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Lou Dobbs Tonight

Global New Deal; Greenberg Goes to the Hill; Middle East Crisis; Obama's Union Rescue; Gunning for Sheriff Joe

Aired April 02, 2009 - 19:00   ET


LOU DOBBS, CNN ANCHOR: Good evening. President Obama and the other national leaders of the G-20 summit have wrapped up their meetings in London. We'll tell you what they have to show for the time they spent together, and we'll cut through the hype, largely driven by the summit's host, British Prime Minister Gordon Brown.

Last night we reported to you on the Service Employees' Union demands on the Obama administration for their campaign support. Tonight, we report on how the automobile industry bailout may be influenced by $4.5 million of campaign contributions by the United Autoworkers Union.

Also a Congressional hearing attacking Maricopa County Sheriff Joe Arpaio, but one of the biggest questions to be answered is why the Justice Department has permitted itself to be politicized by the Democratic leadership in the House. And why no one in Washington seems the least bit concerned that that committee didn't even invite Sheriff Arpaio to its hearing.

And General David Grange joins us. He has just returned from the border with Mexico. We'll be discussing the security of our border, and the war that rages just south of it.

We'll also be focusing on what lies ahead for the auto industry and our economy.

Let's turn to the G-20 Summit in London, President Obama calling the meeting a turning point and the summit's host British Prime Minister Gordon Brown said he sees the emergence of a new world order. The G-20 leaders produced a communique at the end that offers few details and specifics, and little more than pledges, but a lot of pledges: pledges of a trillion dollars for the International Monetary Fund and the World Bank; pledges to be better regulators; and pledges not to be protectionist.

Ed Henry is with the president and reports now from London.


ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice over): Striding into an overflow room of reporters from around the world, President Obama declared his first summit a success, even though he didn't get all he wanted.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We finished a very productive summit that will be, I believe, a turning point in our pursuit of global economic recovery. It was historic because of the size and the scope of the challenges that we face, and because of the timeliness and magnitude of our response.

HENRY: The magnitude -- $1.1 trillion the G-20 leaders agreed to pump into the global economy, which Mr. Obama was pushing over the objections of French President Nicolas Sarkozy and German Chancellor Angela Merkel.

But it's directed to the International Monetary Fund to help developing countries so it may not have the stimulative effect that the president wanted.

OBAMA: I think we did ok.

HENRY: Mr. Obama suggested that expectations were too high, noting it was easier to find consensus at summits led by British and American leaders in decades past.

OBAMA: If it was just Roosevelt and Churchill sitting in a room with a brandy, yes, that's a -- that's an easier negotiation. But that's not the world we live in.

HENRY: Also a mixed bag on financial oversight, with Mr. Obama stopping the French president's demand for a powerful new, overarching regulatory body. Instead the leaders agreed to establish a new financial stability board, as an early-warning sign for future crises, but it has little teeth to actually crack down on risky investments like hedge funds.

OBAMA: I think the steps in the communique were necessary. Whether they're sufficient, we've got to -- we've got to wait and see. This group, once again, will respond as needed.

HENRY (on camera): This group gets another chance to respond this September in New York, but it's important to remember its last meeting was five months ago in Washington. The crisis has only gotten worse ever since, so it's not clear that today's actions will stop this global recession.

Ed Henry, CNN, London.


DOBBS: To put the G-20 pledges of a trillion dollars to save the world economy in perspective, the United States itself is spending $13 trillion of your money to support the $14 trillion American economy. British Prime Minister Brown today declared a new world order is emerging.

We want to know what you think, so our poll question is -- are you excited that a new world order is emerging, or are you concerned about America's sovereignty? Cast your vote at We'll have the results here later.

The federal government's bailout of AIG now amounts to about $170 billion of taxpayer money. Money both this administration and the previous claimed to be necessary to avoid economic disaster. But AIG's former CEO who stepped down four years ago today told Congress AIG isn't too big to fail and that there would have been nothing catastrophic about permitting its failure six months ago.

Brianna Keilar has our report from Capitol Hill.


BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT (voice over): "Not my fault," former AIG CEO Hank Greenberg told Congress. He blamed the company's failure on those who succeeded him after he stepped down in 2005.

MAURICE GREENBERG, FORMER CEO, AIG: The AIG's business model did not fail, its management did.

KEILAR: He panned the $180 billion rescue of the insurance giant.

GREENBERG: All plans so far advanced by the U.S. government to date have failed. And the current plan in my opinion will not succeed.

KEILAR: And he told Congress, Edward Liddy, the man recruited to shepherd through this crisis, isn't up to the task.

GREENBERG: He doesn't have the background for the job that needs to be done.

KEILAR: Credit default swaps, and investment practice, which ultimately led to the company's demise began at AIG under Greenberg. He insisted while he headed AIG, they were used modestly, but some lawmakers, like Maryland's Elijah Cummings, weren't buying it.

REP. ELIJAH CUMMINGS (D) MARYLAND: I'm convinced that the systemic problems at AIG go far deeper than the mistakes made in the four years since you left the company.

KEILAR (on camera): But surprisingly most lawmakers at the hearing asked Greenberg's advice on the AIG bailout. They also asked if he would have paid out those controversial bonuses, and he said no.

Brianna Keilar, CNN, Capitol Hill.


DOBBS: The United States faces another challenge. The North Korean nuclear threat, North Korea's latest missile launch could be just days, perhaps hours, away. Today the State Department sent a blunt message to Pyongyang, "Do not launch that missile."

Still the United States remains exceedingly vague about what consequences North Korea would face if that launch takes place. North Korea claims the missile will carry a satellite into orbit, but the United States, Japan and other nations say the north is really testing a ballistic missile, one that could reach Hawaii and Alaska. Iran's nuclear intentions also a concern tonight. U.S. officials are raising the possibility that Israel might launch an attack against Iran's nuclear program.

Brian Todd has our report.


BRIAN TODD, CNN CORRESPONDENT (voice over): Fresh warnings about a potentially game-changing military confrontation in the Middle East. America's top commander in the region tells Congress Israel may become so threatened by the prospect of an Iranian nuclear weapon that it would take preemptive military action to derail or delay it. An Israeli official tells CNN Israel considers the Iranian threat very severe and immediate; one the international community has to address.

(On camera) Western sources say that if Iran decides to, it could produce enough material for a nuclear bomb within about a year. But there's disagreement over whether Iran would have the expertise so soon to put it on a missile.

(Voice over) The tension is heightened by the perception that Israel's new government is very hawkish. Some western observers believe that new Prime Minister Benjamin Netanyahu's top diplomat hard line foreign minister Avigdor Lieberman just signaled the death of a peace plan hatched in Annapolis, Maryland, calling for an eventual Palestinian state with this comment --

AVIGDOR LIEBERMAN, ISRAELI FOREIGN MINISTER (through translator): The government of Israel never approved the Annapolis process.

TODD: But an Israeli official tells us the two-state solution isn't off the table. And this, from former secretary of state James Baker...

JAMES BAKER, FORMER U.S. SECRETARY OF STATE: If the guy is going to call the shots is not the new prime minister of Israel whose name is Bibi Netanyahu and who is in my view is a lot more pragmatic than he's given credit for.

TODD: In fact Secretary Baker says there's a good chance Netanyahu might be the first Israeli leader to reach a peace deal with Syria.

Brian Todd, CNN, Washington.


DOBBS: In fact, Brian, right after being reelected prime minister of Israel, Benjamin Netanyahu declared that second to only fixing the economy, President Obama's mission must be to prevent Iran from gaining nuclear weapons.

Netanyahu added that unless that mission is accomplished, western civilization will fail and that if America doesn't do it, then Israel may have to take action itself. Up next here, President Obama forcing GM's CEO out of office, but the head of the United Autoworkers Union still has a job. Is that a good idea?

And we'll look whether $4.5 million of campaign contributions to Senator Obama's presidential campaign has anything to do with it.

And one state's answer to New York's problems with a massive budget gap -- tax just about everything.

We'll be right back.


DOBBS: Many states tonight are planning wide-ranging tax increases. State legislatures all across the country are struggling with massive budget deficits.

New Yorkers, for example, are facing huge tax hikes now on just about everything that they buy or use. The State of New York is working on a $132 billion budget, but there are few spending cuts or state layoffs in the plan.

New York lawmakers are unwilling to make the tough choices. Instead, they're passing their costs along to taxpayers.

Bill Tucker has our report.


BILL TUCKER, CNN CORRESPONDENT: The list of proposed tax increases in New York State looks like it might be an April Fools' joke, but it's not. And it's not the way the state should be headed says one leading Republican who worries Albany is about to tax away what remains of the state's economy.

DEAN SKELOS (R), NEW YORK STATE SENATE: They're taxing our health insurance policies, they're taxing our hospitals, they're taxing home care. They're taxing the water we drink. They're taxing wine. They're taxing our vehicles. They're taxing our driver's licenses. If it's moving, they want to tax it.

TUCKER: Governor David Paterson defends the budget as prudent and says most of the increase in spending comes from federal stimulus money. Even so the $132 billion budget is a bitter pill for many to swallow.

New York state workers earn an average pay of $62,453 coupled with generous benefits. The state's wage bill is more than $17 billion. There are 199,000 workers on the state payroll. The governor is proposing 3,000 job cuts. But since August of last year, New York State has lost 145,800 jobs in the private sector. Other costs include $7 billion in pension costs toward which the state employees currently contribute nothing, $45 billion for Medicaid, and $8.5 billion for personal services. To pay for all of this, personal income taxes will rise, especially for the rich, with the state looking to raise $4 billion from those earning more than $300,000.

EJ MCMAHON, MANHATTAN INSTITUTE: I think we may be seeing the beginnings of what could end up being a pretty significant backlash in New York. I've never seen a budget get as universally panned and severely criticized as this budget.

TUCKER (on camera): Here in New York City is where many of the proposed tax increases will hit and hurt the most, a city already reeling under the staggering weight of the thousands of layoffs on Wall Street.

Bill Tucker, CNN, New York.


DOBBS: State payrolls and human services are responsible for large portions of most state budgets. In New York, as Bill Tucker just reported, $17 billion is spent on wages, $8.5 billion on health and human services.

Of California's proposed $92 billion budget, more than $24 billion will go to public payrolls; $30 billion allocated for health and human services.

Michigan spends about $5.1 billion on salaries and benefits, but $17 billion of its $43 billion budget on human services.

In South Carolina, $3 billion of that state's $20 billion budget spent on wages, and almost twice that budgeted for health and human services.

Overall, human services and state payrolls account for about 40 percent of the state bullets.

A staggering number of Americans are receiving government assistance now to help buy food. One in ten Americans, a record 32 million people are now receiving food stamps. The Department of Agriculture reporting that food stamp enrollment rose in all but four states.

Straight ahead here, Arizona's Sheriff Joe Arpaio, a champion in the fight against illegal aliens, but some lawmakers along with special-interest groups are trying to bring him down. We'll tell you about it.

And can the president play hardball in restructuring the auto industry, when its union helped him win the presidency?

We'll have that story here next.


DOBBS: There are questions tonight about the shape of a restructured auto industry in this country. President Obama, of course, has the power to determine the future of the industry, but he also owes a very large political debt to the car industry's labor union.

Ines Ferre has our report.


INES FERRE, CORRESPONDENT, CNN EN ESPANOL (voice over): Unions spent at least $50 million to help elect President Obama into office, one of them the United Autoworkers helped deliver key Midwestern states.

In an interview with LOU DOBBS TONIGHT this week, the new GM CEO installed by the Obama administration says everyone will have to sacrifice, including the unions.

FRITZ HENDERSON, CEO, GENERAL MOTORS: Restructuring the balance sheet because the level of indebtedness we have, whether it's bond debt or whether it's obligations for pension and health care needs to be restructured. We need to significantly reduce the level of indebtedness.

FERRE: Many commentators say that while the president has raised the possibility of bankruptcy for GM or Chrysler, he won't sacrifice the UAW to a bankruptcy court.

PROF. GARY CHAISON, CLARK UNIVERSITY: I'm convinced that Obama and his task force and his car czar will come to the rescue. He has very carefully opened the path towards bankruptcy.

FERRE: The UAW spent $4.5 million on behalf of Barack Obama's campaign. This steward says he's not willing to give in any more to save GM.

MICHAEL FERGUSON, LOCAL 160, SHOP STEWARD: Not a nickel, not one nickel. I've given up enough. They go bankrupt, Mr. Ferguson goes bankrupt.

FERRE: The UAW didn't respond to our request for comment.

(On camera) When he announced his plan for GM and Chrysler, President Obama said that unions and workers had already made painful concessions and would have to make even more. Just how much pain he expects the UAW to bear is unclear especially as the Employee Free Choice Act, which would make it easier for unions to organize workers seems unlikely to pass this year.

Ines Ferre, CNN, New York.


DOBBS: In the midst of all this, some good economic news, factory orders moving higher, durable goods orders rising higher and pending home sales rising. But new jobless claims rose sharply last week -- 669,000 people filing their first claims for unemployment benefits, the highest weekly total in 26 years; the number of laid-off employees now receiving benefits rising to 5.75 million people. Today's jobless numbers come on the eve of the monthly employment report. That report tomorrow is expected to show significant job losses across the country.

While millions of Americans are struggling to find work, many companies and special-interest groups are trying to bring even more foreign workers into the country. The filing deadline for H-1b visas has just closed. It's the program to import so-called skilled foreign workers into the country. It is however designed to do that but the reality is it brings in lesser-skilled labor. The cap is put at 65,000 plus 20,000 special exemptions.

The H-1b program is only one of 12 worker visa programs into this country or guest worker programs. More than 1.5 million people were admitted to the United States last year on those visas that allowed them to work. Another 1,100,000 people were given permanent resident status last year, allowing them to work and to live in the United States.

The president today said the world's most admired politician is Brazil's president at a G-20 lunch in London. President Obama shook hands with President Lula Da Silva saying, quote, "This is my man right here, I love the guy."

It was just last week that Lula criticized the United States and the United Kingdom for causing the world's economic crisis. As he put it, "This crisis was not created by blacks nor Indians nor poor people. It was a crisis created and spread throughout the world due to the irresponsible behavior of white people. They thought they knew everything but they are now showing they knew nothing."

While the president was being with affectionate with Lula, the first lady showed her affection for the queen, sparking some controversy at this, the apparent major breach of protocol -- The Queen of England and first lady with an affection hug.

It was a controversy in some papers in London, a palace spokesperson had to issue a formal response saying there are no rules about touching the queen if she touches you first.

The queen initiated the embrace. They seem to be getting along famously. What's the big deal? Only in Britain could there be papers who thought it was a big deal.

Political correctness of a form, not just, of course, overseas. It happens here and far too often.

Take East Shore Middle School in Connecticut, for example, it enacted a no-touching policy -- Buckingham Palace you might be listening -- no touching, no pushing, no horseplay, no high-fives, no hugs, no way to treat children. Up next, with Mexican drug violence rising along our border, I'll be talking with General David Grange about what he's learned after a tour of our border with Mexico.

And Congress taking aim at one of this nation's most outspoken law enforcement officer and they are politicizing the Justice Department.

We'll be right back.


UNIDENTIFIED MALE: This is LOU DOBBS TONIGHT; news, debate and opinion. Here again, America's most powerful independent voice -- Lou Dobbs.

DOBBS: The house judiciary committee today began hearings on the controversial 287(g) program for local enforcement of immigration laws, but one person missing from the witness list was Maricopa County, Arizona Sheriff Arpaio. Arpaio was being targeted by left- wing politicians, ethno-centric interest groups, open-borders groups for enforcing this country's immigration laws.

But as Lisa Sylvester now reports, Sheriff Arpaio wasn't even invited to testify.


LISA SYLVESTER, CNN CORRESPONDENT (voice over): The Maricopa County Sheriff's office in Arizona says it has turned over more than 23,000 illegal aliens to immigration authorities. It's one of 67 jurisdictions participating in a program where local law enforcement officers help enforce federal immigration law. But the 287(g) program has been criticized by some Congressional Democrats who say several officers are going too far.

REP. JERROLD NADLER (D) NEW YORK: Violating our civil rights laws, violating the Constitution, violating the rights of U.S. citizens and of non-citizens who are here legally. That's not law enforcement; that's subversion of the law.

SYLVESTER: Representative Jerrold Nadler and three other top Democrats have singled out Sheriff Joe Arpaio of Maricopa County, asking for a Justice Department investigation into alleged civil rights abuses. But at this hearing, Sheriff Arpaio was not invited to testify.

SHERIFF JOE ARPAIO, MARICOPA COUNTY, ARIZONA: We've done a great job the working together with the federal agency and now because of politics, using me as the poster boy, they want to get rid of this agreement with the federal government.

SYLVESTER: The Department of Homeland Security is currently reviewing its agreements with local jurisdictions. The American civil liberties unit has asked Homeland Security chief Janet Napolitano to go even further and suspend the 287(g) partnerships while they're reviewed, saying it leads to racial profiling.

But attorney Kris Kobach who often represents groups active and limiting illegal immigration, charges there's no evidence of that.

KRIS KOBACH, IMMIGRATION LAWYER: There have been reports, anecdotes, but there's not been one internal affairs investigation that's ever found any racial profiling by a 287(g) officer.

SYLVESTER: Supporters of 287(g) also claim that 42 local jurisdictions are currently on a waiting list to join the program.

(On camera) Much of this comes down to manpower. Local law enforcement has the officers and the resources on the street, but the agency in charge of enforcing federal immigration law has only 5,600 special agents in charge of finding some 12 million-plus illegal aliens.

Lisa Sylvester, CNN, Washington.


DOBBS: Inseparably (ph) tonight, the Maricopa County Board of Supervisor deciding not to accept $1.6 million in state aid for the sheriff's enforcements efforts. Sheriff Arpaio's critics lobbying that board not to accept the money because of the federal investigation

A spokesman for the board saying the sheriff will keep enforcing immigration laws even without that extra money.

One of Mexico's top drug cartel leaders now in custody. Vicente Carrillo Leyva was arrested in Mexico City where he was living under a fake name. Mexican officials offering $2 million in rewards for 23 other leading cartel suspects.

This, by the way, is the fourth arrest of a major drug cartel suspect in the past three weeks.

Joining me now for more on what is happening with Mexico's drug cartel wars, our military analyst, General David Grange who toured the U.S./Mexico border along with U.S. border patrol agents and other law enforcement officers.

General Grange, good to see you. What was your impression after that tour?

GEN. DAVID GRANGE, CNN MILITARY ANALYST: Well, Lou, it was a great opportunity. I was invited down during vacation to meet with law enforcement officers and look at the border in certain places in Texas.

First of all, the impression I came away with, overwhelmingly, is the hard work, though strapped, very strapped, of the law enforcement agencies down there, the job that they're doing, and the guidance they're given by the governor of Texas, which is really take back this border, control our border. And he supports it morally and with all the resources he possibly has, but they're very short and I believe definitely the federal aid could be improved immensely.

DOBBS: The Senate Judiciary Committee went down today, or at least a portion of it, under the leadership of Senator John F. Kerry, held hearing in El Paso, and amongst the things that Senator Kerry had to say was that he wanted to reinstate the assault weapons ban effectively following what has become an administration mantra to effectively roll back American Second Amendment rights, because that's necessary to stabilize northern Mexico.

Your thoughts, your reaction?

GRANGE: The weaponry that is being turned over or sold to those conducting criminal activity is sold back illegally. In other words, people have the right to buy certain weapons, and that should be -- they should be protected, as long as they uphold the law under the Second Amendment.

Those that resell the weapons to criminals should be hammered. Something should be done with them. But a lot of the weapons are not just from the United States. A lot of these weapons come from other countries, and I would presume Russia, China, through Central America.

For instance, hand grenades, rocket-propelled grenade launchers, those aren't sold at events, at gun shows. Those are smuggled in from other countries.

DOBBS: Let's turn, if we may, General, to right now North Korea, as you know, has a missile on the launch pad, is fueling or has been fueled by this hour and preparing to launch the missile.

What should be the reaction of the United States? We've seen a highly ambivalent and inconsistent response from the United States government over the past week. Your judgment?

GRANGE: Well, we need to be prepared to shoot it down, if necessary, especially if it violates airspace or near the airspace of Japan, our ally. Of course, they do have the right to fire a weapon in other ways, but if it violates Japan or some way we feel is a threat to ourselves or any of our allies, and I think we ought to take action, and they ought to know that.

DOBBS: Let's turn to Pakistan, the president, this is now -- or to Afghanistan. The president has now said that he's going to send 4,000 additional troops, it is now his war, Pakistan is a -- let's put it this way, not an entirely established ally for the United States when it comes to the issue of Afghanistan.

What do you think of calls to just simply remove our troops now from Iraq to the lowest possible levels and from Afghanistan as well?

GRANGE: Well, we definitely don't want to take away from the success of Iraq, so I'll leave Iraq alone until we know that it's stable for sure. It has some momentum going ahead. Afghanistan, we just have to reinforce it with troops and other means of power. And it's a regional effort. And what we're doing, I think, with the recommendations from the military and other -- Department of Defense advisers is to reinforce and to keep them going so they don't fail. If they fail, it will be a regional war.

DOBBS: General David Grange, thanks for being with us.

GRANGE: My pleasure.

DOBBS: Up next, Senator Chris Dodd is trying to shake his ties to political liability AIG. He has some early bad news in the most recent polls. We'll be talking about that and more with two of the country's top political thinkers.

And rescuing Detroit, what will it take? Who will benefit? Will General Motors, Chrysler and Ford survive? That story is next.


DOBBS: The Obama administration this week putting intense pressure on both General Motors and Chrysler. The White House ousting GM CEO Rick Wagoner, pushing Chrysler to make a deal with Fiat, the survival of the industry highly uncertain.

Joining me now, journalist William Hosltein, he is the author of "Why GM Matters: Inside the Race to Transform an American Icon."

Good to have you with us, Bill.

Industry expert Philip Fricke, he is the founder and president of the PKF Financial Consultants. Good to have you here.

And Dr. Pat Choate, director of the Manufacturing Policy Project, among other things, Ross Perot's vice presidential running mate back in 1996, and the author of the very important book, "Dangerous Business: The Risk of Globalization for America."

Pat, thank you for being here.


DOBBS: Bill, let's turn right now to what we were looking at. General Motors with a new CEO, Rick Wagoner is out, and Fritz Henderson is in, he's got two months to get it right and get the approval of the president.

What do you think the prospects are?

WILLIAM HOLSTEIN, AUTHOR, "WHY GM MATTERS": Well, it looks to me like the Obama people are going way too far. They say that they're going to remake the entire board of directors, put in a majority of new directors, and they're going to work to put a whole new management team.

They're overreaching anywhere what you would consider to be a proper or fair or smart balance between government and the private sector. I mean it's just -- I'm outraged that they think that they can go in and remake the entire board and top management in General Motors in a way that will be effective for the long term.

DOBBS: Phil?

PHIL FRICKE, PRES., PKF FINANCIAL CONSULTANTS: Well, I would have to agree with this. I mean, in the first place, this industry must survive. It's very important for America to have a GM and a Ford and a Chrysler. It must survive.

Now to get there, there needs to be some oversight, but there has to be expertise brought to the solutions of this industry. The challenges are great, costs have to be reduced. It needs to be resized and so on.

DOBBS: Why is there have to be three automobile companies? We've seen Chrysler failing. It is -- Daimler Benz got rid of it. Cerberus picks it up, a private equity outfit. Taking now, taxpayer money to keep it afloat. Ford is so far able to operate without the bailout money.

Pat, your thoughts?

CHOATE: Well, the first thing that we've not heard anything about and that we should hear about is what's going to be the government's role in doing its job on trade policy and tax policy. What we've had is a circumstance where the Europeans subsidize their productions through the VAT, a 19 percent subsidy.

Every European car that comes into this market gets a 19 percent rebate. Every American car that goes into Europe gets a 19 percent tax added on. Same thing happens in Japan. Same thing happens in Korea.

So the first thing this government has to do, along with its fiscal measures, is it's got to open those markets and eliminate that discrimination against the American-made product.

DOBBS: Well, the easiest way to do it, and a number of people are interested in balance trade in this country, not protectionists, balance trade, was a move to a VAT approach that would put us on equal footing with other economies, including the Chinese, the Europeans, and Japan.

CHOATE: Well, now's the time, I think, to step up. We're in an emergency, we should do it. It's an efficient way to deal with it. If we were to put in a VAT, those subsidies from Europe would be eliminated and that taxation on American products going overseas would be instantly eliminated.

There's other things like in Korea, they take -- we take 700,000 cars a year from Korea. They take about 7,000 cars a year from the United States and anybody who buys an American car in Korea can expect to be audited by their IRS. DOBBS: But nobody is going to -- no one in this administration is obviously going to talk about they're outsourcing the jobs, free trade or any of those policies that have, in part, led to the demise of Detroit as the powerhouse it once was.

What should be done right now? The federal government is in, there's no pulling them back, there's a bailout in place. There's no withdrawing it.

Bill, what should happen next? For the benefit of the industry and the workers and the country.

FRICKE: Let's get back to your...

DOBBS: No, no. Let's get to what I'm asking you right now.

FRICKE: Yes. The industry to right-size, it needs to lower capacity. There's too much capacity, too much product. The industry does not need three big -- does not need the big three. We have to right-size this industry. We have to have much less capacity, close plants. We have to which much greater efficiency. Costs must be attacked. There's been a lack of attack on the cost structure. It's got to change.

HOLSTEIN: They've been attacking the cost structure dramatically in these recent years. That's what -- I mean Rick Wagoner has cut the unionized workforce in half, he's driven...


HOLSTEIN: Yes, he's driven $5,000 out of the costs of every vehicle by 2010. They've implemented a two-tier wage system. They've been making dramatic progress.

DOBBS: What is the future? And I'm sorry to press you, because we're really constrained on time. But what is the future of Chrysler? Will they survive? And what about Ford? Ford is now competing with the federal government as it faces both a Chrysler and General Motors.

HOLSTEIN: Chrysler is hollow, they're empty. I mean they have no product development plans in place. They cannot survive independently. But General Motors has invested in the product and they can survive long term. They can be a very profitable company.

FRICKE: If GM right-sizes, they survive. Chrysler is questionable. Chrysler does not have the benefits of scale. They simply don't have enough manufacturing. So it's got to be that consolidation of which I speak.

DOBBS: With 30 seconds to go here, Pat, Michigan is devastated, 12 percent unemployment rate. Talking with the governor, Jennifer Granholm, last night, I said, you're the best governor facing the toughest challenges in the country. What does Michigan do here?

CHOATE: Well, basically Michigan has to come back to Washington and say, the fastest way you can help us is give a tax credit for buying new cars.

DOBBS: All right. Dr. Pat Choate, thank you very much.

CHOATE: You bet.

DOBBS: Phil Fricke, thank you very much. And Bill Holstein, thank you very much. Appreciate it.

Up next, a business leader who sees the light? Somebody that I never expect that I'd be putting in a segment we call "Gut Check." We'll be telling you all about and I will be saluting General Electric's Jeffrey Immelt. His epiphany and what it means for this country's manufacturing base and our future.

And the fallout from the AIG bonus scandal. At least one senator could see his long career shattered. That is straight ahead. We'll be right back.


DOBBS: Former governor of Illinois, Rod Blagojevich, saying he's saddened and hurt after being indicted on 16 felony counts of corruption. A federal grand jury handing down the indictment against Blagojevich and five of his closest advisers, including his brother and two close aides.

The former governor is charged with racketeering, conspiracy and wire fraud. Blagojevich was arrested in December while still governor of Illinois for allegedly trying to sell President Obama's vacant Senate seat. The Illinois House of Representatives overwhelmingly voted to impeach him in January.

Six-term Connecticut senator, Christopher Dodd, faces an unsure and uncertain political future. With a Senate race coming up next year, Dodd could see his true blue state turn bright red. In the past few weeks there've been series of hits to his political career, the biggest is the AIG bonus scandal.

Dodd, who chairs the Senate Banking Committee, responsible for allowing the language that permitted those bonuses to be paid. And last week it was discovered that his wife was once director of ICP Holdings, a company controlled by AIG, not to mention AIG, a big campaign contributor of the senators.

And today a new Quinnipiac poll shows Senator Dodd's approval ratings have sunk to 33 percent that is a record low.

Joining me now, former White House political director, Ed Rollins, Democratic strategist Robert Zimmerman.

Good evening, gentlemen. Good to have you with us.

How much -- well, let me turn to you, Ed. How much trouble do you believe Senator Dodd is in here?

ED ROLLINS, FMR. WHITE HOUSE POLITICAL DIR.: I think he's a top target for Republicans. No one really knows what's going to happen in 2010, but when 54 percent of the people in your home state think you're dishonest and you've served that state for 36 years, it's awful hard to change that image.

And so, you know, the several -- it's an independent state. There's a lot of independents. They've been more than happy to vote as they did with Lieberman to vote -- not to nominate -- so it's a maverick state. So I think he's in real trouble.

DOBBS: That's a very good point. And your feelings, Robert, here?

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: I think the first thing we do is take the Democratic talking points and (INAUDIBLE) them up and deal with the reality.

DOBBS: There are Democratic talking points?

ZIMMERMAN: Occasionally they circulate.


ZIMMERMAN: But look, a very important point, if the electorate decides they don't trust you, no matter your position, it doesn't much matter. And of course, it's not just their vote for Lieberman, Connecticut also voted for low (INAUDIBLE) and independent to serve as governor, and so I think it's very critical -- I mean the good news for Dodd is that he's got early warning.

The bad news is he's got a lot of work to do to regain his credibility, but there's a message here for Democrats throughout the country, looking at Christopher Dodd and the AIG and looking, of course, at the most recent congressional race in New York in the special election.

DOBBS: Which speaking of uncertainly political futures, that remains deadlocked.

ZIMMERMAN: That's right, and that is a race where the local first-time Democratic candidate Scott Murphy was on his way to win it, until the AIG bonus scandal broke, and the Republicans, very effectively, used the Obama administration and the Democratic Congress' failure to stop those bonuses from coming -- taking place.

ROLLINS: There's one other thing, Lou.

DOBBS: Sure.

ROLLINS: You know, these important people in Washington, the chairman of the banking committee, leader or what have you, folks back home don't care. For example, there's Al Demato in the state, chairman of the banking committee, got defeated by Chuck Schumer.

So the bottom line is, are you honest? Are representing me well? And if you're a big shot there and you're not basically being an honest individual, we'll throw you out. Just as Daschle got thrown out. Harry Reid is another who's got a very competitive race this time so.

DOBBS: If I wasn't clear, Senator Dodd, obviously, facing Rod Simmons and a Republican.

ROLLINS: Good candidate.

DOBBS: I'm sorry?

ROLLINS: Good candidate.

DOBBS: Next year, 2010, which is, obviously, going to be a signature year because it will establish, first of all, the power of this presidency and this president, all that he is embraced by at least the national media, he still didn't receive a majority of the votes in this country, just those cast.

It's going to be a test that -- do you think that there's anything for any reason for Republicans to even have any hope whatsoever to come up against the (INAUDIBLE) of Democratic powerhouse?

ZIMMERMAN: Let me tell you, the test will be in 2010 whether we see this economic recovery take place, whether we see economic growth. That will be the standard. All of the issues right now are side bars. All of the debates right now are debates for the moment.

The real tests will be economic recovery. But I think the warning, and the real warning for Democrats, is that they're being held to a level of accountability because they control Congress and the presidency. They may not be used to. And AIG is a good example of lack of failure to meet that accountability.

DOBBS: Let me give you some good news. I firmly believe we're going to see a recovery this year. I think we're starting to see and Treasury secretary Geithner acknowledged today that we're starting to see some stabilization in this economy.

It can still be mocked up because of very positive signs. And the Republican Party is absolutely missing in action here. I really...

ROLLINS: I wish it was missing in action. Unfortunately, the ones that are on the playing field are not doing very well.

DOBBS: I mean, whether it's Eric Cantor or it's John Boehner.

ROLLINS: Chairman Steele.

DOBBS: Michael Steele. I mean this is -- I'm going to be very direct, if I may, sir. This looks like amateur night.

ROLLINS: Well, it is. Part of it is they're not -- they've been --at least had a share of the majority of the Senate and the House for a long period of time, or the White House. They don't know how to be an opposition party. They don't have the staff that you'd have and I think the ideas... DOBBS: You sound like we should send them off to some sort of trade adjustment school for training.

ROLLINS: It is a big adjustment and I think to a certain extent their -- the best thing for them is to basically put a spotlight on things that they see that are objectionable. Obama, don't try and counter him, and don't try and basically be out there with a budget that with his no numbers, and don't try and rehash -- don't fight the last battle.

You've got to come up with some new ideas. You've got to get ready with some good candidates. But they're not ready now.

DOBBS: Are you trembling yet?

ZIMMERMAN: Well, actually, that's the only thing that really gives me a lot of hope, plus I think the fact that we're seeing -- the fact that we're also seeing an Obama agenda take shape, we're seeing the Democratic Congress act like an independent -- co-equal branch of government, which I think is healthy.

I think we're seeing a real administrative agenda emerge and I think that will give him a record -- a new record for Democrats to run on.

ROLLINS: The biggest problem will be the Democrat chairman who may be more aggressive and more liberal than the president wants to be. So you may have some things out there that obviously go beyond the pale.

ZIMMERMAN: And you know, the interesting thing is the converse of that, too, is that we have a number of Democratic leaders in the Senate more conservative than the president on this budget. And how they -- how Democrats work well and compromise together that will be the test. We don't often do that all that well. We'll see if they can measure up.

DOBBS: Well, I'm sure the Republicans will be helpful in their cooperation on Capitol Hill.



DOBBS: I was absolutely shocked by your statement. Ed Rollins, thank you very much. Appreciate it. Republican strategist. Democratic strategist, Robert Zimmerman.

Thank you, gentleman.

ZIMMERMAN: Thank you.

DOBBS: Up at the top of the hour, "NO BIAS, NO BULL." Roland Martin in for Campbell Brown.

Roland, what's up? ROLAND MARTIN, CNN ANCHOR: Hey, Lou, President Obama and world leaders wrapped up their big summit in London but just how much did they really get done and just how close did the president come to getting what he wanted done? Well, we'll have the latest live from London. A lot of folks talking about it.

Also, First Lady Michelle Obama is also making waves in this trip. We'll show you what she's been doing and why everyone is so fascinated by her.

Plus, the debate over autism and vaccines. We'll talk with a pediatrician, an autism activist, Holly Robinson Pete, whose son was diagnosed with autism.

That's all at the top of the hour, Lou.

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

MARTIN: Thank you.

DOBBS: Still ahead, tonight's "Gut Check." A surprise and a turnaround by in view by General Electric's Jeffrey Immelt. We'll give him credit, believe me, and thanks. And we'll also have your thoughts on the results of our poll. We're coming right back.


DOBBS: Well, I'd like to point out on this broadcast, when government or business leaders see the light we call it our "Gut Check." We criticized General Electric and its CEO, Jeffrey Immelt, for outsourcing American jobs to cheap overseas labor markets and GE's focus on financial services over manufacturing and technology.

Now GE's CEO, Jeffrey Immelt, in a letter to his shareholders, said the United States must return to its manufacturing roots. Immelt said moving the United States away from manufacturing and towards financial services was wrong.

Immelt said, quote, "I believe that a popular 30-year notion that the U.S. can evolve from being a technology and manufacturing leader to a service leader is just wrong. Real engineering was traded for financial engineering. In the end, our businesses, our government, and many local leaders lost sight of what makes a nation great. A passion for innovation."

Words for not only General Electric but for all of us to live by.

I salute you, Mr. Immelt, and I thank you.

Our poll results as the G-20 wraps up, 93 percent of you say you are concerned about America's sovereignty.

Let's take a quick look at some of your thoughts. Rick in Arizona said: "Dear, Lou, do you know why all these big shots don't like Sheriff Joe? Because he does his job, the job that he was elected to do." Jerry in Arizona said: "Instead of the House Judiciary Committee wasting the taxpayer's time and money investigating Sheriff Arpaio, they should be investigating ACORN, the biggest fraud organization in the country. Of course, since ACORN supports the Democratic Party, that won't happen."

And Lindley in Texas said: Congressman Barney Frank stated on your program Wednesday that he thought company executive salaries should be fair and based on performance. I wonder if Mr. Frank would be willing to follow these same rules for his salary."

We love hearing from you. Please send us your thoughts to Each of you whose e-mail is read here receives a copy of my book, "Independents Day". And a reminder to join me on the radio, Monday through Fridays for the "Lou Dobbs Show" 2:00 to 4:00 p.m. Eastern each afternoon on WOR 710 in New York.

Please go to to get the local listings in your area.

We thank you for being with us and for all of us, thanks for watching. Good night from New York. "NO BIAS, NO BULL" starts right now.

MARTIN: Hey, folks, I'm Roland Martin. And thanks for joining us tonight. One thing I would make clear as I'm filling in for Campbell Brown, who's on maternally leave, of course, is that I'll always keep it real.