PBS NewsHour; December 12, 2011 6:00pm-7:00pm PST

Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS

>> Brown: PRESIDENT OBAMA HERALDED THE END OF THE IRAQ WAR TODAY SAYING AMERICAN FORCES WILL LEAVE THIS MONTH WITH HONOR AND WITH THEIR HEADS HELD HIGH. GOOD EVENING, I'M JEFFREY BROWN.

>> Woodruff: AND I'M JUDY WOODRUFF. ON THE "NEWSHOUR" TONIGHT, WE GET THE LATEST ON TODAY'S MEETING AT THE WHITE HOUSE WITH IRAQ'S PRIME MINISTER MALIKI.

>> Brown: THEN, WE UPDATE THE 2012 RACE FOR THE WHITE HOUSE WITH STU ROTHENBERG AND SUSAN PAGE.

>> Woodruff: PAUL SOLMAN LOOKS TO HISTORY FOR AN ANSWER TO THIS QUESTION: DO HIGHER TAX RATES SLOW ECONOMIC GROWTH OR NOT?

>> IN 1917, GIVEN THE EXPENSE OF WAR, CONGRESS JACKED THE TOP MARGINAL RATE UPWARD.

>> FROM 7% TO 77%. BY THE WAY, THE PHRASE "SOAK THE RICH" EMERGED AT THAT TIME TOO.

>> Brown: RAY SUAREZ GETS TWO VIEWS OF THE GLOBAL CLIMATE DEAL REACHED IN DURBAN, SOUTH AFRICA OVER THE WEEKEND.

>> Woodruff: AND WE TALK WITH BRITISH FOREIGN SECRETARY WILLIAM HAGUE ABOUT HIS COUNTRY'S DECISION TO REJECT AN AGREEMENT AIMED AT FIXING EUROPE'S DEBT CRISIS.

>> IN EUROPE BUT NOT RUN BY EUROPE. THAT'S ALL BEEN MY MANTRA, IF YOU LIKE.

>> Brown: 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.

>> 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 INSTITUTIONSND 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. A FINAL SUMMIT TODAY BEFORE THE LAST AMERICAN TROOPS WITHDRAW FROM IRAQ. THE DECEMBER 31 DEADLINE COMES AFTER NEARLY 4500 AMERICAN DEATHS IN A WAR THAT BEGAN IN 2003. FOR FOR WEEKS, U.S. TROOPS HAVE BEEN PACKING UP AND PULLING OUT OF IRAQ, SHIFTING THE FOCUS TO WHAT COMES NEXT IN THE COUNTRY THEY'RE LEAVING BEHIND. THAT QUESTION TOPPED TODAY'S AGENDA AS PRESIDENT OBAMA AND IRAQI PRIME MINISTER NOURI AL- MALIKI MET AT THE WHITE HOUSE. AT A JOINT NEWS CONFERENCE, THE PRESIDENT PROMISED STRONG SUPPORT.

>> YOU WILL NOT STAND ALONE. YOU HAVE A STRONG AND ENDURING PARTNER IN THE UNITED STATES OF AMERICA. SO MAKE NO MISTAKE, OUR STRONG PRESENCE IN THE MIDDLE EAST ENDURES, AND THE UNITED STATES WILL NEVER WAIVER IN DEFENSE OF OUR ALLIES, OUR PARTNERS, OR OUR INTERESTS. THIS IS THE SHARED VISION THAT PRIME MINISTER AL-MALIKI AND I REAFFIRM TODAY.

>> Brown: SOME 6,000 U.S. TROOPS ARE LEFT IN IRAQ AS THE NEARLY NINE-YEAR-LONG WAR COMES TO AN END. THAT'S DOWN FROM A HIGH OF 170,000, BACK IN 2007. BUT MALIKI ACKNOWLEDGED TODAY THAT EVEN AFTER THE LAST AMERICAN LEAVES, BAGHDAD WILL STILL NEED U.S. ASSISTANCE.

>> ( translated ): IRAQ NOW HAS BECOME RELIANT COMPLETELY ON ITS OWN SECURITY APPARATUS AND INTERNAL SECURITY. BUT IT REMAINS IN NEED OF COOPERATION WITH THE UNITED STATES OF AMERICA IN THE SECURITY ISSUES AND INFORMATION AND COMBATING TERRORISM AND IN THE AREA OF TRAINING AND THE AREA OF EQUIPPING WHICH IS NEEDED BY THE IRAQI ARMY. AND WE HAVE STARTED THAT.

>> Brown: IN ADDITION, MALIKI SAID, IRAQ NEEDS HELP BOOSTING ITS ECONOMY, REPAIRING INFRASTRUCTURE, AND REFORMING ITS EDUCATION SYSTEM. THE U.S. ALSO HAS A KEEN INTEREST IN IRAQ'S FOREIGN POLICY TOWARD TWO KEY NEIGHBORS. ON SYRIA, THE OBAMA ADMINISTRATION HAS CALLED FOR PRESIDENT BASHAR AL-ASSAD TO STEP DOWN OVER HIS GOVERNMENT'S VIOLENT CRACKDOWN ON THE OPPOSITION. IRAQ HAS YET TO ADVOCATE ANY STRONG ACTION AGAINST ASSAD.

>> EVEN IF THERE ARE TACTICAL DISAGREEMENTS BETWEEN IRAQ AND THE UNITED STATES AT THIS POINT IN HOW TO DEAL WITH SYRIA, I HAVE ABSOLUTELY NO DOUBT THAT THESE DECISIONS ARE BEING MADE BASED ON WHAT PRIME MINISTER MALIKI BELIEVES IS BEST FOR IRAQ.

>> Brown: THE PRESIDENT LIKEWISE PLAYED DOWN CONCERNS THAT IRAN'S INFLUENCE OVER IRAQ IS GROWING.

>> HIS INTEREST IS MAINTAINING IRAQI SOVEREIGNTY, AND PREVENTING MEDDLING BY ANYBODY INSIDE OF IRAQ. AND I BELIEVE HIM.

>> Brown: THE LEADERS WENT ON TO MEANWHILE, IN IRAQ TODAY A SIGN OF THE TIMES. U.S. TROOPS HANDED OVER ANOTHER MAJOR BASE TO IRAQI FORCES, THIS ONE LOCATED SOUTH OF BAGHDAD IN HILLA.

>> I AM HAPPY FOR THE IRAQI PEOPLE, THAT THEY ARE ABLE TO SECURE THEMSELVES AND ARE LOOKING AT THEIR BEST INTERESTS. I AM ALSO VERY HAPPY THAT WE ARE UPHOLDING THE SECURITY AGREEMENT AND LEAVING ON TIME.

>> Brown: IN FACT, THE CURRENT SCHEDULE CALLS FOR ALL U.S. FORCES TO BE OUT OF IRAQ BY THE HOLIDAYS. BUT THE U.S. WILL STILL MAINTAIN A SIZABLE DIPLOMATIC PRESENCE. SOME 16,000 PEOPLE WORK AT THE U.S. EMBASSY IN BAGHDAD-- THE LARGEST AMERICAN MISSION IN THE WORLD.

>> Woodruff: STILL TO COME ON THE "NEWSHOUR": THE PRESIDENTIAL CONTEST; THE IMPACT OF RAISING OR CUTTING TAXES; THE CLIMATE AGREEMENT SIGNED IN SOUTH AFRICA AND BRITISH FOREIGN SECRETARY WILLIAM HAGUE. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S HARI SREENIVASAN.

>> Sreenivasan: WALL STREET WAS DOWN SHARPLY TODAY AMID A NEW SURGE OF DOUBTS ABOUT A EUROPEAN DEBT DEAL REACHED LAST FRIDAY. TWO MAJOR RATINGS SERVICES FITCH AND MOODY'S WARNED THE AGREEMENT WOULD DO LITTLE GOOD IN THE SHORT TERM. THE DOW JONES INDUSTRIAL AVERAGE LOST NEARLY 163 POINTS TO CLOSE AT 12,021. THE NASDAQ FELL 34 POINTS TO CLOSE AT 2,612. OCCUPY WALL STREET PROTESTERS TRIED TO BLOCKADE SOME OF THE WEST COAST'S BUSIEST PORTS TODAY. HUNDREDS OF PEOPLE GATHERED BEFORE DAWN AT THE PORT OF PORTLAND, OREGON. THEY BLOCKED TRUCKS FROM ENTERING TWO TERMINALS. PICKETING ALSO FORCED OPERATIONS TO HALT AT TWO TERMINALS IN OAKLAND, CALIFORNIA. SHIPPING FIRMS AND UNION OFFICIALS SENT HOME 150 WORKERS. THE PROTESTERS SAID THEY WERE STANDING UP FOR THE WORKERS. BUT OAKLAND MAYOR JEAN QUAN SAID INTERFERING WITH PORT OPERATIONS HAS THE OPPOSITE EFFECT.

>> IT IS ONE OF THE PLACES WHERE BLUE COLLAR WORKERS IN PARTICULAR IN THIS CITY CAN GET WELL-PAYING JOBS. THOUSANDS OF PEOPLE WORK AT THE PORT OF OAKLAND. THOUSANDS MORE IN AGRICULTURE AND WAREHOUSE AND OTHER LOGISTICS THROUGHOUT THE BAY AREA DEPEND ON THE PORT OF OAKLAND. SO WE'RE WORKING HARD TODAY TO KEEP THE PORT OPERATIONS GOING WITH MINIMUM DISRUPTION.

>> Sreenivasan: THERE WERE ALSO PROTESTS AT THE PORT OF LONG BEACH IN SOUTHERN CALIFORNIA AND AT LONGVIEW, WASHINGTON AND VANCOUVER, CANADA. AFTER A WEEKEND OF MASS PROTESTS, RUSSIAN PRIME MINISTER VLADIMIR PUTIN GOT SOME COMPETITION TODAY IN THE COUNTRY'S PRESIDENTIAL RACE. MIKHAIL PROKHOROV ANNOUNCED HE WILL RUN AGAINST PUTIN NEXT MARCH. PROKHOROV'S WEALTH IS ESTIMATED AT $18 BILLION, AND HE OWNS THE NBA'S NEW JERSEY NETS. HE PLEDGED TO ADVOCATE FOR RUSSIA'S BURGEONING MIDDLE CLASS.

>> ( translated ): SOCIETY IS WAKING UP AND NO MATTER IF WE WANT IT OR NOT, THOSE AUTHORITIES WHO FAIL TO ESTABLISH A DIALOGUE WITH SOCIETY, I THINK THEY WILL SOON HAVE TO GO. A SERIOUS CHANGE IS HAPPENING IN THE WORLD, AND A NEW SORT OF PERSON IS EMERGING FROM THE DEVELOPMENT OF THE INTERNET, COMMUNICATIONS BETWEEN GOVERNMENT AND SOCIETY IS GETTING CLOSER.

>> Sreenivasan: THE ANNOUNCEMENT FOLLOWED SATURDAY'S PROTESTS TARGETING PUTIN AND ALLEGED VOTE FRAUD DURING PARLIAMENTARY ELECTIONS. THOUSANDS OF PEOPLE GATHERED IN MOSCOW AND OTHER CITIES ACROSS RUSSIA. ACROSS SYRIA, BUSINESSES CLOSED THEIR DOORS AND PARENTS KEPT THEIR CHILDREN HOME FROM SCHOOL AS PART OF A GENERAL STRIKE. IT WAS MEANT TO PRESS FOR AN END TO THE CRACKDOWN ON PROTESTS. AMATEUR VIDEO SHOWED THE STRIKE WAS BEING WIDELY OBSERVED, ESPECIALLY IN CENTERS OF THE PROTEST MOVEMENT SUCH AS THE SUBURBS OF DAMASCUS AND THE CITY OF HOMS. ALSO TODAY, THE U.N. HUMAN RIGHTS CHIEF REPORTED THE DEATH TOLL IN SYRIA NOW EXCEEDS 5,000. THE U.S. CONGRESS BATTLED AGAIN TODAY, OVER EXTENDING THE PAYROLL TAX CUT FOR ANOTHER YEAR. SO FAR, DEMOCRATS AND REPUBLICANS HAVE BLOCKED EACH OTHER'S PLANS FOR HOW TO PAY FOR AN EXTENSION. SENATE MAJORITY LEADER HARRY REID AGAIN CRITICIZED REPUBLICANS FOR CLAIMING A SURTAX ON THE WEALTHY WOULD HURT JOB CREATION.

>> BILLIONAIRE JOB CREATORS ARE LIKE UNICORNS, THEY'RE IMPOSSIBLE TO FIND AND DON'T EXIST. THAT'S BECAUSE ONLY A TINY FRACTION OF THE PEOPLE MAKING MORE THAN A MILLION DOLLARS, PROBABLY LESS THAN 1%, ARE ACTUALLY SMALL BUSINESS OWNERS. AND ONLY A TINY FRACTION OF THAT TINY FRACTION IS A TRADITIONAL JOB CREATOR.

>> Sreenivasan: HOUSE REPUBLICANS ENTERED THE FRAY ON FRIDAY. THEIR BILL WOULD TIE THE PAYROLL TAX CUT EXTENSION TO APPROVAL OF THE HOTLY DEBATED KEYSTONE OIL PIPELINE FROM CANADA. DEMOCRATS OPPOSE LINKING THE TWO ISSUES, BUT SENATE REPUBLICAN LEADER MITCH McCONNELL PUSHED THE INITIATIVE TODAY.

>> THE PRESIDENT SAYS HE WANTS THE TWO PARTIES TO COMPROMISE-- THIS IS IT. THERE IS NO REASON THIS LEGISLATION SHOULDN'T HAVE THE PRESIDENT'S ENTHUSIASTIC SUPPORT. THE ONLY REASON, THE ONLY REASON FOR DEMOCRATS TO OPPOSE THIS JOB CREATING BILL WOULD BE TO GAIN SOME POLITICAL ADVANTAGE AT A TIME WHEN EVERY ONE OF THEM SAYS JOB CREATION IS A TOP PRIORITY.

>> Sreenivasan: THE OBAMA ADMINISTRATION HAS DELAYED A DECISION ON THE PIPELINE PROJECT UNTIL 2013. THE U.S. SUPREME COURT AGREED TODAY TO HEAR ARGUMENTS ON A TOUGH NEW IMMIGRATION LAW IN ARIZONA. THE STATE STATUTE REQUIRES THAT POLICE CHECK SOMEONE'S IMMIGRATION STATUS, IF THEY STOP THE INDIVIDUAL FOR SOMETHING ELSE, BUT SUSPECT THEY ARE IN THE COUNTRY ILLEGALLY. LOWER FEDERAL COURTS HAVE BLOCKED THAT AND OTHER PROVISIONS OF THE LAW. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO JUDY.

>> Woodruff: AND WE TURN TO THE REPUBLICAN PRESIDENTIAL RACE, WHERE FORMER HOUSE SPEAKER NEWT GINGRICH REMAINS THE FRONT- RUNNER WITH THREE WEEKS TO GO UNTIL THE IOWA CAUCUSES. FORMER MASSACHUSETTS GOVERNOR MITT ROMNEY LOOKED TO SLOW GINGRICH'S SURGE AT A NEW HAMPSHIRE TOWN HALL THIS AFTERNOON.

>> SPEAKER GINGRICH, LAST 30 YEARS IN WASHINGTON-- IF YOU THINK BACKGROUND IN WASHINGTON, CONNECT VARIOUS PEOPLE, WHY, HE'S THE GUY.

>> Woodruff: ROMNEY ALSO URGED GINGRICH TO RETURN THE ESTIMATED $1.6 MILLION HE RECEIVED FOR PROVIDING STRATEGIC ADVICE TO MORTGAGE GIANT FREDDIE MAC. GINGRICH, WHO ALSO CAMPAIGNED IN NEW HAMPSHIRE TODAY, CHARGED THAT, GIVEN ROMNEY'S BACKGROUND, THE CALL RANG HOLLOW.

>> I WOULD JUST SAY THAT IF GOVERNOR ROMNEY WOULD LIKE TO GIVE BACK ALL THE MONEY HE'S EARNED ON BANKRUPTING COMPANIES AND LAYING OFF EMPLOYEES OVER HIS YEARS AT BAIN, THEN I WOULD BE GLAD TO THEN LISTEN TO HIM,

>> Woodruff: THE DUST-UP BETWEEN THE TWO LEADING CONTENDERS FOR THE REPUBLICAN NOMINATION CAME TWO DAYS AFTER THE PAIR MIXED IT UP AT AN IOWA DEBATE.

>> WE HAVE DIFFERENCES OF VIEWPOINT ON SOME ISSUES. BUT THE REAL DIFFERENCE, I BELIEVE, IS OUR BACKGROUNDS. I SPENT MY LIFE IN THE PRIVATE SECTOR. I UNDERSTAND HOW THE ECONOMY WORKS.

>> LET'S BE CANDID. THE ONLY REASON YOU DIDN'T BECOME A CAREER POLITICIAN IS YOU LOST TO TEDDY KENNEDY IN 1994. ( CHORUS OF BOOS )

>> Woodruff: WHILE GINGRICH AND ROMNEY CLASHED WITH EACH OTHER, THEY ALSO CAME UNDER ATTACK FROM OTHERS ON STAGE. MINNESOTA REPRESENTATIVE MICHELE BACHMANN SAID NEITHER CANDIDATE WAS A TRUE CONSERVATIVE.

>> IF YOU LOOK AT NEWT-ROMNEY, THEY WERE FOR OBAMACARE PRINCIPLES. IF YOU LOOK AT NEWT-ROMNEY, THEY WERE FOR CAP AND TRADE. IF YOU LOOK AT NEWT-ROMNEY, THEY WERE FOR THE ILLEGAL IMMIGRATION PROBLEM.

>> ( LAUGHS )

>> AND IF YOU LOOK AT NEWT- ROMNEY, THEY WERE FOR THE $700 BILLION BAILOUT.

>> Woodruff: TEXAS CONGRESSMAN RON PAUL CHARGED GINGRICH WITH REPEATEDLY SHIFTING HIS VIEWS ON KEY ISSUES.

>> YOU HAVE ADMITTED MANY OF THE POSITIONS WHERE YOU HAVE CHANGED POSITIONS. BUT, YOU KNOW, IF YOU WERE LOOKING FOR A CONSISTENT POSITION, YOU KNOW, I THINK THERE'D BE A LITTLE BIT OF TROUBLE, ANYBODY COMPETING WITH ME ON CONSISTENCY OVER A LONG PERIOD OF TIME. ( CHEERS AND APPLAUSE )

>> Woodruff: TEXAS GOVERNOR RICK PERRY, MEANWHILE, HAMMERED ROMNEY OVER THE HEALTH CARE LAW HE SIGNED AS GOVERNOR OF MASSACHUSETTS.

>> I READ YOUR FIRST BOOK AND IT SAID IN THERE THAT YOUR MANDATE IN MASSACHUSETTS SHOULD BE THE MODEL FOR THE COUNTRY. AND I KNOW IT CAME OUT OF THE REPRINT OF THE BOOK, BUT YOU KNOW, I'M JUST SAYING YOU'RE FOR INDIVIDUAL MANDATES, MY FRIEND.

>> YOU KNOW WHAT? YOU'VE RAISED THAT BEFORE, RICK, AND YOU'RE STILL WRONG.

>> IT WAS TRUE THEN.

>> NO, NO.

>> AND IT'S TRUE NOW. ( LAUGHTER )

>> RICK, I'LL TELL YOU WHAT: 10,000 BUCKS-- ( APPLAUSE ) $10,000 BET?

>> I'M NOT IN THE BETTING BUSINESS, BUT I'LL GIVE YOU THE...

>> OH, OKAY, OKAY.

>> Woodruff: THE DEBATE PARTICIPANTS WERE ALSO ASKED IF A CANDIDATE'S MARITAL FIDELITY SHOULD PLAY A ROLE IN HOW VOTERS VOTE. GINGRICH, WHO HAS BEEN MARRIED THREE TIMES, ADMITTED MAKING MISTAKES. FORMER PENNSYLVANIA SENATOR RICK SANTORUM SAID CHARACTER MATTERS.

>> I THINK PEOPLE MAKE MISTAKES AND YOU ARE HELD ACCOUNTABLE TO THOSE MISTAKES. IT SHOULD BE A FACTOR. YOU'RE ELECTING A LEADER. YOU'RE ELECTING SOMEONE THAT TRUST IS EVERYTHING, AND

>> Woodruff: FOR HIS PART, PRESIDENT OBAMA WEIGHED IN ON THE STATE OF THE REPUBLICAN RACE IN AN INTERVIEW WITH "60 MINUTES" THAT AIRED SUNDAY.

>> IT DOESN'T REALLY MATTER WHO THE NOMINEE IS GOING TO BE. THE CORE PHILOSOPHY THAT THEY'RE EXPRESSING IS THE SAME. AND THE CONTRAST IN VISIONS BETWEEN WHERE I WANT TO TAKE THE COUNTRY AND WHAT-- WHERE THEY SAY THEY WANT TO TAKE THE COUNTRY IS GOING BE STARK. AND THE AMERICAN PEOPLE ARE GOING TO HAVE A GOOD CHOICE AND IT'S GOING TO BE A GOOD DEBATE.

>> Woodruff: UNTIL THEN, THE REPUBLICAN HOPEFULS WILL HAVE TO CONTINUE DEBATING ONE ANOTHER WITH THE NEXT MEETING SET FOR THIS THURSDAY NIGHT IN IOWA. FOR MORE ON THE CAMPAIGN, WE ARE JOINED BY STUART ROTHENBERG, EDITOR AND PUBLISHER OF THE "ROTHENBERG POLITICAL REPORT" AND A CONTRIBUTOR TO THE CAPITOL HILL NEWSPAPER, "ROLL CALL." AND SUSAN PAGE, WASHINGTON BUREAU CHIEF FOR "USA TODAY." GOOD TO HAVE YOU BOTH WITH US. SUSAN, IT'S GETTING HOT OUT THERE. LET'S START BY TALKING ABOUT THAT DEBATE ON SATURDAY. WHAT IS THE MAIN TAKE-AWAY FROM THIS?

>> I THINK NEWT GINGRICH HAD A GREAT DEBATE BECAUSE HE TOOK A VULNERABILITY AND HE ADDRESSED IT IN A SMART WAY. PEOPLE WERE WONDERING, COULD HE HOLD HIS TEMPER? COULD HE NOT DO SOMETHING SELF-DESTRUCT STIFF. HE ANSWERED A SERIES OF ATTACKS. HE DIDN'T LIKE DEFENSIVE. IN CONTRAST MITT ROMNEY TOOK SOME OF HIS VULNERABILITY AND HE MADE IT WORSE. THE VULNERABILITY VULNERABILITY BEING HE'S RICH AND OUT OF TOUCH.

>> Woodruff: THE $10,000.

>> WHO MAKES A $10,000 BET? YOU HAVE TO BE PRETTY RICH TO DO THAT.

>> Woodruff: DOES THE RACE CHANGE AS A RESULT OF WHAT HAPPENED?

>> I DON'T THINK SO. I THINK THEY'RE ALL WATCHING GINGRICH TO SEE WHETHER HE WOULD IMPLODE OR WHETHER HE WOULD MAKE A MISTAKE, HOW HE WOULD HANDLE THE CHRIS SISM. I THINK HE HANDLED IT QUITE WELL. ROMNEY NOW HAS GOT 24, 48 HOURS ON THE DEFENSIVE TO EXPLAIN HIS BET. I DON'T THINK IT'S A GAME- CHANGER. MITT ROMNEY HAS A BIGGER PROBLEM. THAT IS THAT THE CONSERVATIVES IN THE REPUBLICAN PARTY DON'T THINK HE'S AN AUTHENTIC CONSERVATIVE. I THINK NEWT PASSED THE FIRST TEST AND IS IN PRETTY GOOD SHAPE.

>> Woodruff: WHAT HAS TO HAPPEN, STU, TO SLOW GINGRICH'S MOMENTUM? WE SHOWED MICHELE BACHMANN GOT IN A GOOD LINE.

>> RICK PERRY ON THE AIR ATTACKING BOTH ROMNEY AND GINGRICH. RON PAUL IS ON THE WEAR ATTACKING GINGRICH. IT'S NOT CLEAR HOW THIS DYNAMIC IS GOING TO CHANGE. YOU KNOW, THE ROMNEY FOLKS ARE HOPING FOR, I THINK RIGHT NOW THEY'RE HOPING FOR A LONG DRAWN-OUT FIGHT. THEY FEEL LIKE THEY CAN'T WIN SOMETHING SHORT TERM. HE NEEDS TO WIN NEW HAMPSHIRE. JUDY, THE THING THAT'S STRIKING IS THE DISCONNECT BETWEEN PEOPLE OUT IN THE GRASS ROOTS, CONSERVATIVES AROUND THE COUNTRY AND THE WASHINGTON D.C. INSIDERS. THEY ARE APOLECTIC ABOUT NEWT GINGRICH. THEY THINK HE'S UNTRUSTWORTHY AND A BAD MANAGER. THE FOLKS OUTSIDE SEE NEWT AS THE PERSON WHO CAN CARRY THE FIGHT TO BARACK OBAMA.

>> Woodruff: SUSAN, YOU'VE BEEN IN IOWA. WHAT ARE YOU PICKING UP OUT THERE?

>> YOU'RE RIGHT. GINGRICH TAPS INTO THE ENERGY THAT PEOPLE WANT. HE'S A MUCH MORE COMBATIVE PERSONALITY. WHAT I HEAR FROM REPUBLICANS EVERYWHERE IS NOT SO MUCH DEVOTION TO A PARTICULAR CANDIDATE BUT DEVOTION TO THE IDEA THAT THEY'RE GOING TO BEAT BARACK OBAMA. THAT'S PROVIDED THE INTENSITY IN THIS RACE. I THINK THAT'S WHY WE'VE SEEN ONE CANDIDATE AFTER ANOTHER TAKE THE LEAD IN THE REPUBLICAN CONTEST BECAUSE REPUBLICANS ARE VERY FOCUSED ON WHO CAN PREVAIL IN A GENERAL ELECTION DEBATE AGAINST OBAMA. WHO CAN BEAT HIM NEXT FALL?

>> Woodruff: RIGHT NOW THEY THINK IT'S NEWT GINGRICH.

>> RIGHT NOW THEY DO. IN FACT NEWT GINGRICH'S LEAD IS BIGGER THAN THE LEAD OF ANY OF THE OTHER PREVIOUS FRONTRUNNERS, PERRY, CAIN, BACHMANN, ROMNEY. HE'S OVER 30% IN THE GALLUP POLL. NOT TO SAY THREE MORE WEEKS TO GO THINGS CAN HAPPEN. IT'S A SIGNIFICANT LEAD.

>> Woodruff: IT'S INTERESTING AT THIS POINT, STU, WE ARE AT THIS POINT IN THE RACE LOOKING WHAT'S GOING ON IN IOWA. WHO IS WELL ORGANIZED. THAT DOESN'T SEEM TO BE AS MUCH OF AN ISSUE.

>> I WAS BEING TO SOME STRATEGISTS WITHIN THE LAST COUPLE DAYS. THEY SAID TO ME PEOPLE IN THE... PEOPLE HAD BEEN WATCHING FOUR YEARS AGO THEY WOULD HAVE REALIZED THAT THE GROUND GAME IN IOWA IS NOT CRUCIAL ANYMORE. IF YOU THINK BACK FOUR YEARS AGO WHO HAD THE BEST GROUND GAME IN THE STATE? MITT ROMNEY. WHO WON? MIKE HUCKABEE ON THE BASIS OF MOMENTUM. IT'S LOOKING AS THOUGH THE GROUND GAME ISN'T AS IMPORTANT. WHO IS THE HOT COMMODITY GOING INTO CAUCUS?

>> Woodruff: WHAT DOES THAT SAY ABOUT WHAT'S HAPPENING THIS YEAR?

>> WE HAVE A NATIONALIZED RACE. THIS IS A NATIONAL PRIMARY NOW. NOT SO MUCH, I WAS RESPOND TO GO THE NATIONAL TRENDS AND SO IS NEW HAMPSHIRE. YOU KNOW, IT'S NOT JUST THAT GROUND ORGANIZATION DOESN'T MATTER. ADS DON'T MATTER. PERRY HAS THE MOST ADS ON THE AIR. ENDORSEMENTS DON'T SEEM TO MATTER. ROMNEY HAS THE ENDORSEMENTS.

>> IT'S THE DEBATES.

>> Woodruff: IS IT JUST THE DEBATES? I MEAN....

>> THE DEBATES HAVE DRIVEN THIS WHOLE THING. WOULD NEWT GINGRICH BE A SERIOUS CONTENDER IF HE WASN'T SUCH A GOOD DEBATER? THAT IS THE THRUST OF HIS CAMPAIGN.

>> I THINK YOU'RE EXACTLY RIGHT. PEOPLE ARE WATCHING THESE DEBATES. THEY'RE REALLY WATCHING THEM AND DRAWING IMPORTANT CONCLUSIONS.

>> Woodruff: THEY'RE WATCHING THEM AT THE WHITE HOUSE. WE HEARD PRESIDENT OBAMA SAY WHOEVER IT IS, WE'RE GOING TAKE THEM ON. HOW IS THE PRESIDENT HANDLING ALL THIS AT THIS POINT? THIS MESSAGE OF....

>> I THINK HE HAS A PRETTY GOOD STRATEGY. I DON'T KNOW IF IT'S A WINNING STRATEGY. IT WILL DEPEND ON A NUMBER OF THINGS. HE WANTS THIS TO BE A BIG ELECTION NOT JUST A REFERENDUM ON HOW HE'S DOING, BUT SOMETHING BIGGER. A CHOICE BETWEEN VISIONS, THE IDEA OF WHO AND WHAT THIS COUNTRY SHOULD BE. I THINK THAT'S A GOOD CONTRAST. HE HAS TO MAKE IT AS MUCH ABOUT THE REPUBLICANS AS ANYTHING ELSE.

>> Woodruff: SUSAN, USA TODAY HAS A POLL COMING OUT WITH SOME INTERESTING NUMBERS ABOUT THE PRESIDENT.

>> WE HAVE A SURVEY OUT TOMORROW. A SWING STATE SURVEY. IT'S A POLL THAT USA TODAY AND GALLUP ARE TAKING THIS YEAR OF 12 OF THE DECISIVE BATTLE GROUNDS. IT SHOWS THAT PRESIDENT OBAMA FACES BIG CHALLENGES. PEOPLE WHO IDENTIFY THEMSELVES AS DEMOCRATS HAVE SHRUNK SINCE 2008. THE NUMBER OF PEOPLE WHO THINK THE REPUBLICANS HAS GROWN. ON EVERY MEASURE OF ENGAGEMENT IN THE ELECTION LIKE ENTHUSIASM, PAYING CLOSE ATTENTION, THINKING IT MATTERS WHO WINS, REPUBLICANS HAVE THE EDGE ON ALL OF THOSE.

>> Woodruff: DOES THAT DOVE TAIL WITH WHAT YOU'RE SAYING, STU, BECAUSE YOU'RE LOOKING AT POLLS AND TALKING TO PEOPLE ALL OVER THE COUNTRY.

>> ABSOLUTELY. PEOPLE ARE DISSATISFIED WITH THE DIRECTION OF THE COUNTRY. OVERWHELMING ON THIS. THEY'RE NOT HAPPY WITH THE PRESIDENT'S PERFORMANCE. SO THE PRESIDENT HAS TO SAY, LOOK, THAT'S NOT WHAT THIS ELECTION IS ABOUT. IT'S SOMETHING BIGGER. IT'S ABOUT DIFFERENT VISIONS THAT THE REPUBLICAN PARTY HAS AND THAT I HAVE. HE'S GOING TO TALK ABOUT INEQUALITY. HE'S GOING TO TALK ABOUT FAIRNESS. HE'S GOING TO TALK ABOUT THE MIDDLE CLASS SQUEEZE. THESE ARE GOOD MESSAGES BUT IF PEOPLE DECIDE I DON'T LIKE THE WAY THE COUNTRY IS HEADED, ONE PERSON IS PRIMARILY IS RESPONSIBLE, THE GUY IN THE WHITE HOUSE. THEN IT DOESN'T MUCH MATTER WHAT THE PRESIDENT SAYS.

>> Woodruff: AND MEANTIME, SUSAN, THE PRESIDENT ALL HE REALLY CAN DO IS SIT BACK AND WATCH THIS SPECTACLE AMONG THE REPUBLICANS.

>> HE'S GOT TO MAKE SUCH A TOUGH ARGUMENT WHICH IS I'VE DONE A LOT OF GOOD THINGS. THINGS WOULD BE MUCH WORSE IF I WASN'T HERE. SO YOU DON'T REICH THE WAY THINGS ARE GOING THE DIRECTION OF THE COUNTRY, UNEMPLOYMENT, YOUR OWN ECONOMIC SITUATION, BUT WOULD IT BE WORSE IF I WASN'T HERE THE PAST FOUR YEARS. THAT IS A DIFFICULT SELLING JOB.

>> Woodruff: ONE MORE DEBATE COMING UP LATER THIS WEEK AND THEN WE'LL WATCH IT ALL. OKAY. SUSAN PAGE, STU ROTHENBERG, THANK YOU BOTH.

>> THANK YOU.

>> Brown: NOW, WHAT THE UPS AND DOWNS IN TAX RATES MEAN FOR ECONOMIC GROWTH. "NEWSHOUR" ECONOMICS CORRESPONDENT PAUL SOLMAN OFFERS A HISTORY LESSON FOR SOME INSIGHTS. IT'S PART OF HIS ONGOING REPORTING: "MAKING SENSE OF FINANCIAL NEWS."

>> I AM DEEPLY DISAPPOINTED THAT THIS COMMITTEE WAS NOT ABLE TO FIND AN AGREEMENT.

>> Reporter: THE SUPERCOMMITTEE, DOOMED IN PART BY A DEADLOCK OVER TAXING THE RICH. SAME FOR THE BILL TO EXTEND THE PAYROLL TAX AND UNEMPLOYMENT BENEFITS-- HELD UP BY THE ISSUE OF TAXING MILLIONAIRES. AND SO THE QUESTION: DO HIGHER TAXES ON THE RICH RETARD ECONOMIC GROWTH, OR DON'T THEY? WE THOUGHT WE'D LOOK TO HISTORY FOR AN ANSWER-- VISITING LANDMARKS OF NEW YORK WITH NON- PARTISAN TAX PROFESSOR ALEX RASKOLNIKOV. FIRST STOP: A MEMORIAL TO WORLD WAR I, WHICH THE U.S. ENTERED IN 1917, SOON AFTER THE FEDERAL INCOME TAX BEGAN, WITH RATES FROM 1% ON A NET INCOME OF UP TO $20,000-- TODAY'S HALF A MILLION OR SO-- EN ROUTE TO 7% ON ALL EARNINGS ABOVE $500,000-- TODAY'S $11 MILLION OR MORE. HIGHER RATES ON THE EXTRA OR MARGINAL INCOME; THUS THE TERM "MARGINAL TAX RATE." IN 1917, GIVEN THE EXPENSIVE WAR, CONGRESS JACKED THE TOP MARGINAL RATE UPWARD.

>> AND BY THE WAY, THE PHRASE "SOAK THE RICH" EMERGED AT THAT TIME, TOO.

>> Reporter: THE NEW TOP MARGINAL TAX RATE OF 77% APPLIED ONLY TO INCOME STARTING AT A MILLION 1918 DOLLARS. THE AVERAGE RATE FOR THE VERY RICH, HOWEVER, WAS ONLY 15%.

>> 15% AVERAGE RATE MEANS THE WEALTHIEST AMERICANS PAID 15% OF THEIR OVERALL INCOME IN TAXES. IT'S NOT NOTHING, BUT IT'S NOT 77%.

>> Reporter: BUT 15% OF YOUR TOTAL INCOME. THAT'S NOT SOAKING THE RICH, IS IT?

>> WELL, IT DEPENDS ON YOUR PERSPECTIVE. COMPARED TO ZERO, WHICH IS WHAT THESE PEOPLE PAID JUST A FEW YEARS BEFORE, IT'S A SUBSTANTIAL BURDEN. CERTAINLY, IT WAS PERCEIVED AS SUCH.

>> Reporter: WAS THERE A BIG POLITICAL MOVEMENT TO TRY TO REVERSE THIS?

>> THERE WAS A HUGE MOVEMENT TO TRY TO REVERSE THAT, PRESIDENT HARDING ADVOCATED RETURN TO NORMALCY AFTER THE END OF THE FIRST WORLD WAR, AND HIS TREASURY SECRETARY ANDREW MELLON WAS INSTRUMENTAL IN REVERSING THAT... THAT TREND.

>> Reporter: BANKER AND INDUSTRIALIST ANDREW MELLON, WHOSE FOUNDATION IS ON THE UPPER EAST SIDE OF MANHATTAN, SERVED REPUBLICAN PRESIDENTS THROUGHOUT THE 1920s.

>> ANDREW MELLON WAS ONE OF THE RICHEST MEN IN AMERICA, AND HE HAD A PLAN FOR REPAYING THE WARTIME DEBT AND STIMULATING ECONOMIC GROWTH, AND HIS PLAN WAS TO CUT DOWN THE TAX RATES DRAMATICALLY. AND THAT'S WHAT REPUBLICANS PROCEEDED TO DO. THE TOP MARGINAL RATE CAME DOWN FROM 77% ALL THE WAY DOWN TO 25%.

>> Reporter: AND STAYED DOWN. FOR EVIDENCE OF TAX CUT EFFECTIVENESS, PROPONENTS LIKE ARTHUR LAFFER SAY: JUST LOOK AT THE NEXT DECADE, STARTING IN THE 1920s.

>> AND WE HAD THE ONLY BOOM IN THE WORLD DURING THAT PERIOD, IT WAS CALLED THE "ROARING TWENTIES." ON JANUARY 1ST 1932, THE HIGHEST MARGINAL INCOME TAX RATE WAS RAISED FROM 24% TO 63%. WE KNOW WHAT FOLLOWED, IT WASN'T A PRETTY PICTURE.

>> Reporter: DOES PROFESSOR RASKOLNIKOV AGREE ABOUT THE ROARIN' GROWTH OF THE ROARIN' TWENTIES?

>> SO THE QUESTION IS WHETHER THE RATE CUT AT THE TOP CONTRIBUTED TO THAT GROWTH, ACCOUNTED FOR THAT GROWTH, OR DID NOTHING IN PARTICULAR FOR THAT GROWTH. AND THAT'S NOT EXACTLY CLEAR. THE '20s WAS A FAIRLY GOOD PERIOD FOR THE ECONOMY UNTIL THE END OF THE '20s, WHEN THINGS WENT DRAMATICALLY BAD.

>> Reporter: A SYMBOL OF THE ERA'S END: REPUBLICAN HERBERT HOOVER, WHO PRESIDED OVER THE CRASH OF '29, HIKED TAXES IN 1931, WAS THUMPED IN '32 AND MOVED TO THE WALDORF ASTORIA HOTEL AS THE GREAT DEPRESSION DEEPENED. DO YOU READ ANYTHING INTO THIS? I MEAN, THAT PERHAPS THE GREAT DEPRESSION CONTINUED FOR ANOTHER NINE YEARS BECAUSE RATES WERE JACKED UP THAT HIGH?

>> THERE WERE MANY FACTORS GOING INTO DEPRESSION. TAX POLICY WAS ONLY ONE OF THEM, SO IT'S HARD TO KNOW.

>> Reporter: "MANY FACTORS"-- THE VEXING PROBLEM WITH TRYING TO PIN ECONOMIC GROWTH ON TAX RATES. AS THE RAISED RATES OF PRESIDENT ROOSEVELT MAKE CLEAR. WE AIRLIFTED TO AN ISLAND NAMED AFTER HIM ACROSS NEW YORK'S EAST RIVER. SO NEXT STOP ROOSEVELT ISLAND, THE FRANKLIN DELANO ROOSEVELT DRIVE OVER THERE. WHAT HAPPENS UNDER ROOSEVELT?

>> TWO BIG THINGS HAPPEN UNDER ROOSEVELT: ONE-- THE TOP MARGINAL RATES INCREASE EVEN MORE. THEY GO UP ALL THE WAY TO 94%, VERY HIGH TOP MARGINAL RATES. AND TWO-- THE INCOME TAX, OUR INCOME TAX CHANGES FROM A CLASS TAX TO A MASS TAX. THE PERCENTAGE OF POTENTIAL TAXPAYERS WHO ARE ACTUALLY PAYING TAXES GOES FROM JUST 6% TO 34%. NOW IT'S AROUND 50%.

>> Reporter: WHY WAS THERE SUDDENLY A NEED FOR SO MUCH REVENUE?

>> REVENUE WAS NEEDED TO FUND THE NEW DEAL, TO... TO BUILD PUBLIC PROJECTS LIKE THE F.D.R. DRIVE AND HIGHWAYS AND DAMS AND PUBLIC WORKS.

>> Reporter: AND THE RICH MAINLY PAID FOR THEM.

>> NOT ONLY THE MARGINAL RATES WERE VERY HIGH, AVERAGE RATES FOR THE TOP 1% OF INCOME EARNERS WENT FROM 20% TO 40%. ONE YEAR TO 60%. SO THIS IS A VERY HIGH AVERAGE RATE.

>> YOU MAY HAVE HEARD THAT I WAS DRIVING THE NATION INTO BANKRUPTCY, AND THAT I BREAKFASTED EVERY MORNING ON A DISH OF GRILLED MILLIONAIRE. ( LAUGHTER )

>> Reporter: CONCEIVABLY, HIGH TAXES ON THE RICH PROLONGED THE GREAT DEPRESSION. BUT THEN HOW TO EXPLAIN THE POST-WAR BOOM, RIGHT THROUGH THE REPUBLICAN ADMINISTRATION OF DWIGHT EISENHOWER, WHEN THE TOP MARGINAL RATE REMAINED IN THE 90s? AND WHEN PRESIDENT KENNEDY CUT THE TOP RATE, GROWTH DIDN'T EXACTLY SOAR. PRESIDENT REAGAN? CUT RATES DRASTICALLY, AS ADVISORS LIKE ARTHUR LAFFER URGED.

>> TWO BIG TAX CUTS, ONE IN '81 AND ANOTHER ONE IN '86. THE TOP RATE CAME DOWN FROM 50% TO 28%, AND THAT'S THE LOWEST IT'S BEEN SINCE ANDREW MELLON.

>> Reporter: WHAT WAS THE RATIONALE FOR THAT?

>> THAT IF YOU CUT TAXES YOU'LL STIMULATE GROWTH AND THAT GROWTH WILL TRICKLE DOWN FROM THE TOP ALL THE WAY TO THE BOTTOM OF THE INCOME DISTRIBUTION.

>> Reporter: AND WHAT HAPPENED?

>> AH, NOT A WHOLE LOT OF TRICKLING DOWN.

>> Reporter: SO DOES THAT REFUTE THE NOTION THAT IF YOU CUT TAXES YOU STIMULATE GROWTH?

>> IT'S NOT EXACTLY CLEAR, BUT, BUT, THERE'S NO STRONG SUPPORT FOR THE PROPOSITION THAT TRICKLE DOWN WORKS.

>> Reporter: OF COURSE, STRONG POLITICAL SUPPORT FOR THE PROPOSITION CONTINUES TO THE PRESENT. BUT, SADLY, SAYS THE PROFESSOR, THERE'S NO ACADEMIC CONSENSUS. AND THE EVIDENCE GETS NO MORE DEFINITIVE AT THE NEXT MAJOR STOP OUTSIDE PRESIDENT CLINTON'S OFFICE ON 125TH STREET IN HARLEM. CLINTON BOOSTED THE TOP MARGINAL RATE FROM 31% TO 39.6%.

>> ECONOMIC GROWTH SPIKED AFTER THE CLINTON TAX INCREASE AND ALTHOUGH NO ONE SAYS THAT HIGH TAX RATES LEAD TO ECONOMIC GROWTH, THIS KIND OF FACT IS CERTAINLY NOT THE GREATEST FACT IF YOU WANT TO ARGUE THAT HIGHER TAX RATES, TOP MARGINAL RATES IMPEDE ECONOMIC GROWTH. SO RELATIONSHIP IS COMPLICATED.

>> Reporter: AND COMPLICATED IT REMAINS. ECONOMIC GROWTH HASN'T EXACTLY SPURTED IN THE WAKE OF THE TAX CUTS OF GEORGE W. BUSH, WHICH PRESIDENT OBAMA RELUCTANTLY AGREED TO EXTEND THROUGH NEXT YEAR. WE ENDED OUR DAY TRIP AT ZUCCOTTI PARK WHEN WALL STREET OCCUPIERS WERE STILL PROTESTING THE INEQUALITY GAP BETWEEN THE TOP 1% AND THE REST. BUT WHEN IT COMES TO TAXES, IS THAT A BUM RAP? WE HEAR THAT THE TOP 1% PAY THE LIONS SHARE OF INCOME TAXES, AND MORE THAN THEY USED TO.

>> BOTH OF THESE STATEMENTS ARE ABSOLUTELY TRUE, IN FACT THE SHARE OF TOTAL TAX BURDEN PAID BY TOP 1% ALMOST DOUBLED IN THE PAST 30 YEARS.

>> Reporter: BUT DOESN'T THAT SHOW THAT AMERICA HAS BECOME MORE FAIR?

>> WELL, IT DEPENDS ON HOW YOU THINK ABOUT FAIRNESS BECAUSE EVEN THOUGH THE BURDEN BORNE BY TOP 1% HAS DOUBLED, IF YOU LOOK AT THE RATE OF THE INCOME GROWTH IT'S BEEN 10 TIMES THE GROWTH OF THE MIDDLE 20%. SO THE INCOME INEQUALITY INCREASED DRAMATICALLY AND RIGHT BEFORE FINANCIAL CRISIS IT WAS AT THE HIGHEST LEVEL SINCE 1928, SINCE ANDREW MELLON WAS CUTTING TAXES IN THE '20s.

>> Reporter: AT THE END OF THE DAY, THEN, HIGH INEQUALITY AND A SLUGGISH ECONOMY. UNFORTUNATELY, IF HISTORY IS ANY GUIDE, THERE'S NO CONCLUSIVE EVIDENCE THAT ECONOMIC GROWTH IS STIMULATED BY LOWERING MARGINAL TAX RATES ON THE RICH OR FOR THAT MATTER, RAISING THEM.

>> Woodruff: NEXT, GOVERNMENTS AROUND THE GLOBE GRAPPLE WITH WHAT TO DO ABOUT CLIMATE CHANGE. RAY SUAREZ HAS THE STORY.

>> Suarez: NEGOTIATIONS DRAGGED ON FOR NEARLY 36 HOURS PAST THE DEADLINE IN DURBAN, SOUTH AFRICA. IN THE END, LEADERS AT THE 17th UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE MOSTLY AGREED TO KEEP TALKING. AMONG THE DECISIONS THEY DID MAKE, THE DELEGATES EXTENDED THE 1997 KYOTO PROTOCOL, SET TO EXPIRE AT THE END OF 2012, FOR FIVE YEARS. CALLED FOR A NEW BINDING ACCORD TO BE CREATED AND READY TO BE IMPLEMENTED BY 2020. AND SET UP A GREEN CLIMATE FUND. IT WOULD USE PUBLIC AND PRIVATE MONEY TO HELP DEVELOPING NATIONS COMBAT THE IMPACTS OF CLIMATE CHANGE. HERE TO DISCUSS WHAT CAME OUT OF DURBAN AND THE FUTURE OF GLOBAL CLIMATE TALKS ARE NATHAN HULTMAN, DIRECTOR OF ENVIRONMENTAL POLICY FOR THE SCHOOL OF PUBLIC POLICY AT THE UNIVERSITY OF MARYLAND. HE IS ALSO A FELLOW AT THE BROOKINGS INSTITUTION AND WAS IN DURBAN FOR THE CONFERENCE. AND SAMUEL THERNSTROM, SENIOR CLIMATE POLICY ADVISOR FOR THE CLEAN AIR TASK FORCE, A NON- PROFIT GROUP DEDICATED TO REDUCING AIR POLLUTION THROUGH PRIVATE SECTOR COLLABORATION. HE WAS A FORMER MEMBER OF THE WHITE HOUSE COUNCIL ON ENVIRONMENTAL QUALITY DURING THE GEORGE W. BUSH ADMINISTRATION. WELL, NATHAN HULTMAN, DID THE DELEGATES HEAD BACK TO THEIR PLANES IN DURBAN TO HELD HOME FEELING THAT THEY HAD ACCOMPLISHED SOMETHING SIGNIFICANT?

>> I THINK THEY FELT LIKE THEY ACCOMPLISHED SOMETHING SIGNIFICANT. THEY DID PULL OUT AN AGREEMENT OF SORTS AT THE END. IT WAS AN AGREEMENT, AS YOU MENTIONEDED, TO KEEP TALKING AND HOPEFULLY TO CONCLUDE A NEW TREATY BY 2015 THAT WOULD TAKE EFFECT BY 2020 ALTHOUGH I THINK WE CAN REASONABLY ASK THE QUESTION OF HOW IMPORTANT THAT KIND OF AN AGREEMENT MIGHT BE IN TERMS OF ACTUALLY DEPLOYING TECHNOLOGIES THAT MIGHT PROTECT THE CLIMATE.

>> Suarez: DID THEY ACCOMPLISH MUCH?

>> THE HEADLINE STORY OUT OF DURBAN IS PROBABLY NOT ABOUT WHAT WAS IMPORTANT. THE AGREEMENT TO EXTEND KYOTO AND CONTINUE NEGOTIATIONS FOR SUCCESS OR AGREEMENT I THINK PROBABLY WON'T HAVE THAT MUCH AFFECT AT THE END OF THE DAY ON THE GLOBAL CLIMATE. WHAT IS SOMEWHAT MORE ENCOURAGING IS THERE'S BEEN A MOVE OF GAUGING SOME OF THE PRACTICAL REALITIES INSTEAD OF THE PIE IN THE SKY PLEDGES THAT SOMEHOW NEVER SEEM TO BE KEPT. THERE'S BEEN SOME PROGRESS ON ACTUALLY WORKING OUT THE DETAILS OF HOW TO ADVANCE THE DEVELOPMENT OF INNOVATIVE TECHNOLOGIES THAT WILL ENABLE THE REDUCTION OF GREENHOUSE GAS EMISSIONS OVER THE LONG RUN. SO, FOR EXAMPLE, ONE OF THE IMPORTANT DEVELOPMENTS OUT OF DURBAN THAT I THINK HASN'T GOTTEN MUCH ATTENTION WAS THAT THE CLEAN DEVELOPMENT MECHANISM, THE FINANCING MECHANISM ESTABLISHED UNDER KYOTO THAT FUNDS CLEAN ENERGY PROJECTS IN THE DEVELOPING WORLD PREVIOUSLY DID NOT INCLUDE... FUNDING WAS NOT EXTENDED TO CARBON CAPTURE AND SEQUESTRATION PROJECTS, THAT IS, TECHNOLOGY THAT TAKES THE CARBON DIOXIDE OUT OF PRIMARILY COAL-FIRED POWER PLANTS AND CAPTURES IT AND SEQUESTERS IT UNDERGROUND. IT WAS REFORMED IN DURBAN SO THAT IT WOULD ALLOW FINANCING FOR PROJECTS. I THINK THOSE VERY HANDS-ON, PRACTICAL STEPS FORWARD TO ENGAGING WITH THE PROBLEM AND TO HELP US DEVELOPMENT THE ENVIRONMENTAL TECHNOLOGIES THAT WE NEED MAY PROVE TO BE IMPORTANT.

>> Suarez: NATHAN HULTMAN, POORER COUNTRIES IN CANCUN LAST YEAR AND COPENHAGEN THE YEAR BEFORE SAID, "WE NEED HELP. WE CAN'T AFFORD TO IMPLEMENT THE TECHNOLOGIES THAT WOULD BE NECESSARY TO BLUNT THE EFFECTS OF CLIMATE CHANGE WHERE WE LIVE."

>> AND JUST BUILDING OFF THIS PREVIOUS COMMENT, THE NEGOTIATIONS AT DURBAN DID MAKE PROGRESS ON SOME POTENTIALLY SMALLER, MORE MUNDANE ISSUES SO, FOR EXAMPLE THERE'S A GREEN CLIMATE FUND LIKE YOU MENTIONED THAT'S SUPPOSED TO LEVERAGE UP TO $100 BILLION A YEAR FOR NEW FINANCING FOR PROJECTS TO REDUCE THE EMISSIONS IN DEVELOPING COUNTRIES AND HELP THEM DEVELOP TO THE CLIMATE CHANGES WE EXPECT TO SEE. THERE'S A NEW TECHNOLOGY MECHANISM THAT WAS CONCEIVED IN THE CANCUN AGREEMENTS LAST YEAR BUT MADE OPERATIONAL THROUGH SOME OF THE DECISIONS THAT WERE TAKEN AT DURBAN. THAT WILL POTENTIALLY LEVERAGE INNOVATION ACROSS A NUMBER OF DIFFERENT DEVELOPMENT CONTEXTS IDEALLY TO HELP RESEARCHERS AND TECHNICAL EXPERTS IN DEVELOPING COUNTRIES CONNECT WITH EACH OTHER AND STIMULATE THAT KIND OF INNOVATION THAT WE WANT TO SEE HAPPEN IN THE NEAR TERM IN ORDER TO REDUCE EMISSIONS GLOBALLY.

>> Suarez: THE ARGUMENT CONTINUES BETWEEN HEAVILY INDUSTRIALIZED COUNTRIES AND INDUSTRIALIZING COUNTRIES, THE POORER DEVELOPING COUNTRIES SAYING, LOOK, WE MAY BE THE EMITERS OF THE FUTURE BUT YOU GUYS-- EUROPE, NORTH AMERICA-- CREATED THIS PROBLEM SO YOU SHOULD BEAR THE BURDEN. BY KEEPING CHINA AND INDIA IN THE TALKS, DID THEY ACCOMPLISH SOMETHING SUBSTANTIAL THERE?

>> IT'S HARD TO SAY WHAT WAS ACCOMPLISHED WAS SUBSTANTIAL. I THINK WE'LL HAVE TO SEE. I THINK WHAT'S IMPORTANT FOR PEOPLE TO APPRECIATE THOUGH IS THAT BEYOND DURBAN, THE DIVIDE BETWEEN THE DEVELOPING AND DEVELOPED NATIONS IS BREAKING DOWN SOMEWHAT SO THAT NOT ALL OF THE IMPORTANT ACTION ON CLIMATE CHANGE IS OCCURRING IN THIS INTERNATIONAL NEGOTIATED FRAMEWORK BUT IN FACT WHAT WE SEE NOW IS THAT A LOT OF AMERICAN COMPANIES THAT HAVE SOME OF THE MOST IMPORTANT INNOVATIVE CLIMATE FRIENDLY TECHNOLOGIES SUCH AS CARBON CAPTURE AND SEQUESTRATION AS I JUST MENTIONED ARE TAKING THOSE TECHNOLOGIES TO CHINA TO ACTUALLY DEVELOP THEM NOW AND COMMERCIALIZE THEM IN CHINA'S RAPIDLY GROWING ENERGY MARKET. WHILE THE DURBAN NEGOTIATIONS ARE AN IMPORTANT OPPORTUNITY FOR NATIONS TO COME TOGETHER AND MAKE COLLECTIVE AGREEMENTS ABOUT THOSE QUESTIONS, I THINK THERE'S A STRONG ARGUMENT TO BE MADE THAT THE MOST IMPORTANT INTERNATIONAL COLLABORATION ON TECHNOLOGY INNOVATION AROUND CLIMATE IS ACTUALLY OCCURRING VOLUNTARILY AND ON A NATION-TO-NATION AND BUSINESS-TO-BUSINESS RELATIONSHIP.

>> Suarez: BUT THEY STOPPED THE CLOCK, DIDN'T THEY, NATHAN, TO KEEP CHINA AND INDIA ENGAGED?

>> CHINA AND INDIA HAVE BEEN ENGAGED IN DIFFERENT WAYS UNDER, FOR EXAMPLE, THE CANCUN AGREEMENTS OF LAST YEAR THERE'S AN OPPORTUNITY FOR ANY COUNTRY TO REPORT ITS OWN DOMESTIC COMMITMENTS IN AN INTERNATIONAL CONTEXT AND HAVE THOSE COMMITMENTS BE VERIFIED AND MONITORED IN THE INTERNATIONAL SPHERE. THAT ACTUALLY HELPS CREATE A NORM THAT EMISSIONS REDUCTION IS SOMETHING THAT COUNTRIES WANT TO ASPIRE TO. IT ALSO CREATES TRANSPARENCY SO THAT DIFFERENT COUNTRIES CAN LOOK TO EACH OTHER, SEE WHAT THE LEVEL OF AMBITION IS IN THEIR COMPETITOR COUNTRIES OR THEIR PEER COUNTRIES AND CHINA AND INDIA HAVE BEEN ENGAGED IN THAT WAY THOUGH THEY HAVEN'T BEEN PREVIOUSLY, FOR EXAMPLE, IN KYOTO, REQUIRED TO MAKE EMISSIONS CUTS WITH AN INTERNATIONAL TREATY.

>> Suarez: IN SOME OF THE PREVIOUS CONFERENCES, SOME OF THE WORLD'S BIGGEST POLITICAL PERSONALITIES WERE ON HAND. LULA DID I SILL VIRGINIA OF BRAZIL, PRESIDENT OBAMA, HILLARY CLINTON, JACOB ZUMA OF SOUTH AFRICA. ON AND ON AND ON. WHO'S WHO IN INTERNATIONAL BIG COUNTRY POLITICS. THIS TIME IT WAS LEFT TO THE DIPLOMATS. DID THAT MAKE A DIFFERENCE, ONE WAY OR THE OTHER, BAD OR GOOD?

>> YEAH, I MEAN I THINK THAT TO SOME DEGREE HAVING SOME MEETINGS WHERE THE VERY HIGH- PROFILE LEADERS OF THE WORLD MAYBE AREN'T INVOLVED ALLOWS PROGRESS ON SOME OF THE MORE MUNDANE, SOME OF THE MORE NUTS-AND-BOLTS ELEMENTS OF CLIMATE POLICY THAT ARE AGAIN IMPORTANT. SOMETIMES IF IT'S A MEETING THAT ASPIRES TO AN INTERNATIONAL TREATY, A NEW KIND OF APPROACH, IT CAN HELP TO HAVE THE WORLD LEADERS THERE BECAUSE THEY CAN MAKE THAT FINAL PUSH TO MAKE THE TREATY HAPPEN. WE SAW THAT HAPPEN IN COPENHAGEN, FOR EXAMPLE, WITH PRESIDENT OBAMA'S INVOLVEMENT. WE'VE SEEN THAT HAPPEN IN THE PAST EVEN WAY BACK TO KYOTO WHEN A NUMBER OF WORLD LEADERS WEE INVOLVED. BUT AT THIS ONE, YEAH, IT WAS MUCH MORE MINISTERIAL DISCUSSION THERE WAS PROGRESS MADE ON A NUMBER OF FRONTS.

>> Suarez: SAMUEL THERNSTROM, JUST BEFORE THE BROADCAST, CANADA ANNOUNCED IT WAS PULLING OUT OF KYOTO EVEN AS DURBAN CELEBRATED FINDING A WAY TO EXTEND IT AND GIVE NEW LIFE TO THE TREATY. IS THIS AN IMPORTANT DEVELOPMENT FOR A BIG, BIG INDUSTRIAL COUNTRY?

>> IT'S NOT A SURPRISING DEVELOPMENT. CANADA WAS WIDELY EXPECTED TO DO THAT BECAUSE CANADA HAS NOT MET ITS KYOTO TARGETS. IF THEY HAD REMAINED WITHIN THE KYOTO LEGAL STRUCTURE WOULD HAVE BEEN OBLIGATED TO PAY $6-$7 BILLION IN PENALTIES FOR FAILURE TO MEET THOSE TARGETS. SO MOST PEOPLE EXPECTED THAT CANADA WOULD BE LOOKING TO PROTECT ITS FINANCIAL INTERESTS THERE. THAT'S NOT SURPRISING.

>> DOESN'T THIS SHOW SOME WEAKNESS, IN THE KYOTO PROTOCOL.

>> IT'S REACHING ITS END STAGE. THAT MIGHT BE A GOOD THING. IT MIGHT ENABLE US TO MOVE ON TO WHAT MAY BE A MORE PRODUCTIVE SET OF TREATIES OR AGREEMENTS THAT CAN AGAIN SEE THESE TECHNOLOGIES IMPLEMENTED IN A MORE REAL WAY.

>> Suarez: NATHAN HULTMAN, SAMUEL THERNSTROM, THANK YOU BOTH.

>> THANK

>> Brown: FINALLY TONIGHT: EUROPE'S NEW FISCAL DEAL, MINUS ONE MAJOR PLAYER, WITH FINANCIAL AND POLITICAL REVERBERATIONS. TODAY'S STOCK SELL-OFF WAS WIDESPREAD AND IT CAME AFTER MARKETS HAD A WEEKEND TO PONDER FRIDAY'S AGREEMENT AT THE EUROPEAN UNION CRISIS SUMMIT. INVESTORS AND TRADERS TURNED THUMBS DOWN ON A DEAL TO STAVE OFF FUTURE DEBT CRISES. IT WOULD BOLSTER THE EUROPEAN BAILOUT FUND AND FORCE GOVERNMENTS TO SUBMIT BUDGETS FOR CENTRAL REVIEW. BRITISH PRIME MINISTER DAVID CAMERON WAS THE ONLY MEMBER OF THE 27-NATION E.U. TO REJECT THE PACT.

>> I WENT TO BRUSSELS WITH ONE OBJECTIVE: TO PROTECT BRITAIN'S NATIONAL INTEREST. AND THAT IS WHAT I DID.

>> Brown: CAMERON TOOK TO THE FLOOR OF THE HOUSE OF COMMONS TODAY TO DEFEND HIS DISSENT. IT WAS CENTERED ON SHELTERING BRITAIN'S FINANCIAL SECTOR FROM INCREASED E.U. REGULATION.

>> THOSE SAFEGUARDS, ON THE SINGLE MARKET AND ON FINANCIAL SERVICES WERE MODEST, REASONABLE AND RELEVANT. WE WERE NOT TRYING TO CREATE UNFAIR ADVANTAGE FOR BRITAIN. I WISH THOSE SAFEGUARDS HAD BEEN ACCEPTED. BUT FRANKLY I HAVE TO TELL THE HOUSE THE CHOICE WAS A TREATY WITHOUT PROPER SAFEGUARDS OR NO TREATY. IT WAS NOT AN EASY THING TO DO BUT IT WAS THE RIGHT THING TO DO.

>> Brown: CAMERON WON SUPPORT FROM MANY BRITONS, INCLUDING SOME IN THE FINANCIAL INDUSTRY, BASED IN THE CITY OF LONDON, THE BRITISH WALL STREET. BUT THE LEADER OF THE OPPOSITION LABOUR PARTY, ED MILLIBAND, DENOUNCED CAMERON.

>> THE REALITY IS THIS: HE HAS GIVEN UP OUR SEAT AT THE TABLE. HE HAS EXPOSED, NOT PROTECTED BRITISH BUSINESS AND HE HAS COME BACK WITH A BAD DEAL FOR BRITAIN. THE PRIMIE MINISTER MR. SPEAKER CLAIMED TO HAVE WIELDED A VETO. BUT A VETO, LET ME EXPLAIN TO HIM IS SUPPOSED TO STOP SOMETHING HAPPENING. IT'S NOT A VETO WHEN THE THING YOU WANTED TO STOP GOES AHEAD WITHOUT YOU. MR. SPEAKER, THAT'S CALLED LOSING, THAT'S CALLED BEING DEFEATED. ( BOOS ) THAT'S CALLED LETTING BRITAIN DOWN.

>> Brown: CAMERON'S CONSERVATIVE PARTY GOVERNS WITH A COALITION PARTNER, THE LIBERAL DEMOCRATS. THEIR LEADER, NICK CLEGG, HAD APPLAUDED CAMERON ON FRIDAY. BUT BY SUNDAY, HE'D CHANGED HIS STANCE.

>> WELL, I AM BITTERLY DISAPPOINTED BY THE OUTCOME OF LAST WEEK'S SUMMIT, PRECISELY BECAUSE I THINK THERE IS NOW A REAL DANGER THAT OVER TIME THE UNITED KINGDOM WILL BE ISOLATED AND MARGINALISED WITHIN THE EUROPEAN UNION. I DON'T THINK THAT IS GOOD FOR JOBS, IN THE CITY OR ELSEWHERE.

>> Brown: BACK IN BRUSSELS, A TOP E.U. OFFICIAL, OLLI REHN, ECHOED THE CONCERNS EXPRESSED BY CLEGG AND OTHER EUROPEAN LEADERS.

>> WE WANT BRITAIN AT THE CENTER OF EUROPE AND NOT ON THE SIDELINES.

>> Brown: THE SUBJECT ALSO CAME UP TODAY IN WASHINGTON, AS SECRETARY OF STATE HILLARY CLINTON MET WITH BRITISH FOREIGN SECRETARY WILLIAM HAGUE.

>> OUR CONCERN HASN'T BEEN OVER THE POSITION THAT THE U.K. HAS TAKEN. IT'S WHETHER THE DECISIONS MADE BY OTHER MEMBERS OF E.U. WILL WORK.

>> Brown: A SHORT TIME AFTER THAT MEETING, WE SAT DOWN WITH FOREIGN SECRETARY HAGUE FOR AN INTERVIEW. FOREIGN SECRETARY HAGUE, WELCOME.

>> THANK YOU.

>> Brown: QUOTING YOUR COALITION PARTNER, HE SAYS THE DECISION TO REJECT THE E.U. AGREEMENT WAS, QUOTE, BAD FOR BRITAIN AND BRITAIN IS IN DANGER OF BEING ISOLATED AND MARGINALIZED IN EUROPE. WHAT'S YOUR RESPONSE? IS BRITAIN IN DANGER OF BEING ISOLATED AND LOSING POWER BECAUSE OF THIS DECISION?

>> NO. I THINK THAT WAS A DIFFERENCE OF VIEW ABOUT THAT, BUT MY VIEW AND THE PRIME MINISTER'S VIEW VERY MUCH IS THAT THAT IS NOT THE DANGER HERE. THERE ARE HUGE CONCERNS ABOUT THE EUROPEAN ECONOMY, OF COURSE. HERE IN AMERICA AND IN BRITAIN THERE ARE HUGE CONCERNS. BUT THIS IS NOT A QUESTION OF BEING ISOLATED. ON THE WHOLE RANGE OF GLOBAL ISSUES AND THE EUROPEAN UNION, THE UNITED KINGDOM REMAINS IN A CENTRAL AND DRIVING ROLE. ALL THE ISSUES I'VE BEEN DISCUSSING WITH SECRETARY CLINTON THIS AFTERNOON BUT WE WON'T SIGN UP TO EVERYTHING. WE WON'T SIGN UP TO EVERYTHING THAT WASN'T IN OUR OWN INTEREST. IT WASN'T IN OUR INTEREST TO JOIN THE EURO. IT WASN'T IN OUR INTEREST TO SIGN UP ON THE TREATIES ON THE TABLE LAST THURSDAY NIGHT.

>> Brown: PRIME MINISTER CAMERON SPOKE OF CONCERNS FOR BRITISH NATIONAL SOVEREIGNTY SPECIFICALLY A THREAT TO THE FINANCIAL SERVICES INDUSTRY. ISN'T THAT PRECISELY WHAT THE DANGER WOULD BE NOW, THAT DECISIONS WOULD BE MADE-- FINANCIAL, ECONOMIC DECISIONS THAT IN BRITAIN WOULD NOT BE AT THE TABLE?

>> THE RESULTS OF US NOT SIGNING UP TO THE TREATY IS NOT A SINGLE WORD OF THE EUROPEAN TREATIES HAS BEEN CHANGED. OTHER COUNTRIES MAY FORM THEIR OWN TREATIES, BUT THE EUROPEAN TREATIES REMAIN EXACTLY THE SAME. NO OTHER TREATY CAN UNDERCUT OR OVERRIDE THE TREATIES OF THE EUROPEAN UNION IN THE WAY THAT THE E.U. WORKS. AND SO WE COME TO ENJOY OUR FULL RIGHTS TO TAKE PART IN THE SINGLE MARKET AND DETERMINE THE DECISIONS ABOUT THE SINGLE MARKET. SO WE WILL BE VERY VIGILANT IN PROTECTING OUR INTERESTS WITHIN THE FRAMEWORK OF THE WHOLE EUROPEAN UNION.

>> Brown: WHETHER IT'S A TREATY OR AN AGREEMENT, GERMANY, FRANCE HAVE CERTAINLY MADE IT CLEAR THAT THEY WILL GO FORWARD, THAT THERE WILL BE REGULATORY ISSUES ON THE TABLE. THOSE BRITAIN WILL NOT BE AT THAT TABLE FOR.

>> WE'LL BE VERY VIGILANT IN PROTECTING OUR INTERESTS. WE WOULD LIKE TO SEE ARRANGEMENTS WHICH REINFORCE THE PROTECTION FOR FREE COMPETITION AND FINANCIAL SERVICES. BUT SINCE OTHER COUNTRIES WERE NOT PREPARED TO AGREE AT THIS STAGE SO THAT REINFORCEMENTS THAT WE WERE PUTTING ON THE TABLE, THEN WE DIDN'T AGREE TO GO INTO THE TREATY. I'M NOT SAYING WE DON'T NEED FURTHER PROTECTION FOR THE SINGLE MARKET AND FINANCIAL SERVICES IN THE FUTURE, BUT I AM SAYING THAT THAT IS THE KIND OF THING WE WILL NEED TO SEE IF OTHER COUNTRIES WANT TO US JOIN IN ANY TREATIES IN EUROPE.

>> Brown: MANY COMMENTATORS NOW SEE A GERMAN OR A GERMAN- FRENCH LED AND DOMINATED EUROPE. EXPLAIN TO AN AMERICAN AUDIENCE, WHAT DO YOU SEE FOR EUROPE GOING FORWARD?

>> EUROPE GOING FORWARD TO ME IF IT GOES IN THE RIGHT WAY BECOMES LARGER. IT INCLUDES THE COUNTRIES OF THE WESTERN BALKANS AND TURKEY NATURALLY AS MEMBERS OF THE EUROPEAN UNION. IT EMPHASIZES TRADE BOTH WITHIN ITS OWN SINGLE MARKET AND IN A GREATER NUMBER OF FREE TRADE AGREEMENTS WITH THE REST OF THE WORLD. BECAUSE THE ONLY WAY FORWARD NOW FOR WESTERN ECONOMIES ISN'T GOVERNMENT SPENDING. WE'VE REACHED THE LIMITS ON THAT. IT ISN'T ANY MONETARY POLICY OTHER THAN WHAT THE EUROPEAN CENTRAL BANK CAN DO. IT IS TRADE. IT IS THE GROWTH OF ENTERPRISE. IT'S ENCOURAGING SMALL BUSINESSES. IT'S OPENING UP FREER TRADE WITH THE REST OF THE WORLD. THAT IS OUR VISION OF THE WAY THE EUROPEAN UNION SHOULD BE GOING. AND BRITAIN WILL CONTINUE TO PUSH THAT VERY HARD.

>> Brown: A COMMENTATOR ON OUR PROGRAM ON FRIDAY AND ONE HEARS THIS MUCH OVER THE WEEKEND, OUR COMMENTATOR SAID IT'S MUCH MORE DIFFICULT DIFFICULT NOW TO ANSWER THE QUESTION WILL BRITAIN STILL BE IN THE E.U. IN FIVE TO TEN YEARS? HOW WOULD YOU ANSWER THAT QUESTION TODAY.

>> I DON'T THINK IT'S A DIFFICULT ANSWER. WHEN SOMETHING LIKE THIS HAPPENS, A DISAGREEMENT THAT IS CLEARLY VERY HIGHLY PUBLICIZED, PEOPLE START TAKING EXTREME OPINIONS. SOME WHO DON'T WANT US TO BE IN THE E.U. SAY THIS IS THE BEGINNING.

>> Brown: INCLUDING MANY IN YOUR PARTY.

>> INCLUDING SOME BUT MORE MINORITY. WE SHOULD BE IN EUROPE BUT NOT TAKEN OVER EUROPE. THAT IS WHAT WE SEEK.

>> Brown: IN BUT NOT TAKEN OVER.

>> IN EUROPE BUT NOT RUN BY EUROPE HAS ALWAYS BEEN MY MANTRA, IF YOU LIKE. IT'S ALWAYS BEEN THE COURSE THAT I AND MY PARTY HAVE FOLLOWED. SOME PEOPLE WILL SAY THAT. OTHERS WILL SAY THIS IS THE BEGINNING OF ISOLATION AND SO ON. NEITHER OF THESE EXTREMES IS TRUE. THE FACT IS THAT IN EUROPE THERE ARE OVERLAPPING CIRCLES OF DECISION-MAKING. SOME COUNTRIES IN THE EURO AND SOME NOT. WE'RE GLAD WE ARE NOT. SOME ARE IN THE BORDER IMMIGRATION SYSTEM AND SOME ARE NOT. SOME ARE IN NATO. WE ARE A LEADING MEMBER OF NATO. BUT SOME OF THE OTHER E.U. COUNTRIES ARE NOT. SOME WORK TOGETHER WELL ON DEFENSE LIKE BRITAIN AND FRANCE. OTHERS DON'T. WE HAVE TO GET USED TO THE IDEA THAT IN EUROPE SOME COUNTRIES ARE IN SOME ARRANGEMENTS AND SOME AREN'T. THAT'S PROBABLY THE WAY IN WHICH IT IS GOING TO DEVELOP IN THE FUTURE.

>> Brown: I THINK THAT'S THE SECOND TIME YOU'VE SAID YOU'RE GLAD YOU'RE NOT IN THE EURO. YOU SEEM TO SAY IT WITH SPECIAL GLEE, IF THAT'S RIGHT, OR ENERGY. EVEN IF WHAT'S GOING ON NOW, DO YOU THINK THIS IS EXPOSING FUNDAMENTAL PROBLEMS WITHIN THE EURO ZONE? THE REASON I SAY THAT FORCEFULLY IS BECAUSE TEN YEARS AGO WHEN I ARGUED IN BRITAIN THAT WE SHOULD NOT JOIN THE EURO, THESE SAME CHARGES WERE MADE THEN THAT ARE MADE NOW. YOU ARE ISOLATING BRITAIN IN SOME WAY. YOU WILL LOSE INFLUENCE IN SOME WAY. NOW IT WOULD HAVE BEEN A CATASTROPHE FOR US TO JOIN THE EURO. AND PEOPLE CAN NOW SEE THAT CLEARLY. SO WE SHOULD HAVE THE SAME CONFIDENCE IN MAKING OUR OWN DECISIONS NOW AS WE HAD THEN. CERTAINLY THE EURO HAS FUNDAMENTAL PROBLEMS WHICH DO NEED TO BE ADDRESSED. IF YOU CREATE A SINGLE CURRENCY INEVITABLY, YOU HAVE TO CREATE SOME POLITICAL MECHANISM TO FOLLOW THAT UP, SOME GREATER FISCAL CONTROLS AMONG THE COUNTRIES INVOLVED IF YOU'RE GOING TO MAKE IT WORK. THAT IS WHAT THE EURO ZONE COUNTRIES ARE NOW TRYING TO ADDRESS.

>> Brown: WE'VE SEEN MARKETS TODAY SHOW NEW CONCERN OVER FRIDAY'S AGREEMENT. HOW CONCERNED ARE YOU ABOUT THE CONTINUING PROBLEM FOR EUROPE AND FOR THE LARGER GLOBAL ECONOMY?

>> WELL, WE REMAIN CONCERNED ABOUT THE WHOLE GLOBAL ECONOMY, ABOUT THE RESULT OF EXCESSIVE DEBTS AND DEFICITS IN THE WHOLE... IN THE UNITED STATES AS WELL AS IN THE EURO ZONE, OF COURSE. WE ALSO HAVE TO DEAL WITH THEM. IN BRITAIN, WE ARE DEALING WITH THOSE DECISIVELY AS A RESULT OF WHICH THE BRITISH GOVERNMENT IS NOW BORROWING MONEY MORE CHEAPLY THAN EVER IN OUR HISTORY AND MORE CHEAPLY THAN OUR EUROPEAN PARTNERS BECAUSE PEOPLE HAVE CONFIDENCE IN DEALING WITH IT. WE NEED THE SAME CONFIDENCE IN THE EURO ZONE. THAT NEEDS A BIG ENOUGH FIRE WALL TO PERSUADE PEOPLE THERE WON'T BE A CONTAGION OF RISK IN THE EURO ZONE, ADEQUATE RECAP TALLIZATION OF BANKS AND COUNTRIES LIKE GREECE, FOR INSTANCE, TO SOLVE THEIR OWN PROBLEM.

>> Brown: ANOTHER SUBJECT. THIS WEEKENDS THOUSANDS WERE DEMONSTRATING IN RUSSIA OVER THE RECENT PARLIAMENTARY ELECTIONS. MIGHT WE BE SEEING THE BEGINNINGS OF A KIND OF RUSSIAN-ARAB SPRING?

>> I THINK THAT WOULD PROBABLY BE TO GENERALIZE TOO MUCH, TO JUST TRANSLATE THE ARAB SPRING ON TO RUSSIA.

>> Brown: WHAT DO YOU SEE?

>> LET ME GENERALIZE TO THIS EXTENT, WHICH IS THAT I THINK THERE IS AN INCREASED DESIRE FOR ACCOUNTABILITY ACROSS LARGE PARTS OF THE WORLD. PARTICULARLY WHERE PEOPLE FEEL CUT OFF FROM GOVERNMENT, NOT TAKING PART IN THE DECISIONS OF GOVERNMENT. THAT WILL TAKE DIFFERENT FORMS IN DIFFERENT COUNTRIES. IT'S PARTLY FED BY THE INFORMATION REVOLUTION WE'RE EXPERIENCING IN THE WORLD, TRANSMITTING IDEAS OF FREEDOM AND ALSO TRANSMITTING SOME OF THE THINGS GOVERNMENTS DO WRONG. SO THERE IS IN RELATIONSHIP BETWEEN THAT AND WHAT WE'VE SEEN IN THE ARAB WORLD AND ELSEWHERE. AND WE HOPE RUSSIA RESPONDS TO THAT. PROPERLY. WITH FREEDOM. WITH INVESTIGATIONS OF ANY ABUSES IN THE ELECTIONS WHICH PRESIDENT MEDVEDEV HAS OFFERED BY RESPECTING PEACEFUL PROTESTS AND SECRETARY CLINTON SAID IT AT MY NEWS CONFERENCE WITH HER EARLIER, WE'RE GLAD THAT THESE RECENT PROTESTS HAVE BEEN TREATED IN A PEACEFUL WAY.

>> Brown: BRITISH FOREIGN SECRETARY WILLIAM HAGUE, THANKS SO MUCH.

>> THANK YOU.

>> Woodruff: JEFF ALSO ASKED FOREIGN SECRETARY HAGUE ABOUT IRAN AND SYRIA. FIND THE FULL TRANSCRIPT OF THE INTERVIEW ON OUR WEB SITE.

>> Woodruff: AGAIN, THE MAJOR DEVELOPMENTS OF THE DAY: PRESIDENT OBAMA MET WITH IRAQ'S PRIME MINISTER LESS THAN THREE WEEKS BEFORE THE U.S. PULLOUT ENDS. HE SAID AMERICAN TROOPS LEAVE "WITH HONOR AND WITH THEIR HEADS HELD HIGH." AND WORLD STOCK MARKETS SANK ON NEW DOUBTS ABOUT A EUROPEAN DEBT DEAL REACHED FRIDAY. THE DOW INDUSTRIALS LOST NEARLY 163 POINTS. ONLINE, WE EXPLORE THE IMPACT OF LETTING THE PAYROLL TAX CUT EXPIRE. HARI SREENIVASAN EXPLAINS. HARI?

>> Sreenivasan: PATCHWORK NATION LOOKS AT HOW DIFFERENT COMMUNITIES WOULD BE AFFECTED. USE OUR INTERACTIVE MAP TO FIND YOURS. ON OUR HEALTH PAGE, BETTY ANN BOWSER PREVIEWS HER UPCOMING REPORT ON AN ARMY PROGRAM HELPING SERVICE MEMBERS TO DEAL WITH STRESS AND GRIEF. AND WE HAVE MORE ON PRESIDENT OBAMA'S MEETING WITH IRAQI PRIME MINISTER MALIKI, INCLUDING VIDEO EXCERPTS OF THEIR REMARKS AND A LOOK BACK AT OUR COVERAGE OF THE IRAQ WAR ON OUR WORLD PAGE. ALL THAT AND MORE IS ON OUR WEB SITE: newshour.pbs.org. JEFF?

>> Brown: 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. AND THAT'S THE "NEWSHOUR" FOR TONIGHT. ON TUESDAY, WE'LL LOOK AT: THE DEBATE IN THE HOUSE OF REPRESENTATIVES OVER EXTENDING THE PAYROLL TAX CUT. I'M JEFFREY BROWN.

>> 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:

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