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Lou Dobbs Tonight

U.S. Tracking a North Korean Ship; Polls Show Drop in Obama Ratings; FDA Resources; New Credit Card Watchdog

Aired June 18, 2009 - 19:00   ET


LOU DOBBS, HOST: Tonight, the U.S. military tracking a North Korean flagship that is suspected of carrying nuclear material. And the Pentagon is now moving more missile defenses to Hawaii to guard against a possible North Korean missile attack.

Also new polls on the president's handling of foreign policy and the economy -- those polls show mounting concern about some of his administration's principled domestic initiatives.

Also tonight, the battle over taxpayer money that may be going to ACORN, a group under federal investigation for voter registration fraud and other violations -- tonight Congressman Steve King and Bertha Lewis, the CEO of ACORN "Face Off" in our debate tonight.

Also Gerald Walpin, the inspector general of AmeriCorps fired by President Obama, he joins us to tell us what is going on.

We begin tonight with breaking news -- a dramatic escalation in the standoff with North Korea tonight. The U.S. military is now tracking a North Korean flagship. That ship is suspected of carrying nuclear weapons or other nuclear material. North Korea says any attempt to stop one of its ships will be an act of war.

Defense Secretary Robert Gates ordered increase missile defenses to the Pacific after a newspaper report from Japan said North Korea may fire a missile toward Hawaii. Chris Lawrence has our report from the Pentagon.


CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): The United States is keeping both eyes on North Korea. Inside the country, at a potential ballistic missile launch site and on this ship, suspected of carrying weapons or nuclear technology. Senior defense officials tell CNN the U.S. military is tracking the Kang Nam through the Pacific Ocean and they suspect it may be violating U.N. sanctions.

ADMIRAL MIKE MULLEN, JOINT CHIEFS CHAIRMAN: We intend to vigorously enforce the United Nations Security Council Resolution 1874.

LAWRENCE: For now, that means monitoring. But senior defense officials left no doubt they will ask the North Koreans to come aboard and search their ship. The North Koreans would probably say no. UNIDENTIFIED MALE: The United Nations Security Council resolution does not include an option for an opposed boarding or a noncompliant boarding.

LAWRENCE: And North Korea has said any attempt to board will be considered an act of war. But eventually, the Kang Nam will need to refuel. Wherever it stops, the U.S. will pressure that country to refuse refueling until inspectors are allowed onboard. U.S. military officials are also monitoring continuing activity inside North Korea near a missile launch base. Japanese media report the North Koreans could launch another missile test within a month, this one towards Hawaii.

ROBERT GATES, DEFENSE SECRETARY: I have directed the deployment again of THAAD missiles to Hawaii and the SBX radar has deployed away from Hawaii to provide support.

LAWRENCE: The last missile North Korea test fired traveled nearly 2,400 miles from the launch site and landed in the Pacific Ocean. But even if a new missile shows greater range, Hawaii is still another 2,000 miles from that splash down.

GATES: We are in a good position, should it become necessary to protect American territory.


LAWRENCE: So they're keeping an eye on the launch site and of course that ship. A defense official told us they don't know exactly what's onboard the Kang Nam, but they know it's flying under a North Korean flag, it's sailing southward and it is a repeat offender, meaning it is known to have carried proliferation materials in the past. Lou?

DOBBS: Chris, why isn't the U.S. military then forcibly prepared to board the ships in order to stop such ships if they are carrying that cargo?

LAWRENCE: Well, one reason is it's not allowed under this U.N. resolution. And to get this resolution passed, you had to have countries like Russia and China sign on to it. This is about as far as they would go in terms of provoking North Korea.

There are some analysts out there who say it doesn't go far enough, that in fact it will give North Korea perhaps a P.R. victory in that when the U.S. or other countries ask to board and they say no, if they sail on and they are inspected later, the North still gets somewhat of a P.R. boost. That's the opinion of some analysts out there.

DOBBS: All right, Chris, thank you very much -- Chris Lawrence reporting from the Pentagon.

The White House tonight says it will not discuss any specifics related to possible military action against that North Korean ship. Instead the Obama administration says it is focused on enforcement of those U.N. sanctions which Chris Lawrence reported on. After his meeting with South Korean's leader Tuesday, President Obama said he would push for serious enforcement of those sanctions.

The Treasury Department is now warning banks that the North Korean government may be printing phony U.S. currency. The Treasury Department says that could be one step that North Korea takes as it tries to foil economic sanctions as a result of its nuclear weapons program. The Treasury Department is also warning banks to scrutinize third party money transfers, and any attempts by North Koreans to make large cash transactions.

Thousands, hundreds of thousands of Iranians took to the streets of Tehran today. Supporters of opposition leader Mousavi rallied to show their support. Western journalists are still barred from covering those street demonstrations. Today's rally was said to have ended peacefully. More protests however are expected tomorrow, a week after the contested election was held.

President Obama continues to be very popular with the American public, but new polls show the public is increasingly concerned about how the president is handling the economy and other critically important issues -- Bill Schneider with our report.


WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Three new polls out. Let's see how President Obama is doing. "The New York Times"/CBS News poll, 63 percent job approval -- still high, but five points down since April. The Pew Research Center poll, 61 percent, down two since April; "The Wall Street Journal" /NBC News poll, 56 percent, down five since April.

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: We'll recover from this recession, but it will take time. It will take patience.

SCHNEIDER: President Obama is more popular than his policies. Three-quarters of Americans like President Obama, but just over half approve of his policies. People think the economic recovery may be slowing down. From February to May, growing numbers of Americans believed the economy was getting better. Now that number has fallen back a bit.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I think the American people are rightly anxious and concerned about the economy, just as the president is.

SCHNEIDER: How big a concern is the deficit? Most Americans say the president and Congress should worry more about keeping the budget deficit down than about boosting the economy. But it's not Obama's deficit. Forty-six percent say the Bush administration is most responsible for the deficit. Only six percent blame the Obama administration.

OBAMA: This is hard and the reason it's hard is because we've accumulated a structural deficit that's going to take a long time. SCHNEIDER: One thing President Obama has going for him, very little confidence in the opposition. In the "Times"/CBS poll, 57 percent of the public have a favorable opinion of the Democratic Party; more than twice as many as the Republicans. In "The Journal"/NBC poll, a 20-point gap between the parties.


SCHNEIDER: And both of those polls show opinion of the Republican Party is now at an all-time low. Lou?

DOBBS: Thank you very much -- Bill Schneider from Washington.

Up next here, the FDA powerless to order recalls of dangerous foods. And tonight, we look at new tighter rules that Congress is now considering to protect the nation's food supply -- also tonight, the battle over protecting consumers from credit card and mortgage fraud.


UNIDENTIFIED MALE: What planet are you living on? The very people who created the damn mess are the ones now arguing the consumers ought not to be protected.


DOBBS: The Obama administration calling for a sweeping overhaul of regulation. Will it do anything to protect financial industry consumers?


DOBBS: Secretary of State Hillary Clinton will require surgery to fix her broken right elbow. The secretary of state fell while getting into her car yesterday. The 61-year-old Clinton was leaving the State Department for a meeting at the White House when she fell. The secretary is resting at home while she awaits surgery. The State Department says her surgery should happen over the next few days.

The death toll from swine flu in this country is rising. In Connecticut, a man from Hartford County has died. He is that state's fourth swine flu victim. The New Jersey Department of Health now reports a third death from the virus, the victim, a 10-year-old boy, and in North Carolina concern that 33 premature babies have been exposed to swine flu by a doctor.

The infants are now in intensive care at Greensboro Hospital. They're being treated with Tami flu. Meanwhile, more than 30 students and teachers from California have been released from their quarantine in China. They were quarantined for a week after a classmate tested positive for swine flu.

The FDA may soon have new powers to make food safer in this country. For the first time the FDA may actually be able to force a recall. Lisa Sylvester reports from Washington on legislation that is one step closer now to becoming law. (BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Tainted peanuts, E.coli in spinach, salmonella in Mexican jalapeno peppers all recent examples of the gaping holes in the nation's food safety system. The Food and Drug Administration inspects less than one percent of the food imported into the United States and is currently powerless to force a company to recall dangerous foods.

PATTY LOVERA, FOOD AND WATER WATCH: Right now, they don't have that authority which is kind of an astonishing thing. They have to negotiate with the company and get the company to do the recall and it's decades late for us to have that authority for the FDA. They should be able to have that right now.

SYLVESTER: The FDA would have that authority and more under new legislation being considered in the House. Representative Diana DeGette is one of the bill's sponsors.

REP. DIANA DEGETTE (D), COLORADO: It allows an increase of inspections. It also gives the FDA the ability more powers to get records that they need to give some subpoena power and then it also gives the FDA the ability to have a mandatory recall.

SYLVESTER: The FDA would also be required to inspect high-risk food manufacturers or processors at least once a year. Consumer groups say currently inspections of domestic plants average once every 10 years. The bill also calls for a new system that can trace food from the field to a consumer's plates. Industry groups oppose parts of the legislation, objecting to new authority that the FDA will have to quarantine food, new paperwork requirements, and opposing a user fee of $500 levied on food companies to pay for the added oversight.

THOMAS STENZEL, UNITED FRESH PRODUCE ASSOC.: I run a trade association that has many very small members who are going to be extremely challenged to comply with this regulation.

SYLVESTER: The Food Safety Bill has passed the full Energy and Commerce Committee and is expected to be voted on by the full House later this summer.


SYLVESTER: Then there's a question of how to pay for all of this. There is that $500 user fee on companies, but watchdog groups say that's not going to be enough to pay for the inspectors needed and to set up the food tracking system. So this bill gives the FDA new authority, but the agency will still have to convince Congress to come up with more money to pay for the added oversight. Lou?

DOBBS: Thanks very much -- appreciate it -- Lisa Sylvester from Washington.

The president is proposing a new federal office to oversee consumer credit. The Financial Consumer Product Safety Commission would protect consumers from credit card and mortgage fraud. That is the intent, but the question remains, why haven't the existing federal agencies done the job? Kitty Pilgrim has our report.


KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Outrageous credit card fees, abusive lending practices, mortgages that explode after a few years. Consumer advocates say it's about time somebody looks after the consumer in the financial marketplace. The Federal Reserve and the bank regulators all along have had the power to oversee mortgages, credit cards and other financial instruments, but now President Obama wants a new federal oversight panel to take on that task. The small lenders advocacy group, American Financial Services Association says a new oversight panel is not needed.

CHRIS STINEBERT, AMERICAN FINANCIAL SERVICES ASSOC.: You could argue that some of the current regulators were somewhat asleep at the switch. They're certainly awake now. Right now consumer issues are being addressed at all of the agency levels.

PILGRIM: One argument against the new panel is it would put new limits on borrowing and lending that some say would restrict credit at a time when the entire country is in a credit crunch. But advocates of the new panel are not convinced, like Christopher Dodd, chairman of the Senate Banking Committee.

SEN. CHRISTOPHER DODD (D), CONNECTICUT: And when I pick up the morning newspaper and I read the first headline here that fault lines emerge as industry groups blast plan to create consumer agency, what planet are you living on? The very people who created the damn mess are the ones now arguing the consumers ought not to be protected.

PILGRIM: Consumer watchdog group Center for Responsible Lending says the new panel is good to keep the banking industry in check.

KATHLEEN DAY, CENTER FOR RESPONSIBLE LENDING: One of the problems that led to the current crisis is the industry was too close to its regulators and the regulators became cheerleaders for the industry and forgot their role as protectors of consumers as well.


PILGRIM: The new Obama proposal would strip the Federal Reserve of its role in overseeing consumer protection. (INAUDIBLE) something the Federal Reserve is likely to resist. Democrats are trying to push this reform legislation through by the end of the year. Lou?

DOBBS: The Federal Reserve took the lead in protecting consumers and was the only agency of the federal government to do so, and predated this Congress in its efforts as well as its success to do that.

PILGRIM: They've been charged with that role and now they want to strip that away from the Federal Reserve. They say the relationship has been too cozy, that too many abuses have occurred and the banking industry...

DOBBS: And simultaneously efforts are under way to give the Federal Reserve, which has refused to permit disclosure, transparency with Congress over its lending and actions. It wants more power and wants to remain closed.

PILGRIM: That's right. It will have more power to oversee the risk side of the industry.

DOBBS: If -- if Congress...

PILGRIM: If it passes...

DOBBS: Thanks very much, Kitty -- Kitty Pilgrim.

And this programming note; join us here tomorrow night. Our "Face Off" debate presents the question do law enforcement policies of Arizona's Maricopa County amount to racial profiling? Reverend Al Sharpton and Maricopa County Sheriff Joe Arpaio join me here live from Phoenix for tomorrow night's "Face Off" debate.

To hear my thoughts on this issue and much more join me on the radio each Monday through Friday for "The Lou Dobbs Show" 2:00 to 4:00 p.m. each afternoon on WOR 710 Radio in New York. Go to to get local listings in your area.

And we'd like to hear from you. Please go to and tweet me at Lou Dobbs News. We appreciate that.

Coming up here next a transatlantic flight lands safely after the pilot dies in mid-flight. And a massive tornado tears through central Nebraska as a storm chaser drives toward the twister.


UNIDENTIFIED MALE: It's tearing this building apart.



DOBBS: Passengers aboard a Continental Airlines flight today had no idea that the pilot of their aircraft had died while flying over the Atlantic Ocean. While crews, members were asked if there was a doctor among the 247 passengers, two co-pilots took control of the aircraft. Mary Snow has our report.


MARY SNOW, CNN CORRESPONDENT (voice-over): Emergency crews stood by at Newark Airport for Continental Flight 61 coming from Brussels. The FAA and airline had confirmed the captain had died mid-flight, but passengers only learned about it once they got off the plane.

UNIDENTIFIED FEMALE: They never said the pilot died. (INAUDIBLE)

UNIDENTIFIED FEMALE: They called over the (INAUDIBLE) is any one a doctor onboard. Any doctors onboard, please (INAUDIBLE) immediately, so we (INAUDIBLE). We didn't know what happened.

SNOW: Dr. Julien Struyzen from Brussels was among the doctors who went to the cockpit. He says he tried using a defibrillator.

DR. JULIEN STRUYZEN, CARDIOLOGIST ON BOARD: I was the first MD coming onboard (INAUDIBLE) for some duty (INAUDIBLE) illness and his illness (INAUDIBLE) death.

SNOW: CNN affiliate KHOU identified the pilot as Craig Lenell. Continental Airlines says the pilot apparently died of natural causes. They would only say he was 60 years old with 32 years of service. There was a relief pilot onboard as part of the crew, something that's done on long flights and he took over for the captain. One former pilot says crews are prepared for medical emergencies.

CAPT. JOHN COX, FORMER USAIR FLIGHT CAPTAIN: The crew is completely qualified to fly the airplane and a routine landing will be made. So advising the passengers really doesn't contribute anything positive to the situation.

SNOW: And it's only been since December 2007 that commercial pilots are permitted to fly past their 60th birthday -- former FAA official Scott Brenner.

SCOTT BRENNER, FORMER SR. FAA OFFICIAL: Under the new rules pilots are now allowed to fly up until they reach their 65th birthday with some little adjustments where rather than having annual physicals now they have to have physicals twice a year.

SNOW: Brenner says the new age requirements match what's been done in other parts of the world already.

(on camera): And the pilot's wife, Linda Lenell, tells affiliate KHOU that her husband was in perfect health, that he had no known heart issues and she says he underwent physical examinations every six months.

Mary Snow, CNN, Newark, New Jersey.


DOBBS: Crash investors now say the wreckage of Air France flight 447 is 15,000 feet under the Atlantic. Searchers continue to find pieces of the aircraft. And today, a top executive with the company that made the plane's flight recorder said he's still hopeful that it may be found. All 228 people aboard the plane died earlier this month when it went down on a flight from Rio de Janeiro to Paris.

Other stories we're following here tonight: DNA tests show that a man from Michigan is not a child who went missing 54 years ago. Yesterday we told you about that case from 1955. A woman left her children outside a shop in Long Island, New York, while she ran in to buy groceries. When she returned, her boy was missing. A man came forward this month and claimed he was that child. Preliminary DNA tests yesterday showed it was probable. Today, however, conclusive DNA testing revealed that he is not that child. In Nebraska a man filmed a quarter-mile wide tornado while driving toward it.


UNIDENTIFIED MALE: It is tearing this building apart!


DOBBS: That tornado touched down last night just west of Aurora (ph). It uprooted trees, derailed train cars and you can see it tearing the roof off what was a factory. The entire Midwest has been hit by severe weather. No serious injuries have been reported in these storms. Tens of thousands of people, however, tonight are without power.

And NASA successfully sending an unmanned rocket to the moon this evening -- this is the first moon mission in a decade. The Atlas Five rocket is carrying two probes that will search the moon for ice and scout possible landing sites for manned missions. This mission cost nearly $600 million.

President Obama meanwhile has ordered a sweeping review of the entire space program. Tomorrow on the show, we'll have a report on the new leadership at NASA and the future of manned space flight.

Up next, a standoff between the United States and North Korea in the Pacific Ocean, we'll have the latest for you, and the advocacy group ACORN under investigation in 10 states. Is it time to cut off the group's federal funding? That is the subject of our "Face Off" debate.

And President Obama's controversial firing of AmeriCorps inspector general. Critics say it's politic, pure and simple. The inspector general joins me here next.


DOBBS: As we've been reporting here tonight, the U.S. Navy is now tracking a North Korean ship in the Pacific. The cargo vessel is suspected of carrying nuclear weapons or nuclear material. And joining me now to discuss what are rising tensions between the United States and North Korea, Richard Fisher, a senior fellow at the International Assessment and Strategy Center, Dennis Wilder, visiting fellow at the Brookings Institution and Gordon Chang, author of "Nuclear Showdown: North Korea Takes on the World" -- good to have you all with us.

Gordon, let me ask you straight up. I mean the United States Navy is apparently relying on U.N. sanctions for authority to take on this ship. Is that sufficient?

GORDON CHANG, AUTHOR, "NUCLEAR SHOWDOWN": Well you know this is a matter which affects our national security. And yeah, it's nice to respect the United Nations, but at the end of the day we have to make security decisions that are based upon what we calculate as important. And North Korea carrying nuclear technology, we know they've done it before. They sold it to Iran and to Syria. This is extremely serious and so we should pull out all the stops.

DOBBS: Dennis, is this -- does it seem to you to be a situation in which the United States has adequate intelligence and is sufficiently knowledgeable about what is or is not aboard that North Korean vessel?

DENNIS WILDER, BROOKINGS INSTITUTIONS: Well, I don't know exactly what officials know, but clearly if they're following this ship, they have some suspicions. And what they're going to do if they think the evidence is strong enough is they're going to challenge the captain to allow them to come aboard.

If he doesn't allow them to come aboard then they're going to ask him to divert to a port. If he doesn't divert to a port, then they're going to ask ports along the way not to refuel the ship.

DOBBS: And Rick Fischer, that's the way this would proceed. The United States, suspecting a ship of having nuclear technology, and -- or weapons or nuclear material of some kind, apparently, and the United States does not have either the political will or the military purpose here to board that ship.

RICHARD FISHER, INTL. ASSESSMENT & STRATEGY CTR.: Lou, I have to say, this is simply surreal. I mean, I feel like I'm moving into a Dennis Miller joke. How many mushroom clouds do we have to see before we take this despot seriously? If this ship is under suspicion, then the security of the American people and our allies should come first, not the strictures of a U.N. resolution.

DOBBS: But that is precisely what Robert Gates, the secretary of defense, has said. He's referred to those sanctions as the basis, the imprimatur, under which the United States Navy would be acting. Is that not correct?

CHANG: That's exactly what he said. And this issue is an issue of political war. Because you've got to remember in December 2002 we asked the Spanish to stop a North Korean freighter with missile parts on it on its way to Yemen.

And once the Spanish did so, at the risk to their lives, we then said we're not going to worry about it. Let the ship go on to Yemen. So, really, we've got a problem of political will. And it's not just the UN. It goes back for a number of years. And that's the reason why North Korea has seen this big green light to proliferate nuclear technology around the world.

DOBBS: Do you agree with that Dennis?

WILDER: You know, I don't. I think the Obama administration is taking some tough actions now. I think they've had to rethink of their policy on North Korea. I think they're going to get the Chinese involved. I think you saw on Tuesday in the Rose Garden the president is saying he's going to vigorously enforce this. So I think it's a bit of a new day with the Obama administration. I think, frankly, they had a wake-up call from North Korea and I'm hopeful that they will now use the full measure of U.N. sanctions, start putting companies on the list and let's get moving on this.

DOBBS: At the same time, some intelligence agencies obviously are suggesting that the North Koreans want to fire a missile, at least in the direction of Hawaii. To what degree, Rick Fisher, should we be concerned?

The secretary of defense has moved more missile defense assets to Hawaii. What is, as best we can discern it, the thinking of the North Korean leadership? And what should be the U.S. response?

FISHER: Well, the North Korean leadership is going to continue to rattle sabers, to escalate threats, as long as we're willing to cower and give concessions and continue aid. This is what's going to happen for as long as we allow it to happen.

We should shoot down a missile that is in any way aimed at Hawaii or Alaska. We should be boarding this ship to ascertain whether it has nuclear or missile components. It seems very clear to me.

DOBBS: While that may be clear to you, Rick -- Gordon, is it clear to the U.S. military what's going on with this ship? Because obviously the intelligence is critically important here.

Whatever choices are made, whether they are to stay within the bounds of the United Nations sanctions, whether it should come to the point that someone in the Obama administration, whether it be the secretary of the defense or it be the president himself determines that this is a threat to U.S. national security, we must know what is aboard that ship, must we not?

CHANG: Yes. I assume that the Obama administration has clear rules of engagement for the Navy. The thing that I'm concerned about is that China picks up the phone to the State Department and, you know, with just one call stops the mightiest Navy in the world.

So we're going to see if there is a question of political will. You know I certainly hope that the Obama administration has turned the corner, but you know, that remains to be seen.

DOBBS: Dennis, you get the last word on this.

WILDER: Well, I think we're seeing a bizarre stage play by the North Korean leader. You know his first missile test was on July 4th in 2006. Then his nuclear test this year was on Memorial Day.

I think we're going to have another test probably around July 4th this year of a long-range missile.

I completely with agree with Rick, if it's a danger, it should be shot down and we've got the interceptors to do it.

DOBBS: All right. Dennis, thanks very much. Gentlemen, thank you so much for being with us.

WILDER: Thank you.

DOBBS: Multiple fraud investigations into ACORN., forcing Congress now to take sides. A new proposal to cut ACORN's federal funding has launched a serious debate on Capitol Hill.

That is the subject of our "Faceoff" debate tonight.

And the president's controversial firing of the inspector general of AmeriCorps. The man who got fired joins me here next.


DOBBS: The Obama administration said it fired an AmeriCorps inspector general because he was incompetent and showed up to a meeting, quote, "confused and disoriented."

Gerald Walpin is technically on administrative leave. Administration critics say Walpin was removed because he uncovered waste in the federal program run by one of the president's supporters and friends.

Joining me now the man at the center of this controversy and political storm, Gerald Walpin.

Good to have with us.


DOBBS: You were told summarily that you were fired, is that correct?

WALPIN: I was told that I would either resign or be fired and I was given one hour to decide and I thought my obligation to this country was that I stand up to this, which was clearly a firing having to do with the fact that I was doing my job.

DOBBS: Who was on the other end of the phone?

WALPIN: A man by the name Norman Eisen who identified himself as special counsel to the president.

DOBBS: And the reason he gave you for wanting you out?

WALPIN: The only reason he gave is that the president -- in fact, what his words were, the president appreciated my service to the country but thought it was time for me to move on.

DOBBS: Of -- well, of 64 total offices of inspector general, three fired. You among them, one of the most prominent. The White House did not respond to your firing in explanation beyond the perfunctory until Senator Claire McCaskill straighten the White House out on requirements of the law, which is to give 30 days notice to Congress which had not been done. WALPIN: Before being fired.

DOBBS: Correct.

WALPIN: And certainly was done and still has not been done.

DOBBS: And this language, Mr. Walton was confused, disoriented, unable to answer questions and exhibited other behavior that led the board to question his capacity to serve.

WALPIN: Well, I have to tell that explanation, supposed reason, was given only as the third reason. The only reason given to Congress when the letter was sent to Congress was that he had lost confidence in me.

This letter you referred to was sent to just two senators, not Congress as a whole.

DOBBS: Right.

WALPIN: And secondly, I'll let the public know -- say whether I am incoherent and unable to answer questions. The fact is I see in this as code words for somebody who's not young, I'm not. I'll be 78, and suggesting senility.

I think this is one of the greatest insults to somebody who, after a full professional life, decided to give something back to the country by serving this position when the White House called me to ask me to do it.

DOBBS: What is it you learned and the administration apparently either feared you would further disclose or simply reacted, as you suggested, as punishment for your efforts?

WALPIN: You mean what did we learn in our investigations? There were two different ones. One was -- and has never been denied -- that AmeriCorps money was improperly used by now Mayor Johnson to use AmeriCorps members for his own personal purposes.

The second one was in CUNY where over $800 million has been given to a program. The program that CUNY has is very good to supply teachers to underserved schools. But the AmeriCorps, money wasn't needed because they got all their teachers and signed them up before they said I will get something extra.

DOBBS: And the results of your investigations and disclosures?

WALPIN: The corporation, which is the agency involved, rejected them without explaining why the findings and facts. And these are findings and facts made by long-time public servants in my office.

DOBBS: Well, Senator...


DOBBS: Senator Chuck Grassley has sent the White House our list of 12 specific questions. Do you believe that there are other political motivations at work here?

WALPIN: I don't want to speculate. All I know is what was done was wrong and it was done I think to send a chilling message to all inspectors general that they should not touch any hot topics.

DOBBS: Not to touch any hot topics, by which...

WALPIN: I mean topics that may be close to somebody who is at the pinnacle of power.

DOBBS: Or embarrassing specifically to the president or his friends.

WALPIN: That's right.

DOBBS: Well, what is the next step here in your best estimate?

WALPIN: My -- I don't know what will happen, but I am asking obviously that the public know about it and I'd love to see Congress engage in an investigation and a hearing so that all the facts could come out.

DOBBS: Well, responding in that direction, Congressman Darryl Issa, Senator Chuck Grassley, Senator Claire McCaskill, a good friend and supporter of the president, the first to take up support of the law in your behalf, and it will be a story that I assure you we will be following here.

We appreciate it.

WALPIN: Lou, we appreciate -- I appreciate your asking me to come in.

DOBBS: Thank you. Gerald Walpin.

Up next, the advocacy group ACORN under investigation in 10 states. Should it be allowed to receive federal taxpayer money? That is the topic of tonight's "Faceoff" debate.


DOBBS: The methods used by the advocacy group ACORN are under investigation in 10 states across the country. Last month, ACORN workers in Nevada and Pennsylvania were charged with election law and voter registration violations.

Congressman Steve King has introduced legislation that would bar ACORN from receiving federal money. That's the topic of our "Faceoff' debate tonight.

Should ACORN be eligible for federal funding? And joining me now, Congressman Steve King and the CEO and chief organizer of ACORN, Bertha Lewis.

Bertha, good to have you with us.

BERTHA LEWIS, CEO, ACORN: Thanks for having me, Lou.

DOBBS: Congressman, thank you -- thank you for being with us.

REP. STEVE KING (R), IOWA: Thank you.

DOBBS: Let me start -- Congressman King, you said this about ACORN in a statement this week. "ACORN and its estimated 270 corporate affiliates comprise a complex organizational and financial spider web with all the appearances of a criminal enterprise."

That's a very serious charge to say the very least, Congressman. What do you mean?

KING: Well, I intended it to sound serious. It is serious, Lou. And I see another four to five states that are brought into this from an investigation standpoint, but we have a lot of history with this with going back to the Community Reinvestment Act, to ACORN itself admitting to over 400,000 fraud and voter registration forms, coupled with faulty forms as well.

Making -- taking the position that out of 400,000 there really weren't any fraudulent votes that took place. And additionally, there exists, at least according to the news, a contract that the White House apparently has signed with ACORN that they would be providing the workers for the United States census.

For me, this is all entirely appalling and we need to do a complete investigation. It should be done by Congress and it should be done by Justice simultaneously.

DOBBS: Bertha Lewis, your response.

LEWIS: First of all, let me thank you again for having me on so I can set the record straight. We are not under investigation in 10 states. Once again, calling us a criminal organization really is beyond the pale and no, we don't have a contract to do the census.

And so what we should be talking about here is real voter registration being done by the government. We think that the government ought to do its job. We think there ought to be automatic registration so that ACORN or any other group wouldn't have to do it and make sure that the most precious of activities in this democracy get done right.

And again, we didn't turn in and try to commit voter fraud. We turned in every worker that we identified cooperated with authorities. Once again, every single card we flagged we tagged because we have an absolute great program of quality control. So casting stones, calling us names, you know, doesn't move things forward.

Let's try to get automatic registration so that ACORN and other groups don't have to do it.

DOBBS: I'm going to respond first to the issue of investigations, if I may. Just as a matter of record, the fact that ACORN and its employees are under investigation in 10 states, Bertha Lewis, that's a matter of fact. It's not a matter of opinion as to everything else you said.

Your response to that, Congressman?

KING: Well, in addition, when I hear Bertha Lewis say that ACORN doesn't have a contract to do the census, that's just a subtle slip of phrase. That what's been reported is ACORN having a contract to further provide the workers to do the census.

So if you want to draw that distinction, I guess that's fine. But for me, if you put the people out to do count the people in the United States of America that will draw the lines for congressional districts and determine where taxpayer dollars go and it's the same people most likely that are producing over 400,000 fraudulent voter registration forms, and that's admitted by ACORN itself, I can't expect any other result that the same kind of thing that we're doing now.

And the corruption in our election process, why would anyone have an incentive to spend millions of dollars paying people to produce fraudulent voter registration forms unless the result was influence the elections and ACORN has all of the appearances of a criminal enterprise and an organization that is get out the vote drive for Democrats and the face of President Obama is on the entire logo of ACORN itself.

DOBBS: Bertha?

LEWIS: I can just respond?

DOBBS: Please. Please.

LEWIS: Number one, Congressman King, if you have that contract, would you please produce it? Because I -- whether it's for workers who are participating, you know, we can play word games all day long. There is no contract. Please produce some contract. Because I don't have it.

If there's a contract that I'm supposedly getting paid for...


KING: But are you telling that ACORN hasn't contracted for temporary workers?

LEWIS: I have no contract. Please produce it.

KING: You have no agreement?

LEWIS: You say you have it, you produce it. You produce the contract.

KING: I'll be happy to do that.

LEWIS: And again...

KING: I understand there's already been a freedom of information act filed that produces that contract.

LEWIS: Good. So produce -- produce that contract.

KING: We'll do that.

LEWIS: That will be great because it will be news to me. And, again -- again, ACORN, yes, we flag, we tag every suspicious card and we turned in every card and we identified suspicious workers we cooperated. We were defrauded, not the Americans.

KING: Bertha, let's do the audit then. Let's do the congressional investigation. Let's cooperate with justice. Take these 175 corporations that are affiliated that we have listed in the congressional record, add another 100 or so that we don't have listed in the congressional record, and let's go through this forensically and look at all of the data that's there and let's go down there to 2609 Canal Street in New Orleans.

And take a look at everybody that's housed under the same roof and the interlocking board of directors, the same faces doing the same thing under different corporate names. Let's do all of that and tell the American people then. And let's find out who's right with the real investigation instead of just simply diverting the discussion like you have done for the last year or more.

LEWIS: Well, I think that you're diverting the discussion. First you start out with investigations of voter registration. Then you want to talk about corporations. We should be talking about the real issue. Why don't you and other people in Congress put together legislation that guarantees automatic universal registration?

Boom, we solve that problem. Number two...

KING: You mean all the tappings of a criminal enterprise would disappear?

LEWIS: I didn't interrupt you. I didn't interrupt you.


LEWIS: I did not interrupt you, Congressman. Secondly, let's talk about the work that ACORN does every day. Registering people to vote is maybe 5 percent of what we do. Let's talk about how we're working with the mayors across the country to do mandatory mediation to save people's homes and that works in 78 percent of the cases.

Let's talk about how we celebrated...

KING: OK, and when you're done, I'm happy to respond to that.

LEWIS: .... 39 years of working in neighborhoods to clean them up, improve them, trying to get good health care for kids, education, real immigration reform, stopping racial profiling which is why I'm out here in Phoenix.

Let's talk about that and work together on that and... DOBBS: Congressman, you...

LEWIS: You know we've been exonerated before.

DOBBS: We have...

KING: Thank you, Lou.

LEWIS: We'll be exonerated again.

KING: Let's also talk about the involvement of the president of the United States who has been an employee of ACORN.

LEWIS: He never was. You're wrong.

KING: He had headed a project vote in Chicago who made his political reputation there, whose boss bragged about intimidating lenders who were at the core of ACORN at the beginning of the community reinvestment act and tied the links together to push Fannie Mae and Freddie Mac to accelerate the secondary market on the subprime loan crisis.

That's all part of ACORN's involvement, too, as well as...

DOBBS: Congressman, I've got to interject here.

KING: ... defrauding voter registration form.

DOBBS: As to what we do know, as a matter of fact, and that is we investigated whether or not Barack Obama was an employee of ACORN and our investigation found that he was not.

LEWIS: Thank you, Lou.

DOBBS: He did represent their interests, but....

LEWIS: Thank you.

DOBBS: Trying to just keep as many facts forward as we possibly can.

LEWIS: No, and I think that's important. Let's not have rhetoric and hyperbole. Let's talk about things that affect the American public.

DOBBS: We're love...

LEWIS: Let's talk about saving homes...

DOBBS: We're going to do a lot of that. But we're out of time right now.

And Bertha Lewis, we thank you.

LEWIS: Thank you once again.

DOBBS: Congressman Steve King, we thank you.

KING: Thank you, Lou.

DOBBS: Appreciate it.

And please join us for our "Faceoff" debate tomorrow. Reverend Al Sharpton and Arizona's Maricopa County Sheriff Joe Arpaio will join us. They will be debating whether the law enforcement policies of Maricopa County amount to racial profiling

And coming up at the top of the hour, a CNN special, "Money and Main Street" with Anderson Cooper and Ali Velshi.


ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Lou, this is a topic you have stayed so steadily on for years. The topic tonight, "Money in Main Street," it's a special on priority number one. And that is jobs.

Where the jobs picture is improving, where it can't get much worse, and why in some places it never got that bad. More importantly, where do you fit into the picture?

Well, we're going to meet people from across the country who are fighting their way toward a better future and you'll see how they're doing it and how can you do it, too. That's on CNN special, "Money and Main Street," starting at the top of the hour. Lou?

DOBBS: Looking forward to it. Thank you, Ali.

Straight head, your comments on buy American and buy China.


DOBBS: Time now for some of your thoughts. Don in Arizona, "Hey Lou, Sheriff Joe and Al Sharpton are meeting Friday in Phoenix. The subject is racial profiling. Could you have them on faceoff."

Don, they will, in fact, be joining us for our "Faceoff" debate here tomorrow night. Please joins us.

And Bobby in Illinois said, "Lou, when the United States wants to buy American to help our economy, we are protectionists. When China promotes buy China, our leaders wimp out. Boy, do we need to clean house."

And Michael in Arkansas, "Lou, taxes are going up on everything. Government is out of control. Congress and the Senate don't care what the American people want and complaints to them fall on deaf ears."

Send us your thoughts to LouDobbs,com and a reminder to join me on the radio Monday through Friday for the "Lou Dobbs Show," 2:00 to 4:00 p.m. on WOR in New York. And go to to get the local listings in your area for the show.

And you can follow me on Twitter at Lou Dobbs News.

Thanks for being with us tonight. Now a CNN special, "Money and Main Street" with Anderson Cooper and Ali Velshi.