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Lou Dobbs Tonight

Stimulus Showdown; Obama's Appeal; Daschle's tax Troubles; State of Emergency; Buy American

Aired February 02, 2009 - 19:00   ET


LOU DOBBS, CNN ANCHOR: Tonight a political showdown over the $1 trillion borrowing and spending bill masquerading as an economic stimulus package. President Obama calls top Democrats to the White House today. He demands urgent action to save the package. We'll have complete coverage.

And tonight lawmakers demanding hundreds of millions of dollars in additional spending, this time on our national parks. This is stimulus? We'll have that special coverage in "Lou's Line-Item Veto" tonight.

Also tonight fear mongering and outright lies by opponents of the "buy American" provision in the economic stimulus plan. It is a provision to make certain taxpayer dollars are spent on American products made by American workers. We'll tell you who's really upset about that. We'll have all of that, the day's news and much more straight ahead right here.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Monday, February 2nd. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody, the political showdown over that $1 trillion so called economic stimulus package tonight is at a pivotal point. Senate minority leader, Senator Mitch McConnell is now demanding big changes including significant help for homeowners, something that we have been demanding on this broadcast for almost a year and a half.

President Obama wants to push the economic stimulus package through Congress by the Presidents Day weekend. President Obama today said what he called modest differences should not stand in the way of a deal. Jessica Yellin reports now on the showdown from Washington -- Jessica.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Lou, I have been on the phone with my sources on Capitol Hill today and they tell me this stimulus must see big changes for Republicans to sign on. But guess what, not all Republicans agree on what changes they would like to see in the bill.

One major change that does seem to have brought support, a Republican proposal to, as you say, Lou, address the housing crisis. The Senate minority leader today said that gets to the root cause of our crisis.

(BEGIN VIDEO CLIP) SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: We believe Republicans that a stimulus bill must fix the main problem first, and that's housing. That's how all of this began, we think you ought to go right at housing first. And we have already indicated that we think this four percent mortgage proposal which was developed by Glen Hubbard (ph) is something that can work and make a difference.


YELLIN: Now Republicans are floating two housing proposals, one to offer a $15,000 tax credit to anyone who buys a home in the next two years. They say by encouraging spending, that would be real stimulus. The other is something Mitch McConnell referred to just there, having the government guarantee home loans at four or 4.5 percent, which would allow more people to refinance houses at affordable rates.

Folks would still get loans from the banks, but they'd be guaranteed by the governments, so the theory is it shores up the mortgage market. Now Democrats, they're open to both those ideas, but there's another piece Republicans are pushing. That's a tax cut for folks who pay income tax. Democrats don't like that.

The idea is reduce taxes by five percent for people who are in the lowest two tax brackets. Democrats oppose this, Lou, because as you know they would like to see tax credits go to people who make too little income tax -- to pay income taxes.

DOBBS: Well the idea, Jessica, of bringing down interest rates and driving that into the housing market, there's no question that that would be an absolute positive development for a badly battered even in some quarter's depressed housing market. Surely there can't be any resistance to that idea.

YELLIN: Well I've spoken with folks at the White House and Democrats on Capitol Hill, the White House likes the idea, is open to it, Democrats worry that it will cost too much. But they also are open to it, Lou.

DOBBS: Well, with a trillion dollars in the offing here, I can only imagine just how aghast those Democrats are at the idea of spending such large sums of money, both parties of course just on their knees out of anxiety as they seem to be wanting to spend as much taxpayer money as possible. Jessica, thank you very much. Jessica Yellin.

Well President Obama tonight held a top level meeting with congressional Democrats at the White House to discuss the huge borrowing and spending package. The president pushing Democrats and Republicans alike to reach a compromise. Their meeting broke up just a short while ago. Not one of the Democrats who attended the meeting would stop to make any kind of statement. Our Ed Henry now has the report from the White House -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Lou, you're right. We had been told before this meeting at the White House that Democratic leaders would come to the cameras to talk about how they felt, everything was moving forward rapidly. A lot of times when lawmakers end up not coming to the cameras, it's a signal often times that there were problems in the meeting.

Maybe the meeting didn't go as well as expected, as they planned to beforehand. But I'm being assured by Democratic aides familiar with the meeting that there was no problem, they're insisting that the president is still on the page with -- same page with Democratic leaders. They say that at this meeting Speaker Nancy Pelosi, Senate Majority Leader Harry Reid indicated to the president that both of them are still on track to getting this stimulus bill done before the Presidents Day recess in the middle of this month of February and also that all sides are on the same page about getting this done quickly, but the other question is how far apart is everyone in coming together, today the president insisted they're very close.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There's still some differences between Democrats and Republicans on the Hill. Between the White House and some of the products that's been discussed on the Hill. But what we can't do is let very modest differences get in the way of the overall package moving forward swiftly.


HENRY: Now minor differences you heard there from the president. But the Senate Republican Leader Mitch McConnell is insisting that the differences are wide, not just between Republicans and this White House, but even some Democrats or conservative Democrats like Ben Nelson (ph) of Nebraska, suggesting they want some serious changes to this stimulus bill. In the words of Senator Nelson, he wants to change this from a spending bill to an actual jobs bill -- Lou.

DOBBS: And the senator with whom we talked here last week is adamant about it. And I have to -- I am going to do a quick count here. It's probably been three to four years, maybe longer since frankly I have had anything positive to say about the -- about Senator Mitch McConnell's view on public policy.

But there's no question that his idea, the Republican idea here on lowering interest rates and pushing those low rates out into the housing market in this country is an absolute guaranteed positive for the economy. It's hard to imagine that either Pelosi or Reid, no matter their partisan energy here would want to stand in the way of that.

HENRY: Well let me tell you what the White House view is on it in terms of dealing with that. Now Robert Gibbs, the White House spokesman, today insisted that the White House does want to deal with the foreclosure crisis, does want to look at those proposals, but they want to do it in a separate package.

They think this one should be focused on jobs and stimulating the economy, but they're talking about a second package coming out in the second week of February dealing with the foreclosure crisis, dealing with cracking down on the bonuses on Wall Street, et cetera, sort of a separate financial rescue package. So in fairness to the White House, they do say they want to deal with it, but they're not dealing with it...

DOBBS: I'm sorry. I just got lost.


HENRY: ... in this first bill.

DOBBS: I'm just -- I just got lost. What's the name of this bill?

HENRY: It's an economic stimulus bill. They're calling it a recovery plan.

DOBBS: No, no, that's right. It's a recovery plan?


DOBBS: What would be more about recovery than pushing those rates down and driving them into the housing market? What could be less about recovery than doubling the budget of -- I mean this is crazy stuff. Job creation here is going to be hard to ascertain at best, but a trillion, three, whatever you want to call the number, if the number ends up being the 900 billion that we're looking at in the Senate, if it then has -- then at current rates, we're talking about another 350 to $400 billion in interest because all of that money has to be borrowed, I mean I'm getting a little lost about what everybody's picking on here.

HENRY: Well you're right the Congressional Budget Office has said that if you factor in that interest, this bill is actually going to cost them somewhere between 1.2 and $1.3 trillion. The White House view is that the president wants to get the stimulus part done first and then deal with the housing crisis, then deal with some of the broader issues in terms of the financial system.

It's a strategy obviously some Republicans on the Hill do not agree with, but it's a strategy this president's pursuing to try to do it in two chunks instead of one big one. The bottom line is this is still a big one, the first bit, but he's talking about spending maybe hundreds of billions more in a second package, Lou.

DOBBS: You know we have reached a heck of a stage, Ed Henry, when we're talking about 1.3 trillion as being a first installment.

HENRY: First bite, that's right.

DOBBS: Appreciate it. Thank you very much.

HENRY: Thanks Lou.

DOBBS: Ed Henry from the White House. The president's choice to be his health and human services secretary, Tom Daschle tonight fighting to save his nomination. Daschle meeting in a closed door meeting with members of the powerful Senate Finance Committee about his failure to pay more than $140,000 in back taxes and interest.

Afterwards Daschle said he deeply apologized to the president, the Senate and the American people. Dana Bash with our report from outside the room where the Senate Committee today met -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: That's right, Lou, it happened right here and it wrapped up just about an hour ago. What happened was members of the Senate Finance Committee, about 23 of them were all in this room and really looking at for the most part the investigation that their staff have been working on for about a month over what you just mentioned, the fact that Tom Daschle apparently did not pay $128,000 in taxes.

We're told that he -- that Tom Daschle actually came into that room and got about 15 minutes worth of questions from his former Senate colleagues and then something really remarkable happened. They all came out to the microphones, both Democrats and Tom Daschle and the Democrats were extremely effusive in their praise, saying that they actually think that he made an honest mistake and Tom Daschle said the same.


SEN. MAX BAUCUS (D), MONTANA: His tax mistakes are regrettable. His tax mistakes do not change his qualifications to lead on health care reform. They do not change my support for this nomination.

TOM DASCHLE, HEALTH SECRETARY NOMINEE: When I realized the mistake, I notified officials and I paid the tax in full. It was completely inadvertent. But that's no excuse. And I deeply apologize.


BASH: Now in watching that scene, it was sort of easy to forget that Tom Daschle was no longer in the Senate, Lou, because you had about six of his Democratic colleagues there talking about him while he was kind of waiting in the wings, that's what's made the scene a little bit odd, but what was noteworthy was it was just Democrats. There was not a Republican in sight there.

In fact Republicans moved pretty fast out of here after this meeting. Our Ted Barrett (ph), our congressional producer did catch up with one, Senator John Ensign (ph) of Nevada, and he did not sound like those Democrats here. He said that there are tough questions to be asked. He said that it doesn't -- that there are questions that on its surface it's very hard to explain how he didn't know for example that the car and driver given to him by somebody he worked for not just a friend, somebody he worked for, that he didn't have to pay taxes on it.

He said Tom Daschle was a member of the Senate Finance Committee. He said he should know those things. And those are the kinds of questions that now Tom Daschle will get asked in a hearing next week -- Lou. DOBBS: Yes, let me quote something from Senator Daschle, something he said back in 1998, Dana. He launched a scathing attack against people who don't pay their taxes. He said and I quote then Senator Daschle. He said "make no mistake, tax cheaters cheat us all and the IRS should enforce our laws to the letter." Pretty powerful stuff, huh?

BASH: Extremely powerful stuff and I would not be surprised if that quote ended up in the hands of a senator questioning him at the finance committee hearing next week because those are the kinds of questions I think that especially now it is clearly pretty partisan that Republicans say that they're scratching their head on, but it certainly is a unique situation with a former member of their club coming before them with this kind of situation.

DOBBS: It -- well I think there is also certainly a positive there for Daschle, Dana, in that the Republicans we caught up with at least didn't say they're going to fight his nomination. It sounds like it may not be entirely dissimilar to that of Timothy Geithner who did win confirmation. What do you think?

BASH: That's exactly right. That's exactly right and let's just say the Republicans for the most part voted against Tom Daschle. The way the votes are with the Democrats having the kind of majority they have, he would likely, if other Democrats agree with the ones we heard with today, he will likely get confirmed.

DOBBS: All right, Dana, thanks very much -- Dana Bash from Capitol Hill.

BASH: Thank you.

DOBBS: Tom Daschle and Tim Geithner not the only leading public figures to have some tax problems. Top Democratic Congressman Charlie Rangel who's the chairman of the committee that writes the nation's tax code, the House Ways and Means Committee, didn't pay taxes on some $75,000 and rental income on a villa he owns in the Dominican Republic.

Congressman Rangel eventually did pay the taxes on the income, but only after public outcry. The chairman of the powerful Senate Banking Committee, Senator Chris Dodd with problems of his own today trying to end controversy over his links with a mortgage lender at the center of the financial crisis. Senator Dodd saying he will refinance two mortgages that he received from Countrywide Financial which well had to be absorbed by Bank of America to save it in the sub-prime mortgage meltdown.

Senator Dodd insisted he did not know he had received preferential rates from Countrywide when he took out those loans in 2003. Senator Dodd said quote, "knowing what I know now, I regret ever having done business with Countrywide". Senator Dodd tonight remains under investigation by the Senate Ethics Committee. And we should point out that the interest rates right now would be likely considerably lower than the rates that he would hold on those two mortgages that he's refinancing. Well President Obama tonight appears to be on the verge of choosing Republican Senator Judd Gregg of New Hampshire to be his commerce secretary. Senator Gregg is an outright supporter of so-call free trade, and free trade agreements such as NAFTA and CAFTA (ph). Wow, he's also a strong advocate of expanding the H-1B visa program.

Now give another wow. Those programs of course to bring in even more foreign workers into the United States to compete directly with higher price, middle class workers. Corporate America of course uses those visa programs, particularly the H-1B visa program to import cheap labor from foreign countries to replace American workers.

Well the Senate tonight confirming Eric Holder to be attorney general, the vote was 75-21, Holder becomes this country's first African-American attorney general. Some Republicans strongly opposing Holder on concerns about his position on gun rights, the Second Amendment and his policy on fighting radical Islamist terrorists.

Holder also facing criticism for his role in the last minute pardon of Marc Rich (ph), a fugitive financier doing business with a terrorist state namely Iran during the Clinton administration. Later here we'll have much more on the huge so-called economic stimulus package. We're going through the legislation.

We'll show you how your elected officials are trying to spend your money. You may not be entirely pleased with what they're doing. And we found that the Senate has put aside hundreds of millions of dollars for national parks. We'll have all of the details tonight in "Lou's Line-Item Veto" coming right up.

Also ahead, corporate elites launching an all-out assault to stop a provision -- that's right -- to stop a provision that would assure taxpayer dollars be spent on American products made by American workers. Now you would think that's pretty American. But the U.S. Chamber of Commerce says wait a minute, they're in outright opposition. We'll tell you why.

And the state of California tonight faces its worst drought, we'll have that report next.


DOBBS: More developments in the nationwide salmonella outbreak, one of the nation's largest grocery store chains, Kroger is now recalling food made with peanut butter ingredients as this nationwide salmonella outbreak goes on. Kroger is pulling products in the 31 states where it operates under various store names. The company is recalling all packages of so-called Kroger store brand and private selection store baked cookies and cakes. Now those include all peanut butter cookies, assorted and variety bakery cookies, private selection chocolate trio single-layer and double layered iced cakes.

And the Kellogg company is expanding its recall of peanut products tonight as well. Those products include some lots of Keebler Soft Batch Homestyle Chocolate Chunk cookies and Oatmeal Raisin cookies. Also some Special K Protein Meal Bars, certain types of Austin and Keebler cookies. So please go to our Web site,, we have much more information there on the recalls and keep an eye out for all of them.

And tonight also enoki mushrooms produced by Phillips Mushroom Farms of Pennsylvania are also being recalled. Test showing the mushrooms may be contaminated with listeria, so far no illnesses have been reported. It is one hopes a precautionary recall.

These are tough times for the state of California. Unable to do anything apparently about its $42 billion state government deficit, California is giving taxpayers IOUs and forcing some of its state workers to go on furlough. Now the state that's running out of money may also be running out of water. Experts are warning that this year's record low rain and snowfall has the state of California on the verge of the worst drought in its history. Casey Wian with our report.


CASEY WIAN, CNN CORRESPONDENT (voice-over): California's winter snow pack is only about 60 percent of normal this year, melted snow accounts for most of California's water so state officials say water rationing for homes and businesses is likely.

LESTER SNOW, DIR., CALIFORNIA DEPT. OF WATER RESOURCES: The agricultural community of California is going to be very severely impacted and there's going to be literally hundreds of thousands of acres of crops that are not grown this year, and that means probably tens of thousands of jobs of farm workers that will disappear.

WIAN: Governor Arnold Schwarzenegger in a statement called the snow survey "just one more piece of evidence that we urgently need comprehensive water reform to protect our economy, our jobs, our communities and our quality of life. California is headed toward one of the worst water crises in its history."

The state's economy has already spiraled to historic depths. On Sunday, the governor and state lawmakers missed their self-imposed deadline to reach a deal on the projected $42 billion budget shortfall by next year.

H.D. PALMER, CALIFORNIA STATE FINANCE DEPT.: This time there are real world consequences because we have not been able to get to a budget agreement.

WIAN: Already tax refund payments to individuals and businesses are delayed. Nearly a quarter of a million state employees are being forced to take two days off a month without pay.

UNIDENTIFIED FEMALE: In this economy it's staggering. It's one more kind of nail in the coffin.

UNIDENTIFIED MALE: That's right -- I just think that the rest of the United States thinks we're crazy.

WIAN: Virtually absent from the discussion notes a columnist for the "Los Angeles Times" the strain of illegal immigration on the state budget. A Monday column concludes the state spends well over $5 billion a year on illegal immigrants and their families. That's about equal to a third of the state's budget shortfall this fiscal year.


WIAN: Now over the past 10 years, California's population has grown by about 11 percent. But from 1996 through 2006, it's estimated the illegal alien population swelled by about 40 percent. And illegal immigrants now make up nearly eight percent of California's residents -- Lou.

DOBBS: At first I'm just stunned that the "Los Angeles Times" even acknowledged even at the periphery that there is such a thing as an illegal immigration crisis in this country.


WIAN: It was sudden for me to see that as well Lou, as somebody who reads the "Los Angeles Times" every single day, you have not seen that mentioned, but their "Capitol Hill Caller" (ph), Capitol columnist, Sacramento columnist laid it all out, did his version of the math and how much illegal immigration costs the sate of California. And his calculations came up with $5 billion -- a lot of people think it's higher than that perhaps even double. But the fact that the "Los Angeles Times" acknowledged it is something new, Lou.

DOBBS: Now "The New York Times" did a 761-word editorial on the issue of illegal immigration, Casey, and never once mentioned the word illegal. So the coasts are well covered by this sort of mindless political correctness which apparently is -- there's some breakthrough in the "L.A. Times".

Let me turn to the drought, because we reported here for at least what, five years that the southwest of this country was in a 500-year -- parts of it in a 500-year drought. Meanwhile there's no discussion at all about slowing the population of California, good lord, Governor Schwarzenegger talking about a comprehensive water reform?

Is there anything that can't be turned into comprehensive as a way to not deal with it. Comprehensive immigration reform, comprehensive water reform. These are all -- this is just code word for don't actually deal with the issue. What is -- the state is going to be left in an extraordinary vulnerable position, it is flirting with absolute economic and financial disaster.

WIAN: What Governor Schwarzenegger has been talking about for a couple of years is long-term investments in water infrastructure, but even his folks acknowledge now there's not much they can do, but force people to ration water because the situation is so critical right now. There is need for long-term reform, but right now we're already in a crisis, Lou.

DOBBS: All right, Casey thank you very much. Casey Wian from Los Angeles. Coming up here next, lawmakers want to spend hundreds of millions of your dollars on our national parks. Now that's not entirely a bad idea to support our national parks, but is it really job stimulus? We'll examine that in tonight's "Lou's Line-Item Veto".

And special interest business groups trying to kill, of all things, "Buy American" provisions in the so-called economic stimulus package. Isn't that bill supposed to stimulate our economy? Wouldn't it be good thing for America to actually produce something? We'll have that special report and we'll tell you who has decided it's un- American to "Buy American". We'll be right back.


DOBBS: It doesn't get any more absurd, I really believe this, than this. Special interest business groups are now leading the fight against the provisions in the so-called economic stimulus bill that are so-called "Buy American" provisions. These groups -- these business groups are waging a campaign of fear saying that "Buy American" provisions are the same thing as protectionist and could lead to trade wars, perhaps even a depression.

Who's saying all of this? Well, none other than those just -- just wonderful people over at the U.S. Chamber of Commerce. That's right; the U.S. Chamber of Commerce doesn't want you to buy U.S. Bill Tucker with our report.


BILL TUCKER, CNN CORRESPONDENT (voice-over): It sure seems like a patriotic requirement in the economic stimulus plan.

SEN. BYRON DORGAN (D), NORTH DAKOTA: In the context of creating legislation that would put people back to work, the question is are we going to spend American taxpayers money and purchase foreign products in order to make these repairs and build these projects? I hope not.

TUCKER: But the U.S. Chamber of Commerce says it's a dangerous idea. In a letter to the congressional leadership, the Chamber warns of dire consequences should it happen.

JOHN MURPHY, U.S. CHAMBER OF COMMERCE: The concern of the Chamber is that "Buy American" provisions in the stimulus package could have the effect of costing American jobs, causing retaliation from our trading partners overseas as they raise protectionist barriers against our exports.

TUCKER: The Chamber doesn't hesitate to warn that the protectionism of the 1930s contributed to a depression. And even though no one is talking about raising any trade tariffs this time around, only creating a preference for American made steel, iron and manufactured goods. Fear is a substantial part of the Chamber's argument. An argument greeted with outrage by groups who believe the "Buy American" clauses are appropriate, necessary and legal.

LORI WALLACH, GLOBAL TRADE WATCH: There are a handful of very large multinational corporations who don't think of the national interest, they don't think of the public interest, and in their self- interest, what they're trying to do is gin up horror and fear by almost any policy that they -- that doesn't suit their own needs.

TUCKER: The Chamber claims we're the largest exporting country in the world. But according to analysis of the trade data by the Economic Policy Institute, Germany and mainland China exported more than America in 2007. We are the number one importer, however.

ROBERT SCOTT, ECONOMIC POLICY INSTITUTE: U.S. multinational companies are the largest single importer of goods into the United States. Those companies alone imported more than $600 billion worth of goods into the U.S. in 2007. That was about a third of all of U.S. imports.

Foreign multinational companies import another more than $400 billion worth. Together those two groups, U.S. and foreign based multinationals, were responsible for 2/3 of our imports.

TUCKER: Buy America is hardly a new idea. Congress passed the Buy American Act in 1933 for the procurement of federal goods. In 1982, Congress passed a Buy America Act for transportation related procurements and there have been no trade wars as a result.


TUCKER: Now this is where it gets fun, you know, if you like politics as a blood sport, because the only way for the Buy America provisions from Senator Dorgan that are now in the Senate bill to come out is by amendment, which means that some senator will have to go down on the floor and in front of America say they're against American dollars being spent, Lou, on buying American products to stimulate the American economy.

DOBBS: It is absolutely stupefying that the U.S. Chamber of Commerce, as brazen as it has been representing the multinationals -- by the way, anybody who thinks the U.S. Chamber of Commerce represents small business in this country, you're hallucinating. Let me assure you.

They're represent multinationals without any allegiance whatsoever to the national interests of -- at least of this country, and without any apparent interest to the common good of the American people.

But to -- for the U.S. Chamber of Commerce to say don't buy U.S., it makes you wonder why they even have a tax exemption, I mean this is crazy.

TUCKER: It staggers the imagination and as you can imagine, all of the manufacturing groups were all just dumbfounded that this group is supposed...

DOBBS: Well, including the National Association of Manufacturers.

TUCKER: Well, the National Association of Manufacturers, Lou, we have not heard from.

DOBBS: Well, where are they?

TUCKER: They have not -- they didn't...

DOBBS: Where are the little darlings?

TUCKER: They didn't sign the chamber -- they did not sign the chamber's letter.

DOBBS: Where are the little darlings because the NAM, speaking of groups that only represent big multinational groups and not the smaller manufacturers in this country, I mean I think people are starting to figure out what a bunch of -- you know how hoodwinked they've been...

TUCKER: Right.

DOBBS: ... by these two groups. But I have to say, the other day to see President Obama, talking with a number of the heads and CEOs of corporations directly, was, I think, a great reflection on him as well as on those CEOs who suddenly decided maybe the Chamber of Commerce shouldn't be the sole mouthpiece, along with the business roundtable, for business in this country.

This could be a major change in the direction of this country, if we have CEOs who who'd -- because I'm pro business, I am absolutely pro -- I'm pro labor as well. And those are competing concepts in the minds of many. I look at them as counter-billing values that support one another.

But to actually have CEOs who stand up and speak for themselves instead of hide behind the skirts of the U.S. Chamber of Commerce, my gosh, hallelujah, America, we shot got a shot.

Bill Tucker, thank you very much.

TUCKER: You're welcome.

DOBBS: As always.

Well, we want to know what you think about all of this. And our poll question tonight is this: do you believe the fact that the U.S. -- did I say U.S. -- Chamber of Commerce believes "Buy American" is a bad idea shows just how much trouble our nation is in?

We would like to hear from you. Yes or no, cast your vote at We'll have the results here later in the broadcast.

Up next, hundreds of millions of your taxpayer dollars could be spent on our national parks. Now that may not entirely a bad idea but is it economic stimulus? Is it job creation? Our special coverage, "Lou's Line-Item Veto" is next.

Also we'll be examining this huge borrowing and spending bill with one of the country's top economic bankers. We'll be joined by David Cay Johnston, author of "Free Lunch."

Stay with us. We're coming right back.


DOBBS: Joining us now is best-selling author David Cay Johnston, his book is "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense."

That's becoming increasingly clear how they do that under these stimulus packages and bailout bills.

David, great to have you, joining us tonight from Syracuse, New York. Let me, let me turn to something I frankly just shocked me today. And Mitch McConnell, the Senate majority leader, Republican, this is what he had to add to the discussion and the debate and proposals on economic stimulus.


MCCONNELL: We believe Republicans in a stimulus bill must fix the main problem first and that's housing. That's how all of this began. We think you ought to go right at housing first, and we have already indicated that which think that the 4 percent mortgage proposal which was developed by Glen Hubbard is something that can work and make a difference.


DOBBS: Hubbard being, of course, David, as well you well, the former Bush administration economic advisor.

What's your reaction to what -- Senator McConnell had to say?

DAVID CAY JOHNSTON, AUTHOR, "FREE LUNCH": Well, it's remarkable on several levels. Glen Hubbard is a very respectable economist and knowledgeable person, but what about markets setting the prices for mortgages and the values?

The companies out there that are making mortgages and reworking them with people right now are generally just taking the unpaid principal, adding it to the mortgage, extending the mortgage and sometimes giving a little interest rate cut.

House prices have fallen. And someone's going to have to take the loss. Now we can force people out of the houses and the bank can then sell them at a lower price, or the people who are in them can redo those mortgages and the banks take a hair cut, but those losses must be recognized in the economy. There is no escaping this.

DOBBS: All right. Well, let me ask you this because...

JOHNSTON: That's not the core of our problem, though.

DOBBS: It's not the core of the problem, but at the same time, David, I mean, he's talking about pricing as something that's very reasonable for government to price. If government is going to be in the mortgage market, in the housing market, it has the right, and one could say the responsibility and it's not one that distorts the market, to drop in a low interest rate, in this case, let's say it's 4 percent, maybe it's 3.5 percent, whatever it is, the fact is that that would provide considerable incentives to the housing market.

It's something that's been avoided by both political parties and -- over the course of the past year and a half. It also would arguably raise tax revenue because there would be a lower deduction for interest, at the same time helping folks, we might even move to the point where you didn't even have to put in a principal. What do you think?

JOHNSTON: Well, getting rid of the mortgage interest deduction would do a lot to remove distortions in our economy and it's an upside down subsidy. The more you make...

DOBBS: Right.

JOHNSTON: ... the bigger your mortgage, the bigger your benefit. But, Lou, let's say you have a 6 percent mortgage on a house for $500,000 and it value has fallen to $300,000, so the government comes in and says, well, you can have a 4 percent mortgage on $500,000. You're going to pay 4 percent on $200,000 of value that's vanished. That's...

DOBBS: No. No, no, no. No, no, no. I take your point now. I see what you're hung up on. That is, David, what I'm suggesting is this goes along with mortgage modification. All of these -- by the way, JPMorgan Chase, for example, took the lead on this. And to the degree that it's been done substantively that's a terrific program. And lenders across the country who are being bailed out by the taxpayers need to be doing the same thing.

When you were talking about mark to market -- before we get off on all of that, the fact is we've got -- we've seen over $3 trillion lost in our housing markets and meanwhile the bozos in Washington, D.C. keep dealing with everything that's ancillary and on the side.

The great thing about what Mitch McConnell, and by the way, as I said, I -- the number of times I consider and think I have supported Mitch McConnell has said over the last half dozen years, I can't even think of one. But this one makes sense.

JOHNSTON: Well, it may, but I think that we have to address this problem, the prices have gone down and people are not going to stick with properties...

DOBBS: Right.

JOHNSTON: ... where the mortgage puts them severely under water. Now remember in big parts of the country, like where I live in upstate New York, where this is not an issue. This is a concentrated issue in several markets. It is not universal to the country.

DOBBS: Right. No, absolutely, but with -- but if we're going to see a nation take a hair cut, and the taxpayer pay for the hair cut, the taxpayer should be getting some help through that mortgage modification and decidedly lower rates, don't you think?

JOHNSTON: Well, lower rates will do a lot to help this, I'm not questioning that in the least. And it is likely the housing situation will continue to get worse for a while because a lot of the AltA, those are the liars' loans mortgages, those places that haven't already been abandoned by their owners, they're coming up for a reset. The average increase in monthly payments on the AltA loans this year will be a little north of $1,000 a month.

So you're going to see -- right now you're going to see a lot of houses being sold because prices houses fell. But you're going to see a surge of houses that are going to put downward pressure on housing prices again before we get through this.

DOBBS: David, I don't know if you can, but we'd like to have you back tomorrow because we're going to address that very issue here. Hope you can join us for the conversation.

JOHNSTON: Be delighted.

DOBBS: All right, David. Thanks, David Cay Johnston, as always.

Up next here, why is our government delaying the use of the best system to determine whether employees have the legal right to be working in this country? Is it because it's 99.5 percent effective they want to kill it? The Democratic leadership of the House and Senate, the White House, we'll have the story.

And how will up to $2 billion in funding for our national parks stimulate jobs? We'll have the answers next, we'll be right back.


DOBBS: Well, more now on the so-called economic stimulus plan on our special coverage "Lou's Line-Item Veto".

Tonight, the Congress wants to spend about $2 billion of your money on national parks. That's about, just about what the national parks spend every year. The Senate is pushing for some odd or less 800 million. That would be just about half what they spend each year.

But how many jobs would all that money create? Not many. How would it stimulate our economy? Not much.

Kitty Pilgrim with a report.


KITTY PILGRIM, CNN CORRESPONDENT (voice over): The national parks are a treasure, that is not up for debate. But some question why billions of dollars for the national parks is the new stimulus bill in the Congress.

REP, DARRELL ISSA (R), CALIFORNIA: The national parks get $2 billion a year. To give them $2 billion out of borrowed money for some the future generation begs the real question of not is it nice to spend, but is it our right and money to spend by borrowing it from the American people? And that's what we're doing.

PILGRIM: The House stimulus bill passed last week included $1.7 billion in funding for the National Parks Service, which would nearly double its annual budget which has been running about $2.5 billion a year. The Senate's version includes some $800 million.

The Park Service says that money is needed. They have a backlog of $900 billion worth of work that includes repairing roads and park facilities.

A private funded group that lobbies for the Park Service says the spending makes sense.

TOM HILL, NATL. PARKS CONSERV. ASSN.: With the economic situation the way it is, people are going to be more likely to stay home and look for recreational opportunities right at home, rather than getting on a plane and going to Europe.

PILGRIM: Government watchdog groups like Common Cause think billions in lump allocations ought to be reexamined.

BOB EDGAR, COMMON CAUSE: I would ask that the legislative body in the house and Senate really look at these projects on a case-by- case basis and make sure that it's not just make work projects, but projects that help to stimulate the economy.

PILGRIM: Some point out that jobs were created for the national parks during the 1930s for unemployed Americans. The National Parks Service estimates that at least 30,000 jobs will be created by the House version of the bill.


PILGRIM: Now last year 278 million visitors went to the nearly 400 parks across the country. But attendance at national parks has been declining by millions since hitting a peak in 1998.

Well, the National Parks Service today told us they're hoping for the funding and they are seeing the beginnings of an uptick in visitors this year. Lou?

DOBBS: Already, they're seeing an uptick.

PILGRIM: That's what they said.

DOBBS: Oh my goodness. I -- I don't want to have to do an audit, but I think that's rather convenient uptick, as they say.

Thank you very much. Appreciate it. Kitty Pilgrim.

Well, I hope you'll consider calling and e-mailing your elected representatives, congressmen and senators letting them know what you think about this spending legislation. You can go to our Web site,, where you can find all of the contact information you need, the web addresses, telephone numbers, all of it.

And a reminder to please joins us tomorrow night in "Lou's Line- Item Veto" tomorrow night. We examine the more than $14 billion in so-called energy efficiency programs in this massive borrowing and spending bill, that's seven times the current funding it would take the Department of Energy, by some estimates, just about seven years to roll all that money out and get it spent.

Isn't this supposed to be a job creation bill for the next couple of years? Well, we'll have that tomorrow in "Lou's Line-Item Veto." Please be with us.

Up next here, it is more than 99 percent effective. So why isn't e-Verify the best way to check employees' Social Security numbers and legal status of employees and prospective employees a mandatory requirement for America's employers.

William Gheen joins me from American for Legal Immigration to discuss that and a great deal more next. We'll be right back.


DOBBS: Rising concerns tonight. The Obama administration is trying to kill the single most effective government program against illegal immigration. It's e-Verify. E-Verify is 99 percent accurate in determining whether an employee has the legal right to work in this country.

Joining me now is William Gheen. He's the president of Americans for Legal Immigration.

Good to have you with us.

Why in the world is the Obama administration pushing back the deadline for the implementation of e-Verify? Why is there so much resistance to this in Congress?

WILLIAM GHEEN, AMERICAN FOR LEGAL IMMIG.: Well, I believe, Lou, it would be because illegal aliens would have trouble getting jobs if they implemented the programs at this time. As you know, the administration plans to push for a new comprehensive immigration reform amnesty later in the year and if e-Verify were implemented now as well as the new INI rules, it would cost the illegal aliens their jobs.

And they want more time to get the math in the Senate where they wanted to pass the amnesty that over two out of three Americans oppose. And I think they also want to get away from economic issues a little bit. And as you're probably aware, they have some dirty deeds dealing with free speech in this country they'd like to address before they try that again.

DOBBS: Well, I -- you know, I'm kind of used to that. People have been trying to silence my voice for a long time, by the way, from the left, the right, the U.S. Chamber of Commerce or ethnocentric interest groups, it doesn't matter. Issues of free trade or illegal immigration, you name it. A lot of folks want to stifle voices of dissent.

By the way, Congressman Louis Gutierrez is a strong, obviously, proponent of amnesty. He announced that he's going to tour several U.S. cities to pour documents the harm cost to citizens across the country in the absence of comprehensive immigration reform.

What's your reaction to that?

GHEEN: This country doesn't need comprehensive immigration reform. We need comprehensive immigration enforcement. The best thing for this economy right now and for American workers and even your earlier story about the limited water resource in parts of the country is to enforce our existing immigration laws and you know, we went through eight years of Bush making a big to-do out of one thing such as this e-Verify implementation and then doing something else behind the scenes to delay -- we call it pretend immigration enforcement.

Now we have Obama in position and it's his job to enforce the existing laws, not decide which ones he will or will not enforce based on his future plans to try to get through Congress.

DOBBS: You mean like George W. Bush did?

GHEEN: Well, yes. Obama...


GHEEN: Obama is running...

DOBBS: You got the president on his side on this.

GHEEN: Obama needs to play the cards very carefully on immigration enforcement right now or he will be like Bush and well, that's not really change.

DOBBS: I got a kick out of "The New York Times," which is the house organ, if you will, for open borders and amnesty as well Democratic Party and liberals in this country. The editorial said the issue of illegal immigration is a rallying cry at so-called nativism.

And the group, American Cause says anti-immigration absolutism remains the solution for the party's electoral problems. You know, I'm not sure about that but the idea of nativism. This is now the most racially, ethnically, religiously diverse society on earth. We bring in over 3 million legal immigrants in this country every year. We naturalize as citizens just about a million immigrants every year.

What is the deal? Why, why are people trying to -- if you are a nativist, it sounds to me like you're a pretty good person in this country right now because we've got a pretty good we've got a pretty good society. GHEEN: Well, I -- you can supplement the word nativists with American. And they are out to smear as an intimidation attempt to try to suppress free speech and derail the debate with that homonym attack to change the subject. They want to change the subject to be about the messengers that are talking about illegal immigration and that in itself is a suppression of free speech in the country.

DOBBS: William Gheen...

GHEEN: And you're seeing the lengths that they've gone to, to try to push that agenda.

DOBBS: William Gheen, we thank you for being here.

GHEEN: Thank you, sir.

DOBBS: American for Legal Immigration. Thanks, good to have you.

GHEEN: Thank you.

DOBBS: At the top of the hour, Campbell Brown, "NO BIAS NO BULL."

Campbell, a new week. What are you working on?

CAMPBELL BROWN, CNN ANCHOR: Lou, we've got some breaking news we're going to tell you about at the top of the hour.

For President Obama's Cabinet, one nominee confirmed, another one still in trouble, and a new choice, another Republican to be added to the mix. I -- also we mentioned some trouble, former senator, Tom Daschle, just apologized again a few minutes ago for his tax troubles. We'll have that as well.

Also new details from the White House on the president's stimulus plan. A meeting between the President and Democratic leaders has just ended. There are hints it did not go well. We'll have the latest on that.

Also, outrage over a Super Bowl party sponsored by a big bank that also got a lot of your tax dollars in the bailout. All starts at the top of the hour -- Lou?

DOBBS: Looking forward to it. Thank you very much, Campbell.

And a reminder to join me on the radio Monday through Fridays for the "LOU DOBBS SHOW." Tomorrow my guests including Anne Coulter, author of "Guilty: Liberal Victims and their Assault on America.'

Roger Wicker, senator from Mississippi, will give us his thoughts on the government's so-called economic stimulus package.

All of that and a great deal more. Please join us. Go to to get the local listings for the "LOU DOBBS SHOW' and on the radio in your area and on WOR Radio 7:10 in New York 2:00 to 4:00 p.m. Eastern.

We'll be right back with some thoughts of the viewers and the results of polls next.


DOBBS: Tonight's poll results, 90 percent of you say the fact that the U.S. Chamber of Commerce believes "Buy American" is a bad idea shows just how much trouble America is in.

Let's take a quick look at some of your thoughts. Diana in Pennsylvania said: "We're told buy American. We went to Staples, bought a desk, chair and printer, all made in China. Is there anything made in America before?"

There are a few things we're going to try to find some more.

Jovita in Virginia: "The best government money can buy? If I could buy good government, I would. We can't get good government through any means."

We can't disagree. (INAUDIBLE) Finish your thoughts to

Thanks for being with us tonight. Good night from New York. Campbell Brown, "NO BIAS NO BULL" starts right now. Campbell?

BROWN: Thanks, Lou. Hi, there, everybody.