captioning sponsored by macneil/lehrer productions >> woodruff: good evening. i'm judy woodruff. house speaker nancy pelosi said today a vote to extend tax cuts could happen before the november elections, despite senate democrats' move to delay. >> brown: and i'm jeffrey brown. on the newshour tonight, david herszenhorn of "the new york times" sorts through the politics playing out on capitol hill. >> woodruff: and we speak to former federal reserve board chairman alan greenspan, the second in a series of conversations on whether to extend the tax breaks. >> brown: then, margaret warner talks to british deputy prime minister nick clegg about war

strategy in afghanistan and austerity measures at home. >> you can't stand tall in the world if you are running on empty back home. that is what we are trying to fix. we fix our finances at home. we will continue to play a proud and i hope, leading role in the affairs of the world. >> woodruff: jonathan miller of independent television news reports from southern pakistan, where there has been fresh flooding and tens of thousands of people remain marooned. >> brown: mark shields and michael gerson-- sitting in for david brooks-- offer their analysis of the week's news. >> woodruff: and ray suarez updates the story of the social networking site facebook and its c.e.o., mark zuckerberg. that's all ahead on tonight's newshour. major funding for the pbs newshour has been provided by:

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this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> woodruff: with just over five weeks until the midterm elections, democrats in washington were grappling today with how to handle the bush-era tax cuts. senate leaders announced late thursday they'd wait until after the elections to vote on whether to end them. but today, house speaker nancy pelosi would not rule out action before november on extending tax breaks for the middle class. >> well, we will retain the right to proceed as we choose. we'll take it one day at a time am but let me, let me be very clear as we have all been clear and have democratic leadership. america's middle class will have a tax cut. it will be done in this congress. there is no question about

that >> woodruff: on the senate side, the issue will have to wait until a lame duck session in mid-november. democratic majority whip dick durbin said thursday: "we are so tightly wound up in this campaign that it's impossible to see a bipartisan answer to the challenge we face. that's the reality before the election." republicans and some democrats favor extending tax cuts for everyone, including the wealthy. for more on all of this, we turn to david herszenhorn, who covers capitol hill for "the new york times." thanks for being back with us. so what's this delay all about? >> well, the senate clearly doesn't want to get embroiled in this issue before the election. it's just too unpredictable and the story line for democrats is clean, as things stand now. they're making the case that republicans would block tax relief for the middle class to hold out for tax break force the wealthy. republicans, of course shall want to extend those tax cuts for everyone. and so it's easier in the view of democrats to push this until a lame duck session. the political situation will

obviously be less intense then. but as you said, the house speaker today left open the possibility of forcing a vote. and that could get really interesting next week. >> woodruff: now why the different calculus in the senate and in the house. >> the calculus probably isn't different. the conventional wisdom still is that in the end the house will decide to go home and campaign without taking this vote. but there's no reason for speaker pelosi to relent right now when she thinks she's got republicans on the defensive. john boehner, the republican leader a couple weeks ago said if given no choice, he would vote for president obama's preferred plan which is only a partial extension of the tax cuts. so she can continue to threaten to put that bill on the floor and see what the republican was do. >> woodruff: now this is more complicated because democrats are divided among themselves. talk about the regional differences and the other factors that play for them. >> it's really a question of political vulnerability at this point. for democrats who are in very tough races, remember in '08 you had democrats win in districts where democrats really shouldn't win ever. the political fluke, so to

speak, it's very hard for them to fight for re-election in traditionally republican districts. casting this vote that might be portrayed as letting taxes rise on the wealthy, republicans say those are small-business owners, in some cases, can be used against them by opponents. so that political instinct to avoid that tough vote just five weeks before the election is up against more liberal democrats who want to show a contrast and say look, we're going to fight to do as president obama promised during the presidential campaign and let those tax cut force the rich expire. >> woodruff: david, is it all about politics? is there any policy at play here. >> it really is mostly about politics. remember, a lot of folks will try and make this a debate about the federal deficit. continuing the tax breaks for the middle class will add about $3 trillion to the deficit over the next ten years. extending them for everyone, 4 trillion. are you talking about what is a trillion dollars between friends. if you get into the policy debate it makes your head hurt because you really start having to talk about long-term fiscal policy and reform.

>> woodruff: and explain to us what the real deadline is here. these tax cuts were due to expire at the end of the this year unless something happens. >> unless something happens and of course congress could work at the end of the year and apply them retroactively it gets more complicated for the irs to be sure. so there are a lot of people would prefer this not go down to the wire but december 31st is the deadline. >> woodruff: and you could have as you just suggested a very different looking house. >> one once the election is done, the lame duck is the lame duck and a lot will depend on what the results are in the november election. >> woodruff: and again, remind us, david, what taxes are we talking about? income tax rates and what else? >> everybody is focused on the marginal income tax rates but this actually is a whole range of things. capital gains tax, the estate tax which right now doesn't exist, it's expired. there are big packages of taxes other than the marginal rates that have to be wrestled with. that is what makes this complicated and in the house it is easier for democrats to put a bill on the floor that matches what president

obama has proposed, letting the estate tax go back to 2009 levels, for instance. in the senate everybody will have their say and there will be lots of different variations of how you would put that whole package together so it isn't easy. >> it's so much fun to watch all this and it continues. david herszenhorn, "the new york times", thanks very much. >> sure thing. >> brown: we'll continue our look at the tax cuts story with an interview with former federal reserve chairman alan greenspan. also coming on the newshour: britain's deputy prime minister nick clegg; the still-rising flood waters in pakistan; shields and gerson; and facebook: the movie, the ceo and the web site. but first, the other news of the day. here's hari sreenivasan in our newsroom. >> sreenivasan: wall street closed out the week with a big finish. stocks took off after news that factory orders and business spending rose in august. the dow jones industrial average gained more than 197 points to close at 10,860. the nasdaq rose 54 points to close at 2,381. for the week, the dow gained nearly 2.5%; the nasdaq rose

nearly 3%. >> they ordered the air force to reinstate a former flight nurse. major margaret witt was discharged under the military's don't ask don't tell policy after she revealed she a lesbian. the judge found the dismissal violated witt's constitutional rights. president obama traded barbs with iranian president mahmoud ahmadinejad today, in a new war of words. the iranian leader addressed the u.n. general assembly yesterday, and suggested the u.s. government played a role in the 9/11 attacks. today, in an interview with the bbc persian news service, mr. obama condemned the remarks. >> it was offensive. it was hateful. and particularly for him to make the statement here in manhattan, just... just a little north of ground zero, for him to make a statement like that was inexcusable.

>> sreenivasan: ahmadinejad refused to back away from his claim at a news conference in new york. he called the background to the 9/11 attacks "suspicious." >> ( translated ): what i raised is a very clear discussion and a precise one. don't you feel that, if a fact- finding mission was present from the start to explore the true reason behind september 11, that we would not see the catastroph in afghanistan and iraq? why do you assume that all nations should accept what the u.s. government tells them? >> sreenivasan: ahmadinejad also said iran would consider a halt to enriching uranium if it receives nuclear fuel for a medical research reactor. and he said iran is ready to resume international talks on its nuclear program. also at the u.n., president obama urged sudan to ensure a referendum on independence will be fair and on schedule. under a 2005 peace agreement, the people of south sudan are due to vote in january on whether to secede from the north. mr. obama warned that if the vote is not credible, there could be new violence. parts of western wisconsin and southern minnesota were paralyzed today after severe flooding.

remnants of tropical storm georgette have dumped nearly a foot of rain this week. that sent rivers and streams rising out of their banks, washing out roads and forcing hundreds of people to evacuate. the governors of both states have declared emergencies. comedian and satirist stephen colbert took his celebrity to a u.s. house hearing today to raise awareness about farm workers. colbert recently spent a day picking beans in a united farm workers program called "take our jobs." it aims to show that few americans will do such work, leaving low-paid illegal immigrants to do it. >> i think there are way too many undocumented mexican workers here in the united states doing jobs. and i think that we've ignored this issue for too long and it is time to roll up our sleeves and face this issue imagineo-- mano a whatever the spanish word for mano is. >> sreenivasan: colbert stayed in character as a mock news commentator for much of the hearing. in india, athletes from around

the world began to arrive in new delhi for the troubled commonwealth games. the event has been plagued by negative publicity about unfinished venues and dirty accommodations for athletes. and the start of competition is just nine days away. some athletes have pulled out, but new zealand and australia confirmed today their athletes will attend. rescuers in new zealand scrambled today to save 24 stranded pilot whales. it was the second mass stranding in the last month, and the cause remained a mystery. the whales were trucked to another beach 30 miles away to be refloated. they were the only survivors from a pod of 80 whales that beached on wednesday. three more whales died during today's rescue attempt. those are some of the day's major stories. now, back to jeff. >> brown: as the debate over tax cuts continues on capitol hill, we continue our own series of conversations. earlier this week, we heard from president bush's former economic advisor glenn hubbard, who argued in favor of extending them all for everyone. tonight-- former federal reserve chairman alan greenspan, whose 2001 testimony backing the tax cuts was seen as key to getting them passed by congress, but who

now believes they should be allowed to lapse. we talked yesterday at his washington office. >> brown: alan greenspan, welcome. >> thank you. >> brown: you've argued recently that we should let the so-called bush tax cuts laps for everyone, across-the-board. why? >> budget deficit problem, i believe, is far more dangerous than most of us contemplate on a day-by-day basis. what we see is people cutting taxes with borrowed money. spending new programs, new projects with borrowed money. if the debt is increasing at a rate of over a trillion dollars a year, and because interest rates are low , in a weak economy t is very easy for the government to sell as many bonds as it wants. and i think there's a complacency rising at this stage. >> you mean it's cheap to borrow now but that may not

be the case? >> oh, it certainly will not be the case. interest rates are down for a number of technical reasons which i won't get into. but assuredly they're not going to stay here. and the problem is that when you begin to get into this sort of situation, you have to make choices. my choice, because i think that's where the fundamental problem is, is on the spending side. indeed there are innumberable very credible studies which say in effect when are you in this sort of situation, the only types of attacking of this type of deficit that works and stays working is by cutting spending, not by raising taxes. taxes is a temporary measure to solve the problem but it will not solve it longer term. but i'm acute-- acutely aware of the fact that in this congress or the next, that is not going to happen at the levels that is necessary. >> so the argument then is

to let the tax cuts laps. you know the counterargument, we heard it from glenn you had bard on our show. you see the house republicans today with their blueprint out saying this is exactly the wrong time to do that because of the weak economy. >> well, the problem is that the markets may not be listening to them. we don't know at this stage why or how the markets respond to this sort of-- this type of event. and i think we're taking a very high risk. i've been around in markets for a long time. in 1979, for example everyone expected yes, we have a little inflation but there is to the going to be a real problem. within a very short time the bond markets broke, interest rates ran up sharply, mortgage rates went up sharply. the economy went into a real serious depression. and my basic, i say depression in the recession. my problem basically is that economists can't make these

forecasts. and the issue is what happens if we are wrong ? well, the basic problem is that we have over the years been narrowing the gap between the federal debt debt that the public holds and the capacity to borrow. we are now at a state where excluding world war two we are in the worse shape of relationship between borrowing capacity and debt. i suspect since 1791. >> brown: and your argument is that that risk vastly overrules the risk to a slower growth by letting the tax cuts laps. >> yeah. i don't quite agree with those who say that the tax cut lapsing will have a major impact on the economy. >> brown: you don't. >> i think it will have a negative impact. i don't deny that. this is a trade-off between bad and worst

. not between bad and worse, i sometimes put it between terrific and catastrophic. >> brown: really, catastrophic. >> oh, indeed. we've never been in this position before. and you don't have any evidence that we're in control of the budget. there has been no cut that i'm aware of in any significant program in recent years, by any congress. >> now looking back you tested-- 2001 you testified in favor of these tax cuts. it was a time of surplus so i know it was a very different atmos-- atmosphere there. but when you look back now was that a mistake in the sense that we fwhu that one day this would come. there were people at the time that warned that one time that the times would change, right that we would be in a deficit. and it would be hard to roll them back. >> well, that's what you would think. the office of management and budget, congressional budget office, and mainly in my

judgement, the very excellent staff at the federal reserve were all projecting surpluses as far as the eye could see. that there was a structural imbalance, indeed. we at the fed actually had meetings and, in fact, set up a committee which functioned and sent a report of what the federal reserve would do when the debt disappeared. and we no longer had federal securities to do open market policy. so it was a very seriou serious-- serious issue. in the summer of 2001 it disappeared. forecasting is very fragile. forecasting that we're going to get through this by just, we will wait for a year or two and then decide what to do, i think that is a very high risk policy. very high-risk strategy. >> brown: well, here we where now and you referred earlier to the politics of our own time, very fractured, very divisive. would you like to see more

action on spending side. you don't think politics allows that. is our political situation such that we can't act on the tax side. we can't actually act to deal with the kind of potentially cat strafk-- catastrophic future you fear? >> this is the reason why i think this is an extraordinary period. because it makes a big difference between whether, in fact, when the tax cuts will laps under the law on december 31st, whether they are automatic and no congressperson or senator has to comment on it, or whether they have to act affirmatively, which they do, to reenact legislations, that there are going to be a number of people who-- in the congress, who are going to feel pressured that essentially, cutting taxes, which is what they would basically have to do, will

be reversed and say you're increasing the deficit. and there is a political sensitivity in both parties. and i must say that the republicans, i think, have been cutting taxes with borrowed money and democrats have been spending with borrowed money. they agree only on the borrowed money. and the system cannot take that. i think so the question is on issues of policy, you often have to ask yourself, what happens if are you wrong on one side or wrong on the other. if we are wrong by being too conservative, trying to bring the deficit down too quickly, that's a very reparable problem. if we are wrong with 9 buffer between the capacity to borrow and where our debt is at the moment, we have very dangerous possibilities out there. >> brown: all right, alan greenspan, thank you for talking to us. >> my pleasure. >> brown: our next conversation

will be with laura tyson, former chair of the council of economic advisors in the clinton administration. she calls for keeping the tax cuts for the middle class for now, while letting them lapse for the wealthy. >> woodruff: next, to britain's new coalition government, facing issues at home and abroad that are very familiar to americans. margaret warner has that story. >> warner: before last spring's campaign, liberal party leader nicholas clegg was hardly a familiar face to british voters. but the debates changed all that. >> the more they attack each other, they more they sound exactly the same. >> warner: 43-year-old clegg stole the spotlight from the candidates of the two traditionally dominant parties: labor's then-prime minister gordon brown and the conservatives' david cameron. >> we don't simply need to choose from the old choices of the past. we don't need to repeat the mistakes of the past. don't let anyone tell you that, this time, it can't be different. it can. >> warner: the results of the may election were certainly

different; neither major party won a majority of seats in the house of commons. within days, a coalition was forged between cameron's conservatives and clegg's liberal democrats, despite the two parties being at odds on many domestic and foreign policy issues. >> we are announcing a new politics... >> warner: cameron became prime minister and clegg deputy prime minister. it's the first time in decades that the liberals have been in power. since taking office in may, the new government has moved quickly in the face of a tough recession and a record peace-time deficit. the government presented an emergency budget in june, a dose of austerity proposing cuts of 20% or more in many agencies and programs. meanwhile, public discontent with the afghanistan war grows with mounting british casualties there. the new government said it wants to start withdrawing the 9,500

british troops by next summer. nick clegg is representing britain at the u.n. general assembly this week. i spoke to him this morning in new york. >> deputy prime minister clegg, thank you for joining us. >> great to be here. >> there's been a lot of speculation in new york base on what president ahmadinejad has been saying all over town and at the u.n. about whether or not tehran's interested in restarting talks on its nuclear program. what is your government's assessment of that? >> well, our assessment is that we need to keep up the international pres usual-- pressure. it's inred-- incredibly important that the includes, the members of the security council plus germany remain very united, ver solid in exerting problemure on economic sanctions, diplomatic pressure on the iranian regime, so that they understand that we are deadly serious about dealing with the threat of a nuclear armed iran. but also willing to engage with iran on civil-- on a civil nuclear ambition

. >> warner: now unlike the americans, you did meet with the iranians here. your foreign secretary met with the foreign minister of iran a couple of days ago. >> yeah. >> warner: what indication did you get in that meeting about whether tehran wants to restart these talks in a serious way? was there anything concrete? >> it wasn't-- it wasn't the best of meetings in the sense that i think it was, in a sense, a restatement of the kind of position that we know the iranian administration has taken. so i'm to the going to pretend it was a breakthrough. it was a tough meeting. our foreign secretary set out very clearly, as i say, our view that we needed to get more transparency and candor from the iranian administration. but that we were prepared to engage with them. >> rooney: . >> warner: now president obama has said military action as yet another alternative can't be taken off the table. when you ran for, in the last campaign, your party's manifesto said under no circumstances. what is the british, this coalition government's position now?

>> well, no one is talking about a pill tear option. it's not something that people are pursuing. >> warner: actually i interviewed tony blair last week and he did talk about the military option could have been taken off the table. there is a conversation about that. and what i'm trying to find out here is whether are you in this coalition government now. you're in partnership with the united states and these other members. whether to you it is just a nonnegotiable issue or whether that's in the background. >> i didn't serve any purpose to go around saber-rattling about military action. equally serve those purpose to confidently speculate about what if, what if, what if. >> warner: you were in afghanistan just last month. do you think that the counterinsurgency strategy that the u.s. and u.k. are pursuing there is the right one? >> i think we where at a vital, vital phase now in our military engagement in afghanistan. i think the next year is really crucial t really will tip the balance in my view one way or the other.

all that we can do militaryly is create the space, the security space in which a political process can take place of reconciliation, of reintegration and i think that's what we need to look for in the next few months is how can you convert military momentum into political reconciliation. and into a political process which, in turn, will lead to a stable afghanistan. >> warner: my question is was it your assessment when you were there that it's working? >> my assessment is that militaryly certainly in the path of afghanistan in helmand, southern helmand where the united kingdom forces are most leffly -- heavily concentrated now has a momentum and has resources and has troops because of the surge which president obama has delivered. and of course has leadership in general petraeus, which arguably we should have had five years ago. >> warner: now at home your coalition has embarked on this rather draconian austerity budget, the details of which will be released next month. but it is said that the

defense budget will be slashed 20 or 25%. what are the implication of that, first of all forth u.k.'s commitment in afghanistan? >> well, we're to the going to do anything which will in any way weaken our commitment and our ability to fulfill our duty and obligations in afghanistan. that is simply not going to happen. >> warner: so it's off the table? >> absolutely. we're not going to do anything which in any way will undermine our effort in afghanistan. we're there. it's not uncontroversy for other reasons that i have explained. but we are there and we will do the job properly that we've been asked to do. in the wider scheme of things we need to ask ourselves big questions as we need to do across public expenditure when money is tight. which is what kind of weapon systems can we afford. what kind of security threat does we face in the future. are they the same as we faced in the past. can we make any safe predictions about what kind of challenges we will have to address in the future and what implications does that, in turn, have for what we spend our money on.

this is going to be very difficult. it's going to be extremely complex and, indeed, controversial as are decisions in every other area of public spending. whether it's welfare, whether it's education, whether it's health. and so on. but i'm absolutely convinced and the coalition government is absolutely convince head that we will not be able to play our part, our proud part in the affairs of the world unless we also have a strong sustainable economy at home. you can't play, you can't stand tall in the world if you are running on empty back home. and that's what we are trying to fix. we fix our finances at home. we will continue to play a proud and, i hope, leading role in the affairs of the world. >> warner: now how are you as a liberal in this liberal coalition going to make the case to the british public about these major cuts in services that are coming, and also to your own liberal party base. >> sure, sure. i take two things. firstly, i think what's happening at the moment, partly because we haven't

taken the decisions yet is that everybody is reading in, they are worst fears into a vacuum so this kind of image is develop being draconian cuts that will happen next tuesday. they are not they are take place over five years which is actually a more leisurely timetable than principles for some european countries who have had their hand forced by bond markets to take even more dramatic action. i think we are retaining control, if you like, over our own destinys which are meant to be important for new incoming government. if you deny you have a problem and you don't take action on your deficit, you know what happens? what happens is you are asking your children, you ask your kids, your grandchildren to carry on paying off billions of pounds of interests on your debt, on this generation's debts. money which should be used for their schools and their hospitals in the future so what we're saying is look, we messed up as a generation. we've got to wipe the slate clean for the next generation. it's very important that we don't light future generations because of our failings in this generation. >> warner: do you think what you're doing is instructive

for other countries, other mature economies like the united states who are dealing with ballooning deficits or not dealing with it? >> i think the wrong and economically unjustified for us to start sort of, you know, developing a sort of hollyer than thou attitude about other people's fiscal arrangements. we have individually decided for our circumstances, we are an economy which is allied to the american economy but we have different challenges. we've decided it is in our best interest to do what we're doing. i don't think it would be useful to say that is a carbon copy for other people to mimic in exactly the same way. >> warner: everyone has to make their own decision. mr. clegg, thank you very much. >> thank you. >> brown: next, an update on the aftermath of the floods in pakistan, where thousands of people remain in desperate need of aid and waters continue to rise. jonathan miller of independent

television news reports from sindh province in southern pakistan. >> reporter: loaded to capacity, the helicopters of the marine expeditionary force struck out to the northwest, across the ocean that is upper sindh, a water world dotted with islands of misery. farmsteads, villages, entire towns, stranded for weeks now; some entirely abandoned. from horizon to horizon for mile after mile, a vast inland sea, accessible only by chopper. people have been marooned in their villages for as many as three weeks, surrounded by a sea of water. this is their first airdrop. only the hurricane-force downdraft keeps the hungry at bay as they surge towards the huge helicopter, hovering 20 feet off the ground, unable to touch down.

it's still too marshy below. these isolated villages probably ran out of supplies weeks ago. they have no idea when the next drop's going to come. this is their chance. one of the choppers finds enough space to land; local people are held back at a safe distance. the rice crops are ruined and the seed crop destroyed. ten million pakistanis will be reliant on food aid for at least another year. the pilots want to go. suddenly, everyone bolts towards the stacked sacks of flour and boxes of high-energy biscuits. they grab and they run. it's the survival of the fastest. there are winners and there are losers. the americans are throwing tens of thousands of pakistanis a

lifeline. they consider these mercy missions their humanitarian duty, but they know too that they're buying much-needed good will in a fragile, chaotic and volatile nation. >> i see our mission as trying to help people who are starving. i see our mission as trying to alleviate human suffering. that is our mission. if a side benefit of it happens with better will, better relations with the pakistani government, that's fine. >> reporter: we've heard reports of fresh flooding a few hours drive to the south. as we head down the west bank of the river indus, we pass villages only recently abandoned to the water. local police insist we take an armed escort. this is bandit country. the policemen in our two vehicles had both lost their homes. their families now live in camps. suddenly, just outside bhan saeedabad town, we reach the end of the road.

the newly displaced arrive on dry land with what they could grab. they are stoic, but shock is already turning to depression. eight feet of water will take months to drain and evaporate. it's incredible to think that, nearly two months after the floods first struck, fresh areas are still being inundated. this flooding isn't because there's been more rain, though. it's because army engineers decided to relieve pressure on a nearby lake, which had grown to four times its size, by cutting a breach in the protective wall. this wall then just crumbled, allowing all the water to just gush into this area, submerging more than 150 villages. relief workers are yet to reach this area. they have struggled to keep pace with the water. we join a group returning to their village. beside me, in blue, mohammed

sardar, just back from karachi, to see what the flood had done to his family home. the government says 100,000 square kilometers have been flooded nationwide, nearly 30,000 kilometers of roads submerged, nine million acres of cropland are under water, and 21 million people affected. and that was before this area went under. mohammed sardar wanders around jadani village in a state of increasingly traumatized disbelief. some homes remain clear of the water, but half the village has been submerged. >> ( translated ): the destruction is on such a scale, it will be impossible to return to normality. these are poor people and their crops are destroyed. all their savings were invested in their crops, and now they can't harvest them. they are left with nothing. >> ( translated ): what will my life be like? i am sitting here in sadness with my children. nobody is giving me food. i have nothing. all my time is spent in shock,

with my children around me. i have no medicine, no food, no water, no sanitation. >> reporter: as its people survey the damage, a gloom is settling over pakistan. few have faith in their government to do much to help. politics is in a perilous state, the country is broke, millions more people will be condemned to poverty; their future, like that of their nation, mired in uncertainty. >> woodruff: and to the analysis of shields and gerson. that's syndicated columnist mark shields and "washington post" columnist michael gerson. david brooks is off tonight. good to see you both, thank you for being here. let's talk about the bush era tax cuts am we just heard alan greenspan with the argument about why they should be allowed to laps. but let's first talk about what is going on in the congress. democrats, mark, in the senate they're saying let's

postpone a vote. but in the house we don't knows what's going to happen. what's the back story here? >> the story of the house is that the house could pass the tax cut extension for those under 250,000. but you have to understand, judy, that democrats who are in tough races across the country, many of whom are defending seats that interest traditionally republicans, they won in 2006 or 2008 are very much on the defensive. they're on the defensive because of the economy, first of all, the reality of the me. but they're on the defensive explaining all sorts of votes they've cast. they want to get back and just go, complete against their opponent. they don't want a nationalized this race any more. they want to localize it. and the house democrats have cast all the tough votes this session. and the senate democrats and the senate in general has been the long jam. and simply saying the senate had to go first and harry

reid, they did not have 60 votes in the senate to bring it out. >> woodruff: so the prospects are what? >> slim to none in the session that's coming up after the nef elections, in my view. i mean you could have harry reid lose his seat. in that circumstance, his promises and plans wouldn't mean very much. you could have some new members of the senate that take place immediately that turn over taking place immediately. not you know, down the road but because of state constitutions and the way they deal with this, you could have a changed senate right away with places like colorado and other places. and you would have, if the republicans win big and that's a big if, okay, it will be seen, gross domestic productly seen in the country as a reputeiation of obama's economic approach. and there's no way that congressional leaders can act as though that hadn't happened. it's not going to be possible. >> woodruff: so the

democratic hope of extending the middle class tax cuts. >> i disagree with michael. there is a long-standing tradition of lame duck congresss doing significant things. some may recall in 1998 after they last seats in the midterm election the republican congress impeached the president of the united states, a lame duck republican congress did that. when in fact, if they ceded the vote, they wouldn't have passed at least one of the three articles of impeachment. here's the way it would work. the democrats, in my judgement n the house, and that's what the house leadership believes, could pass on what is called a suspension calendar. the house, the majority in the house, majority in the house runs the house, okay. the minority's responsibility in the house is to help make a quorum and that's really it. and the suspension calendar means there will be no amendments up or down. a two-thirds vote is

required and that would then pass 250,000. >> are you saying it is ponderable. >> sure, i do. then it goes to the senate and what happens in the senate is there will be an attempt to try and isolate the 2 -- 250,000 above, the millionaires tax cut, to extend that for a shorter period of time, pain a year and separate that from the 250,000 and below. >> michael, i have a request about the substance. the alan greenspan argument, that the country is facing a catastrophic situation, why isn't that argument catching on among his fellow republicans. >> i think it is important to note that it didn't really catch on among some democrats which is the reason that the democrats are in these circumstances. a significant of those in the house and a significant key members of the senate decided, you know, if you are a keynesian, you don't raise taxes during an economic slowdown. that doesn't make any sense, even according to keynesian economics. it's not only politically unpopular, i think there are some good economic arguments here.

well, if you want to raise taxes, why do it now. you know, at a time where we are facing this slow recovery that feel feels like a continued recession. >> woodruff: i ask because he gave jeff such a grim forecast. >> judy, the average tax cut for a person making a million dollars is $100,000 a year. so what you are really suggesting is we are going to borrow money from the chinese, to provide a tax cut for these folks. and by every measurement, economic standard i've seen this is the least stimulative to the economy, the tax cut for these folks at this level. and that is the argument that's made. >> all right. let's talk about something that incorporates the tax cuts. michael, that is a republican's pledge to america. they rolled it out. they went to a hardware store out in sterling, virginia, what do you make of it? >> i think it is less interesting as a governing agenda as it is as kind of a rorschach test. mainstream moderate republicans and

conservatives seem to bell come that. we are enthusiastic about telephone. precisely because it's not particularly bold, not particularly dangerous or controversial it really overturns the obama agenda. but tea party, the hard-core of the tea party was very critical of the pledge. for the same reasons. because it wasn't bold enough. they don't want to just overturn the obama agenda. they want to overturn broad layers of the u.s. government. i think that that presents a problem for republicans if they win the house between those that really want to take down the whole building and those that want to govern an effective wage. it's going to be a serious conflict. >> so we are getting a look at what could happen down the road. >> i think it is more of a political document than sort of a vague blueprint for governing. i mean they finessed and punted the really tough issues, social security, medicare. it was, they were crowd pleasers that that bill has to be printed 72 hours before it is voted upon. we're going it to repeal tarp. they conveniently forget that tarp was courageously

sponsored by president george bush and voted by both john boehner and eric cantor as well as mitch mcconnell. so it was, more of a crowd pleaser. i think they felt they had-to-have the document. and of course they include the tax cuts again. >> yeah. >> and a lot of it was about the economy. and i want to come to the white house here, michael. because we learned this week that the third senior member of the president's economic team to announce he's leaving in the last month or so, larry summers, is heading out the door. what changes should we look for in economic policy. >> well, first, i think you have to recognize that this is not that unusual after two years in an administration. it's kind of a normal time for people to turn over and in these cases they had plausible personal reasons, there's true. but it's much easier to stay in a team that seems successful and there is a broad judgement that the economic team was not particularly successful. i think that is unfair in part for exactly the reasons that mark talked about. some of those early decisions to save the banking industry, the

financial industry were very much in continuity with the bush administration and very important. but i think they deserve the criticism that they have. put much emphasis on economic growth and job creation in this circumstances. and the president deserves a lot of criticism for going health care instead of those themes, it seems to me. and some democrats as well. >> so mark, do you look for-- what do you look for with the change? >> well, i think that it sounds plausible to me, larry summers, as a rule that he has to live by at harvard, as you know, to be gone two years. but with peter orszag, the budget director having left him with cristie roemer, the chairman of the counsel of economic advisors and then summers, i would say the person in washington with the greatest job security is timothy geithner, secretary of the thresh rear-- treasury because there is no way in the world he would be leaving. >> because he is the last senior figure. >> absolutely right. along with austin goulsby, i would say what is missing in this administration from the

outset, you can argue about policy and its effectiveness, but there has never been an economic spokesman. there has never been somebody without could answer all the questions rather than having geithner do it one day or roemer do it or the president do it. the president should never be explaining bad economic news. and i think that's what they need. a economic czar, whatever it is, but it ought to be somebody that can speak with credibility. because michael's point about what has been done, there's been no greater salvation to the american manufacturing system than the bailout of general motors and chrysler. i mean it saved the american automobile industry, which is now flourishing. and it is the most unpopular initiative of the whole administration. so i mean somebody ought to be able to make that case and it shouldn't just fall to the president to do it. >> brown: i want to ask you both about something that the senate, i guess a couple of things the senate didn't do this week. one of them, michael,s with that they rejected the

so-called disclose act. this is an act that would have required that we know who political contributions are coming from. does this matter in this environment. >> well, i think it reinforces a clear lesson. you don't undertake campaign-finance reform a few weeks before an election when it looks like you are stacking the deck in your favor. any self-respecting opposition party is going to oppose that. you know, the bill itself is supposed to prevent conflicts of interest. this is a clear conflict of interest on the part of the democrats who view this as a favorable change. and you can't do that right before an election. it's not possible. >> i disagree. i think that the democrats, bill was offered not to touch this election, only to take effect in 2011. the position of the republican party lead by mitch mcconnell, their leader for generations has been on campaign finance, don't limit expenditures, don't limit contributions but have full-timely and immediate disclosure. and now that the supreme

court of the united states and its collective wisdom has determined the corporations are individuals, and they have all these rights to spend money and not to answer any questions, anybody, i think it's changing our politics more profoundly financially than anything that's happened in my lifetime. >> is this going to stay this way, michael? if we get into a next year with a presidential election. >> i think you have to do campaign-finance reform in a less political season. there's no-- and this is a conflicted issue because it's not just the chamber of commerce that opposes this law. it's also the aclu and the sierra club and others that feel like they have a right to express themselves in these public settings. so it is a real battle but are you not going to get it a few weeks before an election. it's to the going to happen. >> there were, there was an attempt earlier to give special preference to traditional democratic constituencies. but the offer was made and it was on the table. and rewriting the bill to treat everybody exactly the same, full disclosure for everyone.

and i think when somebody is given 25,000 dollars and spending a campaign to attack michael, i think michael as a candidate has a right to know who is doing it and so do the voters of this district. >> very quick last question, very quick, bob wood ward's new book, inside the obama administration, how they dealt with the war, wars in iraq and afghanistan, do we learn something from this? >> well, there's not much new but it's till pretty disturbing. the politization of these decisions, the fact that the administration is so divided on very basic questions. and the ambivalence of the president. i think the book is going to lead a lot of people to say, get in or get out. instead of pursuing kind of polit the difference policies that don't achieve the objective. >> i thought the president's own approach to it where he welcome ed dissent where there was free and open discussion with competing points of view, unlike previous administrations were familiar with in going to war and planning.

the extensive planning i think was refreshing. i think both bob wood ward, you either talk to him or you don't talk to him and if you don't talk to him, you risk a negative interpretation. so people continue to talk to bob woodward. we continue to talk to you, mark shields, michael gerson, thank you both. >> thank you. >> brown: finally tonight, the very private man behind facebook gets his own moment in the spotlight. ray suarez has the story. >> suarez: it's a fictionalized account of a very real story. "the social network" opens in movie theaters next week, chronicling the birth and rise of social networking giant facebook, including an unflattering portrayal of the site's creator, mark zuckerberg. the movie alleges he took the idea from his harvard classmates. this week, the real mark zuckerberg is making headlines of his own, starting with

a whopping $100 million donation to the public schools in newark, new jersey. the district has been plagued for years by low test scores, poor graduation rates, and crumbling buildings. the venue for the announcement-- the oprah winfrey show. zuckerberg, who dropped out of harvard to work full-time on facebook, said he wants to make sure other students have an opportunity to succeed. the philanthropic move comes just before the film's premiere. on oprah, zuckerberg said the movie was just a movie. >> it's fun. a lot of it is fiction, but even the filmmakers will say that. i can promise you, this is my life, so i know it's not that dramatic. ( laughter ) the last six years have been a lot of coding and focus and hard work. but maybe it would be fun to remember it as partying and all this crazy drama, so, you know, who knows? maybe it will be an interesting story. >> suarez: david kirkpatrick is the author of "the facebook effect." he says zuckerberg doesn't take

the movie lightly. >> at facebook, they are concerned about this movie. they do feel that he... first of all, mark is not a public figure. nobody... most users of facebook don't even know who he is. most of them have never heard his name. so the movie's going to change that. for the first time, mark zuckerberg's going to be a genuine global celebrity. so that's what they're facing. what kind of celebrity is he going to be? is the movie going to define his image, or are they going to define the image... is he going to define it himself? >> suarez: since zuckerberg launched facebook from his dorm room back in 2004, it has grown exponentially, now with more than 500 million active users. 50% log on in any given day. people spend a lot of time there; over 700 billion minutes a month combined. kirkpatrick says zuckerberg is a modern titan in his own right. >> well, certainly, for social media and social networking, he is the guy, just as carnegie was for steel or ford was for auto. i don't think we can compare him to those people yet, just simply

because he hasn't been out there as a business leader for anywhere near as long as they were. he hasn't faced a lot of the challenges they've faced. but, yes, he defines his industry in a way that almost no one has before. >> suarez: judy woodruff visited zuckerberg at facebook's offices in 2006, when the site had fewer than 12 million active users. >> i'm really young, so i have to be thinking about the long term, you know, and how the stuff is going to play out. and i think that the way you achieve the best long-term value is by building real value in the world. are we actually helping them achieve their goal of understanding the world? and if we can do that, then i don't think we're going to have a hard time making a lot of money. >> suarez: zuckerberg has indeed made a lot of money. "forbes" magazine ranked him this week as the 35th richest person in america with a net worth of almost $7 billion, even surpassing apple c.e.o. steve jobs. recently, facebook itself has come in for criticism. some users complained about the

site's privacy settings, leading to a change in its policies. and just yesterday, the site had its worst meltdown in years, a coding error that brought facebook down for two and a half hours, a lifetime in the online world. one of the easiest places to talk to people about facebook is on facebook. so i asked three questions: do you care about the back story? do you want to know about facebook founder mark zuckerberg? do you plan to see the movie? and does the $100 million donation to newark schools alter whatever idea who already had about zuckerberg? and the answers came in all day. a woman i went high school with says, "i'm interested in seeing the movie to learn about the story, but i have no particular interest in zuckerberg." and as a really good illustration of how facebook works, my third grade teacher says, "i don't really care about the backs tory, i don't know about the film, and i want to know, why newark schools? i wonder why such a large donation. and why to newark? is there something behind this

sudden grand donation?" and a tech entrepreneur who's a facebook friend said, "mr. zuckerberg's $100 million donation does not alter my opinion of him or of facebook. i am, however, interested to know more about why he chose newark, what are his objectives in supporting education and, recognizing that he's only 26, is this an indication of a broader philanthropic strategy?" zuckerberg said today he does indeed plan to continue donating to education. whether he will continue to maintain a more public profile remains to be seen. in the meantime, he hopes facebook will grow beyond the half billion people who have already signed up. >> woodruff: again, the major developments of the day: house speaker nancy pelosi would not rule out a vote on extending tax breaks for the middle class before the november elections. and wall street ended the week on an up note. the dow jones industrial average gained nearly 200 points. now back to hari sreenivasan in our newsroom for what's on the newshour online. hari.

>> sreenivasan: find some of the questions ray posed about facebook on our facebook page, watch more of stephen colbert's testimony about the plight of farm workers. plus on "art beat," jeff talks to norwegian novelist per petterson about his book, "i curse the river of time". all that and more is on our web site, newshour.pbs.org. judy. >> woodruff: and that's the newshour for tonight. on monday, we'll talk to former clinton economic advisor laura tyson, who makes the case for extending bush-era tax cuts to the middle class, but not to the very wealthy. i'm judy woodruff. >> brown: and i'm jeffrey brown. "washington week" can be seen later this evening on most pbs stations. we'll see you online, and again here monday evening. have a nice weekend. thank you and good night. major funding for the pbs newshour has been provided by:

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