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Lou Dobbs Tonight

President Obama Says Restarted Stimulus Can Save 600,000 Jobs; Concerns Arise Over Possible Tax Hikes; Supreme Court Delays Two Big Decisions

Aired June 08, 2009 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU DOBBS, CNN ANCHOR: Thank you, Wolf. Good evening, everybody.

President Obama re-launching his economic stimulus plan to prove that it's working. The Obama administration spending tens of billions of dollars to save what it now estimates are 150,000 jobs. The administration says it will save another 600,000 jobs. No one knows where the White House is getting those numbers.

Also, rising concern that the Obama administration is planning higher taxes to pay for a massive overhaul of healthcare. That's the subject of our "Face-off" debate here tonight.

And the Supreme Court makes two important decisions today. The Supreme Court delayed the sale of Chrysler to Fiat of Italy, and refused to rule on the Pentagon's "Don't Ask, Don't Tell" policy of gays in the military.

Tonight, we examine the rising threat to this country from both North Korea and communist China, and what, if anything, the Obama administration will do about it.

We begin with the president's new effort to sell his stimulus package. The president today accelerated that plan after criticism that it has failed to create or save jobs.

President Obama today said the stimulus program has already saved more than 150,000 jobs, saying it would create another, or perhaps save another 600,000 jobs over the next 100 days.

Critics, however, say it is impossible to say how many jobs have been saved or how that is happening. Suzanne Malveaux reports now from the White House.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: President Obama is promising to put more Americans back to work this summer.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The goal here is that we're going to create or save 600,000 jobs over the next 100 days.

MALVEAUX: Whether Obama can deliver on this promise is another story. TAMI LUHBY, CNNMONEY.COM: The information that we're getting now, the 150,000 jobs they said were created in the first 100 days and the 600,000 they are estimating will be created in the next 100 days, those are based on formulas. So that's fuzzy math at this point. They don't really know yet how many jobs have actually been created.

MALVEAUX: Vice Presidential Economic Adviser Jared Bernstein disputed that.

JARED BERNSTEIN, WHITE HOUSE ECONOMIC ADVISER: This is an absolute tried and true economic methodology.

MALVEAUX: But the administration has already had to do some back-peddling. Back in January, when the president was selling his $787 billion economic stimulus package, he promised to save or create between 3.5 to 4 million jobs over the next two years.

That was based on an assumption that unemployment wouldn't go above 8 percent. But with unemployment at a 25-year high of 9.4, Bernstein acknowledged they had incomplete information and got it wrong.

BERNSTEIN: Our forecast seemed reasonable. Now, looking back, it was clearly too optimistic.

MALVEAUX: But the White House is continuing to shop the silver lining. This on the unemployment latest numbers.

OBAMA: This was the fewest number of jobs we have lost in about eight months. So it was about half of the number lost of just a few months ago. And it's a sign that we're moving in the right direction.

(END VIDEOTAPE)

MALVEAUX (on camera): President Obama also defended the administration against what some say is a slow start in getting money to those projects that would create jobs, saying that he would like to put safeguards in place to prevent taxpayer money from being wasted in what he calls potential boondoggles -- Lou?

DOBBS: Suzanne, thank you. Suzanne Malveaux from the White House.

Congressional Republicans hammered the president's announcement, saying it proves the Democrats' stimulus plan is not working. House Minority Whip Congressman Eric Cantor said the Obama administration is wasting money the government doesn't have.

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR, (R) MINORITY WHIP: When we spend money in Washington, we've got to have results. There has not been any sustainable job creation started in this country. And I think that is when the administration is trying to do, is to put some type of cover on what it is that's actually gone on.

(END VIDEO CLIP)

DOBBS: Republicans say the stimulus plan is simply a big government program that will do little or nothing to spur recovery.

By some estimates, the federal government has now committed as much as $13 trillion to shore up our economy, including stimulus spending, loans, and loan guarantees. That $13 trillion is just short of the size of our entire annual economy.

So far, all that money appears to have had little direct effect on Americans who have lost their jobs. Some 6 million Americans have been laid off since this recession began in December of 2007.

Republican senators tonight are threatening an all-out fight with the president over his plans to overhaul healthcare. In a letter to the White House, Republican senators say the president's plans amount to a federal government takeover of the country's healthcare system.

As Dana Bash now reports, Democrats are also mobilizing their supporters.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Thank you so much for coming.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT (voice-over): In this Virginia living room --

SERGIO SALMERON, ORGANIZING FOR AMERICA: This is a time in history when there may be a chance to change things --

BASH: President Obama's foot soldiers, recruiting grass roots help for his looming battle, healthcare reform.

OBAMA: To get this done, I need your voice to be part of the debate.

BASH: But even as Democratic organizers start to rally thousands of activists across the country, Republicans are firing a warning shot, calling the president's push to expand health coverage with a new government insurance option a deal breaker.

SEN. ORRIN HATCH, (R) UTAH: There are a lot of people in my party on the Republican side who want to work with Democrats, who want to get this done, but who are totally against the public plan.

BASH: Orrin Hatch is one of nine Republicans on the powerful Senate Finance Committee who wrote the president, arguing a government-run program competing with private insurers would "inevitably doom true competition."

GOP senators insist that would jeopardize quality.

HATCH: There is no way we can be for a public plan option, because that will put the government between you and your doctor. It will rise costs -- raise costs dramatically. BASH: But many Democrats from the president on down argue Americans will benefit from a public plan that gives private insurers competition.

SEN. TOM HARKIN, (D) IOWA: It's both about coverage and cost, because we believe with a public option plan, that will act as a cost check on the insurance company. And I think that's a good thing.

BASH: So far, Ted Kennedy is the only key Democrat to draft healthcare legislation. It would require all Americans to have health insurance and create a government-run insurance program that would offer essential benefit, including doctor and hospital care and prescription drugs.

(END VIDEOTAPE)

BASH: Most Democrats like Kennedy's plan, but they also realize that it has no chance of getting bipartisan support.

So, Lou, there are a group of centrist Democrats who are considering other ideas to scale back that government program for this insurance idea. And the idea would be to give assurances that a public plan would be able to compete adequately with these private insurance companies.

DOBBS: Dana, thank you very much. Dana Bash from Capitol Hill.

The Supreme Court makes a decision on whether or not to rule on the military's "don't ask, don't tell" policy on gay troops.

And President Obama facing rising criticism from supporters of so-called comprehension immigration reform, pro-amnesty open borders advocates, next.

(COMMERCIAL BREAK)

DOBBS: The Supreme Court today rejected a challenge to the Pentagon's "don't ask, don't tell" policy.

The challenge came from former Army Captain James Pietrangelo. He served six years in the army, seven years in the Vermont National Guard. He was dismissed for being openly gay.

A federal appellate court in Boston threw out a lawsuit filed by Pietrangelo and 11 other veterans, who said the "don't ask, don't tell" policy is unconstitutional. He took the case to the high court, which today refused to hear it.

Chrysler's planned sale of assets to Fiat, however, is on hold, because the Supreme Court did rule that a stay of the deal is in order after Indiana pension funds sought Supreme Court intervention.

The pension funds stand to lose about $5 million if the deal with Chrysler were to go through. Bankrupt Chrysler said that if the sale isn't approved mid-month, the automaker will have to liquidate. Controversy tonight over the president's push to delay so-called comprehensive immigration reform, or what some call "amnesty until next year."

Some claim the nomination of Judge Sonia Sotomayor to the Supreme Court allows the president to delay a key issue within part of the Hispanic community. But many are actually frustrated tonight, saying Judge Sotomayor's nomination is only an excuse to delay another campaign promise.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Latino groups have praised President Obama's selection of a Hispanic, Sonia Sotomayor, for a seat on the U.S. Supreme Court. But key Hispanic organizations say that doesn't give the White House a free pass to back down from a campaign promise of tackling comprehensive immigration reform in the president's first year.

JANET MURGUIA, PRESIDENT, NATIONAL COUNCIL OF LA RAZA: From the Latino community perspective of, you know, a promise is a promise. And he made a commitment to move forward with immigration reform. We're going to help him keep that promise.

SYLVESTER: The immigration bill would open a path to amnesty for millions of foreign workers, create a new guest worker program, and enforcement rules.

The White House postponed a key meeting with lawmakers on the issue that was supposed to be held today, pushing it back until next week because of the president's travel.

Advocates for comprehensive immigration reform want a vote on immigration this year because next year's mid-term elections make it even more of a political hot potato.

The National Hispanic Christian leadership conference warns if President Obama does not follow through, it could cost him and his party Hispanic votes.

REV. SAMUEL RODRIGUEZ, NATIONAL HISPANIC CHRISTIAN LEADERSHIP CONFERENCE: If we do not have CIR passed in 2009, the very possibility that Latino voters may look elsewhere in 2010 and 2012 grows every single day.

SYLVESTER: But "NumbersUSA," a group that favors tighter immigration restrictions, says things have changed drastically.

ROSEMARY JENKS, NUMBERSUSA: Promises were made during the campaign before the collapse of Wall Street. That changed everything. And it's only realistic to expect that the president is going to respond to the economy first.

SYLVESTER: Jenks said an immigration bill is a tough sell in this economy. The unemployment rate is now at 9.4 percent, the highest level since 1983.

(END VIDEOTAPE)

SYLVESTER: Senate Majority Leader Harry Reid says he hopes to bring comprehensive immigration reform up in the fall, but it is not the top of the list of priorities. The Senate first has to tackle the Sotomayor confirmation hearings, then take up healthcare, then energy reform, and, finally, if there's time, immigration -- Lou?

DOBBS: Thank you very much, Lisa Sylvester.

Tonight, deportation proceedings against four illegal aliens have been halted. A federal judge in Connecticut ruled the men's Fourth Amendment rights were violated when immigration agents entered their homes without warrants, probable cause, or consent.

The raid took place during an immigration sweep two years ago. More than 30 illegal aliens were arrested.

Critics say the raids were retaliatory because they came right after New Haven approved identification cards for illegal aliens.

Immigration and Customs Enforcement officials deny that, however. Nonetheless, a federal judge, Michael Strauss, today said the raids were an egregious violation of the constitutional rights of the illegal aliens.

The president's plans for taxes, whether the nation can afford them. That's the subject of our face-off tonight.

And a fast food franchise stirs up controversy with its billboard sharing thoughts on global warming.

(COMMERCIAL BREAK)

DOBBS: Former Soviet President Mikhail Gorbachev, who led the Soviet Union during the collapse of Marxist-Leninism, communism, now saying capitalism has collapsed.

Gorbachev said the financial crisis around the world demonstrates that what he calls the "new western model" is an illusion. In an op- ed article in the "Washington Post," Gorbachev said the current western model does not need adjusting, it needs replacement.

He says the new political and economic model will emphasize public need and public goods. Some might say that sounds a lot like socialism or communism.

Gorbachev himself is no stranger to capitalism. He has been, in fact, well paid by capitalists over the years. He has been the pitchman from everything from Louis Vutton to Pizza Hut.

This would mean should his forecast or call come true, that he lost the way for communism to be supplanted by capitalism to be then restoring communism. To hear my thoughts on that and a lot more, join me every day, Monday through Friday, on the radio for the "Lou Dobbs Show," 2:00 to 4:00 p.m. each afternoon on WOOR-710 radio in New York. And go to loudobbsradio.com to get local listings in your area for the "Lou Dobbs Show."

Other stories we're following tonight -- Burger King is demanding one of its franchises owners take down signs that say "Global Warming is Baloney."

The franchise owner has more than 40 Burger King restaurants all across Tennessee, Arkansas, and Mississippi, and put up the signs in five different locations.

Burger King say franchisees sign agreements saying signs can't be used to promote political beliefs. The owner says he's exercising his right to free speech. The signs remain up.

At the Tony awards, Bret Michaels performed his hits and then was hit by a piece of the set. Michaels, the lead singer of the band Poison, was performing with the cast of the Broadway show "Rock of Ages" when apparently he missed his mark and was struck by the set.

He walked into scenery that was being lowered on to the stage. He was knocked flat on his back and, according to his publicist, suffered a fractured nose and busted lip, but otherwise is OK.

President Obama pushing ahead with sweeping healthcare reform and bigger government. But who pays the bill? That's the subject of our face-off tonight.

And searchers find more wreckage from Air France flight 447 as the mystery over what happened deepens.

(COMMERCIAL BREAK)

DOBBS: The mystery over what happened to Air France flight 447 over the Atlantic a week ago remains unsolved tonight. Rescuers have recovered some wreckage from the airliner and 24 bodies.

But investigators still have no idea why the aircraft broke up in mid-air. The Air France was flying from Brazil to France, carrying 228 people, including two Americans.

North Korea today giving harsh prison sentences to two Americans it captured on the border with communist China. They are journalists Laura Ling and Euna Lee, both sentenced to 12 years in prison.

North Korea said they committed what it termed "grave crimes," no specifics offered. Their sentencing comes amid rising tensions between North Korea and the rest of the world over missile tests and nuclear weapons.

The United States saying North Korea could be put back on the list of state sponsors of terrorism. Republicans and Democrats tonight mobilizing their supporters for what may be a major showdown over healthcare. The president wants a draft healthcare bill on his desk by August.

He's also accelerating the federal government stimulus plan, or trying to. Opponents, however, say President Obama is pursuing a big government agenda financed by massive borrowing and higher taxes.

President Obama's tax plans are the subject of the face-off debate tonight. Joining me are Professor Adam Larick of Carnegie Mellon University, who says that under the president's plans, taxpayers will be pushed too far and that higher and higher taxes on the highest earners isn't sustainable.

Arguing the other side, Robert McIntyre, Director of Citizens for Tax Justice. He says the rich aren't taxed enough and avoid paying their fair share because most of their money is the result of investment, not earnings.

Gentlemen, good to have you with us. Let's start, if I may -- his plans are being called socialist. They're talking about class warfare. What is your view, professor? Are we really talking about socialism, or is this simply the term of art in a political, partisan debate?

PROF. ADAM LERRICK, CARNEGIE MELLON UNIVERSITY: We haven't gotten to socialism, but we're certainly getting close to social democracy like they have in many European countries.

The basic problem in this country today is that 50 percent of American voters don't pay any federal income tax at all.

DOBBS: Say that again.

LERRICK: 50 percent, one out of every two American voters, doesn't pay income tax.

DOBBS: Wow.

LERRICK: All right. If you then add in another 10 percent that pay virtually an insignificant amount, less than $1,000 a year, or less than 5 percent of their income, you now have three out of five voters who gain when the government increases taxes and increases spending.

DOBBS: So what you're saying is 60 percent of voters actually receive more money from the government than they pay in taxes?

LERRICK: Absolutely.

And this is not a new problem. This is a problem people foresaw who actually wrote the constitution.

DOBBS: Before we get to the constitutional aspect of it, let me turn to you, Robert McIntyre. Your reaction? ROBERT MCINTYRE, DIRECTOR, CITIZENS FOR TAX JUSTICE: He's exaggerating a little, but about 40 percent of taxpayers don't owe income tax. But, of course, they owe lots of other taxes -- Social security and gasoline and cigarettes and state and local property and sales.

And when you add it all up, except for the very poorest people in the country, the effective rate it taxes as a share of income is just about flat from the middle all the way to the richest. And that's because the rich have so many loopholes they don't pay anything near in income tax or anything else compared to what the statutory rates look like.

DOBBS: All right. You're exaggerating says Robert McIntyre.

LERRICK: What Robert is looking at is historical data. Once you incorporate the tax increases that the president has already passed through congress, the number will rise to 50 percent of people, of voters who actually pay no income taxes.

MCINTYRE: We don't need to quibble, but it's 40 percent. But either way, it's a substantial number.

DOBBS: You're saying you don't want to quibble, but you guys go ahead and quibble? Is that --

MCINTYRE: No, I'm not going to quibble. I just want to say that this fact that --

DOBBS: It's fine to quibble, I don't mind.

But let me get to the point. This tax system right now, we have everyone from Governor Arnold Schwarzenegger to Steve Forbes who, for years, has talked about a flat tax. We have -- we are talking about a system right now that nearly everyone is dissatisfied with.

Is there some sensible approach here for every American? What do you think?

LERRICK: Well, I'm not sure there is a sensible approach that will appeal to every American.

We have a problem, and Robert raised one point, which is that many of the highest earners in this country actually pay a lower effective tax rate because most of their income or a large percentage come from dividends or capital gains.

The problem there is that money has already been taxed twice before it gets to them. And eventually it will be taxed four times. It's taxed when they earn it. They then invest it, buying shares in a company. The company then pays taxes on its income. They then distribute the dividends to the individual, who pays taxes on the dividend.

And then when they die, they will be taxed again. So you're talking about taxing this money four times. DOBBS: I think there is a place there for you to quibble.

MCINTYRE: We have lots of things taxed more than once. Wages, for instance, are taxed twice, and then again when you spend the money. So trying to add up how many times things are taxed is sort of a futile exercise.

The point here is this -- the income tax is a good tax despite all its warts, which is why half the population, or 40 percent doesn't have to pay it. And that offsets --

DOBBS: If you can get everyone paying the tax, Robert, to sign up for that idea, that's great.

But what I'm really asking here is, what makes sense? We know one thing, that over the course of the past decade, we seen as a percentage of national income, wages and compensation become less and corporations take a larger share, in fact, the greatest share since the great depression.

What is the solution?

MCINTYRE: From my point of view, the solution to get rid of the loopholes. And then you can have a relatively low rate but still progressive system. And it will solve the economic problems that Adam cares about.

But we won't be paying people to invest in crazy things. We won't be having a lower rate on millionaires than we do on wage earners. And then you have enough money to pay for the government without having particularly high tax rates.

DOBBS: Neither one of you suggested something that is dear to many, and that is -- and we're witnessing this right now, when we have almost a 9.5 percent unemployment rate, surely to go to 10 percent, if we are to believe most economists. We are watching government employment rise, and rise steadily, without contraction on either services or employment on government roles.

Yet the private sector, the average wages, are considerably less than the wages being paid government employees. And neither one of you has suggested that perhaps government constraint itself and reduce its spending, particularly in a time of recession.

LERRICK: There's no question the government should reduce its spending. The government's spending now is out of control. We're looking at trillion dollar deficits as far as the eye can see.

DOBBS: If there is no question, then why aren't we talking about how do that, the responsible ways to do that, and dealing with that issue with the urgency that presumably it deserves?

LERRICK: The problem is we used to have two parties in this country. The Democrats were called the "tax and spend party," and then the Republicans, which were theoretically the conservative, fiscally conservative -- DOBBS: Call it what you will, the Republicans were outspending the Democrats for the past decade.

LERRICK: Absolutely. So we have two parties, the tax and spend party and then the spending party. It's unsustainable.

DOBBS: Robert McIntyre?

MCINTYRE: Nobody thinks the government should be spending as much as it is or more.

DOBBS: I didn't say that. I didn't --

MCINTYRE: No, Lou Dobbs said it.

DOBBS: Excuse me, Robert. What I said was, you're neither addressing the issue of constraints on government spending, which many believe should be the priority.

MCINTYRE: Many may believe it, but the public voted for a guy who promised health care for everybody, which is going to be very expensive. He promised to save social security, which means it's going to be very expensive. You can't have those things unless you are --

DOBBS: Are you suggesting a four-point differential on the general election translates to a mandate of unlimited government spending?

MCINTYRE: There are specific things people want the government to do. To do those things, you have to have the tax revenues to pay for them.

LERRICK: But, Lou, you made the exact point. A four-point majority is not a mandate to change our society.

MCINTYRE: The last guy thought it was.

DOBBS: As I recall, Robert, you were amongst those most pleased and happy with the mandate he had.

MCINTYRE: George Bush, not really.

DOBBS: I misunderstood you then. Robert McIntyre, thank you very much. Professor, good to have you with us.

We'd like to know what you think in this poll. Now that 64 percent of all voters receive more from the federal government than they pay in taxes. Do you believe we are officially a welfare state? Yes or no? Cast you were vote at loudobbs.com. We'll have the results here later.

Supreme Court justice nominee Sonia Sotomayor today fractured her ankle just before the judge was flying to Capitol Hill meet with senators about her expected confirmation. White House officials say the judge tripped at New York's LaGuardia Airport. She continued on her flight to Washington and was taken to George Washington University Hospital for x-rays and treatment. After she was released, the judge, on crutches, kept her schedule, a meeting on Capitol Hill. That is the way to handle adversity.

Turning to the media's perception of President Obama, we have an interesting video clip of Newsweek editor at large Evan Thomas talking with MSNBC's Chris Matthews just this past Friday. You won't believe this. Try anyway.

(BEGIN VIDEO CLIP)

EVAN THOMAS, EDITOR-AT-LARGE, NEWSWEEK: We were the good guys in 1984. Felt that way. It hasn't felt that way in recent years. Obama has had a different task. We have seen too often as the bad guys. He has a very different job. Reagan was all about America and he talked about it. Obama is, we are above that now. We're not just parochial. We're not just chauvinistic. We're not jus provincial. We stand for something. In a way, Obama is standing above the country, above the world. He's sort of god. He's going to bring all different sides together.

(END VIDEO CLIP)

DOBBS: The yes, you heard was host Chris Matthews. You may remember during the presidential primaries Matthews said he felt a thrill up his leg while the Senator Obama spoke. It's also worth noting that Evan Thomas just two years ago, talking about the media's criticism of George W. Bush said, quote, famously, two years ago, it is the media's job to, quote, bash the president.

Turning now to China's new censorship, trying to enlist American computer makers to help and growing drug cartel violence in Mexico. Striking one of the country's most famous and affluent tourist attractions.

(COMMERCIAL BREAK)

DOBBS: Three new studies raise serious important new questions about the benefits and the efficiency of producing ethanol. The alternative fuel has the full backing of President Obama, the federal government and has been touted as the clean, renewable fuel of the future. There is some evidence that ethanol may not be as less -- as clean and as less costly as its backers claim. Bill Tucker has our report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): It's been the accepted wisdom for a while now in Washington.

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: The ethanol industry is on the move. America is better off for it.

TUCKER: And it still is. The white house saying, "The president believes investing in renewable fuels such as corn-based ethanol can reduce our dependence on foreign oil, create jobs and grow our agricultural sector."

While government studies show ethanol reduces so-called live cycle greenhouse gases 20 percent compared to gasoline, opponents say there are new reasons to doubt the findings.

DENNIS AVERY, HUDSON INSTITUTE: It's worse for the environment than burning gasoline. If we have to increase the amount of crop land we grow, we use for crops, then we're going to be losing all of the stored soil carbon that was in the forest soil. And that incurs a carbon debt that takes about 100 years to pay back.

TUCKER: The claim of a carbon debt is backed up in a study by the environmental protection agency. A separate study by the nonpartisan Congressional budget office says, as rain forest and grasslands are converted to farm land, that carbon debt worsens because crops don't absorb as much carbon from the air. Ethanol also incurs another indirect but substantial cost, the study by the CBO estimates that the ethanol usage accounted for 10 to 15 percent of food price increases between April 2007 and April 2008. Those studies were echoed in a separate study by the food and agricultural policy research institute in a study requested by five Congressmen from Texas where livestock producers are acutely aware of corn prices. They found if ethanol subsidies were eliminated, ethanol production would decline and grain and food prices would fall.

PATRICK WESTHOFF, UNIVERSITY OF MISSOURI-COLUMBIA: So when corn prices go down, if you take away the current policies, it's bringing down the prices for soy beans and wheat and cotton and other major crops that are growing.

TUCKER: As a result of the higher prices and increased ethanol production, they estimate federal spending on food stamp programs and child nutrition programs will increase by an estimated 600 to $900 million this year. Even groups focused on land preservation agree there are problems that must and can be addressed.

NOAM ROSS, GREENORDER: If we have policies in place to protect land, to protect forests and to protect our climate, they can be shaped in a way that the markets will decide whether ethanol is a solution or a problem.

TUCKER: A group of representatives from the two top corn- producing states in the U.S., along with the Corn Farmers' Coalition disagrees with the EPA study, saying it miscalculates the environmental impact of corn growing. They plan a briefing on Tuesday to dispute that study's findings.

(END VIDEOTAPE)

TUCKER: This is one of three study's findings. Fuel experts say ethanol adds 10 percent to the price of gasoline and that doesn't include the cost of subsidizing ethanol production, Lou.

DOBBS: And we all know because this is the orthodoxy of the time that ethanol is good for you. I would not want anyone to misunderstand here, that we are in no way challenging the orthodox view of Washington, D.C. of either political party, any lobbying organization or certainly the Obama administration. The last thing we would want anyone to think is that we were questioning the federal government in any way, right? Absolutely.

TUCKER: There are three studies that do that for us, Bill.

DOBBS: I wouldn't even think of it. Thank you very much.

TUCKER: You're welcome.

DOBBS: A reminder to vote on the poll. Now that 60 percent of voters receive more from the federal government than they pay in taxes. Do you believe we're officially a welfare state, yes or no? Cast your vote at loudobbs.com. We'll have the results here in a moment.

Drug cartel violence reached one of Mexico's most famous tourist resorts. A fierce gunfire battle erupted over the weekend in Acapulco. 18 people were killed in the gun fire. It all occurred in the midst of a government effort to shore up Mexico's tourist industry. Casey Wian has our report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Less than two weeks after the Mexican government announced a $92 million celebrity endorsement campaign to attract tourism ...

PRESIDENT FELIPE CALDERON, MEXICO (through translator): It is a national movement that requires the participation of all Mexicans.

WIAN: One of the nation's most famous tourist destinations, Acapulco, erupted in gunfire Saturday night. Mexican federal troops battled suspected drug cartel gunman in the streets of one of Acapulco's tourist zones, leaving a military vehicle riddled with bullets and terrified people fleeing the scene. Soldiers found four handcuffed shirtless men who claimed to be kidnapped state police officers. More than 300 shots were fired and 50 grenades exploded. 16 gunmen and two soldiers were killed.

UNIDENTIFIED MALE: First, the military vehicles arrived. Then the federal police arrived, also, the local police. All of them masked. Also the ministerial police arrived. There was a lot of action and it was probably what the situation occurred. Some of the criminals got away.

WIAN: Bringing in $13 billion last year, tourism is Mexico's third leading legal source of foreign income, after oil and money sent by Mexicans living abroad. Income from drug trafficking could eclipse each of those. Mexican drug cartels earned anywhere from 8 to $23 billion in 2005, according to the U.S. National Drug Intelligence Center not counting proceeds from marijuana grown in the United States. The Acapulco shootout is the latest setback for Mexico's tourism industry which suffered cancellation rates of up to 70 percent during the recent swine flu outbreak.

(END VIDEOTAPE)

WIAN: A U.S. State Department travel alert from Mexico remains in effect. It warns Americans about the risks of being caught in the cross fire of battles involving drug cartels and the Mexican military as well as the threat of being kidnapped, Lou.

DOBBS: All right. Casey, thank you very much. A tough environment to be boosting tourism in Mexico. Thanks very much, Casey Wian.

New concerns about two American journalists who have been imprisoned in North Korea amid rising military tensions on the Korean peninsula.

And U.S. computer makers under pressure to help communist China censor the internet.

(COMMERCIAL BREAK)

DOBBS: There's no question that communist Chinese regime censors the internet and spies on the people who use it. The question now is whether American companies are helping them. Kitty Pilgrim has our report.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): The communist Chinese government is requiring all personal computers sold in China to have software to filter user content. The regime said the filters are to prevent pornography. "In order to build a green, healthy and harmonious environment and to avoid unhealthy information on the internet from influencing and hurting the youth." Nonsense, says Congressman Thaddeus McCotter who calls it blatant political censorship. He says U.S. companies have been duped.

REP. THADDEUS MCCOTTER (R), MICHIGAN: What you're seeing is the communist regime that believes liberty threatens prosperity. They have to keep information out and the free flow of ideas under control.

PILGRIM: U.S. companies doing business in China are faced with a July deadline for installing the censorship software. So U.S. companies like Dell and Hewlett-Packard are put in the position of aiding and abetting Chinese censorship. This professor is part of a study that studies Chinese censorship.

JOHN PALFREY, HARVARD UNIVERSITY: It will allow the Chinese government to spy on the activities of all its users. I hope very much that companies like Dell and Hewlett-Packard will push back on this regulation.

PILGRIM: Hewlett-Packard issued a statement today saying, "HP is working closely with the Trade Industry Association to seek additional information." Dell said, "We will be working with government officials to understand the application." U.S. companies like Google and Yahoo! have faced Congressional criticism in the past over allegations they have helped the Chinese government filter content and monitor political dissidents. In 2007, Yahoo! settled out of court after being sued by a Chinese family of a man who was jailed for anti- government internet activity. That same year, the Google cofounder said Google regrets the bad publicity the company generated by helping the communist Chinese government censor the internet in China.

(END VIDEOTAPE)

PILGRIM: Congressman Chris Smith introduced the Global Online Freedom Act to demand full disclosure of U.S. companies that do business with China about online monitoring. Congressman Smith told us today that the bill failed to pass last year because of lobbying money by major internet companies in the United States. He's trying again to get this bill passed this year.

DOBBS: All right. Thank you very much, Kitty; Kitty Pilgrim.

Communist China's pressure on American manufacturers is only one part of the perspective in this nation's dealings with China. The United States needs China's influence to help control North Korea's nuclear program amongst other issues.

Joining me now, two experts on Asia. Richard Fisher, a senior fellow at The International Assessment and Strategy Center. Rick, good to have you with us. And Dennis Wilder, visiting fellow at the Brookings Institution. Good to have you with us.

Let me turn to the issue of the American journalists sentenced today. Rick, let's start with you. What's your perspective? What do you think is the likelihood that the United States government is going to be able to free those two women?

RICK FISHER, INTL. ASSESSMENT & STRATEGY CTR.: The track record is not very good. When North Korea has held hostages in the past, it has done so for a very long time. Not just hostages from the United States, but from Japan and South Korea as well. This does not look good, Lou.

DOBBS: Do you agree Dennis?

DENNIS WILDER, BROOKINGS INSTITUTE: I'm a little more optimistic, Lou. This is a humanitarian issue. The north has done what it wanted to do by demonstrating they could convict journalists wandering around up on its northern border. Hopefully the north will allow an American envoy to come in and negotiate a humanitarian release so these people can come back to their family.

DOBBS: Interestingly enough, Rick, the United States government has a very big response to the threats and challenges being posed right now by North Korea. And that is the Secretary of State Hillary Clinton threatening to put North Korea back on the terrorist list. Is that something will have Kim Jong-Il quaking in his boots?

FISHER: No, probably not. Putting pressure on him in that way probably won't impress him very much. What I suggest we should be doing is working to defend ourselves much better against the nuclear and missile threat he's building and we should be working much harder with our allies to equip them to potentially have the ability to deter North Korea as well.

DOBBS: Is that -- is that your view as well, Dennis?

WILDER: Not really. I was part of the Bush administration. We spent a lot of money on missile defense. We worked with the Japanese on missile defense. We are in a position as secretary gates as said, to shoot down a North Korean missile. I am far more concerned about the dangers of proliferation. In other words, the danger someone in North Korea will decide to sell material to a state or non-state actor. That's why I think we need an international PSI regime and support from the Chinese.

DOBBS: I'm sorry. An international what?

WILDER: Proliferation security initiative. We have this initiative already. We haven't gotten all countries to sign up to it. What this means is intradictions at sea, if we find evidence that the North Koreans, are, indeed, exporting weapons of mass destruction to other countries.

DOBBS: Is there some room here for those who might question on the U.S. role in its entirety, because it seems the United States is alone. Of course Japan and South Korea in varying degrees are concerned. But there is no voice emanating from the European Union from any other quarter of the globe. Again, the United States finds itself leading the response to a threat that the United States, at least, says is a threat to global security. Why should that be?

WILDER: Well, I think that there is a problem here. That since January, the North Korean leader has been in the driver's seat. And frankly the Obama administration needs to take back the initiative. We need a good, strong resolution at the United Nations this week with information regimes, with sanctions on the North Korean elite. The point here is to make the North Korean elite pay a price for supporting the North Korean leader.

DOBBS: How do you do that?

WILDER: You can do it. The Chinese have done it in the past. After the first nuclear test, we saw the Chinese squeeze the North Koreans. The Chinese --

DOBBS: Rick?

FISHER: I think the Chinese should be doing a heck of a lot more, frankly. The Chinese are partially the author of this crisis, and they have simply not stepped up to their responsibility in my opinion.

DOBBS: Therefore, the Chinese are not doing their part. The North Koreans move ahead with their erratic, unpredictable, but apparently affective behavior, and the United States is rendered impotent because of its lead in protesting the actions of the North Koreans and is singularly unsuccessful whether under the form of the Bush administration or new Obama administration in finding support. Of course either strong sanctions or actions against North Korea. Is that where we are?

WILDER: Let's see where we come out at the United Nations this week on sanctions. Because what the Obama administration puts forward is good. It has teeth to it and it builds on the U.N. resolution 1718.

DOBBS: All right. Rick, you get the last word. 15 seconds' worth.

FISHER: I also see a lot of disquiet within the Obama administration. Sec stair gates saying he doesn't want to apply this force twice. I think the policy of the last 15 years has not really gotten us to where we want to be and we really need to start thinking of doing something else to get ourselves in North Korea and displace Chinese influence.

DOBBS: Rick Fisher, Dennis Wilder, we thank you both, gentlemen.

Coming up at the top of the hour, Campbell Brown.

CAMPBELL BROWN, CNN ANCHOR: Hey there Lou. Thanks a lot.

Tonight, the very latest on the two young American journalists jailed in North Korea. This morning Laura Ling and Euna Lee were housed to 12 years hard labor. What is the Obama administration doing to try to win their freedom?

Also, my interview with a dad fighting Brazil's legal system to bring his abducted son home to the U.S. Tonight's great debate, Lou, is it time for America to lift the embargo and embrace Cuba?

And is the Republican Party afraid of Sarah Palin? We're going to talk about that at the top of the hour.

DOBBS: All right. Thank you very much.

Up next, tonight's poll results. Some of your thoughts. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: Tonight's poll results, 89 percent of you say we believe we are officially a welfare state now that 60 percent of all voters receive more from the federal government than they pay in taxes.

Time now for some of your thoughts.

Allen in South Carolina: "Lou, I think you should be appointed czar of the news media. Please don't ever stop or we will never know any truth."

Chuck in Florida: "We need to hire a czar to oversee the czar that appointed all the czars."

Fred in New Jersey: "There are so many czars packed into Washington we should start to refer to them as czardines." I love that one.

Bud in California: "Lou, why is President Obama spending money to create jobs with the stimulus program and at the same time apparently trying to get rid of e-verify?"

Finally Sharon in Wisconsin wrote in to tell us about a bum bumper sticker: "Lou, I saw this on the back of an SUV. I'll keep my money, my freedom, and my guns. You can keep the change."

We love hearing from you. Send us your thoughts to loudobbs.com. Each of you whose e-mail is read here receives a copy of my book, "Independence Day." Join me on the raid you Mondays through Fridays for the Lou Dobbs Show. New York, 2:00 to 4:00 p.m. each and every afternoon on WOR 710 radio. Go to loudobbsradio.com to get the local listings in your area for the shows on the radio. Thank you for being with us tonight. Please join us tomorrow. For all of us, we thank you for watching. Good night from New York.