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LOU DOBBS TONIGHT

President Bush Meets With Congressional Republicans; U.S. Coalition Raids Home of Iraqi Leader

Aired May 20, 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, President Bush tries to rally congressional Republicans, who are increasingly anxious about Iraq and the president's low approval ratings.

SEN. GEORGE ALLEN (R), VIRGINIA: He's resolved. And he's going to stand strong for freedom.

DOBBS: What's going on here? U.S. troops and Iraqi police raid the home of the Pentagon's designated favor in Iraq. We'll have a report.

Should the United States set a firm date to withdraw from Iraq? Former Deputy National Security Adviser James Steinberg says, absolutely. He's our guest tonight.

It could be the first strike ever against the export of American jobs to cheap overseas labor markets; 100,000 telecommunication workers are threatening to walk off their jobs tonight.

PAUL HONGO, CWA LOCAL 1298: It's absolutely wrong to send good- paying American jobs offshore just for the sake of corporate greed.

DOBBS: And in "Made in America," a very unusual computer company, a computer company that makes all its products right here in the USA, and it makes a profit.

Also tonight, the politics of rising gasoline prices. The governor of Colorado, Bill Owens, joins us. He says tapping the nation's emergency oil supplies is not the answer. He joins us tonight.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, May 20. Here now for an hour of news, debate and opinion is Lou Dobbs.

DOBBS: Good evening.

President Bush today made a rare visit to Capitol Hill. The president was there to give a pep talk to Republican lawmakers, who are increasingly worried about the administration's policies in Iraq and the president's declining poll numbers.

Congressional correspondent Ed Henry reports. (BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): The president came to Capitol Hill to rally the troops. House and Senate Republicans emerged from the closed-door meeting and said Bush touted his record on everything from the economy to Medicare and Iraq.

SEN. GEORGE ALLEN (R), VIRGINIA: He's resolved. He's going to stand strong for freedom. It was a good teem meeting.

REP. DEBORAH PRYCE (R), OHIO: He was very upbeat and positive about the direction we're going, and asked us to keep the faith and keep the pressure on and keep ahead on the right track. And I think that, to the last person in there, we're all behind him.

HENRY: That support is critical for the president amid Republican concerns about his falling approval ratings.

SEN. RICK SANTORUM (R), PENNSYLVANIA: Look, I mean, this was no surprise to anyone here that this has been a roughly couple of months for the president, particularly on the issues of Iraq and I think he was here to remind folks that we do have a policy and this policy is going to be tough. Things, as I think he commented, are very likely to get worse before they get better.

HENRY: When Bush vowed to finish the job in Iraq, he received one of several standing ovations. Senator Lamar Alexander said he could have had as many as he wanted. This was the choir and the choir was in tune today. But Democrats were singing a much different tune.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: I believe that the president's leadership in the actions taken in Iraq demonstrate an incompetence in terms of knowledge, judgment and experience in making the decisions that would have been necessary to truly accomplish the mission without the deaths to our troops and the cost to our taxpayers.

(END VIDEOTAPE)

HENRY: Lou, Republicans are unified tonight in denouncing those remarks by Nancy Pelosi. People like House Majority Leader Tom DeLay are saying that they crossed a political line and that in fact comments like that are putting our troops at risk, their lives at risk.

And, in fact, this is a far cry -- all this Republican unity is a far cry from what we heard earlier in the week, when you had people like Speaker Dennis Hastert and Senator John McCain sniping at one another. All of a sudden, we see a sign of unity. We see Republicans maybe going back to normal a little bit, unified and beating up on Democrats, rather than one another, Lou.

DOBBS: Henry, thank you very much, reporting from Capitol Hill.

President Bush will try to ease rising public concerns about Iraq and American war casualties in what will be a series of speeches. They begin Monday. President Bush will deliver his first speech at the Army War College.

White House correspondent Dana Bash reports -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, as Ed was just reporting, today was about the president trying to shore up support in his own party, particularly for the war in Iraq. That is step one in a longer-term communications project from the White House.

Senior Bush aides say the president will step up, as you mentioned, his direct communication with the American people about the situation in Iraq between now and June 30, because they say it's a very critical time for him to do so. They say that he's going to give about one major speech a week, starting, as you mentioned, with the Army War College in Pennsylvania. That will follow an address the following week at the Air Force Academy.

The White House simply says that they know they can't control the bad news coming out of Iraq. But with the president's poll numbers falling and support for Iraq, according to the polls, also falling, they hope at least to get the president's voice into the mix in a more aggressive way. And they also say that things are going to be changing and they hope falling into place between now and June 30, and they hope in a quick way.

So they want the president out there to give the American public an update on what exactly the plans are as they fall into place. And they also say that they understand that anything that happens in Iraq essentially has a short shelf life, including the president's remarks, so they want him to get out there in a very public way. They also want him to set expectations, Lou, that even after June 30, when Iraqis do have at least some control over the government, it doesn't mean that troops are going to come home and it doesn't mean that bad news is going to stop out of Iraq for the American people -- Lou.

DOBBS: Dana, thank you very much -- Dana Bash from the White House.

Defense Secretary Donald Rumsfeld also on Capitol Hill today. He went there to give senators yet another briefing about Iraqi and the prisoner abuse scandal. Afterwards, Secretary Rumsfeld said the scandal is diverting attention from the wars in Iraq and Afghanistan.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: It's too bad, but that's life. An awful lot of us are spending an enormous amount of time on this subject. And we've got the transition coming ahead of us here to sovereignty for the Iraqi people on or before June 30. And there's a great deal of work to be done.

(END VIDEO CLIP)

DOBBS: Rumsfeld said it is perfectly proper to Congress to investigate the scandal, as it shows the world how American democracy does work. A remarkable fall from grace tonight for a man once considered to be America's closest ally in Iraq. U.S. troops and Iraqi police today raided the home and offices of Ahmad Chalabi, a member of the Iraqi Governing Council. Officials said the raid was part of an investigation into suspected fraud at an Iraqi government ministry.

Harris Whitbeck reports from Baghdad.

(BEGIN VIDEOTAPE)

HARRIS WHITBECK, CNN CORRESPONDENT (voice-over): U.S. troops and Iraqi policemen raid the headquarters of the man who calls himself America's best friend in Iraq, Ahmad Chalabi, head of Iraq's National Congress, the man who sat next to Laura Bush during this year's State of the Union address, who provided information that President Bush used to help justify his decision to go to war, now lambasting U.S. policy in Iraq.

AHMAD CHALABI, IRAQI GOVERNING COUNCIL: I am now calling for policies which -- to liberate the Iraqi people, to get full sovereignty now. And I am putting the case in a way which they don't like.

WHITBECK: Chalabi claims that it is his criticism of the pace and scope of the handover plan that soured his relations with Washington and that led to the raid at his home.

But Iraqi officials said the raid was directed at men inside Chalabi's compound who are believed to be involved in cases of government fraud and kidnapping. A U.S. spokesman in Baghdad said neither Chalabi nor his Iraqi National Congress were the targets. And the coalition went to great lengths to say the raid was organized and executed by the Iraqi national police.

DAN SENOR, COALITION PROVISIONAL AUTHORITY: It was an Iraqi-led investigation. It was an Iraqi-led raid. It was the result of Iraqi arrest warrants.

WHITBECK: Although U.S. administrator Paul Bremer was aware of the investigation of government fraud before the raid took place.

(on camera): The question now is how much Chalabi's break with the United States will resonate. Many here say his fortunes in terms of Iraqi public opinion were never very really high in the first place. And his public criticism of U.S. policy in Iraq can't have won him many new friends back in Washington.

Harris Whitbeck, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: Tonight, the Pentagon is considering releasing video or a photograph of the target that U.S. forces hit in Iraq yesterday. The Pentagon wants to prove it was not a wedding party. Iraqi witnesses said the raid struck a home where a wedding celebration was taking place. More than 20 people, including children, according to those reports, were killed.

The Pentagon does not dispute the casualty count, but does insist the site was being used by foreign fighters.

In Gaza today, Israel defied international condemnation and intensified its offensive in the Rafah refugee camp. Palestinians said the Israelis today killed another eight people; 40 Palestinians have been killed in Gaza the past three days.

Matthew Chance reports.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN CORRESPONDENT (voice-over): This is the human cost of Israel's military campaign in the Gaza Strip. Dozens of homes in Rafah near the Egyptian border have been demolished. With nowhere to go, families surviving amid the rubble, but only just.

U.N. teams have set up temporary shelters, this one in a local school. But they say they're extremely concerned for the thousands of people still trapped in the areas under tight military curfew and who they can't reach.

CHRISTER NORDAHL, U.N. SPOKESMAN: They're definitely getting worse by the hour. People who have been under curfew now for 2 1/2 days, they have not been able to go out and do their shopping. They have been without water and electricity. Families, especially families with babies, must find it extremely hard.

CHANCE: These are the shocking images that galvanized international condemnation of Israel's military action, Palestinian demonstrators killed and injured when Israel forces opened fire during their protests. Despite a public rebuke, Though, from Washington and a resolution condemning Israel's actions at the U.N. Security Council, the bloodshed continues.

In fact, the military campaign appears to have been stepped up. More than 1,000 Israel troops have pushed deep into the Rafah refugee camp backed by tanks and helicopter gunships. The search for militants and weapons smugglers must go on, Israel says.

MAJ. SHARON FEINGOLD, ISRAELI ARMY SPOKESPERSON: We are determined to carry on with the operation. The operation has a rationale and purpose, the purpose being we have to prevent the smuggling of arms, exactly the same arms that are targeting Israel towns and cities. In these operations, we understand, again, that we are operating in residential areas. Unfortunately, as long as the other side does absolutely nothing to stop terrorism, we will need to act.

CHANCE: For the moment, how long this operation will last is anyone's guess. In the words of one Israel commentator, reflecting a general mood in Israel, the sands in the hourglass legitimacy for its military here may be running out.

(END VIDEOTAPE) CHANCE: Well, Israel says that it has actionable intelligence that there is a big cache of weapons that has been massed on the other side of the border in Egypt and is being prepared to be brought across by Palestinian militants through the tunnels they make under the Egyptian border, quite large-caliber weapons, the Israelis say, that would cause quite devastating damage to Israelis, even reach Israeli towns from the Gaza Strip.

So they say they have these legitimate reasons for continuing. The human cost, though, has been very high indeed, some 40 Palestinians killed over the course of the last three days. And so that's the reason really why, Lou, there's been such international condemnation of this.

DOBBS: Matthew, thank you very much, Matthew Chance, reporting tonight from Gaza City.

Still ahead here, an exit strategy for the United States in Iraq. Former Deputy National Security Adviser James Steinberg says the United States should set a firm date to pull out of Iraq. He joins us next.

And Democrats blame the White House for soaring gasoline prices. But say Republicans, they say Democrats are also to blame. I'll be joined by Colorado Governor Bill Owens.

And American telecommunications workers are fighting to keep their jobs from being exported to cheap foreign labor markets. It is a battle that could come to a head within matter of hours. We'll have a special report.

(COMMERCIAL BREAK)

DOBBS: My guess tonight says the United States should set a firm date to pull out of Iraq. That date should be the end of next year. James Steinberg co-authored a "Washington Post" column that argued, "The more we talk about staying as long as it takes, the more it appears we are trying to impose our vision on Iraq, further alienating the Iraqi public."

James Steinberg served as deputy national security adviser under President Clinton. He's vice president and director of foreign policy studies at Brookings Institution, joining us tonight from Washington.

Jim, first, we are in Iraq, certainly at this stage, to impose our views and values, are we not?

JAMES STEINBERG, FORMER DEPUTY NATIONAL SECURITY ADVISER: Well, I think when we came into Iraq, Lou, we were seen by the Iraqi people as liberators. We got rid of a terrible dictator. We said we wanted to give them a chance to have their freedom and their future. And I think that's part of what we've lost sight of here and I think that's part of the reason why we've lost the support of the Iraqi people. Some 80 percent now said they disapprove of the United States presence. DOBBS: The support of the Iraqi people, it is clear that they don't want us there. Assuming that those indications of lack of support are accurate, why in the world don't we withdraw?

STEINBERG: Well, I don't think we need to withdraw now, because we need to give them a chance to develop their own government, to elect their own leaders, to have their own constitution.

But I think we should make clear that that's the only reason that we're there. We're not to have our own vision of the Middle East or try to put something there they don't want. We need to give them a chance to have a government that they want and deserve and then define that as the end of our mission.

DOBBS: Well, a government they want and deserve.

Jim, it seems to me, if there's ever a time for the onset of straight talk in Washington, it is now. We will not be pleased, nor perhaps permissive of a government that would radical Islamist in nature, nor would we be pleased with a government that invited global terrorists. We would not be pleased with alliances with Syria, Iran, North Korea, would we?

STEINBERG: I think we have to draw a distinction between what are our security interests and what are our preferences.

We have a right to say, but not just the United States have a right to say that they can't harbor terrorists. That's an international concern. We have a right to say that any Iraqi government can't develop nuclear weapons.

But what we appear to be doing to the Iraqi people is telling them what kind of government they should have, telling them that they have to make the kinds of choices that we want and have the kind of people that we want. And that's where I think we've gone off track.

DOBBS: Well, we may be off track or perhaps we're precisely on track with what the Bush administration enunciated at the outset, Jim. They said they wanted a democratic government in Iraq. They were very clear about it. So that seems to be straightforward.

STEINBERG: But we keep talking about is, we keep talking about staying as long as it takes. What we don't talk about is staying there to support the Iraqi people in having their elections and then ending our mission when they have a government and the capability to do what they want for their country.

That's why we need to define an end point, to have a sense of understanding that our mission is to support them and not to advance our own agenda.

DOBBS: But if we are not there for our own agenda, for our national interests, it begs the question of what in the world are we doing there?

STEINBERG: Our interests is only going to be served if we have governments around the world that choose to support us. We are not going to be able to force them to do that. And we can keep our forces there as long as we want, but we're going to be fighting a national insurgency as more and more Iraqis see us as intruders in their country.

We need to be seen by them as supporting their ambitions and their aspirations. That's what the administration said at the beginning. Now we need to clearly define our mission to make clear that that is the end point of our objectives here.

DOBBS: And do you believe -- General Myers yesterday told the Senate that the United States cannot lose militarily in Iraq, speaking of the broadening insurgency, but neither can the United States win militarily, shocking words.

(CROSSTALK)

STEINBERG: But I think that's exactly right, because, at the end of the day, the only way to defeat these insurgents is for the Iraqi people to take them on themselves. If we don't have the support of the Iraqi people, if they don't want to take on these bad guys themselves, then, in the end, our military power isn't going to do it. That's why we need to regain their support and confidence in us.

And the way to do that is make clear that we're in support of their goals.

DOBBS: James Steinberg, thanks for being here.

STEINBERG: Thank you, Lou.

DOBBS: Coming up next, 100,000 workers are fighting to keep American jobs in this country, their own. Tonight, they could launch the first strike ever against the business practice of overseas outsourcing. And Connecticut's attorney general, Richard Blumenthal, joins us.

Also tonight, skyrocketing gasoline prices. Colorado's governor, Bill Owens, says tapping the Strategic Petroleum Reserve is not the answer. He's our guest.

And a sinking feeling in the Windy City tonight, Chicago literally sinking into the ground. We'll have that report for you coming up.

(COMMERCIAL BREAK)

DOBBS: In "Exporting America" tonight, 100,000 communications workers are threatening to walk off their jobs at midnight tonight. Their chief complaint, the export of jobs from their company to cheap foreign labor markets.

Peter Viles reports tonight from an SBC worker's rally going on in New Haven, Connecticut -- Peter.

PETER VILES, CNN CORRESPONDENT: Lou, a key decision in this drama.

SBC decided to hold down the price of its DSL service to send the support work for that service overseas. That decision has led to a backlash from unionized workers in the company from coast-to-coast.

(BEGIN VIDEOTAPE)

VILES (voice-over): It's shaping up as the first strike against overseas outsourcing, 100,000 communication workers threatening to walk off the job at midnight tonight and stay off the job for four days. SBC Communications, the Texas baby bell, said its managers are capable of running the phone company which provides local service in 13 states from coast to coast.

ANDY SHAW, SBC SPOKESMAN: We are ready. We don't want it to happen. But we could not be any readier. We have got a plan in place. Customer service is still going to be our top priority, not matter what happens.

VILES: The union, the Communication Workers of America, says overseas outsourcing is a major issue in this newspaper ad accusing SBC of -- quote -- "cutting American jobs while sending our high-tech future overseas."

HONGO: The message is simple. It's wrong. It's absolutely wrong to send good-paying American jobs offshore just for the sake of corporate greed.

VILES: SBC acknowledges that a major venture, Accenture, does use overseas labor to provide DSL support to SBC customers -- quote -- "Less than 2 percent of our jobs would fall into that category," the company says. "We provide 169,000 jobs in this country. We have a small number of jobs that are outsourced in order to keep us competitive, so we can protect 169,000 domestic employees."

The company has offered a job guarantee to union employees, but the unions want jobs it doesn't have in fast-growing services, such as Internet data. installation of Wi-Fi hot spots, voice-over Internet services and DSL broadband.

(END VIDEOTAPE)

VILES: Now, as to the question, Lou, of why just a four-day strike. Well, the union says they want to send a message that they are very serious about this issue, but they don't want to damage the company's relationship with its customers, because, as one union leader told us tonight, it is our company, too -- Lou.

DOBBS: And, Pete, SBC made about $8.5 billion in profit last year, a significant increase from the previous year. How has the outsourcing issue presented itself?

VILES: Well, they have a contract for support on the DSL, 24- hour around-the-clock service for Internet service that is outsourced. But the mood of the workers here, very well aware of that $8.5 billion figure, captured on a T-shirt I just saw. It said in big letters, "Outsource the CEO" -- Lou.

DOBBS: Pete, Peter Viles, thank you.

Well, join speaking of the CEO, we invited the chairman and CEO of SBC Communications, Edward Whitacre, to join us here tonight. He declined. A spokesman for SBC says Mr. Whitacre's focus -- quote -- "is on his business and his clients" -- end quote.

Well, my next guest has called the exporting of American jobs -- quote -- "a trend that threatens to undermine the American middle class and American dream."

Connecticut's attorney general, Richard Blumenthal, joins me tonight from New Haven.

Good to see you.

RICHARD BLUMENTHAL, CONNECTICUT ATTORNEY GENERAL: Good to see you. Thank you.

DOBBS: Mr. Attorney General, why are you there? Some might say it's highly unusual for a state's attorney general to be there at what is a labor protest and an issue focusing squarely on the exporting of American jobs to cheap overseas labor markets.

BLUMENTHAL: I've taken a very strong stand, Lou, against offshoring and outsourcing abroad of jobs that are really vital to not only job security of these workers, but our national security.

And I believe very strongly that state officials need to stand up and speak out against this trend. Certainly, we should stop doing business, as states, in the public interest, with companies that send these jobs overseas. My view is, if they don't keep the jobs in this country, they should lose the contracts. And I think we need to show these workers that public officials will side with them in this critical fight against offshoring.

DOBBS: The state government of Connecticut, Mr. Attorney General, what are you doing about outsourcing? As you well know, state governments, some 40 of them in this country, have participated in the outsourcing of American jobs.

BLUMENTHAL: And we need to stop that trend.

I think we're drawing a line here at this place where so many people have marched and spoken in conscience for their country, that really all of us as state officials have a larger obligation to the public interest to make sure that these workers know and all of us know the tremendous concealed costs that are involved in offshoring of jobs, and the hidden subsidies that other countries offer to export these jobs from this country.

And SBC is indeed the most profitable of the baby bells; $8.5 billion on $40.8 billion in revenue, was their profits last year. They can afford -- they have an obligation to keep these jobs here. And it's not only through Accenture, but through Infosys and Symbol (ph). There's also a very important fairness issue here to consumers.

When people call for information or services, they should know where they are calling and who is answering, where they're located and where the profits go.

DOBBS: You know, Mr. Blumenthal, that Accenture is one of those consulting companies, as well as a service provider that is encouraging, advocating, facilitating the outsourcing of jobs. Their role in this, is that of concern to you?

BLUMENTHAL: Very much so.

In fact, our contracts in the state have a provision that enables us to terminate them when it's in the public interest at the sole discretion of the state. And I believe that states like Connecticut with those provisions ought to take action right away to assure that Accenture and any other company involved in offshoring no longer does this kind of work for the state of Connecticut.

DOBBS: Connecticut's attorney general, Richard Blumenthal. We thank you for being with us tonight.

BLUMENTHAL: Thank you.

DOBBS: Now turning to tonight's poll. The question, do you believe SBC workers have a right to strike over jobs being shipped overseas? Yes or no. Please cast your vote at CNN.com/lou. We'll have the results later in the broadcast.

That brings us to tonight's thought. "Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed it is the only thing that ever has." Those are the words of author, anthropologist, Margaret Mead.

Taking a look now at some of your thoughts.

Judy in Morgantown, West Virginia. "What a task you have, Lou. It appears as if you are one of the few minding the store as the middle class with its American dream is sold down the river."

Laura in Olympia, Washington. "The answer to the question of whether free trade works in America or not is simple. It works if you are a CEO or top executive trying to make more profits. It does not if you belong to the working or middle class."

And on our series of reports, "Made in America," Pat Hook in Albuquerque, New Mexico. "It's so refreshing to hear positive news for a change that shows an American company's desire, commitment, and action to build a quality product in America, treats their employees fairly, still have no desire to move their manufacturing jobs overseas.

And Rick Plassio in Pipersville, Pennsylvania. "Lou, being a public school educator, I can appreciate your shows based on themes such as "Broken Borders," "Exporting America" and today's public schools. Your show is reality television. With the only exception being you actually learn something worthwhile."

We thank you for that and we love hearing from you. Send us your thoughts, Loudobbs@CNN.com. We'll share more of your thoughts later here in the broadcast.

High school kids in Hawaii tonight are riding a wave of excitement. The state school board tells CNN it expects to approve surfing as official high school sport. That vote is expected later tonight. We'll keep you posted. Teams will begin competing for their individual schools in the fall. In the past, the board has rejected efforts to make surfing an official high school sport because of concerns over safety and, yes, the costs. Under the new rules, those costs will be divided between the school and community sponsors.

Still ahead, gasoline prices at an all-time high, rising. Colorado's governor Bill Owens says tapping into the nation's petroleum reserve will not force gasoline prices lower. He joins us next.

And a computer company that has defied a lot of trends, in particular, the trend toward overseas production. It's kept all its production and technical support right here in America. That's our special report tonight, made in America.

(COMMERCIAL BREAK)

DOBBS: New calls tonight for the White House to take action against record-high gasoline prices. Democratic attorneys-general in several states today asked the White House to join their investigation into whether illegal price gouging is to blame. Many other Democrats are demanding that President Bush use oil drawn from the nation's Strategic Petroleum Reserve to boost supply and thereby lower prices at the pump. My guest tonight says tapping into the reserve is certainly not the answer. Colorado's governor, Bill Owens joins us tonight from Denver. Governor, good to have you with us.

Why isn't it the right answer? We've seen it work before.

GOV. BILL OWENS (R), COLORADO: I guess economists would doubt that it really worked very well when President Clinton tried it. I agree with John Kerry from four years ago that he said that that wouldn't be a good idea. The reserve itself is designed to be used in true national emergency, a Pearl Harbor type of event. I think it would be a bad idea to use it just to drive down prices on a temporary basis.

DOBBS: Do you believe all these calls, first, for drawing oil from the Strategy Petroleum Reserve and secondly, for investigations into prices, is simply partisan politics?

OWENS: You know, Lou, I believe in many cases it is. I know we have a presidential election coming up this November. I know gasoline and petroleum are commodities, like wheat and corn and silver and gold. Commodity prices go up and down. I also know though that every time gasoline prices go up there are always calls by politicians to investigate because we'd all like to believe that it's conspiracy when, in fact, in every case, it's simply been markets performing as markets do. Sometimes they go up, sometimes they go down.

DOBBS: You mentioned Senator Kerry. I wanted to make sure that we kept that clear. He has not called, just to be clear about it, for anyone to release oil from the reserve. He has simply called for halting purchases for the reserve.

OWENS: Right. Not continuing to fill it. You're correct and I'm correct. If you simply stop adding to that reserve, in fact, you're doing the same thing, which is diverting petroleum from our nation's reserve and putting it into the supply chain. It is important we have that reserve there and important we not play politics with it. I agree with what he said four years ago, which is that the reserve itself isn't even large enough to really be relevant, in terms of the world oil market.

DOBBS: You do agree with that?

OWENS: I agree. I believe that you really can't make any long- term fundamental changes in terms of gasoline markets by diverting oil from that reserve. John Kerry was right four years ago. Just wish he were consistent today.

DOBBS: Governor Owens, you were talking about not playing politics. What is your reaction to this statement? "The idea of emptying the Strategy Petroleum Reserve would put America in a dangerous position on the war in terror," President Bush said. No one has suggested it be emptied. That sounds vaguely political, doesn't it?

OWENS: Well, somehow. I'm sure the president is occasionally political, just as John Kerry is. The fact is we need the reserves. Some governors have called for not filling it. That's why I'm on the show tonight, to take the other view which is we need to continue to fill it because it's in our national interest to do so.

DOBBS: Investigations into price gouging, the prospect of artificial manipulation of gasoline prices in particular? Do you think it should go forward? Do you think it would be appropriate?

OWENS: I think it would be a waste of time but I'm certainly willing to see it go forward. Every year, again, when we've had increased gasoline prices, politicians always figure that it's tankers offshore from Long Island or else they've heard reports of emptying out into the deserts of California. It's not true. This is a market. Markets go up, markets go down.

DOBBS: They do that, but this time, unlike previous times, as you know, Governor, I've covered each one of those instances, I've covered all the investigations into oil companies, this time we have documented the purposeful, absolute distortion of reserves on the part of a major oil company. We have considerable disagreement about how much oil reserves actually exist. We've seen market manipulation by energy companies in California. So, we have -- we can't simply give energy companies any longer a free pass, can we?

OWENS: Well, I don't know that we have. When your show asked me to be on today, we were supposed to be talking about John Kerry and George Bush and that issue. But I would say this. That with China's economy increasing dramatically, with Japan's economy up 6 percent, with half a million new jobs in the American economy in the last 60 days, the world demand for oil is going up, and in fact, we haven't done a good job in this country of increasing domestic supply. And that could actually take us into the presidential election where a president's energy bill has been stalled in Congress, and that bill would have increased domestic supply, which over time would reduce prices.

DOBBS: Governor, you're surely not criticizing the Republican leadership in both houses of Congress and the Republican majorities in both houses?

OWENS: No, I'm not. I know your point. In the Senate we have a 51-49 majority. As you know, though, Lou, the Democrats, have, because of the filibuster, have kept that bill from being voted upon. And so while the governor yesterday made the point that Republicans control narrowly both houses, it's only fair to report the facts, and that is, that through procedural stoppages, the Democratic Party and Senator John Kerry have kept that energy bill from coming to the floor.

DOBBS: Governor Bill Owens, we thank you very much for being here. I can tell you wanted to talk a little more about partisan politics. I'm sorry I didn't oblige. I tell you what I will do, I would never ever want to deny anyone an opportunity to discuss them? So, would you come back soon?

OWENS: I'd love to.

DOBBS: ... and we'll talk John Kerry, George Bush, Republicans, Democrats, conservatives and liberals. It's probably appropriate, this being an election year. Governor Owens, thanks a lot.

OWENS: Thank you, Lou.

DOBBS: Take a look at your thoughts on rising gasoline prices and the strategic oil reserve.

D. Fraboni of Tucson, Arizona, "why haven't the governors complaining of high costs, gas costs, offer to reduce the state gasoline tax and the sales tax on gas purchases." Interesting idea.

And Richard Amen of Aurora, Colorado, "how can the very people who are stopping our drilling for oil in the Alaska reserve now complain about the price of gas?"

Kathryn Tyler in Hungry Horse, Montana, "Lou, I feel a disturbance in the force, I actually agree with President Bush on something. The strategic reserves are for emergencies. And while the high price is an emergency for me, it is not one for the country."

Send us your e-mails, loudobbs@CNN.com.

A reminder now to vote in our poll. The question, "do you believe SBC workers have a right to strike over jobs being shipped overseas. Yes or no." Cast your vote at cnn.com/lou. We'll have the results later in the broadcast.

A fascinating new study has found that parts of this country are sinking, quite literally. In some places the downward movement is up to half an inch a year. An international research team led by Northwestern University discovered that Chicago is sinking a millimeter a year. Now, that's not a lot, but it is sinking. And as it sinks ever so slightly, Canada is rising ever so slightly.

The reason, when glaciers covered North America, the weight of the ice created depression in the Earth. Now, the ice is gone, the land is returning to the original shape. The area near Hudson Bay in Canada is rising fastest. That's where the ice load was heaviest. There will be a quiz.

And still ahead, a shocking statement from the American general in charge of the war in Iraq and what it could mean for U.S. troop strength. General David Grange in "Grange On Point" is next.

(COMMERCIAL BREAK)

DOBBS: There have been several surprising statements by the military in Washington this week. In "Grange On Point" tonight, we're going to focus on a stunning admission by the head of central command, General John Abizaid.

Yesterday, General Abizaid told a Senate committee the United States may need to raise the number of troops in Iraq after the June 30 handover of power. American troops are already fighting gunmen loyal to Muqtada al-Sadr in several Iraqi cities, and it's spreading. General Abizaid says, the violence could even escalate.

American troops could also face a new challenge from insurgents in former Saddam Hussein strong holds such as Fallujah.

Joining me now, General David Grange. General first, General Abizaid saying that we need more troops. There had been, at least it seems, the implication that the troops would not be required because the greatest violence was expected from now until the handover. What's happened? And what will be the effect on our troops there?

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, he brought up some very good points. And I'm very glad he put them on the table. The issue being that there's two key periods of time in Iraq, one is the initial transition, the end of June. And then, of course, the other is the election.

And having been in places where you try to monitor and provide rule of law and security during elections in other countries, it's a very volatile period. There's a lot of people that don't want these things to turn out. And so, he's just forecasting, anticipating violence in the future when they do have the elections, which, I think is prudent, that's his job.

DOBBS: What do you think about his job when says -- when asked, if he had miscalculated on the number of troops necessary to provide security in Iraq, he said, maybe?

GRANGE: Well, miscalculations happen right after the maneuver warfare phase. And there was a bit of loss of momentum, as we discussed many times before, and by not continuing the pressure on Iraq and the people of Iraq at that time, there was a lot of uncertainty with the Iraqi people, hey, was there actually a war? Were we beaten? Maybe we don't like this thing, we'll change it. Things are not happening the way we wanted to. And so, they took advantage, the bad guys, took advantage of that loss of momentum and created, I think, these insurgency strengths that we're seeing today. So, it probably went way back and now it's just coming out, people talking about it a little bit more.

DOBBS: House Majority Leader, Tom Delay today, referring to criticism of the administration's plan and post Saddam Iraq, the issues -- military issues there, a broad number of them, saying that was crossing the line, because it would affect the troops' morale. Effectively, questioning, it seems to me, the patriotism of those being critical.

Do you, A, believe he's right? And B, do you think there is an issue here in leadership, planning, and strategy, that deserves considerable criticism, critical judgment at this point?

GRANGE: Well, you know, you always plan for the worst case. And I think in a way, part of Iraq was done on the cheap. It's better to have more for flexibility, ensure that if this is the priority mission, that sufficient resources are there. There's been some lacking of resources. In order to do the thing, to the best of your ability and give you the flexibility for the uncertainty that always comes about in combat.

I don't think is there a problem with leadership. There's good leaders, there's just matter that the anticipation, of what was going to happen, the second, third order effects were miscalculated somewhat. And I think we're paying for that a little bit now with trying to catch up with this insurgency, with some casualties and things like that.

DOBBS: As you well know, from your distinguished career, your combat experience, your decorated combat performance, when generals make mistakes, soldiers pay the price. We're approaching almost 800 Americans dead. We heard yesterday, General Richard Myers, the chairman of the Joint Chiefs of Staff, say to the Senate, quote, "we will not be defeated" -- I'm going to take away the quote, I'm going to paraphrase him, the United States will not be defeated in Iraq nor will we be able to win militarily. Those are very sobering words.

What's your reaction as former soldier and former leader of soldiers?

GRANGE: Well, my interpretation of his comments that we can't win militarily, he means the military is one of the means of power combined with other means of power, economic, diplomatic, et cetera. I hope that's what he means because it takes all those resources, those means to win. We will not be defeated, I agree with that. We better not be defeated because already of the sacrifice made, the commitment, we can't lose NEVILLE: is thing.

DOBBS: General David Branch, thank you, sir, as always.

GRANGE: My pleasure.

DOBBS: "Grange on Point."

Tonight, building computers right here in the United States, of all things, and making a profit.

(COMMERCIAL BREAK)

DOBBS: "Made in America," our special report, in which we feature companies proudly displaying the made in the U.S. label. Tonight, a computer company that bucked the odds and trend, when it decided overseas outsourcing is simply bad for business.

Bill Tucker reports from Boise, Idaho.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): This is a company that almost wasn't. Three years ago, MPC Computers was losing money and scheduled to be shut down. The company, instead was taken private and that was the beginning of some interesting decision. The acquiring company, Gores Technology listened to existing management and kept them.

ALEC GORES: TECHNOLOGY GROUP: The most important element when you go in the situation are the people working at the company. That is your asset and the second is your customers, of course.

TUCKER: They decided to keep all their manufacturing in the states, at their plant in Idaho.

GORES: We went to other places to save costs rather than outsourcing it somewhere else. We felt it was much better for customer service, much more cost-efficient.

TUCKER (on camera): Not typical decisions, extraordinary results. The company went from losing $100 million a year to profitability in 120 days.

The natural question is why?

What did they do?

Well, the secret is there is no secret.

(voice-over): The company was already successful selling to the government, educational and mid-cites commercial markets. It cleared everything else off the table and then it focused on the issue of outsourcing services and decided service was too important to give to someone else.

MICHAEL ADKINS, PRESIDENT & CEO, MPC COMPUTERS: We did outsource a part of our business on the technical support side. We made a decision in January of this year and than we pulled it all back in house. And we've had tremendous response from our customers in that front in terms of pulling it back in house.

TUCKER: The response from employees is equally as strong.

JIM WATKINS, SUPERVISOR, MPC COMPUTERS: We do whatever it takes to take care of our customers in the field.

JIM RUSH, SUPERVISOR, MPC COMPUTERS: We're competing to do our best and build the best and be quality minded. That's what we're striving for.

TUCKER: Over the past three years, instead of collecting unemployment, the employees have shared in over a million in profit sharing. Bill Tucker, CNN, Nampa, Idaho.

(END VIDEOTAPE)

DOBBS: On Wall Street, stocks closed barely changed for the day. New concerns tonight about China's appetite for raw materials from the United States, competing with the United States those raw materials obviously from around the world.

Christine Romans here to tell us about it.

CHRISTINE ROMANS, CNN CORRESPONDENT: Well, Lou, (UNINTELLIGIBLE) shortages in this country have turned ugly. And in Florida, the situation is desperate. Everyday construction projects are delayed and home builders are just waiting for cement. Cement producers are at full capacity. They rely on import for 20 percent of the demand, but you know, they're competing with China for imports. As China sucks raw material at into it's ships, tied up at it's ports, and Asian shipments once headed here are heading to China instead. It's not a question of price but supply. Florida, South Carolina and the Gulf Coast, the cement just isn't there. The same story is playing out in scrap steel, prices through the roof, they're up another 33 percent in the past three months. Who says China is cooling. It's also, the same story in lumber and plywood, prices sky high.

DOBBS: Christine thanks. Christine Romans.

Still ahead, the results of "Tonight's Poll."

(COMMERCIAL BREAK)

DOBBS: The results now of our poll tonight, 95 percent of you say you believe that SBC workers have a right to strike over jobs being shipped to cheap overseas labor markets, 5 percent do not. Thanks for being with us tonight. Please join us tomorrow.

Joseph Cirincione, of the Carnegie Endowment for International Peace. He says the United States should pull out of Iraq as soon as possible. He's our guest and the head of the Connecticut AFL-CIO, who says the fight against outsourcing is the fight for America's future.

For all us here good night from New York. "ANDERSON COOPER 360" is 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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