The NewsHour with Jim Lehrer; December 6, 2007

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. . . . . . . . . . . And this program was made possible by the corporation for public broadcasting and by contributions to your PBS station from viewers like you. Thank you. President Bush announced a plan today to freeze interest rates on subprime mortgages. Major lenders agreed to the plan for five years. The offer applies to subprime home loans made between 2005 and this past July. It would freeze introductory rates that had been scheduled to rise in 2008 and 2009. The homeowner must also be living in the house to be eligible. The president said there is no perfect solution, but he said a wave of foreclosures hurts everyone.

Lenders and investors would face enormous losses, so they have an interest in supporting mortgage counseling and working with homeowners to prevent foreclosure. The government has a role to play as well. We should not bail out lenders, real estate speculators, or those who made the reckless decision to buy a home they knew they could never afford. If there are some responsible homeowners who could avoid foreclosure with some assistance. Mr. Bush said 1.2 million people could be eligible, either for the rate freeze or some other form of help. Democrats generally welcome the announcement, but Senate Majority Whip Durban and others complained it should go much further. I'm glad that Secretary Paulson and the president have at least acknowledged this crisis, but I'm afraid that this government is afraid of government. What they're asking the lenders to do is to play nice, to be sensitive to the needs of a lot of people who are struggling to keep their homes.

But at some point, they have to step in and show some real leadership when it comes to this government. First, they need to start with their own political party. Durban said some Republicans have blocked some of the housing measures the president wants. We'll have more on this story right after the news summary. There was fresh evidence today of the troubles in the home mortgage industry. The mortgage bankers' association reported the percentage of all mortgages and foreclosure hit an all-time high. The group also said more homeowners fell behind on their payments between July and September. House Democrats pushed through a sweeping energy bill today. It included a $21 billion tax package that repeals tax breaks for major oil companies. The resulting revenue would be invested in renewable energy sources. The bill would also mandate that automakers increase fuel efficiency 40 percent by the year 2020. President Bush threatened to veto over the tax provisions and leaders of the two parties spart over that issue on and off the House floor.

The oil companies, of course, are making extraordinary profits to give them incentive to continue to provide us with the energy that we need. But they do not need additional subsidies from this Congress. You can't tax your way to providing a greater supply of energy in America. And you can't just have more government regulations on the industry and expect that we're going to have more energy in the pipeline. The bill faces a Republican filibuster in the Senate. Republicans today elected John Kyle of Arizona, the minority whip of the Senate. It's the party's number two position in the chamber. Kyle replaces Senator Trent Lot of Mississippi, who's leaving office at the end of the year. Lamar Alexander of Tennessee will move up to the number three post chairman of the Republican Conference. Presidential candidate Mitt Romney addressed the issue of his Mormon faith today. The former Republican governor of Massachusetts sought to reassure voters in a Texas speech.

He said, if elected, I will serve no one religion, no one group. A president must serve only the common cause of the people of the United States. We'll have more on this story later in the program tonight. Attacks in Iraq have dropped 60 percent in the last six months. That word came today from the overall U.S. Commander General David Petraeus. But he also cautioned. Nobody says anything about turning a corner or seeing lights at the end of tunnels. Betrayous met with defense secretary Gates in Baghdad. Gates also met with Iraqi officials and pushed again for political movement. They know that people are getting impatient. And that they need to get on with legislation and sending the message to the rest of their people that they can work together. And my hope is that that'll produce some results fairly soon in some of these key legislative areas. Later the Iraqi Parliament suspended work until January to let lawmakers make the annual journey to Mecca.

The Gates visit came as suspected al-Qaeda gunman attacked a checkpoint north of Baghdad. They killed nine Kurdish troops. And Shiite villagers staged a mock funeral south of Baghdad to protest attacks by al-Qaeda. Shiites at a separate rally inside the Capitol also demanded greater protection. France and Germany called today for keeping the pressure on Iran over its nuclear program. In Paris, German Chancellor Merkel and French President Sarkozy said they agreed with the U.S. that Iran remains a danger. They responded to a U.S. intelligence finding that said the Iranians stopped work on nuclear weapons in 2003. And Brussels belge him today Secretary of State Rice pressed for new UN sanctions. She did so and talks with European and Russian officials. Police in Omaha, Nebraska today, pieced together the story behind the mass killings in a shopping mall.

A teenage gunman opened fire yesterday, killing eight people, and then himself. NewsHour correspondent Kwame Holman narrates our report. The West roads mall in Omaha remained closed today, a day after 19-year-old Robert Hawkins opened fire on throngs of holiday shoppers and store workers. Omaha Mayor Mike Fehi spoke this morning of the worst mass shooting in Nebraska in nearly 50 years. Today, we are still reeling from the events that few could have ever imagined would take place here in Omaha. Hawkins killed five women and three men in the Vonmar department store. Six worked there. The other two were customers. Authorities said the semi-automatic rifle Hawkins used was an AK-47, Omaha's police chief, Thomas Warren. We believe that Robert Hawkins stole the firearm. It had been stored at his father's residence.

It appeared to be concealing something, bought up in a hooded sweatshirt. And of course, upon entering the Fourier area of the store, he immediately took the elevator, which is to the right of the entrance. He took the elevator to the third floor, and upon exiting the elevator, he immediately started firing shots. Robert Hawkins had been treated for mental health problems, a former ward of the state. He had a felony drug conviction and several pending misdemeanor charges. Deborah Maruka Kovac and her husband had taken in the troubled team. He called her about an hour before the shooting. He was trying to find out what was going on with him. He said that he had gotten fired from his job, and he was worried about that, and he said he left a note. It explains everything. In that note, Hawkins apologized for being a burden, but he said, now I'll be famous. On Wall Street today, Stocks Rallyed on hopes the new rate freeze on subprime mortgages will ease the housing crunch. The Dow Jones Industrial Average gained nearly 175 points to close above thirteen thousand six nineteen.

The Nasdaq rose more than 42 points to close at twenty seven o nine. And that's it for the new summary tonight. Now, mortgage relief and religion politics. The mortgage story Judy Woodruff begins with an interview with Treasury Secretary Henry Paulson. Secretary Paulson, thank you very much for joining us. Judy, it's good to be here. Tell us who exactly will be helped by this plan and how will they be helped. Okay, Judy, let me explain what's been done and what's been announced today. We still have a lot more work to do, and we've done a lot of work between now and August. But what's happened is the mortgage industry has come together to devise a plan to help subprime a mortgage borrowers whose rate is going to be facing a reset that they won't be able to afford.

And as we've looked at the universe of buyers, Judy, there are, excuse me, there are some mortgage holders who are obviously not going to need an help. And they're not going to be affected by this. And there's going to be another group that we're not going to be able to help because they won't have the financial capability to afford a reasonable mortgage. And so we're focusing on the middle group, and what is being done is the industry, and here I'm talking about not just the services who collect the payments, but talking about the investors who hold the ultimate securities have agreed to some simple criteria, some standard criteria, which is going to allow them to process modifications much more quickly. And there will be a group of homeowners that meet the criteria and are going to have trouble meeting the higher rates, and they will have their rates frozen for five years. So just to clarify here, of all the people who are facing problems here, how many do you have a number of how many will be held?

That there will be about 1.2 million of these who will qualify for a refinancing or a mortgage modification. And why did the government need to get involved in this, and is there taxpayer money involved? There's Judy, there's no taxpayer money, and the government got involved for a very simple reason. There had been so much innovation and so much complexity in the mortgage market that it was difficult for the industry to solve the problem unless the government played a convening role to bring all the participants together. And I would explain it this way. If you are a mortgage holder, the odds are that the company that is collecting your mortgage, your monthly mortgage payment is collecting it on behalf of investors who are spread all around the world.

And so there's great complexity, and then on top of that, the number of resets is going to increase dramatically. And so there needed to be some way for investors, the investors, the owners of these securities, to handle the load of resets that they were going to be facing. And it's investors' interest that there not be foreclosures. To step back a bit, foreclosures don't just harm the homeowners who lose their home, or the neighborhoods where they're falling real estate prices and higher crime rates or the U.S. economy overall, foreclosures are not in the investors or the lender's best interest because they're very costly. And so they... Well, let me... I just want to step in here because as you know, the criticism is coming from several directions.

Number one, that this doesn't help enough people. For example, that some are saying you've just chosen an arbitrary date. People who are already in a rears are left out of this. Well, Judy, this plan isn't perfect. There is no silver bullet that is going to undo the excesses in the housing market for the last number of years and bad lending practices. But this plan, I believe, will make a difference as a very practical step forward. Now, the industry has been doing a relatively good job of handling the mortgage resets we've had to date. There are only about 15% or less of these resets have resulted in foreclosure. Most of them have resulted in loan modifications or refinancing or sales of the home. But what the industry has done is they've looked and they've said that we are not going to have the capacity to handle these modifications one at a time given the way we're going to be facing.

And so how can we come together with some simple criteria which will approximate what we would have done if we'd had to do it on a loan by loan basis? I'm just going to tick off a few other criticisms. I know you're familiar with all of them. One is that this plan depends too much on the voluntary willingness of the private sector to participate. Well, this is the private sector has come together and they've worked hard and they've been working hard and we've been working hard on this since August. And this is private sector driven and the private sector is coming together to deal with a very practical problem and I think it's going to make a real difference. On the other side we are hearing criticism from groups who argue that it's heavy handed for the government to even be involved as a convener. For example, the Wall Street Journal editorializing today that when the government sitting at the table companies feel ineffective that they're hearing an offer they can't refuse.

Well, if I ever saw a legitimate role for the government, it is a situation like this where there's been so much complexity and innovation that it's outrun the private sector's ability to deal with it. So for the government to convene all the various participants as they work together for a solution. And I think if you had heard the press conference today where you heard the people representing the investors and representing the servicers, I think that's exactly what you would hear. You also hear comments or criticisms having to do with the sanctity of contracts. Mark Feldstein who worked as economic advisor to President Reagan is saying potential investors are going to think, well, the government, that these contractual agreements that have been made can no longer be respected because the government is stepping in and saying we've changed that. Yeah, we're very sensitive to this. There's no way we're violating the sanctity of contracts and here it's very important for me to give you a more detailed answer.

There are proposals in Congress to change bankruptcy laws. There are proposals in Congress to change the sanctity of contracts in terms of immunizing servicers from lawsuits. What this does is a private sector coming together to do with the contracts allow them to do. The servicing agreement expects the servicers to make loan modifications that are in the best interest of the investor group. What has happened here is the industry has come together. The investors have joined with the servicers and said this is in our best interest. And if we had been modifying the loans, if we had time to modify the loans, refinance the loans underwrite them on a case by case basis, we'd be doing that, but we're not going to be able to handle the volume. It will help us do this much more quickly to the benefit of our investor group and obviously to the benefit of neighborhoods and homeowners in the community.

They're going to be enough for closures as it is and we need to avoid those that are preventable. I hear you stepping back for just a moment, Secretary Paulson, what about the Wall Street investment firms? That's the place, of course, where you spent the bulk of your career. Were they wrong to package and sell these securities, based on these loans that they themselves didn't think were good investment. Well, let me step back there also, and I'm glad you've asked the question because we have two focuses. Okay, I have two focuses. I have one focus, which is a very immediate focus, which is to deal with the problems and the dislocations and the capital markets and the credit markets more generally. The mortgage markets specifically and do everything we can to help homeowners and distress and to mitigate the spillover into the general economy of this country. So we've got a immediate focus. We then have all of us policy makers have a focus to say, how do we take corrective actions to prevent these sorts of problems from arising in the future.

Now, we don't want to go so far that we cut off the flow of affordable credit to many homeowners and many citizens of the U.S. and securitization has had a good number of benefits. So, for instance, yesterday, the president's working group on financial markets meant for a couple of hours. And we've been working all the way along and saying, what steps do we need to take? And there are steps that have to do with our regulatory structure because we have a patchwork quilt in this country. And Treasury will be coming out with some suggestions there. There are suggestions that have to do with regulation of the mortgage origination process. There are suggestions that have to do with unfair lending practices and the Federal Reserve is going to be coming out with some rules there.

There are a number of other things that relate to the rating agencies that relate to the securitization process and there's a lot of work that's being done in these areas. Last question, Mr. Secretary, how much worse do you think this housing crisis will get before it gets better? Judy, what I've said all the way along is that we have a healthy, diverse economy in the U.S. and we can be grateful for that and be grateful for the growth outside of the U.S. I think our economy is going to continue to grow. Your question about the housing, that is the biggest risk to the economy. And it's one we need to watch closely. I'm not going to hazard a guess because I got to tell you if people looked at this a year ago, they would have a number of economists would project that it would be better before now. And so we're watching it carefully. We're doing things that we think are appropriate here. And I, you know, I've said I believe our economy is quite healthy, fundamentally strong, and we're going to keep growing.

Henry Paulson, the Secretary of the Treasury, we thank you very much for joining us. Judy, thank you. Jeffrey Brown has more on this story. And we get two outside assessments of this plan, and what other actions should or should not be taken to deal with the subprime troubles. Michael Calhoun is the President of the Center for Responsible Lending, a homeowner and consumer advocacy group. And Andy LaPerrier is a managing director of the International Strategy and Investment Group, known as ISI. His firm does research for large investors, including hedge funds and pension funds. And welcome to both of you. Let's start with a response to this plan. I'll start with you, Michael Calhoun. Does it do enough in your opinion? This plan will help in small ways, but does not at all take care of the crisis that we have now. And it's a crisis not just for families who have subprime mortgages, but it is impacting in a big way all families who are homeowners and the economy as a whole.

If we want to get through this, this is a small step in the right direction, but much, much more is needed. We heard Secretary Paulson referred to 1.2 million, I think. People, he thinks would be eligible for refinancing possibly. Now, what are your numbers? What do you think would be the number of people qualifying for the freeze that he's talking about? We've looked at the numbers and there are a lot of qualifications that you have to meet to be eligible for one of these. Continuations of your interest rate. Our numbers are much smaller, somewhere about 145,000 families. It's our estimate of who might benefit from this continuation of their existing mortgage rates, which are no bargain rates. Most of these rates are eight to nine percent, so it's not like these homeowners who continue with that rate are getting some discount mortgage rate. And do you want to bury a response to the plan overall response?

Well, I think that there's two things going on. First thing, I think mainly what Secretary Paulson talked about, which is you're trying to replicate what a case-by-case modification would produce because resources aren't there to do a case-by-case modification. But I think there's a concern also that there's some shifting of losses going on from homeowners to investors. And that's what investors on Wall Street are watching. Is this going to shift losses from homeowners to investors? And I think there's a little bit of that going on in here as well. Well, how does this affect the equation of winners and losers borrows versus investors? I think the concern that investors are going to have looking at it closely is that there are people who are going to qualify for these loans that aren't really good candidates for loan modification in the absence of these standards that they may have very high debt to incomes. There may be a big risk to default eventually and the longer that it takes to go into foreclosure, the greater the losses will be for those investors. Now, Secretary Paulson, in the interview and in the press conference city, he said several times this is a private sector initiative.

Why was that so important to explain the distinction, I'll start with you, Mike Calhoun. Why do you think he was emphasizing that? And do you want to see more government involvement, more action? I think he was careful to characterize it that way. There have been a few suggestions that there should be some sort of public bailout has been the pejorative term. Should the government put taxpayer dollars involved? I don't think there are a lot of serious proposals for that because that bailout, both lenders, who did bad lending, and some folks feel like, well, this is helping another family on its mortgage, nobody's helping me. I think his important point, though, is that this crisis was created largely by bad lending practices that were at the time very profitable for the lending industry. The typical family who got a subprime loan was not out speculating on some investment property.

The typical subprime loan is a borrower simply refinancing their existing home to help pay off some credit card debts, get money for tuition, deal with medical bills, and they ended up in this exotic loan product that had this built-in payment increase that virtually no one can absorb. The typical subprime borrower would see their payments go from like $1,500 to $2,200 a month, even with no change in market interest rates. And that's why we're seeing all these foreclosures, and that's why the crisis is here. And that's why the number of resets, as he calls, and the adjusting of the rates is going to hit so much in the coming year? Yeah, the resets aren't that market rates have changed. It's that these loans typically had an interest rate of eight to nine percent for the first two to three years. And then at that point, the interest rate jumped up to 11.5 to 12 percent.

They're just not many families who can absorb either that increase or that high of mortgage interest rate. You wrote an op-ed the other day that it was called no bailouts for borrowers. Now, explain that. What is the fear here? And this, I think, goes to what Secretary Paulson and his emphasis on private sector versus the government. Well, I think the concern is that however well-intentioned this proposal may be, it's not going to really do very much. I think we've actually both agree on that because the problem is much larger even than the resets. Of the subprime loans that are delinquent today have not reset the overwhelming majority. So, the worst performing loans of the 2006, the 2007 loans, none of which have reset. So, the problem is many of these borrowers cannot afford the current payment. So, I think things are going to get worse, and I think you're going to hear calls for taxpayer bailout to mitigate the economic fallout from this subprime. And actually, I think, bigger than a subprime problem, it goes to people with good credit scores of also gotten impruded loans. I think, as you hear those calls, I was trying to make the argument that taxpayer bailout would be unfair.

I don't think it would really solve the problem and mitigate those economic fallout very much. I think it would set a bad precedent. What does it do in terms of does it change the market incentives? Is that the fear of a bailout? I think if you go back and say, why are we in this position? I think that a lot of people took risky gambles because interest rates were low, and I think the Fed kept them artificially low for too long. People were engaging in risky behavior, and we ended up getting basically a bubble, and now we're in the bus part of the boom bust. And to the extent that you go in and bailout people who made either irresponsible or not prudent decisions, you encourage that kind of behavior in the future. And we don't want boom busts. They're painful. There are a lot of people who are innocent who are going to suffer from this. We don't want it to happen again, so we don't want to bailout people who made bad decisions. We're also just going to see more of this behavior in the future. Secretary Paulson was referring to various initiatives in Congress, one of them involving reforming bankruptcy laws. He didn't say it clearly, but it didn't sound like he is in favor of that.

You do think there's some changes need to be made. Under current law, if a family is forced to file bankruptcy, for example, they face foreclosure, the bankruptcy court is prohibited from modifying their mortgage loan, even though in bankruptcy the court has authority to modify most other loans, including other loans secured by land, real property, investment houses, even. Moody's has estimated that a change in the bankruptcy code that would allow the court to modify those loans would save over half a million. Over half a million foreclosures in this current crisis. We think that's both a fair approach and a more effective approach. I think the key, and there was a story in the Wall Street Journal of this report, that half of the families who ended up with these subprime loans qualify for a prime loan. They should have gotten fixed rate loans at a lower interest rate than what they have in these subprime loans,

but they were pushed by brokers and lenders who got paid more for selling them these subprime loans than they would have been paid for putting them in a regular 30 year fixed rate loan that would have avoided the crisis for these families and this bigger crisis for the whole economy. It sounds to me like you're worried that if this goes to Congress, these kinds of things gets into the political process that it can take us down a road that could be worse. I think Mike's writing that a lot of that did happen, and I think the investors who should bear losses for buying those loans. The concern is, if you change the rules midway through the game, you're going to have investors who are potential lenders in the future say, well, if things get tough and people start losing their homes, then they're just going to handle losses over to investors, so I don't want to be in that market. If you step back, we're already in the midst of a pretty deep credit crunch that I think is just beginning. The concern is, if you go too far, and I think Mike and I were talking earlier, I think he agrees with it, you go too far, you get people pulled back, the credit crunch gets worse.

Okay, good to leave it there. Thank you both very much. Thank you. Still to come on, the news are tonight, the Romney speech on his faith. But first, this is pledge week on public television, and we're taking a short break now, so your public television station can ask for your support. That support helps keep programs like ours on the air. For those stations not taking a pledge break, the news hour continues now with a look at the disappearing rainforests of Indonesia. An ego Gilmore of Independent Television News reports from Sumatra Island. On Bali Island, meanwhile, officials from more than 100 nations have been meeting at the UN Conference on Climate Change. A window on Sumatra's once abundant forest, banishing at an alarming rate. Over the past 10 years, more than half of the provinces, forests have gone, logged, burned, and pulped.

The worldwide demand is huge. Factories like this one in Rio devour 25,000 cubic meters of wood each day to make pulp and paper for export to Asia and Europe. Across Indonesia, 2 million hectares of forest are disappearing each year, 80% through illegal logging and unauthorized deforestation. So there's been much anticipation about plans by the Indonesian government to stop this destruction, curbing the clearing and burning of remaining tropical forests. And today in Bali, those plans, known as red, were unveiled to a very mixed reaction. This man simply says it's not a good solution for Indonesia's forests. The idea behind red is that Indonesia will ask for billions of pounds to protect and keep its forests.

But many wonder how this can work given the scale of corruption and poor law enforcement that has driven deforestation like this. The message from the Indonesian government at the Bali summit will be pay up or the tree gets it. But even if Western nations do pay up, the concern is that the trees may get it anyway. Certainly, these trees and Sumatra got it, and they were supposedly in a specially protected forest area. This destruction led to the recent prosecution of Indonesia's most notorious timber baron, in a case which highlights the complexities of protecting the country's forests. Here was Adlin Lease entering a court in northern Sumatra last month, running the gauntlet of furious protesters who shouted, hang him, hang him. Prosecutors presented a damning case backed by 85 witnesses, but inexplicably the judges rejected the charges and freed Lease.

Wanted by Interpol, he's now on the run, and the judges are now under investigation. This man has supported the judge's decision, and he's the very man who put their proposals on the table today. Indonesia's defiant forestry minister, see these illegal loggers are now going to use this case to say that what they are doing is not wrong. And this verdict encourages the big companies to come in, and all the virgin rainforests that were previously protected are now under threat. He has reason to be worried. This was the scene of a recent anti-logging bust by Real Police. They seized 1 million cubic metres of logs piled up over a nine-mile stretch. Campaigners have hailed the Real Police Chief for vowing to break the back of the logging syndicates.

But his exposure of the illegal logan scourge has led to a fight with the forestry minister. Johnny Mundung says the logging and timber companies have powerful friends, and he's skeptical about how much progress the police can make. He showed me documents which he claims show official collusion over illegal logging activities, including letters detailing huge kickbacks to secure logging rights. Campaigners have turned that question around to ask what has the Indonesian government done right to inspire confidence for its pay for the forest proposal? And they warn that if it doesn't show real commitment in tackling the problem, it's not just Indonesia's forests for the planet as a whole, which will suffer. Now, Romney, on his religion, Ray Suarez has our story.

Former Massachusetts Governor Mitt Romney delivered his much-anticipated speech with the George H.W. Bush Presidential Library College Station, Texas. The remarks titled Faith in America were seen as Romney's attempt to ease concerns of Christian conservatives who might be reluctant to support a Mormon for president. When I place my hand on the Bible and take the oath of office, that oath becomes my highest promise to God. If I'm fortunate to become your president, I will serve no one religion, no one group, no one cause, and no one interest. A president must serve only the common cause of the people of the United States. Looking in progress in the states where I'm campaigning. At least in polls, show former Arkansas Governor Mike Huckabee, an ordained Southern Baptist minister, moving ahead of Romney in all important eye.

Huckabee is used his faith to attract voters with campaign ads, such as this. If faith doesn't just influence me, it really defines me, but don't have to wake up every day wondering, what do I need to believe? Romney's decision to address his faith through immediate comparisons to remarks John F. Kennedy delivered to a group of Protestant ministers two months before the 1960 presidential election. Kennedy downplayed the influence Catholicism would have on his policy decisions. When no Catholic prophet could tell the president, should he be Catholic, how to act, and no Protestant minister would tell his parishioners for whom to vote. When no church or church school is granted any public funds or political preference. And when no man is denied public office, merely because his religion differs from the president who might appoint him, or the people who might elect him.

But in his speech today, Romney argues religion and civic life should be connected. The founders proscribed the establishment of a state religion, but they did not countenance the elimination of religion from the public square. We are a nation under God, and in God we do indeed trust. We should acknowledge the creator as did the founders in ceremony and word. He should remain on our currency in our pledge in the teaching of our history. And during the holiday season, Nativity scenes and menores should be welcome in our public places. Our greatness would not long endure without judges who respect the foundation of faith upon which our Constitution rests. I will take care to separate the affairs of government from any religion, but I will not separate us from the God who gave us liberty. And Romney sought to reassure evangelical Christians his faith does not concern the affairs.

Any believer in religious freedom, any person who was dealt in prayer to the Almighty, has a friend and ally in me, and so it is for hundreds of millions of our countrymen. We do not insist on a single strain of religion, rather we welcome our nation's symphony of faith. Its estimated Christian conservatives will comprise more than a third Iowa's Republican caucus-goers, January 3rd. And joining us for some analysis of what Mitt Romney said today about religion were joined by John Meechem, editor of Newsweek Magazine and author of American Gospel, God, the founding fathers, and the making of a nation. John Meechem, it has been said many times over the past several weeks that this is a speech that Mitt Romney, quote, had to give. Why? Well, I think there are two reasons. One is a tactical reason in the Republican primaries, in which a number of conservative Christian Orthodox Christian voters have been skeptical of Romney's Mormonism, have been skeptical of Romney's flip flops on other issues.

But very much us worried about whether his values were their values, because his sectarian label was different. I think in a larger sense, he had, as the first Mormon to make a serious bid at this level, he needed to attempt to explain to the country what his view of faith was and relation to politics. Okay, if that was the assignment, how did he do today? Well, I think he did very well if one were a person of faith, if one is a evangelical Republican primary voter, I think it was a very reassuring speech. I think that he clearly defined religious liberty in his terms, which was that you are free to choose whatever denomination, whatever faith tradition, you wish and not have it prescribed or dictated to you by the state. One issue with that is his sense of religious liberty seemed more limited to that than to including those who choose have no faith at all.

And in that sense, I think it was a very effective primary speech, but not so effective in terms of a general election audience reaching out to swing voters. On the second point, I think that he did some good in demystifying Mormonism with his confession of faith in Jesus as the Son of God and a human atoning sacrifice. And that really is the threshold question for a number of people in the Christian community around the country. And I think in that sense, he was quite clear and quite compelling. So, he talked to you while he was preparing this speech before he gave it? Well, he called me last night on his way to Houston or College Station. He had been reported that he had read my book, which you kindly mentioned, which is really a history of the idea of religious liberty. And it was more a thank you call than a consultation.

Not consultation at all. My sense is he wanted to draw on the historical tradition of religious liberty of tolerance of the founding fathers to make the point that while one can separate church and state, one cannot separate religion from politics. And religion and politics are both about people. They're about what motivates them, what drives them, what they hope for, what they fear sometimes. And I think in that sense, he was quite successful in laying out how religion has always been a part of the American tapestry. If he had asked for my advice, which he did not, I would have argued that he needed to explain a bit more clearly that religion is one force among many in the American experience. And that what Thomas Jefferson and James Madison were doing was trying to create a world in which religion could be like commerce, like partisanship, like geography, a force in the republic that would be subject to checks and balances. And would be something that instead of trying to drive it out of politics, which can never be done, or letting it dominate politics, which it should not do, it put it on a level playing field with other considerations.

He alluded to this a little bit earlier, but I want to get you to go some way further. If you are an American who was worried, curious, mystified by Mormonism, would you come away from this morning's speech with the reassurance that you were seeking from a candidate for a major party nomination for president? Well, I think you could take away that reassurance from the totality of the speech. I thought he sounded reasonable. Again, I thought he was a bit too focused on speaking only to religious people. But in terms of explaining Mormonism or trying to make people comfortable with that particular fate, you know, to some extent the American voters are on trial here more than Romney is. Part of the American tradition is that sectarian labels should not matter.

And he explained that he believed the core of his belief, as far as one can tell. And I think we have to take him at his word. He has a record as governor of Massachusetts. And my sense is that he did enough to explain how his faith would affect his public conduct. To me, that's all he has to do. He said he wasn't going to take direction from church elders. He said that he would govern according to the Constitution and the plain duties of the office in an elegant phrase. And so my sense is that as long as he makes those assurances, we can then judge, yay or nay, on whether that one should vote for him. I think to vote against him because of his religion. To vote against him because of the label of the sign outside the church he goes to. He is quite an American. It says an American is trying to coerce faith or make someone go to any kind of church.

People looking for historical parallels have reached back to John Kennedy in 1960. But we heard John F. Kennedy say a little bit earlier this hour that he believed that the separation between church and state was absolute. And Mitt Romney this morning was very careful not to go even close to there. He did. This was also, again, if one were not a person of faith, if one is not a person of faith, this was not a reassuring speech. Governor Romney was quite strong on saying that secularism should not replace more traditional religious faith. That tends to overlook the grand and important role of moral tradition of secularism, Robert Ingersal. There are many, many moral people who are not religious in the same way there are many religious people who are moral. John cannot overlook the secular sources of morality and a strong social conduct, righteous social conduct.

My sense is that Romney did not want there to be any kind of soundbite that would play in Iowa to affirm to evangelical voters who may be skeptical of him that he was in any way a separationist, as you say. You know, again, if I've been consulted, I would have suggested perhaps quoting Thomas Jefferson who once said that it doesn't matter to me whether my neighbor believes in one God, twenty gods, or no God. It now breaks my leg and or picks my pocket. And I think that is the kind of American tradition that we need to vigorously embrace and promulgate. John Meacham, thanks for being with us. Thanks so much. You can watch our candidate interviews and follow the 2008 campaigns with our reporters' notebooks on our website to do so, just go to PBS.org. Again, the other major developments of the day, President Bush announced a plan to freeze interest rates on subprime mortgages and house Democrats pushed through an energy bill that repeal some tax breaks for oil companies and mandates better gas mileage in cars.

And again, to our honor roll of American service personnel killed in Iraq and Afghanistan. We add them as their deaths are made official and photographs become available. Here in silence are eleven more. Thank you.

We'll see you online. And again here tomorrow evening when we'll talk with House Speaker Nancy Pelosi plus Mark Shields and David Brooks among others. I'm Jim Lara. Thank you and good night. Major funding for the news hour with Jim Lara is provided by every day it seems talk of oil, energy, the environment. Where are the answers?

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