The NewsHour with Jim Lehrer

RAY SUAREZ: Good evening. I'm Ray Suarez. Jim Lehrer is off. On the NewsHour tonight: Our summary of the news; Massachusetts' highest court clears the way for gay marriage there; medical and engineering breakthroughs bring new hope to amputees and the paralyzed; Congress is close to a final bill on a Medicare drug package, and takes testimony on the mess in mutual funds; and Germany's foreign minister on Iraq and German-American relations.

NEWS SUMMARY

RAY SUAREZ: The supreme judicial court in Massachusetts struck down a state ban on same-sex marriage today. The decision came in a 4-3 ruling that said, in part: "Whether and whom to marry, how to express sexual intimacy these are among the most basic of every individual's liberty and due process rights." The court stopped short of ordering marriage licenses to be issued to seven couples who sued. Instead, it gave the legislature 180 days to come up with a solution. In Boston, the ruling was both hailed and condemned.

MARY BONAUTO, Plaintiffs' Lawyer: Today's court decision essentially said as to both liberty and equality there is in fact no rational reason whatsoever for this discrimination against gay and lesbian families in the commonwealth of Massachusetts. Some court has finally had the courage to say this really is an issue about human equality and human dignity. It's time that the government treat these people fairly.

GOV. MITT ROMNEY: We obviously have to follow the law as provided by the supreme judicial court -- even if we don't agree with it we're going to follow it in terms of preparing legislation and we'll have legislation which conforms with the law. But we will at the same time initiate a constitutional amendment process, and that constitutional amendment process will be consistent with what I think the feelings are of the people of the commonwealth and of course the entire sweep of recorded history.

RAY SUAREZ: The amendment the governor referred to would define marriage as a union between a man and a woman. In 1999, the Supreme Court in Vermont issued a similar ruling. That led to a state law approving civil unions for homosexuals, but not marriage. Late today President Bush issued a statement denouncing the ruling in Massachusetts. He said he'd work with Congress to "defend the sanctity of marriage." We'll have more on all this in just a moment. U.S. fighter jets and helicopters blasted suspected insurgent positions in Central Iraq today. It happened in and around Baqouba, 30 miles northeast of Baghdad. Aircraft and tanks targeted ambush sites and hideouts. The bombardment was the most intense in the region since the end of major combat in May. There may not be as many foreign fighters entering Iraq now. The commander of the 82nd Airborne Division reported a drop today in infiltrations from Syria, Jordan, and Saudi Arabia. Major General Charles Swannack also said his forces are pulling back from several towns that have been hotspots. He said Iraqi forces would take over security there. President Bush flew to London today for a state visit amid high security and gathering protests. Spencer Michels narrates our report.

SPENCER MICHELS: President Bush arrived at Heathrow Airport just after 7:00 P.M. London time, where he was greeted by Prince Charles. He then flew by helicopter to Buckingham Palace, where he and the first lady will stay during their state visit. It's the president's first trip to Britain since the war in Iraq, and he said he plans to use it to confront doubts in Britain and across Europe about the war. But plans for large-scale antiwar protests are under way in England. Organizers said they expect as many as 100,000 demonstrators will march in London alone on Thursday. In Central London, police blocked off large parts of the city. Nearly 14,000 officers will patrol the capital's streets this week. Officials said the unprecedented security was intended for both protesters and possible terror attacks. London's mayor questioned the security operation's $ 8.5 million price tag.

MAYOR KEN LIVINGSTONE: As we are told that the whole exercise here is just so George Bush can use a few clips of him and the queen in his campaign advertisements for re-election next year, I would have thought that we could send the bill to Republican National Committee.

SPENCER MICHELS: But not all Britons are unhappy about the presidential trip. Recent opinion polls suggest that more welcome Mr. Bush's visit than oppose it.

OLIVER KAMM, Merchant Banker: He's overthrown a dictator who is responsible for mass graves, for the gassing of Kurds at Halabja, for the most vile and vicious dictatorship on the face of the earth. I can't understand why those who adhere to liberal left principles don't give him their support.

SPENCER MICHELS: Tomorrow, the president gets a ceremonial welcome from the queen, and then gives a speech on the transatlantic alliance to a London audience.

RAY SUAREZ: Violence erupted in the Middle East again today, amid new efforts to renew peace talks. A Palestinian gunman killed two Israeli soldiers at a West Bank checkpoint. And in Gaza, Israeli troops wounded nine Palestinians at a refugee camp. Still the new Palestinian Prime Minister Ahmed Qureia went ahead with plans to meet with Israeli Prime Minister Sharon.

The U.S. House passed a far- reaching energy bill today. It would cost $ 32 billion over ten years. That includes $ 14.5 billion in tax breaks for producers of fossil fuels. The bill also doubles the required use of ethanol in gasoline, a boon for farm states. And it contains new standards for power lines, designed to prevent blackouts. Republicans praised the measure, while most Democrats criticized it, in today's House debate.

REP. NANCY PELOSI: This bill looks backward, not forward. This bill will not reduce our dependence on foreign oil. It will make it harder to increase fuel efficiency standards. It does not adequately invest in new technologies and promote energy efficiencies. It will not protect average Americans from price gouging and fraud. And it throws environmental concerns overboard.

REP. DENNIS HASTERT: This bill is fair and it's balanced and it's comprehensive. And it's good energy policy. I hear the complaints on the other side of the aisle. "It's huge investments." Well, folks, to have good energy policy, we have to have investment. We have to put capital where capital can be investment and we can make change. This bill does exactly that.

RAY SUAREZ: In the Senate, some Democrats threatened a filibuster. They object to language that protects the makers of a gasoline additive, MTBE, from lawsuits. The federal government once encouraged its use; now the chemical has tainted drinking water supplies in at least 28 states. Part of the nation's third- largest mass transit system began moving again overnight in Los Angeles. Negotiators reached a tentative settlement over the weekend, ending a month-old strike. The two sides agreed to submit the main issue, healthcare benefits, to nonbinding arbitration. With that, some bus lines returned to service. Full bus and train service could resume by the weekend. Inflation at the retail level was held in check last month. The Labor Department reported today the Consumer Price Index was unchanged in October. Lower energy prices and sharply higher beef prices canceled each other out. On Wall Street, the Dow Jones Industrial Average lost more than 86 points to close at 9624. The NASDAQ fell more than 27 points to close below 1882. That's it for the News Summary tonight. Now it's on to Massachusetts and gay marriage, surprising breakthroughs on new limbs for amputees and the paralyzed, Congress on prescription drugs for seniors and the mess in mutual funds, and the German foreign minister.

FOCUS GAY MARRIAGE

RAY SUAREZ: Margaret Warner has the gay marriage story.

MARGARET WARNER: The core of today's ruling, long awaited by both sides in the gay marriage debate, is reflected in these words from the four justices in the majority. "Currently," they wrote, "a person who enters into an intimate, exclusive union with another of the same sex is arbitrarily deprived of membership in one of our community's most rewarding and cherished institutions. That exclusion," the Court said, "is incompatible with the constitutional principles of respect for individual autonomy and equality under the law. Neither tradition nor individual convictions," the Court went on to say, "can justify the perpetuation of a hierarchy in which couples of the same sex and their families are deemed less worthy of social and legal recognition than couples of the opposite sex and their families."

Today's ruling kicks the legal and political fight over gay marriage to a new level. Where will it lead? For that, we turn to Kevin Cathcart, executive director of Lambda Legal, a gay and lesbian legal and advocacy group. He was formerly director of the group Gay and Lesbian Advocates and Defenders, or GLAD, which brought the case in Massachusetts; And Maggie Gallagher, president of the Institute for Marriage and Public Policy, and author of "The Case for Marriage." Welcome to you both.

Kevin Cathcart, what was the Court saying today? How sweeping a ruling is this?

KEVIN CATHCART: (No audio- network difficulty)... with its guarantees of liberty and equality that the state cannot deprive same sex couples of access to the institution of marriage with all of its rights and responsibilities. This is the first state court to issue this broader ruling.

MARGARET WARNER: Ms. Gallagher, how do you see it? Do you see it as that sweeping?

MAGGIE GALLAGHER: Yeah I do see it as that sweeping. And I think there are people who are thinking that they can come out of this with a civil union legislation. And I think readingthe court decision, they're wrong. This court said very clearly that marriage in the state of Massachusetts has nothing to do with its great historic purposes of getting mothers and fathers for children with... getting men and women together to make the future happen. It's not an institution that's about creating the next generation and protecting it and making it happen. It's now in the state of Massachusetts an institution that's about intimacy, the right to define yourself however you want. It's about, in other words, adults' agenda which is the way a lot of the court decisions have gone over the last 30 years with regard to marriage.

MARGARET WARNER: Mr. Cathcart, the court gave the Massachusetts legislature 180 days to act. Does it have options, short of legalizing gay marriage?

KEVIN CATHCART: I don't think it does. If you read the opinion closely, I think the court left the legislature no wiggle room whatsoever and that the legislature's only choice is to reword the marriage statute to make it clear that same-sex couples are entitled to marriage licenses and that if the legislature doesn't do that, it seems very clear that the court will order it.

MARGARET WARNER: But just staying with you for a minute, Mr. Cathcart, I've read some legal experts saying what the court was saying, I'm reading here, they said what was unconstitutional was to bar a gay individual from, quote, the protections, benefits and obligations of civil marriage not outright that it was unconstitutional to bar them from civil marriage. You don't think there's any wiggle room here?

KEVIN CATHCART: I don't think there are. I think a lot of people are trying to come up with tortured readings of the opinion, but I think the opinion is very clear. I think the court was very clear about the Massachusetts state constitution and I don't see anything except marriage licenses in 180 days.

MARGARET WARNER: You agree, Ms. Gallagher?

MAGGIE GALLAGHER: You know, I really do. I mean Kevin and I may not agree on a lot but we really do agree on that. The court was very clear that this is not about benefits; it's not about health insurance. It's not about the right to visit our hospital partner. It's about the right to the status of marriage, the right to define yourself by your choice of a marriage partner and that it is part of what the court sees as an important trend to raising intimacy and sexual intimacy to the level of a constitutional right. It doesn't... you know, that whole way of framing the issue of marriage leaves very little room for our historic understanding of marriage as a social institution. I would say none at all.

MARGARET WARNER: So, Mr. Cathcart, you know Massachusetts well. You were head of GLAD up in Massachusetts. Do you expect the legislature is just going to go ahead and write this legislation?

KEVIN CATHCART: Well, I don't think the legislature in Massachusetts ever just goes ahead and does anything. So I think it's an open question now what's going to happen in the legislature over the next couple of months. What I do think is clear is that same-sex couples will be getting married in Massachusetts in six months, but what the legislature is going to do, that's a bigger question than I can answer.

MARGARET WARNER: Now, Gov. Romney said... he said we will have legislation to comply with the order but at the same time I'm going to be working on getting a constitutional amendment, meaning state constitutional amendment, declaring that marriage is between men and women. Explain how that process would work.

KEVIN CATHCART: Well, the constitutional amendment process in Massachusetts is much more complicated-- this is true of most states-- than the legislative process. In order to amend the Constitution there have to be votes in the House and Senate of two successive legislative sessions for example this year and next year or next year and the year after. And if the amendment passed the House and Senate in two consecutive years, then in 2006, it would become a ballot question that would go to the people. I think based on the polls in Massachusetts done as recently as October of this year, showing significant support for not changing the Constitution and significant support for recognizing the right of same-sex couples to enter into marriages, civil marriages, I'm actually confident that by 2006 this will be a largely dead issue, that people in Massachusetts will have by then lived for several years with friends, neighbors and relatives in same-sex married relationships and whatever kind of fear or nervousness or hysteria is out there will have toned down dramatically. I believe that we can then win the referendum.

MARGARET WARNER: Do you agree, Ms. Gallagher, that essentially this threat of passing a state constitutional amendment is an empty one in terms of just the time lag if nothing else?

MAGGIE GALLAGHER: You know, Kevin, what if it's not fear, nervousness and hysteria; what if there's a real problem here with both what the meaning of marriage is and who gets to decide what the meaning of marriage is? I don't think it's clear. I think every national poll that's been taken on this issue shows increasing opposition to same-sex marriage. So in addition to the efforts on the ground with whatever the state legislature will or will not do, with whatever the people of Massachusetts will or will not do, there's going to be a really extended national conversation, political battle over it. I'll tell you, it spells real trouble for the Democratic Party from -- all the polls that we show, show that the Republicans are united and this splits the Democratic base because marriage is not an ideological issue. Most people think that marriage is between a man and a woman, that children need mothers and fathers, and it's perfectly rational for the state to prefer marriage, hold it out to the next generation, as the ideal for our children even as it permits people to do other things.

MARGARET WARNER: Kevin Cathcart, what do you think are the national implications of this as we just reported President Bush issued a statement while he was traveling today saying he opposed this ruling and he would work with Congress to I think the phrase was defend the sanctity of marriage?

KEVIN CATHCART: You know, I think that the court decision actually addressed this issue. It is ironic the people who claim to be defending the sanctity of marriage are the people who are trying to close off the institution. And the people who are trying to get married are being told, oh, no, you should stay away from it. I think nothing defends the institution more than the fact that there are significant numbers of people who are trying to get in, same-sex couples who want to have their relationships recognized, take on the rights and responsibilities. And I agree completely that we are entering a new wave of a huge national debate about the topic. That battle was joined this morning -- if people had not been a part of it before. I do think there's a difference between the national polls and the polls in Massachusetts. I think that part of the reason for that is because there has been more debate, more visibility and a lot more discussion in Massachusetts over the last several years as this case wound its way through the courts. So I don't know that we can make assumptions about the outcome in Massachusetts based on national polls but I think we need that debate and from our side we welcome that debate because what we want to do is show people who our families are, why we want and need these protections. And I believe we will convince people.

MARGARET WARNER: Very briefly before we close, I want you both to just say... tell us what happens to all of these-- there's some nearly 40 states that have defense of marriage acts declaring it's between a man and a woman and there's a federal law to that effect. Ms. Gallagher.

MAGGIE GALLAGHER: Well, it's going to be a national battle from day one because the question is whether people who are married in Massachusetts who are same sex are going to have to be recognized in all 50 states, including the 33 states that have DOMA laws, Defense Of Marriage Acts, and the four states that have put a definition of marriage as between a man and a woman in their state constitutions, so again there's another thing that Kevin and I agree on. It's a big national conversation about what marriage is and what it's for and whether fundamentally it's about adult interests and agendas in sexual liberty and sexual affirmations or if it's about the idea that all of us have an obligation to give our children mothers and fathers.

MARGARET WARNER: Mr. Cathcart, do you see this as a confrontation that will ultimately get to the U.S. Supreme Court?

KEVIN CATHCART: Ultimately it will because the federal Defense Of Marriage Act will have to be challenged in the federal courts. But I agree there are going to be lawsuits and lawsuits and lawsuits. People are going to get married in Massachusetts and either people from Massachusetts will move to other states, people from other states will go to Massachusetts, they will go home, they will want to be recognized as married. We are going to see significant litigation in state after state. This is a very long-term battle that is beginning not ending with this court decision today.

MARGARET WARNER: Kevin Cathcart, Maggie Gallagher, thank you both.

RAY SUAREZ: Still to come on the NewsHour tonight, striking new science in artificial limbs, drug coverage for Medicare, regulating mutual funds, and Germany's foreign minister.

FOCUS - RECONNECTING

RAY SUAREZ: Now a report from our science unit. Tom Bearden looks at new ways for medicine and technology to help amputees and the paralyzed get moving.

TOM BEARDEN: Jesse Sullivan is on the cutting edge of a revolution that may change the whole lifestyle of disabled persons. His brain is directly controlling his mechanical hand. Two years ago, Sullivan lost both his arms in a power line accident in his hometown of Dayton, Tennessee. He has two prostheses. The one on his right shoulder is the old technology. Sullivan can use chin switches and others inside the vest to operate the mechanical limb, but the device on his left shoulder is very different.

JESSE SULLIVAN: I guess in my mind, my hand is still there, so I use my hand as... my elbow as the control to it. When I open that, I'm literally... opened my hand. And when I close it, I literally close my hand.

TOM BEARDEN: That kind of control is possible because of a new technique pioneered by Dr. Todd Kuiken and his colleagues at the Rehabilitation Institute of Chicago. Surgeons took the severed ends of the nerves that once controlled Sullivan's arm, and rerouted them to muscles in his chest. The nerves grew into the muscles, and as a result of the new connection, Sullivan's brain could now move them instead. Dr. Kuiken says Sullivan is the first person to receive such a nerve-muscle graft and use it to control an artificial limb.

DR. TODD KUIKEN: So now, when he thought "close hand" for instance, the nerve that used to close his hand made a little slip of his chest muscle contract, and we can detect that chest muscle contracting because every time a muscle contracts, it emits an electrical potential. So we had two little antennas over that muscle, and we could tell when it contracted and then tell the artificial hand to close. So he thinks "close hand," muscle contracts, artificial hand closes.

TOM BEARDEN: It sounds like you almost rewired him.

DR. TODD KUIKEN: Exactly. We rewired him. We're using his muscle as a biological amplifier of his nerve signal, is what we're doing.

TOM BEARDEN: Like the switches on his mechanical arm, the antennas are inside the supporting vest. The device senses the movement and translates it into mechanical motion of the pincer and the elbow. It isn't perfect. Sullivan was in Chicago for a kind of tune-up of the fitting. Nevertheless, it has dramatically improved his outlook on life because he is now able to do many more things on his own.

JESSE SULLIVAN: Well, I can pick up objects with the electric side, like a quarter. I can pick it flat up off the floor or a table. I can get it with this one, but it's difficult. I have to wrestle with it. The hook will pick up smaller objects, and I can do it a little quicker because it's manual. But with the non-electric side, I can pick up an object like a round ball or something like that, I can actually snatch it up in a short time. And anything that's got a little weight to it, the hook has a hard time lifting, because at certain points you exceed the lifting capacity of the... of the hook, and then the hook will open and drop whatever you're trying to lift. So it, you know... whereas this one won't.

TOM BEARDEN: Dr. Kuiken thinks the basic idea can be developed and improved.

DR. TODD KUIKEN: Right now, we're just using one nerve to one segment of muscle to get... try and get one control signal. Potentially, if you think about it, the nerve that used to go to the hand closes all the fingers individually, closes the thumb. It does a lot more than just open and close. So perhaps with some advanced signal processing techniques, we could get better control than we are right now. We're... we're thrilled with what we've got so far, but there's potential, by applying some other people's research, to do even better.

TOM BEARDEN: Some of the most innovative research is being done by Miguel Nicolelis, a neurologist at Duke. He has bypassed the muscle system entirely. His experiments are based on directly reading the firing of neurons in the brains of monkeys. Neurosurgeons implanted an electrode with tiny wires into the surface of an animal's brain, and then connected them to a computer.

DR. MIGUEL NICOLELIS: This microchip that you see here is plugged into the electrodes inserted in the animal's brain.

TOM BEARDEN: The electrodes measured electrical activity in a limited number of brain cells and sent that information through more wires to a computer. Then the monkeys were trained to play simple video games, and the computer recorded what their brains were doing.

DR. MIGUEL NICOLELIS: Like any kid, or any of us would learn, basically by using a joystick to play the game. So the monkeys enjoyed that a lot. It's a great, you know, playtime for them, so they learn to use their hands to control a joystick. And the joystick controls a little computer cursor that is continuously tracking targets that appear on the screen. So the moment the target appears, the animal has to move the joystick so that the cursor will intersect that target and basically grab the target.

TOM BEARDEN: The computer established the correlation between what the monkey's brain was doing and how its hand was moving the joystick. That was difficult to do because a brain doesn't have specific cells that control specific movements. Such activity is distributed throughout the brain, the so- called motor system.

DR. MIGUEL NICOLELIS: There's no central single location in the brain where this information is stored or this information is computed. And that's the image that, until very recently, you could not get: How a brain circuit operates in real time.

TOM BEARDEN: Software translated that information into computer commands that would control a robotic arm in the same way as the joystick. The big moment came when they disconnected the joystick. At first, the monkey continued to move it with its arm, but quickly realized the cursor was no longer responding. And then the monkey began to move the cursor only with its mind. Nicolelis and his colleagues were stunned at how quickly it happened.

DR. MIGUEL NICOLELIS: That was a day, we were just tired, looking at monitors, and all of a sudden, she's playing, and she stops moving, but the game continues. We couldn't speak because it was one of these... it almost looks like a movie, the main part of the movie when you were just looking at something extraordinary. She basically stopped playing with the joystick, but you could see that the game was still going on and she was still winning.

TOM BEARDEN: So in a sense, the monkey is using its mind to control a computer which is controlling the robotic arm?

DR. MIGUEL NICOLELIS: Yes. And at that point, the motions of the robotic arm control the displacement of the cursor on the screen, so the monkey's seeing, now, the outcome of the robotic arm performance. And it's only if the robotic arm can reach the target and grab a virtual object that the monkey can accomplish the goal of completing the video game. So to get the reward now, he has to basically... the animals have to basically utilize the robotic arm as the actuator, instead of their own arms. And the surprising result was at that point, they stopped moving their own arms. They realized that that was a waste of time.

TOM BEARDEN: Nicolelis says it was a remarkable moment for him and his team.

DR. MIGUEL NICOLELIS: It was very satisfying because this involves almost 20 years of work, you know, many, many people, not only in our laboratory, in many groups all over the world, you know. And that's why science is so wonderful. You know, you have lots of people working all over the world, and it's a common language. It's just a few minutes, seeing something or doing something that has never happened before. I think that's what any scientist lives for, that kind of moment.

TOM BEARDEN: Nicolelis thinks the technique, using implanted electrodes, may someday help severely disabled patients. Those with spinal cord injuries, for example, might use miniature wireless devices to control artificial limbs with their minds.

DR. MIGUEL NICOLELIS: What we want to do is to try to produce a prosthetic device that would get signals from these healthy brain areas, the code for the intention of movement, and allow these signals to be controlling a variety of actuators: Robotic arms, wheelchairs, appliances-- a spectrum of devices that would be used to restore basic motor behaviors that these patients have lost, behaviors that would allow them to be more independent, to communicate to the external world, to achieve basic tasks that they cannot any longer achieve without the help of someone else.

TOM BEARDEN: But Nicolelis doesn't want to raise false hopes. He cautioned it will be at least two years before he begins clinical trials with human subjects. Neuroprosthetic research is also continuing at other universities and biotech companies, as all struggle to find ways to help hundreds of thousands of disabled people regain greater control over their environment.

UPDATE RX FOR MEDICARE

RAY SUAREZ: Two congressional updates now. First, correspondent Jeffrey Brown looks at the outlines of a possible deal on Medicare.

JEFFREY BROWN: The push is on this week for changes to Medicare that are being called the broadest expansion of the program since it was created in 1965. There are two key components: The scope of what would be the first prescription drug benefit in the program, and new moves towards using market forces to compete with traditional Medicare to help control costs. Much of this remains controversial, but a congressional vote on Medicare overhaul could come by the end of the week.

Joining me now is Tricia Neuman, director of the Medicare policy project at the Henry J. Kaiser Family Foundation. The foundation funds the NewsHour's health unit.

Tricia, welcome.

TRICIA NEUMAN: Thank you.

JEFFREY BROWN: Let's start with some back grown. What is pushing the drive towards change among seniors?

TRICIA NEUMAN: This is an issue that seniors really care about. This pressure is heartfelt. They're worried that many have multiple chronic conditions. They use a lot of prescriptions and they're paying a lot for them, and they have tremendous difficulty without drug coverage. So this is an issue that comes from seniors in town meetings, and members of Congress have heard a lot about it for many years and have said they want to do something about it.

JEFFREY BROWN: So the prescription drug benefit is getting the most attention or has over the last few years. We have a graphic here that can show some of the highlights. Let's take a look at that. So seniors, beginning in 2006, would sign up for stand-alone drug plan or join a private health plan. The premiums would be about $ 420 a year -- the deductible about $ 275. How would that work? How would these plans work?

TRICIA NEUMAN: So a senior in 2006 would face a choice. They could stay in traditional Medicare and get drug coverage through a private plan or they could choose to sign up for a managed care plan like an HMO or a PPO, where they could get their Medicare benefits and a drug benefit. They would still pay their Medicare Part B premium but they would also pay a new drug premium which is estimated to be about $ 35 a month, but that could vary from plan to plan and from community to community, so it's just an estimate. So the decision is for seniors to choose among these plans in their areas to figure out which gives them the best deal.

JEFFREY BROWN: But the senior gets the choice.

TRICIA NEUMAN: But the senior gets the choice.

JEFFREY BROWN: Okay. Now let's look at the actual proposed coverage. We have another graphic here. Now, the government would pay 75 percent of the drug costs up to 2200 annually. Then there would be no coverage up to about $ 5,000 in costs. Government pays 95 percent of costs after that. There's a gap there. It's been called the donut.

TRICIA NEUMAN: That's right.

JEFFREY BROWN: Why the gap?

TRICIA NEUMAN: Well, the gap is there because there's a limit in the amount of money that has been allocated for this drug benefit. Congress has said they will spend $ 400 billion, and that sounds like a lot of money but it only goes so far so members of Congress have had to work to define a benefit that will fit within their $ 400 billion limit, and that has meant this sort of unfortunate gap in benefits and what that means is really $ 2,800 of expenses that a senior will have to pay before they get catastrophic coverage on top of their deductible and other cost sharing.

JEFFREY BROWN: Now you do a lot of surveys of seniors' expectations. What is it that they are asking for and how does that jibe with what we're seeing here?

TRICIA NEUMAN: Well, our surveys would suggest that seniors are expecting a benefit that looks a lot like what most workers get today. When you talk to seniors, they are looking for what they think of is a standard benefit. And typically these benefits don't have separate drug deductibles. They don't have these gaps in their benefit package-- the donut hole, as you called it. And so our surveys and focus groups would suggest there could be some expectations gap where seniors are expecting more than they may get.

JEFFREY BROWN: The other key issue here is this move towards privatization in some form. Let's look at another graphic we have. It's known formally as "premium support." There's a demonstration project that would start up in six areas in 2010. Private plans would compete with traditional Medicare for seniors. Now, what does that mean?

TRICIA NEUMAN: Well, this is sort of the... one of the major issues in the debate. I think it comes down to a fundamental disagreement between people about what Medicare should look like in the future. There's this notion that some people believe that Medicare should be more privatized, that more people should move into private plans. Others want to retain the stability and security of traditional Medicare. This demonstration project tests the idea of more private plan involvement, more competition, but it does so in just six areas of the country. How it all plays out is sort of an unknown because this is an idea that hasn't been tested.

JEFFREY BROWN: What is the hope of the proponents? What do they want it to accomplish?

TRICIA NEUMAN: Proponents hope that competition will lower the growth in spending for Medicare, will give seniors more choices in terms of the variety of plans from which they could choose. They like the idea of the flexibility that comes with a variety of private plans. Opponents or skeptics wonder whether competition can save money for Medicare when they look at the history of competition in Medicare and elsewhere, they note that there's not a lot of evidence that would suggest that this will happen so there's real disagreement. There's real concern about what will happen to people who prefer traditional Medicare and whether they will end up footing the bill and paying higher costs over time.

JEFFREY BROWN: So another key area seniors will have to decide for themselves where to jump in.

TRICIA NEUMAN: Absolutely.

JEFFREY BROWN: Now there's a lot of other issues in this bill. One that jumped out at me is for the first time there would be a form of means testing. How would that work?

TRICIA NEUMAN: This is an idea that has been tossed around in Congress for many years and that the proposal would be to income relate the Part B premium. What that means is everybody still gets the same benefits but some people would pay more and the proposal would have people with incomes of over $ 80,000 a year pay a higher Part B premium than others on the program.

JEFFREY BROWN: Yesterday the AARP signed on to all this. How significant is that, as this plays out?

TRICIA NEUMAN: It's certainly a significant factor when AARP signs on. AARP obviously looked at the opportunity and decided or made the decision for themselves that this would be the right proposal to move forward with. They did acknowledge problems in the program and I think ultimately seniors will be evaluating how well this program will work for them, but it is important that AARP has endorsed it.

JEFFREY BROWN: Sum it up: A significant moment in the history of Medicare?

TRICIA NEUMAN: Oh, I think it's absolutely significant. If a Medicare benefit, drug benefit is passed, it's certainly significant. Whether you like this proposal or not, it's a significant change for the future of Medicare.

JEFFREY BROWN: Okay. We'll watch over the coming days. Tricia Neuman, thanks a lot.

UPDATE MUTUAL FUND FRAUD

RAY SUAREZ: Our other running story from Capitol Hill tonight: The mutual funds fraud charges. Kwame Holman reports on today's Senate hearing on that subject.

KWAME HOLMAN: The scandals in the mutual fund industry grow almost daily. To date, 11 firms that manage close to $ 1 trillion of investors' money have been charged or are under investigation for securities fraud. This morning, members of the Senate Banking Committee focused on how the Securities and Exchange Commission failed to detect fund managers who allowed insiders to trade after hours, siphoning potential stock profits from everyday investors. William Donaldson, chairman of the SEC, said the Commission did not foresee such schemes.

WILLIAM DONALDSON: For too long, the Commission has found itself in the position of reacting to market problems rather than anticipating them. There are countless reasons for this, not the least of which include historically lagging resources and structural and organizational roadblocks. The time for excuses has long passed.

KWAME HOLMAN: Committee Chairman Richard Shelby asked about a recent SEC action involving the scandals. The commission agreed to a settlement with Putnam Investments, a multibillion- dollar fund that had been charged with securities fraud.

SEN. RICHARD SHELBY: Is the Putnam settlement a model for the type of reforms that the SEC is seeking? Why did you do it so quickly rather than try to seek an industry-wide settlement?

WILLIAM DONALDSON: Well, we don't think that we should use a bludgeon at this time to bring in a whole lot of other reforms that may pertain to the rest of the industry or may pertain to Putnam on this settlement. We thought the higher good, if you will, was bringing these charges to a conclusion and in so doing to hopefully begin to eliminate immediately the burdens that are currently being placed on Putnam Fund shareholders.

KWAME HOLMAN: In the New York Times yesterday, New York State Attorney General Eliot Spitzer criticized the SEC's decision to settle the Putnam case. Spitzer wrote: "My office while committed to working in the Securities and Exchange Commission in our investigation of the mutual fund industry will not be party to settlements that fail to protect the interests of investors and let the industry off with little more than a slap on the wrist." Donaldson defended the settlement in today's Wall Street Journal, and in his opening statement to the Banking Committee.

WILLIAM DONALDSON: The criticism is misguided and misinformed and it obscures the settlement's fundamental significance. First, we put in place a process for Putnam to make full restitution for investor losses associated with Putnam's misconduct. Secondly, we required Putnam to admit its violations for purposes of seeking a penalty and other monetary relief-- an important point. Third, we forced immediate tangible reforms at Putnam to protect investors from this day forward.

KWAME HOLMAN: Connecticut's Christopher Dodd told Donaldson the public interest is not served when regulators are sniping at each other.

SEN. CHRISTOPHER DODD: Are there lines of communication? Is there anything... any effort being made? I mean just having competing op- ed pieces and so forth, I mean, I'm just worried about where this is going to take us -- if you're trying to fashion something here that makes sense.

WILLIAM DONALDSON: We're doing everything in our power to work with the state regulators and that includes all of them. Unfortunately we can't control what certain state regulators decide they want to say publicly. I believe that it's very counterproductive.

KWAME HOLMAN: The committee's top Democrat, Paul Sarbanes of Maryland, followed, saying if one regulator overlooks criminal activity, another one must step in.

SEN. PAUL SARBANES: If a vacuum exists, if a problem has developed, if investors are being abused, if the public perceives that the public interest is not being addressed, then whoever moves into that vacuum is going to be welcome.

KWAME HOLMAN: Donaldson responded that the fund companies that have committed wrongdoing will be punished and investors reimbursed. After Donaldson, the committee heard from mutual fund industry representatives who also said the mutual fund schemes were not on their radar.

SPOKESMAN: This obviously has been a wake-up call for all of us.

KWAME HOLMAN: Again Paul Sarbanes spoke up.

PAUL SARBANES: You sit at the top of the pyramid of your industries, and you're telling us here today, "well, we didn't know this was happening."

SPOKESMAN: We're trade association lobby groups. We don't go out and inspect our members.

KWAME HOLMAN: Members of the Senate and House from both parties are backing legislation to overhaul the way the mutual fund industry operates, but action is not expected until next year. The Banking Committee will continue its hearings on the issue later this week.

CONVERSATION VIEW FROM BERLIN

RAY SUAREZ: Finally tonight, Germany and the war in Iraq. The longtime American ally split with the Bush administration when it went to war last spring. The German foreign minister is in Washington talking with administration officials about postwar Iraq. I talked with Joschka Fischer this morning at the German ambassador's residence in Washington.

RAY SUAREZ: In just the last several days, the United States has announced its desire to accelerate the transition of day-to-day management of affairs to Iraqis, given a date next year. Does this create an opening for Germany to move into closer consultation with the United States on working in Iraq?

JOSCHKA FISCHER: Well, we are always in close consultations because we are close allies. We had our differences about whether it's wise to take that step to go into the war with Iraq, but now we must win the peace together. So we were, from the very beginning, in favor of using the Petersburg-type model by creating and reconstructing an Afghan authority. And of course, I mean, we hope that as soon as possible, this process will move forward. We hope that it will be backed by the U.N. in the Security Council, because this creates a broader legitimacy in the Arab world and within the Iraqi people. So we encourage our American friends to move forward as soon as possible.

RAY SUAREZ: Does this create more of a possibility of direct German involvement in some form in the reconstruction of Iraq?

JOSCHKA FISCHER: Well, we are involved in reconstruction. We have a small but highly efficient team in reconstruction of the water supply in Baghdad. We are funding humanitarian projects. We are ready to contribute and enlarge our efforts to reconstruct Iraq, and the chancellor told the president during the meeting in September in New York City that we are ready to train police, as we did in Afghanistan. But in parallel to that, we focused on Afghanistan, we increased the amount of our troops not only in Kabul, within our ISF mission, but now also in the North. So we will focus militarily on Afghanistan, and we are, I think after the United States, the biggest troop contributor in Afghanistan.

RAY SUAREZ: Do German citizens see it in the way that your government does? Is there domestic support for what you're doing in Afghanistan, and might we also see the same kind of support for future activity in Iraq?

JOSCHKA FISCHER: We have difficulties at the moment with the support by domestic reasons. But I think in the foreign policy, the support is pretty... pretty strong and broad. And of course, I mean, when I said to you we have to win, or we must win the peace together, I mean there is one reason: Because if the United States, if the coalition will fail, terror will follow. This is not... from my view, to give in is not an option. So we have to rethink, maybe to readjust the strategy and the policy. We are in favor of, as soon as possible, create a legitimate Iraqi authority, and as soon as possible, engage the U.N. and get a strong backing from the U.N. because this is very important for the legitimation of the whole process.

RAY SUAREZ: Talk a little bit more about that, the role of the U.N. The United States has run hot and cold on just this question. "It would be helpful if we had the support, but we can do what we need to do if we don't have it." You seem to see the U.N. as a much more vital role player in this regard.

JOSCHKA FISCHER: Well, I don't share the view that there is a contradiction between the U.N. and the United States. The United States is the only world power. And during my five years in the office as a foreign minister, I experienced many times that without the power of the United States, it's impossible to solve crises. The Indian/Pakistani crisis is very dangerous, and one... after this terrible terror attack on the parliament in Delhi where they started the discussion about whether they will use nuclear weapons. I mean, this was a very serious crisis. And together with the Europeans, the United States cooled down the situation. We had it in Liberia. We had it in Sierra Leone and in many other places-- in the Balkans. The Middle East conflict... without the United States, it's impossible to keep the order in this world and solve crises and give the world a more secure future. But on the other side, even the power of the United States, the biggest power, is limited. And the U.N. system has one element which I think a national state, even the most powerful, has not. And this is the legitimacy based on the consensus in the Security Council. So I'm in favor of reform of the U.N. system. And I'm in favor that a new world order must rest on these twopillars: The world power of the United States and the U.N. system. I don't see there a contradiction. We have to bring that together.

RAY SUAREZ: One of your EU partners and also a member of the permanent five, France, has not been as encouraged by this latest American gesture toward a faster transition. They want something... they say they want something much faster, something much deeper. Are you in sort of... between the two countries?

JOSCHKA FISCHER: We don't want to intervene in the Franco-American relations. We watch them very carefully. France is our most important ally inside the European Union. The United States is our most important ally outside the European Union. We watch them very carefully. From the very beginning, we're in favor of such a process, defining transition of serenity to a legitimate Iraqi authority. Our concern is the speed, is the whole process moving forward in the right speed because there is a negative dynamic on the other side. We see these terrorist attacks with terrible consequences, and therefore we hope that our American friends will move as soon as possible. And broadly based-- this is the second element by the U.N. and the Security Council.

RAY SUAREZ: The period roughly from the last German national election to the days just before the invasion of Iraq by the United States was described widely as one of the lowest periods in the German-American relationship since the end of the Second World War. Where are they now?

JOSCHKA FISCHER: I never believed that our relations in the substance were bad. I mean, we had our differences, but I mean, we were in close discussion with our American friends. And it was pretty tough for us because we will never forget. I mean, the United States liberated us from Nazism. My country didn't do it by itself. You defended us during the Cold War. You defended us West Berlin and West Germany, and you supported us immediately in the unification. So it was pretty tough for us, because this is one of the cornerstones of our foreign policy: Close relations to the United States, and integration of the European Union. These are two major elements or principles of our foreign policy. We are moving forward now. And I think our engagement in the war against terror, our engagement in Afghanistan, our support in Iraq, I think it's substantial. And by the way, I mean, American Congress now has decided about $ 85 billion. I mean, that's almost exactly the amount of money we transfer since 1990 from west to east in Germany, each year since unification. So our possibilities in financial terms are limited, and I hope this will be understood.

RAY SUAREZ: But if there has been an improvement-- and it seems like there has been...

JOSCHKA FISCHER: Definitely.

RAY SUAREZ:... Is it more of substance? Did one side have to move toward the other, or did you just get more comfortable with the idea that there were just certain things you weren't going to agree on?

JOSCHKA FISCHER: We have a great tradition in our relations since the German democracy was founded, and it was strongly supported by the United States at that time, and over the decades. We have a strong people-to- people relationship. I think for your servicemen, Germany is a country where they like to live, I think second ranking after the United States. And even during the war where we didn't agree, I mean, we did a lot. We protected the bases, free air space, the Landau Hospital and so on, and our anti-chemical warfare unit in Kuwait during the war cooperated very closely with our Chechen friends and the United States. So I mean, we are allies. We had our differences, but we are allies, and this alliance is very important for us.

RAY SUAREZ: Foreign Minister Fischer, thanks for being with us.

JOSCHKA FISCHER: Thank you very much.

RECAP

RAY SUAREZ: Again, the major developments of the day: The supreme judicial court in Massachusetts struck down a state ban on same-sex marriage. U.S. fighter jets and helicopters blasted suspected insurgent positions in central Iraq. President Bush arrived in London for a state visit, amid high security and gathering antiwar protests. And the U.S. House passed a far- reaching energy bill.

RAY SUAREZ: And again to our honor roll of American service personnel killed in Iraq. We add them as their deaths are made official and photographs become available. Here, in silence, are ten more.

RAY SUAREZ: We'll see you online, and again here tomorrow evening. I'm Ray Suarez. Thanks and good night.