The NewsHour with Jim Lehrer

. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Good evening I'm Jim Lara. On the news article tonight the news of this Friday. Then perspective on efforts to calm the markets in the wake of the mortgage and credit crunch. The weekly analysis of Mark Shields and David Brooks. and a look at combat stress for the report from photojournalists embedded with the U.S. Army Company

in Baghdad and the views of two counselors who work with veterans. Major funding for the new's hour with Jim Lehrer is provided by some say that by 2020, we'll have used up half the world's oil. Some say we already have. Making the other half-last longer will take innovation, conservation, and collaboration. Will you join us? The new AT&T. Pacific Life. The William and Flora Hewlett Foundation, working to solve social and environmental problems at home and around the world. And with the ongoing support of these institutions and foundations.

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 offered ways today to help homeowners pay their mortgages. He outlined proposals to avert loan defaults and home foreclosures. The plan would permit homeowners with good credit to refinance into federally insured mortgages if they can't make their payments. The president also called for stricter enforcement of laws against predatory lenders. And he urged Congress to reform the tax code to let people avoid a penalty when they refinance. At the same time, Mr. Bush ruled out, helping lenders who made too many bad loans. He said a bailout would only encourage them to do it again. The chairman of the Federal Reserve made his own effort today to reassure the public.

Ben Bernanke said the Fed will act as needed, so the credit crunch does not hurt the economy. Wall Street rallied on the news. The Dow Jones Industrial Average gained 119 points to close at 13357. The Nasdaq rose 31 points to close at 2596. The major indexes fell for the week, but for the month, the Dow gained 1%, the Nasdaq rose 2%. Well, I have more on the Bush and Bernanke statements and reaction right after this news summary. Another key member of the Bush administration is stepping down. President Bush announced today, press Secretary Tony Snow will leave on September 14th. Snow said he's going because of financial concerns and not because of his battle with cancer. He said he will miss the job. I am sure I'm going to go through some serious withdrawals in two and a half weeks. But on the other hand, this is a chance for the first time in my life. We'll actually be able to decide what I want to do when I grow up.

And I will spend a lot of time trying to speak out on things I care about. And when looking at opportunities and trying to do some good. The president named Snow's deputy, Dana Perino, to be the new press secretary. The president got a top-level briefing on Iraq today from the Joint Chiefs of Staff. The Pentagon session was a prelude to assessments due next month on security and political progress. The New York Times reported today an independent panel has found the Iraqi National Police are hopelessly corrupt and need overhauling. The report was commissioned by Congress. A Pentagon spokesman said efforts to get rid of corruption in the Iraqi force were showing progress. Iraqi Prime Minister Amaliki's government appealed today for more militias to freeze operations. That came a day after Shiite cleric, Makkata Al-Sater, ordered his body army to stand down for six months. Also today, the U.S. military announced two more U.S. troops were killed.

Wednesday that brought the toll for August to at least 80 up to from July. More than 3,700 Americans have died in Iraq since the war began. Two Egyptians were indicted today in Florida on federal terrorism charges. The two are students at the University of South Florida. Earlier this month, police stopped their car in South Carolina near a Navy base where enemy combatants have been held. Investigators found pipe bombs in the car. Republican Senator John Warner of Virginia announced today he won't run for a sixth term. Warner has been a leading voice on military affairs, and Charlottesville today he pointed to the physical demands of the job, made apparent during a trip to Iraq this month. It was day and night, jumping on and off helicopters, cargo planes, shaking hands, quickly eating and moving on. I was stood at fine. As well as when I was in boot camp in the Marines, no problem at all.

But you got a face. I'm now 80. I will be near 88 when I finish. And I was always amused by one physician talking to the other day. He said, now, your 80s are your golden years. Enjoy them. After that trip, Warner called for U.S. troops to begin leaving Iraq by Christmas. Senator Larry Craig of Idaho will announce tomorrow whether he's resigning or staying on. A number of fellow Republicans have pressed him to step down over his June arrest in Minneapolis. Police were investigating sexual activity and an airport men's room, Craig pleaded guilty to disorderly conduct. A top Democratic fundraiser turned himself in today in California on a grand theft charge. Norman Chu had been a fugitive since 1991 when he failed to appear for sentencing. He went on to become a clothing executive in New York. Most recently, he helped Senator Hillary Clinton's presidential bid this week she and others returned thousands of dollars he raised. The first same sex marriage in Iowa was performed today, a state judge threw out a law against it yesterday and some 20 gay couples applied for marriage licenses.

At least one couple got married today before the same judge stayed his ruling. The issue now goes to the state Supreme Court. Princess Diana's family gathered in London today to mark 10 years since her death. She was killed in a car crash in a Paris tunnel in 1997. Some 500 people attended today's memorial service, including Diana's two sons and Queen Elizabeth II. Prime ministers passed and present were also on hand. Prince Harry offered a tribute to his mother. She was our guardian, friend and protector. She never once allowed her unfaltering love for us to go unspoken or undeminstrated. She will always be remembered for her amazing public work but behind the media glare to us just two loving children. She was quite simply the best mother in the world.

We would say that wouldn't we? But we miss her. The Bishop of London also spoke he urged an end to the long running war of words between Diana's fans and her detractors. And that's it for the new summary tonight. Now confidence in the markets and credit, shields and brooks, and dealing with a stress of combat. Economic confidence building Judy Woodruff has our coverage. For weeks now the problems in the mortgage markets have shaken the financial markets, causing new concerns over whether those troubles could spread to the rest of the economy. Much of the turbulence was caused by homeowners who took out so-called subprime loans, which are riskier and are now unable to pay their mortgage. Those loans came with lower introductory adjustable rates that are now rising or due to rise soon. In some instances that can double a monthly payment. An economist predicted as many as two million people with subprime mortgages will be paying higher monthly payments within the next two years.

Today in dual appearances aimed at different audiences, President Bush and Federal Reserve Chairman Ben Bernanke made it clear they would step in to prevent problems with subprime mortgages from endangering the wider economy. The president announced his proposal at the White House this morning. The plan aimed at helping 80,000 delinquent homeowners who would receive federally insured loans would take effect next year. The government's got a role to play, but it is limited. A federal bailout of lenders would only encourage a recurrence of the problem. It's not the government's job to bail out speculators, or those who made the decision to buy a home they knew they could never afford. Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders or little help from their government.

Some of that help would come from changes in the Federal Housing Administration, part of the Department of Housing and Urban Development, which ensures loans to low and middle income borrowers. The FHA will have more flexibility to back refinanced mortgages for homeowners who have good credit. In the coming days, the FHA will launch a new program called FHA Secure. This program will allow American homeowners who have got good credit history but cannot afford their current payments to refinance into FHA insured mortgages. This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments, and keep their homes. The president also wants the FHA to raise the dollar amount on loans it will back, and call for tax code changes to eliminate penalties for refinancing mortgages. The plan also calls for an increase in transparency in the mortgage industry to help guard against predatory lending.

We believe that the consumers better informed these kind of problems won't arise, are less likely to arise in the first place. The Federal Reserve, nor would it be appropriate to protect lenders and investors from the consequences of their financial decisions. But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy. And, quote, back in Washington, the chair of the Congressional Joint Economic Committee, Senator Charles Schumer said he hoped to see stronger action from the White House in days to come. Just when it looked like millions of homeowners would be left with nothing more than a Hail Mary past to save their homes, the president has decided to call a few plays from the Democratic playbook.

This is a good and promising first step, but, of course, we must do more. Thank you both for being with us. Let's talk about what the Fed chairman said first. I think Mark really hit the nail on the head. I mean, the issue is not only the economy and how it reforms between now and September 18th, but this is a Fed that's trying to stem any spillover effects from Wall Street to Main Street.

They actually have to get out ahead of the economic data, and one of the points that Bernanke made today was how he was talking to people on the street, trying to get sort of more real-time information, which means if the only thing that would stop the Fed from easing on September 18th is, if frankly, all the chaos that we've seen in credit markets is completely cleared up by then, and I just don't see that happening. I think part of the more stable environment we've seen is sort of an implicit promise that Fed has made to actually ease on September 18th, and I think they agree with Mark entirely that they will go ahead and do so. So, in other words, no doubt, and either one of your minds that the Fed would step in under the right circumstances.

Not in my mind. No doubt. No. And just to be clear, what are the circumstances you're talking about? Well, I think the economy is soft. It's going to get softer because of the problems in the housing market. I think inflation is low, and I think it's going to moderate further given the weaker economy. And I think given the turmoil in the financial system, which I still think is with us, I see no reason why the Federal Reserve would not lower interest rates in a couple three weeks. I suppose if things turn out measurably better than anticipated, we won't get those lower rates, but I think at this point those lower rates are coming. And Diane Swank, the timing, the right timing, is that how the markets are reading it? I think absolutely. I mean, the Fed has also been very careful under Bernanke. You know, unlike Greenspan here, his biggest speech of his career was, you know, six to eight weeks after this crisis began, where Greenspan would have been out, under me even moves, doing this ahead of time. But Bernanke's handled it very differently, been much more behind the scenes, and then finally came out just to underscore the message that the Federal Reserve came to by consensus, very different kind of approach,

and trying to really make the ease at the meeting itself in order to not have intermediate moves. They want to be a little more rule-driven. With that said, you know, they want the effect to be the same as if Chairman Greenspan did when he moved between meetings and at the meetings during financial crises in the 1990s, and in the late 1980s. So there's a similar ends here, but the means is very different, and I think that's important as well, is that if the Fed were to fail on this sort of implicit promise they've given, it would really be very chaotic for financial markets. In fact, the only reason the Fed would not ease is really a significant improvement in not only financial markets, but economic conditions between now and September 18th. When you both mentioned the housing markets, Mark Zandy, let's talk about President Bush's speech today, efforts to step in to a degree to help homeowners who are in some trouble. What did you take away from what Mr. Bush had to say?

Well, I think it was a good step. I think it was a small step. It's not going to help a lot of homeowners if it stays as it is, but I think it's a step in the right direction. I think once it makes its way through the Democratic Congress, the scope of the plan will be enlarged and more people will be helped. So I think it was much needed. I think it was well timed. I think it was well intentioned. I really think it's a good idea. And Diane Swank, what was your take on the president? Well, I think Mark Zandy is a little more kind than I am. I take it more as cosmetic than actually real in terms of the economy, in terms of its impact. I mean, this is really sort of pandering to the public and saying, here I'm giving you something at most, it's supposed to help 80,000 people, not the people who are most affected of the 2 million resets that are coming in adjustable rate mortgages out there. I agree with Mark entirely that it would be broader based once Congress gets a hold of it. But even then, at the end of the day, you know, Bernanke operates with a canon, not a precise instrument, but nonetheless very powerful. And at this point in time, with what we saw today, I would put Bush sort of choosing squirt guns. So Mark Zandy, we just heard Diane Swank say it was more cosmetic. The president was pandering.

I think she's a word squirt gun, yeah. And the words. And the words that I know. But that's not quite how you're viewing this. No, you know, the plan was more than just the expansion of the FHA program, which is important by itself, allowing the FHA to ensure more loans and help people who are in delinquency. It also had a tax break for those home owners who are able to reduce the size of their debt if lenders allow them to reduce the size of the debt they owe. They don't have to pay tax on that. And it's hard to gauge how important that will be, but I think it will have an impact. And I think the more important point here is that as we go along for a 12 weeks from now, and if the housing market doesn't respond to these measures, I do think we will see even bigger steps. And I think the administration will go along with those steps. Because this is very, very important to not only these homeowners, but to their communities and to the broader economy.

And I think this is just the first step in what will be a series of steps to try to help these folks out. And what makes you think the administration will do more, might do more? I think it will be necessary for them, both from a political perspective and for economic reasons. I think if the housing market doesn't respond, the economy could very well slip into recession. And I think they understand that and they know that they still have some room to maneuver here and can become even more aggressive. And, Diane, why don't you believe the president steps carry much meaning? I mean, there was the tax break, the president is proposing, the reforms at the federal housing administration, in general trying to make it easier for homeowners to refinance their mortgages. I'm not against any of that, but the idea, he went further to argue that their job owning lenders to try to get them to fit, move into fixed rate financing products and to get people to refinance so they don't adjust. Frankly, lenders are already doing that. They have a lot of incentive to do it in their own right. The other issue is that these steps were very marginal. I'm not against them taking them, but they don't hit the bulk of the population.

It's going to be hit the hardest and that's a subprime borrowers. They're targeting prime loans here, not subprime loans. And that's something that concerns me. I do agree with Mark wholeheartedly that they will likely expand the program. And at the end of the day, I'm not as worried about the macro economy as Mark is from what's going on in the housing market and what happens. Because I think we're going to stem losses there. I think the Fed's got the biggest guns in that arena. But with that said, I do think it is important to take those. People who really were fraudulently putting the loans, they could not afford. There will be some bailout there. And I don't think that's necessarily bad at the stage of the game. I don't, economists don't tend to like things like bailouts, but this is, we're talking of consumers that were sold loans. They couldn't even make the first or second payment on. And that is clearly fraudulent behavior. They were given the American dream and then had it taken out from under their feet. And it's not that expensive. We're talking about some very low priced housing. And so the cost isn't like an SNL bailout or something like that. So I agree with Mark that it will be more broad based. And I think that's important. But the steps, you know, 80,000 out of 2 million that are going to turn and you're only hitting the prime borrowers at the moment.

I guess from the Bush administration perspective, it's kind of like the new deal and it's close to FDR we've heard from him. Not that I'm saying that's where we should go. But this is really very marginal on the scope of the economy at the stage of the game. So just quickly, Diane Swank, what more are you saying the administration should be doing if anything? Well, it's not a question of really should be. I think we're going to see a reaction. I think the biggest reaction that we see should come out of the Fed, to be honest with you. My concern always is when Congress and the administration gets into fixing problems after financial crises, they overshoot and tend to do too much and have unintended consequences that cost us somewhere else down the road. So I worry in anything they do move too quickly because Congress is just not made to move quickly about financial market situations, nor is the administration that they could do a misstep and really overshoot. Some good things that could come out. I actually don't think it's a bad idea to under a sunset clause, expand the amount that Fannie Mae and Freddie Mac can buy in the market, expand their portfolio limits. They can help restore the market that way. I do think there might be some need to also go up a little higher on the FHA loans, the insurance that they're providing there, go to a little bit higher level.

All those things, there's a lot that they can do on the margin that combined will be more productive. Yeah, that was a baby step. I say squirt gun. I really don't find it that big of a deal. I guess personally, I got offended when the administration actually, at one point in time, the HUD Secretary came out and said, you know, we're basically the Calvary coming to save the day, and they are not that at all at the stage of the game. So Mark Zandy pulled together what the President said, what the Fed Chairman Ben Bernanke had to say all in all, effect on the mortgage markets and effect on the economy more broadly. Well, I think it was a good day for policymakers, both the administration and the Chairman of the Federal Reserve stepped up. They did what they needed to do. I think the markets were cheered by it. I don't think ultimately at the end of the day it will be enough and we will see more. The Federal actually lower interest rates and we'll see more out of the administration in Congress, but I think it was a clear, direct step in the right direction. And I think we should be cheered by that.

And Diane Swank, just in summary, together, things are better or not as a result of what these two, the President and the Fed Chairman had to say today. On that, I agree with Mark. They are better. And at the end of the day, whatever the message is, whether it's baby steps, big steps, doesn't matter at the end of the day, what Washington told us today from the Federal Reserve, the White House, and eventually from Capitol Hill, is that they're not letting this economy go down without a fight. And I think they've got a lot of ammunition altogether to deal with it. All right, we are going to leave it there. We thank you both. Diane Swank, Mark Zandy. And to the analysis of shields and Brooks syndicated columnist Mark Shields, New York Times columnist David Brooks. David should everyone feel better now because of what Fed Chairman Bernanke and President Bush said today about the economy and all the things that the folks were just talking about. Sanguine. Go to Home Depot, start redeflying your house. They should feel a little better on the sense that there's activism in Washington, that people are paying attention, they're doing what they can.

The Fed is obviously going to be aggressive as we just heard from the two economists. On the executive branch level, there are sort of two interesting issues here. One is how big a moral hazard does the administration think they're presenting? Are they rewarding people who took bad loans and who took irresponsible decisions? And I think that's what's bracketing their behavior so far, though as we just heard, they may go more. The second issue, which makes this different from a lot of the banking crisis in the past, is you've got a mortgage in Ohio, and it's held by a bank in Germany. What's the term? Paul Simon at a terrific risk on this last time. What are the terms about you and what do you know about the Germans? So that makes this much more unpredictable than similar situations in the past. But do you have the feeling, Mark, that the situation is under control by the folks in charge? No, I don't know. I think the president's impulse. I think first of all, the Federal Reserve and the Treasury Department underestimated the dimension and the velocity of the potential. The potential crisis here in home ownership for closures and mortgage failures.

That's the first thing. Second thing is the president's whole inclination is to rely on the free market. And so now he's acting. And there is a potential here for cooperation with the Congress, both Barney Frank, the Democratic Chairman of the House Committee, the appropriate committee, and Chris Dodd and the Senate. The problem is going to be this, Jim, in a realistic sense. The Congress is going to go further than when the president did. As we just heard in the earlier segment with Judy, that will be the moment of truth. Well, the president, because they'll give the president what he's requested. But they'll also do more. Well, Diane Planck said that it's Congress and the president can't act fast enough anyhow, it ought to be left to the Fed. That's the only one who couldn't move. And I know she said that. But I do think that there is an impulse in the Congress to do something and to do more than the administration. But this is obviously, I mean, the administration's always saying it's 80,000 mortgage homeless. They're going to affect. And we're talking about a potential of 2.2 million for closures.

But this is a soft spot for Bush because the ownership society is something near and dear to his heart. And he has been promoting policies for the past six years to expand home ownership. And a lot of people probably are in trouble or people who are induced by policy the past few years. On the other hand, there really is that moral hazard issue. And I think the president referred to it this time that if you take out, I mean, the greed here is on the part of the lenders, some of them, who lured these people with loans that we all got in our emails. But then people, you know, we've all got home shopping. You look at something, you think, oh, I'm going to take a risk. I really want that house. And you get a little greedy. And it's effective as well. The other thing that I'll touch on this last night, the number of loans that are made not by regulated savings institutions. I mean, they're made by unregulated institutions. That's going to be one of the through security so that's right. And through not banks and SNLs and the traditional way that we associate home mortgages being made. What do you make of Senator John Warner's decision about to go again?

Well, in a strange way, it elicited cheers, first of all, from Democrats in the House I talked to today, because they're thrilled at the prospect of Tom Davis, the Republican Congressman from Virginia, running for the Senate. Because they see Tom Davis as the most formidable and able Republican strategist in the House of Representatives. They're thrilled that he would be leaving the House, and hope he would look at me. Well, they don't want him to win, but if he wins, that's fine. He won't be in the House where he's just a very, very able guy. But I think John Warner really is a moment in the Senate that we see two win frequently. John Warner and Carl Levin, the past chairman, and the President Chairman of the Armed Services Committee, are a model in civility and comedy. They work together to each other as well. That's right, exactly. And this precious little of that, and John Warner is one of the people who came to this Senate in 1978 as somewhat of a bizarre figure married to Elizabeth Taylor, star power, and sort of went her really hurt coattails. And the Senate has grown to the point where I think he's an enormously respected and the state is a enormously respected. He's been a bipartisan figure.

Democrats really think they have a chance to win that seat. Well, I think it's a shame. He is a Senator Senator. I mean, the Senate is different from the House. The Senator is supposed to be more deliberative, more statesman-like, more civil, more thoughtful, and Warner epitomized all those virtues. And I think some of the things you heard from him over the past few years was that a lot of people come over from the House being elected to the Senate and bring the morals of the more A's, I should say, of the House to the Senate, a more slashing style, a less collegial style. And he resisted that, and if you remember, he was very active in the Gang of 14 on the traditional filibusters. And so I think he preserved the best of what the Senate should be. And so I personally think it's a shame for the institution. And heck, who will only be 88? He could be the ninth youngest Senator at this point. It's a pretty old body. No, go ahead. I'm sorry. I was just thinking of all the time, thinking today of all the times you've said on this program and everybody else's program, and on many different places, on many different issues, we can work this out. This would be, of course, Iraq is just the most grievous one of the President, but he's always said this.

It's the words that first come out of his mouth. Now, that's exactly right. And obviously, I'm Iraq most recently. I mean, he's been trying to build the bridge on that between the two parties. What are your expectations about the Justice Department investigation of a Berto Gonzalez? Yeah. Well, people have looked into what Gonzalez said, and clearly what he said was unsatisfying, and some would say pathetic. But the people who looked into it have said that it's not purger, or it's not, he didn't violate law. So I suspect that it'll peter out that's just based on what people have said. What do you think? I think there is going on. I think it gives legs to the Congress to continue the investigation. Even though he's resigned, even though he's resigned, because there is this investigation by the Inspector General, the Justice Department, and the Office of Professional Conduct. And I think Jim, the smoking gun, which is not David's right, has not emerged, is if there's any evidence, e-mail, any other form of any U.S. attorney who was fired because he or she was prosecuting a Republican member politician, or because he or she refused or was dragging the feet on prosecuting a Democratic politician.

If there's any evidence of that, and several Democrats have talked to think there is, then it becomes a really serious offense. But am I correct, David, in believing that or understanding that this investigation was not self-launch by the Justice Department, it was requested by the Democratic majority on the Senate Judiciary Committee? Right. And I think this is the right way to do it rather than a special counsel. But they've looked at this, and the threshold is not whether there's politics. There's a lot of politics, exactly as Mark said, whether it's frustrating the course of justice. And we'll see if they get there, but so far with all the investigations that's been so far hasn't reached that level. Now, speaking of resignations just a short while ago, the wires moved a story about Senator Larry Craig. We knew he was going to make an announcement tomorrow. Associated Press is reported that they, from sources that he's definitely going to resign. And the Republicans have been asking for it from day one since the story first broke.

Were they correct to do so to push him out this way? I think he was a victim, not to his behavior, but he was a victim of what had happened with Mark Foley in 2006. Mark Foley was a Republican congressman from Florida. They'd been reports to the leadership of his own party about proper overtures he had made to house male pages. And they just kicked it further and further downfield. They never came to grips with it. And the Republican defeat in 2006 was part of the problem that the whirlwind that was reaped. And Larry Craig, as soon as this happened, as I recall, the only Senator who came immediately to his defense and said, let's stop this, let's just wait a minute and find out what happened was Chris Dodd, the Democrat from Connecticut. Every other one, the Republicans seem to be lined up with, I've got the rope, you find the tree. Let's name this guy. Now David, you're newspaper. The New York Times, an editorial page which is not to support Republicans as a general rule, said wait a minute on Larry Craig.

If there's a double standard here that if the incident had been involving a heterosexual incident, rather than a homosexual incident, this would never have happened. There would not be the press to get him out. There's some double standard. We all know senators who, and what Larry Craig has alleged to have done is made a pass at someone he thought was willing to have sex with him. That's what the allegation is. And we all know senators and it's been widely reported who have made passes at people, whether they thought they were willing or not. And those people were not chased out of the Senate. But here the politics is different. Partly probably because it's a alleged homosexual affair, and that probably gets people from that point. But I think the larger issue, and I've heard anecdotally several times today, is that a lot of people, and especially mothers, are uncomfortable sending their 10 or 11-year-old boys into a public restroom and an airport. And they want to have some confidence or a football stadium, whatever. That when they do that, they can do so with safety. And this strikes right at that insecurity.

And I think that sort of insecurity about the public climate is feeding into this in a way it wouldn't if it were done at a restaurant or somewhere else. That it's the pollution if you want to put it that way of a public space where people should feel safe sending their kids. Well, people have a right to expect to walk into a public restroom and not to have sexual activity taking place. I know there's any question about that. But when you talk about the public trust being violated, I mean, his Duke Cunningham, Republican Congressman from California, who was selling his vote. There was no call for an ethics investigation. Here was Jack Abramoff buying up large chunks of the Republican caucus that seemed to be Bob Nae and others. And there was no call for an ethics committee. I mean, in this case, the rush to judgment, they started up the bus. They threw him under the bus. They ran him back on the over. I mean, you know, what he did was a violation of the broke, he did break the public piece, and he violated his own marital vows. But it wasn't the same thing as selling his vote.

Quickly, before we go, the Census Bureau figures marked this week on poverty and the uninsured. Is it growing, the uninsured, up 2 million to 47 million, etc. Is that it does it have the possibility of breaking out as a major issue of the 2000 campaign, 2008 campaign? I think it already is, Jim. I really do. I think there's an acceptance for the discussion, full discussion, full debate of a national solution, national health plan to remedy this figure. I'll tell you that the first sign is going to be there was an increase of 600,000 the number of uninsured children. When the Congress comes back, the Senate passed a less ambitious version of this plan's extension, the state, the children's health plan, and the House passed a more generous one in the compliance of one. The House, if they're smart, if they're not brain dead, Democrats in the House will embrace the Senate plan and pass it as is. And I can't believe that President Bush, even though he's threatened, would dare to veto it politically.

I think it is huge politically. When you go to Republican Democratic events in the presidential campaign, it's like going to two different universes. They're talking about different issues with two exceptions. There's two issues that come up in both equally and they come up a lot. The first is immigration and the second is health insurance. I was with Mitt Romney in New Hampshire several weeks ago now. Every other question was about health insurance. And this was not Hillary Clinton or John Edwards. This was Republican wanting to talk about it. They want something done about it, so they don't want to be able to leave their job and go to a new job. When you look at what came out of the census, slight rise in income, slight drop in poverty, but are unquestionably insignificant rise in the uninsured. And what was striking to me was the uninsured white Americans was the same. Unintradations Americans were down, but African Americans in Hispanics were bearing the brunt of this. So it has that element too. Housing, housing, and health insurance to two things that touch everybody. And yes indeed, thank you gentlemen both very much.

Finding tonight, coping with combat stress and Iraq. We begin with a report on the recent experiences of a U.S. Army company in Baghdad. It's narrated by Kimmy Nazaram of the Guardian newspaper in Great Britain. Please be warned, many of the images are graphic. Saturday may the 19th. It's late afternoon in Baghdad. Photojournalist Sean Smith captures this image inside a Bradley armored car, six U.S. soldiers and their translator are burning to death. This is Sean's account of the horrific events of that day and the following two weeks. His footage starts with a rare moment of calm for a patchy company in Amaria, Western Baghdad. Then in the distance, an explosion.

This is fourth platoon. They rush out to investigate. Sean filmed the soldiers as they discover the target of the blast. The Bradley upside down and on fire. It's been blown up by a roadside bomb. But fourth platoon are too late to help their seven trapped colleagues. Live ammunition explodes inside the Bradley. Seconds later and nervous, they raid a nearby house looking for the bomb maker. They detain several men and leave them with interrogators. You've got grenades going off, you've got an ID pulling up your vehicle. And then you're expected to go back in those four to six, four to five hours and get them relaxed to come back out and do another six hours. You just don't have time to do it. Your body never gets to come down. You're always on that high height and sense of alertness. You just don't have the rest. 48 hours later and specialist lakes unit are back in the neighborhood.

They're conducting random house checks. They're jumpy. But this time all they find is a frightened and elderly woman. Fourth platoon finds nothing and leave. But the next morning, this is what happened. Apache Company's second platoon are now on patrol. They're suspicious of car circling their position. Might be a lookout for nearby snipers. Still nervous after the Bradley attack, they order the car to stop. And when it doesn't, they open fire. They drag the driver through the nearest front yard and try to revive him.

The soldiers attempts to keep the man alive fail. And neighbor turns up. She thinks she knows who he is. The man was killed because he failed to stop. Second platoon specialist Vassel was there that day. I challenge anybody in college to do my rotation. They don't have to do anything. Just come hang out with me and go home at the times I go home and come stay here 15 months with me. The day starts with second platoon call to investigate a blast at an insurgent bomb factory. They pick their way through the rubble. Moments later there's a secondary explosion. Chaos, debris and flying shrapnel. An Iraqi soldier has taken the brunt of it. Neighbors both children and adults are hurt too.

The Americans set up an emergency first aid operation. They try and help the wounded. A young boy has shrapnel rings in his face and his body. It's an ordinary day for the people of Baghdad and Apache Company. We're supposed to be on the way home right now. We were supposed to be flight home six days. Six days. We're waiting out children. But because we have people up there in Congress with a brain of a two-year-old who don't know what they're doing. They don't experience it. I challenge the president or whoever has us here for 15 months to ride along alongside me. I'll do another 15 months if he comes out here and rides along with me every day, 15 months. I'll do 15 more months. No, they don't even have to pay me at you. More now, and to Margaret Warner, who recorded this conversation last week.

For analysis of what we just saw and what it tells us about the stress U.S. troops are under in Iraq. We turned to two former officers who counsel soldiers exposed to combat trauma. Former Navy Lieutenant Commander Heidi Kraft is a clinical psychologist in San Diego who sees exclusively combat trauma patients. In 2004, she directed a combat stress unit in Iraq and later wrote a book about the experience. And former Army Major Brian Butler, who served in the first Gulf War. He's now a licensed professional counselor with the Colorado Springs Health Group, working with soldiers back from Iraq. Welcome to you both. As clinicians in the field, beginning with you, Heidi Kraft, what's your reaction to what we just saw? What part of it brings most true to you? I think the thing, as I watched that clip that resonated the most with me, was overarching exhaustion. I watched these soldiers as they moved through those minutes out there, and we went with them on those missions.

And I felt like they just got more and more exhausted as the clip went on. This is something, unfortunately, that with operational tempo, many times we're up against. But of course, sleep deprivation and physical and emotional exhaustion all play into a person's ability to cope with stress. Brian Butler, what was your overall reaction? My reaction was the multiple levels and dynamics of trauma. I mean, anywhere from seeing a Bradley flipped upside down on its top with other Army soldiers dying inside. You have accidentally shooting the wrong person. You're trying to treat civilians who have nothing to do with the combat. They're just simply injured because of a bomb. So you have all these multiple dynamics of trauma going on at the same time or within a space a few days. And of course, combined with sleep deprivation and the other stressors that just come with being in a combat environment that really rang true. So Heidi Craft, we did see, our current theme was that they're in and out of these civilian houses. You have bombs going off, you have children, bloodied and crying.

You have a woman screaming when they just found an old woman looking for an IED planter. What's the overall impact on soldiers of experiences like that? I think that what these guys are seeing in this clip struck me as very, very similar to what my patients who happen to be Marines were telling me about their experiences in 2004. This, the mission of going door to door and working in these environments involves many times not having a clear understanding of who the enemy is and not being able to trust anybody. There's a real vulnerability of our troops at this time in this conflict, which continues to sort of resonate through everything they do. So, of course, they're going to be impacted by having civilians be involved in these types of missions, and yet their orders are clear. They can't trust anyone. So it's sort of a double standard that will always be with them, and certainly makes this whole process a lot more complicated.

Brian Butler, of course, the soldier doesn't know whom to trust, but they also see the civilians hurting physically, emotionally. What kind of impact do you see it in your patients having had? It has a huge impact on them in terms of the existential anxiety and the confusion they feel and trying to do the mission as well as they can. At the same time, there's no clear cut boundaries and there's no clear cut enemy in terms of trying to distinguish them the civilians from the insurgents. So it does cause a lot of confusion and it makes them incredibly hostile because you're in a hostile environment, and when you're in a chronic, hostile environment, you tend to begin to see things with a hostile intent, and so you become hostile. And the chronic nature of that hostile environment was something that one of the young soldiers talked about and Heidi Kreff just want to ask you about what he had to say. He said, well, we have grenades going off in IEDs, and then we're told to go back and rest for six hours and then come back out again.

And he said, we don't have the time to come down, you're always with that heightened sense of alertness, you don't have time to rest. Is that actually physically true and psychologically true that they don't get to come down? It is absolutely true, most definitely, the level of arousal in which a person is placed in a situation like that is very, very high, and it is really difficult, both physiologically, but especially emotionally, to actually have the recovery process from that level of arousal. Six hours, it just isn't going to even start to do it. And yet, as I mentioned, the operational tempo a lot of times doesn't allow them what they really need, which is the time to completely what we call reset, allow their physiology and their emotional cognitive processes to return to normal and heal during that short period of time in order to be able to go back. And why is that important to have that resetting time? Well, I think especially in this group that we watched in the clip,

they were there for a very extended deployment, which was another thing that they complained about and had a difficult time with, so that we're talking here about two different things, very acute and emergent sort of reaction to what's happening in the moment, which is really the fight or flight response, but also a chronic, ongoing and relentless stress that they're up against day after day after day, so the two things layer over each other. Brian Butler, what's your sense of what the body and mind need in the way of the intensity of the hostility and the protracted nature of it to recover from that, to be ready to go back? The concerns I have are the impact on the brain structures and the brain functioning. Long-term chronic exposure to trauma and potential trauma does have an impact on brain function, and there are recent studies that show that it also has an impact on brain structure. There's a portion of the brain called the prefrontal cortex, and it is responsible for a lot of executive functions,

things that you think about, it kind of is our logic center, if you will, to an extent. Research studies have shown that under prolonged chronic trauma and stress, the blood flow to the prefrontal cortex is diminished. There's another portion of the brain called the hippocampus, which other research studies have shown actually could possibly be shrinking in relation to the long-term chronic exposure to trauma, particularly in soldiers. So there's a concern with the impact on brain structure and function. The chronic long-term exposure is causing, and in the short-term, absolutely in World War II and in Vietnam, they frequently would pull whole units out of the front line and give them, oh, easily, a weak, sometimes even more, to kind of refit process what they've gone through, they've gone through, grieve, the loss of their friends and the comrades, and then kind of go back in after they've had a chance to calm down and relax. And those are the things that, if the operation was temple and the mission will allow, need to have happen.

And I've no doubt the military is aware of that, and are doing what they can to do that. Heidi, the other pretty horrible, quite horrible scene, of course, involved the taxi driver, mistaken, at least shot and killed. And then the woman crying and saying he was just coming to pick me up for an appointment. Now, again, what is the impact on soldiers of when something like this happens, when they're involved and responsible? How do they process that? There are many things that people process later in the trauma. A lot of times these things are not processed in country during the mission, quite simply because you need to keep your blinders on and keep your head in the game and are not allowed, don't allow yourself to go there to be able to do the healing work. But now, I'm sure Brian would agree that people that I see now who have returned from combat and who are struggling with this process. One of the big themes that will emerge again and again is guilt of various types, guilt and shame. Many times around the baseline moral and ethical conflicts of combat of any type.

This particular conflict, as I had alluded to before, has this element of not knowing who the enemy is and not being able to trust anyone. And that's what happened with the taxi driver, as well as the old woman. These guys had a very distinct order that they were following, which is when they tell a car to stop, if it doesn't stop, their orders are clear because they have to assume that's the enemy. But I would expect that it's possible some of these guys may suffer from what we call sequelae of that later. And really do, they struggle with this idea of being a human who values human life and being in a position like that, having to make that choice, and then having the guilt that they will live with later. It's oftentimes a part of the presentation of post-traumatic stress disorder. Thank you so much, Brian Butler and Heidi Kraft. Thanks for being with us. You welcome, thank you.

And both Heidi Kraft and Brian Butler will be taking questions about combat stress in an online forum to participate. Go to our website at pbs.org. And again, the major developments of this day, President Bush outlined ways to help homeowners avert loan defaults and home foreclosures. Federal Reserve Chairman Ben Bernanke said the Fed will act as needed, so the credit crunch does not hurt the economy. And late today, the Associated Press reported Senator Larry Craig of Idaho will announce tomorrow he's resigning. He was arrested in June and Minneapolis as police investigated sexual activity in an airport men's room, Craig pleaded guilty to disorderly conduct. And once again to our honor role 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 nine more.

Thank you. Washington, we can be seen later this evening on most PBS stations. We'll see you online. And again here Monday evening with a report from Margaret Warner on the political turmoil in Pakistan among other things.

Have a nice Labor Day holiday weekend. I'm Jim Lara. Thank you and good night. Major funding for the news hour with Jim Lara is provided by. What does the future hold? Will you have the choices to make your world better? To live the life you dream of? At Pacific Life, planning for a better tomorrow is what we're all about. That's why for over 135 years Pacific Life has offered millions of people a world of financial solutions to help them live well now and plan well for the future. Pacific Life, the power to help you succeed. And by Chevron. The new AT&T. The Atlantic. And with the ongoing support of these institutions and foundations. And this program was made possible by the Corporation for Public Broadcasting and by contributions to your PBS station from viewers like you.

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Good evening, I'm Jim Lara. On the news hour tonight the news of this Friday. Then perspective on efforts to calm the markets in the wake of the mortgage and credit crunch. The weekly analysis of Mark Shields and David Brooks. And they look at combat stress for the report from photojournalists embedded with the U.S. Army company in Baghdad and the views of two counselors who work with veterans. Major funding for the news hour with Jim Lara is provided by.

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President Bush offered ways today to help homeowners pay their mortgages. He outlined proposals to avert loan defaults and home foreclosures. The plan would permit homeowners with good credit to refinance into federally insured mortgages if they can't make their payments. The president also called for stricter enforcement of laws against predatory lenders. And he urged Congress to reform the tax code to let people avoid a penalty when they refinance. At the same time Mr. Bush ruled out helping lenders who made too many bad loans. He said a bailout would only encourage them to do it again. The chairman of the Federal Reserve made his own effort today to reassure the public. Ben Bernanke said the Fed will act as needed so the credit crunch does not hurt the economy. Wall Street rallied on the news. The Dow Jones Industrial Average gained 119 points to close at 13357. The Nasdaq rose 31 points to close at 2596.

The major indexes fell for the week, but for the month the Dow gained 1% the Nasdaq rose 2%. Well, I have more on the Bush and Bernanke statements and reaction right after this news summary. Another key member of the Bush administration is stepping down. President Bush announced today press Secretary Tony Snow will leave on September 14th. Snow said he's going because of financial concerns and not because of his battle with cancer. He said he will miss the job. I am sure I'm going to go through some serious withdrawals in two and a half weeks, but on the other hand.