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Lou Dobbs Tonight

Big U.S. Offensive in Iraq; Baghdad Bomb Kills 78 People; Mideast Chaos: Bush-Olmert Summit Meeting

Aired June 19, 2007 - 18:00   ET


LOU DOBBS, HOST: Tonight, rising anger among Hispanic and black Americans over efforts by the Bush White House and the Democratic leadership to impose amnesty on the U.S. Senate and American citizens.
We'll have that special report.

Also tonight, new fears that unscrupulous employers could exploit gaping holes in the amnesty legislation to import even more cheap foreign labor to drive down wages and force more Americans out of work.

We'll have the story.

The Bush administration announcing restrictions on exports that could help communist China's military. But critics say those rules will do absolutely nothing to stop Chinese spies from stealing America's most sensitive military secrets and technology.

And the director of the Congressional Budget Office joins me here tonight. We'll be discussing the huge and unacknowledged cost of the Senate's so-called grand amnesty plan, a plan the Congressional Budget Office says is hardly effective.

All of that, all the day's news, and much more, straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Tuesday, June 19th.

Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody.

Our troops in Iraq tonight are taking part in one of the biggest offenses against insurgents in nearly three years. Our troops are battling to retake the city of Baquba in Diyala province from the al Qaeda. Al Qaeda took control of Baquba after the arrival of U.S. reinforcements in Baghdad. The terrorists are using Baquba as a base for their attacks against the Iraqi capital.

Jamie McIntyre now has the report from the Pentagon -- Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Lou, one objective of what's been dubbed Operation Arrowhead Ripper is to disrupt the al Qaeda networks responsible for the bombings like the one today that have made Baghdad one of the most dangerous cities in the world.


MCINTYRE (voice over): The immediate target is Diyala province, just northeast of Baghdad. Backed by helicopters, warplanes and artillery, a combined U.S.-Iraqi force of more than 3,000 troops moved into the capital, Baquba, under cover of darkness, into a dangerous urban battleground laced with powerful explosive booby traps.

MAJ. GEN. BENJAMIN MIXON, MULTINATIONAL DIVISION, NORTH: We had a tactical surprise against the enemy last night when we moved in, and our soldiers have already successfully disengaged up to 10 of these very large IEDs, with no damage and no casualties caused to our soldiers.

MCINTYRE: The U.S. says it rounded up almost two dozen suspects, and the U.S. general in charge of Diyala says in an exclusive interview with CNN it will now be the job of Iraqi forces to secure the city while U.S. troops keep up the pressure on al Qaeda.

MIXON: That will then allow us to move outside of Baquba to do detailed operations in the areas where we believe the enemy will move from once we defeat him in Baquba.

MCINTYRE (on camera): And every time you put pressure on al Qaeda, on Sunni insurgents, on Shia insurgents, they simply move someplace else. Where would they go from here?

MIXON: Well, the nature of this enemy, he will hide in the farmlands and palm groves. But there's a difference this time. We have the support of many of the locals that live in the area, the sheikhs that are in the area. He's going to have a tough time finding a place to hide following and during this particular operation.

MCINTYRE (voice over): But Diyala province is much more diverse than Anbar province to the west, where Sunni sheikhs recently allied with the U.S. against al Qaeda. So Mixon concedes it will be harder to win and keep local support.


MCINTYRE: And in the short term, General Mixon concedes that al Qaeda will likely just pick up its bomb-making operations and move it elsewhere. That's why it's important, he says, to pursue them. And General Mixon knows he's got months, not years to show some real progress -- Lou.

DOBBS: Jamie, General Mixon, as you've reported, is among those generals who said he didn't have enough troops to carry out his mission. His feeling now?

MCINTYRE: Well, he says he has them now. He got extra troops after making that complaint. In fact, he'd been watching this al Qaeda activity for a while but really couldn't move against it until he had those additional forces. And he said to me today that he's going to make another assessment, and he still needs more troops. He's going to ask for those as well.

DOBBS: Jamie, thank you very much.

Jamie McIntyre from the Pentagon.

As our troops hunt al Qaeda terrorists north of Baghdad, insurgents killed 78 Iraqis in a massive truck bock explosion in the Iraqi capital. It was one of the worst bomb attacks in that city this year.

Hala Gorani reports from Baghdad.


HALA GORANI, CNN CORRESPONDENT (voice over): A few days of relative calm in Baghdad shattered to pieces. A massive truck bomb explodes outside a Shiite mosque, killing dozens and injuring over 200 people. This is the second attack on a major Shia shrine in less than a week.

Last Wednesday, the al-Askariya mosque in Samarra was target by suspected al Qaeda insurgents, turning the mosque's two minarets into piles of rubble. Several days of total curfew kept the violence at relatively low levels, but Monday's brash attack in central Baghdad is re-igniting fears sectarian reprisal killings will further plunge the country into a Shia-against-Sunni bloodbath.

As they capital reeled from this latest attack, the U.S. military continued a major offense in Diyala province, a major al Qaeda stronghold. In an operation dubbed Arrowhead Ripper, 10,000 U.S. troops are on an all-out offensive to root out insurgents and dismantle factories that manufacture the car bombs and IEDs that continue to wreak havoc in Baghdad and in other major Iraqi cities.

Monday's truck bomb attack highlighting the difficulty of controlling the violence that kills Iraqis by the hundreds every month, while the number of U.S. troops who have died in combat has continued to climb since the U.S. military's troop increase strategy started in earnest a few weeks ago. Warnings from top U.S. officials that more offensive operations will mean more casualties may already be coming true.

Hala Gorani, CNN, Baghdad.


DOBBS: Insurgents have killed three more of our troops. Two of them in Baghdad, one in Diyala province.

Fifty-three of our troops have now been killed in Iraq this month, 3,530 of our troops killed since the beginning of the war. 26,129 of our troops wounded, 11,742 of them seriously. President Bush today focused on another crisis in the Middle East, the aftermath of the Hamas military victory in Gaza. President Bush and the Israeli prime minister today met at the White House. They agreed to work together to strengthen Palestinian President Abbas. The United States and Israel say Hamas is a terrorist group.

Ed Henry has our report from the White House.


ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): President Bush and Israeli Prime Minister Ehud Olmert were united in their outrage at the violence in Gaza.

EHUD OLMERT, ISRAELI PRIME MINISTER: I'm sure that many people in the world were astounded by the brutality and the cruelty and the viciousness of the Hamas murders that killed so many Palestinians in such a way.

HENRY: United, too, in their support for a new round of Israeli/Palestinian peace talks, as well as efforts to prop up Palestinian President Mahmoud Abbas.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He is the president of all the Palestinians. He is -- he has spoken out for moderation. He is a voice that is a reasonable voice amongst the extremists in your neighborhood.

HENRY: In 2003, the president promised the Iraq War would help stabilize the Mideast.

BUSH: Success in Iraq could also begin a new stage for Middle Eastern peace.

HENRY: But with critics charging the war has done the opposite, the president is now warning failure in Iraq could make the Mideast crisis worse.

BUSH: If we were to fail, then all of a sudden these extremists would have safe haven, extremists in the Middle East would be emboldened by the failure of those of us who live the nice, comfortable existences not to help those who are struggling for freedom.

HENRY: A president who has faced heat for not doing enough to win the hearts and minds of Iraqis says he has the solution to defeating extremists throughout the Mideast.

BUSH: We can only defeat them so much militarily. We have to also defeat them with a better idea. It's a better that's being practiced by our friend Israel. It's called democracy.


HENRY: But the White House is now facing tough questions about why it didn't do more sooner to help President Abbas and why it didn't move earlier to have a sustained rather than sporadic approach to brokering Mideast peace -- Lou.

DOBBS: And did the White House proffer any answers to those questions?

HENRY: Well, on Mideast peace, broadly speaking, they insist that from the beginning they've been trying to make it work. But as you know in 2001, the White House was very blunt in saying that they didn't want to take the approach the Clinton administration did. They felt that raised expectations too much, and they didn't want to have as much of a hands-on approach -- Lou.

DOBBS: Well, certainly high expectations are no longer an issue.

Ed Henry, thank you very much, reporting from the White House.

HENRY: Thank you.

DOBBS: Another abrupt resignation at the White House today. The White House budget chief, former congressman Rob Portman, former U.S. trade representative, stepping down.

Portman says he wants to spend more time with his family. The president wants to replace Portman with another former congressman, Jim Nussle.

This is the second high-level departure from the White House this month. White House counselor Dan Bartlett announcing his resignation the first of the month.

Up next here, a rising number of Hispanic and black Americans are simply furious with the Bush administration's attempted amnesty agenda.

Also tonight, disturbing new concerns about the devastating impact of that amnesty legislation on middle class Americans.

And new charges the Bush administration has failed to stop U.S. exports that could help communist China's surging military.

Stay with us. We're coming right back.


DOBBS: Hispanic and black Americans today speaking out against the Senate's so-called grand bargain on immigration. Groups opposing the amnesty agenda are in Washington now making their views clear to both the Senate and the White House.

Lisa Sylvester has our report.


LISA SYLVESTER, CNN CORRESPONDENT (voice over): Opponents to the amnesty plan are pushing back, determined to beat the Senate immigration proposal. Among those protesting are two groups representing black Americans and legal Hispanics who played by the rules. They call themselves Choose Black America and You Don't Speak for Me.

MIGUEL CRUZ, YOU DON'T SPEAK FOR ME: And yet, illegal aliens have the illegal edge and the illegal advantage over our poor because illegals will illegally take these jobs at half the illegal pay if illegally necessary.

SYLVESTER: Claudia Spencer immigrated from Mexico legally. Two years ago she became a U.S. citizen. But now she says she's demoralized because what she patiently waited for could be given away.

CLAUDIA SPENCER, YOU DON'T SPEAK FOR ME: Today, amnesty looms as perhaps the greatest wrong that could befall hundreds of millions of loyal Americans -- past, present and future.

SYLVESTER: The groups say minorities, the working poor, and high school dropouts could be in direct competition with new workers legalized under the Senate plan.

According to the Bureau of Labor Statistics, nationally the unemployment rate for Caucasians is only 3.9 percent. For Hispanics, it's 5.8 percent. For African-Americans, 8.5 percent.

TERRENCE LANG, CHOOSE BLACK AMERICA: Let's face it, primarily this is going on in the inner city. It's not going on in Ted Kennedy's neighborhood. It's not going on behind the gates of Bel Air and Beverly Hills. No, it's happening in the inner city.

SYLVESTER: The Senate bill was blasted as a bonanza for big business looking for cheap labor and for the political parties searching for new voters. Activist Terrence Lang summed up their message with this line: "This nation belongs to the people. We don't build a people for the government. You build a government for the people."


SYLVESTER: Now, the groups not only criticize the immigration proposal, but they had some sharp words for the Congressional Black Caucus and the Hispanic Caucus, saying they are putting the interesting of illegal aliens over the interests of millions of legal Americans who could find themselves out of work if the Senate bill ever becomes law -- Lou.

DOBBS: Lisa, thank you very much.

Lisa Sylvester from Washington.

Leading Republican congressmen today proposed immigration legislation that emphasizes border security. The Secure Borders First Act introduced by Congressman Peter King and Congressman Lamar Smith. Their legislation calls for security of the border, first and foremost, as a matter of national security, no legalization for illegal aliens in the United States, no amnesty, and enforcement of our existing immigration laws.

The congressmen say the public will not accept the Senate's amnesty legislation, and their bill is a more basic and realistic approach to the crisis. Congressman Smith said the status quo is intolerable, and in his words it would be immigration reform just to enforce current law.

The new proposal is the subject of our poll tonight.

Do you believe the Secure Borders First Act introduced by Congressman Peter King and Congressman Lamar Smith is a more sensible and effective approach to comprehensive immigration reform?

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

Let's take a look at some of your thoughts now.

Hundreds of you e-mailing us in response to our poll question last night in which we asked, do you consider yourself a Republican or Democrat or Independent?

Bob in Pennsylvania said, "Hi, Lou. Your poll asks the question, 'Do you consider yourself a Democrat, Republican or Independent?' I consider myself disgusted!"

And Terry in North Carolina, "Lou, There should be another category: sick and tired."

Richard in New York, "To answer your question of the day, I'm not a Republican or a Democrat. I'm just screwed by both."

We'll have more of your thoughts here later in the broadcast.

Immigration reform, so-called, continues to be a serious issue for voters in this country. It is of great concern in the state of Georgia. That's where a special election is being held to fill former congressman Charlie Norwood's seat. The longtime Republican died in February, and as Mary Snow now reports, the crisis over illegal immigration could be the deciding factor in the outcome.


MARY SNOW, CNN CORRESPONDENT (voice over): Today's special election isn't getting a lot of national attention. But the race is dominated by national issues.

MERLE BLACK, EMORY UNIVERSITY: This is really a conservative Republican district.

SNOW: Georgia's 10th. It's a very red congressional district in a red state. And while it's 1,500 miles from the Mexican border, the issue voters are talking about is...

UNIDENTIFIED MALE: Immigration, and securing our borders.

UNIDENTIFIED FEMALE: I think that it's something that has got to be handled. And it's got to be handled now. It's out of control.

UNIDENTIFIED FEMALE: I really don't think what we're -- what we're proposing right now is going to be very beneficial.

SNOW: President Bush overwhelmingly won this district in 2004, but all 10 candidates in this campaign are breaking with him over immigration reform.

BLACK: None of these candidates are defending the Bush proposals on immigration.

SNOW: Republican Jim Whitehead, who is considered the frontrunner in this race, is dead set against the immigration bill in Congress. While people in this part of Georgia are angry over immigration, don't expect them to vote in a Democrat.

BLACK: If a Democrat were able to win this seat, especially in a runoff, that would be a huge story.

SNOW: If no candidate wins 50 percent of today's vote, there's a runoff in July. And since six of the 10 people running are Republicans, there's a chance a Democratic candidate can make it into the runoff.

Mary Snow, CNN, New York.


DOBBS: Coming up, corrupting the guest worker program. How some companies plan to avoid hiring American workers.

We'll have that report.

The State Department unable to handle an increased demand for new passports, even though it had more than two years to plan for it.

We'll have the details.

And new restrictions aimed at keeping American technology out of the hands of communist China's military. Any chance that plan might work?

We'll have the report.

We're coming right back.


DOBBS: The United States is putting forward new restrictions on exports that could enhance communist China's military capabilities. Beijing, of course, is aggressively trying to build up its armed forces in part by stealing U.S. military secrets.

Kitty Pilgrim has our report.


KITTY PILGRIM, CNN CORRESPONDENT (voice over): The Pentagon estimates that China is spending up to $100 billion a year to upgrade its military. The U.S.-China Economic and Security Review Commission 2007 report this month warned of China's desire for new military technology. "China increasingly is investing in capabilities designed to thwart U.S. access to the region."

New Commerce Department rules attempt to restrict U.S. companies from exporting any product with military application.

MARIO MANCUSO, UNDERSECRETARY OF COMMERCE: They essentially build a higher fence around sensitive dual-use technology so we ensure and we hedge against the Chinese military modernization. At the same time, they make it easier for U.S. companies to compete in China.

PILGRIM: Nevertheless, the export regulation is generating worry. It allows U.S. companies to export to prescreened trusted customers in China.

REP. DAN BURTON (R), INDIANA: Every company over there is subject to communist China surveillance, and they own part of the companies. And so if we sell technology to them that will be beneficial to the military, then they're going to get it.

PILGRIM: Military analysts say the new rules are an improvement to the 1979 Cold War era regulations. But confusing and ambiguous regulations allow U.S. export companies to get around them.

JOAN JOHNSON-FREESE, NAVAL WAR COLLEGE: Right now the definitions of what -- what constitutes certain parts make it near impossible for industry to follow. And consequently, they push the envelope of what's allowed.

PILGRIM: Not all technology leaks can be controlled at the commercial level. The FBI estimates that up to 3,000 Chinese front companies operate in the United States.

The FBI's counterintelligence domain program is asking top research universities to keep an eye open to projects with military applications. Asking faculty and students to be alert for unusual questions from international students.


PILGRIM: And the Chinese Foreign Ministry today came out today to say the United States should relax export controls on high-tech exports in order to correct the trade imbalance -- Lou.

DOBBS: I'm sorry, who is it that wants to relax it?

PILGRIM: The Chinese Foreign Ministry would like them to do that.

DOBBS: Oh, the Chinese -- that's amazing. Aligning themselves almost senselessly with the U.S. Chamber of Commerce and the business roundtable. Wonderful.

Kitty, thank you very much. Coming up here next, we'll examine an issue no one else wants to talk about, the huge cost of the Senate's so-called grand amnesty plan. And we'll tell you about a little-noted study by the Congressional Budget Office that points out that the amnesty legislation won't work. And we'll tell you what it's going to do to our -- particularly our lower-income workers in this country.

Senators blasting the U.S. State Department just because they can't seem to fill out a passport formula that works and provides passports to American citizens.

And the culture of corruption appears to be thriving on Capitol Hill. Well, it actually is doing more than appearing. It is.

We'll have that special report. Stay with us.


DOBBS: The government has a guest worker program. In fact, several of them. But you wouldn't know that listening to either President Bush or the Democratic leadership of the Senate. In fact, the United States government issues some 80 different types of visas and administers a half-dozen guest worker programs right now.

As the Senate considers expanding the guest worker program, critics fear it will only offer employers even greater incentive to bypass American workers in favor of cheap, foreign labor. Further driving down wages and working conditions for Americans.

Christine Romans has our story.


CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): There are a half-dozen guest worker programs meant to fill U.S. labor shortages with foreign labor. In this grainy seminar video posted on the file- sharing site YouTube, a Pittsburgh law firm on how to use loopholes to ensure foreign workers can get the jobs instead of Americans.

LAWRENCE LEBOWITZ, VP MARKETING, COHEN & GRIGSBY: And our goal is clearly not to find a qualified and interested U.S. worker.

ROMANS: The Programmer Guild, a high-tech worker advocacy group, spliced together several minutes of footage, including an apparent how-to for meeting minimum requirements for advertising a job.

LEBOWITZ: So, certainly, we are not going to try to find a place where the applicants are going to be the most numerous. We're going to try to find a place again where we're complying with the law and hoping -- and likely not to find qualified and interested worker applicants.

ROMANS: The seminar has since been removed. After repeated calls and e-mails, a spokeswoman for the law firm would only say the event was to educate their clients and would not confirm the substance of the seminar. It all comes as the debate over guest worker programs intensifies.

SEN. CHUCK GRASSLEY (R), IOWA: Quite frankly, we have evidence that a lot of companies are using H-1B skilled worker program for illegal immigrants at the very same time that they could be hiring Americans.

ROMANS: Senator Grassley has long been concerned about H-1B visa abuse, and recent congressional testimony highlighted humanitarian concerns in the H-2A and H-2B programs.

RON HIRA, ROCHESTER INST. OF TECHNOLOGY: You try to control one set of misuse in one category, and employers will just adapt and go to another visa category and start to misuse those.

ROMANS: He says employers are gaming the system. But advocates of guest worker program say they're essential for the economy, especially in agriculture, where more legal slots are needed.

JAMES HOLT, AGRICULTURE ECONOMIST: We're talking about bringing the workers that are coming in now illegally into the United States in a legal, controlled program. And I'm -- I think anybody and everybody would be in favor of that.

ROMANS: Fraud and abuse can be stopped, he says, if Congress allocates more resources and personnel.


ROMANS: And now the Senate is considering revamping the entire system, giving Z visas for workers already in the country illegally and Y visas for those who want to come. But worker advocates fear a new system will only mean a new generation of loopholes -- Lou.

DOBBS: I don't even know if we can call them "loopholes." I mean that's a pretty startling, straightforward statement that business and those that support business, the law firms and everyone else, they're just basically trying to screw the American worker. And to hear the Senate talking about its nonsense associated with this amnesty legislation.

Couple of little facts that Bill Gates, wanting unlimited H-1B visas, the president saying you got to have a guest-worker -- the most tortured logic to come from the president's mouth, I think, is we can't secure our border without a guest-worker program. No one can construct any kind of reason from that statement.

But there are two facts that people keep forgetting -- seven out of 10 visa requests under the H-1B program come from Indian companies in the United States to provide employees to outsource to American companies and reduce wages. And the other little minor item which is supposed to be high-skill jobs, four out of five jobs under the H-1B program are level-one jobs, not level four, i.e., low-skilled jobs, not high-skilled jobs. These are Americans trying to screw American workers. And it just is as plain, straightforward and can anyone convince any of us that the president of the United States and this Senate with this sham amnesty program isn't aware of these facts?

ROMANS: Senators Grassley and Dick Durbin have actually sent a letter to the government. They've been asking some hard questions about the H-1B program and fraud and trying to make sure that any kind of loopholes are closed so we'll see how far they can get.

DOBBS: Well, Durbin is supporting amnesty, Grassley is opposed to it. So 50 percent shot of some reason prevailing. At least in that instance. Perhaps higher if we see any kind of semblance of character and honesty in the days and weeks ahead. Christine, thanks for the illuminating report. Christine Romans.

The Bush administration also facing outrage over its failure to clear what is now a massive and growing backlog of passport applications. The State Department can't even handle the passport applications, let alone anything that would be associated with this amnesty legislation. The State Department can't process those applications in time for the summer vacation season. Senators on Capitol Hill today, well, they've noticed. And they've blasted the State Department for its sheer income tense. Andrea Koppel reports from Capitol Hill.


ANDREA KOPPEL, CNN CORRESPONDENT (voice-over): One by one senators vented.

SEN. DAVID VITTER, (R) LA: I'm very concerned, because it's yet again another story of the complete failure of competence in government and ineptness.

KOPPEL: The target of their anger? The U.S. State Department.

SEN. BILL NELSON, (D) FL: We want to know who's accountable and why this mess has happened as it is.

KOPPEL: Lawmakers wanted to know why, when it had two years to prepare for new travel requirements, the State Department has a backlog of almost 3 million Americans suck waiting for their passports during the summer's busy travel season. In the congressional hot seat? Maura Harty, the State Department's top official responsible for passport's and visas.

MAURA HARTY, ASSISTANT SECRETARY FOR CONSULAR AFFAIRS: Sir, it was a miscalculation on the size of the surge.

UNIDENTIFIED MALE: OK, and whose miscalculation?

HARTY: I take responsibility for it, sir. We did our best evaluation based on a report by a -- by a company that is trusted and well known. KOPPEL: Harty told senators the State Department got 1.5 million more applicants than it had projected. And said the problem was compounded by Hurricane Katrina which took a major processing center offline for months.

HARTY: The great majority of people that applied for passports are getting them in time to travel. We recognize that's not good enough.

KOPPEL: But for some senators like Florida's Bill Nelson, the time for excuses is over. Nelson wants to know why, in the midst of preparing for the up-tick in applications, the State Department switched contractors to Citibank to help process passport applications.

NELSON: And don't give me this nonsense that the State Department is saying that it's the contractor's fault, and the contractor's saying it's the State Department's fault. You know, when somebody points a finger, there's three other fingers that are pointing back at the individual.


KOPPEL: Now, meanwhile to add insult to injury, the State Department had this $97 fee that applicants are supposed to pay if they wanted to get their passport expedited to them. They had to pay an additional $60 above that, Lou, and in many instances they either got their passport just before they were supposed to leave for vacation, or in some instances didn't get it in time for their vacation. Now Senator Nelson is demanding that the State Department refund all of that money, all of the $60 that various millions of Americans paid for those expedited passports, Lou.

DOBBS: Expedited my foot! Andrea Koppel, I mean, to see Senator Nelson there, and good for him, good for the committee to get into this. But the idea that this government doesn't even have the wherewithal to process passports on their own? They're outsourcing the job to Citigroup and to others?

This government is becoming nothing more than a hollow structure incapable of carrying out its -- its role as a government entity! What in the world are these people thinking about?

KOPPEL: There are a lot of lawmakers up here, Lou, who have the same question.

DOBBS: Andrea, thank you very much. Andrea Koppel from Capitol Hill. Your government at work, or not.

Well, there are new allegations by the way, that members of Congress, you know, the ones providing oversight over the idiotic process we're calling a State Department that is outsourcing its job to private industry and doing a bang-up job, well apparently some of those congressmen are using those offices to help out their relatives. A new report revealing that a third of the most powerful congressmen have family members on their payrolls. Kathleen Koch has the report. (BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): One point six million dollars. That's how much the watchdog group Citizens for Responsibility and Ethics in Government says the most powerful members of the House of Representatives have paid relatives or relatives' companies over the last three election cycles.

MELANIE SLOANE, CITIZENS FOR RESPONSIBILITY AND ETHICS IN GOVERNMENT: It's a huge loophole. Members of Congress are basically adding to their salaries by having their family members, particularly their spouses, make lots of money off their campaign payroll.

KOCH: A loophole because while it's illegal to put them on their congressional payroll, it's not illegal for a lawmaker's campaign to hire them. On the payroll, wives, husbands' companies and children including those of two presidential candidates.

SLOANE: Ron Paul has paid his daughter one of the highest amounts of money over three election cycles. He paid her $163,000 and Duncan Hunter has paid his daughter in law, $105,000. And those are pretty hefty amounts of money over three election cycles.

KOCH: Paul in a statement said there was, quote, "nothing inappropriate" about his daughter's employment as campaign treasurer or what he called the quote, "relatively modest compensation she receives." Hunter was not available to respond. Howard Berman of California paid his brother's company $195,000. In a statement he explained his brother's firm are seasoned political professionals and, quote, "no portion of the money my campaign committee has spent retaining their services has benefited me financially."

One lawmaker, Gary Miller of California, even paid himself.

SLOANE: He was paying himself in rent over $124,000 over three election cycles. And that's an awful lot of money to pay your own business in rent for your campaign committee.

KOCH: Miller's office says he firmly believes his campaign office is in firm compliance with federal law.

(on camera): While federal law does allow qualified family members to be hired by the campaign, some lawmakers believe it's just not right. Two have introduced a bill in the House to stop the practice of hiring spouses, but it's not expected to pass. Kathleen Koch, CNN, Washington.


DOBBS: I'm shocked that that wouldn't pass.

Well, coming up next here -- the high cost of amnesty for illegal aliens. I'll have a discussion with Peter Orszag, he's the director of the Congressional Budget Office. He's assessed what the Senate's grand compromise will accomplish and cost. And on the heels of two new public opinion polls, a new frontrunner in the race for president. And this candidate isn't even a candidate. Stay with us. We'll be right back.


DOBBS: Well, there's been precious little research for some reason, on the part of either the executive branch or the legislature on the cost of that so-called grand bargain on immigration legislation. The Congressional Budget Office did come in for -- at the request of the Congress to take a look at what some of the costs might be, and joining me now is Peter Orszag. He's the director of the Congressional Budget Office, and it's good to have you with us.


DOBBS: Well, I've looked through your testimony as well as the report. It is, and I think we should all acknowledge, that it is a limited, if you will, analysis of what's going on and that you weren't required to do anything like reach to the level of a fiscal impact or social impact statement. Your bottom line, the Congressional Budget Office finds that the amnesty legislation, as it is now laid out, will cost what?

ORSZAG: Eighteen billion dollars for the federal budget as a whole over the next 10 years, so for each person in the United States, that's about $5 a year. So pretty modest fiscal impact over the next decade.

DOBBS: Modest fiscal impact, and your study assesses what kind of efficiency in stopping illegal immigration? How -- it will just stop illegal immigration cold, right?

ORSZAG: No. The legislation does not shut down the black economy, and therefore it does not eliminate unauthorized immigrants. We estimate that it would reduce the flow of unauthorized immigrants by about a quarter relative to today.

DOBBS: So in other words, this grand bargain will basically be amnesty for anywhere between 12 million and 20 million illegal aliens. It will only curtail the flow of illegal aliens in this country by 25 percent. It will cost roughly $2 billion a year net to the treasury. And that's it.

ORSZAG: Well, that's one way of looking at it. Obviously another way of looking at it is that there would be some reduction in the number of illegal immigrants in the United States ...

DOBBS: There would be what, I'm sorry?

ORSZAG: There would be some reduction in the number of illegal immigrants.

DOBBS: Sure, 25 percent reduction. ORSZAG: And some increase in legal immigrants and by 15 or 20 years out, those two would basically balance each other, so the number of immigrants in the United States would be roughly what it would be in the absence of this legislation. More legal ones, somewhat fewer less illegal ones.

DOBBS: So, in other words, darn little impact in terms of the flow of immigration. It just would sort of invert at some point 12, 14 years out so that more people would be legalized because effectively illegal aliens would be legal, correct?

ORSZAG: That's one of the things going on. But you got the basic story right, which is it doesn't have in the long term any big effect on the number of immigrants in the United States.

DOBBS: So, so when we hear the president say, and we hear the Senate Democratic leadership say that this is going to stop illegal immigration, that it's going to not cost the American taxpayer anything, it's all just a big boffo, wonderful, Disneyland result, they're full of it?

ORSZAG: Well, I wouldn't use that kind of language.

DOBBS: Of course you wouldn't.

ORSZAG: What I would say is, again, the net fiscal impact is pretty small. It's probably not where you want to be paying most of the attention. And the impact on the number of immigrants in the United States isn't that big, either. It just changes the nature of those immigrants away from illegals and toward legal.

DOBBS: Right. And what it really does, it seems to me, at least, you could argue this, and I will not put it in terms that would be repugnant to you, it seems it really is amnesty for all the illegal -- all the illegal employers of illegal aliens. That's its principle, short-term impact.

ORSZAG: I'm going to let various different participants, including yourself, characterize it in different ways. I think our job is to just analyze what the impact is.

DOBBS: Let's talk about that analysis a little further as well. Did Congress, did anybody say to you, let's look at the fiscal impact of this, 30 years out? Because, as you know, 10 years is an interesting snapshot, but the real impact comes with Social Security, Medicare, Medicaid, when those given legal status become citizens, their impact on Social Security, as you know, Robert Rector at the Heritage Foundation, putting the number at around $2.6 million just for the retiree benefits assuming that the number of illegal aliens is relatively limited.

ORSZAG: Well, Lou, as Toby Keith would say, that's not how it is.

DOBBS: All right. Did you say Toby Keith?

ORSZAG: The Office of the Chief Actuary -- I did say Toby Keith.

DOBBS: You rock on, Mr. Director.

ORSZAG: The Office of the Chief Actuary at Social Security has looked at the long-term impact on the Social Security solvency from this legislation and suggested that if anything it's a slight net improvement over the next 75 years. We've looked 20 years out and we also find small impacts. The reason is, yeah, you're paying more benefits, but you also are collecting more revenue from people.

DOBBS: Now, are you also making the same assumption as does Robert Rector, and this seems critical, do you maintain fidelity with the fact that 60 percent of the illegal immigrants, those who are not visa over-stayers, but those who have actually entered the country illegally, do not have high school educations?

ORSZAG: Yeah, we do assume that there is a -- as you note, there really is quite a difference. If you look, for example, even below high school drop-outs you look at eighth grade drop-outs and below, 36 percent of immigrants from Mexico and Central America have that level of education, only one percent of native-born workers. We do assume that there is a continued disparity in educational attainment of immigrants.

DOBBS: Do you -- can you think of some reason why there has not been an exhaustive study of the fiscal impact? You've done ...

ORSZAG: I think ours has been, is.

DOBBS: You believe it is.

ORSZAG: Yeah, I do.

DOBBS: You believe it is that exhaustive study. OK. Well, with that, and without quibbling over whether it is or it isn't, it is a valuable addition to the body of research, and we thank you for being with us here.

ORSZAG: Well, thank you for having me.

DOBBS: Peter Orszag of the Congressional Budget Office, thank you.

And next, Fred Thompson, he is doing pretty well for a fella who isn't even doing. We'll be talking about how he is doing in the polls, and just imagine what would happen if he got interested in running for his party's nomination. I'll be talking about that with three of the country's very best radio talk show hosts. Stay with us.


DOBBS: Joining me now three of my favorite and top radio talk show hosts in this country, in New York, Mark Simone of WABC Radio, Wilmer Leon of XM Radio. Good to have you with us. And in Denver, good to have you with us, Peter Boyles, KHOW. Well, guys, we get to begin with a news announcement. As we say here on CNN, this is breaking news. Mayor Michael Bloomberg has just announced that he is an independent and no longer affiliated with the Republican Party.

Mark Simone, what does it mean? Here he comes.

MARK SIMONE, WABC RADIO: I've asked him a few times if he's serious about running.

DOBBS: You and me both, brother.

SIMONE: Yeah, I got the feeling he was just having fun with the whole idea of it. But that's significant. I think that means he's really going to do it.

DOBBS: Wilmer, he has just also said a couple times recently, he's not interested at all in running for president.

WILMER LEON, XM RADIO: Showing you he's a true politician.

DOBBS: A helpful thing to be if you're going to be a politician.

LEON: But I think it's going to be interesting to see people have always been comparing him to Ross Perot.

DOBBS: Right.

LEON: He has Ross Perot's money but he's a true politician and Ross Perot was a business man.

DOBBS: Ross Perot, in point of fact, brown shoes to Michael Bloomberg's tuxedo he has so much money. Peter, what do you make of it?

PETER BOYLES, KHOW RADIO: What took him so long? You watch this, and people have absolutely turned against mainstream politics and the political parties in this country. I frankly have had enough of them. I had enough of them a long time ago. Just a smart move, what they say in "The Godfather," it was a smart move. Tell Mike I always liked him.

DOBBS: Well, the fact is on this show last night we did a study, one of our scientific polls. Our audience responded, 71 percent identified themselves as independent. So Michael Bloomberg may be catching a wave here as the Democrats and the Republicans continue to just sort of fritter away the political capital as President Bush would say.

Speaking of frittering away political capital, Wilmer, the idea that he's gone again, he's going to come up with $4 billion for border security if you just give amnesty to all the illegal employers, the corporations and 12 million to 20 million illegal aliens, it will all be good.

LEON: A drowning man will grasp on anything to stay afloat. This is obvious. There's no substance to the domestic agenda. This is obvious. We're not talking about health care, we're not talking about social security, we're not talking about education. And now he want to talk about amnesty. He's really, to me, trying to serve two basic constituencies. One with the guest-worker program. He's trying to support his business supporters who want to maintain a low-wage labor pool.

DOBBS: Right.

LEON: And then with the amnesty issue he's trying to tap into a pool of -- of Latino voters that he can bring to the party.

DOBBS: It's a play by both political parties and their corporate masters and their socioethnocentric interest groups to create cheap votes and cheap labor. Peter, what do you think?

BOYLES: Two things, Lou. Number where is he going to get the $4.3 billion, and he says he's going to get it from the fines he collects from the illegals. That's hogwash. Number two, there's actually three points here. Number two, what this man in essence is doing is no means no. He is date raping the country. Everybody said no. And no doesn't mean no to George Bush.

Number three, this is the laughable part. When he stands there and says, now, give me this and then I'll fix the border. My God, fix the border. Don't give me this. This is a date rape. And, frankly, I'm with Michael Bloomberg, let's get away from all of these people.

SIMONE: Yeah. You ever drive along the expressway and there's a residential neighborhood and the neighbors, there's too much noise and so they build a 20-foot ball immediately for miles. And I've checked. We've got millions of miles of this 20 foot wall all over our expressways. How hard would it be to put that on the border?

DOBBS: Apparently it's pretty hard. We've got 13 miles built despite the fact that this president and Michael Chertoff fully appropriated have the money to build it and they are now claiming they are going to secure the borders.

Let's -- this president has got a lot of trouble, not the least of which is to watch this shamnesty as it's now being called. But, Wilmer, what we're watching in the Middle East, it's almost inconceivable to think that what was bad in terms of results of U.S. foreign policy in the Middle East has gone to worse, tragically worse.

LEON: When you don't have a clear understanding of the cultures that you're dealing with, it's very difficult to come up with any kind of substantive, qualitative policy. We claim to be going into the Middle East to spread democracy. Then the Palestinians have a free and fair election, but we don't like the result. So we withdraw our financial support from the party that won.

Which then only furthers to increase the oppression of the people in Gaza. Gaza is one of the most densely populated parts in the world.

SIMONE: Well, spreading democracy sounded good on paper.

DOBBS: So did regime change, so did weapons of mass destruction, whatever stuck to the wall.

SIMONE: Yeah. And you can't even blame this administration, whatever story we're reporting from there, you could have been reporting it 10 years ago or 20 years ago or 30 years ago. We've had administrations that understood that part of the world and couldn't do any better.

DOBBS: And this nation has a despicable legacy of foreign policy for 60 years. In the Middle East, and we're not certainly improving upon that. Peter, Fred Thompson, coming out of the top of the polls, and he's not even running. That's pretty -- that's pretty -- pretty strong stuff!

BOYLES: Yeah, but nobody is -- the great thing is and I so far like the guy, but nobody knows anything about the like and so you like him.

DOBBS: Sure. He was a great president, a great D.A., a great sub skipper. What do you mean we don't know anything about him?

SIMONE: It's like that beautiful woman or guy you see across the room and you say, that's the person for me, until you actually sit down and talk to them and go out with them one night.

BOYLES: I think, Lou, it speaks more to who we are. Because we look at the field as they call it in the horse race. You can't pick a winner. So it is really the dark horse. There's a guy that you say, wow, well, maybe he is who we want.

DOBBS: Well you know what, he's got six years more experience than Barack Obama in the Senate. So we know a little something about it him. It didn't seem to be a problem for Barack Obama.

SIMONE: And all the TV experience. He was a D.A. for years.

DOBBS: Sure. And Hillary Clinton leading the pack.

LEON: Well, it's so early in the horse race. We haven't really even gotten out of the first turn. So we're going to have to wait and see how things shake out in the months to come.

DOBBS: But it's the only race we got it.

LEON: It's the only race we've got.

DOBBS: Good to have you with us.

LEON: Thank you very much.

SIMONE: Thank you.

DOBBS: Peter, thank you.

BOYLES: Thank you, sir, as always.

DOBBS: Coming up, we'll have the results of our poll. You don't want to miss it. Stay with us.


DOBBS: The results of our poll tonight, "The Washington Post" is going to love this result. Ninety-five percent of you believe the Secure Borders First Act introduced by Congressman Peter King and Congressman Lamar Smith is a far more sensible approach to comprehensive immigration reform. Take that.

And time now for one last e-mail. Pearl in California.

"Lou, Senator Jon Kyl's interview was the biggest bunch of double talk I've ever heard. When the government pulls those so called triggers, it will hit every American right between the eyes. What is it that he just does not understand? No amnesty, no way in hell."

That's representative of nearly all of the views that have been expressed to us here. Thanks for being with us tonight. Please join us tomorrow. THE SITUATION ROOM begins now with John King. John?