The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I`m Jim Lehrer.

On the "NewsHour" tonight: the news of this Thursday; then, the latest on the violence in Baghdad, as Prime Minister Al-Maliki vows a crackdown; analysis of the president`s State of the Union health care proposals; an update on the Lewis Scooter Libby perjury trial; a conversation about New York City and slavery during the Civil War; and an Anne Taylor Fleming essay on Clint Eastwood, the man for all movies.

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JIM LEHRER: Iraqi Prime Minister Al-Maliki vowed today to hunt down militants in Baghdad, no matter what. He promised parliament, the crackdown will feature more U.S.-Iraqi operations. He said, "There will be no safe haven, no school, no home, no mosque."

Major Sunni, Kurdish and Shiite parties voiced support for the plan. But a leading group of Muslim scholars denounced it as a campaign of genocide against Sunnis.

Hours after Maliki`s speech, a suicide car bomber killed 26 Iraqis in central Baghdad. The Shiite neighborhood of Karada was hit for the second time this week. Afterward, angry residents chanted, "We want the Sunnis out."

The explosion sent smoke high above the east bank of the Tigris River, and heavy gunfire rang out. More than 50 people were wounded in the bombing.

Also today, two rockets hit the Green Zone that houses the U.S. embassy and Iraqi government offices. Six people were hurt. And a U.S. soldier was killed by a roadside bomb northwest of Baghdad.

We will have more on Iraq right after this news summary.

In Lebanon, supporters and opponents of the government battled today at a Beirut university in a third day of violence. At least four people died, as rioters set cars on fire and threw stones. Armored vehicles were sent in, and the military ordered a curfew. Later, Sheik Hassan Nasrallah, leader of the Hezbollah opposition, appealed for calm.

Prime Minister Siniora addressed the situation, after meeting with U.S. Secretary of State Rice in Paris.

FOUAD SINIORA, Prime Minister of Lebanon: My government is there as a legitimate and constitutional government. It will continue, as long as it has the support of the constitutional authorities, which is the parliament, and has majority of the Lebanese.

So, as long as we enjoy this -- this confidence, we are staying. We are an elected, democratically elected, government, and will continue to behave as such.

JIM LEHRER: The prime minister was in Paris for an international donors conference. The United States and other nations pledged $7.6 billion to rebuild Lebanon.

Secretary of State Rice said today, President Bush will ask Congress for more money to help Afghanistan. He`s expected to seek another $10.6 billion for security forces and reconstruction. The U.S. has already given more than $14 billion in aid to Afghanistan since 2001.

The president traveled to Missouri today to push his health care tax plan. It would tax employer contributions to workers` health coverage. The revenue would fund tax deductions for people with only basic coverage or none at all.

Democratic Senator and presidential candidate Barack Obama made his own proposal today. He called for universal health care within six years.

Republican Duncan Hunter formally joined the race for president today. The California congressman launched his bid in South Carolina, an early voting state in the Republican primaries. Hunter has served 14 terms in the House, and, until recently, chaired the House Armed Services Committee.

A former sheriff`s deputy in Mississippi pleaded not guilty today in the deaths of two black teenagers in 1964. James Seale was first arrested when the men disappeared, but local authorities dropped all charges. The U.S. Justice Department reopened the case seven years ago. Seale was arrested yesterday and charged with kidnapping the victims.

FBI Director Robert Mueller spoke in Washington today.

ROBERT MUELLER, FBI Director: Forty years ago, the system failed. We in the FBI have a responsibility to investigate these cold-case civil- rights era murders where evidence still exists to bring both closure and justice to these cases that, for many, remain unhealed wounds to this day.

JIM LEHRER: Seale is now 71 years old. A second suspect was reported to be cooperating with authorities. Both men were reputed to be Ku Klux Klansmen in the 1960s.

The president of Israel, Moshe Katsav, gave up his powers temporarily today. He faces allegations of rape and other sexual offenses by four former female employees. But he maintains, he is innocent. A parliamentary committee voted to let Katsav step aside up to three months. But his leading critic said he should have been ousted.

ZEHAVA GALON, Knesset Member: I`m really frustrated, because I can`t accept the decision of temporary suspension. I think that it`s a shame that the Israeli parliament got this decision. I thought that the right way was to have a process of impeachment, after such accusations against the president of Israel.

JIM LEHRER: For now, Katsav gets to keep his legal immunity while he fights a possible indictment. The new acting president will be Dalia Itzik, the first woman to hold the ceremonial post.

Ford Motor Company announced today the largest loss in the company`s 103 years. It amounted to $12.7 billion for all of 2006. Much of the loss went to pay for worker buyouts and other parts of a restructuring campaign. Ford said it`s on track to return to profit in 2009.

Wal-Mart agreed today to pay more than $33 million in back wages to 87,000 workers. It`s part of a federal settlement involving overtime pay. The giant retailer told the Labor Department in 2005 it miscalculated overtime during a five-year period. The settlement does not involve any fines or penalties.

On Wall Street today, stocks fell on new concerns about the housing industry and interest rates. The Dow Jones industrial average lost 119 points, to close at 12502. The Nasdaq fell 32 points, to close at 2434.

And that`s it for the news summary tonight.

Now: more death and words in Baghdad; the president`s health care proposals; the Scooter Libby trial; New York and a war; and movie man Clint Eastwood.

Our Iraq update comes from New York Times reporter Damien Cave in Baghdad.

Ray Suarez talked with him by phone earlier this evening.

RAY SUAREZ: Damien Cave, welcome.

Even as the new Bush strategy for Iraq is being debated in the U.S., the prime minister in Baghdad has announced that he`s got one, too, Operation Imposing Law.

What`s the plan?

DAMIEN CAVE, The New York Times: The plan is -- from what we can tell, is very similar to what the Americans have offered.

He hasn`t gone into too much detail, but the main point that he`s trying to make here is that the Iraqis are in control of whatever it is that ends up happening in Baghdad with the security plan.

RAY SUAREZ: Is the prime minister declaring that, at the end of this process, his government will have a monopoly on the use of armed force in Iraq?

DAMIEN CAVE: He`s made -- he`s made no claims like that, in terms of getting actual complete results and disarming gunmen.

His main focus and his main promise has been to go after people of both sects, and to basically not let anyone who breaks the law get away with it, and be protected by their affiliation of tribe or sect or connections to power, which is something of a more ambitious promise than things that he`s made in the past.

The big question, of course, is whether or not he will follow through. Similar questions have been made before, and, in some cases, they have been less than completely dedicated to the actual enacting of those problems.

RAY SUAREZ: So, is he implying there that he`s even ready to fire on or disarm the Mahdi army?

DAMIEN CAVE: Like many -- many people, including, in some cases, the Americans, the specific naming of the militias is not something that he would want to do very often.

He has shown evidence and discussed, recently, raids and arrests of several people who are connected to Shiite militias of various sorts. And he`s been arguing for weeks now that this idea of an Iraqi government that doesn`t function, and that does not try to do its best to hold people to the law, regardless of sect, is inaccurate.

And he has provided some evidence of that, suggesting that, if he continues on this trend, it may be something of a shift, or at least an expansion, to something that`s broader than what he`s done in the past, in terms of going after Shiite militias and -- and the Mahdi army.

RAY SUAREZ: Prime Minister al-Maliki unveiled Operation Imposing Law in the Iraqi parliament. Is he likely to get much support there, seeing that many of the deputies have ties to armed groups?

DAMIEN CAVE: It`s very unlikely.

Parliament has become a place that is as sectarian as the streets here, in many ways, where you have large Shia parties and large Sunni parties, who basically talk past each other, in many cases, and accuse each other of misdeeds, and -- and basically keep the parliament in deadlock.

And, so, we can expect support in some cases from his counterparts, who are the Shiite leaders, and -- but the idea of a consensus in parliament, the idea of what he was calling for today, which was a national consensus around the security plan, is difficult. It seems it will be a challenge for him to actually create that, given -- given the history that he`s had with some of these guys.

And, you know, there are some of the same frustrations and bad blood between the leading political figures here as you can see when you`re at a market and you`re talking in a Sunni neighborhood vs. in a Shia neighborhood. Both -- both sides are accusing the other of having done more misdeeds. And each individual sect feels that they are more victimized than the other.

RAY SUAREZ: You mentioned that the prime minister promised that this security plan would be put in place without regard to sect or faction, but are Sunnis worried that it won`t be applied evenhandedly?

DAMIEN CAVE: They are.

I mean, this is a -- been a concern of theirs for a long time, and in part why, in many Sunni neighborhoods, they welcome the Americans as a -- as what they see as a more objective party and a more evenhanded protector.

There are concerns about that. And, once again, you know, the idea here is that, as far as Maliki is concerned, to try and -- try and do his best to prove that he will go after both sides. And, you know, he hasn`t spoken too much about what he would do beyond that to win over the Sunni opposition.

RAY SUAREZ: Well, you were recently embedded with American troops during some heavy fighting in Baghdad. Was the new al-Maliki plan much in evidence?

DAMIEN CAVE: I think this was, in many ways, a prelude to what may come later, in terms of the American surge.

And what it revealed, at least for me, is -- I was with this platoon for 20 hours of the first operation -- is the difficulties of urban combat. This area of Haifa Street, which is roughly 1,000 yards from the Green Zone, has become this honeycomb of empty apartments, where gunmen are -- can fire at will, and move from one apartment to another, hiding, without ever being clear, you know, one, if it`s a Sunni gunman, two, if it`s a Shia gunman, three, why they`re firing.

And the Americans that I was with who were following Iraqi army units and working with Iraqi army units, it was, in many cases, almost impossible to tell whether -- who was firing at them, whether it was a single gunman, whether it was an Iraqi army guy on the roof. The Americans, in some cases, didn`t have communications with the Iraqi army counterparts.

And there was -- it was, in many cases, very chaotic, which was not to say that it wasn`t organized, as organized as urban combat can be. But it`s a really, really difficult job, particularly in this area of Haifa Street, where you have high-rises on one side, and these hovels on another, where the rooms are of varying sizes.

And, as these troops are moving in large groups from one room to another, they find themselves in open areas, and in areas, you know, in dark corners, in dark alleyways. Trying to maneuver through this environment was extremely difficult for these guys, no matter how hard or how well they were trying to do it.

RAY SUAREZ: What did you observe about the effectiveness of Iraqi forces that were in the fighting alongside American troops?

DAMIEN CAVE: I mean, as I -- as I have seen in -- in the past, with - - with Iraqi security forces, it was, in many ways, a mixed review.

They did not run away when they came under fire. They continued to fight. And, yet, there was also a sense, for many of them, that this was almost a field trip for them. There was very little sense of ownership for a lot of the troops, who seemed to be nowhere near as well trained as the Americans.

In one case, we were standing out -- the Americans were hiding in a small apartment down this alleyway by a mosque, and a group of Iraqi soldiers was just standing out in this alleyway and wide open. And a sniper started firing at them.

Two of them ended up wounded. And the Americans had been telling them to get in the building for about 10 minutes before the sniper shots. And this happened repeatedly throughout the day. And the Americans were constantly having to say, to tell them where -- to suggest to them, at least, where to go, how to protect themselves, and what to do.

RAY SUAREZ: Damien Cave of The New York Times joined us from Baghdad.

Damien, good to talk to you.

DAMIEN CAVE: Yes, thank you.

JIM LEHRER: Now the president`s new proposals on health care and the uninsured, and to Margaret Warner.

MARGARET WARNER: President Bush took to the road again today, this time to sell his new health care plan.

He met with doctors and nurses at Saint Luke`s Hospital in Lee`s Summit, Missouri, then held a roundtable discussion on the proposals he had first laid out in his State of the Union address. The goal, he said, is to make affordable health insurance available to more Americans.

We look at the president`s plan, first, for the basics, with our health correspondent, Susan Dentzer.

Susan, welcome.

So, what, broadly, is the outline of the president`s plan?

SUSAN DENTZER: Margaret, there are two new aspects to what the president is proposing this year.

The first is a major change in the federal tax treatment of employer- sponsored health insurance coverage that, in effect, would change that very dramatically, and replace it with a system where all Americans who had health insurance would be eligible for a standard deduction that would help pay for their health insurance. That`s part one.

The second part is an offer of flexibility, in terms of federal funding, for states that undertake themselves to expand health insurance coverage for their own populations. And the effort is to take federal funds that are currently given to states for health care and redirect them to help carry out these reform efforts.

MARGARET WARNER: So, tell us a little bit about how part one would work. And this is the one that creates this new standard deduction for health insurance.

SUSAN DENTZER: Right.

Well, employer-sponsored health insurance has long been tax deductible to the employer and tax-exempt, non-taxable, to the employee. And this results in a revenue loss to the U.S. Treasury now equal to about $140 billion a year. So, that`s a big subsidy to health insurance.

The problem that many people perceive is, this subsidy goes to people who get their coverage through the employer. So, an idea that has circulated for many decades is to take that subsidy and spread it more broadly across the population, give a tax benefit to people who have to buy coverage themselves on the individual market.

So, what the president is proposing to do is now make health insurance contributions from your employer taxable income. But, to offset that, people would be able to take a $7,500 standard tax deduction, like the deduction you take now for yourself or a dependent. It would be another standard deduction, $7,500 for an individual, $15,000 for a family.

And the argument is that that would enable people who don`t have coverage now to help pay for it.

MARGARET WARNER: So, how many people get health insurance now through the employer? And what percentage of them have plans that cost more than, say, $15,000 or $7,500, so they would be taxed on this?

SUSAN DENTZER: About 147 million Americans, more or less, have coverage through the employer. This is, again, workers and dependents of workers, spouses, domestic partners, et cetera.

The administration says that 80 percent of policies -- not people -- of policies -- fall under the $15,000 cap. But 20 percent don`t. And, for those policyholders, in effect, if they had policies that were worth more than $15,000, they would have to, in effect -- they would have a choice of either dropping down to have less generous coverage or, in effect, paying a tax on the differences, taxable income.

MARGARET WARNER: And those whose plans are less rich or less expensive, they would get some sort of a tax break?

SUSAN DENTZER: They do. And they not only get a tax break, because the standard deduction not only -- it frees you from federal income tax; you`re also exempt from payroll taxes, Social Security and Medicare.

So, it`s -- it could be a large tax advantage for people, at least for people who have enough income that they`re paying federal income taxes in the first place.

MARGARET WARNER: And, then, briefly, the other part about giving the states more flexibility, what`s that designed to encourage?

SUSAN DENTZER: Basically, it`s designed to support states like California, which, of course, under Governor Arnold Schwarzenegger, recently announced it would undertake to have universal coverage within the state.

And, in effect, what this federal offer now is, is basically to take dollars that are currently channeled under Medicaid and Medicare to hospitals that have a so-called disproportionate share of the uninsured, take those dollars that now go to support those institutions that care for the uninsured, and channel them, instead, to help states expand coverage for the population.

But what the states have to do...

(CROSSTALK)

MARGARET WARNER: Expand insurance coverage?

SUSAN DENTZER: Exactly.

But what states have to do in return is, they have to define a basic package of benefits. They have to exempt those packages of benefits from many requirements that are now in place in states on what to cover. And they have to come up with a system of subsidies. And these federal dollars would -- could be redirected to help them pay for all of that.

MARGARET WARNER: Thanks, Susan.

Let`s now get two perspectives on the president`s proposal from Sara Rosenbaum, who chairs the Department of Health Policy at George Washington University School of Public Health, and Grace-Marie Turner, president of the Galen Institute, a group that promotes free-market approaches to health care.

So, Grace-Marie Turner, will this work? Will this expand health insurance access for more Americans?

GRACE-MARIE TURNER, President, Galen Institute: Absolutely.

When you -- when you put a generous tax break out there, and a generous new incentive, that everybody is eligible for -- 47 million people don`t have health insurance. This is a way to encourage everybody to buy health insurance, in order to get the $15,000 tax break. It`s -- you know, it`s a deal. You can`t get the tax break unless you buy the health insurance.

So, yes. And I think, also, it`s going to dramatically change the incentives for the market to offer more affordable choices. So, I think there will be more affordable choices. And people will have new money through this new tax break, that otherwise was going to the federal treasury in taxes, that they can keep to buy health insurance.

MARGARET WARNER: Do you think it will work, Sara Rosenbaum?

SARA ROSENBAUM, Department of Health Policy Chair, The George Washington University School of Public Health: The White House estimates that about three million people will acquire coverage who don`t have it today.

MARGARET WARNER: Three million of the 47 million uninsured?

SARA ROSENBAUM: Correct.

The problem is that the proposal has the potential to destabilize coverage for the 147 million people whom Susan Dentzer mentioned. And we don`t know how far...

MARGARET WARNER: Those who get it through their employer?

SARA ROSENBAUM: Exactly.

And we don`t know how many people will lose the coverage they have and will -- may or may not be able to reacquire coverage in the individual market.

MARGARET WARNER: Well, explain why this would destabilize the employer-based market.

SARA ROSENBAUM: As Susan pointed out, today, health insurance is part of wages and compensation. And, so, an employer gives you part of your wages in the form of a health insurance plan for you and your family.

The employer, of course, gets a tax deduction. And you have excluded income. If the tax code is changed to allow you to take that deduction as an individual, then, an employer could turn to its work force and say: You know what? This is really a burden on us to provide an insurance plan. So, instead, what we`re going to do is let you go out and buy an insurance plan and take your own tax deduction.

The employer may or may not put any of that money that was part of your compensation package back into your wages. You may find yourself, in fact, without the insurance subsidy you have been getting, and now shopping for benefits in a market that doesn`t exist with much less income.

MARGARET WARNER: Do you think that`s a risk?

GRACE-MARIE TURNER: No, because -- no, I think that employers are -- are so devoted to providing health insurance. They see it as a real competitive advantage, that they want to provide good health benefits, so they can attract good workers.

For most employees, I don`t think anything is going to change. Big employers especially, middle-sized employers, want to provide health benefits. And it`s just a matter of changing where the tax break is. Instead of getting it as an employee, you now get it as an individual. It makes health insurance more portable.

But I think, for the great majority of Americans, they`re not going to see a change. But, for -- for millions of Americans who don`t have the option to get health insurance at work, this provides them a new opportunity.

And it just seems to me that, always, in health policy, we`re talking about, oh, we can`t change anything, because it might be -- affect this person, the coverage they now have, when we keep forgetting about, what about the 47 million people who don`t have anything? Let`s give them a new opportunity. And let`s make this coverage portable, so people don`t have job lock and don`t get stuck into jobs, because they have to keep their health insurance.

MARGARET WARNER: Now, what about the other part of this idea, which is, if your plan costs more than $15,000 -- which the White House is defining as a very rich and expensive plan, which I guess maybe 20 percent of Americans have -- that you would now have to pay taxes on that?

Is the -- do those mostly go to the wealthy, and they could afford to pay taxes on that extra $2,000 or $3,000?

SARA ROSENBAUM: One of the -- the problems with the proposal is that it equates having a wealthy plan, or having a good plan, with being a wealthy person.

There may, in fact, be no correlation between having a very beneficial plan and being a wealthy person. Some of the workers who have very good plans today are teachers, nurses and health care workers, assembly line workers, municipal employees. These are people who make relatively modest livings.

But a good chunk of their compensation is in the form of their health benefits. And, therefore, clamping down on their -- the tax benefit of a wealthy plan may, in fact, have a very serious effect on workers who can least afford it.

GRACE-MARIE TURNER: But what that has done, because workers are getting more and more of their compensation packages in the form of health benefits, then, it means that they`re getting lower cash wages, that it`s making them poorer, because so much more of their compensation is going to pay for health insurance.

But they don`t know it, because most people don`t have the vaguest idea how much the full value -- what the full value of their health insurance policy is.

So, this makes that more visible. And it gives people a negotiating tool. Employers and employees would be on the same side of the table, saying, how can we figure out how to stay under that $15,000 cap, so that we can then have more resources for cash wages, and not have so much of it going to health insurance?

MARGARET WARNER: Let me ask you this.

When the White House briefed on this, they did say -- as you both have said -- all three of you have said -- that, really, only about three million new people would be getting health insurance.

Does that strike you as -- I mean, that`s 5 percent, maybe, or 6 percent, of the uninsured. Does it strike you as a risky move for such a small payoff? Or is the payoff something else that we`re not getting here?

GRACE-MARIE TURNER: Well, first of all, this -- this proposal is budget neutral for the -- to the federal government, which is a big deal in Congress, obviously.

And it provides a tax cut for about 100 million people, provides portability and security of ownership of health insurance, and can provide new opportunities for the uninsured to get coverage.

And I think, in addition, if states step up to the plate and use some of the money that Susan talked about to provide extra -- extra funds to help people buy health insurance...

MARGARET WARNER: Under the second part of this proposal.

GRACE-MARIE TURNER: ... then, I think you would actually see that number go higher.

But it`s hard for them to calculate that, because we don`t know what the states will do. It`s going to change the whole conversation. There`s going to be a whole bunch more people out there saying: I want an affordable policy.

Let`s see what happens.

MARGARET WARNER: Do you think this could spark a whole reform of the system in a way that would end up expanding coverage?

SARA ROSENBAUM: I think you put your finger on the fundamental flaw in the proposal, which is that we are being asked to make what could be very dramatic changes in a very rapid way in the current system for financing health care for 200 million people, if you add in, also, the Medicaid program, which would be asked to pay over into this new state pool, and, then, if you add in Medicare, again, millions more, for the promise that maybe we would pick up another three million people.

I would say that the wisest course at this point is to congratulate the president on joining the discussion, and go slow.

MARGARET WARNER: And, so, finally, very briefly, to all three of you, what do you think the political prospects are for this on Capitol Hill?

SARA ROSENBAUM: I think that, once the excitement about the fact that the president has now stepped up to the plate, has opened the door to a discussion about affordability as an issue, a subsidy as being absolutely eventual to solving the uninsured problem, what we will see is a sober and serious and somewhat lengthy discussion.

The hope is that, on some of the issues that we can resolve today, such as expanding coverage for children, we will do that quickly.

MARGARET WARNER: Grace-Marie Turner?

GRACE-MARIE TURNER: Organizations as diverse as the Heritage Foundation and the Urban Institute, The Washington Post and The Wall Street Journal, have all said, a core problem at the heart of the health care system is the discriminatory tax treatment of health insurance.

This begins to address that. I think we have a whole new conversation. And I think that`s hard to ignore.

MARGARET WARNER: And, Susan, political prospects?

SUSAN DENTZER: Under the Constitution, tax legislation has to originate in the House of Representatives. And the leadership of the House Ways and Means Committee that originates that legislation has already said, Charlie Rangel, and Pete Stark, who heads the Health Subcommittee, that they`re not going to take up the tax proposal. So, for the next two years, that is not going any place.

However, the other proposal about helping states, I think, will get some more serious examination, particularly in the Senate, and especially as states continue to look at ways to do their reforms. They want more money, though, than the president has put on the table. So, we will have to see where the dialogue goes.

MARGARET WARNER: Which -- that is an old story.

Thank you, all three, very much.

SARA ROSENBAUM: Thank you.

GRACE-MARIE TURNER: Thank you.

JIM LEHRER: Still coming tonight: New York divided at war; an essay about Clint Eastwood; and this update of the Libby trial by Jeffrey Brown.

JEFFREY BROWN: The trial of Lewis Scooter Libby, the vice president`s former chief of staff, began this week at the federal courthouse in Washington. Libby is charged with perjury and obstruction of justice for lying during a federal investigation into the leaking of CIA operative Valerie Plame`s identity to the press in 2003.

Plame is the wife of former Ambassador Joe Wilson, who publicly challenged evidence the Bush administration cited for invading Iraq.

Carol Leonnig is covering the trial for The Washington Post. She joins us now for an update.

Carol, the trial opened this week with a real surprise from the defense team. Explain the case that they`re trying to make.

CAROL LEONNIG, THE WASHINGTON POST: Well, hello, Jeff.

And, yes, it was a surprise. The defense for Scooter Libby, Vice President Cheney`s former chief of staff, said that, in addition to Mr. Libby not having great memories and probably misspeaking about his conversations with reporters to a grand jury, he also believed that he had been a victim, hung out to dry by the White House, that was eager to save their top political strategist, Karl Rove.

JEFFREY BROWN: And, as you said, up to now, he had been -- they had been saying that he had forgotten these calls.

CAROL LEONNIG: Yes.

Remember, if you will, that Scooter Libby is accused of lying to the FBI, lying to a grand jury, and trying to obstruct a criminal investigation into who leaked information to reporters about a covert or a secret CIA officer, Valerie Plame, to the press.

And he is saying that: I did misspeak, and I might have misremembered, but I had a very stressful job, with a lot of national security concerns, al-Qaida bombings, potential assassinations of the president, foreign dignitaries, and, really, in his view, reporter conversations were a snippet of conversation that was insignificant to him.

JEFFREY BROWN: This -- this notion of being the scapegoat, a little confusing. I wonder if it`s -- if it`s clearer to you. Does it set up a kind of split between -- in the White House between the president`s staff and the vice president`s staff? Is that -- is that what they`re going for here?

(CROSSTALK)

CAROL LEONNIG: It`s the fascinating new question circulating all over in law firms and in newsrooms everywhere in Washington.

There are a lot of legal experts who tell me that what they have seen about this claim has very little what you might describe as legal weight. How exactly does the idea that you were a victim, a political victim, who was scapegoated by the White House after a criminal investigation began, how does that relate to whether or not you misspoke or lied to a grand jury and to the FBI months earlier?

There are some who think this may be a trial strategy, that, in a city where Democrats greatly outnumber Republicans, that demonizing Rove and separating Libby from Karl Rove and the Bush administration may help Libby, in some respects.

JEFFREY BROWN: Now, in the meantime, prosecutor Patrick Fitzgerald tells a very different story. And he has -- he stuck with it this week, right?

CAROL LEONNIG: He sure did.

You may remember, through lots of court filings, Fitzgerald has said that this case is not about the war, but it -- in Iraq. It`s about a man who lied in a leak information, and who is now going to be held accountable.

But Fitzgerald, though a straight shooter, according to the judge and according to all of our experiences thus far, really has made this case a lot about the war. He has described a -- a battle that was going on, in which the vice president`s office, and -- and specifically Libby, at the direction of the vice president, was trying to rebut this criticism, fight it off, discredit somebody who was questioning the administration and its justification for war in Iraq.

And -- and, point by point by point, it`s one administration official after the other who says: Scooter Libby and I talked about Valerie Plame or talked about Wilson and his wife a month or several weeks before he says he learned about this from a reporter.

JEFFREY BROWN: And that`s what happened today, with -- with a witness who -- Cathie Martin -- who had worked for Vice President Dick Cheney, right?

CAROL LEONNIG: That`s right.

Cathie Martin`s significance is particularly important, because she`s the first witness -- four witnesses have taken the stand so far -- she`s the first witness to say -- to be able to -- to describe working closely with Cheney and Libby during this volatile period in the summer of 2003, when the administration was on the defensive about the war in Iraq. It had just started. No weapons of mass destruction were being found.

And Cathie Martin`s testimony was sort of inside that battle in the vice president`s office. What were the strategies that were going on? And she describes a very active and aggressive vice president.

We have reported a little bit about this already last year, but she brought to life this vice president who was deputizing his chief aide, Libby, and others to get in there, stop the press from saying this. Here are some talking points that he dictated personally to his staff, what should they say to the press about Ambassador Joe Wilson and his claims that the intelligence was all wrong.

JEFFREY BROWN: Well, you know, Carol, we just have a minute, but you -- you have just raised what -- what has gotten the most attention this week is this notion that we`re getting an inside look at the Bush administration during that period.

You`re sitting in the courtroom every day. Do -- do you sense that? Are you getting that kind of picture?

CAROL LEONNIG: You know, it`s a wonderful question, because it feels as though we`re reliving the summer of 2003, but in a new and even more painful way.

By that, I mean the defense and the prosecution are highlighting all of the rivalries and the -- the bitter alliances and the strategizing within the administration over what to do about a war that wasn`t going well and that didn`t look, at least at first blush, like it had been properly justified.

JEFFREY BROWN: All right. Carol Leonnig, thanks again.

CAROL LEONNIG: Thank you.

JIM LEHRER: Now a conversation about New York City during the Civil War era.

Gwen Ifill is in charge.

GWEN IFILL: There are many myths about slavery: that it was confined only to the Civil War era; that it only occurred in the South; that all Northerners were abolitionists.

History tells another story, much of it now on view at the New York Historical Society in the exhibit New York Divided: Slavery and the Civil War. The exhibit showcases the contributions of more than 200 scholars, historians, and academics. And it continues through next September.

James Oliver Horton, a professor of American studies and history at George Washington University and historian emeritus at the Smithsonian, is this exhibit`s chief historian. He joins me now.

Welcome, professor Horton.

JAMES OLIVER HORTON, Historian Emeritus, National Museum of American History: Well, thank you.

GWEN IFILL: So, it turns out slavery was actually abolished in New York City in 1827, but it took many more decades for that to be real.

JAMES OLIVER HORTON: No, actually, the first gradual emancipation law went into effect for New York in 1799. That law said that a person born after the 4th of July in 1799 had to spend a number of years in slavery. And it differed, depending upon whether you were a male or female, but in the 20s, 20, 25 years in slavery.

But, then, in 1827 -- again, on the 4th of July -- a law went into effect that said, slavery is over. So, as of the 4th of July, 1827, slavery was officially abolished in New York City and State.

GWEN IFILL: So, if it was abolished, if it was over many years before the Emancipation Proclamation, when people think of the end of slavery, what was the division in New York over slavery?

JAMES OLIVER HORTON: Well, of course, slavery was ended in New York State, but it was very much alive in the American South, and even in some, what we think of today as Northern states. Delaware, for example, had slavery well until after the Civil War.

And the last 16 slaves in my home state of New Jersey were freed by the 13th Amendment in 1865, so that there were still some slaves scattered in various places in the North, but that the stronghold of slavery was obviously the American South.

Now, New York was involved, in many ways, with the South, but, most importantly, economically. I mean, New York really provided much of the capital that made the plantation economy in the South possible. It not only bought the cotton. It loaned money for the growing of cotton. It handled the foreign distribution of cotton. It was very much involved in cotton -- in the cotton production.

GWEN IFILL: And the cotton -- and king cotton was the big commodity at that time. It was, like, oil is today?

JAMES OLIVER HORTON: Absolutely.

On the eve of the Civil War, the American South produced seven-eighths of the world`s cotton. And, when we think about how powerful that made the South, because it was in control of this cotton economy, you realize, in the 72 years between the election of George Washington and the election of Abraham Lincoln, 50 of those years sees a slaveholder as president of the United States, and, for that whole period of time, there was never a person elected to a second term who was not a slaveholder, it gives you some idea of how powerful cotton and the cotton South was.

GWEN IFILL: So, because of that, you`re saying that, even though slavery was abolished, the slave economy, as it -- as it was practiced in the docks of New York, flourished?

JAMES OLIVER HORTON: Absolutely, the slave economy, and as the slave economy affected New York`s economy.

Now, so, you had a substantial proportion, especially the business interests in New York, focused on Southern plantation society. But, at the same time, you had an important anti-slavery movement which was growing in New York. The foundation of that movement was the Free Black Society in New York, that is, in New York City and in New York State.

But there were a substantial number of white allies who were part of the anti-slavery movement. And this integrated movement in opposition to the institution of slavery was very important. And that`s the thing which made New York a divided place, with anti-slavery on one side and pro- slavery on the other.

GWEN IFILL: But the abolitionists were not necessarily welcomed or greeted particularly well in those decades in New York.

JAMES OLIVER HORTON: Oh, my goodness.

(LAUGHTER)

JAMES OLIVER HORTON: To be an abolitionist, even in the North, could be taking your life in your hands.

I mean, the Tappan brothers -- I`m talking about Lewis and Arthur Tappan -- who were very important business people in New York, they -- their firm was the forerunner of Dun and Bradstreet in New York. Their houses were attacked in several anti-abolitionist mobs that -- that just thought the abolitionists had no business operating in New York City or New York State.

And, as I said, you could -- you could put your property or your life at risk to be an abolitionist.

GWEN IFILL: And there are names of African-Americans, like James McCune Smith, which most schoolkids don`t know about, who were very prominent in the movement as well.

JAMES OLIVER HORTON: Oh, absolutely.

I mean, David Ruggles, who, when -- when Frederick Douglass escaped from slavery in Baltimore, he got to New York. And he was actually helped and sheltered by David Ruggles, who ran the -- what was called the Vigilance Committee, which was a kind of underground railroad organization, which protected fugitive slaves once they got to the New York area.

GWEN IFILL: So, there were actually racial underpinnings to this objection as well?

Jim Crow, for instance, was a real character, a real three-dimensional character, at that time.

JAMES OLIVER HORTON: Absolutely.

In fact, Jim Crow was developed by a white actor, whose name was Thomas "Daddy" Rice. And he would put on a costume. He would put on blackface. And, then, he would sing the song "Jim Crow."

"I whirl around. I turn around. I do just so. I whirl around. I jump Jim Crow."

And he would sing this song. And he was very popular. And he would do this kind of stereotypical impersonation, his -- his interpretation of actually a black man that he met in the South. And it got to be a very popular performance that he -- he did.

GWEN IFILL: You talked about what happened to the Tappan brothers. There were riots over this issue in New York. There was a mayor who asked that New York secede from the Union at some point. This was all long after we thought that New York was supposed to have been through with this.

JAMES OLIVER HORTON: Well, you know, you`re talking about Fernando Wood, who was the mayor of New York at the time of the Civil War.

In December of 1860, South Carolina announced that it was seceding from the United States. And Fernando Wood proposed to the city council that the city of New York secede from the state of New York and from the United States to establish an independent commonwealth. And this independent commonwealth would have been made up of Long Island, Staten Island, and Manhattan Island.

And the reason for that was that this independent commonwealth could continue to do business with the slaveholding South, which had -- or was in the process of seceding to form the Confederate States of America. From the standpoint of economics, this commonwealth would have given New York businessmen a continued access to the moneymaking ventures that they had going in the American South.

GWEN IFILL: How did African-Americans organize during this period? Were -- there were newspapers; there were organizations, other than just strictly anti-slavery organizations?

JAMES OLIVER HORTON: Absolutely.

You know, the first African-American newspaper in the country was formed in New York in 1827, Freedom`s Journal. And the African-American population, the free blacks that organized in New York during this period, organized not only for -- to address the problems and the issues specific to New York, but they organized with free blacks across the North to address the problems that free black people faced and that those in slavery faced.

So, they -- they organized as an anti-slavery group. But they also organized as a civil rights group. And there were a number of conventions that were held, starting in the 1830s. Free blacks across the North held conventions, where they came together to discuss their strategies, to talk about their -- the issues that confronted them.

And, in fact, in the exhibit at the New York Historical Society, there is the recreation of one of the conventions. And -- and the thing I love about this particular part of the exhibit is, the visitors can actually vote on various issues. They can vote on the issue of colonization: Should black people be colonized in West Africa?

They can vote on the question of women`s rights: How many -- how much -- how much should women be given, in terms of rights of citizenship?

GWEN IFILL: Was any of this taught -- is any of this taught in our schools? This -- so much of this, I think, comes as news to people.

JAMES OLIVER HORTON: Well, hopefully, it`s taught someplace.

(LAUGHTER)

JAMES OLIVER HORTON: It certainly wasn`t taught when I was in school.

Now, I think there are places in public schools where, today, it is being taught. I mean, I -- I, in the last few years, have been working with a number of people in New York City at the Gilder Lehrman Institute for American History, which has been sponsoring workshops for public school teachers, to make them aware of these kinds of issues, to give them access to the data that they can use for teaching.

And, so, I want to hope that, in many places, it is being taught. But I have to be realistic, to understand that, in most places, it`s not being taught.

GWEN IFILL: Well, people can certainly see it on view at the New York Historical Society. The exhibit is New York Divided: Slavery and the Civil War.

James Oliver Horton, thank you very much for joining us.

JAMES OLIVER HORTON: Oh, it`s been my pleasure. And thank you for having me.

JIM LEHRER: And, finally tonight, essayist Anne Taylor Fleming thoughts about Oscar nominee Clint Eastwood.

ANNE TAYLOR FLEMING: As the Oscar race heats up here in Hollywood, the newspapers are now full of daily stories and ads touting this or that best movie contender, while the various stars, from Helen Mirren, to Kate Winslet, work the talk shows, even the august "60 Minutes." `Tis the season of frenzied availability.

Standing calmly in the midst is a previous winner, the iconic, laconic actor-turned-director Clint Eastwood, with his duet of World War II movies, "Flags of Our Fathers" and "Letters From Iwo Jima."

It always seems to be a surprise to see Eastwood in contention, though he and his films have been nominated three times for best director and best picture, and won each twice, most notably in 2004, when he bested auteur Martin Scorsese with his boxing movie, "Million Dollar Baby."

Part of the surprise is just the enduring memory of his acting days, the chiseled cowboy and smoldering cop he once was.

UNIDENTIFIED ACTOR: What do they want?

CLINT EASTWOOD, Actor: They want a car.

UNIDENTIFIED ACTOR: What are you going to do?

CLINT EASTWOOD: Get `em one.

ANNE TAYLOR FLEMING: It`s also about age.

CLINT EASTWOOD: I am going to disconnect your air machine. Then you`re going to go to sleep. Then, I will give you a shot, and you will stay asleep.

ANNE TAYLOR FLEMING: In his late 70s, Eastwood is still making movies, big-time, big-issue pictures, bigger and bigger. And there is something thrilling in his continual evolvement, his willingness to keep taking risks.

And no film -- make that, no films -- have been riskier than his current war duet. The first, "Flags of Our Fathers," tells the American side of the battle for Iwo Jima, specifically, the story of the men in the famous flag-raising photograph taken on that island and how they were -- skillfully, if cynically -- used and exploited in a public-relations campaign to raise war funds.

UNIDENTIFIED ACTOR: I can`t take them calling me a hero.

ANNE TAYLOR FLEMING: With its textured message and beautifully shot carnage, it is a strange movie, a little disjointed and old-fashioned, shot full of sorrow. And it did not do very well when it opened last fall.

UNIDENTIFIED ACTOR: Some of the things I saw done, things I did, they weren`t things to be proud of, you know?

ANNE TAYLOR FLEMING: What do we want from our war movies? What do we need, especially at a time when again we are at war, facing the daily tally of our new young casualties.

Think of the great ones, "All Quiet on the Western Front," and "Paths of Glory," about World War I battles...

UNIDENTIFIED ACTOR: Order 75`s to commence firing on our own position.

ANNE TAYLOR FLEMING: ... and the dozens of movies about World War II, from "Bridge on the River Kwai," to "Patton," to "Saving Private Ryan."

They stir and provoke and show us the savagery and camaraderie and bravery, the wreckage and missteps and often checkered leaders.

I, like a lot of the critics, did not think "Flags" made it quite into that company.

But then came its companion, "Letters From Iwo Jima," the same story of the same battle, but told from the Japanese point of view, in Japanese, and, taken together, Eastwood`s movies do make an original and notable contribution to the cinematic war archive.

UNIDENTIFIED ACTOR (through translator): I`m not in the coffin yet.

"Letters" threads a fine moral needle. It humanizes the badly outnumbered Japanese, who were, in effect, on a suicide mission, and they knew it. Watching them is painful, no matter one`s viewpoint on the ultimate wrongness or evilness of their cause, and it offers an insight into a culture that sees suicide as a sacred act.

In short, Eastwood pushes buttons. Yes, he might do it in an earnest, straightforward, sometimes overly controlled way.

UNIDENTIFIED ACTOR: He didn`t serve me.

UNIDENTIFIED ACTOR: I don`t make the rules. We don`t serve Indians.

ANNE TAYLOR FLEMING: And maybe he doesn`t let your heart or senses breathe quite enough. But these movies are seriously meant, the work of a man who, as he ages, risks more, not less.

I`m Anne Taylor Fleming.

JIM LEHRER: And, again, the major developments of the day.

Iraqi Prime Minister al-Maliki vowed to hunt down militants in Baghdad, no matter where they hide. Hours later, a suicide car bomber killed 26 Iraqis in central Baghdad.

A former sheriff`s deputy in Mississippi pleaded not guilty in the deaths of two black teenagers in 1964.

And the Ford Motor Company announced the largest loss in its history, $12.7 billion in 2006.

And, once again, to our honor roll of American service personnel killed in Iraq and Afghanistan -- we add them as their deaths are made official and photographs become available. Here, in silence, are 12 more.

We will see you online and again here tomorrow evening with Mark Shields and David Brooks, among others.

I`m Jim Lehrer. Thank you, and good night.