PBS NewsHour; July 29, 2010 6:00pm-7:00pm PDT

Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS

>> Lehrer: GOOD EVENING. I'M JIM LEHRER. LAWYERS FOR THE HOUSE ETHICS COMMITTEE AND NEW YORK DEMOCRAT CHARLES RANGEL MOVED TOWARD A POSSIBLE SETTLEMENT OF 13 VIOLATIONS OF THE CONGRESSIONAL CODE OF ETHICS.

>> Brown: AND I'M JEFFREY BROWN. ON THE "NEWSHOUR" TONIGHT: "NEWSHOUR" POLITICAL EDITOR DAVID CHALIAN FILLS US IN ON THE LATEST DEVELOPMENTS.

>> Lehrer: THEN, ECONOMISTS MARK ZANDI AND JOHN TAYLOR DEBATE THE EFFECTIVENESS OF GOVERNMENT EFFORTS TO STIMULATE THE ECONOMY.

>> Brown: RAY SUAREZ REPORTS ON WHAT'S NEXT IN ARIZONA, AFTER A FEDERAL JUDGE BLOCKED KEY PARTS OF THE STATE'S IMMIGRATION LAW.

>> Lehrer: THEN TWO STORIES ON THE MEXICAN DRUG VIOLENCE. YONE GRILLO OF "GLOBAL POST" TALKS TO RESIDENTS OF CIUDAD JUAREZ, MEXICO, ABOUT A CITY UNDER ATTACK.

>> WE ARE GETTING THE KIDNAPPINGS, THE CARJACKING, ESPECIALLY THE EXTORTIONS. I MEAN, IT HAS KILLED THE CITY.

>> Brown: JUDY WOODRUFF GETS AN UPDATE FROM REPORTER ANGELA KOCHERGA ON THE SPREAD OF VIOLENCE FROM NORTHERN MEXICO.

>> Lehrer: AND, FRED DE SAM LAZARO EXPLORES HANDS-ON HEALING WITH PHYSICIAN AND AUTHOR ABRAHAM VERGHESE.

>> I'M THE FIRST TO ADMIT THAT THE RESOLUTION OF A HAND FEELING THE BELLY DOESN'T COMPARE WITH THE RESOLUTION OF A CAT SCAN SCANNING THE BELLY BUT ONLY MY HAND CAN SAY THAT IT HURTS AT THIS SPOT, AND NOT AT THIS SPOT.

>> Lehrer: THAT'S ALL AHEAD ON TONIGHT'S "NEWSHOUR." 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.

>> Lehrer: VETERAN NEW YORK CONGRESSMAN CHARLIE RANGEL AGREED TO A LAST-MINUTE PLEA DEAL TODAY ON ETHICS CHARGES. BUT THE FULL HOUSE ETHICS COMMITTEE HAS YET TO ACCEPT ITS TERMS. "NEWSHOUR" CONGRESSIONAL CORRESPONDENT KWAME HOLMAN BEGINS OUR COVERAGE AS THE RANGEL DRAMA FINALLY GOES PUBLIC.

>> Reporter: REPORTS OF THE PLEA DEAL CAME HOURS AFTER THE VETERAN NEW YORK CONGRESSMAN ARRIVED AT HIS CAPITOL HILL OFFICE PREPARED FOR A TOUGH DAY.

>> 60 YEARS AGO, I SURVIVED A CHINESE ATTACK IN NORTH KOREA, AND AS A RESULT, I WROTE A BOOK THAT HAVING SURVIVED THAT, THAT I HAVEN'T HAD A BAD DAY SINCE. TODAY, I HAVE TO REASSESS THAT STATEMENT.

>> Reporter: FOR A TIME, IT APPEARED RANGEL'S PROGNOSIS WAS CONFIRMED, AS A HOUSE INVESTIGATING PANEL MET, AND MADE PUBLIC THE CHARGES. THE LIST OF 13 ETHICS VIOLATIONS INCLUDED ALLEGATIONS THAT RANGEL USED CONGRESSIONAL LETTERHEAD TO SOLICIT FUNDS FOR A PUBLIC SERVICE CENTER NAMED AFTER HIM AT THE CITY COLLEGE OF NEW YORK AND FAILED TO REPORT MORE THAN $600,000 ON FINANCIAL DISCLOSURE FORMS. OTHER CHARGES INVOLVED MISHANDLING TAXES ON RENTAL INCOME FROM A VILLA RANGEL OWNS IN THE DOMINICAN REPUBLIC. AND HIS ALLEGED MISUSE OF FOUR RENT-CONTROLLED APARTMENTS IN NEW YORK CITY, INCLUDING ONE AS A CAMPAIGN OFFICE. TEXAS DEMOCRAT GENE GREEN CHAIRED THE PANEL THAT'S BEEN INVESTIGATING RANGEL FOR 21 MONTHS.

>> ONE OF THE MOST DIFFICULT TASKS ASSIGNED TO A MEMBER OF CONGRESS IS TO SIT IN JUDGMENT OF COLLEAGUE. THE TASK IS MORE DIFFICULT WHEN PERSON HAS BEFRIENDED, I AM ONE. I KNOW ALL PARTIES LOOK FORWARD TO FINAL RESOLUTION.

>> Reporter: RANGEL'S ATTORNEY SUBMITTED A WRITTEN STATEMENT TO THE COMMITTEE SAYING, THE UNDISPUTED EVIDENCE IN THE RECORD IS THAT CONGRESSMAN RANGEL DID NOT DISPENSE ANY POLITICAL FAVORS, THAT HE DID NOT INTENTIONALLY VIOLATE ANY LAW, RULE OR REGULATION, AND THAT HE DID NOT MISUSE HIS PUBLIC OFFICE FOR PRIVATE GAIN. A SHORT TIME LATER, NEWS OF THE TENTATIVE, LAST-MINUTE AGREEMENT EMERGED, OUT OF NEGOTIATIONS BETWEEN RANGEL'S ATTORNEYS AND NON-PARTISAN LAWYERS FOR THE HOUSE ETHICS COMMITTEE. TALKS HAD BEEN ONGOING FOR DAYS, BUT THE HANG-UP WAS RANGEL'S REFUSAL TO ADMIT TO CERTAIN CHARGES. DETAILS OF WHAT THE CONGRESSMAN DID AGREE TO, IN THE END, WERE SCARCE, BUT MEMBERS OF THE ETHICS COMMITTEE WERE REVIEWING THE PROPOSED SETTLEMENT. THE MOVE WOULD SPARE RANGEL A HOUSE TRIAL THIS FALL THAT COULD HAVE EMBARRASSED THE 20-TERM LAWMAKER AND BECOME A POTENTIAL LIABILITY FOR HIS DEMOCRATIC COLLEAGUES THIS NOVEMBER. HOUSE SPEAKER NANCY PELOSI ADDRESSED THAT CONCERN EARLIER IN THE DAY, AT HER WEEKLY BRIEFING.

>> HOLDING A HIGH ETHICAL STANDARD IS A SERIOUS RESPONSIBILITY THAT WE HAVE. THE PROCESS WILL WORK, IT'S BIPARTISAN. THE CHIPS WILL HAVE TO FALL WHERE THEY MAY, POLITICALLY, BUT UPHOLDING A HIGH ETHICAL STANDARD IS A TOP PRIORITY FOR US.

>> Reporter: TWO DEMOCRATS-- BETTY SUTTON OF OHIO AND WALT MINNICK OF IDAHO-- HAD ALREADY CALLED FOR RANGEL TO RESIGN. AND HOUSE REPUBLICAN LEADER JOHN BOEHNER USED THE RANGEL MATTER TO ISSUE A BROADER ATTACK.

>> THIS IS A SAD MOMENT FOR OUR INSTITUTION. AND, THIS ISN'T ABOUT CHARLIE RANGEL. THIS IS ABOUT SPEAKER PELOSI'S MOST GLARING PROMISE THAT SHE'S BROKEN, WHEN SHE SAID IN '06 THAT IT WAS TIME TO DRAIN THE SWAMP. I THINK SPEAKER PELOSI OWES THE AMERICAN PEOPLE SOME ANSWERS TO THEIR QUESTIONS.

>> Reporter: RANGEL ALREADY STEPPED DOWN AS CHAIR OF THE TAX WRITING WAYS AND MEANS COMMITTEE LAST MARCH. THAT WAS AFTER THE ETHICS PANEL FOUND HE IMPROPERLY ACCEPTED CARIBBEAN TRIPS FROM CORPORATIONS.

>> Lehrer: AND WE GET MORE NOW FROM "NEWSHOUR" POLITICAL EDITOR DAVID CHALIAN. DAVID, THERE IS A DEAL ON THE TABLE. THE LAWYERS HAVE ACCEPTED IT BUT THAT IS AS FAR AS IT'S GONE AT THIS POINT?

>> WELL, THE RANGEL LAWYERS HAVE PUT FORTH A DEAL. BUT THE ETHICS COMMITTEE STAFF, THE NONPARTISAN LAWYERS AND THE NONPARTISAN STAFF THERE STILL REVIEWING IT. AND THAT MAY TAKE SOME TIME. REPUBLICANS ARE NOT EAGER TO JUMP AND ACCEPT THIS DEAL. THEY SAID TODAY IN THE HEARING, JIM, YOU KNOW, HE HAD... CHARLIE RANGEL HAD TIME THROUGHOUT THE ENTIRE INVESTIGATIVE PROCESS TO STRIKE A DEAL. AND AS ONE REPUBLICAN MEMBER OF THE COMMITTEE PUT IT TODAY, WE'RE NOW IN THE TRIAL PHASE. SO THEY'RE NOT EAGER TO ACCEPT THIS DEAL. BUT THE FACT THAT CHARLIE RANGEL GOT TO A PLACE WHERE HE'S WILLING TO ADMIT SOME LEVEL OF WRONGDOING, THAT HE WAS ABLE TO PUT TOGETHER A PACKAGE WITH HIS LAWYERS, PRESENT IT TO THE COMMITTEE AND SAY HERE'S A TENTATIVE AGREEMENT TOWARDS SETTLEMENT, NOW THE ETHICS COMMITTEE NEEDS TO REVIEW THAT.

>> Lehrer: IS THERE ANY REPORTING THAT INDICATES THAT IT IS REPUBLICANS VERSUS DEMOCRATS ON MAKING THIS DECISION?

>> WELL, IT'S MORE JUST READING THE TEA LEAVES OF HOW THEY SPOKE IN THE OPEN HEARING TODAY. AS YOU KNOW, AND KWAME WAS TALKING ABOUT THERE, TODAY WAS THE FIRST ORGANIZATIONAL PUBLIC MEETING OF THIS A JUDE CA TORY BODY INSIDE THE ETHICS COMMITTEE THAT WILL BASICALLY SERVE AS JUDGE AND JURY IN THIS PROCESS IF IT GOES TO A FULL TRY. AND JUST LISTENING TO THE WAY THE DEMOCRATS AND REPUBLICANS WERE SPEAK, THEY WERE SPEAKING SOMEWHAT DIFFERENTLY. IT WAS THE REPUBLICAN MEMBERS THAT KEPT POINTING OUT WE'RE DONE WITH THE INVESTIGATION. HE HAD HIS OPPORTUNITY TO SETTLE. WE'RE NOW MOVING TO A TRIAL. DEMOCRATS MORE WERE SPEAKING TO, WE JUST NEED TO MAKE SURE THIS PROCESS MOVES FORWARD IN THE MOST FAIR WAY IT CAN.

>> YEAH. ALL RIGHT. NOW FOR THE RECORD HERE, WE SHOULD POINT OUT THAT RANGEL WAS NOT PRESENT IN THIS HEARING, THE MEETING LASTED LESS THAN 30 MINUTES, RIGHT, AT THE HOUSE ETHICS COMMITTEE.

>> THAT'S RIGHT. COHAVE APPEARED IF HE WANTED BUT TODAY WAS NOT A DAY OF THE CHAIRWOMAN'S LOFTGREN, THE WOMAN WITHOUT WHO HEADS UP THE ETHICS COMMITTEE SAID TODAY WAS IN THE A DAY TO PRESENT THE EVIDENCE. TODAY WAS SIMPLY A DAY TO READ FORTH THE 13 COUNTS OF ALLEGED VIOLATIONS AND TO SET FORTH THE PROCESS FOR A POTENTIAL TRIAL SHOULD IT GET TO THAT IN SEPTEMBER WHEN CONGRESS RETURNS. THAT'S WHEN WE WOULD PROBABLY HEAR FROM CHARLIE RANGEL.

>> REFRESH OUR MEMORYS ABOUT THE HOUSE ETHICS. FIRST OF ALL, HOW MANY MEMBERS ARE ON THERE.

>> ON THIS BODY, BECAUSE THIS ISN'T THE FULL COMMITTEE. ON THIS BODY THAT WILL LOOK AT THIS TRIAL, IT'S FOUR REPUBLICANS AND FOUR DEMOCRATS. AS YOU KNOW, THE HOUSE ETHICS COMMITTEE, IT'S THE ONLY COMMITTEE IN THE HOUSE THAT HASEK WALL NUMBERS OF DEMOCRATS AND RE7 KANSES. IT DOESN'T MATTER WHO IS IN THE MAJORITY. IT TRULY IS A BIPARTISAN PROCESS. IT HAS A NONPARTISAN STAFF AND FOR THEM TO FIND CHARLIE RANGEL GUILTY, IF YOU WILL, OF ANY ONE OF THESE CHARGES, IT REQUIRES FIVE VOTES. SO THE VOTE,.

>> Lehrer: NOT YOU-- UNANIMOUS BUT A MAJORITY VOTE.

>> BUT IT TECHNICALLY WOULD HAVE TO BE BIPARTISAN. NOT JUST ONE PARTY CAN MAKE THE VOTE HAPPEN FOR GUILT. SO THE VOTE WOULD, BY NATURE, BY MATH, HAVE TO BE A BIPARTISAN ONE IF IT GETS TO THAT.

>> IS THERE ANY WAY TO KNOW THAT, WHETHER THE DEMOCRATS ARE REALLY PUSHING TO HAVE THIS THING RESOLVED NOW BECAUSE THE TRIAL, THE PUBLIC TRIAL WOULD NOW BE SEEN AS EVEN A BIGGER PROBLEM FOR DEMOCRATS BEYOND CHARLIE RANGEL IS THAT STILL HANGING OUT THERE?

>> NOW YOU GOT TO THE POLITICS OF THIS AND YOU HEARD LEADER BOEHNER. HE SAID THIS ISN'T ABOUT CHARLIE RANGEL, THIS IS MUCH BROADER ABOUT SPEAKER PELOSI BECAUSE THEY WANT TO MAKE THIS A NATIONAL ISSUE FOR THEM TO USE THE REPUBLICANS IN THIS CAMPAIGN SEASON AND DEMOCRATS ARE WARY ABOUT IT. THEY DO NOT WANT SOME DISTRACTION IN WHAT IS ALREADY A VERY TOUGH POLITICAL ENVIRONMENT FOR THEM. THEY DO NOT WANT THIS AS PART OF THE CAMPAIGN SEASONMENT AND HERE'S WHY. IT IS BECAUSE IT IS JUST STINKS OF WASHINGTON AS USUAL. HERE'S THE GROUP THAT PROMISED A LOT OF CHANGE IN 2006 AND 2008. NANCY PELOSI DRAINED THE SWAMP. AND THIS JUST REEKS OF WASHINGTON AS USUAL. AND THEY DON'T WANT THAT AT ALL IN THIS ANTI-WASHINGTON, ANTI-ESTABLISHMENT YEAR. BUT YES, TO YOUR QUESTION ABOUT THE REPORTING, THE LEADER OF THE DEMOCRATIC CAMPAIGN COMMITTEE HAS MET WITH CHARLIE RANGEL TWICE IN RECENT WEEKS. THAT'S NOT JUST FRIENDLY CONVERSATION. I'M SURE WE KNOW THAT DEMOCRATS HAVE BEEN EAGER TO PUSH HIM TOWARDS THE SETTLEMENT TO RESOLVE THIS WITHOUT A PUBLIC TRIAL.

>> MEANWHILE CHARLIE RANGEL MAY HAVE HIS OWN VIEWS ABOUT WHAT IS BEST FOR HIM BEYOND THE PARTY.

>> NO DOUBT ABOUT IT. HE IS A LEGACY THAT HE IS WATCHING. HE HAS BEEN THERE 40 YEARS. HE ALREADY GOT TO THE HARDEST PART WHICH IS STEPPING DOWN FROM THE WAYS AND MEANS COMMITTEE. ONCE HE REALIZES HE IS NEVER GOING TO HAVE THAT GAVEL AGAIN THAT MAY HELP HIM COME TO TERMS WITH THE PROCESS GOING FORWARD.

>> OKAY, DAVID, THANK YOU.

>> THANK YOU.

>> AND STILL TO COME ON THE NEWSHOUR.

>> Brown: STILL TO COME ON THE "NEWSHOUR": THE EFFECTIVENESS OF THE STIMULUS MONEY; ARIZONA'S IMMIGRATION FALLOUT; MORE DEADLY DRUG VIOLENCE IN MEXICO AND THE HEALING PHYSICIAN. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S HARI SREENIVASAN IN OUR NEWSROOM.

>> Sreenivasan: AFGHAN PRESIDENT HAMID KARZAI COMPLAINED TODAY THAT U.S. AND NATO FORCES ARE NOT ATTACKING TALIBAN SANCTUARIES. HE SAID, THE "SOURCES OF FUNDING AND TRAINING OF TERRORISM LIE OUTSIDE AFGHANISTAN"-- AN APPARENT REFERENCE TO PAKISTAN. THIS WEEK'S HUGE LEAK OF U.S. MILITARY DOCUMENTS DEPICTED PAKISTAN'S SPY AGENCY COLLABORATING WITH THE TALIBAN. KARZAI SAID THE LEAKS HAVE ALSO JEOPARDIZED AFGHAN INFORMANTS.

>> WHETHER THOSE INDIVIDUALS ACTED LEGITIMATELY OR ILLEGITIMATELY IN PROVIDING INFORMATION TO THE NATO FORCES-- THEY ARE LIVES. AND THOSE LIVES WILL BE IN DANGER NOW. THEREFORE, WE CONSIDER THAT EXTREMELY IRRESPONSIBLE AND AN ACT THAT ONE CANNOT OVERLOOK.

>> Sreenivasan: IN WASHINGTON, DEFENSE SECRETARY ROBERT GATES ALSO CRITICIZED WIKILEAKS FOR RELEASING 91,000 CLASSIFIED DOCUMENTS. HE WARNED OF SEVERE CONSEQUENCES FOR U.S. TROOPS AND U.S. ALLIES.

>> IT'S AMAZING HOW MUCH TRUST MATTERS IN RELATIONSHIPS WHETHER WITH GOVERNMENTS OR INDIVIDUALS AROUND THE WORLD. IT SEEMS TO ME AS A RESULT OF THIS MASSIVE BREACH OF SECURITY WE HAVE CONSIDERABLE REPAIR WORK TO DO IN TERMS OF REASSURING PEOPLE AND REBUILDING TRUST.

>> Sreenivasan: GATES ALSO SAID THE DEFENSE DEPARTMENT IS NOW CLAMPING DOWN ON ACCESS TO INFORMATION IN THE FIELD MEANWHILE, THE BODY OF A SECOND U.S. NAVY MAN WAS RECOVERED IN EASTERN AFGHANISTAN. HE AND ANOTHER PETTY OFFICER DISAPPEARED IN LOGAR PROVINCE LAST MONTH. THE OTHER MAN'S BODY WAS FOUND SUNDAY. HAVE NOT EXPLAINED WHY THE TWO NATO HAVE NOT EXPLAINED WHY THE TWO AMERICANS WERE OUT BY THEMSELVES, IN DANGEROUS COUNTRY. THE SCANDAL AT ARLINGTON NATIONAL CEMETERY MAY BE GETTING WORSE. THAT WORD CAME AS U.S. SENATORS RAISED NEW ALARMS ABOUT THE CONFUSION OVER WHO'S BURIED WHERE. THE PROBLEMS WITH MIXED UP AND MISIDENTIFIED GRAVES AT ARLINGTON APPEARED TO MUSHROOM TODAY. AT A SENATE OVERSIGHT HEARING, DEMOCRAT CLAIRE McCASKILL SAID IT COULD BE MUCH WORSE THAN INITIAL ESTIMATES OF UP TO 211 BURIAL SITES.

>> THE PROBLEMS WITH THE GRAVES AT ARLINGTON MAY BE FAR MORE EXTENSIVE THAN PREVIOUSLY ACKNOWLEDGED. AT A CONSERVATIVE ESTIMATE, 4,900 TO 6,600 GRAVES MAY BE UNMARKED, IMPROPERLY MARKED, OR MISLABELED ON THE CEMETERY'S MAPS.

>> Sreenivasan: McCASKILL CITED HER OWN INVESTIGATION, BUT GAVE NO DETAILS. LAST MONTH, ARMY INVESTIGATORS BLAMED ARLINGTON'S PROBLEMS ON YEARS OF SHODDY RECORD-KEEPING AND MISMANAGEMENT. IN SHORT ORDER, THE TWO MEN TASKED WITH OVERSEEING THE CEMETERY WERE FORCED OUT. TODAY, THE FORMER SUPERINTENDENT, JOHN METZLER, ACKNOWLEDGED HE'S ULTIMATELY TO BLAME.

>> AS THE SENIOR GOVERNMENT OFFICIAL IN CHARGE OF THE CEMETERY, I ACCEPT FULL RESPONSIBILITY FOR ALL OF MY ACTIONS AND FOR THE ACTIONS OF MY TEAM. AND I WANT TO EXPRESS MY SINCERE REGRETS TO ANY FAMILY WHO THESE FAILURES MIGHT HAVE CAUSED THEM PAIN.

>> Sreenivasan: METZLER RAN ARLINGTON FOR 19 YEARS. BUT HE SUGGESTED THE DISCLOSURES OF MISIDENTIFIED GRAVES SURPRISED HIM. THAT ANGERED LAWMAKERS LIKE REPUBLICAN SCOTT BROWN OF MASSACHUSETTS.

>> I'M AN ATTORNEY, BEFORE I GOT HERE. I TELL YOU. I'D HAVE A LOT OF FUN WITH YOU IN A DEPOSITION BECAUSE I DON'T FEEL WE'RE GETTING THE STRAIGHT TALK HERE.

>> Sreenivasan: METZLER'S FORMER DEPUTY, THURMAN HIGGINBOTHAM, GENERALLY BLAMED OUT-MODED RECORD KEEPING.

>> IT WAS ALWAYS CONCEPTUAL THAT ANYTHING DONE BY HAND FOR 140- PLUS YEARS THAT THERE WOULD HAVE TO BE SOME ERRORS SOMEWHERE.

>> Sreenivasan: HIGGINBOTHAM REFUSED TO ANSWER MOST OTHER QUESTIONS, CITING HIS RIGHT AGAINST SELF-INCRIMINATION. THE ESTIMATE ON HOW MUCH OIL HAS SPILLED INTO MICHIGAN'S KALAMAZOO RIVER ROSE SHARPLY TODAY. THE ENVIRONMENTAL PROTECTION AGENCY SAID MORE THAN ONE MILLION GALLONS OF OIL MAY HAVE LEAKED FROM A PIPELINE SINCE MONDAY. THE OIL COULD REACH LAKE MICHIGAN, 80 MILES DOWNSTREAM. AND, IN NEW ORLEANS, THE GOVERNMENT POINT MAN ON THE GULF OIL SPILL, THAD ALLEN, SAID THE EFFORT TO PLUG THE BLOWN WELL COULD BEGIN BY THIS WEEKEND. ON WALL STREET TODAY, THE DOW JONES INDUSTRIAL AVERAGE LOST MORE THAN 30 POINTS TO CLOSE AT 10,467. THE NASDAQ FELL NEARLY 13 POINTS TO CLOSE AT 2,251. TOYOTA HAS ANNOUNCED YET ANOTHER RECALL IN NORTH AMERICA. 400,000 VEHICLES IN THE U.S. AND CANADA MAY HAVE STEERING PROBLEMS. THE RECALL IS MOSTLY FOR AVALONS FROM THE 2000 TO 2004 MODEL YEARS. TOYOTA PLANS TO FIX THE PROBLEM BY REPLACING A PART ON THE STEERING COLUMN-- A PROCEDURE THAT TAKES ABOUT TWO HOURS AT DEALERSHIPS. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO JEFF.

>> Brown: AND WE TURN TO THE CONTINUING DEBATE OVER THE IMPACT OF THE STIMULUS AND OTHER PROGRAMS TO HELP THE ECONOMY IN THE PAST AND, PERHAPS, ONCE AGAIN. THE LATEST ECONOMIC DATA SHOWED AGAIN JUST TOUGH THE ROAD TO RECOVERY IS. FIRST-TIME CLAIMS FOR JOBLESS BENEFITS DIPPED A BIT AGAIN, BUT NOT BY ENOUGH TO SUGGEST THE OVERALL UNEMPLOYMENT RATE IS FALLING. AND THE PRIVATE FIRM REALTY TRAC REPORTED HOME FORECLOSURES IN THE FIRST HALF OF THE YEAR WERE UP IN THREE QUARTERS OF THE LARGEST METROPOLITAN AREAS. FACED WITH THOSE FACTS, PRESIDENT OBAMA TODAY STRESSED HIS SUMMER-LONG MANTRA: THE NUMBERS ARE BAD, BUT WITHOUT THE FEDERAL STIMULUS HE CHAMPIONED, THEY'D BE MUCH WORSE.

>> BECAUSE OF WHAT WE DID, AMERICA AS A WHOLE IS IN A DIFFERENT PLACE TODAY. OUR ECONOMY IS GROWING INSTEAD OF SHRINKING. OUR PRIVATE SECTOR'S BEEN ADDING JOBS FOR SIX STRAIGHT MONTHS INSTEAD OF LOSING THEM.

>> Brown: AND A NEW REPORT RELEASED YESTERDAY MAY HELP THE PRESIDENT MAKE THAT CASE. ECONOMISTS MARK ZANDI AND ALAN BLINDER SAID THE STIMULUS OF NEARLY $800 BILLION, PLUS THE WALL STREET BAILOUT, KNOWN AS TARP, AND OTHER MEASURES, LIKELY WARDED OFF AN OUTRIGHT DEPRESSION. THE STUDY FOUND THAT WITHOUT THOSE PROGRAMS THE GROSS DOMESTIC PRODUCT WOULD BE 6.5% LOWER; EIGHT MILLION MORE PEOPLE WOULD BE UNEMPLOYED AND PRICES WOULD BE FALLING AS DEFLATION SET IN. BUT SUCH BENEFITS ALSO COME WITH HIGH COSTS. LAST WEEK, THE WHITE HOUSE PROJECTED A DEFICIT OF NEARLY $1.48 TRILLION FOR THIS FISCAL YEAR. THAT'S DOWN SLIGHTLY FROM AN EARLIER ESTIMATE, BUT STILL AMOUNTS TO 10% OF THE NATION'S TOTAL ECONOMIC OUTPUT. AT THE SAME TIME, REPUBLICANS CONTINUE TO CHARGE ALL THAT SPENDING IS DOING LITTLE TO HELP THE ECONOMY. AND THEY WARN OF TAX HIKES TO COME. NORTH CAROLINA'S VIRGINIA FOXX SPOKE ON THE HOUSE FLOOR TODAY.

>> $6.1 TRILLION THAT'S HOW MUCH MONEY THE FEDERAL GOVERNMENT HAS SPENT IN JUST THE FIRST 18 MONTHS OF THE OBAMA PRESIDENCY, WASHINGTON IS SPENDING $17 MILLION EVERY MINUTE OF EVERY HOUR OF EVERY DAY, THERE'S ONLY ONE WAY TO FEED THAT KIND OF DESTRUCTIVE HABIT: WASHINGTON NEEDS MORE OF YOUR TAX DOLLARS AND THAT'S EXACTLY WHAT DEMOCRATS ON CAPITOL HILL AND THE WHITE HOUSE ARE TALKING ABOUT.

>> Brown: IN THE MEANTIME, FEDERAL RESERVE CHAIRMAN BEN BERNANKE HAS SAID SOME STIMULUS OUTLAYS ARE STILL NECESSARY. BUT RECENT POLLS SHOW PUBLIC SUPPORT FOR STIMULUS SPENDING AND ITS POTENTIAL TO REVIVE THE ECONOMY HAS WANED. AND WE JOIN THIS DEBATE NOW, WITH MARK ZANDI, CO-AUTHOR OF THE NEWLY-RELEASED PAPER AND CHIEF ECONOMIST AT MOODY'S ANALYTICS. AND JOHN TAYLOR, ECONOMICS PROFESSOR AT STANFORD UNIVERSITY AND SENIOR FELLOW AT THE HOOVER INSTITUTION. HE WAS UNDERSECRETARY OF THE TREASURY IN THE GEORGE W. BUSH ADMINISTRATION. MARK ZANDI, IT'S A PRETTY BIG CLAIM THAT GOVERNMENT ACTION PREVENTED ANOTHER DEPRESSION. GIVE US THE OUTLINE OF THE ARGUMENT FOR THAT?

>> WELL, I'M NOT ARGUING THAT ANY INDIVIDUAL ASPECT OF THE POLICY RESPONSE WAS GOOD OR BAD. I MEAN I THINK WE CAN DEBATE THAT FOR A LONG TIME TO COME AND WE WILL. BUT I THINK IF YOU TAKE THE TOTALITY OF THE RESPONSE, WHAT THE FEDERAL RESERVE Z WHAT THE BUSH ADMINISTRATION, WHAT THE OBAMA ADMINISTRATION HAVE DONE, WHAT CONGRESS HAVE DONE, IT'S THAT TO TALLITY THAT THAT-- TOTALITY THAT HAS BROUGHT AN END TO THE GREAT RECESSION AND JUMP-STARTED AN ECONOMIC RECOVERY JNS JOHN TAYLOR, THE TOTALITY LEAD US OUT OR PREVENTED ANOTHER DEPRESSION, WHAT DO YOU SEE?

>> I DON'T THINK THERE'S ANY EVIDENCE FOR THAT. YOU LOOK AT THE TOTALITY WHICH I HAVE BEEN DOING FOR SEVERAL YEARS NOW, LOOKING AT EACH PROGRAM AND ADDING THEM UP. AND I FIND A VERY SMALL EFFECT. IN FACT, TO SOME EXTENT SOME OF THE EARLY ACTIONS I THINK WERE DAMAGING. SOME OF THE ACTIONS TAKEN, ACTUALLY I THINK, LEAD TO SOME OF THE PANICS THAT WE SAW. SO NO, I JUST DON'T THINK THERE'S ANY EVIDENCE WHEN YOU LOOK AT THE NUMBERS, WHEN YOU SEE WHAT HAPPENED WHEN PEOPLE REACTED TO THE STIMULUS, IT DID VERY LITTLE GOOD.

>> Brown: WELL, MARK ZANDI, I MEAN WE CAN GET INTO ECONOMIC MODELS HERE AND IT WILL GET INTO THE WEEDS QUICK BUT GIVE US AN EXAMPLE. GIVE US SOMETHING CONCRETE THAT ALLOWS US TO SEE AN IMPACT.

>> OKAY. LET'S TAKE THE RECOVERY ACT. THE FISCAL STIMULUS THAT IS MUCH CRITICIZED. THE MAXIMUM BENEFIT OF THAT FISCAL STIMULUS THROUGH THE TAX CUTS OF THE TIM LUS AND THROUGH THE SPENDING INCREASES HIT THEIR APEX LAST SUMNER JUNE, JULY AND AUGUST OF LAST SUMMER. AND THAT IS PRECISELY WHEN THE RECESSION ENDED. THE EXACT PRECISE TIMING. SO THAT, I THINK, IS SOME EVIDENCE, AT LEAST IT IS VERY SUGGESTIVE THAT THE STIMULUS, THE RECOVERY ACT WAS VERY IMPORTANT TO BRINGING AN END TO THE GREAT RECESSION.

>> Brown: JOHN TAYLOR, WHAT DO YOU SEE COMING FROM THAT STIMULUS?

>> WHEN YOU LOOK AT THE SPECIFIC THINGS THAT WERE DONE, SO SENDING CHECKS TO PEOPLE, TO JUMP-START CONSUMPTION. YOU LOOK AT THE CHECKS SENT OUT, AND YOU DON'T SEE CONSUMPTION JUMP-STARTING OR MOVING. IN OTHER WORDS, IT DIDN'T HAVE THE EFFECT THAT IT WAS ADVERTISED TO HAVE. AND I SAY THE RECOVERY IS STARTING EARLIER, QUITE FRANKLY, THE PANIC IN THE FALL OF 2008 WAS BEHIND US BY DECEMBER, JANUARY. AND ALSO I WOULD SAY THE RECOVERY THAT WE HAD AND UNFORTUNATELY IT'S NOW FIZZLING. LARGELY DUE TO BUSINESS INVESTMENT. IN FACT THAT RECOVERY IS INVESTMENT, NOT GOVERNMENT PURCHASES. AND THE SLOW DOWN IS BECAUSE INVESTMENT HAS SLOWED DOWN AND PEOPLE ARE GETTING NERVOUS ABOUT THE INCREASED DEBT THAT IS PARTLY RESULTED FROM THE STIMULUS.

>> Brown: JUST TO STAY WITH YOU SO WE UNDERSTAND. IF NONE OF THIS HAD BEEN... NONE OF THESE INTERVENTIONS BY GOVERNMENT HAD BEEN UNDERTAKEN, WHERE WOULD WE BE NOW. YOU ARE ARGUING WE WOULD BE BETTER OFF?

>> WELL, QUITE FRANKLY, YES. BECAUSE SOME OF THE EARLY INTERVENTIONS MADE THINGS WORSE. THE, IN FACT, I GO BACK TO THE ULTIMATE CAUSE OF THIS CRISIS, AND THAT WAS A PERIOD WHERE THE FED INTERVENED AND KEPT INTEREST RATES TOO LOW, LEAD TO THE HOUSING BOOM AND THE BUST AND THE TOXIC ASSETS AND THE TROUBLE IN THE FINANCIAL INSTITUTIONS. YOU DON'T EVEN HAVE TO GO BACK THAT FAR. YOU CAN JUST LOOK AT THE RESPONSE IN 2008 WHERE WE HAD AN ON-GAIN, OFF-AGAIN BAILOUT PROCESS , NOT HELPING THE CREDITORS OF LEHMAN, ON-AGAIN, OFF-AGAIN SPOOKED THE MARKETS. AND HAD A NEGATIVE EFFECT. AND PLUS WE HAVE A LEGACY OF DEBT RIGHT NOW WHICH IS UNFORTUNATELY HOLDING THE ECONOMY BACK AND PEOPLE WORRIED ABOUT TAX INCREASES.

>> Brown: MARK ZANDI, RESPOND TO THAT.

>> WELL, I WOULDN'T DISAGREE WITH JOHN THAT THE UNEVEN TREATMENT OF THE CREDITORS FINANCIAL INSTITUTIONS BEGINNING WITH BEAR STEARNS AN FANNIE MAE FREDDIE MAC AND OF COURSE EVERYONE KNOWS LEHMAN BROTHERS WAS THE PROXIMATE CAUSE FOR TAKING WHAT WAS A SIGNIFICANT FINANCIAL CRISIS. BUT GENERATING A FINANCIAL PANIC. EVERYONE LOST FAITH. SO I WOULD BE VERY SYMPATHETIC TO THAT ARGUMENT AND I THINK HE'S CORRECT. OUR ANALYSIS, THE ANALYSIS THAT DR. BLINDER AND I CONDUCTED BEGAN AFTER THE PANIC HIT, AFTER WE WERE IN THE MIDDLE OF TURMOIL AND THE FINANCIAL SYSTEM WAS ON THE PRECIPICE OF A COLLAPSE AND WE ASKED THE QUESTION, WELL IF POLICYMAKERS HAD NOT RESPONDED BY PROVIDED EQUITY TO THE BANKING SYSTEM F POLICYMAKERS HAD NOT RESPONDED BY CONDUCTING BANK STRESS TEST, IF THE F.D.I.C. HAD NOT STEPPED IN AND GUARANTEED BANK DEBT ISSUE ANSESANCE F THE F.D.I.C. HAD NOT RAISED DEPOSIT INSURANCE LIMITS TO RESTORE CONFIDENCE, IF WE HAD NOT HAD ALL THE PLETHORA OF TAX CUTS AND SPENDING INCREASES THAT WERE ALL THE VARIOUS ASPECTS OF STIMULUS, THEN WE WHAT BE IN A MEASURABLY WORSE PLACE. JOHN IS RIGHT THERE WERE A NUMBER OF POLICY MISTAKES THAT GOT US INTO THIS MESS BUT WE WOULD STILL BE IN A VERY SIGNIFICANT MESS IF NOT FOR THE AGGRESSIVE POLICY RESPONSE.

>> SO HERE WE HAVE THE TWO OF YOU, PROMINENT ECONOMISTS LOOKING AT THIS, AND PROVIDING VERY, VERY DIFFERENT PICTURES. NOW MARK ZANDI, LET ME START WITH YOU ON THIS. WHY DOES IT MATTER. WHY DID YOU LOOK BACK AND WHY DOES IT MATTER TO US NOW IN TERMS OF WHERE WE ARE NOW.

>> IT IS VITAL. BECAUSE IF WE DON'T GET A BETTER UNDERSTANDING OF WHAT WE WENT THROUGH AND HOW WE RESPONDED IN SUCCESS OF THAT, WE CAN'T PAGE GOOD POLICY GOING FORWARD. WE CAN'T HAVE A REASONABLE DEBATE ABOUT WHETHER WE SHOULD EXTEND EMERGENCY UNEMPLOYMENT INSURANCE BENEFITS. WE CAN'T HAVE A DEBATE, A GOOD DEBATE ABOUT SHOULD WE GIVE MORE HELP TO THE HARD-PRESSED STATE GOVERNMENTS. I MEAN IF JOHN IS SAYING THAT THOSE THINGS DIDN'T MATTER THAN WE'RE NOT GOING DO THOSE THINGS AND I WOULD CONSIDER THAT TO BE INAPPROPRIATE POLICY IN THE CONTEXT OF WHERE WE ARE TODAY SO THIS IS A VERY IMPORTANT DISCUSSION THAT WE NEED TO GET SOME CLARITY AROUND.

>> IS THAT WHAT YOU ARE SAYING PROFESSOR TAYLOR.

>> IT CERTAINLY IS VITAL AND IT IS IMPORTANT. AND OF COURSE THE CONCLUSION THAT I COME TO, AND THERE IS DIFFERENCE OF OPINION. I THINK PEOPLE SHOULD RECOGNIZE THE DIFFERENCE OF OPINION. WHAT I COME TO IS THAT THESE HAVE NOT HAD AN IMPACT AND NOW MOREOVER WE'RE IN A SITUATION WHERE THE DEBT HAS GOT SEWN HIGH THAT WE NEED TO ADDRESS THAT. PEOPLE ARE WORRIED ABOUT THESE TAX INCREASES. EVERYONE AGREES THAT INCREASING TAXS IS TO THE GOING TO HELP THE ECONOMY YET THAT IS WHAT WE ARE FACED RIGHT NOW. THE BEST STIMULUS I THINK WOULD BE TO FOREGO ANY TAX INCREASES FOR AT LEAST THE NEXT FEW YEARS.

>> JUST TO STAY WITH YOU, SO THE ARGUMENT THAT IS OUT THERE, OF COURSE, IS WHETHER WE NEED ANOTHER SHOT OF SPENDING. YOU THINK THE DEFICIT OVERRIDES THAT?

>> I CERTAINLY DO. ESPECIALLY IF YOU AGREE WITH ME THAT THE SPENDING INCREASES JUST DIDN'T DO VERY MUCH. THE ECONOMY RECOVERED AS BUSINESS INVESTMENT IS RECOVERED. NOW THE ECONOMY IS SLOWING DOWN AS BUSINESS INVESTMENT IS FLAGGING BASED, I THINK, ON THIS UNCERTAINTY ABOUT POLICY. REGULATORY AND TAXES IN PARTICULAR.

>> MARK ZANDI, HOW DO YOU FACTOR INTO THE STIMULUS VERSUS, OF COURSE, THE WORRY ABOUT THE DEFICIT.

>> WELL, I THINK JOHN IS RIGHT. I WOULD NOT ALLOW THOSE TAX INCREASES TO TAKE HOLD ON JANUARY 1st EITHER. I THINK ECONOMY'S STILL TOO FRAGILE FOR THAT. BUT I WOULD SAY, AND I AGREE WITH JOHN THAT OUR FISCAL PROBLEMS ARE VERY SERIOUS AND WE NEED TO ADDRESS THEM. BUT WE'RE NOT GOING TO ADDRESS OUR FISCAL PROBLEMS UNLESS THIS ECONOMY IS OFF AND RUNNING. UNLESS THE RECOVERY EVOLVES INTO A SELF-SUSTAINING ECONOMIC EXPANSION AND WE'RE NOT THERE YET. AND GIVEN THAT WE HAVE A NINE AND A HALF% UNEMPLOYMENT RATE IF WE GO BACK INTO RECESSION IT WILL BE PAINFUL THERE WILL BE NO POLICY RESPONSE. SO PRUDENT RISK MANAGEMENT SAYS WE SHOULD AIR ON THE SIDE OF DOING A LITTLE TOO MUCH RATHER THAN TOO LITTLE TO MAKE SURE WE OFF AND RUNING SO WE CAN REALLY ADDRESS OUR FISCAL PROBLEMS.

>> Brown: JUST A BRIEF LAST WORD FROM YOU, BRINGING YOU BACK TO YOUR WASHINGTON DAYS, WE'RE HAVING AN ECONOMICS DEBATE BUT IS THIS GOING TO BE DETERMINED MORE BY POLITICS?

>> I THINK THE ELECTIONS ARE VERY IMPORTANT HERE. YOU MENTIONED AT THE BEGINNING ABOUT THE POLLS INDICATING PEOPLE DON'T THINK THIS WORKS. NEVER'S VERY WORRIED ABOUT THE DEFICIT. I THINK POLITICIANS ARE BEGINNING TO HEAR THAT AND HOPEFULLY WILL MAKE THEIR DECISIONS BASED ON IT.

>> ALL RIGHT, JOHN TAYLOR, MARK ZANDI, THANK YOU BOTH VERY MUCH.

>> THANK YOU

>> Lehrer: THE GOVERNOR OF ARIZONA TODAY APPEALED A FEDERAL JUDGE'S RULING THAT BLOCKED PARTS OF THE STATE'S HIGH PROFILE IMMIGRATION LAW. RAY SUAREZ REPORTS FROM PHOENIX ON THE CONTINUING FALLOUT.

>> Reporter: IMMIGRATION ACTIVISTS FROM ARIZONA AND AROUND THE COUNTRY DESCENDED ON THE STREETS OF DOWNTOWN PHOENIX THIS MORNING. THE MOOD WAS MORE UPBEAT THAN ORGANIZERS HAD PLANNED. THAT'S BECAUSE OF THE RULING YESTERDAY BY A FEDERAL JUDGE WHICH BLOCKED KEY PARTS OF THE CONTROVERSIAL IMMIGRATION LAW KNOWN AS SB-1070 WHICH WENT INTO EFFECT TODAY. THE LAW WAS PASSED THREE MONTHS AGO. IT MADE IT AN ARIZONA CLASS ONE MISDEMEANOR TO BE IN THE U.S. ILLEGALLY AND BE IN THE STATE. IT REQUIRED LOCAL LAW ENFORCEMENT TO CHECK THE IMMIGRATION STATUS OF PEOPLE THEY CAME ACROSS WHILE ENFORCING OTHER LAWS AND REQUIRED IMMIGRANTS TO CARRY THEIR DOCUMENTATION WITH THEM AT ALL TIMES. THESE LAST TWO PROVISIONS WERE AMONG THOSE BLOCKED BY THE FEDERAL JUDGE, WHO SAID THEY RAISED THE POSSIBILITY OF WRONGFUL ARREST AND PLACED TOO GREAT A BURDEN ON LEGAL RESIDENTS.

>> Reporter: DANIEL ORTEGA IS ONE OF THE LAWYERS WHO HAD ARGUED BEFORE THE JUDGE AGAINST THE LAW.

>> IT'S AN ABSOLUTE VICTORY BECAUSE IF YOU LOOK AT THE 14 PROVISIONS OF SB-1070, THE FOUR CRITICAL ONES THAT WERE RULED UPON TODAY ARE THE ONES THAT ARE THE HEART OF THIS LAW. IT IS NOW TOOTHLESS. IT HAS BEEN NEUTERED. THE BOTTOM LINE IS THAT THE OTHER PROVISIONS, WHICH ARE 10 APPROXIMATELY, ARE INEFFECTUAL WITHOUT THE POLICE BEING ABLE TO ENFORCE IMMIGRATION LAW.

>> Reporter: STATE REPRESENTATIVE RICK MURPHY, WHO WAS ONE OF THE ORIGINAL CO- SPONSORS OF SB-1070, WAS DISAPPOINTED BY THE TEMPORARY STAY, BUT PREDICTED IT WILL BE OVERTURNED BY A HIGHER COURT.

>> BASICALLY, IT DOESN'T SEEM TO MAKE A WHOLE LOT OF SENSE AND THAT IT WAS KIND OF A STRETCH. THE IDEA THAT WE CANNOT ARREST PEOPLE FOR BREAKING THE LAW AND WORKING, WHEN IT'S ILLEGAL FOR THEM TO THAT, IS SILLY. IT'S BEEN LEGAL FOR DECADES. THE IDEA THAT WE CAN'T ASK THEM FOR WHETHER THEY HAVE THEIR DOCUMENTATION WITH THEM, WHEN FEDERAL LAW HAS REQUIRED THAT FOR DECADES, SEEMS SILLY. AND SO IT SEEMS THAT THE GROUNDS THAT THEY RELIED TO BLOCK THIS LAW WAS A STRETCH AND ULTIMATELY WE'LL PREVAIL ON THAT.

>> Reporter: THE INJUNCTION DID NOTHING TO STOP MARICOPA COUNTY SHERIFF JOE ARPAIO FROM CONDUCTING A PLANNED ILLEGAL IMMIGRANT CRIME SWEEP TODAY IN PHOENIX. BUT BECAUSE MUCH OF THE LAW IS ON HOLD, HE WAS REQUIRED TO TURN SUSPECTS OVER TO BORDER CONTROL OFFICERS RATHER THAN PUT THEM DIRECTLY IN THE COUNTY JAIL.

>> NOTHING IS GOING TO DETER ME FROM MY JOB, INCLUDING A RULING BY A FEDERAL JUDGE. SO IT'S BUSINESS AS NORMAL.

>> Reporter: ONE OF THE THINGS SUPPORTERS OF THE LAW HOPED TO ACCOMPLISH WAS TO STANDARDIZE POLICE ENFORCEMENT OF IMMIGRATION LAW. CURRENTLY, DIFFERENT DEPARTMENTS ACROSS THE STATE HAVE VERY DIFFERENT PRACTICES. IN PINAL COUNTY, FOR INSTANCE, SHERIFFS DEPUTY DELCIA RANDALL ALREADY SPENDS MUCH OF HER WORK DAY PATROLLING REMOTE AREAS OF HER VAST RURAL COUNTY LOOKING FOR DRUG SMUGGLERS AND ILLEGAL IMMIGRANTS. ON THE DAY WE PATROLLED WITH HER, SHE HEARD A NOISE IN THE BUSHES.

>> POLICIA. VEN AQUI.

>> Reporter: ALTHOUGH SHE DIDN'T FIND ANYONE THIS TIME. SHE SAID SHE OFTEN DOES WORKING HAND-IN-HAND WITH BORDER PATROL AGENTS TO APPREHEND ILLEGAL IMMIGRANTS. OVER 2,000 PASS THROUGH PINAL COUNTY EVERY DAY. SHE TOLD US THAT SB-1070 WOULDN'T REALLY CHANGE HOW SHE DOES HER JOB DURING ROUTINE TRAFFIC STOPS EITHER. LATER ON THIS DAY, SHE ARRESTED A FARM WORKER WHO APPEARED TO BE DRIVING UNDER THE INFLUENCE AND QUESTIONED HIM ABOUT WHERE HE WAS FROM.

>> I LIVE RIGHT HERE.

>> I ASK THEM FOR THEIR ADDRESS. A LOT OF TIMES IF THEY CAN'T GIVE YOU AN ADDRESS, THEY'RE PROBABLY A FARM WORKER OR THEY'RE HERE ILLEGALLY. SO YOU JUST KEEP ASKING THEM.

>> Reporter: RANDALL'S BOSS, SHERIFF PAUL BABEU HAS DENOUNCED THE JUDGES INJUNCTION OF THE LAW, SAYING IT AMOUNTED TO DE- FACTO AMNESTY OF IMMIGRANTS.

>> IT'S A NATIONAL SECURITY THREAT AND A PUBLIC SAFETY ISSUE. IF YOU LOOK AT IT FROM THAT PERSPECTIVE I THINK WE CAN ALL AGREE THAT SOMETHING SIGNIFICANT NEEDS TO BE DONE BECAUSE WE JUST CAN'T HAVE THE VOLUME OF PEOPLE THAT ARE COMING IN. WE CAN'T HAVE THIS SENSE OF LAWLESSNESS IN OUR COUNTY.

>> Reporter: BUT NOT ALL POLICE DEPARTMENTS OR INDIVIDUAL OFFICERS WANT TO TAKE ON THE ROLE OF IMMIGRATION COP. DAVID SALGADO HAS SERVED ON THE PHOENIX POLICE FORCE FOR 19 YEARS AND IS ONE OF THE INDIVIDUALS WHO FILED A LAWSUIT AGAINST THE STATE. HE SAYS THE DEPARTMENT IS ALREADY STRETCHED TOO THIN TO TAKE ON ANY ADDITIONAL DUTIES. WE SPOKE TO HIM BEFORE THE INJUNCTION.

>> WE DON'T HAVE THE TIME. WE DON'T HAVE THE RESOURCES. I'M TELLING YOU RIGHT NOW THAT SOME OF US ARE GOING TO TURN OUR BACKS AND SAY WE DON'T HAVE TIME TO BE DEALING WITH THIS. WE DON'T HAVE TIME TO DEAL WITH A CLASS ONE MISDEMEANOR THAT IS GOING TO TAKE US OFF THE STREETS AT LEAST TWO TO THREE HOURS.

>> Reporter: SALGADO SAYS THE NEW LAW THREATENS TO DESTROY THE RELATIONSHIP POLICE HAVE BUILT WITH THE LATINO COMMUNITY. IN FACT, OVER THE PAST FEW WEEKS, IMMIGRANTS RIGHTS GROUPS HAVE BEEN COUNSELING PEOPLE ON HOW TO RESPOND TO POLICE INQUIRIES ABOUT LEGAL STATUS. AT THIS MEETING ON MONDAY IN THE SUNNYSLOPE NEIGHBORHOOD, A LAWYER TOLD THE AUDIENCE MEMBERS THAT IF THEY WERE STOPPED BY POLICE, THEY SHOULD EXERCISE THEIR RIGHT TO REMAIN SILENT AND NOT ANSWER QUESTIONS ABOUT THEIR FAMILIES OR WHERE THEY WERE BORN. HE ALSO TOLD THEM NOT TO BE AFRAID. BUT HOUSEKEEPER ALMA MENDOZA SAYS EVERYONE IN HER NEIGHBORHOOD IS AFRAID OF WHAT THE LAW WOULD MEAN IF THE INJUNCTION WAS LIFTED, EVEN IF THEY ARE IN THIS COUNTRY LEGALLY, AS SHE IS.

>> IT'S GOING TO BE HARD FOR EVERYONE, ESPECIALLY IF THEY'RE HISPANIC. BECAUSE WE'RE AFRAID THE POLICE WILL STOP AND PULL YOU OVER FOR ANY REASON. EVEN IF YOU'RE NOT A BAD PERSON, IF YOU'RE NOT DOING ANYTHING WRONG. YOU HAVE THE CHANCE THAT THE POLICE ARE GOING TO STOP YOU AND THEY'RE GOING TO ASK YOU ABOUT YOUR STATUS.

>> Reporter: AND THERE'S ONE OTHER CONCERN FOR LATINOS-- THE JUDGE'S RULING LET STAND A PROVISION OF THE STATE LAW WHICH MAKES IT A CRIME TO PICK UP DAY LABORERS ON PUBLIC PROPERTY. THAT'S DISAPPOINTING FOR MANUEL MORENO, A LEGAL RESIDENT, WHO DOES LANDSCAPING AND CARPENTRY WORK.

>> ( translated ): IT'S GOING TO BE MORE DIFFICULT TO GET A JOB. EMPLOYERS WILL BE AFRAID TO HIRE US BECAUSE THEY WILL GET A TICKET. BUT LIFE CONTINUES AND WE'LL HAVE TO FIND A WAY TO SURVIVE, TO PAY PHONE BILLS AND PAY THE RENT.

>> Reporter: IT'S BECAUSE OF DIFFICULTIES LIKE THAT, THAT LATINO ACTIVISTS SAY THEY WILL CONTINUE THEIR PROTESTS AND ACTS OF CIVIL DISOBEDIENCE, UNTIL IT IS CLEAR THAT THE NEW ARIZONA IMMIGRATION LAW HAS BEEN COMPLETELY AND PERMANENTLY OVERTURNED.

>> Brown: NOW, A TWO PART LOOK AT THE DEEPENING DRUG WAR IN MEXICO. WE START WITH A REPORT FROM JUAREZ, ONE OF THE EPICENTERS OF THE VIOLENCE. YONE GRILLO OF THE INTERNATIONAL WEB SITE "GLOBAL POST" REPORTS ON THE EFFECT ON ORDINARY CITIZENS.

>> Reporter: THE MOST MURDEROUS CITY ON THE PLANET WITH MORE THAN 5,000 HOMICIDES IN TWO AND A HALF YEARS. GANGS HAVE ALSO BURNED DOWN BUSINESSES AND TORTURED THEIR OWNERS TO SQUEEZE OUT PROTECTION MONEY. AND THIS MONTH, NEW TERROR TACTICS HIT THE STREETS, WHEN GANGSTERS SET OFF THE FIRST CAR BOMB. THE BLOODSHED AND EXTORTION RAGE ON, EVEN AS MORE THAN 10,000 SOLDIERS AND POLICE TRY TO LOCK DOWN THE CITY. BUT WHAT ARE THE RESIDENTS OF THIS CITY OF 1.3 MILLION DOING ABOUT THE SITUATION? WE TALKED TO BOTH RICH AND POOR TO GET ANSWERS TO THAT QUESTION. IN A WORKING CLASS NEIGHBORHOOD, CATHOLIC PRIEST OSCAR ENRIQUEZ WHO RUNS A COMMUNITY CENTER, SAYS THAT ORDINARY PEOPLE CAN'T DO MUCH. HE SAYS THEY ARE POWERLESS TO ACT BECAUSE CORRUPTION IS RAMPANT AND THE AUTHORITIES ARE IN ON THE GAME: THEY REGULARLY GET PAID OFF BY DRUG TRAFFICKERS.

>> ( translated ): I BELIEVE THAT THE FIRST PEOPLE RESPONSIBLE ARE THE AUTHORITIES. WHO LET ORGANIZED CRIME GROW IN THE CITY? IT SEEMS THAT FOR THE SO-CALLED JUAREZ CARTEL TO GROW FOR 30 OR 40 YEARS, YOU NEED INSTITUTIONAL, POLITICAL, ECONOMIC AND FINANCIAL SUPPORT. IT APPEARS THERE HAS BEEN A VERY STRONG INSTITUTIONAL COMPLICITY IN THE GROWTH OF ORGANIZED CRIME.

>> Reporter: IN A RAMSHACKLE SLUM ON THE WEST SIDE OF JUAREZ, SANDRA RAMIREZ ALSO BLAMES AUTHORITIES FOR NOT PROVIDING ALTERNATIVES TO YOUNG PEOPLE. A SOCIAL WORKER, WHO GREW UP HERE, SHE'S DOING HER PART BY TRYING TO STEER TEENS AWAY FROM A LIFE OF CRIME. THE CENTER SHE WORKS IN PROVIDES COUNSELING, ART AND MUSIC WORKSHOPS AND A SPACE FOR YOUNG PEOPLE TO GET OFF THE STREET. BUT THESE BARRIOS ARE TEEMING WITH YOUNG MEN RECRUITED AS TRAFFICKERS OR HIT MAN IN THE WAR OVER THE DRUG TRADE WHO NEED MORE THAN SHE CAN PROVIDE.

>> ( translated ): TAKE A CASE OF ONE BOY I KNOW. HE IS 14 YEARS OLD AND HAS ONLY STUDIED IN ELEMENTARY SCHOOL. HIS MOTHER USES DRUGS AND HE DOESN'T LIVE WITH HER. HE TOLD ME THAT A CAR CAME WITH SOME GUYS HE HAD SEEN AND THEY SAID, WE'LL GIVE YOU $40 A WEEK AND A CELL PHONE AND WE GIVE YOU WORK AND THE ONLY THING THAT YOU HAVE TO DO IS STAND AT A POST AND KEEP WATCH. AND WE'LL GIVE THIS PHONE WITH CREDIT AND A NUMBER AND IF YOU SEE A CAR WITH CERTAIN CHARACTERISTICS YOU CALL. THAT IS THE ONLY THING YOU HAVE TO DO. DO YOU THINK A KID LIKE HIM WON'T ACCEPT THESE TYPE OF OFFERS? AND THERE ARE HUNDREDS OF CASES LIKE THIS IN JUAREZ. NOBODY ELSE HAS OFFERED HIM ANYTHING EXCEPT THEM.

>> Reporter: RAMIREZ SAYS THAT SOCIAL PROGRAMS NOT SOLDIERS ARE WHAT'S NEEDED TO STOP THE DRUG WAR. SHE SAYS THE SLUMS REQUIRE MORE SCHOOLS, MORE JOBS AND MORE CENTERS LIKE HERS. BUT RATHER THAN GOING UP, THE FUNDS FOR SOCIAL PROGRAMS HAVE GONE DOWN IN THE LAST YEAR, SHE SAYS. JUST MINUTES AWAY BY CAR, A DIFFERENT WORLD EXISTS: A NEIGHBORHOOD OF EXPENSIVE HOMES AND GARDENS. BUT WE WERE ABRUPTLY STOPPED IN OUR TRACKS. WE HAVE DRIVEN TO THIS UPPER MIDDLE CLASS NEIGHBORHOOD AND FOUND THIS PLASTIC BARRICADE FULL OF CEMENT BLOCKING THE STREET. RESIDENTS HAVE PUT THIS UP TO STOP SUSPICIOUS CARS DRIVING THROUGH. THE CITY GOVERNMENT IS AGAINST THIS, BUT THE RESIDENTS SAY IF POLICE CAN'T STOP CRIME THEY HAVE TO TAKE MATTERS INTO THEIR OWN HANDS. AMONG THOSE WHO PUT MONEY TOWARD THE BARRICADE WAS 76-YEAR OLD RESIDENT FELISA COTERA, WHO HAS SEEN THE CITY'S UPS AND DOWNS SINCE THE 1930s. WHAT MOTIVATED HER TO ACTION?

>> ORIGINALLY, WE THOUGHT IT WAS GANGSTERS AND DRUG TRAFFICKERS KILLING EACH OTHER OFF. WE FIGURED WELL IT IS THEIR PROBLEM NOT OURS. WELL, IT SPILLED OVER. NOW WE ARE GETTING THE KIDNAPPINGS, THE CARJACKING, ESPECIALLY THE EXTORTIONS. I MEAN, IT HAS KILLED THE CITY.

>> Reporter: WE GET A CALL FROM FELLOW REPORTERS THAT A DEAD BODY HAS BEEN FOUND NEARBY. WE CLIMB UP AN ABANDONED HOUSE TO GET A VIEW OF THE CRIME SCENE, AND GET A REMINDER OF WHY PEOPLE HERE ARE OFTEN SCARED TO SPEAK UP. BEHIND ME, THERE IS A BODY OF A MAN WHO HAS BEEN TORTURED. HE HAD A MESSAGE WRITTEN ON HIS CHEST AND HAD HIS FINGER CUT OFF AND STUCK IN HIS MOUTH AS A WARNING AGAINST SNITCHES. THAT KIND OF THING HAPPENS EVERY DAY HERE IN JUAREZ KEEPING PEOPLE IN FEAR. BUT DESPITE SUCH TERROR, SOME CITIZENS ARE STILL WILLING TO SPEAK OUT. DOCTOR LETICIA CHAVARIA IS PART OF A GROUP PROTESTING AGAINST ATTACKS ON DOCTORS. 18 WERE KIDNAPPED FOR RANSOM LAST YEAR. SHE SAYS THAT THE COMMUNITY HAS TO TRANSFORM ITS ATTITUDE TO MOVE FORWARD.

>> ALL OF US HAVE FEAR. THAT IS NATURAL. TERROR IS A PART OF OUR HUMAN INSTINCT FOR SURVIVAL. BUT RIGHT NOW IN THIS CITY, IN PLACE OF FEELING FEAR, WE NEED TO FEEL COURAGE TO DO SOMETHING TO CHANGE THINGS. I AM PUTTING MY GRAIN OF SAND, MY PARTICIPATION, FIRST OF ALL, TO TRY AND MAKE OTHER CITIZENS CONSCIOUS THAT ONLY UNITED AND ACTING AS CITIZENS CAN WE HAVE THE STRENGTH TO BRING ABOUT CHANGE.

>> Reporter: THIS KIND OF OUTSPOKEN BRAVERY IS HARD TO FIND IN A CITY AS DEADLY AS JUAREZ. BUT IN THE FIGHT AGAINST THE CARTELS, IT'S ONE OF THE ONLY WEAPONS THE COMMUNITY HAS LEFT.

>> Brown: JUDY WOODRUFF TAKES THE STORY FROM THERE.

>> Woodruff: WE GET MORE NOW ON THE ESCALATING VIOLENCE IN MEXICO FROM ANGELA KOCHERGA, THE MEXICO BUREAU CHIEF FOR BELO TELEVISION AND NEWSPAPERS. SHE SPENT THE DAY REPORTING IN JUAREZ AND JOINS US NOW FROM EL PASO. ANGELA KOCHERGA, AS YOU HEARD THAT REPORT WAS FROM JUAREZ, YOU'VE JUST BEEN THERE, WHAT ARE PEOPLE SAYING?

>> WHAT DID YOU FIND TODAY ?

>> WELL, WE REPORT FREQUENTLY IN JUAREZ AND TODAY WE WERE OUT WITH PARAMEDICS. AND THEY ARE VERY MUCH ON EDGE AS ARE MOST CITIZENS ON JUAREZ. YOU MAY RECALL ABOUT TWO WEEKS AGO A CAR BOMB WENT OFF IN MEXICO'S FOURTH LARGEST CITY. AND IN THIS BORDER CITY THAT WAS THE FIRST ACTUAL A CAR BOMB HAD GONE OFF ANYWHERE IN MEXICO. AND THE PEOPLE WHO CLAIMED RESPONSIBILITY SAID THEY WOULD SET OFF MORE BOMBS AM THEY GAVE A 15 DAY DEADLINE BEFORE THEY WOULD DO SO AND WE'RE ALMOST AT THAT DEADLINE.

>> Woodruff: IS THERE A SENSE THAT THE POLICE, THE AUTHORITIES ARE MAKING ANY HEADWAY WITH ALL THIS?

>> REALLY PEOPLE ARE VERY, VERY FRUSTRATED. WE'VE HAD LOTS OF SOLDIERS, TROOPS HERE ON THE BORDER IN JUAREZ AND NOW FEDERAL POLICE HAVE TAKEN OVER POLICING THE TREATS. AND THERE REALLY HAS BEEN NO LETUP IN THE VIOLENCE. AND IT'S REACHED SUCH AN EXTREME LEVEL NOW. THESE CARTELS ARE TARGETING POLICE DIRECTLY. AND PEOPLE FEEL LESS SAFE HAVING THE POLIT IN -- POLICE IN THEIR NEIGHBORHOODS BECAUSE THEY ARE WORRIED ABOUT ANOTHER ATTACK. SO PEOPLE DO NOT FEEL THAT THIS IS WORKING OR THAT THEY ARE ANY SAFER.

>> Woodruff: AND THEN WE READ THAT FOUR JOURNALISTS HAD BEEN KIDNAPPED. AND THAT WAS APPARENTLY IN CONNECTION WITH REPORTING ON THIS PRISON SITUATION WHERE YOU HAD INMATES LET OUT TO GO COMMIT A CRIME.

>> JOURNALUSS IN MEXICO VERY MUCH UNDER SIEGE. IT'S ONE OF THE POST DNING ROUSE PLACES IN THE WORLD TO BE A JOURNALIST THESE DAYS. AND THOSE FOUR JOURNALISTS, INCLUDING PHOTOGRAPHERS MR. COVERING A PRISON RI OT, A PRISON EP CENTER OF A CONSTRUCTION SCANDAL AND THE DIRECTOR HAS BEEN FIRED AND MEXICAN'S ATTORNEY GENERAL HAD ALSO BEEN ARRESTED BECAUSE SHE AND THE PRISON GUARDS ALLEGEDLY WERE LETTING THESE INMATES OUT TO BE HITMEN FOR A DRUG CARTEL IN THE REGION. AND THEY WERE COMMITTING MASS MURDERS USING WEAPONS AND VEHICLES PROVIDED BY THE PRISON. AND THEN GOING BACK INTO THEIR CELLS. ACCORDING TO THE ATTORNEY GENERAL THEY WERE LINKED TO A MASS MURDER NOT TOO LONG AGO, 17 PEOPLE GUNNED DOWN AT A BIRTHDAY PARTY.

>> Woodruff: IS THERE A SENSE THAT THE LEVEL OF VIOLENCE IS INCREASING? OR IS IT JUST MORE OF THE SAME?

>> THERE'S A SENSE OF AN ESCALATION. WHEN WE TALK ABOUT THESE JOURNALISTS, THEY WERE PICKED UP, KIDNAPPED AND BEING HELD HOSTAGE FROM WHAT WE UNDERSTAND. AND NOT ONLY ARE THESE CARTELS TRYING TO SILENCE THE MEDIA IN THESE REGIONS. THEY'VE PRETTY MUCH SELF CENTERED IN ORDER TO STAY SAFE. THEY ARE NOW IT SEEMS IN THIS INSTANCE TRYING TO GET ONE OF THE MEDIA COMPANIES IF NOT MORE TO AIR ONE OF THEIR TAPED MESSAGES. AND APPARENTLY ONE OF THE EMPLOYERS OF THESE REPORTERS DID SO IN ORDER TO WIN HIS RELEASE. SO NOT ONLY TRYING TO SILENCE THE MEDIA AND THE MESSAGE BUT ALSO TO CONTROL THAT MESSAGE. AND OF COURSE FOR MAXIMUM TERROR, NOT JUST AGAINST THEIR RIVALS OR POLICE. BUT ENTIRE COMMUNITIES. ENTIRE REGIONS HERE ALONG THE BORDER.

>> Woodruff: AND IS THERE ANY PART OF THE COUNTRY THAT IS IMMUNE FROM THIS? WHERE YOU DON'T SEE THIS SORT OF VIOLENCE AND ACTIVITY? VIOLENT ACTIVITY?

>> OF COURSE IT'S MUCH WORSE ALONG THE BORDER. AND THERE ARE POCKETS OF LAWLESSNESS, YOU COULD REALLY SAY, INçó SEVERAL REGIONS OF MEXICO. THE STATE OFñrÑi MICHOJACAN BUT EVERY STATE OF MEXICO HAS SEEN SOME LEVEL OF VIOLENCE. IT VEERED WIDELY BUT EVEN MEXICO CITY HAS HAD SOME DECAPITATIONS, HORRIBLE MURDERS NEARBY AND BEHEADS AND SOME OF THOSE MUTILATIONS WITH THE NARCO MESSAGES AS BECOME VERY COMMONPLACE IN MEXICO. THE TOURIST AREAS HAVE BEEN LARGE LEIGH LEFT A ENAND ARE NOT SEEING THIS. BUT THE STATES WHERE THEY ARE LOCATED HAVE SEEN SOME OF THIS VICE LEN.

>> Woodruff: -- VIOLENCE.

>> Woodruff: BUT THIS DOES COME AFTER THE CAMPAIGN BY PRESIDENT CALDERON TO GO AFTER THESE DRUG CARTELS. ARE PEOPLE SENSING THAT THE GOVERNMENT IS HELPFUL IN SOME WAY OR IS NOT ABLE TO DO ANYTHING ABOUT WHAT'S GOING ON ?

>> WELL, EARLY ON IN THIS CAMPAIGN MANY MEXICANS FULLY SUPPORTED PRESIDENT CALDERON'S EFFORT TO GO AFTER DRUG CARTELS BECAUSE THEY HAD REACHED SUCH A LEVEL POV WE ARE IN A LOT OF THESE REGIONS. BUT THERE REALLY IS SOME BATTLE FAT AGENCY. PEOPLE DON'T SEE THAT THE STRATEGY HAS WORKED. AT LEAST THE LAW ENFORCEMENT STRATEGY AS FAR AS PUTTING SOLDIERS HERE OR PUTTING FEDERAL POLICE ON THE STREETS. I MEAN THE KILLING HAS CONTINUED UNABATED. BUT ALSO AS PRESIDENT CALDERON HAS POINTED OUT WHAT IS THE ALTERNATIVE IF YOU BACK DOWN. I MEAN THESE CARTELS HAVE GAINED SUCH POWER AND ARE SO BRUTAL AT THIS POINT. THEY'RE REALLY-- DOESN'T SEEM TO BE MUCH OPTION. BUT THERE IS A QUESTIONING OF THE STRATEGY BEING UTILIZED.

>> VERY, VERY TOUGH SITUATION TO REPORT ON. ANGELA, THANK YOU VERY MUCH FOR TALKING WITH US

>> Lehrer: FINALLY TONIGHT, A DOCTOR'S CALL TO HEALING. SPECIAL CORRESPONDENT FRED DE SAM LAZARO TALKS TO AUTHOR AND PHYSICIAN ABRAHAM VERGHESE. A VERSION OF THIS STORY AIRED ON PBS' "RELIGION AND ETHICS NEWSWEEKLY."

>> WE ARE LOOKING FOR-- .

>> Reporter: ABRAHAM VERGHESE HAS ALL THE PREDENTIAL -- RECREDENTIALS OF A PHYSICIAN FROM TAN FORBD MEDICAL SCHOOL BUT HE HAS TWO BEST SELLING MEMOIRS AND A NEW WORK OF FICTION THAT EVOKE A DIFFERENT KIND OF MEDICAL VOCATION.

>> MY DESIRE TO BE A PHYSICIAN HAD A LOT TO DO WITH THAT SENSE OF MEDICINE AS A MINISTRY OF HEALING. NOT JUST A SCIENCE. AND NOT EVEN JUST A SCIENCE AND AN ART BUT ALSO A CALLING, ALSO A MINISTRY.

>> Reporter: HIS GOAL IS TO HAVE TODAY'S MEDICAL INSTITUTES ASPIRE SIMILARLY TO A CALLING AS MUCH AS A CAREER IN MEDICINE. TO AWAKEN A MORE BASIC CURIOSITY AS THEY SHARPEN THEIR CLINICAL ACUMEN. THESE THIRD YEAR MEDICAL INSTITUTES WERE STUDYING ABNORMALITIES ON THE SCAN, SPECIFICALLY THE PROMINENCE OF CERTAIN BLOOD VESSELS.

>> THIS IS WHAT IS CALLED PULMONARY REDISTRIBUTIONMENT HAVE YOU HEARD THAT TERM. AN EARLY SIGN OF HEART FAILURE. WHO'S GOT GOOD HAND VEINS THAT I CAN BORROW.

>> Reporter: HE OFFERED A SIMPLE PHYSICS EXPLANATION OF WHY BLOOD VESSELS SHOULD NOT NORMALLY BE VESABLE ABOVE THE LEVEL OF HEART.

>> THE LEVEL OF THE RIGHT AT TREE UP IS RIGHT HERE. WATCH WHAT HAPPENS AS I RAISE HER HAND, YOU STILL SEE THE VEIN, NICE THREE DIMENSION, RIGHT? SEE HOW THEY ARE FLATTENING OUT.

>> COOL.

>> THEY ARE GONE.

>> THE BOTTOM LINE, WELL BEFORE AN TRAY,-- X-RAY, A DOCTOR MIGHT SPOT TELLTALE SIGNS OF DISEASE.

>> YOU SEE THE NECK VEINS AND THEY ARE NOT COUGHING, SPEAKING, SINGING, STRAINING.

>> INCREASINGLY HE SAYS INSTITUTES AND PRACTITIONERS OF MEDICINE IN THE WEST RELY ON TECHNOLOGY IN A SYSTEM THAT STRESSES COGNITIVE KNOWLEDGE AND MACHINES OVER THE SKILL THAT COMES FROM TOUCH AND FEEL.

>> I'M THE FIRST TO ADMIT THAT THE RESOLUTION OF A HAND FEELING THE BELLY DOESN'T COMPARE WITH THE RESOLUTION OF A CAT SCAN SCANNING THE BELLY BUT ONLY MY HAND CAN SAY THAT IT HURTS AT THIS SPOT AND NOT AT THIS SPOT. ONLY MY HAND CAN SAY THAT. ONLY MY HAND CAN SAY THAT THIS MASS WHICH MIGHT BE BE ANEURYSM IS ALSO PAINFUL WHICH IS THEREFORE MAYBE A LEAKING ANEURYSM. THERE ARE KNEW-- NUANCES OF EXAM THAT NO MACHINE IS GOING TO GIVE YOU.

>> IT'S A THEME VERGHESE HAS SOUNDED REPEATEDLY OVER THE YEARS WRITING IN MAGAZINES INCLUDING "THE NEW YORKER"S AND ATLANTIC AND NOW IN A BEST-SELLER CALLED CUTTING THE STONE IT FULFILLS A LONG HELD DESIRE TO WRITE FICTION AS HE TOLTED THIS BOOK CLUB IN MENLO PARK, CALIFORNIA.

>> A WONDERFUL AMERICAN WRITER SAYS FICTION IS THE GREAT LIE THAT TELLS THE TRUTH ABOUT HOW THE WORLD LIVES.

>> Reporter: THE SETTING FOR VERGHESE'S MOVE SELL FAR FROM SILICON VALLEY. A MISSION HOSPITAL IN ETHIOPIA. IT IS A TEXTURED 650 PAGE NARRATIVE SET AMID THAT COUNTRY'S TURMOIL IN THE '60s AND '70s. IT'S STORIES OF MEDICINE, DOCTORS AND FUTURE DOCTORS AT THE HOSPITAL, ALL ILLUSTRATE WHAT THE AUTHOR CALLS THE SAMARITAN ROLE OF THE HEELER. VERGHESE WENT FROM MED SCHOOL IN INDIA TO BOSTON, TENNESSEE, TEXAS THEN STANDFORD. HE WAS BORN AND RAISED IN ETHIOPIA TO PARENTS ORIGINALLY FROM INDIA AND FROM ITS ORTHODOX TRADITIONS. FAITH WAS A BIG PART OF LIFE FOR THIS AND OTHER EXPAT REE AT COMMUNITIES IN. WHICH MAY UNWITTINGLY HAVE SHAPED SOME OF THE NOVEL'S CHARACTERS.

>> YOU SAID THAT WHAT REALLY INSPIRED TO YOU WRITE THE BOOK WAS YOU WANTED TO WRITE A BOOK THAT WOULD GET PEOPLE INTERESTED PERHAPS IN MEDICINE. BUT THERE WAS SO MUCH IN THE BOOK ABOUT FAITH AND DIFFERENT TYPES OF FAITH. SO HOW DID YOU COME TO HAVE SO MUCH OF THIS, OF ANOTHER THEME IN YOUR BOOK.

>> WELL, YOU KNOW, I HONEST ANSWER IS I DON'T REALLY KNOW. IT JUST EVOLVED THAT WAY. AND I THINK WHEN ARE YOU IN MEDICINE YOU AGONIZE OVER MATTERS OF FAITH.

>> Reporter: VERGHESE SAYS MOST INSTITUTES TODAY ENTER MEDICAL SCHOOL WITH THE SAME DEEP COMMITMENT THAT CARING FOR THE SICK AS THE MISSIONARIES IN HIS FICTIONAL AFRICAN HOSPITAL BUT HE SAYS THAT ZEAL OFTEN GETS LOST IN TODAY'S HEALTH-CARE SYSTEM.

>> I JOKE BUT ONLY HALF JOKE THAT IF YOU SHOW UP IN AN AMERICAN HOSPITAL MISSING A FINGER, NO ONE WOULD BELIEVE YOU UNTIL THEY GET A CAT SCAN, MRI AND ORTH PETIC CONSULT.

>> ALL THE EMPHASIS ON MACHINES, HE SAYS, ADDS COST TO THE HEALTH-CARE SYSTEM AND COMES AT THE EXPENSE OF ONE OF OUR MOST IMPORTANT RITUALS, A VISIT WITH ONE'S DOCTOR.

>> RITUALS ARE ABOUT TRANSFORMATION. WE MARRY WITH GREAT CERTIFICATE PONY TO SIGNAL A TRANSFORMATION. WE ARE BAPTIZED IN A RITUAL TO SIGNAL A TRANSFORMATION. THE RITUAL OF ONE INDIVIDUAL COMING TO ANOTHER AND CONFESSING TO THEM THINGS THEY WOULDN'T TELL THEIR SPOUSE, THEIR PREACHER, THEIR RABBI, AND THEN EVEN MORE INCREDIBLY, DISROBING AND ALLOWING TOUCH IN ANY OTHER CONTEXT WOULD BE ASSAULT. YOU KNOW, TELL ME THAT THAT IS NOT A RITUAL OF GREAT SIGNIFICANCE. IF WE SHORTCHANGE THE RITUAL BY NOT BEING ATTENTIVE OR YOU ARE INPUTING INTO THE COMPUTER WHILE THE PATIENT IS TALKING TO YOU, ARE YOU BASICALLY DESTROYING THE OPPORTUNITY FOR THE TRANSFORMATION. AND WHAT IS THE TRANSFORMATION, IT IS THE CEILING OF THE PATIENT FINANCIAL BOND.

>> IRONICALLY HE SAYS RESEARCH IS EMERGING THAT COULD ROB RATS THE IMPORTANCE OF THIS BOND. THE VIRTUE OF THE SAMARITAN HEALER.

>> WE ARE LEARNING THAT YOU CAN HAVE A POWER EFFECT ON PATIENTS OR POWERFUL NEGATIVE AFFECT ON PATIENTS BASED ON CONTEXT, BASED ON YOUR TONE OF VOICE. THEY ARE ACTUALLY ASSOCIATED WITH SIGNIFICANT CHEMICAL CHANGES IN THE BRAIN. THE PARKINSON'S PATIENTS DOPAMINE LEVEL GOES UP WITH A PLACEBO WHO ARE NOW ABLE TO SHOW THAT THE WORDS OF KURT TRIGGER BIOLOGICAL REACTIONS WHICH ARE THE VERY THINGS THAT YOU WANT. AND YOU CAN USE DRUGS TO GET THERE. OR YOU CAN USE WORDS OF COMFORT TO GET THERE WHICH WOULD MAKE YOUR DRUGS SO MUCH MORE EFFECTIVE. IT'S AN INCREDIBLE INSIGHT, YOU KNOW, INTO A COUPLE OF DECADES NOW PRACTICING MEDICINE. IT'S LOVELY TO COME FULL CIRCUMSTANCE TOLD WHERE I STARTED. BUT WITH THE SCIENCE TO BACK IT UP.

>> VERGHESE HAS ALREADY STARTED ON HIS NEXT WORK OF FICTION, THE STORY OF AN ELDERLY SMALL TOWN DOCTOR IN TEXAS .

>> AND AGAIN THE MAJOR DEVELOPMENTS OF THE DAY, LAWYERS LAWYERS FOR VETERAN NEW YORK CONGRESSMAN CHARLIE RANGEL AGREED TO A LAST-MINUTE PLEA DEAL ON ETHICS CHARGES. IT WAS SUBJECT TO APPROVAL BY THE HOUSE ETHICS COMMITTEE. AND THE CHAIR OF A SENATE OVERSIGHT COMMITTEE WARNED THAT UP TO 6,600 GRAVES AT ARLINGTON NATIONAL CEMETERY MAY BE MISIDENTIFIED. THAT'S FAR MORE THAN INITIAL ESTIMATES. THE "NEWSHOUR" IS ALWAYS ONLINE. HARI SREENIVASAN, IN OUR NEWSROOM. PREVIEWS WHAT'S THERE. HARI?

>> Sreenivasan: DAVID CHALIAN AND THE "NEWSHOUR" POLITICAL TEAM HAVE LAUNCHED A NEW FEATURE ON THE RUNDOWN. IT'S CALLED "THE MORNING LINE" AND IT GIVES YOU A LOOK AT THE STORIES DAVID AND OTHERS ARE WATCHING ON THE POLITICS BEAT. AND WE FOLLOW UP ON THE SITUATION IN HAITI AND ITS EARTHQUAKE AFTERMATH. AID WORKERS HAVE BEEN ABLE TO KEEP THE SPREAD OF DISEASE AT BAY, BUT CAN THAT LAST? OUR GLOBAL HEALTH UNIT REPORTS. PLUS ON ART BEAT, A SPECIAL LOOK AT A NEW WORK FROM THE PAUL TAYLOR DANCE COMPANY AS THE GROUP'S CHOREOGRAPHER MARKS HIS 80th BIRTHDAY. WE TALK TO TWO DANCERS ABOUT THE COMPANY'S LEGACY. ALL THAT AND MORE IS ON OUR WEB SITE, newshour.pbs.org. JIM?

>> Lehrer: 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 TEN MORE.

>> Brown: AND THAT'S THE "NEWSHOUR" FOR TONIGHT. I'M JEFFREY BROWN.

>> Lehrer: AND I'M JIM LEHRER. WE'LL SEE YOU ON-LINE. AND AGAIN HERE TOMORROW EVENING WITH DAVID BROOKS AND RUTH MARCUS, AMONG OTHERS. THANK YOU AND GOOD NIGHT. MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY: AND THE WILLIAM AND FLORA HEWLETT FOUNDATION, WORKING TO SOLVE SOCIAL AND ENVIRONMENTAL PROBLEMS AT HOME AND AROUND THE WORLD. AND WITH THE ONGOING SUPPORT OF THESE INSTITUTIONS AND FOUNDATIONS. AND... THIS PROGRAM WAS MADE POSSIBLE BY THE CORPORATION FOR PUBLIC BROADCASTING. AND BY CONTRIBUTIONS TO YOUR PBS STATION FROM VIEWERS LIKE YOU. THANK YOU. Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS Captioned by Media Access Group at WGBH access.wgbh.org