PBS NewsHour; September 21, 2011 3:00pm-4:00pm PDT

GOOD EVENING, I'M GWEN IFILL.

>> Brown: AND I'M JEFFREY BROWN. ON THE "NEWSHOUR" TONIGHT: RAY SUAREZ, IN NEW YORK, REPORTS ON THE PRESIDENT'S ADDRESS TO THE GENERAL ASSEMBLY. AND WE ASSESS THE STATE OF MIDDLE EAST DIPLOMACY WITH ZBIGNIEW BRZEZINSKI AND RICHARD HAAS.

>> Ifill: THEN, JUDY WOODRUFF HAS THE STORY OF TWO AMERICAN HIKERS RELEASED FROM IRAN AFTER BEING JAILED AS SPIES FOR TWO YEARS.

>> Brown: FROM LIBYA, JAMES FOLEY OF "GLOBAL POST" UPDATES THE BLOODY BATTLE FOR MOAMMAR QADDAFI'S HOME TOWN OF SIRTE.

>> Ifill: IS AMERICA'S WEALTH GAP AS WIDE AS IT SEEMS? ONE ECONOMIST TELLS PAUL SOLMAN... MAYBE NOT.

>> A GOOD PART OF WEALTH IS EMBODIED IN THE RIGHT TO YOUR SOCIAL SECURITY FLOW OF INCOME AND ALSO TO THE GUARANTEED HEALTH INSURANCE THAT YOU GET. THAT'S WORTH HUNDREDS OF THOUSANDS OF DOLLARS TO A TYPICAL PERSON.

>> Brown: AND WE LAUNCH A NEW SERIES EXAMINING AMERICA'S HIGH SCHOOL DROPOUT CRISIS. TONIGHT: ACTOR DENZEL WASHINGTON TALKS ABOUT MAKING A DIFFERENCE IN THE LIVES OF AT-RISK YOUTH.

>> IT'S ONE THING TO SIT AROUND AND TALK ABOUT WHAT THE PROBLEMS ARE, YOU KNOW? BUT IT'S ANOTHER THING TO GET OFF YOUR BEHIND AND ACTUALLY DO SOMETHING ABOUT IT. THAT'S WHAT I'M ABOUT.

>> Ifill: THAT'S ALL AHEAD ON TONIGHT'S "NEWSHOUR." MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY:

>> I MEAN, WHERE WOULD WE BE WITHOUT SMALL BUSINESSES?

>> WE NEED SMALL BUSINESSES.

>> THEY'RE THE ONES THAT HELP DRIVE GROWTH.

>> LIKE ELECTRICIANS, MECHANICS, CARPENTERS.

>> THEY STRENGTHEN OUR COMMUNITIES.

>> EVERY YEAR, CHEVRON SPENDS BILLIONS WITH SMALL BUSINESSES. THAT GOES RIGHT TO THE HEART OF LOCAL COMMUNITIES, PROVIDING JOBS, KEEPING PEOPLE AT WORK. THEY DEPEND ON US.

>> THE ECONOMY DEPENDS ON THEM.

>> AND WE DEPEND ON THEM. THIS PROGRAM WAS MADE POSSIBLE BY THE CORPORATION FOR PUBLIC BROADCASTING. AND BY CONTRIBUTIONS TO YOUR PBS STATION FROM VIEWERS LIKE YOU. THANK YOU.

>> Brown: PRESIDENT OBAMA SOUGHT TODAY TO HEAD OFF THE PALESTINIANS' BID FOR RECOGNITION AS A STATE BY THE UNITED NATIONS. HE SPOKE TO THE U.N. GENERAL ASSEMBLY FOR THE THIRD TIME SINCE TAKING OFFICE. THE PRESIDENT HAD MADE CLEAR HE WOULD MAKE MIDDLE EAST PEACE THE FOCUS OF TODAY'S ADDRESS. HE SET THE STAGE BY RECOUNTING WHAT HE CALLED "A REMARKABLE YEAR," THAT SAW THE KILLING OF OSAMA BIN LADEN, AS WELL AS ARAB SPRING UPRISINGS THAT HAVE BROUGHT DOWN DECADES-OLD REGIMES DICTATORS IN LIBYA, EGYPT AND TUNISIA.

>> SOMETHING IS HAPPENING IN OUR WORLD. THE WAY THINGS HAVE BEEN IS NOT THE WAY THEY WILL BE. THE HUMILIATING GRIP OF CORRUPTION AND TYRANNY IS BEING PRIED OPEN. THE PROMISE WRITTEN DOWN ON PAPER-- ALL HUMAN BEINGS ARE BORN FREE AND EQUAL IN DIGNITY AND RIGHTS-- IS CLOSER AT HAND.

>> Brown: THE PRESIDENT THEN TURNED TO THE ISRAELI- PALESTINIAN CONFLICT, ACKNOWLEDGING THAT, FOR MANY IN THE AUDIENCE AT THE U.N., IT STANDS AS A KEY TEST OF THOSE PRINCIPLES. BUT THE PRESIDENT ACKNOWLEDGED, THE ISRAELI-PALESTINIAN CONFLICT MORE THAN ANY OTHER HAS PUT THOSE PRINCIPLES TO THE TEST.

>> ONE YEAR AGO, I STOOD AT THIS PODIUM AND CALLED FOR AN INDEPENDENT PALESTINE. I BELIEVED THEN AND I BELIEVE NOW THAT THE PALESTINIAN PEOPLE DESERVE A STATE OF THEIR OWN. BUT WHAT I ALSO SAID IS THAT GENUINE PEACE CAN ONLY BE REALIZED BETWEEN ISRAELIS AND PALESTINIANS THEMSELVES. ONE YEAR LATER, DESPITE EXTENSIVE EFFORTS BY AMERICA AND OTHERS, THE PARTIES HAVE NOT BRIDGED THEIR DIFFERENCES.

>> Brown: FUELED BY THAT FAILURE, PALESTINIAN AUTHORITY PRESIDENT MAHMOUD ABBAS PLANS TO ASK THE U.N. SECURITY COUNCIL FOR FORMAL RECOGNITION AS A STATE. BUT PRESIDENT OBAMA INSISTED THAT IS THE WRONG PATH.

>> AND I AM CONVINCED THAT THERE IS NO SHORT CUT TO THE END OF A CONFLICT THAT HAS ENDURED FOR DECADES. PEACE IS HARD WORK PEACE WILL NOT COME THROUGH STATEMENTS AND RESOLUTIONS AT THE U.N.. IF IT WERE THAT EASY, IT WOULD HAVE BEEN ACCOMPLISHED BY NOW. ULTIMATELY, IT IS ISRAELIS AND PALESTINIANS WHO MUST LIVE SIDE BY SIDE. ULTIMATELY, IT IS ISRAELIS AND PALESTINIANS, NOT US, WHO MUST REACH AGREEMENT ON THE ISSUES THAT DIVIDE THEM: ON BORDERS AND SECURITY; ON REFUGEES AND JERUSALEM.

>> Brown: THE PRESIDENT DID NOT MENTION THE U.S. THREAT TO VETO PALESTINIAN STATEHOOD IN THE SECURITY COUNCIL, IF IT COMES TO THAT. INSTEAD, HE COUNSELED A DIFFERENT ROLE FOR THE U.N., IN THE MIDDLE EAST.

>> WE WILL ONLY SUCCEED IN THAT EFFORT IF WE CAN ENCOURAGE THE PARTIES TO SIT DOWN TOGETHER, TO LISTEN TO EACH OTHER, AND TO UNDERSTAND EACH OTHERS HOPES AND FEARS. THAT IS THE PROJECT TO WHICH AMERICA IS COMMITTED. THERE ARE NO SHORTCUTS. AND THAT IS WHAT THE UNITED NATIONS SHOULD BE FOCUSED ON IN THE WEEKS AND MONTHS TO COME.

>> Brown: LATER, THE PRESIDENT MET WITH ISRAELI PRIME MINISTER BENJAMIN NETANYAHU, AND REAFFIRMED THE U.S. COMMITMENT TO ISRAEL'S SECURITY. IN TURN, THE PRIME MINISTER SAID THE AMERICAN PLEDGE TO BLOCK RECOGNITION OF A PALESTINIAN STATE WAS A BADGE OF HONOR. PRESIDENT OBAMA MET WITH PALESTINIAN AUTHORITY PRESIDENT ABBAS THIS EVENING. RAY SUAREZ IS IN NEW YORK TO COVER THE U.N. MEETINGS FOR US. I TALKED WITH HIM A SHORT TIME AGO. RAY, START WITH THE SPEECH ITSELF. IN YOUR OPINION THE ROOM. WHAT WAS THE ATMOSPHERE? WHAT WAS THE RECEPTION?

>> WHEN AN AMERICAN PRESIDENT SPEAKS TO THE GENERAL ASSEMBLY OF THE UNITED NATIONS, JEFF, EVERY SEAT IN THE HOUSE IS FULL. THIS MORNING WAS NO EXCEPTION. BUT COMPARED TO SPEECHES EARLIER IN BARACK OBAMA'S PRESIDENCY, THE RECEPTION FOR THIS ONE WAS FAIRLY SUBDUED. POLITE APPLAUSE AT THE BEGINNING AND THE END. THE CROWD KNEW THAT BARACK OBAMA WAS GOING TO TRY TO DO TWO VERY DIFFICULT THINGS AT ONCE: BOTH INSIST THAT THE U.N. IS HIGHLY EFFECTIVE AND DOING GREAT THINGS IN THE WORLD AND THAT IT WASN'T THE PLACE TO WORK OUT THE PALESTINIAN/ISRAELI CRISIS.

>> Brown: SO A LOT OF BEHIND-THE-SCENES DIPLOMACY GOING ON TODAY. WHAT ARE YOU HEARING ABOUT ALTERNATIVES OR COMP PLEASES? WHAT'S GOING ON?

>> WELL, JUST ABOUT AN HOUR AFTER BARACK OBAMA GOT OFF THE STAGE, THE PRESIDENT OF FRANCE, NICOLAS SARKOZY, GAVE HIS SPEECH AND SAID THAT THERE IS A MIDDLE COURSE BETWEEN AN ALMOST-CERTAIN AMERICAN VETO FOR PALESTINIAN STATEHOOD AND DOING NOTHING. HE WANTED TO GIVE THE PALESTINIANS NON-MEMBER STATUS, WHICH IS ONE STEP UP FROM THE CURRENT OBSERVER STATUS THAT THEY ENJOYED. HE SAID ALONG WITH DOING THAT-- WHICH ONLY REQUIRES A SIMPLE VOTE IN THE GENERAL ASSEMBLY RATHER THAN A SECURITY COUNCIL DECISION-- YOU WOULD SET A ONE-YEAR TIME LIMIT FOR WORKING OUT THE FINAL PARAMETERS OF AN AGREEMENT BETWEEN THE ISRAELIS AND THE PALESTINIANS.

>> Brown: BUT THEN THERE WAS A BRIEFING, I GATHER THIS AFTERNOON, FROM PALESTINIAN OFFICIALS. SO WHAT WAS THEIR REACTION TO THINGS LIKE THAT THAT ARE BEING FLOATED AND ARE THEY LISTENING TO THE PRESSURE THAT'S BEING XIRTD?

>> IT WAS A FAIRLY HIGH-RANKING MEMBER OF THE PALESTINIAN DELEGATION WHO'S THE DEPUTY PRIME MINISTER AND MINISTER OF INFORMATION, HE SAID THAT HE WAS WILLING TO LISTEN TO THE SARKOZY PROPOSAL BUT THAT THE PALESTINIANS WERE GOING TO EXHAUST THEIR EFFORTS TO WIN FULL MEMBERSHIP IN THE UNITED NATIONS BEFORE THEY RETURN TO SOMETHING SHORT OF FULL MEMBERSHIP. SO THEY WEREN'T CLOSING THE DOOR TO THE FRENCH PRESIDENT'S IDEA BUT THEY SAID THEY WANTED TO APPROACH THE SECURITY COUNCIL FIRST AND BEGIN THE PROCESS OF BECOMING A FULL MEMBER OF THE U.N.

>> Brown: NOW, SPEAKING OF THE SECURITY COUNCIL, I GATHER YOU'VE HAD A CHANCE TO SOME MEMBERS OF THE CURRENT COUNCIL. WHAT INDICATIONS ARE YOU GETTING? WHAT ARE THEY SAYING LEADING INTO THIS?

>> WELL, THE SECURITY COUNCIL HAS 15 MEMBERS, FIVE PERMANENT MEMBERS, 10 ROTATING SEATS. NO LESS THAN NINE OF THE CURRENT MEMBERS OF THE SECURITY COUNCIL HAVE ALREADY ENDORSED PALESTINIAN STATEHOOD. ALREADY RECOGNIZED A PALESTINIAN STATE EXISTING WITHIN THE 1967 BORDERS. BUT WHETHER THOSE SAME COUNTRIES WOULD VOTE IN THE SECURITY COUNCIL FOR A PALESTINIAN PROPOSAL FOR FULL MEMBERSHIP IS AN OPEN QUESTION. WE SPOKE TO MEMBERS OF TWO DELEGATIONS-- BRAZIL AND INDIA-- BOTH COUNTRIES THAT HAVE ENDORSED PALESTINIAN STATEHOOD AND THEY SAID THEY HAVE TO SEE THE TEXT OF THE PROPOSAL BEFORE THEY'RE WILLING TO MAKE OFFICIAL THEIR REACTION TO IT. THEY SAY THEY WANT A PALESTINIAN STATE, THEY WANT TO ASSURE ISRAELI SECURITY WITH DEFENSIBLE BORDERS BUT THEY WANT TO SEE THE TEXT FIRST AND THEY AREN'T WILLING TO COMMIT YET.

>> Brown: SO THE PRESIDENT HAD A FULL DAY OF TALKS AND IT SOUNDS LIKE THEY'RE CONTINUING.

>> WELL, THE PRESIDENT HAD A SERIES OF BILATERAL MEETINGS WITH PRIME MINISTER OF JAPAN, WITH PRIME MINISTER NETANYAHU, AS YOU MENTIONED IN THE REPORT. AND WITH TWO MEMBERS OF THE PERMANENT FIVE MEMBERS OF THE SECURITY COUNCIL-- DAVID CAMERON THE PRIME MINISTER OF THE U.K., AND FRENCH PRESIDENT SARKOZY. AND HE'LL FINISH THE DAY WITH WITH MAHMOUD ABBAS HIMSELF. AND EARLIER, NAB BEAL SCHAAF SAID "WE'LL LAY OUT OUR POSITION TO THE PRESIDENT, WE AREN'T BACKING DOWN, WE AREN'T CHANGING THE POSITION THAT WE CAME TO NEW YORK WITH AND WE WANT TO MAKE SURE THAT PRESIDENT OBAMA FULLY UNDERSTANDS WHERE WE STAND. WE KNOW THAT HE'S ENTERING AN ELECTION CYCLE WHERE HE WON'T BE ABLE TO SPEND A LOT OF POLITICAL CAPITAL OR A LOT OF TIME AND ATTENTION ON US. SO WE, THE PALESTINIANS, ARE GOING TO GO TO THE WORLD COMMUNITY TO ASK FOR THEIR BACKING IN A PEACE PROCESS RATHER THAN WAIT FOR THE AMERICANS TO COME AROUND AFTER NOVEMBER OF 2012."

>> Brown: ALL RIGHT, RAY SUAREZ AT THE UNITED NATIONS. THANKS A LOT.

>> GOOD TO TALK TO YOU, JEFF.

>> Brown: AND TO A BIGGER PICTURE LOOK AT ALL THIS NOW WITH TWO MEN WITH EXTENSIVE HIGH-LEVEL DIPLOMACY EXPERIENCE. ZBIGNIEW BRZEZINSKI WAS NATIONAL SECURITY ADVISOR DURING THE CARTER ADMINISTRATION AND IS NOW A COUNSELOR AT THE CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES. RICHARD HAASS SERVED AT THE STATE DEPARTMENT AND NATIONAL SECURITY COUNCIL FOR PRESIDENTS GEORGE H.W. AND GEORGE W. BUSH. HE'S NOW PRESIDENT OF THE COUNCIL ON FOREIGN RELATIONS. RICHARD HAASS, I'LL START WITH YOU. FROM THE U.S. PERSPECTIVE. IS THIS DIPLOMATIC TUSSLE AT THE U.N. A PROBLEM OR AN OPPORTUNITY?

>> WELL, IT'S A PROBLEM. IT ONLY BECOMES AN OPPORTUNITY IF SOMEHOW THIS THREAT OF ACTION IN NEW YORK LEADS TO THE RESUMPTION OF DIRECT TALKS AND THOSE TALKS GO SOMEWHERE. YOU HAVE TO BE A WIDE-EYED OPTIMIST TO BELIEVE THAT. SO IT'S REALLY A PROBLEM BECAUSE THE UNITED STATES IN THE MIDST OF THE SO-CALLED ARAB SPRING DOES NOT WANT TO HAVE TO CAST A VETO IF THINGS COME TO THAT, GIVEN THE ANTI-AMERICANISM IT WOULD LIKELY GENERATE IN THE REGION. AT THE SAME TIME THE UNITED STATES WOULD CAST THE VETO AND IS COMPELLED TO CAST THE VETO GIVEN ITS COMMITMENTS TO ISRAEL AND ITS LONG-HELD VIEW AND THE HISTORICAL RECORD THAT PROGRESS ONLY COMES THROUGH DIRECT TALKS AND YOU CAN'T DO A RUN AROUND THROUGH THE UNITED NATIONS.

>> Suarez: ENTHUSE, HOW DID YOU SEE IT?

>> I THOUGHT THE PRESIDENT'S SPEECH IN A WAY, UNINTENTIONALLY SIGNALED THE FACT THAT THE U.S. ROLE IN THE PEACE PROCESS IS FALLEN VICTIM TO DOMESTIC POLITICS BECAUSE HIS POSTURE WAS ONE OF KIND OF GENTLE ENCOURAGEMENT FOR THE PEACE PROCESS BUT HE DIDN'T CONVEY MUCH SENSE OF URGENCY. THE CONTRAST BETWEEN HIS SPEECH AND SARKOZY'S SPEECH WAS REALLY DRAMATIC. THE PRESIDENT'S SPEECH FIRST OF ALL DEALT WITH THE PALESTINIAN ISSUE IN A MUCH LARGER CONTEXT SO HE DEALT WITH IT VERY BRIEFLY SARKOZY'S SPEECH WAS FOCUSED AND IT CONVEYED A SENSE OF GENUINE CONCERN THAT THERE WAS NO PROGRESS THAT WOULD BE SOON AND THAT THINGS WOULD DETERIORATE AND THE PARTIES TO THE CONFLICT-- ISRAELI AND PALESTINIANS-- NEED PEACE, DESERVE PEACE, BUT THEY HAVE TO BE ACTUALLY HELPED FROM THE OUTSIDE TO GET THAT PEACE.

>> Suarez: DO YOU THINK THERE IS AN OPPORTUNITY HERE OUT OF WHAT'S THIS EFFORT TO COME TO THE U.N. THIS WEEK?

>> I THINK IF WE ENGAGE IN SOME SERIOUS NEGOTIATIONS I THINK PERHAPS THERE IS AN OPPORTUNITY BUT THE UNITED STATES WILL PROBABLY NOT BE TAKING THE LEAD. I SUSPECT THE EUROPEANS WILL BE TAKING THE LEAD TO A GREATER EXTENT. I WOULD BE MUCH HAPPIER IF INSTEAD OF THREATENING TO VETO THE PALESTINIAN RESOLUTION WE WERE PREPARED TO OFFER AN ALTERNATIVE RESOLUTION, OUR OWN AND WITH OUR FRIENDS. AND THAT RESOLUTION COULD MAKE SEVERAL VERY IMPORTANT BUT RELEVANT POINTS. ONE, IT COULD ENDORSE U.N. SUPPORT WHICH GOES BACK TO THE EARLY... LATE PART OF THE 1940s, SUPPORT FOR AN INDEPENDENT JEWISH STATE, DEMOCRATIC JEWISH STATE. SECOND IT COULD ALSO ENDORSE A DEMOCRATIC PALESTINIAN STATE. THIRD, IT COULD OUTLINE THE FRAMEWORK FOR THE PEACE NEGOTIATIONS MUCH IN KEEPING WITH WHAT SARKOZY WAS SAYING AND COMMIT THE PARTIES-- THAT IS TO SAY THE EUROPEANS, OURSELVES, TO AN ACTIVE ROLE IN THE PROCESS. I THINK THAT WOULD BE MUCH MORE PRODUCTIVE.

>> Suarez: RICHARD HAASS, WHAT DID YOU HEAR IN THE PRESIDENT'S SPEECH AND DID YOU SEE SOME DIPLOMATIC WAY FORWARD HERE?

>> WELL, THE PRESIDENT SPOKE IN CLEAR GENERALITIES. WHAT WAS NOTICEABLE WAS THE LACK OF SPECIFICS AND I THINK IT REFLECTS AN ACKNOWLEDGEMENT THAT THE SITUATION IS NOT TERRIBLY RIGHT. THE ISRAELIS ARE UNDERSTANDABLY CONCERNED ABOUT WHAT'S GOING ON. THEIR BORDERS, THEY LOOK AT EGYPT, SYRIA, JORDAN AND SO FORTH SO THEY ARE VERY WARY ABOUT MOVING FORWARD WITH THE PALESTINIANS GIVEN ALL THAT UNCERTAINTY. MEANWHILE, THE PALESTINIANS THEY SEE THE GROWING PUBLIC PRESSURES IN THE ARAB WORLD. I THINK IT MAKES THEM LESS LIKELY THAN EVER BEFORE TO COMPROMISE. SO AGAINST THAT BACKDROP IT'S VERY HARD TO SEE THE RAW MATERIAL OF PROGRESS, AGAIN, THE ONLY WAY I CAN SEE SOMETHING COMING OUT OF THIS AND I DON'T THINK IT'S TERRIBLY LIKELY IS THAT ALL OF THIS PRESSURE IN NEW YORK LEADS TO SOME SORT OF A... THE RESUMPTION OF DIRECT TALKS. MORE LIKELY, THOUGH, IS THE SITUATION IN NEW YORK COMES TO A HEAD. EITHER UNITED STATES USES ITS VINO THE SECURITY COUNCIL OR THE PALESTINIANS CAN'T EVEN MUSTER THE NINE VOTES THEY NEED. THE SITUATION THEN GOES TO THE GENERAL ASSEMBLY, THERE YOU DO HAVE THE OVERWHELMING PASSAGE OF SOME WATERED-DOWN INCREASE IN PALESTINIAN LEGAL STANDINGS AND THEN YOU FACE THE PROBLEMS ON ALL SIDES WHERE THE ISRAELIS COULD RETALIATE, MAKE LIFE MUCH MORE DIFFICULT FOR THE PALESTINIANS, CONGRESS MAY CUT OFF AID. I'M NOT RECOMMENDING IT, I THINK IT WOULD BE A MISTAKE, BUT YOU COULD SEE THAT. AND EVEN THE PALESTINIAN PEOPLE, A FEW DAYS AFTER IT WOULD SAY, HEY, WHAT'S CHANGED? HOW HAS OUR REALITY IMPROVED? SO RATHER THAN HELPING MAHMOUD ABBAS, THE HEAD OF THE PALESTINIAN NATIONAL AUTHORITY, THIS COULD ACTUALLY BOOMERANG ON HIM. I DON'T THINK THE PALESTINIANS HAVE THOUGHT THIS THROUGH WHAT IT IS ESSENTIALLY THEY'VE STARTED HERE.

>> Suarez: WHAT ABOUT, ZBIGNIEW BRZEZINSKI, WE'VE ALL RAISED THIS LARGER CONTEXT. THE PRESIDENT CALLED IT THE REMARKABLE YEAR OF THE ARAB SPRING, BUT THAT'S CLEARLY BROUGHT SOME NEW COMPLICATIONS TO ALL THIS. INCLUDING THE ISRAELI PALESTINIAN CONFLICT AND THE ENTIRE U.S. POSTURE VIS-A-VIS THE MIDDLE EAST.

>> YOU'RE ABSOLUTELY RIGHT. I THINK WHAT'S HAPPENING IN THE MIDDLE EAST IS CLEARLY A SEA CHANGE IN THE DIRECTION OF CONTINUED DECLINE, ACCELERATING DECLINE AND EVENTUALLY TERMINATION OF THE CENTRAL ROLE THAT THE UNITED STATES HAS BEEN PLAYING IN THAT REGION SINCE THE END OF WORLD WAR II. WE WERE WELCOMED INTO THE MIDDLE EAST BY THE ARABS BECAUSE THEY SAW IN US A PARTY THAT WAS NOT PART OF THIS IMPERIAL COLONIAL TRADITION OF THE BRITISH AND THE FRENCH THAT ARE DOMINATING THE REGION BUT OVER THE LAST 50 YEARS OR SO THEY HAVE BEEN INCREASING THIS BY OUR UNWILLINGNESS TO ADDRESS SERIOUSLY THE PROBLEMS PARTICULARLY ARISING OUT OF THE ISRAELI PALESTINIAN CONFLICT. I THINK THIS WEEK MAY BE DECISIVE. IF WE DON'T RECOUP, I THINK WE'LL REALLY BE WITNESSING IN THE NEAR FUTURE THE END OF THE AMERICAN ROLE IN THE MIDDLE EAST AND THAT WILL BE DISASTROUS FOR THE UNITED STATES IN THE FIRST PLACE. THERE THE LONGER RUN FOR ISRAEL. SO IN FACT A LOT OF ISSUES ARE AT STAKE HERE.

>> Suarez: DO YOU THINK THE STAKES ARE THEY THAT HIGH, RICHARD HAASS, IN TERMS OF THIS LARGER CONTEXT?

>> NO, I THINK THERE IS A GENERAL DECLINE IN U.S. INFLUENCE. NOT SO MUCH FOR THE REASONS DR. BRZEZINSKI MENTIONED BUT FOR OTHER CHANGES, THE RISE OF IRAN'S POWER, THE RISE OF ISLAMIC APPEAL. THE REDUCTION IN THE STRENGTH OF CERTAIN GOVERNMENTS SUCH AS WE'VE SEEN IN EGYPT THAT HAD TILTED TOWARDS THE UNITED STATES. SO I THINK THOSE ARE ALL THE... THOSE ARE ALL PART OF THE REALITIES. BUT PEACEMAKING HISTORICALLY HAS THRIVED LESS BECAUSE OF WHAT OUTSIDE POWER,st, INCLUDING THE UNITED STATES, DID, THAN IT DID BECAUSE OF WHAT THE LOCALS THEMSELVES DID. WHETHER IT WAS ANWAR SADAT OR ITZHAK RABIN OR MENACHEM BEGIN. HISTORY SUGGESTS PEACE WORKS WHEN YOU HAVE LEADERS WILLING TO TAKE RISKS FOR PEACE, TO MAKE COMPROMISES, THEN THEY CAN SELL THOSE COMPROMISES TO THEIR OWN PEOPLE. THE PROBLEM IS YOU HAVE A PALESTINIAN LEADERSHIP THAT IS VERY WEAK AND NOT IN THE POSITION TO COMPROMISE AND YOU'VE GOT AN ISRAELI GOVERNMENT THAT'S VERY CONSERVATIVE, IT'S NOT TERRIBLY INCLINED TO COMPROMISE AND, AGAIN, LOOKS OUT AND SEE THIS IS CHANGING STRATEGIC PICTURE WHICH MAKES THEM VERY UNWILLING TO MAKE LONG-TERM DECISIONS GIVEN ALL THE UNCERTAINTY. SO IT'S HARD FOR KNOW IMAGINE A CONTEXT IN WHICH THE PROSPECTS FOR PEACE ARE POORER THAN THEY ARE NOW. SO IT'S NOT REALLY A FUNCTION OR QUESTION OF WHAT THE UNITED STATES IS WILLING TO DO. I SIMPLY THINK IN THIS CONTEXT NO OUTSIDE FORCE, INCLUDING THE UNITED STATES, CAN ACCOMPLISH A LOT IN THE ABSENCE OF MORE RAW MATERIAL TO WORK.

>> Suarez: DR. BRZEZINSKI?

>> WELL, THAT'S A DIRE PROSPECT, ISN'T IT? FOR INSTANCE, IT DOESN'T MEAN THE GRADUAL EXPULSION OF THE UNITED STATES IN THE REGION AND THAT WILL HAVE VERY MAJOR GEOPOLITICAL CONSEQUENCES FOR OUR REGION IN THE WORLD AND THE STABILITY OF THE REGION. BUT IT'S A VERY PROSPECT FOR THE PALESTINIANS AND ISRAELIS. IN THE FIRST INSTANCE, THE PALESTINIANS AT SOME POINT WILL ERUPT AND THEY'LL GET CRUSHED AND WHAT HAS BEEN ACCOMPLISHED OVER THE LAST SEVERAL YEARS WILL BE RESERVED. AND IN THE LONG RUN THE ISRAELIS WILL BECOME AN ISLAND IN A SEA OF HOSTILITY AND THE MARGIN OF ADVANTAGE THEY'VE HAD MILITARILY IS GOING TO DECLINE. LOOK AT THE FOLLOWING SIMPLE FACT: 30 YEARS AGO WE HAD GOOD RELATIONS WITH IRAN, WITH SAUDI ARABIA, WITH EGYPT AND TURKEY AND THROUGH OUR FRIENDS. THINK OF HOW MUCH THAT HAS ALREADY CHANGED. THE IMPLICATIONS OF THAT ARE FAR REACHING.

>> Suarez: ALL RIGHT, WE WILL HAVE TO LEAVE IT THERE. ZBIGNIEW BRZEZINSKI AND RICHARD HAASS, THANK YOU VERY MUCH.

>> THANK YOU:

>> Ifill: STILL TO COME ON THE "NEWSHOUR": THE AMERICAN HIKERS FREED IN IRAN; THE FIGHT FOR QADDAFI'S HOMETOWN; A DIFFERENT TAKE ON THE EXTENT OF ECONOMIC INEQUALITY IN THE U.S. AND DENZEL WASHINGTON ON AT-RISK YOUTH. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S HARI SREENIVASAN.

>> Sreenivasan: THE FEDERAL RESERVE ANNOUNCED NEW STIMULUS STEPS TODAY. THE CENTRAL BANK SAID THE ECONOMY NOW FACES SIGNIFICANT DOWNSIDE RISKS. SO, IT WILL SELL $400 BILLION IN SHORT-TERM TREASURY SECURITIES AND BUY LONGER-TERM BONDS INSTEAD. THE GOAL IS TO PUSH DOWN INTEREST RATES FOR HOME AND BUSINESS LOANS. WALL STREET WENT INTO A TAIL SPIN AFTER THE FED ANNOUNCEMENT. THE DOW JONES INDUSTRIAL AVERAGE LOST MORE THAN 283 POINTS TO CLOSE BELOW 11,125. THE NASDAQ FELL 52 POINTS TO CLOSE AT 2,538. AMID THE GENERAL SELL-OFF, CHEVRON STOCK LOST ANOTHER 3.6%. ON MONDAY, A FEDERAL APPEALS COURT RE-INSTATED AN $18 BILLION JUDGMENT AGAINST THE OIL COMPANY FOR POLLUTING THE AMAZON IN ECUADOR. FOR THE RECORD, CHEVRON IS AN UNDERWRITER OF THE "NEWSHOUR." THE GREEK GOVERNMENT ANNOUNCED A NEW ROUND OF AUSTERITY MEASURES TODAY IN ITS LATEST BID TO STAVE OFF DEFAULTING ON ITS DEBT. THEY INCLUDE SUSPENDING MORE CIVIL SERVANTS THAN INITIALLY PLANNED, AND CUTTING MONTHLY PENSIONS. WORKERS IN ATHENS ANSWERED BY DEMONSTRATING OUTSIDE PARLIAMENT FOR A SECOND DAY. THEY CARRIED SIGNS AND BANNERS PROTESTING THE COST-CUTTING PLANS. THE STATE OF GEORGIA MOVED AHEAD THIS EVENING WITH AN EXECUTION THAT'S DRAWN INTERNATIONAL PROTEST. TROY DAVIS WAS CONVICTED OF KILLING AN OFF-DUTY POLICEMAN IN 1989, BUT SEVERAL WITNESSES HAVE RECANTED. POPE BENEDICT, FORMER PRESIDENT CARTER AND OTHERS HAVE WEIGHED IN ON DAVIS' BEHALF. ALSO THIS EVENING, TEXAS WAS EXECUTING A WHITE SUPREMACIST IN A NOTORIOUS HATE CRIME FROM 1998. THE VICTIM-- JAMES BYRD JUNIOR-- WAS DRAGGED TO DEATH BEHIND A TRUCK. IN MEXICO, POLICE BEGAN SEARCHING FOR CLUES AFTER A NEW ATROCITY IN THE COUNTRY'S DRUG WAR. SUSPECTED DRUG GANG MEMBERS DUMPED 35 BODIES UNDER THIS BUSY OVERPASS DURING TUESDAY'S RUSH HOUR. TODAY, BLOOD STAINS COVERED THE PAVEMENT AT THE SITE. AUTHORITIES SAID MOST OF THE VICTIMS HAD LINKS TO ORGANIZED CRIME. TYPHOON ROKE SLAMMED INTO JAPAN TODAY LEAVING AT LEAST 13 PEOPLE DEAD OR MISSING. THE STORM MADE LANDFALL WEST OF TOKYO. FROM THERE, IT PASSED DANGEROUSLY NEAR THE REGION DEVASTATED BY A TSUNAMI LAST MARCH. THE POWERFUL SYSTEM DUMPED HEAVY RAIN THAT SENT RIVERS POURING OUT OF THEIR BANKS. THOUSANDS OF COMMUTERS ACROSS TOKYO WERE STRANDED AT THE EVENING RUSH HOUR AFTER TRAIN SERVICE HALTED. THE U.S. AND TAIWAN HAVE FORMALLY ANNOUNCED A MAJOR ARMS DEAL-- TO UPGRADE TAIWAN'S FLEET OF F-16 FIGHTER JETS. THE DEAL IS WORTH NEARLY $6 BILLION AND INCLUDES ADVANCED RADAR TO DETECT STEALTH AIRCRAFT. THE U.S. STOPPED SHORT OF SELLING 66 NEW F-16'S TO TAIWAN. EVEN SO, CHINA DENOUNCED THE ARMS AGREEMENT TODAY. THE CHINESE GOVERNMENT REGARDS TAIWAN AS A RENEGADE PROVINCE. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO GWEN.

>> Ifill: TWO AMERICANS CONVICTED AS SPIES IN IRAN FINALLY WON THEIR FREEDOM TODAY. THEY'D BEEN HELD THERE SINCE 2009. PRESIDENT OBAMA CALLED THE RELEASE WONDERFUL NEWS. JUDY WOODRUFF HAS THE STORY.

>> Woodruff: THE PLANE CARRYING AMERICANS SHANE BAUER AND JOSHUA FATTAL LANDED IN MUSCAT, OMAN SHORTLY BEFORE MIDNIGHT AND THEY WERE REUNITED WITH THEIR FAMILIES. HOURS EARLIER, THEY'D LEFT IN A CONVOY OF CARS FROM THE EVIN PRISON COMPOUND IN TEHRAN. THE IRANIAN NEWS AGENCY SAID OMAN PAID THEIR BAIL-- $1 MILLION. IRANIAN PRESIDENT MAHMOUD AHMADINEJAD INITIALLY SUGGESTED THEY'D BE FREED LAST WEEK, JUST BEFORE HIS TRIP TO NEW YORK FOR THE U.N. GENERAL ASSEMBLY OPENING.

>> WHEN WE SAID WE WILL RELEASE THEM, WE WILL RELEASE THEM, AS A HUMANITARIAN GESTURE.

>> Woodruff: IRANIAN JUDGES HELD UP THE RELEASE UNTIL TODAY. THE TWO 29-YEAR-OLD AMERICANS HAD BEEN JAILED FOR MORE THAN TWO YEARS FOR ALLEGEDLY SPYING ON IRAN. THEY WERE SEIZED ALONG THE IRAN- IRAQ BORDER IN JULY OF 2009. FELLOW AMERICAN SARAH SHOURD WAS ALSO WITH THEM. SHE WAS FREED A YEAR AGO ON BAIL. ALL THREE MAINTAINED THEY WERE JUST HIKING IN NORTHERN IRAQ'S KURDISH REGION WHEN THEY ACCIDENTALLY STRAYED OVER THE UNMARKED BORDER INTO IRAN.

>> AN IRANIAN PUBLIC PROSECUTOR SAYS THREE AMERICAN DETAINEES HAVE BEEN CHARGED WITH ESPIONAGE.

>> Woodruff: IN THE END, IRANIAN OFFICIALS PUT THEM ON TRIAL, CONVICTED THEM OF SPYING AND SENTENCED EACH ONE TO EIGHT YEARS IN PRISON. THE CASE SET OFF A FLURRY OF DIPLOMATIC ACTIVITY AIMED AT GETTING THEM RELEASED.

>> WE BELIEVE STRONGLY THAT THERE IS NO EVIDENCE TO SUPPORT ANY CHARGE WHATSOEVER.

>> Woodruff: AND THE MOTHERS OF THE THREE MADE A TRIP TO IRAN IN MAY OF LAST YEAR TO MEET WITH THEIR CHILDREN.

>> IT'S TOTALLY SEPARATE OF THE POLITICS. WE'RE GOING THERE AS MOTHERS TO BRING OUR CHILDREN HOME. WE'RE VERY DETERMINED, IT'S DEEPLY EMBEDDED IN ME THAT THAT'S OUR GOAL.

>> Woodruff: FOR A TIME, THE OUTCOME SEEMED IN DOUBT. FOR MORE THAN FIVE MONTHS, THERE WAS NO NEWS FROM BAUER AND FATTAL, ONCE SHOURD WAS RELEASED LAST SEPTEMBER.

>> WE DON'T KNOW IF THEY'RE WE'VE HAD NO WORD FROM THEM SINCE NOVEMBER AND I'M WORRIED THAT THEY COULD BE HUNGER STRIKING AGAIN. WHEN I WAS IN PRISON, SEVERAL TIMES, WE WERE FORCED TO RESORT TO THOSE MEASURES BECAUSE OUR CONDITIONS WERE SO BAD AND WE HAD ABSOLUTELY NO CONTACT WITH OUR FAMILIES.

>> Woodruff: IN A STATEMENT LATE TODAY, THE BAUER AND FATTAL FAMILIES SAID, "TODAY CAN ONLY BE DESCRIBED AS THE BEST DAY OF OUR LIVES." JOINING US NOW TO TALK ABOUT HOW THE HIKERS GAINED THEIR FREEDOM IS KAREEM SADJADPOUR OF THE CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE. HE HAS BEEN WORKING WITH THE FAMILIES OF THE HIKERS. KAREEM, GOOD TO SEE YOU AGAIN. WHY DID IRAN LET THEM GO AFTER THEY WERE SENTENCED TO EIGHT YEARS EACH?

>> JUDY, WHEN THESE YOUNG MEN WERE DETAINED 26 MONTHS AGO THEY BEGAN AS HOSTAGES TO THIS U.S./IRAN COLD WAR AND OVER TIME THEY KIND OF EVOLVED INTO HOSTAGES TO THE INTERNAL IRANIAN POLITICAL SITUATION, TO TEHRAN'S INTERNAL POLITICAL BATTLES. THE PROBLEM THEY HAD WAS THAT THEIR MAIN CHAMPION WAS PRESIDENT AHMADINEJAD WHO WANTED THEM RELEASED IN ORDER TO WIN SOME POSITIVE PUBLICITY FOR HIMSELF. BUT BECAUSE OF THE FACT THAT AHMADINEJAD IS SO EMBATTLED DOMESTICALLY, HAS MADE HIMSELF SO MANY ADVERSARIES, HIS ENEMIES WANTED TO DEPRIVE HIM OF THAT PUBLICITY.

>> Woodruff: SO DOES THEIR RELEASE MEAN HE WON THIS BATTLE OR THE FACT THAT IT WAS DELAYED SO LONG MEAN THAT HE LOOKS WEAK? WHICH IS IT?

>> I THINK IT CAN BE A COMBINATION OF THE TWO. WE HAVE TO KIND OF STAY THAT THE POWER IN IRAN, THE SUPREME LEADER HOMINY. HAD IT NOT BEEN KHAMENEI THE YOUNG MEN WOULDN'T HAVE BEEN DETAINED FOR 26 MONTHS. HAD IT NOT BEEN FOR KHAMENEI THEY WOULD NOT HAVE BEEN RELEASED TODAY. AND KHAMENEI HAS THIS LEADERSHIP STYLE IN WHICH HE LIKES TO WIELD POWER WITHOUT ACCOUNTABILITY AND IN ORDER TO WIELD POWER WITHOUT ACCOUNTABILITY HE NEEDS A PRESIDENT LIKE AHMADINEJAD WHO HAS ACCOUNTABILITY WITHOUT POWER I THINK IT'S A DELICATE BALANCE IN WHICH KHAMENEI HAS TO PLAY. HE WANTED TO PUT AHMADINEJAD IN HIS PLACE AND WEAKEN HIM DOMESTICALLY, BUT I DON'T THINK HE WANTED TO RENDER HIM TOTALLY IMPOTENT AND RENDER AHMADINEJAD KIND OF THIS POWERLESS PUPPET BECAUSE ALL EYES WOULD THEN GO ON KHAMENEI. HE ACHIEVED WHAT HE WANTED TO WHICH WAS WHAT THAT HE MADE AHMADINEJAD SWEAT A LITTLE BIT. IT BECAME OBVIOUS THAT. BUT AT THE SAME TIME HE ALLOWED AHMADINEJAD TO DELIVER THEM. THE.

>> Woodruff: YOU'RE SAYING ULTIMATELY KHAMENEI FELT IT WAS HIS GOVERNMENT'S INTEREST TO LET THEM GO?

>> THAT'S ABSOLUTELY RIGHT. NOTHING HAS BEEN ACHIEVED THESE LAST 26 MONTHS. WHEN IRAN FIRST DETAINED THEM, THEY INTIMATE INTIMATED THEY WANTED PRISONERS EXCHANGED. THEY WEREN'T ABLE TO ACHIEVE THAT AND WE CAN GO BACK TO THE 1979 HOSTAGE CRISIS WHEN HE EMBARKS ON HIS OPERATION WITHOUT REALLY KNOWING WHERE THEY'RE GOING AND ULTIMATELY IN A SHORT TIME I THINK THEY RECOGNIZE THE COST OF CONTINUING THE HOLD ON TO THESE FOLKS THAT WAY OUTWEIGH THE BENEFITS.

>> Suarez: THE MILLION DOLLARS, THE ROLE OF OMAN. EXPLAIN THAT. WHERE'S THE MONEY COMING FROM?

>> I THINK IN THE PAST THE MONEY... SARA SHOURD ALSO WHO WAS THE HIKER WHO WAS RELEASED LAST YEAR, WHEN SHE WAS RELEASED I THINK THE MONEY CAME FROM THE OMANI GOVERNMENT AND I LOOK AT OMAN AS... AS A U.S. DIPLOMAT I'M SURE YOU'RE FAMILIAR WITH RYAN CROCKER, THE AMBASSADOR TO AFGHANISTAN WHO IS ONE OF THE MOST EFFECTIVE DIPLOMATS OF HIS GENERATION BUT ALWAYS SOMEONE WHO DOESN'T GRAB THE HEADLINES, JUST QUIETLY GETS THE JOB DONE. AND OMAN IS THE RYAN CROCKER OF MIDDLE EAST DIPLOMACY. THEY'RE NOT AFTER THE HEADLINES LIKE DUBAI, TURKEY, QATAR, BUT THEY KIND OF QUIETLY GET THE JOB DONE EFFECTIVELY AND OMAN PLAYED AN INSTRUMENTAL ROLE IN WINNING THE RELEASE NOT ONLY OF SARAH SHOURD LAST YEAR BUT ALSO JOSH AND SHANE.

>> Suarez: SO YOU'RE SAYING THE MONEY CAME FROM THE OMANI GOVERNMENT?

>> IT APPEARS IT CAME FROM THE OMANI GOVERNMENT. WHETHER IT'S REIMBURSED BY THE UNITED STATES I DON'T KNOW BUT I THINK FOR OMAN... THE SULTAN OF OMAN, A MILLION DOLLARS IS PROBABLY A DROP IN THE BUCKET.

>> Woodruff: I NOTICE HE THANKED THE PRESIDENT OF IRAQ, JALAL TALABANI AND HE THANKED THE SWISS GOVERNMENT. WHAT ROLE DID THEY PLAY?

>> THE WYSS GOVERNMENT LOOKS AFTER U.S. INTERESTS IN TEHRAN AND...

>> SO IT WAS A FORMALITY?

>> EXACTLY.

>> Pelley: WHAT ABOUT IRAQ.

>> THERE WERE MANY BACK CHANNELS INVOLVED IN THESE NEGOTIATIONS. THE TURKS MADE EFFORTS, THE IRAQIS MADE EFFORTS, THE OMANIS MADE EFFORT BUS ULTIMATELY I WOULD GO BACK AND SAY THAT REALLY THE SUPREME LEADER PROBABLY MADE A DECISION THAT, YOU KNOW, TO CONTINUE TO HOLD ON TO THESE PEOPLE DIDN'T ACHIEVE ANYTHING.

>> Woodruff: SO WHEN ALL IS SAID AND DONE, KAREEM SADJADPOUR, ARE RELATIONS BETTER OFF, WORSE OFF, THE SAME?

>> THEY'RE WORSE OFF. I THINK THIS HAS FURTHER TARNISHED IRAN'S INTERNATIONAL REPUTATION. THERE'S A NEW BBC POLL OUT THAT SAYS IRAN HAS ECLIPSED NORTH KOREA AS THE LEAST-LIKED NATION IN THE WORLD AND I SAW EVEN ON FACEBOOK A YOUNG IRANIAN WAS COMMENTING AND HE SAID WHAT'S SAD ABOUT THIS THAT THESE TWO YOUNG MEN NEVER GOT TO EXPERIENCE THE RICHNESS OF IRANIAN CULTURE OR IRAN'S ANCIENT HISTORY. THE WARMTH OF THE IRANIAN PEOPLE. ALL THEY SAW WAS THE INSIDE OF A PRISON AND NOW THEY'RE LEAVING. AND I THINK THIS REALLY FURTHER ISOLATES IRAN INTERNATIONALLY.

>> Woodruff: DOES ANYONE THINK THEY WERE ACTUALLY SPYING AS THE IRANIAN GOVERNMENT SAYS?

>> NO, I DON'T THINK ANYONE THINKS THAT AND THE FACT THAT THE IRANIAN REGIME NEVER WANTED TO TRY THEM PUBLICLY, THEY NEVER PRODUCED A SHRED OF EVIDENCE REVEALS THE FACT THAT THEY WERE DOING WHAT THEY SAID THEY WERE DOING WHICH WAS HIKING IN IRAQI KURDISTAN.

>> Woodruff: KAREEM SADJADPOUR, WE THANK YOU FOR BEING WITH US AGAIN.

>> THANK YOU, JUDY.

>> Brown: NEXT, AN UPDATE ON THE WAR IN LIBYA. NOW IN ITS SEVENTH MONTH, THE ONE-TIME REBEL FORCES ARE NOW RECOGNIZED AS THE OFFICIAL GOVERNMENT AND CONTROL TRIPOLI. BUT THEY CONTINUE TO MEET FIERCE RESISTANCE IN THE BATTLE FOR SIRTE, THE HOMETOWN OF LONGTIME LEADER MOAMMAR QADDAFI. THAT'S WHERE JAMES FOLEY OF THE INTERNATIONAL WEBSITE "GLOBAL POST" HAS BEEN. HE FILED THIS REPORT.

>> THE BATTLE FOR THE SOME BOLL I CAN CITY OF SURT IS TURNING INTO A BLOODBATH. QADDAFI'S HOMETOWN, HIS LAST REMAINING STRONGHOLD IS UNDER ASSAULT FROM SOME 600 VEHICLES AND 1,500 REBEL FIGHTERS.

>> ACTUALLY, WE'RE LOOKING FOR SOME SNIPERS HERE. THERE'S SOME SNIPERS AND WE NEED TO GO INSIDE THIS CITY.

>> THE EFFECT IS DISORGANIZED AND PROVING COSTLY. OVER 40 REBELS HAVE BEEN KILLED AND HUNDREDS WOUNDED SINCE THE FIGHT BEGAN HERE SIX DAYS AGO. THIS TRAUMA DOCTOR LOST A COLLEAGUE WHO WENT TO THE FRONT END JUST THAT MORNING.

>> HE TOLD ME "I WILL CARRY SOME INJURED TO BRING THEM HERE." HE DIED.

>> Reporter: FAR FROM BEING A UNITED FRONT AGAINST A 42-YEAR TYRANT, THE REBELS ARE OFTEN SPLINTERED ALONG TRIBAL AND GEOGRAPHIC LINES WITH EACH FACTION FOLLOWING THEIR OWN ORDERS-- OR NO ORDERS AT ALL.

>> WHY IS HE UP THERE? THERE IS NO ORGANIZATION. THERE'S NO COMMAND. UNDERSTAND THAT.

>> Reporter: REBEL FORCES ARE NOW TRYING TO TAKE THIS COMPLEX WHICH THEY BELIEVE IS AL MILITARY INFRASTRUCTURE WHERE THERE'S SNIPERS AND HEAVY WEAPONS. REBELS GAINED GROUND ONLY TO GIVE IT BACK AGAIN AFTER NIGHT FALL BECAUSE THERE WAS NO MASTER PLAN.

>> Reporter: THE QADDAFI FORCES INSIDE SURT AREN'T LETTING UP THE FIGHT. THEY'RE ATTACKING FROM CIVILIAN AREAS, LIMITING THE REBELS' ABILITY TO FIRE BACK. THIS CIVILIAN WHO ESCAPED FROM SURT DESCRIBES THE SITUATION.

>> THEY FIRED SOME MISSILE IN MY HOUSE.

>> Reporter: THEY'VE EVEN TARGETED A FIELD HOSPITAL.

>> THEY'RE BOMBING US HERE.

>> ON THEIR PUSH INTO THE CITY, REBEL COMMANDERS TRY TO WALL OFF THE FIGHTING OF SOME NEIGHBORHOODS SO FAMILIES CAN SLEEP, BUT THEY'RE ALSO LAYING DOWN PLENTY OF THEIR OWN FIREPOWER AND THERE ARE REPORTS OF CIVILIAN INJURIES. THE FEAR HERE IS THAT THE DISARRAY AMONG THE REBELS CAN FORESHADOW A GRIM FUTURE AND THAT THE FIGHT TO OUST QADDAFI MIGHT LEAD TO A BLOODIER ONE TO CONTROL THE COUNTRY AFTERWARDS.

>> Ifill: THERE IS STILL ALSO FIERCE FIGHTING UNDER WAY FOR CONTROL OF ANOTHER QADDAFI STRONGHOLD, BANI WALID SOUTHEAST OF TRIPOLI.

>> Brown: AND WE RETURN NOW TO OUR CONTINUING SERIES ON INEQUALITY. "NEWSHOUR" ECONOMICS CORRESPONDENT PAUL SOLMAN HAS BEEN EXAMINING THAT SUBJECT, INCLUDING STUDIES SHOWING AN ALARMING RISE IN THE SO-CALLED WEALTH GAP. BUT TONIGHT'S INTERVIEW TAKES ISSUE WITH THAT VIEW. IT'S PART OF PAUL'S REPORTING ON "MAKING SENSE OF FINANCIAL NEWS."

>> IT WOULD BE NICE IF THERE WAS MORE EQUALITY, BUT LET'S NOT OVERDO IT.

>> Reporter: BOB LERMAN IS PROFESSOR OF ECONOMICS AT AMERICAN UNIVERSITY, A FELLOW AT THE URBAN INSTITUTE, AND AN OLD COLLEGE FRIEND-- A YEAR AHEAD OF ME AT BRANDEIS UNIVERSITY IN THE '60s.

>> THANK YOU, THAT'S THE ONE WE'RE GOING TO USE ON THE VIDEO.

>> Reporter: WE SOMETIMES PLAY TENNIS WHEN LERMAN VISITS BOSTON. BUT THIS MATCH AT OUR ALMA MATER WAS PROMPTED BY AN EMAIL HE WROTE IN RESPONSE TO OUR RECENT STORY ABOUT INEQUALITY, IN WHICH WE ASKED PEOPLE ON THE DAVID LETTERMAN TICKET LINE IN NEW YORK TO PICK THE CHART THAT BEST DEPICTED AMERICA'S DISTRIBUTION OF WEALTH. WHICH ONE DO YOU THINK THE UNITED STATES IS?

>> I WOULD-- I MIGHT SAY THIS ONE.

>> Reporter: IN THE FIRST CHART, EACH ONE-FIFTH OF THE POPULATION HAS 20% OF THE WEALTH. IN THE MIDDLE PIE CHART, A MIDDLING AMOUNT OF INEQUALITY: THE RICHEST FIFTH OWNS 36%, THE POOREST FIFTH, ONLY 11%. AND IN THE THIRD CHART, EXTREME INEQUALITY, WHERE THE RICHEST FIFTH OWNS 84% OF THE NATION'S WEALTH, WHILE THE BOTTOM TWO- FIFTHS, 40% OF THE POPULATION, OWNS AN ALMOST INVISIBLE 0.3% OF THE NATION'S PROPERTY.

>> I THINK THE MIDDLE ONE IS U.S.

>> Reporter: WHICH ONE WOULD YOU THINK THE U.S. WAS?

>> HOPEFULLY THAT.

>> Reporter: THE PUNCHLINE: MOST PEOPLE IN SURVEYS LIKE THIS ONE, INCLUDING OURS, GET IT WRONG. THE THIRD AND MOST UNEQUAL CHART IS AMERICA, BASED ON THE DISTRIBUTION OF HOUSING AND FINANCIAL WEALTH. BUT BOB EMAILED TO SAY HE THOUGHT THE SURVEY WAS MISLEADING. YOU THINK INEQUALITY REALLY ISN'T A PROBLEM?

>> NO, I THINK IT'S SOMEWHAT OF A PROBLEM, BUT YOU WAY OVERSTATED IT, THERE WERE NO NUANCES TO THE REPORT. YOU IGNORED A BIG SOURCE OF WEALTH WHICH IS WEALTH EMBODIED IN SOCIAL SECURITY.

>> Reporter: SINCE WE BOTH EMBARKED ON ADULTHOOD HERE AT BRANDEIS, BOB KNOWS THE BOSTON AREA WELL ENOUGH TO MAKE HIS CASE IN AND AROUND TOWN. JUST DOWN THE ROAD, THE EPOCH NURSING HOME, A VENUE FOR HIS MAIN NUANCE.

>> A GOOD PART OF WEALTH IS EMBODIED IN THE RIGHT TO YOUR SOCIAL SECURITY FLOW OF INCOME, AND ALSO TO THE GUARANTEED HEALTH INSURANCE THAT YOU GET. THAT'S WORTH HUNDREDS OF THOUSANDS OF DOLLARS TO A TYPICAL PERSON AND YOU MULTIPLY THAT BY THE NUMBER OF PERSONS AND YOU'VE GOT A LOT OF WEALTH. TAKE A LOT OF THE PEOPLE RIGHT HERE AT THIS NURSING HOME. MEDICARE IS A SOURCE OF WEALTH THAT FINANCES THEIR STAY HERE.

>> Reporter: PEOPLE LIKE CLARE DEVANE AND DOROTHY ARNOLD. SO YOU TWO WERE JUST SITTING HERE WHILE WE WERE DOING THE INTERVIEW, WE DIDN'T DISCUSS THIS BEFORE. YOUR POINT IS?

>> HOW ARE YOU BEING FINANCED HERE?

>> THROUGH MEDICARE AND MASSHEALTH.

>> ME TOO. MEDICARE AND MASSHEALTH.

>> SO THIS ISN'T YOUR OWN PRIVATE SAVINGS THAT'S PAYING FOR YOUR ROOM HERE?

>> NO. SOME OF MY MONEY CAME HERE, BUT THEN MEDICARE TOOK OVER AND MASSHEALTH.

>> Reporter: HOW OLD ARE YOU?

>> 94.

>> Reporter: AND AS LERMAN WOULD POINT OUT, THE LONGER YOU LIVE, THE MORE WEALTH MEDICARE OR SOCIAL SECURITY REPRESENT. SO MEDICARE IS LIKE A STASH OF WEALTH THAT YOU'RE NOW DRAWING ON.

>> RIGHT.

>> THAT'S RIGHT.

>> WE WOULDN'T BE HERE OTHERWISE.

>> Reporter: AND THAT'S YOUR WHOLE POINT.

>> THAT'S MY WHOLE POINT.

>> Reporter: DOWNTOWN BOSTON, AND A STREET BUSKER WE COULDN'T RESIST, MAYBE BECAUSE OF THE SNAZZY HAT. HE WAS PLAYING ON THE BOSTON COMMON, SO NAMED BECAUSE FROM 1634 ON, EVERYBODY HAS HAD EQUAL ACCESS TO IT, UP THROUGH TODAY'S REGAL SWAN BOATS, READY AND WILLING TO OFFER COMMONERS A RIDE. AFTER THE AMERICAN REVOLUTION, GENERAL WASHINGTON CAME HERE TO CELEBRATE OUR RIGHT TO THE PURSUIT OF LIFE, LIBERTY AND HAPPINESS, MADE POSSIBLE THESE DAYS, SAYS BOB LERMAN, BY THE SOCIAL SAFETY NET, WHICH IS NOT COUNTED AS PART OF THE OFFICIAL WEALTH NUMBERS. SO SOCIAL SECUTIRY REPRESENTS HIDDEN WEALTH FOR MOST OF THE DISTRIBUTION.

>> YES.

>> Reporter: AND SO DOES MEDICARE.

>> SO DOES MEDICARE. AND ANOTHER ELEMENT OF IT AND IT'S RELATED, IS HEALTH EXPENDITURES OVERALL FOR ALL AGES.

>> Reporter: AS IT HAPPENS, THIS PUBLIC PATCH OF BOSTON FEATURES A MONUMENT TO A MONUMENTAL BREAKTHROUGH IN HEALTH CARE: ETHER FOR ANESTHESIA TO RELIEVE PAIN. LIKE MOST OF MODERN MEDICINE, SAYS, LERMAN, IT'S AVAILABLE TO US ALL.

>> THE DISTRIBUTION OF HEALTH SPENDING IS PURE EQUALITY. 20% OF HEALTH SPENDING IS ON THE BOTTOM 20%, 20% IS ON THE NEXT 20% AND 20% IS ON THE TOP 20%.

>> Reporter: BUT YOU CAN'T TELL ME THAT THE TOP 20% OF AMERICANS IN TERMS OF WEALTH GET THE SAME HEALTHCARE AS THE BOTTOM 20%. THESE GUYS HAVE CONCIERGE DOCTORS WHOM THEY CAN CALL ON AT ANY TIME. THESE GUYS ARE LUCKY TO GET INTO THE EMERGENCY ROOM.

>> WELL, I AGREE THAT THE TOP 1% OR THE TOP HALF OF 1% HAVE FUNDAMENTALLY DIFFERENT HEALTHCARE, BUT NOT THE OVERALL TOP 20%.

>> Reporter: BUT THE HUGE DISPARITY IS BETWEEN THE PEOPLE AT THE VERY TOP AND EVERYONE ELSE.

>> WELL THAT MIGHT BE FAIR IF THE PEOPLE AT THE VERY, VERY TOP COULD ACTUALLY GET A BETTER OPERATION. IT'S NOT AT ALL CLEAR THAT'S THE CASE. THE WEALTHIEST PERSON 25 YEARS AGO COULD NOT GET ACCESS TO THE SAME CARE THAT THE MIDDLE-INCOME PERSON GETS TODAY.

>> Reporter: THE BOTTOM LINE, TO LERMAN, IS THAT IF YOU ADD IN HEALTHCARE AND SOCIAL SECURITY WEALTH, THE DISTRIBUTION WOULDN'T LOOK LIKE THIS-- THE RICHEST FIFTH OF AMERICANS WITH 84% OF THE WEALTH; THE POOREST TWO FIFTHS WITH AN ALMOST INVISIBLE SLIVER. IT WOULD LOOK SOMETHING LIKE THIS: RICHEST FIFTH-- 55%; POOREST TWO-FIFTHS: ALMOST 17%. BUT THEN IF YOU LOOK AT THE TOP 10%, THE TOP 5%, THE TOP 1% IN AMERICA YOU'RE GOING TO HAVE SOMETHING THAT LOOKS JUST AS UNEQUAL IF NOT MORE SO THAN THIS PICTURE DOES.

>> PAUL, YOU KNOW WHAT'S AMAZING, IT'S AMAZING WE DON'T HAVE MORE INEQUALITY THAN WE DO HAVE GIVEN THE FACT THAT 40% OF KIDS ARE BORN TO UNMARRIED PARENTS, WE'VE HAD A LOT OF IMMIGRANTS FROM VERY POOR COUNTRIES COME INTO THE COUNTRY, AND YET STILL THE DISTRIBUTION OF CONSUMPTION, THE DISTRIBUTION OF HEALTH EXPENDITURES IS RELATIVELY EQUAL.

>> Reporter: JUST HALF A BLOCK AWAY, IT LOOKED PRETTY UNEQUAL TO US. BUT YOU CAN'T TELL ME THAT THE PEOPLE WHO SHOP AT CHANEL HERE ON NEWBURY STREET IN BOSTON OR STAY AT THE TAJ BOSTON, THAT USED TO BE THE RITZ CARLTON, AREN'T LIVING A SIGNIFICANTLY DIFFERENT LIFE THAN THE REST OF THE AMERICAN PUBLIC.

>> THE VERY TOP ARE BUT OVERALL YOU DON'T SEE THAT BIG A GAP. TODAY, YOU COULD HAVE A FERRARI OR YOU COULD HAVE A KIA. YOU COULD STAY AT THE TAJ BOSTON OR YOU COULD STAY AT THE HOLIDAY INN, IS THERE THAT BIG A DIFFERENCE? SO LET'S BE CLEAR. THE RICH DO HAVE MORE OPPORTUNITY TO CONSUME THAN EVERYONE ELSE BUT I'M NOT SURE THAT WE NEED TO BE AS CONCERNED ABOUT IT AS IMPLICIT IN YOUR PROGRAM.

>> Reporter: NOW ALL THIS MAY NOT REASSURE THOSE WORRIED ABOUT ECONOMIC INEQUALITY. THE RICH DON'T JUST BUY STATUS DUDS, THEY MIGHT POINT OUT, BUT PRIVATE LIMOS; PRIVATE SCHOOLS, PRIVATE EVERYTHING. AND THEIR MONEY ALSO BUYS SECURITY AND POWER, GETTING OTHERS TO SING YOUR SONG ON BOSTON COMMON OR, SOME WOULD ARGUE, WASHINGTON, D.C. SKEPTICS MIGHT HAVE ONE FINAL CONCERN AS WELL: THAT AMERICA'S FAMOUS ECONOMIC UPWARD MOBILITY, WHERE EVEN THE UGLIEST OF DUCKLINGS CAN TURN INTO A SWAN, IS BECOMING A THING OF THE PAST. BUT THOUGH BOB LERMAN AGREES THAT WHAT HE CALLS THE SUPER- DUPER RICH HAVE BEEN PULLING AWAY FROM THE REST OF US, HE THINKS THERE'S A MORE POSITIVE WAY TO LOOK AT OUR PICTURE OF INEQUALITY.

>> IT'S ACCURATE FOR FINANCIAL AND HOUSING WEALTH BUT NOT FOR THE COMPREHENSIVE PICTURE OF WEALTH. THE DISTRIBUTION OF WEALTH IS STILL WIDE BUT IT'S NOT NEARLY SO WIDE AS YOU MIGHT EXPECT.

>> Reporter: WE'LL LOOK INTO THIS AND OTHER ISSUES FURTHER AS WE CONTINUE OUR SERIES ON ECONOMIC INEQUALITY.

>> Brown: IN A COMING REPORT, PAUL EXPLORES CONNECTIONS BETWEEN ECONOMIC STATUS AND PERSONAL HEALTH.

>> Ifill: FINALLY TONIGHT, WE LAUNCH AN 18-MONTH FOCUS ON THE NATION'S HIGH SCHOOL DROPOUT RATE. THE AMERICAN GRADUATE PROJECT-- A PARTNERSHIP WITH PUBLIC RADIO AND TELEVISION-- WILL EXAMINE THE BREADTH OF THE PROBLEM AS WELL AS ITS CONSEQUENCES. THE NUMBERS ARE STAGGERING. ONE THIRD OF U.S. HIGH SCHOOL STUDENTS DON'T GRADUATE ON TIME. AND LATINO AND AFRICAN AMERICAN BOYS ARE TWICE AS LIKELY TO BECOME HIGH SCHOOL DROPOUTS. THE RESULT: HIGHER RATES OF INCARCERATION, UNEMPLOYMENT AND POVERTY. AMONG THE SOLUTIONS INCREASINGLY IS COMMUNITY INVOLVEMENT AND HIGH WATTAGE CELEBRITY ATTENTION. OSCAR WINNING FILM DIRECTOR RON HOWARD JOINED BASKETBALL STAR LEBRON JAMES AND SINGER ASHANTI AND ACTOR DENZEL WASHINGTON IN WASHINGTON TODAY TO PRODUCE A NEW PUBLIC SERVICE ANNOUNCEMENT FOR THE BOYS AND GIRLS CLUBS OF AMERICA.

>> I'M A GREAT BELIEVER AND LOVER OF WHAT THE COUNTRY ASPIRES TO OR SOMETIMES I FEEL WHAT IT PURPORTS TO ASPIRE TO, AND IT'S UP TO US TO ACT ON THAT.

>> Ifill: WE SPOKE ABOUT THE DROPOUT CRISIS AFTERWARD WITH DENZEL WASHINGTON, THE BOYS AND GIRLS CLUBS LONGTIME NATIONAL SPOKESMAN. FUNDAMENTALLY WE ARE FAILING OUR KIDS. IT IS NOT THEIR FAULT. IT IS THE-- IT'S THE FAULT OF THE ADULTS.

>> Ifill: WHEN YOU SAY WE'RE FAILING OUR KIDS, THERE ARE SO MANY FINGERS BEING POINTED AT SCHOOLS, AT GOVERNMENT, AT PARENTS, AND SOMETIMES AT THE KIDS THEMSELVES.

>> WELL, I'M NOT HERE TO POINT FINGERS. IT STARTS IN THE HOME. I'M ABOUT SOLUTIONS. YOU KNOW, IF THREE OUT OF TEN DROP OUT, THAT MEANS SEVEN OUT OF TEN DON'T. I'M TRYING TO TURN THAT SEVEN INTO AN EIGHT OR INTO A NINE, THE WORK WE DO WITH THE BOYS AND GIRLS CLUBS HELPING TO DO THAT IN THE LAST TEN YEARS. WE'VE DOUBLED THE NUMBER OF CHILDREN WE REACH. WE'VE GONE FROM 1,800 CLUBS TO 4,000 CLUBS, FROM TWO MILLION YOUNG PEOPLE TO FOUR MILLION YOUNG PEOPLE. SO I'M ABOUT BEING PART OF THE SOLUTION. WE ARE MAKING PROGRESS, AND WE'RE HERE IN WASHINGTON TO GET MORE SUPPORT. AND WE REACH OUT TO PEOPLE ACROSS AMERICA FOR THEIR SUPPORT BECAUSE WHAT WERE DOING AT THE BOYS AND GIRLS CLUBS WORK. IT'S ONE THING TO SIT AROUND AND TALK ABOUT WHAT THE PROBLEMS ARE, YOU KNOW, BUT IT'S ANOTHER THING TO GET OFF YOUR BEHIND AND ACTUALLY DO SOMETHING ABOUT IT. AND THAT'S WHAT I'M ABOUT. I'M NOT ABOUT COMPLAINING ABOUT WHAT THE STATISTICS ARE AND HOW AWFUL IT IS. I'M ABOUT DOING SOMETHING ABOUT IT. AND IF ONE IS NOT ABOUT ACTUALLY DOING SOMETHING, THEN ONE SHOULD REALLY KEEP THEIR MOUTH SHUT OR MOVE OUT OF THE WAY, AND ALLOW SOMEONE WHO WANTS TO HELP TO HELP. WE CAN ALL VOLUNTEER.

>> Ifill: WHERE ARE THE MOST EFFECTIVE SOLUTIONS TO BE FOUND? IN GOVERNMENT-- YOU'RE HERE IN WASHINGTON-- OR IN COMMUNITIES?

>> NO, IN EACH AND EVERY ONE OF US. WE CAN FORGET ASKING THE GOVERNMENT. NOW, WE AT THE BOYS AND GIRLS CLUB GET TREMENDOUS FINANCIAL SUPPORT DIRECTLY FROM THE DEPARTMENT OF JUSTICE, BUT ALSO FROM, YOU KNOW, FROM THE FEDERAL GOVERNMENT. I MEAN, THE DEPARTMENT OF JUSTICE UNDERSTANDS. IF THEY SPEND THE MONEY WITH US EARLY, THEY DON'T NEED TO SPEND IT ON PRISONS OR INCARCERATION OR POLICING LATER ON.

>> Ifill: THERE'S TALK THAT EARLY WARNING SIGNS ARE THINGS THAT YOU NEED TO BE WATCHING FOR IN ORDER TO CHANGE THESE OUTCOMES THAT WE'VE BEEN TALKING ABOUT. WHAT KINDS OF EARLY WARNING SIGNS SHOULD WHETHER IT'S TEACHERS OR INDIVIDUALS OR COMMUNITY GROUPS OR ORGANIZATIONS LIKE YOURS BE WATCHING FOR?

>> I MEAN, FUNDAMENTALLY, IT'S PARENTING. MY MOTHER SAID THAT YOUR BIGGEST INFLUENCE ON YOUR CHILDREN WILL BE IN THEIR FIRST FIVE YEARS, BECAUSE IN THOSE DAYS IT WAS FIVE YEARS. BECAUSE ONCE YOU WENT TO KINDERGARTEN, ONCE YOU STARTED GOING TO SCHOOL, YOU WERE INFLUENCED BY OTHERS. SO IT STARTS IN THE HOME. I MEAN, THE FUNDAMENTAL RESPONSIBILITY, OR THE PROBLEM, IF WE WANT TO CALL IT THAT, IS THE BREAKDOWN OF THE FAMILY, AND THAT OBVIOUSLY DIRECTLY AFFECTS THE CHILD. WE HAVE FIVE EXAMPLES TODAY-- FROM BROKEN HOMES, ONE WHOSE FATHER WAS ONE OF THE BIGGEST DRUG DEALERS IN ARKANSAS. PARENTS MIGHT HAVE TO HELP THEIR CHILDREN OUT OF THESE TOUGH SITUATIONS. I MEAN, THE MOST DANGEROUS TIME FOR CHILDREN IS BETWEEN 3:00 AND 6:00 WHEN THEY'RE OUT OF SCHOOL. THEY'RE GOING TO JOIN SOME CLUB. THEY'RE GOING TO LINE UP WITH, YOU KNOW, THE ATHLETES, THE JOCKS, OR THE JERKS, OR THE NERDS OR THE GOTHS OR THE DRUGGIES-- THEY'RE GOING TO DO SOMETHING, YOU KNOW. THEY'RE GOING TO BE NEGATIVELY INFLUENCED UNLESS THEY'RE POSITIVELY INFLUENCED. AND THAT IS OUR RESPONSIBILITY AS ADULTS.

>> Ifill: AS YOU BALANCE OUT THE THREE PRONGS OF THIS-- THE HEALTHY LIFESTYLE, THE ACADEMIC ACHIEVEMENT-- WHAT WAS THE THIRD? HOW IMPORTANT IS ACADEMIC ACHIEVEMENT IN ALL OF THIS?

>> IT'S ABSOLUTELY IMPORTANT. I MEAN, IT'S ONE THING TO KNOW; IT'S ONE THING TO MAKE MONEY; IT'S ANOTHER THING TO KNOW HOW TO COUNT IT. BUT EDUCATION-- I REMEMBER MY MOTHER USED TO TAKE US, PUT US IN THE CAR ON SUNDAY, AND RIDE US AROUND WEALTHY NEIGHBORHOODS. AND WE WOULD IMAGINE WHICH HOUSE WAS GOING TO BE OURS. AND THAT WAS A PART OF OUR EDUCATION. YOU KNOW, THEY TALK ABOUT ROLE MODELS. AND YOU SEE, I DON'T KNOW, ME OR LEBRON JAMES OR SOMEBODY ON TV BOUNCING A BASKETBALL. BUT YOUR REAL ROLE MODELS ARE THOSE PEOPLE THAT ARE IN YOUR CLUB, THOSE PEOPLE THAT ARE IN YOUR ENVIRONMENT THAT AFFECT YOU EITHER POSITIVELY OR NEGATIVELY. IF ALL YOU SEE EVERY DAY IS THE DRUG DEALER, AND HE'S THE ONLY ONE, OR SHE'S THE ONLY ONE THAT HAS A MERCEDES, THAT'S WHAT YOU'RE GOING TO ASPIRE TO. SO IT'S UP TO ALL OF US TO REACH OUT TO OUR YOUTH. AND YOU KNOW, SOME OF THEM-- YOU'RE HERE. LEBRON JAMES IS HERE. JENNIFER LOPEZ IS INVOLVED. THERE'S A BEYONCE SONG IN THE VIDEO. WHAT DIFFERENCE DOES IT MAKE IF THESE WORDS COME FROM CELEBRITIES, FROM WELL-KNOWN PEOPLE?

>> IT DOESN'T MAKE ANY DIFFERENCE, BUT THERE ARE THOSE PEOPLE-- LIKE I SAID, WHEN I GREW UP IN THE CLUB, I LOVED MUHAMMAD ALI, BUT I COULDN'T GET HIM ON THE PHONE. BUT I WAS ABLE TO TALK TO MY MENTOR, BILLY THOMAS, OR DIFFERENT PEOPLE IN THE CLUB. I REMEMBER I HAD A DEBATE-- I WAS ABOUT NINE OR TEN YEARS OLD- - I HAD A DEBATE WITH THE MAYOR OF OUR TOWN. HE SPOKE, AND THEN HE SAID, DOES ANYBODY HAVE ANY QUESTIONS? AND I HAD A COUPLE OF QUESTIONS. SO I DON'T PARTICULARLY BELIEVE HE WAS GIVING ME THE ANSWERS, THE REAL ANSWERS, SO I KEPT ASKING UNTIL THEY MADE ME SIT DOWN. ( LAUGHS ) IT'S A TRUE STORY. BUT THERE WAS A GENTLEMAN IN THE CLUB, CHARLES WHITE, WHO WORKED IN THE CLUB. AND HE SAID, YOU KNOW, YOUNG MAN, WITH YOUR SMARTS, YOU CAN BE ANYTHING YOU WANT TO BE. AND I NEVER FORGOT THAT. I WALKED OUT OF THAT BUILDING AND I SAID, WOW, I'VE NEVER HEARD THAT BEFORE. I CAN BE ANYTHING I WANT TO BE. OKAY, I COUNT. I'M IMPORTANT. SO I DIDN'T HEAR THAT FROM MUHAMMAD ALI. I HEARD THAT FROM CHARLES WHITE.

>> Ifill: AS YOU HAVE WATCHED CHILDREN GROW THROUGH THIS EFFORT, HAVE THINGS CHANGED? HAS IT GOTTEN TOUGHER FOR THIS GENERATION OF YOUNG PEOPLE? ARE THEY DIFFERENT THAN THEY WERE WHEN YOU CAME ALONG?

>> I THINK US OLDER PEOPLE ARE JUST CYNICAL, BECAUSE WE'VE GOT MORE YEARS BEHIND US THAN WE DO IN FRONT OF US. YOU KNOW, I REMEMBER SPEAKING. I WAS DOING THE MOVIE MALCOLM X AND WE WERE SHOOTING AT COLUMBIA UNIVERSITY. AND BETWEEN TAKES, I WAS-- WE USED STUDENTS. AND BETWEEN TAKES WE WERE TALKING ABOUT ALL THE ISSUES OF THE DAY, AND OH, IT'S THIS, AND THE WORLD IS AND THIS WAS 20 YEARS AGO. I CAN IMAGINE WHAT THE CONVERSATION WOULD BE LIKE NOW. AND BASICALLY, I SAID, SO WHAT ARE YOU GOING TO DO? YOU'RE GOING TO GIVE UP? AND THEY'RE LIKE, NO, NO, WE'RE GOING TO CHANGE THINGS. THAT DIDN'T EVEN COME INTO THEIR MIND. I SAID, OH, THAT'S ME, THE OLDER, CYNICAL ONE THAT'S THINKING LIKE THAT. SO I ENJOY WORKING WITH YOUNG PEOPLE AND LISTENING TO YOUNG PEOPLE BECAUSE YOUNG PEOPLE ARE POSITIVE. US OLDER FOLK ARE THE ONES THAT- - OH, YOU KNOW, IT'S ALL GOING TO HELL IN A HAND BASKET. THAT'S THE WAY WE THINK. I DON'T THINK THAT'S THE WAY IT IS.

>> Ifill: DENZEL WASHINGTON, THANK YOU SO MUCH FOR JOINING US.

>> MY PLEASURE.

>> Ifill: WE'LL REPORT MORE ON THE DROP-OUT PROBLEM IN COMING MONTHS. "AMERICAN GRADUATE" IS A PUBLIC MEDIA INITIATIVE FUNDED BY THE CORPORATION FOR PUBLIC BROADCASTING.

>> Brown: AGAIN, THE MAJOR DEVELOPMENTS OF THE DAY: PRESIDENT OBAMA REJECTED PALESTINIAN PLANS TO SEEK STATEHOOD THROUGH THE UNITED NATIONS. AND TWO AMERICANS CONVICTED AS SPIES IN IRAN FINALLY WON THEIR FREEDOM, AFTER MORE THAN TWO YEARS IN PRISON. THE FEDERAL RESERVE SAID THE DOWNSIDE RISKS AND ANNOUNCED A NEW STIMULUS EFFORT. WALL STREET ANSWERED WITH A SELL-OFF-- THE DOW LOST MORE THAN 280 POINTS.

>> Brown: ON OUR WEB SITE, YOU CAN FIND MORE ABOUT THE U.N. MEETING, THE WEALTH GAP AND OTHER STORIES. HARI SREENIVASAN EXPLAINS. HARI?

>> Sreenivasan: WATCH ALL OF PRESIDENT OBAMA'S SPEECH ON THE RUNDOWN BLOG AND FIND PAUL'S PIE CHARTS ILLUSTRATING INCOME GAPS ON OUR "MAKING SENSE" PAGE. PLUS PATCHWORK NATION TAKES A FRESH LOOK AT FORECLOSURE NUMBERS ACROSS THE U.S. AND WHAT THOSE FIGURES MAY SIGNAL FOR THE WIDER ECONOMY. ALL THAT AND MORE IS ON OUR WEB SITE: newshour.pbs.org. GWEN?

>> Ifill: AND THAT'S THE "NEWSHOUR" FOR TONIGHT. ON THURSDAY, WE LOOK AT A FILM EXPLORING THE WORLD'S LARGEST HUMAN MIGRATION AS MILLIONS OF CHINESE RETURN TO THE COUNTRYSIDE FOR THE NEW YEAR'S HOLIDAY. I'M GWEN IFILL.

>> Brown: AND I'M JEFFREY BROWN. WE'LL SEE YOU ONLINE AND AGAIN HERE TOMORROW EVENING. THANK YOU AND GOOD NIGHT. MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY: AND 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. Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS Captioned by Media Access Group at WGBH access.wgbh.org

>> THIS IS "BBC WORLD NEWS AMERICA." FUNDING FOR THIS PRESENTATION IS MADE POSSIBLE BY THE FREEMAN FOUNDATION OF NEW YORK, STOWE, VERMONT, AND HONOLULU. NEWMAN'S OWN FOUNDATION. AND UNION BANK.

>> UNION BANK HAS PUT ITS FINANCIAL STRENGTH TO WORK FOR A WIDE RANGE OF COMPANIES, FROM SMALL BUSINESSES TO MAJOR CORPORATIONS. WHAT CAN WE DO FOR YOU?

>> AND NOW, "BBC WORLD NEWS AMERICA."

>> THIS IS A SPECIAL EDITION OF "BBC WORLD NEWS AMERICA" FROM NEW YORK. THE STANDOFF INTENSIFY AS AT THE U.N.. THE PALESTINIANS BID FOR MEMBERSHIP. PRESIDENT OBAMA SAYS THIS IS NOT THE WAY.

>> PEACE WILL NOT COME THROUGH STATEMENTS THAT THE NETTED