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LOU DOBBS THIS WEEK

Salmonella Continues to Plague Food Supply; Foreign Ownership of a Major U.S. Railroad? Candidates Failing to Tackle Major Issues

Aired June 14, 2008 - 19:00   ET

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


LOU DOBBS, HOST: Tonight, the deadly salmonella outbreak in tomatoes is spreading around the country. The Food and Drug Administration apparently has no idea about the source of the outbreak. What in the world is going on here?
And: A secret of foreign hedge fund trying to take control of one of our biggest railroad companies is nothing less than an outright threat to our national security. We'll have all of that and much more from an independent perspective -- straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS THIS WEEK: News, debate, and opinion. Here now: Lou Dobbs.

DOBBS: Good evening.

Senators McCain and Obama are attacking one another but neither candidate is proposing any new ideas on the major issues. These candidates are failing to come up with new proposals to deal with issues that are vitally important to independent voters and independently-minded voters this campaign season. McCain and Obama instead focusing on what many call partisan blather and petty politics on issues such as the membership of their vice presidential search committees.

Dana Bash has our report.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CORRESPONDENT (voice-over): Not even 24 hours after the head of Barack Obama's vice presidential search team quit over questionable business practices, John McCain not so subtly launched at a new target, Eric Holder another Obama V.P. vetter, a former Justice Department official who gave the green light for a Bill Clinton controversy in the final hours of his presidency -- pardoning fugitive financier, Mark Rich.

SEN. JOHN MCCAIN, (R) PRESUMPTIVE PRES. NOMINEE: Mr. Holder recommended the pardoning of Mr. Rich, and all of those things will be taken in consideration by the media and the American people.

BASH: The Obama campaign shot back that A.B. Culvahouse, who's helping McCain pick his running mate, is, quote, "A prominent D.C. lobbyist who served as the Reagan administration's point man on the Iran-Contra scandal."

It's the latest and an escalating to-and-fro. Both candidates are trying to prove the other isn't a real reformer because of the company he keeps. Camp Obama has been pounding away at McCain's team for months -- especially two former top lobbyists who helped ran his campaign. But this war on each other's advisors is at odds with how both candidates promised the races would be run.

MCCAIN: I pledge to conduct a respectful campaign.

SEN. BARACK OBAMA, (D) PRESUMPTIVE PRES. NOMINEE: I said that I was looking forward to a civil, substantive debate on the issues.

BASH: Ironically, in the very same press conference that he raised questions about Eric Holder, Obama's advisor, McCain decried the back- and-forth, the sound bytes taking out of context, and renewed his call for a debate on the issues with joint town hall meetings.

MCCAIN: This is why we need town hall meetings. This is why we need to go the American people and stand before them, and have them ask the questions, and us give the answers.

BASH (on-camera): McCain went on to hold his own town hall meeting in his favorite stumping ground of New Hampshire where he did talk about a host of issues, everything from a gas tax holiday to climate change.

Dana Bash, CNN, New York

(END VIDEOTAPE)

DOBBS: A new CNN-Opinion Poll shows voters prefer Senator McCain's foreign policy but the same poll shows voters prefer Senator Obama's policies on the economy. Pollsters are also asking voters about the candidates' personal qualities.

Bill Schneider has our report.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): Barack Obama is supposed to be the rockstar of this campaign. John McCain says he will win the election on substance. That may be backwards. Voters who say personal qualities are more important than issues, prefer McCain.

MCCAIN: I don't seek the presidency on the presumption I'm blessed with such personal greatness that history has anointed me to save my country in its hour of need. I seek the office with the humility of a man who cannot forget my country saved me.

SCHNEIDER: Among those who say issues are more important, Obama leads by more than 20 points. What issues? The big one.

OBAMA: In the last eight years, we failed to keep the fundamental promise that if you work hard, you can live your own version of the American dream.

SCHNEIDER: Obama has the edge over McCain on the economy. It's a fairly narrow lead, just six points. It may have less to do with Obama's issue positions than with his party. The Democratic Party now has a huge lead over the Republican Party on the economy -- two to one in a recent poll.

By winning the nomination, Obama has become the Democrat, the candidates who offers different economic policies than those of President Bush -- in a word, change.

OBAMA: So, there's going to be a very clear choice in this election. John McCain will dust off the old political playbook that George Bush used in the last two elections, and the disastrous tax policies that have failed the American people. I am running to lead this country in a new direction.

SCHNEIDER (on-camera): Despite the public's position to the war in Iraq, McCain leads Obama on foreign policy. But, that's not the issue on most people's minds right now.

Bill Schneider, CNN, Washington.

(END VIDEOTAPE)

DOBBS: Senator Obama this week cancelled a visit to Cedar Rapids, Iowa because the city is badly flooded. Floods and tornadoes have devastated large areas of the Midwest, extreme weather is also hitting other parts of the country.

Susan Roesgen has our report.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: There are some structures there. I don't know if that's a house or whatever. It looks like it's going to be right in the path here very shortly.

SUSAN ROESGEN, CNN CORRESPONDENT (voice-over): Oklahoma, a tornado rips apart an industrial farm. Incredibly, the workers inside survived. Wisconsin...

UNIDENTIFIED MALE: There it goes.

ROESGEN: Homes are cut in halves, swallowed in floodwaters that swamp a town.

In the west, wildfires, the south record drought. While the east bakes in a deadly heat wave.

UNIDENTIFIED MALE: He told us to just get under the tables.

ROESGEN: And now, four Boy Scouts killed in the tragedy in Iowa.

From January to June, extreme weather has pounded the country with relentless force. So what's causing it?

CHAD MYERS, CNN METEOROLOGIST: We're talking about a big trough of low pressure in the west, that's made a very cold spring and early summer. And then up here across the parts of the northeast, it's been a big ridge of high pressure that's been very warm. But in the middle, it's kind of this stalled front is where the rain has been and where the tornadoes have been. You got hot, you got the rain, and you got cool and dry. Yes they are all connected.

UNIDENTIFIED FEMALE: Oh, my goodness.

ROESGEN: In the last three years, there had been an average of more than 1,100 tornadoes annually. But so far this year, there have already been more than 1,500 reports of tornados or tornado damage.

UNIDENTIFIED FEMALE: I've never seen anything like this. I don't know where to go.

ROESGEN: The heavy rain, the floods, the worst in years could have a lasting impact on America's farms.

(on-camera): These are a couple of the soybeans that have died under water here. And the worst of it is, even if the rain were to stop, even if all this water were to dry up, it's just about too late to try to plant the fields again.

(voice-over): And many Americans are wondering if global warming is a factor. CNN severe weather expert Chad Myers doubts it.

MYERS: This just has been a very -- it's been a stormy year. It's all going to change. It's all going to kind of get back to normal. But things do look like they're breaking right now. And this storm after storm, day after day, will come to an end quite soon.

ROESGEN: Not soon enough for those in harm's way.

Susan Roesgen, CNN, Madison, Wisconsin.

(END VIDEOTAPE)

DOBBS: Up next, the Supreme Court is ruling in favor of giving terrorist suspects in Guantanamo constitutional rights. We'll examine the military and legal consequences of that ruling.

And: The federal government has no clue, it says, about the source of a deadly salmonella outbreak spreading across the country. Our government at work. We'll have that special report here next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The Supreme Court this week ruled five to four that suspected terrorists being held at Guantanamo Bay have a constitutional right to challenge their detention in federal courts. Justice Anthony Kennedy writing in the majority ruling said, quote, "The laws and the Constitution are designed to survive and remain in force in extraordinary times." Chief Justice Antonin Scalia in a scathing dissent said, "The decision will almost certainly cause more Americans to be killed."

Constitutional law professor Richard Pildes and CNN military analyst, General David Grange, express their strong views and concerns about the implications and consequences of this ruling.

(BEGIN VIDEO CLIP)

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: I think some of the concerns may be when you turn over an enemy combatant on the battlefield, what's going to happen with that particular prisoner? Right now if the constitutional rights are given to everyone besides American citizens, and they have a right to a trial before interrogation and information is brought out from those prisoners, it may cause some confusion. So, I think there's some implication here.

DOBBS: And professor, on a legal basis, does this take the umbrella of the Constitution to new limits?

PROF. RICHARD PILDES, NEW YORK UNIVERSITY: I would say that the decision is definitely unprecedented. But I think the Supreme Court is also reacting to a situation it views as an unprecedented -- that Guantanamo has now existed for six years. The court has been made aware that this looks like it could go on for a long, maybe indefinite period of time. And so, at this stage, they're stepping in.

But contrary to what the general said, the court's decision does not mean that the courts are going to jump in right away once people are captured and detained. The court clearly will give the government the executive time to hold people. What the court's decision says is after this amount of time, there has to be some federal judge who can judge the decision of whether this person really is a soldier for al Qaeda or soldier for the Taliban. It's just too long to hold people indefinitely with no oversight.

DOBBS: I'm not going to speak for the general, but I got to believe he's shuttering as you use the term soldier -- because these are not soldiers, these are terrorists. Does that give you pause?

PILDES: Well, I'm trying to make it explainable to people who understand a conventional war. So, if we had a German soldier during World War II, we would detain them for the course of the war. But this has already go on longer than World War II. And what the court is saying is that people we think are terrorists, people we think are enemy soldiers or enemy combatants, there has to be a federal judge who at least looks at the evidence to see if that's, in fact, a correct judgment.

DOBBS: Are you in any way mollified here, general?

GRANGE: Well, it's a different kind of a war, and the war is not going to end any time soon. I don't think that the military that works for us in Guantanamo Bay wants to keep these detainees longer than they have to.

But some of the information, I know, is classified. I know that some of them that are released too early go back on the battlefield and re- fight America and other coalition forces.

I think that they want to charge them if they can and they want to get a ruling. But some of it does take time but so does counter insurgencies, and so does war against terrorist organizations, which is going to be here for some time.

DOBBS: From a legal perspective, your response to the general's concern which is, he correctly, it seems to me states -- I mean, we are definitely in a different kind of a war.

PILDES: I think that the general's concerns are clearly right and the significance of this decision is going to depend on how much common sense, practical judgment the district judges bring to their role. Are they going to listen to evidence properly? Are they going to understand the difficulty of proving whether someone is an enemy combatant or not?

It's now in the hands of the federal district judges to exercise some, you know, common sense, good legal judgment, and that's when we're going find out whether this decision has monumental consequences or fairly minimal more symbolic consequences.

DOBBS: General, you get the last word here.

GRANGE: Well, over 500 have been released. They have about what -- 270 still in captivity. I think they want to expedite the process. I think when they can do that, let's try to do it. But the decision has been made. And so, obviously, the military will follow their orders.

DOBBS: All right. Thank you very much. General Grange, it's good to have you with us. Professor Pildes, thank you.

GRANGE: My pleasure

PILDES: Thank you.

(END VIDEO CLIP)

DOBBS: Up next: Outrage over a foreign hedge fund and its efforts to take control of one of our strategic asset, one of the country's largest railroads. We'll have a report.

And: Senator Evan Bayh joins. He's demanding an investigation.

And: Dozens more victims of those contaminated tomatoes. Why hasn't the government found the source of the salmonella outbreak, or have they -- and perhaps, simply not told the rest of us? We'll have complete coverage. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The deadly salmonella outbreak this week is spreading further. The government is reporting dozens of new cases of salmonella connected to consumption of tomatoes. And as Louise Schiavone now reports, the Food and Drug Administration still does not know, it says, the source of this outbreak.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The Centers for Disease Control is reporting dozens more confirmed illnesses linked to tainted tomatoes and it's not over yet.

VOICE OF DR. IAN WILLIAMS, CHIEF, OUTBREAKNET TEAM, CDC: We would characterize this outbreak as ongoing.

SCHIAVONE: Not only are there no answers about the source of the contamination from the Food and Drug Administration...

VOICE OF DR. DAVID ACHESON, ASSOC. COMMISSIONER FOR FOODS, FDA: It is possible that we may not know but the same is true of any outbreak.

SCHIAVONE: The Government Accountability Office charges that with 80 percent of the nation's food supply at stake, the FDA seems incapable of explaining how it will execute a recently unveiled food safety plan.

LISA SHANES, GOVERNMENT ACCOUNTABILITY OFFICE: The FDA has implemented few of our past food safety related recommendations. Of the 34 recommendations we made since 2004, FDA has fully implemented seven.

SCHIAVONE: The verdict from lawmakers who've been pressing FDA to meet their obligations...

REP. JOHN DINGELL, (D) MICHIGAN: To have FDA come up and say they don't know what to do about it, or how much money they need, or what resources they require, is a shame and a disgrace.

SCHIAVONE: On Capitol Hill, the government's food czar reported that for now, there are no tools in place to track the origin of the latest salmonella outbreak.

ACHESON: Most people when they've to consume a tomato just know they've consumed the tomato, they don't know where it came from. And by the time somebody...

REP. BART STUPAK, (D) MICHIGAN: You think consumers don't know where their food comes from if it's labeled?

ACHESON: Well, let me ask you a question, if I may.

STUPAK: Sure.

ACHESON: If you've eaten a tomato in the last week, do you know where it comes from?

STUPAK: No, because you won't implement country of origin labeling.

SCHIAVONE: Mexico sends 80 percent of its tomato crop to the U.S., and while Mexico has not been cleared by the FDA, official say they cannot say that Mexico is the source of the problem.

(END VIDEOTAPE)

SCHIAVONE: Well, the FDA says it's been in touch with Mexico but has not sent investigators over the border or to any farm for that matter because they are yet able to pinpoint the place that the bad crop came from.

DOBBS: At this point, would we all be forgiven if we thought the FDA was being led by just really a pack of baboons and fools. To hear David Acheson responds to Congressman Stupak with that arrogant nonsense -- I mean, what is going on? Why is this administration, why is this agency being permitted to behave and conduct itself like jack idiots?

SCHIAVONE: They really are cornered and all of the people in Congress -- Democrats and Republicans have confronted them about this. But just because they're being confronted, just because they're cornered, doesn't mean they have the answers and they don't have the answers because they don't have the infrastructure to give the answers.

DOBBS: Which they have refused to build up over the course of the past 7 1/2 years. A number of statistics -- 1/3 third of the tomatoes consumed in this country now are imported.

SCHIAVONE: That's right.

DOBBS: Eighty-three percent of those tomato imports come from Mexico. Therefore, does the FDA have any idea what percentage of the tomatoes that have been, that have not been cleared, originate from Mexico, but that seems to be the real issue -- Mexico and central Florida. Why can't this agency even though it's run by some of the biggest Neanderthals ever imaginable at the head of the agency, why can't they answer those straightforward questions?

SCHIAVONE: We know from our research that the predominance of the crop that was consumed in the United States for months of April and May came principally from Mexico and Florida.

Now, the FDA was asked during the conference call late this afternoon -- why not just say you're looking at Mexico? And they have said, well, we're not going say that Mexico is guilty until we know for a fact.

(CROSSTALK)

SCHIAVONE: They have...

DOBBS: Just ask them to say they're guilty. If you know that the preponderance of a crop comes from Mexico, what idiot would not go down and inspect those crops. They did the same thing in Florida because Florida is the other largest producer and they put investigators there. Why would they not do the same thing in Mexico?

SCHIAVONE: They say they have been in touch with them. They have exchanges of information. But they have not crossed the border yet. I asked them-- is this a diplomatic issue and they said, oh, no, there's no...

DOBBS: A diplomatic issue when Americans are being sickened and one has died. This administration, this president, this Congress to tolerate this -- I mean, I don't know what in the world the American people are supposed to do. This is just sheer dereliction of duty. It's unconscionable. We're talking about American lives here.

So, thank you. Keep on it; go get them. Thanks, Louise Schiavone. Appreciate it.

Up next: A shadowy foreign company trying to take control of a critical American asset. We'll have that report.

And: A leading senator is calling for enforcement of our immigration laws. Senator Chuck Grassley joins me.

And: Senator McCain and Obama are hammering one another on the economy. Does either one really have a plan, do they have a clue? The independent perspective on that and much are still ahead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Well, if I'll lapse (ph) in to opinion here in the next few minutes, it's only my opinion, not CNN's, not anybody else's, it's just mine. All provoked by the "New York Times," they provoke me from time to time.

The "New York Times" today attacked me for my criticism of a foreign hedge fund investment or attempted investment in a key component of this country's infrastructure, a key national security asset, in my opinion. That investment would put one of the nation's major railroads under the influence, strong influence of a foreign fund whose investors remain unknown to the federal government and to everybody else.

And as Kitty Pilgrim now reports, there are major security concerns on Capitol Hill over this deal.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): CSX connects to every population and industrious center east of the Mississippi, with 1,200 trains a day, connecting 13 military base and 70 ports.

U.S. legislators are concerned that TCI, $19 billion hedge fund based in London, wants to place five directors on the CSX board, cut capital expenditures and increase rail rates. The hedge fund has accumulated 4 percent of shares and another 11 percent of economic interest in CSX. TCI won't disclose who its investors are.

PROF. JOHN COFFEE, COLUMBIA UNIVERSITY: Because they're unregulated, hedge funds are not subject to any transparency in that regard. They never have to disclose. They're under no obligation to tell you who owns them. And most of their shareholders don't want to be disclosed as shareholders.

PILGRIM: Six senators on the banking committee have written to the Treasury Department asking for CFIUS review on national security grounds. SEN. EVAN BAYH, (D) INDIANA: We have to know what the facts are. And we have to see who the investors are. And if there is a foreign government attempting to exert some sort of influence or control over an important national security asset in the United States of America, including important infrastructure like a railroad, well, we need to know about that and not just accept assertions that it's OK, but make sure that, in fact, it's OK.

PILGRIM: TCI says nobody should be worried about their investors, only 1 percent of their assets are sovereign wealth funds.

SNEHAL AMIN, THE CHILDREN'S INVESTMENT FUND: Hopefully we've made people comfortable that the vast majority of the money is from the U.S. or Europe, not threats in any way. And even if we can disclose who the rest of the world, the other 5 percent, you'd realize these are not people, not funds to be concerned about. And even the sovereign wealth funds are not funds to be concerned about.

PILGRIM: TCI says its proxy fight with CSX is being politicized, and opposition to TCI has nothing to do with national security issues.

(END VIDEOTAPE)

PILGRIM: Well, this is not the first time TCI investment in a company has met with resistance by government officials. TCI's investment in a Japanese power company was opposed by the Japanese government on national security grounds.

Now, U.S. industry watchers say it's important to review any foreign investment in a strategic asset such as a major railroad. Lou?

DOBBS: You've got to give credit to Senator Mendez, Senator Evan Bayh, as you reported, Congresswoman Corrine Brown, amongst others, for stepping into this.

The arrogance of this hedge fund, to take on the Japanese government, they pushed around apparently the British government quite regularly.

But the management of CSX, whatever else you want to say, as the "New York Times" did point out today, at least, has risen 2 1/2 times over the course of the past three years, their stock. So, they don't really need this hedge fund to tell them how to run their business. I mean, on that level alone, they look like complete, I'll try to think of a nice word, complete fools.

PILGRIM: We talked to industry analysts for the railroad industry. They say CSX is in the process of a three or four year turn around, they should be allowed to continue that. You know, it's funny because TCI says they never sought control of CSX but they do have a very strong corporate agenda that involves cutting capital spending and so they do.

DOBBS: Right. Frankly, you know, we got the president of the United States and you got this excuse, poor excuse for a treasury secretary, Henry Paulson, they're going around the world with their hats in hand trying to get foreign capital. Now, this is the kind of nonsense that follows suit the idea that you're giving entitlement to a hedge fun. First of all, the idea that hedge funds are not regulated in this country is absolutely an obscenity. To have a foreign hedge fund is an even greater obscenity and it's time to get rational. The other part of this is, this is a national security asset, and, you know, this is just a joke that's got to be ended it. I don't care whether CSX thinks we're politicizing it or not, in point of fact, we are, for the purpose of people paying attention to a national security asset.

PILGRIM: Well, when you look at the grid of CSX, there's no mistake, this is a major asset to this country.

DOBBS: And of course, I would make the management of CSX and their lobbyists as well uncomfortable because, as a national security asset, they are going to be held to a higher standard, certainly, by our government and by this broadcast among others.

Kitty, thank you very much. Great job of reporting.

Kitty Pilgrim.

Well, they're not going to be held to much of a higher standard by the "New York Times." Its standards -- not in -- manifest evidence in their most recent article attacking me and my position on CSX and TCI.

The "New York Times" also making an issue of this American flag lapel pin -- a pin I've worn here every night and have done so since September 11th. I wear it out of respect and honor for the victims of September 11th. The "Times'" Andrew Sorkin wrote, Lou Dobbs wearing an American flag pin in his left lapel -- nasty me -- introduced a segment on his CNN program last week with his trademark outrage.

Yes, I was outraged -- I often am -- when we see government and national media combine for stupidity in a just wonderful, wonderful effort to mislead the American people and not fully inform them.

The "New York Times" apparently making an effort to brand me as a flag waving protectionist. Well, obviously, I'm not a protectionist. I do wear my lapel pin.

And, by the way, Andrew Sorkin, the issue that you forgot was -- to include your article was the fact that Japan had exactly the same reaction to TCI when they attempted to raise their investment in J Power, an important utility, a national security asset for the Japanese. You forgot to mention that as well.

And did you mention the part about the sovereign wealth funds and the fact that this hedge fund refuses to disclose its ownership? Some things you might have considered. Just a thought.

Love and kisses, see you next time.

Senator Evan Bayh and five other senators are now demanding a federal investigation of the TCI funds' actions. Senator Bayh explained why the senators are so concerned about the influence of this fund and why TCI's role warrants close examination.

SEN. EVAN BAYH (D), INDIANA: We welcome investment in this country. That's good for us. But when it comes to critical national infrastructure, national security assets, like a railroad that carries nuclear material, for example, defense materials, for example, it's important that we make sure that foreign investments don't undermine our nation's security.

That's number one.

And number two, we've seen the rise in recent years of sovereign wealth funds, basically foreign government controlled investment vehicles, that are now investing billions and soon to be trillions of dollars and we need to make sure -- and I understand there's some sovereign money in this...

DOBBS: Correct.

BAYH: ... British hedge fun.

DOBBS: Absolutely.

BAYH: We need to make sure that hedge funds and these intermediaries aren't being used to object secure foreign government control of critical U.S. infrastructure.

DOBBS: Well, Senator, one of the problems we have in this country is that we're not regulating hedge funds themselves. And that's a problem in every degree. But your concerns that you raise about CSX railroad, your concern should be absolutely determined in what happens here.

This is not simply a matter for a whim of the marketplace as you point out and as your other senators, Congresswoman Corrine Brown points out. This is a strategic U.S. asset. What in the world are we supposed to do? Just simply raise our hands and say please? Whatever you wish?

BAYH: No. Absolutely not, Lou. There is a process in our government, it's called the CFIUS process, that's a long acronym, designed to review these kinds of acquisitions.

Now following the Dubai port deal situation we specifically changed the law to include critical infrastructure like railroads.

DOBBS: Right.

BAYH: Now it's up to the Treasury Department to decide how they are going to implement the law and whether they will continue to be a toothless tiger or they're going to, in fact, have some teeth.

The reason for our letter to treasury was to say, look, this is the very kind of situation we contemplated when we wrote this into the law. Please go forward and implement it accordingly.

DOBBS: You're being modest. The smart and secure investment -- Foreign Investment Act, you led the way on that. You were very -- well, you were modest to say we, although your colleagues, of course, did vote on but it was your initiative and you deserve great credit for it.

BAYH: Thank you.

DOBBS: What in the world is going to happen there? What is the attitude, the mood in the Senate to put up with a snarky little investment fund, that calls itself the Children's Investment Fund, refuses arrogantly to disclose anything of its ownership, its investments, and then demand of CSX, you know, that it perform in a different level when it's already increased its stock price over the course of three years by 2 1/2 times.

I mean this is pretty amazing arrogance. The Japanese -- by the way, the "New York Times" forgot to point it out. The Japanese told these little snarky Britishers with their fancy little hedge fund attitudes to go stick it.

Why don't we find a way to expeditiously do the same?

BAYH: Well, we should, Lou. And if the Treasury is not willing to implement the law using its discretion in cases like this, we'll have to take a careful look at requiring them to do that in the future because it's a dereliction of their duty if they don't. That's number one.

Number two, with regard to these sovereign wealth funds there needs to be some kind of rules that guarantee that their investments are made solely on economic grounds rather than for political reasons.

And you know what, Lou, I -- when we get accused of being Sinophobes or protectionists or that kind of thing.

DOBBS: Right.

BAYH: That has nothing to do with it. I would be having these same concerns if our own government were trying to get five seats on the board of CSX.

DOBBS: The same people who would be accusing you and me of being Sinophobes or whatever are the ones railing about Abu Dhabi buying the Chrysler building.

Who care? It's not a strategic asset.

BAYH: Right.

DOBBS: Buy it as you wish.

DOBBS: We thank you very much. It's also nice to see a few dollars come back for the country.

Senator Evan Bayh, thanks for being here. Good luck.

BAYH: Good to be with you. DOBBS: Up next, petty politics taking center stage on the presidential campaign trail. Where's the focus on the issues that the candidates promised? The ones that independent voters care the most about?

I'll be joined by three of the country's leading political analysts and Senator Chuck Grassley. He wants legislation to renew the e- Verify system and he wants it passed quickly. He's our guest here next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: President Bush has signed an executive order cracking down on the employment of illegal aliens by government and the president signing that order the same week that Senator Grassley introduced legislation to reauthorize and to improve the e-Verify program, a federal program that verifies the work eligibility of new employees, their legal status.

Senator Grassley joins me now from Capitol Hill.

Good to have you with us.

SEN. CHUCK GRASSLEY (R), IOWA: Lou, I'm always glad to be with you.

DOBBS: Senator, do you have the feeling that you're going to be able to succeed in reauthorizing the e-Verify program?

GRASSLEY: Well, I would hope that even people that maybe doesn't want it to be as sweeping as my legislation would require it to be, because we apply it to everybody, they surely would think that we need to have the E-Verify program as limited as it is in use, at least continue the extent to what it is, if for no other reason than to give employers who are overly concerned about whether a person is legally or illegally in the country an opportunity to use it.

And we shouldn't take away the choice of people that want to use it.

DOBBS: Well, 69,000 employers using it now. It's considered by the Department of Homeland Security to be -- as you know, 99.5 percent reliable.

The ACLU is attacking President Bush for signing an order that requires contractors to use the E-Verify system to make sure that their employees are legal when doing business with the federal government. I mean you couldn't get this more screwed up and upside down in this country when it comes to national values if you tried, could you?

GRASSLEY: Well, you know, I had an opportunity -- it's probably an annual meeting with constituents who are ACLU leaders from my state. We had this very discussion. But let me tell you the reason why it's so important that the president do that, and I would have had it in my legislation if he hadn't done it so it's quite a victory to get it done by executive, but isn't it silly to require every federal agency that a federal employee be E-Verified. But so much of the work of the federal government is done by private contractors that it doesn't include the contractors, because we've had instances in which people from terrorist organizations have been employed...

DOBBS: Absolutely.

GRASSLEY: ... on army bases as an example.

DOBBS: Well, and the examples go on, as you know. I mean your legislation would require that E-Verify be made permanent rather than expire and, I believe, what, it expires in November, without your legislation. It requires federal contractors to use E-Verify, allows employers to verify the status of all their employees, requires employers to re-verify the status of temporary workers.

It does everything but require every employer to use it. Why not require every employer to use it?

GRASSLEY: Well, I -- obviously, favor that because that would have been a part of an immigration bill that, for the most part, I like except for the amnesty that was in it. But I guess to get that accomplished we're going to have a more comprehensive immigration bill. And...

DOBBS: Well, why is that, Senator? Because I mean this -- you know the big problem here, I've said all along, I don't know whether you agree with me, but I've said all along the only rational act in this entire illegal immigration mess is the alien. We understand what is motivating that man or woman.

But what we don't understand is why illegal employers of those illegal aliens, they are the ones driving illegal immigration. If we could put a verify out there and require that business to be responsible for these -- verifying the status of their employees, that go a long way to solving our problems, wouldn't it?

GRASSLEY: Well, of course, it would. And I'd like to give you an answer that I agree with you 100 percent and I do agree with you 100 percent.

But in this business that I'm in and it frustrates people like you and our constituents when we answer this way, but it's what can you get done right now and this is what I think I can get done right now.

DOBBS: Yes. Well, I think -- I understand that. And as you suggest, like your constituents, I don't like the answer. I would like to see something better. But at least it's progress and for that I commend you, Senator Grassley. We appreciate your being with us.

GRASSLEY: Well, thank you very much. And call me back when you need me.

DOBBS: You got a deal. Thank you very much, Senator.

GRASSLEY: OK. DOBBS: Up next, Senators McCain and Obama engaging in petty politics on the presidential campaign trail. Just what they promised not to do. We'll have an independent perspective on that. And a great deal more with three of the best political analysts.

Stay with us, we're coming right back.

(COMMERCIAL BREAK)

DOBBS: Senators McCain and Obama promise to keep their campaigns positive but lately their campaigns have been anything but positive, rather a display of petty politics at its worse.

For more now on this campaign and all the week's political news and developments I'm joined by three of the best political analysts in the country. In Arlington, Virginia, Beth Frerking, senior editor, Politico.com.

Beth, good to have you with us.

BETH FRERKING, POLITICO.COM: Thanks for having me.

DOBBS: Democratic strategist Julie Roginsky. Julie, good to have you with us. And Democratic strategist and contributor -- CNN contributor Hank Sheinkopf.

Hank, good to have you here.

HANK SHEINKOPF, CNN CONTRIBUTOR: Thank you, Lou.

DOBBS: Well, let's start with what in the world is going on, Beth? These two candidates said they're going to be all about love, kisses, elevated discourse, and the next thing you know they're in the trenches and they're getting pretty muddy.

FRERKING: They are. And I think we probably shouldn't be surprised. You know, love and peace goes only so far. But they're in a general election now and they're going to be going after each other. And I think certainly on the town hall proposals we're going to already start see the tussling there.

They're going to be trying to take what's best for their advantage and they're going to really start going after each other on the economy, on their plans to strengthen the economy. We're probably going to see more on the war and given the decision -- the Supreme Court decision on Guantanamo Bay. That's another area that they're going to disagree in.

You know, if they're going to point out differences about each other, unfortunately, you can't just be happy and nice all time.

DOBBS: Well, you know, personally, I'm all for it -- you know, in your face, hard, tough encounters between these two candidates. I don't want to see this phony nonsense. It looks like -- but the pettiness is also something I don't want to see. This thing -- this gotcha stuff about one campaign -- the Obama campaign losing a third of it's vice presidential search committee.

The -- you know, the Obama campaign going after McCain because he said it's the casualties in Iraq that count. And of course, he's exactly right. And they know better. And they keep insulting voters. I mean this was supposed to be different, Hank.

SHEINKOPF: Well, it's not going to be different, Lou, because there are now more media outlets than ever having more time to fill up, more pages to fill, more stories to be filed. And by the way, something's got to fill those pages and whatever they do is news.

DOBBS: Well, that's so callous and cynical, I think.

SHEINKOPF: Well, forgive me. Please, Lou, forgive me.

DOBBS: Julie?

JULIE ROGINSKY, DEMOCRATIC STRATEGIST: (INAUDIBLE) commitment to stay positive? When have you ever seen a campaign in the history of this country or any country that's been face some positive issues? But look, I hope that what he's talking about is accurate. And in fact, we'll be talking about the war and economy.

But we're not. You're seeing the RNC already going down the road of discussing who is on the vice presidential search committee for Barack Obama, and who cares?

These are -- some people paying $4 for a gallon of gas. There's a war going on that people hate. And they're talking about Eric Holder maybe, you know, being involved in a Marc Rich pardon from eight years ago. It's so silly and so petty. I hope we could actually debate the issues because there is a vast difference between these two on the issues. It's not about these petty other nonsense.

DOBBS: I think you're maybe -- you and I might argue about how much of a difference and how many issues there's a difference on. But at the same time, Obama said he's going to be the agent of change that he's going to put this kind of politics behind us.

This looks like a great vulnerability for him. For him to get down and wrestle in the mud here and to be looking like he's got a smile on his face as he does it may have a liability, may create a liability for him, right?

ROGINSKY: I don't think so. Look, I mean, if he sticks to the issues and he talks about the differences between himself and McCain on the issues, I don't think there's anything wrong about stressing somebody else's -- it's cold comparative politics. It's you stress somebody else's differences with you. It's not getting down in the mud and saying, you know, my mother versus your mother, and you know, what you may have done back 20 years ago.

That's -- to me, there's a substance of difference.

DOBBS: It's your Jim Johnson versus his Rick Davis versus... ROGINSKY: Yes, and by the way, how many people watching right now care who Jim Johnson or Rick Davis are? They care a lot more about how they're paying for gas and thinking a lot more about, you know, sending their kids to college, I think.

FRERKING: Lou, if I can respond to that.

DOBBS: Sure. Sure.

FRERKING: You know, I think it's a tough line to walk because we've seen what happens in past elections when people didn't respond to charges. Certainly you had John Kerry being a perfect example of that...

DOBBS: Right.

FRERKING: ... coming in late on the swift boat charges. So I think the Obama people are saying, we're not going to sit back and we're not going to let things just go. We saw what happened also with him and the Jeremiah Wright controversy. You know he came out in the beginning but he really didn't completely move himself way from him until later and that hurt him at the time.

So you've obviously got some people in his campaign saying we need to punch right back and say something, and yet on the other hand, like you're saying, how long does he do that? How far does he do that before people say, wait, what about the change?

DOBBS: Yes. Yes, it looks like we've seen a little bit of this movie before.

All right. We're going to be back with our panel in just a moment and amongst the things we're going to discuss is what about Reverend Jeremiah Wright? And what about Pastor John Hagee? Where did they go? Will they return?

And a reminder to please join me on the radio Monday through Friday for LOU DOBBS SHOW. Monday, investment strategist (INAUDIBLE) and veteran Harvey Eisen joins me for the latest on the direction of this economy. Michael Goodwin, "New York Daily News," and I will be talking about politics and what's on the mind of independent voters.

And Nan Mooney, author of "Keeping up with Our Parents" will be my guest. Join us for the LOU DOBBS SHOW to get your local listings and go to Loudobbsradio.com to get your local listings.

We'll be right back with out panel on presidential politics in just one moment.

(COMMERCIAL BREAK)

DOBBS: I'm back with Beth Frerking, Julie Roginsky and Hank Sheinkopf.

And let's go to the issue of what in the world happened to Hagee and the Wright and all the boys and girls who have got to the public square and on the campaign trail

ROGINSKY: Asked and answered, I'm going to say to this issue. I think we should stop talking about it and start talking about things that people care about.

Look, I don't care about Reverend Wright.

DOBBS: Hey, wait a minute. You were just talking about comparative politics here.

ROGINSKY: Comparative on the issues, Lou. How much more Jeremiah Wright can we take?

SHEINKOPF: Here's what happened. They have been replaced by John McCain. This is the great switcheroo. And the target here is John McCain and Obama has to get away from those problems, those other problems as quickly as he can, and what better thing to do than a guy who says, maybe we'll keep the war going, maybe we won't. And the economy, I'm not so sure.

DOBBS: Well, neither one of these candidates, in my opinion, is so sure on the economy. As a matter of fact, I don't think either one of them has a clue what they are talking about at this juncture.

I assume that their advisors and they will come together and inform late on an original idea, whether both candidates will be able to do that, I don't know. But hopefully one of them will because they certainly haven't to this point.

Beth, your thoughts?

FRERKING: Well, you know, Obama is definitely already talking about this, as you've seen. It sounds like he's taking a few pages from Hillary Clinton's campaign. Suddenly we're talking about, you know, change and how it affects you. Change and how it works. He's speaking to groups now on Social Security, to seniors, on his tour, you know, at the moment.

And so I think he's starting to very definitely move to those sort of more wonky topics, you know, the topics that people are living every day as opposed to sort of inspiring speeches. And I think he's going to have to start making those connections that, frankly, Hillary Clinton made a lot when she was campaigning. She was very good at connecting on those kinds of issues.

DOBBS: I think you're exactly right. But I also think you got to give Senator McCain some credit here. He took on CEOs this past week on the high pay that they're receiving, the high levels of compensation, and he said he wants it rolled back.

I mean this is populism at its best. Hallelujah to both candidates as far as I'm concerned.

ROGINSKY: Yes. Again, (INAUDIBLE) let them keep every single tax breaks they got under George Bush as they're collecting some of those very high salaries and, you know, and that -- what that does is basically affect the people who make over $2.8 million a year more than it does any middle class person.

So at least, you do have a difference here in substance between John McCain -- and (INAUDIBLE) tremendously with the very affluent like his predecessor is...

DOBBS: And like the Republican Party as well.

ROGINSKY: And like the Republicans usually does, and I think that Barack Obama is talking about doing a very targeted middle tax break. You may agree or disagree with is, but having said that at least Obama...

(CROSSTALK)

DOBBS: I mean I think that the wealthy in this country should be paying a lot more in the way of taxes. It's an obscenity that the wealthy in this country is not paying a fair share. The larger obscenity, however, is that we're not at the same time requiring equal sacrifice and equal sharing of burden here when we're at war.

And I mean that in both societal way as well as in a tax base fashion. There is no excuse...

ROGINSKY: I agree.

DOBBS: ... for only an element of our society being available to the United States military to serve this nation and that's wrong. Dead wrong.

SHEINKOPF: I couldn't agree with you more. Let me go back to the tactical issue, Lou, because that's something we understand.

DOBBS: Sure.

SHEINKOPF: McCain's problem, get George Bush off his back. How does he do that? Become a populist. Go back to who he was. He's not going to worry about losing the Evangelicals. Why? Because the states -- they're in states he's going to win any way.

DOBBS: OK. You mentioned the town hall meetings, Beth. Do you believe that we're actually going to them? McCain is out doing them and has been doing them. But now do you think there's any realistic expectation that we'll see them in the same town hall meeting at the same time without a moderator?

FRERKING: Well, I think it's very interesting that the Obama campaign didn't immediately agree to the same things that the McCain campaign agreed to, you know, the proposal by Nancy Reagan to have the town halls at the LBJ School and out in California.

I think he may come under some pressure if he doesn't eventually agree to that. Now, one every week, I don't know. I kind of doubt that. But certainly if he keeps pushing it off and pushing it off I think people will start saying, well, what's he afraid of? Why won't he go in there and talk, you know, one on one with his opponent in the Republican Party? ROGINSKY: I think tactically what he's doing is lowering expectations. I think everybody so expects Barack Obama to blow away John McCain in the debate so he's procrastinating a little bit, by having this dialogue and what is he afraid, he may be lowering expectations, which is something George Bush did dramatically well back in 2000 with Al Gore. I think that may be the reason for it.

SHEINKOPF: And what's the rush? It was right. But what's the rush? We had a long way to go until November. What's the rush?

DOBBS: All right. I will answer that question.

SHEINKOPF: Please.

DOBBS: We have so many issues and challenges facing this country right now. We were running one every week, I doubt that we will get to all of the substantive issue that the American people deserve to hear from these candidates on (INAUDIBLE).

Anyway, Beth, good to have you with us.

FRERKING: Thank you, Lou.

DOBBS: And thank you very much, Julie. Thank you.

And thank you for being with us. Join us here tomorrow. For all of us, good night from New York.

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