PBS NewsHour; December 2, 2011 3:00pm-4:00pm PST

Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS

>> Lehrer: THE UNEMPLOYMENT RATE DROPPED TO UNDER 9% LAST MONTH, THE LOWEST IN TWO AND A HALF YEARS. GOOD EVENING. I'M JIM LEHRER.

>> Brown: AND I'M JEFFREY BROWN. ON THE NEWSHOUR TONIGHT, WE EXPLORE WHAT'S BEHIND THE NEW NUMBERS-- SHOWING SOME PROMISE, BUT CONTINUING PROBLEMS FOR THOSE SEEKING WORK.

>> Lehrer: FROM TENNESSEE, PAUL SOLMAN TAKES A CLOSER LOOK AT WHY SOME EMPLOYERS ARE RELUCTANT TO HIRE NEW EMPLOYEES.

>> Reporter: OLD HICKORY BAT COMPANY IS ANOTHER SMALL NASHVILLE FIRM.

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

>> LOOK WHAT OTHERS AREDOIUNG.

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

>> AND BY BNSF RAILWAY. 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.

>> Brown: THE NOVEMBER JOBS REPORT CAME OUT TODAY, AND IT SHOWED NEW JOB CREATION AND A SURPRISING DROP IN UNEMPLOYMENT. IT ALSO GAVE PRESIDENT OBAMA SOME PROGRESS TO POINT TO AS CONGRESS BATTLED OVER BILLS TO HELP THOSE WORKING AND THOSE OUT OF WORK.

>> THIS MORNING, WE LEARNED THAT OUR ECONOMY ADDED ANOTHER 140,000 PRIVATE-SECTOR JOBS IN NOVEMBER. THE UNEMPLOYMENT RATE WENT DOWN.

>> Brown: AT A CONSTRUCTION SITE IN WASHINGTON THIS MORNING, THE PRESIDENT WAS EAGER TO PLUG THE NEWS FROM THE LABOR DEPARTMENT. THE ECONOMY SCORED A NET GAIN OF 120,000 JOBS, COMBINING THE 140,000 CREATED IN THE PRIVATE SECTOR WITH THE LOSS OF 20,000 GOVERNMENT JOBS. THE INCREASED HIRING CAME MOSTLY IN RETAIL AND HOSPITALITY INDUSTRIES, HELPED BY BUSINESSES ADDING STAFF FOR THE HOLIDAYS. THAT HELPED PUSH THE UNEMPLOYMENT RATE DOWN TO 8.6%, THE LOWEST IN NEARLY TWO AND A HALF YEARS. MOREOVER, THE NUMBER OF JOBS ADDED IN PREVIOUS MONTHS WAS REVISED UPWARD FOR THE FOURTH MONTH IN A ROW. BUT IMPROVEMENTS TO THE JOBLESS RATE WERE NOT ALL DUE TO GOOD NEWS. TODAY'S DATA ALSO SHOWED THAT 300,000 AMERICANS LEFT THE WORK FORCE ALTOGETHER, AND SO WERE NO LONGER COUNTED AS UNEMPLOYED. OFFICIALLY, 13.3 MILLION PEOPLE REMAINED UNEMPLOYED. AND FOR THE THOUSANDS LINING UP AT JOB FAIRS AROUND THE COUNTRY TODAY, THE STRUGGLE CONTINUES.

>> IF YOU DON'T HAVE A JOB, YOU DON'T EAT. SO I REALLY NEED THIS.

>> Brown: AT THE CAPITOL, REPUBLICAN HOUSE SPEAKER JOHN BOEHNER FOCUSED ON THAT SIDE OF THE PICTURE.

>> ANY JOB CREATION IS WELCOME NEWS, BUT THE JOBLESS RATE IN OUR COUNTRY IS STILL UNACCEPTABLY HIGH. TODAY MARKS THE 34TH CONSECUTIVE MONTH OF UNEMPLOYMENT ABOVE 8%, AND AS YOU MAY REMEMBER, THE OBAMA ADMINISTRATION PROMISED THAT UNEMPLOYMENT WOULD NOT EXCEED 8% IF WE PASSED THEIR STIMULUS BILL. THAT PROMISE HAS GONE UNFULFILLED.

>> Brown: IN THE MEANTIME, CONGRESS CONTINUED TO WRESTLE WITH TWO KEY JOB-RELATED ISSUES: LAST NIGHT, SENATE DEMOCRATS AND REPUBLICANS BLOCKED EACH OTHER'S PROPOSALS FOR EXTENDING THE PAYROLL TAX CUT DUE TO EXPIRE DECEMBER 31. THE PRESIDENT RAISED THE ISSUE TODAY AS HE AND FORMER PRESIDENT CLINTON TOUTED PLANS TO CREATE JOBS BY MAKING BUILDINGS MORE ENERGY EFFICIENT. HE INSISTED CONGRESS ACT ON THE PAYROLL TAX EXTENSION.

>> WE NEED TO GET THIS DONE. AND I EXPECT THAT IT'S GOING TO GET DONE BEFORE CONGRESS LEAVES. OTHERWISE, CONGRESS MAY NOT BE LEAVING, AND WE CAN ALL SPEND CHRISTMAS HERE TOGETHER.

>> Brown: THERE'S DIVISION IN REPUBLICAN RANKS, WITH MANY SAYING THE PAYROLL TAX CUT HAS RUN UP MORE DEBT, BUT DONE NOTHING TO CREATE JOBS. AT A MEETING OF HOUSE REPUBLICANS TODAY, ARIZONA CONGRESSMAN JEFF FLAKE SAID MANY RANK AND FILERS WERE OPPOSED TO AN EXTENSION.

>> MOST OF THE PEOPLE STANDING UP WERE TROUBLED WITH MOVING AHEAD ON THIS.

>> Brown: AT THE SAME TIME, FLAKE SAID THERE'S FEAR OF A VOTER BACKLASH IF THEY DON'T EXTEND THE TAX CUT.

>> PEOPLE ARE CONCERNED THAT OUR CONSTITUENTS WON'T UNDERSTAND THIS. ALL THEY KNOW IS THAT THEY'LL GET A HIT, AS I WILL, AS EVERYBODY WILL IF YOU GET RID OF THIS PAYROLL TAX HOLIDAY.

>> Brown: THE HOUSE AND SENATE ALSO HAVE TO CONSIDER EXTENDING BENEFITS FOR THE LONG-TERM UNEMPLOYED. THEY, TOO, ARE SET TO EXPIRE AT YEAR'S END. AND WE LOOK AT TODAY'S NUMBERS NOW, WITH DIANE SWONK, CHIEF ECONOMIST FOR MESIROW FINANCIAL, A FINANCIAL SERVICES FIRM IN CHICAGO. AND CARL VAN HORN, FOUNDING DIRECTOR OF THE HELDRICK CENTER FOR WORKFORCE DEVELOPMENT AT RUTGERS UNIVERSITY. TODAY, THE CENTER PUBLISHED ITS LATEST SURVEY ON HOW AMERICANS WHO LOST JOBS IN THE RECESSION HAVE BEEN IMPACTED. SO, DIANE SWONK, I'LL START WITH YOU. WE HAVE THE RATE GOING DOWN FOR GOOD, AND SOME BAD REASONS. START WITH THE GOOD NEWS. WHERE WAS THE HIRING COMING FROM?

>> WELL, WHAT WE DID SEE IS WE DID SEE A LOT OF HIRING AS YOU ALREADY MENTIONED IN THE RETAIL AND HOSPITALITY SECTORS. UNFORTUNATELY, THAT MEANT THE COMPOSITION OF HIRING WE SAW PUSHED DOWN AVERAGE HOURLY WAGES BECAUSE WE DIDN'T SEE HIRING IN THE HIGH-WAGE MANUFACTURERS, VERY MUCH OF IT, AND THE CONSTRUCTION SECTORS. ALSO WE CONTINUE TO LOSE JOCKS IN THE PUBLIC SECTOR. IT DOES LOOK LIKE WE'RE STARTING TO GET NEW BUSINESS FORMATION FROM OTHER INDICATORS WE'RE SEEING AND THAT HOUSEHOLD SURVEY SHOWING THE UNEMPLOYMENT RATE. TO DO OF THAT'S GOOD NEWS. BUT YOU SAID THERE WAS GOOD NEWS AND BAD NEWS. A LOT OF PEOPLE GAVE UP ENTIRELY AND THE PERCENT AND NUMBER OF PEOPLE UNEMPLOYED MORE THAN SIX MONTHS REMAIN UNCHANGED. WE HAVE MORE THAN 40% OF THOSE UNEMPLOYED STILL UNEMPLOYED FOR MORE THAN SIX MONTHS. THERE'S A REAL SORT OF-- THERE'S REAL HARD TIMES OUT THERE FOR ANYONE UNEMPLOYED FOR A VERY LONG TIME. IT TEND TO BE PEOPLE WHO HAVE BEEN UNEMPLOYED FOR A SHORT TIME THAT GET RE-EMPLOYED NOT THOSE UNEMPLOYED FOR SIX MONTHS WHO NEED IT THE MOST.

>> Brown: WHAT DO YOU MAKE OF THE UPWARD REVISIONS? JUDGEY DOES THAT KEEP HAPPENING?

>> THE INITIAL PAYROLL DATA, IT'S A SURVEY ESTABLISHED FIRM, AND SO IT DOESN'T GET ALL OF THE NEW BUSINESS CREATION, AND OFTENTIMES IT JUST DOESN'T CAPTURE THE INFORMATION WHEN WE'RE AT A TURNING POINT SO THAT MIGHT BE ENCOURAGING WE'VE SEEN CONSISTENTLY UPWARD INSTEAD OF DOUBLE PLAY WARD REVISIONS BECAUSE IT COULD BE WE'RE CAPTURING MORE JOBS NOW THAT ARE ACTUALLY BEING CREATED. THAT'S THE GOOD NEWS. AND THE KEY IS CATCH-UP TO EARLIER POSITIVE ACTIVITY RELATED TO THINGS LIKE JAPAN'S EARTHQUAKE OR A FUNDAMENTAL TURN IN THE ECONOMY MORE SUSTAINABLE GOING FORWARD.

>> Brown: WHICH SECTORS CONTINUE TO LAG? YOU TALKED ABOUT SOME OF THE ONES GETTING AHEAD. WHERE DO YOU STILL SEE THE PROBLEMS?

>> MANUFACTURING ACTIVITIES IS PICKING UP, PARTICULARLY IN THE AUTO SECTOR ALTHOUGH HIRING HAS NOT PICKED UP VERY MUCH. IT WAS ALMOST FLAT. I THINK 2,000 JOBS WERE CREATED IN THE MONTH OF NOVEMBER THAT'S DESPITE A MAJOR REBOUND IN MANUFACTURING ACTIVITY IN THE AUTO INDUSTRY AND ONE OF THE PROBLEMS THEY'RE FINDING IS NOT A SHORTAGE OF ENGINEERS-- ALTHOUGH THAT IS ONE OF THE PLACE WHERE'S THERE IS A SHORTAGE-- BUT THE SHORTAGE OF SKILLED WORKERS, MACHINISTS AND ENGINEERS, AND WE'RE HOPING SOME OF THOSE PEOPLE WHO HAD BEEN CONSTRUCTION WORKERS AND MAYBE HAD SOME OF THESE SKILLS HAD SOMEHOW TRANSLATE THOSE INTO THE PLACES THEY'RE NEEDED NOW IN THE ECONOMY. THERE HASN'T BEEN THAT APPRENTICE SHIP KIND OF THING WE SEE IN EUROPE TO BE ABLE TO FILL THOSE JOBS AND MANY MANUFACTURERS ARE COMPLAINING THEY CAN'T FIND WORKERS NOW.

>> Brown: CARL VAN HORN, ONE OF THE THINGS YOU LOOKED AT WAS WHAT HAPPENS TO PEOPLE WHEN THEY DO GET REHIRED? TELL US WHAT YOU FOUND.

>> FIRST OF ALL, WE'VE BEEN INTERVIEWING UNEMPLOYED WORKERS WHO LOST THEIR JOBS AT THE BEGINNING OF THE RECESSION OFF AND ON FOR THE LAST TWO YEARS NOW. AND WHAT WE FOUND WAS THAT ONLY ABOUT 27% OF THEM-- THIS IS A NATIONAL SURVEY-- HAD RECOVERED, HAD GOTTEN A JOB, A FULL-TIME JOB WHEN WE INTERVIEWED THEM AGAIN IN SEPTEMBER OF THIS YEAR. AND OF THOSE, ABOUT HALF OF THEM TOOK A PAYCUT, AT LEAST OF 10%, AND SOME OF THEM TOOK ASIGNIFICANT PAYCUT. ANOTHER THIRD OF THEM TOLD US THEY HAD TO CHANGE THEIR CAREERS ENTIRELY IN ORDER TO GET ANOTHER JOB.

>> Brown: SO WHEN THEY COME BACK IN AND TAKE A LOWER WAGE, THAT REFLECTS VERY-- CLEARLY, A VERY COMPETITIVE ATMOSPHERE THAT THEY'RE TRYING TO GET INTO.

>> YEAH, THERE'S A VERY LARGE NUMBER OF APPLICANTS FOR EVERY JOB. THERE ARE SOME, LIKE DIANE MENTIONED, THAT ARE HIGHLY SKILLED JOBS THAT GO UNFILLED, BUT BY AND LARGE THAT'S NOT CASE WHERE WE FIND PEOPLE TELLING US THEY JUST CAN'T FIND WORK, DESPITE THEIR BEST EFFORTS TO CONTINUE TO LOOK AND TRY HARD TO FIND ANOTHER JOB. I THINK THE OTHER POINT TO MAKE IS THAT THEY TOLD US ONLY ABOUT ONE IN-- 14% HAD ACTUALLY GOTTEN A SKILLS TRAINING PROGRAM TO HELP THEM CHANGE YEARS. SO WHAT THAT MEANS IS MOST OF THEM EITHER WEREN'T ABLE TO FIND SUCH A PROGRAM OR COULDN'T AFFORD IT.

>> RIGHT.

>> AND, THEREFORE, THEY'RE STUCK IN THE SAME PLACE THEY WERE BEFORE.

>> Brown: WHAT KINDS OF THINGS-- WHAT'S THE ATTITUDES THEY'RE TELLING BUTHAT TIME SPENT LOOKING FOR WORK? ARE THEY STILL OUT THERE FIGHTING FOR WORK? I'M TRYING TO FIT THIS INTO THE NUMBERS WE'RE ENERGY OF PEOPLE JUST DROPPING OUT ALTOGETHER.

>> A SMALL PERCENTAGE DROP OUT ENTIRELY. ABOUT 6% QUIT WORKFORCE, SOME TAKING EARLY RETIREMENT IF THEY WERE ELIGIBLE, SOME JUST GIVING UP. MOST STAY IN THE LABOR MARKET AND WE ASKED THEM ABOUT WHAT THEY'RE DOING TO LOOK FOR WORK AND THEY'RE DOING ALL THE THINGS WE WOULD EXPECT THEM TO DO. THEY'RE SEARCHING THE INTERNET. THEY'RE CONTACTING FORMER EMPLOYERS AND FRIENDS AND SO ON. BUT THEY'RE UNSUCCESSFUL. I MEAN, IN TERMS OF THE UNEMPLOYED, I THINK IT'S IMPORTANT TO REINFORCE THE POINT OF THOSE WE FIRST INTERVIEWED TWO YEARS AGO, WHO WERE STILL UNEMPLOYED, 50%, THEREFORE ARE, UNEMPLOYED FOR MORE THAN TWO YEARS. SO THEY LOST THEIR UNEMPLOYMENT INSURANCE BENEFITS IF THEY HAD ANY. AND SO IT'S A VERY, VERY LONG STRUGGLE. AND WHAT WE FIND IS THAT THEY ARE CHANGING THEIR LIFESTYLES ENTIRELY. THEY'RE NOT ONLY GIVING UP ON THINGS THEY'D LIKE TO HAVE BUT THEY'RE GIVING UP ON THINGS THEY NEED TO HAVE. THEY'RE SELLING POSSESSIONS. THEY'RE BORROWING MONEY. THEY ARE FORGOING VISITS TO THE THE DOCTOR AND ALL THE KINDS OF THINGS THAT MAKE LIFE UNPLEASANT IN A CONTINUED STATE OF UNEMPLOYMENT.

>> Brown: DIANE SWONK, YOU WANTED TO JUMP IN THERE?

>> YEAH, I WANTED TO ADD THAT IS REALLY REFLECTED IN THE POVERTY STATISTIC AS WELL. WE HAVE MORE THAN ONE IN FIVE CHILDREN IN THIS COUNTRY NOW LIVING BELOW THE POVERTY LINE WHICH IS ALREADY A PRETTY LOW THRESHOLD. ALMOST A THIRD OF THOSE CHILDREN ARE IN THE STATE OF FLORIDA ALONE WHERE THE CONSTRUCTION BUST WAS SO HORRENDOUS, AND YOU HAVE A LOT OF THEM HOMELESS. AND THAT'S A REALLY TRAGIC REALITY OF TODAY. IT'S HOW MANY PEOPLE ARE NOT ONLY DOING THAT, BUT YOUNG PEOPLE COMING BACK EITHER FROM COLLEGE OR THEY DIDN'T HAVE AA COLLEGE DEGREE, THEY'RE 25 YEARS OLD, THEY'RE MOVING BACK IN WITH THEIR FAMILIES AND ADDING FINANCIAL STRESS ON TO A FAMILY ALREADY STRESSED. YOU MAY HAVE MORE THAN ONE PERSON IN A HOUSE WHO HOT LAST A JOB FOR A LONG PERIOD OF TIME AND FEWER, AND FEWER WAGE EARNERS ABLE TO SUPPORT THAT HOUSEHOLD. THAT'S WHAT WE'RE SEEING EVEN ON BLACK FRIDAY, SOME OF THE SURVEYS OF THE PEOPLE STANDING IN LINE, THEY WERE STANDING IN LINE BECAUSE THEY WAITED ALL YEAR TO BUY THE ONE THING THEY NEEDED TO REPLACE DURING THE BLACK FRIDAY SALES AND THEY COULD ONLY AFFORD IT DURING THOSE SALES.

>> Brown: CARL VAN HORN, KEY KEEP HEARING TODAY A SORT OF GLASS HALF FULL, HALF EMPTY. WHAT DO YOU LOOK AT? WHAT DO YOU SEE?

>> WELL, I THINK WHAT OUR DATA SHOW IS REALLY A MOVING PICTURE OF AN EVOLVING CRISIS. THESE ARE THE FOLKS THAT WERE AT THE FOREFRONT OF THE ECONOMIC RECESSION. THEY LOST THEIR JOBS AT THAT POINT. AND AS EVIDENCED BY OUR STUDY, MOST OF THEM HAVE NOT RECOVERED. ONE OF THE THINGS WE TRY TO DO IS LOOK AT THAT AND FIGURE OUT WHAT PERCENTAGE OF THEM ARE ACTUALLY RECOVERED, AND WE ONLY FOUND ABOUT 7% HAD FULLY RECOVERED IN THE SENSE THEY HAD ONLY TAKEN A TEMPORARY CUT IN PAY. THEY WERE BACK WORKING AGAIN. WE FOUND ANOTHER 30% WHO ARE WHAT WE CALL DEVASTATED. THAT IS TO SAY, THEY HAVE A SIGNIFICANT LOSS OF INCOMES, CHANGING THEIR STANDARD OF LIVING, AND THEY REALLY BELIEVE THAT IT'S A PERMANENT CHANGE IN THEIR LIFE, AND AS WE SAID BEFORE, THEY'RE HEADED ON THEIR WAY, IF THEY'RE NOT ALREADY, IN POVERTY. THEY WERE DRAWING ON FOOD STAMPS AND OTHER SOCIAL SERVICES THAT THEY'VE NEVER USED BEFORE. OF SO WHAT IT TELLS US IS THAT'S THERE'S THIS HUGE PROBLEM-- AGAIN, MILLIONS OF PEOPLE WHO HAVE BEEN UNEMPLOYED FOR A VERY LONG PERIOD OF TIME, AND THE FURTHER ALONG IT GOES FROM THEIR LAST UNEMPLOYMENT, THE HARDER IT IS FOR THEM TO GET BACK INTO THE LABOR MARKET.

>> Brown: ALL RIGHT CARL VAN HORN AND DIANE SWONK, THANK YOU BOTH VERY MUCH.

>> THANK YOU.

>> Lehrer: STILL TO COME ON THE NEWSHOUR TONIGHT: A CLOSER LOOK AT WHY BUSINESSES ARE NOT HIRING; A CONVERSATION WITH FORMER PRESIDENT BILL CLINTON; AND SHIELDS AND BROOKS. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S KWAME HOLMAN.

>> Holman: WALL STREET MOVED HIGHER AT FIRST ON THE JOBS REPORT, BUT THE GAINS EVAPORATED AS THE DAY WENT ON. IN THE END, THE DOW JONES INDUSTRIAL AVERAGE LOST JUST MORE THAN HALF A POINT TO CLOSE AT 12,019. THE NASDAQ ROSE LESS THAN A POINT TO CLOSE JUST UNDER 2,627. STILL, THE MARKET HAD ITS BEST WEEK IN NEARLY THREE YEARS. THE DOW, THE NASDAQ AND THE S&P 500 EACH GAINED MORE THAN 7%. GERMAN CHANCELLOR ANGELA MERKEL WARNED TODAY IT COULD TAKE YEARS TO FIX EUROPE'S STAGGERING DEBT PROBLEMS. SHE SPOKE AMID GROWING SIGNS EUROPEAN LEADERS MAY FASHION A MORE POWERFUL POLITICAL UNION. WE HAVE A REPORT FROM FAISAL ISLAM OF INDEPENDENT TELEVISION NEWS.

>> Reporter: IT'S NO LONGER JUST A CURRENCY, A NOTE, OR A COIN.

>> Reporter: IT STARTS HERE AT THE BUNDESTAG, WHERE THE GERMAN LEADER ANGELA MERKEL VOWED THIS MORNING TO CREATE A FISCAL UNION, A SHARING OF SOVEREIGNTY ACROSS EUROPE OVER TAXATIONS, SPENDING, AND GOVERNMENT BARGAINING.

>> ( translated ): WE HAVE TO OVERCOME MISTAKES THAT WERE MADE WHEN WE FIRST CREATED THE UNION AND MAKE IT A REAL UNION. TO ACHIEVE THIS, THERE IS NO OTHER WAY BUT TO ALTER EUROPEAN TREATIES OR POSSIBLY TO WRITE NEW TREATIES.

>> Reporter: THIS ANNOUNCEMENT CAME JUST HOURS AFTER A SIMILAR SPEECH FROM FRENCH PRESIDENT SARKOZY. SO HERE IS THE GRAND BARGAIN THAT'S BEING NEGOTIATED ACROSS EUROPE. ALREADY, EURO FRIENDLY FACES ARE NOW RUNNING ALL FIVE PROBLEM NATIONS-- PORTUGAL, IRELAND, SPAIN, ITALY, AND GREECE. ALL HAVE CHANGED GOVERNMENTS THIS YEAR, TWO WITH UNELECTED TECHNOCRATIC PRIME MINISTERS. IN THE FUTURE, THE GERMAN CHANCELLOR SEES THE EUROPEAN COURT OF JUSTICE IN LUXEMBOURG AS JUDGE AND JURY, ABLE TO LEGALLY ENFORCE REQUIREMENTS FOR E.U. NATIONS TO BALANCE THEIR BUDGETS, ESSENTIALLY AN END TO THEIR FINANCIAL INDEPENDENCE. BUT THAT MIGHT REQUIRE A CHANGE IN THE E.U. TREATY TO BE RATIFIED BY ALL MEMBER STATES, POSSIBLY THOSE OUTSIDE THE EURO, SUCH AS BRITAIN, TOO. THE PRIME MINISTER MET PRESIDENT SARKOZY IN PARIS FOR LUNCH. BUT THERE WAS APPARENTLY LITTLE TALK OF USING THIS MOMENT TO WIN BACK EXTRA POWERS FROM BRUSSELS FOR BRITAIN. IN THE NEXT SEVEN DAYS, WE'RE GOING TO SEE EPIC AND HISTORIC CHANGES TO THE WAY THAT EUROPE RELATES TO EUROPEAN COUNTRIES, AND SO FAR, DAVID CAMERON'S PLAYING ALONG BECAUSE OF THE ECONOMIC CRISIS. THAT'S PLEASED PARIS AND BERLIN, BUT IT MAY GO DOWN LESS WELL IN HIS OWN PARTY.

>> IN THE SHORT TERM THE BANNING COULD STEP IN AND BUY HUGE QUANTITIES OF DEBT. THEY WILL ONLY DO THIS IF AND ONLY IF THIS NEW FISCAL UNION CAN GUARANTEE DISCIPLINE AND ECONOMIC STABILITY.

>> Holman: MERKEL IS SET TO MEET WITH FRENCH PRESIDENT SARKOZY ON MONDAY TO OUTLINE POSSIBLE CHANGES TO THE EUROPEAN UNION TREATY. THOSE PROPOSALS WILL BE DEBATED AT A SUMMIT OF E.U. LEADERS NEXT FRIDAY. REPUBLICAN PRESIDENTIAL CANDIDATE HERMAN CAIN WILL ANNOUNCE THE FUTURE OF HIS CAMPAIGN TOMORROW. CAIN HAS BEEN ROCKED BY ALLEGATIONS OF A LONG-TIME AFFAIR AND CHARGES OF SEXUAL HARASSMENT. HE SPOKE AT A RALLY THIS AFTERNOON IN SOUTH CAROLINA.

>> I AM REASSESSING BECAUSE OF ALL OF THIS MEDIA FIRESTORM STUFF. WHY? BECAUSE MY WIFE AND FAMILY COMES FIRST. I GOTTA TAKE THAT INTO CONSIDERATION. TOMORROW IN ATLANTA, I WILL BE MAKING AN ANNOUNCEMENT BUT NOBODY'S GOING TO GET ME TO MAKE THAT PREMATURELY. THAT'S ALL THERE IS TO THAT.

>> Holman: CAIN HAS DENIED ALL THE ALLEGATIONS. HE'S SAID HE WILL MEET WITH HIS WIFE GLORIA THIS EVENING. IN EGYPT, RESULTS TRICKLED IN TODAY FROM THIS WEEK'S PARLIAMENTARY ELECTIONS, THE FIRST SINCE PRESIDENT MUBARAK WAS OUSTED IN FEBRUARY. OFFICIALS SAID TURNOUT WAS MORE THAN 60%, BUT MANY OF THE RACES WERE HEADED TO RUNOFFS. FROM ALL INDICATIONS, THE LONG- BANNED MUSLIM BROTHERHOOD PLACED FIRST, FOLLOWED BY AN ULTRA-CONSERVATIVE ISLAMIST PARTY. FRESH VIOLENCE RAGED ACROSS SYRIA TODAY. ACTIVISTS SAID AT LEAST NINE PEOPLE DIED AND DOZENS WERE WOUNDED. THE WORST OF IT WAS AROUND A TOWN NEAR THE BORDER WITH LEBANON. EXPLOSIONS AND HEAVY GUNFIRE THERE LASTED FOR MORE THAN SIX HOURS. AT THE SAME TIME, MEMBERS OF THE SYRIAN UPRISING REPORTED THAT, IN NOVEMBER ALONE, AT LEAST 950 PEOPLE WERE KILLED, THE DEADLIEST MONTH YET. LARGE SECTIONS OF THE AMERICAN WEST WERE PICKING UP TODAY FROM A VIOLENT WIND STORM ON THURSDAY. HUNDREDS OF BUILDINGS WERE DAMAGED, AND SEVERAL CITIES DECLARED EMERGENCIES. ON UTAH HIGHWAYS, 18-WHEELER TRUCKS WERE TOSSED LIKE TOYS. DEBRIS FLEW AT UPWARD OF 100 MILES AN HOUR IN SOME PLACES ACROSS SOUTHWEST. SURFERS TOOK ADVANTAGE TO RIDE VIRTUALLY-UNHEARD-OF WINDBLOWN WAVES ON NORTHERN CALIFORNIA'S LAKE TAHOE. AND EVERYWHERE, LARGE TREES SNAPPED AND SPLINTERED...

>> WE COULDN'T EVEN GET OUT. WE HAD TO CRAWL THROUGH TREES. WE THOUGHT IT WAS GOING TO COME THROUGH THE HOUSE.

>> Holman: HIGH WINDS ARE A LATE FALL FIXTURE FOR PARTS OF CALIFORNIA AND THE BAJA PENINSULA, BUT THURSDAY'S BIG BLOW WAS ONCE-IN-A-DECADE. A STRONG HIGH PRESSURE SYSTEM COLLIDED WITH COLD, LOW PRESSURE, FUNNELING WINDS DOWN MOUNTAIN CANYONS AND SLOPES TO THE STATE'S COASTAL PLAIN. THE RESULT-- HURRICANE-FORCE GUSTS THAT SPREAD DESTRUCTION ACROSS UTAH, WYOMING, ARIZONA, NEW MEXICO AND COLORADO. OVERALL, MORE THAN 300,000 HOMES AND BUSINESSES LOST POWER, INCLUDING LOS ANGELES INTERNATIONAL AIRPORT, WHERE ALL THE LIGHTS WENT OUT BRIEFLY. SCORES OF TREES WERE DOWNED ALL OVER THE WEST ONTO POWER LINES, CARS AND HOMES.

>> WE HEARD A CRASHING SOUND LIKE AN AIRPLANE HITTING TH HOUSE, AND YOU CAN SEE THE HOLE THAT THE TREE BROUGHT IN. IT SHOOK THE HOUSE LIKE AN EARTHQUAKE. I ACTUALLY WOKE UP THINKING IT WAS AN EARTHQUAKE.

>> Holman: THE DAMAGE HAD UTILITY CREWS OUT IN FORCE TODAY ACROSS THE REGION. AND FIRE CREWS STILL WERE BUSY, ESPECIALLY IN CALIFORNIA, BATTLING AT LEAST A DOZEN WIND- BLOWN FIRES. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO JIM.

>> Lehrer: TODAY'S JOBS REPORT UNDERSCORED AGAIN THAT HIRING REMAINS FAR SHORT OF WHAT'S NEEDED. THE NEWSHOUR'S ECONOMICS CORRESPONDENT, PAUL SOLMAN, HAS BEEN ASKING EMPLOYERS WHY THEY ARE RELUCTANT TO BRING ON MORE EMPLOYEES. HERE IS HIS REPORT FROM TENNESSEE, PART OF HIS REPORTING ON "MAKING SENSE OF FINANCIAL NEWS."

>> Reporter: NASHVILLE, TENNESSEE-- A RED STATE'S BLUE CITY WITH A BETTER-THAN-AVERAGE ECONOMY. A GOOD SPOT, WE THOUGHT, TO ASK EMPLOYERS, HOW COME YOU'RE NOT HIRING MORE PEOPLE?

>> WE'RE AT THE END OF THE ROPE WHEN IT COMES TO WANTING TO HIRE PEOPLE BECAUSE WE CAN'T AFFORD TO HIRE ANYBODY. IT'S COSTING US A FORTUNE TO STAY... TO TRY TO STAY IN BUSINESS.

>> Reporter: FOR 34 YEARS, BOBBY JOSLIN'S BEEN MAKING SIGNS, FROM PAPER TO NEON. HE'S BECOME A NASHVILLE FIXTURE. ♪ ♪

>> Reporter: BUT JOSLIN SIGN IS STRUGGLING, BECAUSE, SAYS THE FERVENT REPUBLICAN, OF UNCERTAINTY ABOUT FEDERAL POLICY-- REGULATIONS, FOR INSTANCE.

>> WE'RE FIGHTING MANDATES THAT JUST KEEP COMING AT US OUT OF NOWHERE.

>> Reporter: MANDATES? YOU'RE A SIGN COMPANY! WHAT KIND OF MANDATES ARE YOU FACING?

>> WELL, TWO YEARS AGO, THREE YEARS AGO, WE HAD TO HAVE ALL OUR TOW MOTOR PEOPLE CERTIFIED TO OPERATE A TOW MOTOR.

>> Reporter: A WHAT?

>> A FORKLIFT. AND THAT COST THE COMPANY $3,600. NOW, WERE HAVING TO DISPOSE OF ALL OUR LIGHT BULBS. WE'RE IN THE SIGN BUSINESS, WE CREATE A LOT OF VOLUME OF FLUORESCENT TUBES. SO WE JUST GOT THROUGH SPENDING $8,500 ON A LIGHT BULB CRUSHER.

>> Reporter: WHAT NEW REGS MIGHT THE GOVERNMENT IMPOSE, HE WONDERS?

>> FOR INSTANCE, THE "OBAMA- CARE," WHEN WE BRING ON A NEW EMPLOYEE, WE DON'T KNOW WHAT THAT EMPLOYEE TRULY IS GOING TO COST US IN 2014. AND WE'RE NOT IN THE PRACTICE OF HIRING PEOPLE AND THEN LAYING THEM OFF.

>> Reporter: "UNCERTAINTY OF TAXES AND REGULATION CRIPPLING JOB CREATION." ITS BECOME A REPUBLICAN TALKING POINT.

>> UNCERTAINTY IS THE NUMBER ONE OBSTACLE TO JOB CREATION IN THIS COUNTRY. UNCERTAINTY.

>> THIS UNCERTAINTY HAS PREVENTS ENTREPRENEURS FROM TAKING RISK, FROM STARTING A BUSINESS, AND FROM CREATING JOBS.

>> ONEROUS REGULATIONS AND REGULATORY UNCERTAINTY ARE ACTING TO CAST A WET BLANKET ON JOB CREATION IN AMERICA.

>> Reporter: SO IS IT TOO MUCH TO SUGGEST THAT IF YOU KNEW THAT THE REPUBLICANS WERE GOING TO TAKE OVER THE WHITE HOUSE AND THE SENATE, YOU WOULD BE MORE REASSURED AND THEREFORE MORE LIKELY TO HIRE?

>> ABSOLUTELY. BECAUSE THE POLICY OF THE REPUBLICAN PARTY IS LESS GOVERNMENT IN OUR LIVES. WE CAN CREATE JOBS WHEN THE GOVERNMENT STAYS OFF OF OUR BACK. IT'S THAT SIMPLE.

>> Reporter: OR IS IT THAT SIMPLE? JOSLIN TOLD US BUSINESS IS DOWN 35% OVER THE PAST THREE YEARS, SO THEN... LACK OF DEMAND IS THE OTHER REASON YOU'RE NOT HIRING, RIGHT?

>> WELL, ABSOLUTELY. SALES DRIVE EVERYTHING. THEY DRIVE A COMPANY UP OR LACK OF IT DRIVES A COMPANY DOWN.

>> Reporter: BUT IF "SALES DRIVE EVERYTHING," HOW IMPORTANT CAN "POLICY UNCERTAINTY" BE? AT NEARBY VANDERBILT UNIVERSITY, ECONOMIST PETER ROUSSEAU.

>> I DON'T THINK THAT UNCERTAINTY IN THE GOVERNMENT POLICY ENVIRONMENT SHOULD BE READILY DISMISSED, BUT I THINK THAT WE REALLY NEED TO THINK OF THESE FACTORS AS MORE SECOND ORDER, COMPARED TO THE DEEPER FUNDAMENTAL WHICH IS GOING ON, WHICH IS JUST BASIC DEMAND. WHAT'S HAPPENED TO THE CONSUMER? THEIR HOUSE VALUE HAS FALLEN BY 35% OR MORE SINCE THE... SINCE THE RECESSION. THEY ARE FACED WITH A MOUNTAIN OF CONSUMER DEBT WHICH THEY'RE TRYING TO PAY DOWN AT THIS POINT. AND SO, OF COURSE, THIS IS ALL GOING TO TRANSLATE INTO A RELUCTANCE TO ENGAGE IN NON- ESSENTIAL PURCHASES.

>> Reporter: AND EVERYWHERE ELSE WE WENT IN NASHVILLE, BUSINESSES PRETTY MUCH AGREED-- THE OVERRIDING UNCERTAINTY IS ABOUT DEMAND. WHY, FOR EXAMPLE, IS DAVID STANSELL NOT HIRING?

>> WE'RE NOT CERTAIN ABOUT THE AVAILABILITY OF WORK, THAT'S WHY.

>> Reporter: STANSELL RUNS AN ELECTRICAL CONTRACTING COMPANY TIED TO THE CONSTRUCTION INDUSTRY. HIS THIRD-GENERATION FAMILY FIRM SUPPORTED 200 EMPLOYEES; IT IS NOW DOWN TO 133.

>> THE WORK IS NOT AVAILABLE, OR NOT AS MUCH WORK AVAILABLE AS WE COULD DO.

>> Reporter: GIVEN THAT NASHVILLE UNEMPLOYMENT IS BELOW THE NATIONAL AVERAGE, SOME FIRMS ARE THRIVING, AND ACTUALLY HIRING. LINUS HALL STARTED YAZOO BREWING EIGHT YEARS AGO, AND BUSINESS HAS BEEN HOPPING, RIGHT THROUGH THE RECESSION.

>> IT SEEMS LIKE, IN GOOD TIMES OR BAD, PEOPLE LIKE TO DRINK BEER, AND IT HASN'T SEEMED TO HAVE AFFECTED US MUCH AT ALL.

>> Reporter: AS FOR PREMIUM YAZOO...

>> I THINK GOOD BEER IS LIKE AN AFFORDABLE LUXURY.

>> Reporter: HALL HAS 12 EMPLOYEES, UP FROM TEN LAST YEAR.

>> WE THINK OUR BUSINESS WILL CONTINUE TO GROW NEXT YEAR, SO PROBABLY AROUND THE MIDDLE OF THE YEAR, WE ANTICIPATE HAVING TO HIRE A COUPLE OF EXTRA PEOPLE.

>> Reporter: BUT DOESN'T POLICY UNCERTAINTY MAKE HIM AT LEAST A LITTLE RELUCTANT?

>> NO, IF WE HAD TO SCALE BACK, WE COULD, BUT RIGHT NOW, WE'RE SEEING A LOT OF DEMAND AND WE'RE JUST TRYING TO KEEP UP WITH THAT.

>> Reporter: OLD HICKORY BAT COMPANY IS ANOTHER SMALL NASHVILLE FIRM. HOW'S BUSINESS?

>> BUSINESS IS GREAT.

>> Reporter: V.P. TRAVIS COPLEY PLAYED BASEBALL IN THE MINORS. SO YOU WILL BE HIRING?

>> THAT IS THE PLAN RIGHT NOW, YES, SIR.

>> Reporter: AND YOU DON'T WORRY ABOUT WHO THE NEXT PRESIDENT IS GOING TO BE, WHETHER THE REPUBLICANS TAKE OVER THE SENATE-- THAT'S NOT GOING TO AFFECT YOUR PLANS?

>> WE'RE NOT GOING TO SHUT DOWN BUSINESS FOR THE NEXT TWO YEARS TO SEE WHO GETS ELECTED AND SEE WHAT CHANGES THEY MAKE. AND I WOULD VENTURE A GUESS THAT MOST PEOPLE ARE GOING TO TAKE THAT APPROACH. YOU'RE NOT GOING TO STALL YOUR BUSINESS OUT WAITING TO SEE WHAT THE POLITICIANS IN WASHINGTON DO. YOU'RE GOING TO ADJUST, YOU HAVE TO ADJUST EVERY DAY IN BUSINESS. YOU KNOW, WITH US, SOMEONE MAY YOU DO EVERYTHING WITHIN YOUR POWER TO KEEP THE DEMAND HIGH TO GENERATE BUSINESS.

>> Reporter: SO THE BREWER AND THE BAT MAKER BOTH SAY ITS DEMAND THAT DRIVES THEIR HIRING DECISIONS, NOT UNCERTAINTY ABOUT WHICH WAY THE WINDS FROM WASHINGTON BLOW. BUT JIM GARDNER, BANKER TO, AMONG OTHERS, ELECTRICAL CONTRACTOR DAVE STANSELL, HAS HEARD FROM OTHER CLIENTS THAT POLICY UNCERTAINTY IS A FACTOR.

>> MY EXPERIENCE IN BANKING IS THAT CLIENTS TYPICALLY DO NOT LIKE ELECTION YEARS BECAUSE CONVERSATIONS ABOUT TAXES, INCREASED REGULATION, ALL THAT'S RATCHETED UP, AND THAT CREATES THE PERCEPTION OF MORE UNCERTAINTY.

>> Reporter: AND THAT'S WHERE THE MONEY THEN STAYS ON THE SIDELINES?

>> AND IT STAYS ON THE SIDELINE. OUR BANK, FOR INSTANCE, IS SEEING A LOT OF BUSINESSES WITH VERY GOOD BALANCES IN NON- INTEREST BEARING ACCOUNTS OR LOW-INTEREST BEARING INSTRUMENTS WHERE, IN YEARS PAST, THAT MONEY WOULD HAVE BEEN DEPLOYED ELSEWHERE.

>> Reporter: SO WHICH IS THE KEY FACTOR, UNCERTAINTY OVER POLICY OR OVER FUTURE DEMAND?

>> I'M GOING TO DISAPPOINT YOU WITH AN ANSWER AND SAY THAT I'M SEEING THAT IT'S A LITTLE BIT OF BOTH.

>> Reporter: ONE MORE NASHVILLE VENUE-- THE CONSULTING OFFICES OF THE TAX AVERSE ARTHUR LAFFER, RONALD REAGAN'S PROPHET OF SUPPLY-SIDE ECONOMICS. SURELY, HE WOULD SUPPORT THE UNCERTAINTY THEME.

>> UNCERTAINTY IS NOT THE PROBLEM. THE PROBLEM IS THE PROSPECTS FOR LOWER RETURNS IN THE FUTURE, THAT'S THE PROBLEM. AND WHEN YOU LOOK AT THIS ECONOMY, YOU KNOW THAT'S A REASONABLE PROBLEM, IT REALLY IS.

>> Reporter: OF COURSE, IF LAFFER WERE CERTAIN POLICY WOULD CHANGE IN HIS DIRECTION OF LOWER TAXES ON THE WEALTHY, SAY...

>> I WOULD BE WILLING TO BET YOU A NICKEL THAT IF YOU LOWER THE TAX RATES, YOU'LL CREATE AN INVESTMENT ENVIRONMENT THAT THEY WILL INVEST MORE THAN THEY OTHERWISE WOULD HAVE INVESTED.

>> Reporter: BUT THAT'S NOT WHY COMPANIES AREN'T INVESTING NOW.

>> THE REASON THEY'RE NOT USING THEIR CASH BALANCES IS THEY DON'T SEE A GOOD AFTER-TAX RATE OF RETURN ON USING AND INVESTING THAT CAPITAL.

>> Reporter: PULITZER PRIZE WINNER DAVID CAY JOHNSTON IS ONE THE COUNTRY'S FOREMOST ECONOMICS REPORTERS, WITH A SPECIALTY IN TAXES. A BUSINESSMAN HIMSELF-- HE OWNS A SMALL FAMILY FIRM MANAGING A HOTEL-- HE AGREES WITH LAFFER ON THE PRIMACY OF DEMAND.

>> I NEED MORE CUSTOMERS, ESPECIALLY ONES WHO CAN PAY HIGHER PRICES, AND THEN I'LL HIRE MORE WORKERS. AND EVERY BUSINESSMAN I KNOW SAYS EXACTLY THAT. NON-FINANCIAL COMPANIES ARE SITTING ON OVER $3 TRILLION OF CASH, THE LATEST I.R.S. DATA SHOWS. COMPANIES ARE NOT INVESTING THAT MONEY BECAUSE THERE'S NO DEMAND. IT'S NOT BECAUSE THEY'RE CONCERNED THAT TAX RATES MAY GO UP OR REGULATIONS MAY CHANGE. THEY NEED TO HAVE PEOPLE AND BUSINESSES WITH MONEY TO SPEND IN ORDER TO INVEST.

>> Reporter: IN NASHVILLE, THOUGH, BOBBY JOSLIN INSISTS POLICY UNCERTAINTY IS HOLDING BACK INVESTMENT.

>> WE NEED TO REPLACE A COUPLE OF EXPENSIVE CRANES. WE'RE NOT GOING TO DO IT BECAUSE WE DON'T KNOW WHAT THE TAX STRUCTURE IS GOING TO BE THIS TIME NEXT YEAR ON CAPITAL EXPENDITURE. WE'RE HOLDING OFF ON THAT.

>> Reporter: AND IF YOU KNEW THAT TAXES WERE GOING TO BE LOWER ON CAPITAL EXPENDITURES NEXT YEAR, YOU'D BUY THE CRANES NOW?

>> IN A NEW YORK MINUTE. WE WOULD ORDER THE CRANES. WE WOULD ORDER THE CRANES RIGHT NOW!

>> Reporter: TO WHICH OLD HICKORY BATS TRAVIS COPLEY COUNTERS...

>> IF IT MAKES SENSE, YOU DO IT, REGARDLESS OF WHAT'S GOING ON IN WASHINGTON AT THE TIME.

>> Reporter: AND GOING ON, IT WILL BE, FOR ANOTHER YEAR AT THE VERY LEAST.

>> Brown: NOW, TO OUR INTERVIEW WITH FORMER PRESIDENT BILL CLINTON. JUDY WOODRUFF SAT DOWN WITH HIM IN WASHINGTON EARLIER THIS AFTERNOON TO DISCUSS HIS NEW BOOK, "BACK TO WORK: WHY WE NEED SMART GOVERNMENT FOR A STRONG ECONOMY."

>> Woodruff: PRESIDENT BILL CLINTON, THANK YOU VERY MUCH FOR TALKING WITH US.

>> THANK YOU, JUDY.

>> Woodruff: SO YOUR BOOK "BACK TO WORK" IS ABOUT JOBS, ABOUT HOW TO GET THE ECONOMY GOING. LET ME ASK YOU ABOUT TODAY'S NUMBERS FOR THE MONTH OF NOVEMBER, UNEMPLOYMENT NUMBERS. THE PICTURE IS IMPROVING A LITTLE BIT. WHAT DOES THE JOBS SCENE LOOK LIKE TO YOU?

>> WELL, I THINK WHAT YOU'RE SEEING IS THE ECONOMY GOT WAY DOWN WITH THE DOUBLE WHAMMY OF THE FINANCIAL COLLAPSE AND THE MORTGAGE CRISIS AND THE NATURAL RHYTHMS OF THE AMERICAN ECONOMY, PLUS THE BENEFIT OF THE PAYROLL TAX CUTS-- WHICH I DO THINK HELPED A LOT TO MAINTAIN A CERTAIN LEVEL OF CONSUMER SPENDING, A CERTAIN LEVEL OF CONFIDENCE-- AND SMALL BUSINESSES HAVE BEEN SAYING FOR MONTHS, ABOUT 40% OF THEM, THEY WOULD HIRE MORE PEOPLE IF THEY COULD GET CREDIT AND YOU JUST FELT THIS BUILDING UP. SO I FEEL GOOD ABOUT IT. NOW, ALSO WHAT'S HAPPENING IS MORE JOBS ARE CREATED IN THE PRIVATE SECTOR AND THE GOVERNMENT SECTOR HAS BEEN SHRINKING STEADILY AS THE STIMULUS PLAYS OUT AND ALL THE BANKS ARE IN TROUBLE BECAUSE THE ECONOMY IS DOWN. WE HAD 140,000 NEW PRIVATE SECTOR JOBS AND LOST 20,000 GOVERNMENT SECTOR JOBS.

>> Woodruff: ONE OF THE THINGS YOU TALKED ABOUT IN THE BOOK IS SOMETHING YOU HIGHLIGHTED TODAY WITH PRESIDENT OBAMA AND THAT IS RETROFITTING, OR MAKING BUILDINGS MORE ENERGY EFFICIENT, AND IN THE PROCESS CREATING I GUESS TENS OF THOUSANDS OF CONSTRUCTION JOBSS. PRESIDENT CLINTON, THAT'S AN AREA THAT CLEARLY WAS HARD HIT, BUT THIS KIND OF PROJECT IS SHORT TERM, ISN'T IT?

>> NOT IF WE DO AS MUCH AS WE SHOULD. THAT IS, THIS IS THE NEAREST THING AMERICA'S GOT TO A FREE LUNCH. THAT IS, YOU CAN-- IF YOU CAN SET UP A FINANCING MECHANISM WHERE YOU LET THE PEOPLE WHO OWN THE BUILDINGS-- WHETHER THEY'RE SCHOOLS, STATE, COUNTY, AND LOCAL BUILDINGS, FEDERAL BUILDINGS, HOSPITALS, OR BIG COMMERCIAL BUILDINGS LIKE THE ONE THE PRESIDENT AND I VISITED TODAY-- WITH NO DEBT, IF YOU CAN SET IT UP SO THEY CAN PAY THAT MONEY BACK ONLY FROM THEIR UTILITY SAVINGS, THEN YOU CAN CREATE JOBS, AND THERE'S NO NET OUT-OF-POCKET COST TO THE PEOPLE WHO OWN THE BUILDINGS. AND WHEN THE DEBT'S PAID OFF, THEY HAVE A HUGE DROP IN THEIR UTILITY BILLS. IT'S THE NEAREST THING WE'VE GOT TO A FREE LUNCH AND THE RETURN IS VERY HIGH. FOR EVERY $1 BILLION YOU SPEND ON BUILDING RETROFITS, YOU GET BETWEEN 7,000 AND 8,000 JOBS.

>> Woodruff: THE CENTRAL THESIS OF THE BOOK SUCAN'T REALLY GROW THE ECONOMY UNLESS THE GOVERNMENT IS INVOLVED. THIS PROJECT TODAY, PRIVATE-PUBLIC PARTNERSHIP, WAS IT YOUR SENSE THAT THIS MESSAGE WAS JUST NOT GETTING ACROSS FROM PRESIDENT OBAMA AND HIS ADMINISTRATION?

>> NO, MY SENSE WAS-- AS YOU SEE FROM THE BOOK, I AGREE WITH THE GENERAL THRUST OF HIS POLICIES, AND I THINK PARTICULARLY IN THE ENERGY AREA HE'S DONE A VERY GOOD JOB. MY SENSE WAS THAT THE PARTISAN POLITICAL CRIME SUMMIT IN WASHINGTON WAS SUCH THAT THE ONLY PEOPLE LISTENING TO EITHER SIDE WERE PEOPLE THAT ALREADY AGREED WITH THEM. SO WHAT I WANTED TO DO WAS SAY LOOK AT THE LAST 30 YEARS. LOOK WHAT OUR COMPETITORS ARE DOING. THERE IS NO EXAMPLE ON THE PLANET OF A SUCCESSFUL ECONOMY WITH BROADLY SHARED PROSPERITY AND A SHRINKING, WEAK GOVERNMENT. YOU CAN HAVE A SMALL, LEAN GOVERNMENT, BUT THEY'RE ALL STRONGER, ALL WORKING IN PARTNERSHIP. WHAT WORKS ARE THESE PARTNERSHIPS, THESE NETWORKS. FOR EXAMPLE, DELAWARE IS DOING A LOT OF BUILDING RETROFITS NOW BECAUSE THE GOVERNMENT OF DELAWARE ISSUED A BOND AND SOLD IT WHICH WILL PAY THE CONTRACTORS A GUARANTEED RETURN, AND THEN THE GOVERNMENT WILL RECEIVE REPAYMENTS FROM THE PEOPLE WHO OWN THE BUILDINGS FROM THEIR SAVINGS AND PAY THE BONDHOLDERBOND HOLD BOND HOLDER. THAT'S NOT BIG GOVERNMENT, SMALL GOVERNMENT, LIBERAL, CONSERVATIVE. IT'S THE KIND OF THING WE OUGHT TO BE DOING, AND WE CAN CREATE-- I THINK FOR THREE YEARS YOU COULD HAVE A MILLION OR MORE PEOPLE IN THE CONSTRUCTION INDUSTRY EMPLOYED JUST DOING THIS IF WE CAN WORK THE FINANCING OUT EVERYWHERE. THAT'S WHY THE AFL-CIO ALREADY RAISED MORE THAN $1 BILLION FROM PENSION FUNDS TO PUT IN THIS. THEY CAN GET A MORE RELIABLE TURN RUN-IN THIS THAN THEY CAN INVESTING THE FUNDS IN THE MARKET.

>> Woodruff: IS THAT A MESSAGE RECEIVED WELL ON BOTH SIDES OF THE POLITICALILE?

>> I DON'T KNOW. I HOPE SO BECAUSE THERE ARE NO TAX DOLLARS INVOLVED-- THAT IS, YOU DON'T HAVE TO APPROPRIATE OR RAISE TAXES. AS I SAID, IT'S PRETTY CLOSE TO A FREE LUNCH BECAUSE THE UTILITY BENEFIT, TOO-- THAT IS, THIS BUILDING, THIS BIG, 1964 OFFICE BUILDING IS BEING RETROFITTED. THEY'RE GOING TO CUT THEIR ENERGY USE BETWEEN 40% AND 50%. THAT'S LIKE GIVING A TINY POWER PLANT BACK TO THE LOCAL UTILITY. AND FOR THAT AMOUNT OF ENERGY, IT'S A LOT CHEAPER TO GET IT THAT WAY THAN TO BUILD A NEW POWER PLANT. YOU JUST GIVE IT BACK TO THEM AND THEY ACCOMMORE GROWTH IN THE AREA.

>> Woodruff: SO THIS-- AGAIN, THIS CENTRAL MESSAGE HERE THAT GOVERNMENT NEEDS TO BE INVOLVED TO GET THE ECONOMY GROWING.

>> YES.

>> Woodruff: IS THAT A MESSAGE THAT PEOPLE ARE HEARING AND ACCEPTING DO YOU THINK?

>> I HAVE NO IDEA. I JUST THOUGHT THAT-- IN THE 2010 ELECTIONS, I THOUGHT IT WAS PEOPLE-- PEOPLE WERE ANGRY AND FRUSTRATED AND SCARED, AND I THINK THE REPUBLICANS WON BECAUSE THEY THOUGHT THE DEMOCRATS HAD GIVEN THEM A LOT OF GOVERNMENT AND MAYBE A LITTLE TOO MUCH, AND PEOPLE DIDN'T FEEL BETTER. BUT THESE THINGS HISTORICALLY, THESE FINANCIAL MELTDOWNS TAKE FIVE TO 10 YEARS TO GET OVER. WHEN REAL ESTATE IS INVOLVED, IT'S CLOSER TO 10. WHAT THE PRESIDENT IS TRYING TO DO IS BEAT THE FIVE-YEAR LIMIT. HE'S TRYING-- BUT NOBODY CAN GET IT DONE BY 2010, SO I THOUGHT WELL, I'M NOT RUNNING FOR ANYTHING ANYMORE. I WORK WITH REPUBLICANS. I GET A LOT OF SUPPORT FROM REPUBLICANS FROM MY FOUNDATION WORK AND PEOPLE AROUND THE WORLD. SO I JUST TRIED TO LAY OUT HERE'S WHAT'S HAPPENING IN THE REST WORLD. HERE ARE THE PEOPLE DOING BETTER THAN US. EVERY ONE OF THEM HAS A GOVERNMENT THAT IS NOT UNDER ASSAULT BUT IS IN PARTNERSHIP WITH THE PRIVATE SECTOR.

>> Woodruff: HOW MUCH OF A DRAG IS UNEMPLOYMENT AND THE ECONOMY BROADLY GOING TO BE ON PRESIDENT OBAMA IF HE RUNS FOR REELECTION, DO YOU?

>> WELL, I THINK HE'LL BE RE-ELECTED, BECAUSE I THINK THE UNEMPLOYMENT RATE WILL CONTINUE TO DROP SOME. I THINK, AS WE ALL KNOW, IT'S A LITTLE UNDERSTATED BECAUSE ABOUT 6% OF THE PEOPLE WHO WERE IN THE WORKFORCE IN 2000 HAVE DROPPED OUT. THEY QUIT LOOKING FOR JOBS. AND WE KNOW THERE'S A HUGE NUMBER OF AMERICANS WITH PART-TIME JOBS WHO REALLY WANT FULL-TIME JOBS. BUT IT DOES SHOW PROGRESS, AND IT SHOWS PROGRESS IN THE PRIVATE SECTOR. SO IF WE CAN CONTINUE THIS, I DON'T THINK IT WILL BE A BIG DRAG BECAUSE THE AMERICAN PEOPLE ARE KIND OF RECALBRAIDING AND WHEN-- RIGHT NOW, PRESIDENT OBAMA HAS BEEN OUT THERE RUNNING AGAINST HIMSELF. IN TOUGH TIMES, NOBODY CAN DEFEAT HIMSELF. THAT IS, HE'S RUNNING AGAINST EVERYTHING EVERYBODY FELT WHEN-- BEFORE THE FINANCIAL CRASH. WHEN WE GET A CHOICE, I THINK HE'LL DO FINE.

>> Woodruff: I ASK BECAUSE PEOPLE SAY, YES, HE'S BEEN OUT THERE TALKING ABOUT THE ECONOMY, BUT THE MESSAGE ISN'T BEING HEARD, THAT PEOPLE ARE SO CONCERNED AND FOCUSED ON THE--"

>> A LOT OF PEOPLE THEY CAN'T HEAR THINGS BECAUSE THEY'RE SCARED. THEY'RE WORRIED. I HAD TWO WOMEN COME TO A-- I TALK ABOUT ALL THE GOVERNMENT-PRIVATE COOPERATION IN FLORIDA, AND WHY THEY HAVE 100 COMPUTER SIMULATION COMPANIES IN ORLANDO ALONE. THESE TWO WOMEN, ONE SAID, "MY HUSBAND HAS BEEN OUT OF WORK SIX MONTHS. I HOPE THIS HAS SOME GOOD ADVICE." AND SHE WAS CLEARLY IN HER 50s SOMEWHERE. NEXT LADY COMES THROUGH, ABOUT TWO PEOPLE LATER, SAME AGE, SHE SAID,"I'M HERE BECAUSE OF MY HUSBAND. I SENT HIM HOME TO BED AND AFTER EIGHT MONTHS IT'S HIS FIRST DAY AT A NEW JOB TOMORROW." THAT'S WHAT'S GOING ON TOMORROW. I WANTED TO SAY HERE'S A SHORT BOOK THAT WILL TELL YOU ABOUT THE LAST 30 YEARS, WHERE WE ARE, AND HOW TO GET OUT OF THIS.

>> Woodruff: MORE ON POLITICES, HOW DO YOU SIZE UP THE REPUBLICAN RACE RIGHT NOW AND WHO IS THE TOUGHEST PERSON FOR PRESIDENT OBAMA TO FACE?

>> IT'S HARD TO SAY NOW. I'M NOT ALL THAT SURPRISED BY GINGRICH'S RESURGENCE. I PREDICTED IT AFTER HE CRASHED BECAUSE THE-- THE FAR RIGHT OF THE PARTY KEEPS WANTING AN ALTERNATIVE TO GOVERNOR ROMNEY. FOR ALL KINDS OF REASONS, AND HE KEEPS DOING WELL IN THE DEBATES, TRYING TO HOLD ON AND A PRIMARY WHERE THE PARTY MOVES SO FAR TO THE RIGHT, AS BILL KLEIN FAMOUSLY SAID THEY HAVE TO EMPRETZEL THEMSELVES TO TRY TO BE ACCEPTABLE. IT NOW LOOKS LIKE THE GINGRICH-ROMNEY RACE. I WOULDN'T BE SURPRISED IF IT DOESN'T LOOK LIKE THAT AT IOWA CAUCUS TIME. BUT HOW IT COMES OUT DEPENDS UPON NOW HOW MR. GINGRICH CONDUCTS HIMSELF FROM NOW UNTIL-- THROUGH THE PROCESS, AND HOW ROMNEY RESPONDS TO THE CHALLENGE. IT'S GOING TO BE INTERESTING TO WATCH. BUT I DON'T KNOW ENOUGH ABOUT THEIR CALENDAR OR HOW MUCH ELICATIBILITY IS GOING TO FIGURE IN BECAUSE THE REPUBLICAN CAUCUS AND PRIMARY VOTERS KNOW INTRUDE YOU WORKED WITH--

>> Woodruff: YOU WORKED WITH THE OPPOSITE SIDES OF THE POLITICAL AISLE BUT WORKED WITH NEWT GINGRICH. HE'S ACTUALLY BEEN SAYING NICE THINGS ABOUT HOW WILLING YOU WERE TO WORK WITH REPUBLICANS WHEN YOU WERE PRESIDENT. YOU SAID SOME NICE THINGS ABOUT HIM, A MAN OF IDEAS. WHAT SORT OF PRESIDENT DO YOU THINK HE WOULD BE?

>> IT DEPENDS UPON THE TURN HIS LIFE HAS TAKEN SINCE HE LEFT PUBLIC LIFE. THAT IS, I ALWAYS LIKED WORKING WITH HIM, AND HE HAD A REAL GOOD FEEL FOR FOREIGN POLICY WHEN I WAS PRESIDENT, AND HE GENERALLY WANTED TO DO WHAT WAS BEST FOR AMERICA AND WHAT WOULD ADVANCE THE CAUSE OF FREEDOM AND SHARED PROSPERITY IN THE WORLD, EVEN THOUGH I THOUGHT OF HIS LOT OF HIS DOMESTIC IDEAS WERE WRONG AND BAD FOR THE COUNTRY. THAT'S WHAT LED TO THE GOVERNMENT SHUTDOWN. BUT THE THING THAT-- I SAW WHERE MR. MOLINARY, THE FORMER CONGRESSMAN FROM STATEN ISLAND, JUMPED ON HIM TODAY. WHAT MADE PEOPLE NERVOUS THE FIRST TIME WAS THE SAME THING THAT MADE THEM NERVOUS ABOUT MR. DELAY. EY THOUGHT THEY WOULD GO OVERBOARD IN THE USE OF THEIR AUTHORITY. AND A BIG PART OF BEING A GOOD PRESIDENT IS NOT JUST WHAT YOU DO BUT WHAT YOU WON'T DO. SO, ON THE OTHER HAND, WHEN HILLARY WAS A SENATOR FROM NEW YORK ON THE ARMED SERVICES COMMITTEE, SHE AND NEWT WORKED TOGETHER ON A MILITARY MODERNIZATION COMMITTEE THE PENTAGON SET UP, AND THEY ENJOYED WORKING TOGETHER. SHE ENJOYED IT. SO WE-- HE-- THE PRESSURE OF THE CAMPAIGN HAS A WONDERFUL WAY OF REVEALING YOUR STRENGTHS AND WEAKNESSES. AND WE JUST NEED TO LET THE REPUBLICANS HAVE THEIR RACE AND SEE HOW IT ROLLS OUT. I HAVE NO IDEA WHAT'S GOING TO HAPPEN.

>> Woodruff: AND HIS STRENGTHS AND WEAKNESSES, YOU SAID GOOD ON FOREIGN POLICY?

>> HE'S GOOD ON FOREIGN POLICY. HE'S THINKING ALL THE TIME ON DOMESTIC POLICY. LIKE I THINK IF YOU'RE GOING TO BE A REPUBLICAN IN 2012, WHERE HE CAME DOWN ON IMMIGRATION IS ABOUT AS FAR AS YOU COULD GO, BUT HE'S GOT TO KNOW THAT ONE OF THE ADVANTAGES AMERICA HAS, EVEN WITH THE RETIREMENT OF THE BABY BOOMERS, IS THAT OUR AVERAGE WORKFORCE IS STILL YOUNGER THAN EUROPE OR JAPAN. AND WITHIN A COUPLE OF DECADES, BELIEVE IT OR NOT, BECAUSE OF THE ONE CHILD POLICY, IT WILL BE YOUNGER THAN CHINA AND THAT MEANS IMMIGRANTS FLOWING INTO THIS COUNTRY WHO CAN CONTRIBUTE TO THE ECONOMY. SO THAT'S THE KIND OF THING I WANTED TO SEE. LET'S JUST WATCH IT PLAY OUT AND SEE WHAT HAPPENS.

>> Woodruff: PRESIDENT CLINTON, WE'RE TALKING ABOUT POLITICS AND ABOUT YOUR NEW BOOK "BACK TO WORK" THANK YOU VERY MUCH.

>> THANK YOU, JUDY.

>> Lehrer: AND TO THE ANALYSIS OF SHIELDS AND BROOKS-- SYNDICATED COLUMNIST MARK SHIELDS, "NEW YORK TIMES" COLUMNIST DAVID BROOKS. IS BILL CLINTON STILL A MAN WHERE RATES LISTENING TO AND PAYING ATTENTION TO?

>> YOU KNOW, JIM, JOHN SEARS, WHO WAS A BRILLIANT REPUBLICAN STRATEGIST, WORKED FOR RICHARD NIXON AND RONALD REAGAN, ONCE PROPOSED IN LIEU OF CAMPAIGNING, THEY OUGHT TO GIVE EACH PRESIDENTIAL CANDIDATE SIX HALF HOURS, HE OR SHE GO ALONE WITH THE CRAM. IF AND IF THEY CAN'T BE INTERESTED FOR SIX HALF HOURS, THEY SHOULD NOT BE ELECTED PRESIDENT BECAUSE THEY'LL OBVIOUSLY LOSE THE COUNTRY'S INTEREST IN A SHORT TIME. BILL CLINTON IS ENDLESSLY INTERESTING. WHATEVER ELSE ANYONE THINKS OF HIM, AND IT'S A GREAT SECOND ACT. I MEAN, HE'S AT 67% APPROVAL TODAY IN AMERICA, 28%-- AT A TIME WHETHER THE PUBLIC IS SOUR ON POLITICIANS, THEY HAVE NO USE FOR THEM, BILL CLINTON HAS LIFTED TO A DIFFERENT LEVEL.

>> HE IS THE POWER OF CRYSTALLIZATION. HE TAKES A LOT OF COMPLEX EVENTS AND LAYS OUT HIS THINKING. OFTEN WHAT HE SAYS IS NOT BLINDINGLY NEW. BUT IT'S OBVIOUS ONCE HE SAID IT, BUT OBSERVER HE SAID IT, IT WASN'T OBVIOUS. THAT'S THE TREMENDOUS SKILL HE HAS. WHAT HE SAID ABOUT GINGRICH. I THINK THAT'S EXACTLY RIGHT. WE KNEW AS SPEAKER HE WAS A POOR MANAGER AND WHEN HE WAS COMPETING AND SOMETIMES COOPERATING WITH BILL LET HE WAS SOMETIMES CHAOTIC AND DISORGANIZED AND HE WOULD LET HIMSELF VENT ABOUT WHERE HE WAS SITTING ON THE AIRPLANE AND THINGS LIKE THAT. SO CLINTON PUTS HIS FINGER ON IT, WHICH IS HOW HE MANAGES THE CAMPAIGN WILL SHOW WHETHER HE'S GROWN FROM THOSE DAYS OR NOT SO WE'LL SEE OVER THE NEXT COUPLE OF MONTHS.

>> Lehrer: WHAT DID YOU THINK OF LET'S POINT, THAT THERE HAS NEVER BEEN A TIME THE ECONOMY REALLY DREW GREW WITH A WEAK GOVERNMENT. IT DOESN'T HAVE TO BE A BIG GOVERNMENT BUT IT HAS TO BE A STRONG GOVERNMENT.

>> I LIKED WHAT HE SAID WHEN YOU HAVE FINANCIAL CRISES WITH HOUSING DEBT IS USUALLY TAKES FIVE TO 10 YEARS OUT OF THAT. I AGREE WITH THAT. I LIKE THAT CANDOR. IT DEPENDS. I THINK WE NEED A STRONG GOVERNMENT. YOU NEED A STRONG GOVERNMENT TO DO THE RIGHT KIND OF REGULATION, DO THINGS LIKE THAT. THE PROBLEM IS A LOT OF GOVERNMENT PROGRAMS SEEM OBVIOUS BEFOREHAND BUT THEY DON'T WORK OUT AS WELL. ONE OF THE POLICIES HE TALKED ABOUT IN THE BEGINNING OF THE INTERVIEW WAS SOME OF THE ENERGY RETROFITTING, AND THAT DOES SEEM LIKE A THING THAT IS A NO-BRAINER. IT WAS TRIED AS PART OF THE STIMULUS ACT AND THERE HAVE BEEN NEWS STORIES, THE JOB PRODUCTIONS OUT OF IT HAVE BEEN DISAPPOINTED. FUNDS GO INTO DIFFERENT PROJECTS AND YOU GET VERY LITTLE JOB GROWTH. THE PRESIDENT WENT TO A TOWN IN INDIANA, PROMISED A BIG ENERGY JOB INITIATIVE THAT WOULD CREATE HUNDREDS OF THOUSANDS OF JOBS AND IT CREATED 75 JOBS. SOME OF THE THEM HAVE PRODUCED NEW FACILITIES BUT WE HAVEN'T SEEN THE JOB GROWTH WE WERE HOPING FOR.

>> Lehrer: YOU HEARD WHAT HE SAID ABOUT THE RACE FOR THE REPUBLICANS IN 2012. WHAT DO YOU HAVE TO SUBTRACT OR ADD TO WHAT HE HAD TO SAY?

>> HE SPOKE WELL ABOUT NEWT GINGRICH, POSITIVELY ABOUT HIM, BUT NEWT GINGRICH'S TWO GREATEST FAILURES IN HIS SPEAKERSHIP INVOLVED DIRECTLY BILL CLINTON. THE FIRST WAS HIS POUT, IF YOU'LL RECALL, COMING BACK FROM PRIME MINISTER RABIN'S FUNERAL, FOR NOT BEING ABLE TO GET OFF THE FRONT STAIRS OF AIR FORCE ONE AND NOT BEING TREATED AS RESPECTFULLY AS HE WANTED TO BE AND ALMOST PETULENT, AND THE FACT OF THE IMPEACHMENT OF BILL CLINTON IN WHICH NEWT GINGRICH PLAYED A MAJOR PART AND EXPOSED AS A TOTAL HYPOCRITE TO AT THE SAME TIME HAVE BEEN CARRYING ON AN ILLICIT AFFAIR, EXTRAMARITAL AFFAIR WITH HIS STAFFER. BUT I THINK THAT THERE'S NO QUESTION GINGRICH HAS EMERGED FROM THE DUST.

>> Jim:

>> Jim: WHY?

>> WHY HAS HE DONE IT. HE'S DONE IT FOR A COMMOF REASONS. FIRST OF ALL, HE USED THE VEHICLE AVAILABLE TO HIM, WHICH HAS BEEN A VEHICLE IN THIS CAMPAIGN ALMOST UNIQUE, AND THAT'S BEEN THE DEBATES. THE REPUBLICAN PARTY WANTS TO DEFEAT BARACK OBAMA. BUT THEY UNDERSTAND, REPUBLICAN VOTERS I HAVE TALKED TO AND LISTENED TO, THEY UNDERSTAND THEY NEED SOMEBODY WHO CAN GO TOE TO TOE WITH OBAMA, AND NEWT GINGRICH, WHETHER DESERVED OR UNDESERVED, HAS BECOME THE INTELLECTUAL HEFT OF THE REPUBLICAN PATRIOT. AND THEY SE-- THE REPUBLICAN PA. HE HAS ALSO PLAYED IT VERY WELL, RONALD REAGAN'S RULE-- YOU NEVER SAY ANYTHING NEGATIVE ABOUT OTHER REPUBLICANS. HE SMILED ALL THE WAY UP. HIS FOCUS HAS BEEN ON THE PRESS AND ON OBAMA. AND I JUST THINK IN THIS FIELD, HE'S LOOKED GOOD. HE'S NEVER BEEN SCRUTINIZED. HE'S NEVER BEEN ENGAGED. NOW, OF COURSE THAT HE'S THE FRONT-RUNNER, HE WILL BE.

>> Lehrer: WHAT'S YOUR EXPLANATION?

>> I TAKE THAT AND I WOULD ADD ONE OTHER THING, WHICH IS WHITE, HIGH SCHOOL-EDUCATED VOTERS. THAT'S WHO THE REPUBLICAN PARTY IS. THEY'RE A WHITE, WORKING CLASS ELECTORATE. WE HAVE TWO PROMINENT POLITICIANS IN THIS COUNTRY WITH VERY LITTLE PULL WITH THOSE VOTERES, BARACK OBAMA, AND MITT ROMNEY. SO IF YOU LOOK AT WHO WINS THE WHITE WORKING CLASS, DECADE AFTER DECADE, ELECTION AFTER ELECTION, IT'S THE REPUBLICANS BY 25 PERCENTAGE POINTS SO THAT'S THE CORE OF THE PARTY. THEY DON'T PARTICULARLY LIKE MITT ROMNEY. THEY DON'T RELATE TO HIM. AND NEWT GINGRICH COMES IN WIT WITH-- HE'S A COLLEGE PROFESSOR WHO DOESN'T LET YOU FORGET HOW MUCH HE KNOWS BUT HE HAPPENS TO BE DOING A LOT BETTER WITH THOSE PEOPLE. THEY'RE LOOKING FOR A HOME AND THEY'RE UNHAPPY WITH ROMNEY. I STILL THINK AT THE END OF THE DAY IT'S GOING TO BE ROMNEY. I STILL THINK THAT IS MUCH MORE LIKELY. I WOULD HAVE SAID 95% AND NOW I SAY 85. SO I'M DOWNGRADING A LITTLE. I THINK IT'S CHARACTER LOGICAL. WITH NEWT GINGRICH EACH SUCCESSFUL MOMENT IS NOT TIED WITH THE LAST MOMENT AND THE NEXT MOMENT. I THINK HE'S GOING TO BE UNPREDICTABLE, LET'S PUT IT THAT WAY.

>> LET ME JUST ADD ONE THING TO THAT AND THAT IS, JIM, WE HAVE A COUNTRY RIGHT NOW WHERE BARACK OBAMA HAS A 43% APPROVAL RATING IN THE GALLUP POLL. NO PRESIDENT RUNNING FOR REELECTION HAS EVER HAD A JOB RATING THAT LOW IN DETERMINE OF HIS THIRD YEAR IN THE HISTORY OF THE GALLUP POLL. THREE OUT OF FOUR AMERICANS BELIEVE THE COUNTRY IS HEADED IN THE WRONG DIRECTION. THIS IS AN ELECTION ABOUT WHAT THE GOVERNMENT SHOULD DO, SHOULDN'T DO, WHO SHOULD PAY FOR IT, WHAT WE'RE GOING TO ASK OF EACH OTHER WHAT, WE'RE GOING TO ASK OF OURSELVES. IT SHOULD BE A VERY SERIOUS DEBATE AND BECAUSE OBAMA'S STEWARDSHIP HAS BEEN AN IMPERFECT AND FLAWED STEWARDSHIP. IF NEWT GINGRICH IS THE NOMINEE, BARACK OBAMA WILL COAST TO A SECOND TERM. HE WILL COAST IT A SECOND TERM.

>> Lehrer: WHY?

>> BECAUSE IT WILL BE ALL ABOUT NEWT GINGRICH. NEWT GINGRICH IS SUCH A FLAWED VESSEL AND SUCH A FLAWED CANDIDATE. HE HAS MORE SKELETONS THAN THE HARVARD MEDICAL SCHOOL LAB DOES. AND I'M TELLING YOU, IT'S-- IT WOULD BE BAD FOR THE COUNTRY. TO HAVE OBAMA COAST TO A REELECTION UNTESTED, UNCHALLENGED, UNDISCUSSED, IT IS REALLY GOING TO BE BAD.

>> Lehrer: THAT'S TOUGH STUFF. DO YOU AGREE WITH THAT, DAVID?

>> I COMPLETELY AGREE WITH IT. PEOPLE HAVE FORGOTTEN A LOT OF THINGS THAT HAVE GONE ON IN NEWT GINGRICH'S LIFE. I THINK HE'S ENJOYABLE TO BE AROUND. I CHERISH HIS PRESENCE ON OUR STAGE BUT YOU LOOK AT HIS SECOND MARRIAGE, LET ALONE HIS FIRST MARRIAGE. YOU LOOK AT THE INTERVIEW HIS SECOND WIFE GAVE TO "G.Q."MAGAZINES. THESE ARE SCATHE CHARACTER LOGICAL ASSASSINATIONS. YOU LOOK AT THE LOBBYING HE'S DONE. YOU LOOK AT, AS I SAID, HOW HE MANAGED THE SPEAKERSHIP. I THINK HE'S A GREAT PRESENCE. I LOVE LISTENING TO THE GUY, BUT THE CONSTANCY HE NEEDS. AND THE FACT HE HAS NO ORGANIZATION IS NO ACCIDENT. IT'S THE SAIL ISSUE. I AGREE WITH MARK AND THE QUESTION IS WILL REPUBLICANS SAY I SORT OF LOVE LISTENING TO THAT GUY. NO WAY HE CAN WIN. I THINK AT THE END OF THE DAY THEY WILL MAKE THAT DETERMINATION.

>> Lehrer: END OF THE DAY, HERMAN CAIN GOING TO BE GONE TOMORROW YOU THINK?

>> ANY TIME, JIM, PRESIDENTIAL CANDIDATE VOLUNTARILY USES THE WORD "CONSENSUAL" IN A PRESS CONFERENCE--

>> Lehrer: NO MATTER WHAT THE SUBJECT?

>> IT'S LIGHTS OUT.

>> Lehrer: YOU AGREE WITH THAT, TOO.

>> BILL CLINTON USED THAT TERM. I THINK THE VOTERS HAVE DECIDED. WHETHER HE HAS DECIDE OR NOT, VOTERS HAVE DECIDED.

>> IT WAS BILL CLINTON'S SECOND TERM.

>> Lehrer: THE PAYROLL TAX THING THAT WAS REPORTED ON AT THE BEGINNING AND WE'VE BEEN TALKING ABOUT IT ALL WEEK, WHERE IS THAT GOING TO END UP? THEY'RE GOING TO EXTEND IT, WHERE THEY NOT?

>> THEY'RE GOING TO EXTEND IT. IT'S THE FIRST TIME ON A TAX ISSUE THE REPUBLICANS GOT CAUGHT ON THE WRONG SIDE. WHILE THEY WERE IN SWIMMING THE DEMOCRATS STOLE THEIR PHILOSOPHICAL CLOTHES AND JOHN BOEHNER UNDERSTANDS THIS BUT SOME REPUBLICANS DON'T. AND REPUBLICANS WHO NEVER WORRIED ABOUT PAYING FOR THE BUSH TAX CUTS IN 2001, 2003, NOW, MY GOODNESS, THEY'VE GOT TO FIND A WAY TO PAY FOR THEM. I THINK THAT THE PRAGMATISTS IN THE REPUBLICAN PARTY, LED BY SPEAKER BOEHNER, INCLUDING MAJORITY LEADER CANTOR, UNDERSTAND THAT THE REPUBLICANS CAN'T BE ON THE WRONG SIDE OF THIS.

>> Lehrer: OF A TAX CUT.

>> OF A TAX CUT FOR THE WORKING PEOPLE.

>> IT WILL BE INTERESTING TO SEE HOW THEY DO TRY TO PAY FOR IT. THERE'S A SPLIT IN THE REPUBLICAN PARTY MR. BWHETHER TO TAX THE RICH. THE OFFICIAL MANTRA OF THE PARTY IS NO YOU DON'T RAISE TAXES ON THE RICH. THAT'S NOT WHERE A LOT OF REPUBLICAN VOTERS ARE, LET ALONE THE GENERAL PUBLIC. THE REPUBLICAN POLITICIANS DO NOT REPRESENT THE REPUBLICAN PEOPLE, LET ALONE THE AMERICAN PEOPLE ON THIS.

>> Lehrer: FINALLY, WITH JUST A MINUTE LEFT, ANY THOUGHTS ABOUT-- MARK I UNDERSTAND YOU ARE NOT A BIG FAN OF BARNEY FRANK, AND OF COURSE HE ANNOUNCED HIS RETIREMENT THIS WEEK.

>> YES, AND THIS WAS NOT IDEOLOG COOLED. YOU GO TO CAPITOL HILL AND WE SEE THESE SCRUM WHERE'S REPORTERS SURROUND THE POLITICIANS AND MOST ARE LIKE US, SORT OF MIDDLE-AGED GUYS AND CAN TAKE IT, BUT THERE ARE ALWAYS A BUNCH OF YOUNG PEOPLE JUST LEARNING THE TRADE ASK THEY'RE NERVOUS AND I JUST SAW BARNEY FRANK AS CRUEL TO THEM ON A COUPLE OF OCCASIONS, NEEDLESSLY CRUEL. I'M SURE HE DID A LOT OF GOOD THINGS BUT THAT NEEDLESS CRUELTY ALWAYS PUT ME OFF AND THAT'S THE LINGERING MEMORY I HAVE.

>> Lehrer: WHAT'S YOUR MEASUREMENT?

>> BARNEY COULD BE RUBE, HE COULD BE IMPATIENT, BUT HE WAS A GIFTED POLITICIAN--

>> Lehrer: GIFTED IN WHAT WAY?

>> FIRST OF ALL, HE HAD A TOWERING INTELLECT, AND HE SAW THINGS MORE QUICKLY-- HE COULD EXPLAIN ANYTHING IN 15 MINUTES QUICKER AND MORE COMPLETELY THAN ANYBODY-- NOT JUST TO POPULARIZE IT AND TO DAVID'S POINT ABOUT CRYSTALLIZATION, BUT UNDERSTAND IT AND EXPLAIN IT TO AN INTERESTED PERSON. BEYOND THAT, JIM, HE WAS ALWAYS INTERESTED IN RESULTS. I MEAN, PEOPLE SAW HIM AS THIS GREAT IDEOLOG. HE WASN'T A GREAT IDEOLOG. HE HAD A GUIDING PHILOSOPHY. HE WAS A PRACTICING LIBERAL. CAME AS A LIBERAL. LEAVES AS A LIBERAL. BUT HE WAS ALWAYS THE PERFECT-- NEVER THE ENEMY OF THE GOOD. HE NEVER SETTLED-- IN OTHER WORDS, HE NEVER SAID,"I WANT TO WALK OUT OF THIS FEELING VIRTUOUS AND MORE MORAL BECAUSE MY POSITION WASN'T ACCEPTED." THAT WAS-- ON FRANK, HE WAS CRITICIZED BY SOME ON THE LEFT, CRITICIZED BY MANY ON WALL STREET, BUT HE GOT IT DONE, AND HE AND CHRIS DODD DID, AND THAT'S BARNEY FRANK.

>> Lehrer: YOU'VE SEEN THAT BARNEY FRANK?

>> I THINK THAT GUY EXISTED, BUT YOU DON'T LIKE BULLIES. IN THE ABSTRACT YOU MIGHT LIKE THE LITTLE PEOPLE BUT IF YOU DON'T TREAT THE LITTLE PEOPLE AROUND YOU WITH RESPECT YOU GO A LITTLE FAR DOWN IN MY BOOK.

>> Lehrer: OKAY, DAVID, MARK, THANK YOU BOTH.

>> Brown: AGAIN, THE MAJOR DEVELOPMENTS OF THE DAY: THE UNEMPLOYMENT RATE DROPPED TO UNDER 9% LAST MONTH, THE LOWEST IN TWO AND A HALF YEARS. AND REPUBLICAN PRESIDENTIAL CANDIDATE HERMAN CAIN SAID HE WILL ANNOUNCE THE FUTURE OF HIS CAMPAIGN TOMORROW IN THE FACE OF ALLEGATIONS HE HAD A LONG-TIME AFFAIR. AND TO KWAME HOLMAN FOR WHAT'S ON THE NEWSHOUR ONLINE. KWAME.

>> Holman: ON OUR "MAKING SENSE" PAGE, A STRING OF POSITIVE UNEMPLOYMENT NUMBERS AND PAUL SOLMAN'S OWN MEASURE OF HOW MANY AMERICANS ARE OUT OF WORK. AND ON "ART BEAT," JEFF TALKS TO THE AUTHOR OF A NEW BIOGRAPHY ON MICHELANGELO CARAVAGGIO ABOUT THE ARTIST'S MYSTERIOUS AND VIOLENT LIFE. ALL THAT AND MORE IS ON OUR WEB SITE, newshour.pbs.org. JEFF.

>> Brown: AND THAT'S THE NEWSHOUR FOR TONIGHT. ON MONDAY, WE'LL LOOK AT THE LATEST ON THE EUROPEAN DEBT CRISIS AS FRENCH AND GERMAN LEADERS HOLD AN ECONOMIC SUMMIT. I'M JEFFREY BROWN.

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