PBS NewsHour; August 1, 2011 7:00pm-8:00pm EDT

Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS

>> Brown: THE DEFICIT REDUCTION PLAN HAMMERED OUT BY PRESIDENT OBAMA AND CONGRESSIONAL LEADERS THIS WEEKEND MOVES CLOSER TO A FINAL UP-OR/d GOOD EVENING.

>> Woodruff: AND I'M JUDY WOODZUGF.ç ON THE NEWSHOUR TONIGHT, WE HAVE THE LATEST ON THE DOWN-TO-THE- WIRE DEAL MAKING TO RAISE THE DEBT CEILING, AND WE'LL TALK TO WHITE HOUSE BUDGET DIRECTOR JACK LEW.

>> Brown: THEN, CONGRESSMEN RAUL GRIJALVA OF THE PROGRESSIVEçç CAUCUS AND TIM HUELSKAMP OF THE TEA PARTY CAUCUS WALK US THROUGH THEIR VERY DIFFERENT OBJECTIONS TO THE COMPROMISE.

>> Woodruff: AND IN NEW YORK, PAUL SOLMAN EXPLORES HOW THE MARKETS VIEW THE END RESULT ANDç THE PROCESS THAT GOT US THERE.

>> Brown: ALSO TONIGHT, MARGARET WARNER EXAMINES THE BLOODY GOVERNMENT CRACKDOWN ON PROTESTERS IN SYRIA WITH ABIGAIL FIELDING-SMITH OF THE "FINANCIAL TSsQ:MzG-SMITH OF THE "FINANCIAL

>> Woodruff: PLUS RAY SUAREZ GETS NEW INFORMATION ON THE RAID THAT KILLED OSAMA BIN LADEN FROM NICHOLAS SCHMIDLE OF THE "NEW YORKER" MAGAZINE.çç

>> Brown: AND SPENCER MICHELS HAS AN ENCORE REPORT ON A SAN FRANCISCO ART EXHIBIT THAT'S DRAWING IN THE CROWDS. THAT'S ALL AHEAD ON TONIGHT'S NEWSHOUR. MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY:

>> OIL COMPANIES HAVE CHANGED MY COUNTRY.

>> OIL COMPANIES CAN MAKE A DIFFERENCE.

>> WE VEHE TCHANCE TO BUILD THE ECONOMY.

>> CREATE JOBS, KEEP PEOPLE HEALTHY, AND IMPROVE SCHOOLS.

>> ...AND OUR COMMUNITIES.

>> IN ANGOLA CHEVRON HELPS TRAIN ENGINEERS, TEACHERS AND FARMERS, LAUNCH CHILD'S PROGRAMS. IT'S NOT JUST GOOD BUSINESS.

>> I'M HOPEFUL ABOUT MY COUNTRY'S FUTURE.

>> IT'S MY COUNTRY'S FUTURE.

>> AND BY THE BILL AND MELINDA GATES FOUNDATION. DEDICATED TO THE IDEA THAT ALL PEOPLE DESERVE THE CHANCE TO LIVE A HEALTHY, PRODUCTIVE LIFE. 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.

>> Woodruff: CONGRESS HEADED TODAY TOWARD VOTES ON A LONG- SOUGHT AGREEMENT TO PREVENT A NATIONAL DEFAULT. IT CALLED FOR REDUCING DEFICITS AND RAISING THE NATIONAL DEBT CEILING BY MORE THAN $2 TRILLION OVER TEN YEARS. THE FINAL ACTS IN THE LONG DEBT AND DEFICIT DRAMA EMPLOYED OUT THIS AFTERNOON FIRST IN THE HOUSE.

>> THE DIRECTION IS HISTORIC. WE'RE GOING FROM SEEING HOW MUCH MONEY WE CAN SPEND TO HOW MUCH CAN WE CUT.

>> THIS BILL TO ME IS A PIG IN POKE.

>> LEADERS ON BOTH SIDES SPENT THE DAY LINING UP SUPPORT. VICE PRESIDENT BIDEN TRAVELED TO THE CAPITAL.

>> THERE IS FRUSTRATION. THAT WE'RE EXPERIENCING. WHAT THEY WANT TO KNOW IS SPECIFICALLY ABOUT THE PROPOSED LEGISLATION. I THOUGHT THAT, AND I FEEL CONFIDENT ABOUT THIS.

>> HOUSE REPUBLICANS HELD A SIMILAR BEHIND CLOSED DOORS. MAJORITY LEADER ERIC CANTOR SPOKE AFTERWARDS.

>> IT'S NOT ENTER, IT'S NOT BUT CHANGING THE WAY THAT WASHINGTON SPENDS TAX PAIR DOLLARS IS A LOT LIKE REDIRECTING AND TURNING AN AIRCRAFT CARRIER. IT'S A MONUMENTAL TASK.

>> THE TEN YEAR AGREEMENT WOULD UNFOLD IN STAGES. THE FIRST WOULD CUT SPENDING. THE DEBT CEILING WOULD IMMEDIATELY BY A SIMILAR AMOUNT ALLOWING THE GOVERNMENT TO CONTINUE BORROWING INTO 2012. IN STAGE TWO A JOINT CONGRESSIONAL COMMITTEE WOULD RECOMMEND ONE AND-A-HALF DOLLARS IN ADDITIONAL SAVINGS TO THE YEAR IS END. OTHERWISE AUTOMATIC SPENDING CUTS OF $1.2 TRILLION WOULD KICK IN, TAKING EQUAL DOMESTIC AND DEFENSE PROGRAMS. MEDICAID AND SOCIAL SECURITY WOULD BE EXEMPTED BUT PAYMENTS TO MEDICARE PROVIDERS COULD GO EITHER WAY, THE DEBT CELLING WOULD BE INCREASED AGAIN BY AT LEAST $1.2 TRILLION ALSO BY YEAR'S END. IT COULD BE BLOCKED BUT ONLY BY A TWO THIRDS VOTE OF CONGRESS. AFTER SOME UNCERTAINTY OVER WHICH CHAMBER WOULD ACT FIRST. THE MEASURE GREW SUPPORT FROM REPUBLICANS AND DEMOCRATS.

>> MR. SPEAKER, IF THIS WERE THE ONLY STEP EVER, IT'S ONLY THE BEGINNING. WE END THIS MESS WITH ONE BILL OR ONE PIECE OF LEGISLATION. IT TOOK A LONG TIME AND A LOT OF VOTES AND IT'S GOING TO TAKE A LONG TIME AND A LOT OF BATTLES TO GET OUT OF IT AND THIS IS A GOOD START. IT TOOK MEMBERS OF BOTH PARTIES TO FIND OBJECTIONABLE, BUT THE CHOICE IS BETWEEN THIS PROPOSED AND THE IDEAL. THIS IS BETWEEN THIS PROPOSAL AND CATASTROPHIC DEFAULT TOMORROW.

>> DEMOCRAT MAJORITY LEADER HARRY REID PRESSED HIS CHIMP BORROW TO LINE UP BEHIND THE BILL AS WELL.

>> IT'S BEEN A LONG TIME FOR CONGRESS AND I HOPEFUL THAT WE HAVE THE VOTES. IF I'M NOT HERE TO DECLARE VICTORY, LET'S GET THIS THING PASSED.

>> DEADLINE TO STAY OFF A FEDERAL DEFAULT. OR TOMORROW NIGHT.

>> Woodruff: NOW, WE GET THREE VIEWS ABOUT THE DEAL AT HAND AND THE DEBATE SURROUNDING IT. FIRST, THE PRESIDENT'S DEFENSE OF IT AS SEEN BY JACK LEW, THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET. I SPOKE WITH HIM A SHORT TIME AGO. JACK, THE PRESIDENT'S DIRECTOR, THANK YOU VERY MUCH FOR COMING.

>> GOOD TO BE WITH YOU JUDY.

>> Woodruff: MOVING INTO CONGRESS, LET'S START WITH WHAT THE CONSERVATIVE REPUBLICANS ARE SAYING. THEY ARE SAYING THIS IS NO WHERE NEAR ENOUGH TO TACKLE THE TEN PLUS TRILLION DOLLAR DEAF CAN YOU TELL.

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

>> Woodruff: THE REPUBLICAN LEADERSHIP IS CROWING ABOUT WHAT THEY GOT. SPEAKER BOEHNER IS SAYING IT'S VERY UNLIKELY THERE WOULD BE ANY TAX INCREASES, WHICH IS SOMETHING THE PRESIDENT HAD SAID HE WANTED. THE SENATE SPEAKER CANTOR SAYS THERE'S NO WAY. THE HOUSE WOULD SUPPORT TAX INCREASES. TAX IN CREASE IS OFF THE TABLE.

>> QUITE THE CONTRARY, JUDY. EVERY STEP OF THE WAY, THERE WILL NOT BE -- HAVE A COMMITMENT SO THAT WE DON'T HAVE A SIST -- THE PEOPLE AT THE HIGHEST INCOME BUCKETTATE PART OF THE SOLUTION.

>> Woodruff: JACK, IF SOMETHING COMES OUT OF THIS, THIS YEAR THAT DOESN'T INCLUDE TAX IN CREASES, THE PRESIDENT WILL VETO IT?

>> WHAT'S CLEAR IS THE THING IS FROM THE HOUSE TO THE SENATE. 12 MEMBERS OF CONGRESS IS CHARGED WITH LOOKING AT THIS WITH THE UNDERSTANDING THAT WE NEED TO BRING SOMETHING BACK THAT CAN PASS THE HOUSE AND THEN INTO LAW. THERE ARE A LOT OF DIFFERENT THINGS, DESCRIBING WHAT IT WOULD TAKE LONG TERM STRUCTURAL CHANGES, BUT THAT WOULD REQUIRE BALANCE. THIS PACKAGE, WHAT IS A BIG SOLUTION. IT HAS EFFECTS, ANNUAL SPENDING PROGRAMS. THE NEXT STEP IS OUR BALANCE.

>> Woodruff: AND ARE YOU ABLE TO SAY THE PRESIDENT WOULD VETO SOMETHING WITHOUT TAX INCREASES?

>> I CAN SPECULATE ON THE WORK OF THE COMMITTEE BEFORE THE CONGRESS EVEN PASSES THE BILL. BUT WHAT WE REQUIRED FOR BALANCE BACK IS TO PUT IT TOGETHER.

>> Woodruff: LET ME MOVE NOW TO WHAT I KNOW YOU'RE HEARING. THEY'RE SAYING THE PRESIDENT AND THE DEMOCRATS GAVE UP AND LET THE REPUBLICANS GET WHAT THEY WANTED.

>> WELL, THIS HAS BEEN AN AWFULLY TOUGH NEGOTIATION. WE SHOULD START WITH FIRST PRINCIPLES. THE PRESIDENT SAID THAT WE NEED TO ADDRESS DEFICIT REDUCTIONS WHILE WE NEED TO INCREASE THE DEBT LIMIT. THESE ISSUES SHOULD NEVER HAVE BEEN CONNECTED THE WAY THEY WERE IN SAVING THE DEFAULT OF THE COUNTRY. WE NEED TO REDUCE SPENDING AND REDUCE THE DEFICIT AND HE THINKS THE TAXES IS PART OF THE WHOLE SOLUTION. HE THINKS THIS IS THE WHOLE SOLUTION. IT'S NOT, IT'S A DOWN PAYMENT. THE DISCRETIONARY IS TOUGH BUT THEY WOULD REQUIRE CHOICE TO BE MADE BUT THEY DON'T DEVASTATE PROGRAMS THE WAY PASSING THE REPUBLICAN HOUSE WOULD.

>> Woodruff: IF THAT'S THE CASE, WHY ARE PROGRESSIVE GROUPS, AND I JUST READ SOME QUOTES FROM A COUPLE OF THEM A MOMENT AGO SAYING NOTHING OF THE RICH, JOBS AND THE MIDDLE CLASS. AND IT LINES UP SOCIAL SECURITY, MEDICARE AND MEDICAID FOR CUTS.

>> LET ME ADDRESS THOSE MAYBE IN ORDER. THERE'S NOTHING IN THIS LEGISLATION THAT SINGLES IT OUT. IF YOU LOOK AT SOMETHING LIKE EDUCATION, WE BUILT IN A PROTECTION FOR EDUCATION FUNDING SO THAT THE NEED TO FUND, WE BUILT ON NON-DEFENSE LEVELS. IT IS A BELT TIGHTENING. IT IS A TOUGH THING TO TAKE A FREEZE GOING A LITTLE BIT LOWER. BUT IT'S ALMOST $3 BILLION, PLUS THE ABILITY TO WRITE BILLS WITH CONGRESS ON PRIORITIES. WE'VE AGREED ON SPENDING LEVELS. WE'RE NOW ARGUING ABOUT PRIORITIES. YOU ASKED THE QUESTION THAT THE REVENUES SHOULD BE PART OF THE WHOLE SOLUTION. THIS IS THE FIRST STEP. IT IS NOT THE WHOLE SOLUTION.

>> Woodruff: AND JACK LEW, THE HOUSE ENDED UP FIGHTING THIS REPUBLICAN TURFS, EVEN THE WHITEHOUSE AND SENATE BEING FOUGHT ON THE HOUSE REPUBLICAN TURF.

>> THERE'S NO DOUBT THE WILLINGNESS TO TWHRETTEN AND UNDERMINING THE FULL FAITH AND CREDIT INTO A TAIL SPIN WITH SOMETHING THAT WAS MEANINGFUL RISK. WITH MEMBERS OF THE OTHER PARTY. THE RESPONSIBILITY LEADERS UNDERSTOOD THAT WAS NOT A PLACE TO GO. AND WE WERE ABLE TO NEGOTIATE A COMPROMISE.

>> Woodruff: FINALLY, ANOTHER COMMENT FROM ONE OF YOUR FRIENDS, THE MINORITY WHIP IN THE HOUSE OF REPRESENTATIVE A LAWYER DEMOCRAT, HE SAID THAT THE PRESIDENT SHOULD HAVE OFFERED THAT MUCH SOONER. IN ESSENCE THAT TIME WAS WASTED AND A LOT OF THIS COULD HAVE BEEN AVOIDED IF THE PRESIDENT HAD CONTHAT.

>> HE'S SHOWN THROUGH HIS ENGAGEMENT OVER THE LAST MONTHS HIS WILLINGNESS TO LEAD AND NEGOTIATE. WE HAVE A BIPARTISAN AGREEMENT BETWEEN THE PRESIDENT AND THE SPEAKER. IT'S SOMETHING OF A TRAGEDY THAT THEY'RE WILLING TO GO TO THE FINISH LINE. ULTIMATELY THE SPEAKER COULD HAVE. I HOPE WE GET BACK ON THE TRACK AND TALK ABOUT THE KIND OF BALANCED POLICY TO DO, IT'S WHAT THE AMERICAN PEOPLE ARE ASKING.

>> Woodruff: JACK LEW THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET. GOOD TO SEE YOU THANK YOU.

>> GOOD TO BE WITH YOU, JUDY.

>> Woodruff: FROM THE LEFT AND THE RIGHT THAT REMAIN -- VOICES FROM THE LEFT AND THE RIGHT THAT REMAIN OPPOSED TO DISAGREEMENT. CONGRESSMAN RAUL GRIJALVA IS A DEMOCRAT AND COCHAIR OF THE CONGRESSIONAL PROCESS IS. TIM HUELSKAMP, I'LL START WITH THE REPUBLICAN LEADERSHIP THIS IS A WORTHY DEED WITH VOTES TO PASS. YOU AND OTHERS IN THE TEA PARTY LARGELY DICTATED THE TERMS OF THE REVENUE, TAX REVENUES, FOR EXAMPLE. SO WHY NOT DECLARE A VICTORY AND VOTE.

>> I WISH THAT ACTUALLY WORKED. WE'RE FEARFUL THAT DESPITE WHAT PASSED, WE WOULD HAVE A CREDIT DOWN GRADE. THEY HAD BEEN SUGGESTING THAT MIGHT BE POSSIBLE AND YOU KNOW, THINGS AREN'T QUITE GOOD ENOUGH AND, YOU KNOW, BUT I WAS ELECTED ON I THINK IT'S TIME FOR A BETTER PACKAGE FOR THE LONG TERM PROBLEM WE HAVE FOR THE NATION.

>> Brown: IF THIS IS PASSED WE MIGHT STILL A DOWN GRADE.

>> I THINK THAT'S POSSIBLE AND VERY LIKELY FROM THE LATEST TESTIMONY WE HAD HAVE S&P, TO PUT US ON THE TRAJECTORY TO PAY OFF TRILLION DOLLAR DEBT. IT'S THE FACT THAT'S THE MESSAGE I'VE HEARD FROM THE CREDIT RATING AGENCIES.

>> Brown: MR. GRIJALVA FROM THE OTHER SIDE OF THE AISLE. WHAT'S THE PRINCIPAL REASON THAT --

>> THE PRINCIPAL REASON IS VERY FUNDAMENTAL. THIS IS NOT HOW TO SACRIFICE A DEAL. THIS DEAL GOT US OUT OF THE SITUATION WHICH IS ONE OF THE PILLARS, WITH AUTOMATIC CUTS GO INTO PLACE THAT WE CARE ABOUT ASK HAVE BEEN DEFENDING, MEDICARE MEDICAID AND SOCIAL SECURITY, AND THEN SUDDENLY HAVE CUTS. THE SCENARIO MR. LEW WAS TALKING ABOUT HOW THIS COMMITTEE IGNORES THE REALITY. WE HAVE A DIVIDED CONGRESS AND SIX AND SIX IS NOT GOING TO GUARANTEE A BIPARTISAN CAMELOT. THERE'S STILL GOING TO BE DIFFERENCES. THE CUTS FOR MANY OF US IS GOING TO HURT JOBS TO NOT DEAL WITH THE GROWTH.

>> Brown: SO YOU DON'T THINK YOU COULD REVISIT THE TAX REVENUE WHILE THERE ARE QUESTIONS YOU SAY OF FAIRNESS LATER ON WITH THIS COMMISSION.

>> NO, I DON'T. MY COLLEAGUES ON THE OTHER SIDE OF THE AISLE ARE GOING TO APPOINT SIX PEOPLE WILLING TO LOOK AT THAT. NUMBER ONE, THE STALEMATE. NUMBER TWO WILL BE ON THE TABLE WILL BE ENTITLEMENTS. THERE'S A STALEMATE. FOR ACROSS THE BOARD, IT'S A VERY EASY AND CONVENIENT WAY TO TAKE CONGRESS OUT OF THE VERY TOUGH DECISIONS TO MAKE AND PUTS IT IN THE HANDS OF THE COMMITTEE, A SUPER CONGRESS AS I LIKE TO CALL IT TO MAKE THE DECISIONS. THAT'S NOT PART, IT'S NOT A COMPROMISE. IT'S A CAPITULATION OF OUR LEADERSHIP AND THE MAJORITY OF THE MEMBERS OF THE PROGRESSIVE CAUCUS.

>> Brown: MR. HUELSKAMP, WHAT DO YOU THINK OF THIS COMMITTEE. YOU PROBABLY DISAGREE WITH EVERYTHING OF MR. GRIJALVA AND MAYBE SOME OF IT YOU AGREE.

>> I THINK IT'S A GRIMMIC. IT'S A RESPONSIBILITY OF 3400 MEMBERS OF CONGRESS AND -- I'M AFRAID WE HAVE NOT FOUND THE SOLUTION WE CAN AGREE OR DISAGREE. FUNDAMENTALLY IT'S FOLKS WHO HAVE TO MAKE THE RIGHT CALL. THEY HAVE TO TIETDEN THEIR BELTS OVER THE LAST THREE YEARS. THEY'VE BEEN TRYING TO BALANCE THEIR BUDGET. THEY EXPECT WASHINGTON TO DO IT. I FRANKLY DON'T THINK THIS IS GOING TO WORK EITHER.

>> Brown: WHERE DOES THIS LEAVE YOU AND THE MEMBERS OF YOUR CAUCUS VIS-A-VIS LEADERSHIP IN YOUR PARTY, AND THEN OF COURSE IN PARTICULAR PRESIDENT OBAMA?

>> WELL, NOT ONLY IS IT THE WHITEHOUSE THAT THE NEGOTIATIONS SIDE OF THIS WHOLE EQUATION IS NOT WORKING OUT FOR US AND I THINK THE PRESIDENT NEEDS TO AMEND THE PREROGATIVE. IF THIS DOESN'T GO THROUGH, AND SECOND OF ALL, WE ARE GOING TO TALK ABOUT A BALANCED AND SHARED SACRIFICE APPROACH AND THE AMERICAN PEOPLE HAVE TO CHIME IN AND THE WAY TO CHIME IN FOR THE PRESIDENT TO BE AN ADVOCATE AND TO LEAD THEM INTO THAT PROCESS.

>> Brown: HOW SERIOUS A MATTER IS THIS TONIGHT IN THIS DECISION. ARE THEY RISKING DEFAULTS.

>> IT'S NOT A RISKING OF DEFAULTS. I DIDN'T LEAD US TO THE WATER HERE. THIS HAS BEEN ONE THAT --

>> Brown: MR. HUELSKAMP, WHAT YOU WERE THE ONE DECIDED.

>> IT'S VERY POSSIBLE OUR CREDIT RATING, WE WANT TO AVOID THAT. THERE'S ENOUGH REVENUES TO PAY OUR CREDITS, THAT'S ABOUT 10% OF OUR REVENUE EACH MONTH. SO IT WAS AN ISSUE THAT WE MEET OUR COMMITMENT TO THE AMERICAN PEOPLE AND FIND A WAY TO PASS A BALANCED BUDGET. THAT'S A FUNDAMENTAL RIRL THAT AMERICANS FOLLOW THROUGH EVERY DAY, AND FRANKLY I JUST DON'T THINK FOLKS -- GOOD ENOUGH IN ORDER TO GET OUR FISCAL HOUSE IN ORDER.

>> Brown: WHERE DOES THIS LEAVE YOU IN YOUR CAUCUS VIS-A-VIS THE LEADERSHIP?

>> WELL, WE HAD CHANGED THE DEBATE IN WASHINGTON AND THE PACKAGES AND WHERE WE COULD BORROW AND SPEND MORE MONEY. NOW WE'RE TALKING ABOUT HOW DO WE BALANCE. I THINK FUNDAMENTALLY WE HAVE AN ENTITLEMENT SYSTEM THAT IS UNSUSTAINABLE. WE HAVE 10,000 -- MEDICAID AND MEDICARE AND SOCIAL SECURITY NEED TO MAKE SOME CHANGES FOR FUTURE GENERATIONS.

>> Brown: MR. GRIJALVA, IT SOUNDS LIKE THE PROSPECT FOR LONGER TERM QUESTIONS ARE READY.

>> IT'S GOING TO BE THE 2012 ELECTION WILL PROVIDE THE AMERICAN PEOPLE WHERE WE GO. I THINK THE ISSUE AT ANOTHER ELECTION IS GOING TO BE BALANCE. WHERE REVENUE GENERATION, WE GET OUR FISCAL HOUSE IN ORDER, THEY NEED TO GO HAND IN HAND. THAT'S PART OF THE SOLUTION AND I THINK THAT'S GOING TO BE A DEFINING ISSUE IN THIS UPCOMING ELECTION.

>> Woodruff: ON WALL STREET TODAY, THE STOCK MARKET INITIALLY RALLIED ON THE NEWS OF A DEAL, BUT A WEAK REPORT ON MANUFACTURING KILLED THE SURGE. THE DOW JONES INDUSTRIAL AVERAGE ENDED WITH A LOSS OF TEN POINTS, CLOSING THE DAY AT 12,132. THE NASDAQ FELL 11 POINTS TO CLOSE AT 2744. NEWSHOUR ECONOMICS CORRESPONDENT PAUL SOLMAN SPENT THE DAY WATCHING THE REACTION IN THE FINANCIAL WORLD, STARTING WITH . ON WALL STREET TODAY THE STOCK MARKET INITIALLY RALLIED ON THE NEWS OF THE DEAL BUT A AK REPORT ON MANUFACTURING KILLED IT. THE DOW JONES INDUSTRIAL AVERAGE ENDED WITH A LAWLS OF 10 POINTS. CLOSING TODAY AT 12,132. NASDAQ FELL 11 POINTS TO CLOSE AT 2744. OUR ECONOMIC CORRESPONDENT SPENT THE DAY WATCHING THE REACTION IN THE FINANCIAL WORLD, STARTING WITH THE BOND MARKET'S RESPONSE. PERHAPS THE MOST VITAL ISSUE SURROUNDING A POSSIBLE DEFAULT. AS PART OF HIS REPORTING ON MAKING SENSE OF FINANCIAL NEWS. ON THE MANHATTAN TRADING FLOOR, ONE OF THE WORLD'S LARGEST MONEY MANAGERS, THE DAY BEFORE WHAT WAS BILLED AT ECONOMIC ARMAGEDDON FOR THE BOND MARKET KICKS OFF QUIETLY. THE VOTE ON THE WEEKEND'S DEBT ñ WHAT HAPPENS TO THE 10 YEAR IOU.

>> CONTRARY TO WHAT A LOT OF PUNDITS WERE SAYING THAT, YOU KNOW,-- THERE WAS ALL THIS STIR ABOUT THE BOND VIGILANTES DEMANDING A HIGHER INTEREST RATE IN ORDER TO LEND US MONEY. THE INTEREST RATE KEPT GOING DOWN.

>> A LOT OF THAT WAS COMPLETELY REMOVED FROM THE REALITY THAT ESSENTIALLY SAYS -- IN FACT, THE RATING AGENCIES STANDARDS AND POORS FIRST SIGNALLED DOWN GRADE IN THE SPRING, INTEREST RATES HAVE BEEN DOING ANYTHING BUT FOLLOW THE SCRIPT.

>> GOING BACK TO APRIL 19 RATING CAME OUT. AS YOU CAN SEE, THE INTEREST RATES JUST WENT LOWER AND LOWER AND LOWER AND LOWER.

>> SO WHAT IT EXPLAINS IS A PLUMMET INCLUDING I REMEMBER THE FINANCIAL TIMES WAS WARNING THAT THE RATE WAS GOING TO GO IN EXACTLY THE OPPOSITE DIRECTION.

>> THE TURMOIL IN THE MIDDLE EAST, THE SO-CALLED ARAB SPRING, IF YOU WILL, AND MORE THE EUROPEAN SOVEREIGN DEBT CRISES.

>> SO PEOPLE SAY I'M GOING TO TAKE THESE EUROPEAN BONDS I'VE GOT, I'M GOING TO SELL THEM, THE MONEY I'M GOING TO BUY U.S. BONDS.

>> AT THE END, IT'S ONLY AS GOOD AS THE ALTERNATIVE. AND FRANKLY THAT'S NO REAL ALTERNATIVES IN THE WORLD TO U.S. GOVERNMENT DEBT. SO IT'S POSSIBLE TO GET AND IT HAS BEEN EXTREMELY DIFFICULT.

>> CONTINUE TO FEEL THAT U.S. TREASURY BONDS OFFER THE SOURCE OF VALUE FOR A LONG TERM INVESTMENT.

>> THE U.S. BOND MARKET, THAT IS. A WOBBLY ECONOMY IS STUCK AND -- DEBT DIRECTOR OF FOREIGN EXCHANGE, DAVID DURST. WHAT'S HAPPENING TO THE DOLLAR RIGHT AT THE MOMENT.

>> GOOD QUESTION. THE DOLLAR IS RALLYING QUITE A LOT AT THE MOMENT. THAT'S THE DOLLAR INDEX TODAY. SO SHOOTING UP, YES, I MEAN EVER SINCE THEY ANNOUNCED THE DEAL WAS ANNOUNCED LAST NIGHT BASICALLY, SINCE THE MORNING WE BASICALLY HAD TO BIG THINGS UP.

>> IT'S UP AGAINST ALMOST EVERY CURRENCY IT TURNS OUT, SAVE THE JAPANESE YEN AND THE SWISS FRANK.

>> THE SWING FRANK IS A BIG GAINER VERSUS THE DOLLAR TODAY.

>> THEY DIDN'T RAISE THE SWISS DOLLAR IN SWITZERLAND, WHY WOULD IT BE REAL YIK AGAINST THE CURRENCY LIKE OURS WHICH IS RALLYING GERNS OTHER CURRENCIES.

>> IT'S A GREAT QUESTION. THE REASON IS AS MUCH AS THE DOLLAR IS A SAFE HAVEN AT THE MOMENT, SWISS IS EVEN A GREATER SAFE HAVEN.

>> FLIGHT TO SAFETY THAT IS SEEMED TO BE IN FULL SWING. BUT THE DOLLAR HADN'T BEEN LOOKING ALL THAT SAFE OVER THE PAST YEAR. GIVEN THE NEW DOLLAR THE FED HAS BEEN PRINTING SAYS DULST. SO WHAT TODAY'S RALLY TRIGGERED BY THE DEBT CEILING DEAL?

>> IT HAS NOTHING TO DO WITH THE DETAIL CEILING. THIS PARTICULAR DETAIL DEAL AS IT IS IS ALMOST ALL SPENDING CUTS. IT WOULD PROBABLY BE LIKELY TO WEAKEN THE ECONOMY NOT STRENGTH I BEEN THE ECONOMY.

>> SO YOU MEAN BECAUSE OF THIS DEBT DEAL, THERE WOULD BE LESS GOVERNMENT SPENDING THAT WOULD CONTRACT THE ECONOMY FURTHER AND THEN THE FED WOULD NEED TO PRINT MORE DOLLARS TO GET THE ECONOMY MOVING AGAIN WHICH WOULD DRIVE DOWN THE VALUE OF THE DOLLAR.

>> THAT VERY WELL COULD BE CORRECT IN THE SHORT TERM. IN THE LONG TERM A GOOD SOLID DEBT DEAL THAT WOULD REDUCE THE LONG TERM DEBT AND DEF SIT WOULD BE BULLISH FOR THE DOLLAR, BUT WE'RE TALKING VERY VERY LONG TELLER. REMEMBER THESE CUTS ARE OVER TEN YEARS.

>> AT THE END OF THIS DAY, THE TEN-YEAR INTEREST RATE WAS DOWN TO 2.75%. THE DOW AND AS MUCH INFLUENCED BY THE DEBT CEILING CRISES.

>> Brown: STILL TO COME ON THE NEWSHOUR, HE BRUTAL CRACKDOWN ON SYRIAN PROTESTORS; THE RAID THAT KILLED OSAMA BIN LADEN; AND THE STEIN FAMILY'S ART COLLECTION. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S KWAME HOLMAN.

>> Holman: EGYPTIAN TROOPS USED ELECTRIFIED CLUBS AND FIRED SHOTS INTO THE AIR TODAY TO END A SIT-IN AT CAIRO'S TAHRIR SQUARE. SEVERAL HUNDRED PROTESTERS HAD CAMPED THERE FOR SEVERAL WEEKS, DEMANDING FASTER POLITICAL CHANGE. CLASHES ERUPTED AFTER SOLDIERS BEGAN DISMANTLING THE PROTESTERS' TENTS. IN THE END, TROOPS BACKED BY ARMORED VEHICLES AND RIOT POLICE CLEARED THE ENTIRE SQUARE. IN TURKEY, PRIME MINISTER RECEP TAYYIP ERDOGAN MOVED TO TIGHTEN CIVILIAN CONTROL OF THE MILITARY AFTER FOUR TOP COMMANDERS RESIGNED ON FRIDAY. IT WAS TO PROTEST THE ARRESTS OF DOZENS OF OTHER GENERALS ALLEGEDLY INVOLVED IN COUP PLOTS. TODAY, ERDOGAN OPENED A MEETING OF THE COUNTRY'S SUPREME MILITARY COUNCIL TO DISCUSS APPOINTING NEW COMMANDERS. HE ALSO TRIED TO SHOW SOLIDARITY WITH THE MILITARY, TAKING PART IN A TRADITIONAL WREATH-LAYING TAKING PART IN CEREMONY.

>> I WISH THAT THE MILITARY COUNCIL WOULD BE GOOD AND USEFUL FOR OUR COUNTRY AND OUR PUBLIC. I RESPECTFULLY REMEMBER OUR PARTERS WHO DIED FOR THE PROTECTION OF OUR COUNTRY.

>> Holman: THE MEETING OF THE MILITARY COUNCIL WILL RUN FOR FOUR DAYS. THE INTERNATIONAL RED CROSS HAS BEGUN DISTRIBUTING FOOD TO MORE THAN 160,000 FAMINE VICTIMS IN SOUTH CENTRAL SOMALIA. THE ANNOUNCEMENT TODAY MARKED THE FIRST LARGE-SCALE RELIEF EFFORT THERE SINCE THE BEGINNING OF THE YEAR. MEANWHILE, MORE SOMALI REFUGEES STREAMED INTO NEIGHBORING KENYA FOR MUCH-NEEDED MEDICAL TREATMENT AND FOOD. AND U.N. OFFICIALS WARNED THE FAMINE IS STILL SPREADING. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO JUDY.

>> Woodruff: NEXT TONIGHT, SYRIA'S GOVERNMENT STEPS UP ITS KILLING OF OPPOSITION DEMONSTRATORS IN THE CITY OF HAMA AND OTHER TOWNS. YESTERDAY, PRESIDENT OBAMA SAID HE WAS APPALLED BY THE ASSAD REGIME'S USE OF VIOLENCE AND BRUTALITY AGAINST ITS OWN PEOPLE. THE UNITED NATIONS SECURITY COUNCIL IS MEETING ON THE ISSUE THIS EVENING. WE START WITH A REPORT NARRATED BY BILL NEELY OF INDEPENDENT TELEVISION NEWS. THEY ARE BURYING THEIR DEAD BUT THEY'RE AIMING TO BURY THE REGIME THAT KILLED THEM. SYRIA'S REVOLUTION AND ITS DEATH TOLL IS GROWING. 84 PROTESTERS KILLED IN ONE TOWN, 29 IN ANOTHER. MORE KILLINGS TODAY. MOST OF THE SLAUGHTER WAS ON THE STREETS OF HAMA, THE SENIOR ARMY ATTACKING WITH TANKS, FIRING INDISCRIMINATELY. THERE'S ONE RESIDENT WHO TOLD US, IT IS STILL GOING ON. IF YOU ARE HOME, YOU WILL BE KILLED. THIS IS THE MESSAGE.

>> THIS RIVER RUNS RED WITH THE BODIES DUMPED INTO IT IN THE LAST TWO DAYS. WE CAN'T PROVE THESE MEN ARE FROM THE REGIMES. WE DON'T KNOW THE VICTIMS ARE PROTESTERS BUT THAT'S WHAT THE INSULT SUGGESTS. THE DEAD MEN ARE CALLED TRAITORS, ANIMALS, TRASH. THE MEN THROW EIGHT OR NINE OF THEM OVER THE BRIDGE, DISPOSED OF WITHOUT BURIAL. THEY COME WITHOUT WARNING. THE PROTESTERS MOVE TOWARDS TANKS, MINGAL WITH TROOPS AND THEN THEY'RE FIRED ON. THE BULLETS AND THE TROOPS DON'T DISCRIMINATE. THIS GIRL WAS SHOT IN HER HOME. THIS BRUTAL CRACK DOWN HAS BEEN LAUNCHED AT THE VERY START OF THE MUSLIM HOLY MONTH OF RAMADAN. IT HAS BEGUN THE REVOLUTION AND THE REGIME'S BRUTAL RESPONSE

>> Woodruff: FOR AN UPDATE, MARGARET WARNER TALKED EARLIER THIS EVENING WITH CORRESPONDENT ABIGAIL FIELDING-SMITH OF THE "FINANCIAL TIMES" IN BEIRUT. ABIGAIL FIELDING-SMITH, THANK YOU FOR JOINING US. THERE ARE REPORTS TONIGHT THAT THE SAAAG GOD LAUNCHED ANOTHER ATTACK OF HAMA IN THE EVENING. THE FIERCEST ONE YET. WHY WOULD THE GOVERNMENT BE GOING WHATEVER AWE MA NOW AFTER THE SUMMER WHEN THE CITY IS BASICALLY FREE OF GOVERNMENT CONTROL?

>> WELL IT'S THE START OF RAMADAN AND PROTESTERS ACROSS THE COUNTRY HAVE THREATENED TO ESCALATE PROTESTS DURING RAMADAN. THEY SAID EVERY DAY WILL BE LIKE FRIDAY IN RAMADAN. I THINK THEY WANTED TO SEND A CLEAR MESSAGE. THEY'VE ALWAYS HAD SLIGHTLY MIXED FEELINGS ABOUT HAMA. ON THE ONE HAND THERE ARE VERY LARGE PROTESTS THERE WHICH OBVIOUSLY THEY DIDN'T LIKE. BUT ON THE OTHER HAND THERE WAS A HUGE MASSACRE THERE IN 1982 AND 10,000 PEOPLE WERE KILLED. THE REGIME IS THOUGHT TO BE WARY OF THOSE MEMORIES. SO I FEEL THEY DIDN'T QUITE KNOW WHAT TO DO. BUT NOW THEY'VE SENT A CLEAR SIGNAL THAT THIS IS A MESSAGE NOT JUST A HAMA TO THE WHOLE PROTEST MOVEMENT, DON'T THINK ABOUT ESCALATING THINGS IN RAMADAN.

>> Woodruff: HOW ARE THE DEMONSTRATORS RESISTING? WHAT DO THEY HAVE TO RESIST WITH?

>> IN HAMA, ONE TOLD ME ALL THEY HAVE REALLY IS STICKS AND STONES LITERALLY. THERE'S NOT VERY MUCH THEY CAN DO UP AGAINST ARMORED VEHICLES AND MACHINE GUNS. THERE ARE REPORTS IN THE EAST WHERE THEY HAVE SLIGHTLY EYES ACCESS TO WEAPONS AND ARE SHOOTING BACK BUT NOT ON A VERY LARGE SCALE I'VE HEARD OF. OVERWHELMINGLY THIS IS A PROTEST MOVEMENT. THAT'S ALL I HEAR THE PEOPLE ON THE GROUND SAYING. THE PROTEST ORGANIZERS ARE VERY KEEN TO KEEP IT THAT WAY.

>> Woodruff: THIS IS THE FIRST DAY YOU SAID THE HOLY MONTH OF RAMADAN. WHAT SENSE DO YOU GET ABOUT WHETHER THE PEOPLE OF SYRIA ARE RESPONDING TO THIS CALL TO ESCALATE THE DEMONSTRATIONS?

>> WELL, I THINK YOU KNOW, EVEN IF THERE HADN'T BEEN A CALL PRIOR TO THE EVENTS OF THE LAST TWO DAYS, PEOPLE ARE VERY ANGRY AT WHAT'S HAPPENED NOT JUST IN HAMA BUT ALSO IN THE EAST AND ELSEWHERE IN SYRIA AND PARTICULARLY THAT IT'S HAPPENING NOW DURING THE HOLY MONTH. I THINK PEOPLE ARE VERY ANGRY. WHENEVER I SPEAK TO ACTIVISTS, THEY SAY THEY ARE DEFIANT AND PEOPLE ARE NOT GOING TO BE SCARED AND COWER INTO THEIR HOUSES. ON THE OTHER HAND, IT'S CLEAR THAT THE REGIME USES SIGNIFICANT LEVEL OF FORCE.

>> Woodruff: THE PROTEST LEADERS HOPE THAT DURING RAMADAN WHEN PEOPLE GATHER AT DUSK TO BREAK THE FACES AT THE MOSQUE, THAT WILL HELP GENERATE BIGGER PROTESTS, MORE FREQUENT ONES?

>> WELL YES. PRAYER TIME HAS BEEN A TRADITIONAL TIME WHEN PROTESTS HAVE REALLY SORT OF STARTED IN EARNEST IN SYRIA BECAUSE IT'S AN OCCASION WHERE PEOPLE GATHER. AND SO OBVIOUSLY IN RAMADAN YOU HAVE MORE OF THOSE OCCASIONS, YOU HAVE THEM EVERY DAY. BUT ALSO SOMEONE I WAS TALKING TO TODAY SAID IT'S ALSO KIND OF THE SPIRIT OF RAMADAN WHICH IS ONE WITH SPIRITUAL TIME WHEN PEOPLE THINK ABOUT WHAT'S IMPORTANT TO THEM AND WHAT THEY WANT TO ACHIEVE.

>> Woodruff: ONE OF THE CITIES WHERE THE ACTIVISTS HAVE URGED PEOPLE TO JOIN IN IS DAMASCUS, THE CAPITAL. WHAT ARE THEY DOING TO COUNTER. WHAT ELSE, WHAT IS THE GOVERNMENT DOING TO COUNTER THAT POSSIBILITY.

>> ONE OF THE THINGS THEY'VE BEEN QUITE KEEN TO DO IS TO CLAMP DOWN ON THE SUBURBS. THERE ISN'T LARGE PROTESTS IN DAMASCUS NOT BECAUSE OF THE SECURITY BUT BECAUSE THERE'S MORE PRESENCE IN DAMASCUS. YOU HAVE A STAKE IN THE SYSTEM WHO SUPPORT THE PRESIDENT EVEN. BUT THERE'S A DIFFERENT MOOD IN THE SUBURBS AND THE SUBURBS HAVE BEEN SEEKING TO KIND OF BUILD MOMENTUM AND TAKE IT INTO THE CAPITAL. AND THERE'S BEEN A BIG CRACK DOWN IN THE SUBURBS.

>> Woodruff: AS YOU POINTED OUT YESTERDAY, WE ALSO SAW GOVERNMENT ASSAULTS IN OTHER CITIES AROUND THE COUNTRY. DOES THE GOVERNMENT HAVE ENOUGH LOYAL FORCES TO ACTUALLY MAINTAIN THAT KIND OF PRESENCE, THAT KIND OF PRESSURE ALL THROUGHOUT THE COUNTRY?

>> WELL, I MEAN IT'S DIFFERENT TO TALK ABOUT THE EXACT CAPACITIES OF THE SYRIAN MILITARY. IT'S NOT TOTALLY TRANSPARENT. THEY'VE GOT A LARGE ARMY BUT AS YOU SAY THEIR LOYALTY IS IN QUESTION. UNLESS THE MILITARY THAT I'VE SPOKEN TO SEEM TO THINK THAT THEY'RE ABLE TO SUSTAIN THE KIND OF DEPLOYMENTS THAT THEY'VE DONE UP UNTIL NOW BUT IF THEY HEART HAVING -- HAVE TO START, THAT WOULD BE STRETCHED.

>> Woodruff: THE SANCTIONS AGAINST SEAR YAWRKS THE SECURITY COUNCIL IS GOING BEHIND CLOSED DOORS AT THE UN, EVEN WHEN WE SPEAK. HOW IS SYRIA WITHSTANDING THE ECONOMIC PRESSURE. HOW MUCH IS SYRIA FEELING IT.

>> ANECDOTALLY THERE'S A LOT OF PRESSURE ON THE SYRIAN POUND. PEOPLE DON'T HAVE CONFIDENCE IN THE CURRENCY. THERE'S REPORTS OF PEOPLE TAKING THEIR MONEY OUT OF COUNTRY. SO OBVIOUSLY THERE'S LOTS TOURISM WHICH IS A SOURCE OF CURRENCY FOR THEM. SO PRESSURE IS BEING HELPED. I DON'T THINK THE LATEST ROUNDS OF SANCTIONS WILL DO TOO MUCH TO ADD TO THAT.

>> Woodruff: FINALLY, I KNOW YOU ARE IN TOUCH WITH THE ACTIVIST CIRCLES. HOW ARE THEY HOLDING UP UNDER ALL THIS PRESSURE FROM THE GOVERNMENT.

>> I'M ALWAYS AMAZED AT THEIR MORALE AND THE WORST THINGS HAPPEN AND THE MORE THINGS GO ON, THE MORE THEY SEEM TO BE DETERMINED AND THEY DON'T SEEM TO BE BEING COWED. BUT HAVING SAID THAT, THINGS ARE VERY DIFFICULT FOR THEM TO MEET UP WITH EACH OTHER AND DISCUSS STRATEGY AND, YOU KNOW, TO PASS ON AND SHARE INFORMATION. SO I THINK THE ONES THAT I'VE SPOKEN TO, THEIR SPIRIT IS STILL VERY STRONG AND IF ANYTHING BEING STRENGTHENED BY THESE CRACK DOWNS. BUT OBVIOUSLY THEY DO HAVE AN EFFECT AND I DON'T THINK ANYONE THINKS IT'S GOING TO BE AN EASY STRUGGLE.

>> Woodruff: ABIGAIL FIELDING-SMITH FROM THE FINANCIAL TIMES, THANK YOU.

>> THANK YOU.

>> Brown: NOW, MORE DETAILS HAVE SURFACED ON THE U.S. RAID THAT KILLED OSAMA BIN LADEN. RAY SUAREZ EXPLORES THAT STORY.

>> Suarez: FOR ALL THE DETAILED PLANNING THAT WENT INTO THE BIN- LADEN OPERATION, THERE WERE MOMENTS WHEN EVERYTHING COULD HAVE GONE WRONG. SOME OF THOSE HAVE BEEN RECOUNTED IN A DETAILED ARTICLE IN THE LATEST "NEW YORKER." THE NAVY SEAL OPERATION BEGAN IN F GHANISTAN AS HELICOPTERS TOOK FOR E PAKISTANI TOWN OFFO ASLOTTABAD, WHEREIN W LEN IEVED TO BE LIVING. JOOLSINSTEBEOLCH SCHMIDL US NOW. IN YOUR TELLING IT TURNS PERHAPS THE MOST CRITICAL DECISION IS MADE BEFORE THE RAID EVEN BEGAN, HAVING MORE HELICOPTERS AVAILABLE.

>> THAT'S RIGHT. IT WAS A LAST MINUTE DECISION BY THE PRESIDENT THAT HE WANTED THE SEALS TO HAVE THE ABILITY TO QUOTE/UNQUOTE FIGHT THEIR WAY OUT OF PAKISTAN. SO THE QUICK REACTION FORCE WHICH WAS COMPRISED OF THE SHAW NOOK HILL -- HELICOPTERS THAT WERE TO LEAVE AFTER THE TWO INITIAL BLACKHAWKS WHICH WAS THE ASSAULT TEAM. THAT NUMBER WAS ADDED. IT'S UP TO FOUR AT THE LAST MINUTE.

>> THAT TURNED OUT TO BE IMPORTANT BECAUSE ONE OF THE HELICOPTERS IN THE RAID CRASHED.

>> THAT'S RIGHT. AS THE FIRST BLACKHAWK MADE HEIGHTS WAY OVER THE TARGET, IT EXPERIENCED THIS BIZARRE ARROW DYNAMIC PHENOMENA CALLED SETTLING WITH POWER WHERE THE PILOT BEGINS -- THE HELICOPTER BEGINS FALLING AND THE PILOT HAS AN INABILITY TO ELEVATE THE HELICOPTER. SO IT ULTIMATELY CRASHED AND THEY HAD TO CALL A CHINOOK.

>> WHAT WAS WAITING FOR THEM WAS GOING TO BE AN EDUCATED GUESS. WAS THERE MUCH MUCH RESISTANCE IN THE COMPOUND.

>> WELL, THE NOTION FOR THE PAST FEW YEARS WE ALWAYS THOUGHT THAT BIN LADEN WAS GOING TO BE SURROUNDED BY THIS TEAM OF 20, 30 BODY GUARDS THAT WERE ALL GOING TO BE READY TO GO TO THE DEATH FOR HIM. IT ENDED UP INSIDE THE HOME IT WAS HIS COURIER AND HIS BROTHER AND 20 YEAR OLD SON WERE THE ONLY ADULT MALES IN THE HOUSE.

>> WHILE THE EXPLOSIONS WERE GOING OFF AND ROUND WERE BEING LOOSED FROM WEAPONS, STANDING OUTSIDE THE WALLS, WHO WAS HE AND WHAT WAS HE DOING THERE.

>> THEY HAD BROUGHT ALONG. SO IN THE FIRST HELICOPTER THAT ARE 12 SEALS AND IN THE SECOND THERE WERE 11 SEALS. CAIRO, THE BELGIAN DOG AND PAKISTANI AMERICAN TRANSLATOR. AND HE WAS OUT THERE. THE TRANSLATOR WAS OUT THERE ESSENTIALLY TO HOLD THE CURIOUS LOCALS AND LOCAL RESIDENTS AT BAY AND TO TELL THEM THAT THERE'S A SECURITY OPERATION GOING ON. OF COURSE THIS IS AN INDIVIDUAL WHO LOOKS LIKE A PAKISTANI AND HE'S SAYING THERE'S A SECURITY OPERATION GOING ON, GO BACK TO YOUR HOMES AND PEOPLE SIMPLY TOOK HIM AT HIS WORD AND TURNED AROUND AND WENT HOME.

>> WHEN THE TEAM WAS MAKING ITS WAY THROUGH THE BUILDING, WERE THEY WORKING BY EDUCATED GUEST. WAS THERE ANY INTELLIGENCE ABOUT THE LAYOUT OF THE INTERIOR OF THE BUILDING.

>> VERY LITTLE. THE SATELLITE PHOTOS THAT WERE TAKEN OF THE COMPOUND HAD BEEN TAKEN PRECONSTRUCTION AND POST CONSTRUCTION. IN THE REHEARSALS IN THE WEEKS LEADING UP TO THE OPERATION ITSELF, THEY HAD PRACTICED WITH A RANGE OF SCENARIOS WHAT THE HOUSE MIGHT LOOK LIKE. BUT THEY HAD VERY LITTLE IDEA. THEY BRAKE INTO THREE-MAN FIRE TEAMS AND THEY BEGAN SORT OF CLEARING METHODICALLY. BUT THEY HAD NO IDEA WHAT THEY WERE ENCOUNTERING AS THEY WENT ALONG.

>> SEALS DID HAVE TO KILL SEVERAL MEN ON THE WAY DEEPER INTO THE BUILDING. BUT FINALLY THEY FOUGHT THEIR WAY INTO OSAMA BIN LADEN'S SET OF ROOMS. WHAT DID THEY FIND?

>> INTERESTINGLY TO GET UP TO BIN LADEN'S ROOM AND EVEN TO GET FROM THE FIRST FLOOR TO THE SECOND FLOOR, THERE HAD BEEN METAL GATES, LOCKED METAL GATES PREVENTING INDIVIDUALS FROM ASCENDING THOSE FLOORS. SO IS THERE WAS A METAL GATE AT THE BASE OF THE STAIRWELL LEADING FROM THE SECOND TO THE THIRD FLOOR. SO THREE SEALS BLASTED THROUGH THAT GATE REACHED THE TOP STAIRS TURNED TO THE RIGHT AND AT THE END OF THE HALLWAY THEY SAW BIN LADEN POKING HIS OWED OUT OF THE DOOR.

>> HOPPER OSAMA BIN LADEN'S LAST MOMENTS DESCRIBED TO YOU.

>> THESE THREE SEALS PRECEDED DOWN THE HALLWAY, THERE WERE TWO WOMEN STANDING IN FRONT OF HIM, HIS FIFTH AND YOUNGEST WIFE AMAL AND ANOTHER WOMAN, WE'RE NOT 100% SURE OF THE IDENTITY. BUT AMAL WAS SCREAMING HYSTERICALLY AT THE MEN, AT THE SEALS IN ARABIC. SHE BEGAN APPROACHING THEM AS IF WE WERE GOING -- NO ONE KNEW EXACTLY WHAT SHE WAS GOING TO DO. THE ASSUMPTION WAS SHE MIGHT HAVE BEEN WEARING A SUICIDE VEST. THE FIRST SEAL SHOT HER ONCE IN THE CALF TO DISABLE HER AND WRAPPED HER IN A BEAR HUG AND DROVE HER AND THE OTHER WOMAN OFF TO THE SIDE. HAVING WILLING TO SOAKED UP THE EXPLOSION IN ORDER TO BE ABLE TO SEAL THE MISSION. THE OTHER SEAL CAME THROUGH THE DOOR AND SHOT BIN LADEN IN THE CHEST AND WHEN HE FELL BACKWARDS ONCE IN THE HEAD.

>> JUST TO CLARIFY, THE BEAR HUG WAS TO SHIELD OTHERS IN THE ROOM FROM THE BLAST IF IT WAS A SUICIDE VEST.

>> EXACTLY. TO ABSORB THE IMPACT OF THIS, OF WHAT COULD HAVE BEEN A SUICIDE BLAST.

>> DID OSAMA BIN LADEN RESIST IN ANY WAY?

>> OH. HE WAS UNARMED AND I SORT OF ASKED IF THERE WERE ANY FINAL WORDS AND ANY SORT OF DIRTY HARRY MOMENTS AND THERE WERE NONE. IT ALL SORT OF HAPPENED VERY SPLIT SECOND BUT HE DID NOT RESIST.

>> HOW DID YOU FIND OUT ABOUT THIS?

>> OVER THE COURSE OF THE PAST TWO MONTHS, I'VE BEEN ABLE TO FIND A NUMBER OF PEOPLE WITH INTIMATE KNOWLEDGE OF THE RAID AND HAVE BEEN ABLE TO SORT OF BUILD PIECE BY PIECE AND BE ABLE TO CONFIRM AFTER ASPECT OF THIS MULTIPLE FILES AND FROM THAT WAS ABLE TO DEVELOP THIS ACCOUNT.

>> HAVE YOU SPOKEN TO ANYONE WHO WAS ACTUALLY ON THE RAID?

>> I'VE NOT SPOKEN TO ANY OF THE 23 SEALS WHO WERE ON THE RAID, NO.

>> THE HELICOPTER THAT CRASHED, WAS CHALK FULL OF ADVANCED TECHNOLOGY. HOW DID THEY HANDLE THAT? THEY COULDN'T BRING IT BACK WITH THEM.

>> THAT'S RIGHT. THE PILOTS FOR THESE HEALTH CARTS FOR THESE VERY PURPOSES CARRY A HAMMER UNDER THE SEAT. THE PILOT STARTED DAMAGING THE PANEL TO DISASSEMBLE HAD. AFTER THAT A DEMOLITION TEAM TOOK OVER. USED GRENADES, C4 CHARGES AND EVENTUALLY THEY EXPLODED THE HELICOPTER.

>> A REFRESHINGLY OLD FASHION. IT'S BEEN SOME TIME NOW. DO WE KNOW MUCH ABOUT WHAT WAS IN THOSE MATERIALS THAT THE SEALS TOOK AWAY FROM THE COMPOUND. HUNDREDS OF POUNDS OF IT.

>> THINGS HAVE EMERGED OVER THE COURSE OF THE PAST COUPLE MONTHS. THE ASSUMPTION IS THAT -- THE ASSUMPTION WAS THAT BIN LADEN WAS MORE OF A SPIRITUAL HEAD AND DIDN'T HAVE MUCH OF AN OPERATIONAL ROLE IN AL-QAEDA. SOME OF THE INTELLIGENCE HAS SUGGESTED OTHERWISE, THAT HE WAS TRYING TO PROMOTE A 9/11 ANNIVERSARY ATTRACT. THERE WERE PLANS, WE DON'T KNOW TO WHAT EXTENT TO ASSASSINATE GENERAL PETRAEUS, THE PRESIDENT. AND THERE WAS PLANS TO STAGE ATTACK ON U.S. TRAIN FACILITIES AS WELL. BUT WE DON'T KNOW SORT OF AT WHAT STAGE OF THE DEVELOPMENT ANY OF THOSE WERE.

>> I GUESS THEY'RE STILL LOOKING AT IT, RIGHT.

>> I'M SURE.

>> NIKOLAS SCHMIDLE OF THE NEW YORKER, THANKS A LOT.

>> THANKS FOR HAVING ME ON.

>> Woodruff: FINALLY TONIGHT, SAN FRANCISCO RECREATES A WORLD- CLASS ART COLLECTION. NEWSHOUR CORRESPONDENT SPENCER MICHELS HAS OUR ENCORE REPORT.

>> Brown: IN TURN OF THE CENTURY PARIS, THE AMERICAN WRITER, GERTRUDE STEIN HELD COURT FOR PARENTERS AND WRITERS AT THE HOME SHE SHARED WITH HER BROTHER AND SISTER-IN-LAW. SHE HAD BEEN RAISED IN OAKLAND, THEN WENT TO BALTIMORE, BUT PARIS WAS WHERE THE ART SCENE WAS. CENTURY OLD PHOTOGRAPHS OF THEIR APARTMENTS SHOWED THE WALLS NEARLY HIDDEN BY PAINTINGS OF PA PAPA CAST OWE AND MAITIES. TODAY THAT AMAZE AUGUST SEAM BLAGOJEVICH OF GROUND BREAKING ART HAS BEEN REASSEMBLE IN THE SAN FRANCISCO MUSEUM OF MODERN ART.

>> EXBUSINESS OWNS THE PIECES THAT WERE OWNED BY THE SOMETIMES FROM FIVE DIFFERENT CONTINENCE, FROM PUBLIC COLLECTIONS, FROM PRIVATE COLLECTIONS, REALLY FROM ALL OVER THE WORLD.

>> Brown: JANET BISHOP ONE OFS THE SHOW'S CURATORS, BUYING PAINTINGS BY UNHERALDED ART FRM PA CAST OWE OR MAITIES. NOT YES FAMOUS OR EXPENSIVE CAVE RISE TO CUBISM AND SURREALISM.

>> THEIR HOMES BECAME THE CROSSROADS FOR DIALOGUE AND ANYONE WHO IS INTERESTED IN SEEING THE MOST INTERESTING NEW ART BEING MADE IN PARIS AT THE TIME REALLY HAD TO GO TO THE STEIN RESIDENCES.

>> Brown: FOR YEARS, BISHOP AND OTHERS CRACKED DOWN THE COLLECTION AND CONVINCED CURRENT OWNERS TO PART WITH THEIR TREASURES FOR EXHIBITION HERE, THEN IN PARIS AND FINALLY NEXT FEBRUARY IN NEW YORK. A VERY EXPENSIVE JOURNEY. IN SAN FRANCISCO THE PAINTINGS WERE EXAMINED MINUTELY ON ARRIVAL FOR PREEXISTING FAULTS OR FLAWS. IN THE MUSEUM'S CONSERVATION ROOM, SOME OF THE WORK RECEIVED A LITTLE TOUCHING UP, A LITTLE CLEANING. THE REMOVAL OF OLD VARNISH. PERHAPS SOME REFRAMING. EVERYBODY BEING VERY CAREFUL. THE STEININGS WHO ARE NOT WEALTHY, THEY HAD A MODEST INHERITANCE FROM A HUT WHO OPERATED CABLE CARS IN SAN FRANCISCO. THEY SPENT MOST OF IT ON PAINTINGS AND SCULPTURES, DESTINED TO BECOME EXTREMELY VALUABLE.

>> GERTRUDE STEIN SAID YOU CAN BUY ART OR CLOTHES BUT YOU COULDN'T DO BOTH. SO THE STEINS DECIDED TO FOCUS ON ARTISTS WHO WERE THEIR PEERS, ARTISTS WHO HAD NOT YET MADE THERE REPUTATIONS.

>> Brown: MATISSE WAS A FAMILY FAVORITE. IN 1996, GERTRUDE STEIN AND HER BROTHER LEO SAW THIS MATISSE IN A GARAGE UNSOALDZ.

>> THEY STEPPED FORWARD HE TEND OF THE EXHIBITION AND OFFERED MATISSE A DISCOUNTED PRICE AND HE ACCEPTED IT. AND AS SOON AS THAT PAINTING GOT TO THEIR HOME, PEOPLE NEEDED TO GO SEE IT. IT HAD BEEN THE MOST NOTORIOUS SUBMISSION TO THAT SALON.

>> Brown: NOTORIOUS BECAUSE EVEN MATISSE'S WIFE WHO WAS THE MODEL WAS EMBARRASSED BY THE COLORS THAT DIDN'T CORRESPOND TO NATURE.

>> IT WAS ONE THING TO DO THAT WITH LANDSCAPE BUT THEN TO TAKE THAT PALLET AND -- PALATE AND PAINT A WOMAN'S FACE GREEN WAS SHOCKING AND UNPRECEDENTED.

>> Brown: THE PAINTING, WOMAN WITH A HAT, IS TODAY REGARDED AS A MASTER MASTERPIECE AND GRACE COVER OF THE CATALOG. THIS PAINTING BISHOP SAYS HAD A PROFOUND INFLUENCE ON PICASSO.

>> IT'S A VERY POWERFUL AGGRESSIVE WAY, AN IMMEDIATE CHALLENGE TO PICASSO HED INTO AF DRAWINGS AND PAINTINGS THAT RESPOND DIRECTLY TO THE BLUE NUDE.

>> Brown: WITH STEIN SCULPTURES AND PICTURES AT SAN FRANCISCO MOMA WOULD BE WORTHY OF A SHOW EVEN IF IT WEREN'T FOR THE STEINS. BUT THE STEINS OF COURSE GIVE A LOT OF ADDED INTEREST.THE CONTEMPORARY JEWISH MUSEUM THEY HAVE A COMANNIAN SHOW ON THE LIFE OF GERTRUDE STEIN.

>> THESE ARE TWO DRIVERS BY DAVID LEVINE.

>> Brown: AS A CHARACTER, STEIN WAS A FASCINATING STUDY AND ONE ART PROFESSOR AWE MAYOR TUESDAY AT STANFORD AND GUEST CURATOR OF THIS STEIN SHOW IS IN HER LIFE AND FRIENDS.

>> MANY FRIENDS WERE RATHER SHORT-LIVED BECAUSE SHE WOULD QUICKLY MOVE ON TO ANOTHER INTEREST, ANOTHER ARTIST, ANOTHER PROJECT THAT IS SHE WAS TAKING ON.

>> Brown: ONE FRIEND SHE DID KEEP WAS HER COMPANION, ALICE B.TOKLAS, A MAJEAOR THIS EXHIBIT.

>> G COLLECTOR.

>> THEY LIKED COLLECTING BUT AFTER A WHILE, HER PUBLIC ENGINE AS A PATRON AND A COLLECTOR BOTHERED HER. SHE WANTED TO BE KNOWN THE SAME WAY PICASSO WAS KNOWN, FOR HER CREATIVE WORK NOT JUST HER COLLECTING OF OTHERS.

>> Brown: STEIN THOUGHT OF HERSELF PRIMARILY AS A WRITER WHOSE WORK IT CONTENDS HAS COME BACK INTO FASHION.

>> SHE WAS ALWAYS JUST A LITTLE OUTSIDE THE MAINSTREAM UNTIL FEMINISM REDISCOVERED HER AND LOOKED AT HER IN A COMPLETELY DIFFERENT LENS.

>> Brown: INCLUDING THE BEST SELLING AUTOBIOGRAPHY OF TOKAS, THERE WAS FOUR SAINTS AND THREE AXIS, AN ALL-BLACK CAST PRODUCED IN 1934. BOTH MUSEUMS ARE SHOWING EXCERPTS. ♪ AS A WRITER AND A COLLECTOR, GERTRUDE WAS A VERY STRONG PERSONALITY WHO ENCOURAGED HER G PAINTED AND SCULPTED. PERHAPS THE MOST FAMOUS PORTRAIT IS BY PICASSO IN BOTH FORMS.

>> HE'S TELLING A WONDERFUL STORY HAVING SAT IN PICASSO'S ARTIST AND AT ONE POINT HE GOT COMPLETELY FED UP. HE WENT OFF TO THE PEER KNEES FOR THE SUMMER AND WHEN HE GOT BACK TO HIS STUDIO, HE REPAINTED THE HEAD COMPLETELY AND MADE HER VERY MASK LIKE AND THAT REALLY WAS A FUNDAMENTAL STEP TOWARD CUBISM.

>> WANTING TO ENSURE HER OWN LEGACY, STEIN LEFT A PICASSO PORTRAIT TO THE METROPOLITAN MUSEUM OF ART THE ONLY PAINTING SHE WILLED TO A MUSEUM. BOTH SAN FRANCISCO SHOWS ARE ATTRACTING LARGE CROWDS AND REMAIN UP UNTIL SEPTEMBER 6TH.

>> AND AGAIN THE MAJOR DEVELOPMENTS OF THE DAY. U.S. HOUSE VOTED 269-161 TO APPROVE THE DEFICIT REDUCTION PLAN AND BY PRESIDENT OBAMA AND CONGRESSIONAL LEADERS AND SEND IT ON TO THE SENATE. ARIZONA CONGRESS WOMAN GABBY GIFFORDS VOTED FOR THE BILLS. RETURNING TO THE HOUSE FOR THE FIRST TIME SINCE BEING SHOT LAST JANUARY. SHE DREW A STANDING OVATION FROM COLLEAGUES IN BOTH PARTIES. AND GOVERNMENT FORCES IN SYRIA ASSAULTED THE CITY OF HAMA AND OTHER TOWNS WHO ARE SECOND DAY KILLING SCORES OF PEOPLE. AND FOR WHAT'S ON THE NEWS HOUR ON-LINE.

>> THERE'S MORE FROM PAUL SOLOMON ON HOW WALL STREET REACTED TO NEWS OF THE DEBT CEILING DEAL. THAT'S ON OUR MAKING SENSE PAGE. ALSO, SPOKE WITH "LOS ANGELES TIMES" STAFF WRITER ABOUT INSIDE THE CARTEL SERIES ABOUT HOW ELICIT DRUGS FROM MEXICO MAKE IT TO THE UNITED STATES. PLUS WE BUILT A NEW WIDGET THAT TRACKS HOW MANY MANY TEMPERATURE RECORDS ARE BROKEN EACH DAY ACROSS THE U.S. YOU CAN FIND IT ON OUR SCIENCE PAGE. ALL THAT AND MORE ON OUR WEBSITE. ALL THAT AND MORE IS ON OUR WEB SITE, newshour.pbs.org. JEFF?

>> Brown: AND THAT'S THE NEWSHOUR FOR TONIGHT. ON TUESDAY, WE'LL LOOK AT THE WINNERS AND LOSERS IN THE POLITICAL WRANGLING BETWEEN PRESIDENT OBAMA AND CONGRESSIONAL LEADERS OVER THE DEBT AND DEFICIT DEAL. I'M JEFFREY BROWN.

>> Woodruff: AND I'M JUDY WOODRUFF. WE'LL SEE YOU ONLINE, AND AGAIN RE TOMORROW EVENING. THANK YOU, AND GOOD NIGHT. MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY: CHEVRON. WE MAY HAVE MORE IN COMMON THAN YOU THINK. AND BY THE ALFRED P. SLOAN FOUNDATION. SUPPORTING SCIENCE, TECHNOLOGY, AND IMPROVED ECONOMIC PERFORMANCE AND FINANCIAL LITERACY IN THE 21ST CENTURY. 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 BHaptioned bycceswgbh.oOM Mrg Ar access.wgbh.org VO:GEICO, COMMITTED TO PROVIDING SERVICE TO ITS AUTO INSURANCE CUSTOMERS FOR OVER 70 YEARS. MORE INFORMATION ON AUTO INSURANCE AT GEICO.COM OR 1-800-947-AUTO ANY TIME OF THE DAY OR NIGHT.