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LOU DOBBS TONIGHT

Interview With Senator Tom Daschle; America on Alert; Does Job Retraining Work?

Aired March 12, 2004 - 18:00   ET

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

(BEGIN VIDEOTAPE)
LOU DOBBS, CNN ANCHOR (voice-over): Tonight, America on alert, security increased as Homeland Security issues a transit warning.

In Spain, the number of casualties in the worst terrorist attack since September 11 rises, 200 people killed, 1,500 wounded.

UNIDENTIFIED MALE: I there's a good chance that al Qaeda has inspired these attacks.

DOBBS: The economy is growing. The stock market is higher, but few jobs are being created. And hundreds of thousands more jobs have been shipped to cheap overseas labor markets.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: They think outsourcing is good. We think it's horrible.

DOBBS: Senator Tom Daschle is our guest tonight.

Business leaders and some politicians say retraining is the answer to help unemployed Americans. Does it work? We'll have a special report tonight.

Tonight, the inspiring story of National Guard specialist Diane Gilliam in "Heroes."

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, March 12. Here now for an hour of news, debate and opinion, Lou Dobbs.

DOBBS: Good evening.

Tonight, police all across the United States are stepping up patrols of railroad stations and trains after the worst terrorist attack in Europe in nearly two decades. The Department of Homeland Security has told law enforcement agencies to look for unattended bags and backpacks. In Spain tonight, more evidence that radical Islamist terrorists may be responsible for planting the bombs on those commuter trains.

The bombs killed 200 people and wounded 1,500 others. A Spanish radio station today said the detonators in those bombs were different than those used by the ETA terrorist group and that suggests al Qaeda.

Al Goodman reports from Madrid.

(BEGIN VIDEOTAPE)

AL GOODMAN, CNN CORRESPONDENT (voice-over): Despite reports of denials from ETA and claims of responsibility from groups associated with al Qaeda, Spain's interior minister went on TV again on Friday to point his finger mainly at ETA.

UNIDENTIFIED MALE (through translator): How is it possible that after 30 years of attempts of ETA, they are not going to be priority suspects in this investigation?

GOODMAN: Soon after the bombings on Thursday, officials blamed the Basque separatist group ETA, listed as a terrorist organization by the United States and the European Union. But after they discovered a stolen van just outside the capital with seven detonators and Arabic- language audiotapes inside, they said they couldn't rule out an Islamic terrorist groups.

Some in Spain were sure it was ETA, even though the mass casualty bombings would mark by far the deadliest attack in the year's 35-year fight for Basque independence, while abroad, several international experts say al Qaeda surely had a role in the devastation.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: So I think there's a good chance that al Qaeda has inspired these attacks and if you define it broadly enough they are somehow involved.

GOODMAN: Some Spanish media are questioning whether the government might be playing politics and some analysts say making the government's archrivals ETA the culprits in the bombings could help them in Sunday's national elections.

A Spanish anti-terrorism expert who has investigated ETA and al Qaeda told CNN the latest evidence points more towards al Qaeda. Some explosives found intact in a sports bag on one of the trains are not the type ETA usually uses, he said, but the interior ministry seemed to contradict that later.

Another bomb scare on Friday at the same train station that took the brunt of the bombings a day earlier further fraying the nerves here.

GOODMAN (on camera): No one could say if blame for the bombings would be established conclusively before Sunday's parliamentary elections, but as Spaniards marched against the violence on Friday, they seemed to agree the bombings would weigh heavily on the vote.

Al Goodman, CNN, Madrid.

(END VIDEOTAPE)

DOBBS: Eight million people took part in those demonstrations against terrorism. That's one in five of the entire population of Spain. Investigators continue to search the wreckage of the trains for evidence. ITN's Bill Neely reports from Madrid.

(BEGIN VIDEOTAPE)

BILL NEELY, ITV REPORTER (voice-over): Train 431 ripped open by bombs yesterday, taken apart today. And it wasn't easy, the pieces welded together by the force of explosives, the seats embedded in the metal, the seats where people read or slept and died.

The bloody blankets that covered them were removed, like the books they never finished. At least 70 people died on this train alone in four explosions in four of the six carriages.

(on camera): There's still a strong smell of burning here, but it's the sight inside that carriage and the others here that's really shocking, such a confined space, packed with so many people. It's hard to believe how anyone could have survived in there.

(voice-over): And something terrifying has come from this train, the voice of a passenger calling her mother recorded on an answer phone as she realized something was wrong, the bombs exploding in the background.

(EXPLOSIONS)

NEELY: The bombs you've just heard, two of the 10 that killed and injured 1,500 people. Train 305, where at least 40 died, blasted open by three bombs.

(on camera): The investigators here are sifting through the debris of this train and another one further up the tracks, looking for bomb fragments, the tiniest piece of debris, perhaps, that might help answer the central question, who did this.

(voice-over): And they found evidence that each bomb would have been heavy in its bag, 15 to 30 pounds of explosives, detonated by a mobile phone. All four bombed trains came from this town, where there was uproar today.

Students at the station sing and yell their defiance at the bombers, the young, like the old, united in revulsion.

(on camera): This is where dozens of the victims were from. There's defiance here. There's obviously shock. But there's also a growing sense of disbelief at the possibility that this place may be where the conspiracy to bomb these trains was hatched.

(voice-over): Outside the station in this van, police found seven detonators and a video with verses from the Koran. The police say the detonators and the way the bombs were built makes them think that someone other than ETA, the Basque terrorists, was behind the bombings. In the station car park today, flowers, candles, and dozens of cars still unclaimed, their owners dead or badly injured, and the death toll is rising.

DR. JOSE MARIA DE MIGUEL, EMERGENCY PHYSICIAN: Because some of them are under multi-organ failure and I think we may expect some of them will die within a few hours.

NEELY: Tens of thousands in Madrid left work at lunchtime today to stand in silence in protest of the worst atrocity Spain has witnessed since its civil war 70 years ago, among them, doctors and nurses overwhelmed by the casualties and by their own grief.

This is a country in deep shock, in deep confusion, because they have no real idea, no evidence who did this. The relatives of the dead have no comfort either. Only 50 of the bodies have been positively identified, one in four. The rest are too badly mutilated. Spaniards are desperate to show their solidarity. Flags hang from windows, many pinned with black ribbons. And tonight people are on the streets, and there are millions.

The passengers were back at Atocha station today, but nothing is really normal here anymore. They stood today at the site of what is now the worst terrorist atrocity since September the 11th, March the 11th in Madrid. They clapped out of respect for the dead and by tradition and to calm their nerves amid a fearful city.

Bill Neely, ITV News, Madrid.

(END VIDEOTAPE)

DOBBS: Regarding that graphic audiotape recorded as the bombs exploded, the woman on that tape, we've now learned, that woman on the tape is among the survivors, but we don't have details of her condition tonight.

President Bush today went to the Spanish ambassador's residence in Washington. There, he expressed solidarity with the Spanish people. President Bush is urging patience and offering help as Spanish investigators try to determine who is responsible.

Senior White House correspondent John King reports -- John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Lou, the president also this afternoon, along with the first lady, conducted an interview with Spanish television, another way for the president to voice his condolences and solidarity to the people of Spain.

And in that interview, the president weighed in on the big question, of course, who was responsible for this tragic bombing. The president saying in that interview -- quote -- "We don't know who did this yet. I wouldn't rule anybody out. You'll hear all kinds of rumors and it will take a while to find out the facts."

Now, the president in that interview also saying that, if the United States can help Spain in any way with intelligence information or law enforcement assistance, he is willing to do so. Here in Washington, the president also took a trip, adding to his schedule early this afternoon a stop up at the Spanish ambassador's residence here in Washington, a wreath-laying ceremony to voice his condolences.

After that event, the president standing side-by-side with Spain's ambassador to the United States, saluting Spain as a key ally in the war on terrorism. And, Lou, the president spending the weekend up at Camp David. We are told he will be updated if there are any updates on the investigation. And, of course, as the year goes on, this election year, a chance for peace and quiet at Camp David will be increasingly rare for the president and the first lady, enjoying that part this weekend -- Lou.

DOBBS: John, thank you.

Turning to domestic matters -- and, of course that means the presidential election -- the Bush-Cheney campaign is stepping up its attacks against Senator Kerry. What is the reaction there at the White House? Does the campaign believe its new ads are having an impact?

KING: It believes in time, they will. Lou, this is a calculated risk by the Bush-Cheney campaign. Any time a candidate launches negative or attack ads, you run the risk that voters will rule on your candidacy or your negative ratings will go up.

But the White House believes it is time to try to define Senator Kerry on its terms. So, in these new ads, they portray Senator Kerry as soft, perhaps lacking resolve, when it comes to the war on terrorism. They also portray him as someone who would raise taxes by $900 billion, perhaps even more, a calculated strategy by the Bush campaign to bring Senator Kerry's ratings down and to force Senator Kerry to spend in response what little money he has in the bank, Lou.

DOBBS: John King, thank you very much -- John King, our senior White House correspondent.

Senator John Kerry struck back at President Bush's latest television commercials with a new ad of his own. Senator Kerry's ad accuses the president of misleading America. The ad refutes the Bush campaign suggestion that Kerry favors a $900 billion tax hike. Over the past 10 days, the Kerry campaign has raised $7 million just over the Internet. And for its part, the Bush campaign spent $6 million on advertising in just the last week.

Still ahead, economists say our economy is booming. Millions of unemployed Americans, however, have reason to believe otherwise.

And insurgents kill another two American soldiers in Iraq, as the U.S. military carries out the largest troop rotation in more than half a century.

And in "Heroes" tonight, an American soldier who survived a deadly crash in Afghanistan tells her dramatic story.

And an American businessman is suing the Bush administration over what he calls an unfair defense of Chinese competition.

Stay with us.

(COMMERCIAL BREAK)

KING: Two more American soldiers have been killed in Iraq. A roadside bomb destroyed their Humvee west of Baghdad. The soldiers were killed as the military continues what is the largest troop rotation since World War II.

Senior Pentagon correspondent Jamie McIntyre reports -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: And, Lou, that rotation is on, with tens of thousands of U.S. troops heading over to Iraq and tens of thousands more coming home here.

The 122nd Engineering Battalion returns to Georgia. But the requirement to keep some 100,000 troops in Iraq for the foreseeable future means that many soldiers will be going back after getting just about a year off. Already, the 3rd Infantry Division from Fort Stewart, Georgia, who led the charge into Baghdad last March, have been alerted that they will start preparing to redeploy to Iraq by Thanksgiving.

And despite calls in Congress to increase the size of the Army to some 30,000 soldiers, Pentagon officials insist that, with 2.6 million troops in the U.S. military, they have got plenty of forces.

(BEGIN VIDEO CLIP)

GEN. PETER PACE, VICE CHAIRMAN, JOINT CHIEFS OF STAFF: The math is, with 2.6 million active Guard and Reserve, we can maintain 200,000, 300,000 folks deployed for the foreseeable future. The art part is how you do the balance and the mix that they the secretary is talking about, but also understanding whether or not you are in a spike or in a new plateau.

(END VIDEO CLIP)

MCINTYRE: So why do they have to send troops back so soon? Well, the Pentagon says the problem is the way the military is organized. They can't redeploy or they can't deploy a lot of the forces, because they are organized an old doctrine, too many artillery and air defense units, for instance, not enough battle-ready infantry.

That's why the Army is reorganizing its 10 divisions into smaller brigades, 48 combat-ready units that will give the Army much more flexibility. And the 3rd Infantry Division is the first division to be reorganized that way -- Lou.

DOBBS: Jamie, one can hardly imagine a soldier, a Marine right now, caring much about spikes and plateaus. All they know is that they are being rotated under a very accelerated schedule back into a very violent combat area.

What is the resistance on the part of the Department of Defense to enlarging the ground troops, the number of forces in uniform?

MCINTYRE: Well, they keep insisting that that would be, over the long term, a very expensive solution, costing billions of dollars and wouldn't necessarily give them any more capability now.

They are convinced that their plan to reorganize and get to a lot of those troops that are simply not deployable now will solve the problem. They are also saying that, while this sounds counterintuitive, that, despite the hardship on these troops, they are not really seeing a big problem with recruiting and retention. In fact, some of the units that have had the toughest assignments have had the highest reenlistment rates.

DOBBS: As you say, counterintuitive. When it comes to military, when we hear counterintuitive, it often means that somebody is not necessarily following common sense. But I'm pleased in this case, as you report, Jamie, that that is not the situation.

Jamie McIntyre, our senior Pentagon correspondent, thank you.

DOBBS: The Department of Defense today said a series of mechanical failures were to blame for the crash of a military helicopter. That crashed claimed five lives outside of Kabul, Afghanistan, in November. Aboard, 13 people. One of them from that crash is the focus of our "Heroes" tonight.

Casey Wian has a remarkable story from Huntington Beach, California.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Four years ago, Diane Gilliam was fresh from a failed relationship.

SPECIALIST DIANE GILLIAM, ARMY NATIONAL GUARD: When that guy and I broke up, I wanted to get the hell out of Dodge.

WIAN: So Gilliam joined the National Guard, which angered her family.

ANITA COYOLI, MOTHER OF DIANE: It was different than her career plans had been, which were to become a schoolteacher, so I was kind of shocked.

WIAN: Gilliam trained in Army intelligence and was sent to Afghanistan last August, where she interrogated Afghani prisoners.

GILLIAM: It was a wonderful experience for me, especially when we heard like it in the news that prisoners were being sent over to Guantanamo Bay. It was like, that's us.

WIAN: In November, the helicopter Gilliam and 12 others were traveling in suffered an engine failure.

GILLIAM: That's where you hear a pop, see some smoke and some sparks, and I thought we had been shot. But according to a sergeant who was on the helicopter ahead of us, they saw us and then they didn't see us. And I realized this was not going to be a hard landing. It was within seconds. I was like, oh, crap, we're going to crash.

WIAN: Looking at the wreckage, it's hard to believe anyone survived. Gilliam remembers a wall of flames and a brief sense of calm as she struggled to exit the inverted chopper.

GILLIAM: I looked to my right as I'm walking out where the fire was and there was a soldier on fire. And I'm looking out at him. And he's screaming. And I just can see the flames coming up his face. And I can see his mouth and his eyes. And he was just like, oh my God. He was like, help me, help me. Someone put the blames out.

WIAN: She and another soldier helped, but five others died.

Now home, Gilliam endures physical therapy to recover from injuries to her neck, collarbone, ribs and knees. She also has post- traumatic stress disorder, but wants to return to Afghanistan when she is recovered.

GILLIAM: The people in the country overall are really awesome.

WIAN: Her mom now embraces Gilliam's military service. And Diane still plans to be a teacher some day.

Casey Wian, Huntington Beach, California.

(END VIDEOTAPE)

DOBBS: And coming up next, it was a profession in crisis, the nursing industry facing a severe shortage of skilled workers just a few years ago. But a recovery may be under way. We'll have that story for you.

And sales were booming for this New Jersey manufacturer, that is, until a Chinese company undercut its product, its design, and now that New Jersey company is suing President Bush for failing to defend it.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: The nursing shortage in this country is critical. And over the past few years, there's been an effort to turn it all around, applications flooding into the nation's nursing schools.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Who wants to be a nurse? The answer used to be, not many.

CHERYL PETERSON, AMERICAN NURSES ASSOCIATION: We are looking to a very severe future shortage of nurses. The Bureau of Labor Statistics has projected that, by 2012, we'll need 1.1 million new registered nurses and that's to cover not the only new job growth, but also the retirement of nurses who are in the profession today.

PILGRIM: But suddenly, in this economy, nursing looks more attractive, the prospect of a steady job with guaranteed work at the end of a degree. This year, applications to nursing schools are up 16 percent after years of declines; 127,000 students enrolled in B.A. programs for nursing last year. More than 15,000 qualified applicants had to be turned away, simply because there was not enough room for them.

Nursing schools say the shortage has helped to drive up salaries.

GREG NEWSCHWANDER, CATHOLIC UNIVERSITY SCHOOL OF NURSING: The pay has advanced. And now entry-level salaries are about what they would be for most of the other baccalaureate-prepared professional careers.

PILGRIM: At Catholic University in Washington, the freshman nursing class is triple the usually size. Like many other schools, it now offers an accelerated program to give student a nursing degree in 20 months. Here, it is drawing student who are changing careers.

This student was a nuclear maintenance mechanic in the Navy.

UNIDENTIFIED MALE: I would like to go ahead and work emergency medicine or combat medicine, if possible, going back out with the Marines doing more front-line medicine, if possible.

PILGRIM: This woman wants to reenter the work force after being a full-time mom.

UNIDENTIFIED FEMALE: Whenever anyone's kid has a problem, everyone calls me to find out what I should do. I kind of like the knowledge base of it.

PILGRIM: But what they like best is the potential for a job where they are in demand.

(END VIDEOTAPE)

PILGRIM: Now, this may not solve the nursing shortage right away. Many of the new graduates are going into specialized care. And the hospitals are still facing a severe nursing shortage for the foreseeable future -- Lou.

DOBBS: Kitty, thank you very much -- Kitty Pilgrim.

Tonight's poll, the question: Do you believe the majority of us have an adequate voice in shaping the future of our country, yes or no? Cast your vote, please, at CNN.com/Lou. We'll have the results of the poll later in the broadcast.

Coming right up, an American company is challenging the White House tonight, saying the Bush administration's trade policy does more to protect the Chinese than Americans. We'll have a special report.

And jobs for America. Minority Leader Senator Tom Daschle says he has a solution, proposing legislation to protect American jobs.

And some say retraining is the answer for unemployed American workers who's high-paying, high-skilled jobs have been exported to cheap labor markets. A special report tonight, one test case on training.

But, first, some comments from Jay Leno on an example of misplaced priorities in corporate America.

(BEGIN VIDEO CLIP, "THE TONIGHT SHOW WITH JAY LENO")

JAY LENO, HOST: CNN is reporting five executives at Kraft Food received a $10 million bonus. They got $10 million in bonuses, while they laid off 6,000 workers. Well, duh, where do you think they got the money for the bonuses?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

DOBBS: The economy, jobs and outsourcing, huge issues in this election campaign. The latest consumer confidence report says voters concerns about the economy continue, and, to this point, they are unpersuaded by optimistic forecasts of most economists.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): We know it's a jobless recovery. Now it's turning into an anxious recovery, consumer confidence slipping in March. Confidence was higher two years ago, right out of the recession. What is wrong? Well, headlines like this one in "BusinessWeek," scenes like this one in Manhattan, long lines at a job fair where jobs were scarce.

UNIDENTIFIED MALE: At this present time, there are no definite openings. But what I would like to do is keep your resume on file.

LINDSAY STRICKE, SOCIAL WORKER: It's disheartening, because there are people of all ages, all backgrounds, all education levels who really want to work towards this country's productivity. And they are not being allowed because there just are not enough jobs.

VILES: Morgan Stanley now calculates, private payrolls are running 8.2 million jobs what would have occurred in a normal recovery. That's more than $400 billion in forgone growth and wages. Consumer spending is holding the economy together. But there are signs of stress, rising debt levels, record personal bankruptcies, surprisingly high rates of mortgage foreclosures in some areas.

JESSICA DAVIS, FORECLOSURE ANALYST: I think the economy, quite frankly, especially in New York, is very schizophrenic. You hear that it's getting better, but yet there's still a tremendous amount of people that are out of jobs.

VILES: Those stresses are worse in states that have lost the most jobs. The national rate of new foreclosures on home loans is 0.45 percent. But, in Ohio, it's double that, 0.91 percent. Foreclosures also roughly double the national rate in Indiana and South Carolina. All three of those states hard hit by lost jobs. (END VIDEOTAPE)

VILES: Economists continue to predict we will finally get meaningful job growth sometime later this year. Not nearly as big the Bush administration is predicting, if we don't get the job growth in the words of Morgan Stanley, jobless recoveries like this one are not sustainable. Can't go on like this, Lou.

DOBBS: And no one at this point can definitively say why in the world jobs aren't being created?

VILES: I mean, Steven Roach who has an $8 million estimate of the jobs that we should have in a normal recovery, he may be at the high end but that's a huge number. We don't have a convincing explanation of why the economy dosen't have those jobs.

DOBBS: We thank you very much. Peter Viles.

Senate minority leader Tom Daschle and fellow Democrats today introduced the Jobs for America Act. That bill would require companies that outsource jobs overseas to give notification before doing so. I talked to the senator earlier and asked him what prompted the legislation?

(BEGIN VIDEOTAPE)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: Well, we have a fundamental difference of opinion with the administration, Lou. They think outsourcing is good, we think it is horrible. We think we ought to be able to do the same things that are now being done overseas right here at home. We think these jobs ought to stay here and we think when they go abroad, the American workers ought to know when, why and how they are going to be affected, today they don't.

DOBBS: The idea that your legislation will require corporations to give notification, to whom would they give that notification and what would be -- how would that information be used?

DASCHLE: Well, they would have to give the information to the workers themselves. The workers would have to know just why the jobs are going overseas, when they are going overseas and where they are going. Right now, they are left in the dark. Sometimes, as we have seen, actually in South Dakota, people are told not to show up the next Monday on a Friday with no knowledge of what the reasons are and where the jobs are going.

So we think it's important that workers have a right to know. Even more important than right to know, though, we don't think the jobs ought to go there in the first place. We ought to try to do all we can to keep them here at home. That's the first step. God forbid they do go abroad, at least, the workers out to be given the information.

DOBBS: Alan Greenspan has said in effect that he is very concerned about the rising tide of what he called protectionism, do you view this legislation as protectionism? DASCHLE: I don't think there's anything protectionist about it. I think what we're trying to do is put an element of fairness into the market itself. We can compete with anybody, Lou, as you said many times, if we have a fair and balanced playing field. It's not fair today and we know that. The government, I think, is perpetrating many of these things. They are responsible in part. I think we need to hold our own government a lot more accountable than they are today.

DOBBS: The Commerce Department isn't compiling the information, the Chamber of Commerce, the business roundtable, a host of organizations, what can we do to learn more about who is outsourcing these jobs?

DASCHLE: I think it's an embarrassment to this country and to this government that we know so little about the economic condition of our country, that we can't say how many jobs are being lost. It is amazing to me. We talk about jobs gained or lost in this economy, well I'm sure we gained a lot of jobs, the problem is they are all in China and India right now. That isn't where they ought to be. They ought to be here at home. The fact we don't have any documentation to demonstrate what is happening in our economy shows how shortsighted this whole system really is today.

DOBBS: Senator Kerry has called for a 120-day review of all of the trade agreements, freetrade agreements. He is being pummeled for even the suggestion that there would be an adjustment to our trade agreements. You know that he's going to be called protectionist, he's going to be called probably worse than that.

DASCHLE: I think the first thing we've got to do, Lou, is just to reduce the hyperbolic rhetoric. That's the knee-jerk reaction. Any time you question -- I'm a free trader, I voted for every one of these free trade agreements so far. But I have to say I share the view of Senator Kerry and many others. Now has come a time when we've got to review whether or not they are working and what all the repercussions are. If we don't do that, if we don't make a better assessment of our circumstances today, the next time we are presented with a free trade agreement we'll be voting on it blindly. That's unacceptable and inexcusable. I hope we can avoid that. The first thing is to get the facts and that's all Senator Kerry is asking.

DOBBS: And Jobs for America Act, that would also produce some facts for all of us to take a look at. What do you think the prospects are of passage this year?

DASCHLE: I have to be honest with you, I don't think it's even 50/50. I think there's a lot of opposition in part, because the American business community is looking at this as yet another obstacle or impediment, I don't see it that way. There is a lot of opposition to it, but it's the right thing to do. We're going to keep fighting to see that it gets past one way or the other sooner or later.

DOBBS: Senator Daschle, thanks for being with us.

DASCHLE: My pleasure.

(END VIDEOTAPE)

DOBBS: A New Jersey company is suing President Bush and U.S. trade representative Robert Zolic (ph) for failing to protect American manufacturers. The company Motion Systems is challenging the White House to provide safeguards from a flood of Chinese imports. Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT: Motion Systems makes that little device used to make a dentist chair tilt up or down. It's also used in scooters for senior citizens. Business was great before 2001, before a Chinese company developed a nearly identical unit.

BILL WOLF, MOTION SYSTEMS CORP.: The Chinese manufacturer produces the unit and sells it for less than one-third of what we sell it for. In fact, it's sold for less than we can buy the materials for.

SYLVESTER: As sales dropped off, Motion Systems filed what is called a 421 petition at the International Trade Commission. That's a safeguard provision written into the law when China joined the World Trade Organization. It's supposed to protect American manufacturers from a surge of Chinese imports. The International Trade Commission agreed with Motion Systems that imports were causing market disruption and recommended quotas be put in place. But that never happened. Despite the ITC's ruling the Bush administration concluded that restricted imports would hurt the U.S. economy.

JIM WOLF, MOTION SYSTEMS CORP.: We are being told by -- to follow these set of rules. And then you follow those set of rules and then it's OK to change the rules. It's like playing in a crooked card game. No one wants to play.

SYLVESTER: This is not the only time this has happened. The International Trade Commission has reviewed five 421 China safeguard petitions. The ITC determined Chinese imports were disrupting the U.S. market in three cases but in each case the White House refused the ITC's recommendation for quotas.

TOM PUTNAM, MOTION SYSTEMS CORP.: This is the largest decline in manufacturing since the great depression. If everybody doesn't stand up and take notice of that, we are doomed.

SYLVESTER: Motion Systems is not done fighting. It has filed a lawsuit against President Bush and U.S. trade representative Robert Zolic to reverse the decision. That case is pending.

SYLVESTER: We asked the U.S. trade representative's office and the White House counsel for an interview, but they declined to comment. Lisa Sylvester, CNN, Washington.

(END VIDEOTAPE)

DOBBS: Tonight's thought is on some of the great threats to society. "The things that will destroy us are politics without principle, pleasure without conscience, wealth without work, knowledge without character, business without morality, science without humanity, and worship without sacrifice." Those are the words of Mahatma Gandhi.

When we continue, we'll have some of your thoughts and the story of one Massachusetts community devastated by outsourcing. For many, promising careers were replaced with less satisfying and certainly lower paying jobs. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Many of those who defend the outsourcing of American jobs to cheap overseas labor markets point to job retraining as a solution. The problem, however, is that it's very much an unclear proposition which jobs workers should be training for. In one Massachusetts community, thousands of people devastated by the loss of high tech jobs are struggling to find the next growth area. Louis Schiavone reports from Lawrence, Massachusetts.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT: This aging factory community has seen prosperity and decline but one enduring gem was the Lucent Technologies Operation the next town over. At its peak employing over 10,000 workers until the bottom dropped out of the U.S. technology market.

KAREN TWOMEY, 11-YR. LUCENT VETERAN: I loved working for Lucent, again it's very difficult being unemployed and having to live on unemployment.

BOB POMERLEAU, 7-YR. LUCENT VETERAN: I'm learning to get along with a lot less than I have been used to in the past, like a lot of people around here.

SCHIAVONE: When the dust settled on the two-year Lucent plunge, 4,000 employees here had been laid off. Today, fewer than a thousand work at the North Andover (ph) plant.

BOB HALPIN, PRESIDENT, MERRIMACK VALLEY EDA: It was quite devastating and the loss of 4,000 manufacturing jobs has had a spinoff effect of affecting another 2,000 or 3,000 jobs with contractors and vendors and other retail establishments. All of whom benefited from the high wage jobs.

SCHIAVONE: Business and government launched a rescue effort in 2002 nailing down almost $3 million in federal career assistance for the first 2,400 laid off workers and more is in the pipeline. The money has gone to networking, resume writing, job fairs, career and technology retraining, so far it hasn't been a miracle cure.

SHAW ROSEN, EXEC. DIR., MERRIMACK VALLEY WIB: The size of the layoffs that we had here, have simply not been able at this point even after retraining to obtain their current -- I mean, their previous wage levels. SCHIAVONE: For example, one Lucent customer service representative earning $45 an hour at the time of the layoffs went on to a similar job elsewhere at $16.35 an hour.

For many, Lucent's promising careers have given way to less satisfying jobs. From this aspiring labor relations position...

UNIDENTIFIED FEMALE: Now I'm an office manager for a dentist's office.

SCHIAVONE: To this former Lucent product manager now a nightshift process manager at a Gloucester (ph) fish producer.

UNIDENTIFIED MALE: I'm not better off in today's snapshot.

SCHIAVONE: Business leaders say the future lies in even more highly skilled math and science related jobs such as medical devices and testing, biopharmaceuticals and sophisticated homeland security and defense industries.

LYNN KARROLY, RAND CORPORATION: What the United States needs to do is to identify where in the world economy we retain our comparative advantage.

SCHIAVONE: It's a case where just networking or getting certified for last year's job may not be enough. Louise Giovani (ph) for CNN, Lawrence, Massachusetts.

(END VIDEOTAPE)

DOBBS: A reminder now to vote in our poll tonight, the question, "do you believe the majority of us have an adequate voice in shaping the future of our country? Yes or no." Cast your vote at CNN.com/lou. We'll have the results for you coming up.

Also ahead we'll be talking with the week's news makers, the editors of the leading business publications in the country. It was a tough week for investors and we'll have a complete wrap-up of the market with Christine Romans. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Now taking a look at some of your thoughts, many of you have written, of course, on exporting America.

Barbara Leigh Kaplan of St. Paul, Minnesota. "Mr. Dobbs, I always thought of you as a conservative but as I have watched you during the past months I've thought, wow, Lou is becoming more and more liberal because you've been giving voice to my concerns about outsourcing and the economy. What I realize finally is this is not a conservative/liberal issue. This is just an issue of right and wrong and of common sense.

Paul DiMare of Miami, Florida. "I saw your comments last night on free trade and couldn't agree more. I run a family-owned farming business that has been operating continuously for more than 75 years and we've been almost driven from business by this country's trade policy giveaways. Keep pressing on this issue, it's critical to the future of America.

And Christine of Hillsborough, New Jersey. "Well, after watching last night's segments on exporting America, I don't know whether to laugh, cry, or throw up. High paying middle-class jobs are leaving this country in droves. My husband lost his software engineering job to outsourcing. But according to one of your guests, that's what he should be training for because jobs for that field will double. Maybe in India they're doubling but not here."

We love hearing from you. Send us your e-mails at loudobbs@CNN.com.

On Wall Street today stocks recovered from yesterday's steep losses. The Dow up almost 112 points today, the NASDAQ booming up almost 41 points. The S&P up almost 14. Christine Romans is here with "The Market."

CHRISTINE ROMANS, CNN CORRESPONDENT: Why, that's the best rally in more than a month. Three stocks rose for every that fell but volume was weaker on this rebound. And the week was pretty miserable. It was the worst week in more than a year. The Dow, NASDAQ, and S&P each down 3 percent, the worst percentage decline since this rally began.

Stock investors unnerved by weakening consumer sentiment readings, massive twin deficits and the bleak jobs market. Lou, for Halliburton it was the worst week in more than two years. The stock fell 7 percent after company said its cash flow may be squeezed by government investigations into its work in Iraq. 7 percent in one week.

DOBBS: Halliburton, because of its connections, obviously, to the vice president previously, you would think that company would work diligently not to embarrass the former CEO?

ROMANS: It says it's a victim of mudslinging in an election year and it hasn't done anything wrong. It talked to investors today and said it doesn't expect to see any more problems with the Iraq issue. Everything is out on the table.

DOBBS: Excellent in a good way to end the week, even it was a down week in the market. Christine, thank you. Christen Romans.

Up next, we'll have the results of tonight's poll and we'll be joined by tonight's news makers. First a reminder to check our website for the complete list of companies we have confirmed to be exporting America. They now number more than 400. That's at CNN.com/lou. We'll continue in a moment. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of tonight's poll, 5 percent of you say the majority of Americans have an adequate voice in shaping the future of our country. 95 percent of you said they do not. That's we do not. We're joined now by tonight's news makers, Steve Shepard, who is the editor in chief of "Businessweek," Rik Kirkland, managing editor of "Fortune" magazine and Bill Baldwin, editor at "Forbes" magazine. Good to have you gentlemen with us. Let's start with the bad news, 3 percent decline in the market over this week. What does that suggest to you, Steve?

STEVE SHEPARD, EDITOR-IN-CHIEF, "BUSINESSWEEK": It suggests people are worried about jobs, the economy, and the prospect that Senator Kerry might be the next president.

DOBBS: You're going to put this on Senator Kerry?

SHEPARD: I think people are worried about that...

DOBBS: That is interesting.

SHEPARD: Because they see tax increases and worried a little bit about protectionism. I think that's in the market. I really do.

DOBBS: You looked at me when you said protectionism. (UNINTELLIGIBLE). Rik, your thoughts?

RIK KIRKLAND, MANAGING EDITOR, "FORTUNE": I agree with that. I think that the terrorism event rattled confidence, the fact stocks had been going up uninterrupted without a correction of any kind. I think people got a little nervous. The market supposedly looks six or nine months out and I think it looked out, maybe a new president, maybe a little less growth than we thought, pull back.

BILL BALDWIN, EDITOR, "FORBES": Maybe not only a new president but higher taxes. I don't think we're going to see those tax cuts being made permanent, do you?

DOBBS: Personally I don't, no. Nor do I think given a half trillion dollar budget deficit, should we, do you?

BALDWIN: Well, I wouldn't mind seeing my taxes going up for a better effort to combat terrorism. Maybe that will do something about the market (UNINTELLIGIBLE).

DOBBS: We just showed that poll which our viewers overwhelmingly felt that we were not able to adequately voice the shape of our future to play a role. Do you believe we should have these -- Kerry has said point blank, 200,000 plus your taxes are going up.

SHEPARD: Well, we have some structural problems and I think tax increases probably in the cards if Kerry wins. And I don't think -- I think Bush is going to have a struggle to get the tax cuts made permanent because the deficit is beyond a cyclical problem.

KIRKLAND: This notion of making them permanent. It's a funny debate. Reagan cut taxes in 1980 and they were cut until he raised them. That's just the way it is.

(CROSSTALK) DOBBS: There is a sense here in this debate, and I'm personally pleased that a lot of these issues are coming forward, issues on free trade, outsoucing, job creation, the nature of what we are as both a nation and an economy. But there seems to be this argument where people are saying it's all inevitable. We can't change policy, we can't re-examine policy. We can't adjust to new circumstances or simply refuse to recognize there are new circumstances. I can't recall a period anything like this. Can you, Steve?

SHEPARD: Well, I don't think that's the case. I think that there are things we...

DOBBS: You are not being helpful to my judgment.

SHEPARD: Now you tell me what you want me to do, oh!

No, I think we have a jobs creation problem in this country. I think it's important to analyze the problem correctly. I don't think the main reason is...

DOBBS: As your publication is doing this week, with "Where are the Jobs?"

SHEPARD: And the conclusion is that the problem is not outsourcing. The problem is productivity growth. Let me just give you two numbers.

DOBBS: Sure.

SHEPARD: 300,000 jobs have been lost to outsourcing over the last three years. That's the best estimate anybody has.

DOBBS: The "Wall Street Journal" today reported approaching 700,000.

SHEPARD: Over what period of time?

DOBBS: Over that period of time.

SHEPARD: The numbers I'm aware of...

(CROSSTALK)

SHEPARD: Let me just make the point, that when you get a 0.1 increase in productivity growths that 1.3 million jobs that are lost. Productivity is much more potent in preventing job creation than is outsourcing. So then have you to look at what to do about that.

(CROSSTALK)

BALDWIN: ...they got by with fewer people in the recession and they say, you know what, let's not rehire them even though our profits are up very strongly.

KIRKLAND: I am going to shock you, Lou, and sort of agree with you a little bit. (CROSSTALK)

DOBBS: Leave the studio!

KIRKLAND: Let me explain why. I think you don't have a real debate during the political season. You just have easy answers, easy solutions and blame. The truth is a lot of powerful people will privately agree with the notion that maybe something is different this time. That the process of globalizing and bringing on to the stage two countries whose combined population is 2.5 billion is at the margin changing things.

At some point we are going to have to have a serious debate about how we respond. It may not be -- I hope it isn't to raise barriers and shut down trade. We have to have a more adaptive economy, we have to think about healthcare, support for unemployed workers and that's a real debate we ought to be having.

DOBBS: This is something I find extraordinary. Actually Senator Daschle was talking about it earlier in the broadcast when we spoke. This hyperbolic rhetoric that the only alternative to free trade in writing a blank check. The U.S. trade representative, what a job he's got. We got a half trillion dollar trade deficit and he keeps talking about free trade. That's a half trillion dollars worth of trade as far as I'm concerned and the bill falls flat on Americans.

The question I have is the European Union has managed balanced trade for years. China manages balanced trade. Canada, Japan are surpluses. Why isn't that protectionist if we were to talk about balanced trade and be called protectionist here. I'm not sure I understand that. Can you help me out, Bill?

BALDWIN: The politicians are spending a lot of time on negatives, on losing jobs, on outsourcing. I would like to hear politicians talk a little bit more about creating jobs.

(CROSSTALK)

DOBBS: Bill, before do you that, answer my question. Which is, why, if they are managing balanced trade relationships, isn't that protectionism?

BALDWIN: The Chinese are protectionists...

(CROSSTALK)

DOBBS: What about the European Union?

BALDWIN: I don't think their economies are really enviable.

(CROSSTALK)

DOBBS: I'm talking about the trade balances.

KIRKLAND: I don't think they are managing those balances. They are managing the currency, no question about that. (CROSSTALK)

KIRKLAND: It swings up and down...

DOBBS: But they never come out of a range and the fact is that they are balanced trade policies.

SHEPARD: We have a trade deficit with Europe because we are growing much faster therefore we are importing from them than they do from us. And this won't change until the currencies adjust which...

KIRKLAND: We've had surpluses and growth too before.

DOBBS: We've had surpluses but not recently and we have a lot of trade surplus in this country for more than two decades.

SHEPARD: They have 10 percent unemployment rate in Europe. Is that what you want for the United States?

DOBBS: No, they have a 10 percent unemployment rate in Germany, 9 percent in France, it's quite different.

SHEPARD: On average, in the EU, it's about 10 percent.

BALDWIN: And Senator Daschle is going jobs even more available here by making it illegal to fire people. It might be that he'll just wind up making it harder to hire people. He'll wind up with a European solution.

DOBBS: I'll like to wind up with an American solution and as we were discussing earlier, the real choice is not false choice but hyperbolic rhetoric.

KIRKLAND: But the problem isn't the trade deficit. It really isn't. I mean, it's not the level of the trade...

DOBBS: You have ten seconds to tell us what the real problem is.

KIRKLAND: The problem is can we remain innovative and get jobs created again. How do you do it? That's the real issue. And the trade deficit is a residual number you'll measure.

DOBBS: Spur innovation. The way to do that is to send those jobs and those factories production overseas. We'll pick this up next week. And we're going to read all of your publications over the weekend to figure out all of the answers. Thank you very much, gentlemen.

That is our show for tonight. Thank for being with us. We hope you are have a great weekend. For all of us here good night from New York. "ANDERSON COOPER" is next.

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