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East Coast Braces For Hurricane Isabel; Senate Defies White House

Aired September 16, 2003 - 18:00   ET


LOU DOBBS, HOST: Bracing for Isabel. Tonight, more than 100,000 people are getting ready to flee, as the storm approaches the East Coast.
The Senate defies the White House today, blocking new rules that would have allowed big media to grow even bigger. Senator Byron Dorgan joins us.

Exporting America: American workers, particularly young workers, are paying the high costs of free trade agreements. Peter Viles reports.

And success and inspiration, creativity and innovation have propelled a mother of three to the top of her business. Tonight, she shares the secrets of success and satisfaction in her life.

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, September 16. Here now, Lou Dobbs.

DOBBS: Good evening.

Tonight, the political circus of the California recall election has taken another unexpected and bizarre turn. It now appears the same court that yesterday decided to delay the recall election today is now having second thoughts. The 9th U.S. Circuit Court of Appeals says it may review a decision by three of its own judges that put the recall on hold.

Bob Franken is in Los Angeles and has the latest for us -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Well, until the last day or so, the term en banc was probably not a word that everybody knew.

It means the full court. But in the case of the 9th Circuit, it would mean a panel of 11 or 12 judges review the 3-judge paneled that had in fact ordered that the election be delayed because of the defective voting machines that are used in six of most populous counties in California, affecting 44 percent of the vote. We're talking about the infamous hanging chad, punch card ballot machines.

In any case, the three-judge panel said, until Monday, they would stay the order, prevent it from going into effect, until appeals could be filed. And there's been strong consideration about going straight to the U.S. Supreme Court. But the full court said, no, we want to hear your arguments, why there should be an appeal by this panel. Now, time is of the essence. The election is scheduled three weeks from now.

So there would have to be a sudden hearing. The judges would have to make a sudden ruling. And if, in fact the ruling -- somebody would be dissatisfied by the ruling and there would have to be somebody going to the Supreme Court. But right now, the efforts to go directly to the Supreme Court have been put on hold, because the lawyers were ordered to first do their filing with the appeals court. And then we see what the appeals court decides about a hearing.

Yes, it is a mess. The candidates continue to campaign as if the election is going on. Of course, at stake is whether the election goes October 7 or whether it would be moved to March 2 -- Lou.

DOBBS: Bob, how soon will the 9th Circuit Court of Appeals, how soon are they expected to act, if indeed they do hear these attorneys before moving directly to the Supreme Court?

FRANKEN: Well, it would seem that, by virtue of the order that they put out today requiring a quick response, they're ready to make their decision very quickly on whether to hear a hearing.

If they want, they could really hear this by the end of the week. Things move very slowly in the legal field, unless somebody decides that they should move quickly. When federal judges make a decision, usually, they get their way.

DOBBS: Bob Franken from Los Angeles, thank you.

Well, from the political storm in the West to the hurricane threat in East, tonight, emergency officials are advising more than 100,000 people to leave North Carolina, as Hurricane Isabel charges toward the East Coast. Weather experts say Isabel could pick up speed again as it approaches shore. Hurricane Isabel is now a Category 2 storm, sustained winds of more than 105 miles an hour.

The National Hurricane Center expects Isabel to make landfall by Thursday. Two reports tonight: Brian Cabell, from Kill Devil Hills in the Outer Banks, North Carolina; John Zarrella from Norfolk, Virginia, on the Navy's preparations for this hurricane.

We go to Brian Cabell first -- Brian.

BRIAN CABELL, CNN CORRESPONDENT: Lou, if Hurricane Isabel is out there 500 or 600 miles away, as we've been told, we certainly haven't seen much sign of it today. It has been a quiet day. It has been a sunny day.

It's been a blustery day. We've seen swimmers out here, a few of them. We've seen people sunning themselves. Mostly, we've seen people simply walking along the beach, enjoying the sights. Still, a state of emergency has been declared here in North Carolina by the governor. A mandatory evacuation of the Outer Banks has been ordered by emergency officials here. And schools have been closed indefinitely. There has been a steady stream of cars on Highway 12 off of the Outer Banks today. We are told that highway may be flooded if a hurricane does in fact hit here with full force. That brings us to the question of a mandatory evacuation, which was ordered at noontime today. What that means, essentially, is that rescue, emergency officials are suggesting strongly that people leave here.

They are not arresting them if they don't, but they are warning that, if they don't leave and a hurricane hits, they probably will not be able to rescue them. Most businesses have been closing today. There are a few open. We have a motel that we'll be staying in tonight. There is also a grocery store that promises to stay open tomorrow night and possibly on into Thursday.

It appears, Lou, as though most of the tourists have gone home, probably 90, 95 percent of them. But the locals, it appears, a good number of them, are staying, at least for now. They're waiting to see what will happen tomorrow -- Lou.

DOBBS: And, Brian, what is the sense there as to how much time those residents have to get out and to follow the mandatory evacuation order?

CABELL: From what we've been told, it sounds like most people are going to wake up tomorrow morning, listen to their radios, watch their TVs, and get a sense of what the meteorologists are saying. If it looks like maybe it's going to be somewhere in the neighborhood of 110, 120 miles-per-hour winds, then a good number of them will leave.

But from what we've heard, people don't seem terribly concerned by winds in the neighborhood of 100 miles per hour. And they'll probably have a good indication of that probably sometime midday tomorrow.

DOBBS: Brian, thank you very much -- Brian Cabell.

Let's go to John Zarrella now. John's in Norfolk, Virginia -- John.

JOHN ZARRELLA, CNN MIAMI BUREAU CHIEF: Lou, people here are certainly not lackadaisical about the storm. But you can see, there aren't too many folks on the beach. But as the sun sets, some people getting out to walk the beach, perhaps for the last time for the next couple days, before the surf really kicks up.

And the United States military certainly here in Norfolk is taking no chances. For about five, 5 1/2 hours this afternoon, Navy ships began pulling out aircraft carriers, destroyers, frigates. In all, about 40 Naval vessels and Coast Guard ships left their docks here to get out to open water, the theory being that, of course, they can ride the storm out better at sea than they could if they were at their moorings, at dock, where they can be beaten up against the dock and sustain more damage than if they are out to sea.

The United States Air Force, from Langley Air Force Base, also got some of its planes out of here today. F-16s, 60 of these F-16 fighter jets sent inland to Indiana to a base there. There were half a dozen F-16s that were sent to bases in North Dakota and in Florida, a long way to go, but getting all those planes out of harm's way.

And certainly not just the military preparing, but people. As we surveyed the situation here in the Norfolk-Hampton Roads area, shops were completely wiped out of bread, of any kinds of staples, of canned goods, flashlights and batteries. We went to a Home Depot last night. And people lined up six, seven cars deep getting plywood, so that they can continue to board up their windows to keep flying debris and objects from penetrating those windows.

So a lot of activity here in the Hampton Roads area, people not taking the storm lightly, but, of course, watching and waiting to see exactly where Hurricane Isabel will make landfall and how much of a punch it will pack when it does -- Lou.

DOBBS: John, thank you very inch -- John Zarrella amongst those watching and waiting. Thank you.

Later in the show, Max Mayfield, who is director of the National Hurricane Center, joins us to give us the very latest assessment, the best judgment on when and where Isabel will hit the East Coast.

Hurricane Isabel could of the cost the insurance industry billions of dollars if it comes ashore full strength. In 1992, Hurricane Andrew caused nearly $16 billion in losses. Industry officials say those losses from Isabel are projected to add up to $4 billion to $6 billion. Since Andrew, insurance companies have taken steps to curb their losses in hurricane-prone areas. And Virginia and North Carolina coastlines certainly apply.

Homeowners' deductibles are now a percentage of the claim, rather than a fixed amount. Insurers no longer saturate an area with policies either. They limit their liability in a catastrophe. And they've also taken efforts to strengthen building codes and their enforcement in areas that they judge to be at risk. Those higher premiums will also help defray some of the costs. The average homeowner's policy is expected to go up at least 8 percent next year because of the storm.

The Red Cross is getting ready to help people in South Carolina and North Carolina and Virginia, when Hurricane Isabel hits the coast. But the Red Cross is not ready this time, because its disaster relief fund is all about empty.

Bill Tucker has the story.


BILL TUCKER, CNN CORRESPONDENT (voice-over): She's big and threatening. Up and down the East Coast, people are bracing for the impact of Isabel.

But the Red Cross is struggling, its coffers drained by wildfires in the West, the onslaught of tornadoes this spring, floods in Texas, and a massive typhoon in the U.S. territory of Guam. From June 30 of last year through the end of June this year, the Red Cross spent $114 million, while receiving only $39 million in donations.

MARTY EVANS, PRESIDENT & CEO, RED CROSS: Today, with the disaster relief fund empty, there's very great concern. We're going to be there, but we need the support of the American public to make sure that we can do what we need to do in the wake of this impending storm.

TUCKER: The last time the Red Cross found itself this short of funds was in 1992, right before Hurricane Andrew, which ranks as the third most expensive disaster for the Red Cross.

It comes down to the people. Individuals gave nearly 84 percent of the $240 billion given to charities last year.

LEO ARNOULT, AMERICAN ASSOCIATION OF FUNDRAISING COUNSEL: The American people are very generous and they rise to the occasion. So, during times of tragedy, certainly hurricanes, the case of the Red Cross, we tend to rise to the occasion during those very turbulent times.

TUCKER: Giving, though, is not guaranteed. And in 2002, our giving rose 1 percent. Giving to human services in disaster relief fell by 10 percent.


TUCKER: Last time people really stepped up and responded to a disaster was September 11, 2001, when they donated over $1 billion to the Red Cross alone. Some $214 million remains in that Liberty Fund. And it is earmarked only for the relief of victims of that manmade disaster -- Lou.

DOBBS: Bill, thank you very much -- Bill Tucker.

Homeowners looking to protect their homes from Isabel are paying a much higher price for lumber and plywood than they would have only a few months ago. Prices have risen to near record highs over the past several months, in fact. Home Depot, Lowe's say they have frozen prices at East Coast stores to help consumers who are bracing for this hurricane.

One reason for the rapid rise in the prices of plywood is increased demand from the U.S. government for wood to be used in Iraq. The military orders add to already short supplies because of wet weather in the South, wildfires in the West, and a home-building boom all across the country.

Today, Senate Minority Leader Tom Daschle asked Vice President Dick Cheney for full disclosure of his financial relationship with the energy services company Halliburton. Vice President Cheney is a former CEO of Halliburton. Halliburton has received big contracts in Iraq since the end of the war against Saddam Hussein, at least major combat operations.

Senator Daschle said, "The vice president needs to explain how he reconciles the claim he has no financial interest in Halliburton of any kind with the hundreds of thousands of dollars in deferred salary payments he receives from Halliburton." The vice president's office said Mr. Cheney has no financial interest in Halliburton, saying the vice president bought an insurance policy to guarantee his deferred salary, and that occurs whether or not Halliburton stays in business.

Coming up next here: blocking big media. Congress fights back against massive media expansion and concentration. Senator Byron Dorgan of North Dakota joins us. He's leading the fight. He's our guest.

And the cost of free trade: why American workers are the ones paying the high price of free trade. Peter Viles reports.

And New York Stock Exchange Chairman Richard Grasso is fighting for his job tonight, as calls for his resignation grow louder, more frequent, and they're coming from big institutional investors. Christine Romans has that story and the market coming up.


DOBBS: A political battle is brewing over a tax on a favorite caffeinated beverage. It isn't the Boston Tea Party. But for caffeine lovers in Seattle, it is no less significant -- that story and a great deal more still ahead here.

Stay with us.


DOBBS: The White House, sensing a political shift in the winds, is launching a major effort to help manufacturers rebound from a crippling slump.

In a speech yesterday, Commerce Secretary Don Evans stressed the importance of negotiating new free trade agreements and opening foreign markets to American goods. However, as the manufacturing slump continues, it's clear that American workers are paying the high price of those free trade agreements.

Peter Viles has the report.


PETER VILES, CNN CORRESPONDENT (voice-over): WTO trade talks collapse in Cancun; the Bush administration jawbones China to float its currency; the commerce secretary goes to Detroit to address the crisis in manufacturing; all signs that free trade, the policy embraced by the Clinton and Bush administrations, isn't free of problems and isn't really free.

Critics believe the United States is being outsmarted. While U.S. trade policy focuses on selling American goods abroad, foreign producers such as China are building market share in a much better market, the United States.

WILLIAM HAWKINS, U.S. BUSINESS & INDUSTRY COUNCIL: We import last year almost $1 trillion worth of foreign-produced manufactured goods, $1 trillion of the U.S. market lost to imports. There's no market overseas anywhere that can replace $1 trillion lost in our own market.

VILES: Since NAFTA was implemented in 1994, the United States has lost 2.4 million manufacturing jobs, 13 percent of the manufacturing job base. And the trade imbalance has soared, from $117 billion in '94 to $480 billion last year, about 5 percent of the U.S. economy. On one hand, the Bush administration talks about new free trade agreements. On the other hand, it talks tough on trade.

DON EVANS, COMMERCE SECRETARY: We are going to aggressively target unfair trade practices wherever they occur. Americans can compete against any country's white collars or blue collars, but we will not submit to competing against another country's choke collars.


VILES: Now, most economists continue to maintain that the U.S. labor market is going to turn the corner and start improving any day now. And yet today, the Federal Reserve said -- quote -- "The labor market has been weakening" -- Lou.

DOBBS: The administration, to its credit, is at long last waking up to the fact the United States has been outsmarted for a very long time on this issue.

VILES: It is a long time. Which is the best market in the world that you want to get into and grab market share? It's this market, the United States. Every country in the world seems to realizes that. We're looking at these other markets, China, Taiwan, Korea. There's not as much money to be made there.

DOBBS: Secretary Evans making the point about choke collars. Sudden, there's a connection between human rights and the equality of the environment and labor laws and product.

VILES: Sure.

DOBBS: All these CEOs in this country, we are paying them a lot of money, and they're geniuses.

VILES: Right.

DOBBS: They're giving away the manufacture of their products to people working for 30 cents an hour.

VILES: This is something the administration has not yet mentioned. But up to half of the imports coming into the country come into the country because of decisions made by American corporations that think it's smarter to outsource from somewhere else in the world, bring the goods here, then either finish them or bring them as finished goods.

DOBBS: I think any CEO deserves $15 million to $20 million to figure out that, if they can just cut jobs and lower their cost, they can get another bonus. It's times for CEOs, those high-paid CEOs, to start doing a little heavier math than that.

VILES: Agreed.

DOBBS: And taking care of folks who count.

Peter Viles, thank you. Appreciate it.

General Wesley Clark, a former supreme commander of NATO, is expected to announce he's a presidential candidate for the Democratic nomination. General Clark will become the 10th Democrat to join in the race to challenge President Bush next year. The general led NATO forces during the air war against Serbia in 1999.

Another Democrat, Senator John Edwards today, formally launched his campaign for the presidency. Senator Edwards made no mention of his Democratic rivals today. He focused instead on President Bush.

Voters in Seattle are focused on a new tax. They're frothing over a proposed dime-a-cup espresso tax. Seattle wants to use the $3.5 billion a year to pay for childhood education program. Opponents call it bad public policy. They even dumped espresso into a lake, in their own version of the Boston Tea Party. And in Seattle, Washington, I assure you, that's heresy to dump coffee into the lake. Polls will be open until 8:00 p.m. Pacific tonight. Go vote.

Tonight's thought on what matters most, at least in business. "In the end, all business operations can be reduced to three words: people, product and profits" -- that from Lee Iacocca.

And we want to remind you Hurricane Isabel is racing toward the East Coast. And Max Mayfield, who's the director of the National Hurricane Center, will be coming up to join us.

And fighting for his job now is New York Stock Exchange Chairman Richard Grasso. He faces a growing storm of criticism and mounting calls for his resignation. Christine Romans has the report and the market for us.

And a blow to big media. Senator Byron Dorgan of North Dakota amongst those leading the charge against media expansion, and he is our guest.

Please stay with us.


DOBBS: A powerful rally on Wall Street, that after the Fed left interest rates unchanged. The Dow soared more than 118 points. The Nasdaq surged 42, the S&P 500 up more than 14.

And today, more calls for the resignation of the charm chairman of the Big Board.

Christine Romans is here now and has the latest for us.

Christine, these calls are mounting now. CHRISTINE ROMANS, CNN CORRESPONDENT: And they are.

And that Fed meeting didn't get any attention on the trading floor, because it came at about the same time as a very high-profile call for Dick Grasso's resignation. California's treasurer called for the resignation of Mr. Grasso.


PHIL ANGELIDES, CALIFORNIA STATE TREASURER: It's important that Mr. Grasso resign and do it quickly. It's important that this pay package, in conjunction with that resignation, be revised, so it's rational and appropriate. And then, it's important that the New York Stock Exchange do all that it can to restore its credibility.


ROMANS: And, shortly after that, New York state Comptroller Alan Hevesi also said it was time for Grasso to go.


ALAN HEVESI, NEW YORK STATE COMPTROLLER: I think Richard Grasso's ability to be a regulator, to be a spokesperson for corporate reform has now been shattered. And he ought to resign.


ROMANS: And the North Carolina treasurer also, as well as several NYSE members, joined the fray. New York, California, and North Carolina pension funds together contain about $500 billion in investments. Those are big customers for the New York Stock Exchange.

There was no comment from the NYSE, but, on the trading floor, plenty of speculation about who would succeed Grasso if he were to step down. Some mentioned the co-chief operating officers of the exchange, Catherine Kinney and Bob Britz. Britz ran the closing bell today. And, by the way, both of those executives earned $2 million bonuses in the last couple of years, on top of million-dollar salaries themselves.

Now, meanwhile, the investigation continues into mutual fund abuses. New York attorney general Eliot Spitzer announced civil and criminal charges against Theodore Sihpol, a former broker at Bank of America, for allegedly helping a hedge fund make illegal trades. New York and federal officials say his arrest is just the beginning in this matter, Lou. And the NASD fined Morgan Stanley $2 million for sales contests among its brokers to sell Morgan Stanley's own mutual funds --Lou.

DOBBS: And I talked with attorney general Eliot Spitzer today, Christine. And I asked him how much more work does he think needs to be done. And he had a deep sigh. And he said, lots. So this is still with us and looks like it will be with us for a while, unfortunately.


DOBBS: Christine, thanks -- Christine Romans.

We want to hear from you tonight. The poll question: Should New York Stock Exchange Chairman Richard Grasso resign? Yes or no. Cast your vote at We'll have the results for you alter.

Coming up next: Hurricane Isabel charging toward land tonight. Max Mayfield, National Hurricane Center director, joins us to tell us when and where. And the state of many of the states is improving, thanks, in some cases, to tax cuts. Jan Hopkins reports.

And California's comptroller, Steve Westly, joins us.

And smashing through the glass ceiling, one woman who balanced her family and her career and did it with creative flair and great success -- that story.

And Jim Citrin, author of "Five Patterns of Extraordinary Careers," will join us.

Stay with us.


DOBBS: Let's find out where Hurricane Isabel is likely to make landfall and when.

Max Mayfield joins us now. He's the director of the National Hurricane Center.

Max, how does it look tonight?

MAX MAYFIELD, DIRECTOR, NATIONAL HURRICANE CENTER: Lou, we've still got a very consistent forecast. The center of the hurricane should be near the North Carolina coast by noon on Thursday.

But it's still a very large hurricane, where the aircraft keep sending us reports that the storm-force winds extend well out over 200 miles. So we think the tropical storm force winds will get to the North Carolina coast around midnight tomorrow night. And then it will continue to move inland. This will have a large impact over a large area. And we do have hurricane watches posted now. They will likely be changed to hurricane warnings later tonight.

DOBBS: And last night, as you were bringing us up to date on Isabel, you said the hurricane force winds extended to 100 miles. Have they abated at all?

MAYFIELD: Actually, even though the intensity has come down from this time yesterday, in fact, they expanded. The hurricane-force winds go out about 160 miles away from the center now.


MAYFIELD: So this is still a very large hurricane that has the potential to cause considerable damage and loss of life, if we don't prepare.

DOBBS: And you said the eye last night was somewhere between 30 and 40 miles. Has that changed at all, Max?

MAYFIELD: Actually, it looks like it's getting a little bit smaller. In fact, on the loop behind me, you can see it's probably around 25 miles or so right now. We've still got over a day and a half before we get to the coastline. And I think we will see some fluctuations. But the main thing people need to know is that this is still a powerful hurricane and capable of causing a lot of damage and loss of life.

DOBBS: Max Mayfield, thank you very much. And we hope to see you tomorrow night here. Thanks for bringing us up to date.

MAYFIELD: Thank you, sir.

DOBBS: Elsewhere tonight, good news from some -- for state capitals following one of the worst years, of course, for state budget. Many states have raised taxes. They've cut services to make ends meet. And now, as Jan Hopkins reports, some of those states are beginning to see signs of a turnaround.


JAN HOPKINS, CNNfn CORRESPONDENT (voice-over): In Oregon last spring, the schools closed early because they ran out of money. And this, summer the state faced $1 billion deficit. Now things are starting to improve.

MARTIN BRANTLEY, DIR., OREGON ECDD: I think that we're seeing some pretty good anecdotal evidence of a number of industries beginning to kind of get traction.

PETER BRAGDON, CHIEF OF STAFF, GOV. TED KULONGOSKI: Intel, for example, just opened within the last couple of months a state of the art facility, multi-billion dollar facility, that is also gearing up. They are also putting $400 million into refurbishing another facility that they have in the Portland area.

HOPKINS: Oregon state revenues are up $400 million. That's 4.4 percent of the budget. And if proposed tax increases go into effect, state revenues will increase another billion dollars, for a total increase of 15 percent.

TOM POTIOWSKY, OREGON STATE ECONOMIST: Exports have increased, which is important for Oregon. We have also seen temporary workers being hired by businesses. And withholding taxes to starting to hold, the profit taxes starting to come up.

HOPKINS: Indeed, Oregon's personal income tax collections are on the rise after declining since 2000. Corporate income tax collections are also growing again.

And Oregon isn't alone. The Rockefeller Institute sees a reversal of fortunes in Montana, Nevada, Hawaii and Rhode Island. NICK HENNY, ROCKEFELLER INSTITUTE: We're starting to see the effect of the stronger economy, things like personal income tax withholdings are getting a little bit stronger and that's probably because the employment situation is at least stabilizing, if not really booming yet.

HOPKINS: Most states are benefiting from the federal tax cut. Some states are helped by increases in defense spending. Hawaii is helped by an improving Japanese economy.


HOPKINS: Even California, the state that most experts usually consider to be a basket case, is beginning to see its state revenues at least stabilize. But people like Steven Moore of the Club For Growth believe it will take 10 years to get out of the mess in California -- Lou.

DOBBS: Well, that's a -- that's an interesting opinion from a remote observer. We're going to find out what the real deal is. Jan, thanks. Jan Hopkins.

As Jan just said, California's budget is stabilizing. The state's deficit still totals billions of dollars. But let's find out what really is going on.

Joining me now for more on California's budget and its government, the man who knows, the state's controller, Steve Westly.

Good to have you with us.


DOBBS: You have had some positive news on the budget deficit, the number $38 billion bandied around for months. What is the actual deficit right now?

WESTLY: Well, as you may know, the legislature passed a budget which has whittled our deficit down from $38 billion to $8 billion. Obviously that's still a big piece to be tackled in the next year, but we're whittling away on it. And like in other states, we're seeing a small increase in income tax withholding and it looks like employment numbers may be improving as well. So I'm very hopeful for the longterm, you're going to see California, which is essentially the world's fifth largest economy, coming back fairly strongly over the next two to three years.

DOBBS: As California's comptroller you have the best sense, you have your pulse on that economy and a good measure of its politics as well. How important is that deficit, winnowed down now by the legislature to $8 billion, improving tax receipts as you suggest, modest improvements -- how is that likely to play against a recall election, if indeed there is a recall election?

WESTLY: Well the big news out here, as you know, is the court decision which may postpone the recall vote until March. And if economic numbers continue to look better, obviously that should help the governor. And again, our rebound looks like it's being read by housing, and to a smaller extent, tech. But time would probably be on the governor's side in that recall election.

DOBBS: Mr. Westly, do I take it to mean that you're not supporting Lieutenant Governor Bustamante?

WESTLY: Well, like many people, I've taken a no on the recall position, and a yes on Bustamante if it comes to that.

The key is we make common sense decisions that begin to put California's fiscal house back in in order and that's exactly what I'm working to do.

DOBBS: Well, and good for you, because California right now needs a lot of common sense decisions -- $8 billion -- ti sounds like a simple situation that has eluded both the governor, his administration and the California legislature. You either raise taxes or you cut services. Why has neither been attempted?

WESTLY: Well, you're absolutely right. We all know what the answer is. It's cutting services or raising taxes. The simple fact is both of those require political courage and it's hard to demonstrate a lot of that when you're worrying about a recall election.

The real answers in California I believe, is we need to have some form of budget reform. A two-year budget process, we need to have a greater reserve policy to protect us from this happening again and, frankly, we probably need legislation that docks legislators' pay if there's no budget done on time. These are the sorts of common sense things we need to put in place so this doesn't happen again.

DOBBS: Well, you have the power to at least delay that pay, don't you?

WESTLY: I do and it was the very first thing I did at 12:01 on July 1 when the budget wasn't handed to me on time.

DOBBS: Steve Westly, we thank you very much for joining us to help us understand better California's budget, its economy and its inestimable (ph) politics that almost defy imagination at times. Steve Westly, thank you.

WESTLY: California will be back.

DOBBS: Absolutely. Absolutely, Steve. Thank you very much.

A reminder now to vote in tonight's poll: "Should New York Stock Exchange Chairman Richard Grasso resign? Yes or no?" Your vote could be cast your vote, if you wish, at We'd love to hear from you, and we'll have the results later in the show.

Coming up next, blocking big media. The Senate votes down a major media expansion, rolls back FCC rules. Senator Byron Dorgan amongst those leading the charge. He's our guest next. (COMMERCIAL BREAK)

DOBBS: The United States tonight used its veto. It used its veto to protect Israel in the United Nations. The United States blocked a Security Council resolution that demanded Israel lift its threat to expel Yasser Arafat from the territories. Today's veto came only four days after the United States refused to use a veto or to block the end of U.N. sanctions against Libya. Libya is one of Israel's most outspoken critics. It also accused of supporting international terrorism and is on the U.S. list of states sponsoring terrorism.

On Capitol Hill today, the Senate joined the House in voting to throw out the FCC's new rules on media ownership. Those rules would have allowed big media companies to own more television stations, radio stations, newspapers and the single market. Critics, including many in Congress, say that would take away choices for the public independence of the press.

My guest tonight is one of the senators who led a bipartisan push to overturn those rules, Senator Byron Dorgis (sic) joins us from Capitol Hill.

Senator, good to have you with us.

SEN. BYRON DORGAN (D), NORTH DAKOTA: Good to be here. Thanks.

DOBBS: This vote, 55-40, is it impressive enough? Strong enough to demonstrate to the House that they need to act as well?

DORGAN: Well, I hope so. We had four senators who would have voted with me but were gone with three of them running for president who weren't here and one other. So it would have been 59-40.

And it's a strong vote. I mean, the Senate has said that the FCC's rules on broadcast ownership are wrong. They're wrong-headed. They're not in the public interest and what the message is, I think, to the FCC is do it over and do it right.

DOBBS: And you want these rules rolled back you don't want to simply change, you want them rolled back all the way, correct?

DORGAN: Sure. It's interesting the groups that support this all the way from the National Rifle Association on the one hand, the National Organization for women on the other, Walter Cronkite, Jesse Helms and why that is the case, because what we see read, here in this country being controlled by few somewhere fewer entities is not healthy for a democracy. Let me make one other point, if I might. What the FCC has said in its rules in the larger cities in the country it's fine for one company to own the following, the dominant newspaper, three television stations, eight radio stations the cable company and they can do it in city after city. Well, look, I don't think that's moving in the right direction at all, and most of my colleagues felt the same way

DOBBS: What is your sense as to how the FCC's going to react? Michael Powell effectively with a vote along party lines and the commission move forward with this revamping of the rules which permits I think anyone would say 45 percent reach extraordinary concentration.

What do you think the FCC reaction will be, should be?

DORGAN: I really don't know. You know, the fact is, the House of Representatives has passed a portion of the repeal -- just a portion of it. The Senate has now used what is called legislative veto, or Congressional review it to get rid of the entire set of rules. But this has to go through the House of Representatives again, then it would have to go the president for signature.

DOBBS: And this is squaring up as for those Republicans, you a Democratic, but those Republicans who joined you, this is a square-up encounter and confrontation with the White House.

DORGAN: Well, it is. I mean, this was a bipartisan vote in the Senate. And you know, look, I don't think -- people say well the president would veto this. I don't think the president would want to make this his first veto. That doesn't make any sense. I hope we can get this done and say to the FCC there's a public interest here, people are concerned about localism, competition, diverse any broadcasting and your rules move in exactly the wrong direction.

DOBBS: Senator Byron Dorgan, we thank you for being with us.

DORGAN: Thank you.

DOBBS: And congratulations on a vote that went your way.

DORGAN: Thank you very much.

Up next -- a global brand. All kinds of media to create household names you know. A global brand is a woman. She's in charge of one of the most interesting and largest and successful advertising agencies in the world. We'll have the story of her career and the qualities that she exemplifies. James Citrin, author of "The 5 Patterns of Extraordinary Careers" joins us talks to us about how to achieve success and satisfaction in your life.


DOBBS: Tonight in our series of special reports on extraordinary careers we take a look at a woman at the top of the cut-throat world of Madison Avenue. She reached the pinnacle without missing on any part of raising her children. She's Shelly Lazarus. She is the chairman and CEO of Ogilvy & Mather and the ideal advertisement for striking the balance between career and family.



DOBBS (voice-over): Shelly Lazarus got used to being the only woman in the room. LAZARUS: I wielded enormous power actually. Because most of what we were selling was to women. And there would come that inevitable moment you know, when the whole room would turn to me and go, well, Shelly, what do women think?

There's my muffin.

DOBBS: Today she's in charge of Ogilvy & Mather, overseeing 11,000 employees in 120 countries. Lazarus wants consumers to see her clients everywhere.

She calls it 360 degree branding.

LAZARUS: Those are fabulous cans. Every moment we're a consumer -- where a consumer comes in contact with a brand is an opportunity to really enhance the perception of that brand.

DOBBS: Even a company's lobby is up for review.

LAZARUS: Those are great projects when you take on the lobby and the halls, because then all of the employees can sort of feel the brand that as they to work every day.

DOBBS: Ogilvy & Mather client roster, IBM.

UNIDENTIFIED MALE: You have to let go.



DOBBS: Kodak.


DOBBS: Sprite.


DOBBS: And American Express.

Even in a TiVo tilted world with a short attention span, Lazarus says advertising isn't endanger of extinction.

LAZARUS: The single greatest use of TiVo during the Super Bowl was to watch certain commercials again. And that just make me smile. It make my heart beat faster because it proves again people enjoy advertising. They enjoy good advertising.

DOBBS: Shelly Lazarus met David Ogilvy in her first years working for the company when she was nine months pregnant with her first child.

LAZARUS: I think David had never seen a woman, a pregnant woman, actually sitting in his agency and so he started to come visit me. Every night at 6:00 I would look up and there was David and he would always go, are you all right? And so we developed this incredible friendship based on that 30 days of visits.

DOBBS: 31 years later, she's running his company, and remembers his advice.

LAZARUS: When he was CEO he spent a disproportionate amount of time worrying about his people and thinking about the people and spending time with them. And David said, all the time I spent when I think back on it, I should have spent more. And you know, it's just something that I will never forget.

DOBBS: But Lazarus did not sacrifice time with her family to get to the top.

LAZARUS: I just knew from the start that I was committed to being the kind of mother I wanted to be. And that if I couldn't find the balance in my work, that I wasn't going to continue. I went to all of the school plays. I went to field day. I went to all of the birthday parties.

DOBBS: And now, as CEO of Ogilvy & Mather, Lazarus is, herself, a global brand.

LAZARUS: If I can show women that you can do that part of life and also be a CEO and be happy yourself and satisfied and anxious to come to work every morning, then that's a very important message to send. I love that one.


DOBBS: James Citrin co-author of "The 5 patterns of Extraordinary Careers" and is with us tonight.

Jim, good to have you back.


DOBBS: A remarkable woman in every respect.

CITRIN: A real role model, not just for women but men as well.

DOBBS: The responsibility the way she has taken, and she succeeded a woman in the post which is also remarkable in American business these days.

What about Shelly Lazarus makes her a success?

What made it work for her?

What can people, young people in particular, who are pushing ahead in their careers, trying to learn as much as they can, trying to get as much experience, trying to do the right thing to position themselves for, "success"?

CITRIN: Well, a few things. So many lessons to be learned from Shelly. One that is it is absolutely possible, it not easy, but it's possible to find that ideal and elusive balance between being committed to the job and also being important and rooted to the family. So that balance, she's a great role model for that.

But the other thing is the people side. She learned it from David Ogilvy. She cares about the people and as a result they created this incredible culture where creativity reins.

DOBBS: That is truly the culture of Ogilvy & Mather, across every level.

CITRIN: Well, you know, I'm sure there are some exceptions, but it's really a wonderful culture based on respect for the individual, great listening. That's one of the great secrets to advertising, as I've learned, is being a great listener and having a pulse on what is out there. And the fact that she just takes so much passion and joy in her work, it comes across. It comes across in the segment, and when you meet her.

DOBBS: As Shelly Lazarus was laughing there and talking about, she loved it and it makes her heart beats faster, she's talking about advertising, for crying out loud.

CITRIN: But advertising is important, because what she's -- this concept of 360 degree branding, it's all about creating a relationship with customers, not just about showing ads. It's in the packaging. It's in the promotion. It's in all the various ways that companies like Kodak, American Express, IBM, connect with their constituents.

DOBBS: As you and I are this week talking about success and satisfaction in one's life, I think most of us have a sense of what is satisfaction in our lives, a sense of happiness, fulfillment, with our families, our loved ones, our friends. Success in business is sometimes harder to define. The people, though, who are successful, how do they define success?

CITRIN: I think they define it -- based on all the research we did behind "The Five Patterns of Extraordinary Careers" -- they define it by being in these roles where they're just great at what they do. They love the people. They really enjoy who they're working with on a day-to-day basis, and are actually interested in the thing that they're working on. It's that passion, people, culture kind of triangle that Shelly's a great example of.

DOBBS: And the most important quality, and in case you're wondering, I'm not asking Jim a question that he hasn't written about in the book, but the fact is, what is the quality that most successful people look for in the environments, in the corporations, the organizations they work for?

CITRIN: It is the ability to let great people thrive. These are thoroughbreds who want -- they don't want to be micromanaged. They want to have an environment where they can do important things, take the kinds of risks and be rewarded for success, and not completely punished when something that is tested doesn't work.

DOBBS: Jim, that sounds like a pretty good recipe. And we thank you. And Jim is kind enough to be back tomorrow night as we continue to look at some extraordinary people with extraordinary careers. Doing it the right way. Jim Citrin, thanks a lot.

CITRIN: Thanks, Lou.

DOBBS: Tomorrow night, we take a look at a businessman who turned family tragedy into an opportunity to help his children and others who suffer from a rare incurable disease. Tomorrow night, Brad Margus, our focus. Please join us.

When we continue tonight, we'll bring you the results of our poll, and fear of hanging chads delays the California recall race. We'll share some of your thoughts that you've shared with us, next. Please stay with us.


DOBBS: The results now of our poll. The question, should New York Stock Exchange Richard Grasso, the chairman of the exchange, resign? Only 93 percent of you said yes; 7 percent said no.

And tonight's quote comes from Washington, where a Justice Department official made these comments in defense of the PATRIOT Act saying, quote, "this kind of baseless hysteria has convinced the American Library Association that under the bipartisan PATRIOT Act the FBI is not fighting terrorism. Instead, agents are checking out how far you have gotten in the latest Tom Clancy novel." Attorney General John Ashcroft.

Many of you wrote in about the decision by the 9th Circuit Court to postpone the California recall election. Nancy Rigg said: "I've lived in Los Angeles for more than 20 years and never have we had any problems with our voting machines, including hanging chads or any other Florida-style lunacy. I speak as an independent voter who is totally fed up with both parties. Send us Hurricane Isabel, please. We need to wash out all of the entrenched politicians in Sacramento, including every biased judge on the 9th Circuit Court of Appeals." That's a tall order.

Margaret from Arlington, Texas, said: "I don't think anyone wants another election like the 2000 presidential race. I am sure California would like to have the person who is really elected to serve." Well, actually, that's why they're having the recall.

But many of you also wrote about my interview last night with Al Franken. Wayne Styles of Bethlehem, Pennsylvania said: "Fair and balanced? Who is Al Franken kidding? He is as biased in his liberalism as his subjects are in their conservatism."

And Lyle Shidla of Summerville, Massachusetts said: "You commented very accurate that our politics are so polarized and we do so much to create division. Finding common ground through compromise is what has made this country great. Why do so many want to tear it apart by promoting extreme viewpoints that few Americans share?"

And finally, Steve Mitchell of Cocoa Beach, Florida, wrote about our report last night, "Drowning in Debt" and said: "In the past, I've always paid my credit card bill off each month. But if the federal government can run a $500 billion deficit, it must not be such a bad idea to do so myself." Well, actually, I think you may have missed the point of the report.

But we love hearing from you anytime with any view. Please e- mail us at That's our show for tonight. Thanks for being with us. Tomorrow, a man who runs one of the country's most successful biotech companies while fighting to find a cure for his own son's life-threatening illness. Commerce Secretary Donald Evans will join us. And Laura Ingraham, author of "Shut Up and Sing: How Elites From Hollywood, Politics and the United Nations Are Subverting America," will be here. Please join us.

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


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