The NewsHour with Jim Lehrer

RAY SUAREZ: Good evening. I'm Ray Suarez. Jim Lehrer is off tonight. On the NewsHour, an update on the fighting in Afghanistan, plus a report from Egypt on the reaction there; a debate about how to stimulate the economy, weekly analysis by Mark Shields and David Brooks, and another favorite poem.

NEWS SUMMARY

RAY SUAREZ: There was more confusion today over the fate of the last Taliban-held city in northern Afghanistan. The opposition's foreign minister said Taliban fighters inside Kunduz had until tomorrow afternoon to agree to surrender or face another assault. Other sources said they had until Sunday. Meanwhile, U.S. jets bombed Taliban-held ridges surrounding the city of Kunduz. Also today, UN-sponsored talks on a future Afghan government were delayed until Tuesday. They were to begin Monday in Bonn, Germany. A UN spokesman said they were postponed to give the various factions time to confer. Early tests showed no anthrax in the mail or home of a 94-year- old woman who died Wednesday of the disease. Connecticut Governor John Rowland announced that today. He said tests on two postal facilities and 400 postal workers were also negative. He spoke in Hartford.

GOVERNOR JOHN ROWLAND, Connecticut: Well, the good news is that I'm pleased that the reports have come up negative at the two postal facilities. There's a peace of mind there for our postal facility workers and office employees. The bad news is the mystery continues. I've got a lot of confidence in the FBI And the CDC, but this is tough to find and tough to track. So I'm cautiously optimistic we could get lucky and find out how it happened but it's going to take some exhaust I have investigative work.

RAY SUAREZ: Also today, the Centers for Disease Control confirmed a letter sent from Switzerland to Chile contained anthrax. It's the first reported case of anthrax in the mail outside the U.S. The letter was postmarked Zurich, but bore a Florida return address. Spain today put conditions on extraditing eight suspected members of al-Qaida to the United States. The Spanish foreign ministry said it will not hand over the men, who were arrested last week, unless the U.S. guarantees they will not face the death penalty, or trial in a military court. The U.S. has not yet made an extradition request. The United States and European Union members have frequent disputes over extradition when the death penalty may be involved. Israeli troops trying to disperse stone-throwers shot and killed a Palestinian teenager today. The 15-year-old boy was among a crowd of about 200 protesters who took to the streets of Gaza after the funerals for five Palestinian boys killed yesterday by an explosion. Palestinian officials blamed an Israeli booby-trap. Israel's defense minister said the incident was still under investigation. And late today, the militant group Hamas said one of its senior military leaders was killed in an Israeli missile strike in the West Bank. At The Hague, in the Netherlands today, the UN War Crimes Tribunal said it charged Slobodan Milosevic with genocide for alleged Serbian atrocities in Bosnia, from 1992 to 1995. It's the third and most serious indictment against the former Yugoslav leader. He's also been indicted for alleged crimes in Croatia and Kosovo. Shoppers around the country turned out in heavy numbers today to begin the traditional Christmas shopping season. Retailers lured consumers back to stores by slashing prices and extending hours. The September terrorist attacks, recent layoffs, and slumping economy have dampened consumer spending, which accounts for nearly two-thirds of U.S. economic activity. But, analysts said, price cuts could mean lower profits for retailers, despite increased shopping volume.

UPDATE - AFGHAN BATTLES

RAY SUAREZ: Now, an update on the situation in northern Afghanistan, where Taliban forces still control the town of Kunduz. Negotiations for their surrender broke down yesterday. Gaby Rado of Independent Television News reports.

GABY RADO: Today's skies above Kunduz were slashed through the vapor trails of American bombers from first light. Whatever the talk of surrender down below, the U.S. Air Force was keeping up the pressure from above. The smoke from their bombs was visible in the distance. Soldiers of the United Front or northern alliance were clearly encouraged by what they saw in the skies. The front lines are inching toward Kunduz, squeezing it from both east and west. From our position on the east, we saw Taliban forces on the ridge of a hill above the town of Kahrnabad, just outside Kunduz - remarkably, also heard a Taliban commander speaking over a walkie-talkie. ( Speaking Pashtun )

GABY RADO: reporter: The man talking from inside Kunduz is trying to negotiate the defection of himself and 100 of his men, along with some of their equipment. The United Front officer with a walkie-talkie says he's sending a go-between, but the Taliban says he only wants to talk to a United Front commander called Rahjad, whom he knows. Knowing it has the upper hand, United Front is encouraging a split between Taliban fighters who are Afghan and those from outside, Pakistanis, Arabs, and Chechens. Afghans are being offered a safe return to their homes, while foreigners face imprisonment and criminal trial or even worse. Though from these front lines everything is simply rumor, there are reports of foreign Taliban forces killing Afghans who want to surrender.

GENERAL ABDUL DAYON, United Front (Translated): We only talk to the Afghans. We don't have any contact with the foreign Taliban because they deceived our people and attacked our country. Whenever they want to change sides, we will respect their human rights. They may be killed in battle, but if we capture them, we will behave with humanity.

GABY RADO: Though cameras were kept away from today's fighting, there was evidence of it in the local hospital. United Front fighters were brought in with injuries sustained in battle. As everywhere in Afghanistan, doctors are having to cope with serious shortages of medical supplies. As the day wore on, tanks and armored vehicles amassed on a hill dominating the road to Kunduz, deployed here on the east of the side of the city are the Tajik forces of general Muhammad Daoud; over on the west are the Uzbeks of General Abdul Rasheed Dohstum. Many believe the two United Front warlords are vying with each other to be the first to capture the prize. As the sun sets over Kunduz behind me, the situation appears to be at a stalemate. There are almost certainly disputes among the Taliban about whether to surrender and whom to surrender to. The longer that goes on, the more the likelihood grows of a United Front attack, and the rumors here this evening are that that attack may come as early as tonight.

RAY SUAREZ: This week the Taliban invited western reporters to visit refugee camps they control near the southern city of Kandahar. Dostum but yesterday they changed their minds. ITN's Bill Neely reports.

BILL NEELY: In southern Afghanistan, as further north, conflict and a little chaos has quickly as the Taliban had taken us into their camp, they ordered us out. We were given one hour to leave. They have lost most of their weapons and most of their territory. Today they lost patience with scrutiny from the inside. It's not at all clear why we're being expelled. The Taliban say it's for our own security. But exactly how our security is at risk and from whom, they're not saying. They had said they would take us to their stronghold of Kandahar, but we could see American planes on their way to bomb it. The Taliban's difficulty in keeping control was soon clear. They took us on convoy towards the Pakistan border, but when we stopped at a town, the locals turned on us -- almost pulling me out through a side window, then attacking the car.

BILL NEELY: Has he got the key?

SPOKESMAN: This guy here is still....

BILL NEEY: Trapped inside the car we watched perhaps a dozen Taliban gunmen surround it and fight off a mob of angry locals. The very sight of foreigners clearly enrages many Afghans who have been bombed for months. As we left, more Taliban fighters were heading for their besieged base at Kandahar, further conflict there inevitable.

RAY SUAREZ: Most of the remaining forces are massed in Kandahar. The Washington Post reported today that Taliban leaders there have detained the wives and children of hundreds of Afghan fighters to prevent the men from fleeing or surrendering.

FOCUS - REPORT FROM EGYPT

RAY SUAREZ: Now, a report from Egypt on the political repercussions of September 11 on this major Arab ally of the United States. Elizabeth Farnsworth is in Cairo.

ELIZABETH FARNSWORTH: Ramadan in Cairo, post-September 11. It's sunset. Those who are fasting can eat again after a day without food and water. In neighborhoods all over the city, wealthy people have set up what are called "Tables of God," where the poor, or just people passing by, can dine free of charge. On this night, they ate quietly and quickly and then left. But some stayed because they were eager to talk about terrorism and Islam.

SPOKESMAN: This is really a Muslim. But most Muslims hate war. No war.

ELIZABETH FARNSWORTH: You're saying this is the true Islam? It's not...

SPOKESMAN: Yes.

ELIZABETH FARNSWORTH: ...War.

SPOKESMAN: Yes, this is Islam, really. But with the war, it is too bad. Too bad, the war. We not like war, but this is really Muslim man, like this.

SPOKESMAN: As you see, we don't know each other, but we collect it, and we slave... In this place...

SPOKESMAN: Coming from all over.

SPOKESMAN: ...And we are from many different governors.

ELIZABETH FARNSWORTH: Uh-huh. States.

SPOKESMAN: Yes. But we came here around 5:00. This is the time at which we can eat.

SPOKESMAN (Translated): Islam doesn't know the words "hate," "war," "jealousy," "cheating." The West doesn't know that Islam is a religion of forgiveness, a message of peace.

ELIZABETH FARNSWORTH: Do some people like Osama bin Laden here?

MAN: No, not at all.

MAN: No.

MAN: No.

MAN: No.

ELIZABETH FARNSWORTH: Nobody?

MAN: No.

MAN: No, no, no.

ELIZABETH FARNSWORTH: You don't support Osama bin Laden?

MAN: Osama bin Laden? No!

SPOKESMAN ( Translated ): Osama bin Laden has a point to be made regarding the Arab states and Islamic states, but he's making it the wrong way, which is international terrorism, because terrorism breeds terrorism.

ELIZABETH FARNSWORTH: Each Egyptian we talked to this week said that the terrorism confronted now by the United States was all too familiar to them.

SPOKESMAN: That's because... Not because that's the war of the United States. It is our war. We have been in the trenches before the United States. Welcome aboard.

ELIZABETH FARNSWORTH: Abdel Monem Said is the director of the al-Aham Center for Political and Strategic Studies.

ABDEL MONEM SAID: They bombed the cafes in Egypt. They shot at terrorists, they shot at trains, at boats in the Nile.

ELIZABETH FARNSWORTH: At your president.

ABDEL MONEM SAID: At our president. They killed our president before. ( Gunfire )

ELIZABETH FARNSWORTH: The president was Anwar Sadat, shot to death by Islamic militants in 1981. Since then, the government of President Hosni Mubarak has been at war with many of the same people and groups believed responsible for the events of September 11. Ayman al Zawahari, who founded al-Qaida with Osama bin Laden, was a leader of the group that killed Sadat. Al-Qaida's military chief, Mohammed Atef, was also Egyptian. He was reportedly killed by American bombing this week. And Mohamed Atta, who flew one of the planes into the World Trade Center, was the son of a Cairo lawyer. The Egyptian government's fierce antiterrorism offensive in the '90s made it very difficult for those militants to function inside Egypt, and so they left, and began to work internationally. The last significant attack in Egypt occurred in November, 1997, when terrorists killed 62 people-- 58 of them tourists-- at Luxor, in upper Egypt. Four years have passed since then, but the campaign here against militant Islamic groups continues. According to human rights organizations, there are about 15,000 people in prison who were detained under emergency antiterrorism legislation. Most are tried in military courts, where they are kept in cages during the proceedings. And arrests continue. This week in a military courtroom closed to cameras, but much like the one seen here, a high-profile trial of 94 alleged terrorists is under way. Human rights organizations in Egypt and the United States have criticized the lack of due process in the military trials, the torture of detainees, and conditions in prison. But government leaders like Moustafah al-Faqi make few apologizes.

MOUSTAFA AL-FAQI, Egyptian National Assembly: Each country has its own set of values and ideals, rights, and traditions. That's why the human rights is a relative issue; it's not an absolute issue. It depends on the criteria, which society. I'm afraid that America will follow us, after some years to come, in certain criteria and measures against terrorism.

ELIZABETH FARNSWORTH: Like the military courts.

MOUSTAFA AL-FAQI: Yes, of course. The style of American life will be changed because you have faced the same problems. I remember we were attacked strongly because of the military courts, et cetera, et cetera. But it was one of the ways and means to stop terrorism.

ELIZABETH FARNSWORTH: Immediately after September 11, President Mubarak denounced the attacks on the World Trade Towers and the Pentagon, and said he supported the U.S. right to strike back. But his response differed greatly from "Desert Storm," when he had helped put together the coalition that drove Iraq out of Kuwait, and when thousands of Egyptian troops were among the first to fight. For this new battle, though, there would be no Egyptian soldiers and fewer statements of outright support. Also, the Egyptian press, including "al-Ahram," which is close to the government, unleashed a torrent of criticism of American support for Israel and the bombing of Afghanistan. In response, the "Washington Post" editorialized that Egypt's "autocratic ruler, Hosni Mubarak, props himself up with $2 billion a year in U.S. aid while allowing, and even encouraging, state-controlled clerics and the media to promote the anti-modern, anti-western and anti-Jewish propaganda of the Islamic extremists." Other American newspapers were critical, too. Abdul Menem Said, who writes a column for "al-Ahram" said his American counterparts overreacted.

ABDUL MENEM SAID: You'll find Egypt is full of different types of opinions, and all these opinions, some of them with, some against the United States. Some of them are just outside propaganda for certain political forces. Some are kind of deep type of analysis. Each kind of variety you get in Egypt is worth, I think, looking at... seriously-- not like you pick here and pick there to fit a previously conceived kind of an idea. The media in Egypt probably, and the United States more, is making wrong reading of American-Egyptian relations, which I think on the people's level and on the government's level, is quite strong.

ELIZABETH FARNSWORTH: In fact, while Egyptians go about their everyday lives-- working, shopping for Ramadan, playing backgammon with friends-- behind the scenes there is increasing cooperation between Egypt's security forces, who are ubiquitous in Cairo, and the FBI U.S. agents in Cairo are working with their Egyptian counterparts to gather as much information as possible about suspects in the September 11 attacks. Also, hundreds of over flights of U.S. warplanes have been authorized by the Mubarak government, and the authorization process for U.S. warships to transit the Suez Canal has been greatly speeded up. This cooperation is not popular in poor Cairo neighborhoods, like Imbaba, where Islamic radicalism has sunk deep roots and where security forces have been particularly brutal. Many people in Imbaba do not like what the U.S. is doing in Afghanistan.

MAN (Translated): Terrorism is everywhere, all over the world, not just in Afghanistan. America should not put so much pressure on Afghanistan.

DIA'A RASHWAN: They have old women, old men. Those old people have given us no trouble. It's difficult to pinpoint where the terrorists are, so what's happening in Afghanistan is not fair. They have the feeling now that this war, whole international war against international terrorists, it's only international war led by Americans against all of our Muslim people.

ELIZABETH FARNSWORTH: Dia'a Rashwan has studied Egypt's radical Islamic movements for two decades at the "al-Ahram" think tank. He said the men in Imbaba may fear they could be targeted next.

DIA'A RASHWAN: You could have, in my mind, many... A lot of new groups which will be created in the future only to defend themselves, their societies, their countries, from which we call now the American aggression against Arab and Muslim people -- as it's in Afghanistan. (Car horns honking )

ELIZABETH FARNSWORTH: Most of the Egyptians that we spoke to said that they feel relatively safe from terrorist attacks now, but a lawyer close to the underground group said they may be weakened, but they're not defeated. Montasser al Zayat was a member of a group called Gamaa Islamiya and was imprisoned in the 1980s. He claims he no longer supports terrorism, but he still represents militants as an attorney.

MONTASSER AL ZAYAT, Attorney (Translated): Anyone who imagines that the Islamic groups have been vanquished, I say to them, "No." No, and they will not be. No government or nation will be able to break them, because the militant Islamic groups have a long heritage and history of Islam.

ELIZABETH FARNSWORTH: In Afghanistan, it appears-- perhaps it's wrong-- but it appears that people have welcomed the fall of the Taliban. What is your response to that?

MONTASSER AL ZAYAT (Translated): The Taliban is in crisis. And I don't want to make it harder for them, but who says the Taliban represents the right implementation of Islam?

ELIZABETH FARNSWORTH: In the poor neighborhood of Imbaba, as in other parts of Cairo, there is much sympathy for the Palestinians. The men we spoke to in the street there brought it up and claimed a resolution of that conflict would help end terrorism. Montasser al Zayat shares that view.

MONTASSER AL ZAYAT (Translated): It's very important the U.S. understand the feeling of hate against them. It's because of their policies. Even those people who attacked the U.S. didn't do it because of the American people. We don't hate Americans because they are American. We don't hate the French or British, despite the fact that they occupied our land for 70 years. We don't hate the Germans. So the hate-- and it's very important to clear up this point -- is directly related to U.S. policy.

ELIZABETH FARNSWORTH: Parliamentary leader Moustafa al-Faqi puts it differently.

MOUSTAFA AL FAQI: A more troubling terrorism with the Palestinian question, but from the other side I would like to say, more justice in international relations. Narrowing the gap between poor and rich countries and states, it will help in depriving terrorists from their own.

ELIZABETH FARNSWORTH: Do you think that Egypt has won its war against terrorism?

MOUSTAFA AL FAQI: More or less, I can say yes. We have the upper hand now. After a continuous, long fight. It doesn't mean that we are 100% safe. The old terrorist circles underground are still watching and monitoring what's going on. Okay? If they have a chance to react or to respond, they will. Definitely. They will not be able to do it in the United States. They have to do it in the Middle East to do it, anywhere else, but they have to respond.

ELIZABETH FARNSWORTH: But Abdel Monem Said believes events in Afghanistan and elsewhere have weakened radical Islamic groups.

ABDEL MONEM SAID: Iran has nothing to inspire them. Sudan, already, they are out of power. And in Algiers, they are making a despicable kind of... horrifying kind of an example. Of course, Afghanistan, it shows. The pictures now show what they are. So in a sense, I think Islamic political activism has been weakened.

ELIZABETH FARNSWORTH: And so, in this Ramadan season, as people gather in prayer at al Azar mosque, which dates from the 10th century, Egyptians are waiting and wondering what further effects the events of September 11 might have on them.

RAY SUAREZ: Still to come on the NewsHour tonight, stimulating the economy, Brooks and Shields, and a favorite poem.

FOCUS - STIMULATING THE ECONOMY

RAY SUAREZ: With the turkey eaten, the shopping usually follows. But this year, the Christmas shopping season opens amid a troubled economy and a congressional debate over what to do about it. Kwame Holman begins our report.

KWAME HOLMAN: Discount chain Target opened this suburban Washington, DC, store at 7:00 this morning. Two hours later, it was moderately crowded. Shoppers came expecting, and finding, big discounts.

ROBIN WHITMORE: Sales are great out here. Demand seems to be high, so shop early and you get the best selection.

KWAME HOLMAN: The economy began slowing early this year, then was buffeted by the September attack. Some shoppers came to do their part to invigorate the economy; others were wary of spending too much.

ALIYAH JONES: I think that we're heading into a serious recession and you need to watch your spending, and you can't spend like you used to spend because you don't know what tomorrow's going to be like, so you need to conserve and save for the next day.

KWAME HOLMAN: There's reason for caution. Last month, unemployment went up sharply to 5.4%, the highest rate since 1996. 400,000 jobs were lost. In the third quarter, which ended October 1, Gross Domestic Product fell at an annual rate of 0.4%. But recently there have been positive signs. Retail sales rose more than 7% in October, the largest one- month increase ever recorded. Nonetheless, despite ten straight interest rate cuts by the Federal Reserve since January, many experts believe the economy is in a recession that began in the spring. For his part, President Bush is looking for help for the economy from Congress. On Monday, he again prodded lawmakers to end weeks of partisan wrangling and send him an economic stimulus package of tax cuts and new spending.

PRESIDENT GEORGE W. BUSH: I hope I'll be able to sign an economic stimulus package. I think I will be able to do so, but it's going to require the Senators to come together and move a bill, and then we can reconcile the differences with the House version.

SPOKESMAN: The majority having voted in the affirmative, the motion is passed...

KWAME HOLMAN: The House of Representatives late last month passed a Republican-designed economic stimulus bill. At a cost to the Treasury of about $110 billion, its main features include: accelerated tax write-offs on equipment purchased by businesses worth $39 billion; repealing and for a few companies refunding the corporate alternative minimum tax, which limits corporate tax deductions, $25 billion; tax rebates of $14 billion to low-income workers who didn't qualify for them under last spring's major tax cut; speeding up an income tax rate reduction from that tax cut, $13 billion; extending unemployment benefits by 13 weeks, $9 billion; and subsidizing health insurance premiums for the unemployed, $3 billion. Democrats called the bill unbalanced.

REP. SHERROD BROWN, (D) Ohio: If you're a major corporation, this legislation is for you. But if you are a laid-off worker, if you don't have health insurance, this bill is woefully inadequate. The GOP bill gives damn near everything to many of America's largest corporations.

REP. CLAY SHAW: When you start hearing about all of this money going to these corporations and big businesses-- that's where the jobs are! There is a basic difference between the Democrat and the Republican bill. The Republican bill believes in the preservation and creation of jobs.

KWAME HOLMAN: The partisan lines were drawn just as starkly in the Senate, as the Finance Committee took up a democratic stimulus bill.

SEN. PHIL GRAMM: In all the years that I've been in the Senate and the House and all the years I've watched this committee, the product we are producing today is rank partisanship in the clearest form that I have ever seen it since I've served here. To save my life, I cannot understand how this produces the end result that we all want and that we all, I believe, think will be required in order to pass a bill.

SEN. TOM DASCHLE: I think that this is the right plan at the right time. In the month following the terrorist attacks on our nation, 415,000 people lost their jobs. It was the biggest one-month increase in joblessness in America in 21 years. All tolled, 7.7 million Americans who want to work are without work today.

KWAME HOLMAN: Senate Democrats' stimulus package has many of the same features as the House Republican bill, but in mirror image; at a cost of $66 billion, it leans heavily toward spending instead of tax cuts. Like the Republicans, Democrats also would spend about $14 billion on tax rebates for low- income workers, but Democrats would extend unemployment benefits by $14 billion-- $5 billion more than the Republicans. And subsidize health insurance premiums by $12 billion, far more than the Republican plan. Democrats would accelerate tax write-offs for businesses, but by only $19 billion, about half what Republicans want. And some Democrats also want a separate package of spending on homeland defense, $15 billion to prepare cities for bio-terror attacks and to build roads and bridges. Trying to bridge the gap between the Democratic and Republican approaches to economic stimulus will be a major item on President Bush's schedule early next week.

RAY SUAREZ: And our man on the economy, Paul Solman of WGH-Boston, has more.

PAUL SOLMAN: Well, to help us evaluate the economy at the moment, and how the government hopes to stimulate it, we're joined in New York by Joseph Stiglitz, awarded the Nobel Prize in economics last month, former chairman of the Council of Economic Advisers during the Clinton administration and former chief economist at the World Bank. He's now a professor at Columbia University. Ken Kies is a managing partner at Price Waterhouse-Coopers who served on Capitol Hill as chief of staff for the Joint Committee on Taxation in the mid-90's. And David Wyss is chief economist and forecaster at Standard and Poor's, an economic research and rating firm. Welcome, all.

So David Wyss, it's the first day of the shopping season officially. Where, unofficially, is the economy at?

DAVID WYSS: So far we're doing better than I thought we would. We're in a recession. Clearly the events of September 11 pushed us over the edge. We're going to stay in the recession. It's not over yet. But if nothing else happens it looks like the consumer is reviving relatively quickly. That should keep the recession relatively mild. I think it will be over by the spring. That if is a big if.

PAUL SOLMAN: 415,000 jobs lost we heard Senator Daschle say. I mean that's a huge, huge rise in the unemployment rate, the greatest in I don't remember how many years but 25, 30 years, something like that.

DAVID WYSS: It is going to continue. We're not done with the layoffs. You'll see more layoffs continuing. We expect the unemployment rate to be up by 6.5% by next summer. That would be the lowest peak unemployment rate since we've seen in any recession since 1960.

PAUL SOLMAN: Professor Stiglitz, are you as sanguine as David Wyss here?

JOSEPH STIGLITZ: First I point out that the loss to the economy of output being three, four, five percent below its potential is enormous. It's not just whether we're in recession. It's whether... How much we're losing. It's not only the jobs are being lost. We're losing at a rate of about 400 billion, 350 billion a year. That's a lot. It's not just whether we're in decline. It's that we're not living up to our potential.

PAUL SOLMAN: You mean that's how much the economy would have grown if we weren't in recession?

JOSEPH STIGLITZ: If we weren't... If we were living up to our potential and if we weren't, you know, having jobs destroyed rather than being created.

PAUL SOLMAN: So that's one bad thing. The other negatives on the horizon for you? I mean, you were here or we interviewed you in January at the American economic association conference and you were talking about a downward spiral in the economy. Do you continue to see it spiraling down?

JOSEPH STIGLITZ: Spiraling may be too strong, but, remember, right now we're one of the great changes is that globalization of the world and right now it's the first time in a very long time that all three major economies in the world are in a negative having their economy decline. Japan has remained weak and Germany now is also facing decline. So the confluence of these international forces I think are another negative aspect of the U.S. economy.

PAUL SOLMAN: And I notice Singapore, for example, Taiwan, those economies which had been going gangbusters for decades are now in deep recession, right?

JOSEPH STIGLITZ: That's right. I mean they weathered the big 1997-98 downturn without going into recession. Now they are in a serious recession. If you go to Latin America, there's also recession in a number of countries there. So if you look at the global landscape, it doesn't look great.

PAUL SOLMAN: Ken Kies, when you look at either the domestic or local or international economy, what do you see?

KENNETH KIES: Well, Paul, I think we're facing a very serious situation. Just take the tourism business in the United States. The aftermath of September 11 has crippled that industry, and it's not likely that it's going to return anytime soon. The third quarter profit numbers that came in in the last month or so have been bad news left and right. So I think we're facing a very serious economic situation, and that's really what puts a lot of pressure on the Congress to produce a stimulus bill because virtually every person in America realizes that we will be in a recession by the end of this year when we have two quarters of a negative economic growth matched up against one another.

PAUL SOLMAN: David Wyss, are these economists more gloomy than the consensus? You're a forecaster who is always looking at what everybody else is saying as well as your own forecast.

DAVID WYSS: Well, I think it's a matter of degree. We know we're in a recession. I think it w a mild recession but there's a lot that could go wrong to make this longer and deeper than we think right now.

PAUL SOLMAN: The thing that strikes me hearing all three of you. Today the stock market went up by 125 points, 1 point some odd percent. It's back up near 10,000. That is, the Dow Jones is near 10,000. Doesn't that suggest that the world in general or investors in general are rather sanguine about things?

DAVID WYSS: Well, it suggests that the market thinks the problem is over. We're in a recovery. The timing is about right. If you think the economy will bottom next spring, the stock market normally bottoms six months before the economy. We're now officially back in the bull market. We're up 20% from the bottom. Yeah, the market thinks it's over. The market is not always right.

PAUL SOLMAN: Professor Stiglitz, the market is not always right, right?

JOSEPH STIGLITZ: That's for sure. We had the dot-com bubble and everybody said, you know, the great news. Then it burst. I think the important thing is that there is a lot of uncertainty. And that's why it's important to have a stimulus package that is what I call flexible and effective. That if the economy gets worse, it will feed in automatically. If things don't get bad, then it won't spend more. That's why a focus on unemployment, a focus on helping the states who are facing a shortfall in their revenues, these kinds of things, flexible packages really can make a difference and appropriately designed for the kinds of uncertainty we're facing.

PAUL SOLMAN: And which of the two stimulus packages that we saw outlined in Kwame's piece more nearly fits with what you're talking about?

JOSEPH STIGLITZ: The Democrats fix that. Much of the expenditures, tax cuts under the Republican proposal are going to come into place well after even the more pessimistic of us think that the economy will be in recovery. It's just a corporate give-away. It's not really a stimulus package. It's an embarrassment that it's being sold as a stimulus package.

PAUL SOLMAN: That is the House bill. What you're calling the Republican bill is the House bill. Is that right?

JOSEPH STIGLITZ: That's right, and the Senate version of the Republican bill in some ways is even more problematic.

PAUL SOLMAN: Ken Kies, make the case for the House bill.

KENNETH KIES: It's both the House bill and the President's bill. The case is simple. Corporate America is what drives the economy. It represents 69% of all jobs in America. 75% of all wages because they're better paying jobs. 83% of all exports. And it represents 75% of all the R&D that's done in the United States. Professor Stiglitz is actually wrong about its impact. The repeal of the corporate AMT and the refundability of the credits would all happen within the first couple months. It would push $20 billion-some into the U.S. economy immediately. The same thing try is of the carry back provision. It would push money out there and operating loss carry back. I know.

PAUL SOLMAN: That was great.

KENNETH KIES: We want to make sure everybody knows what we're talking about.

PAUL SOLMAN: Exactly.

KENNETH KIES: But it would help companies that are incurring big losses this year, the airline industry and others who are going to have a big loss when they get to the end of this year would be able to take that loss and apply it against income they earned in a prior year.

PAUL SOLMAN: Now, these are tax breaks that the companies would get either for... Because they would otherwise have paid this alternative minimum tax or they have lost money and could apply it to back taxes, is that correct.

KENNETH KIES: That's correct. In the case of the corporate AMT.....

PAUL SOLMAN: Alternative minimum tax.

KENNETH KIES: Yes. It is not a tax credit like the government gives for people doing things like burning chicken man you're. It's a credit because they've already paid tax and they're going to be allowed in the future where the law is changed or not to apply that credit against the future tax liability. What the House bill would do is let them get a refund of that early. They would be able to use that money to avoid lay-offs, to do R&D, to handle capital expenditures that they're going to have to put off because of sagging profits -- for all those types of things this would be a significant infusion of money that would help to give the economy a boost. It puts it right where it belongs which is where most of the jobs are.

PAUL SOLMAN: So, Professor Stiglitz, what's wrong with creating jobs? It sounds almost obvious.

JOSEPH STIGLITZ: It's the wrong way. Think about the big bailout of the airlines. The airlines got the money. They went ahead and laid off all the workers anyway. The point is that you need to have not just a corporate give- away. You need to have something that will generate new employment. Investment tax credit that would encourage firms, give them money if and only if they create new investment. That's something that will work. But just giving them money in a world in which a lot of these firms have excess capacity is not going to generate investment.

PAUL SOLMAN: What do you mean excess capacity?

JOSEPH STIGLITZ: Well, in a lot of the industries in the United States right now we over invested in the late '90s. We have excess capacity in telecommunications. We have more wire... More fiber optics than we need. Giving these companies more money isn't going to lead them to build more fiber optics or to create new jobs. Putting more money into corporate coffers doesn't necessarily lead to more employment. You need to have a link between the two. Giving money to the unemployed -- on the other hand -- these are people who really desperately need money. We have one of the worst unemployment systems in the advanced industrial countries. These people are going to take their money and they're going to spend it just to be able to sustain their standards of living. That will put money into the economy. That will recycle. We call that big bang for the buck because it has what we call multipliers. That helps generate real jobs in the economy.

PAUL SOLMAN: All right. So, last question, David Wyss, you're in the forecasting business. You're listening to economists such as these all the time. What are most economists saying about which of these two bills is likely to prevail or maybe better put what's the likely fate of these two bills?

DAVID WYSS: My guess is we'll end up with a compromise between the two. Frankly I think both bills are fairly heavily partisan. Coming in between the two is probably not a bad idea. I think that the House bill I like less well than the Senate bill simply because it seems more designed to stimulate campaign contributions than the economy. But I think we need some form of stimulus bill. I'm willing to be reasonably flexible on how we do it. But somehow we got to get this economy moving again.

PAUL SOLMAN: You think that there will be some kind of in between these two bills that will come out of Congress soon?

DAVID WYSS: I think the political cost of not doing anything is too great. Eventually that's going to force Congress to do something. I'm not sure what. But the problem is Washington is the only city in the world where bipartisan is spelled with four letters.

PAUL SOLMAN: With four letters?

DAVID WYSS: Four-letter word.

PAUL SOLMAN: I see. Let's leave it at that now that I get the joke. Thank you all very much. Appreciate it.

FOCUS - POLITICAL WRAP

RAY SUAREZ: Now our Friday night analysis with Shields and Brooks. Syndicated columnist Mark Shields and David Brooks of the Weekly Standard. Well, we were warned early on in the war that this was going to take a long time. Don't wait for a quick result. Then the Taliban unraveled, but the administration keeps on giving us these warnings about a long, hard slog. David, what's going on?

DAVID BROOKS: It's still possible they could snatch a quagmire from the jaws of victory and that's in Kandahar where there is the hard core of the Taliban. There might not be Northern Alliance type soldiers to actually fight them there in the south. It could be a more contentious phase we're entering. We enter that phase at a time when the debate in the U.S. turns to post Afghanistan, to Iraq, to the Philippines, to other places. We could be entering the toughest phase of the war at just the moment when we're thinking, well, what else is involved in this war on terror?

RAY SUAREZ: You drop that name Iraq in there. Is the administration try to go get the American people ready for looking to other places after Afghanistan is settled?

DAVID BROOKS: Well at the very beginning of this war, George Bush said there will be many theaters of operation. It was clear Afghanistan was just stage one. Condoleezza Rice this week said it's no secret that Saddam Hussein is a major problem for the world and we're going to deal with that situation eventually. They are planning in the Pentagon how to deal with it. They don't know. It's a tough situation. There's no question that the administration feels that the war on terror will not be complete as long as Saddam Hussein is in power with his potential nuclear weapons with his germ -- biological weapons with his terrorist training bases. That's the problem they're looking at long term.

RAY SUAREZ: Mark, what do you think?

MARK SHIELDS: Ray, I'm confounded quite frankly. Somebody once said that the way Americans learn geography is by war. I think it's true. I mean we're learning now, I mean I never knew that the Taliban was composed of domestic and foreign -- and that the foreign are the real zealots and they're the ones that want to go to the mattresses and fight to the last gun. If that's the case I think it could go for a while but certainly the military operation has gone well. But the Taliban was an ancillary. I mean we're talking about al-Qaida. We're talking about Osama bin Laden, which were the objectives I think in going into Afghanistan as I understood them. And those, you know, those still remain. Those still remain as unresolved. I have to say that in spite of the war and the seriousness of our effort there, there is a total schizophrenia. Here at home, there is -- the grave words that the President utters are unmatched by any sense that there's a war going on. We are not made to feel uncomfortable for driving our six-mile-a-gallon behemoths on the road -- gas guzzlers as long as we have a flag on it. The only sacrifice that's asked is ouchless, painless -- you get a lapel pin. That's okay. Just by a matter of historical precedent, Ray, we have never gone into a war cutting taxes. The Civil War began with the installation and imposition of the income tax. During World War I the income tax went up to 77%. During World War II it went from 4 million Americans paying it to 48 million. So there's a real disconnect with people at risk, dying, very few Americans are touched, hurt, pained, wounded by this both economically and personally.

RAY SUAREZ: Take it from there.

DAVID BROOKS: I agree with that to this extent. We are talking and the President has been talking about a major war lasting years and years and years and yet what are we talking about in the Defense Department budget? An increase of $20 billion. Most experts will tell you to get to where we were when we had Desert Storm you have to increase defense spending by 40 to 60 billion dollars a year. There is a disconnect between the policy we're talking about and Bush's defining the war extremely broadly and what we are actually doing. They're saying it will come in phases but it's a very slow set of phases so far.

RAY SUAREZ: During the past week we heard the First Lady give the weekly presidential radio address about the subject of women in Afghanistan. Dick Cheney is going to speak to the same subject. Karen Hughes, Colin Powell, what's going on here?

DAVID BROOKS: I'd say almost you get into the clash of civilizations or at least the clash of ages. The treatment and the role of women in society is an emblem of modernity and modern nations allow women to do just about everything or should and some countries like the Taliban allowed them to do absolutely nothing. One of the things we are doing is facing a pre-modern view of history at least as far as the treatment of the role of women. I noticed yesterday in Kabul 100 women marched trying to get some role in the post Taliban government. It's not clear they'll get that. But we should be on that side because that's a symbol of a whole series of political evolutions toward democracy, toward equal treatment of all people and women included.

RAY SUAREZ: So you don't see that largely being for internal consumption?

DAVID BROOKS: It's obviously a political winner. Who's against women not being able to go to school. 3% of girls in Afghanistan are in school. Nobody is against that. It's a political winner but it's a symbol of a larger cultural shift that we want to impose or help the Afghan people go through.

MARK SHIELDS: Most women in Afghanistan are old enough to have experienced a time when this was not the case. I mean when women were teachers and doctors and professionals and the administration... Mrs. Bush has guaranteed that women will be part of the new government. But, you know, and while admirable and commendable there is a problem. What about Kuwait where women don't vote or Saudi Arabia where women can't drive cars. Will this bepart of our agenda or is it simply a matter of domestic consumption politically if it's limited to the Taliban in Afghanistan.

RAY SUAREZ: Well, that's a tough one because holding this coalition together we're seeing some of our allies are not so happy about some of the people we have to do business with this week, next week it may be a new set of characters. I mean the Northern Alliance, David, the Pakistanis aren't too happy about them winning.

DAVID BROOKS: Well, this is the crux of the war. How do you fight the war without allies in the region while you're essentially trying to undermine their governments which we should and probably should be doing with all the governments in the Middle East, the non-democratic governments. Our friends in Egypt have a press that is anti-American, anti-Semitic. How do we rely on them as our allies and yet try to fundamentally change them? That's the trick here. And the discussion is how much internal dissent there in the Arab world where we just set it up and people within the Arab world will do it themselves, Egyptian intellectuals, human rights activists, and that is the problem the administration will be facing, how to rely on these regimes and at the same time undermine it, which we're really going to have to do if we have a democratic region.

RAY SUAREZ: The consequence is the softness in the economy. The debate continues and the president is requesting a stimulus bill, Mark.

MARK SHIELDS: This is a perfect example to me. One of the smartest conservatives I know, a man who graces this very program on Friday nights, said of the House passed stimulus package that every once in a while a political party confirms the worst negative stereotypes about itself by doing something like the repeal of the alternative minimum tax and then not simply content to let GE and everybody else off the hook from paying less than their janitors do but insisting that they also be reimbursed for the taxes they have paid since Ronald Reagan put that law on the books. George W. Bush sitting at 90% popularity according to Glen Kessler in the "Washington Post" today and other sources I've talked to is committed to this. It wants to fight for it and it wants to defend which to me is not only bad public policy. I think it's politically disastrous. You do not at a time of sacrifice say to the best off, the most privileged, the most prosperous in our society you will not pay in treasure, you will not pay in blood, you will not have the slightest inconvenience.

RAY SUAREZ: Do you think that is going to be in the final version of the bill?

DAVID BROOKS: I think the alternative minimum tax may be not. There may not be a final version of this bill. At the rate we're going we're going to have a stimulus package for the recession of 2007 because there is a good chance nothing will pass -- Phil Gramm said it's a 60-40 chance that nothing will pass this year. The economy may be recovering. And it's part because neither party wants to give away -- there's a centrist package which has trivial distinctions. It would bring down the minimum tax rate from 27 to 26 for some people. Well, whoopti-do I'm going to shop because it's 27 to 26. The fact is neither side is moving. I said last week I hope it fails because they have delayed it and they have weeded out any worse while part of the bill so it's trash on both sides as far as I'm concerned.

RAY SUAREZ: Well, doesn't the President feel he really needs the bill as a demonstration of political will and need to move on, very quickly?

MARK SHIELDS: I think he does, Ray. I don't think there's any question about it but it's awfully tough to make that case when you have General Motors sitting there with $6 billion in cash saying we're going to give them $868 million more at a time when unemployment is running out and where state treasuries are being depleted.

RAY SUAREZ: Fellows, thanks a lot. Have a good weekend.

FINALLY - FAVORITE POEM PROJECT

RAY SUAREZ: Finally tonight, a thanksgiving holiday reading from the favorite poem series, the project by then-poet laureate Robert Pinsky asking americans to read their favorite poem. Here is Annik Stahl, a technical writer in Seattle.

ANNIK STAHL: Every year since about, I would say, 1989, I write out a copy of this poem and I put it up somewhere near the Thanksgiving table. If it's at my house or at somebody else's house or... I've always brought it with me. You might not think it's a Thanksgiving appropriate poem, but I think it is because it's really about the people and the angels and the animals and God coming together. And our relationship with God and how we might have fallen out of favor. There's still a lot of beauty in it. And I think the poet really brings that out at the end -- you get to see that... I mean, you get to see a god that is really whimsical and somebody that wants to be understood, you know, not just a guy in a long robe, you know, wielding his power because he can. I mean he really, you know, it's like he has human qualities or we have godly qualities. It's really... It's a very synergistic poem. It combines nature, evolution, and the spiritual religious part of that whole Adam and Eve story. And I think a lot of the feelings and emotions in it are very applicable to everyday life.

ANNIK STAHL: "Lamentations" by Louise Gluck.

1. The Logos

They were both still, the woman mournful, the man branching into her body. But God was watching. They felt his gold eye projecting flowers on the landscape. Who knew what He wanted? He was God, and a monster. So they waited. And the world filled with His radiance, as though He wanted to be understood. Far away, in the void that He had shaped, he turned to his angels.

2. Nocturne A forest rose from the earth. O pitiful, so needing God's furious love-- Together they were beasts. They lay in the fixed dusk of His negligence; from the hills, wolves came, mechanically drawn to their human warmth, their panic. Then the angels saw how He divided them: the man, the woman, and the woman's body. Above the churned reeds, the leaves let go a slow moan of silver.

3. The Covenant Out of fear, they built a dwelling place. But a child grew between them as they slept, as they tried to feed themselves. They set it on a pile of leaves, the small discarded body wrapped in the clean skin of an animal. Against the black sky they saw the massive argument of light. Sometimes it woke. As it reached its hands they understood they were the mother and father, there was no authority above them.

4. The Clearing Gradually, over many years, the fur disappeared from their bodies until they stood in the bright light strange to one another. Nothing was as before. Their hands trembled, seeking the familiar. Nor could they keep their eyes from the white flesh on which wounds would show clearly like words on a page. And from the meaningless browns and greens at last God arose, His great shadow darkening the sleeping bodies of His children, and leapt into heaven. How beautiful it must have been, the earth, that first time seen from the air.

RECAP

RAY SUAREZ: Again, the major developments of the day. Afghanistan's Northern Alliance gave the Taliban fighters inside the besieged city of Kunduz until tomorrow afternoon to agree to a surrender, or face another assault. And early tests showed no anthrax in the mail or home of a 94-year-old Connecticut woman who died Wednesday of the disease. We'll see you online and again here Monday evening. Have a nice weekend. I'm Ray Suarez. Thank you and good night.