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Lou Dobbs Tonight

McCain's Free Trade Push; Auto Industry is in Trouble; FDA Paid Bonuses; U.S. Sends $400 Million to Mexico to Fight Drug Cartels

Aired July 01, 2008 - 19:00   ET


Tonight huge bonuses for government officials who have failed to trace the source of a massive salmonella outbreak.

Also, the worst year for automakers in nearly two decades, tens of thousands of more middle class jobs at stake.

And the state of Mississippi joins Arizona in a widening crackdown on illegal employers of illegal aliens.

We'll have that, all the day's news, much more straight ahead tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Tuesday, July 1st. Live from New York, sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening, everybody.

Senator McCain has just landed in Colombia to push so-called free trade. It is an issue he says is vital to the future of this country. Now McCain today declaring that in his opinion the consequences of what he called protectionism and isolationism could cause immense harm to middle class Americans.

The Obama campaign accused McCain of visiting Latin America simply to win Hispanic votes in this country. Obama says he opposes so-called free trade deals that are not fair to American workers.

Dana Bash has our report -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, Kitty, this is the second time in as many weeks that John McCain chose to leave the country to promote free trade which he insists will help U.S. workers. But he has heard firsthand that's a tough sell in key Rust Belt states back home.


BASH (voice-over): A tough on crime speech in Indiana, a reliably Republican state that Barack Obama hopes to make competitive, a political no-brainer. But you won't find John McCain's next stop on any electoral map, Colombia, in South America. It has some political veterans scratching their heads. DAVID GERGEN, FORMER PRESIDENTIAL ADVISER: He should be spending his time here, laying out much more emphatically and clearly his economic plans.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I am strongly in favor of the free trade agreement between the United States and the nation of Colombia.

BASH: McCain says he's going Colombia to spotlight his support for free trade, which he calls crucial to jump starting the U.S. economy, a sharp difference with Barack Obama.

MCCAIN: He doesn't support the Colombia free trade agreement. I think it would be -- have very serious consequences if we rebuked our closest ally.

BASH: The Colombia free trade agreement is now stuck in Congress, held up by Democrats including Obama.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: That we have not been very good negotiators in our trade agreements in terms of making sure that the interests of American workers and not just corporate profits are cared for.

MCCAIN: We must encourage more trade agreements to create more jobs on both sides of the border.

BASH: McCain's new Web ad promising trade equals jobs is proof he hopes his trip abroad will help back home. His problem, there is new evidence most voters don't agree with McCain that free trade will help fix their economic woes.

A new CNN Opinion Research poll shows 51 percent call free trade a threat to the economy. Forty-one percent call it an economic opportunity. It is especially risky for McCain in hard hit must win states like Ohio where voters confront him.

UNIDENTIFIED MALE: Is there any way that the trade can become more fair instead of just free? I come from a closed plant, excuse me, in New Jersey.


BASH: Now McCain acknowledges the anxiety expressed by that worker and others like him are very real. But he's adamant despite the political risks that more trade is a net gain for the American worker in the long run and Kitty expect to hear a lot more of that in Colombia. We're expecting to hear him speak in just a couple of hours there and of course at his next stop and that's going to be in Mexico.

PILGRIM: Dana, Mexico, as you say, later this week, what will be on the agenda there?

BASH: Very similar as you can imagine to what he's going to be talking about in Colombia, first and foremost free trade. He thinks just like in Mexico, the free trade agreement with Mexico and Canada, NAFTA, is something that he supports and he says it is a big difference between his position and Barack Obama.

But also he's going to talk about the big issue with that country which is immigration, illegal immigration, expect him to talk about what he's been saying on the campaign trail, which is secure the border first. But what we'll be watching for, kitty, is to see how he characterizes in the words he uses with regard to what he wants to do next, which is comprehensive immigration reform.

He's been talking more and more about that since the Republican primaries have been over and, you know, it's going to be interesting to see how he frames that particular issue when he's across the border inside Mexico.

PILGRIM: We'll be watching closely. Thanks very much -- Dana Bash.

Now later in the broadcast, we'll have much more on the crisis in Mexico. The out of control drug war, one of the leading authorities on Mexico, Professor George Grayson, will join us live from Mexico City.

There is a new CNN opinion poll. It says McCain is trailing Obama. The CNN/Opinion Research Corporation poll says Obama has 50 percent support, McCain 45 percent in a two-way race.

Now on the issue of patriotism, 90 percent of voters believe McCain is patriotic compared with 73 percent who believe Obama is patriotic. This poll was taken before Obama's speech on patriotism yesterday. In that speech, Obama strongly defended his patriotism and the commitment to this country.

Well Senator Obama today delivered another speech about his values. Obama spoke about faith and religion in a new attempt to win the support of Christian voters. Obama saying he will embrace and expand a Bush initiative to give money to religious groups that provide social services.

Jessica Yellin has the report.


JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Barack Obama believes government should offer more support to faith- based organizations.

OBAMA: I know there is some who bristle at the notion that faith has a place in the public square. But the fact is leaders in both parties have recognized the value of a partnership between the White House and faith-based groups.

YELLIN: After accusing President Bush of politicizing his faith- based initiatives, Obama vowed to reform and expand the program, to devote $500 million to a new summer learning program run by faith organizations, to institute performance evaluations for organizations that receive government funds and to insure the groups don't discriminate in hiring or providing services. OBAMA: This counsel will not just be another name on the White House organizational chart. It will be a critical part of my administration.

YELLIN: The announcement comes as prominent religion conservatives increasingly attack Obama's faith.

JAMES DOBSON, FOCUS ON THE FAMILY: I think he's deliberately distorting the traditional understanding of the Bible to fit his own world view, his own confused theology.

YELLIN: And go after him for supporting reproductive rights.

UNIDENTIFIED MALE: Senator, I have a question for you. If as you say fatherhood begins at conception, when does life begin?

UNIDENTIFIED FEMALE: Dear Lord, please be with us here tonight.

YELLIN: Since last fall, the Obama campaign has been working to preempt questions about his religion in part by holding discussions about religion and politics with small groups of voters like this one at a house in Cincinnati last night.

JOSHUA DUBOIS, DIR. RELIGIOUS AFFAIRS, OBAMA CAMPAIGN: When you hear someone talk about the moral values Kennedy, which candidate or which party are they normally referring to?


YELLIN: Obama is trying to woo some of those values voters and this expert says he has a shot at success.

UNIDENTIFIED MALE: And one of the areas in which Senator Obama might be able to get that extra margin of voters would be in some of these religious communities, Catholics, evangelical Protestants, white main line Protestants that in the past have tended to vote more Republicans.


YELLIN: Kitty, in the primaries, Barack Obama won among churchgoers overall. But he lost to Senator Clinton among Catholics in particular. As we face the general election, Barack Obama inherits John Kerry's disadvantage with evangelicals, so he has quite a significant challenge to overcome. His campaign believes he will have success with many of these believers -- Kitty.

PILGRIM: Thanks very much, Jessica Yellin.

Well Senator Obama tonight is facing a major new political threat from the powerful gun lobby, the National Rifle Association planning to spend millions of dollars to portray Obama as a threat to gun rights. Now this after the Supreme Court ruled that Americans can own guns for self-defense.

Brian Todd reports from Washington. (BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): Coming soon, a $15 million ad blitz against Barack Obama over his record on gun control.

CHRIS COX, NATIONAL RIFLE ASSOCIATION: The gun owners in this country are not only very loyal. They don't like being lied to. They're not easily fooled and if Barack Obama thinks that he can fool them or if they -- that they have short memories, he's mistaken.

TODD: The National Rifle Association's beef with Obama? He supports a ban on semiautomatic weapons, on almost all concealed weapons, and a limit on handgun purchases to one a month. Obama says he supports legitimate gun ownership.

OBAMA: I'm a strong supporter of the Second Amendment. But I do not think that that precludes local governments being able to provide some common sense gun laws that keep guns out of the hands of gang bangers or children.

TODD: Obama could soon find himself the target of NRA ads like this one from 2004 against John Kerry.

UNIDENTIFIED MALE: That dog don't hunt.

TODD: And Obama's remark that bitter voters turn to guns and religion could come back to haunt him. But a spokesman is un-phased.

ROBERT GIBBS, OBAMA CAMPAIGN SPOKESMAN: We think we'll get the votes of plenty of gun owners and gun owners will have a home in the Obama campaign.

TODD: Republican John McCain wins praise from the NRA for opposing bans on assault weapons, certain ammunition and handguns in Washington, D.C.

MCCAIN: For more than two decades, I've opposed efforts to ban guns, ban ammunition bans, ban magazines, and dismiss gun owners as some kind of fringe group, unwelcome in modern America.

TODD: But the NRA disagrees with McCain over his support for background checks at gun shows. Could the NRA's anti-Obama ad campaign make a difference?

AMY WALTER, NATIONAL JOURNAL'S HOTLINE: There is a lot of competing pressures for these voters. I mean they're concerned about the economy; they're concerned about gas prices. So I just don't know that this issue alone is going to have the impact that it may have in the past.


TODD: And the NRA is just one of many groups planning independent ad campaigns about Obama and McCain. But remember, the 2000 election, the NRA ran ads against Al Gore in Tennessee that some analysts think may have been a key factor in Gore's loss in his home state that kept him from winning the presidency -- Kitty.

PILGRIM: Thanks very much, Brian Todd.

Well gun right groups in the state of Georgia tonight, they're celebrating a new law that went into effect today. And that law allows people with a concealed weapon to -- permit to carry guns into restaurants, state parks and on public transportation.

There are still legal arguments over whether those gun rights extend to Hartsfield-Jackson International Airport. That's the busiest airport in the entire country. And the airport managers have declared it a gun free zone.

Still to come, President Bush lashes out at Congress for failing to help middle class home owners. Who is really to blame? We'll have a live report.

Also, the auto industry faces its worst crisis in decades, working men and women and their families are facing financial disaster. We'll have the story.


PILGRIM: President Bush tonight is trying to present himself as a champion of middle class Americans who are struggling to deal with the housing crisis. The president today declaring that Congress can pass the housing bill if it shows more focus. The president trying to dispel the idea that he's not out to help working men and women and their families.

Ed Henry reports from the White House -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Kitty, it is practically a ghost town on Capitol Hill right now. The Democratic- controlled Congress has taken more than a week off for the Fourth of July holiday. That's why the president in part is teeing off. He went to a credit counseling agency today in Little Rock.

Congress taking a lot of flack because it went home last Friday without finishing work on a housing rescue bill that has been long awaited. Lawmakers left town without doing that and they face a blistering editorial in today's "New York Times" noting that between now and next Monday when Congress comes back to work, some 55,000 more people could slip into foreclosure. So the president teed off on Congress today.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Well I think we can get us a bill, but it is going require less politics and more focus on keeping our minds on who we need to help and that's the homeowner.


HENRY: What the president didn't mention is that the housing reform is being blocked right now by a Republican, Senator John Ensign of Nevada. He wanted to add unrelated renewable energy tax credits to this housing bill last week. That's what stalled it. And also the president has threatened to veto any final product that Congress comes up with because he doesn't think they have been strong enough yet on federal housing administration reform.

Now, some local communities like Fairfax County in nearby Virginia, nearby to the White House right here, they're getting very concerned about all of the finger pointing between Democrats and Republicans and they're worried there has been no reform.


GERALD CONNOLLY, FAIRFAX CO. BOARD OF SUPERVISORS: As they're dithering at the federal level, thousands of home owners have lost their homes. And we're talking about millions more being potentially at risk with rising mortgage interest rates because of variable mortgage systems that people have. And so it is critical that the government step in and try to stabilize the situation.


HENRY: Now the Democrat you just heard there, Gerald Connolly from Virginia, he has come up with a plan of his own, essentially the local government is going to buy up to 200 foreclosed homes in Fairfax County, Virginia, and then try to eventually sell them at a reduced price to firefighters, police officers who normally could not afford a home in such a rich area. So you can see maybe local governments now trying to step in and deal with what Washington is not doing, Kitty.

PILGRIM: What a terrible, dire situation for home owners in this country. Thanks very much. Ed Henry.

HENRY: Thank you.

PILGRIM: Well adding to the burden on America's middle class is gas prices. They hit a new record today, just under $4.10 a gallon. Now driving the increases is the soaring cost of oil, of course, and oil rose more than $143 a barrel during the day, it closed at $141.

City workers in Birmingham, Alabama, today began working a four- day week to save energy. Other states and cities across the country are also considering a four-day workweek.

And there was a slight increase in U.S. manufacturing in June. This is the first increase since January. But that was overshadowed by the rising cost of raw materials and energy.

Auto sales in this country plunged last month. Sales figures released today show the consumers are shunning gas guzzling SUV's and pickup trucks, but the hybrids and fuel efficient cars they want are in short supply.

Bill Tucker has our report.

(BEGIN VIDEOTAPE) BILL TUCKER, CNN CORRESPONDENT (voice-over): Sales of new cars and trucks are being crushed. Chrysler saw its sales collapse in June, down 36 percent. The company which relies on nearly three- quarters of its sales from trucks, minivans and SUV's had already announced it is shutting down its minivan plant in St. Louis, cutting back on the shifts at the Belvedere, Illinois plant.

Chrysler sales are down 22 percent so far this year. Chrysler reported the worst looking numbers but it had plenty of company in its misery as high gas prices and a weakening economy exposed Detroit's vulnerability.

PROF. PETER MORICI, UNIVERSITY OF MARYLAND: Generally recession is exposed weak management. When times are good, mistakes are papered over by the rising tide. But when the economy turns south, the people with weak business models are really exposed.

TUCKER: Ford sales tumbled 28 percent in June, down 14 percent in the first half. GM's fell 18 percent and 16 percent in the first six months. Compounding the problems for domestic producers, they were already hurting.

REBECCA LINDLAND, GLOBAL INSIGHT: These companies were weak coming into 2008. And so they have already cut costs to the bone. They have already had, you know, tens of thousands of layoffs, both from a union and non-union standpoint.

TUCKER: That gives the advantage to foreign automakers who are in a stronger financial condition, making them better able to weather the bad news, but even Toyota saw its sales fall.

DAVID ZOIA, WARD'S AUTOMOTIVE: This is a trend that has really affected everyone, you know some more than others.

TUCKER: Like Honda, for example, its sales rose modestly last month.


TUCKER: Now analysts agree that the economy is a contributor in making buyers shy of a commitment, but they also point out those buying high mileage cars are the widely preferred vehicles and domestic manufacturers just haven't had much in the way of inventory to offer them. The only good news out of today's reports, if you want to call it that, is that GM does remain the number one domestic producer here in the United States.

PILGRIM: Bill, it is unbelievable, why was the country so unprepared for this situation?

TUCKER: Well you know it is tempting to blame the automobile industry and in a lot of ways you can because you can say look, in 1970's, we were here, we've seen this, we know. But how do you -- if you're an automaker and you have got people with an appetite for big cars, big SUVs who don't particularly care about the mileage they get, how can you make them buy a little tiny high mileage car? And you know the epiphany really didn't happen until this year, Kitty. It was like April, suddenly everybody went whoa these gas prices are for real and now their appetite for what they want to buy has changed.

PILGRIM: Consumers suddenly got religion with $4-a-gallon gas.


PILGRIM: Thanks very much, Bill Tucker.

Well up next, FDA officials are still cashing in despite their utter failure to protect you. We'll have a special report.

Also, raging wildfires in the West. California calls in the National Guard as fires burn out of control. Stay with us.


PILGRIM: Governor Arnold Schwarzenegger tonight called for National Guard troops to help battle the hundreds of wildfires raging across California, 200 troops will be deployed. Authorities today ordered new mandatory evacuations along the Big Sur coast of California. Nearly 1,400 firefighters are battling the Big Sur fires. And so far that blaze is only three percent contained.

At least a thousand different fires have already charred hundreds of square miles in California. In Arizona, fires around the town of Crown King still burning out of control, 300 firefighters on the scene, 120 residents evacuated. Officials say there is no way to know when they might have those fires under control.

The Food and Drug Administration tonight still does not know the source of a salmonella outbreak that has sickened nearly 1,000 people. Now as we first reported here, more than a week ago, the FDA is not even sure the outbreak began with tomatoes. Now in spite of the FDA's failure to protect the American public, officials are still collecting millions of dollars in bonuses.

Louise Schiavone reports.


LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The nation's $2.3 billion tomato industry is on the ropes as the Centers for Disease Control admits tomatoes are not the lone suspects in an as yet unremitting salmonella outbreak.

VOICE OF DR. ROBERT TAUXE, CTRS. FOR DISEASE CONTROL & PREV.: The CDC has broadened its epidemiological investigation to be sure that the assessment encompasses food items that are commonly consumed with tomatoes.

SCHIAVONE: Sources say growers were enraged to hear from the FDA that tomatoes may not be the source of infection. TOM NASSIF, WESTERN GROWERS ASSN.: Taking an industry hostage, creating this much damage when the possibility now exists that tomatoes weren't implicated in the first place is very disturbing and our growers and shippers are calling us and they're very angry.

SCHIAVONE: The FDA admits...

VOICE OF DAVID ACHESON, FDA: The pace of this investigation has been frustratingly slow.

SCHIAVONE: A long-stated explanation for this is that FDA funding has been insufficient for the technology, science and field work required. But a Congressional examination of FDA pay reveals that the funding shortage has not held down upper level agency salaries.

In 2007, Dr. David Acheson, the FDA food safety director, earned $221,824, paid as he has been for several years under a special exception for expert consultants. Over a year long period that ended in April, the FDA paid $35 million to top officials in incentives over and above their salaries. This as the industry they regulate is in a downward spiral.

JIM PREVOR, PERISHABLEPUNDIT.COM: We believe that the tomato supply chain has lost about a quarter of a billion dollars. They have their jobs. They get their salaries whether they're right or wrong.

SCHIAVONE: In its own defense, the FDA tells CNN, quote, "the agency employs a very knowledgeable, experienced and highly educated staff and has to compete with the private sector to attract individuals of the highest caliber to meet the growing demands on its scientific and regulatory mission both here and abroad", end quote.

House Energy and Commerce Subcommittee Chairman Bart Stupak told CNN quote, "These bonuses are not going to the men and women in the field who FDA struggles to retain. They're going to top agency officials in Washington who have presided over the agency while an unprecedented number of Americans have been sickened by contaminated food and drugs."


SCHIAVONE: Kitty, the latest reported sickness was registered with the CDC on June 20th, bringing the official total to 869 in 36 states. Officials believe that thousands more have been affected.

PILGRIM: In the last three weeks while this has been playing out, have you seen a change in tone with the FDA?

SCHIAVONE: Yes, when we first challenged the CDC and the FDA on whether or not it really was tomatoes since they still to this day do not have a tomato sample in hand that has a salmonella Saint Paul (ph) mark on it, they're very defensive. As of today they're saying, well, there are other things that are prepared with tomatoes.

We have to follow the science. This is part of our investigation. So we see a real softening of their insistence. They say oh tomatoes are the lead suspect, but the truth is they still don't really know.

PILGRIM: And 800 plus people sick from it...

SCHIAVONE: And for every single one of them, Kitty, 35 to 40 more people have been sickened. Those are just the ones they have on record.

PILGRIM: I know. Yes, thanks very much. Louise Schiavone. Thanks, Louise.

Time now for tonight's poll: Do you believe that senior members of the FDA deserve $35 million in staff incentives paid to them in the past year?

Yes or no? Cast your vote at We'll bring you the results later in the broadcast.

Violent protests erupted again tonight in South Korea. And that's over U.S. beef imports. Thousands of protesters clashed with the police in the streets of Seoul as U.S. beef went on sale for the first time under a new trade agreement.

South Koreans banned U.S. beef imports in 2003 after an outbreak of mad cow disease in this country. President Bush will visit South Korea next month.

Coming up, in many states a rising backlash against employers of illegal aliens. We'll have a special report on that.

And also, San Francisco's sanctuary policy is protecting a rising number of criminal illegal aliens who should be in prison or deported. We'll tell you all about it.

And Mexico on the brink, our national security is at risk. We'll examine Mexico's escalating war against violent drug cartels. Stay with us.


PILGRIM: A tough new law takes effect tonight in Mississippi. Mississippi is requiring businesses to use E-Verify to assure the legal status of new employees. Under the law, businesses that do not comply could lose their business license.

Lisa Sylvester reports.


LISA SYLVESTER, CNN CORRESPONDENT: Mississippi is only the second state in the nation to require private businesses check their employees to make sure they are eligible to work in the United States. The law, which just took effect, will be phased in beginning with companies with 250 or more workers. Mississippi lawmaker Michael Watson says the issue of illegal immigration was something he heard a lot about as he went door to door campaigning. Residents worried about the burden on schools, hospitals and social services.

MICHAEL WATSON (R), MISSISSIPPI STATE SENATOR: It is something that affects the state, probably much more than the nation. It is a local level, it is a local issue, it's not just a federal issue. It is important for us to get a hold of this thing and do something positive to make a difference.

SYLVESTER: E-Verify is an Internet based system run by the Department of Homeland Security that matches worker's information against social security records.

ROBERT DIVINE, IMMIGRATION GROUP: Without E-Verify, you're stuck with just looking at the document and making your best shot on whether that's a valid document.

SYLVESTER: But critics say the program that was set up on a voluntary basis not ready for widespread use. Arizona was the first state to mandate state wide employment checks.

REP. GABRIELLE GIFFORDS (D), ARIZONA: Some of the businesses that have signed up have reported a variety of challenges and problems using E-Verify. They're finding it complicated, unreliable and burdensome.

SYLVESTER: But proponents say the system works, weeding out illegal workers. According to Department of Homeland Security, 92 percent of workers were cleared within seconds. Most of the remaining workers are found to be ineligible to work.

There are eight other states that require most or all public employers to verify employee citizenship. All hires for the federal government or its contractors must also be E-Verified.

Lisa Sylvester, CNN, Washington.


PILGRIM: Well, E-Verify is already a proven success. More than 69,000 employers currently use E-Verify to determine that their new hires are authorized to work in the United States. So far this year, employers used it to check more than four million potential employees -- 99.5 percent of qualified employees were cleared automatically by E-Verify.

There is outrage tonight after the city of San Francisco stepped in to shield eight Honduran crack dealers from federal authorities. Now those dealers then escaped from a local halfway house. San Francisco has been has long been a so-called sanctuary city for illegal aliens. Police there refused to cooperate with federal immigration authorities. The "San Francisco Chronicle" today reported eight crack dealers shielded by San Francisco walk away.

Jaxon Van Derbeken reported that story and he joins us now San Francisco.

Thanks for being with us. Excellent report. Jaxon, these offenders were put into long-term youth rehab centers that had no lockdown capacity, correct?

JAXON VAN DERBEKEN, "SAN FRANCISCO CHRONICLE": That's right. They could come and go as they pleased essentially and within virtually days of arrival, in these mountains in southern California, mountain homes where small town where they come from San Francisco, they arrive, they showed up for a couple of days and walked away.

PILGRIM: This is astonishing. And in reading your report this is the second time some offenders from El Salvador escaped last year from a similar situation, didn't they?

VAN DERBEKEN: Right. I think what happens is the city briefly decided or had historically been sending these individuals back on plane flights to their native countries and federal government stopped that. And so even though the first time it failed last year, they resorted to doing it again within the last month and that's when the eight people walked away.

PILGRIM: Unbelievable story. And they basically import these drug offenders into local communities and put them in these youth rehab centers, don't they?

VAN DERBEKEN: Right. What happens is they get arrested on the streets dealing crack in San Francisco. And the local authorities have decided that rather than turn them over to the federal immigration officials, they decided to just sort of settle this issue on their own because of the sanctuary issue, they don't feel it is their place to alert the federal government to the fact that there are these youthful offenders who are not here legally, perhaps. And then they decided to just sort of disposition them case, resolve their case by sending them down south or to another country.

PILGRIM: When you were reporting this story, how has Mayor Newsom been defending this practice?

VAN DERBEKEN: Well, he says that it is a historic practice that, you know, he essentially inherited. And that he doesn't like it but he understands that the city is the city of sanctuary and he also understands that the federal government believed that these people should be deported and be sent to their country properly through legal channels. So they're trying to do this balancing act, but so far the city hasn't been able to strike that balance very effectively at this point.

PILGRIM: It sounds like a disaster at this point. What is ICE doing to force San Francisco to force them to comply with the law?

VAN DERBEKEN: When they discovered these people were arriving in Houston, en route to Honduras, they stopped them and they questioned the probation officer accompanying them. Both in December and then again in May, a separate run, if you will. And what happens was is that after that, they met with local authorities, they sent them a letter saying, don't do this or at least that's their interpretation. San Francisco believes it is a little bit more iffy than that.

But in any event, they basically said that they -- the red flag was flown, that they were alerted to the fact that this was improper in December and then they did it again in May. And now San Francisco stopped the flights and that prompted the trip down to San Bernardino County for these eight people who walked away.

PILGRIM: Jaxon Van Derbeken, an incredible story. Thanks very much for coming on the program tonight. Thank you.

VAN DERBEKEN: Thank you.

PILGRIM: Coming up, the Mexican drug wars rage on. Will half a billion dollars in U.S. aid defeat the drug cartels? One of the nation's leading authorities on Mexico will join me here.

Also, an Obama supporter says McCain's military record doesn't make him qualified for the presidency. Three top radio talk show hosts will tell us what their independent minded listeners are saying about this and a lot more. So stay with us.


PILGRIM: The drug cartel violence raging along our border with Mexico continues unchecked. More than 4,200 people have been killed in Mexico's drug wars over the past 18 months. President Bush Monday authorized half a billion dollars in aid to Mexico to help them fight the drug cartels.

Professor George Grayson is one of the leading authorities on Mexico and its crisis. He joins me now from Mexico City.

Professor Grayson, is this initiative a step in the right direction?

PROF. GEORGE GRAYSON, COLLEGE OF WILLIAM & MARY: Kitty, it is at least a modest step. The marines in Mexico need infrared sighting equipment for night warfare. Helicopters are required to try to land troops in isolated areas, which are really no-man's-lands now. And monies can be expended wisely I think on sophisticated x-ray and gamma ray equipment to try to uncover both money and arms that are crossing the border.

PILGRIM: The big worry, though, and you said this, Professor Grayson, is that the Merida initiative is like a big pinata for Mexican officials that everyone has their hand out. How assured are we this money will go to the right cause?

GRAYSON: Well, no money is going to cross the border. It is all going to be either in equipment, including weapons, or in the form of training. So I think we will be able to keep pretty good watch over how it is used. I am more emboldened to the extent that the army and the navy make use of the resources because they have a pretty good record. In contrast, the police remain corrupt to the core.

PILGRIM: You know, the Senate approved the aid package but they had wanted to put in certain conditions on that the Mexican government would have to adhere to in order to qualify. That was discarded. Do you believe that too much consideration was give tonight Mexican government? They said it was an infringement on their sovereignty.

GRAYSON: Two points here. Kitty, first is that the Senate wanted to have soldiers accused of human rights violations tried in civil courts. The fact is that military courts here are much tougher on alleged lawbreakers than are the civilian courts.

And secondly, Mexicans who were lobbying for passage of this legislation said it would help to fight terrorism. And indeed the drug cartels, the Juarez cartel, for example, or especially the Tijuana cartel, which can't get cocaine, is now trafficking in illegal immigrants. So the Mexicans may have been an argument for us to try to do more to stop the flow of --

PILGRIM: Professor Grayson, I would like to quote Congressman Ted Poe of Texas and he was against this initiative and I'd like to read you his statement. "Past agreements with Mexico to fight drug trafficking in their country have proven disastrous. Mexican officials originally supported the $1.4 billion gift but then refused to take it if it was subject to U.S. oversight. If that's not a red flag, I don't know what is."

Do you believe he's right?

GRAYSON: Well, nationalism is ubiquitous here. And Calderon politically couldn't have entered into the Merida agreement if there had been constraints on Mexican sovereignty. It is just one of the givens in the bilateral relationship.

PILGRIM: Thank you very much, Professor George Grayson. Thank you.

A reminder now to vote in tonight's poll. Do you believe that senior members of the FDA deserve $35 million in staff incentives paid to them in the past year? Yes or no. Cast your vote at We'll bring you the results in a few minutes.

Coming up at the top of the hour, the election center, Soledad O'Brien is filling in for Campbell Brown.

Soledad, what are you working on?

SOLEDAD O'BRIEN, CNN ANCHOR: Good evening to you.

Coming up, we're working on issue #1, a very close look at how John McCain and Barack Obama promise to fix the economy. We'll get specific on what they want to do about gas prices, the housing crisis, taxes and much more.

Plus, our very own Ali Velshi promises an unforgettable demonstration about how much money Wall Street has lost this year using his very own domino theory. You don't want to miss that. I'll see you in a few minutes.

PILGRIM: We look forward to it. Thanks so much, Soledad O'Brien.

Coming up, Senator McCain is in Colombia to promote his free trade agenda. Three top radio talk show hosts will be here and we'll find out what their listeners are saying about this and much more.

Also, communist China trying to divert attention from its human rights record by blasting the United States over trade. We'll have a special report. Stay with us.


PILGRIM: Joining me now are three of the nation's best talk radio hosts. In Chicago we have Steve Cochran, who was simulcasting this discussion live on his WGN radio show.


PILGRIM: In Washington, D.C., Wilmer Leon from XM Radio and here in New York we have Mark Simone from WABC Radio. Gentlemen, thanks for being with me.

Senator McCain traveling to Colombia and then going to Mexico. Just fill me in on what you think this strategy, how this makes sense, Steve.

COCHRAN: Well, I'm not sure that it does from a political standpoint because swing states being crucial and swing states being in the economic position they're in, it is tough. And you can argue all you want about this being a new economy and a worldwide economy. Until the rest of the world plays by the same rules and standards that we hold to our -- hold America to, the imbalance will get bigger and bigger and people are going to lose jobs we can make the rules and keep our end of the bargain. The people we're dealing with aren't doing their share and China is a fine example of that at the other end of the world.

PILGRIM: It is hard to see how this will play in key swing states like Ohio and Michigan and Pennsylvania. Wilmer, thoughts on this?

WILMER LEON, XM RADIO: I don't understand how it is going to play either. And particularly when Senator McCain's primary solution seem to be improving programs for unemployed workers and increasing unemployment benefits or continuing unemployment benefits instead of really trying to find tangible and workable solutions in terms of how we're going stop this country from hemorrhaging jobs. Sorry, I'm having trouble --

COCHRAN: Too many syllables, Wilmer. Can't bring that many syllables to the show.

PILGRIM: Hemorrhaging is an upsetting word.

LEON: Hemorrhaging jobs.

PILGRIM: It is. I wanted to -- Wilmer, I'm going to play the McCain campaign today released a new web ad about the senator's support for the Colombia free trade deal. Let's listen to that for a second.


MCCAIN: To fuel our economy, we must create more jobs for Americans and for our neighbors to the south. With better jobs, more of them will be able to stay in their country. We can't go back on our word with free trade promises with America or Central America or Canada or anyone else. We must encourage more trade agreements to create more jobs on both sides of the border and why I'm behind the Colombian Free-Trade Agreement.

I'm John McCain and I approve this message.


PILGRIM: It really is hard to see how this is going to sell.

COCHRAN: NAFTA has worked really well on Mexican immigration, hasn't it?

MARK SIMONE, WABC IN NEW YORK: Why even bring this up? This is like campaigning with a Halliburton jacket on.

COCHRAN: And an Enron hat.

SIMONE: This would be like Obama taking Wesley Clark to dinner tonight. It's like the third rail of the subway, stay away from it.

LEON: He also wants to equate people who want to even negotiate or discuss this issue; he equates them to be isolationists and protectionists. These are a lot of people who just want to keep their jobs; they just want to feed their families. There's nothing -- you're protecting your job. There's nothing isolationist about wanting to feed your family.

PILGRIM: Hold on one second. I want to show our viewers this poll. This is CNN research corporation poll. Foreign trade is a threat to our economy, 51 percent, an opportunity for economic growth, 41 percent. What's really interesting is if you look at it over time, that 51 percent is now and it has come up from 35 percent in the year 2000. Increasingly, Americans are starting to see these lopsided trade policies as a threat to their economy.

SIMONE: That's why you wonder about McCain's judgment. It wasn't necessary to do this. Why did he even bother?

COCHRAN: Because you know he doesn't want to be accused of flip- flopping on it. He is literally at a tipping point here and he needs to go quiet on this issue and not deal with it and move forward on other things because the damage done by flip-flopping is nothing compared to the damage he's going to do if he sticks to this line.

PILGRIM: By taking the wrong subject to the American public. Now let's talk about Obama today. He says he wants to expand President Bush's faith based program. Let's listen to what he had to say.


OBAMA: I know there's some who bristle at the notion that faith has a place in the public square. The fact is leaders in both parties have recognized the value of a partnership between the White House and faith-based groups.


PILGRIM: One really wonders how much that will resonate with the American public, how big an issue this is in the campaign. Mark, thoughts on this?

SIMONE: Let me point out, I'm not on any side here. In fact, with this election, we have to pray nobody wins here. It's not going to be great either way. But I guess it's you campaign to the left to get the nomination and scramble back to the center. But Obama might have overshot the center there.

There are a lot of evangelicals in the African-American community that have supported him and maybe this is for them or maybe thinks he can make inroads in the evangelical area because McCain is weak there. McCain doesn't speak their language. If he is a very religious guy, he's kept it very private. So maybe he's trying to cut into that.

PILGRIM: Steve, what do you think?

COCHRAN: I think the important thing people have to remember is the money for these programs comes from money set aside for areas like this. Everybody jumped all over Bush when he did this. Now that Obama is doing it, we'll see if there is as much heat involved.

In general, in principle, I have to argue, it's not a terrible idea because in the big picture, churches do more community work and these sort of organizations in general do more in their local communities and we need that kind of grass roots effort. The question is, how is it monitored, how is it ultimately paid for and what type of political influence does it create and those are unanswered questions.

PILGRIM: Well the details are, as you say, very sticky.

Wilmer, thoughts on this?

LEON: Yes. Senator Obama's point that the circumstances in America are such that it's going to take more than just the national government in order to solve them, that we're going to have to look to communities, we're going to have to look to faith-based organizations for assistance, that's a very valid point.

The question, I think, first of all, is he going to keep the office of faith based initiatives in the White House as the president did because symbolically, it shows by having that office in the White House, it is a very important point to the president. On the political side, not only is he looking to evangelicals, also, he could be looking to the large African-American mega churches, many of those minister whose became kind of disenchanted with him when he threw Reverend Wright under the bus.

PILGRIM: Let's just look at one last poll because it is interesting. Obama, 50 percent, McCain, 45 percent. The thing that's striking is why Obama hasn't gotten more of a lead, given Bush's low approval ratings in the country.

Mark, we're almost out of time. Quick thoughts.

SIMONE: It might be what I'm saying. Both these guys talk a lot, both seem to be on every side of everything. Nobody trusts either right now. They don't know who to choose. It's evenly divided.


COCHRAN: McCain is going to need the independents and the key for Obama is women and college students show up to vote. Six hundred Starbucks stores closed today, McCain ought to go make coffee in those neighborhoods. That's a good place to start.

PILGRIM: Wilmer, last words.

LEON: You're looking at a poll in June about an election in November. I don't think it means a lot. And to Steve's point, when the college kids come back and younger folks get back in the process, I think you'll see the numbers change.

PILGRIM: Thanks very much, Mark Simone, Wilmer Leon, Steve Cochran. Thank you, gentlemen.

COCHRAN: Thank you, Kitty. CNN continues --

PILGRIM: Up next, communist China strikes back at U.S. critics. We'll tell you what the Chinese are saying about this country. We'll tell you next. Stay with us.


PILGRIM: Communist China is under increasing fire for its record on human rights ahead of the Olympic Games. Instead of responding to criticism of its own record, China tonight is going on the offensive against the United States.


PILGRIM: Human rights advocacy groups are calling communist China's grand Olympic debut this summer, the genocide Olympics because of China's support of a murderous regime in Sudan and the killings in Darfur.

Two Congressman, Chris Smith of New Jersey and Frank Wolf of Virginia, were in China this week asking for the release of more than 700 political prisoners. Chinese human rights lawyers trying to meet with the congressman were either detained or told not to show up. The congressman called on President Bush not to attend the Beijing Olympics because of a deterioration of human rights before the games.

Advocacy groups and athletes wants an Olympic tradition to be observed, a 55 day Olympic truce to last the duration of the games, so international aid organizations can come into Darfur.

JOEY CHEEK, OLYMPIC MEDALIST, 2002, 2006: It should be called so we can help restart the diplomatic peace process. We can engage humanitarian aid to the people who have been cut off. Hopefully, there can be increased deployment to the peacekeeping force so far delayed.

PILGRIM: China, under fire from the international community, is firing back at the U.S., criticizing the United States for its economic problems, calling the trade policy protectionist and complaining about the decline of the dollar.

PETER BROOKES, THE HERITAGE FOUNDATION: The Chinese are not happy about the value of the dollar. They're not happy about the economic troubles here in the United States. They're worried about their foreign currency reserves that are pegged at about $1.8 billion today, losing their values. They're also trying to blaming the United States that their -- for inflationary pressures in China as well.

PILGRIM: This week, Premier Wen Jiabao complained to Secretary of State Condoleeza Rice about the falling dollar, the second such complaint this year.


PILGRIM: Well, it is ironic that the Bush administration glosses over these tensions. President Bush still plans to attending the Olympics this August and recent trade talks were described as a successful meeting.

Well, tonight's poll results -- 99 percent of you do not believe senior members of the FDA deserve $35 million in staff incentives paid to them in the past year.

We have time now for some of your thoughts.

Anthony in Florida wrote to us: "Just want to personally thank you for covering the Nielsen story here in Florida and the outsourcing that is taking place. It's good to know that someone is looking out for the remainder of we, the employees, who still have jobs here."

And William in Missouri wrote: "Hey, Lou. I wanted to thank you for the way you that you stand up for myself and my family. We are hard working, union, middle class Americans and it really gives me hope and inspiration to see and hear you fighting for us and our great country. Keep up the great work."

And Frank in New Jersey: "Being an independent thinking U.S. citizen today is like being on the Titanic an hour after it struck the iceberg and having to listen to a bunch of idiots saying, 'isn't this exciting?'"

We love hearing from you. Send us your thoughts at Please join Lou on the radio, Monday through Friday for "The Lou Dobbs Show." Go to to find the local listings for "The Lou Dobbs Show" on the radio.

Thanks for being with us tonight. Please join us tomorrow.

For all of us here, thanks for watching. Good night from New York.

The "ELECTION CENTER" starts right now. And here is Soledad O'Brien filling in for Campbell Brown -- Soledad.