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

Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS

>> Ifill: GOOD EVENING. I'M GWEN IFILL. NEW GOVERNORS ARE SWORN IN, AND IMMEDIATELY CONFRONT EXPENSIVE OLD PROBLEMS.

>> Woodruff: AND I'M JUDY WOODRUFF. ON THE NEWSHOUR TONIGHT, WE TALK TO OUR PUBLIC MEDIA COLLEAGUES IN CALIFORNIA, OHIO, AND NEW YORK ABOUT STATE BUDGET WOES GREETING THE NEW LEADERS.

>> Ifill: RAY SUAREZ GETS THE DETAILS OF GOLDMAN SACHS' BIG INVESTMENT IN SOCIAL NETWORKING GIANT FACEBOOK FROM ANDREW ROSS SORKIN OF THE "NEW YORK TIMES."

>> Woodruff: JEFFREY KAYE REPORTS ON THE DIRE HEALTH CONDITIONS FACING SOUTHERN SUDAN AS IT PREPARES FOR A VOTE ON INDEPENDENCE.

>> Reporter: MOST PEOPLE HAVE NO ACCESS TO HEALTH CARE SO THE CHALLENGE IS NOT SO MUCH TO IMPROVE THE SYSTEM. IT'S TO CREATE ONE.

>> Ifill: WE EXAMINE THE COSTS AND CONSEQUENCES AS

>> Ifill: THEN WE EXAMINE THE COSTS AND CONSEQUENCES AS MILLIONS OF BABY BOOMERS TURN 65.

>> Woodruff: PLUS PAUL SOLMAN LOOKS AT THE JOB PROSPECTS FOR RECENT COLLEGE GRADUATES, WHO GOT THEIR DEGREES IN THE MIDST

>> ONCE THEY LOOK AT OF THE RECESSION. AND FIGURE I'VE BEEN OUT OF COLLEGE FOR A WHILE IT BECOMES AN ISSUE, A TAINTED ISSUE. WHY HAVE OTHER PEOPLE OVERLOOKED YOU?

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

>> MOVING OUR ECONOMY FOR 160 YEARS. BNSF, THE ENGINE THAT CONNECTS US.

>> OIL COMPANIES HAVE CHANGED MY COUNTRY.

>> OIL COMPANIES CAN MAKE A DIFFERENCE.

>> WE HAVE THE CHANCE TO BUILD THE ECONOMY.

>> CREATE JOBS, KEEP PEOPLE HEALTHY AND IMPROVE SCHOOLS.

>> ...AND OUR COMMUNITIES.

>> IN ANGOLA CHEVRON HELPS TRAIN ENGINEERS, TEACHERS AND FARMERS, LAUNCH CHILD'S PROGRAMS.

>> IT'S NOT JUST GOOD BUSINESS.

>> I'M HOPEFUL ABOUT MY COUNTRY'S FUTURE.

>> IT'S MY COUNTRY'S FUTURE. UNITEDHEALTHCARE.

>> AND BY THE BILL AND MELINDA GATES FOUNDATION. DEDICATED TO THE IDEA THAT ALL PEOPLE DESERVE THE CHANCE TO LIVE A HEALTHY PRODUCTIVE LIFE. AND WITH THE ONGOING SUPPORT OF THESE INSTITUTIONS AND FOUNDATIONS. AND... THIS PROGRAM WAS MADE POSSIBLE BY THE CORPORATION FOR PUBLIC BROADCASTING. AND BY CONTRIBUTIONS TO YOUR PBS STATION FROM VIEWERS LIKE YOU. THANK YOU.

>> Ifill: FROM NEW YORK TO CALIFORNIA TODAY, THE NEW YEAR BROUGHT A WAVE OF NEWLY ELECTED GOVERNORS INTO OFFICE. BUT IN MANY STATES, THE CELEBRATIONS ENDED BEFORE THEY BEGAN.

>> IT STARTS WITH JOBS, JOBS, JOBS, GETTING THE ECONOMY RUNNING ONCE AGAIN.

>> LET US GET WISCONSIN WORKING AGAIN.

>> Ifill: ACROSS THE COUNTRY MANY OF THE 26 NEW GOVERNORS TAKING CHARGE ARE FACING A COMMON PROBLEM: RED INK. CALIFORNIA IS PROBABLY IN THE WORST SHAPE WITH A GROWING $25 BILLION DEFICIT AND AN UNEMPLOYMENT RATE TOPPING 12%. THAT'S WHAT FACING INCOMING DEMOCRAT JERRY BROWNE, WHO HELD THE JOB ONCE BEFORE FROM 1975-1983.

>> IT I TAKE THIS OBLIGATION FREELY WITHOUT ANY MENTAL RESERVATION... REALLY, NO MENTAL RESERVATION.

>> Ifill: TODAY AT AGE 72 HE BEGINS HIS THIRD TERM SUCCEEDING REPUBLICAN ARNOLD SCHWARZENEGGER.

>> THE BUDGE ETED I PRESENT NEXT WEEK WILL BE PAINFUL BUT IT WILL BE AN HONEST BUDGET. THE ITEMS OF SPENDING WILL BE MATCHED WITH AVAILABLE TAX REVENUES. AND SPECIFIC PROPOSALS WILL BE OFFERED TO REALIGN KEY FUNCTIONS THAT ARE CURRENTLY SPREAD BETWEEN STATE AND LOCAL GOVERNMENT IN WAYS THAT ARE COMPLEX, CONFUSING AND INEFFICIENT. MY GOAL IS TO ACHIEVE GREATER ACCOUNTABILITY AND REDUCE THE HISTORIC SHIFTING OF RESPONSIBILITY BACK AND FORTH FROM ONE LEVEL OF GOVERNMENT TO ANOTHER. AT THIS STAGE OF MY LIFE, I HAVE NOT COME HERE TO EMBRACE DELAY AND DENIAL.

>> Ifill: IN MICHIGAN THE STATE BUDGET DEFICIT IS APPROACHING $2 BILLION. PLUS THE STATE IS TIED WITH CALIFORNIA FOR THE SECOND HIGHEST UNEMPLOYMENT RATE IN THE COUNTRY, 12.4%. NEW REPUBLICAN GOVERNOR RICK SNYDER VOWED TO TACKLE THE PROBLEM DURING HIS INAUGURAL ADDRESS ON SATURDAY.

>> OUR SOLUTION HAS TO ADDRESS THE ISSUE, THE CHALLENGE OF KEEPING OUR YOUNG PEOPLE IN THIS STATE. WE MUST CREATE MORE AND BETTER OPPORTUNITIES AND JOBS FOR THE UNDEREMPLOYED AND THE STRUCTURALLY UNEMPLOYED. THE REINVENTION OF MICHIGAN MUST NOT LEAVE ANYONE BEHIND.

>> I ANDREW CUOMO DO SOLEMNLY SWEAR....

>> Ifill: IN NEW YORK DEMOCRATIC GOVERNOR ANDREW CUOMO DECIDED TO SCRAP THE USUAL ELABORATE INAUGURAL FESTIVITIES.

>> THERE'S A LOT OF DISAPPOINTMENT VIS-A-VIS THE GOVERNMENT. THERE'S A LOT OF SUFFERING FROM THE ECONOMY, AND I DON'T THINK A GRAND CEREMONY OR A LAVISH CEREMONY WOULD BE APPROPRIATE. IN MY ADMINISTRATION THIS IS GOING TO BE THE WAY IT WORKS. WHEN WE ACTUALLY DO SOMETHING AND PERFORM AND HELP THE PEOPLE OF THE STATE OF NEW YORK AND WE MAKE GOVERNMENT FUNCTION, THEN WE'RE GOING TO HAVE A BIG PARTY AND CELEBRATE AND NOT BEFORE.

>> Ifill: BEST ESTIMATES PUT NEW YORK'S BUDGET DEFICIT AT UPWARDS OF $9 BILLION. TO START WHITTLING THAT DOWN, CUOMO PLANS WEDNESDAY TO ANNOUNCE A ONE-YEAR FREEZE IN STATE WORKERS' PAY.

>> Ifill: FOR MORE ON THE BUDGET SHORTFALLS FACING THE NEW GOVERNORS WE'RE JOINED BY THREE PUBLIC MEDIA REPORTERS. JOHN MYERS, THE SACRAMENTO BUREAU CHIEF FOR KQED PUBLIC RADIO. KAREN KASLER, CAPITAL BUREAU CHIEF FOR OHIO PUBLIC RADIO AND TELEVISION. AND KAREN DEWITT, CAPITAL BUREAU CHIEF FOR NEW YORK STATE PUBLIC RADIO AND PBS STATION WXXI. WE'LL START YOU WITH JOHN MYERS BECAUSE I HEAR THAT TODAY AT THE INAUGURAL LUNCH JERRY BROWNE SERVED HOT DOGS. HOW BIG A HOLE IS CALIFORNIA IN?

>> WELL, HE ACTUALLY ATE A COUPLE OF FREE HOT DOGS THAT WERE BEING OFFERED ON THE STATE CAPITAL LAWN, GWEN. THAT'S PROBABLY ABOUT THE SAME THOUGH I DON'T THINK JERRY BROWNE WILL TELL ANYBODY THERE ARE ANY FREE LUNCHES ANYMORE AROUND CALIFORNIA. THINGS ARE TOUGH. HE HAS A $28 BILLION SHORTFALL. YOU SAID $25 IN THE OPENING. THAT COULD BE THE LOW NUMBER. IT COULD BE HIGH TO $28 GIVEN THE CHANGES IN THE ESTATE TAX LAW THERE IN WASHINGTON. BUT AS MUCH AS $28 BILLION OVER A YEAR-AND-A-HALF. THE GOVERNOR MADE IT CLEAR HE DOESN'T WANT TO DO SMOKE AND MIRRORS. HE DOESN'T WANT TO DO GIMMICKS AND BUDGETS ANYMORE. HE WANTS TO HAVE AN HONEST BUDGETING. THAT'S SOMETHING HE TALKED ABOUT A LOT. THAT WILL BE TOUGH TO DO. ONE OF THE MOST POLITICALLY POLARIZED PLACES IN ALL OF CALIFORNIA IS RIGHT HERE IN SACRAMENTO. THE NEW GOVERNOR IS FINDING THAT OUT VERY SOON. HE HAS A SHORT WINDOW HERE TOO I SHOULD MENTION. HE WANTS TO PUT CUTS FORWARD BUT HE PROBABLY WANTS TO PUT TAXES ON A SPECIAL ELECTION BALLOT IN MAY OR JUNE OF THIS YEAR. THE VOTERS WOULD HAVE TO SAY SOME THINGS ABOUT THAT. TO GET IT ON THE BALLOT YOU HAVE TO GET LAWMAKERS TO DO THAT HERE IN JUST A MATTER OF WEEKS.

>> Ifill: KAREN DEWITT, LET'S TALK ABOUT ALBANY FOR A MINUTE. WHAT IS ANDREW CUOMO FACING THERE?

>> THAT'S RIGHT. AS YOU MENTIONED IN THE PIECE, THE STATE BUDGET DEFICIT IS $9.5-$10 BILLION. THAT'S 10% OF ALL THE MONEY THAT THE GOVERNOR AND LEGISLATURE HAVE CONTROL OVER SPENDING. THE BUDGET IS BIGGER BUT THEY ONLY HAVE CONTROL OVER ABOUT $90 BILLION. THIS IS THE THIRD YEAR WE'VE HAD A MULTIBILLION DOLLAR BUDGET DEFICIT. BUT UNLIKE THE PAST TWO YEARS THERE'S PROBABLY NOT GOING TO BE BILLIONS OF DOLLARS OF FEDERAL STIMULUS MONEY TO BAIL THEM OUT. SO CUOMO IS GOING TO HAVE TO GO AGAINST EVERY MAJOR INTEREST GROUP, THE UNIONS, THE EDUCATION COMMUNITY, THE HEALTH CARE COMMUNITY, AND HE'S GOING TO HAVE TO MAKE CUTS BECAUSE HE SAID THAT HE'S NOT GOING TO DO TAXES AND HE'S NOT GOING TO INCREASE SPENDING. IT'S A VERY FISCALLY CONSERVATIVE AGENDA FOR A DEMOCRATIC GOVERNOR. HE'S REALLY GOING TO GO UP AGAINST EVERYONE. IT WILL BE VERY INTERESTING TO WATCH.

>> Ifill: VERY INTERESTING. KAREN KASLER IN OHIO, THE GOVERNOR HASN'T TAKEN THE OATH OF OFFICE YET. HE DOES ON JANUARY 10 I BELIEVE. WHAT DOES HE FACE?

>> WELL, INTERESTINGLY ENOUGH WE DON'T HAVE THIS POLARIZATION IN OHIO'S CAPITAL. THE REPUBLICANS TOOK BACK THE OHIO HOUSE. THEY STRENGTHENED THERE ARE POWER IN THE OHIO SENATE AND THE NEW GOVERNOR IS IS A REPUBLICAN. IN A SENSE IT COULD BE ARGUED THAT JOHN KAY SIK WHO YOU MAY REMEMBER FROM HIS TIME AS A HOUSE BUDGET CHAIR HE CALLED HIMSELF THE ARCHITECT OF THE FEDERAL BALANCED BUDGET BACK THEN IN 1997. HE SAYS THAT, YOU KNOW, HE DOESN'T HAVE ANY CONSTRAINTS, THAT HE CAN DO PRETTY MUCH WHAT HE WANTS TO DO. HE FEELS LIKE THERE IS A LOT OF OHIO HANGING FRUIT AS HE PUTS IT. HE SAYS THAT CERTAIN LOW HANGING FRUIT HASN'T BEEN PICKED BECAUSE OF POLITICAL ISSUES, POLITICAL REASONS. HE SAYS THAT HE WANTS TO GO AFTER THIS. HE WON'T GELT SPECIFIC BUT IT CERTAINLY SEEMS LIKE ISSUES INVOLVING AND PROGRAMS INVOLVING MEDICAID AND ALSO NURSING HOMES, HOSPITALS, SOME OF THESE AREAS ARE GOING TO BE LIKELY TARGETS. WE HAVE ABOUT A 4 TO 8 BILLION DOLLAR BUDGET DEFICIT THAT WAS ESTIMATED. NOW WE'RE HEARING FROM THE INCOMING SENATE FINANCE COMMITTEE CHAIRMAN THAT IT COULD BE AS HIGH AS $10 BILLION. WE HAVE A $52 BILLION TWO-YEAR BUDGET SO $10 BILLION OUT OF BALANCE IS A HUGE NUMBER TO DEAL WITH.

>> Ifill: LET'S PICK THROUGH SOME OF THE REASONS WHY THE STATES ARE IN DIRE STRAITS. WE HEARD KAREN DEWITT IN NEW YORK SAY THIS IS A QUESTION OF SOMETIME LUGS FUNDING WHICH IS NOW MISSING. LET'S GO TO CALIFORNIA AND TALK ABOUT THESE PENSION LIABILITIES. THAT'S A BIG CHUNK OF WHAT'S GOING WRONG THERE, ISN'T IT?

>> GWEN, I THINK THAT'S FAIR. I MEAN THE OUTGOING GOVERNOR, THE EX-GOVERNOR ARNOLD SCHWARZENEGGER ONE OF THE LAST THINGS HE DID IN THE OFFICE IN THE BUDGET DEAL THAT WAS DONE IN THE FALL IS REWORK SOME OF THE PENSION TO PUBLIC EMPLOYEES AT THE STATE LEVEL, MAKING THEM A LITTLE BIT LESS GENEROUS. STILL A LOT MORE WORK TO DO THERE. YOU'RE SEEING THE PUBLIC TAKE NOTICE OF THIS ISSUE CERTAINLY BUT IT GOES FAR BEYOND THAT. ONE THING I WAS STRUCK BY GOVERNOR JERRY BROWNE SAYING TODAY WHEN HE TOOK THE OATH OF OFFICE WAS HE SAID THAT MAYBE CALIFORNIA DOESN'T HAVE A PROBLEM BUT IT HAS A CONDITION. AND A CONDITION THAT CAN ONLY BE MANAGED AND NOT FIXED. THAT'S A VERY DIFFERENT KIND OF RHETORIC THAN SAYING I'VE GOT A SOLUTION TO THIS. IT SAYS MAYBE WE'RE JUST KIND OF THIS IS THE WAY THINGS ARE AND WE'VE JUST GOT TO DO THE BEST WE CAN. THAT'S A REAL MIND SHIFT SET FOR THE PUBLIC BOTH HERE AND IN OTHER STATES THAT ARE HAVING PROBLEMS.

>> Ifill: JERRY BROWNE SAID PEOPLE WILL HAVE TO BE PREPARED TO TAKE THE PAIN. IS THAT A MESSAGE ANYBODY EVER WANTS TO HEAR? WHAT WAS THE REACTION TO THAT?

>> WELL, IN GENERAL EVERYBODY SAID, WELL, WE AGREE HE'S RIGHT. THEN THE DEVIL WILL BE IN THE DETAILS. I THINK THE REAL QUESTION FOR A GOVERNOR LIKE BROWNE-- AND THIS MAY BE TRUE IN OTHER PARTS OF THE COUNTRY TOO-- IS CAN YOU GET THE PUBLIC TO FINALLY UNDERSTAND WHAT'S GOING ON? CAN YOU GET THEM TO REALLY UNDERSTAND THE DEPTH OF THE PROBLEMS WE'RE HAVING HERE IN CALIFORNIA, OTHERS HAVE? BROWN CALLED IT CAN PEOPLE HAVE A DEVOTION TO CALIFORNIA FIRST AND PARTY SECOND? I THINK THAT'S HIS REAL TEST OUT HERE.

>> Ifill: LET'S TALK ABOUT THIS IDEA ABOUT WHAT IT IS THAT PEOPLE EXPECT. ONE OF THE THINGS IN NEW YORK STATE, KAREN DEWITT, IS THAT WE'VE HEARD THAT DURING THE CAMPAIGN AT LEAST ANDREW CUOMO, GOVERNOR CUOMO, HAD TALKED ABOUT A PROPERTY TAX CAP WHICH SEEMS TO RUN AGAINST THE IDEA OF CREATING ADDITIONAL REVENUES FOR A STATE IN A TOUGH SITUATION.

>> YEAH, THAT'S ABSOLUTELY RIGHT. BUT PROPERTY TAXES ARE AMONG THE HIGHEST IN THE NATION. PEOPLE ARE UPSET WITH THAT. BUT ONCE THEY SEE CUOMO... WHAT FEWER TAXES ARE GOING TO BRING, IF THAT BRINGS CUTS TO EDUCATION AND TO HEALTH CARE, THEN THE PUBLIC MAY NOT BE BEHIND IT IN THE SAME WAY BECAUSE I THINK IN THEORY PEOPLE SAY TAXES ARE TOO HIGH, SPENDING IS TOO HIGH. GOVERNMENT IS OUT OF CONTROL. BUT IF YOU ASK THEM SPECIFICALLY IN POLLS WOULD YOU CUT SCHOOLING? WOULD YOU CUT YOUR CHILDREN'S SCHOOL? THEY'LL SAY NO. WE DON'T WANT TO DO THAT. IT WILL BE DIFFICULT FOR CUOMO TO CONTINUE TO CONVINCE PEOPLE THAT THESE CUTS HAVE TO BE MADE.

>> Ifill: IS THERE A LOW HANGING FRUIT IN NEW YORK STATE LIKE JOHN KAYE SIK IS LOOKING FOR IN OHIO?

>> YOU KNOW, THERE ISN'T REALLY. THEY'VE ALREADY DONE A LOT OF THAT. THEY RAISED A TEMPORARY INCOME TAX ON THE WEALTHY. THAT EXPIRES IN APRIL. CUOMO SAYS HE DOESN'T WANT TO RENEW THAT. SO THEY'VE MADE A LOT OF THE EASY CUTS. YOU KNOW, THEY'VE CUT THINGS LIKE THE PAPER SUPPLIES OF STATE AGENCIES. FORMER GOVERNOR PATTERSON IMPOSED 900 LAY-OFFS SO THERE REALLY ISN'T A LOT OF STUFF LEFT. WE'RE GOING TO HAVE TO MAKE REALLY FUNDAMENTAL CUTS, MAYBE CONSOLIDATE AGENCIES AND STOP DOING SOME SERVICES THAT HAVE BEEN DONE FOR A LONG TIME IN NEW YORK.

>> Ifill: ONE OF THE CRITICAL CONNECTIONS BETWEEN THE FEDERAL GOVERNMENT AND THE STATE GOVERNMENT IS THIS QUESTION OF WHO IS PAYING FOR MEDICAID FOR THE HEALTH INSURANCE PROGRAM FOR THE POOR? IN OHIO, THAT SEEMS TO BE A BIG PART OF THE DRAG ON THE STATE BUDGET. IS THAT TRUE?

>> RIGHT. 40% OF THE STATE BUDGET IS MEDICAID. INTERESTINGLY ENOUGH, WHEN YOU LOOK THROUGH THE STATE BUDGET 85% OF OHIO'S BUDGET IS MONEY THAT HAS PASSED THROUGH TO LOCAL BOARDS OR AGENCIES OR GOVERNMENT ENTITIES. OF COURSE THAT INCLUDES SOME MEDICAID MONEY BUT ALSO K-12 EDUCATION, THAT SORT OF THING. THE POINT OF TRYING TO EXPLAIN THIS TO PEOPLE, HOW TO MAKE THESE CUTS AND NOT HAVE IT IMPACT YOUR SCHOOL, YOUR TOWN, YOUR ROAD THAT YOU DRIVE TO GO TO WORK IS GOING TO BE A VERY DIFFICULT CASE TO MAKE. THE COLUMBUS DISPATCH HERE TODAY HAS A LITTLE INTER-ACTIVE THING ON ITS WEBSITE WHERE YOU CAN TRY TO BALANCE THE STATE BUDGET. WHAT WOULD YOU CUT? AND THEN YOU GO THROUGH AND FIGURE OUT WHAT THE NEWSPAPER'S HEADLINES WOULD BE IF YOU WERE THE GOVERNOR AND YOU CUT MONEY TO EDUCATION. YOU CUT MONEY TO MEDICAID. ALL THESE SORTS OF ISSUES. IT'S A VERY CHALLENGING THING TO EXPLAIN TO PEOPLE HOW THIS MONEY WILL AFFECT YOU IF INDEED IT IS CUT. IT'S EASY TO TALK ABOUT IN PRINCIPLE BUT IN FACT IT BECOMES A TOTALLY DIFFERENT ARGUMENT.

>> Ifill: THERE IS THE DEBATE, JOHN MYERS, ABOUT CUTTING. HOW ABOUT THE DEBATE ABOUT RAISING ANY MONEY? ANY DISCUSSION IN SACRAMENTO ABOUT HOW TO GET ADDITIONAL REVENUES.

>> THERE IS, GWEN. ONE OF THE THINGS THAT THE GOVERNOR TALKED ABOUT DURING HIS CAMPAIGN WAS IF THERE WOULD BE NEW TAXES IT WOULD HAVE TO BE WITH THE VOTE OF THE PEOPLE. THAT'S PART OF THE IDEA THAT HE WOULD HAVE A SPECIAL ELECTION SOMETIME IN THE LATE SPRING AND EARLY SUMMER TO ASK THE VOTERS TO EXTEND TEMPORARY TAX INCREASES, SOME THAT WERE PUT UP LAST YEAR. A CAR TAX, A SALES TAX TO KEEP THEM FROM EXPIRING WHICH THEY'RE SET TO DO RIGHT NOW. OF COURSE THAT'S A TOUGH SELL WITH THE VOTERS. THEY'VE GOT TO BE DRAWN INTO THAT AND BELIEVE IT'S REAL. YOU HAVE TO GET REPUBLICANS TO BUY OFF IT IN SACRAMENTO BEFORE YOU COULD GET IT ON THE BALLOT. I THINK YOU'RE RIGHT. I THINK THAT'S A TOUGH ONE FOR EVERYONE TO TRY TO UNDERSTAND BUT AGAIN THE QUESTION IS WHAT ARE YOU GOING TO DO IF YOU DON'T HAVE THOSE REVENUES? WHAT ELSE ARE YOU GOING TO CUT? SCHOOLS, COLLEGES, UNIVERSITIES, PRISONS EVEN. THAT'S A HUGE DRAW HERE IN CALIFORNIA. A LOT OF TOUGH QUESTIONS.

>> Ifill: ARE THERE TOUGH QUESTIONS ABOUT RAISING TAXES IN SOME WAY IN NEW YORK, KAREN DEWITT?

>> ABSOLUTELY. I MEAN GOVERNOR CUOMO HAS PROMISED THAT HE'S NOT GOING TO RAISE TAXES. NOW HE DIDN'T SAY SPECIFICALLY HE WASN'T GOING TO RAISE FEES. BUT I DON'T THINK YOU COULD RAISE LIKE THE DMV FEES FOR DRIVER'S LICENSES OR ANY OF THAT STUFF ENOUGH TO MAKE UP $10 BILLION. THEY'RE GOING TO HAVE TO FACE THE CUTS. IT'S REALLY GOING TO BE... IT'S GOING TO BE TOUGH. IT'S GOING TO BE VERY TOUGH FOR HIM.

>> Ifill: HOW MUCH TOUGHER IS IT MADE BY THE FACT THAT ALBANY IS SUCH A FAMOUSLY DYSFUNCTIONAL LEGISLATIVE EXECUTIVE RELATIONSHIP?

>> THAT JUST ADDS SPICE TO IT, I THINK, RIGHT? THE LEGISLATURE IS JUST NOTORIOUSLY DYSFUNCTIONAL THOUGH THE LEGISLATIVE LEADERS SAY THEY ARE GOING TO WORK WITH THE GOVERNOR. THE THING IS THE LEGISLATURE DOES HAVE A LOT OF POWER IN NEW YORK STATE OVER BUDGET MATTERS AND OTHER THINGS. SO THE GOVERNOR CAN'T JUST COME THROUGH LIKE A STEAM ROLLER LIKE HIS PREDECESSOR ELIOT SPITZER WAS THE FAMOUS STEAM ROLLER. HE'S GOING TO HAVE TO TRY TO CONVINCE THEM TO COME ALONG WITH HIM. THAT'S QUITE A BIT MORE DIFFICULT THAN JUST TRYING TO BLUDGEON THEM INTO SUBMISSION.

>> Ifill: KAREN KASLER, WE HAVE A PARTY CHANGE HAPPENING IN OHIO STATE HOUSE. HOW IS THAT GOING TO PLAY INTO THIS AND ARE THERE REVENUES THAT CAN BE RAISED AS A PART OF CLOSING THIS GAP?

>> WELL, WHEN YOU TALK TO VARIOUS LAWMAKERS ABOUT THE BUDGET, THE INCOMING SPEAKER HAS SAID THAT IT WILL HORRIFIC BUDGET CUTS TO DEAL WITH THIS BUDGET DEFICIT. OTHER LAWMAKERS HAVE MADE SIMILAR COMMENTS. THE INCOMING GOVERNOR IS ALMOST VERY CASUAL ABOUT THE BUDGET DEFICIT. HE DOESN'T COME ACROSS AS BEING OVERLY WORRIED ABOUT IT. HE CLAIM THEIRS WILL BE A BALANCED BUDGET WITH A TAX CUT. WITH THE REPUBLICANS IN CONTROL OF THE HOUSE, THE SENATE AND THE GOVERNOR'S'S OFFICE WE'RE NOT GOING TO SEE A TAX INCREASE CERTAINLY. I KNOW THE NEW GOVERNOR HAS SIGNED THE NO NEW TAXES PLEDGE TALKED ABOUT BY OTHER NATIONAL CONSERVATIVE GROUPS. THAT PLEDGE ALLOWS FEE INCREASES BUT NOT JUST TO RAISE MONEY. THE GOVERNOR HAS BEEN TALKING ABOUT THE PUBLIC PRIVATE PARTNERSHIP, LEASING THE OHIO TURNPIKE POSSIBLY PRISONS AND MAYBE OTHER THINGS. THERE ARE SOME REPORTS ABOUT LEASING STATE GOVERNMENT OFFICE SPACE AND SELLING THE BUILDINGS. SO THERE ARE A LOT OF OPPORTUNITIES. HE SAYS EVERYTHING IS ON THE TABLE. BUT HE HAS NO CONSTRAINTS.

>> Ifill: THAT WILL BE FUN TO CHECK BACK IN WITH YOU GUYS AND SEE HOW MUCH REALITY COMES AGAINST THE PROMISES. KAREN KASLER, KAREN DEWITT AND JOHN MYERS, THANK YOU ALL VERY MUCH.

>> THANK YOU.

>> Woodruff: STILL TO COME ON THE NEWSHOUR, THE ECONOMIC CONSEQUENCES AS BABY BOOMERS TURN 65; THE HEALTH CARE CHALLENGES IN SOUTHERN SUDAN; THE GOLDMAN SACHS INVESTMENT IN FACEBOOK; AND THE BLEAK JOB MARKET FOR RECENT COLLEGE GRADS. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S HARI SREENIVASAN.

>> Sreenivasan: A FLOOD DISASTER IN THE AUSTRALIAN OUTBACK WORSENED TODAY, CUTTING OFF A COASTAL CITY OF 75,000 PEOPLE. ROCKHAMPTON WAS THE LATEST OF 22 CITIES AND TOWNS IN QUEENSLAND STATE TO BE INUNDATED. HEAVY RAIN THAT BEGAN BEFORE CHRISTMAS HAS TRIGGERED FLOODING OVER AN AREA THAT'S ROUGHLY THE SIZE OF FRANCE AND GERMANY COMBINED. OFFICIALS TODAY ORDERED MILITARY FLIGHTS TO DELIVER FOOD AND MEDICAL SUPPLIES INTO ROCKHAMPTON. IN EGYPT, POLICE PURSUED A POSSIBLE AL QAEDA ROLE IN THE BOMBING OF A COPTIC CHRISTIAN CHURCH DURING NEW YEAR'S MASS. THE EXPLOSION IN ALEXANDRIA KILLED 21 PEOPLE AND WOUNDED NEARLY 100 OTHERS. WITHIN HOURS, PROTESTERS CONFRONTED POLICE FOR FAILING TO PROTECT CHRISTIANS. THERE WERE MORE PROTESTS IN CAIRO SUNDAY AND TODAY. CHRISTIANS MAKE UP ONLY 10% OF EGYPT'S MOSTLY MUSLIM POPULATION OF 80 MILLION PEOPLE. THE U.S. MILITARY HAS SUFFERED ITS FIRST DEATHS IN IRAQ FOR 2011. TWO AMERICAN SOLDIERS WERE KILLED LATE SUNDAY IN THE CENTRAL PART OF THE COUNTRY. MEANWHILE, THREE NATO TROOPS HAVE DIED IN AFGHANISTAN SINCE THE NEW YEAR BEGAN. MORE THAN 700 WERE KILLED IN 2010. THE MEN AND WOMEN WHO WANT TO LEAD THE REPUBLICAN PARTY FACED OFF TODAY IN WASHINGTON. THEY'RE CHALLENGING THE INCUMBENT CHAIRMAN, WHO HAS COME UNDER INTENSE CRITICISM. REPUBLICANS OFFICIALLY TAKE OVER THE U.S. HOUSE THIS WEEK. BUT TODAY AN INTERNAL FIGHT WAS IN FULL PUBLIC VIEW OVER WHO WILL LEAD THE PARTY'S CHARGE TO TAKE BACK THE WHITE HOUSE IN 2012. THE EMBATTLED REPUBLICAN NATIONAL CHAIRMAN MICHAEL STEELE DEFEND HIS RECORD AGAINST FOUR CHALLENGERS AT THE NATIONAL PRESS CLUB IN WASHINGTON.

>> MY RECORD STANDS FOR ITSELF. WE WON. I WAS ASKED TO WIN ELECTIONS. I WAS ASKED TO RAISE MONEY $192 MILLION OVER THE LAST TWO YEARS. WE WON. THE FACT THAT WE'RE HERE RIGHT NOW CELEBRATING THAT WIN, I THINK, SAYS A LOT ABOUT THE RECORD.

>> PARTY LEADERS NOW APPEAR POISED TO REPLACE STEELE. HIS TWO YEARS ON THE JOB HAVE BEEN MARKED BY REPEATED GAFFES. JUST THIS MORNING THE WASHINGTON TIMES REPORTED THE REPUBLICAN NATIONAL COMMITTEE IS MORE THAN $20 MILLION IN DEBT. THE CURRENT LEADER IN COMMITTED VOTES FROM THE RNP'S 168 MEMBERS IS WISCONSIN STATE CHAIRMAN.

>> WE NEED A LOT OF MONEY. WE NEED A CHAIRMAN THAT'S GOING TO PUT HIS OR HER HEAD DOWN AND SPEND LITERALLY FIVE, SIX HOURS EVERY DAY MAKING MAJOR DONOR CALLS, MAJOR DONOR VISITS LITERALLY WORKING LIKE AN ABSOLUTE DOG FOR THE NEXT TWO YEARS, GETTING OUR FISCAL HOUSE IN ORDER.

>> OTHERS LIKE THE FORMER MISSOURI PARTY CHAIR ANN WAGNER ALSO CRITICIZED STEELE'S TENURE.

>> IT IS TIME FOR SOME TOUGH LOVE AT THE REPUBLICAN NATIONAL COMMITTEE. HOW CAN AN ORGANIZATION THAT HAS LOST ITS CREDIBILITY, IS $20 MILLION IN DEBT, IS STEEPED IN MISMANAGEMENT, DISTRACTIONS AND DRAMA, ACTUALLY LEAD US INTO THE NEXT ELECTION CYCLE OF 2012 AND OFFER CHANGE?

>> THE RNC WILL VOTE ON A NEW CHAIRMAN WHEN IT HOLDS ITS WINTER MEETING NEXT WEEKEND.

>> Sreenivasan: THE NAVY WILL INVESTIGATE THE CAPTAIN OF THE AIRCRAFT CARRIER U.S.S. "ENTERPRISE" OVER HOMEMADE VIDEOS SHOWN ON BOARD. OWEN HONORS WAS SECOND-IN- COMMAND WHEN HE HELPED MAKE THE VIDEOS IN 2006 AND 2007. ON SUNDAY, THE "VIRGINIAN-PILOT" NEWSPAPER RELEASED CLIPS. THEY SHOW HONORS AND OTHERS ACTING OUT SUGGESTIVE SHOWER SCENES, USING GAY SLURS AND MIMICKING SEXUAL ACTS. THE NAVY CALLED THE VIDEOS "CLEARLY INAPPROPRIATE." A NEW BLOOD TEST CAN DETECT A SINGLE CANCER CELL IN THE HUMAN BLOOD STREAM, AND IT COULD BE AVAILABLE IN SEVERAL YEARS. RESEARCHERS AT MASSACHUSETTS GENERAL HOSPITAL IN BOSTON UNVEILED THE SCREENING METHOD TODAY. THE JOHNSON AND JOHNSON COMPANY WILL HELP BRING IT TO MARKET. THE TEST COULD HELP DOCTORS DECIDE WHICH TREATMENTS WILL WORK AND HELP THEM GAUGE RESULTS MUCH FASTER. SCIENTISTS BEGAN AVIAN AUTOPSIES TODAY AFTER MORE THAN 3,000 BLACKBIRDS FELL DEAD FROM THE SKY IN ARKANSAS ON NEW YEAR'S EVE. RESIDENTS AND CLEANUP CREWS IN THE TOWN OF BEEBE SPENT THE WEEKEND PICKING UP THE CARCASSES. THE HEAD OF ONE LAB SAID THE BIRDS MAY HAVE BEEN CAUGHT IN A VIOLENT THUNDERSTORM. 100 MILES AWAY, 100,000 DRUM FISH WASHED UP DEAD NEAR OZARK. WILDLIFE OFFICIALS SAID IT IS UNLIKELY THE FISH KILL IS RELATED TO THE BIRD DEATHS. IN ECONOMIC NEWS, U.S. FACTORY ACTIVITY ROSE IN DECEMBER BY THE MOST SINCE LAST SPRING. AND CONSTRUCTION SPENDING WAS UP IN NOVEMBER FOR THE THIRD MONTH IN A ROW. THE TWO REPORTS HELPED GET WALL STREET OFF TO A GOOD START FOR 2011. THE DOW JONES INDUSTRIAL AVERAGE GAINED 93 POINTS TO CLOSE ABOVE 11,670. THE NASDAQ ROSE MORE THAN 38 POINTS TO CLOSE AT 2691. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO JUDY.

>> Woodruff: THE BUSINESS WORLD WAS ABUZZ TODAY OVER A NEW INVESTMENT DEAL THAT VALUES THE SOCIAL MEDIA COMPANY FACEBOOK AT A WHOPPING $50 BILLION. RAY SUAREZ HAS THE STORY.

>> Suarez: THE POPULAR SOCIAL NETWORKING WEB SITE FACEBOOK IS NOW WORTH MORE THAN COMPANIES LIKE EBAY, TIME WARNER, AND STARBUCKS. ACCORDING TO TODAY'S "NEW YORK TIMES," THE INVESTMENT FIRM GOLDMAN SACHS AND A RUSSIAN COMPANY CALLED DIGITAL SKY TECHNOLOGIES INVESTED $500 MILLION IN FACEBOOK IN A DEAL THAT VALUES THE COMPANY AT $50 BILLION. FACEBOOK LETS USERS CREATE PERSONAL WEB PROFILES AS WELL AS CONNECT TO AND SHARE INFORMATION WITH FRIENDS. IT IS USED BY ABOUT HALF A BILLION PEOPLE AROUND THE WORLD. LAST YEAR IT SURPASSED GOOGLE AS THE MOST VISITED WEB SITE IN THE U.S. HERE TO TELL US MORE IS ANDREW ROSS SORKIN, WHO CO-WROTE THE STORY FOR THE "TIMES." ANDREW, WHAT DOGS GOLDMAN SEE IN MAKES IT WORTH THAT MUCH MONEY?

>> I THINK THERE'S TWO STORIES HERE. ONE IS THIS VALUATION OF FACEBOOK AT $50 BILLION. YOU SAY WHY? WHY $50 BILLION? THAT SOUNDS LIKE A LOT OF MONEY. ON A RELATIVE BASIS, SOMETHING LIKE A GOOGLE WHICH, AS YOU JUST SAID, FACEBOOK HAS JUST SURPASSED IN TERMS OF USE, GOOGLE IS WORTH CLOSE TO $200 BILLION. THEY'RE ALL TRYING TO GET AT THE ADVERTISING MARKET, TARGETED ADVERTISING, BEING ABLE TO REALLY BE ABLE TO ADVERTISE DIRECTLY TO YOU BY KNOWING AS MUCH INFORMATION ABOUT YOU. THAT'S WHAT FACEBOOK PERHAPS EVEN MORE SO THAN GOOGLE IS ABLE TO BRING THE ADVERTISER. THE SECOND COMPONENT....

>> Suarez: I'M SORRY. GO AHEAD.

>> THE SECOND BIG HEADLINE HERE THERE IS GOLDMAN SACHS. WHY IS GOLDMAN SACHS, A WALL STREET INVESTMENT FIRM, DOING THIS? AND IT IS AS MUCH A FINANCIAL INVESTMENT FOR THEM AS IT IS AN OPPORTUNITY TO GET ON THE GROUND FLOOR OF A POSSIBLE FACEBOOK IPO IN THE FUTURE. THIS IS A PRIVATE SALE EARLY. IT'S AN OPPORTUNITY FOR THEM TO GIVE THEIR HIGH NET WORTH CLIENTS ACCESS TO THESE COVETED SHARES. SO THERE'S ALL SORTS OF FEE STREAMS THROUGHOUT THAT WILL MAKE THIS DEAL PERHAPS PROFITABLE FOR GOLDMAN SACHS EVEN IF FACEBOOK ULTIMATELY SN AS PROFITABLE AS PEOPLE THINK.

>> Suarez: WHEN I SAW THE STORY THIS MORNING, YOUR STORY, I LOGGED ON FACEBOOK. AND THE FIRST THREE ITEMS IN MY CUE WERE MY KID BROTHER'S NEW SHORT HAIRCUT, A PICTURE OF MY SON AT A COLLEGE CONVENTION, AND A JOURNALIST FRIEND SHOOTING ME A COPY OF YOUR STORY. I THOUGHT, WELL, HOW DO YOU MONETIZE THAT KIND OF PERSON-TO- PERSON CONTACT? I CAN SEE SOME VALUE IN IT. BUT I DON'T KNOW IF I WAS MAKING ANYBODY ANY MONEY.

>> I'LL TELL YOU WHAT'S HAPPENING, RAY, WHICH IS ON THE SIDE, ON THE CORNER OF YOUR WEB SCREEN ON FACEBOOK JUST LIKE ON GOOGLE, THERE ARE ADS THAT ARE TARGETED TO YOU, SPECIFICALLY. THEY MIGHT HAVE YOUR ALMA MATER. THEY MIGHT HAVE INFORMATIONING INFORMATION FROM YOUR EMAILS THAT THEY'RE PICKING UP SAYING HE'S INTERESTED IN THAT OR IT'S AN EMAIL ABOUT A TRIP YOU'RE PLANNING. IT MIGHT HAVE AIR FARES. WHAT'S HAPPENING IS A TOTALLY NEW MODEL OF ADVERTISING THAT'S BEING ABLE TO REALLY COME AT YOU DIRECTLY AND BE CUSTOMIZED TOWARDS YOU HOPING THAT YOU'RE MORE LIKELY TO CLICK ON THAT THAN A GENERIC AD THAT IS SENT ACROSS THE WEB OR TELEVISION OR THE RADIO.

>> Suarez: YOU MENTIONED A FUTURE POSSIBLE IPO FOR FACEBOOK BUT RIGHT NOW FACEBOOK SHARES DON'T CIRCULATE FREELY. BUT IS THERE ANOTHER MARKET, ANOTHER WAY OF BUYING INTO THIS COMPANY NOW THAT GOLDMAN SACHS OWNS THIS STAKE?

>> WELL, EVEN PRIOR TO GOLDMAN SACHS OWNING THE STAKE, ODDLY ENOUGH, THERE WAS A HOT SECONDARY MARKET, ALMOST A SHADOW MARKET FOR FACEBOOK SHARES. FACEBOOK EMPLOYEES AND EARLY INVESTORS IN FACEBOOK HAVE BEEN HOLDING ON TO THESE SHARES SINCE THE COMPANY'S CREATION. THEY'VE BECOME THE SECONDARY EXCHANGES WHERE PEOPLE ARE ACTUALLY TRADING IN THESE SHARES IN ADVANCE OF A POTENTIAL IPO. THE IDEA THAT GOLDMAN SACHS IS NOW GOING TO NOT ONLY INVEST $450 MILLION BUT IN ADDITION THEY'RE GOING TO RAISE AN ADDITIONAL $1.5 BILLION FROM THEIR OWN INVESTORS MEANS THERE WILL BE AN EVEN LARGER MARKET OUT THERE FOR THESE SHARES. HOWEVER, I SHOULD NOTE THAT BECAUSE OF THE SECONDARY MARKET, THE S.E.C. WHICH HISTORICALLY HAS REGULATED THE PUBLIC MARKET IS NOW LOOKING AT THIS SPACE. I THINK THEY'RE VERY CURIOUS TO UNDERSTAND WHETHER PRIVATE COMPANIES ARE USURPING THE RULES AROUND PUBLIC DISCLOSURES. THE RULES THAT THE S.E.C. HAS IS THAT IF YOU HAVE MORE THAN 499 SHAREHOLDERS, ONCE YOU GET TO 500 SHAREHOLDERS, YOUR 500th SHAREHOLDERS MEANS YOU HAVE TO START MAKING PUBLIC DISCLOSURES ABOUT YOUR FINANCES. THUS FAR, FACEBOOK HAS NOT DONE SO.

>> Suarez: FOLLOWING UP ON WHAT YOU JUST SAID, WHAT CAN GOLDMAN DO WITH ITS STAKE IN FACEBOOK IN.

>> WELL, IT'S VERY INTERESTING. THEY CAN'T DO MUCH EXCEPT WAIT FOR THE IPO, BUT WHAT IS SO INTERESTING ABOUT THIS SPECIAL PURPOSE VEHICLE WHICH GOLDMAN IS CREATING IS THAT EFFECTIVELY THEY MAY ULTIMATELY HAVE SEVERAL HUNDRED INVESTORS IN THIS VEHICLE BUT THEY WILL ONLY COUNT OR WHAT THEY'RE TRYING TO DO IS MAKE IT COUNT AS ONE INVESTOR SO THAT THEY WON'T GO BEYOND THE 500 INVESTORS THAT TECHNICALLY THE S.E.C. HAS THE RULE FOR. SO THE REAL QUESTION IS ACTUALLY WHETHER THE S.E.C. IS GOING TO LOOK FAVORABLY UPON THIS OR NOT. THE S.E.C. IS NOT ONLY LOOKING AT FACEBOOK BEFORE THIS INVESTMENT BUT THEY'RE ALSO LOOKING AT TWITTER INVESTMENTS, INVESTMENTS IN LINKED-IN AND OTHER COMPANIES. THERE'S BECOME THIS HOT SECONDARY MARKET FOR ALL SORTS OF PRE-IPO INTERNET COMPANIES.

>> Suarez: EARLIER IN THE JUST PAST DECADE, RUPERT MURDOCH BOUGHT MYSPACE FOR WHAT WAS THEN CONSIDERED A PHENOMENAL AMOUNT OF MONEY. IT WAS GIVEN A VERY GAUDY VALUATION AT THE TIME. I DON'T THINK ANYBODY THINKS IT'S WORTH THAT TODAY. HOW DO WE KNOW THIS ISN'T JUST ANOTHER MYSPACE.

>> IT MAY BE ANOTHER MY MANUFACTURE SPACE. I SHOULD TELL YOU GOLDMAN SACHS, WHATEVER YOU THINK OF THEIR BRAND AND CREDIBILITY THEY BOUGHT INTO A COMPANY CALLED WEB BAND. I DON'T KNOW IF YOU REMEMBER THAT FROM THE LATE '90s. IT DOESN'T EXIST TODAY. NOT ALL THEIR INVESTMENTS WORK OUT. BUT I DO THINK THAT FACEBOOK HAS MORE VALUE THAN SOME PEOPLE ARE ASCRIBING TO IT. THEY ARE A PROFITABLE COMPANY. THEY'RE MAKING $2 BILLION, WITH A B, IN REVENUE. MORE IMPORTANTLY THEIR TENTACLES ARE EVERYWHERE. BECAUSE THEY HAVE AN ALMOST EMAIL SERVICE AND BECAUSE THEY'RE SO UBIQUITOUS AND PEOPLE ARE ON SO TIEDED INTO IT THERE'S A REAL QUESTION AS TO WHETHER A COMPETITOR, YOU KNOW, TWO GUYS IN A GARAGE, CAN ACTUALLY START SOMETHING NEW THAT SOMEHOW USURPS FACEBOOK ALL OVER AGAIN.

>> Suarez: IF GOLDMAN SACHS IS RIGHT ABOUT WHAT FACEBOOK IS WORTH MARK ZUCKERBERG ITS FOUNDER IS WORTH $14 BILLION. ANDREW ROSS SORKIN, THANKS FOR JOINING US.

>> THANK YOU, RAY.

>> Ifill: NEXT TONIGHT, THE HEALTH CARE CHALLENGES THAT THREATEN TO OVERWHELM AN AFRICAN NATION AS IT PREPARES TO CAST A CRITICAL VOTE ON INDEPENDENCE. SPECIAL CORRESPONDENT JEFFREY KAYE REPORTS FROM SOUTH SUDAN.

>> Reporter: ON THE BANKS OF THE NILE RIVER IN SOUTH SUDAN ENTREPRENEURS PUMP WATER TO FILL UP TANKERS. PRIVATE WATER COLLECTION AND SALES FROM RIVERS AND WELLS IS BIG BUSINESS HERE. PARTICULARLY DURING THE DRY SEASON. BUT FOR CUSTOMERS THE WATER OFTEN COMES AT A HIGH COST.

>> IT IS A GOOD BUSINESS FOR THEM BUT THIS IS SPREADING DISEASES.

>> Reporter: DR. JUSTIN BRUNO DIRECTS THE CHILDREN'S HOSPITAL IN THE TOWN OF JUBA.

>> THE WATER IS NOT... IT IS JUST FLOWING NATURALLY. THE PEOPLE JUST DRINK IT. IT'S NOT BOILED.

>> Reporter: WHAT HAPPENS AS A RESULT?

>> DISEASES. PEOPLE GET ACUTE DIARRHEA. PEOPLE GET BLOODY DIARRHEA. AND TYPHOID FEVER. THAT IS RAMPANT IN THIS TOWN AND IN SOUTHERN SUDAN.

>> Reporter: YOU CAN TRACE THAT RIGHT BACK TO THE....

>> RIGHT BACK TO THE RIVER WATER.

>> Reporter: PATIENTS SUFFER NOT ONLY FROM PREVENTABLE DISEASES BUT EVEN IF THEY MAKE IT TO A HEALTH CARE FACILITY OFTEN FROM INADEQUATE TREATMENT. THIS ESSENTIALLY IS THE WAITING ROOM OF THE ONLY CHILDREN'S HOSPITAL IN SOUTH SUDAN. THE HEALTH CARE SYSTEM, SUCH AS IT IS HERE, IS BARELY FUNCTIONING. MOST PEOPLE HAVE NO ACCESS TO HEALTH CARE SO THE CHALLENGE IS NOT SO MUCH TO IMPROVE THE SYSTEM. IT'S TO CREATE ONE.

>> THE MOST PRESSING THING IS THE LACK OF FED CAL SUPPLIES.

>> Reporter: WHAT DO YOU MEAN?

>> MEDICATIONS ARE NOT ENOUGH FOR THE PATIENTS.

>> Reporter: BESIDES THE LACK OF DRUGS, THE HOSPITAL'S SINGLE X-RAY MACHINE IS BROKEN. IT SHARES A STORAGE ROOM WITH A BUSTED BLOOD BANK REFRIGERATOR. THERE'S NO ULTRASOUND OR CT MACHINE. AND EVEN THOUGH THERE'S AN EMERGENCY WARD, THE HOSPITAL HAS NO ANESTHESIA. IN-PATIENTS HERE, MOST SUFFERING FROM MALARIA, MALL NUTRITION, RESPIRATORY INFECTIONS AND DIARRHEA OFTEN SHARE BEDS OR SLEEP ON THE FLOOR. MARY WALKED HERE BAREFOOT FROM HER VILLAGE 50 MILES AWAY CARRYING HER THREE-YEAR-OLD SON SUFFERING FROM CONVULSIONS BROUGHT ON BY CEREBRAL MALARIA.

>> YOU CAN GET HEALTH CARE SERVICES HERE. WE NEED TO HAVE THE HEALTH CENTERS CLOSER TO THE PEOPLE.

>> Reporter: SOUTH SUDAN'S DIRE HEALTH CONDITIONS ARE REFLECTED IN A RECENT UNITED NATIONS COMPILATION OF WHAT IT CALLED SCARY STATISTICS. MOST PEOPLE HAVE NO ACCESS TO SAFE DRINKING WATER OR SANITATION. MALARIA IS HYPER ENDEMIC. A 15-YEAR-OLD GIRL IS MORE LIKELY TO DIE IN CHILDBIRTH THAN FINISH SCHOOL. KATIE MORRIS IS A PROGRAM MANAGER FOR CATHOLIC RELIEF SERVICES WHICH, AMONG OTHER PROJECTS, PROVIDES SUPPORT FOR 43 HEALTH FACILITIES IN SOUTHERN SUDAN.

>> IF YOU LOOK AT IT BY THE NUMBERS IT PAINTS QUITE A GRIM PICTURE. MATERNAL AND INFANT MORTALITY ARE AMONG THE HIGHEST IN THE WORLD. VACCINATION COVERAGE IS AMONG THE LOWEST FOR CHILDREN AND PREGNANT WOMEN. IT'S A VERY SAD PICTURE.

>> Reporter: CHANGING THAT PICTURE WILL BE AMONG THE BIGGEST CHALLENGES FACING AN INDEPENDENT SOUTH SUDAN. IT IS EXPECTED HERE PEOPLE VOTE TO SEPARATE FROM THE NORTH IN A REFERENDUM THAT BEGINS JANUARY 9. EVEN NOW SOUTH SUDANESE OFFICIALS ARE PLANNING HOW TO BUILD A MEDICAL SYSTEM VIRTUALLY FROM SCRATCH. A MEMBER OF PARLIAMENT DR. MARTHA MARTIN HEADS THE LEGISLATURE'S HEALTH COMMITTEE.

>> DEVELOP THEM THROUGH THE HEALTH CARE.

>> Reporter: A FAMILY DOCTOR TRAINED IN CUBA, MARTIN SAYS FAMILY HEALTH CENTERS CAN BE USED AS BUILDING BLOCKS OF A NATIONAL SYSTEM.

>> YOU HAVE HEALTH CARE. YOU HAVE THE PATIENT IN THE CENTER. YOU GIVE THEM THE FIRST AID. . THEN YOU SEND THEM TO A BIG HOSPITAL.

>> Reporter: THE FIRST THING TO DO IS DEVELOP A PRIMARY HEALTH CARE SYSTEM.

>> YOU HAVE TO HAVE A GOOD SYSTEM.

>> Reporter: IT'S AN AMBITIOUS UNDERTAKING. CLINICS LIKE THIS ONE, IN THE TOWN OF JUBA, ARE SCATTERED THROUGHOUT THE COUNTRY. BUT LESS THAN 30% OF SOUTH SUDAN'S POPULATION HAS ACCESS TO HEALTH CARE SERVICES. LIKE THE HOSPITALS, MANY CLINICS ALSO LACK RESOURCES. WHEN WE ARRIVED AT THE HEALTH CENTER, WOMEN WERE WAITING TO HAVE THEIR CHILDREN VACCINATED. THE MUD FLOOR CLINIC HAS NO RUNNING WATER, NO TOILETS, NO DELIVERY ROUTES. NO DOCTOR. MEDICATIONS WERE RUNNING LOW, AND THE STAFF OF TEN SHARED TWO STETHOSCOPES. THIS CLINIC IS FUNDED BY THE CATHOLIC CHURCH. OUTSIDERS, INCLUDING THE U.S. GOVERNMENT, THE U.N., EVANGELICAL GROUPS AND AID ORGANIZATIONS, PAY FOR MOST OF SOUTH SUDAN'S HEALTH CARE.

>> OVER 60% OF THE HEALTH FACILITIES IN SOUTHERN SUDAN ARE SUPPORTED FINANCIALLY AND IN SOME CASES OPERATIONALLY BY INTERNATIONAL OR NATIONAL NON-GOVERNMENTAL ORGANIZATIONS. SO THE IDEA IS THAT OVER TIME THE GOVERNMENT CAPACITY WILL GROW AND THAT THEY WILL BE ABLE TO ABSORB SOME OF THESE FACILITIES AND TAKE STAFF ON TO THEIR PAYROLL.

>> Reporter: WHAT FEW SERVICES THE GOVERNMENT CURRENTLY PROVIDES ARE INEFFICIENT. AFTER SEVERAL HOURS AT THIS CLINIC, MANY WOMEN HAD GIVEN UP WAITING FOR VACCINATIONS. THE SERUM HADN'T COME SO PATIENTS HAD DRIFTED AWAY. SOME CLINICS ARE TRYING TO REDUCE MATERNAL AND CHILD MORTALITY RATES BY SENDING COMMUNITY HEALTH WORKERS INTO VILLAGES. IN THE SHANTY NEIGHBORHOOD ON THE OUTSKIRTS OF JUBA, MIDWIFES FROM A U.S.-FUNDED CLINIC VISIT HUTS TO PROVIDE WOMEN WITH PRE-AND POST-NATAL INSTRUCTIONS AND CARE. ONE IN SEVEN PREGNANT WOMEN IN SOUTH SUDAN IS LIKELY TO DIE AS A RESULT OF THE PREGNANCY. 14% OF CHILDREN DIE BEFORE THEIR FIFTH BIRTHDAY. MIDWIFE SAYS SIMPLE LESSONS CAN SAVE LIVES.

>> WE COME HERE TO SAY THE BABY, TO SEE THE MOTHER, TO CHECK THEM AND TO GIVE HER HYGIENE, HOW TO EAT, HOW TO BIRTH THE BABY.

>> Reporter: BREASTFEED.

>> YES. BREASTFEEDING.

>> Reporter: SHE HAD DELIVERED BABY EMMANUEL SEVEN DAYS EARLIER. THAT'S A RARE OCCURRENCE IN SOUTH SUDAN WHERE ONLY 10% OF BIRTHS ARE ATTENDED BY A HEALTH CARE WORKER. THE MIDWIFES URGE PREGNANT WOMEN TO DELIVER THEIR BABIES IN THE CLINIC, TO USE CLEAN WATER, AND TO AVOID PUTTING ASHES ON SEVERED UMBILICAL CORDS, A TRADITIONAL TREATMENT. OFFICIALS SAY THEY ARE OPTIMISTIC ABOUT BUILDING A HEALTH CARE SYSTEM IN SOUTH SUDAN. SOUTH SUDANESE PROFESSIONALS WHO TRAINED ABROAD DURING DECADES OF CIVIL WAR ARE RETURNING TO THE COUNTRY TO PRACTICE MEDICINE. AMONG THEM DR. BRUNO WHO ATTENDED MEDICAL SCHOOL IN NEIGHBORING UGANDA WHERE, AS A TEENAGER, HE HAD FLED BY FOOT A YEAR-LONG TREK FROM HIS HOME. BRUNO BELIEVES THAT INDEPENDENCE MIGHT LEAD TO LESS SPENDING ON THE MILITARY AND MORE ON HEALTH.

>> AT THE MOMENT MORE THAN 50% OF OUR ASSOCIATES, OF OUR BUDGET GO FOR SECURITY.

>> Reporter: TO THE MILITARY.

>> FOR THE MILITARY. IF INDEPENDENCE COMES, THERE WILL BE LESS SPENDING ON THE ARMY AND THEN THERE WILL BE MORE SPENDING IN HEALTH CARE SYSTEM AND OTHER SERVICES. INDEPENDENCE WILL MEAN A LOT OF DEVELOPMENT COMING IN, A LOT OF HEALTH CARE SYSTEM IMPROVING. BECAUSE THE MONEY THAT WILL GO FOR SECURITY WILL HAVE BEEN PUT IN DEVELOPMENT, THE SPECIAL HEALTH CARE SYSTEM.

>> Reporter: HOW MUCH SOUTH SUDAN SPENDS ON ITS MILITARY IS LIKELY TO DEPEND IN PART ON WHETHER THE INDEPENDENCE VOTE AND ITS AFTER MATH WILL BE PEACEFUL. IN ANY EVENT, ECONOMIC DEVELOPMENT SHOULD GO A LONG WAY TO HELP REVERSE THE ABYSMAL HEALTH STATISTICS BY SPURRING THE CREATION OF WATER AND SANITATION SYSTEMS. SOUTH SUDAN'S INTERIM CONSTITUTION GUARANTEES FREE PRIMARY HEALTH CARE TO ALL. CLEARLY A LONG-TERM GOAL. FOR NOW OFFICIALS AND HEALTH WORKERS ARE COMBATTING PREVENTABLE DISEASES WITH MORE BASIC STEPS. EDUCATION, BETTER NUTRITION, AND SIMPLE DRUGS.

>> Woodruff: THE START OF THE NEW YEAR MARKS ANOTHER MILESTONE FOR THE BABY BOOM GENERATION. THE FIRST OF THE ESTIMATED 79 MILLION AMERICANS BORN BETWEEN 1946 AND 1964 WILL TURN 65 YEARS OLD THIS YEAR, AT A RATE OF 10,000 A DAY, ACCORDING TO THE PEW RESEARCH CENTER. AND THERE ARE BIG IMPLICATIONS FOR EVERYONE. THE NUMBER OF PEOPLE ENROLLED IN MEDICARE WILL GROW FROM 47 MILLION IN 2010 TO ROUGHLY 80 MILLION WHEN THE LAST OF THE BABY BOOMERS TURNS 65 IN ABOUT TWO DECADES, WHILE ENROLLMENT IN SOCIAL SECURITY IS EXPECTED TO RISE FROM 44 MILLION TO SOME 73 MILLION. AT THE SAME TIME, THE RATIO OF WORKERS PAYING TAXES TO SUPPORT THE PROGRAMS TO BENEFICIARIES WILL DROP. HERE TO EXPLORE SOME OF THE ISSUES RAISED BY ALL THIS ARE NICHOLAS EBERSTADT, AN ECONOMIST AND DEMOGRAPHER AT THE AMERICAN ENTERPRISE INSTITUTE. AND TED FISHMAN, AUTHOR OF THE BOOK, "SHOCK OF GRAY," WHICH LOOKS AT THE IMPACT OF THE WORLD'S AGING POPULATION. TED FISHMAN, TO YOU FIRST. PEOPLE HAVE BEEN TURNING 6 FOR A LONG TIME. IT DOESN'T MAKE US THE OLDEST COUNTRY BECAUSE WE HAVE THE BIGGEST BABY BOOMER POPULATION. IN FACT IN SOME WAYS WE'RE YOUNGER BECAUSE OUR BABY BOOM POPULATION IS BIG. JAPAN HAD A VERY SHORT BABY BOOM. ONLY AROUND FOUR YEARS LONG. AND THEY'RE THE OLDEST COUNTRY IN THE WORLD. SO WE HAVE THIS BIG, DIVERSE BABY BOOM COMING ALONG INTO THE POST RETIREMENT YEARS, AND THEY'RE ALMOST SEPARATED BY AN ENTIRE GENERATION. ONE OF THE INTERESTING THINGS ABOUT THE BABY BOOMERS IS THEY MOVE INTO RETIREMENT AS YOU'RE GOING TO HAVE BABY BOOMERS TAKING CARE OF OLDER BABY BOOMERS. IT'S A VERY, VERY BIG GROUP. IT'S GOING TO BE A VERY DIVERSE GROUP.

>> Woodruff: NICK EBERSTADT, PUT THIS IN SOME CONTEXT. WHAT DOES THIS MEAN FOR THE WORK FORCE OVERALL?

>> WELL, THE UNITED STATES IS OLDER THAN IT'S EVER BEEN BEFORE. BUT WE'RE GOING TO SEE A FUNDAMENTAL, DRAMATIC PUSH TOWARDS FURTHER AGING OVER THE NEXT 20 YEARS. THINK OF IT LIKE THIS. OVER THE NEXT 20 YEARS, THE U.S. POPULATION MAY GROW BY ABOUT 60 MILLION, A LITTLE OVER 60 MILLION. HALF OF THAT GROWTH WILL BE PEOPLE OVER THE AGE OF 65. WE'RE GOING TO HAVE A POPULATION EXPLOSION BUT IT'S GOING TO BE AN EXPLOSION OF SENIOR CITIZENS. THAT'S GOING TO MEAN THAT THE RATIO OF POTENTIAL WORKERS TO POTENTIAL RETIREES IS GOING TO CHANGE REALLY FUNDAMENTALLY. RIGHT NOW IT'S ABOUT 5 TO 1. 20 YEARS FROM NOW IT WILL BE AROUND 3 TO 1.

>> Woodruff: TED FISHMAN, HOW WELL PREPARED IS THE REST OF SOCIETY TO CARE FOR ALL THESE BOOMERS GETTING OLDER?

>> WE'RE NOT PREPARED RIGHT NOW. WE'RE IN A BIT OF A PANIC. I'M GOING AROUND THE COUNTRY TALKING ABOUT MY BOOK. PEOPLE ARE SO DESPERATELY AFRAID THEY'RE GOING TO OUTLIVE THEIR MONEY. THAT MEANS THEY'RE ADJUSTING AROUND IT. SO PEOPLE ARE PREPARING TO WORK A LITTLE BIT LONGER. YOU CAN GET RENORM US RELIEF FROM SOME OF THE FISCAL CHALLENGES IF PEOPLE JUST WORK A FEW YEARS LONGER. BUSINESS IS ADJUSTING VERY, VERY DRAMATICALLY LOOKING FOR YOUNGER WORKPLACES AROUND THE WORLD. THE AGING OF OUR COUNTRY IS REALLY PROPELLING OUR GLOBALIZATION STRATEGIES TOO. AND URBANIZING COUNTRIES ABROAD, PUTTING THEM IN THE SAME AGING DYNAMIC WE'VE BEEN IN. AS NICK SAID THERE'S AGING AHEAD BUT OUR AGING IS REALLY CAUSING AGING EVERYWHERE IN WORLD.

>> Woodruff: WORKING LONGER? THAT'S THE SOLUTION FOR SOME PEOPLE. HOW BIG OF A SOLUTION IS THAT?

>> WORKING LONGER MAY BE PART OF THE ANSWER. THE GENERATION THAT'S HEADING TOWARDS RETIREMENT NOW IS BETTER EDUCATED AND HEALTHIER THAN ANY AMERICANS BEFORE THEM. THAT'S MAYBE PART OF THE ANSWER. WE'RE GOING TO HAVE TO LOOK AT OUR UNFUNDED LIABILITIES IN SOCIAL SECURITY AND MUCH MORE TO THE POINT IN MEDICARE WHICH IS ENORMOUS LIABILITY COMPARED TO SOCIAL SECURITY. WE'RE ALSO GOING TO HAVE TO LOOK AT SOME CHANGES IN FUNDAMENTAL HABITS LIKE SAVING, PREPARING FOR RETIREMENT AND THE LIKE.

>> Woodruff: LET'S TALK ABOUT SOCIAL SECURITY AND MEDICARE. TED FISHMAN, I MEAN, HOW BIG A MISMATCH IS THERE? ESPECIALLY WITH MEDICARE? FOR THIS COHORT?

>> IT'S A HUGE MISMATCH. IF WE KEEP GOING ON THE CURRENT TRAJECTORY, WE WILL BE SPENDING ALL OF OUR G.D.P. ON AGE-RELATED EXPENSES BEFORE THE BABY BOOMERS AGE OUT OF THE PICTURE. SO WE DO NEED CHANGES. THE GOOD NEWS IS THAT AS NICK SAID THE ECONOMY HAS CHANGED WHERE WE'RE NOW MORE OF A SERVICE ECONOMY SO PEOPLE CAN STAY IN THE WORK FORCE LONGER IF THEY'VE INVESTED IN THEIR OWN SKILLS. THEY'RE NOT TOILING PHYSICALLY. YOU DON'T NEED A HUGE DIFFERENCE IN THE RETIREMENT AGE OR WHEN PEOPLE RETIRE IN ORDER TO MAKE AN ENORMOUS DIFFERENCE IN THE AFFORDABILITY OF THESE PROGRAMS. THIS IS PART OF THE DISCUSSION THAT'S HAPPENING ALL OVER THE WORLD. IT'S JUST STARTED. I'M PRETTY CONFIDENT THAT THE SOLUTIONS BEING DISCUSSED RIGHT NOW WILL TURN INTO SOLUTIONS THAT MAKE IT FAR MORE MANAGEABLE THAN IT IS TODAY.

>> Woodruff: TED FISHMAN, YOU'RE TALKING ABOUT SOCIAL SECURITY AS WELL IN THAT ANSWER?

>> THAT'S RIGHT. ALL OF THE HEALTH-RELATED, WHICH IS THE BIG, HUGE EXPENSE IN SKORBL SECURITY WHICH IS MORE MANAGEABLE BUT IN THE LONG TERM ALSO NEEDS ADJUSTING.

>> Woodruff: NICK EBERSTADT, ONE OF YOU MENTIONED SAVINGS. CLEARLY THIS IS A GENERATION THAT MANY OF US HAVE FOCUSED ON PUTTING MONEY ASIDE. HOW MUCH OF A CUSHION IS THAT GOING TO PROVIDE ULTIMATELY?

>> WELL, IT DOES PROVIDE A CUSHION. ALREADY. I MEAN, THE GENERATION THAT'S HEADING TOWARDS RETIREMENT HAS BEEN SAVING, BUT THE SAVINGS HAVE BEEN VERY UNEVEN. THE DISTRIBUTION OF SAVINGS AND ASSETS IS VERY UNEVEN FOR THE GROUP THAT'S SAY, IN THE 55- TO 64-RANGE RIGHT NOW.

>> Woodruff: MEANING SOME PEOPLE HAVE SAVED A LOT.

>> SOME PEOPLE HAVE SAVED A LOT AND OTHERS HAVEN'T. SOCIAL SECURITY PROGRAM, ONE OF ITS GREAT SUCCESSES HISTORICALLY HAS BEEN TO PREVENT OR FORESTALL POVERTY FOR OLDER PEOPLE. BUT IF ONE IS LIVING ON SOCIAL SECURITY ALONE, ONE HAS GOT PRETTY... DAYS LOOKING AHEAD.

>> THE BIG DANGER IS THAT PEOPLE ARE BEING PUSHED OUT OF THEIR PRIMARY EMPLOYMENT BEFORE THEY GET TO SOCIAL SECURITY AGE. THERE'S THE HIGHEST EMPLOYMENT IN UNEMPLOYMENT IN HISTORY FOR THE 50-PLUS WORKER. THEY'RE WORKING FOR A LONG TIME. SO WHEN YOU SAVE YOU'RE NOT JUST SAVING FOR YOUR RETIREMENT. YOU'RE SAVING FOR A CONTINGENCY THAT HAPPENS BEFORE YOUR OFFICIAL RETIREMENT, SOME SORT OF FORCED RETIREMENT. THAT MEANS THAT THE MONEY YOU SAVE OVER YOUR LIFETIME MAY ALSO BE WELL INVESTED IF YOU INVEST IN YOURSELF AND YOUR SKILLS. SO INSTEAD OF BECOMING A LOW- VALUE WORKER IN YOUR 50s, YOU CAN HAVE INVESTED IN YOURSELF AND HAVE HIGH INTELLECTUAL CAPITAL, HIGH SKILLS SO THAT THERE ISN'T THE PRESSURE TO PUSH YOU OUT OF THE WORK FORCE. THERE IS AN EXTRA MONETARY PRESSURE THAT THE BOOMERS WILL BE FACING AS THEY MOVE THROUGH THE 50s INTO THEIR 60s IN ORDER TO STAY EMPLOYED.

>> TED'S POINT IS IMPORTANT. IT DOESN'T JUST AFFECT PEOPLE IN THEIR 50s AND EARLY 60s. PART OF WHAT IS GOING TO MAKE THE SITUATION BETTER FOR THE UNITED STATES IN THE FUTURE IS IF THE UNITED STATES IS A RICHER, MORE PRODUCTIVE SOCIETY. WITH MORE WEALTH, YOU ALWAYS HAVE MORE OPTIONS. THIS MEANS FOCUSING NOT JUST UPON PEOPLE RIGHT BEFORE RETIREMENT AGE BUT YOUNG PEOPLE ON THEIR TRAINING, ON THEIR EDUCATION, ON THEIR SKILLS AND PRODUCTIVITY FOR THE FUTURE.

>> Woodruff: SO TO BOTH OF YOU AND TO TED FISHMAN FIRST OF ALL, WHAT ARE THE DECISIONS THAT WE'RE LOOKING FOR GOVERNMENT TO MAKE AND FOR INDIVIDUALS TO MAKE AS WE BEGIN TO TRY TO GRAPPLE WITH THIS?

>> WELL, IN ORDER FOR THE GOVERNMENT TO STAY SOLVENT, THEY NEED INDIVIDUALS TO STAY SOLVENT LONGER. IN ORDER FOR INDIVIDUALS TO STAY SOLVENT LONGER THEY NEED TO WORK LONGER. THERE OUGHT TO BE SOME SORT OF TAX ADVANTAGE, INVESTMENT PROGRAM YOU CAN TAKE IN YOURSELF. HOW DO I IMPROVE MY SKILLS OVER TIME? WE SAVE FOR YOUR CHILDREN'S EDUCATION. WE SAVE FOR OUR RETIREMENT. IF WE'RE NOT SAVING FOR THE HONING OF OURSELVES AS A WORKER IN OUR 50s, 60INGS, EARLY 70s WE'RE GOING TO FIND OUR SELF-S IN A JAM. THAT WILL BE THE JAM WE SHARE TOGETHER UNLESS PEOPLE REALLY ARE CAPABLE AND ABLE AS WORKERS.

>> Woodruff: FINAL NOTE OF ADVICE.

>> IN ADDITION PERSONAL RESPONSIBILITY FOR ONE'S OWN HEALTH, PREVENTIVE HEALTH CARE. AND ON THE GOVERNMENT SIDE, ENCOURAGING INNOVATION IN HEALTH SCIENCES AND IN OTHER AREAS THAT CAN INCREASE OUR PRODUCTIVITY AND WEALTH TO HELP US DEAL WITH ALL OF THESE PROBLEMS IN THE FUTURE.

>> Woodruff: WE'LL TELL THE BABY BOOMERS TO WORRY BUT NOT TO WORRY TOO MUCH. ALL RIGHT. TED FISHMAN, WE THANK YOU. NICK EBERSTADT, THANK YOU VERY MUCH.

>> THANK YOU.

>> Ifill: FINALLY, FROM AN OLDER GENERATION TO A YOUNGER ONE, WE FOLLOW UP A STORY WE AIRED LAST MONTH ON THE TOUGH JOB MARKET FOR RECENT COLLEGE GRADUATES. TONIGHT NEWSHOUR ECONOMICS CORRESPONDENT PAUL SOLMAN LOOKS AT JOB HUNTERS WHO'VE ALREADY BEEN OUT OF SCHOOL FOR A FEW YEARS. IT'S PART OF HIS REPORTING ON MAKING SENSE OF FINANCIAL NEWS.

>> Reporter: THE LAST COUPLE OF YEARS HAVE BEEN A VERY, VERY TOUGH TIME TO BE COMING OUT OF COLLEGE. RUTGERS UNIVERSITY WHERE RICHARD WHITE RUNS CAREER SERVICES.

>> AT THE TIME OF GRADUATION, PROBABLY 50% OF COLLEGE GRADS HAVE SOME KIND OF JOB. THAT'S DURING THE GOOD TIMES. THAT PROBABLY WAS CUT IN HALF DURING THESE LAST TWO TOUGH YEARS.

>> Reporter: GREEN SHOOTS HAVE NOW APPEARED FOR THE CLASS OF 2011, RICHARD WHITE SAYS.

>> THERE ARE TWO RECENT NATIONAL SURVEYS, ONE BY THE NATIONAL ASSOCIATION OF COLLEGES AND EMPLOYERS, WHICH IS PROJECTED A 13% INCREASE IN EMPLOYER HIRING OF RECENT COLLEGE GRADS. THE OTHER JUST WAS ANNOUNCED BY MICHIGAN STATE UNIVERSITY. THAT INDICATES A 10% INCREASE.

>> Reporter: BUT THE UPTURN MAY NOT HELP GRADS WHO HIT THE JOB MARKET WHEN THE GREAT RECESSION DID. MIKE, WITH THE 2006 DEGREE IN LABOR RELATIONS, SAYS HIS SPOTTY JOB HISTORY IS A STIGMA.

>> ONCE THEY LOOK AT MY RESUME AND FIGURE OUT I'VE BEEN OUT OF COLLEGE FOR A WHILE AND THEY'RE ALMOST, YOU KNOW, IT BECOMES THE ISSUE OF, A LITTLE BIT OF A TAINTED ISSUE. WHY HAVEN'T YOU GOTTEN MORE ESTABLISHED? WHY HAVE OTHER PEOPLE OVERLOOKED YOU?

>> Reporter: IT MAY BE IRRATIONAL SAYS PROFESSOR CARL VAN HORNE BUT IT'S TRUE.

>> SOME EMPLOYERS CLEARLY WILL DISCRIMINATE AGAINST THOSE WHO HAVE WHITE SPACES ON THEIR RESUME. THEY'LL SAY WHY DIDN'T JOE OR SALLY HAVE A JOB BETWEEN 2008 AND 2011? FORGETTING WE'VE HAD THIS HORRIBLE RECESSION. THEY'LL STILL SAY, WELL, I'LL TAKE THE PERSON WHO IS RIGHT OUT OF SCHOOL JUST AS WE ALWAYS EMBUE GREAT FAITH IN THE NEXT PERSON WHO COMES ALONG.

>> Reporter: IS THIS THE FATE THAT AWAITS RECENT GRADS LIKE THOSE WE'VE INTERVIEWED? AND THROW POLL GEE MAJOR DAVID COOK WHO WASHED TRASH CANS ON A JOB THAT ENDED LAST MONTH. AND GARY WORKING PART TIME FOR A YEAR NOW LOGGING LICENSE PLATES ON A TOLL ROAD IN COLORADO. AND EVAN, A HISTORY GRAD WITH A POLITICAL SCIENCE MINOR, WHOSE SUBSTITUTE TEACHING ONE DAY A WEEK JUST NORTH OF CAPE COD. AND AND I GAIL WHO GRADUATED WITH HONORS WALKING DOGS PART TIME IN MANHATTAN. NOT THAT THEY REGRET GOING TO COLLEGE MIND YOU.

>> I LOVE I'VE GONE TO COLLEGE ESPECIALLY SINCE I DON'T COME FROM A FAMILY OF COLLEGE GRADUATES.

>> Reporter: BUT SHE SAYS.

>> IF I KNOWN I WOULD BE GRADUATING INTO THIS KIND OF ECONOMY, I PROBABLY WOULD HAVE PURSUED SOMETHING A LITTLE MORE PRACTICAL. POSSIBLY PRE-MED.

>> I ALSO WANT TO MAJOR IN ART HISTORY AND POLITICAL SCIENCE.

>> Reporter: DO IT YOURSELF VOICE GENERATED ANIMATIONS. MOCKING LIBERAL ARTS DEGREES. THEY'RE NOW ALL THE RAGE ON THE INTERNET.

>> IF YOU LIKE LEARNING ABOUT HISTORY, YOU CAN ALWAYS VISIT ONE OF THE LOCAL LIBRARIES AND BORROW THE BOOKS FOR FREE. IT WOULD SAVE YOU 18 GRAND ON LEARNING SOMETHING YOU CAN READ ABOUT AT THE LIBRARY THAT WOULD ONLY COST YOU $2 IN LATE FEES.

>> Reporter: IT'S ONLY 18 GRAND BECAUSE THIS ONE IS FROM CANADA. ONE OF THE MOST POPULAR SUCH CARTOONS LAMPOONS ENGLISH MAJORS.

>> I GOT AN A ON MY HAMLET PAPER. I HAVE BRILLIANT THOUGHTS ABOUT THE SCENE OF DEATH IN LITERATURE?

>> IN ALL OF LITERATURE, WHAT DO YOU INTEND TO SPECIALIZE IN.

>> ALL OF IT. I LIKE ROBIN WILLIAMS IN DEAD POET'S SOCIETY.

>> Reporter: BUT ACADEMIC STUDY SUGGESTS IT MAY BE A TOUGH SLOG EVEN FOR THOSE WITH LESS LOFTLY GOALS.

>> YOUR ENTERING WAGE WHEN YOU GRADUATE FROM COLLEGE HAS A BIG LONG-TERM EFFECT ON YOUR WAGES OVER THE LIFETIME. SO THE STUDENTS GRADUATING INTO THIS RECESSION ARE NOT LIKELY TO DO AS WELL AS THE STUDENT WHO GRADUATED IN 2005 OR THE ONE WHO GRADUATED IN 1999 OR WHATEVER IN TERMS OF THEIR LIFETIME EARNINGS.

>> Reporter: NEW GRADS IN A DOWN MARKET TAKE AND REMAIN IN LESSER JOBS. STUNTING THEIR INCOME GROWTH.

>> THEY TEND TO BE LESS RISK ORIENTED. THEIR RISK AVERSE. IF YOU GET THE JOB IN COMMUNICATIONS, THEN YOU'RE LESS LIKELY TO LOOK OVER YOUR SHOULDER AND SAY MAYBE THERE'S A BETTER JOB DOWN THE ROAD. YOU THINK I'D BETTER STICK WITH THIS ONE.

>> Reporter: IN THE END SCHOOLS LIKE RUTGERS ARE DOING WHAT THEY CAN TO MAKE STUD TONTS THE WORLD OF WORK. BUT SAYS THE SCHOOL'S CAREER SERVICES HEAD, A FOUR-YEAR LIBERAL ARTS DEGREE FOR ALL ITS VIRTUES MAY JUST BE A WORKPLACE ANACHRONISM.

>> THE EDUCATIONAL SYSTEM THAT WE HAVE IN THIS COUNTRY IN MANY WAYS THE BEST IN THE WORLD. YET IT'S SOMEWHAT BASED ON A 17th CENRY MODEL WHICH IS THE LIBERAL ARTS. A SMATTERING OF THIS AND THAT AND TRYING TO DEVELOP A BROAD- MINDED, YOU KNOW, WELL THINKING INDIVIDUAL. WHETHER THAT IS WHAT, YOU KNOW, THIS ECONOMY, THIS GLOBAL ECONOMY IN OUR COUNTRY NEEDS IN THE 21st CENTURY IS A BIG QUESTION.

>> Reporter: IT'S A QUESTION THAT MAY BE ASKED WITH SPECIAL URGENCY BY THOSE WHO GRADUATED THE PAST FEW YEARS.

>> Woodruff: AGAIN, THE MAJOR DEVELOPMENTS OF THE DAY. NEW GOVERNORS FROM CALIFORNIA TO NEW YORK TOOK OFFICE WITH THE NEW YEAR, AND CONFRONTED HUGE BUDGET PROBLEMS. A FLOOD DISASTER IN THE AUSTRALIAN OUTBACK GREW WORSE, CUTTING OFF A COASTAL CITY OF 75,000 PEOPLE. AND A NEW INVESTMENT DEAL VALUED THE SOCIAL NETWORKING COMPANY FACEBOOK AT $50 BILLION. AND TO HARI SREENIVASAN, FOR WHAT'S ON THE NEWSHOUR ONLINE. HARI?

>> ONE YEAR AFTER THE DEVASTATING EARTHQUAKE THERE. A VIDEO DISPATCH OF HIS FIRST IMPRESSIONS OF PORT-AU-PRINCE. FIND OUT WHICH GLOBAL HOT SPOTS AND TOP ISSUES OUR FOREIGN AFFAIRS BEAT IS TRACKING IN 2011. PLUS, ON OUR POLITICS PAGE, POLITICAL EDITOR DAVID CHALIAN TALKS TO GWEN AND JUDY ABOUT WHAT TO EXPECT DURING THE FIRST WEEK OF THE NEW CONGRESS. ALL THAT AND MORE IS ON OUR WEB SITE, newshour.pbs.org. GWEN?

>> Ifill: AND THAT'S THE NEWSHOUR FOR TONIGHT. ON TUESDAY, WE'LL LOOK AT WHAT'S AHEAD FOR THE NEXT CONGRESS. I'M GWEN IFILL.

>> Woodruff: AND I'M JUDY WOODRUFF. WE'LL SEE YOU ONLINE, AND AGAIN HERE TOMORROW EVENING. THANK YOU, AND GOOD NIGHT. MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY: THEY'RE THE ONES THAT HELP DRIVE GROWTH.

>> LIKE ELECTRICIANS, MECHANICS, CARPENTERS.

>> EVERY YEAR CHEVRON SPENDS BILLIONS WITH MORE SMALL BUSINESSES. THAT GOES TO THE HEART OF LOCAL COMMUNITIES, PROVIDING JOBS, KEEPING PEOPLE AT WORK. THEY DEPEND ON US.

>> THE ECONOMY DEPENDS ON US.

>> AND WE DEPEND ON THEM. UNITEDHEALTHCARE. 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. Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS Captioned by Media Access Group at WGBH access.wgbh.org "THE ELECTRIC COMPANY" IS BROUGHT TO YOU BY... FIND YOUR VOICE AND SHARE IT, AMERICAN GREETINGS, PROUD SPONSOR OF "THE ELECTRIC COMPANY." AGREEMENT FROM THE U.S. DEPARTMENT OF EDUCATION'S READY TO LEARN GRANT, AND VIEWERS LIKE YOU, THANK YOU. YOU 5 WORDS. TO INSPIRE PEOPLE IS TO ENCOURAGE THEM TO MAKE OR DO THINGS. YOUR SIGNATURE IS YOUR NAME WRITTEN DOWN IN YOUR OWN SPECIAL WAY. A PETITION IS A LETTER THAT PEOPLE SIGN TO GET WHAT THEY WANT. VERIFY MEANS TO PROVE SOMETHING'S TRUE.