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Kerry Set For Victory; States Consider Limiting Outsourcing

Aired February 17, 2004 - 18:00   ET


LOU DOBBS, CNN ANCHOR: Tonight: Senator John Kerry looks set for another convincing primary victory. Wisconsin voters say jobs are the No. 1 issue. President Bush fights back on his economic record.

Punch card voting is being phased out around the country. Electronic voting is being phased in. But will it prevent another Florida 2000 or will it create possibly something even worse?

UNIDENTIFIED MALE: There's certainly a lot of inner workings with the electronics where they could go wrong.

DOBBS: "Exporting America." Nearly two dozen states are considering laws to limit the massive exodus of American jobs to cheap overseas labor markets.

UNIDENTIFIED MALE: A real outrageous activity to be getting this work to be done outside of the country.

DOBBS: And Martha Stewart on trial, another setback for the prosecution. We will have a live report from the federal courthouse in New York.


ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, February 17. Here now, Lou Dobbs.

DOBBS: Good evening.

The polls will close in Wisconsin in just under three hours. Front-runner Senator John Kerry is hoping to have such a strong showing tonight that this will be the last primary for most of his rivals for the Democratic presidential nomination. But Howard Dean and Senator John Edwards say they are determined to stay in the contest.

We have three reports tonight, Kelly Wallace with the Kerry campaign, Dan Lothian with the Edwards campaign, Bob Franken with the Dean campaign.

We begin with Kelly Wallace in Middleton, Wisconsin -- Kelly.

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Lou, John Kerry's aides headed into the evening believing a victory definitely very possible, although, at the same time, they like to say they are taking nothing for granted.

And that is part of the reason why Senator Kerry headed out a short time ago to go to a polling place. And there, he is going to ask Wisconsin voters personally to vote for him. Earlier today, he got a boost from 19 labor unions and their five million members. This labor coalition had originally backed Dick Gephardt, but now formally endorsing John Kerry.

And there, the senator was sounding very much like the front- runner, focusing exclusively on President Bush.


SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: This is not a conservative Republican administration. This is an extreme, radical administration. And we need to replace them with common sense and fundamental American values. And that's exactly what I intend to do.


WALLACE: As for the expectations game, if John Kerry wins, but either Howard Dean or John Edwards pull off a very strong second-place finish, well, the line from the Kerry camp is that, in order to win this nomination, you have to win contests. You can't keep coming in second.

If John Kerry is to lose here in Wisconsin, you would look for this campaign to shift its time and resources looking ahead to the March 2 Super Tuesday states -- Lou.

DOBBS: Kelly, thank you very much -- Kelly Wallace in Middleton, Wisconsin.

John Edwards says he's undaunted by John Kerry's commanding lead. Senator Edwards said the primaries will last well into March. And there's plenty of time, he says, for voters to recognize the differences between the candidates.

Dan Lothian with the Edwards campaign reports from Milwaukee -- Dan.

DAN LOTHIAN, CNN BOSTON BUREAU CHIEF: Well, Lou, and Senator Edwards says that he has been sensing some momentum over the last couple of days. They are saying that, no matter what happens, even if they don't have a strong showing here tonight, they will stay in this race.

What Senator Edwards would love to have is a two-way race between himself and Senator Kerry. He did make a couple of campaign stops today, beginning in Milwaukee and then heading to Madison at a University of Wisconsin meeting with some students there, urging them to go out and vote and to vote for him.

The campaign is already looking beyond this primary to Super Tuesday. Edwards will head to New York tomorrow evening, where he will have a fund-raiser. And then they have put together a schedule for several states of the Super Tuesday states, will focus on those states that have lost manufacturing jobs -- Lou.

DOBBS: Dan, thank you -- Dan Lothian from Milwaukee.

Howard Dean, for his part, insists that Wisconsin will not be his last stand. He said today, this isn't done yet.

Bob Franken is with the Dean campaign, joining us now from Milwaukee -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Well, Lou, whatever else happens, Howard Dean can probably lay claim to the most creative campaign event of the day, a root beer factory tour.

He decided that he was going to do that amid speculation that he was taking his last sip of the campaign nectar, as he continues to resist reports that he's going to pull out. Of course, most point out, the candidate who is still trying to pull off a surprise victory would not really admit that he was going to consider pulling out if he didn't pull off that surprise.

And Howard Dean showed that repeatedly in interview after interview.


HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: I will tell you this. We are interested in winning. And if I don't win, we are interested in having a Democratic president in the White House. And that is what I intend to do.


FRANKEN: Whatever happens here in Wisconsin, Howard Dean returns to his home in Burlington, Vermont, tomorrow to decide what is the best way to unelect President Bush with or without Howard Dean as a candidate -- Lou.

DOBBS: Thank you, Bob -- Bob Franken from Milwaukee.

CNN's live coverage of the Wisconsin primary begins when those polls close. They close at 9:00 p.m. Eastern. Larry King will pick up our coverage, then Aaron Brown at 10:00 p.m., Wolf Blitzer at 11:00 p.m.

Exit polls today show Democratic voters in Wisconsin confirming what we reported to you here last night. The No. 1 issue in that state is jobs. Voters in other primary and caucus states share the same opinion on the single most important issue as this point in the campaign.

Senior political analyst Bill Schneider has early exit polling details now from Wisconsin -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, Lou, you are right. It's the economy, and you're not stupid, the same issue as in other states, the economy and jobs, followed by health care and then the war in Iraq, which is behind domestic concerns.

The issue of trade with other countries became a major focus in Wisconsin campaign for the first time. We asked voters in Wisconsin, do you think trade with other countries mostly creates jobs for American workers, loses jobs, or has no effect? And the answer, not even close. Nearly three-quarters of Wisconsin primary voters say trade loses American jobs. And that is in a state that has lost nearly 75,000 jobs in the last three years.

That view is shared by supporters of all three of the major candidates, Edwards, Kerry and Dean. Kerry voted for NAFTA. Dean supported it as governor of Vermont. They have both promised to revisit the treaty negotiations if they become president. Their criticism? NAFTA was not implemented fairly and hurt U.S. workers, they say.

Edwards says he never supported NAFTA. In fact, he is making opposition to NAFTA his major point of disagreement with his rivals. More than eight in 10 Edwards supporters today say they feel that trade loses American jobs. Edwards has launched into criticism of NAFTA as an issue that embodies the major themes of his campaign.

He's an economic populist and he's a political outsider. He's not part of the trade deal supported by the political establishment of both political parties -- Lou.

DOBBS: Bill, are we seeing any volatility here, any growth in the response among voters as we move from primary to primary and caucus to caucus on the importance of jobs and international trade as a campaign issue?

SCHNEIDER: No, it's always been the major focus in the campaign.

But I think what is happening in Wisconsin is, for the first time, the trade element is coming into it, because you have Edwards opening up an issue difference with his rivals in this campaign on NAFTA, saying it clearly. In the debate for the first time, he criticized Kerry and Dean for supporting NAFTA. He says he never supported it. Of course, he wasn't in the Senate. He didn't have to vote for it.

But when he ran for the Senate in North Carolina, he made it clear he didn't support NAFTA, nor did his Republican opponent. In North Carolina, it was not a popular cause. But that's the first time the trade issue has been opened, central in the campaign here in Wisconsin. And we'll see tonight what kind of impact it has.

DOBBS: Bill Schneider, thank you.


DOBBS: Treasury Secretary John Snow today said the economy is on track for rapid growth, growth that he said will soon lead to more jobs. Snow is one of three Cabinet secretaries visiting the Pacific Northwest this week, promoting the president's economic policies.

Meanwhile, the president today focused on national security.

Senior White House correspondent John King has the report -- John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: And Lou, both issues, of course, jobs and national security certain to be the central focus of the presidential campaign to come.

Let's begin with the president down in Fort Polk, Louisiana, today, Mr. Bush delivering a pep talk to the troops, also meeting with some family members of those who lost their lives during service in Iraq. The president today again forcefully defending his decision to go to war in Iraq, saying he made a reasonable conclusion based on the intelligence he had at the time about Saddam Hussein being a threat, as the president put it.

Mr. Bush saying, if he had that same intelligence today, he would again make the same decision. The Bush-Cheney campaign also releasing some criticism of the president's likely fall opponent, Senator John Kerry, saying he had voted at least 12 times against legislation that included military pay raises. So the Bush campaign certainly warming to a fight on national security issues.

And, as you mentioned, Lou, three of the president's Cabinet members, the chief members of the economic team, out taking a bus tour of the West Coast, the labor secretary, the commerce secretary and the treasury secretary in Washington and Oregon promoting the president's economic plan. Back here in Washington, though, another of the president's top advisers trying to clean up a bit of a political mess.

Greg Mankiw, the top economist here at the White House, stirred up Democratic criticism and even outrage from key Republicans last week when he said that outsourcing, sending low-wage jobs out of the United States overseas, was a logical extension of a free trade economy and that, over time, would make the U.S. economy more efficient.

Today, at a speech in Washington, Mr. Mankiw said he was misinterpreted because, he conceded, perhaps he was not perfectly articulate.


GREGORY MANKIW, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Last week, some comments I made about the benefits of international trade were far from clear and were misinterpreted to suggest that I was praising U.S. job losses. Nothing could be farther from my views. Creating an environment for robust job creation is a paramount goal of the president and his economic team.


KING: Commerce Secretary Don Evans, Lou, on the West Coast, trying again to put this whole controversy over Mr. Mankiw's comments aside, said the president has three priorities when it comes to the economy, jobs, jobs, and jobs -- Lou. DOBBS: Three pretty good items to bring to the fore.

John King, senior White House correspondent, thank you.

Still to come: Millions of Americans will vote electronically in this presidential election this year, but will it prevent another Florida 2000? Or will it create something worse? We'll have a special report coming up here.

And the general leading the hunt for Osama bin Laden says, time is running out for the al Qaeda leader. Our Pentagon correspondents report.

And Martha Stewart on trial, the judge today dealing another setback to the government. We'll have a live report from the courthouse in New York -- all of that, a great deal more, still ahead.

Please stay with us.


DOBBS: The Army today said another soldier has been killed in Iraq. The American soldier was killed last night by a roadside bomb 250 miles northwest of Baghdad. He was the first member of the Stryker brigade to be killed. Strykers are the Army's newest fighting vehicle. The brigade deployed to Iraq last fall from Fort Lewis, Washington.

About 11,000 American troops are in Afghanistan. They are fighting terrorists and looking for Osama bin Laden. Today, the top U.S. general in Afghanistan, Lieutenant General David Barno, said time is running out for bin Laden, as American and Pakistani troops step up their hunt.

Pentagon correspondent Barbara Starr has the report -- Barbara.

Well, Lou, indeed, today, General Barno offering an unprecedented look at the hunt for Osama bin Laden. Now, General Barno telling a press conference that the Pakistani military is moving in an unprecedented fashion through those remote tribal areas along the border with Afghanistan, pressuring villagers to stop supporting the al Qaeda and give up Osama bin Laden, if, indeed, he is hiding in that region.

Here's a little bit of what General Barno had to say.


LT. GEN. DAVID BARNO, U.S. COMMANDER IN AFGHANISTAN: We do have confirmed reports that, over the last six or eight weeks, that the Pakistani military and their local paramilitary elements in the tribal areas have been undertaking a very serious effort, working with the tribal leadership, to uncover and disrupt terrorist organizations that may be living and operating in their midst.

(END VIDEO CLIP) STARR: So the strategy, Lou, pretty clear tonight, the Pakistani military trying to push the al Qaeda out. If they move back towards the Afghanistan border in response to that pressure, General Barno's troops will be waiting for them.

But, of course, it's worth remembering that Osama bin Laden has slipped the net before -- Lou.

DOBBS: Barbara, it's also noteworthy that we have heard exactly this same expression, that time is running out, in relation to Osama bin Laden. What is there, if anything, that makes us think this time, the statement is more accurate than it has been in the past?

STARR: Well, according to General Barno today, some pretty unprecedented movement by the Pakistani conventional military and paramilitary forces. They are now moving through those villages along the tribal regions in a way that they never have before.

And they are being very tough on the village elders that they believe may have been supporting the al Qaeda and giving them shelter for the last 2 1/2 years. Just one example of the tactics that General Barno says the Pakistani military is now using, if village elders are believed to be sheltering al Qaeda and they don't give them up, the Pakistani military is moving in and destroying their houses.

That's, of course, a tactic that has been seen in the past to have been used by the Israeli military, very tough new measures, by all accounts. The idea, the U.S. hopes, is that the Pakistani villagers in these remote areas for the first time now since September 11 will start giving up on their support for al Qaeda. Hopefully, that will put the al Qaeda on the move and the U.S. will be able to find them.

DOBBS: Barbara, thank you very much -- Barbara Starr from the Pentagon.

Secretary of State Colin Powell today said, the United States has no enthusiasm, as he put it, for sending U.S. forces into Haiti to stop an armed revolt. Dozens of people have been killed in more than a week of rioting between supporters and opponents of President Jean- Bertrand Aristide. The White House said it is working with France and allies in the Caribbean to bring about a peaceful end to the violence. France today said it is considering whether to send its own peacekeeping force.

Coming up next, a new setback for federal prosecutors trying to prove Martha Stewart committed fraud and obstructed justice. We'll have a live report from the federal courthouse in New York.

Also, "Exporting America": 40 -- 40 -- state governments are now sending work overseas. Some lawmakers are trying to stop that. We'll have a special report -- that and a great deal more coming right up.

Stay with us.

(COMMERCIAL BREAK) DOBBS: Lesbian and gay marriages in San Francisco will continue, at least for now.

A judge in California today delayed until at least Friday a ruling on whether to block those marriages. A separate hearing on the issue is under way now. Almost 2,500 gay and lesbian couples have been married in San Francisco since just last Thursday. That's when the city's mayor ordered city officials to begin to issue marriage licenses to gay couples.

Two conservative groups filed motions to block those marriages, saying they violate California law. Before the ruling, San Francisco's mayor said gay marriages should be legal under equal protection.


GAVIN NEWSOM, MAYOR OF SAN FRANCISCO: What we're doing in San Francisco, what we were doing before last Thursday, from my perspective, was clearly, by any objective standard, discriminatory. It's that oath that I'm withholding -- or, rather, that I'm holding -- as it relates to my actions as mayor, in terms of engaging in what I think is an appropriate act that will deliver on that promise of the state Constitution.


DOBBS: Tomorrow night here, our "Face-Off" focuses on gay marriage, two leading national experts with sharply conflicting views on the controversy from the Family Research Council and another from the People For the American Way.

A late development tonight in the case against Martha Stewart. The prosecution added two new witnesses.

Mary Snow has the very latest for us from the federal courthouse in Lower Manhattan.

MARY SNOW, CNN CORRESPONDENT: Lou, a surprise in the government's case against Martha Stewart.

The judge ruled late today that prosecutors will be ale to call two friends of the government's star witness, Doug Faneuil. Now, defense attorneys tried to block this testimony for a number of reasons, one being the late timing of the request. The other, they have argued that Faneuil lied to the government to curry favor with the government.

But Judge Cedarbaum says the statements made to the friends were made in January of 2002, five months before Faneuil began cooperating with investigators. The judge said the government is entitled to show that he told one friend, if not two, that he had done something wrong and he had been asked to do it.

Also, earlier, a blow today to the prosecution. The judge eliminated certain phone records, others that she has allowed into evidence. She ruled that the government cannot use those phone records alone to try and prove their conspiracy charges against Martha Stewart and her co-defendant, Peter Bacanovic. She instructed jurors not to speculate on the content, she said, because the government couldn't prove the substance of these conversations.

Lou, the government was (AUDIO GAP) the case on Thursday. But with these new witnesses, that could likely push the timing back a bit -- Lou.

DOBBS: Mary, any indication, quickly, as to whether or not Martha Stewart will, in fact, be taking the stand?

SNOW: No indication yet. Her lawyers have said all along they wanted to see how the government presented its case and then they would make that determination.

The prosecution said today that they have not received a witness list from the defense, which could begin as early as Thursday, probably, afternoon.

DOBBS: Mary Snow, thank you.

Coming up next, "Exporting America." Nearly half of all state governments say they are working to keep American jobs in this country. But most of those states are already sending those jobs to overseas cheap labor markets. We'll have a special report.

Also, the exporting of America is threatening American innovation. Tonight, I'll be talking with the president of the Electronic Industries Alliance, Dave McCurdy.

And American textile workers are losing their jobs because illegal foreign imports are flooding the American market. We'll have a special report on a disturbing issue not often discussed.

Also ahead, electronic voting machines designed to make voting easier, but many critics say not having a paper trail is too risky in this difficult political age and uncertain web. A leading expert on e-voting, Professor David Dill of Stanford, is our guest -- that and a great deal more coming right up.

Please stay with us.


DOBBS: "Exporting America" tonight.

We have reported here on a number of state governments in this country that have chosen to use cheap foreign labor for state government work. Now nearly two dozen states have laws pending that would ban the exporting of state contract work to cheap overseas labor markets.

But, as Bill Tucker now reports, many of those bills are riddled with loopholes.


BILL TUCKER, CNN CORRESPONDENT (voice-over): New Jersey was the first state to consider prohibiting the outsourcing of state contracts to overseas workers. It now has a lot of company. But, as of yet, not a single state has been able to pass a bill. And none will if the National Foundation of American Policy gets its way.

STUART ANDERSON, NATIONAL FOUNDATION FOR AMERICAN POLICY: State bills to limit outsourcing would raise costs for taxpayers, would send negative signals on foreign investment, which would hurt job creation in those states. And it would put at risk, because of potential retaliation, many U.S. jobs in export industries.

TUCKER: Forty states already rely on overseas help desks for their food stamp recipients. And workers in overseas call centers also process a great deal of private and financial information.

Concerned about the issues of privacy and jobs, one legislator in North Carolina has a pending bill to address both.

ERIC REEVES (D), NORTH CAROLINA STATE SENATE: First of all, I thought it was a bad idea to be able export citizens' personal information to another jurisdiction, No. 1. And then, No. 2, I thought it was a real outrageous activity to be getting this work to be done outside of the country.

TUCKER: Most proposed legislation does not go as far; 22 states currently have some sort of anti-offshoring legislation pending, ranging from forcing call centers to tell people where they are located to banning state contracts from overseas workers.

ROBERT SANCHEZ, ZAZONA.COM: There's only one bill that I'm aware of that even mandates that American -- Americans are able to take the jobs. In most other cases, they allow for what we call the insourcing of jobs by using H-1B and L-1 visas to import cheaper foreign labor.

TUCKER: In other words, the work could still be done here, but with tax dollars going to foreign companies using foreign workers.


TUCKER: Now, federal legislators recently made headlines with their ban on offshoring of U.S. government contracts. But what most people probably don't realize, Lou, is that provision expires at the end of September.

DOBBS: We'll see, as they say, how the summer goes.

Bill, thank you -- Bill Tucker.

Well, we have reported extensively, of course, over the past year that Americans are not only losing many jobs to cheap foreign labor markets, but also to foreigners who come into this country on L-1, H- 1A and B visas and a few other visas as well. Tonight, the federal government says it will no longer accept any more applications for one of those visas this fiscal year, because, the government says, it has already received enough applications to fill the 65,000 H-1B visas, not even five months into the new fiscal year.

The federal government says it won't accept new applications, in fact, for the next fiscal year until April.

Well, my guest now says this country's reliance on outsourcing to cheaper foreign labor markets will ultimately cost the United States its edge in an area critical to our future prosperity, both in technology and innovation itself.

Joining me now is David McCurdy. He is a 14-year member of Congress. He's now president of the Electronic Industries Alliance, certainly one of the most powerful associations in Washington.

Good to have you with us, David.


DOBBS: The issues that this country is confronting in the host of areas are complex, fewer, more complex than this issue of labor, the cost of labor, innovation, technologies relationship.

How in the world are we going to, in your judgment, best confront the issues of innovation in this country?

MCCURDY: Well, first of all, I'm pleased that you framed it as a complex issue because it is. Because so much of it has been a binary argument, just exporting versus jobs. And there really are other functions.

And in order for us to grow jobs, especially here in this country, business has to create shareholder value. And to do that they have to innovate, innovate and innovate.

And so we have a system of innovation in this country, and it always has to be recreated. It has to be refueled and remade. And unfortunately there are signs that that system is starting to -- you know, it's still the best in the world, but the gap between it and other nations, I think, will narrow over time unless we take action.

DOBBS: It has to narrow, because as we're exporting jobs, we're also exporting capital. We're also exporting our knowledge base and intellectual property. And it is the basis of the next wave of innovation in the countries to whom -- to which we are exporting jobs in many cases.

It isn't the total picture, but it's certainly part of the picture that our policy makers, our corporations, seem to just absolutely resist considering and focusing on.

MCCURDY: Actually I disagree, because our industry leaders -- and we just had a two-day working exercise on this very issue, and over 80 people participated in this. They gave up their time to come down and talk about the future.

And it is an issue of the future. And how do you create that job growth? How do you create that next wave?

DOBBS: What's the answer?

MCCURDY: Well, it's an extensive answer.

First of all, you have to look at the education system in this country, K through 12. There has to be serious reform there. We have some initiatives. We have a foundation called Instep (ph) that looks at science and technology education.

We have to look at the R&D funding. R&D funding, which historically in the old days, when I was in Congress...

DOBBS: Research and development.

MCCURDY: Research and development funding was, in a big part, supported by the federal government.

In the '90s they shifted to more reliance on the private sector. And overall, R&D funding has, I think been focused too much on just medical research and ignoring some of the critical areas...

DOBBS: Technology...

MCCURDY: ... for future job growth in the technology sectors.

DOBBS: Dave, as you well know, we also hear from technology companies, some of the world's biggest, some of them, in fact, your organization represents, bragging about the amount of R&D.

But not always making the distinction between R&D that's going on in this country and R&D that's going on in countries around the world, in many cases countries to whom they are now building the outsourcing of jobs or the exporting of America.

So when we talk about these in broad terms, we're looking at 14.7 million people in this country who do not have jobs. Many of them have just given up looking for jobs.

You mentioned education. I couldn't agree with you -- my personal opinion, I think you're exactly right. But businesses isn't paying attention to it. Our policy makers.

And I don't care whether you're a Democratic or a Republican, you bear a responsibility right now for the sorry state of education. But so does the business community, because they are the most demanding of those prized resources, those young minds.

MCCURDY: Lou, I was amazed when I first took over this job five years ago that in most of our meetings rather than talking about just trade or tax or environment, which are critical issues for us, our own business leaders want to talk about education.

They brought it up at the top of the agenda every single time. Because they're the ones who have to rely on those skilled jobs. And you talk about 14 million people, the question is, what are the skills level of people in order to create that value, and create that next wave, that next product, that next service which is going to be essential if you are going to create more jobs.

DOBBS: As you and I talked before, how soon do you think it will be before your membership thinks we're ready to start investing people in this country, those U.S. multinationals, and drive up that education base, be sure those jobs are not exported out simply on the basis of the price level for a job? How soon will that happen?

MCCURDY: Don't focus just on the multinational corporations.

DOBBS: I won't focus just on that.

MCCURDY: The small businesses that are critical to growth.

DOBBS: ... small business. But you don't represent small business.

MCCURDY: No, I do, too. Absolutely. When you look at the membership, I have -- I have stereo speaker makers in Kentucky, versus...

DOBBS: Let's talk about the big ones, all the big money and all those jobs. Because even though outsourcing and exporting of these jobs is taking place by small companies, the preponderance is by large U.S. multinationals.


DOBBS: Are they prepared to start -- Are they prepared to start looking at the expense to this country in tax base, in cost to lives of families, and say we're not going to export simply on the basis of cheap labor?

MCCURDY: We're outsourcing for a number of reasons. Cost is one of those. But clearly, market access is another. And is actually being able to access...

DOBBS: Market access is great. That isn't the reason companies are moving their businesses into India, or the Philippines.

MCCURDY: India...

DOBBS: Potentially.

MCCURDY: Philippines may a question. But clearly China and India. I just returned from India. Let me tell you, the potential market there is huge.

DOBBS: It's potential, but it's ten years, 20 years away.

MCCURDY: And that's why -- Don't be too worried about them taking over all the high tech jobs right now. DOBBS: I'm very worried about it. I think you're getting some very good insight into the issue, because I know you've been focusing on it. I hope you'll come back here as we talk about this more and help us explore it.

MCCURDY: We're trying to stay ahead of the curve, and we would very much like that opportunity.

DOBBS: Thank you, Dave.

MCCURDY: Appreciate it.

DOBBS: Dave McCurdy.

Gaping loopholes in U.S. customs inspections are also costing American jobs. Less than 0.1 percent of three million textile shipments to this country is inspected. Foreign manufacturers, as a result, are exploiting those security gaps at a significant cost to the American textile worker, the very few workers who are left in that industry.

Lisa Sylvester has the story.


LISA SYLVESTER, CNN CORRESPONDENT (voice-over): This piece of clothing says it's made in Honduras, but it may actually be made in China. Foreign manufacturers have been skirting U.S. customs rules, smuggling garments into the United States, according to a recent General Accounting Office report.

CASS JOHNSON, AMERICA TEXTILE MANUFACTURERS INST.: They funnel it through a country -- another country that has either no quotas or it doesn't fill its quotas.

It says, "I'm going to be a product of Sri Lanka." And so they sew the tag into the garment in China that says "product of Sri Lanka," and then they ship it to the United States using falsified entry documents.

SYLVESTER: In June 2002, U.S. customs agents visited 65 factories in Hong Kong that were supposedly manufacturing goods destined for the United States. Twenty-six of them were shell fronts for other foreign manufacturers.

And there are other ways to get around the rules. U.S. customs allow shippers to pass cargo through the United States en route to another country free of charge and free from quota restrictions.

But according to the GAO report, customs does not adequately track shipments to make sure they leave the United States. Shipments are often diverted, ending up on U.S. store shelves without a penny in tariffs ever being paid.

This kind of cheating makes it hard for American textile manufacturers to compete. Last year 37 textile factories closed in North and South Carolina.

REP. JOHN SPRATT (D), SOUTH CAROLINA: It has plagued our industry, but it is a problem because it shows you how difficult it is to protect our own borders, not just with people coming across the border but also goods and services.

SYLVESTER: It's not known how much is lost in tariff revenue, but in one single case 5,000 containers were stopped in Long Beach, California. The exporter was trying to avoid paying $65 million in duties.


SYLVESTER: We asked custom officials for an interview, but they declined to comment, saying only that they will implement the GAO report recommendations, including developing an automated system to track cargo and increasing the number of inspections -- Lou.

DOBBS: That's an improvement, at least. Lisa, thank you very much. Lisa Sylvester, reporting from Washington. Thank you.

Coming up next, John Kerry heads to the Wisconsin primary with a solid lead. We have just about -- a little less than two and a half hours before the polls close in Wisconsin.

His Democratic rivals say this race isn't over. There is some suggestion of momentum talk.

We'll be talking with three of the nation's leading political journalists about what we can expect tonight and in the weeks ahead.

And many states have switched to electronic voting to avoid another presidential election debacle as in Florida 2000, but some critics say that relying on electronics is asking for even more trouble. We'll have that story for you, coming right up.

Stay with us.


DOBBS: The hanging chads of Florida 2000 inspired several states to switch from paper ballots to electronic voting machines. More than a quarter of all voters are expected to be using those new machines, e-voting in this year's presidential election.

But that doesn't mean that the problems have been solved.

Kitty Pilgrim has the story.


KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Just touch the screen. Fifty million people are expected to vote electronically in the 2004 elections. The problem of hanging chads generated an outcry for a less complicated system, but some say electronic voting may not be it. KIMBALL BRACE, PRESIDENT, ELECTION DATA SERVICES: From the voter's standpoint it appears to be less complicated. But there's certainly a lot of inter-workings with the electronics where they could go wrong.

PILGRIM: Worries about electronic voting include software mall function, vulnerability to hackers and a lack of paper trail or paper records of votes.

In California, 14 of 58 counties are using electronic voting in the primary in two weeks. Some watchdog groups are concerned.

KIM ALEXANDER, PRESIDENT, CALIFORNIA VOTER FOUNDATION: One of the main reforms that my organization and a number of groups are calling for is a requirement that there be a voter verified paper ballot that's produced at the time the voter votes. The voter can verify and make sure that the machine captured their votes accurately.

PILGRIM: In Ohio, a state funded study found problems with four of the main electronic voting manufacturers. And another report in Maryland, the Rava (ph) report said there are, quote, "considerable security risks in electronic voting" and made recommendation to ensure the election will be accurate.

Diebold, one of the main manufacturers, today said many of the concerns raised in these studies have been addressed and electronic voting in this election will be, quote, "safe, secure and accurate," unquote.

The problematic punch cards are being phased out. By the fall election, they will have disappeared in 11 of the states that used them in 2000. Still, some 32 million people will vote that way in November.


PILGRIM: With all the talk of change, many states have held back on changing systems. And federal funding to improve voting systems has lagged. Some districts are simply waiting for better answers on security before making the switch -- Lou.

DOBBS: And they're waiting on about three and a half billion dollars in help.

PILGRIM: That's exactly right.

DOBBS: Kitty, thank you. Kitty Pilgrim.

That brings us to the subject of tonight's poll. Do you trust e- voting without a paper trail? Yes or no?

Please cast your vote at We'll have the results later here in the show.

My next guest is simply, many people's consideration, this country's foremost expert on electronic voting. David Dill is professor of computer sciences at Stanford University. He joins us now from Mountain View, California.

Professor, good to have you with us.


DOBBS: A lot of talk, a lot of concern about electronic voting as simply being moved into our electoral process much too early to assure security, reliability, even verifying -- the ability to verify the results.

What is your take?

DILL: Well, I'd like an analogy. Suppose you had a bank, and your bank told you that it was going to reduce costs by getting rid of records of transactions. And in particular, they were going to have more efficient audits by just printing out the account balances when anyone wanted to see what was happening inside the bank.

People wouldn't have confidence in a bank like that, because they've lost accountability. We're pretty much doing the same thing for our election system.

For a couple of hundred years we've been able to do manual recounts to audit the system and when we went to computers, there was paper involved, so that we could go back and check that the computer did the right thing.

DOBBS: But what you're really saying is that people, if in these states where we're using electronic voting this year, may be in point of fact begging for those hanging chads?

DILL: I don't know how other people feel about it, but I can speak for myself, that I don't have a lot of confidence in the systems.

They may appear to be working perfectly, but if the voter can't see that the electronic ballot is what they intended, and if nobody else can check that later, we've got a system we really ought not to be putting so much trust in.

DOBBS: Not so much trust, paper verification, a paper trail of the vote, that seems at least to me a practical solution. Is it one that is also pragmatic, feasible and sufficiently timely to put it into place this year?

DILL: Well, that's a very difficult question. What we certainly can do, is go back to tried and true voting technologies, particularly the marked sense, you know, otherwise known as optical scan systems.

Even most places that have touch screen machines will have an absentee ballot system in place based on paper ballots. And it certainly would be feasible in most places to have people fill out those paper ballots in the polling place, and they could be counted just like all other absentee ballots. DOBBS: Professor, several people are pointing to the success in Brazil of a vote there involving 10,000 people that went off without a hitch, suggesting great success. Your thoughts?

DILL: Well, how do we really know? We don't -- you know, there's no way to go back and check those machines, except that apparently three percent of them. I have trouble getting exact information about what's going on in Brazil, but apparently three percent of the machines had printers attached to them, due to the efforts of Dr. Rebecca Mercury, who I consider to be the foremost expert of this, independent of the election officers.

DOBBS: Professor David Dill, Stanford University, we thank you for being with us. We'll be talking as we move through this and hopefully talking about solutions that are available soon. Thanks.

Coming up next, the polls closing in Wisconsin in just over two hours. We'll be talking with our political panel, three of this country's leading political journalists, next. Stay with us.


DOBBS: Voters in Wisconsin now have just over two hours to cast their votes in that state's Democratic presidential primary.

Joining me now, our panel of top political journalists: Ron Brownstein, national political correspondent, "L.A. Times"; Karen Tumulty, national political correspondent, "TIME" magazine; Roger Simon, political editor, "U.S. News & World Report." All of them tonight joining us from Washington.

Ron, since you were most recently in Wisconsin, let me ask you. Are there going to be any surprises tonight, in your best judgment?

RON BROWNSTEIN, "L.A. TIMES": Well, it's always hard to say. As I said last night, John Kerry started out with a big lead for the same reason he's had it everywhere else: a lot of voters there think he's the best candidate against President Bush.

Where we've seen in other states where John Edwards has been able to concentrate his time and effort, is he's generally finished strong. I mean, voters respond to him. He's been a little tougher in his message, going after Kerry, to some extent, saying that Kerry supported NAFTA. And he did not.

Howard Dean has some residual support there. But I see it as much kind of treading water. I wouldn't be surprised Edwards does reasonably well. He got some big endorsements.

His problem, Lou, is it's taken that concentrated effort for him to cut into Kerry's lead. He now moves into a period where we're going to have ten states voting in two weeks. And it's simply not going to be possible for him to spend the kind of time in all of them that he's been able to devote to Wisconsin.

DOBBS: Karen, how well would Senator Edwards have to do to call it a success tonight?

KAREN TUMULTY, "TIME" MAGAZINE: Well, I guarantee you that no matter how well he does, he's going to call it a success. But at this point it looks like the best he can hope for is a fairly impressive second place.

They're going to claim success if he gets within ten points of John Kerry. But as Ron suggests, it's harder to kind of nip that into a rationale for keeping on going as the campaign gets a lot more expensive from here on out.

DOBBS: The Democrats, though, Roger, it seems the conventional wisdom is the longer they can go through the primary process, the better able they are to drive their own base and to pummel President Bush. Is the conventional wisdom right or wrong?

ROGER SIMON, "U.S. NEWS & WORLD REPORT": I'm not so sure it's right in this instance. It does provide publicity for the candidate, and it does provide airtime for the bashing of George Bush, especially during the debates. But it does open up divisive issues within the party.

Every time that Kerry or that Senator Edwards mentioned that he voted against NAFTA, and Senator Kerry voted for NAFTA, it opens up a wedge.

Also, it is costing John Kerry money to keep running this campaign, money he would love to use to bash George Bush in a series of TV commercials.

So I'm not sure this is such a unifying event. And I'm not trying to get candidates to drop out. You know, honest work, they can stay in as long as they want and spend other people's money, but I'm not sure it's helping the money.

BROWNSTEIN: Can I take the other side on that, Lou?

DOBBS: Sure.

BROWNSTEIN: Because I do think the evidence over the years is that both parties have, I think, fundamentally miscalculated.

The assumption has always been that you're better off by settling this as quickly as possible. I think the evidence is pretty clear this year that the primary process provides an unparalleled opportunity, not only to make the case against the incumbent administration, but also to introduce the eventual nominee to the public who is a winner.

As long as this race goes on, we have headlines every Tuesday -- a newscast every Tuesday and headlines every Wednesday of John Kerry winning another state. And I think it's pretty indisputable his position vis-a-vis President Bush has improved enormously since the beginning of this process.

Now, that might change if it gets a lot more nasty between him and Edwards, but I see no sign of that occurring. And in that circumstance, I think the evidence suggests the Democrats are better off to have this go on for a while.

DOBBS: Let me ask you very quickly here, we're just about out of time. But it seems that, whether it is John Kerry or John Edwards or whichever candidate, should there be a surprise here, the fact is, it seems that the Democratic nominee has great vulnerability to the economy.

If we are to see, as the president's people -- I was about to say men, but including Elaine Chao, labor secretary -- are out ballyhooing the administration's success with the economy.

If this economy were to suddenly take off, that's a significant vulnerability for the Democratic nominee, is it not?

TUMULTY: I'd say that if this economy really takes off there is no way a Democratic nominee, whoever he is, can beat George Bush. And particularly if that is coupled with success in Iraq, if it looks like we have an exit strategy, none of these people can beat George Bush.

SIMON: It also depends on how you define the economy. Are we talking about the stock market? The stock market is already improving. Or are we talking about job creation? And...

DOBBS: You've got to include job creation.

SIMON: Well, if you're going to include job creation, it's going to be much tougher to have a better economy between now and November, but it certainly could happen.

DOBBS: Roger, thank you very much, Karen, Ron, thank you all. We look forward to your thoughts throughout the evening.

On Wall Street today, stocks broke a two-session losing streak. The S&P 500, in fact, is just below its highest close in almost two years, as Roger Simon just alluded. The Dow climbing 87 points, the NASDAQ up 27, almost. The S&P up 11.

Taking a look at some of your thoughts on exporting America, Paul Bayon of Redding, California: "The current trend of moving jobs overseas does not allow the average worker to retrain for anything. During the last boom workers could retrain for high-tech jobs, but now even these jobs are being moved overseas."

Barbara Beaudoin of Chelmsford, Massachusetts: "What kind of an America are we creating for our children? Exporting of jobs can diminish employment and career opportunities."

Morn from Muncie, Indiana: "I'm about as different from you on the surface as can be, but I think your program is brilliant, thought- provoking and truly informative. I'm a 35-year-old, tattooed, pierced, Midwestern entrepreneur with purple dreadlocks, an East Coast education, and fiercely protective of my civil liberties. When it comes to American economic and security issues, you're right on the money. If America is to remain an individual sovereign nation, it is obvious that we should strictly monitor and enforce immigration laws, hire Americans, and buy American products. To do anything else is to act as though one wants a dissolution of nations into some sort of Star Trek global 'Federation.'"

And Sheldon Spain of Zebulah, North Carolina: "We are fast becoming the United States of Corporate America!"

We always love hearing from you, even if you have tattoos and pierced places on you. Sometimes that's an important expression. I hope my children aren't listening.

E-mail us at

Coming up next, the results of tonight's poll. But first, an update on the latest U.S. companies our staff has confirmed to be exporting America. These are U.S. companies either sending American jobs overseas or choosing to employ cheap foreign labor instead of American workers.

Tonight's additions include Cognizant Technology Solutions, Cypress Semiconductor, Franklin Templeton, iGATE Corporation, Innova Solutions, Outsource Partners International, Stanley Furniture, Strategic Point Investment Advisors, Valence Technology and Xpitax.

For the complete list log on to We'll be right back. Please stay with us.


DOBBS: Now the results of our poll tonight. Twelve percent of you said you trust e-voting without a paper trail. Eighty-eight percent of you do not.

I had intended to include Professor Dill's web page: verified voting. That's Verified, past tense,, if you want to learn more about that subject.

That's our show for tonight. Thanks for being with us. Tomorrow night here, face off on gay marriage. Two leading experts with conflicting views on the controversy.

Thursday, Congressman David Dreier joins us to tell us why he supports the president's trade policies. Mary Matalin will be with me to talk about all things and affairs Republican. Please join us.

For all of us here, see you tomorrow. Good night from New York. Anderson Cooper is next.



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