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Lou Dobbs This Week

Bhutto Assassination; Iowa Campaigning

Aired December 30, 2007 - 18:00   ET

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


KITTY PILGRIM, CNN HOST: Tonight, the race for the Iowa caucuses is down to the wire. The contests, too close to call. We will have complete coverage. And Pakistan in chaos after the death of Benazir Bhutto. We will examine the implications for the United States and war on terror. All that and much more straight ahead tonight.
ANNOUNCER: This is LOU DOBBS THIS WEEK, news, debate and opinion.

Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening everybody. The countdown to the Iowa caucuses has entered its final, most divisive phase. The frontrunners have the advantage but they also have the most to lose.

About half of the voters in Iowa are still undecided just days before the caucuses. And that means wild card candidates could shake up the entire race. Bill Schneider has our report.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN POLITICAL ANALYST (voice-over): In the Democratic race, Hillary Clinton and Barack Obama have been getting most of the attention but there is a wild card in the Democratic race. John Edwards. Polls in Iowa show a tight three-way race between Clinton, Obama and Edwards. Edwards is betting heavily on Iowa.

DENNIS GOLDFORD, DRAKE UNIVERSITY: John Edwards, we have to remember, never really left after the '04 caucus cycle. He had a good, strong organization here in Iowa.

SCHNEIDER: After some initial missteps, that $400 haircut, adopt has adopted a strong populist message.

JOHN EDWARDS, (R) PRESIDENTIAL CANDIDATE: I have fought for jobs in the middle class and health care. I fought for the kind of working people in the middle class that I grew up with.

SCHNEIDER: If Edwards wins Iowa he could become the Clinton alternative instead of Obama. In the Republican race, the focus has been the hot race in Iowa between Mitt Romney and Mike Huckabee. John McCain was written off last summer when his campaign nearly ran out of money. But he may be coming back to life in New Hampshire where he won the endorsement of an influential conservative newspaper.

McCain is now running a strong second in New Hampshire. In 2000, when McCain beat George W. Bush in the Granite State he was the maverick. Now he is the candidate of experience. SEN. JOHN MCCAIN, (R) AZ: And it really has a lot to do with experience and knowledge and background that I have on national security issues throughout my entire life.

SCHNEIDER: Republicans have mixed feelings about McCain.

GOLDFORD: His two main issues cut in opposite directions. Republicans don't like his stance on immigration and they do like his support for the war in Iraq and particularly for the surge.

(END VIDEOTAPE)

SCHNEIDER (on camera): Those are the same feelings Republicans have about President Bush. If McCain wins New Hampshire the Republican race will look totally different and so will the Democratic race if Edwards wins Iowa. That's why they are called wild cards. Kitty?

PILGRIM: Bill, what do they have to do to appeal to voters right now in this last couple of days? I mean, what's the selling point?

SCHNEIDER: Get them out. They have to get the voters out of their homes on a cold winter night and make sure they attend the caucuses. Caucuses, much more than primaries, are a function of organization. People have to spend an entire evening attending a meeting. You have got to be organized.

PILGRIM: And the sense of urgency, though, certainly has been created by the media coverage of this event, has it not?

SCHNEIDER: Yes. The media coverage has been intense. I think you will see somewhat higher turnout this year than we have in the past. But remember, only fewer than 10 percent of the eligible voters actually show up at these things. And when it is this close, it all becomes getting your people out.

PILGRIM: Thank you, Bill. Please stay with us. I'm also joined by two other members of the best political team on television. Dana Bash, who is on the campaign trail in Pella, Iowa, and senior political correspondent Candy Crowley who is in Storey City, Iowa. Dana, let me ask you the fist question.

Mitt Romney is lagging in the polls in Iowa and he has really drawn on the question of illegal immigration by attacking Mike Huckabee and John McCain on their records. How is this playing?

DANA BASH, CNN CORRESPONDENT: Well, Mike Huckabee has been trying to fend himself from this when he went from being an asterisk to somebody who is a real contender, much less a front-runner. Because that has been really his soft spot here in Iowa. What he has been trying do is come out with a plan and to try to counteract the fact that he did support and still admits that he supports the concept of giving some college tuition breaks to children of illegal immigrants.

But the thing that's really interesting about it is that he's now turning -- trying to turn what happened in Pakistan, Kitty, into the issue of illegal immigration. He has towards the end of the week started to pound away at the fact that what we should learn from the crisis in Pakistan is that we should be weary of the 660 illegal Pakistanis, that's a figure that he gave, who came to this country last year. And he's really, really trying to appeal to the Iowa Republicans who say that this is a top issue. Especially men, especially rural men. He has been losing ground with those voters towards the end of this year.

PILGRIM: You know, Mike Huckabee was also attacked by "The Washington Post" for his record on illegal immigration. Now, this new aggressive stance, do you think it's a defensive posture?

BASH: Oh, sure. You know what? He actually pretty much admitted that with reporters a couple of weeks ago. That this is something he realizes is a problem for him here, the fact that he has been attacked on this issue. The fact that you talk to Iowa Republicans and you watch them in the town hall meetings, Kitty, with Mike Huckabee and ask him in public and go up to him in private. He knows how huge an issue it is. That's why he is trying to play good defense by having good offense, if you will.

PILGRIM: Let's turn to Candy who is also standing in the cold. Candy, John Edwards has launched a bus tour throughout -- basically emphasizing middle class values and middle class issues. How effective is this?

CANDY CROWLEY, CNN CORRESPONDENT: Well, you know, obviously, the campaign thinks it is effective because as you remember, John Edwards launched his campaign on an anti-poverty, sort of Bobby Kennedyesque tour. He's someone who has spoken frequently about poverty but his move to the middle class because their where the home and hearth issues are and that's where people want to talk about health care and housing. And education. So they obviously have moved there. That's the bulk of the voters here in Iowa, our middle class voters. Look, John Edwards has always done really well here. This has been virtually a three-way tie for some time now. And as you mentioned, you know, right now, they have to reach out to those that have been undecided and remain undecided and, obviously in the Edwards campaign they believe that the strong, strong pitch to the middle class and by the way, so to the other campaigns believe that's where they need to go in final days.

I really would like to get all of your opinion on the new events that happened towards the end of the week that were totally unanticipated ask p that's the spotlight on international foreign policy and the candidates all positioning themselves in that respect. Senator Hillary Clinton calling for an independent international investigation to look into this incident. Sort of taking the initiative to claim this turf. Bill, what do you think of this move?

SCHNEIDER: Well, this is an issue that ought to play to her hands. Because she is seen as the candidate of experience. Every time we asked voters, Democrats, who do you think has the most experience, Hillary Clinton hands down. Other candidates primarily Barack Obama, have raised questions, what kind of experience does she get from being first lady? Nevertheless, the voters see she has been in the White House and know she is married to a former president who will be there if she becomes president. So experience is really her strong suit. And this issue, international crisis, really plays to that.

PILGRIM: She certainly stepped forward very quickly on that. Dana, any thoughts on this as the candidates' position, their expertise on international affairs?

BASH: Yes. That it is really just as interesting to watch on the Republican side as the Democratic side because just where I am in Iowa, the sort of top two contenders on the Republican side are former governors. Governors historically, whether you are talking about Bill Clinton or George Bush have had problems convincing voters about their foreign policy chops and it matters a lot more.

We have said for a long time that since 9/11 but it has not mattered that much in the past couple of months because domestic issues like the economy have really risen to the top. So it has been interesting to watch the way John McCain in particular here in Iowa hit this incredibly hard, really was pretty blatant in the way he tried to take advantage of the fact he does have foreign policy experience and he knows the players and he knows the region.

PILGRIM: Candy, do you want to weigh in on this?

CROWLEY: Well, what's interesting here is what Pakistan has done is give these candidates on the Democratic side another way to get out, what really has been their argument all along for Hillary Clinton, it has been competence, it has been experience. For Barack Obama, it has been judgment. So that's how he has approached this whole Pakistan crisis.

He said listen, if we had not gone into Iraq which by the way Hillary Clinton supported, we would have been able to keep our focus on Afghanistan and on al Qaeda and he makes that loop around to the turmoil that's now in Pakistan. So in some ways there are not new arguments coming out on the Democratic side. It is the same arguments that have been buttressed by the things going on in Pakistan.

PILGRIM: Fascinating stuff. Thank you very much. Candy Crowley, Dana Bash and Bill Schneider, thank you.

Still to come, presidential candidate and Congressman Duncan Hunter tells us about the rising threat of communist China.

Also, one state is showing the entire nation how to deal with the harsh effects of illegal immigration. We will have a special report.

And President Bush is determined to prove that he is no lame duck. We will tell you what's on the president's agenda in 2008. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Republican presidential candidate Duncan Hunter is not only speaking out against illegal immigration, he is also warning about communist's China growing military and economic threat to the United States. Congressman Hunter spoke with Lou recently.

(BEGIN VIDEOTAPE)

LOU DOBBS, CNN HOST: Let's turn to one of the aspects in free trade and that is what this administration is doing with China in terms of playing just as soft pedal as you possibly could to an extravagant military buildup and an overwhelming trade surplus in which it is dictating U.S. commercial policy.

REP. DUNCAN HUNTER, (R) PRESIDENTIAL CANDIDATE: China is clearly arming. They have now got the F-10 multi-role fighter and they are making the Su-27 Mig (ph) aircraft in co-production with the Russians, they shot a satellite out of space. They have got about three submarines a year being produced to our one. They are becoming a superpower stepping into the shoes of the Soviet Union and sadly, Lou, they are doing it with American trade dollars. That's one of the tragedies of this administration.

Also a tragedy, of course, of the Clinton administration. I would change that as president of the United States. And I have got the only bill along with Tim Ryan of Ohio that has some real teeth that would put countervailing duties on the Chinese as a cheat on trade.

DOBBS: Let me ask you this as a presidential candidate. As you travel around the country. You are talking about -- one of the few Republicans to do so, to talk about the idiocy of the free trade policies being followed by this administration and previous as you pointed out, the Clinton administration. You are talking about Ramos and Compean. You are one of the few candidates to stand straight up on a record that says you are for border security. And against illegal immigration.

Why -- in your judgment, isn't your candidacy at this point gaining more traction and more mainstream media attention?

HUNTER: Well, you know what I have is the same problem everybody has when they run as a representative. I started out, Lou, with 1/53, because I have the 52nd congressional district in the state of California. So I started out with 1/53 of one state and you've got to expand that, you've got to contact hundreds of millions of people.

But I would remind you that when I can focus on an audience, we have been getting good results. And we won the straw poll in Texas at the state convention. We won the straw poll among elected Republican leaders in Arizona. And we tied McCain and Giuliani at the top in the first big straw poll held in South Carolina. And I have -- I have to raise more money and I have to meet about another 100 million people and we will be fine.

DOBBS: Well, the process -- Every journey begins with one step. You've made more than a few steps. Let me ask you this. How are you going to do in Iowa?

HUNTER: Well, we are not concentrating on Iowa. I think that -- I don't think there is any daylight in Iowa. I think Iowa is heavily professionalized and heavily organized by the Romney campaign. And I think that between Huckabee and Romney that there is no daylight for anybody. So we are working hard in New Hampshire and I'm running my Chuck Yeager commercials in New Hampshire.

And one other thing I think will be a factor here, that's this. You know, communist China has a company and that company is trying to buy an American defense contractor. The Chinese company did business with Saddam Hussein. They helped put in his air defenses in to defend against American aircraft. That Chinese company is acquiring an American defense contractor called 3Com. And the people helping that company are acquiring the contractor is Governor Romney's company that he constantly talks about that he founded called Bane Capital (ph). So that's going before the Committee on Foreign Investment just like the Dubai ports deal did. And I think that the American people should hold his campaign accountable for teaming up with a Chinese company which has proven itself to be against the interests of American service personnel and American security and purchasing an American defense contractor 3Com. And 3Com does, they do classified work for the DOD. They do cybersecurity for the Department of Defense.

DOBBS: Congressman, thank you very much. Congressman Duncan Hunter.

HUNTER: Many thanks.

(END VIDEOTAPE)

PILGRIM: Coming up, the battle to seal our broken borders. One state leads the way. And we will show you how Arizona is showing the entire nation how to stop illegal immigration.

And military commanders reporting progress in Iraq. But what more must be done before our troops can come home? The special report from the Pentagon. And what's ahead for President Bush in '08 and beyond his final term in office? We'll have a look ahead. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: As part of our reporting on the illegal immigration crisis we've paid particular attention to one state. Arizona. Striving to fix its broken border with Mexico and looking very much like a model for the entire nation. An example that we first reported in September, the City of Scottsdale taking action after a police officer was shot to death by an illegal alien.

That community now requiring all criminal suspects to state upon arrest whether or not they are in this country legally. Earlier this week, I spoke with Arizona State Representative Russell Pierce. He is a former sheriff's deputy and author Arizona's groundbreaking anti- illegal immigration laws. We will have my interview with Pierce in a moment. First Casey Wian has the latest on Arizona's crackdown.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): In September, Phoenix police officer, Nick Erfle was gunned down while attempting to arrest Erik Martinez, a criminal illegal alien who had been deported to Mexico in 2006. LT. BENNY PINA, PHOENIX POLICE DEPT: He has had several arrests in the past and he's a documented member of a local street gang.

WIAN: Police say after killing Erfle, Martinez took a motorist hostage, then he was shot and killed by other officers. Martinez's criminal history is a prime example of the gaps in U.S. immigration law enforcement. After serving prison time for theft, Martinez was deported by Immigration and Customs Enforcement, but he was able to illegally re-enter the United States, which outraged local officials at the time.

MAYOR PHIL GORDON, PHOENIX: This individual that took our officer's life today is a perfect example, a poster child of the failed Washington policies in terms of securing our border.

WIAN: Martinez was again arrested by Scottsdale police for assault but they did not notify ICE and he was released on bail by a judge. He could have been sentenced to 20 years in prison if convicted of felony illegal reentry. Officials say it's an oversight that cost the life of a Phoenix police officer. Now the Scottsdale P.D. is tying to prevent it from happening again.

SGT. MARK CLARK, SCOTTSDALE POLICE DEPT: What happened was this tragic event last fall, it really -- it caused us to look at, well number one, we happen to be the agency, the last agency to arrest this criminal. And he was ultimately released by the judge later. But it caused us to look at how do we deal with the illegal immigrants in our community that commit crimes?

WIAN: Now Scottsdale police ask every criminal suspect where they were born and if they are in the United States illegally. If officers suspect they are, they call an Immigration and Customs Enforcement hot line so ICE can hold the suspect for prosecution or deportation.

(END VIDEOTAPE)

WIAN (on camera) ICE has increased the resources available to local law enforcement in Arizona and made detention and removal officers now available 24 hours a day. Kitty?

PILGRIM: Thanks very much. Casey Wian. Thanks, Casey.

The results of Arizona's crackdown have been nothing short of remarkable. In the Border Patrol's Yuma sector arrests of illegal immigrants have been dropped from 119,000 last year to 38,000 in 2007. Not only does the trend continue downward but authorities in Arizona report that border crime has dropped significantly as well. I spoke with Arizona State Representative Russell Pearce. He is a former sheriff's deputy and author of Arizona's groundbreaking anti-illegal immigration laws.

(BEGIN VIDEOTAPE)

RUSSELL PEARCE (R), ARIZONA STATE LEGISLATURE: Well, if the pundits are to be believed, yes, it is. They say dozens are leaving every day. Hundreds are leaving monthly and that's its intent. Clearly illegal is illegal. They don't have right to be here, they don't have a right to take jobs that belong to Americans. And then you can't ignore the economic impact. Arizona, $2 billion a year, $2 billion a year just in K-12 to educate illegal alien children.

Plus the crime, plus as you talked about. And this crime isn't just Officer Erfle. It's kind of like the Newark, New Jersey incident of the MS-13 gangs that execution style murdered those young college students.

This is a daily event throughout the United States. This is a daily event. In Arizona, you've got Officer Adkins, Officer Martin, Officer Erfle, Officer Glidewell. You've got Deputies Pierce, Deputy Archslinger (ph), you've got Officer Eagle down at the Park Range. You've got several agents.

This is just Arizona. I mean, it is outrageous that we would think this is just collateral damage for the cheap labor advocates as they continue to import and lure illegal aliens across the border with jobs. Enough is enough. And Arizona is speaking out and we're not going to take it anymore.

PILGRIM: Let's take our viewers through some of the points of your law which is very, very tough on employers. If an employer knowingly employs an illegal alien on the first offense, the business temporarily loses their license and face probation for three years. If they're caught again, the license is permanently revoked.

Some are saying it's like a corporate death penalty if you are involved in hiring illegal aliens. And you're basically cutting off the demand for the cheap labor force, correct?

PEARCE: Absolutely. We live in a free market. The market will adjust, but what you can't do is allow businesses to rely on staying open while breaking the law and yet ignore all the damage to Americans and the taxpayer. And enough is enough.

This law is fair. And it will be proven to be the fairest and most nondiscriminatory law in the nation. Tough, but fair. You have to knowingly hire an illegal alien. That's been the law since 1986. It's a felony under federal law, you can't knowingly hire an illegal alien.

And in Arizona though, and in the nation, you've always had to rely and perform what is the I-9 process, that's documentation of eligibility and so forth. But that's been an employer fraudulent ridden process because if you just have documents, and even though they're fraudulent, you know they are, you can kind of wink and nod and put them in the folder.

Now in Arizona, we're going to demand by law that you sign up for the e-verify program. It used to be the basic pilot. That program will tell you very clearly whether they're eligible to work here. The reason people don't like to sign up for it, they don't want to know if their workers are legal or not legal. Now they're going to have to. No more winking and nodding. And again, if you knowingly hire an illegal alien, first offense, up to 10 days suspension, three years probation. Subsequent violation, you lose your right to do business in the State of Arizona.

PILGRIM: I want to talk to the figures. It's nine to 12 percent of the workforce in mostly low skilled jobs in Arizona is illegal. The law was challenged by business groups last week, it survived that challenge. A judge is going to hold a hearing on the constitutionality of this law in about two weeks saying that, you know, a state law can't override federal law. What do you think of these challenges?

PEARCE: Well, I love them because they're going to get put in their place. You know, clearly, states have inherent authority to enforce federal law, including immigration law. Had Congress not wanted the states to enforce these laws, they have what is called plenary powers. They could have invoked those and preempted the states from enforcing these laws. They didn't do that. In fact, Congress has made it clear it's always been the intent for the states.

And when do not states have a constitutional responsibility for their citizens for the economic harm, the crime and damage and the cost to the taxpayers, the legal citizens? We have a constitutional responsibility. The citizens have a constitutional right and it's time for our politicians and our policy makers to quit hiding and put America first, put the American citizens first and enforce the law.

And that's what's going to happen. They will learn, this law is constitutional, it's fair and it's legal. And it is going to survive the challenge. I truly believe because again, it's written entirely with knowing that we were going to be sued. I was very careful to make sure that this complied with previous court rulings and the Constitution and congressional intent.

PILGRIM: Well, we will keep the focus on it as it survives these challenges. Thank you very much for being on the program, Russell Pearce. Thank you, sir.

PEARCE: And it will, thank you very much.

(END VIDEOTAPE)

PILGRIM: Coming up, some say U.S. foreign policy is in disarray after the death of Benazir Bhutto. We will talk to leading authorities on the chaos in Pakistan. And the Pentagon is optimistic about the progress in Iraq. Are more troop reductions likely? And President Bush's last year in office may be his busiest ever. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: The death of Pakistani opposition leader Benazir Bhutto is a major setback for U.S. foreign policy. It could embolden radical Islamist terrorists in Pakistan and other countries. It could lead to even more political instability in Pakistan, a nuclear armed country. Two leading authorities on Pakistan, Christine Fair of the Rand Corporation and Ashley Tellis of the Carnegie Endowment for International Peace give us their assessment.

ASHLEY TELLIS, CARNEGIE ENDOWMENT: I think what it does is it takes us further away from the normalcy that we would like to see return to Pakistan. And the distance from normalcy means that the war on terror is hampered and the kind of political transition that we would like to see towards a moderate regime becomes even more difficult.

PILGRIM: Christine is this a setback for the Bush administration and their policy? They were, after all, homing for some kind of a power sharing agreement with Bhutto and Musharraf and now that's dashed.

CHRISTINE FAIR, RAND CORPORATION: Well, to be clear there was very little chance that Benazir Bhutto was going to emerge from that election and prime minister. And I think that the real objective was that Musharraf was hoping to have a reasonably fair and free election through which he could legitimize his government. And a number of changes to the Constitution was made. He really needed to do something to increase the patina, if you will, of democracy so he can feel a little bit more emboldened in trying to fight the war on terror with a greater sense of popular support.

PILGRIM: President Musharraf had declared a state of emergency. There were some issues with his moving towards democracy, Mr. Tellis.

Do you believe that now this -- it will move in more of a direction of away from democracy at this point? It will have to, to maintain stability?

TELLIS: It does not have to come to that and in fact, ideally I hope he makes the right decision of moving as quickly as possible towards an election. The problem, though, is that one of the principal parties in Pakistan, Benazir Bhutto's People Party is without a leader right now. And under these circumstances whether you can have an election that that actually represents the popular will is really an open question.

PILGRIM: Let me read you a comment that Benazir Bhutto wrote upon her return to her country after years in exile. She was very critical of the Musharraf government. She didn't withhold any criticism of the Musharraf government.

And this is what she wrote. "I have long claimed that the rise of extremism and militancy in Pakistan could not happen without support of elements from within the current administration. My return to my country poses a threat to the forces of extremism that have thrived under a dictatorship. They want to stop the restoration of democracy at any price."

And yet, the Musharraf government is the government that is our ally on terror and is that not a contradiction?

TELLIS: It is a contradiction. And I think that is true to at least one proposition in her e-mail. Which is that elements of the Pakistani government have been at least in dalliance with some of the extremist groups. My own sense is that Musharraf has tried to take some steps in the direction of moving Pakistan to normalcy. But my judgment is that he has not done enough.

PILGRIM: Christine Fair, we have spent billions in aid to President Musharraf's government and hoping that the war on terror will be pushed along. We heard from our correspondent earlier that the Pakistani military has not come up to our expectations in terms of quelling terrorist activity in Waziristan.

Do you believe that we will be able to get results or do you think that this will begin to deteriorate and pressure will be on U.S. forces going forward?

FAIR: Well, I think in the big picture we have to remember that even though we spent $10 billion and there may be a temptation to say we have not struck the best bargain, what we do get from Pakistan is an uninterrupted access to move our fuel from Karachi port into Afghanistan. It's always important to remember that.

Now that being said, addressing the issue that you raised I think as Dr. Tellis has mentioned the Pakistan military and some of the associated outfits that it uses like the Frontier Corps has demonstrated a solid inability to deal with the insurgency across the entire Pashtun Belt that connects Pakistan to Afghanistan. So even if Pakistan's will to go after the militant elements that are ensconced in that area, it is certainly the case that militarily the Pakistan armed forces are not up to that job.

And what we have seen as a result of some of their less capable military actions has been a response among the populace that's resulted in a wider spread insurgency far beyond what's traditionally considered to be the tribal belt.

PILGRIM: With this extremist element in Pakistan, Dr. Tellis, how much do you worry about Pakistan's nuclear capacity and falling into the wrong hands.

TELLIS: I think at the moment, the threat is not as acute as people sometimes think. But there is an enduring problem. And the enduring problem is that the ranks of the Pakistan military especially at the lower levels has become increasingly penetrated by people with radical ideas. Who if given the opportunity might not stop in doing something that is particularly dangerous. And that is the contingency that we always have to worry about. It is something that will occupy both the Pakistani state and the United States for actually many years to come.

PILGRIM: Christine Fair, how do you think the U.S. should proceed in terms of foreign policy going forward in this moment of crisis?

FAIR: Well, my concern has been as it has been a concern of many people around town that right now our policy is not related to Pakistan. It is really focused on one person and that's Musharraf. And I think this crisis is just as much as any other crisis that Pakistan has confronted in recent months demonstrates the United States needs to have a policy to engage the country of Pakistan and not simply Musharraf and his primary institution of the army.

PILGRIM: Thank you very much. Christine Fair and Ashley Tellis. Thank you four your analysis this evening.

TELLIS: Thank you. PILGRIM: Still ahead, the Pentagon says that there could be more progress in Iraq in 2008. Could more of our troops be heading home?

And he's not exactly a lame duck president. We will tell what you what President Bush is planning in 2008. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: The Pentagon is forecasting more progress in Iraq in 2008. Military officials hope to continue reducing U.S. troop strength after the surge force is returned home. U.S. casualties in Iraq are sharply lower than the first half of this year. But our losses continue. Barbara Starr reports.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN CORRESPONDENT (voice-over): In Helena, Montana, people paid respects to Private Darrin Smith (ph) who died in Iraq. Another family suffering a deeply personal tragedy.

Still there are hopes now for a better new year. December may be the lowest month on record for U.S. troops dying in Iraq. As of Christmas, 18 troops lost their lives. A dramatic drop from the high of 126 who died in May when U.S. troops surged into Iraq. The military says the strategy of sending more troops has worked.

MAJ. GEN. KEVIN BERGNER, U.S. ARMY: The surge has been very successful in the purpose to reduce the number of violence, the casualties and to set better conditions for the important political steps that the government of Iraq very much needed to take.

STARR: The Bush administration desperately wants that political progress so it can pull 30,000 more troops out of Iraq next year, leaving about 100,000 on the ground.

ROBERT GATES, DEFENSE SECRETARY: My hope has been that the circumstances on the ground will continue to improve in a way that would -- when General Petraeus and the chiefs and Central Command do their analysis in March will allow a continuation of the draw downs.

STARR: The other goal, shorten the 15-month tour of duty.

LT. GEN. WILLIAM CALDWELL, U.S. ARMY: There's just something after the 12-month period where that extra three months is just a tremendous drain on families and on the troopers that are deployed over there.

STARR: The Pentagon will spend much of the new year working on what lies ahead in part by reviewing what went wrong in the past.

CALDWELL: The one thing that we have looked at real hard is post Vietnam era, we walked out of there and walked away from everything we had learned.

STARR: The military says it's learned that killing the enemy and reaching out to win the hearts of and minds of Iraqis must go hand in hand for long-term success. A lesson many soldiers and their families wish had not ever been forgotten in Iraq.

(on camera): Everyone agrees there has been a lot of progress in Iraq in the last six months. But no commander is willing to bet how many years it may be before all of the troops can come home. Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

PILGRIM: President Bush is hoping to shift his international agenda away from Iraq next year and focus on other issues. One of his main priorities is a search for lasting peace between Israelis and Palestinians. The president also hopes to reinvigorate his domestic agenda. Ed Henry reports.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CORRESPONDENT (voice-over): President Bush on the tarmac in Texas. Just one of many airports he will be breezing through during his final year in office. As he gears up for his heaviest international travel schedule ever.

GEORGE W. BUSH, U.S. PRESIDENT: I'm looking forward to going to the Middle East.

HENRY: He heads to Israel January 8th and then stops in hotspots like Saudi Arabia and Egypt. Following up on the Annapolis summit.

BUSH: We've got a couple of objectives, one is to advance the Palestinian-Israeli peace process. Secondly is to continue to work with our Arab friends on reconciliation with Israel.

HENRY: Then Air Force One heads to Africa in February. European summits in April and June. As well as two stops in Asia. Japan for the G-8 summit in July and China for the Olympics in August. Mr. Bush is resting up in Crawford for all of that globetrotting because he's in search of other legacy items beyond just the Iraq War. And major reason he will be focusing so hard on foreign policy initiatives like broader Mid-East peace. The president's domestic legacy is thin. Beyond the Medicare prescription drug benefit. His signature education reform law is struggling to be renewed because of conservative opposition. While any benefits of the Bush tax cuts could be overshadowed by economic uncertainty and the mortgage crisis.

And while the president's liberal use of the veto pen this year proved he still is relevant, it also antagonized the very Democratic leaders he will need to compromise next year to rack up major accomplishments on the domestic front.

BUSH: I don't know what I am going to do after -- I have an exciting 13 months ahead. And I know you are just waiting for me to say sprint to the finish line so I won't. But it's ...

HENRY (on camera): The only sprinting for the president here in Crawford will be on his mountain bike. For Christmas, the first lady gave him winter biking gear. In turn the president gave her a new purse and a silver tray. Ed Henry, CNN, with the president in Crawford, Texas.

(END VIDEOTAPE)

PILGRIM: Coming up, down to the wire in Iowa. Candidates fighting for voters days before the Iowa caucuses.

And how qualified are the presidential candidates to deal with the chaos in Pakistan? Three of the nation's top political analysts will join us.

(COMMERCIAL BREAK)

PILGRIM: Joining me now are three of the best political analysts in the country. Here in New York we are joined by Democratic strategist Hank Sheinkopf and "New York Daily News" columnist Errol Louis. In our DC bureau, Diana West of "The Washington Times." And Diana is also the author of the book, "The Death of the Grownup."

Thanks for joining us all. Let's start -- we have to start with the Benazir Bhutto problem in Pakistan. And it is a problem for the Bush administration because so much political capital was put on making an alliance with Bhutto and having Bhutto and Musharraf sort of dual power situation. Now those hopes are dashed. Where do we stand now, Errol?

ERROL LOUIS, "NEW YORK DAILY NEWS": Well, there is a real argument that the United States really pushed her into this. Bhutto had given clear indications that she was thinking about boycotting the elections and that Musharraf regime was not playing fair. She was pushed. It was pushed by the Bush administration and she goes back and she gives up her life.

It goes to, I think, a larger issue that has not really been addressed which is the Pakistani government created the very problem that now threatens to overwhelm the regime. They brought all of those insurgents, they brought all of those radicals there to battle against the Soviets during the Cold War. Their monster has gotten out of their control. And it is now up to the United States to try to fug out how to put the genie back in the bottle and have a partner in Musharraf who does not seem particularly able to pull off.

PILGRIM: There was a hope -- She was very critical of Musharraf. But there was a hope she could bring the regime through a series of processes that would turn into something akin to democracy, probably not a pure democracy. Hank, where do we stand with Pakistan?

HANK SHEINKOPF, DEMOCRATIC STRATEGIST: Two quick observations. The big winner here is Osama bin Laden who is laughing hysterically every day. And the Bush administration's foreign policy in that region premised on a safe and secure Pakistan doing our work for us now goes out the window. Democracy is not the cure for all problems in the world.

PILGRIM: Diana?

DIANA WEST, "WASHINGTON TIMES": Yes. I would second what Hank just said. Democracy is not the cure for all problems in the world. And I think in watching some of the commentary that has come out about the Bhutto assassination, former U.S. ambassador to the UN John Bolton has made the point that we should not be micro managing the internal affairs of countries such as Pakistan. And I think with the Bush administration's gambit to insert Bhutto into the mix, we see -- we see how this can go so dreadfully awry.

Our big concern should be the safety of the nuclear arsenal that Pakistan has and for example, most of our presidential candidates are not really making that connection.

PILGRIM: Yeah. There was a good bit of discussion on the campaign trail, though, about this as candidates try to use it to their advantage to highlight their expertise in foreign affairs. Let's listen to what Senator John McCain said just recently in his campaign.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: If I were president of the United States I would be on the phone right now and I would be meeting with the National Security Council and I would be seeing ways we can help, restore order, or maintain order or restore order whichever is the case in Pakistan. I know the players and I know the individuals and I know how -- the best way to address this situation.

(END VIDEO CLIP)

PILGRIM: We also have Senator Clinton stepping out on Friday calling for an independent international investigation. Diana, thoughts on the positioning of candidates on this issue.

WEST: Well, there's almost something ghoulish about the way everyone jumps on assassination to prove their foreign policy credentials in terms of who spoke to Benazir Bhutto last or who knows Musharraf.

But I think that what we really need to take a look at is the emphasis of the candidates. Democracy, as Hank said, is not the answer here. And the candidates most of whom are the Democrats but also Rudy Giuliani who are calling for an unimpeded rush to election don't nosily know what they will be getting and I think we need to really sort of assess the candidates on the basis of that.

PILGRIM: Yes, elections do not necessarily mean stability. Errol?

LOUIS: Elections do not necessarily mean democracy, in fact. Other institutions, the army and whether or not it is corrupt, the courts, and whether or not they are impartial and fair, and the news media, whether or not they are censored or controlled by the government, these are places where the United States really could without micro managing have some kind of a beneficial effect. When you hear candidates saying let's just figure out some way to have a reasonably objective election, I think they are missing the point.

SHEINKOPF: We have learned nothing from our activities throughout the last 40 to 50 years from the Cold War and we interfered in Vietnam and created a phony government and the end result chaos. We did it in Iran, look what we have today. We did it in Guatemala, we had dictatorships. What are we doing? And trying to tell people how to vote or how they should vote is not our business. And frankly, what's most dangerous about this is the reaction of India. OK. India now is on alert and I am sure. They have a neighbor and fought with constantly over disputed territory who has nuclear weapons. This is very dangerous and who is the most ghoulish does not necessarily deal with the very facts at hand.

PILGRIM: All right. We will take a break on that point and we will be right back with our panel in just a moment. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: We are back with our panel. Hank Sheinkopf, Errol Louis and Diana West and let's move straight into the campaigns because this is crunch time in Iowa and let's take a look at the polls -- this is the latest poll. Very tight. "L.A. Times"/Bloomberg poll. It has Clinton at 29. Obama, 26. And Edwards at 25. Basically a statistical dead heat. Diana, we will start with you as you are in Washington. Go ahead.

WEST: No clear Democratic front-runner in Iowa. Who would have thought we would be here -- an amazing thing. I think that the energy at this point, according to the polls we are looking at is swinging to Edwards which is a good place for him to be at the last -- this last few days.

PILGRIM: Go ahead, Errol.

LOUIS: I think Edwards has really courted the labor vote. And this is a race where more so in the past people are going to look to their trusted institutions, their local newspaper, their local labor union, their local party organizations to so which way to go. Because the issues are so broad and the candidates are so different. Edwards is in good shape to pull off a surprise, I think.

PILGRIM: Are you suggesting that Oprah Winfrey is not ...

LOUIS: Well, you know -- flash in the pan. I don't know if that will see people through a five or six-hour caucus in the cold snows of January.

PILGRIM: I would like to know who set up the initial schedule. Hank?

SHEINKOPF: Bottom line here is hats off to John Edwards, win, lose or draw. Why? Stay the course did what he felt was appropriate. Courted particular interest groups and changed people's opinions and watched everybody else do everything else.

PILGRIM: And middle class issues, just shows -- let's take a look at Republicans and we have Huckabee really pulling ahead. Take a look at this. Huckabee, 37. Romney, 23. Thompson 11, McCain 11 and Giuliani, six percent. We are seeing this powerhouse Huckabee campaign right now. Will it stick? Diana?

WEST: Well, it is -- it looks very solid for him in Iowa. I think what has become a little bit more interesting, though, is the race for third. I mean, it is -- all those three guys at the bottom of the poll are all very close. Will Thompson actually eke out a third place bronze medal that may make him more interesting going into the future contests?

PILGRIM: And McCain is -- you know, doing better in New Hampshire as to be expected. Focusing more on that. Errol?

LOUIS: The clip you showed of him I think shows why. He has got a lot of foreign policy experience and he has been blessed by some of the trusted sources. Both "The Boston Globe" and the "Manchester Union Leader." Liberal and Republican -- and conservative papers are behind him.

So he's -- he is going back to the strategy that won him New Hampshire in a big surprise win in 2000. He's hoping for a repeat of that.

PILGRIM: Let's put up that poll for our viewers. The New Hampshire Republican poll. We have Romney 34, McCain, 21, Giuliani 14, Huckabee, nine and Thompson, four.

Hank?

SHEINKOPF: People are confused. All the television that is up right now, television ads probably not doing much. People will be looking for cueing devices, outside sources as Errol noted to help them figure this out. One thing is sure. Iowa will create momentum going into New Hampshire and there is some reflection between the two. People are going to say did Senator Clinton do what she was supposed to? Yes, she may be able do what she was supposed to. What she was supposed to was walk away with it and that's the difference.

PILGRIM: Well, let's take a look at New Hampshire with Clinton. She is at 30 percent. Obama is at 32 and Edwards is at 18. It's very close. But Clinton is not the front-runner in New Hampshire.

SHEINKOPF: All depends on who turns out. It is a great thing in politics. We can all prognosticate until the cows come home. The really issue is who is coming out to vote. Clinton is not organized, union is not organized. That tells you the Clintons and Edwards are in better shape. Obama has never organized anything like this before. Watch the Edwards operation. Watch the Clinton operation.

LOUIS: And watch the independents who are allowed to vote in the New Hampshire primary.

WEST: Yes. Exactly right.

PILGRIM: Big wild card. Diana, last word?

WEST: I was just going to say the exact same thing. They say if Obama does well in Iowa and that the independents will flock to him.

PILGRIM: You know, this -- the undecided voters Iowa are really a very big chunk of -- that is -- could go any way. We can sit here and look at the numbers all day. But it really could go any way. LOUIS: And undecided could mean they stay home which is something important to keep in mind. As Hank says if voters are confused it is not clear what they are going to do. It is not like they will necessarily flip a coin. They may just decide to wait it out and see what happens.

SHEINKOPF: Nonvoting, non-decision-making is a very powerful thing voters do. Some people think that is pathological. Exactly the opposite. They may say a pox on all houses, I'm staying home. I will get you in November.

WEST: That's right.

PILGRIM: Interesting stuff. Diana? Go ahead.

WEST: They say that -- they only expecting about 120,000 caucus voters in Iowa to make this big headline for us. So it is a small group.

PILGRIM: And we will be watching with bated breath. Thank you very much for being here today. Errol Louis, Hank Sheinkopf, Diana West.

And thank you for joining us. Please join us tomorrow. For all of us here, thanks for watching and enjoy your holiday weekend. Good night from New York.

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