PBS NewsHour; July 15, 2011 3:00pm-4:00pm PDT

Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS

>> Woodruff: PRESIDENT OBAMA SAID TODAY TIME IS RUNNING OUT TO BREAK THE LOGJAM OVER RAISING THE DEBT CEILING. GOOD EVENING, I'M JUDY WOODRUFF.

>> Suarez: AND I'M RAY SUAREZ ON THE "NEWSHOUR" TONIGHT. WE HAVE THE LATEST ON THE BEHIND-THE-SCENES MANEUVERING.

>> Woodruff: PLUS, WE INTERVIEW TWO GOVERNORS DELAWARE DEMOCRAT JACK MARKELL AND WISCONSIN REPUBLICAN SCOTT WALKER ABOUT THE PHILOSOPHICAL DIVIDE OVER THE ROLE OF GOVERNMENT.

>> Suarez: THEN, FROM CALIFORNIA, SPENCER MICHELS REPORTS ON THE FALLOUT FROM A SUPREME COURT RULING FORCING THE STATE TO SHIFT INMATES OUT OF OVERCROWDED PRISONS.

>> THERE'S NO ROOM IN OUR JAIL. IF WE PUT SOMEBODY IN FROM THE STATE PRISON, WE'VE GOT TO KICK SOMEBODY ELSE OUT THE BACK END, OR WE HAVE TO PUT MORE PEOPLE ON PROBATION OR ELECTRONIC MONITORING.

>> Woodruff: MARK SHIELDS AND DAVID BROOKS ANALYZE THE WEEK'S NEWS.

>> Suarez: AND HARI SREENIVASAN PREVIEWS THE COMING CLASH BETWEEN THE U.S. AND JAPANESE TEAMS IN THE WOMEN'S WORLD CUP FINAL WITH CHRISTINE BRENNAN OF "U.S.A. TODAY" AND ABC.

>> THIS IS REALLY A LITTLE BIT ABOUT SOCCER AND A LOT ABOUT NATIONALISM AND ABOUT, WHETHER IT'S TIDALLY-WINKS OR SOCCER, AMERICANS WANT TO SEE AMERICANS WIN.

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

>> WELL, THE BEST COMPANIES ARE DRIVEN BY NEW IDEAS.

>> OUR HISTORY DEPENDS ON NEW IDEAS. WE SPEND BILLIONS ON ADVANCED TECHNOLOGIES.

>> IT'S ALL ABOUT INVESTING IN THE FUTURE.

>> WE CAN FIND NEW ENERGY-- MORE CLEANER, SAFER AND SMARTER.

>> COLLABORATING WITH THE BEST IN THE FIELD.

>> CHEVRON WORKS WITH THE SMARTEST PEOPLE AT LEADING UNIVERSITIES AND TECH COMPANIES.

>> AND YET, IT'S REALLY BASIC.

>> IT'S PAYING OFF EVERYDAY. 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.

>> Suarez: THERE WERE NO WHITE HOUSE DEFICIT TALKS TODAY. INSTEAD, THE PRESIDENT CALLED FOR CONGRESS TO PRODUCE A SERIOUS PLAN OVER THE WEEKEND. HE SPOKE AT HIS THIRD NEWS CONFERENCE IN THE LAST TWO WEEKS.

>> WHAT I'VE TRIED TO EMPHASIZE IS WE HAVE A UNIQUE OPPORTUNITY TO DO SOMETHING BIG.

>> Suarez: BUT AFTER FIVE STRAIGHT DAYS OF TALKS WITH CONGRESSIONAL LEADERS, PRESIDENT OBAMA CONCEDED TODAY SOMETHING BIG REMAINS ELUSIVE.

>> WE ARE OBVIOUSLY RUNNING OUT OF TIME. AND SO WHAT I'VE SAID TO THE MEMBERS OF CONGRESS IS THAT YOU NEED, OVER THE NEXT 24 TO 36 HOURS, TO GIVE ME SOME SENSE OF WHAT YOUR PLAN IS TO GET THE DEBT CEILING RAISED THROUGH IF THEY SHOW ME A SERIOUS PLAN, I'M READY TO MOVE, EVEN IF IT REQUIRES SOME TOUGH DECISIONS ON MY PART.

>> Suarez: THE PRESIDENT HAD PREVIOUSLY INSISTED ON EXTENDING THE DEBT CEILING THROUGH 2012 PAST NEXT YEAR'S ELECTION. BUT AFTER THURSDAY'S TALKS, HE SETTLED FOR ASKING CONGRESSIONAL LEADERS TO REVIEW THREE OPTIONS WITH THEIR MEMBERS. THE FIRST-- THE SO-CALLED "GRAND BARGAIN" THAT MR. OBAMA FAVORS-- WOULD CUT DEFICITS BY ABOUT $4 TRILLION DOLLARS, INCLUDING SPENDING CUTS AND NEW TAX REVENUES. A MEDIUM-RANGE PLAN WOULD AIM TO REDUCE THE DEFICIT BY ABOUT HALF THAT AMOUNT. THE SMALLEST OPTION WOULD CUT BETWEEN $1 TRILLION AND $1.5 TRILLION DOLLARS WITHOUT INCREASED TAX REVENUE OR ANY MEDICARE AND MEDICAID CUTS. BUT AFTER A CLOSED-DOOR CAUCUS AT THE CAPITOL, HOUSE REPUBLICANS SOUNDED IN NO MOOD TO PICK ONE OF THOSE OPTIONS.

>> QUITE FRANKLY, MEMBERS OF CONGRESS ARE GETTING TIRED OF WHAT WON'T DO AND WHAT THE PRESIDENT WANTS.

>> Suarez: SPEAKER JOHN BOEHNER TRIED TO LEAVE THE DOOR OPEN TO COMPROMISE, BUT HE COMPLAINED THE PRESIDENT AND CONGRESSIONAL DEMOCRATS HAD OFFERED NOTHING WORTH CONSIDERING.

>> I DON'T WANT TO PRECLUDE ANY CHANCE OF COMING TO AN AGREEMENT. BUT THEY'VE BEEN UNWILLING TO PUT A REAL PLAN ON THE TABLE. AND WITHOUT SERIOUS SPENDING CUTS, WITHOUT REAL REFORM OF OUR ENTITLEMENT PROGRAMS, THIS PROBLEM IS NOT GOING TO BE SOLVED.

>> Suarez: INSTEAD, HOUSE REPUBLICANS PLANNED TO VOTE NEXT WEEK ON CUTTING SPENDING BY $2.4 TRILLION OVER TEN YEARS AND ADOPTING A BALANCED BUDGET AMENDMENT TO THE CONSTITUTION. THE PRESIDENT HAD ALREADY REJECTED THAT APPROACH.

>> IF YOU'RE TRYING TO GET TO $2.4 TRILLION WITHOUT ANY REVENUE, THEN YOU ARE EFFECTIVELY GUTTING A WHOLE BUNCH OF DOMESTIC SPENDING THAT IS GOING TO BE TOO BURDENSOME AND IS NOT GOING TO BE SOMETHING THAT I WOULD SUPPORT.

>> Suarez: MR. OBAMA INSISTED HE'D SUPPORT TOUGH CHOICES, INCLUDING MEANS TESTING FOR MEDICARE, IF REPUBLICANS RECONSIDER THEIR STAUNCH OPPOSITION TO TAX INCREASES.

>> THE PROBLEM IS MEMBERS OF CONGRESS ARE DUG IN IDEOLOGICALLY INTO VARIOUS POSITIONS BECAUSE THEY BOXED THEMSELVES IN WITH PREVIOUS STATEMENTS. AND, YOU KNOW, SO THIS... THIS IS NOT A MATTER OF THE AMERICAN PEOPLE KNOWING WHAT THE RIGHT THING TO DO IS. THIS IS A MATTER OF CONGRESS DOING THE RIGHT THING AND REFLECTING THE WILL OF THE AMERICAN PEOPLE.

>> Suarez: WITH AN AUGUST SECOND DEADLINE NEARING, THERE WAS INCREASED FOCUS ON A SENATE PLAN CRAFTED BY MINORITY LEADER MITCH McCONNELL AND MAJORITY LEADER HARRY REID. IT WOULD LET THE PRESIDENT EXTEND THE BORROWING LIMIT ON HIS OWN, BUT INCLUDE VOTES ON SPENDING CUTS. MEANWHILE, A SIMILAR DRAMA REACHED AN APPARENT CONCLUSION IN MINNESOTA, AS LEADERS BRIDGED THEIR BUDGET DIVIDE. THE COMPROMISE BETWEEN DEMOCRATIC GOVERNOR MARK DAYTON AND REPUBLICAN LEGISLATIVE LEADERS COULD END A STATE GOVERNMENT SHUTDOWN THAT'S ENTERING ITS THIRD WEEK.

>> WE'RE EXPECTED TO DO EVERYTHING AROUND THE CLOCK BECAUSE OF THE URGENCY OF GETTING THE LIGHTS BACK ON AND MINNESOTA BACK TO WORK AS SOON AS POSSIBLE AND I THINK THAT WILL BE VERY SOON.

>> IT WAS ABOUT MAKING SURE THAT WE GET A DEAL THAT ALL CAN BE DISAPPOINTED IN BUT IT'S A DEAL THAT IS DONE. A BUDGET THAT WILL BALANCED. A STATE THAT WILL BE BACK TO WORK.

>> Suarez: STATE LAWMAKERS COULD SIGN OFF ON THAT DEAL IN THE NEXT FEW DAYS. NOW, HOW MIGHT THE DEBATE IN WASHINGTON IMPACT STATES ACROSS THE COUNTRY? IT'S ONE OF THE QUESTIONS BEING EXAMINED AT THE NATIONAL GOVERNORS ASSOCIATION'S ANNUAL MEETING, WHICH KICKED OFF TODAY IN SALT LAKE CITY, UTAH. AND WE ARE JOINED NOW BY TWO GOVERNORS ATTENDING THE CONFERENCE, REPUBLICAN SCOTT WALKER OF WISCONSIN AND DEMOCRAT JACK MARKELL OF DELAWARE. GENTLEMEN, EMBEDDED IN ALL THESE DEBATES, BOTH IN STATES ACROSS THE COUNTRY AND IN WARB TON, THERE SEEMS TO BE ONE OVERRIDING QUESTION, WHAT IS GOVERNMENT FOR? GOVERNOR MARKELL WHY DON'T WE START WITH YOU? WHAT IS GOVERNMENT FOR?

>> WELL, WHAT WE REALLY HAVE TO DO THESE DAYS IS JUST FOCUS ON A HANDFUL OF KEY ISSUES. THAT REALLY MEANS HELPING PUT PEOPLE BACK TO WORK. GOVERNMENT IS NOT GOING TO CREATE THE JOBS BUT GOVERNMENT HAS GOT TO CREATE THE ENVIRONMENT. WHAT BUSINESSES ARE LOOKING FOR ARE GOVERNMENTS WHO CREATE GREAT SCHOOLS BUT REASONABLE TAXES, GREAT QUALITY OF LIFE. A LOT OF RESPONSIVENESS. WE'RE ALSO LOOKING OBVIOUSLY TO MAKE SURE THAT WE DO CONTINUE TO IMPROVE THE SCHOOLS AND WE'VE GOT TO MAKE SURE WE HAVE A REASONABLE TAX LOAD SO THOSE ARE THE MAIN THINGS. WE'VE GOT TO MAKE SURE THAT OUR TAXPAYERS THAT WERE GOOD STEWARTS OF OUR TAXPAYERS MONEY, THAT'S WHAT THEY ARE LOOKING TO US FOR.

>> GOVERNOR WALKER, LET ME TURN TO YOU WITH THAT SAME QUESTION. WHAT IS GOVERNMENT FOR?

>> YEAH, I THINK IF YOU WERE TO JOIN US OUT HERE, YOU JACK AND PRI TALKING ABOUT THIS EARLIER AND OTHER GOVERNORS WERE TALKING, DEMOCRAT AND REPUBLICAN ALIKE AT LEAST AS GOVERNORS IN THE STATES ARE DOING EXACTLY WHAT WE SHOULD BE DOING IN WASHINGTON. THAT IS WORKING TOGETHER TO GET THINGS REVOLUME OFED. THE THINGS WE HEAR ABOUT ARE BALANCING THE BUDGET AND PUTTING PEOPLE TO, WITHOUT. WHEN YOU BALANCE THE BUDGET YOU HELP WITH EDUCATION, THE QUALITY OF LIFE, HELP WITH THE SAFETY NET. GOVERNORS IN EACH OF THE STATES RESPECTIVELY B 40 PLUS STATES THAT HAD DEFICITS AND WE'RE TURNING THEM INTO BALANCED BUDGETS BECAUSE WE HAVE TO IN THE STATES. THEY'RE JUST NOT DOING THAT IN WASHINGTON. I THINK GOES BACK TO THOSE CORE PRINCIPLESES. MAKE SOUND STRUCTURAL DECISIONS THAT PUT THE BUDGET IN PLACE SO IT IS BALANCED AND ULTIMATELY DO THINGS THAT DO NOT HURT AND IDEALLY HELP THE ECONOMY. BECAUSE MORE THAN ANYTHING ELSE WE HAVE TO GET PEOPLE WORKING AGAINST.

>> GOVERNOR WALKER DO PEOPLE WANT OR ENDORSE THE NOTION OF SMALLER GOVERNMENT AT THE SAME TIME AS THEY WANT GOVERNMENT SERVICES?

>> WELL, I THINK THEY WANT A BALANCE. OUTSIDE OF GOVERNMENT THERE ISN'T THE FALSE CHOICE WE OFTEN HEAR OF GOVERNMENT THAT YOU EITHER HAVE TO JACK UP PRICES OR CUT THE QUALITY OF SERVICES, IN THE PRIVATE SECTOR, PARTICULARLY THE LAST COUPLE OF YEARS, EMPLOYERS IN SMALL BUSINESSES FIND A WAY TO BALANCE THE TWO OUT, BECOME MORE EFFICIENT, MORE EFFECTIVE, FIND WAYS TO STREAMLINE THINGS SO ULTIMATELY THEY CAN STILL PROVIDE AN AFFORDABLE PRODUCT AT A QUALITY LEVEL THAT PEOPLE EXPECT. IN GOVERNMENT WE NEED TO FIND BETTER WAYS TO DO THAT AS WELL. AND AGAIN THAT'S WHAT WE ARE DOING IN THE STATES, DEMOCRAT, REPUBLICAN, ALIKE ARE TALKING ABOUT BEST PRACTICES HERE TODAY ALREADY. WE NEED TO MAKE STRUCTURAL CHANGES AT THE FEDERAL LEVEL LIKE WE HAVE BEEN DOING IN THE STATE TO IT IS NOT JUST A SHORT-TERM FIX. BECAUSE THAT IS REALLY WHAT GOT US IN THIS PROBLEM. REPUBLICANS AND DEMOCRATS ALIKE HAVE BEEN DEFERRING THINGS IN WASHINGTON OFF TO THE FUTURE. THE TIME TO ACT IS NOW AND MY HOPE IS THEY WILL FOLLOW OUR LEAD AND THE RESPECTS RESPECTABLY.

>> Suarez: GOVERNOR MARKELL DOES IT MAKE IT HARD TO BE IN CHARGE IN A TIME OF STRAIGHTENED CIRCUMSTANCES WHEN PEOPLE TELL PUBLIC OPINION RESEARCHERS VERY SINCERELY THEY WANT SMALLER GOVERNMENT, AND THEN HOW WHEN YOU TRY TO CUT BACK?

>> IT IS A VERY CHALLENGING TIME, AND ESPECIALLY WE ALSO HAVE TO REMEMBER HUBERT HUMPHREY ONCE SAID THAT THE GREATNESS OF A NATION IS MEASURED IN HOW WE TREAT THOSE IN THE DAWN OF LIFE, THE DUSK OF LIFE AND SHADOW OF LIFE, THE VERY YOUNG, THE VERY OLD, THOSE WHO COULD NOT CARE FOR THEMSELVES, SO WHAT WE ARE REALLY TRYING TO BALANCE HERE IS WE HAVE A RESPONSIBILITY TO PROTECT THOSE WHO ARE MOST VULNERABLE. WE ALSO WANT TO PUT EACH OF OUR STATES IN A POSITION WHERE WE ARE POISED TO GROW AND TO HELP AS MANY FAMILIES AS POSSIBLE ENTER THE MIDDLE CLASS AND GO AS FAR AS THEY CAN POSSIBLY GO WHILE AT THE SAME TIME BALANCING OUR BUDGETS. THESE HAVE BEEN VERY DIFFICULT TIMES TO BE GOVERNORS. BUT IF YOU FOCUS IN AND YOU REALLY FOCUS IN ON THE IDEA OF PUTTING MORE PEOPLE BACK TO WORK ESPECIALLY, THAT WILL HELP SOLVE SO MANY OF THE OTHER CHALLENGES THAT WE FACE.

>> GOVERNOR WALKER YOU MADE HEADLINES ACROSS THE COUNTRY. YOU CAME TO OFFICE IN MADISON VOWING TO CHANGE THE DIRECTION OF GOVERNMENT SPENDING VERY QUICKLY, WERE THE PEOPLE OF BUSINESS WITS READY?

>> WELL, I ANY WHAT WE WEREN'T READY FOR AND I SAID THIS BEFORE WAS TO SPEND MORE TIME IN JANUARY AND FEBRUARY BUILDING THE CASE BUT I THINK WHAT WE WEREN'T PREPARED FOR WAS THE NATIONAL FOCUS, THE NATIONAL ATTENTION, THE NATIONAL MONEY THAT CAME IN WHEN WE WERE TRYING TO FIX THE PROBLEM AND DO IT IN THE WAY THAT MANY SMALL-BUSINESS OWNERS DO, AND THAT IS IDENTIFY THE PROBLEM, A SOLUTION AND ACT ON IT NEVER REALIZING HOW MUCH MONEY, INFLUNSD AD WAS COME IN FROM ACROSS THE COUNTRY. WHAT YOU ARE SEEING NOW IS NOT ONLY IN OTHER STATES LIKE OHIO BUT YOU EVEN SEE NEW YORK STATE GOVERNOR CUOMO HAS DONE SIMILAR THINGS, IN MASSACHUSETTS THEY HAVE DONE SIMILAR THINGS IT. I THINK EARLIER TODAY JACK AND I HEARD A STORY FROM GOVERNOR KRISTY WHERE HE WORKED WITH THE DEMOCRATS IN THE LEGISLATURE THERE TO MAKE SOME CHANGES. EACH STATE IS DIFFERENT SO WE HAVE TO DO THINGS SLIGHTLY DIFFERENTLY. BUT FOR US WE ARE ALWAYS SEEING THE BENEFITS. SCHOOL DISTRICT AFTER SCHOOL DISTRICT, LOCAL GOVERNMENT AFTER LOCAL GOVERNMENT IN THE LAST FEW WEEKS HAS TALKED ABOUT THE FACT THAT BECAUSE OF OUR REFORMS, MANY OF THEM ARE NOT ONLY AVOIDING LAYOFFS THEY'RE ACTUALLY BRINGING MORE TEACHERS IN, LOWERING CLASSROOM SIZE, SETTING MONEY ASIDE FOR MERIT PAY. OUR HOPE IS WE CAN CONTINUE TO SEE THOSE SIGNS ALL ACROSS WISCONSIN. WE DO THAT T NOT ONLY HELPS US BALANCE THE BUDGET T MAKE APPROXIMATES THE GOVERNMENT WORK BETTER AND ALLOWS US TO CONTINUE THE TREND OF THE 26,000 NEW PRIVATE SECTOR JOBS WE SAW CREATE EARLIER THIS AREA, ABOUT HALF OF WHICH ARE IN MANUFACTURING WHICH IS A CORE INDUSTRY FOR US.

>> GOVERNOR MARKELL YOU'VE BEEN PUBLICLY ON RECORD CRITICIZING THE RACE TO THE BOTTOM AMONG STATES BUT YOU HAD TO MAKE HUNDREDS OF MILLIONS OF DOLLARS IN CUTS TOO, DIDN'T YOU, SOCIAL SERVICES AND OTHER AGENCIES?

>> WE DID. I MEAN IT'S BEEN VERY CHALLENGING. I THINK ON THE ISSUE OF THE PENSION HEALTH-CARE REFORM, WE HAD MANY SIMILAR ISSUES. WE TOOK A DIFFERENT APPROACH THAN GOVERNOR WALKER TOOK IN WISCONSIN. WE HAVE COLLECTIVE BARGAINING IN OUR STATE. WE DIDN'T TRY TO GET RID OF THAT WE ACTUALLY BROUGHT THE UNIONS TO THE TABLE. WE ASKED FOR THEIR IDEAS AND PARTICIPATION. WE ACTUALLY EXCEEDED THE SAVINGS TARGET THAT WE SET. BUT WE THOUGHT IT WAS IMPORTANT THAT WE DO HAVE THEM ON THE TABLE, RECOGNIZING IT THAT IF YOU LOOK AT IT FROM THIS PERSPECTIVE F YOU ASK ANY BUSINESS WHAT IS THE MOST IMPORTANT ASSET TO YOUR BUSINESS, MOST WILL SAY IT'S THE PEOPLE WHO COME TO WORK EVERY DAY. AND SIMILARLY IN STATE GOVERNMENT IT MIGHT BE THE PEOPLE WHO ARE CARING FOR OUR PATIENTS IN THE STATE HOSPITAL, IN THE MIDDLE OF THE NIGHT. IT MIGHT BE THE PEOPLE DRIVING THE TRUCKS TO PLOW THE SNOW WHILE THE REST OF US ARE SLEEPING. AND IN DELAWARE THE APPROACH WE TOOK IS WE HAD THEM COME TO THE TABLE. WE WORKED OUT AN APPROACH TOGETHER. WE ENDED UP AS I IS A SAVING ABOUT IS 30-- 130 MILLION OVER 5 YEARS ON PENSION AND HEALTH CARE. BUT THAT BEING SAID THIS CONTINUES TO BE A VERY CHALLENGING TIME. WE DON'T HAVE A STRONG NATIONAL ECONOMY AT OUR BACKS YET AND NO MATTER WHAT PARTY WE'RE IN, WHAT PART OF THE STATE WE ARE IN, WE HAVE JUST GOT TO CONTINUE TO FOCUS AND HOW CAN WE THAT SILL TATE BUSINESSES BEING SUCCESSFUL IN OUR STATE SO THEY CAN PUT MORE PEOPLE TO WORK.

>> GOVERNOR MARKELL DO YOU SUPPORT RAISING THE FEDERAL GOVERNMENT'S DEBT LIMIT?

>> OH, I DO. I MEAN I THINK IT COULD BE CATASTROPHIC IF THE DEBT LIMIT DOES NOT GET RAISED. IF THEY'RE NOT ABLE TO GET THINGS TOGETHER IN WASHINGTON IT'S NOT GOING TO BE GOOD FOR ANY GOVERNOR ACROSS THE COUNTRY. I DON'T THINK IT'S GOING TO BE GOOD FOR THE AMERICAN PEOPLE. SO I'M VERY HOPEFUL THAT REPUBLICANS AND DEMOCRATS ALIKE, THE ADMINISTRATION AND THOSE IN THE SENATE AND THE HOUSE WILL ALL BE ABLE TO FIGURE THIS OUT. BECAUSE I THINK THE IDEA-- THE IDEA OF THIS COUNTRY DEFAULTING ON ITS DEBT COULD ABSOLUTELY BE A TERRIBLE, TERRIBLE THING FOR OUR COUNTRY.

>> GOVERNOR WALKER, SAME QUESTION, DO YOU SUPPORT OR RAISE THE FEDERAL GOVERNMENT'S DEBT CEILING.

>> MY HOPE IS IF WE PURSUE THAT WE ULTIMATELY HAVE LONG-TERM STRUCTURAL CHANGES SO WE ARE NOT REVISITING THIS JUST A COUPLE YEARS DOWN THE ROADS. MANY OF OUR STATES, DEMOCRAT, REPUBLICAN GOVERNORS ALIKE CAN MAKE LONG-TERM STRUCTURAL CHANGES SO WE ARE REALLY THINKING LESS ABOUT THE NEXT ELECTION AND MORE ABOUT THE NEXT GENERATION. BUT THE OTHER PART IS WE WANT TO MAKE SURE WE DO IT IN A WAY THAT HELPS THE ECONOMY. THE BIGGEST SINGLE THING, JACK AND PRI ON A PANEL A COUPLE WEEKS AGO AT THE CHAMBER OF COMMERCE AND WE HEAR REPEATEDLY ACROSS OUR STATES AND A NATIONAL BASIS, THE BIGGEST SINGLE THING OF STANDING IN THE WAY OF EMPLOYERS BIG AND SMALL AND EVERYONE IN BETWEEN ADDINGING NEW JOBS IS UNCERTAINTY. TO THE EXTENT WE CAN GET PAST THIS DEBATE V SANITY IN WASHINGTON AGAIN, QUESTION START GETTING TO A POINT WHERE EMPLOYERS UNDERSTAND AND HAVE CERTAINTY TO WHAT THE FUTURE HOLDS, I THINK THAT WOULD BE OPTIMISTIC FOR US PUTTING PEOPLE BACK TO WORK. THE LONGER THIS LAGS ON, AND THE LESS CERTAINTY THE MORE CHALLENGING. ALL OF US WHO CARE ABOUT PUTTING OUR PEOPLE BACK TO WORK WANT TO US MOVE FORWARD.

>> Suarez: BEFORE WE GO I WOULD LIKE TO HEAR FROM BOTH OF YOU ABOUT YOUR OWN UNCERTAINTY. THAT WASHINGTON DEBATE BUMPS ALONG, AREN'T YOU CATCHING YOUR BREATH A LITTLE? DON'T YOUR OWN BUDGETS DEMAND-- DEPEND IN PART ON FEDERAL GOVERNMENT SPENDING PLANS FOR 121, 12 AND 13? GOVERNOR MARKELL?

>> IT CERTAINLY DOES. AND THAT BEING SAID, WE CAN CONTROL WHAT WE CAN CONTROL SO WHEN I WAKE UP EVERY DAY, FOCUSED ON WORKING WITH BUSINESSES IN DELAWARE TRYING TO MAKE THEM MORE SUCCESSFUL SO THEY'LL PUT MORE PEOPLE TO WORK, WORKING WITH TEACHERS AND OTHER SCHOOL-BASED PERSONNEL, ADMINISTRATORS TO MAKE SURE OUR SCHOOLS ARE AS GOOD AS THEY CAN BE. BECAUSE THAT IS THE ONLY WAY TO HAVE A STRONG ECONOMY GOING FORWARD. AND OF COURSE WE WORK CLOSELY WITH OUR CONGRESSIONAL DELEGATION. AND WITH OTHER GOVERNORS SO THAT WE'RE REACHING OUT TO CONGRESS TO MAKE SURE THAT AS COSTS GET SHIFTED AROUND, THEY JUST DON'T GET SHIFTED TO THE STATES. BECAUSE WE ALL SERVE THE SAME TAXPAYERS. AND JUST SHIFTING AN OBLIGATION INTERESTED FEDERAL TAX PAYER TO A STATE TAXPAYER REALLY DOESN'T ACHIEVE VERY MUCH. BUT THIS IS A CRITICAL ISSUE FOR STATES ACROSS THE COUNTRY.

>> AND GOVERNOR WALKER LET ME GET A QUICK RESPONSE FROM YOU AS WELL.

>> I THINK THERE IS A SIMILAR CONCERN REGARDLESS OF PARTY. JACK AND I AND OTHERS TODAY TALKED ABOUT THIS. CERTAINLY CONCERN ABOUT NOT ONLY SPENDING CHANGES BUT IN TERMS OF WHAT KIND OF TOOLS THEY GIVE US. COMBINE THAT WITH THE FACT THE ECONOMY CERTAINLY HAS A DIRECT IMPACT IF THEY DON'T GET THIS WORKED OUT ON MUNICIPAL AND STATE BOND ISSUES. AND IN THE LARGER CONTEXT IT HAS AN IMPACT ON THE ECONOMY. IF THINGS ARE UNSTABLE, IT'S GOING TO BE HARD TO PUT THESE OUT TO, WITHOUT. I'M OPTIMISTIC WE'LL GET THIS DONE AND GET BACK TO STABILITY AND PUTTING PEOPLE TO WORK IN WISCONSIN AND CONNECTICUT AND ALL ACROSS THE COUNTRY.

>> GOVERNORS WALKER AND MARKELL, THANK YOU BOTH.

>> THANK YOU.

>> Woodruff: STILL TO COME ON THE "NEWSHOUR": CALIFORNIA'S OVERCROWDED PRISONS; MARK SHIELDS AND DAVID BROOKS AND THE WINNING U.S. SOCCER TEAM. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S HARI SREENIVASAN.

>> Sreenivasan: THE LOWER HOUSE OF ITALY'S PARLIAMENT GAVE FINAL APPROVAL TODAY TO A NEW SET OF AUSTERITY MEASURES. LAWMAKERS PASSED THE $99 BILLION PACKAGE TO BALANCE THE BUDGET BY 2014. IT INCLUDES FREEZING PAY FOR GOVERNMENT WORKERS AND HIKING HEALTH CARE FEES. THE ITALIAN GOVERNMENT FAST- TRACKED THE VOTE TO FEND OFF THE DEBT CRISIS WHICH HAS ALREADY ENGULFED GREECE, IRELAND AND PORTUGAL. THE SCANDAL SWIRLING AROUND THE MURDOCH MEDIA EMPIRE FORCED AN APOLOGY FROM THE VERY TOP TODAY AND TWO HIGH-LEVEL RESIGNATIONS. WE HAVE A REPORT FROM CATHY NEWMAN OF "INDEPENDENT TELEVISION NEWS."

>> Reporter: THIS IS THE HUMBLING OF A MEDIA MOGUL. RUPERT MURDOCH HAS COME TO THIS CENTRAL LONDON HOTEL TO PAY PENANCE TO APOLOGIZE FOR THE FIRST TIME TO THE DOWLER FAMILY. OVER ALLEGATIONS THE "NEWS OF THE WORLD" HACKED INTO THEIR DAUGHTER MILLY'S PHONE AFTER SHE DIED. THEY ARRIVED HALF AN HOUR LATER YESTERDAY, RUPERT MURDOCH CALLED THE WALL STREET JOURNAL, ONE OF HIS OWN PAPERS, JUST TO INSIST THAT THE PHONE HACKING CRISIS HAD BEEN HANDLED EXTREMELY WELL IN EVERY WAY POSSIBLE. HE SAID THERE'D ONLY BEEN A FEW MINOR MISTAKES. TODAY, HE TRIED TO STOP THE ROT.

>> I'M THE FOUNDER OF THE COMPANY, I WAS APPALLED TO FIND OUT WHAT HAD HAPPENED AND I APOLOGIZE AND I HAVE NOTHING FURTHER TO SAY.

>> Reporter: THE DOWLER FAMILY'S LAWYER SAID HE BELIEVED THE TYCOON'S REGRET WAS GENUINE

>> YES, HE DID APOLOGIZE, HE APOLOGIZED MANY TIMES. I DON'T THINK SOMEBODY COULD HAVE HELD THEIR HANDS IN THEIR HEAD IN THEIR HANDS SO MANY TIMES TO SAY THAT THEY WERE SORRY.

>> Reporter: RUPERT MURDOCH'S USED TO HAVING EVERYTHING HIS OWN WAY, BUT NO LONGER. HE'S ALREADY ABANDONED HIS BID FOR B-SKY-B AND CLOSED THE "NEWS OF THE WORLD" AND THIS MORNING HE HAS TO SACRIFICE NEWS INTERNATIONAL'S CHIEF EXECUTIVE REBEKAH BROOKS, THE PAPER'S FORMER EDITOR. IN A STATEMENT SHE SAID, "AS CHIEF EXECUTIVE OF THE COMPANY I FEEL A DEEP SENSE OF RESPONSIBILITY FOR THE PEOPLE WE HAVE HURT AND I WANT TO REITERATE HOW SORRY I AM FOR WHAT WE NOW KNOW TO HAVE TAKEN PLACE. I BELIEVED THAT THE RIGHT AND RESPONSIBLE ACTION HAS BEEN TO LEAD US THROUGH THE HEAT OF THE CRISIS. HOWEVER, MY DESIRE TO REMAIN ON THE BRIDGE HAS MADE ME A FOCAL POINT OF THE DEBATE.

>> THERE IS NO CHANCE OF THE LID BEING PUT BACK ON THIS COVER-UP NOW. RUPERT MURDOCH KNOWS THAT, HE'S GOT TO GET ALL OF THE FACTS OUT TO THE PUBLIC DOMAIN TO GET TO THE TRUTH. HER DEPARTURE HELPS THAT HAPPEN.

>> Reporter: FULL DISCLOSURE COULD SPELL TROUBLE FOR THIS MAN THE METROPOLITAN POLICE COMMISSIONER SIR PAUL STEVENSON. HE'S UNDER FIRE FOR THE CLOSE RELATIONSHIP HE AND HIS SENIOR OFFICERS ENJOYED WITH THE "NEWS OF THE WORLD." HE EVEN GAVE THE PAPER'S FORMER DEPUTY EDITOR A JOB LAST YEAR. POLITICIANS ARE ASKING WHETHER SCOTLAND YARD'S LINKS TO THE PAPER STOP POLICE PROBING THE PHONE- HACKING SCANDAL MORE DEEPLY. FULL DISCLOSURE IS EMBARRASSING TOO FOR THE PRIME MINISTER. A LIST OF ENGAGEMENTS RELEASED BY DOWNING STREET TODAY SHOW JUST HOW FREQUENTLY HE PAID COURT TO NEWS CORP. EXECUTIVES AND THEY TO HIM. THE PRIME MINISTER WON'T BE SAYING SORRY FOR THAT, BUT RUPERT MURDOCH WILL BE APOLOGIZING AGAIN THIS WEEKEND FOR WHAT HE CALLED SERIOUS WRONGDOING AT THE "NEWS OF THE WORLD." HE'S PERSONALLY SIGNED A LETTER, WHICH WILL RUN AS AN ADVERT IN SEVEN NATIONAL NEWSPAPERS SO HIS LATER IN THE DAY, A SECOND TOP MURDOCH EXECUTIVE RESIGNED. SINCE 2007, LES HINTON HAS BEEN C.E.O. AT DOW JONES AND COMPANY, PUBLISHER OF THE "WALL STREET JOURNAL." BUT FOR 12 YEARS, HE CHAIRED THE COMPANY THAT OVERSAW THE BRITISH TABLOIDS NOW INVOLVED IN THE SCANDAL. HE SAID IN A STATEMENT TODAY HE WAS IGNORANT OF WHAT APPARENTLY HAPPENED, BUT FELT IT PROPER TO RESIGN. FOR MORE ON THAT PART OF THE STORY, I'M JOINED NOW BY REM REIDER OF "AMERICAN JOURNALISM REVIEW." THANKS FOR BEING WITH US.

>> MY PLEASURE.

>> SO TELL US A LITTLE BIT ABOUT MR. HINTON WHO HE IS, HOW IMPORTANT IS THIS RESIGNATION?

>> WELL, IT IS VERY IMPORTANT. AND IT'S VERY INEVITABLE. HINTON HAS BEEN VERY CLOSE TO MURDOCH FOR A LONG TIME AND HAS QUITE A GOOD REPUTATION, ACTUALLY N THIS COUNTRY FOR HIS WORK AT THE JOURNAL. HIS PROBLEM WAS THE FACT THAT HE OVERSAW THE NEWS OF THE WORLD DURING THE YEARS OF THE HACKING, AND NOT ONLY, YOU KNOW, TOOK ANY STEPS TO HALT T IF HE INDEED KNEW ABOUT T HE SAYS HE DIDN'T, BUT TWICE ASSURED PARLIAMENT THAT THE HACKING WAS THE WORK OF A SINGLE ROGUE, THAT THERE WAS NO SYSTEMATIC EFFORT, THAT THERE WAS NO PATTERN. AND NATURALLY THERE IS A LOT OF ANGER ABOUT THAT IN BRITAIN. SO EVEN THOUGH I'M SURE IT WAS A TOUGH DAY LOSING TWO OF HIS KEY PEOPLE FOR MR. MURDOCH, THESE TWO GO BACK 50 YEARS. BUT THERE IS NO WAY THIS WASN'T GOING TO HAPPEN.

>> NOW WHAT ABOUT THE RELATIONSHIP BETWEEN HINTON AND REBEK-- REBEKAH BROOKS, DOES THIS MEAN PERHAPS THEY WERE MUCH CLOSER AND THEY KNEW THESE THINGS WERE HAPPENING? >>.

>> I DON'T THINK WE KNOW THAT AND I DON'T THINK THESE DEVELOPMENTS REALLY TELL US MUCH ABOUT THAT. IT'S-- YEAH, THEY CERTAINLY OVERLAPPED WHEN REBEKAH BROOKS WAS RUNNING NEWS OF THE WORLD AND MR. HINTON WAS OVERSEEING ALL OF THE BRITISH PAPERS. BUT THE QUESTION OF COURSE IS YOU KNOW, IS HOW DO THEY NOT KNOW ABOUT IT OR SHOULDN'T THEY HAVE KNOWN ABOUT IT. BUT YOU KNOW, HINTON IN HIS STATEMENT WAS VERY EMPHATIC THAT IT WAS IN GOOD FAITH THAT HE TWICE TOLD PARLIAMENT THAT THIS WAS THE WORK OF ONE PERSON AND HE SAID POINTEDLY THAT HE THOUGHT THAT THE ROT WAS GONE WHEN HE LEFT TO COME TO THE U.S. TO RUN DOW JONES AND THE "THE WALL STREET JOURNAL".

>> REM REIDER, THANKS SO MUCH FOR YOUR TIME.

>> IT'S MY PLEASURE, THANKS.

>> Sreenivasan: IN SYRIA TODAY, HUGE CROWDS OF PROTESTERS CHALLENGED THE REGIME OF SYRIAN PRESIDENT BASHAR ASSAD AND SECURITY FORCES ONCE AGAIN OPENED FIRE. ACTIVISTS REPORTED AT LEAST 32 PEOPLE WERE KILLED. THE DEMONSTRATORS-- HUNDREDS OF THOUSANDS STRONG-- FLOODED INTO CITIES ACROSS SYRIA, EVEN IN DAMASCUS, THE CAPITAL. THEY CLAPPED, CHEERED AND WAVED BANNERS IN THE LARGEST RALLIES SINCE THE UPRISING BEGAN MORE THAN FOUR MONTHS AGO. THE U.S. AND MORE THAN 30 OTHER NATIONS HAVE FORMALLY RECOGNIZED THE MAIN OPPOSITION GROUP IN LIBYA AS THE LEGITIMATE GOVERNMENT. THE ANNOUNCEMENT CAME AT A GATHERING IN TURKEY TODAY. SECRETARY OF STATE HILLARY CLINTON SAID MOAMMAR GADHAFI HAS FORFEITED HIS RIGHT TO RULE TO THE TRANSITIONAL NATIONAL COUNCIL.

>> UNTIL AN INTERIM AUTHORITY IS IN PLACE, THE UNITED STATES WILL RECOGNIZE THE T.N.C. AS THE LEGITIMATE GOVERNING AUTHORITY FOR LIBYA AND WE WILL DEAL WITH IT ON THAT BASIS. IN CONTRAST, THE UNITED STATES VIEWS THE QADDAFI REGIME AS NO LONGER HAVING LEGITIMATE AUTHORITY IN LIBYA.

>> Sreenivasan: THE LIBYAN UPRISING BEGAN IN FEBRUARY. THE BATTLE HAS SINCE HIT A STALEMATE, WITH QADDAFI CONTROLLING THE CAPITAL TRIPOLI AND MUCH OF WESTERN LIBYA. THE REBELS CONTROL THE EAST, WITH NATO ENFORCING A NO-FLY ZONE AND HITTING GOVERNMENT TARGETS. ON WALL STREET, STOCKS MANAGED A LATE-DAY RALLY, AFTER A ROUGH WEEK. THE DOW JONES INDUSTRIAL AVERAGE GAINED MORE THAN 42 POINTS TO CLOSE ABOVE 12,479. THE NASDAQ ROSE 27 POINTS TO CLOSE ABOVE 2,789. FOR THE WEEK, THE DOW LOST MORE THAN 1%. THE NASDAQ FELL MORE THAN 2%. AFTER A FOUR-YEAR FLIGHT, NASA IS READY FOR A RENDEZVOUS WITH THE GIANT ASTEROID VESTA. THE UNMANNED "DAWN" SPACECRAFT HAS FLOWN 1.7 BILLION MILES, AND IF ALL GOES WELL, IT WILL ENTER ORBIT AROUND THE ASTEROID TONIGHT. IT IS EXPECTED TO SEARCH FOR CLUES ABOUT THE SOLAR SYSTEM'S ORIGIN. THE SPACECRAFT USES ION PROPULSION SO IT CAN APPROACH THE ASTEROID SLOWLY AT JUST 60 MILES AN HOUR. A YEAR FROM NOW, IT WILL MOVE ON TO AN EVEN LARGER ASTEROID. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO RAY.

>> Suarez: NEXT, THE STATE OF CALIFORNIA STRUGGLES WITH SOME TOUGH CHOICES BROUGHT ON BY A RECENT SUPREME COURT RULING. "NEWSHOUR" CORRESPONDENT SPENCER MICHELS REPORTS.

>> Reporter: IT WAS SCENES LIKE THIS IN A GYMNASIUM AT SOLANO STATE PRISON IN CENTRAL CALIFORNIA THAT CONVINCED THE U.S. SUPREME COURT LAST MAY TO ORDER THE STATE TO REDUCE ITS PRISON POPULATION OF 143,000 INMATES. JUSTICE ANTHONY KENNEDY USED THREE PHOTOS OF JAMMED PRISONS TO ILLUSTRATE HIS MAJORITY OPINION. THE COURT FOUND THAT MORE THAN A DECADE OF OVERCROWDING IN A SYSTEM WITH NEARLY TWICE AS MANY PRISONERS AS IT WAS DESIGNED FOR DEFIED CONSTITUTIONAL STANDARDS AND LEAD TO WHAT KENNEDY CALLED "GROSSLY INADEQUATE" MEDICAL AND MENTAL HEALTH CARE. SINCE THE COURT RULING, THE STATE HAS BEGUN REDUCING THE NUMBERS. THE SOLANO GYM HAS BEEN CLEARED OF BUNKS, AS SOME PRISONERS WERE SHIPPED OUT OF STATE. BUT THE COURT ORDERED AN ADDITIONAL 10,000 FEWER INMATES STATEWIDE BY NOVEMBER, AND A REDUCTION OF 33,000 WITHIN TWO YEARS TO REMEDY A SITUATION OF WHICH THE INMATES ARE WELL AWARE.

>> THE MAJOR EFFECTS IS THE BATHROOMS, SHOWERING, JUST BASIC HYGIENIC TYPE OF SITUATIONS, CROWDED CHOW HALLS. YOU KNOW, THERE'S PEOPLE EVERYWHERE.

>> WHEN THE HEAT WOULD RISE, YOU KNOW, INCIDENTS WOULD JUST POP OFF LEFT AND RIGHT, YOU KNOW, A HOT SUMMER, YOU NEVER KNOW WHAT MIGHT HAPPEN.

>> Reporter: CRITICS OF THE COURT DECISION, INCLUDING SUPREME COURT JUSTICE SAMUEL ALITO, SAID THE MAJORITY OPINION WAS GAMBLING WITH THE SAFETY OF THE PEOPLE OF CALIFORNIA. BUT MATTHEW CATE, SECRETARY OF CALIFORNIA'S DEPARTMENT OF CORRECTIONS AND REHABILITATION, THERE WILL BE NO WHOLESALE RELEASE OF PRISONERS.

>> ANYBODY WHO'S IN PRISON TODAY, IS GOING TO SERVE THEIR FULL SENTENCE. IT'S DIVERTING TOMORROW'S INMATE TO JAIL INSTEAD OF PRISON FOR EXAMPLE, TO SERVE THEIR TIME, AND THAT ALLEVIATES PEOPLE'S FEARS.

>> Reporter: WHILE THE STATE FOUGHT LAWSUITS DEMANDING FEWER INMATES-- ONE DATING BACK 20 YEARS-- CATE PARTIALLY AGREED WITH THE OUTCOME BECAUSE THE OVERCROWDED PRISONS WERE HARD TO MANAGE AND OFTEN UNSAFE. WAS THE SUPREME COURT URGING YOU INTO SOMETHING YOU WANTED TO DO ANYWAY?

>> THAT'S PROBABLY A GOOD WAY TO SAY IT. WE FOUGHT THE SUPREME COURT CASE, WE THINK, YOU KNOW, THE STATE SHOULD BE SOVEREIGN AND WE SHOULD BE HANDLING OUR OWN BUSINESS, BUT IT DID PROVIDE SOME URGENCY TO GET THIS DONE.

>> Reporter: TO BRING DOWN THE POPULATION IN CALIFORNIA'S 33 PRISONS, AND COMPLY WITH THE HIGH COURT, THE ADMINISTRATION OF GOVERNOR JERRY BROWN HAS LAUNCHED A CONTROVERSIAL PLAN THAT IS CERTAIN TO AFFECT EVERY CITY AND COUNTY IN THE STATE. IT'S CALLED REALIGNMENT, AND ITS AIM IS TO SEND NEWLY CONVICTED LOWER LEVEL OFFENDERS TO COUNTY JAILS AND PROBATION DEPARTMENTS INSTEAD OF PRISON. IN MOST STATES, INCLUDING CALIFORNIA, JAILS ARE ADMINISTERED BY COUNTY SHERIFFS AND HOLD PRISONERS FOR SHORT PERIODS; PRISONS ARE RUN BY THE STATE, AND USUALLY HOUSE LONGER TERM CONVICTS CONVICTED OF MORE SERIOUS CRIMES.

>> NOT ONLY WILL JAILS GET MORE CROWDED, BUT THE POPULATION IN THOSE JAILS WILL CHANGE, AND COUNTY OFFICIALS WORRY ABOUT THAT.

>> Reporter: REDWOOD CITY, SOUTH OF SAN FRANCISCO, IS THE COUNTY SEAT OF SAN MATEO COUNTY. ITS JAIL-- MORE OVERCROWDED THAN MANY-- IS JUST A FEW STEPS FROM DOWNTOWN. THEY KEEP THE PERSONAL POSSESSIONS OF THE MORE THAN A THOUSAND PRISONERS IN THESE GARMET BAGS. THE JAIL WAS BUILT FOR ABOUT 800. MOST OF THESE INMATES ARE SERVING SHORT SENTENCES OR WAITING FOR TRIAL. UNDER THE GOVERNOR'S PLAN, THIS JAIL COULD GET AN ADDITIONAL 400 OR 500 PRISONERS, OVERCROWDING IT EVEN MORE. SHERIFF GREG MUNKS IS WORRIED.

>> NOW WE'LL HAVE PEOPLE UP TO THREE YEARS, AND THAT'S NEW FOR US. THE PRISON GANGS THAT ARE SO PREVALENT IN THE STATE PRISONS, THAT WILL GROW ALONG WITH THE POPULATION, SO THAT'S SOMETHING THAT WE'RE GOING TO HAVE TO GEAR UP FOR.

>> Reporter: DEPUTY SHERIFF BOBBY INTROCASO SEES PROBLEMS AHEAD.

>> STATE INMATES ARE MORE, WE CALL THEM MORE SOPHISTICATED INMATES, SO THEY KNOW HOW TO WORK SYSTEMS, THEY KNOW HOW TO WORK DEPUTIES, THEY ARE MORE MANIPULATIVE, YOU HAVE TO WATCH THEM A LOT CLOSER AND IT'S A LOT MORE WORK.

>> Reporter: IN ADDITION, COSTS OF THE NEW PLAN ARE A MAJOR CONCERN TO LOCAL OFFICIALS. IN STANISLAUS COUNTY, WHICH INCLUDES MODESTO, SUPERVISOR JIM DEMARTINI IS WORRIED.

>> THERE'S NO ROOM IN OUR JAIL. IF WE PUT SOMEBODY IN FROM THE STATE PRISON, WE'VE GOT TO KICK SOMEBODY ELSE OUT THE BACK END, OR WE HAVE TO PUT MORE PEOPLE ON PROBATION OR ELECTRONIC MONITORING.

>> Reporter: DEMARTINI AND STANISLAUS COUNTY CHIEF PROBATION OFFICER JERRY POWERS SAY THAT WHEN COUNTY JAILS GET TOO CROWDED, LOCAL SHERIFF'S AND JUDGES WILL BE FORCED RELIEVE THE OVERCROWDING THERE BY RELEASING PRISONERS. SO THE SUPREME COURT ORDER WILL REVERBERATE THROUGHOUT THE SYSTEM.

>> AND SO THOSE, OF THOSE INDIVIDUALS WHO ARE IN THE LOCAL SYSTEM NOW ARE GOING TO BE IMPACTED BY BEING PUSHED OUT INTO LESSER CUSTODIAL SITUATIONS, LESSER SUPERVISION BY PROBATION DEPARTMENTS.

>> Reporter: WITH SOME CONVICTED FELONS, POWERS SAYS, THAT APPEARS TO BE WORKING OUT. ONE OF HIS PROBATIONERS IS 24- YEAR-OLD CEASAR RIVERA OF MODESTO TAKING PART HERE IN A CLASS ON AMBITION. HE WAS ARRESTED FOR PETTY THEFT AND SENTENCED TO 150 DAYS IN JAIL. IT WAS HIS SECOND CONVICTION.

>> YEAH, I STOLE SOMETHING, YOU KNOW, TO PAY FOR MY RENT. SO I WENT AHEAD A DID A CRIME THAT I ACTUALLY SHOULD NEVER HAVE, BUT I DID IT FOR MY FAMILY.

>> Reporter: RIVERA ENDED UP GETTING INTO AN ALTERNATIVE WORK PROGRAM, HE HAS A JOB AND A WIFE AND DAUGHTER, AND HE'S ON PROBATION.

>> RIGHT NOW, THE JAILS ARE SO PACKED, YOU KNOW, SO PACKED THAT THEY'RE LETTING THESE PEOPLE THAT DON'T HAVE A LOT OF TIME GETTING RELEASED ON THIS PROGRAM. SO DID YOU SPEND ANY TIME IN JAIL?

>> YEAH, ACTUALLY DID A DAY IN JAIL.

>> Reporter: JUST ONE DAY?

>> JUST ONE DAY.

>> Reporter: BUT SOME FELONS, POWERS ARGUES, AREN'T SUITED FOR PROBATION. HE AND HALF A DOZEN OF HIS PROBATION OFFICERS GO ON DAILY OPERATIONS TO FIND FELONY PROBATION VIOLATORS; PEOPLE WHO MAY BE IN POSSESSION OF WEAPONS, OR HANGING OUT WITH GANGS, OR USING OR SELLING DRUGS.

>> SEE THESE ARE USED BAGGIES, EMPTY BAGGIES OF METH, THERE'S

>> Reporter: SUCH OPERATIONS ARE EXPENSIVE, BUT, ACCORDING TO CHIEF PROBATION OFFICER POWERS, NECESSARY. ADDITIONAL DEMANDS ON THE DEPARTMENT UNDER REALIGNMENT COULD PUT SUCH PROGRAMS IN JEOPARDY.

>> WE THINK WE'RE GOING TO HAVE PROBABLY SOMEWHERE IN THE NEIGHBORHOOD OF 500 ADDITIONAL INDIVIDUALS THAT WILL BE RESPONSIBLE TO THE PROBATION OFFICER. WE'RE GOING TO NEED MORE TREATMENT PROGRAMS. THOSE ARE GOING TO BE ESSENTIAL IN PREVENTING THAT RECIDIVIST BEHAVIOR THAT HAS JUST PLAGUED THE SYSTEM FOR DECADES.

>> Reporter: THE GOVERNOR IS HOPEFUL THAT LOCAL COMMUNITIES CAN PICK UP THE SLACK. HE FOUGHT SUCCESSFULLY FOR MONEY IN THE STATE BUDGET TO GO TO COUNTIES TO PAY FOR JAILS AND PROBATION. STILL, MANY ON THE LOCAL LEVEL ARE SKEPTICAL THEY'LL GET IT, GIVEN CALIFORNIA'S CONTINUING BUDGET CRISIS.

>> THERE'S NEVER ANY FUNDING, IT'S JUST UNFUNDED MANDATES. I'VE GOT TO SEE THE MONEY FIRST.

>> Reporter: WHILE POWERS IS UNSURE IF THE STATE WILL COMPLETELY FUND THE ADDITIONAL LOAD, HE THINKS THE SUPREME COURT DECISION MIGHT JUST FORCE REFORMS ON A BROKEN CRIMINAL JUSTICE SYSTEM.

>> I'M UNHAPPY THAT IT CAME DOWN THE WAY IT DID, ALTHOUGH I THINK IT MAY, ULTIMATELY, RESULT IN A BETTER SYSTEM FROM FRONT TO BACK FOR CALIFORNIA. WE SEND THESE PEOPLE INTO THE BACK END OF THE SYSTEM, THE STATE PRISON SYSTEM, AND THEY COME OUT WORSE THAN WHEN WE SENT THEM IN.

>> Reporter: SHERIFF MUNK ALSO SEES AN UPSIDE TO MOVING INMATES FROM PRISONS TO LOCAL JAILS.

>> I THINK WE CAN DO A BETTER JOB AT THE COUNTY LEVEL THAN WHAT'S BEEN OCCURRING AT THE STATE. KEEPING THESE INDIVIDUALS CLOSER TO THE COMMUNITY, KEEPING THEM CLOSER TO THEIR FAMILIES, KEEPING THEM AND CONNECTING THEM WITH COMMUNITY BASED RESOURCES THAT THEY'RE GOING TO NEED TO BE SUCCESSFUL WHEN THE GET OUT, BECAUSE THEY ARE GOING TO GET OUT.

>> Reporter: ALL THE PLAYERS AGREE THAT POLITICS-- RIGHT VERSES LEFT, HARSH SENTENCES VERSES SENTENCE REFORM-- HAVE CREATED LOGJAMS THAT WORSENED OVERCROWDING AND PREVENTED MAJOR CHANGES. PRISON CHIEF CATE SAYS TIME HAS RUN OUT.

>> ULTIMATELY, IF THE STATE DOESN'T ACT IN SOME WAY, THEN THE U.S. SUPREME COURT HAS SAID THAT WE MAY SEE AN INMATE RELEASE, AND I THINK THAT'S SOMETHING TO BE AVOIDED, AND SO WE'RE TRYING TO TAKE STEPS PROACTIVELY TO AVOID JUST THAT.

>> Reporter: LONGTERM, CATE SAYS, THE STATE WILL HAVE TO BUILD A FEW MORE PRISONS. SHORT TERM-- LOCAL COMMUNITIES WILL ABSORB MORE OFFENDERS AND HOPE FOR FUNDING FROM THE HARD- PRESSED STATE.

>> Woodruff: AND TO THE ANALYSIS OF SHIELDS AND BROOKS. SYNDICATED COLUMNIST MARK SHIELDS AND "NEW YORK TIMES" COLUMNIST DAVID BROOKS. IT'S GOOD TO SEE YOU BOTH.

>> FEW.

>> Woodruff: SO WE'RE JUST WATCHING A TOUGH SITUATION IN CALIFORNIA. WE'VE GOT ANOTHER KIND OF A TOUGH SITUATION HERE IN WASHINGTON. MARK, WHAT ABOUT THIS ONGOING STALEMATE OVER THE DEBT LIMIT? DOES IT LOOK LIKE THEY'RE GOING TO REACH AN AGREEMENT AND NOT BREECH THE DEADLINE? WHAT DO YOU THINK?

>> JUDY, ANYBODY WHO-- AT THIS POINT IS REALLY JUST SHOOTING IN THE DARK. I AM HOPEFUL THAT THEY WILL. I THINK THAT THE MORE LIKELY SCENARIO IS THAT THE SENATE WORKS FIRST. I THINK SENATOR-- REPUBLICAN LEADER MITCH McCONNELL CAME UP WITH SOMETHING THAT WAS DEVILISHLY SHREWD WITH HIS PROPOSAL TO BASICALLY YIELD RESPONSIBILITY FOR THE BUDGET PROCESS, APPROPRIATION PROCESS FROM THE CONGRESS AND PUTTING ALL THE RESPONSIBILITY ON RAISING THE DEBT ON THE PRESIDENT IT POLITICALLY PUTS THE BLAME THERE, IN HIS JUDGEMENT. GETS BY THE POSSIBILITY OF THE GOVERNMENT CLOSING DOWN AND AVOIDS AS HE PUT IT DAMAGING THE REPUBLICAN BRAND WITH A SHOWDOWN OR SHUTDOWN. AND DAMAGING THE NATION'S ECONOMY. SO YOU I THINK THAT THE LIKELIHOOD IS THE SENATE WILL ACT FIRST.

>> Woodruff: DAVID THIS IS NOT THE PLAN THE PRESIDENT WANTED.

>> RIGHT SO, LAST WEEK WE ARE SORT OF IN A HIGH RISK, HIGH REWARD SITUATION WHERE THERE WAS THE TANTALIZING PROSPECT OF A $4 TRILLION DEAL, THE BIG DEAL OBAMA AN BOEHNER BOTH WANTED AT LEAST IN THEORY SO THAT WAS HANGING OUT THERE SORT OF AS A SERIOUS ADDRESSING OF THE ISSUE. THE DOWNSIDE OF THAT SITUATION WAS THAT WE COULD HAVE ABSOLUTELY NOTHING. HAD DEFAULT, A GIGANTIC CRISIS. I THINK BOTH OF THOSE OPTIONS HAVE BECOME LESS LIKELY BECAUSE OF THE DEAL PARK DESCRIBED. AND THE SENATE DEAL WHICH McCONNELL AND HARRY REID HAS COME UP WITH IS LESS HIGH RISK AND LESS HIGH REWARD. THE RISK IS, LESS RISK IS WE PROBABLY WON'T HAVE DEFAULT. BUT THERE IS NO REWARD AT ALL. I MEAN IT MEANS THAT THE REPUBLICANS AND MEMBERS OF THE CONGRESS DO NOT ACTUALLY HAVE TO VOTE ON RAISING THE DEBT CEILING. THEY CAN GO HOME AND SAY I NEVER VOTED FOR THAT. IN FACT THERE ARE SYMBOLIC LOADS WHERE THEY CAN REJECT IT ON THE OTHER HAND THERE IS NO REAL. IT IS REALLY JUST KICKING THE KANG DOWN THE ROAD.

>> ARE YOU SAYING THE PRESIDENT HAS NO CHOICE BUT TO GO ALONG WITH THAT. IF HE CAN'T GET ANYTHING CLOSER TO WHAT HE WANTS.

>> HE WANTS THE BIG $4 TRILLION DEAL BOTH FOR SUBSTANTIVE REASONS BECAUSE I THINK HE WOULD LIKE TO PUT THE COUNTRY ON SOME SORT OF SUSTAINABLE THING, TRACK. ALSO BECAUSE FOR POLITICAL REASONS. AT LEAST GESTURE TO REALLY SIGNIFICANT OFFERS THAT I THINK THE REPUBLICANS SHOULD HAVE TAKEN. BUT THAT DEAL WAS APPARENTLY NOT AVAILABLE AND SO THIS IS PLAN B.

>> BUT MARK DON'T YOU STILL HAVE RESISTENCE IN THE HOUSE WHERE YOU HAVE A REPUBLICAN MAJORITY, BIG TEA PARTY CON TING-- CONTINGENT WITHOUT DON'T, MANY OF THEM WHO DON'T THINK THE DEBT SEALING IS SOMETHING YOU SHOULD FAKE AS SERIOUSLY.

>> WE HAVE TWO GROUPS, ONE THAT SAYS THE DEBT CEILING DOESN'T MATTER AT ALL LED BY MICHELE BACHMANN, STEVE KANE AND A FEW OTHERS BUT YOU HAVE PEOPLE THAT LOOKED AT THIS $34 TRILLION-- $4 DRL DEAL, THE BOEHNER OBAMA PLAN WHICH WOULD INVOLVE SOME REVENUES, CLOSING DOWN FOR THEIR TAX PREFERENCES, GIVING THOSE UP. AND ANYTHING THAT INCREASES REVENUES IN ANYWAY IS THE THIRD RAIL TO THESE FOLKS. AND IT REALLY HAS BECOME THAT. I THINK THEY WILL LOOK BACK QUITE HONESTLY WITH RECRIMINATIONS AND REGRET THAT THEY HAD THIS CHANCE TO GET THE $4 TRILLION. AND CHOSE NOT TO. I MEAN BECAUSE THE VOTES AREN'T THERE IN THE REPUBLICAN CAUCUS THAT IS WHAT HAPPENED TO JON BOEHNER, HE HAD THIS RUG PULLED OUT BEYONDED INTRAMURAL BICKERING WITH ERIC CANTOR, PERCEIVED BICKERING. THE REPUBLICAN LEADERSHIP DESAI-- DENIES IT EXISTS BUT IT APPARENT THAT CANTOR HAS BEEN THE SPOKESMAN AND THE LEADER OF THAT GROUP AND THE REPUBLICAN CAUCUS THAT IS MOST ANTI-TAX.

>> Woodruff: AND THE PRESIDENT, DAVID S STILL SAYING, HE SAID I PUT ON THE TABLE, AND HE STILL S ENTITLEMENTS, SOCIAL SECURITY, MEDICARE, MEDICAID. AND HE'S SAYING THIS IS SOMETHING THAT REPUBLICANS, AN OPPORTUNITY THEY PASSED UP ON.

>> YEAH, I'M NOT SURE IT IS A LITTLE EXAGGERATED TO SAY HE PUT IT ON THE TABLE. THEY MAY HAVE BEEN PUTTING IT ON THE TABLE AND SMELLED AT ROAMA FROM THE KITCHEN. SO IT WASN'T REALLY ON THE TABLE. SO THE AROMA WAS-- .

>> Woodruff: IT'S NOT REALLY AN OFFER.

>> IT WAS NEVER REALLY MATERIALIZED BUT IT WAS A POSSIBILITY WORTH EXPLORING AND THE POSSIBILITY WORTH EXPLORING WAS RAISE THE MEDICARE ELIGIBILITY, TYING SOCIAL SECURITY TO A DIFFERENT INFLATION MEASURE WHICH WOULD REDUCE THE BENEFITS AND ABOUT $1.4 TRILLION IN DISCRETIONARY SPENDING CUTS SO THESE WERE SERIOUS OFFERS THAT WERE EXTREMELY UNLIKELY COMING FROM A DEMOCRAT. I DON'T THINK THEY WILL BE ON THE TABLE ANY TIME SOON AGAIN BECAUSE IF OBAMA WINS, WILL HAVE NO INCENTIVE TO COME THIS FAR TO THE CENTER. AND IF OBAMA LOSES AND THE REPUBLICANS TAKE CONTROL OF THE HOUSES, NO ONE EITHER IS GOING TO WANT TO TOUCH MEDICARE ON ITS OWN SO THIS WAS SORT OF A PERFECT SITUATION TO GET THE MOST FOR WHAT THE REPUBLICANS WANTED AND THEY STILL WOULDN'T BITE.

>> SO DO YOU AGREE WITH MARK THAT THEY MAY REGRET THAT THEY WILL REGRET.

>> I WROTE A COLUMN CALLING IT THE MOTHER OF ALL NO-BRAINERS. I THOUGHT IT WAS THE DEAL TO TAKE IT WILL BE INTERESTING FOR POLITICAL SCIENTISTS TO LOOK BACK ON THIS AND WHY THEY DIDN'T TAKE IT BECAUSE AS OBAMA POINTED OUT CORRECTLY TODAY THE POLLS SHOW THAT A PLURALITY OF REPUBLICANS SUPPORT A DEAL THAT INCLUDES SOME TAX INCREASES. MAYBE 80% SPENDING CUTS, 20% TAX INCREASES, MAJORITY OF REPUBLICANS SUPPORT THAT, LET ALONE THE GENERAL PUBLIC. AND STILL THE PEOPLE IN CONGRESS WOULDN'T TAKE THAT DEAL.

>> MARK, IS IT CLEAR WHO HAS THE UPPER HAND AT THIS POINT?

>> I WOULD SAY RIGHT NOW, AS OF THE 15th OF JULY THE PRESIDENT DOES. BECAUSE THE PRESIDENT CAN GO TO THE NATION AND SAY LOOK, I WANTED TO CUT. I WAS WILLING TO GO 4 TRILLION. I WAS WILLING TO TAKE THE SACRED COWS FROM THE DEMOCRATIC PARTY, THE CROWN JEWELS, MEDICARE, MEDICAID AND TO REALLY CUT THE SPENDING THERE. AND THEY REJECTED IT. I AM NOT THE BIGGEST SPENDER IN THE AMERICAN HISTORY, I'M THE BIGGEST CUTTER IF AMERICAN HISTORY AND THEY TURNED THEIR BACK ON IT. AND YOU KNOW, I THINK HE HAS THAT ADVANTAGE. I REALLY DO. ESPECIALLY AS LONG AS THIS UNITY IN THE REPUBLICAN SIDE. THAT'S WHY MITCH McCONNELL WANTS TO GET IT OFF THE TABLE.

>> I WOULD DISAGREE WITH THAT A LITTLE. I DO THINK IF HE HAD COME OUT WITH A PLAN. THE PRESIDENT IS TO BE FAULTED FOR NOT REALLY COMING OUT WITH A REAL PLAN AND NOT EVEN MAKING A CASE FOR SIMPSON BOULS BACK WHEN THAT WAS AROUND, TO FORM PUBLIC OPINION. HE NEVER REALLY DID THAT. I THINK PEOPLE ARE LOOKING AT IT AS THEY ARE ALL MESSED UP. AND IT'S ALL THE INCUMBENTS. THOSE PEOPLE IN WASHINGTON, THEY CAN'T DO A --

>> YOU THINK THAT IS HOW THE PUBLIC FEELS.

>> I THINK IT IS REFLECTING BADLY ON ALL INCUMBENTS.

>> I THINK THE PRESIDENT HAS THE ADVANTAGE. I THINK HE CAN MAKE THE CASE AND CERTAINLY JOHN BOEHNER WAS OUT ON A LIMB AND HE NEEDED TO HAVE SOMETHING SPECIFIC IN PRINT TO BRIDGE BACK TO HIS OWN PEOPLE. WHICH HE NEVER HAD. BUT I THINK THE PRESIDENT'S GOOD FAITH, JOHN BOEHNER BELIEVES HIM, ABOUT THE $4 TRILLION, HE THOUGHT IT WAS SERIOUS.

>> Woodruff: DO YOU THINK, MARK, THERE WAS A POSSIBILITY AT SOME POINT, THIS BIG IDEAOLOGICAL DIVIDE BETWEEN REPUBLICANS AND DEMOCRATS, THEIR VIEW OF THE ROLE OF GOVERNMENT, AND RAY GOT INTO THAT WITH SOME EXTENT WITH THE GOVERNORS, REPUBLICAN AND DEMOCRATIC GOVERNORS A FEW WEEK WEEKS AGO, THAT THERE WAS A REAL CHANCE THAT COULD HAVE BEEN BRIDGED IN ALL THIS?

>> WELL, JUDY T ONLY HAPPENS IN AN ODD NUMBERED YEAR. I MEAN IT WAS-- IT DOESN'T HAPPEN IN EVEN NUMBERED YEARS WHEN THERE IS ELECTIONS. THIS WAS THE CHANCE WAS THERE A REAL CHANCE I'M NOT SURE. I THINK IF THE PRESIDENT HAD TRIED TO MOVE PUBLIC OPINION, I THINK HE HAD THE DEMOCRATS. THE DEMOCRATS WERE GOING TO BE WITH HIM. I DON'T THINK THEY WERE GOING TO REVOLT AGAINST HIM IAN THOUGH THERE IS SKEPTICISM AND DISTRUST ON THE PART OF CONGRESSIONAL DEMOCRATS.

>> BECAUSE A LOT OF THEM RUN HAPPY.

>> ESPECIALLY AFTER THE EXTENSION OF THE BUSH TAX CUTS AND OTHER POLICIES BUT I THINK THE POSSIBILITY WAS THERE AND I THINK WE WILL LOOK BACK ON IF WITH REGRET.

>> HE WOULD HAVE-- IT WASN'T POSSIBLE HERE BUT IF HE AND OTHERS HAD SPENT THE LAST COUPLE OF YEARS LAYING THE INTERNATIONAL GROUNDWORK WITH AMERICAN PEOPLE I DON'T KNOW WHY THEY DON'T DO PIE CHARTS. DO A ROSS PERROTT. GO ON TV, SAY HERE IS THE SITUATION. I THINK PEOPLE ARE USED TO THAT KIND OF THINKING AND THEY WOULD RESPOND TO IT BUT THEY HAVEN'T LAID OUT THE CASE. HE DIDN'T EMBRACE SOME OF THE OPTIONS ON THE TABLE. AND THEREFORE ONCE IT IS VERY HARD FOR POLITICAL FACTIONS TO MOVE WHEN THE PUBLIC ISN'T THERE.

>> ONE OF YOU BROUGHT UP DIVISION AMONG REPUBLICANS POINTING OUT. YOU HAVE THE MICHELE WILL BACHMANN AND OTHER WAS DON'T TAKE THE DEBT CEILING AS SERIOUSLY. MARK, SHE'S BECOME A DARLING IN IOWA. WE ARE WATCHING HER NUMBERS, SHE'S RUNNING FOR PRESIDENT. THE CONGRESSWOMAN FROM MINNESOTA. DOES THAT SAY THAT THERE IS MORE SUPPORT OUT THERE AMONG REPUBLICANS FOR THIS VIEW THAT DEBTS MATTER AND THAT YOU KNOW, WHATEVER, THE RATINGS AGENCIES, AND THE FEDERAL RESERVE BOARD CHAIRMAN SAYS REALLY CAN BE IGNORED.

>> AND THE BUSINESS COMMUNITY.

>> AND THE FINANCIAL COMMUNITY.

>> I MEAN YOU CAN SAY AT ONE LEVEL YOU GOT TO ADMIRE THE REPUBLICANS IN THE HOUSE BECAUSE THEY ARE INDIFFERENT TO THE ECONOMIC INTERESTS OF THEIR PARTY THAT HAVE EXPRESSED THEMSELVES BUT MICHELEBACK MANN IS FASCINATING. I THINK WHAT THIS SHOWS IS HER APPEAL IN IOWA AMONG IOWA REPUBLICANS BY HER ALL-OUT UNEQUIVOCAL OPPOSITION TO IS RAG THE DEBT CEILING. BUT ALSO SHOWS HER FEELING AS A POTENTIAL PRESIDENTIAL CANDIDATE. I THINK IT WILL HELP HER IN THE POLL IN IOWA WHICH IS IN EARLY AUGUST. BUT I THINK, JUDY, IT REALLY CRIPPLES HER AS A GENERAL ELECTION CANDIDATE BECAUSE IT IS A LEVEL OF IRRESPONSIBILITY I DON'T THINK AMERICANS WOULD ACCEPT IN A PRESIDENTIAL CANDIDATE.

>> HOW DO YOU SEE THAT.

>> SHE RAN FOR A LEADERSHIP POSITION IN THE HOUSE AND GOT A HANDFUL OF VOTES. SHE IS NOT A CHARACTERISTIC FIGURE IN THE HOUSE SHELL. IS DOING WELL IN IOWA, SHE IS FROM IOWA, SHE HAS A SOCIAL CONSERVATIVE BASE. PEOPLE ARE ANGRY. YOU KNOW, REMEMBER, FOR THIS VOTE IT'S VERY MUCH LIKE THE TARP VOTE. ITS HE A A VOTE WHERE WE ARE GOING BAIL OUT PEOPLE WITHOUT DON'T DESERVE IT. SO THEY ARE SPEND ON THEMSELVES WHETHER ON WALL STREET OR WASHINGTON AND WITH WE ARE ENDLESSLY BEING ASKED TO PAY MORE MONEY TO THESE PEOPLE SO THERE IS A LOT OF CYNICISM, ANGER AND DISTRUST ABOUT THE ENTIRE ESTABLISHMENT. AND SHE DOES TAP INTO THAT -- BUT SHE MAY DO WELL IN IOWA BUT THE REPUBLICAN PARTY IS STILL NORMAL PARTY AND THEY WILL GO FOR A NORMAL CANDIDATE WHETHER IT IS MITT ROMNEY OR SOMEBODY ELSE T IS TO THE GOING TO BE MICHELLE BACHMANN.

>> Woodruff: AND NO WHAT THER WHAT THE RATINGS AGENCIES AND FEDERAL RESERVE BOARD CHAIRMAN SAYS ABOUT THE CONSEQUENCE.

>> AND THE BUSINESS COMMUNITY WASN'T EXACTLY CAPTAIN COURAGEOUS. THEY SAID NO YOU HAVE TO BALANCE THE BUDGET. THEY DIDN'T SAY WE'RE WILLING TO GIVE UP OUR TAX PREFERENCES. WE WANT TO CLOSE THESE LOOPHOLES OR ANYTHING.

>> Woodruff: QUICKLY, PRESIDENTIAL CANDIDATES, THE PRESIDENT HIMSELF, WE'VE SEEN SOME NUMBERS THAT HE'S RAISED, MARK WHAT IT IS, $86 MILLION SO FAR FOR HIS CAMPAIGN COMBINED WITH THE DEMOCRATIC NATIONAL COMMITTEE. WHAT DOES THAT SAY ABOUT HOW STRONG HE IS GOING INTO NEXT YEAR.

>> WELL, IT SAYS HE'S GOING HAVE A LOT OF MONEY. AND PROBABLY IN ALL LIKELIHOOD HE WILL HAVE A LOT MORE MONEY THAN WHOEVER THE REPUBLICAN NOMINEE IS ESPECIALLY IF THEY GO THROUGH A BRUTAL PRIMARY. AND THEIR RESOURCES ARE DEPLETED. AND IT ENABLES YOU TO PLAY IN MORE PLACES, TO PUT YOUR OPPONENT ON THE DEFENSIVE TO GO TO STATES WHERE THE OPPONENT IS NOT LIKELY TO HAVE TO DEFEND THEM IN ODE CIRCUMSTANCES BUT THEN FORCE HIM TO SPEND HIS TIME AND MONEY THERE. BUT YOU KNOW, THE MONEY WE DON'T KNOW WHERE IT CAME FROM. WE DON'T KNOW THE BIG DONORS WHICH WAS NOT EXACTLY WHAT BARACK OBAMA STARTED IN POLITICS ABOUT WAS BRINGING BIG MORE DONORS IN POLITICS.

>> Woodruff: DOES THIS MAKE HIM THE FOREMIDABLE OPPONENT.

>> IT SIM PRESSIVE. THERE ARE-- OUT IN THE COUNTRY LIBERALS ARE JUST FINE WITH HIM AND THEY ARE GIVING MONEY. I WAS IMPRESSED THAT NEARLY HALF THE DONORS HADN'T GIVEN THEY DIDN'T GIVE LAST ELECTION CYCLE THAT IS IMPRESSIVE. THAT MEANS THEY HAVE PEOPLE TO CAR AT CLIPBOARDS, THEY HAVE A GOOD MACHINE.

>> Woodruff: YOU TWO ARE A GOOD TEAM, THANK YOU, DAVID, MARK, SEE YOU NEXT WEEK.

>> THANK YOU.

>> Suarez: FINALLY TONIGHT, THE U.S. WOMEN'S SOCCER TEAM SETS ITS SIGHTS ON A WORLD CUP VICTORY THIS WEEKEND. HARI SREENIVASAN HAS THAT STORY.

>> IT HAS BEEN A DOZEN YEARS SINCE AMERICAN WOMEN WON THE CUP AND CAPTURED NATIONAL ATTENTION. BUT ON SUNDAY AFTERNOON THE U.S. WILL TRY TO RECAPTURE THE TITLE AND BECOME THE FIRST WOMEN'S TEAM TO WIN THREE WORLD CUPS. IT'S BEEN A TOUGHER AND MORE COMPETITIVE ROAD THIS TIME. THE U.S. LOST A GAME IN THE OPENING ROUND. THEN STUNNED BRAZIL IN AN EPIC QUARTERFINAL MATCH BY TYING THE SCORE IN THE 122nd MINUTE WITH A HEADER BY ABBEY WAMBACH THAT MATCH ALSO INCLUDED AN IMPRESSIVE PERFORMANCE BY THE GOALKEEPER. EARLIER THEY KNOCKED OUT FRANCE WITH ANOTHER LATE GOAL BY WAMBACH. NOW A TEAM THERE JAPAN PLAYING IN ITS FIRST WORLD CUP FINAL. CHRISTINE BRENNAN HAS BEEN COVERING THE GAME, SHE JOINS US FROM ENGLAND WHERE SHE IS COVERING THE BRITISH OPEN IN BETWEEN MATCHES SO FOR FOLKS WHO HAVEN'T BEEN WATCHING ALL THE GAMES, TELL A BIT ABOUT THIS TEAM, HOW DID THEY GET HERE?

>> IT'S BEEN A CIRCUITOUS ROUTE FOR THE U.S. TEAM. NORMALLY WE THINK THE U.S. WILL WIN EVERYTHING FOR WOMEN'S SOCCER BUT IT HAS BEEN DIFFERENT THISER. >>. ALMOST DIDN'T QUALIFY. THEY LOST TO MEXICO AND QUALIFYING HAD TO DO A HOME AND HOME SERIES AGAINST ITALY TO BE THE LAST TEAM TO GET INTO THE WORLD CUP. BUT EVEN SO, THE U.S. IS RANKED NUMBER ONE IN THE WORLD SO A LITTLE CONFUSION BECAUSE IT WAS A DIFFICULT ROAD TO GET INTO THE TOURNAMENT. BUT THE U.S. THROUGHOUT HAS BEEN RANKED NUMBER ONE AND THAT GOES BACK TO BEING THE GOLD MEDALIST FROM THE OLYMPICS IN 2008 AMONG OTHER THINGS.

>> Reporter: THE TEAM ALSO SEEMS TO MENTION NUMBER 21, THAT IT ISN'T JUST ABOUT THE STARTING SQUAD BUT THAT THE BUNCH HAS CONTRIBUTED SOME SIGNIFICANT ATHLETIC PERFORMANCES AS WELL?

>> OH, ABSOLUTELY, AND MEGAN. WHEN YOU THINK ABOUT THE BRAZIL GAME AND WAMBACH'S HEADER, 30 SECONDS AWAY AND IT IS OVER AND THE U.S. IS OUT OF THE WORLD CUP AND MAGAZINE AN IS THE ONE WHO SENT THAT INCREDIBLE CROSS THAT LASER RIGHT TO ABBEY WAMBACH'S HEAD AND THAT LIGHTNING BOLT OF A HEADER BY WAMBACH AND THAT WENT IN. SO THERE HAVE BEEN SEVERAL PLAYERS THAT HAVE COME OFF THE BENCH AND PERFORMED VERY WELL. THE COACH IS SWEDISH. SHE'S NOT AN AMERICAN. AND SHE HAS I THINK DONE A TERRIFIC JOB, MAYBE MORE THAN ANY OTHER AMERICAN COACH EVER IN THE HISTORY OF U.S. WOMEN'S SOCK TORE MAKE THIS A TEAM EVEN THOUGH THERE CLEARLY ARE SOME SUPERSTARS. IT'S ALL ABOUT, ALL OF THEM ON THERE. AND I THINK ARE YOU SEEING IT THAT ESPECIALLY WITH RUPINOE.

>> YOU ROUT ABOUT THIS, IT IS INTERESTING THAT THE STORY LINES ARE ABOUT THE ATHLETIC-- ATE LETISM AND LESS ABOUT THE FACT IS A WOMEN'S TEAM AND THE WORLD CUP.

>> THAT IS RIGHT. IF YOU CONSIDER HOW WE LOOKED AT WOMEN'S SPORTS IN THE PAST, ESPECIALLY THE '99 WORLD CUP. THE ROSE BOWL FILLED TO CAPACITY, 40 MILLION AMERICANS WATCHING, ON THE COVER OF TIME, PEOPLE, "SPORTS ILLUSTRATED" THE SAME WEEK AFTER THEY WON THE WORLD CUP. THAT IS THE ONLY NEWS STORY EVER TO HIT ALL FOUR COVERS IN THE SAME WEEK THAT WAS CULTURAL THAT WAS ABOUT TITLE 9 COMING OF AGE, AMERICANS FALLING IN LOVE WITH THE GIRL NEXT DOOR, AND FALLING IN LOVE WITH WHAT WE HAVE CREATED WITH TITLE 9 I THINK THIS IS THAT, ALWAYS THERE IS ALWAYS THAT PART OF THAT BUT I THINK IT'S PORE ABOUT THE ATHLETIC FEATS. I DON'T THINK WE WOULD BE TALKING ABOUT THIS TODAY IF IT WEREN'T FOR THAT BRAZIL GOAL, THE GOAL AGAINST BRAZIL BY ABBEY WAMBACH AND JUST THE AWE INSPIRING MOMENT THAT WE SAW. AND IT'S THE WAY WE TALK ABOUT MEN SPORTS. WELL NOW ONE OF THE RARE TIMES WE ARE TALKING ABOUT WOMEN'S SPORTS AND ACTUALLY TALKING ABOUT THE 5th LETIC ACHIEVEMENT. WE'RE TALKING ABOUT SPORTS. AND I THINK THAT'S REALLY GOOD FOR WOMEN'S SPORTS. THE IDEA THAT THESE COUPLE GOALS THAT HAVE REALLY ELECTRIFIED THE NATION, THAT IS THE STORY, NOT SOME OF THE CULTURAL ASPECTS OF THIS ONE.

>> TELL US A BIT MORE ABOUT THE TEAM THAT THEY ARE FACING. THE JAPANESE ARE ALSO PLAYING THEIR HEARTS OUT. I HAVE HEARD IT IS VERY EMOTIONAL. THAT THEY ARE USING THE NATURAL DISASTERS AS THE EARTHQUAKE AND TSUNAMI AS MOTIVATORS.

>> THAT'S RIGHT. JAPAN HAS GONE THROUGH SO MUCH SINCE MARCH AND I THINK THAT OTHER ATHLETES IN ANY SPORT HAVE BEEN TALKING ABOUT IT, THINKING ABOUT IT. THE MOTIVATION FOR TEAM HAS BEEN SHOWING VIDEO OF SOME OF THE HORROR AFTER THE EARTHQUAKE AND TSUNAMI, THAT THEY SENT THEM OUT FROM THE LOCKER ROOM, FOR ONE GAME JUST AFTER SHOWING VIDEO. JAPAN IS, THIS IS ITS FIRST FINAL SO TALK ABOUT PAR KNIT WOMEN'S SPORTS AND THINGS GETTING BETTER AND MOREATE ET-- ATHLETIC EXCELLENCE THROUGHOUT THE WORLD OF WOMEN SPORTS. JAPAN I THINK IS VERY MUCH AN EXAMPLE OF THAT. NEVER BEFORE IN A FINAL OF THE WOMEN'S WORLDS CUP. AND THEY ARE ORGANIZED, AGGRESSIVE, THEY WILL PASS THE BALL AND TRY TO KEEP IT. IT IS POSSESSION ORIENTED GAME FOR JAPAN. AND THE U.S. IS GOING TO BE TRYING TO GO TO ABBEY WAMBACH WHO IS QUITE A BIT TALLER THAN THE ORE PLAYERS. THIS IS A SUCCESS FOR JAPAN, AND THE NATION AND THE SENSE OF HEALING AFTER THE MARCH EVENT.

>> Reporter: IF THEY WIN SUNDAY THE U.S. WOMEN WOULD BE THE FIRST TEAM TO WIN THE WORLD CUP THREE TIMES AFTER '99 AND '91. BUT WHAT WILL THIS DO FOR WOMEN'S SOCCER. BECAUSE SOME OF THE WOMEN IN THIS GAME TODAY GREW UP WATCHING THAT TEAM FROM '99.

>> I THINK WHAT WE HAVE SEEN FROM '99 AND 12 YEARS LATER 2011 THAT THIS IS A SPORT THAT IS EXTREMELY POPULAR IN THE UNITED STATES, ESPECIALLY ON THE PARTICIPATION SIDE. DRY BY ANY FIELD AND WILL YOU SEE LITTLE GIRLS AND LITTLE BOYS PLAYING SOCCER. THE NATION IS NOT EMBRACED IT AS A SPECTATOR SPORT AS MUCH. BUT OF COURSE THIS IS REALLY A LITTLE BIT ABOUT SOCCER AND A LOT ABOUT NATIONALISM AND ABOUT WHETHER IT'S-- AMERICANS WANT TO SEE AMERICANS WIN. I THINK THAT IS WHAT A LOT OF PEOPLE ARE RALLYING AROUND. WHAT DOES IT DO IN THE FUTURE THERE SU A PROFESSIONAL LEAGUE THERE HAS BEEN ONE AFTER THE '99 SUCCESS. THAT LEAGUE FOLDED AFTER THREE YEARS IT WENT THROUGH 100 MILLION DOLLARS IN THREE YEARS AND FOLDED. THEN A NEW LEAGUE CAME UP A COUPLE YEARS AGO AND IT IS REALLY STRUGGLING IN THESE ECONOMIC TIMES. WILL THESE MOMENTS, WILL THE WORLD CUP SELL MORE TICKETS FOR WOMEN'S PROFESSIONAL SOCCER, I'M NOT SO SURE. I THINK WHAT WHAT YOU SEE INTERNATIONALLY IN THESE KIND-OF-OLYMPIC OR WORLD CUP EVENTS, I'M NOT SO SURE THE PEOPLE THEN WHEN THE ATHLETES SCATTER DO THEY WANT TO GO WATCH HOPE SOLO AND ABBEY WAMBACH WITH THE MAGIC JACK OF BOCA RATON PLAYING AGAINST BOSTON OR SOME OTHER TEAMS WITH SOME OF THE OTHER WORLD CUP PLAYERS. THAT HASN'T BEEN SHOWN OR PROVEN TO BE THE CASE. BUT AS A ONE-OFF STAND ALONE THIS SAY MAGNIFICENT MOMENT FOR WOMEN'S SPORTS.

>> CHRISTINE BE BRENNANS, THANKS SO MUCH FOR YOUR TIME.

>> THANK YOU.

>> AGAIN

>> Woodruff: AGAIN, THE MAJOR DEVELOPMENTS OF THE DAY: PRESIDENT OBAMA URGED CONGRESS TO DO SOMETHING BIG ON THE DEBT CEILING AND DEFICIT REDUCTION. HE SAID HE HOPES TO SEE A SERIOUS PLAN IN THE NEXT DAY OR SO. TWO TOP EXECUTIVES IN THE RUPERT MURDOCH MEDIA CONGLOMERATE RESIGNED, INCLUDING THE PUBLISHER OF THE "WALL STREET JOURNAL" AND THE HEAD OF MURDOCH'S BRITISH OPERATIONS. IT WAS THE LATEST FALLOUT FROM THE PHONE HACKING SCANDAL IN BRITAIN.

>> Woodruff: AND AGAIN TO OUR HONOR ROLL OF AMERICAN SERVICE PERSONNEL KILLED IN THE IRAQ AND AFGHANISTAN CONFLICTS. WE ADD THEM AS THEIR DEATHS ARE MADE OFFICIAL AND PHOTOGRAPHS BECOME AVAILABLE. HERE, IN SILENCE, ARE NINE MORE.

>> Suarez: AND THAT'S THE "NEWSHOUR" FOR TONIGHT. ON OUR WEB SITE, WE PREVIEW OUR UPCOMING SERIES FROM INDONESIA. OUR FIRST TWO STORIES ARE ALREADY POSTED INCLUDING THE ONE WE'LL AIR MONDAY HERE ON THE BROADCAST. IT CAPTURES THE SOMETIMES CRUEL TREATMENT FOR MENTALLY ILL PATIENTS LOCKED IN CAGES AND RESTRAINED WITH CHAINS. FIND THAT AND MORE AT newshour.pbs.org. I'M RAY SUAREZ.

>> Woodruff: AND I'M JUDY WOODRUFF. "WASHINGTON WEEK" CAN BE SEEN LATER THIS EVENING ON MOST PBS STATIONS. WE'LL SEE YOU ONLINE AND AGAIN HERE MONDAY EVENING. HAVE A NICE WEEKEND. THANK YOU AND GOOD NIGHT. MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY: 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 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."