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LOU DOBBS TONIGHT

Americans in Middle East on Alert; 9/11 Commission Places Blame on Clinton and Bush Administrations

Aired March 23, 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, the State Department puts Americans throughout the Middle East on alert. Protests in Iraq after the assassination of the Hamas leader, more threats from Hamas tonight.

UNIDENTIFIED MALE: We will continue our resistance until the end of Palestinian tragedy.

DOBBS: An independent commission blames the administrations of both President Clinton and President Bush for failure to pursue Osama bin Laden and the al Qaeda.

In our special report, "Middle-Class Squeeze," Americans least able to pay their medical bills face the highest hospital charges.

DIANNA JELLISON, UNINSURED PATIENT: It makes me very mad, very mad.

DOBBS: And fighting words from Commerce Secretary Don Evans tonight about the export of American jobs to cheap overseas labor markets. Secretary Evans says critics of overseas outsourcing are waving the surrender flag.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, March 23. Here now for an hour of news, debate and opinion, Lou Dobbs.

DOBBS: Good evening.

The State Department today put Americans on the Mideast on alert, telling them to take security precautions. That warning followed Hamas' threat to launch a new wave of revenge attacks. For its part, Israel rejected the condemnation of many nations for its assassination of the Hamas founder, Sheik Yassin. In fact, Israel says it will kill the entire leadership of Hamas.

Ben Wedeman reports from Gaza.

BEN WEDEMAN, CNN CORRESPONDENT: Yes, Lou.

Well, this evening, Hamas has actually appointed a replacement for the assassinated founder of that organization, Sheik Ahmed Yassin. His replacement at least for Gaza and the West Bank is Abdel-Aziz al- Rantissi, who is going to be in charge of Hamas operations in the area. Now, Mr. Rantisi is a well-known hard-liner. I have interviewed him many times, a very uncompromising person when it comes to any question of peace with Israel.

And, of course, Israel has on more than one occasion targeted Mr. Rantisi in the past. Now, in his first public statement as acting head for the organization in Gaza and the West Bank, he said that: We will fight the Israelis everywhere. We will chase them everywhere.

However, indications are that it will be Mr. Rantisi who will be chased. Israeli officials are saying that they will not let up in their campaign to eliminate the leaders of the Palestinian militant organizations, Israel's internal security minister saying that everyone in those Palestinian militant groups are now in our sights, in his words -- Lou.

DOBBS: Thank you very much, Ben Wedeman, from Gaza.

Anger and grief throughout the Arab world after the assassination of Sheik Yassin. There were violent protests in Iraq against the killing of the Hamas leader.

ITN's Julian Manyon reports.

(BEGIN VIDEOTAPE)

JULIAN MANYON, ITN REPORTER (voice-over): Fire-hundred miles east of Gaza, in Iraq's infamous Sunni Triangle, they protested against the killing of Sheik Yassin. This was Ramadi, scene of repeated clashes between American troops and insurgents.

And the protests soon turned ugly as the demonstrators set fire to a police car. While U.S. troops stood back, newly trained members of the Iraqi police force moved in to try to disburse the crowds. They soon resorted to gunfire. The demonstrators fled for their lives, but several were hit. One man was shot in front of the camera. His friend picked him up and carried him off down the street to safety.

Other sections of the crowd were driven off in the same brutal fashion. But in the frenzy that Sheik Yassin's name seemed to inspire, one demonstrator challenged a policeman to shoot him. Instead, the Iraqi policeman ran away to join his fellow officers.

Worryingly for the coalition, police discipline seemed to break down on a day when trouble in Iraq was sparked by a killing far away in Israel.

(END VIDEOTAPE)

DOBBS: That report by ITN's Julian Manyon.

Elsewhere in Iraq today, insurgents killed Iraqi 17 police officers and trainees. Nine of those killed were ambushed near Hillah south of Baghdad as they traveled to work in a minibus. Two other police officers were killed in the northern Iraq city of Kirkuk. In Washington today, the commission investigating the September 11 attacks criticized both the Clinton and Bush administrations for their failure to pursue Osama bin Laden and al Qaeda. The commission said the use of diplomatic rather than military options allowed al Qaeda leaders to escape. While the commission's focus includes intelligence failures, today's emphasis was on the military.

Among the day's witnesses, Defense Secretary Donald Rumsfeld and his predecessor in the Clinton administration, William Cohen.

Senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT (voice-over): The 9/11 Commission's report zeros in on the reluctance of the U.S. to launch any follow-up strike against Osama bin Laden after a failed 1998 cruise missile attack in Afghanistan as well as the lack of retaliation for the 2000 al Qaeda attack against the USS Cole.

UNIDENTIFIED MALE: Other than that, there wasn't anything. And 19 men as a consequence defeated us utterly with less than a half a million dollars.

MCINTYRE: Top Cabinet members from both the Clinton and Bush administrations insisted there was never enough actionable intelligence to launch a successful snatch-or-kill mission. But the commission revealed at least three times when bin Laden was spotted, including one confirmed sighting in February of 1999 at a desert camp in the Helmand province of Afghanistan.

PHILIP ZELIKOW, EXECUTIVE DIRECTOR, 9/11 COMMISSION: The lead CIA official in the field felt the intelligence reporting in this case was very reliable. The UBL unit chief at the time agrees. The field official believes today that this was a lost opportunity to kill bin Laden before 9/11.

MCINTYRE: Under the Clinton administration, the U.S. military had no armed Predator spy drones, so couldn't take a shot at a man thought to be bin Laden. But even the Bush administration argued that wasn't a failure.

COLIN POWELL, SECRETARY OF STATE: It was a crash effort all during 2001 the first seven months of this administration to get it armed. And it was armed in September. And as soon as it was armed, as soon as it was tested, and we knew what it could do, it was used.

MCINTYRE: Powell's predecessor, Madeleine Albright, complained that during her tenure the Pentagon was too timid, failing to offer President Clinton aggressive military options for fear of failure.

MADELEINE ALBRIGHT, FORMER SECRETARY OF STATE: From my perspective, the Pentagon did not come forward with viable options in response to what the president was asking for.

MCINTYRE: But former Defense Secretary Cohen said a range of options, including a special forces hunter-killer team on alert to get bin Laden, were useless without good intelligence.

WILLIAM COHEN, FORMER SECRETARY OF DEFENSE: There were three instances each time the munitions and the people were spun up, that they were called off because the word came back, we are not sure.

MCINTYRE: And Cohen's successor argued that, since al Qaeda sleeper cells were in the U.S. years before September 11, killing bin Laden would likely not have prevented the 2001 attacks.

DONALD RUMSFELD, SECRETARY OF DEFENSE: And, ironically, much of the word would likely have called the September 11 attack an al Qaeda retaliation for the U.S. provocation of capturing or killing bin Laden.

(END VIDEOTAPE)

MCINTYRE: The point of the commission's inquiry is to find lessons learned, not necessarily assign blame. But there was plenty of finger pointing today both between Bush and Clinton administration officials putting at each other, and even within the Clinton administration, finger pointing between the State Department and the Pentagon -- Lou.

DOBBS: Jamie, thank you very much -- Jamie McIntyre, senior Pentagon correspondent.

President Bush today said that he would have taken action against al Qaeda much earlier had he received a warning about September 11. It was the president's first direct response to criticism from former White House counterterrorism adviser Richard Clarke. Clarke's book was today cited by a Democratic member of the 9/11 Commission, former Congressman Timothy Roemer.

Senior White House correspondent John King has that story -- John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: And, Lou, the White House taking offense at Clarke's book, especially the points that the administration, Clarke says, ignored the al Qaeda threat because it was so obsessed with Iraq.

Dick Clarke even saying in that book and in the interviews to promote it that perhaps if President Bush had done more he could have prevented the September 11 attacks. Mr. Bush was asked about the book today during a meeting here in the Cabinet Room at the White House. The president says the American people should have no doubt at all about the bottom line.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: George Tenet briefed me on a regular basis about the terrorist threats to the United States of America. And had my administration had any information that terrorists were going to attack New York City on September 11, we would have acted.

(END VIDEO CLIP)

MCINTYRE: The administration's credibility at issue in that new book by Richard Clarke, also at issue and under question in those public hearing by the 9/11 Commission. As part of its effort today to mount a counteroffensive, if you will, to the Clark book, the White House released his resignation letter dated January 30, 2003, just 14 months ago, in which Dick Clarke stepped down from his post on the National Security Council and said that it had been an enormous privilege to serve in the Bush White House for two years.

Richard Clarke going on in that letter to wish the president well as he confronted the terrorist challenges in the days ahead. Lou, the White House bottom line is this, that in two years in the Bush White House and even after he left the Bush White House, Richard Clarke never raised these criticisms. The White House says he is making them now to sell a book and perhaps influence a presidential campaign -- Lou.

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

And later here, I'll be talking with former CIA Director James Woolsey about al Qaeda, its possible links with Saddam Hussein's former regime.

And a disturbing report about the huge cost of medical care in this country for Americans who are least able to pay their hospital bills.

Commerce Secretary Don Evans today launched an incredible attack against people who have the temerity to criticize the export of high- paid American jobs and record trade deficits.

That story and a great deal more still ahead here.

(COMMERCIAL BREAK)

DOBBS: Commerce Secretary Don Evans tonight will defend vigorously outsourcing. In a transcript of prepared remarks the secretary will deliver to the World Affairs Council in Washington, Secretary Evans cites the internationalism of Franklin and Theodore Roosevelt in charging that -- quote -- "The emerging economic isolationism and its undercurrent of unspoken nativism must be firmly and forcefully rejected."

The secretary also says -- quote -- "America is not a fortress. It is a bridge. And the traffic on that bridge goes two ways, exchanging jobs, trade, profits and prosperity. Economic isolationists are waving a surrender flag, rather than the American flag."

Meanwhile, Gerhard Chancellor Gerhard Schroeder took an entirely different view. The German chancellor in fact condemned the practice of outsourcing in Germany, calling it unpatriotic, Schroeder's comments reported in "The Financial Times" among the first public statements against outsourcing in Germany. And that brings us to the topic of tonight's poll. The question: Do you believe pursuing a balanced trade policy and opposing the export of American jobs to cheap overseas labor markets is economic isolationism or responsible economic policy? Please cast your vote at CNN.com/Lou. We'll have the results for you later in the broadcast.

President Bush is under mounting pressure to block legislation that would ban the export of American jobs to cheap foreign labor markets. The president's Export Council -- and that's a team of his top economic advisers as well as private advisers -- has drafted a letter to the president in which they wholeheartedly endorse outsourcing.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): In a draft letter to President Bush, the president's Economic Council not only defends shipping jobs overseas, but argues worldwide sourcing creates net value for the U.S. economy. The council's members include CEOs of multinational corporations, such as Caterpillar, Dell, and the Marriott Corporation.

It also includes key members of the president's economic team, the secretaries of commerce and labor and the U.S. trade representative, all coming down in favor of offshoring.

JOSH BIVENS, ECONOMIC POLICY INSTITUTE: It's a very interested group writing this letter. It is essentially a brief on behalf of U.S. multinationals. It essentially says outsourcing is very, very good for us. I think they are right. Outsourcing is very, very good for U.S. multinationals. What is left unanswered is, is it good for American workers?

SYLVESTER: Two-point-three million people have lost their job since President Bush took office. It's a tough sell convincing Americans that outsourcing jobs benefits them. Last month, when White House Chief Economic Adviser Gregory Mankiw openly embraced sending jobs overseas, he ended up backpedaling a few days later.

LAEL BRAINARD, BROOKINGS INSTITUTION: The remarks in the economic report of this president on offshoring were for this president what the supermarket scanner was for his father 12 years ago. They really captured for the American people their sense that he is out of touch with their basic concerns.

SYLVESTER: The president's council argues that more foreign companies are moving to the United States and American companies are leaving for overseas. But critics say there's a big difference. When American companies move offshore to India and China, they are opening new factories and creating new jobs. When a foreign company moves to the United States, it often is acquiring an existing factory. That's what happened when Mercedes-Benz merged with Chrysler.

ALAN TONELSON, U.S. BUSINESS & INDUSTRY COUNCIL: They kept the same factories here. They employed the same workers. They kept turning out automobiles and, in fact, they even had the same label.

SYLVESTER: The president's Export Council turned down our request for an interview. A few hours after the letter was posted on the council's Web site, someone decided to take it down.

(END VIDEOTAPE)

SYLVESTER: A statement was released from a senior Bush administration official saying: "There are economic isolationists in our country who believe we should separate ourselves from the rest of the world by raising up barriers and closing off markets. They are wrong" -- Lou.

DOBBS: Economic isolationism. The Bush administration insists that there is no alternative to the free trade that's led to record trade deficits, but economic isolationism. I know of no one talking about economic isolationism. Do you?

SYLVESTER: Well, this is a popular buzzword this week here in Washington, the sense that by putting up trade barriers that we're somehow trying to surround ourselves or to separate ourselves from the rest of the world. But, in this case, what most people would say is, it's not that. What they want is fair trade and they don't necessarily want to back away from free trade -- Lou.

DOBBS: Lisa Sylvester, thank you very much.

General Motors today said it would export 13 times as much white- collar work in the coming year as it currently does. General Motors' new plan comes in an internal memo first reported by Ed Garsten of "The Detroit News." That General Motors memo calls for an increase in investment in outsourcing from $3.5 million to $48 million this year.

Half of the work will be exported to Canada. General Motors wouldn't tell us where the other work is going. General Motors isn't the only case, of course, of exporting American work. One recent editorial cartoon pokes fun at just how widespread that practice has become. It shows a father speaking to his little daughter saying, no, you may not outsource your homework to India. Our thanks to Jeff Koterba of "The Omaha World Herald."

Still ahead here, rising health care costs are squeezing the middle class. Many hospitals are taking utter advantage of Americans who can't afford health insurance. They are having to pay the highest prices for medical care. We'll have a special report next.

And former CIA Director James Woolsey says it's a mistake to assume there was no al Qaeda-Iraq connection before September 11. The former CIA director is our guest tonight.

All of that and a great deal more still ahead here.

(COMMERCIAL BREAK)

DOBBS: A new warning about Medicare tonight. The Medicare trustees now say the system will have to start digging into its trust fund now. The trustees also warn that the system will be broke by 2019. That's seven years earlier than the estimate just last year. They blame the problem on the new prescription drug law. The White House blames the problem on rising health care costs.

This week, we are reporting extensively on those rising health care costs and how they are squeezing the country's middle class. Tonight, higher hospital bills for the uninsured. Millions of Americans who cannot afford insurance often end up paying more for health care than insurance companies and the government.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): Ed and Dianna Jellison are still paying the price for a trip to the hospital two years ago. Suffering from encephalitis, a viral infection, Ed was hospitalized 17 days.

JELLISON: My whole world had been turned completely upside down. We lost our business. My husband wasn't going to be the same again. Everything had changed.

VILES: They paid $30,000 in doctor's bills, but then another bill came from Florida Hospital, $116,000. The Jellisons had no health insurance. If they did, the insurance company would have been charged a fraction of that amount.

JELLISON: It makes me very mad, very mad.

VILES: But that's the way hospital billing works. List prices are wildly inflated, but insurance companies don't pay those high prices. Only the uninsured do.

K.B. FORBES, WWW.CONSEJOHELP.ORG: It is outrageous that they price-gouge a working-class, middle-class family here in the United States. It's all about greed. All they wanted to do was suck out the hard-earned assets of this family.

VILES: These are cases K.B. Forbes has analyzed. An appendectomy, the bill to Medicare would be $10,000, to an insurance company, $12,000, but if you are uninsured, $29,000. A broken leg cost Medicare $4,800. It costs an insurance company $5,400. Cost if you have no insurance, $15,000.

Still, the hospital industry says it loses money treating the uninsured.

CARMELA COYLE, AMERICAN HOSPITAL ASSOCIATION: We have 44 million Americans who have no health insurance coverage at all. And while they come to America's hospital emergency departments and are able to receive care, there is no payment that's ultimately received for many of those patients. VILES: The Bush administration's point man on this, Tommy Thompson, is urging hospitals to offer discounts to the uninsured and some hospitals are doing so.

(END VIDEOTAPE)

VILES: We talked to Florida Hospital about the Jellisons. The hospital denies that there is any price-gouging here, but admits the Jellisons' bill probably exceeds the hospital's cost of treating them, the byproduct, the hospital says, of a dysfunctional billing giving huge discount to the biggest customers, no discount to the little guy. And this is the system -- if you can call it a system -- all over the country, Lou.

DOBBS: Well, that is remarkable. A dysfunctional billing system is hardly a satisfactory explanation to the Jellisons staring at a $116,000 hospital bill?

VILES: Right.

Essentially, what the hospitals are saying if you push them on this is, yes, there's a crisis here. We didn't create it. And we can't fix it. We lose money on Medicare. We lose money on the uninsured. What do you want us to do? The government does need to step in here at some level. And Tommy Thompson has done so, saying to the hospital, you can go ahead and cut them a lower rate. The hospital is somewhat hesitant to do that.

DOBBS: Well, hesitant because they're the only people who don't have representation.

VILES: Right.

DOBBS: The insurance companies have adequate representation in Washington. The hospitals certainly do.

Pete, thank you very much. A disturbing story. Appreciate it.

This week, we've been reporting extensively on those health cares costs, and we will continue to do so.

Coming up next, the secretaries of defense and the department of state will be focusing on the 9/11 Commission. Former CIA Director James Woolsey is our guest.

The surge of immigrants and illegal aliens into this country has bitterly divided the nation's oldest environmental group. The president of the Sierra Club, Larry Fahn, is our guest tonight.

(COMMERCIAL BREAK)

DOBBS: Senior officials from both the Clinton and Bush administrations today testified before the independent commission investigating the September 11 attacks.

National security correspondent David Ensor has our report -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Lou, the commission's staff director told of three different times during the Clinton administration when the CIA thought it might have had Osama bin Laden in its sights, once in particular, at a desert camp in Afghanistan in February of 1999, where he stayed for a week.

The problem, Philip Zelikow said officials told him, was that bin Laden was staying near senior officials and a prince from the United Arab Emirates who were there to hunt and to see him. There was hesitation, and the opportunity was quickly gone, according to Zelikow.

Now, former Defense Secretary William Cohen said, however, that he does not believe they ever had a clear shot at bin Laden. The commissioners grilled both the Clinton people and the current secretaries of state and defense about why they didn't do more against al Qaeda before 9/11. The same charge made by Richard Clarke, the former terrorism czar. He was much quoted during the hearing.

Both administrations said there wasn't enough -- quote -- "actionable intelligence." And Wednesday, the commission will get a chance to ask why not of George Tenet, the director of central intelligence, and to hear more detail on Clarke's charges from Clarke himself. And those charges, of course, are mostly against the Bush administration that it dropped the ball on al Qaeda early on.

A number of witnesses, though, have been saying that it may not really have been possible to stop 9/11 even if bin Laden was killed and other actions taken against the leaders. The sleeper cells, after all, were already in the United States Lou.

DOBBS: David, thank you very much -- David Ensor.

My next guest served as director of the CIA for two years during president Clinton's first term. James Woolsey joins us now from our Washington bureau.

It's good to have you here.

The fact is that there seems to be plenty of blame placed on both the Clinton administration and the Bush administration. Are you surprised that it's being so even-handed, this commission?

JAMES WOOLSEY, FMR. CIA DIRECTOR: Well, I'm glad if that's the approach, because they really do need to look at the whole picture. I think that one very important issue here, Lou is whether there had been any ties between Iraq and al Qaeda back in the 90s. And, you know, George Tenet wrote in 2002, October 7, to the Senate, saying that there were senior level contacts going back ten years, senior al Qaeda in Iraq and training by the Iraqis of al Qaeda in, quote, "poisons, gases and conventional explosive."

So although there are a number of people, some of who served at senior levels in the Clinton administration, who don't want there to have been any contacts of any kind and don't want to admit it between al Qaeda and Iraq, I think including Dick Clarke, because then they would be charged with not having done enough to lean on Saddam. I think those contacts are clear at least in George Tenet's eyes and there's been more detail come out since.

DOBBS: Dick Clarke, Richard Clarke, asserts there were no clear ties between the September 11 attacks and Iraq. You obviously -- what would be the reason for him to say? He was in charge of counterterrorism at that point.

WOOLSEY: There may not have been Iraqi ordering of 9/11. The contacts going back a long time are clear. Clarke, on page 95 of his book, which I've just been reading, has at least three important misstatements. First of all, he does not seem to recognize at all that one of the major plotters in the '93 attack on the World Trade Center was an Iraqi citizen, went back to Iraq after the attack, was seen by ABC News in Baghdad outside his father's home and was told that he was being taken care of by the Iraqi government.

And reports of documents we captured during the invasion indicate that Yassin was on a monthly stipend from the Iraqi government and was given a house. Why would the Iraqis do that with one of the World Trade Center bombers of '93 unless they had some kind of relationship with him. Clarke doesn't even seem to be curious about something like that.

DOBBS: Jim, one of the things that struck me in today's testimony, listening to former Senator Bob Kerrey, who I thought did a remarkable, candid, straightforward, evenhanded job, he goes back through, actually the late 80s, 90s, through the Clinton administration, through the Bush administration, the USS Cole, the first attack on the World Trade Center, the millennium attacks, the attacks on our embassies in Africa, the USS Cole and, of course, September 11. My God, all of that was known to be al Qaeda. How in the world could two administrations frankly be so ineffective in dealing with a demonstrated threat?

WOOLSEY: Part of the problem may have been that some of the senior analysts in CIA, DIA and some of the White House staffers got locked into early the view that al Qaeda had nothing at all to do under any circumstances with any governments and they missed some connection with governments. Look, Clarke in his book creates out of whole cloth the notion that some of us whom he calls part of a cult believe that Ramzi Yousef was not really in prison in Colorado. In fact, he was, as Clarke puts it, lounging beside Saddam Hussein as a mastermind of Iraqi intelligence during the 90s. It's nonsense. None of us has said anything remotely like that.

We're curious about whether or not this young Pakistani who lived in Kuwait was born there, Abdul Bassir (ph) became -- changed his name to Ramsey Yussef and became a terrorist or whether there had been some kind of theft of his identity. For Clarke to say something like that is like the 13th chime of the clock. Not only is it bizarre in and of itself, it calls into question, as far as I'm concerned, everything from the same source.

DOBBS: Jim Woolsey, this commission working hard, diligently a great deal of time being spent. What in your estimation will be the productive positive result from this commission's findings?

WOOLSEY: I think they need to go back and question everyone's assumptions back to the early and mid 90s about al Qaeda, and governments. And look hard at whether their objectively, whether there were any ties between al Qaeda and Iraq, between al Qaeda and Iran. There are a number of things al Qaeda did that I think it's going to be difficult in time for people to sustain saying they did completely alone and unhelped by anyone who was, you know, had some fake passports, whatever. Look, Lou, it doesn't mean that any organization were under the command of the others.

I look on them as sort of like Mafia families. They hate each other, they kill each other from time to time. They insult each other but they are capable of cooperating here and there. And the people like Clarke who have been saying they never work together under any circumstances I think those assumptions need to be questioned vigorously by this commission and others.

DOBBS: You are the professional. When you talk about questioning assumptions, I think there's sort of a reflex from most of us mere civilians we hope our intelligence experts are constantly challenging assumptions and assessing a word straightforwardly. Does it concern you and we've only got a few seconds but I would like to know. We're spending an inordinate amount of time looking in a rearview mirror rather than forward. Does that concern you?

WOOLSEY: To some extent. We need to get the past as clear as we can in order to understand the future. The assumptions a lot of people made is those organizations never touched base with one another, never cooperated on anything. I think maybe the major misleading thing that was done to all of us by the intelligence agencies from the mid 90s on and by people like Clarke.

DOBBS: Jim Woolsey, thank you very much for being here.

WOOLSEY: Good to be with you.

DOBBS: Still ahead tonight, immigration divides the nation's oldest environmental group in a bitter power struggle. We'll be joined by the Sierra Club's president, Larry Fahn.

And the collapse of globalization? The brilliant essayist and author John Ralston Saul joins us. He is convinced that globalization is dead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Police in Mexico have dismantled one of the country's largest alien smuggling rings. 26 employees of Mexico's national immigration institute have been arrested and authorities suspect dozens of other current and former government employees are involved. Mexican officials say the organization smuggle Latin American and Asian immigrants into the United States for as much as $6,000 each. Mexico's attorney general has asked the United States to investigate whether any U.S. officials or alien traffickers were involved in the ring. My next guest says the Sierra Club should not be tackling the issue of immigration. He says it's a global issue rather than a national issue. But immigration is dominating the current campaign for the board of this country's oldest environmental group. Joining me now is Larry Fahn president of the board of directors of the Sierra Club. Larry, good to have you hear.

LARRY FAHN, PRESIDENT OF BOARD OF DIRECTORS, SIERRA CLUB: Good to be with you, Lou.

DOBBS: We're hearing from a lot of your membership. There is a lot of interest in this issue. We had former governor, former Colorado Governor Lamm talking about this issue. He sees a direct connection between the issues of excessive population growth and the environment, you do not, why?

FAHN: Well, Governor Lamm is now running for our board of directors and wishes to make that a big issue with the Sierra Club. And the Sierra Club's membership decided six years ago that we would focus our efforts on the global aspects of the problem. And just like the issue of outsourcing which you spend so much time talking about. We have a Bush/Cheney administration that has a free trade agenda that is keeping us on a race to the bottom. Jobs are going to the places with the lowest environmental standard and the lowest labor standard, the lowest wages. That's exacerbating the problem.

Another thing that's happened is the Bush administration upon coming into office reinstated the so-called global gag rule to play can placate the far religious right of his Republican base. That has had the effect of drastically reducing family planning assistance, birth control education, birth control services, exacerbating the problem that is caution people to want to come here.

DOBBS: Well, Larry, I have to say, it's obvious you're not afraid of controversy and going to obviously difficult political issues.

Why the resistance to the issue of immigration?

FAHN: Well, immigration is just been one issue that has divided our membership and our leadership very, very badly. And we have always been...

DOBBS: Let me understand this. The correlation between population and environment seems straightforward at least to me. Why would that be a decisive issue, especially in your part of country?

You water rights issues. It's extra order the demands on the environment as a result of the population growth in the southwest in particular.

FAHN: Well, it's true. There's population growth issues in a lot of parts in he country. But once again the Sierra Club has been taking it on in different context. We're working on issues of sprawl and land use planning, urban growth boundaries. What has happened is a large number of Sierra Club volunteers from all around the country led by 13 of our former presidents were very, very alarmed that a lot of folks were coming in with the agenda that does not match with the Sierra Club's agenda. We've been working on wilderness protection, national parks, and we were founded by an immigrant back in 1892. We would like to continue with our core agenda and also deal with the global aspects of population.

DOBBS: You have had an immigration policy that addressed the issue of overpopulation before the 199 -- was it 1998 vote, 1996?

FAHN: Well, yes.

DOBBS: Why did you reverse it at that point?

FAHN: Well, I think what happened was people were coming forward that wanted to make it a major environmental campaign issue for the Sierra Club, and a majority of the leadership at that time, in fact at that time I think our board was unanimous that that was not something we wanted to do. So we put it up to a vote of the members and by a 60/40 margin they decided to stay out of the debate on what the numbers should be. You know, pulling up the Statute of Liberty, pulling up the drawbridges and saying no more people could come here, it just moves the problems to other places. It's not the issue. It's not the solution. It's a global dilemma and we think...

DOBBS: The same thing, Larry of any other issue. You could talk about it in terms of gas-house, emissions, you could be talking about it in a host of issues, but it seems that there is an inherent rejection of this issue that you're not articulating. For example, the board has said that some of those running for the board having racist and anti-immigration ties.

FAHN: That's, that's not what we said. What happened, Lou...

DOBBS: Said you said it.

FAHN: No one said they have racist ties. What happens is this issue polarizes people and it does bring people out of the woodwork with racist tendencies that come forward and are trying to influence our election. And some of these candidates have unwittingly become supported by some very pernicious types. We want nothing to do with those people and we just as soon stay clear of the issue.

DOBBS: But the issue keeps coming forward and it's been asserted by amongst others the Southern Poverty Law Center. But two of the people have been recognized for the contributions such as the NAACP and the Democratic Black Caucus. There seems to be an intense avoidance of this issue, I think intellectually one has to assume is attached to the environment, whether we're talking about China, whether we're talking about California, or New York.

FAHN: Well, we have nothing against those candidates with those good credentials. But most of the candidates that have forth this year, have run for board by petition and they have absolutely no experience in our organization. They haven't come up through the ranks. They are not familiar with how our organization works. And they have made some very scurrilous allegations that we have been, for example, spending Sierra Club resources to defeat their campaign which is nonsense. A group of people have collectively called a new coalition called groundswellsierra.org and they are running an independent campaign to alert people to the agenda of some of these outsiders.

DOBBS: Larry Fahn, we appreciate you being with us. President of the sierra club, come back soon.

FAHN: Thank you.

DOBBS: When we continue, I'll be joined by author, essayist and thinking, John Ralston Saul. He says globalization hasn't delivered and he makes some very strong arguments about several important issues facing this country and, indeed the world. He says globalization is dead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: My guest says globalization is dead. He's the author of an essay laying out a powerful argument on what he sighs as the collapse of globalism and the rebirth of nationalism. The eminent John Ralston Saul in this month's "Harper's" magazine argues the ideology of globalization, like most other grand economic theories has run its course. Saul offers dozens of examples how globalization has failed to live up to its bold promises leading to, in some part, the rebirth of nationalism. He points to the perfectly held almost religious belief that free markets would create economic and social equality and worldwide democracy is one example of the broken promises of globalization.

John Ralston Saul joins me now. I have to tell you it's a great pleasure to be here.

JOHN RALSTON SAUL, AUTHOR, "ON EQUILIBRIUM": Great to be here.

DOBBS: A brilliant article. I don't do this too often, but if I may I'm going to recommend to our viewers that they pick up this edition of "Harper's" and read, because whether they agree with you or not it's proactive and good stuff.

SAUL: It's good to get people thinking even if they don't agree.

DOBBS: Absolutely. It's always nice to have them agree.

SAUL: Fifty percent or what's ever.

DOBBS: The idea that globalization is dead particularly in the concept of these times in which we're dealing with the issues of outsourcing, immense trade deficit, a difficult world given terrorist threat, what do you mean by that?

SAUL: Well, you know, economic ideologue, you know, it's an ideologue when people say it's inevitable and there's no way back, you know your into dream lands. The more you hear that it's inevitable the more you know you're near end. And they usually last 25 to 50 years. The Soviet Union had a little longer run, but they had a secret service. They had a lot of guns. But most -- you know, even Keynesian lasted about half a century. And the last time we did deregulated markets from 1890 to 1929, so really this is really sort of a technocrat's version of what ended in 1929, and, you know, basically if you try to look at the world through the prism of economics, things like families, life, democracy, gets pushed to the edge and you get into a greater and greater instability and eventually it sort of kills itself. I guess that's sort of where -- we're near that edge now.

DOBBS: That edge, and some might even say we've crossed that edge for it strikes me now in this campaign year here, this country, the idea that there is an issue of free trade versus economic isolationism creating polar extremes, neither is true. But perfectly labeled. The idea that the inevitability about free trade and globalization. You don't hear people talking about any other part that the markets will take care of it, that free trade is the panacea for every ill. How do we get to that point?

SAUL: I think after 9/11 when the world started dropping into the most terrible depression. And the people who were supposed to save the day, which was the marketplace, the natural balance, the leaders of the trans-national corporations sort of disappeared because they had to look at their own bacon. We were pulled out of that basically by the governments of the nation states. So suddenly the nation states rediscovered themselves.

And actually quite successfully stopped us from going into this depression. I suppose we're at a stage now where the effects of a certain kind of deregulation and of trying to see the world almost entirely through trade, is leading to things like cheap money, chasing cheap jobs or money chasing jobs, jobs chasing money. And it leads to the return of kind of boom and bust cycles but there are new kinds of boom and bust cycles and one of them is instability of communities because jobs move around so fast. They're going to move but not so fast.

DOBBS: As you point out in your article, these laissez-faire wonderful free market solutions, quote, unquote, these aren't exactly new. Going back to the 20s, much of the same thinking was at hand?

SAUL: Yes. There has never been a successful civilization in the West that didn't have a healthy free market. The free market is absolutely essential to a healthy stable society. On the other hand, the free market really only works in a kind of calm situation, it's as if it is jumping up and down on a spring bed. Well, the mattress is a solid civilization, it's a proper regulation, it's things which mean that you're not going to get a company's racing about looking for a better place. Look at northern Mexico, you know, it looked like everything was going to northern Mexico. As soon as northern Mexico standards started to rise, because things were going there, something moved on somewhere else.

DOBBS: When manufacturers discovered that there was cheaper labor.

SAUL: Somewhere else. DOBBS: In China, than the $2.50 that many were making...

SAUL: So that in ten years, the last ten years the real value of the minimum wage in Mexico has gone down by 21 percent. It's a very temporary gain. The idea that taking more care about the way one does trade will actually harm (UNINTELLIGIBLE) isn't true. We have to take more care in general about how we do trade which doesn't mean closing the borders.

DOBBS: A suggestion that, for example, citizens of this country or any other are more than just consumers or investors or workers, they are actually citizens who have lives, families, needs that are to be met by the nation state as well as the economy.

SAUL: We just, you know, I do think that the heart of democracy is the citizen. That's where legitimacy lies. If the citizen can't find some kind of stability inside their community, then democracy can't work. Remember that Argentina, up until about 1930 had a higher per capita standard of living than places like Canada and Australia. It was a dream. What went wrong? What went wrong in many ways was it lost that sense of the power of the small citizen. That sense of stability.

DOBBS: That citizen in this country is generally referred to as the middle class, working men and women in this country which has always been the pride, the foundation of both our society as well as our economy. The middle class in this country is under an assault that it hasn't seen since certainly the 1930s. What would be your thoughts about the future for both the middle class, the relevance of the middle class, the success of this country and it's future?

SAUL: You know, the 20 Western democracies, their stability is all based on success and size of middle class. That's how you get out of the kind of Marxist versus fascist argument. If you have a big solid middle class. They are actually under threat in all 20 countries. That is what is so fascinating. I think what we have to do is really quite simple. For 25 years we put in place at the international level very successful binding regulations relating to trade. Very difficult to do. But what we didn't do was put in place at the international level regulations to do with taxation, to do with labor conditions, do with the environment, et cetera.

In other words, the nation state is based on a balance between the market place, internal trade labor conditions, taxation, so on. That balance which is -- an election is really about you want it to move a bit this way or that way. We took one big piece out and put it at the international level. If we want that trade to work we have to take...

DOBBS: You're talking about the World Trade Organization?

SAUL: Generally the trade agreements. They are very brilliant but you have to take taxation or labor at the international level or else it backfires.

DOBBS: We thank you very much. SAUL: Wonderful to be here.

DOBBS: John Ralston Saul, thank you. Next, we'll have the results of our poll. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Now the results of tonight's poll. 8 percent of you say pursuing a balanced trade policy and opposing the export of American jobs to cheap overseas labor markets is economic isolationism. 91 percent of you say it is responsible economic policy. Another reason I love our audience.

That's our show for tonight. We thank you for being with us. Tomorrow, our face-off. Is the pledge of allegiance unconstitutional? We'll hear two very different, very passionate opposing views. And Thursday, House Minority Leader Congresswoman Nancy Pelosi joins us. For all of us here, good night from New York. "ANDERSON COOPER 360" next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


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