hill, at that point in time, that was very, very important.

ROMANS: Sort of an icon of the greatest generation, when you look back at sort of his resume, you know, a father, and a patriot, and a Navy officer, and a Congressman reelected 12 times. You know, you say they don't make them like that anymore?

ROLLINS: Well, you know, maybe they do but you don't see them. They came up in a different way. I mean, obviously, many of these are the World War II generation who went off and served their country. They started in local politics. They weren't multimillion dollar campaigns. You didn't go out and hire campaign consultants. You basically sort of did it yourself, knocking on doors, running on the local order.

This was a guy, when he was the leader, went out and campaigned a couple hundred nights a year for his fellow members of Congress, which is sort of unprecedented, asking for nothing more than to help them get elected.

And I think, unfortunately, it created tragedy in his own family and his wonderful, supportive wife, obviously, developed an alcoholic problem because she wasn't there all the time. And they made that very public and they resolved it. They were ordinary people who rose to the highest job that he never sought and I think served this country very, very well.

ROMANS: You bring up Betty Ford and that's interesting because it was sort of part of his legacy. The first, I guess, of that generation to be public about what, I guess, a long time ago was considered a personal weakness. And she sort of brought it out and said, no, this is an illness that can be treated. That's also part of the legacy of this president.

MIGUEL PEREZ, SYNDICATED COLUMNIST: She was just as courageous as he was. And I was in college, just finishing my -- graduating from college as he took over as president. And I learned to admire the man.

In the beginning, when he pardoned Richard Nixon, I was outraged. And later on, I came to realize that he was right and I was wrong. It was the right move. He healed the nation. Imagine what we would have gone through in this country if he had not pardoned Nixon. The prosecution of a president, what image that would have taken -- cost for us around the world. He was a healer. He was selfless. He was a very, very honest man, just the right man at the right moment.

ROMANS: Thomas, we keep hearing the word healer all day today. We also keep hearing bipartisanship. This was a guy who could battle it out with another legendary personality, Tip O'Neill, on the floor of the House and then go and have a beer that night or even pick up his kids the next day in the family carpool. Is that spirit of bipartisanship, is it gone? Could it come back? Was it remarkable?

THOMAS EDSALL, AUTHOR: Well, really what he did was to set the stage for a much more partisan Republican Party. His defeat was really the defeat of the remnants of the moderate wing. He had picked Nelson Rockefeller as his vice president, who he had to drop.

He set the stage both by his defeat being a setback to that moderate wing, the Rockefeller wing. But also it put a Democrat in office at the worst possible time. Jimmy Carter had the gas shortages, he had the hostage crisis. He had inflation rates and interest rates up to 19 percent. And all that was perfect ultimately for the election of Ronald Reagan. So he was a very significant transitional president from one kind of Republican Party to another.

ROMANS: Ed, and when you look at those names in the Ford administration, the Ford era, a lot of them are here today. Did he, I guess, help raise up the current...

ROLLINS: Well, he did. I mean, obviously Dick Cheney was someone who came of age, who was a very young intern working for Rumsfeld at 31, 32, was the deputy chief of staff, became the youngest chief of staff at 33, was a very professional man.

Rumsfeld, obviously. Bush, even though he had been a minor player in the Nixon administration, really took a more major role as the CIA director under Ford. I think one of the key things -- and not to take issue with Tom. Tom's a very dear friend of mine.

ROMANS: You can take issue.

ROLLINS We've taken plenty of issues in the past. But the bottom line is, I think Ford was the last of the centrists. He supported civil rights. He supported a lot of very important things that Republicans were known for, more for the Midwest Republicans. Reagan was more the west, the Goldwater era.

But I think the key thing is -- and where he was very unselfish is he could have held off for two or three months and not issued the pardon. The political thing to do would have been to wait till the '94 elections had come and gone. Here's a guy who had a 78 percent approval rating a month after he was in office, but he chose to stop the process and to move on by pardoning him in September.

And his party, which he loved, he had been a man of the House -- took tremendous loss, 49 seats in the House, including his seat that had been held by Republicans forever. And so I think the bottom line is he didn't do what was political. He did what he thought was in the best interest of the country. And that's a big step forward.

PEREZ: We could use a lot more Republicans like Gerald Ford nowadays. You know, I miss the moderate Republican. I think we need them, centrists. Well maybe in 2008 we may have one or two running for president.

But you know, that move away from moderate Republicans, that move toward conservatism really hurt the nation, in my opinion. And also, having lost to Jimmy Carter, I was not an American citizen when Gerald Ford ran against Jimmy Carter.

I would have voted for Mr. Ford, I'm sure. But he gave way to the worst president, in my opinion, in my lifetime, Jimmy Carter, in my opinion, was a terrible president. So what did we elect when he got rid of Gerald Ford? I think it's regrettable.

ROMANS: Tom, let me ask you a quick question about I guess the presidency there and the decision making and maybe Ed is a good person to close out on this.

Could a president today make the kind of decisions and have the kind of an Oval Office that he had then? Is it much more consensus driven, much more poll driven now than it was then? Has the presidency changed since Gerry Ford's day?

EDSALL: Oh, It's changed tremendously. The president has a much more calculating staff. The whole operation is guided by political strategy. There is not this sense of a president being the healer of the nation or the father of the nation. There's much more, he is the chief political operative or political agent of his political party. So all that has changed very radically since Ford was there.

ROLLINS: One of the great things Ford would do is when Ford was campaigning, he'd call up a bunch of his old cronies, his friends on the Hill, he'd say, "Come on, I'm going out today to campaign in Colorado." They'd get on Air Force One, and they'd have a nice lunch and a couple of martinis and he'd say, "What's going on Hill?" And he'd go out.

Unfortunately sometimes when you had a martini or two, he'd talk a little longer than he probably should. But he didn't care. This was who he was and he wasn't about to be programmed -- or he wasn't about to be driven by pollsters or any of the rest of it.

ROMANS: Ed Rollins, Miguel Perez, Thomas Edsall, thank you, everyone, for joining us. Thank you very much.

Still ahead, the results of tonight's poll and more of your thoughts.


ROMANS: Now the results of tonight's poll, 75 percent of you do not think that a one-year cooling off period is enough time before former lawmakers should be able to become corporate lobbyists.

Time now for some of your thoughts.

Lucinda in New Jersey: "Two thumbs up for the mayor of Hazleton, Pennsylvania. It's nice to see that someone in politics knows the definition of illegal. I hope he wins his fight for what is right."

Marcia in Illinois: "Senators McCain and Kennedy need to revise immigration one more time. Just hang out citizenship certificates at all our borders and airports, along with a blank check from the American taxpayers." Thanks for being with us tonight. For all of us here tonight, good night from New York. "THE SITUATION ROOM" starts right now with Ed Henry and Suzanne Malveaux -- Ed, Suzanne.