PBS NewsHour; July 27, 2011 3:00pm-4:00pm PDT

Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS

>> Brown: FOR REPUBLICANS THERE WERE GLIMMERS OF UNITY ON A REWORKED DEBT AND DEFICIT REDUCTION PLAN. BUT DEMOCRATS SAID THE LATEST PROPOSAL IS A NON-STARTER. GOOD EVENING. I'M JEFFREY BROWN.

>> Ifill: AND I'M GWEN IFILL. ON THE "NEWSHOUR" TONIGHT, KWAME HOLMAN FOLLOWS TODAY'S DEVELOPMENTS AND WE TALK TO WHITE HOUSE SENIOR ADVISER DAVID PLOUFFE AND ILLINOIS CONGRESSMAN PETER ROSKAM, A MEMBER OF THE REPUBLICAN LEADERSHIP.

>> Brown: THEN, AMID SIGNS OF RENEWED LIFE FOR THE AUTO INDUSTRY. WE EXAMINE THE NEW ROUND OF LABOR TALKS BETWEEN THE U.A.W. AND DETROIT'S BIG THREE.

>> Ifill: RAY SUAREZ GETS AN UPDATE ON THE TURMOIL IN LIBYA.

>> Brown: AND WE CLOSE WITH A PAUL SOLMAN STORY ABOUT A CONVICTED MURDERER AND MIDDLE SCHOOL DROPOUT WHO NOW MAKES $80,000 A YEAR AFTER COMPLETING COLLEGE WHILE BEHIND BARS.

>> THESE ARE MY DREAMS. I FIT IN RIGHT HERE, BUT THIS IS WHAT I'M LOOKING AT, THIS IS WHERE I WANT TO BE, THIS IS WHERE I CAN BE, THIS IS WHERE I DESERVE TO BE.

>> Brown: 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. 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. 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: THE KNOCKS AGAINST HOUSE SPEAKER JOHN BOEHNER'S PLAN FOR SOLVING THE DEBT CRISIS CAME MOSTLY FROM DEMOCRATS TODAY, AS MORE REPUBLICANS GOT ON BOARD. MEANWHILE, FINANCIAL MARKETS NERVOUSLY NOTCHED DOWNWARD. "NEWSHOUR" CONGRESSIONAL CORRESPONDENT KWAME HOLMAN STARTS US OFF.

>> Reporter: REPUBLICAN LAWMAKERS TODAY APPEARED TO RALLY AROUND HOUSE SPEAKER JOHN BOEHNER'S PLAN TO AVOID DEFAULT, EVEN AS IT WAS BEING RE-TOOLED TO ACHIEVE ADDITIONAL SAVINGS. A VOTE ON THE BOEHNER PROPOSAL-- ORIGINALLY PLANNED FOR TODAY-- WAS DELAYED UNTIL TOMORROW AFTER THE NONPARTISAN CONGRESSIONAL BUDGET OFFICE SAID THE BILL WOULD CUT $850 BILLION, INSTEAD OF THE $1.2 TRILLION PROMISED. DESPITE THE UNCERTAINTY ABOUT THE PLAN, A WAVE OF HOUSE REPUBLICANS EMERGED FROM THEIR CLOSED-DOOR SESSION THIS MORNING RESIGNED TO ACCEPT IT. AMONG THEM, FLORIDA FRESHMAN ALLEN WEST, WHO WAS ELECTED WITH STRONG TEA PARTY SUPPORT. DOES IT MEET ALL THE CRITERIA I'D LIKE TO HAVE? NO. BUT I THINK PART OF GOVERNING IS TO BE ABLE TO SAY, THIS IS GOOD ENOUGH FOR US TO GO FORWARD.

>> Reporter: ANOTHER FRESHMAN-- BLAKE FARENTHOLD OF TEXAS-- SAID HE HAD GONE FROM "LEAN NO" TO "LEAN YES."

>> YOU'VE GOT TO CLAIM A WIN WHEN YOU CAN CLAIM A WIN. A FOOTBALL GAME IS A GREAT EXAMPLE. "CUT, CAP AND BALANCE" WAS A HAIL MARY TOUCHDOWN PASS. LET'S GO AND TAKE WHAT WE CAN GET IN THIS. GET THE FIVE YARDS, GET THE FIRST DOWN AND FIGHT THE NEXT BATTLES.

>> Reporter: UNTIL THIS POINT, MANY CONSERVATIVES HAD OBJECTED TO ANY MOVE AWAY FROM THAT SO- CALLED "CUT, CAP AND BALANCE" PLAN, WHICH PASSED THE HOUSE LAST WEEK. IT CALLED FOR $6 TRILLION IN DEFICIT SAVINGS OVER TEN YEARS, PLUS A BALANCED BUDGET AMENDMENT TO THE CONSTITUTION. BUT AS THE AUGUST SECOND DEADLINE HAS MOVED CLOSER, PRESSURE HAS MOUNTED. PHONE CALLS FROM CITIZENS AROUND THE COUNTRY FLOODED MEMBER OFFICES AGAIN TODAY, WHILE ONLINE TRAFFIC BOMBARDED CONGRESSIONAL WEBSITES. AND, THE INFLUENTIAL, REPUBLICAN-FRIENDLY "WALL STREET JOURNAL" EDITORIAL BOARD WROTE: "IF CONSERVATIVES DEFEAT THE BOEHNER PLAN, THEY'LL NOT ONLY UNDERMINE THEIR HOUSE MAJORITY. THEY'LL GO FAR TO RE-ELECTING MR. OBAMA AND MAKING THE ENTITLEMENT STATE THAT MUCH HARDER TO REFORM." STILL, NOT ALL REPUBLICANS WERE CONVINCED, INCLUDING TIM HUELSKAMP OF KANSAS:

>> IT'S NOT ABOUT THE SPEAKER, IT'S NOT ABOUT THE PRESIDENT, IT'S NOT ABOUT THE SENATE LEADERSHIP, IT'S ABOUT THE WHAT THE AMERICAN PEOPLE ARE ASKING FOR. IT'S ABOUT WHAT MY CONSTITUENTS ARE LOOKING FOR. PEOPLE, THEY WANT A SOLUTION. AND THE DEAL-MAKING, THAT'S ALL PART OF THE PROCESS UP HERE, BUT I THINK PEOPLE ARE LOOKING AND SAYING DOES THIS SOLVE THE PROBLEM? AND I DON'T THINK THIS DOES SOLVE THE PROBLEM.

>> Reporter: THE BOEHNER PLAN ALSO FACED A FIRM WALL OF OPPOSITION IN THE DEMOCRATIC CONTROLLED SENATE, WHERE LEADERS TODAY PLEDGED TO TURN BACK THE MEASURE, IF IT SUCCESSFULLY CLEARS THE HOUSE. MAJORITY LEADER HARRY REID:

>> MAGIC THINGS CAN HAPPEN HERE IN CONGRESS IN A VERY SHORT PERIOD OF TIME UNDER THE RIGHT CIRCUMSTANCES. BUT IT APPEARS QUITE CLEAR THAT BOEHNER WAS... FAVOR WAS DONE BY C.B.O. FOR HIM YESTERDAY BECAUSE HIS BILL WAS DOOMED TO FAILURE AND HE CAN JUGGLE THINGS AROUND AND HI HAD A CAUCUS TODAY AND THEY MAY GET IT PASSED BUT IT DOESN'T MATTER. THAT IS A FLAWED PIECE OF LEGISLATION.

>> Reporter: THE C.B.O. ALSO RELEASED ITS SCORE OF REID'S PLAN, PROJECTING SAVINGS OF $2.2 TRILLION. THAT'S A HALF BILLION SHY OF WHAT DEMOCRATS HAD AIMED FOR IN ORDER TO INCREASE THE DEBT LIMIT THROUGH THE END OF 2012. NEW YORK SENATOR CHUCK SCHUMER ARGUED THE NUMBERS DON'T LIE.

>> ASIDE FROM AVOIDING DEFAULT, FROM BEING MORE LONG-TERM, HAVE MORE CUTS! ON PAPER, REPUBLICANS HAVE NO BASIS FOR REJECTING SENATE PLAN.

>> Reporter: BUT THE SENATE'S TOP REPUBLICAN MITCH McCONNELL SAID THE BOEHNER PLAN OFFERED THE ONLY WAY FORWARD.

>> I REMAIN AS COMMITTED AS EVER TO RESOLVING THIS CRISIS IN A WAY THAT WILL ALLOW US TO AVOID DEFAULT WITHOUT RAISING TAXES AND TO CUT SPENDING WITHOUT BUDGET GIMMICKS. THERE'S ONLY ONE OPTION THAT DOES THAT AND THAT'S THE ONE SPEAKER BOEHNER HAS PROPOSED.

>> Reporter: DESPITE THE CONTINUED STALEMATE, THE PRESIDENT OF THE STANDARD AND POORS RATINGS AGENCY SAID HE THOUGHT LAWMAKERS WOULD BEAT THE CLOCK AND NOT RISK DEFAULT. ON WALL STREET TODAY, THE IMPASSE CAUSED STOCKS TO SLIDE. THE DOW JONES INDUSTRIAL AVERAGE LOST MORE THAN 198 POINTS TO CLOSE AT 12,302. THE NASDAQ FELL 75 POINTS TO CLOSE BELOW 2,765.

>> Ifill: I SPOKE TO THE PRESIDENT'S SENIOR POLITICAL ADVISOR DAVID PLOUFFE FROM THE WHITE HOUSE BRIEFING ROOM A SHORT WHILE AGO. DAVID PLOUFFE, THANK YOU FOR JOINING US. SO HIS REPUBLICANS SAY THEY ARE CLOSING RANKS TONIGHT. WHAT DO YOUR HILL ALLIES TELL YOU ABOUT WHERE THINGS STAND?

>> WELL, WE ALWAYS ASSUME THE SPEAKER WILL FIND AWAY TO CLAW TOGETHER THE VOTES FOR HIS PACKAGE. BUT, YOU KNOW, THE SENATE DEMOCRATIC LEADERS SAID THAT PACKAGE IS DEAD ON ARRIVAL, SO WHAT WE NEED NOW IS COMPROMISE. WE NEED THE LEADERS ON CAPITOL HILL TO... THERE'S ACTUALLY QUITE A BIT OF COMMON GROUND BETWEEN THE SENATE AND HOUSE PROPOSAL. THEY NEED TO COMPROMISE IN THE COMING DAYS HERE IS WE CAN AVOID DEFAULT NEXT TUESDAY AND MAKE SURE WE DON'T HAVE THINGS LIKE INTEREST RATE SPIKES. IT'S CLEAR THIS IS ALREADY PUTTING A VERY DANGEROUS CLOUD OVER THE AMERICAN ECONOMY. YOU SEE A LOT OF BUSINESS LEADERS SMALL AND LARGE SAYING THAT THIS IS REALLY PREVENTING THEM FROM INVESTING AND REALLY HAVING THE CERTAINTY THEY NEED TO MOVE FORWARD AND INVEST IN HIRE NEW EMPLOYEES. SO WE NEED TO MAKE SURE TO GET THIS CLOUD OUT FROM THE ECONOMY, DO THE WORK THE AMERICAN PEOPLE SENT EVERYBODY TO DO HERE. MAKE A GOOD DOWN PAYMENT ON DEFICIT REDUCTION AND IN THE COMING MONTHS FINISH THE JOB BECAUSE ENTITLEMENT REFORM, TAX REFORM CLEARLY ARE GOING TO BE LEFT TO CONGRESS OVER THE COMING MONTHS. FILL PILL WHAT DO YOU BASE YOUR OPTIMISM ON THAT THERE WILL BE A DEAL AUGUST 2? TODAY WE SEE THE STOCK MARKET CLOSED THE LOWEST IT HAS IN EIGHT WEEKS.

>> WE'RE GETTING CLOSE. I THINK PEOPLE ARE RIGHT TO BE GETTING INCREASINGLY WORRIED. BUT ALL THE LEADERS-- DEMOCRAT AND REPUBLICAN-- SAID THEY DON'T THINK WE SHOULD GET TO THE BRINK OF DEFAULT, MUCH LESS DEFAULT. SO SOMETIMES THESE THINGS HAPPEN LATE. BUT I HAVE CONFIDENCE THAT... BECAUSE, AGAIN, THE SENATE PROPOSAL AND THE HOUSE PROPOSAL HAVE QUITE A BIT OF COMMONALITY. THERE ARE MAJOR DIFFERENCES THAT NEED TO GET IRONED OUT. BUT IT WOULD JUST BE UNTHINKABLE THAT OUR LEADERS WOULDN'T COME TOGETHER. BECAUSE WE'RE NOT TALKING ABOUT SOMETHING THAT'S TEN MILES APART HERE. IF WE CAN JUST AGREE ON A COUPLE OF THE OUTSTANDING ISSUES, WE CAN BRING THIS TO A CLOSE. NOW, THE PRESIDENT, AS YOU KNOW, IN HIS CONVERSATIONS WITH SPEAKER BOEHNER, WAS HOPING TO DO SOMETHING MUCH BIGGER IN DEFICIT REDUCTION RIGHT NOW. BUT I THINK EITHER OF THESE PROPOSALS HAVE A COMMITTEE OF CONGRESS THAT WILL BE CHARGED WITH COMING BACK TO THE AMERICAN PEOPLE AND THE CONGRESS IN SAYING HERE'S HOW WE WANT TO MOVE FORWARD ON THINGS LIKE TAX AND ENTITLEMENT REFORM.

>> Ifill: LET ME TALK TO YOU ABOUT SPEAKER BOEHNER AND HIS PROPOSAL ON THE TABLE. TWO THINGS: THAT HAS PRESIDENT SPOKEN TO SPEAKER BOEHNER SINCE THE MEETING SO FAMOUSLY BROKE OFF LAST FRIDAY? AND HAVE THERE BEEN CONVERSATIONS BETWEEN THEM? AND ALSO, I JUST WANT YOU TO BE CLEAR. WOULD THE PRESIDENT VETO THE PART OF SPEAKER BOEHNER'S PLAN THAT WOULD CALL FOR A SECOND VOTE TO HAPPEN AT THE END OF THIS YEAR TO RAISE THE DEBT LIMIT?

>> WELL, THE PRESIDENT AND THE ADMINISTRATION HAVE BEEN IN CONSTANT TOUCH WITH CONGRESSIONAL LEADERS-- DEMOCRATIC AND REPUBLICAN. AND WHAT THE PRESIDENT... THE ADMINISTRATION'S BEEN CLEAR. WE DO NOT ACCEPT A SHORT-TERM DEBT LIMIT EXTENSION FOR THIS REASON... AND YOU'RE STARTING TO SEE MORE BUSINESS LEADERS TALK ABOUT THIS, A COUPLE REPUBLICAN SENATORS I BELIEVE TALKED ABOUT THIS TODAY. PARTICULARLY NOW THE BOEHNER PLAN I THINK IS GOING TO HAVE A DEBT CEILING EXTENSION THAT MIGHT NOT EVEN GET YOU THROUGH THE END OF THE YEAR. SO LOOK AT THIS SPECTACLE. YOU KNOW, THE AMERICAN PEOPLE ARE WATCHING THEIR LEADERS IN CONGRESS WRESTLE WITH THIS, PLACING A GREAT BURDEN ON THE ECONOMY. WHY ON EARTH WOULD WE DO THIS A FEW MONTHS FROM NOW? PARTICULARLY IF IT'S AROUND THE HOLIDAY SEASON, WHICH IS ONE OF THE MOST IMPORTANT TIMES IN OUR ECONOMY. SO WE NEED TO GET A LOT OF DEFICIT REDUCTION RIGHT NOW, AND I THINK WE CAN DO THAT. WE NEED TO MAKE SURE THE DEBT LIMIT IS NOT HANGING OVER THE ECONOMY ANY TIME SOON. AND THEN WE NEED TO FINISH THE JOB OF DEFICIT REDUCTION. THE OBVIOUS THING WE HAVE TO DO HERE, OBVIOUSLY, IS KEEP A LASER-LIKE FOCUS ON THE ECONOMY AND ON JOBS AND REDUCING THE DEFICIT IS PART OF THAT BUT NOT ALL THERE IS.

>> Ifill: ONE OF THE THINGS THE PRESIDENT SAID WITHIN THE LAST WEEK IS THAT REVENUES ARE ESSENTIAL IN ORDER TO KEEP THAT LASER FOCUS ON THE ECONOMY. IN OTHER WORDS, TO KEEP THE ECONOMY GOING. YET NEITHER OF THESE TWO PROPOSALS IN FRONT OF RIGHT NOW HAVE ANY REVENUES ATTACHED TO THEM.

>> THEY DO NOT BUT REVENUES WOULD HAVE BEEN PART OF A LARGER PACKAGE WHERE YOU ALSO HAD ENTITLEMENT REFORM. SO WE THINK IT'S VERY IMPORTANT THAT... BECAUSE CONGRESS IS GOING TO COME BACK TO THIS MATTER. EITHER OF THE PROPOSALS-- THE REID OR THE BOEHNER PROPOSAL-- HAVE A COMMITTEE OF 12 MEMBERS OF CONGRESS THAT ARE SUPPOSED TO REPORT OUT ADDITIONAL DEFICIT REDUCTION IDEAS. AND PART OF THAT YOU'RE CERTAINLY GOING TO HAVE TO HAVE TAX REFORM REVENUES AND ENTITLEMENT REFORM. BECAUSE SPENDING CUTS ARE IMPORTANT, IT'S A GOOD DOWN PAYMENT. NOW DO ANYTHING SIGNIFICANT ABOUT THE DEFICIT, YOU'LL HAVE TO DO MORE THAN THAT. NOW, THE REID PROPOSAL HAS MORE SAVINGS THAN THE BOEHNER PROPOSAL. SO THAT'S A BETTER FIRST STEP. BUT WE NEED DO FUNDAMENTAL TAX REFORM. AND BY THE WAY, WE CAN LOWER RATES, CUT TAXES FOR MOST PEOPLE IN THE COUNTRY BUT THE VERY WEALTHY, CORPORATIONS WHO HAVE BEEN ENJOYING SPECIAL LOOPHOLES AND THEN AS THE PRESIDENT WAS PROPOSING... AND, YOU KNOW, WE'VE GOTTEN SOME CRITICISM FROM OUR PARTY. THE PRESIDENT WAS WILLINGING TO DO REALLY TOUGH THINGS AS IT RELATES TO MEDICARE AND MEDICAID EVEN SOCIAL SECURITY IF IT'S DONE CAREFULLY. SO THERE'S NO EASY ANSWERS HERE. IF WE'RE GOING TO REDUCE THE DEFICIT, WE HAVE TO TACKLE THOSE TOUGHER THINGS OF TAX AND ENTITLEMENT REFORM DOWN THE ROAD HERE.

>> Ifill: IS THE WHITE HOUSE WILLING TO COME UP WITH ITS OWN COMPROMISE SEPARATE FROM THE REID AND BOEHNER PLAN TO GET SOMETHING THROUGH RATHER THAN HAVE TO VETO OR AT LEAST ACCEPT SOME KIND OF SHORT-TERM EXSNENGS

>> WELL, WE'RE WORKING VERY CLOSELY WITH FOLKS ON CAPITOL HILL. NOW, MOST OF THE SPENDING CUTS IN EITHER THE REID PLAN OR THE BOEHNER PLAN WERE... A LOT OF THOSE DERIVED FROM THE WORK THAT THE PRESIDENT DID WITH SPEAKER BOEHNER AND THE VICE PRESIDENT DID WITH CONGRESSIONAL LEADERS. AND I THINK KEY THING HERE IS WHERE ARE THE AREAS OF COMPROMISE? YOU HAVE TO MAKE SURE YOU CAN HAVE A SPENDING CUT PACKAGE THAT CAN PASS BOTH CHAMBERS, SO THERE WILL BE WORK TO DO THERE. AND THEN THE HOUSE REPUBLICANS ARE INSISTING ON HAVING ANOTHER DEBT LIMIT VOTE HANGING OVER THE AMERICAN PEOPLE AND THE AMERICAN ECONOMY. AND THAT'S THE WRONG THING TO DO WE WON'T ACCEPT THAT. THERE'S OTHER WAYS, THOUGH, TO MAKE SURE THAT CONGRESS DOES REPORT OUT. BECAUSE OBVIOUSLY EVERYONE WOULD WANT THIS COMMITTEE IN CONGRESS TO WORK. BUT THERE'S SIX REPUBLICANS AND SIX DEMOCRATS. IN THE EVENT THERE'S A STALEMATE YOU WANT TO MAKE SURE THERE'S STILL DEFICIT REDUCTION THAT CONGRESS IS FORCED TO ENACT AND THOSE ARE THE TYPES OF DISCUSSIONS THAT ARE HAPPENING.

>> Ifill: LET'S TALK ABOUT REAL CONSEQUENCES IF THIS DEAL IS NOT REACHED BETWEEN NOW AND AUGUST 2. ON AUGUST 3, THE BIPARTISAN POLICY CENTER SAYS A $23 BILLION CHECK IS DUE TO PAY SOCIAL SECURITY BENEFITS, ONLY $12 BILLION WILL BE COMING INTO THE FEDERAL TREASURY. WHAT DO YOU DO ABOUT THAT? WHAT DO YOU DECIDE NOT TO PAY THAT DAY?

>> WELL, THE TREASURY DEPARTMENT I BELIEVE, LATER THIS WEEK WILL BE LAYING OUT IN MORE DETAIL EXACTLY WHAT WOULD TRANSPIRE HERE. BUT IT'S BEEN PRETTY CLEAR: OUR BORROWING AUTHORITY RUNS OUT AFTER AUGUST 2 AND WE, FOR EVERY $10 WE SPEND, WE OBVIOUSLY BORROW A LOT OF IT. AND SO THIS IS GOING TO HAVE CATASTROPHIC CONSEQUENCES. FIRST OF ALL, WHAT KIND OF MESSAGE DOES IT SEND TO PEOPLE HERE IN THIS COUNTRY AND AROUND THE WORLD IF WE CAN'T DO OUR BUSINESS HERE? THE UNITED STATES OF AMERICA WOULD DEFAULT FOR THE VERY FIRST TIME. YOU RUN THE RISK OF A DOWNGRADE. YOU RUN THE RISK OF RATES GOING UP WHICH WOULD AFFECT MOST SMALL BUSINESSES AND AMERICANS AND OBVIOUSLY AS YOU BEGIN TO RUN OUT OF RESOURCES AND YOU'RE RUNNING ON FUMES, PAYMENTS BEGIN TO GET DELAYED AND THINGS LIKE SOCIAL SECURITY AND VETERANS AND SMALL BUSINESSES AND CONTRACTORS.

>> Ifill: IF THE CONSEQUENCES ARE SO CATASTROPHIC, MR. PLOUFFE WHY WOULD THE PRESIDENT NOT TAKE ADVANTAGE OF HIS EXECUTIVE AUTHORITY TO JUST DECIDE TO DECLARE THIS DEBT CEILING RAISED?

>> WELL, LISTEN, WE'VE LOOKED AT THESE CONSTITUTIONAL ISSUES. IN THE CLOSING DAYS HERE, YOU'RE STARTING TO SEE MEMBERS OF CONGRESS AND OTHERS SAY, WELL, MAYBE THERE'S A CONSTITUTIONAL WAY AROUND THIS PROBLEM. MAYBE THERE'S ACTUALLY MORE MONEY AT TREASURY. THERE'S NO OFF RAMPS HERE. THE ONLY OPTION HERE IS FOR CONGRESS TO DO ITS JOB. WE'VE RUN OUT OF EXCUSES AND WE ARE RUNNING OUT OF TIME.

>> Pelley: DAVID PLOUFFE AT THE WHITE HOUSE. THANK YOU SO MUCH.

>> THANKS, GWEN.

>> Ifill: FOR ANOTHER VIEW, I SPOKE REPRESENTATIVE PETER ROSKAM OF ILLINOIS. HE'S THE CHIEF DEPUTY REPUBLICAN WHIP AND A MEMBER OF THE HOUSE WAYS AND MEANS COMMITTEE. CONGRESSMAN, THANK YOU FOR JOINING US. YOU ARE THE CHIEF VOTE COUNTER IN THE HOUSE REPUBLICAN CAUCUS. WHERE DOES THE BOEHNER PLAN STAND TONIGHT? DO YOU HAVE THOSE 217 VOTES?

>> I THINK THERE'S VERY GOOD MOMENTUM ON THE BOEHNER PLAN. I THINK WHAT MOST MEMBERS OF CONGRESS ARE RECOGNIZING IS THAT THERE'S A FEW OPTIONS THAT THEY FACE, ONE IS TO DEFAULT-- WHICH IS A NON-STARTER, A NON-OPTION-- THE OTHER IS TO ACCEPT SENATOR REID'S PLAN WHICH IS FILLED WITH GIMMICKS-- WITH ALL DUE RESPECT TO SENATOR REID. AND THE OTHER PATWAY FORWARD IS THE PLAN THAT SPEAKER BOEHNER LAID OUT. I THINK MORE AND MORE MEMBERS, THE MORE THEY SEE IN THE PLAN THE MORE COMFORTABLE THEY ARE AND SO WE POE POSE TO MOVE THAT WITHIN THE NEXT COUPLE OF DAYS.

>> Ifill: IN YOUR CAUCUS MEETING TODAY, WHAT DID PEOPLE EXPRESS THAT WORRIED THEM THE MOST ABOUT THIS. WHY ISN'T EVERYONE AUTOMATICALLY IN FAVOR OF THIS?

>> WELL, LOOK, I THINK THERE'S A LEVEL OF CONCERN ABOUT THE SAME SORT OF THEMES THAT WE'VE BEEN HEARING THROUGHOUT THIS ENTIRE DEBATE AND THAT IS THAT THE CUTS DON'T MATCH WHERE WE ARE AS A NATION AND THAT WE CAN ALWAYS GO DEEPER, WHICH IS A PREMISE THAT I COMPLETELY ACCEPT. NOW, THE REALITY IS THAT WE'RE DEALING WITH HARRY REID, WHO CONTROLS THE UNITED STATES SENATE, AND A PRESIDENT OF THE UNITED STATES WHO HAS NOT AUTHORED HIS OWN PLAN AND HAS EVEN RESIST ADD GREAT DEAL OF THESE CUTS ALONG THE WAY. SO WHAT WE'RE TRYING TO DO IS MAKE SURE WE ACCOMPLISH A COUPLE KEY GOALS. NUMBER ONE: MAKE SURE THE OBLIGATIONS OF THE FEDERAL GOVERNMENT ARE MET AND THAT EVERY OBLIGATION IS TAKEN CARE OF. AND, SECONDLY, TO MAKE SURE THAT WE'RE ACTUALLY CUTTING MORE THAN WE'RE RAISING THE DEBT CEILING. THOSE ARE THEMES THAT WE'VE BEEN CONSISTENT WITH THROUGHOUT AND WITHIN THAT FRAMEWORK I THINK THERE'S BEEN A GREAT SPIRIT OF ACCOMMODATION AND TRYING TO MOVE FORWARD.

>> Ifill: IS THERE ANY ACROSS-THE-AISLE BIPARTISAN CONVERSATION GOING ON ABOUT THIS ANYMORE?

>> WELL, LOOK, THERE'S CONVERSATIONS, BUT THEY'RE LARGELY CONVERSATIONS IN PASSING. I THINK AT THIS POINT. BECAUSE THE REALITY IS I DON'T EXPECT ANY HOUSE DEMOCRATS TO VOTE FOR THIS. I THINK THE REALITY IS THIS IS SOMETHING THAT SPEAKER BOEHNER AND LEADER REID NEGOTIATED TOGETHER UNTIL PRESIDENT OBAMA VOICED SOME OBJECTIONS TO LEADER REID ABOUT THIS. SO I THINK IT'S BEEN HAPPENING AT THE LEVEL OF LEADER REID, SPEAKER BOEHNER AND NOW SPEAKER BOEHNER IS PLANNING TO MOVE IT THROUGH THE HOUSE WITH THE SUPPORT OF HIS CONFERENCE.

>> Ifill: WE HAVE HEARD TODAY THAT THE PHONES WERE JAMMED AT THE CAPITOL WITH PEOPLE IN YOUR CONSTITUENTS CALLING IN. IS THAT WHAT YOU'RE HEARING FROM YOUR MEMBERS AS WELL?

>> I THINK'S A HIGH LEVEL OF EXPECTATION ON THE PART OF THE AMERICAN PUBLIC THAT THEIR LEADERS COME TOGETHER AND SOLVE TWO THINGS: ONE IS MAKE SURE THE OBLIGATIONS ARE MET AND THAT WE DON'T GO INTO ANY SORT OF TAIL SPIN AS A RESULT OF THIS. BUT AS IMPORTANTLY, MAKE SURE THAT THE DEBT CEILING ISN'T RAISED JUST WILLY-NILLY WITH NO PRO-CONDITIONS. AND I THINK IF THERE'S A THOUGHTFUL WAY FORWARD-- AND THAT, I WOULD SUBMIT, IS THE BOEHNER PLAN-- THAT ACCOMPLISHES THOSE TWO THINGS I THINK MOST AMERICANS CAN GET THEIR HEADS AROUND THAT AND FEEL A HIGH LEVEL OF CONFIDENCE. WHICH IS WHY I THINK IT'S INTERESTING WHEN YOU WERE INTERVIEWING THE WHITE HOUSE REPRESENTATIVE, HE VERY CAREFULLY DIDN'T THEY THE PRESIDENT WOULD VETO THE BILL. AND I THINK THEY OBVIOUSLY LEFT THE DOOR OPEN BECAUSE THEY KNOW THIS BILL IS GOING TO END UP ON PRESIDENT OBAMA'S DESK.

>> Ifill: BUT THEY DID SAY THE TWO-STEP PLAN, THE VOTING NOW AND VOTING LATER PLAN, WOULD BE DIFFICULT FOR THE ECONOMY.

>> WELL, LOOK, I THINK'S ALL KINDS OF DIFFICULTIES FOR THE ECONOMY. EVEN WORSE AND MORE DIFFICULT FOR THE ECONOMY WAS THE PREMISE THAT PRESIDENT OBAMA CAME TO THE CONGRESS WITH MONTHS AGO AND THAT WAS SIMPLY RAISE THE DEBT CEILING, GIVE AN ADDITIONAL $2.4 TRILLION WITH NO PRE-CONDITIONS. SO THERE'S A GREAT DEAL OF CONCERN AS WE MOVE FORWARD WITH ANY ECONOMIC GROWTH AND I THINK 9.2% UNEMPLOYMENT FIGURE IS ACTUALLY A BODY BLOW TO THE WHOLE AMERICAN ECONOMY. SO WE'VE ALL GOT OUR WORK CUT OUT FOR US. BUT FOR ADMINISTRATION TO LAY AT THE FEET OF THIS DEBT CEILING CONVERSATION ALL THE ECONOMIC WOES I THINK AN OVERSTATEMENT.

>> Ifill: LET ME READ TO YOU SOMETHING SPEAKER BOEHNER SAID TODAY IN A RADIO INTERVIEW AS WE TALK ABOUT THIS COMPROMISE ISSUE OR THIS COMING TO SOME SORT OF AGREEMENT ISSUE. HE SAID "BARACK OBAMA HATES IT, HARRY REID HATES IT, NANCY PELOSI HATES IT. WHY WOULD REPUBLICANS WANT TO BE ON THE SIDE OF BARACK OBAMA, HARRY REID AND NANCY PELOSI? THAT'S BEYOND ME" HE SAID. WHERE DO YOU SEE A SOLUTION WITH THAT KIND OF RHETORIC?

>> WELL, WAS HE REFERRING... I DON'T SEE THE QUOTE. WAS HE REFERRING TO...

>> Ifill: HIS OWN PLAN.

>> JOHN BOEHNER'S PLAN. WELL, ULTIMATELY, I THINK THAT'S A CLUE TO THE PATHWAY FORWARD.

>> Ifill: HOW'S THAT?

>> WELL, I THINK IT'S REPRESENTATIVE OF THE IDEA THAT WHAT IS IT IN THIS PLAN THAT PRESIDENT OBAMA OBJECTS TO? HE OBJECTS TO THE SPENDING RESTRAINTS IN THE PLAN AND ULTIMATELY THE INABILITY TO MOVE FORWARD AND DO THE TYPES OF SPENDING THAT HE'S PROPOSED IN THE PAST. NOW WE'RE DOWN TO THIS WITCHING HOUR, IT IS UPON US. AND I THINK WHAT HAS TO HAPPEN IS COOLER HEADS HAVE TO PREVAIL, WE'VE GOT TO COME TOGETHER AROUND A PLAN, THE BOEHNER PLAN IS THE ONLY ONE THAT CAN GET TO THE PRESIDENT'S DESK, WE NEED TO GET THIS DONE AND THE PRESIDENT NEEDS TO SIGN IT.

>> Ifill: WHAT PATH DO YOU SEE TO THIS GETTING TO THE PRESIDENT'S DESK IF THE SENATE, AS THEY SAY NOW, HAVE NO INTENTION OF ENDORSING AND SUPPORTING THE BOEHNER PLAN?

>> I THINK TWO THINGS. FIRST IS THIS IS SOMETHING THAT LEADER REID DID NEGOTIATE WITH SPEAKER BOEHNER AND TO KNOW JOHN BOEHNER IS TO KNOW HE'S NOT A PERSON THAT OVERSTATES POSITIONS. SO CLEARLY IN THAT NEGOTIATION, LEADER REID DISCLOSED WHERE THE MAJORITY WAS IN THE UNITED STATES SENATE. THAT'S THE FIRST THING. THE SECOND THING IS WE'VE HEARD A LOT OF BLUSTER OUT OF THE UNITED STATES SENATE OVER THE PAST COUPLE OF WEEKS. WE HEARD THE SENATE ADD MONOTISCH HOUSE THAT IT WAS GOING TO BE WORKING TILL THIS ALL WENT TO FRUITION AND ULTIMATELY THE SENATE ADJOURNED LAST WEEKEND. SO I THINK WHEN IT ALL COMES DOWN TO IT AND WE'RE FACED WITH PAYING OUR BILLS AND MEETING OUR OBLIGATIONS, THE SENATE WILL STEP UP, DO THE RIGHT THING, PASS THIS, AND THE PRESIDENT WILL SIGN IT.

>> Ifill: "WALL STREET JOURNAL" EDITORIAL PAGE-- WHICH USUALLY SIDES WITH YOU ON THESE THINGS-- WROTE TODAY THAT THEY BASICALLY THINK REPUBLICAN LAWMAKERS MAY BE SEEKING THE PERFECT OVER THE GOOD IN OPPOSING THE BOEHNER PLAN. IS THAT ABOUT... IS THAT THE WAY YOU SEE IT?

>> WELL, I THINK THE THAT THERE'S... I'VE BEEN INVOLVED IN A LOT OF CONVERSATIONS EVEN WITHIN THE PAST FEW HOURS WITH SOME REPUBLICAN LAWMAKERS WHO WERE RELUCTANT ABOUT THE BOEHNER PLAN TO BEGIN WITH. AND TO THAT POINT THEY'VE RECOGNIZED THAT THE PERFECT THE ENEMY OF THE GOOD AND WE'VE HAD MEMBERS THAT HAVE BEEN VERY ELOQUENT ON THAT POINT AND SO NOW WHAT THEY'RE TRYING TO DO IS TO MOVE FORWARD WITH TWO SIMPLE CONCEPTS. ONE IS MEET THE OBLIGATIONS OF THE FEDERAL GOVERNMENT AND NUMBER TWO, CUT MORE THAN YOU'RE RAISING THE DEBT CEILING.

>> Ifill: HOW MUCH OF THIS IS ABOUT GETTING TO THAT AND HOW MUCH OF THIS IS ABOUT ULTIMATELY FORCING THE PRESIDENT TO CHOOSE?

>> WELL, I DON'T THINK PEOPLE ARE LAYING AWAKE AT NIGHT TRYING TO OPINE AND COME UP WITH SCHEMES ABOUT MAKING THE PRESIDENT CHOOSE. ULTIMATELY, WHAT'S BRINGING EVERYBODY TOGETHER ON ALL OF THESE VOTES IS THE NOTION AUGUST 2 IS A DATE OF CONSEQUENCE THAT HAS TO BE DEALT WITH. SO I WOULDN'T SUBMIT THAT THERE'S ANY, YOU KNOW, POLITICAL POSTURING AND OTHER NONSENSE. I THINK THAT THERE'S A LOT OF FOLKS LOOKING FORA PATHWAY FORWARD AND THAT'S WHERE I THINK JOHN BOEHNER IS TRYING TO LEAD AND I THINK ULTIMATELY THAT WILL BE A SUCCESSFUL EFFORT.

>> Ifill: PETER ROSKAM, REPUBLICAN FROM ILLINOIS, THANK YOU SO MUCH.

>> THANKS, GWEN.

>> Brown: STILL TO COME ON THE "NEWSHOUR": A NEW ROUND OF BARGAINING BETWEEN LABOR AND THE AUTO COMPANIES; THE CONFLICT IN LIBYA, FIVE MONTHS ON AND A SUCCESS STORY ABOUT A CONVICTED FELON. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S HARI SREENIVASAN.

>> Sreenivasan: THE MAYOR OF KANDAHAR WAS ASSASSINATED IN SOUTHERN AFGHANISTAN TODAY. A SUICIDE BOMBER HID EXPLOSIVES IN HIS TURBAN, BEFORE BLOWING HIMSELF UP INSIDE A HEAVILY-FORTIFIED GOVERNMENT COMPOUND. IT'S THE THIRD TALIBAN ATTACK ON AN AFGHAN POWERBROKER IN THE SOUTH IN MORE THAN TWO WEEKS. THE NEW U.S. AMBASSADOR TO AFGHANISTAN RYAN CROCKER SAID IT'S PROOF THE TALIBAN IS SO DAMAGED, IT CAN'T CARRY OUT LARGE-SCALE OPERATIONS. HE SPOKE TODAY IN KABUL.

>> THEY'VE HAD TO KIND OF REGROUP AND FIGURE OUT WHAT THEY CAN DO AND, IN SOME CASES, THAT HAS BEEN ASSASSINATION. WE SAW A VERY SIMILAR PATTERN IN IRAQ. CLEARLY, THESE ARE HORRIFIC ATTACKS BUT THEY CAN ALSO BE INTERPRETED AS A SIGN OF SIGNIFICANT ORGANIZATIONAL WEAKNESS.

>> Sreenivasan: A TALIBAN SPOKESMAN TOLD THE ASSOCIATED PRESS THE KANDAHAR MAYOR WAS TARGETED FOR ORDERING THE DESTRUCTION OF HOMES CITY OFFICIALS CLAIMED WERE ILLEGALLY CONSTRUCTED. TWO CHILDREN WERE KILLED DURING THAT DEMOLITION. THE PRIME MINISTER OF NORWAY TODAY ANNOUNCED AN INDEPENDENT COMMISSION WILL REVIEW HOW LAST WEEK'S TWIN ATTACKS WERE ALLOWED TO HAPPEN. AND MORE DETAILS EMERGED ABOUT THE SELF-CONFESSED KILLER, WHO IS IN POLICE CUSTODY. WE HAVE A REPORT FROM CARL DINNEN OF "INDEPENDENT TELEVISION NEWS."

>> Reporter: BY THE SIDE OF THE LAKE, A SHORT DISTANCE FROM THE ISLAND OF UTOYA, NORWEGIANS ARE STILL GRAPPLING WITH THE ENORMITY OF WHAT HAPPENED IN THIS BEAUTIFUL PLACE. IT'S BEEN REPORTED, ALTHOUGH NOT CONFIRMED BY POLICE, THAT THE NUMBER OF MISSING HAS BEEN DOWNGRADED FROM FIVE PEOPLE TO ONE. THEY HAVE HOWEVER BEEN DESCRIBING THE MOMENT THEY

>> ( translated ): WE CAME INTO A CLEARANCE IN THE FOREST, AND SUDDENLY THERE WAS THE GUNMAN WITH HIS HANDS ABOVE HIS HEAD JUST IN FRONT OF US. WE APPREHENDED HIM IN THE NORMAL MANNER. HIS WEAPONS LAY 50 METERS AWAY ON THE GROUND. WHAT HAPPENED NEXT WAS THAT ONE OF THE POLICE OFFICERS TOOK CONTROL OF THE GUNMAN AND ALL THE OTHERS RAN TO THE VICTIMS TO GIVE FIRST AID.

>> Reporter: THE SURVIVING VICTIMS SAY THEY ARE NOW LOOKING AFTER ONE ANOTHER.

>> PEOPLE ARE SAD. WE SUPPORT EACH OTHER AND TAKE CARE OF EACH OTHER AND ALSO THE PUBLIC IS VERY WARM TOWARD THE PEOPLE WHO ARE INVOLVED IN THIS AND THAT IS VERY GOOD TO KNOW.

>> Reporter: HOW ARE YOU FEELING?

>> I FEEL SAD, I FEEL SCARED, BUT I ALSO FEEL VERY TAKEN CARE OF.

>> Reporter: RECORDED ON A CCTV CAMERA IN A NEARBY SHOP THIS WAS THE MOMENT THE BOMB EXPLODED IN OSLO KILLING EIGHT PEOPLE. MOBILE PHONE FOOTAGE CAPTURES THE CONFUSION OUTSIDE ON THE STREET. IT'S NOW BELIEVED THAT POLICE IDENTIFIED BREIVIK AS HAVING HIRED THE BOMB CAR BEFORE THEY GOT TO THE ISLAND. THIS EVENING NORWAY'S PRIME MINISTER SAID THE GOVERNMENT WOULD CONTRIBUTE TOWARDS THE VICTIMS FUNERAL COSTS AND ANNOUNCED A NEW INVESTIGATION.

>> Reporter: WE ARE GOING TO WE WILL CALL THIS THE 22 JULY COMMISSION AND IT WILL REPORT DIRECTLY TO ME. IT WILL GIVE ITS FINDINGS TO PARLIAMENT.

>> Reporter: A SHORT TIME AFTER HE SPOKE, THE POLICE CONFIRMED THE NAMES OF ANOTHER 13 VICTIMS OF FRIDAY'S ATTACKS. THE YOUNGEST HAD JUST CELEBRATED HER 14th BIRTHDAY WHEN SHE WAS KILLED.

>> Sreenivasan: NORWEGIAN ANTI- TERROR POLICE TODAY DEFENDED THEIR RESPONSE TO REACHING THE ISLAND, AND SAID A BROKEN DOWN BOAT DID NOT DELAY THEIR ARRIVAL. SINCE THE FIRST REPORTS OF SHOOTING ON THE ISLAND, IT TOOK POLICE 90 MINUTES TO ARRIVE ON THE SCENE. A PLANE CARRYING TEN TONS OF FOOD AID LANDED IN FAMINE-HIT SOMALIA TODAY, ENOUGH TO FEED 3,500 CHILDREN FOR ONE MONTH. THE WORLD FOOD PROGRAM SAID IT IS THE FIRST AIRLIFT TO ARRIVE THERE SINCE THE U.N. DECLARED A FAMINE IN PARTS OF SOMALIA LAST WEEK. MEANWHILE, HUMANITARIAN AGENCIES ARE DOUBLING EFFORTS ACROSS THE BORDER IN KENYA, WHERE THOUSANDS OF SOMALIS HAVE FLED FOR FOOD AND SHELTER. THE U.N. ESTIMATES MORE THAN 11 MILLION PEOPLE IN EAST AFRICA NEED AID AS A RESULT OF THE DROUGHT. LANDSLIDES KILLED AT LEAST 36 PEOPLE IN SOUTH KOREA TODAY. THEY WERE TRIGGERED BY TORRENTIAL DOWNPOURS WHICH DUMPED 15 INCHES OF RAIN IN AND AROUND SEOUL IN JUST 17 HOURS. THE DELUGE TURNED THE CAPITAL CITY'S STREETS INTO GUSHING CREEKS. RESCUE CREWS USED ROPES TO PULL PEOPLE TRAPPED IN PARTIALLY SUBMERGED CARS TO SAFETY. WEATHER FORECASTERS WARNED ANOTHER TEN INCHES OF RAIN COULD FALL IN SEOUL THROUGH FRIDAY. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO JEFF.

>> Brown: AUTOWORKERS AND DETROIT'S CARMAKERS HAVE OPENED LABOR NEGOTIATIONS FOR THE FIRST TIME SINCE ESCAPING A NEAR-DEATH EXPERIENCE DURING THE RECESSION. AND THIS TIME THE EXPECTATIONS HAVE CHANGED. KICKING OFF WITH A CEREMONIAL HANDSHAKE AT A PLANT OUTSIDE DETROIT, REPRESENTATIVES OF THE UNITED AUTO WORKERS AND GENERAL MOTORS BEGAN LABOR CONTRACT TALKS TODAY. THE UNION'S FOUR-YEAR CONTRACT WITH THE BIG THREE AUTOMAKERS EXPIRES IN SEPTEMBER. AND THE NEW ROUND OF TALKS COMES AT A CRITICAL TIME FOR THE INDUSTRY. G.M. AND CHRYSLER BOTH FILED FOR BANKRUPCY TWO YEARS AGO AND AT THE TIME THE U.A.W. MADE SIGNIFICANT CONCESSIONS IN WAGES, BENEFITS AND MORE TO HELP KEEP THE COMPANIES AFLOAT. NOW, AMID SOME EARLY SIGNS OF A REBOUND-- G.M., FOR EXAMPLE, HAS REPORTED FIVE CONSECUTIVE QUARTERLY PROFITS-- THE UNION IS EAGER TO REGAIN SOME OF ITS LOSSES. BUT BOTH SIDES TODAY TALKED ABOUT WORKING TOGETHER TO REMAIN COMPETITIVE

>> WE'RE PROVING THAT LABOR AND MANAGEMENT AND GOVERNMENT AND COMMUNITY CAN ALL WORK TOGETHER.

>> Reporter: AT THE, SAME TIME, T

>> Brown: G.M. C.E.O. DAN AKERSON INSISTED IT WAS STILL IMPORTANT TO HOLD DOWN LABOR COSTS.

>> THE WORLD IS QUITE BRUTAL. IT DOES NOT TOLERATE WEAKNESS.

>> Brown: CHRYSLER, WHICH ALSO BOTH G.M. AND CHRYSLER RECEIVED TENS OF BILLIONS OF DOLLAR FROM THE FEDERAL GOVERNMENT TO STAVE OFF COLLAPSE IN 2009. BUT AS OF LAST WEEK, THE U.S. GOVERNMENT NO LONGER OWNS ANY CHRYSLER SHARES AND RETAINS ONLY A MINORITY STAKE IN G.M., STOCK. FOR MORE ON ALL THIS, WE'RE JOINED BY DAVID SHEPARDSON OF THE "DETROIT NEWS." WELCOME BACK.

>> THANKS, JEFF.

>> Brown: NOW, IT'S INTERESTING. THESE TALKS BEGIN, AT LEAST, WITH A SORT OF SENSE OF COMMON TASK OF KEEPING THINGS GOING, RIGHT?

>> BOTH SIDES WANT THIS TO GO WELL FOR OBVIOUS REASONS. SOME OF THE RHETORIC THAT YOU NORMALLY SEE IN THESE EVERY FOUR YEAR LABOR TALKS JUST ISN'T THERE. FOR THE SIMPLE REASON, TWO OF THE THREE COMPANIES DID GO THROUGH NEAR-DEATH EXPERIENCES. THEY RECEIVED $85 BILLION AS AN INDUSTRY AS A WHOLE IN BAILOUTS AND THERE'S REALLY A SENSE THAT TAXPAYERS AND THE GOVERNMENT ARE WATCHING AND THEY DON'T WANT TO LET PEOPLE DOWN BY GOING TO THE MAT OR HAVING ARBITRATION OR NOT GETTING A DEAL DONE ON TIME.

>> Brown: SO THE U.A.W., AS WE SAID, THEY MADE A LOT OF CONCESSIONS. WHAT ARE THEY FOCUSING ON NOW? WHAT DO THEY THINK THEY MIGHT BE ABLE TO GET BACK?

>> THEY MADE A LOT OF CONCESSIONS. SINCE 2003, U.A.W. WORKERS HAVEN'T HAD A PAY RAISE. A LOT OF RETIREE HEALTH CARE COSTS HAVE BEEN OFF LOADED. THEY'VE BEEN PAID FOR WITH STOCK. THE RETIREE RUST IS HELD. NOW THEY WANT TWO THINGS: THEY WANT MORE COMPENSATION. FORD JUST REPORTED $2.4 BILLION PROFITS SO THEY WANT A CHUNK OF THAT AND THEY WANT MORE JOBS. THEY WANT AN ASSURANCE THAT MAYBE JOBS THAT SUPPLIERS HAVE OR THAT HAVE BEEN OUTSOURCED TO TEMPORARY WORKERS CAN GO BACK TO THE UNION.

>> Brown: ON THE COMPENSATION, I MEAN, ONE IMPORTANT THING THAT THEY GAVE WAS THIS... THEY STARTED WITH THIS TWO-TIER WAGE SYSTEM, RIGHT?

>> RIGHT.

>> Brown: SO YOU HAVE NEW WORKERS MAKING A LOT LESS MONEY. IS THAT AN AREA YOU'RE FOCUSING ON.

>> THOSE WORKERS ARE MAKING ABOUT $14 AN HOUR, WHICH TRANSLATES INTO $30,000 A YEAR, NOT A GREAT WAGE FOR WORKING A VERY DIFFICULT JOB. THAT'S A CONCERN. BUT THEY BASICALLY ACCEPTED THE FACT THAT IN ORDER TO BUILD SMALL CARS AND TO BE COMPETITIVE WITH FOREIGN PLANTS WHERE WORKERS ARE MAKING FAR LESS MONEY, THEY'RE NOT GOING TO GET THOSE WAGES BACK. BUT THEY ARE LOOKING AT SOME WAY TO GIVE MORE INCENTIVES THROUGH PROFIT SHARING. REMEMBER, THE BIG THREE STILL HAVE NET COSTS MUCH HIGHER THAN HYUNDAI OF VOLKSWAGEN OR TOYOTA IN TERMS OF OVERALL COSTS. AND IN PART BECAUSE THEY HAVE SO MANY RETIREES AND THEY HAVE VERY LARGE PENSION COSTS AND WHERE THOSE OTHER COMPANIES DON'T HAVE THE TYPE OF RETIREE BASE.

>> Brown: IN TERMS OF THE NUMBER, THE JOBS YOU WERE REFERRING TO, I READ THIS TODAY, I WANT TO MAKE SURE I GET IT RIGHT HERE. THE U.A.W. HAS LESS THAN HALF THE NUMBERS OF EMPLOYEES AT THE BIG THREE THAN IT DID FIVE YEARS AGO.

>> ABSOLUTELY RIGHT.

>> Brown: THAT'S ASTOUNDING.

>> IN 1979 THERE WERE 1.5 MILLION U.A.W. WORKERS, 600,000 OF THE BIG THREE. IN 2004 IT WAS 230,000, TO TODAY IT'S 111,000. THEY'VE SUFFERED ENORMOUS REDUCTIONS AND HUNDREDS OF THOUSANDS OF WORKERS HAVE TAKEN BUYOUTS IN THE LAST FEW YEARS. SO THE COMPANIES ARE BRINGING MORE CARS ONLINE. THEY CAN USE... THEY CAN DANGLE MORE JOBS AND MORE PRODUCTS AND MORE EMPLOYMENT TO THE U.A.W. AS A CONCESSION BECAUSE THEY DON'T WANT TO INCREASE THEIR HOURLY WAGE RATE BECAUSE THEY'RE STILL PAYING MORE ON AVERAGE THAN THEIR FOREIGN COMPETITORS.

>> Brown: BUT FOR THE UNION IT'S IN A SENSE FIGHTING FOR SOME RELEVANCY HERE, I GUESS, RIGHT?

>> WELL, SURVIVAL BASICALLY. THERE'S TWO THINGS THE UNION NEEDS TO DO. THEY NEED TO GET A CONTRACT THAT THEIR MEMBERS WILL ACCEPT. THEY ALSO HAVE TO SEND A MESSAGE TO THE FOREIGN COMPANIES. THEY HAVE BEEN TRYING DESPERATELY TO ORGANIZE THE TRANSPLANTS. TOYOTA, HONDA, NISSAN, AND, FRANKLY, THEY'VE HAD NO SUCCESS. AND THEY'VE TRIED THIS FOR DECADES AND THE NEW WAUB PRESIDENT BOB KING HAS MADE THIS A GOAL. IF THEY DON'T ORGANIZE THE TRANSPLANTS THEY ARE FOREVER GOING TO BE SORT OF SLIDING DOWN THE SCALE. IT'S HARD TO CONVINCE THE DETROIT THREE TO PAY HIGHER WAGES IF YOUR COMPETITORS ARE PAYING LESS. AND THE ONLY WAY THEY THINK THEY CAN GET PARITY IS IF THEY CAN ORGANIZE THE TRANSPLANTS.

>> Brown: NOW THEY STARTED, AS WE SAID, THE TALKS WITH G.M. TODAY. CHRYSLER STARTED ON MONDAY. WOULD W THOSE TWO COMPANIES, THE U.A.W. SIGNED A NO-STRIKE CLAUSE AS PART OF THE BANKRUPTCY AGREEMENT. BUT NOT WITH FORD. NOW THOSE TALKS START FRIDAY. FORD IS IN A SLIGHTLY DIFFERENT SITUATION. COULD THAT CHANGE THE NEGOTIATION OR THE NATURE OF THE NEGOTIATION WITH FORD?

>> REALISTICALLY, NO. THEY DON'T WANT TO HURT THE ONE AMERICAN COMPANY THAT DIDN'T GET A BAILOUT. I MEAN, THEY TEND TO TREAT THEM THE SAME. BUT I... FRANKLY, WORKERS AT FORD DID REJECT CONCESSIONARY DEAL TWO YEARS AGO THAT WAS ACCEPTED BY WORKERS AT CHRYSLER AND G.M. BECAUSE OF THE BAILOUT. SO I THINK REALISTICALLY YOU WILL NOT SEE A STRIKE AT FORD EVEN THOUGH LEGALLY YOU COULD GIVEN THE IMPACT YOU HAVE ON THESE COMPANIES. IT'S STILL VERY... THESE COMPANIES AREN'T OUT OF THE WOODS. THEY ARE MAKING MONEY BUT NO ONE KNOWS IF AUTO SALES WILL CONTINUE, IF THE DEBT WILL... PEOPLE WON'T BE ABLE TO GET CREDIT GIVEN ALL THE UNCERTAINTY. SO BE VERY RISKY FOR BOTH THE COMPANY AND THE UNION TO GO DOWN THE STRIKE ROAD.

>> Brown: FINALLY WE'VE MENTIONED ALL THAT TAXPAYER MONEY, RIGHT? THE GOVERNMENT IS NOT AT THE TABLE ANY LONGER, RIGHT? BUT YOU'RE SAYING THAT THE FACT OF IT IS THE POLITICS IS STILL IN THE AIR.

>> OH, ABSOLUTELY. PRESIDENT OBAMA'S MADE THE SURVIVAL AND THE REBIRTH OF THE DETROIT THREE A BIG PART OF HIS REELECTION CAMPAIGN. WERE THE COMPANIES TO NOT REACH A DEAL OR SOMEHOW FIND A TECHNICALITY TO STRIKE, IT WOULD BE A DISASTROUS MOVE ON THE P.R. FRONT FOR BOTH THE UNION AND THE COMPANIES AND THESE COMPANIES HAVE GOTTEN LOTS OF MONEY, G.M. AND CHRYSLER, IN TAXPAYER MONEY, AND THEY'VE SENT THE MESSAGE WE OWE IT TO THE TAXPAYERS TO GET THIS RIGHT, TO KEEP THE INDUSTRY ON THE PROPER FOOTING, TO GET A CONTRACT THAT BOTH REWARDS THE MEMBERS BUT DOESN'T MAKE THE COMPANIES UNCOMPETITIVE. SO YOU KNOW IT'S PROBABLY GOING-TO-GO RIGHT DOWN TO THE WIRE, SEPTEMBER 14. NOT UNLIKE THE DEBT CEILING.

>> Brown: (LAUGHS) I WAS THINKING THE SAME THING. BUT THIS ONE WE'RE PRETTY SURE WILL GET DONE. DAVID SHEPARDSON, THANKS AGAIN.

>> THANKS, JEFF.

>> Ifill: NEXT, LIBYAN REBELS GAIN FRIENDS ABROAD BUT NOT MUCH GROUND AT HOME. RAY SUAREZ HAS OUR REPORT.

>> Suarez: BRITAIN TODAY ADDED ITSELF TO A LIST OF MORE THAN 30 COUNTRIES, INCLUDING THE UNITED STATES, NOW GIVING DIPLOMATIC RECOGNITION TO THE REBELS' NATIONAL TRANSITIONAL COUNCIL. BRITISH FOREIGN SECRETARY WILLIAM HAGUE:

>> THE NATIONAL TRANSITIONAL COUNCIL HAS SHOWN ITS COMMITMENT TO A MORE OPEN AND DEMOCRATIC LIBYA, SOMETHING THAT IT IS WORKING TO ACHIEVE THROUGH AN INCLUSIVE POLITICAL PROCESS. THIS IS IN STARK CONTRAST TO QADDAFI WHOSE BRUTALITY AGAINST THE LIBYAN PEOPLE HAS STRIPPED HIM OF ALL LEGITIMACY.

>> Suarez: HAGUE ALSO SAID THE MOVE PAVES THE WAY FOR THE REBELS TO GET ACCESS TO $150 MILLION OF LIBYAN OIL MONEY HELD IN BRITAIN. AND HE ANNOUNCED THE EXPULSION OF THE FEW REMAINING ENVOYS FROM COLONEL QADDAFI'S REGIME WITHIN THREE DAYS, BUT THEY COULD REPORTEDLY BE GIVEN MORE TIME IF THEY CHOOSE TO DEFECT. QADDAFI, MEANWHILE, CONTINUES TO REJECT CALLS TO STEP DOWN AND IN A FURTHER ACT OF DEFIANCE, LIBYAN STATE TELEVISION YESTERDAY SHOWED THE LOCKERBIE BOMBER ABDELBASET AL MEGRAHI AT A PRO-GOVERNMENT RALLY. HIS APPEARANCE COMES NEARLY TWO YEARS AFTER HE WAS RETURNED FROM BRITAIN ON HUMANITARIAN GROUNDS BECAUSE HIS DOCTORS SAID HE WAS MONTHS AWAY FROM DYING FROM CANCER. ON THE GROUND IN LIBYA, A VIRTUAL STALEMATE CONTINUES. OVER THE PAST FIVE MONTHS NATO HAS FLOWN MORE THAN 6,000 BOMBING SORTIES ON GOVERNMENT TARGETS. BUT PRO-QADDAFI FORCES HAVE STILL BEEN ABLE TO KEEP THE REBELS FROM MAKING SIGNIFICANT ADVANCES ON THE CAPITAL TRIPOLI. ANTI-QADDAFI FORCES CONTROL MUCH OF THE EAST AND POCKETS IN THE WEST. THE REBELS SAY THEY WILL CONTINUE TO FIGHT DURING THE HOLY MONTH OF RAMADAN, WHICH BEGINS NEXT WEEK. FOR MORE, WE TURN TO OMAR TURBI, A LIBYAN-AMERICAN BUSINESSMAN AND A NON-OFFICIAL ADVISOR TO THE REBELS. HE'S TRAVELED TO LIBYA THREE TIMES SINCE THE UPRISING BEGAN INCLUDING JUST THREE WEEKS AGO. MR. TURBI, NOW THAT THE LIST OF GOVERNMENTS RECOGNIZING THE NATIONAL TRANSITIONAL COUNCIL IS MORE THAN 30 COUNTRIES LONG, MAYBE IT'S TIME ASK WHETHER THIS IS SYMBOLIC DIPLOMACY OR WHETHER IT REALLY STRENGTHENS THE HANDS OF THE COUNCIL.

>> THE U.K.'S RECOGNITION OF THE TRANSITIONAL NATIONAL COUNCIL IS A DEFINITE AND A CLEAR SIGNAL TO THE CYNICAL REGIME IN TRIPOLI THAT THE WORLD-- THE U.K., THE IMPORTANT POWERS OF THE WORLD-- NO LONGER RECOGNIZE THE LIBYAN REGIME AS LEGITIMATE AND RELEASING $150 MILLION TO THE TRANSITIONAL NATIONAL COUNCIL IS A VERY GOOD THING. AS A MATTER OF FACT, FROM WHAT I KNOW, THERE'S AT LEAST $3 BILLION IN SAFES IN QADDAFI'S NAME IN LONDON, $900 MILLION OF WHICH WERE TRANSFERRED TO THE U.K. ON FEBRUARY 22 AND THAT MAY COME AS A SURPRISE TO YOUR AUDIENCE THAT THERE'S NOT ONLY $34 BILLION OF LIBYAN ASSETS IN THE UNITED STATES, THERE'S NORTH OF $120 BILLION, ACCORDING TO A RELIABLE SOURCE IN THE UNITED STATES GOVERNMENT.

>> Suarez: SO, MR. TURBI, THIS CLEARS THE WAY, THIS RECOGNITION FOR A MORE RAPID PROCESSING OF THESE ACCOUNTS? A MORE RAPID TURNOVER OF PROPERTIES AND MONIES AND ASSETS THAT MIGHT BE HELD FOR THE GOVERNMENT OVERSEAS?

>> YOU KNOW, IT'S UP TO THE TRANSITIONAL NATIONAL COUNCIL AND THE LIBYAN PEOPLE, PARTICULARLY IN THE EASTERN PART OF LIBYA, TO EMPLOY THE PROPER LEGAL MECHANISMS TO GET ACCESS TO THOSE FUNDS. I HAVE BEEN TRYING TO PERSUADE MANY MEMBERS OF THE TRANSITIONAL NATIONAL COUNCIL, THE EXECUTIVE COMMITTEE THAT'S PART OF THE TRANSITIONAL NATIONAL COUNCIL TO HAVE THE RIGHT LEGAL FRAME, THE RIGHT LAWYERS, THE RIGHT METHODOLOGY TO HAVE ACCESS TO THE FUND JUST FOR THE FACT THAT THE UNITED STATES AND BRITAIN RECOGNIZE LIBYA IT DOESN'T MEAN THAT THE FUNDS ARE GOING TO BE READILY AVAILABLE. AS A MATTER OF FACT, ABOUT THREE WEEKS AGO, SECRETARY CLINTON COMMITTED $600 NOT THE COUNCIL AND GUESS WHAT? THEY DIDN'T EVEN KNOW, THEY WERE TRIPPING ALL OVER THEMSELVES AND DIDN'T KNOW HOW TO HAVE ACCESS TO THE MONEY. SO IT'S VERY IMPORTANT FOR THE TRANSITIONAL NATIONAL COUNCIL IN BENGHAZI TO KNOW THAT JUST SIMPLY BECAUSE OF THE U.S. AND U.K. RECOGNIZING THEM THE MONEY IS NOT GOING TO START FLOWING.

>> Suarez: ONE BIG TOPIC OF DISCUSSION BETWEEN ALL THE COUNTRIES INVOLVED IS THE CIRCUMSTANCES UNDER WHICH COLONEL QADDAFI MIGHT LEAVE LEADERSHIP AND WHETHER OR NOT HE WOULD LEAVE THE COUNTRY. BUT HAS THE INTERNATIONAL CRIMINAL COURT EFFECTIVELY SLAMMED THE DOOR BY SAYING NO, HE CAN'T LEAVE AND GO ANYWHERE, HE CAN'T RETIRE, WE WANT TO TRY HIM?

>> WELL, THE COUNCIL HAS BEEN UNDER PRESSURE FROM FRANCE, THE U.K., ITALY AND THE UNITED STATES IN THE LAST TWO AND A HALF WEEKS, THREE WEEKS, TO TRY TO REACH A POLITICAL SOLUTION BECAUSE AS YOU WELL KNOW, NATO DID NOT ANTICIPATE THE WAR TO EXTEND AND GO ON THIS LONG. SO THERE IS FATIGUE WITHIN NATO, THERE IS THE AMMUNITION THAT THEY HAVE BEEN USING IS RUNNING A LITTLE BIT LOW BUT I CAN TELL YOU ONE THING. THERE ARE ONLY THREE OPTIONS, NONE OF WHICH ARE POLITICAL SETTLEMENTS WITH THE LIBYAN REGIME BECAUSE OF THE NATURE OF THE PSYCHOPATH QADDAFI HIMSELF AND HIS FAMILY. YOU CAN'T REALLY LEAVE THE MAN IN THE COUNTRY. HE WILL CAUSE TROUBLE. IF YOU LET HIM GO OUTSIDE WITHOUT BEING TRIED AT THE HAGUE HE WILL ALSO CAUSE TROUBLE THERE TOO. SO THE ONLY THREE OPTIONS IN MY OPINION IS THAT HE EITHER SURRENDERS TO THE COURT OR GETS KILLED BY NATO WHICH IS SOMETHING THAT I'M SURE NOBODY WOULD BE SAD ABOUT OR BASICALLY HAVING TROOPS ON THE GROUND WHICH I'M BEGINNING TO ADVOCATE RECENTLY IF WE CAN ACTUALLY CONVINCE OUR BROTHERS IN THE REGION-- EGYPT OR THE ARAB LEAGUE OR POSSIBLY OTHER WESTERN NATIONS-- TO STEP UP AND BRING SOME BOOTS ON THE GROUND AND FINISH THIS. BECAUSE THE COORDINATION BETWEEN THE LIBYAN TRANSITIONAL NATIONAL COUNCIL AND NATO, TO BE HONEST WITH YOU, HAS NOT BEEN IN THE BEST OF COORDINATION. SO WE NEED TO PUT AN END TO THIS AND WE NEED TO ACTUALLY DO BETTER. BUT I MUST COMMEND SECRETARY HILLARY CLINTON FOR HER LEADERSHIP AND STEERING THE CONTACT GROUP THAT HAS BEEN CONVENING. I WOULD SAY THE THIRD, FOURTH TIME NOW IN VARIOUS OCCASIONS OF THAT REGION SO WITHOUT HER ACTUALLY TENACITY AND PUSH AND COORDINATION AND STAYING ON TOP OF THIS, I THINK SITUATION WOULD HAVE BEEN A LITTLE BIT DIFFERENT

>> Suarez: QUICKLY, SIR, BEFORE WE GO, CAN WE TALK ABOUT CONDITIONS IN THE COUNTRY CONTROLLED BY THE NATIONAL TRANSITIONAL COUNCIL IN ARE YOU RUNNING OUT OF THINGS: FOOD, FUEL, OTHER SUPPLYS?

>> YOU KNOW, THEY'RE MUCH BETTER OFF IN EASTERN LIBYA THAN THEY ARE IN TRIPOLI. IT'S MISERABLE IN TRIPOLI AND IN THE WESTERN PART OF LIBYA. I HAPPEN TO HAVE VISITED SOME PARTS OF THE WESTERN PARTS AND ON MY WAY OUT FROM BENGHAZI TO TUNISIA ABOUT THREE AND A HALF WEEKS AGO AND BENGHAZI THINGS WERE LESS SECURE MID TO LATE MARCH JUST AT THE BEGINNING OF THE BOMBING BY NATO WHEN THEY WERE IMPLEMENTING THE NO-FLY ZONE. BUT MY RECENT VISIT, THE COUNCIL HAS BECOME MORE POLITICAL, THEY'RE... THEIR POLITICAL PROCESS AND DEMOCRATIC PROCESS ARE MUCH BETTER. THEY HANDLE MANY MORE THINGS, BUREAUCRATIC THINGS, FOR WHOLE EASTERN PART OF THE COUNTRY, BELIEVE IT OR NOT, AND ALSO THE WESTERN PART OF THE COUNTRY. THINGS THAT HAVE NOTHING TO DO WITH THE EXECUTION OF THE WAR OR EXECUTION OF THEIR DEALINGS WITHOUT IN THE OUTSIDE WORLD. AND DURING THE A FOUR-WEEK PERIOD A STUDY WAS DONE BY THE NATIONAL DEMOCRATIC INSTITUTE WHICH IS ON MY WEB SITE, OMAR TURBI.ORG, IT SHOWS HOW MUCH PROGRESS THE COUNSEL HAS MADE AND HAS DONE.

>> Suarez: OKAY, MR. TURBI, WE'LL HAVE TO STOP IT THERE BUT WE WILL BE FOLLOWING THIS STORY. THANK YOU FOR JOINING US.

>> ALL RIGHT. THANKS VERY MUCH TO YOU.

>> Brown: FINALLY TONIGHT, THE SECOND OF TWO REPORTS ABOUT COLLEGE CLASSES FOR CONVICTS. LAST NIGHT, "NEWSHOUR" ECONOMICS CORRESPONDENT PAUL SOLMAN PROFILED A UNIQUE PROGRAM AT A NEW YORK STATE PRISON. TONIGHT: WHAT HAPPENS TO SOME OF THOSE FELONS WHEN THEY LOOK FOR A JOB. PART OF PAUL'S ONGOING REPORTING: "MAKING SENSE OF FINANCIAL NEWS."

>> Reporter: A HOMECOMING OF SORTS FOR ANTHONY CARDENALES, AT WOODBOURNE PRISON IN UPSTATE NEW YORK.

>> THIS IS THE FIRST TIME THAT I'M LOOKING AT YOU FROM THIS SIDE.

>> Reporter: WHEN RELEASED TWO YEARS AGO AT AGE 34, HE'D SPENT HALF HIS LIFE LOCKED UP, WITH MANY OF THE GUYS IN THIS ROOM. AND THE GUYS WHO GUARD THEM.

>> IT FELT REALLY GOOD WALKING IN THIS DOOR TODAY AND THESE GUYS LOOKING AT ME AND THEIR EYES OPENING UP THERE, YOU KNOW? ( APPLAUSE )

>> Reporter: YOU CAN UNDERSTAND THE EYE-OPENING. WHEN CARDENALES LEFT THIS PLACE TWO YEARS AGO, HIS JOB PROSPECTS SEEMED, WELL SUB-OPTIMAL. A JOB INTERVIEW CAN EVEN GO WELL, UNTIL.

>> OH, I SEE HERE YOU'VE BEEN CONVICTED OF A FELONY. HOW LONG AGO? I WAS CONVICTED IN 1992. ARRESTED IN 1991. OH, WOW, THAT'S A LONG TIME AGO! HOW LONG HAVE YOU BEEN HOME? 30 DAYS.

>> Reporter: THE CLICHE IS THAT PRISONS ARE SCHOOLS FOR SCOUNDRELS. BUT DURING HIS TIME BEHIND BARS, CARDENALES SEEMS TO HAVE BECOME, QUITE LITERALLY, A DIFFERENT MAN. IF MANY OF US OUTSIDE COULD BE TIPPED TO VIOLENCE BY EXTREME CIRCUMSTANCE, HE APPEARS TO HAVE BEEN TIPPED THE OTHER WAY, BY THE BARD COLLEGE PRISON PROGRAM. JUST TWO YEARS OUT OF JAIL, CARDENALES IS A RISING MIDDLE MANAGER AT AN ELECTRONICS RECYCLING COMPANY IN WESTCHESTER COUNTY, N.Y., MAKING $80,000 A YEAR. HE'S PROOF THAT A LIBERAL EDUCATION IN PRISON, OR AT LEAST BARD'S DEGREE, CAN PAY OFF. MOREOVER, SAYS HIS BOSS, HE REPRESENTS A HIDDEN NATIONAL ECONOMIC RESOURCE JUST BEGGING TO BE TAPPED.

>> LOOK, WE'VE GOT A HIDDEN WORKFORCE OUT HERE, I'M TALKING ABOUT YOU ALL.

>> Reporter: IN A JOB-CHALLENGED ECONOMY, VIRGIL FISHER IS LOOKING TO HIRE, AS THE COMPANY HE RUNS WE-RECYCLE! HE RUNS WE-RECYCLE! EXPANDS. IMPRESSED BY THE EX-CON GRADS OF BARD COLLEGE'S PRISON PROGRAM WHO ALREADY WORK FOR HIM, HE'S LOOKING TO RECRUIT MORE OF THEM AT WOODBOURNE. THIS IS THE CURRENT CROP OF MATRICULANTS.

>> DON'T LOSE SIGHT ABOUT WHAT THIS IS ALL ABOUT. IT'S ABOUT BUSINESS. IT'S ABOUT COMPETING. IT'S ABOUT BEING ABLE TO WIN IN A GLOBAL ECONOMY. WE HEAR ALL THE TIME THAT WHEN YOU GO TO PRISON, THE ONLY THING THAT YOU'RE LEARNING HOW TO DO IS TO BE A BETTER CRIMINAL. AND WE HAVE PEOPLE WHO ARE COMING OUT WHO ARE ABLE TO RUN SUPPLY CHAIN, WHO ARE ABLE TO RUN HUMAN RESOURCES, WHO ARE ABLE TO DO OUR SETTLEMENTS FOR US.

>> Reporter: FISHER ISN'T TARGETING EVERYONE BEHIND BARS. TALENT INSIDE, HE BELIEVES, IS DISTRIBUTED JUST LIKE OUTSIDE: AS A BELL CURVE.

>> YOU'RE GOING TO HAVE A GROUP IN THE MIDDLE THAT IS AVERAGE AND THEN YOU'RE GOING TO HAVE A GROUP THAT IS BELOW AVERAGE AND THEN YOU'RE GOING TO HAVE A GROUP THAT JUST RISES TO THE OCCASION. AND THAT'S TYPICALLY ABOUT 10%- 15%.

>> Reporter: ARE YOU CHERRY- PICKING? AREN'T YOU SKIMMING THE CREAM OF THE CROP HERE

>> ABSOLUTELY. WHAT BUSINESS WOULD NOT WANT TO HAVE THE BEST AND THE BRIGHTEST?

>> Reporter: "THE BEST AND THE BRIGHTEST" WHO NO ONE ELSE IS LIKELY TO HIRE.

>> WE'RE GOING OUT AND COMPETING AGAINST 21, 22 YEAR OLD KIDS COMING OUT OF COLLEGE WHO DON'T EVEN HAVE A PARKING TICKET.

>> Reporter: THEY DON'T EVEN HAVE A PARKING TICKET, WHAT DO YOU HAVE? YOU SAY THE KID DOESN'T EVEN HAVE A PARKING TICKET. IF I'M AN EMPLOYER WHAT AM I GOING TO SEE ON YOUR RECORD?

>> I'M 55 YEARS OLD, I WAS IN THE MARINE CORPS. I'VE GOT A LOT OF OTHER THINGS GOING ON BESIDES PRISON, BUT THIS IS A BIG PART OF IT, TOO. I'VE BEEN HERE 24 YEARS.

>> Reporter: AND WHY?

>> Reporter: WHAT ARE YOU HERE FOR?

>> I WAS CONVICTED OF MURDER.

>> MURDER SECOND DEGREE.

>> ATTEMPTED MURDER.

>> I WAS CONVICTED OF MURDER.

>> UH, ROBBERY.

>> ROBBERY.

>> ATTEMPTED BURGLARY.

>> Reporter: A HARD CORE TO WORK WITH, BUT THE BARD PROGRAM SIMPLY SEES ITSELF DOING WHAT EDUCATION HAS ALWAYS DONE IN AMERICA: CIVILIZE STUDENTS FOR THE WORLD OF WORK. ANTHONY CARDENALES IS THE PREMIER CASE IN POINT. A SEVENTH GRADE DROPOUT, HIS EARLY WORK HISTORY WAS STICK-UP ARTIST TO THE WEALTHY. AND THEY BROUGHT MY DAUGHTER. SHE'D BEEN ACTING OUT SINCE SHE WAS VERY YOUNG, YOU KNOW. SHE GETS THESE RAGE, THESE BOUTS OF RAGES AND SHE ACTS OUT VIOLENTLY. SO AS I'M TALKING TO MY EIGHT- YEAR OLD DAUGHTER I'M TELLING HER, "LOOK, YOU CAN'T BE IN SCHOOL, YOU CAN'T DO THIS, YOU KNOW, THIS IS WRONG."

>> Reporter: MEANWHILE YOU'RE IN SOLITARY CONFINEMENT, SHACKLED.

>> I WAS SHACKLED UP BEHIND THE CAGE. HER RESPONSE TO ME WAS, "BUT DADDY, YOU DO THE SAME THING." WHEN SHE SAID THAT TO ME, IT WAS ALMOST LIKE YOU KNOW SHE THREW A MIRROR IN MY FACE AND SAID, "WOW!"

>> Reporter: IN 2001, CARDENALES MADE THE INAUGURAL CLASS OF A NEW COLLEGE PROGRAM FOR CONVICTS RUN BY BARD, AN ELITE LIBERAL ARTS SCHOOL IN NEARBY ANNANDALE ON HUDSON. HE GRADUATED IN 2008.

>> THE TITLE OF MY SENIOR PROJECT WAS SPACE TIME AND HUMAN RESILIENCE AND IT JUST REVOLVED AROUND HOW WE CREATED SPACE AND SUBJECTIVELY IDENTIFIED WHAT TIME IS AND HOW IT UNFOLDS.

>> Reporter: ANY PARTICULAR AUTHORS THAT INFLUENCED YOU?

>> I USED KIERKEGAARD. I USED A LOT OF THE EXISTENTIALIST WRITERS, AND I JUST FELT LIKE ALL OF THEM WERE HIGH WHEN THEY WERE WRITING. BUT THEY HAD THAT DEEPER VISION AND DEEPER DIALOGUE THAT MADE ME STRUGGLE WITH IT AND IN STRUGGLING WITH IT, IT ENABLED ME TO TIE IT INTO YOU KNOW THE EVERYDAY EXPERIENCE.

>> TALKING ABOUT EXISTENTIALISM, AND I CAN'T EVEN PRONOUNCE IT! WE GET IN A LOT OF PHILOSOPHICAL DISCUSSIONS AND YOU HAVE TO SOMETIMES PINCH YOURSELF AND SAY HOW COULD THEY BE SO SMART, BECAUSE THEY WERE AWAY FOR SO MANY YEARS?

>> Reporter: BUT A LOT OF COMPANIES WOULD SAY, "I'M RUNNING A HUGE RISK BY TAKING THE BEST AND THE BRIGHTEST FROM A PRISON IN UPSTATE NEW YORK."

>> BUT ARE THEY ANY DIFFERENT THAN THE POPULATION THAT IS COMING OUT OF COLLEGE? I WOULD SAY THAT THEY HAVE BETTER WORK ETHIC THAN THE PEOPLE WHO DID NOT GO TO PRISON, AND THE WORK, THEIR WORK ETHIC RUBS OFF ON THE REST OF THE TEAM.

>> Reporter: YET ANOTHER HIDDEN WORKFORCE BENEFIT FOR A SMALL COMPANY, SAYS FISHER, THAT HAS TROUBLE BOTH COMPETING WITH BLUE CHIP FIRMS FOR TOP TALENT AND FINDING GOOD WORKERS WILLING TO GET DOWN AND DIRTY.

>> WE'VE GOTTEN USED TO A CERTAIN LIFESTYLE AND A CERTAIN CONCEPT OF WHAT OUR JOB SHOULD LOOK LIKE. TAKE FOR EXAMPLE OUR JOBS THAT WE HAVE DOWNSTAIRS. THE MAJORITY OF COLLEGE DEGREE PEOPLE WOULD NOT DO THAT JOB EVEN IF IT MEANT WITHIN SIX MONTHS YOU'RE GOING TO MOVE UP TO A PRODUCTION SUPERVISOR AND AFTER ABOUT A YEAR YOU'RE GOING TO MOVE UP TO A PLANT MANAGER. THAT'S FAST TRAJECTORY RIGHT THERE BUT IT'S THAT FIRST SIX MONTHS OF WORKING AS A MATERIAL HANDLER AND THAT'S THOUGHT TO BE A MENIAL JOB.

>> Reporter: SO YOU CAN'T GET PEOPLE TO DO THAT?

>> YEAH, I CAN. I CAN GET BUT IT'S NOT GOING TO BE THE COLLEGE-EDUCATED PERSONS COMING OUT OF A COLLEGE, A BIG NAME COLLEGE.

>> Reporter: THE GRADS HERE HAVE ROUGHLY THE SAME CREDENTIALS, BUT PERHAPS A BETTER SOME MIGHT SAY MORE DESPERATE-- WORK ETHIC.

>> WHEN I LEAVE HERE, I'M NOT COMING BACK TO PRISON. I HAVE NO CHOICE IN THE MATTER.

>> I'M GONNA WORK HARDER FOR YOU THAN THE NEXT GUY BECAUSE I HAVE TO. YOU UNDERSTAND?

>> Reporter: BECAUSE THE STAKES ARE HIGHER.

>> THE STAKES ARE VERY HIGH. I CAN'T AFFORD TO SCREW UP EVEN A LITTLE BIT. SO I'M GONNA GIVE YOU 150%, WHEREAS THE KID COMING OUT OF COLLEGE, HE MIGHT BE USING YOU AS A STEPPING STONE, OR HE'S LOOKING AROUND, HE'S FEELING HIS WAY IN THE WORLD. YOU SEE THE DIFFERENCE.

>> I WILL DO ANY JOB. I'LL CLEAN THE FLOORS, I MEAN LITERALLY I WAS PUTTING CABLE WIRE UP IN THE RAIN. I WORKED 10-12 HOUR DAYS FOR $200 A WEEK, THAT'S WHAT I MADE NO MATTER HOW MANY HOURS I WORKED, NO MATTER HOW MANY DAYS, $200 A WEEK.

>> Reporter: HOW CAN YOU LIVE ON $200 A WEEK?

>> I COULDN'T, BUT HOW COULD I LIVE WITH NO MONEY? A FEW WEEKS OUT OF THAT JOB I WENT INTO AN $18 AN HOUR PAYING JOB. 90 DAYS AFTER THAT JOB I CAME INTO THIS JOB WHICH WAS HIGHER THAN THAT AND IT WAS A SALARY JOB.

>> THESE ARE MY DREAMS. I FIT IN RIGHT HERE, BUT THIS IS WHAT I'M LOOKING AT, THIS IS WHERE I WANT TO BE, THIS IS WHERE I CAN BE, THIS IS WHERE I DESERVE TO BE. COMBINATION OF WHO YOU ARE AS A PERSON, THE VALUES YOU HOLD, THE EDUCATION YOU HAVE, THE APPLICATION OF WHO YOU ARE TO THE NEW WORLD, BECAUSE IT IS A NEW WORLD. I DIDN'T EVEN KNOW HOW TO USE MY HOUSE PHONE. URINALS FLUSH WITHOUT YOU TOUCHING ANYTHING! I'M SERIOUS. YOU WALK UP, USE THE BATHROOM, AND YOU WALK AWAY AND IT FLUSHES!

>> Reporter: AND YET, SAYS CARDENALES, IF HE COULD GET THROUGH IT, MANY OF THEM CAN.

>> I MEAN, RIGHT NOW MY TITLE IS MANAGER, SUPPLY CHAIN, MILLIONS OF DOLLARS FLOW THROUGH MY HANDS. I'M RESPONSIBLE FOR CONNECTING OUR SOURCING TEAM WHO GETS ALL OUR RAW MATERIAL, TO OUR MANUFACTURING TEAM WHO PRODUCES AN END PRODUCT. SERIOUSLY BRO, WE DIDN'T HAVE ONE CLASS TO PREPARE ME FOR THAT! ( LAUGHTER ) I LOOKED AT MY MENTOR WHO'S THE HARDEST PERSON THAT I'VE EVER WORKED FOR IN THE ILLEGAL REALM, IN THE LEGAL REALM, BY FAR HANDS DOWN! ( LAUGHTER )

>> Reporter: FOR ALL THE CREDIT CARDENALES GIVES BOSS VIRGIL FISHER, HE WAS ACTUALLY HIRED BY THE OWNERS OF WERECYCLE! JOHN AND WENDY NEU, "NEWSHOUR" FUNDERS LONG IN THE SCRAP METAL BUSINESS, LONG COMMITTED TO DOING WELL BY DOING GOOD. SO YOU'RE A BRED-IN-THE-BONE DO- GOODER, RIGHT?

>> I SUPPOSE, YES. I TRY.

>> Reporter: DID THEY MEET YOUR EXPECTATIONS, EXCEED YOUR EXPECTATIONS?

>> WE COULDN'T HAVE ASKED FOR ANYTHING MORE.

>> Reporter: IN FACT, THEY

>> TWO OF THEM RANK AS HIGH AS ANYBODY WE'VE EVER HAD WORKING FOR US.

>> Reporter: OF ALL THE THOUSANDS OF PEOPLE?

>> OF ALL THE THOUSANDS.

>> Reporter: ONE OF THOSE TWO IS ANTHONY CARDENALES, AND HE SEES PLENTY LIKE HIM, INCLUDING HIS BEST FRIEND IN PRISON, GEORGE PEREZ SCHEDULED FOR PAROLE THIS FALL AFTER SERVING 12 YEARS FOR DRUG DEALING AND HOMICIDE.

>> IF I CAN APPLY THE SAME NEGATIVE ENERGY THAT I USED TO DO THESE THINGS AND THEN REVERT IT AND TURN IT INTO POSITIVE ENERGY, THEN I CAN GO BEYOND WHAT ANY NORMAL PERSON CAN DO, YES, AND SUCCESS FROM THAT.

>> Reporter: AS IT HAPPENS, WHEN WE WERE AROUND, CARDENALES AND THE FOUNDER OF THE BARD PROGRAM, MAX KENNER, WERE PITCHING VIRGIL FISHER ON PEREZ.

>> WHEN HE WAS IN SCHOOL, HE WAS A TOP STUDENT IN THE COLLEGE, AND ANTHONY AND GEORGE AND ONE OTHER STUDENT RAN THE OFFICE THAT RAN THE WHOLE SCHOOL.

>> HE'LL WIN THE JOB.

>> YOU SURE?

>> THE ONLY FEAR I HAVE IS THAT HE DOESN'T WASTE WORDS AND THAT MAY BE MISINTERPRETED.

>> HEY, I LIKE HIM ALREADY! ( LAUGHTER )

>> Reporter: AND SO WE CONCLUDE THIS MOST UNUSUAL OF ECONOMIC STORIES IN PRESENT-DAY AMERICA, ONE WITH A POTENTIALLY HAPPY ENDING. ON THE OTHER HAND, CONCLUDES MAX KENNER:

>> IT'S NOT A GOOD THING THAT WE FIND SUCH EXTRAORDINARY STUDENTS IN A CONTEXT LIKE THIS, RIGHT? THIS IS A TRAGEDY.

>> Reporter: A TRAGEDY FOR AMERICA, PERHAPS, BUT MAYBE A GODSEND FOR A PLACE LIKE WERECYCLE! AND FOR THOSE IT GIVES AN ACTUAL CHANCE AT THAT FORMER STAPLE OF THE AMERICAN ECONOMY, UPWARD MOBILITY.

>> Ifill: AGAIN, THE MAJOR DEVELOPMENTS OF THE DAY: HOUSE SPEAKER BOEHNER'S OFFICE SAYS IT'S REVISED ITS DEBT CEILING PLAN THAT WOULD WIN OVER RELUCTANT CONSERVATIVES. STOCKS ON WALL STREET SLID AS A DEAL ON RAISING THE DEBT CEILING REMAINED ELUSIVE. AND, THE TALIBAN CLAIMED RESPONSIBILITY FOR ASSASSINATING THE MAYOR KANDAHAR IN A SUICIDE BOMBING.

>> Brown: AND THAT'S THE "NEWSHOUR" FOR TONIGHT. ON THURSDAY, WE'LL HAVE AN INTERVIEW WITH CHRISTINE LAGARDE, THE NEW HEAD OF THE INTERNATIONAL MONETARY FUND. I'M JEFFREY BROWN.

>> Ifill: AND I'M GWEN IFILL. 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 GLOBAL EXPERTISE TO WORK FOR A WIDE RANGE OF COMPANIES. WHAT CAN WE DO FOR YOU?

>> AND NOW, "BBC WORLD NEWS AMERIC