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CNN LOU DOBBS MONEYLINE

Man Opens Fire at Case Western University; Coalition Forces Demand U.N. Recognizes Their Control Over Iraq; House Clears Scaled Back Tax Cut

Aired May 9, 2003 - 18:00   ET

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

LOU DOBBS, HOST: Tonight we are following a breaking story right now in Cleveland, Ohio. A man with a machine gun opened fire at Case Western Reserve University, the first shots fired just about two hours ago. Two people have been wounded. Some people remain inside the building, although authorities there are attempting to evacuate the building.
Cleveland Police have surrounded the building, and they blocked of traffic from nearby streets. We are told the SWAT teams have moved inside the building, and Cleveland police chief, Edward Lohn, made a plea for the gunman to contact police through a special telephone number.

Once again, a gunman has opened fire inside the Peter B. Lewis building at Case Western Reserve University in Cleveland, Ohio. Two people have been injured. The gunman is still inside. One of the victims remains inside the building. The Weatherhead Management School, located in that building. Police have surrounding, of course, the building, cut of traffic.

We are monitoring the story throughout this hour, and we'll be going to the story, returning to Case Western University as developments warrant throughout this next hour.

Turning to other news, the United States, Britain and Spain are demanding that the United Nations recognize their control over Iraq. The countries today put forward a draft resolution at the U.N. Security Council that calls for an end to U.N. sanctions in Iraq. Michael Okwu will have the latest for us from the U.N.

Also tonight, a scaled back version of the president's tax cut proposal has cleared the House of Representatives. Now the Senate is expected to pass a different version of tax cuts next week. We'll be talking about the tax cut options, whether they're needed, what they could mean for the economy with the leading editors of this country, Steve Forbes, the editor-in-chief of "Forbes" magazine, Rik Kirkland the managing editor of "Fortune," Steve Shepard, the editor-in-chief of "BusinessWeek."

And President Bush today proposed dropping U.S. trade barriers with several Middle Eastern countries. President Bush said free trade is a key on the road to peace in the Middle East. Kitty Pilgrim will report. Tonight, the countries that liberated Iraq from Saddam Hussein say they will need to control Iraq's oil revenues for at least a year. The United States, Britain and Spain told the United Nations that money will pay for the rebuilding and reconstruction of Iraq. Michael Okwu at the United Nations with the live report -- Michael.

MICHAEL OKWU, CNN CORRESPONDENT: Lou, hello. This resolution would lift sanctions in Iraq. It would also phase out the oil for food program over the course of the next four months. Iraqis' oil revenues would go into an Iraqi assistance fund that would be monitored by an advisory board made up of representatives from the U.N., the World Bank and the IMF, but make now mistake about it, Lou, the United Nations and Great Britain would be in control about how those funds would be dispersed.

(BEGIN VIDEO CLIP)

JOHN NEGROPONTE, U.S. AMBASSADOR TO THE U.N.: They thought our resolution was forward looking. It didn't rehash some of the arguments of the past. A number of the delegations noted that they wanted to take a pragmatic and a constructive approach. So, I would say that I feel that most delegations saw this as charting a way forward. Certainly, they had some questions, many of a legal and technical nature. After all this, resolution does deal with some quite complicated and complex issues that I think are going to have to be addressed in greater depth.

(END VIDEO CLIP)

OKWU: Now, the resolution would support the formation of an Iraqi interim authority. It would also call for the appointment of an U.N. special coordinator who would promote peace and also be in charge of putting together police force, also in charge of doing things like reconstruction and humanitarian activities.

But some diplomats have had some question about the coordinator's role and also the fact that the resolution makes no mention of the possible return of U.N. weapons inspectors.

(BEGIN VIDEO CLIP)

JEAN MARC DE LA SABLIERE, FRENCH AMBASSADOR TO THE U.N.: We also think that the role of the U.N. coordinator or special representative, whatever you call it, should be enhanced and in particular, in the political field. And, there is also a question on how the council will monitor the whole process.

(END VIDEO CLIP)

OKWU: Bottom line is here today, absolutely no rancor, Lou, and very little division, at least today. A U.N. diplomat said that countries like Chile and Mexico would like to mend fences with the United States and do not look for opposition from the African countries.

The German ambassador today was talking about a spirit of cooperation and, also we understand that although some of the diplomats there had some very serious questions, Lou, the Russians were really out in charge of this. They were the ones who look, perhaps, Lou, that somewhere down the line, they could be in opposition to all of this -- Lou.

DOBBS: The Russians, French and the Germans, primary oppositions of U.S. policy on Iraq. Are you saying that of those, only Russia will oppose?

OKWU: Well, it's a little like looking into the crystal ball at this point, Lou, but the fact is that it was only the Russians today who had the most extreme views, as far as one Security Council diplomat was concerned. Of course, there have been some small concessions in this resolution, according to diplomats, Lou.

The fact is it will pay out some $10 billion, at least part of $10 billion of contracts that were approved before the war. And as you know, Lou, Russia has a great stake in this. They have some $1.5 billion tied up. France also has a significant amount and, certainly, at least that paragraph in the resolution would make the Russians happy -- Lou.

DOBBS: A sweetener. All right. Michael Okwu, thank you very much.

Secretary of State, Colin Powell is about to return to the Middle East. Later tonight, he travels to Israel and the West Bank. There he'll meet with Israeli Prime Minister Ariel Sharon, and Palestinian Prime Minister Mahmoud Abbas. The talks will focus on the road map for peace.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: I am encouraged that we may have a fresh start. It's not going to be easy. We have seen things in the area in recent days that show us that it's not going to be easy, but I'm anxious to get started, and I'm anxious to see if we cannot make progress as rapidly as possible and take advantage of the new strategic situation created by the end of regime in Baghdad.

(END VIDEO CLIP)

DOBBS: During his eight-day trip, Secretary Powell meets with Arab leaders in Jordan, Egypt and Saudi Arabia, then travels on to Europe for stops in Russia, Bulgaria and Germany.

President Bush today proposed ending U.S. trade restrictions against several Middle East countries over the next decade. President bush said economic prosperity is critical to future peace in the Middle East. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNNfn CORRESPONDENT (voice-over): Trade makes for peace, and prosperity will calm the Arab street. That's the idea behind a free trade zone in the Middle East proposed by President Bush today.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The Arab world is a great cultural tradition, but it's largely missing out on the economic progress of our time. Across the globe, free markets and trade have helped defeat poverty and taught men and women the habits of liberty.

PILGRIM: President Bush pointed out that the GDP of the region less than that of Spain and that fewer people in the Arab world have access to the Internet than those in sub-Sahara Africa.

According to the U.S. government estimates, in Iran, 53 percent of people live below the poverty line; Jordan, 30 percent; and a third of the population unemployed. In Syria, 25 percent live in poverty. Growth in the region has virtually stagnated since the 1980s. Job creation has been sluggish. Population growth is exploding.

SUSAN RICE, BROOKINGS INSTITUTION: The imperative to open up the economies, both to one another within the region and to the larger world, is very pressing. So, the vision is a good one. The difficulty, of course, will come with implementation because a lot of these governments remain corrupt and in bad need of political and economic reform.

PILGRIM: The United States already has free trade agreements with Jordan and Israel and is hoping to sign a deal with Morocco by the end of the year.

Some trade is restricted. The United States has economic sanction in place against Libya, Iran, and Syria.

(END VIDEOTAPE)

PILGRIM: Now, in the wake of the war, there have been a flurry of economic meetings. The World Economic Forum planning to meet in Jordan in late June, and this group usually meets in Switzerland, but they say the timing they say is right for what they say call an extraordinary annual meeting, Lou.

DOBBS: All right, Kitty, thank you very much. Kitty Pilgrim.

A U.S. Army helicopter today crashed in Iraq. Three American soldiers were killed, another injured. The Black Hawk helicopter was on a routine mission when it struck a power line and crashed into the Tigris River. The helicopter is from the Fourth Infantry Division. Preliminary reports indicate the crash was an accident.

Defense Secretary, Donald Rumsfeld, said he could not predict how long U.S. forces will be in Iraq. The defense secretary was joined at the Pentagon briefing by General Tommy Franks, the commander of coalition forces in the Gulf. It was General Franks' first briefing at the Pentagon since the beginning of the war. General Franks said the rebuilding of Iraq is progressing, but access to water, health care and electricity is still inadequate.

Meanwhile, the State Department assured Afghanistan that Iraq's reconstruction won't hamper U.S. efforts there. Deputy Secretary of State, Richard Armitage met today with Afghan President, Hamid Karzai in Kabul.

Still ahead here, another day of tax fights on Capitol Hill. But these debates led to agreement. This story is far from over. We'll tell you what comes next.

And the editors of the nation's leading business magazines join us for our weekly editors circle. Tax cuts, the state of the economy, a flying presidential photo-op, just a few of the topics they will tackle. Stay with us.

(COMMERCIAL BREAK)

DOBBS: A rally in technology gave the market a strong close on the week. The Dow up 113 points today. The Nasdaq rose 30 points. The S&P 500 up 13 points on the day. Both the Nasdaq and S&P scored their fourth straight weekly gains. Christine Romans is here with what is turning out to be a lot of good news on the market these days.

CHRISTINE ROMANS, CNNfn CORRESPONDENT: Indeed. And a stunning rally here helped help by Treasury Secretary, John Snow, Lou, who said he does not see a significant risk of deflation in the U.S.

The major stock averages up less than 1 percent for the week, but it was enough to make the longest winning weekly stretch for the Nasdaq and S&P since October, and the Dow closing above 8,600 for the first time since January 10.

Now, Coke rose 7 percent this week after two analyst upgrades. Gateway Computer up 17 percent. It hopes to be cash flow positively the fourth quarter this year. Intel is banking on growth in the semiconductor industry this year. That nudged the stock higher.

And big moves elsewhere. The dollar split another 2 percent against the euro. Bonds moved higher every day this week, and crude oil jumped almost eight percent this week, Lou. So, some big moves.

DOBBS: Big moves. Solid progress.

ROMANS: Absolutely.

DOBBS: All right, Christine. Thank you very much.

It has now been 522 days since Enron filed for bankruptcy at the inception of the worst corporate corruption sandal in this country's history. Sixty-five executives in all of corporate American have now been charged, 15 of them from Enron. No one has served a day in jail.

Still ahead here tonight, we'll be, of course, following developments at Western Case University in Cleveland, Ohio, where two people have been wounded by a gunman. Police have surrounded that building. We'll be going to Cleveland, Ohio, for the latest developments there immediately after this commercial break.

Also, public health expert Lawrence Gostin says it's only a matter of time before there's a SARS virus outbreak in this country. Professor Gostin joins us next.

Democrats trying to draw negative attention to the president's landing on the USS Abraham Lincoln. Well, they have apparently succeeded in doing just the opposite. Senior political analyst, Bill Schneider, will be here to tell us about all of that.

A great deal more still ahead here. Please stay with us.

(COMMERCIAL BREAK)

(VIDEO GAP)

DOBBS: ... to talk, to call and to talk with authorities. Once again, a gunman opened fire inside a building at a Case Western Reserve University building in Cleveland, Ohio. Two people injured. The gunman remains inside. We do not know how many people, students and faculty and administrative employees, remain inside that building. There were 40 to 50 initially.

Police have tried to get as many of them out of that building as possible. And as you can see there, they remain cordoned around that building. We'll be monitoring the story throughout this hour, and as soon as new developments arise, we'll bring them to you.

The House of Representatives today passed a $550 billion tax cut bill. That includes a scaled back version of the President's dividend tax cut. Even as that bill passed, the Republican controlled House, Democrats were criticizing President Bush and his administration's record on the economy.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), MINORITY LEADER: What is his answer to this record unemployment? The same, warmed over stew. The same recipe for economic disaster. This number, 563, drives home the point a personal way. Since President Bush became president, every working hour of every working day, 563 Americans lose their jobs.

REP. TOM DELAY (R-TX), MAJORITY LEADER: So embarrassing is the minority's lack of leadership on the economy that they didn't even propose a remedy to the economy until just yesterday. And that proposal, to raise taxes. How unimaginative. How pathetic. How typical.

(END VIDEO CLIP)

DOBBS: Well, unimaginative perhaps, but raising taxes also on the minds of some of those in the U.S. Senate. This is only the beginning of this fight. The Senate will vote on its own version of a tax cut scheduled next week, then more compromises begin. Legislators trying to find a resolution, a compromise between the House and the Senate plans.

Democrats still complaining about how much money it costs to fly President Bush to the aircraft carrier USS Abraham Lincoln last week. Joining us now, our senior political analyst, Bill Schneider. Bill, instead of making the President look foolish, some say the Democrats have made themselves look petty.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Petty, grudging. Looks like a very foolish thing for Democrats to do because all week long, we and other cable networks have been running pictures of the president landing dramatically on the Abraham Lincoln.

There is a picture right now. These are pictures that Republicans love to see on television. The president in a flight suit. That's not a military uniform, by the way. It's a flight suit that he wore to fly on the jet plane. The complaint is that he could have gone by helicopter because the ship was only about 30 miles offshore. He chose to take a jet plane because the White House said the president wanted to land on an aircraft carrier, the same way pilots normally land on an aircraft carrier, to see what it was like.

Democrats say it's a waste of money. They've been trying to demand that the Bush reelection campaign pay back the Treasury, but Republicans just love to see those pictures on television. The more Democrats complain, the better the Republicans like it.

DOBBS: Well, Bill, one of the answers, obviously, the White House cannot give -- it was certainly good politics, a terrific stunt by any measure on the part of the administration -- but it also looked like an opportunity for the Commander in Chief, the President of the United States, to go out and have just plain old fashioned fun. What do you think?

SCHNEIDER: He said exactly that. He was glad he was glad did it. It was a good landing. He said it was fun. But remember, he is the Commander in Chief, and this was very much politically his war. A lot of Democrats are saying, we're sure we're going to see this end up in Republican re-election campaign commercials, and my guess is you will. Some Democrats say, well, we have already prepared the way for that by saying this was all a political stunt and, therefore, when he puts it in the commercial, we'll be able to say it was a political stunt.

But I don't think that's going to have any impact. This was a war. People died in this war. The president was commander in chief, and I think no one grudges, except a few minority Democrats, grudge the president this victory.

DOBBS: Well, Republicans certainly aren't having any fun in the Senate. The Democrats filibustering now two judicial nominees. The Republicans threatening to remove the filibuster as an art form in the Senate. What are the prospects?

SCHNEIDER: They're not very good. It takes a two-thirds vote to remove the filibuster because it's one of the Senate rules. A lot of people think the filibuster must be in the Constitution. Well, it's not. It was originated in the early 19th century as a way to continue debate. The Senate has the reputation of being the world's greatest deliberative body. On the other hand, nothing much gets done in the Senate when senators -- when a minority of Senators can block things from happening. It was used repeatedly on civil rights measures but these days, it's being used more and more on very trivial matters. The president wants to change those rules, but it would take a two-thirds vote to do that, which is more than it would take to break the filibuster. It isn't going to happen.

DOBBS: It's unlikely to happen. We should also point out while the Republicans are in power right now in the Senate, the Republicans have used that filibuster when the Democrats were in charge of the Senate. Have they not?

SCHNEIDER: Absolutely. You remember when Clinton became president, he proposed an economic bill to prime the economy for -- he called it an economic stimulus package.

DOBBS: I absolutely do.

SCHNEIDER: To prime the economy for deficit reduction. The Republicans filibustered that to death. So, my guess is, if they propose changing the filibuster, some Republicans are going to say, not so fast.

DOBBS: And the result of all of that was the Deficit Reduction Act of 1993.

SCHNEIDER: That's right.

DOBBS: Filibuster or bust. All right, thanks a lot, Bill Schneider, as always.

SCHNEIDER: Sure, Lou.

DOBBS: Checking in now on the level of our national debt. Tonight it stands at more than $6,460,289,277,541.89. Your family's share, well, you're getting pretty close to having a $70,000 piece of that rather tasteless, even, well, I think perhaps sour pie.

As Bill Schneider just mentioned, the White House and Senate Republicans today spoke out on the need to overhaul the judicial confirmation process. Senate Democrats have block Miguel Estrada's nomination, say the system works.

Our quote of the day comes from one Democratic senator who sees it somewhat differently, saying, "The people on Main Street USA doe not understand why anyone has to wait this long to be voted up or down. The world's greatest deliberative body has become the world's greatest obstructionist body." That comes from Senator Zell Miller, Democrat of Georgia.

Still ahead here, you've heard about CEO compensation on this broadcast, but when it comes to the New York Stock Exchange, we have some eye popping numbers for you. Chairman Richard Grasso's salary set by the very members he is paid to oversee. Is that a conflict of interest? Is it business as usual? Or is America just great or what? Jan Hopkins reports.

And we'll have some thoughts on that topic, more from our editors' circle. The top editors of the top magazines, "BusinessWeek," "Forbes" and "Fortune," coming up. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Another controversy at the New York Stock Exchange tonight. This time, exchange chairman, Richard Grasso, at the center of the controversy. Reports surfacing this week he earned a salary of $10 million last year, well, at least he was paid that. Jan Hopkins reports.

(BEGIN VIDEOTAPE)

JAN HOPKINS, CNNfn CORRESPONDENT (voice over): 2002 was not a good year in the stock market. Net income at the New York Stock Exchange down to $28 million, but the chairman of the exchange, Dick Grasso, apparently did all right. This week in Washington, Grasso was asked about being a $10 million man.

QUESTION: Do you think you're worth $10 million a year?

RICHARD GRASSO, CHAIRMAN, NEW YORK STOCK EXCHANGE: That's not my judgment to make.

HOPKINS: In fact, the compensation committee of the Exchange decides on Grasso's pay. That committee is made up mostly of the heads of Wall Street firms, who themselves make over $10 million a year. The Exchange is one of the regulators of these firms. No one on the board returned our calls.

UNIDENTIFIED MALE: The Honorable William H. Donaldson.

HOPKINS: Last night at the Economic Club of New York, Grasso introduced Bill Donaldson, now head of the SEC. Donaldson blasted executive pay packages and urged boards to hold the line.

Donaldson was head of the New York Stock Exchange before Grasso and is thought to have made $2 to $3 million a year. Now he makes $142,500 as head of the SEC. Shareholder advocate, Nell Minnow, criticized the Exchange for its insensitivity.

NELL MINNOW, THE CORPORATE LIBRARY: It's an outrage. There is absolutely no way in the world that he has earned that kind of pay, and it would never happen if they had a good corporate government structure.

HOPKINS: Since the New York Stock Exchange is a private member organization, salaries are not public information, and the Exchange refuses to comment on the reports.

(END VIDEOTAPE)

HOPKINS: When Dick Grasso talked to me last night about his pay, he was in yen, and then seriously, he said he came to the exchange 35 years ago from the military. He took a pay cut to $81 a week, and he told me that anything above that would be OK with him.

Now, Lou we understand today that that $10 million figure may be incorrect. It actually may be more like $18.5 million -- Lou.

DOBBS: Will the exchange confirm that number one way or another?

HOPKINS: They will not talk about it at all.

DOBBS: Oh, they won't talk about it?

HOPKINS: No.

DOBBS: OK, well, what is the number two person at the Exchange make? That's pretty good.

HOPKINS: My understanding is a lot less. I think something like $750,000. The...

DOBBS: Probably makes for a pretty heated competition for Grasso's job then, wouldn't it?

HOPKINS: Yes, that's right. The compensation for the top executives at other exchanges are about $1.5 million. The Chicago Merc and the Nasdaq, those are both publicly traded companies. They get some stock options, as well -- Lou.

DOBBS: Pretty good paid for a business that really doesn't have a lot of competition. All right. Thanks a lot, Jan. Jan Hopkins.

HOPKINS: Thank you.

DOBBS: That brings us to the MONEYLINE poll question. Do you think New York Stock Exchange member firms should decide the salary of the man that regulates them? Yes, no, or hey, it's business. Cast your vote at cnn.com/moneyline. We'll have the preliminary results coming up in the broadcast.

The final results of yesterday's poll. The question, which country is the most reliable ally of the United States? Four percent said Russia. Sixteen percent said France. Twelve percent said Germany. Sixty-eight of you favor Poland. That conforms to current realities.

Joining me now, the editors of the leading business magazines. Steve Forbes, editor-in-chief of "Forbes" magazine, Rick Kirkland, managing editor of "Fortune"; Steven Shepard, the editor-in-chief of "BusinessWeek." Good to have you gentlemen here.

Let's start with the Grasso controversy. This is blown up. I don't think Dick Grasso quite expected to see his pay in the front pages and at the lead of newscasts, what do you think?

STEVE FORBES, "FORBES": Well, it still doesn't match what the baseball players get if that $10 million is correct and even though the exchange has taken some real hits he actually hasn't done a bad job over the years and he didn't do it in stock options. So, I'll go against the grain. I think he's earned his pay.

DOBBS: All right.

RIK KIRKLAND, "FORTUNE": I'll go there a little bit too. I feel like in general I don't mind seeing CEOs getting cash. I think these outrageously large stock option grants that aren't expensed has been the real problem.

STEPHEN SHEPARD, "BUSINESSWEEK": I think it misses the point because the issue here is as you said earlier whether the people he's supposed to be regulating have a voice in setting his compensation, and two, this is a quasi public...

DOBBS: Well, they do.

SHEPARD: Yes, they do and this is a quasi public institution, not a private, strictly private entity and so you have to look at it that way it seems to me.

DOBBS: Quasi public...

KIRKLAND: That implies the use of the government standard or something? I mean it's a tough one to figure out how you assess (UNINTELLIGIBLE).

SHEPARD: Well, there's got to be something between, you know, the 140 that Greenspan makes and Ted (UNINTELLIGIBLE), you know.

FORBES: It certainly isn't a government agency.

SHEPARD: No, but it has a regulatory function of government and I think that changes the game a little bit.

DOBBS: But the game so far a lucrative one. Let's turn to this...

FORBES: I think you should have $10 million too.

DOBBS: I'm sorry?

FORBES: You should have $10 million a year too.

DOBBS: Well, I would only ask that which the marketplace would provide. I never sought more or less.

(CROSSTALK)

DOBBS: And I know that you feel precisely the same way. Let's turn to this economy and what this marketplace is providing right now, jobs still not being created. The Senate, the House in full fury over tax cuts. Next week the Senate takes up what the House today passed. It will take up a separate version but tax cuts the issue.

Let me ask you sir, Mr. Forbes, with your well just passing interest in the issue of tax cuts what you think. FORBES: Well, first of all the tax cut is way too small but the best version is what the House has proposed, reducing capital gains from 20 to 15, reducing the dividend tax down to 15. That would be stimulative both short-term and long-term. The White House should take that and run with it.

KIRKLAND: I mean I just don't think this tax cut is going to be all that stimulative. That said, I'm happy to see something happening to offset the incredibly rising burden that's going -- hitting taxpayers all across this country with state and local taxes going up. So, I just think you've got to do something. I just don't think we should oversell the immediate stimulus effect from this.

SHEPARD: Well, for a change, I agree with Steve. I like the House proposal to get capital gains and the dividend tax down to about 15 percent. I think it will be stimulative and good for economic growth. I think at some point, however, we're going to have to start talking about spending because if we push through, continue to push through big tax cuts at some point I think Greenspan is right. We got to do something on the spending side.

FORBES: The thing about tax cuts is that it does stimulate the economy, especially reducing capital gains and that will give Washington the wherewithal, even if Washington can't control its spending don't punish the rest of the country.

DOBBS: Since none of you wants to rise to this, the other side of this, let me just ask you as devil's advocate and I'll confess that I've got serious questions about this tax cut as it's proposed in both the House and the Senate. The Democratic plan is a non-starter it seems to me as well.

How in the world are you going to drive jobs off a tax cut in a period of 12 to 16 months?

KIRKLAND: Well, I don't think -- well, here's the thing that really bothers me about this tax cut. I don't think we're talking about the big issue. You know we always have these debates in Washington. We get stuck on a number. We get stuck on the platform in front of us. The fact is as in the '70s we had bracket creep driving people up and up and up into higher tax brackets and then we -- then Reagan came along and passed his cut in '81 and actually indirectly in that debate that got dealt with.

Now what we're missing is this alternative minimum tax is going to be driving hundreds of thousands of taxpayers in this country over the next -- millions over the next five or ten -- it's bigger, that revenue hole is bigger than this tax bill and we're not even talking about that and it's just an outrage.

DOBBS: Well, to his credit, Bill Thomas, the chairman of the House Ways and Means Committee is addressing it in part, introducing incrementalism at least in terms of the dividend tax cut. I think Charles Grassley deserves great credit for bringing the $500 cap to dividends which takes care of about 86 percent of investors and perhaps pushes off (UNINTELLIGIBLE). (CROSSTALK)

DOBBS: It's not going to have any stimulus but at least it's also, it seems to me, an issue of proportionality here. People in this country who work for a living, the working men and women of this country should not have less of a burden removed from their shoulders than investors. It's a philosophical argument.

FORBES: The Bush tax plan does substantially reduce with its credits that tax burden of $40,000, $50,000 a year earners. The thing on dividends, the key to remember on that or on the capital gains is does it reduce the rate on each additional dollar earned, what economists with their usual poetry call the marginal tax rate? If it does that it's very, very stimulative.

SHEPARD: The one thing that we're not talking about in this debate is what is the effect on the debt payment? We talk about are tax cuts going to raise the deficit but we never talk about the other problem with the tax cuts which is increases the federal debt, and you just showed a number which talks about how much (UNINTELLIGIBLE).

DOBBS: Which we do every night.

SHEPARD: It is a very, very big part of the federal budget is the interest on the accumulative debt and this deficit is it going to add to it?

DOBBS: We're not addressing (UNINTELLIGIBLE) let's do and that is a dollar that's at a four-year low against the Euro, a trade deficit, a current account deficit that is no longer being funded by capital flows from our trading partners.

KIRKLAND: Well, it's being funded because it has to -- the money has to flow in or the accounts don't balance.

DOBBS: It has to flow in but the point that it is not in excess for the first time of our current account deficit.

(CROSSTALK)

FORBES: What's happening in Europe, though, is what happened in Japan with a vengeance. Europe is deflating. They're experiencing economic dehydration and they have a central bank, like Japan's, that doesn't realize what they're doing to their economy.

(CROSSTALK)

FORBES: It's not so much the dollar is weak as the Euro is over strong. It's being made too dear.

SHEPARD: Well, the irony of this is that the Europeans wanted the Euro to be stronger. Now they're getting a stronger Euro which is hurting them and it's coming about because the United States runs such a big trade deficit.

KIRKLAND: Here's the problem. We need the dollar to be weaker, I mean a little and we want it to run ahead of itself but a little weakness is going to be OK. This can't keep building but we really need, the big problem in the world is nobody else in this world economy, only the U.S., thinks it's able to grow, and as Steve says Europe's deflating. Japan's been locked in ten years of deflation.

DOBBS: And Alan Greenspan says we have a problem.

KIRKLAND: If that continues our current account deficit, whatever the dollar value, is just going to get worse until we do really get into a bad problem.

SHEPARD: And the dollar is not coming down against the Chinese currency because the Chinese currency is (UNINTELLIGIBLE) and we have a very big trade deficit with China and the currency changes are not going to affect that.

KIRKLAND: This is why I worry we're in the sort of inverse of the '70s and I think we're going to have an OK period of growth here for a while, but you could have, you know, we've talked about stagflation in the '70s, inflation and stagnation, I worry we can have stagflation in the 21st century deflation and slow growth.

DOBBS: Wait a minute, John Snow, the treasury secretary, says gentlemen: "I don't think the U.S. has any risk of being in a significant deflationary period and any comparisons to Japan" which some of our panelists have just made, "I think would be inappropriate." Aren't you reassured by the treasury secretary?

KIRKLAND: Well, I don't think we're Japan.

FORBES: No, we're not Japan. It's the O'Neill situation but in a mild form but we've had a deflation. We've had a deflation since 1999, very mild compared to Japan (UNINTELLIGIBLE) prices collapsed and I'm glad Greenspan is aware of it because the key -- they key with the deflation is like inflation. Inflation, don't print so much money, deflation, print more money.

SHEPARD: If the dollar is coming down that guarantees we will not have serious deflation (UNINTELLIGIBLE).

DOBBS: Mr. Kirkland, you get the last word.

KIRKLAND: I'd rather be the U.S. than Europe.

DOBBS: Amen, bro. Gentlemen thanks for being here. Steve, Rik, Steve, thank you very much.

And here is that trade deficit we just talked about. This is day 129 of 2003 by our calculations and projections the trade deficit, roughly $177 billion and streaming.

Still ahead here, the very latest on the shooting at Case Western University in Cleveland, Ohio, we'll be going live. There are the live helicopter pictures from Case Western in Cleveland, eastern Cleveland. Two people have been wounded. As many as 50 people could still be within that building, police trying to extricate them. We will have the very latest for you.

Also tonight, severe weather continuing to plague much of the country tonight, towns struggling to pick up after what has been a week of deadly tornadoes. Stay with us.

(COMMERCIAL BREAK)

DOBBS: As we've said a developing story, breaking news, in Cleveland, Ohio. You're looking at pictures of Case Western University. A gunman today burst through security and opened fire at Case Western University. That shooting started just over two hours ago. Two people have been wounded.

Witnesses say the gunman shot one person outside the building, shattered a glass door, shot at least one other person inside the building. One is now hospitalized the other remains trapped inside the building.

Police on the scene have revised their estimates about the number of people inside the building. Originally they thought 40 to 50 perhaps inside the building and they tried to get people to evacuate the area.

They now fear that as many as 50 to 60 people could still be inside that building. SWAT teams have surrounded the building. Others, we are told, have entered the building, the gunman firing an automatic weapon.

Turning to other news across America tonight, brutal weather continues in parts of the country. Severe storms, tornadoes, are expected to strike several states over the weekend. There have been already 225 tornadoes reported since May 1. Forty-two people have died as a result.

Remarkably no one died when this twister tore through Oklahoma City just about 24 hours ago. Three hundred homes were destroyed by the tornado. Hundreds of other homes were damaged. One hundred people were injured by the tornado.

In Kansas, several tornadoes stormed through the eastern part of the state. One of those tornadoes ripped into buildings near the University of Kansas but it did miss the campus of the University of Kansas.

Floods are a problem in the south where heavy rain has fallen nearly nonstop this week. Chattanooga, Tennessee, the worst flooding there in 30 years. Interstate 85 links Alabama and Georgia. It remains closed because of high floodwaters.

The SARS virus epidemic continues to spread throughout China. One hundred eighteen new cases, six new deaths today reported, Chinese citizens fearing the spread of the virus have attacked quarantine centers in several parts of the country. And, Russia has now sealed part of its border with China because of fears of the SARS virus being introduced into Russia. The United States has been spared a major outbreak of the virus so far and credit authorities, the Health and Human Services, the Centers for Disease Control, and the World Health Organization, but my next guest tonight says all of that could well change and when it happens, he says, America is not prepared to handle it.

Joining us now is Lawrence Gostin, Director of the Center for Law and Public Health at Georgetown University, professor, good to have you here.

LAWRENCE GOSTIN, GEORGETOWN UNIVERSITY: Good evening.

DOBBS: We have been remarkably blessed by the containment of the SARS virus in this country, no deaths. Why are you so concerned?

GOSTIN: Well, I do think that CDC has done an excellent job but if we got a mass outbreak in the United States I think we're badly prepared. The state and local health departments are in what the Institute of Medicine called disarray. They don't have sufficient laboratories. They don't have sufficient ways of monitoring the epidemic or responding, and I think we also have problems just in terms of our antiquated laws that really aren't up to scratch when it comes to this kind of an epidemic.

DOBBS: Let's move to the laws that you talk about, professor. Which laws are outmoded? What laws do you think should be introduced here? Most of us get pretty nervous when people start talking about new laws on nearly any issue.

GOSTIN: Well that's true but, you know, if you think about it our public health laws in the United States actually date back to the late 19th early, 20th century and you can't fight a 21st century epidemic with these outmoded laws.

And so, if we wanted to use quarantine, vaccination, treatment, or any of the other standard tools they actually might not be available in relation to a novel disease like SARS and even if they were they're so outmoded that they're probably unconstitutional.

DOBBS: You're saying that we don't have adequate authority to quarantine people who could be infected by this disease?

GOSTIN: That's true in many states we don't. Just even a few years ago when we had an outbreak of tuberculosis, places like New York decided to use compulsory treatment and compulsory isolation and quarantine and found that the laws were too old and they had to reform their laws right in the middle of an epidemic. You can imagine what would happen if we had a large outbreak of SARS and we weren't able to do anything.

DOBBS: The last large scale quarantines in this country, as you know professor, came about in the 1950s. What would you like to see the U.S. government, state governments do right now?

GOSTIN: Well, first of all I'd like to see state governments be funded so that they had a really strong public health infrastructure for the 21st century. I'd like us to reform our antiquated laws so that they're strong, decisive, consistent, and I'd also like to have us have the capacity if we needed it for quarantine in humane conditions where people could be safe because frankly we don't have the facilities for quarantine.

Most hospitals only have one or two isolation rooms and we really need mobile hospitals, strategic forces that could go out and be able to handle a large outbreak and if it's not SARS, it could be another disease right around the corner.

DOBBS: Professor Lawrence Gostin, we thank you very much for being with us here.

GOSTIN: It's a pleasure.

DOBBS: Good talking with you.

Springtime in corporate America means annual shareholder meetings and that means the annual road show of one Evelyn Y. Davis. She's a tireless, controversial, outspoken woman who is a shareholder activist long before it was chic. For many years she was dismissed as nothing more than a gadfly but the corporate corruption scandal in America changed all of that.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNNfn CORRESPONDENT (voice-over): When regulators finally announced that big Wall Street settlement, the first question came not from "The New York Times," not from "The Wall Street Journal."

ELIOT SPITZER, NY ATTORNEY GENERAL: So, why don't we open it up to questions?

VILES: It came from a 73-year-old woman and she wasn't buying it.

EVELYN Y. DAVIS: Mr. Spitzer if the banks and brokerage houses do not comply, would you ask for or insist that the (unintelligible) companies spin of the research (unintelligible)?

SPITZER: Evelyn, I'm not going to speculate about what we will do or need to do if there's non-compliance.

VILES: Evelyn Y. Davis has been a thorn in the side of corporate America for decades, a fixture at shareholder meetings. She's feuded with Ted Turner, told Lee Iacocca to lose some weight, berated Bob Eaton (ph) for selling Chrysler to the Germans.

DAVIS: You have to have a lot of courage. You can't be shy. Nobody has ever accused me of being shy.

VILES: She's been dismissed as a publicity hound who browbeats CEOs into buying the quirky newsletter she publishes but she was fighting for shareholders long before Congress or the regulators took up the battle against corporate corruption. This was 1998. The bull market was running wild and Evelyn Y. Davis put the president on the spot.

DAVIS: Is the market being dangerously high? What is the administration going to do to protect small investors, people who have maybe 100 or 200 or 500 shares of stocks in the markets from the forthcoming bear market and we all know what has to go up has to go down?

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: That's true but it's also true that over time the trend has been up.

VILES: It took a long bear market and a crime spree in corporate America, but Evelyn Y. Davis has finally won some respect.

DAVIS: A lot of people who used to be against me or thought I was too flamboyant or they didn't pay attention, now all of a sudden instead of being the villain I'm the hero.

VILES: Well, maybe not a hero. Here's how another shareholder activist puts it.

ELEANOR BLOXHAM, THE VALUE ALLIANCE: I think that some people have dismissed her and that perhaps in some terms rightly so because of some of her antics, but you know I think she's had to shout as loud as she's had to because sometimes the CEOs are kind of hard of hearing. So, I think she's played a useful role.

VILES: She's still playing it. The Davis agenda is jam packed with common sense proposals to clean up corporate America and give individual shareholders more clout.

DAVIS: There should be no discrimination between individual shareholders and institutional shareholders. Currently institutional shareholders at the SEC are treated as royalty and individual shareholders like peasants.

VILES: In 45 resolutions this spring, Davis is campaigning to end staggered election of board members. She wants term limits for directors, just like politicians. She wants companies to tell their shareholders when they make political donations. Better yet, she wants them to take vows of political neutrality.

There's more. She wants the SEC to make shareholder resolutions binding. She thinks stock options should be banned entirely because they pressure companies to inflate earnings, and she thinks investors should ignore Wall Street Brokerage analysts.

DAVIS: I always say as a good estimate be skeptical about what analysts say and I feel basically any investors when you're talking about investor educations if they feel that they need an analyst or a recommendation from a broker they really should be in mutual funds.

VILES: She doesn't think the Spitzer settlement will make analysts any more honest but she did learn something, she says, from the analyst scandal.

DAVIS: Never put anything in an e-mail that someone else can read. Don't put in an e-mail I love you unless it's directed to your spouse.

VILES: But behind all the bluster, Davis is a buy and hold investor who actually believes in corporate America.

DAVIS: I still basically have confidence in corporate America and I think the majority of CEOs try to do an honest job.

(END VIDEOTAPE)

VILES: Davis actually won some big victories this spring. Bristol Myers Squibb and Dow Jones both agreed to scrap their system of staggered elections for board members. Davis believes annual elections of all the members make those boards more accountable to their shareholders -- Lou.

DOBBS: A long held view by many corporate critics and observers. It's interesting. Evelyn Y. Davis, who else right now is working vigorously as an advocate for shareholders in this country?

VILES: Well, Nell Minnow and you heard from her earlier in the broadcast.

DOBBS: Right.

VILES: In the story about the New York Stock Exchange. ISS, Institutional Shareholder Services when they take a position they're very, very influential. Calpers (ph) in California, they manage $130 billion, sometimes throw their weight around, and the AFL-CIO also influential.

DOBBS: All right, thank you very much, Peter Viles. And we hear more from Evelyn Y. Davis than those others. All right, thanks.

I was thinking, CEOs think of Evelyn Y. Davis as a pain in the whatever.

VILES: Pain in the assets.

DOBBS: Exactly. The fact of the matter is shareholders just hearing that now start cheering her.

VILES: Sure. She was there fighting whether you like her or not she was there.

DOBBS: Absolutely and you have to like it. Peter Viles, thank you.

We turn now to this week's CEO of the Week, tonight a man who designed a successful strategy based on one constant, change. Paul Charron of Liz Claiborne, our CEO of the Week.

(BEGIN VIDEOTAPE) DOBBS (voice-over): Back in 1995, Liz Claiborne was written off by most as a mature brand but new CEO Paul Charron had bold plans and wasted no time telling his team about them.

PAUL CHARRON, CHMN & DEO, LIZ CLAIBORNE: This management team at this instant in time has the opportunity to turn around one of the great American companies and you might only have this opportunity once or twice in an entire career. So, don't blow it.

DOBBS: They didn't. In fact over the next eight years, Charron and his team catapulted Liz Claiborne to the number five apparel maker. The company's sales soared 71 percent.

CHARRON: I'm by nature an optimist. The people were responsive. My predecessor gave me a lot to work with, great brand, great people, great retail relationships, no debt, a lot of cash. It was simply a question of deploying the assets intelligently.

DOBBS: Charron hasn't been shy about making key acquisitions either and he's expanded its men's apparel and cosmetic businesses and introduced the Liz Claiborne name to shoppers in Mexico. He's added accessories and created exclusive lines for Kohl's J.C. Penney. The Liz Claiborne brand anchors the company bringing in almost half of total sales.

CHARRON: We have had 29 consecutive quarters of increasing sales and the last quarter was once again another record in earnings per share and I think it's a tribute to the power of the strategy, precisely and consistently executed.

DOBBS: Charron's managers have the power to make their own decisions and he expects them to embrace change.

CHARRON: We're in the fashion business. What's change or what's fashion but change and change is complex. So, we get paid for managing the complexity which is fashion and so far we've done it pretty well.

(END VIDEOTAPE)

DOBBS: We want to point out that the board of directors of Liz Claiborne is entirely independent. The company stock is up 46 percent over the past three years over the same period the S&P 500, we don't need reminding, has fallen 34 percent. Congratulations to Paul Charron for being our CEO of the Week, and to Liz Claiborne, our best to him and to the company.

Still ahead here are the preliminary results of tonight's poll, a look at some of your e-mails including one that takes issue with the way many of you voted in last night's poll. Don't worry, you were right. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Now the preliminary results of tonight's poll. The question: "Do you think New York Stock Exchange member firms should be deciding the salary of the man who regulates them?" Eleven percent of you said yes, 82 percent said no, seven percent said hey it's business.

Now for a look at some of your thoughts, many of you wrote about last night's poll question. That question asked which country is our most reliable ally, Russia, France, Germany, or Poland? Sixty-eight percent of you said Poland.

Ron Spies of Cincinnati, Ohio, however, was surprised with the results of our poll. He said: "If we get in a major war who do you really think would send troops first. Out of the list, I assure you it would not be Poland."

Well, Ron, there is a surprise for you. Poland did provide troops to the coalition forces and will send thousands more to take an active role in the reconstruction of Iraq. It is perhaps worth noting, Ron, that France and Russia and Germany did not.

On the subject of SUVs, Jeannie Cimiotti of River Edge, New Jersey wrote to say: "I dumped my SUV for a Honda hybrid and I've never been happier. I'm doing my bit to help the environment plus I've only had to gas up three times since Thanksgiving." We wish everyone had that option.

Dennis from Harrison, Michigan wrote in in support of President Bush's trip to the USS Abraham Lincoln saying: "I feel the trip was entirely suitable considering he is the commander-in-chief of the armed forces. If Senator Byrd has a problem with that maybe he should run for president."

We love hearing from you. Please e-mail us. Send us your thoughts at loudobbs@cnn.com and please include your name and your home town.

Thanks for being with us. Monday our guests include Senate Majority Whip Mitch McConnell on tax cuts, the lawsuit he's leading against the McCain-Feingold law.

And, coming up next "LIVE FROM THE HEADLINES" with Anderson Cooper.

We thank you for being with us. We wish you a very pleasant weekend, and for all of us here good night from New York.

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



Forces Demand U.N. Recognizes Their Control Over Iraq; House Clears Scaled Back Tax Cut>


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