PBS NewsHour; January 9, 2012 3:00pm-4:00pm PST

Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS

>> Brown: TENSIONS ROSE BETWEEN THE U.S. AND IRAN TODAY AS TEHRAN UPPED THE NUCLEAR ANTE, WHILE ALSO CONVICTING AN AMERICAN OF SPYING AND SENTENCING HIM TO DEATH. GOOD EVENING. I'M JEFFREY BROWN.

>> Woodruff: AND I'M JUDY WOODRUFF. ON THE NEWSHOUR TONIGHT, MARGARET WARNER GETS THE LATEST ON THE ESCALATING RHETORIC FROM DAVID SANGER OF THE "NEW YORK TIMES" AND JULIAN BARNES OF THE "WALL STREET JOURNAL."

>> Brown: THEN, WE TURN TO POLITICS, AS REPUBLICAN PRESIDENTIAL HOPEFULS JOCKEYED FOR POSITION, THE DAY BEFORE THE NATION'S FIRST PRIMARY.

>> Woodruff: GWEN IFILL REPORTS ON THE CAMPAIGN FROM MANCHESTER, NEW HAMPSHIRE.

>> Ifill: 24 HOURS UNTIL THE VOTERS GET THEIR SAY. BELIEVE IT OR NOT SOME OF THE MORE INDEPENDENT-MINDED ONES STILL HAVEN'T MADE UP THEIR MINDS. WE TALK TO THEM.

>> Brown: AND WE GET ANALYSIS FROM STUART ROTHENBERG OF THE "ROTHENBERG POLITICAL REPORT" AND SUSAN PAGE OF "U.S.A. TODAY."

>> Brown: PLUS, WE EXAMINE THE ARGUMENTS IN TWO SUPREME COURT CASES ON REDISTRICTING IN TEXAS AND ENVIRONMENTAL REGULATIONS WITH MARCIA COYLE OF THE "NATIONAL LAW JOURNAL."

>> Brown: AND RAY SUAREZ TALKS WITH SUSAN DENTZER ABOUT THE SLOW-DOWN IN HEALTH CARE SPENDING. THAT'S ALL AHEAD ON TONIGHT'S NEWSHOUR. MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY:

>> BNSF RAILWAY.

>> 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.

>> Brown: THERE WERE GRAVE NEW DEVELOPMENTS TODAY IN IRAN'S WAR OF WILLS WITH THE WEST, AND WITH THE U.S. IN PARTICULAR. ONE INVOLVED THE REGIME'S NUCLEAR PROGRAM; THE OTHER, AN AMERICAN CONDEMNED TO DEATH. MARGARET WARNER HAS OUR REPORT.

>> Warner: AMID CRIES OF "DEATH TO AMERICA" TODAY THE IRANIAN SUPREME LEADER WAS DEFIANT AT A TEHRAN RALLY. HE PROCLAIMED HIS NATION WOULD NOT GIVE UP ITS NUCLEAR PROGRAM, DESPITE THE ECONOMIC DAMAGE DONE BY INTERNATIONAL SANCTIONS.

>> THE STRONG DECISION OF THE SACRED ISLAMIC REPUBLIC IS BASED ON NOT BEING DIVERTED FROM THE PATH IT HAS ADOPTED, NOT SUR SURRENDERING AND RESISTING AGAINST BULLYING AND EXTREME DEMANDS OF SUPER POWERS.

>> Warner: HIS DECLARATION CAME AS THE INTERNATIONAL ATOMIC AGENCY IN AN EMAIL TO RIGHT IRZ SAYS IRAN HAS BEGUN ENRICHING URANIUM AT A SECOND UNDERGROUND SITE. IT HAD ANNOUNCED ITS INTENTION TO DO SO ON SATURDAY. THE EXISTENCE OF THE FACILITY NEAR THE IRANIAN HOLY CITY WAS PUBLICLY REVEALED BY WASHINGTON AND ITS ALLIES IN LATE 2009. IT IS VERY DEEP UNDERGROUND, UNLIKE A SIMILAR PLANT. THE IRANIAN GOVERNMENT INSISTS THAT ITS NUCLEAR ACTIVITIES ARE FOR PEACEFUL ENERGY PURPOSES ONLY, AN ASSERTION DISPUTED BY THE U.S. AND ITS ALLIES. ON CBS YESTERDAY, SECRETARY OF DEFENSE LEON PANETTA REPEATED INTERNATIONAL DEMANDS THAT IRAN STOP ENRICHING URANIUM.

>> BUT WE KNOW THAT THEY'RE TRYING TO DEVELOP A NUCLEAR CAPABILITY, AND THAT'S WHAT CONCERNS US. OUR RED LINE TO IRAN IS, "DO NOT DEVELOP A NUCLEAR WEAPON." THAT'S A RED LINE FOR US. THEY NEED TO KNOW THAT IF THEY TAKE THAT STEP THAT THEY'RE GOING TO GET STOPPED.

>> Warner: TENSIONS BETWEEN THE U.S. AND IRAN HAD ALREADY BEEN HEIGHTENED LAST WEEK AS PRESIDENT OBAMA SIGNED NEW SANCTIONS LEGISLATION AND THE IRANIANS ISSUED THREATS AGAINST AMERICAN WARSHIPS TRANSITING THE STRAIGHT OF HORMUZ. THE WATERWAYS IS A VITAL PERSIAN GULF CHOKE POINT FOR OIL SHIPPING. TODAY THE TENSIONS WERE STOKED FURTHER BY THIS ANNOUNCEMENT.

>> IRAN HAS SENTENCED TO DEATH A DETAINED U.S.-BORN IRANIAN MAN CHARGED WITH SPYING FOR THE U.S. INTELLIGENCE AGENCY, THE C.I.A..

>> Warner: THIS MAN IS A FORMER U.S. MARINE AND MILITARY TRANSLATOR. BORN IN ARIZONA TO A FAMILY OF IRANIAN DESCENT, HE IS SAID TO HOLD DUAL CITIZENSHIP. HE WAS DETAINED IN IRAN LAST AUGUST AND TRIED FOR ESPIONAGE LAST MONTH. THE VERDICT WAS REPORTED TODAY. IN WASHINGTON WHITE HOUSE SPOKESMAN JAY CARNEY REJECTED THE CHARGES AND THE DEATH SENTENCE.

>> IF TRUE, WE STRONGLY CONDEMN SUCH A VERDICT AND WILL WORK WITH OUR PARTNERS TO CONVEY OR CONDEMNATION TO THE IRANIAN GOVERNMENT. ALLEGATIONS THAT HE EITHER WORKED FOR OR WAS SENT TO IRAN BY THE C.I.A. ARE FALSE. THE IRANIAN REGIME HAS A HISTORY OF FALSELY ACCUSING PEOPLE OF BEING SPIES ANDY ELICITING FORED CONFESSION.

>> Warner: THERE WAS ONE EPISODE OF GOOD WILL INVOLVING THE U.S. AND IRAN. LATE THURSDAY AN AMERICAN DESTROYER, THE U.S.S. KIDD RESCUED 13 IRANIAN FISHERMEN AND THEIR VESSEL FROM SOMALI PIRATES IN THE GULF OF OMAN JUST OUTSIDE THE PERSIAN GULF. THE KIDD IS PART OF THE BATTLE GROUND AROUND THE AIRCRAFT CARRIER, A SHIP THAT LEFT THE GULF JUST DAYS EARLIER AND THAT IRAN HAD WARNED NOT TO RETURN. NOW, TO TWO JOURNALISTS COVERING THE LATEST IRAN-U.S. DEVELOPMENTS. DAVID SANGER HAS REPORTED ON THE CONFLICT OVER IRAN'S NUCLEAR PROGRAM AS CHIEF WASHINGTON CORRESPONDENT FOR THE "NEW YORK TIMES." TONIGHT, HE IS IN CAIRO. AND JULIAN BARNES IS A PENTAGON REPORTER FOR THE "WALL STREET JOURNAL." WELCOME TO BOTH OF YOU. JULIAN BARNES, LET'S START WITH THE STUNNING NEWS TODAY. A FORMER U.S. MARINE SENTENCED TO DEATH IN IRAN. WHAT'S THE BACK STORY HERE? WHAT WAS HE DOING THERE? HE'S AN IRANIAN-AMERICAN. HE WAS A MARINE WHO WAS STATIONED IN IRAQ IN 2004, AND THEN WENT BACK AS A CONTRACT TRANSLATOR A YEAR LATER. HIS FAMILY HAS SAID HE WAS SIMPLY GOING TO VISIT HIS GRANDMOTHERS, TO VISIT RELATIVES IN IRAN. BUT IN THE CURRENT SITUATION THAT'S A DANGEROUS THING TO DO.

>> Warner: WHAT'S THE U.S. DOING TO TRY TO GET HIS RELEASE.

>> THERE'S NOT MUCH THE U.S. CAN DO. THE STATE DEPARTMENT IS ASKING OR PURSUING DIPLOMATIC CHANNELS TO TRY TO GET HIM RELEASED. WE DON'T OBVIOUSLY HAVE RELATIONS WITH IRAN. THAT MAKES IT MORE COMPLEX BUT THE INTERSECTION IS THROUGH SWISS EMBASSY IS PUSHING FOR ACCESS TO HIM. BUT IT'S GOING TO BE A MATTER OF NEGOTIATION.

>> Warner: DAVID SANGER, THIS IS THE FIRST AMERICAN SENTENCED TO DEATH IN IRAN SINCE THE IRANIAN REVOLUTION. DO YOU THINK WE HAVE TO LOOK AT THIS OR DO THE ADMINISTRATION PEOPLE THINK YOU HAVE TO LOOK AT THIS IN THE CONTEXT OF THE TENSIONS CURRENTLY BETWEEN THE U.S. AND IRAN OVER THE NUCLEAR PROGRAM?

>> I CERTAINLY THINK YOU DO. WHEN YOU THINK ABOUT ALL OF THE ESCALATIONS OF THE PAST FEW WEEKS, YOU HAVE THE UNITED STATES DECLARING AND EUROPE SOME OF THE TOUGHEST OIL-RELATED EMBARGOES AND PENALTIES IN AN EFFORT TO TRY TO MAKE IT MUCH HARDER FOR IRAN TO GET OIL REVENUE. THIS GOES RIGHT TO THE SECURITY OF THE STATE. YOU'VE SEEN THE IRANIANS THREATEN TO CLOSE THE STRAIGHT OF HORMUZ AND THEN, OF COURSE, YOU'VE SEEN JUST IN THE PAST FEW DAYS THE FIRST OPERATIONS AT IRAN'S UNDERGROUND SECOND URANIUM ENRICHMENT PLANT. THIS, OF COURSE, IS IS IN DIRECT VIOLATION OF SEVERAL U.N. SECURITY COUNCIL VIOLATIONS... RESOLUTIONS. SO EVERYTHING IS BEING ESCALATED. I EXPECT THE SENTENCE IS PROBABLY PART OF THAT.

>> Warner: WHAT IS CRUCIAL, STAYING WITH YOU, DAVID, WHAT IS CRUCIAL ABOUT TODAY'S... WELL, IT WAS ACTUALLY AN ANNOUNCEMENT OVER THE CONFIRMED BY THE I.A.E.A.. THIS FACILITY HAS BEEN KNOWN FOR TWO YEARS. WHAT'S NEW HERE?

>> THE FACILITY WAS ACTUALLY THEN TO THE UNITED STATES AND ISRAEL FOR A LITTLE LONGER THAN TWO YEARS. IT WAS DETECTED DURING THE BUSH ADMINISTRATION. PRESIDENT OBAMA AND PRESIDENT SARKOZY OF FRANCE AND GORDON BROWN, THEN THE BRITISH PRIME MINISTER, REVEALED IT IN PUBLIC IN 2009. AND THERE WERE SEVERAL AMERICAN OFFICIALS WHO SAID TO ME AT THAT TIME THAT THEY THOUGHT THAT SINCE IT WAS REVEALED, THE IRANIANS WOULD NEVER ACTUALLY USE IT. THEY WOULD BASICALLY KEEP IT EMPTY. WELL THAT TURNED OUT NOT TO BE THE CASE. THEY'VE BEGUN TO INSTALL CENTRIFUGES THAT CAN HOLD ABOUT 3,000. THEY'VE ENRICHED URANIUM BEFORE, OF COURSE, MARGARET, BUT THIS PLANT IS DEEP UNDER A MOUNTAIN ON A IRANIAN REVOLUTIONARY GUARD BASE AND SURROUNDED BY ANTI-AIRCRAFT WEAPONS SO IT'S MUCH MORE SECURE THAN ANYTHING ELSE THEY HAVE BUILT THAT WOULD MAKE IT MUCH HARDER FOR ANY MILITARY ACTION TO TAKE IT OUT.

>> Warner: WHAT ARE PEOPLE AT THE PENTAGON SAYING ABOUT THIS? HOW ALARMING DO THEY FIND THIS NEWS?

>> THIS IS ALARMING TO SOME BECAUSE AS DAVID SAID, IT MAKES THE MILITARY ACTION MUCH HARDER. TODAY AT' PENTAGON, YOU KNOW, THE MESSAGE WAS ONE THAT THIS IS NOT THE POINT OF NO RETURN FOR IRAN. MR. PANETTA OVER THE WEEKEND SAID THEY HAVE NOT YET MADE THE DECISION TO MAKE A BOMB. THAT'S A CRUCIAL POINT FOR THE PENTAGON THAT AT THAT POINT WHERE IRAN WILL HAVE GONE TOO FAR AND TAKEN A STEP. THEY ARE MAKING... THEY'RE NOT THERE YET. THERE'S ROOM FOR NEGOTIATION. IT'S NOT NOW THE TIME FOR A STRIKE.

>> Warner: DAVID, WHAT DO THE AMERICANS THINK IS THE REASON THAT IRAN WOULD HAVE MADE THIS ANNOUNCEMENT THIS WEEKEND?

>> WELL, IT WASN'T EXACTLY A SURPRISE. I WAS IN VIENNA AT THE I.A.E.A. HEADQUARTERS IN DECEMBER. AT THAT TIME THE INSPECTORS WERE TALKING ABOUT THE FACT THAT THIS MOMENT WAS IMMINENT. JUST FROM THE VISITS THEY HAVE MADE. BUT I THINK THAT THE IMPORTANT THING HERE IS THAT THE IRANIANS MAY WELL HAVE DECIDED THAT ALTHOUGH THERE'S BEEN NO DECISION TO GO AHEAD WITH THE WEAPONS ITSELF, THEY MAY WANT TO GET EVERYTHING IN ORDER SO THAT THEY COULD PRODUCE A WEAPON AS QUICKLY AS POSSIBLE. IN OTHER WORDS, STAY JUST BEHIND THE LINE OF ACTUAL WEAPONS PRODUCTION. THAT WAY THEY COULD STAY WITHIN THE NUCLEAR NON-PROLIFERATION TREATY BUT THE WHOLE WORLD WOULD KNOW AND THE MIDDLE EAST WOULD KNOW THAT IN THREE OR SIX OR NINE MONTHS THEY COULD ACTUALLY PRODUCE A BOMB. AND FOR THEIR PURPOSES, A VIRTUAL BOMB MIGHT BE AS USEFUL AS A REAL ONE.

>> Warner: YOU MEAN FOR POLITICAL PURPOSES.

>> IT MAKES A POLITICAL STATEMENT AND IT ALSO EXPANDS IRAN'S INFLUENCE IN THE REGION. YOU KNOW, THE IRANIANS LOOK AT MORE MOAMMAR QADDAFI AND THE OVERTHROW OF HIS REGIME IN LIBYA AND THEIR ANALYSIS, AS IS THE NORTH KOREAN ANALYSIS IS, IS ONE OF THE REASONS THAT THE WEST FELT FREE TO JOIN WITH THOSE ATTACKS AND WITH THE REBELS WAS THAT QADDAFI HAD ANNOUNCED HE WAS GIVING UP HIS NUCLEAR WEAPONS PROGRAM BACK IN 2003. SO IT'S VERY POSSIBLE THAT IN DOING THE OVERTHROW IN LIBYA, THE UNITED STATES AND ITS ALLIES IN HELPING THAT OVERTHROW MAY HAVE HARDENED THE DETERMINATION OF STATES LIKE IRAN AND NORTH KOREA TO MOVE AHEAD WITH THE WEAPONS PROGRAM OR AT LEAST BE READY TO.

>> Warner: SO JULIAN BARNES, MEAN WHILE THOUGH, THIS REALLY HAPPENED LAST THURSDAY BUT YOU HAD THIS DRAMATIC STORY, A KIND OF GOOD NEWS STORY OF THE AMERICAN NAVY RESCUING THESE 13 IRANIAN FISHERMEN BEING HELD HOSTAGE BY SOMALI PIRATES, ACTUALLY BOARDING THE IRANIAN SHIP. NOW I GATHER THE PENTAGON WENT TO SOME LENGTHS TO REALLY PUBLICIZE THIS.

>> THAT'S RIGHT. I MEAN, THERE WAS A SNAP NEWS CONFERENCE. THEY GOT ADMIRAL WHO IS IN CHARGE OF THE STRIKE GROUP AND A COMMANDER WHO WAS THE SKIPPER OF THE U.S.S. KIDD WHICH ACTUALLY DID THE RESCUE ON THE PHONE. THEY HELD THE NEWS CONFERENCE.

>> Warner: THIS IS OVER THE WEEKEND.

>> THEY DID IT ON FRIDAY BECAUSE IT BEGAN ON THURSDAY AND THEY SORT OF FREED THE IRANIAN FISHERMEN ON THE MORNING OF FRIDAY. THIS WAS THE KIND OF GOOD NEWS STORY AS YOU SAID. THE PENTAGON WAS LOOKING FOR. I MEAN, THEIR MESSAGE WAS ALL THROUGH THE CRISIS OF THE LAST WEEK WAS THE RISING TENSIONS IN THE STRAIT OF HORMUZ. THE U.S. IS THERE TO KEEP THE PEACE, TO BE A STABILIZING AGENT... INFLUENCE. AND ALSO TO BE GOOD MARINERS, TO RESCUE PEOPLE IN NEED. THIS WAS SORT OF A PERFECT MOMENT. EYE RONIC TWIST TO THE END OF RISING TENSIONS THAT THEY WERE ABLE TO HIGHLIGHT.

>> Warner: VERY BRIEFLY, DO THE U.S. OFFICIALS THINK THIS WILL HAVE ANY BROADER IMPLICATIONS ON THE RELATIONSHIP?

>> NOT WITH THE GOVERNMENT. I THINK THE MESSAGE IS OVER TIME THAT THE IRANIAN PEOPLE WILL SEE THAT THE U.S. IS A FORCE FOR GOOD. BUT IT'S NOT GOING TO MAKE ANY DIFFERENCE WITH TEHRAN.

>> Warner: JULIAN BARNES OF THE WALL STREET JOURNAL AND DAVID SANGER OF THE "NEW YORK TIMES," THANK YOU BOTH.

>> THANK YOU.

>> Woodruff: STILL TO COME ON THE NEWSHOUR, VYING FOR VOTES IN NEW HAMPSHIRE; DRAWING THE ELECTORAL MAP IN TEXAS; AND SPENDING LESS ON HEALTH CARE. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S HARI SREENIVASAN.

>> Sreenivasan: PRESIDENT OBAMA ANNOUNCED TODAY HIS WHITE HOUSE CHIEF OF STAFF, BILL DALEY, IS STEPPING DOWN. DALEY HAD BEEN IN THE POSITION FOR JUST ONE YEAR. HE'S A FORMER COMMERCE SECRETARY WHO RAN VICE PRESIDENT GORE'S 2000 PRESIDENTIAL CAMPAIGN. AT THE WHITE HOUSE, THE PRESIDENT PRAISED DALEY'S TENURE AS CHIEF OF STAFF.

>> ON HIS VERY FIRST DAY, BILL TOOK PART IN A MEETING WHERE WE DISCUSSED OSAMA BIN LADEN'S COMPOUND. THIS WAS ALL BEFORE HE EVEN HAD TIME TO UNPACK HIS OFFICE. OVER THE LAST YEAR, HE'S BEEN INTIMATELY INVOLVED IN EVERY DECISION SURROUNDING THE END OF THE WAR IN IRAQ, AND OUR SUPPORT OF THE PEOPLE OF LIBYA AS THEY FOUGHT FOR THEIR FREEDOM.

>> Sreenivasan: DALEY ORIGINALLY COMMITTED TO STAY THROUGH THE ELECTION. THERE WAS NO EXPLANATION GIVEN FOR WHY HE IS LEAVING EARLY, EXCEPT HIS DESIRE TO SPEND MORE TIME WITH HIS FAMILY. HE WILL BE REPLACED BY JACOB LEW, WHO IS CURRENTLY THE PRESIDENT'S BUDGET DIRECTOR. A COURT-MARTIAL BEGAN TODAY FOR THE LAST U.S. MARINE ACCUSED IN THE MASSACRE OF TWO DOZEN IRAQIS. A MILITARY PROSECUTOR SAID STAFF SERGEANT FRANK WUTERICH FIRED ON UNARMED WOMEN AND CHILDREN IN THE TOWN OF HADITHA AFTER A FELLOW MARINE WAS KILLED THERE IN 2005. WUTERICH IS BEING TRIED AT CAMP PENDLETON, CALIFORNIA, FOR VOLUNTARY MANSLAUGHTER IN NINE OF THE DEATHS. SIX OTHER MARINES HAD CHARGES DROPPED OR DISMISSED, AND ONE WAS ACQUITTED. THREE BOMBS WENT OFF IN BAGHDAD THIS EVENING, KILLING AT LEAST 17 IRAQIS. IT APPEARED TO BE THE LATEST IN A WAVE OF SECTARIAN VIOLENCE THAT HAS LEFT MORE THAN 90 PEOPLE DEAD IN LESS THAN A WEEK. AND IN AFGHANISTAN, A MAN WEARING AN AFGHAN ARMY UNIFORM SHOT AND KILLED A U.S. SOLDIER AT AN AMERICAN BASE ON SUNDAY. IT HAPPENED SEVERAL HUNDRED MILES SOUTH OF KABUL. A NATIONWIDE STRIKE OVER SKYROCKETING FUEL PRICES BROUGHT NIGERIA TO A VIRTUAL STANDSTILL TODAY. THOUSANDS OF PROTESTERS MASSED ACROSS THE WEST AFRICAN COUNTRY, INCLUDING MORE THAN 10,000 IN LAGOS ALONE. THEY BURNED TIRES AND CARRIED SIGNS ACCUSING THE GOVERNMENT OF CORRUPTION. WITNESSES SAID POLICE SHOT AND KILLED AT LEAST THREE PROTESTERS. THE CROWDS DEMANDED THE RETURN OF SUBSIDIES THAT KEPT THE PRICE OF GASOLINE ARTIFICIALLY LOW. IN YEMEN, HUNDREDS OF PEOPLE PROTESTED AGAINST A NEW LAW GRANTING PRESIDENT ALI ABDULLAH SALEH IMMUNITY FROM PROSECUTION. THE YEMENI CABINET APPROVED IT SUNDAY. IT BARS SALEH FROM BEING INDICTED FOR ANY CRIMES DURING HIS 33-YEAR RULE. TODAY DEMONSTRATORS FILLED STREETS IN THE CAPITAL CITY, SANAA, WAVING BANNERS AND CHANTING SLOGANS. THEY DEMANDED THAT SALEH STAND TRIAL FOR KILLING HUNDREDS OF PEOPLE DURING THE UPRISING THAT BEGAN 11 MONTHS AGO.

>> WE REJECT COMPLETELY THE IMMUNITY WHICH HAS BEEN APPROVED BY THE PARLIAMENT. WE HAVE ALREADY REJECTED THE GOVERNMENT THAT APPROVED THIS LAW. WE ARE GATHERED HERE WITH ONE COMMAND WHICH IS THAT THE REGIME SHOULD GO AWAY WITH ALL ITS SYMBOLS AND ANYONE WHO HURTS ANY YEMENY PERSON SHOULD BE PUNISHED OR PUT ON TRIAL.

>> Sreenivasan: PRESIDENT SALEH SIGNED AN AGREEMENT IN NOVEMBER, TRANSFERRING POWER TO HIS VICE PRESIDENT. THAT IS SCHEDULED TO TAKE PLACE ON FEBRUARY 21. IN U.S. ECONOMIC NEWS, THE FEDERAL RESERVE ANNOUNCED CONSUMERS STEPPED UP THEIR BORROWING IN NOVEMBER BY THE MOST IN TEN YEARS. AND ON WALL STREET, STOCKS MANAGED MODEST GAINS. THE DOW JONES INDUSTRIAL AVERAGE GAINED MORE THAN 32 POINTS TO CLOSE ABOVE 12,392. THE NASDAQ ROSE TWO POINTS TO CLOSE AT 2676. THE OBAMA ADMINISTRATION WILL BAN NEW MINING CLAIMS AROUND THE GRAND CANYON FOR 20 YEARS. THE BAN APPLIES TO ONE MILLION ACRES OF PUBLIC LAND IN AN AREA RICH IN HIGH-GRADE URANIUM ORE. INTERIOR SECRETARY KEN SALAZAR SAID URANIUM IS STILL KEY TO THE NATION'S ENERGY STRATEGY, BUT THE GRAND CANYON HAS TO BE PROTECTED AS A NATIONAL TREASURE. HE SAID THE BAN WOULD NOT AFFECT MORE THAN 3,000 EXISTING MINING CLAIMS. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO JUDY.

>> Woodruff: WE TURN TO THE REPUBLICAN PRESIDENTIAL CAMPAIGN NOW, AS VOTERS IN NEW HAMPSHIRE PREPARE TO CAST PRIMARY BALLOTS.

>> THIS IS MITT ROMNEY CALLING.

>> Woodruff: THE FRONTRUNNER SPENT PART OF HIS PRIMARY EVE PHONING NEW HAMPSHIRE VOTERS AND PART OF IT DOING DAMAGE CONTROL. THE FORMER MASSACHUSETTS GOVERNOR TOUCHED OFF A TEMPEST AT A CHAMBER OF COMMERCE BREAKFAST IN NASHUA. HE WAS ARGUING THAT HEALTH CARE CONSUMERS SHOULD BE ABLE TO CHANGE INSURERS THE WAY EMPLOYERS LAY OFF WORKERS WHEN HE SAID THIS.

>> I LIKE BEING ABLE TO FIRE PEOPLE THAT PROVIDE SERVICES TO ME. YOU KNOW, IF SOMEONE DOESN'T GIVE ME THE GOOD SERVICE I NEED, I WANT TO SAY THAT I'M GOING TO GET GET SOMEBODY ELSE TO PROVIDE THAT SERVICE TO ME.

>> Woodruff: FORMER UTAH GOVERNOR JON HUNTSMAN IN CONCORDE JUMPED ON THE COMMENT SAYING GOVERNOR ROMNEY ENJOYS FIRING PEOPLE. I ENJOY CREATING JOBS. HUNSMAN AFTER SKIPPING IOWA IS VYING FOR SECOND PLACE IN NEW HAMPSHIRE. HIS CAMPAIGN HOPES FOR A LATE ROMNEY STUMBLE. THIS AFTERNOON ROMNEY TRIED TO SHAKE OFF THE FUROR.

>> THINGS CAN ALWAYS BE TAKEN OUT OF CONTEXT. I UNDERSTAND THAT'S WHAT THE OBAMA PEOPLE WILL DO. I WAS SPEAKING ABOUT INSURANCE COMPANIES AND THE NEED TO BE ABLE TO MAKE A CHOICE. MY COMMENTS ENTIRELY REFLECTED THAT DISCUSSION WHICH IS WE SHOULD BE ABLE TO CHOOSE THE INSURANCE COMPANY OF OUR CHOICE.

>> Woodruff: EVEN SO, RIVALS STEPPED UP THEIR CRITICISM OF ROMNEY'S 15-YEAR TENURE RUNNING THE INVESTMENT FIRM BANE CAPITAL FROM 1984 TO 1999. HE HAS SAID HE HELPED CREATE 100,000 JOBS BUT A GROUP BACKING NEWT GINGRICH PUT OUT AN ON-LINE DOCUMENTARY KING OF BANE PAINTING ROMNEY AS A CORPORATE TAKEOVER ARTIST WHO KILLED COMPANIES AND JOBS.

>> MITT ROMNEY BECAME CEO OF BANE CAPITAL THE DAY THE COMPANY WAS FORMED. HIS MISSION: TO REAP MASSIVE REWARDS FOR HIMSELF AND HIS INVESTORS.

>> MITT ROMNEY, THEM GUYS DON'T CARE WHO I AM.

>> HE'S FOR SAUL BUSINESS? NO, HE ISN'T.

>> Woodruff: GINGRICH RELEASED HIS OWN WEB AD TODAY ATTACKING ROMNEY. THE FORMER HOUSE SPEAKER ALSO CHARGED THAT BANE CAPITAL, QUOTE, APPARENTLY LOOTED ITS TAKEOVER TARGET. TEXAS GOVERNOR RICK PERRY CAMPAIGNING IN ANDERSON SOUTH CAROLINA GOT IN HIS DIG AT ROMNEY.

>> THERE IS SOMETHING INHERENTLY WRONG WHEN GETTING RICH OFF FAILURE AND STICKING IT TO SOMEONE ELSE IS HOW YOU DO YOUR BUSINESS. I HAPPEN TO THINK THAT THAT IS INDEFENSIBLE.

>> Woodruff: IT WAS UNCLEAR HOW THE 11th-HOUR CRITICISM WOULD PLAY. BUT POLLS TAKEN THROUGH THE WEEKEND SHOWED ROMNEY HOLDING ON TO A STRONG LEAD AHEAD OF TUESDAY'S VOTE. IN FACT, RICK SANTORUM, WHO MISSED WINNING IOWA BY JUST A HANDFUL OF VOTES, SAID TODAY THAT A SECOND-PLACE FINISH IN NEW HAMPSHIRE WOULD BE A DREAM COME TRUE. THE FORMER PENNSYLVANIA SENATOR SPOKE IN NASHUA.

>> I'M INTERVIEWING, IF YOU WILL, FOR PRESIDENT OF THE UNITED STATES IN A GENERAL SNISMT ELECTION. I'M NOT JUST TRYING TO INTERVIEW TO WIN A PRIMARY. I WANTS FOLKS HERE TO KNOW THAT I'M CAPABLE OF DEALING WITH ALL OF THE ISSUES WITH PROTESTORS SCREAMING IN MY EAR BECAUSE THAT'S THE AMERICAN EXPERIENCE. THAT'S WHAT DEMOCRACY IS ALL ABOUT.

>> Woodruff: TEXAS CONGRESSMAN RON PAUL WHO FINISHED THIRD IN IOWA HAD SO MANY NEWS PEOPLE SHOW UP AT AN EVENT IN MANCHESTER THIS MORNING HE HAD TO CUT IT SHORT. HE DID MANAGE TO SPEAK AT ANOTHER EVENT.

>> I GUESS YOU'VE NOTICED THE CAMPAIGN HAS PICKED UP A LOT OF STEAM AND A LOT OF INTEREST. WHEREVER WE GO. SEATS LIKE THERE'S BEEN A LOT OF QUESTIONS BUT THERE ARE STILL SOME THAT ARE UNDECIDED AND HOPEFULLY WE CAN REACH THEM.

>> Woodruff: IN THE CLOSING HOURS, REACHING THEM, VOTERS OF ALL STRIPES, WAS THE LAST BIG TEST FACING THE CANDIDATES IN NEW HAMPSHIRE.

>> Brown: GWEN IFILL HAS BEEN IN NEW HAMPSHIRE FOR US FOR THE LAST SIX DAYS, TAKING THE PULSE OF VOTERS WHO AREN'T AFFILIATED WITH EITHER PARTY, AND WHO COULD MAKE THE DIFFERENCE TOMORROW.

>> Ifill: THIS COUPLE HAVE A LOT OF THINKING LEFT TO DO.

>> FOR ME IT'S BEEN A PROCESS OF ELIMINATION.

>> I HAD TO DECIDE WHO I WANTED TO VOTE AGAINST IN AN EFFORT TO COME DOWN WITH A SMALL POOL OF PEOPLE THAT I COULD THEN SUPPORT.

>> Ifill: THE BURNS-- SHE A COLLEGE PROFESSOR, HE A BUSINESS OWNER-- SAY THEY ARE A DIVIDED BUT UNDECIDED HOUSEHOLD. AS INDEPENDENT VOTERS, NEITHER DEMOCRATS NOR REPUBLICAN. HE LIKES FORMER AMBASSADOR JON HUNTSMAN'S OVERSEAS EXPERIENCE. THEY THREW HIM A PARTY AT THEIR HOME AND PLANTED SIGNS ON THEIR LAWN. SHE LIKES MITT ROMNEY'S PERSONALITY AND FAMILY BACKGROUND. AFTER THEY HEARD WHAT ROMNEY ENGAGE IN WHAT THEY CONSIDERED CHINA BASHING AT THIS RALLY LAST WEEK THEY CHANGED THEIR MINDS. BY THE END OF THE WEEK, THEY WERE CHECKING OUT TEXAS CONGRESSMAN RON PAUL WITH HIS UNCOMPROMISING MESSAGE OF SMALL GOVERNMENT ANNUITY GINGRICH, TOO.

>> WE'LL BE RUNNING....

>> Ifill: THE ROMNEY SIGNS ENDED UP IN THEIR TRUNK.

>> WE STILL HAVE OUR TWO JON HUNTSMAN SIGN UP. SUCH SWING VOTERS REGISTER AS UNDECLARED.

>> DO I VOTE STRATEGICALLY FOR THE PERSON WHO I THINK COULD BEAT THE PRESIDENT? DO I VOTE TACTICALLY FOR THE PERSON WHO I THINK REPRESENTS MY VIEWS?

>> THE ONLY PERSON ON THE STAGE AS WELL TO HAVE LIVED OVERSEAS.

>> Ifill: HE'S NOW THINKING ABOUT VOTING FOR PAUL OR HUNTSMAN. DAWN IS TORN BETWEEN HUNTSMAN AND GINGRICH. THEY WATCHED A PAIR OF WEEKEND CANDIDATE DEBATES TO DECIDE. THEY ARE PART OF THE NEW HAMPSHIRE 41% UNAFFILIATED VOTERS WHO HAVE A KNACK FOR DECIDING LATE. JOHN McCAIN WON THEM IN 2000 AND 2008. THIS TIME THREE CANDIDATES ARE COMPETING FOR THEIR ATTENTION. HUNTSMAN, PAUL, AND ROMNEY. NEW HAMPSHIRE REPUBLICANS ARE LESS CONSERVATIVE THAN THEIR COUNTERPARTS IN EITHER IOWA, WHICH PRECEDED THEM IN VOTING, OR SOUTH CAROLINA WHICH HOLDS ITS PRIMARY IN TWO WEEKS. ANDREW SMITH IS A POLITICAL SCIENCE PROFESSOR AND DIRECTOR OF POLLING AT THE UNIVERSITY OF NEW HAMPSHIRE. UNDECLARED VOTERS, HE SAID, DO NOT EASILY FIT INTO A POLITICAL BOX.

>> WE HAVE TO THINK OF THEM AS THREE DIFFERENT GROUPS. THERE ARE UNDECLARED WHO ARE REALLY DEMOCRATS AND THEY VOTE AND BEHAVE LIKE REGISTERED DEMOCRATS. AND THEN THERE ARE THOSE PEOPLE IN THE MIDDLE THAT ARE KIND OF NOT PARTISAN, NOT AS POLITICAL. THEY'RE THE ONES WHO ARE WILD CARDS.

>> THIS PRESIDENT HAS FAILED ON ALMOST EVERY DIMENSION.

>> Reporter: ROMNEY WHO WAS GOVERNOR OF NEIGHBORING MASSACHUSETTS AND LEADS IN THE FINAL PRE-ELECTION POLLS PITCHED PART OF HIS APPEAL TO THOSE MID GROUND VOTERS DURING YESTERDAY'S DEBATE.

>> WE CAN WORK TOGETHER, REPUBLICANS AND DEMOCRATS ARE ABLE TO GO ACROSS THE AISLE BECAUSE WE HAVE COMMON... WE REALLY DO HAVE AREAS OF COMMON INTEREST.

>> Ifill: HE WAS CHALLENGED BY HIS COMPETITORS ON THE STAGE WHEN HE CLAIMED NOT TO BE A CAREER POLITICIAN.

>> CAN WE DROP A LITTLE BIT OF THE PIOUS BALOGNE. THE FACT IS YOU RAN IN '94 AND LOST.

>> WE WANT SOMEONE WHEN THE TIME GETS TOUGH AND IT WILL IN THIS ELECTION WE WANT SOMEONE WHO WILL STAND UP AND FIGHT FOR THE CONSERVATIVE PRINCIPLES NOT BAIL OUT AND NOT RUN AND NOT RUN TO THE LEFT OF TED KENNEDY.

>> I DON'T SEE HOW WE CAN HAVE ANYBODY REALLY COMPETE WITH OBAMA WHO DOESN'T CHALLENGE THIS HUGE EMPIRE WE HAVE OVERSEAS AND THE OVERSEAS SPENDING. I MEAN THIS IS HOW NATIONS COME DOWN.

>> AS I LOOK FROM HERE DOWN TO RICK SANTORUM I SEE INSIDERS, INDIVIDUALS WHO HAVE BEEN THE BIG-SPENDING REPUBLICANS IN WASHINGTON D.C..

>> THE AMERICAN PEOPLE ARE TIRED OF THE PARTISAN DIVISION. THEY HAVE HAD ENOUGH. THERE IS NO TRUST LEFT. AMONG THE AMERICAN PEOPLE AND THE INSTITUTIONS OF POWER AND AMONG THE AMERICAN PEOPLE AND OUR ELECTED OFFICIALS.

>> Ifill: NEW HAMPSHIRE VOTERS WHO TELL POLLSTERS THEY ARE WEARY OF WASHINGTON AND OF INSINCERITY APPEAR TO BE LISTENING FOR THOSE THEMES. JENNY, A RETIREE LIKES GINGRICH'S PROMISE TO SHRINK GOVERNMENT. BUT WORRIES THAT HE CAN'T BE ELECTED. SO AFTER RICK SANTORUM DID WELL IN IOWA, SHE CAME TO SEE HIM AND WAS IMPRESSED BY HIS SOCIAL CONSERVATISM.

>> IS IT UNUSUAL FOR YOU TO TAKE THIS LONG TO MAKE UP YOUR MIND?

>> NO. BUT THE LAST ELECTION I REALLY WASN'T SURE. THE LAST ERECTION... THE LAST ELECTION I WAS A REGISTERED DEMOCRAT AND NEW HAMPSHIRE, YOU KNOW, THEY DON'T LIKE TO BE PREDICTABLE. WHEN THE PRESS COMES PREDICTING IT, THEY'RE GOING TO GO THE OTHER WAY.

>> Ifill: AND RENEE SAID SHE IS TRYING TO CHOOSE AMONG SANTORUM, ROMNEY AND GINGRICH.

>> I WANT SOMEBODY TO TELL US THAT THINGS ARE A MESS AND WE HAVE TO FIX THEM. THAT MEANS IT'S GOING TO HURT. I WOULD RATHER, YOU KNOW, HIM SAY, LIKE SOCIAL SECURITY, MEDICAID, MEDICARE, THEY'RE HUGE ISSUES THAT NEED TO BE TACKLED.

>> Ifill: NEWT GINGRICH IS SAYING THAT TOO. SO IS MITT ROMNEY.

>> I KNOW. I HAVE TO DECIDE AMONG THE THREE. THIS IS WHY I WANT TO SEE THEM ALL IN PERSON. RICK SANTORUM STRIKES ME AS A GENUINE GOOD GUY. MITT ROMNEY STRIKES ME AS A GOOD MAN. NEWT GINGRICH STRIKES ME AS HE'S A LITTLE BIT MAYBE, A LITTLE ON THE EDGE. EVERYBODY I KNOW IS UNDECIDED.

>> Ifill: JIM AND JANE GREEN STARTED THEIR WEEKEND AT A ROMNEY RALLY.

>> I LIKE MITT. I'VE ALWAYS LIKE MITT BUT I LIKE NEWT GINGRICH TOO. I WANT A CONSERVATIVE LEADER THAT SEES THE AMERICAN VALUES WITH LESS GOVERNMENT BUT A STRONG MILITARY.

>> BECAUSE WE ARE GIVEN SUCH A PRIVILEGE OF BEING THE FIRST PRIMARY THAT MOST OF THE PEOPLE REALLY UNDERSTAND THAT IT'S IMPORTANT. THEIR SINGLE VOTE IS IMPORTANT. AND REALLY PAY ATTENTION TO WHAT'S GOING ON.

>> Ifill: BUT REGISTERED REPUBLICANS STILL DETERMINE THE WINNER. SO APPEALING ONLY TO THE TRULY UNDECLARED AND UNDECIDED HAS ITS RISKS. AMONG THEM, THEY DON'T ALWAYS VOTE. REGISTERED REPUBLICANS DO. THE UNIVERSITY OF NEW HAMPSHIRE'S ANDREW SMITH PREDICTS TWO-THIRDS OF THEM WILL CAST VOTES ON TUESDAY.

>> WE HAVE REALLY HIGH TURNOUT. THAT MEANS THAT IT'S NOT THE ACTIVISTS WHO DETERMINE WHO WINS IN NEW HAMPSHIRE LIKE IS THE CASE IN IOWA. IT'S REGULAR VOTERS WHO DON'T PAY THAT MUCH ATTENTION TO POLITICS.

>> Ifill: AND THOSE REGULAR VOTERS, ACCORDING TO THE LATEST POLL, MAY HAVE ALREADY SETTLED ON TUESDAY'S WINNER.

>> THERE'S BEEN A PERCEPTION AMONG VOTERS IN NEW HAMPSHIRE AS WELL AS THE OTHER CAMPAIGNS THAT MITT ROMNEY HAS THIS THING NAILED DOWN. I THINK A LOT OF THE CAMPAIGNS HAVE CONCEDED NEW HAMPSHIRE TO ROMNEY. THEY'VE TAKEN THE SCANT RESOURCES THEY'VE GOT AND INVESTED THEM IN STATES LIKE IOWA OR SOUTH CAROLINA WHERE THEY'VE GOT A BETTER CHANCE OF REACHING A MORE SOCIALLY CONSERVATIVE ELECTORATE.

>> TO EARN MY VOTE....

>> Ifill: THAT ELECTORATE WILL ULTIMATELY DECIDE WHICH CANDIDATES LIVE TO FIGHT ANOTHER DAY.

>> Woodruff: FOR MORE ON THE REPUBLICAN RACE, AND HOW A HIGH LEVEL SHAKEUP AT THE WHITE HOUSE COULD AFFECT THE CAMPAIGN. SO, GWEN, YOU'VE NOT ONLY BEEN OUT THERE WITH THE VOTERS, YOU'RE FOLLOWING THE CANDIDATES. HOW DOES IT LOOK ON THE GROUND?

>> Ifill: WELL, IT LOOKS PRETTY DOWN AND DIRTY AT THIS POINT. TODAY WE HAD ALL OF THE CANDIDATES DECIDING THEY'RE GOING TO JUMP RIGHT ON MITT ROMNEY BECAUSE HE LOOKS LIKE HE'S GOING TO PULL THIS OUT TOMORROW NIGHT AT THE POLLS. THE INTERESTING THING IS THAT VOTERS HAVE NOT MADE UP THEIR MINDS AS WE SAW IN THAT PIECE BUT ON THE LAST DAYS OF THESE CAMPAIGNS, AS YOU KNOW, JUDY, THE PEOPLE WHO SHOW UP AT THESE RALLIES THEY ALL HAVE ARE SO CURIOUS. THEY STILL HAVE MORE QUESTIONS TO ASK. THEY MAY HAVE DECIDED ALREADY. THEY MAY LIKE THE GUY OR HATE THE GUY BUT THEY STILL WANT TO KNOW THINGS. THE CANDIDATES ARE I ACCUSING EACH OTHER. RICK PERRY IN SOUTH CAROLINA NOW HAS A RING TONE MAKING FUN OF MITT ROMNEY FOR SAYING HE WOULD FIRE PEOPLE. ALL THE REPUBLICANS ARE ATTACKING MITT ROMNEY FROM THE LEFT. ALL THE DEMOCRATS ARE ATTACKING MITT ROMNEY FROM THE LEFT. IT'S KIND OF A RAUCOUS FINAL DAY.

>> Woodruff: SO IS THE COMMENT ROMNEY'S COMMENT THAT HE LIKES TO FIRE PEOPLE, IS THAT GETTING AS MUCH ATTENTION AS IT SOUNDS LIKE HERE AND HOW IS HE HANDLING IT? WE HEARD HIM SAY, WELL, YOU KNOW, THAT HAPPENS AND THE OBAMA PEOPLE ARE GOING TO JUMP IT. IN FACT IT'S HIS OWN REPUBLICAN COMPETITORS WHO ARE.

>> Ifill: WELL, I WAS AT HIS... HE HAD A LITTLE PRESS CONFERENCE TODAY AFTER AN EVENT. I WAS THERE. HE WAS ASKED ABOUT THIS VERY THING. HIS ANSWER WAS, YOU KNOW WHAT? I'M A BIG BOY. I CAN TAKE IT IF PEOPLE JUMP ON ME. BUT HIS LARGER POINT WAS THAT HIS COMMENTS WERE TAKEN OUT OF CONTEXT. WHEN HE SAID HE LIKED TO FIRE PEOPLE HE WAS LIKENING THAT TO PEOPLE HAVING THE CHOICE TO SWITCH INSURANCE COMPANIES. THAT WAS THE QUESTION HE WAS RESPONDING TO. YOU KNOW, CONTEXT SOMETIMES DOESN'T COUNT ESPECIALLY IN THE LAST 24 HOURS OF A CAMPAIGN.

>> Woodruff: GWEN, AS WE SAID, HE IS STILL FAR AHEAD IN THE POLLS. HE'S EXPECTED TO WIN IN NEW HAMPSHIRE. A LOT OF THIS CONTEST THERE SEEMS TO BE COMING DOWN TO SECOND PLACE AND THIRD PLACE. MY QUESTION IS, HOW MUCH OF WHAT THE CANDIDATES ARE SAYING IS REALLY INTENDED TO PITCH FORWARD TO SOUTH CAROLINA AND BEYOND?

>> Ifill: YOU'VE GOT IT. EVERYONE IS TRYING TO PITCH FORWARD. IT'S REALLY KIND OF INTERESTING. AS YOU KNOW, AS WE TALKED ABOUT THIS IS A VERY INDEPENDENT STATE IN LOTS OF WAYS SO YOU HEAR IN THE LAST DAY NEWT GINGRICH WHILE STILL ACCUSING MITT ROMNEY OF BEING A MASSACHUSETTS MODERATE ALSO SAYING, YOU KNOW, WOULD GOVERN WITH DEMOCRATS IN THE REAGAN MODEL. SPEAKING TO INDEPENDENTS. YOU HEAR A LOT OF THE OTHER CANDIDATES DOING THE SAME THING AT THE SAME TIME SAYING I'M GOING TO HAVE A MUCH WARMER PLACE TO LAND. THIS IS THE GEORGIA FORMER CONGRESSMAN IN NEWT GINGRICH IN SOUTH CAROLINA. MITT ROMNEY BRINGING WITH HIM TO NEW HAMPSHIRE THIS WEEK THE GOVERNOR OF SOUTH CAROLINA TO CAMPAIGN HERE WITH HIM AS WELL AS THERE. RICK PERRY IS ALREADY ON THE GROUND THERE. JON HUNTSMAN IS DO OR DIE HERE IN NEW HAMPSHIRE. THEY'RE ALL LOOKING FORWARD BUT REALLY NOT MUCH PAST TOMORROW NIGHT.

>> Woodruff: GWEN IFILL IN FRONT OF A VERY SPARKLING NEW HAMPSHIRE BACKGROUND. THANK YOU. WE WILL SEE A LOT OF YOU TOMORROW NIGHT.

>> Ifill: SEE YOU THEN, JUDY.

>> Woodruff: FOR MORE ON THE REPUBLICAN RACE AND HOW A HIGH- LEVEL SHAKE-UP AT THE WHITE HOUSE COULD SHAPE UP THE CAMPAIGN WITH US NOW ARE SUSAN PAGE AND STEWART ROTHER... ROTHEN BURG. STU, THERE IS A LOT OF PILING ON IT SEEMS GOING ON BY THESE REPUBLICANS AGAINST MITT ROMNEY. HOW ENDURING IS THIS? HOW MUCH OF A PROBLEM IS THIS FOR THE ROMNEY CAMP?

>> WELL, IT'S NOT GOING TO BE JUST THE NEXT COUPLE DAYS, JUDY IT WILL BE OVER THE NEXT WEEK TWO. LEADING UP TO SOUTH CAROLINA AND THEN FLORIDA. LOOK, IT'S A PROBLEM. BUT WHEN YOU'RE THE FRONTRUNNER YOU HAVE TO ACCEPT THAT. IF THE POLLS ARE AT ALL ACCURATE, THEN FORMER ROMNEY HAS A LEAD, A SUBSTANTIAL LEAD AND THE QUESTION IS WHETHER UNDECIDED VOTERS BREAK DRAMATICALLY TO ONE CANDIDATE WHICH SEEMS UNLIKELY BUT IT GOES WITH THE TERRITORY WHEN YOU'RE THE FRONTRUNNER.

>> Woodruff: SUSAN, NEWT GINGRICH HAD SEEMED TO HAVE A DISAPPOINTING FINISH IN IOWA. IS HE GETTING TRACTION NOW WITH THIS ARGUMENT AGAINST ROMNEY WHICH HE'S JUST PUSHING AND PUSHING AT AND RUNNING ADS IN SOUTH CAROLINA?

>> I DON'T KNOW IF HE'S GETTING TRACTION WITH VOTERS. HE'S NOT DOING VERY IN THE STATEWIDE NEW HAMPSHIRE SURVEYS BUT I DON'T THINK WE SHOULD EXPECT HIM TO STOP DOING IT. IT'S A GRUDGE MATCH NOW. NEWT GINGRICH BLAMES MITT ROMNEY AND THE SUPER PAC THAT SUPPORTS MITT ROMNEY FOR COSTING HIM THE LEAD HE HAD JUST A COUPLE WEEKS AGO IN THE REPUBLICAN FIELD. HE'S NOW GOTTEN BIG CONTRIBUTIONS. HE'LL MOVE ON TO SOUTH CAROLINA. HE WILL CONTINUE TO FOLLOW... IT MAY NOT COST ROMNEY VICTORY HERE OR THE NOMINATION BUT IT CERTAINLY LAYS THE GROUND WORK FOR THE CRITICISM WE'RE GOING TO HEAR FROM PRESIDENT OBAMA AND THE DEMOCRATS AGAINST MITT ROMNEY IF HE'S THE NOMINEE IN THE FALL.

>> Woodruff: ANOTHER CRITICISM WE HEARD, STU, OF MITT ROMNEY WAS FROM JON HUNTSMAN WHO HAD NOT BEEN THE FACTOR THAT HE IS. HE'S BEEN CAMPAIGNING IN NEW HAMPSHIRE AND IN THE DEBATE OVER THE WEEKEND HE WENT AFTER ROMNEY WHEN ROMNEY CRITICIZED HIS SERVICE AS PRESIDENT CLINTON... PRESIDENT OBAMA'S AMBASSADOR TO CHINA. IS HUNTSMAN GOING TO GET ANY TRACTION FROM THIS?

>> LOOK, HE HAS BEEN SPEND ALL HIS TIME IN NEW HAMPSHIRE WHILE EVERYONE ELSE WAS IN IOWA. PERSONAL CONTACT DOES MATTER IN THESE RACES IN SMALL SFATS. I THINK THE SURVEY DATA SUGGESTS THAT HE IS MOVING UP. THE QUESTION IS, CAN HE MOVE UP FAR ENOUGH AND FAST ENOUGH? AND THAT REALLY SEEMS UNLIKELY AT THIS POINT. YOU KNOW, A LOT OF CONSULTANTS I TALKED TO, REPUBLICANS SAY THAT IF HUNTSMAN HAD STARTED TO TRY TO POSITION THEMSELVES INITIALLY AS A CONSERVATIVE ALTERNATIVE, KIND OF AN ESTABLISHMENT OR MAIN STREET CONSERVATIVE ALTERNATIVE TO ROMNEY, HE MIGHT HAVE A CHANCE HERE. BUT HE STARTED OFF REALLY AS A MORE LIBERAL ALTERNATIVE. THERE WASN'T MUCH ROOM AT THAT POINT FOR HUNTSMAN RUNNING AGAINST ROMNEY. SO WE'LL SEE. HE'S MADE SOME GAINS.

>> Woodruff: A QUICK QUESTION ABOUT RICK SANTORUM. HE SUPPOSEDLY CAME OUT OF IOWA WITH SOME MOMENTUM, JUST A FEW VOTES BEHIND MITT ROMNEY. WHAT'S HAPPENED TO HIM IN NEW HAMPSHIRE AND WHERE DOES HE GO FROM HERE?

>> HE'S REALLY STRUGGLED IN NEW HAMPSHIRE. THE THING THAT MADE HIM SUCH A POWERHOUSE IN IOWA, HIS STRENGTH WITH SOCIAL CONSERVATIVES AND EVANGELICAL CHRISTIANS DOESN'T TRANSLATE IN NEW HAMPSHIRE. THIS IS THE LIVE FREE OR DIE STATE A LIBERTARIAN TRADITION, A STATE WHERE SAME SEX MARRIAGE IS LEGAL. PEOPLE IN THE AUDIENCES FOR RICK SANTORUM EVENTS HAVE TAKEN HIM TO TASK IN SOME CASES FOR HIS STANCE ON SOME OF THOSE ISSUES. SO THERE'S SOME SECOND GUESSING NOW. SHOULD RICK SANTORUM HAVE SKIPPED NEW HAMPSHIRE, GONE STRAIGHT TO SOUTH CAROLINA? ONCE AGAIN A STATE THAT HAS A LOT OF EVANGELICAL CHRISTIANS, HAS HE SQUANDERED THE BOOST THAT HE GOT OUT OF IOWA?

>> Woodruff: QUICKLY, STU, ON RON PAUL WHO DID COME IN THIRD IN IOWA, SUPPOSEDLY HAS THIS ENTHUSIASTIC FOLLOWING BUT NOW WE'RE HEARING HE'S GOING TO SKIP FLORIDA. HE'S JUST GOING TO FOCUS ON CAUCUS STATES?

>> JUDY, THAT MAKES YOU WONDER WHETHER THIS IS A STRATEGY TO WIN THE NOMINATION OR JUST TO GET ENOUGH DELEGATES TO CAUSE THE REPUBLICAN PARTY PROBLEMS WHEN IT MEETS AT ITS NATIONAL CONVENTION. WE UNDERSTAND THAT FLORIDA IS A LARGE STATE, AN EXPENSIVE STATE. HE DID POORLY FOUR YEARS AGO GETTING ABOUT 3% OF THE PRIMARY VOTE BUT IF YOU WANT TO BE THE NOMINEE YOU HAVE TO COMPETE IN FLORIDA.

>> Woodruff: I WANT TO ASK YOU, SUSAN, ABOUT THE NEWS OUT OF THE WHITE HOUSE. THE PRESIDENT'S CHIEF OF STAFF BILL DAILY LEAVING, BEING REPLACED BY THE OMB DIRECTOR, THE BUDGET DIRECTOR, JACK LU. WHAT EFFECT, IN ANY, WAS THIS A SURPRISE, NUMBER ONE AND WHAT EFFECT IF ANY DOES THIS HAVE ON THE CAMPAIGN TO COME?

>> YOU KNOW, THE TIMING IS A SURPRISE. BUT THE FACT THAT BILL DAILY IS STEPPING DOWN NOT A SURPRISE. IT'S BEEN RUMORED FOR MONTHS. HE HAD SAID IN AN INTERVIEW THAT HE WOULD STAY ONLY THROUGH THE RE-ELECTION BATTLE. OBVIOUSLY NOT STAYING THAT LONG. HIGHLY RESPECTED FIGURE FROM ONE OF THE NATION'S GREAT POLITICAL FAMILIES BUT HE WAS NEVER... HE NEVER TURNED OUT TO BE A REALLY GOOD FIT IN THE CHIEF OF STAFF ROLE. HIS RELATIONS WITH DEMOCRATS IN CONGRESS WERE QUITE DREADFUL. YOU HEARD THEM CHEERING THE NEWS THAT JACK LU, WHO STARTED OUT AS AN AIDE TO TIP O'NEILL, WOULD GET THAT TOP JOB AT THE WHITE HOUSE. AS TO WHAT IT MANES FOR THE RE-ELECTION CAMPAIGN, POWER IS REALLY CENTERED AT THAT CHICAGO HEADQUARTERS. WITH DAVID PLUFG WHO IS THE DEPUTY CHIEF OF STAFF I MEAN THAT HIS EMPIRE BECOMES EVEN MORE TOTALLY HIS.

>> Woodruff: THE DRAMA IS NOT ONLY ON THE REPUBLICAN SIDE TODAY BUT ALSO AT THE WHITE HOUSE. SUSAGE PAGE IN NEW HAMPSHIRE, STEWART ROTHENBERG, THANK YOU BOTH. WE'LL SEE YOU TOMORROW, BOTH OF YOU.

>> THANK, JUDY.

>> Brown: AND NOW TO A POLITICALLY SENSITIVE LEGAL CASE. TEXAS DOESN'T HOLD ITS PRIMARY UNTIL APRIL. BUT WELL BEFORE THEN, THE U.S. SUPREME COURT IS BEING ASKED TO SETTLE A REDISTRICTING DISPUTE WITH BROAD IMPLICATIONS FOR THE MAKEUP OF THE STATE'S-- AND POSSIBLY THE NATION'S-- FUTURE POLITICAL LANDSCAPE. TEXAS GAINED FOUR NEW CONGRESSIONAL SEATS DUE TO AN EXPLOSION OF POPULATION GROWTH IN THE PAST DECADE, MORE THAN HALF OF IT WITHIN THE HISPANIC COMMUNITY. THE STATE LEGISLATURE DREW UP A NEW MAP OF VOTING DISTRICTS, BUT IT'S BEING CHALLENGED BY MINORITY RIGHTS GROUPS AS UNREPRESENTATIVE. IN THE MEANTIME, A FEDERAL COURT HAS DRAFTED ITS OWN REDISTRICTING PLAN, AND IT IS BEING CHALLENGED BY THE STATE. AND ALL OF THIS WAS PRESENTED TODAY IN ARGUMENTS BEFORE THE SUPREME COURT. OUTSIDE THE COURT TODAY, BOTH SIDES WEIGHED IN.

>> TEXAS GAINED FOUR NEW CONGRESSIONAL SEATS BECAUSE OF LATINO POPULATION GROWTH. BUT THE REDISTRICTING PLANS ENACTED BY TEXAS CREATED NO NEW OPPORTUNITIES FOR LATINO VOTERS IN THE STATE. INSTEAD OF EMBRACING THE LATINO COMMUNITY IN TEXAS, ITS LEADERSHIP HAS SLAMMED THE DOOR IN OUR FACE. THE VOTING RIGHTS ACT PROTECTS MINORITY VOTERS FROM EXACTLY THE KIND OF DISCRIMINATION THAT TEXAS HOPES TO GET AWAY WITH TODAY.

>> WHAT THE LEGISLATURE DOES AND IS ENTITLED TO DO IS TO DRAW DISTRICTS IN THE STATE OF TEXAS THAT COMPLYS WITH THE VOTING RIGHTS ACT TO THE EXTENT POSSIBLE PROTECTS INCUMBENTS. WE BELIEVE THAT WHAT THE STATE OF TEXAS DID IN PASSING THE REDISTRICTING MAPS FULLY COMPLY S WITH VOTING RIGHTS ACT AND ENSURES A NEW RECORD NUMBER OF HISPANICS WHO WERE ELECTED TO OFFICE AS REPUBLICANS WITH THE HOPE AND OPPORTUNITY THEY WILL BE ABLE TO COME BACK AND CONTINUE TO SERVE AS REPUBLICANS IN THE STATE LEGISLATURE.

>> Brown: THE JUSTICES ALSO

>> Brown: THE JUSTICES ALSO HEARD ARGUMENTS TODAY IN A CONTROVERSIAL LAND RIGHTS AND ENVIRONMENTAL REGULATION CASE. MARCIA COYLE OF THE "NATIONAL LAW JOURNAL" WAS IN THE COURTROOM FOR BOTH SETS OF ARGUMENTS, AND JOINS US NOW.

>> THANK YOU, JEFF.

>> Brown: LET'S START WITH THE TEXAS CASE. ONE OF THE COMPLICATING FACTORS HERE IS THAT TEXAS IS A STATE THAT HAS TO GET ANY CHANGES IN ITS VOTING PROCESSES APPROVE UNDER THE VOTING RIGHTS ACT. GIVE US A LITTLE MORE BACKGROUND.

>> THAT'S CORRECT. THAT'S BECAUSE TEXAS HAS A HISTORY OF RACIAL DISCRIMINATION IN ITS VOTING PRACTICES. IT'S CALLED SO CALLED COVERED JURISDICTION UNDER THE VOTING RIGHTS ACT. THERE ARE NINE STATES THAT ARE COVERED JURISDICTIONS WITH SIMILAR HISTORIES. MOST OF THEM IN THE SOUTH BUT THERE ARE COUNTIES AND CITIES IN ADDITIONAL SEVEN STATES, SOME IN THE NORTHEAST, SOME IN THE WEST, THAT ARE ALSO COVERAGE JURISDICTIONS. TEXAS HAD TWO OPTIONS HERE WHEN IT DRAFTED A REDISTRICTING PLAN AFTER THE 2010 CENSUS. YOU COULD GO TO THE UNITED STATES ATTORNEY GENERAL TO HAVE THE PLAN APPROVED. THE QUICKEST WAY. OR TO GO TO THE FEDERAL DISTRICT COURT IN WASHINGTON WHERE IT ACTUALLY WENT AND IS STILL IN THE PROCESS OF HAVING THAT COURT REVIEW THE PLAN.

>> Brown: SO I LAID OUT SOME OF THE... WHAT'S HAPPENED HERE. YOU JUST GAVE US SOME MORE. WHAT IS THE LEGAL DISPUTE THAT WAS BEFORE THE COURT?

>> THE FIGHT IN THE COURT TODAY IS REALLY OVER AN INTERIM REDISTRICTING PLAN THAT WAS CRAFTED BY A FEDERAL COURT IN SAN ANTONIO TEXAS. AFTER TEXAS ASKED THE DISTRICT COURT IN WASHINGTON FOR APPROVAL OF ITS PLAN, ABOUT THE SAME TIME, EIGHT ORGANIZATIONS, INDIVIDUALS, MOSTLY CIVIL RIGHTS AND MINORITY GROUPS, CHALLENGED THE TEXAS PLAN IN SAN ANTONIO TEXAS FEDERAL DISTRICT COURT AS VIOLATING THE VOTING RIGHTS ACT AS WELL. AS THE TIME CAME CLOSER TO THE PRIMARY ELECTIONS, THE DISTRICT COURT IN WASHINGTON KNEW IT WASN'T GOING TO COMPLETE ITS PROCESS IN TIME SO IT TOLD THE SAN ANTONIO COURT, "PREPARE AN INTERIM PLAN." IT DID PREPARE THAT PLAN, AND THAT WAS WHAT WAS FOUGHT OVER IN THE SUPREME COURT TODAY. TEXAS, REPRESENTED BY FORMER SOLICITOR GENERAL PAUL CLEMENT, ARGUES THAT THE SAN ANTONIO COURT DID NOT GIVE DEFERENCE TO THE NEW TEXAS PLAN IN DRAFTING ITS INTERIM PLAN. INSTEAD, IT PRETTY MUCH GAVE A PLAN THAT RESPONDED TO ALL OF THE CHARGES BEING MADE IN THE LAWSUITS BEFORE IT.

>> Brown: IN THE BACKGROUND, IS THIS LARGER QUESTION, A CONSTITUTIONAL QUESTION ABOUT THE VOTING RIGHTS ACT ITSELF, RIGHT?

>> WELL, IN 2009 THE SUPREME COURT CAST CONSIDERABLE UNCERTAINTY ABOUT THE CONSTITUTIONALITY OF SECTION 5, THE PRE-CLEARANCE PROVISION THAT TEXAS IS UNDER, AND IT DIDN'T ADDRESS IT HEAD ON IN THAT 2009 CASE. IT'S IN THE BACKGROUND OF THIS CASE BUT TODAY THE CHIEF JUSTICE MADE IT CLEAR THAT IT WASN'T DIRECTLY COMING UP IN THIS CASE.

>> Brown: THE STATES WANT TO GET OUT FROM UNDER IT.

>> ABSOLUTELY. THEY FEEL CIRCUMSTANCES HAVE CHANGED. I MEAN SOME OF THESE PRE-CLEARANCE REQUIREMENTS GO ALL THE WAY BACK TO THE LATE 1960s.

>> Brown: NOW, I SAID THERE WERE BIG STAKES HERE, BIG IMPLICATIONS. EXPLAIN IT. FOR THOSE WHO DON'T LIVE IN TEXAS. WHAT IS AT STAKE HERE?

>> I THINK, FIRST OF ALL, THERE ARE VERY IMPORTANT POLITICAL IMPLICATIONS. AS YOU REPORTED, TEXAS GAINS FOUR NEW HOUSE SEATS. AND HOW THAT PLAN ULTIMATELY COMES OUT MAY HAVE A BEARING ON WHO CONTROLS THE U.S. HOUSE OF REPRESENTATIVES AFTER THE GENERAL ELECTION. AND SECONDLY, IT'S THE VOTING RIGHTS ACT. PROBABLY THE MOST SUCCESSFUL CIVIL RIGHTS STATUTE IN OUR HISTORY. WHENEVER THE COURT SAYS ABOUT THE VOTING RIGHTS ACT AND THE ROLE OF FEDERAL COURTS IN INTERPRETING IT AND APPLYING IT IS GOING TO BE VERY IMPORTANT TO ALL OF US BECAUSE WE ARE IN THE MIDST OF SOME VERY DRAMATIC CHANGING DEMOGRAPHICS IN THIS COUNTRY.

>> Brown: YOU TOLD ME EARLIER TODAY, THIS WAS A TECHNICAL ARGUMENT. YOU'RE SHAKING YOUR HEAD.

>> IT'S A VERY COMPLICATED PROCESS, THE REDISTRICTING AND THE APPROVAL OF REDISTRICTING PLANS. I THINK THE JUSTICES FEEL IN A SENSE THEY'RE BETWEEN A ROCK AND A HARD PLACE. THE PRIMARY ELECTION WAS POSTPONED UNTIL APRIL, CONTINGENT ON A USABLE PLANK IN PLACE BY FEBRUARY 1. AND THE JUSTICES SEEMED TO KE IT CLEAR THEY DIDN'T SEE HOW THIS WAS POSSIBLE BY FEBRUARY 1.

>> Brown: WE WILL WATCH THAT AS PART OF THE POLITICAL CAMPAIGN THAT WE'RE WATCHING OVER THE NEXT MONTH. ALL RIGHT. A COUPLE OF MINUTES I DO WANT TO BRING UP THIS OTHER CASE BECAUSE THIS WAS A VERY CONTROVERSIAL ENVIRONMENTAL REGULATION CASE. SACKETT VERSUS EPA.

>> RIGHT. THE SACKETTs BOUGHT LAND NEAR PRIEST LAKE IN IDAHO. THEY WANTED TO BUILD A HOME. THEY PREPARED BACK IN 2007, I BELIEVE, TO BUILD THAT HOME BY FILLING IN THE LOT. EPA ISSUED WHAT THEY CALL A COMPLIANCE ORDER SAYING, "WAIT A MINUTE. THIS IS WETLAND PROPERTY. YOU CAN'T DO THIS. YOU HAVE TO RETURN IT TO ITS NATURAL STATE OR YOU WILL FACE PENALTIES OF UP TO $37,500 PER DAY UNTIL YOU COMPLY." THE SACKETTS DIDN'T BELIEVE THEIR PROPERTY WAS WETLAND BUT THEY HAD VERY FEW OPTIONS AVAILABLE. THEY ARE IN THE SUPREME COURT TODAY ARGUING THAT THEY HAVE A RIGHT TO GO TO COURT TO CHALLENGE THAT COMPLIANCE ORDER. BUT THE LOWER COURT....

>> Brown: RATHER THAN WAIT TO GO BACK TO THE EPA.

>> EXACTLY. LOWER COURTS INCLUDING IN THE SACKETTS CASE HAVE HELD THAT THERE IS NO PRE-ENFORCEMENT JUDICIAL REVIEW. YOU HAVE TO WAIT UNTIL EPA TAKES THE NEXT STEP WHICH IS AN ENFORCEMENT ACTION AGAINST YOU.

>> Brown: WHY DID IT GET TO THE SUPREME COURT THEN? SOMEBODY FELT OTHERWISE, RIGHT?

>> THAT'S RIGHT. ACTUALLY THE SACKETTS LOST IN THE LOWER COURT SO THEY APPEALED TO THE SUPREME COURT. I WOULD SAY THAT THE JUSTICES WERE VERY HOSTILE, IT APPEARED TODAY, TO THE EPA. THE GOVERNMENT'S LAWYER, YOU KNOW YOU'RE GOING TO HAVE A BAD DAY IF ONE OF THE JUSTICES SAYS TO YOU AS JUSTICE ALITO TODAY, YOU PRESENTEDED THE FACTS OF THIS CASE TO THE ORDINARY HOMEOWNER, WOULDN'T THAT HOMEOWNER SAY, THIS DOESN'T HAPPEN IN THE UNITED STATES? THE FEELING IS THERE HAS TO BE SOME WAY THAT THE HOMEOWNER CAN CHALLENGE EPA'S CLAIM THAT IT'S A WETLAND BEFORE THE PENALTIES START ACCRUING.

>> Brown: BRIEFLY, THIS ONE ALSO HAS IMPLICATIONS WELL BEYOND ITS CASE, BEYOND ENVIRONMENTAL REGULATIONS.

>> YES IT DOES BECAUSE NOT ONLY EPA BUT OTHER FEDERAL AGENCIES ISSUE THESE COMPLIANCE ORDERS. THEIR PURPOSE GENERALLY IS TO ALLOW AN AGENCY TO ACT SWIFTLY WHEN THERE'S A THREAT OF SOME KIND. AND IF THE COURT IMPOSES OR SAYS THAT THERE IS JUDICIAL REVIEW, THE AGENCIES FEEL THAT THEY ARE GOING TO BE HAULED INTO COURT AND THOUSANDS OF CHALLENGES TO THESE ORDERS AND THEY WON'T BE ABLE TO RESPOND SWIFTLY.

>> Brown: MARCIA COYLE OF THE NATIONAL LAW JOURNAL, THANK YOU.

>> MY PLEASURE, JEFF.

>> Woodruff: FINALLY TONIGHT, WHAT'S SLOWING DOWN THE RISE OF HEALTH CARE SPENDING. RAY SUAREZ TAKES A LOOK.

>> Suarez: IT'S OFTEN REPORTED THAT AMERICANS SPEND MORE ON HEALTH CARE THAN THE CITIZENS OF ANY OTHER INDUSTRIALIZED COUNTRY. WHAT'S ALSO BEEN TRUE FOR MANY YEARS IS THAT THE COST OF HEALTH CARE HAS RISEN MUCH FASTER THAN THE COST OF LIVING OVERALL. NOW A NEW REPORT FROM THE GOVERNMENT SHOWS THE RISE HAS SLOWED FOR THE SECOND CONSECUTIVE YEAR. IT FOUND THAT HEALTH CARE SPENDING GREW BY 3.9% FOR 2010, THE MOST RECENT YEAR ON RECORD. THAT'S JUST A SHADE HIGHER THAN IN 2009. STILL THE TOTAL AMOUNT SPENT IN 2010 WAS 2.6 TRILLION DOLLARS OR ABOUT $8400 A PERSON. MOREOVER, HEALTH INSURANCE PREMIUMS CONTINUE TO CLIMB. WHILE WORKERS ARE PAYING AN EVER-GROWING SHARE. MONEY. TO HELP FLESH OUT WHAT'S BEHIND THESE CHANGES, WE CHECK IN WITH SUSAN DENTZER, EDITOR IN CHIEF OF THE JOURNAL HEALTH AFFAIRS WHERE THE REPORT WAS PUBLISHED TODAY. SHE'S ALSO AN ANALYST FOR THE NEWSHOUR. SUSAN, AT 3.9% UP, IT'S STILL GOING UP MUCH FASTER THAN THE COST OF LIVING. BUT THAT'S CONSIDERED A TAME NUMBER.

>> IT REALLY IS, RAY. IF YOU COMPARE IT TO PRIOR YEARS, YOU CAN REALLY SEE THE DIFFERENCE. FOR EXAMPLE, IN 1980, THE RATE OF GROWTH OF HEALTH SPENDING JUMPED IN ONE YEAR BY 13%. IN 1990, IT JUMPED BY 11% IN ONE YEAR. IN RECENT YEARS WE'VE SEEN THAT RATE OF GROWTH SLOW. THESE TWO MOST RECENT YEARS, 2009 AND 2010 REPRESENT THE SLOWEST RATE OF NATIONAL HEALTH SPENDING GROWTH IN 51 YEARS. WE KNOW WHY THAT HAPPENED LARGELY. IT'S BECAUSE THE ECONOMY PLUMMETED IN 2009. WE HAD THE FIRST DECLINE IN OVERALL GROSS DOMESTIC PRODUCT IN 2009 THAN WE HAVE HAD IN 60 YEARS.

>> Suarez: UNPACK THAT NUMBER. WHEN YOU SAY WE KNOW WHY IT HAPPENED AND IT'S THE ECONOMY. WERE PEOPLE BUYING LESS HEALTH CARE OR ABLE TO PAY LESS FOR IT.

>> BOTH. ACROSS THE BOARD WE SEE PEOPLE WERE GOING TO THE DOCTOR LESS. PEOPLE WERE GOING TO THE HOSPITAL LESS. PEERP WERE GETTING LESS OUT- PATIENT SURGERY. WE HAD THE SLOWEST RATE OF GROWTH IN PRESCRIPTION DRUG SPENDING IN YEARS. RETAIL PRESCRIPTION DRUG SPENDING WENT UP ONLY 1.2%. IN ONE YEAR. THAT IS IS OVER AND AGAINST YEARS WE'VE HAD RELATIVELY RECENTLY OF 18%. ANNUAL RATES OF INCREASE. SO ACROSS THE BOARD IN ALMOST EVERY SECTOR, IF THERE WAS AN EARTHQUAKE IN THE ECONOMY IN 2009 THE AFTERSHOCKS WERE FELT IN HEALTH CARE WELL INTO 2010.

>> Suarez: NOW 2010 WAS ALSO THE FIRST YEAR OF THE OBAMA ADMINISTRATION'S HEALTH CARE REFORM. THEIR STATED INTENTION WAS TO BEND THE COST CURVE. DID THAT HAVE ANYTHING TO DO WITH THIS LOWER SPEND SOMETHING.

>> NO. BUT IT'S ALSO TRUE THAT ANYTHING THAT HAPPENED OUT OF THE AFFORDABLE CARE ACT HAD A NEGLIGIBLE IMPACT ON ALL OF THIS IN 2010. THE ACTUARIES CENTER FOR MEDICARE AND MEDICAID SERVICES ACTUARIES SAY THAT THE OVERALL CONTRIBUTION OF THE AFFORDABLE CARE ACT WAS 0.1 PERCENTAGE POINTS AS A CONTRIBUTOR TO THE OVERALL 3.9 PERCENTAGE POINTS OF INCREASE SO IT WAS NEGLIGIBLE. NOW WE KNOW THAT MOST OF THE AFFORDABLE CARE ACT IS YET TO COME. THE BIG EXPENDITURES WILL HIT IN 2014 WHEN WE EXPAND HEALTH INSURANCE COVERAGE, OPEN UP THE NEW HEALTH INSURANCE EXCHANGES, EXPAND MEDICAID, ET CETERA. SO FAR VERY LITTLE IMPACT.

>> Suarez: ONE PART OF THE ECONOMIC EFFECT WHICH IS DIRECTLY TIED TO HEALTH INSURANCE IS EMPLOYMENT. 2010 WAS A VERY HIGH UNEMPLOYMENT YEAR. DID THAT DRIVE PEOPLE TO MORE EXPENSIVE WAYS OF GETTING HEALTH CARE COVERAGE OR JUST KEEP THEM HOME INSTEAD OF GOING TO THE DOCTOR?

>> IT PRETTY MUCH KEPT THEM HOME. NOT ONLY DID WE HAVE THE HIGHEST RATE OF UNEMPLOYMENT IN 27 YEARS, PEOPLE ALSO LOST HEALTH COVERAGE BECAUSE OF THAT. PRIVATE HEALTH INSURANCE COVERAGE DECLINED ALMOST 2%. IN THE ONE YEAR FROM 2009 TO 2010. OF COURSE, IT HAD DECLINED IN THE PRIOR YEAR AS WELL. SO PEOPLE WERE LOSING THEIR JOBS, LOSING THEIR HEALTH CARE COVERAGE, HAVING TO PAY MORE. THOSE PEOPLE WHO DID HAVE COVERAGE HAVE HAD TO PAY MORE. WE KNOW THAT EMPLOYERS HAVE BEEN SHIFTING 1... MORE OF THE COSTS OF HEALTH CARE TO WORKERS. NOW IF YOU GO TO THE PHYSICIAN OR IF YOU GO TO THE HOSPITAL, THE HIKELYHOOD IS YOU'RE GOING TO HAVE A HIGHER CO-INSURANCE RATE. YOU'RE GOING TO PAY MORE OF THAT BILL DIRECTLY YOURSELF. ALL OF THOSE THINGS CAME TOGETHER. PEOPLE WENT TO THE EMERGENCY DEPARTMENT LESS. PEOPLE WENT TO DOCTORS' OFFICES LESS. PEOPLE DID LESS ELECTIVE SURGERY IN HOSPITALS. YOU CAN SEE THAT CLEARLY IN THE RATE OF HOSPITAL USE IN 2010. SO THE ECONOMY IN HEALTH CARE GOT HIT AS HARD AS THE ECONOMY ANY PLACE ELSE.

>> Suarez: BUT IN THAT 2.6 TRILLION DOLLAR OVERALL NATIONAL HEALTH CARE BILL, WASN'T THE FEDERAL GOVERNMENT ON THE HOOK FOR MORE OF IT AT THE SAME TIME AS WELL?

>> YES, INDEED. IN PARTICULAR BECAUSE OF THE STIMULUS LAW THAT WAS PASSED IN 2009 WHICH HAD THE FEDERAL GOVERNMENT PICK UP MORE OF THE SHARE OF MEDICAID SPENDING, MEDICAID, OF COURSE, THE PROGRAM THAT LARGELY COVERS THE POOR AND ALSO SOME OF THE LONG-TERM CARE NEEDS OF THE AGED AND DISABLED. WE KNOW THAT THE FEDERAL GOVERNMENT KICKED IN MORE TO HELP THE STATES OUT THROUGH THE WORST PERIOD OF THE ECONOMIC DOWNTURN. THAT DID RESULT IN HIGHER SPENDING. BUT EVEN SO, MEDICAID SPENDING IN 2010 WAS STILL ONLY UP 7% WHICH IS MUCH LOWER THAN IT'S BEEN IN PRIOR YEARS. IF WE LOOK ON A PER-PERSON BASIS, PER-PERSON IN MEDICAID SPENDING ONLY WENT UP 1.2 PERCENTAGE POINTS. SO THAT'S AGAIN A REALLY LOW RATE OF SPENDING PER PERSON RELATIVE TO WHAT WE'VE SEEN AS THE HISTORICAL NORM IN THIS COUNTRY.

>> Suarez: TWO INTERESTING PIECES OF DATA JUMPED OUT AT ME FROM THE REPORT. ONE WAS THAT CO-PAYS WERE HIGHER FOR THINGS LIKE PRESCRIPTION DRUGS AND OF COURSE INSURANCE. THE RAW COST OF INSURANCE ITSELF WAS HIGHER YET THE HOUSEHOLD SHARE OF THE OVERALL NATIONAL BILL WAS LOWER. IS THAT BECAUSE OTHER PEOPLE IN THE CHAIN WERE PICKING UP MORE AT THE SAME TIME?

>> Suarez: PARTLY IT'S AGAIN THIS EFFECT OF THE FEDERAL GOVERNMENT STEPPING IN AND PAYING MORE OF THE MEDICAID BILLS OF THE COUNTRY IN PARTICULAR. OF COURSE WE KNOW PEOPLE CONTINUE TO QUALIFY FOR MEDICARE SO THAT IS RISING AS WELL. SO THERE WAS THIS TEMPORARY ADJUSTMENT OF THE FEDERAL GOVERNMENT KICKING IN MORE MONEY TOWARD HEALTH CARE. OVER THAT PERIOD. BUT AS YOU SAY, A LARGER EFFECT HERE GOING ON IS THAT PEOPLE ARE HAVING TO PAY MORE FOR HEALTH CARE OUT OF POCKET TO THE DEGREE THAT THAT PERSISTS, OF COURSE, THE BIG QUESTION PEOPLE ARE NOW ASKING IS, WHAT'S GOING TO HAPPEN WHEN THE ECONOMY COMES BACK? DOES ALL OF THIS GET THROWN....

>> Saurez: WHAT IS GOING TO HAPPEN WHEN THE ECONOMY COMES BACK?

>> WE DON'T KNOW. BUT IF SOME OF THESE THINGS ARE JUST TO... DUE TO THE ECONOMY AND PEOPLE GET EMPLOYED AND GET INSURANCE HEALTH INSURANCE AGAIN AND WE HAVE THE BIG HEALTH INSURANCE EXPANSION COMING DOWN THE LINE IN 2014, IT COULD THROW ALL OF THIS INTO REVERSE. WE COULD SEE HEALTH EXPENDITURES GOING UP MUCH MORE QUICKLY. THAT'S WHAT WE'RE EXPECTING NOW IN 2014. ON THE OTHER HAND IF SOME OF THESE CHANGES ARE MORE FUNDAMENTAL, IF SHIFTING MORE OF THE COST TO INDIVIDUALS IS MAKING THEM MORE COST CONSCIOUS ABOUT HEALTH CARE, LESS LIKELY TO GO TO AN EMERGENCY ROOM WHEN THEY COULD GET CARE THAT THEY NEED, SAY, AT AN URGENT CARE CLINIC, THOSE COULD HAVE MORE LASTING EFFECTS. WE'LL HAVE TO SEE HOW ALL OF THIS PLAYS OUT.

>> Suarez: SUSAN DENTZER, GOOD TO TALK WITH YOU.

>> GREAT TO BE WITH YOU, RAY.

>> Brown: AGAIN, THE MAJOR DEVELOPMENTS OF THE DAY. U.N. MONITORS CONFIRMED IRAN HAS BEGUN ENRICHING NUCLEAR FUEL AT A SECOND SITE, AND IRAN ANNOUNCED A FORMER U.S. MARINE HAS BEEN CONVICTED OF SPYING AND SENTENCED TO DEATH. REPUBLICAN PRESIDENTIAL HOPEFULS CROSSED AND RECROSSED NEW HAMPSHIRE, ON THE EVE OF THE FIRST-IN-THE-NATION PRIMARY THERE. AND BILL DALEY STEPPED DOWN AS WHITE HOUSE CHIEF OF STAFF, AFTER JUST A YEAR ON THE JOB. ONLINE, WE REMEMBER HAITI'S EARTHQUAKE TWO YEARS LATER. HARI SREENIVASAN EXPLAINS. HARI?

>> Sreenivasan: WE UPDATE THE RECOVERY EFFORTS, AND WE'VE POSTED A SLIDESHOW AND A DISPATCH FROM PORT-AU-PRINCE ON OUR WORLD PAGE. ON THE ECONOMIC FRONT, A VIEWER ASKED PAUL SOLMAN IF THE U.S. COULD FACE A CRISIS SIMILAR TO THAT OF THE EUROZONE. FIND PAUL'S ANSWER ON HIS MAKING SENSE PAGE. AND OUR TEAM IN NEW HAMPSHIRE HAS COLLECTED THE SIGHTS AND SOUNDS OF THE CAMPAIGN TRAIL. THAT'S ON OUR POLITICS PAGE. 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 HAVE FULL COVERAGE OF THE NEW HAMPSHIRE PRIMARY, INCLUDING A SPECIAL REPORT WITH THE RESULTS AT 11:00 P.M. EASTERN TIME. I'M JEFFREY BROWN.

>> Judy: AND I'M JUDY WOODRUFF. 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: MOVING OUR ECONOMY FOR 160 YEARS. BNSF, THE ENGINE THAT CONNECTS US. 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 Captioned by Media Access Group at WGBH access.wgbh.org

>> THIS IS "BBC"

>> 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.

>> AT UNION BANK, OUR RELATIONSHIP MANAGERS WORK HARD TO KNOW YOUR BUSINESS, OFFERING SPECIALIZED SOLUTIONS AND CAPITAL TO HELP YOU MEET YOUR GROWTH OBJECTIVES. WE OFFER EXPERTISE AND TAILORED SOLUTIONS FOR SMALL BUSINESSES AND MAJOR CORPORATIONS. WHAT CAN WE DO FOR YOU?