gwen: primary night surprises, are they a sign of things to come? plus, the faltering economy and the stem cell debate, tonight on "washington week." one surprise in alaska -- >> it ain't over until it's over. >> another in florida. >> tonight we've seen a clear message to the washington insiders. >> yet as outsiders stage upsets, some insiders survive. >> republicans will win in november and we will regain our majorities in both the senate and the house. >> i make the case that i am the real democrat in this race. gwen: millions of dollars and dozens of negative ads laterer, the immensety of the midterm challenge becomes a little more clear, in part because the

economy refuses to recover with yet more bad news on housing and on wall street. >> president obama should ask for and accept the resignations of the remaining members of his economic team. >> folks, i'm still waiting for what it is that they are for. gwen: plus, an unexpected court ruling revives the stem cell research debate. covering the week, karen tumulty of "the washington post," charles bashington of the associated press, eamon javers of cnbc and pete williams of nbc news. >> award winning reporting and analysis, covering history as it happens. live from our nation's capital, this is "washington week" with gwen ifill. produced in association with national journal, funding for "washington week" is provided by --

>> what if you can just be you? what if you had your last bad date? what if she's out there? what if he's out there? what if you can be loved for exactly who you are? you can.

>> funding for "washington week" is also provided by -- exxonmobil, the ethics and excellence in journalism foundation, the annenberg foundation, the corporation for public broadcasting, and by contributions to your pbs station from viewers like you. thank you. once again live from washington, moderator gwen ifill. gwen: good evening. this week's primary results show that several things we've come to expect. insiders are struggling, outsiders attractive. but money, it turns out, cannot always buy you love or power. in alaska, republican senator lisa murkowski's career is still up in the air. in arizona, gop senator john mccain spent $20 million to save his. and in florida, which always manages to have the most interesting elections, hospital executive rick scott spent $39 million and won the gop's gubernatorial nod while

democratic congressman kendrick meek was able to beat back another outsider's $50 million to win his party's senate nomination. but november brings a brand-new fight. what do we make of all of this? let's start, karen, with alaska. >> well, alaska was a big surprise, probably the biggest surprise of this election year so far and no one was more surprised than lisa murkowski, the senior senator from alaska, who thought -- and everyone else thought -- that she was going to cruise to a pretty easy primary win. she had a 20-1 money advantage over her opponent. she had a last name as the daughter of a former governor and senator that has been a fixture ant alaska ballot for 30 years, and then this almost unknown attorney, joe miller, came up tea party favorite and right now we still haven't seen all of the ballots counted but he's holding a narrow edge and

as these absentee ballots are coming in, it's really looking like it's going to be very difficult for her to pull this one out. gwen: now, among joe miller's fine qualities, he was endorsed by sarah palin. and he's also a harvard law school graduate, i think. but no one had ever taken it seriously, even though sarah palin had been a former governor, what was the palin effect? >> actually, yale law school. gwen: oh, my goodness. don't write, don't write. >> the palin effect was interesting. there's been a long standing palin/murkowski family feud going in alaska. this was just latest chapter. and what it did i think more than anything is it brought in a lot of tea party enthusiasm and probably most importantly a lot of tea party money. the group called the tea party express poured in over $500,000 worth of advertising to -- gwen: goes a long way in alaska. >> it sure does. and it essentially took this

unknown candidate and made his message for him. >> what do the tea party folks not like about murkowski and do like about him? >> well, this is proof, as if we needed it, that this is a year when no incumbent can afford to be caught off guard. so they portrayed lisa murkowski as too close to the democrats, as insufficiently conservative and also as just part of that washington establishment. and alaska's a really interesting state because there is no state that benefits from federal largess quite as much as alaska does. in fact, per capita, it's got more money from president obama's economic stimulus plan than any other state and yet people in alaska think of themselves as rugged individualists, frontiersmen and they resent a lot of what comes their way. gwen: well, let's go to the other end of the united states to florida, chuck, where we saw not one but two pretty

interesting races and one that's not even really -- that's just teeing up for a bigger fight this fall. >> that's right garks went. florida as you said in the introduction is always an interest stake. a couple of things that i think were fun about florida, one, it showed the difference, kind of ongoing difference in general what's happening with democrats and republicans. the democrats continue to be a somewhat more stable, you might say sleepy party. so you don't see the big surprises there. this isn't necessarily good for them. they may not have the energy in november. but for example in the senate race there, they had a very wealthy self-funder who a lot of people thought might be kendrick meek. the congressman who wants the senate nomination -- >> jeff green is a wealthy self-funder. >> and that didn't happen. you might say the traditional insider candidate won. the exact opposite happened in the governor's race in the republican party, where you did have rick scott, the wealthy outsider beat the insider.

so we see that going on. the other real interesting thing, maybe one of the best races to watch this year is the senate race in florida, which is now set and it's going to be a three-way race. you have kendrick meek the democrat, and marco rubio, the tea party republican. in the middle you have charlie crist, the governor who used to be republican. he had to switch to be independent because the tea party basically ran him out of the party. he's going to be like sampson between the two pillars and he will be trying to push the two other guys out. the question is, if somebody can get to 34% and keep the other two at 33%, that could be a winning combination. >> does this clear the path for rubio to go through because the democrats and independents will split their votes and therefore the conserve kivs have the momentum and we might look for a rubio win? >> it certainly could. and maybe the best money is on that. but the other type of thing can happen, crivet was a republican. maybe rubio and crist split the conservative group and make a way for kendrick meek to scoot there. what he will hope for is this

guy's republican, this guy's a democrat and i'm a floridian. and there is a lot of resentment towards partisan politics and that might work. gwen: we saw john mccain, who only two years ago was his party's nominee for president, holding on after spending $20 million against an upstate. he is perceived as moving somewhere to the right on special issues like immigration in order to outrun his competition. did it work? >> well, what he really did i think most importantly was he took that money and used it to absolutely demolish his opponent. and that's one of the things we've seen that is making this year different. so far you usually by this point have primarilyy positive ads, people running on their records, you know, trying to introduce themselves to voters. gwen: especially in a primary, where you're voting for someone in your own party. >> at this point something like 70% to 80% of all of the advertising has been negative. and interestingly enough, this is a strategy lisa murkowski had

been urged to do and refused to do. she said i'm not going sfoned my money -- to spend my money running that kind of race. she ran on her record, all of the wonderful things she brought back to alaska. as a result that money did not do anything but leave her vulnerable because that's exactly the opposite, it seems like, of what you want to be this year. >> so we have this big tea party gathering coming up this weekend in washington. as you look at the election so far, how has the tea party done? >> the tea party has really had a mixed record but in where it has succeeded, in some ways it has delivered the democrats, the candidates that they wanted to be running against. these may well be our future senators and house members. but they have given the democrats an opening to sort of paint people like say sharon engle in nevada. that was the opponent harry reid wanted because they're going to paint these people as very extreme. what we see in this rally think think tomorrow is the beginning of a new phase for the tea party and trying to figure out how you

take all of this energy, all of this anger and develop it into a movement that can sustain itself past the primaries, past november and into, you know, something that genuinely lasts. gwen: does that mean, chuck, that -- it's easy to say this, but that the tea party's strength threatens the republican party or at least the republican party as we have come to know it? >> that would be a contentious argument to make. i suppose it's possible. certainly nevada, as karen pointed out, probably the tea party has delivered -- well, it definitely has delivered the candidate harry reid wanted to run against. gwen: colorado? >> after you get past that, it's a really mixed question, gwen. and we should note that we talk about it, let's assume lisa murkowski loses this primary to joe miller. just like in utah where the tea party kicked out bob bennett, in both of those states it's very likely a republican will be elected to the senate. it's just going to be a different republican. so what you're going to have is a republican caucus in the

senate, that is much more libertarian leaning and might cause all kinds of headaches for mitch mcconnell. but, you know, gwen, in colorado, in kentucky is rand paul going to lose that election? it could be a very limited impact in terms of what party controls washington. >> how about democrats, how uncertain are they? they've certainly -- every right track, wrong track poll we look at, every generic congressional poll we look at shows the democrats are the ones with the uphill race. >> that's right. this environment could hardly be worse for the democrats. and as they look forward, the only things you hear them talking about is the fact that they do have generally some pretty good candidates who have been working hard. these people are not generally, you know, asleep at the switch. they are battle tested and they have a lot more money in most of these races than the republicans. >> but they're really worried about demoralized voters who might just stay home. gwen: can i ask another question, it seems that this because of the negative

advertising, there just seems to be so much angrier, this race, among the candidates. we saw that in florida, mccollum still has not endorsed the guy who beat him in the governor's race. and also in alaska, we saw that joe miller, the guy who beat lisa murkowski, someone somewhere tweeted on his behalf that comparing her work in washington to the oldest profession. he later apologized. my goodness, this seems to be really nasty. >> but you look at what voters are dealing with in their lives, which is a set of very serious problems. nowadays four in ten voters are telling some pollsters that they or someone in their family have been out of a job in the last year. so at some point, and congressman boehner, the republican leader in the house says after labor day at some point it seems like voters are going to begin asking the two parties, what are you going to do to deal with my problem? gwen: finally, when are we going to know quickly what happens in

alaska? lawyers all had to get through counting the ballots. >> it could take -- >> the hanging chads in alaska. gwen: we've been there before. yes, we have. thank you both. some weeks we wonder what all of these folks are fighting to get actually. today the government admitted that the economy is growing even more slowly than it thought. all week long the stock market dipped below and then back above the 10,000 mark. and earlier this week we learned sales of existing homes plunged an amazing 27% to the lowest level in a decade. all this came amid-an extraordinaryy finger pointing exchange between house republican leader john boehner and vice president joe biden. >> the prospect of higher taxes, stricter rules, more regulations has employers sitting on their hands. and after the pummeling they've taken from washington over the last 18 months, who can blame them? >> for eight years before we arrived in the west wing, mr. boehner's party ran the economy in the middle class literally

into the ground. they took a $237 billion operating surplus inherited from the clinton administration and left us with a $1.3 trillion deficit. in the process quad droolled the national debt, all before we literally turned on the lights in the west wing. gwen: now it was a wedged over a distance by two men who clearly were prepared, reading off a teleprompter their attack lines. why are they having this fight now? >> this is a battle for the soul of the stimulus going into the elections. both boehner and biden want to present a narrative about whether the stimulus worked or not. of course, biden is claiming and has been out all week with various statistics and offerings saying this thing kept us from having a depression. it would have been so much worse if we hadn't spent all of this money. boehner, on the other hand ecks is portraying the stimulus and all of the federal efforts since the obama administration came in as really an assault by government on the private sector causing all kinds of uncertainty

and all kinds of fear to the private sector. and that's what's holding back growth in this country. both parties know is that this economy is really awful and it's not likely to change before november. so they have to try to hammer that narrative of who's to blame and who gets credit for whatever limited success there's been before november. gwen: the third b, ben bernanke, maybe the fourth b, he was in jackson, wyoming, pete's home state today. highly watched speech. everyone was saying, what will the fed do? will the fed pull us out? what did he say? >> what ben brent: said in -- bernanke still isn't done yet. but he said the fed still has actions it6 c13 isn't done yet. but he said the fed still has actions it can take. it can still go out and buy massive amounts of securities. it can still inject fertility gwen: is he saying they will do those things? >> he's saying they do if if needed and he's seeing a

cautiously optimistic outlook going into 2011. he said the recovery is slowing down, which is not good news, particularly if you're a democrat running for office rite now but he said they will take action if they need to. that was enough, just that sort of burst of confidence was enough to really rally the market, which the dow closed below 10,000 yesterday. today we were up 160-plus points. there was a real rally, bernanke rally on wall street. wee see if that translates at all into the real economy where people feel it. >> aren't some people still saying we could still have a double-dip recession, which would be a terrible thing? >> yeah, the whole thing this year has been what shape of a letter is this recession going to shape, v shape where it goes straight down and comes back up, i u where it's a gradual drop? now we are talking about a w-shaped recession where where it goes up, down, up, down. we are seeing growth but it's tiny. and with 14 million plus americans out of work, we need really robust growth for a long time to get us back anywhere

near where we were in 2007. so what you're looking at is almost a semipermanent class of americans who are out of work. that's going to create a lot of anger in the political system going forward. >> you say that the fed chairman says that going into 2011 that things can begin to improve. that's too late, isn't it, for the democrats? is the narrative set for them? >> it is. i think it's starting to harden. coming back after labor day, americans will start to focus on fall campaigns, tv ad spending will heat up and we'll get into the campaign season. where we are now is about where people will sort of remember feeling when they go into the voting booth in november. i think that the democrats have to play a very bad set of cards here going into the fall in terms of the economy because that impression is really jelling and hardening very fast right now. >> so we've got these bad housing numbers this week. and one of the things the national association of realtors said, yeah, when those tax incentives ended the housing market just went off a cliff. so at the end of the day, were the tax incentives good for the housing industry or not?

>> that's one of those six in one and half dozen of the other, right? because you can say it was good that it goosed those sales for the period that it did but the economic question is whether it robbed sales from the future. that is whether there would be people buying houses in september or october of this year who already did it because of the tax incentive. therefore, september and october are going to be bad. the upshot of the housing numbers we saw this week, according to most of the experts, is that we're going to look at a home price slide again, maybe fairly substantially. that doesn't bode well for folks who have equity in their houses and are hoping to use that nest egg for whatever purpose, retirement, college tuition, what have you. gwen: is it fair to say we're going to see -- that republicans have decided they unearthed the spokesman on the combhe and joe biden is the spokesman failing the president and they're going to see a lot more of this? >> i think they used biden this week because, amount, barack obama was in martha's vineyard riding his bike and playing golf. gwen: don't begrudge him a vacation. >> that's right. but also biden can come out and

punch a little harder than the president can. there's something about being presidental that means you don't want to necessarily engage in political fisticuffs with the minority leader of the house of representatives. but biden was more of a pier peer, he can come out and do the dueling sound bite thing as he did this week. the white house liked that this week. i think biden liked it this week. i think boehner liked his audition for speaker of the house. gwen: well, that's something to look forward to. thanks, eamon. the obama administration got another unwelcome late summer surprise this week when a judge blocked the awarding of federal grants for stem cell research. remember that? it's a decision the justice department says it will challenge. this is not a new debate but this is a new fight, pete. it feels like we've been here before. remind us about it. >> this was a sleeper case and it really stunned the research community because they did not see this coming. so what's at issue here are the type of stem cells that come from human embryos. and since 1996 congress has said you can't use any federal money on any research in which embryos

are destroyed. now, since the bush administration, the federal government has always taken the position that well, it supports only research on the stem cells themselves not on the actual gathering of the stem cells so, therefore, there's no violation of the law and what the judge said this week is no, you can't divide those things up. it's all of a piece. the judge said because embryos have to be destroyed to get the stem cells, then no money can be spent on anything -- no federal money can be spent on anything done with the stem cells later. so this threatens about 200 research projects that are already in progress that rely on federal money that's already granted. gwen: $64 million, right?s0 >> it's actually closer to 100. gwen: more than that. >> and because these grants are actually renewed every year and this would stop any renewal, a lot of these projects will probably stop when the money gives out, as long as this ruling remains in effect. gwen: if the justice department as it promises challenges this, what's their basis for challenging it?

>> they'll say number one the judge got the law wrong, that he's wrong about the law, that you can make this distinction, that no embryos are destroyed in the actual research on stem cells themselves, that the cells are harvested by private companies that basically gather these embryos for in vitro fertilization. and when they're not needed for that anymore and they're going to be discarded, that's when private companies gather the cells and make them available to the federal government as a technical matter, by the way, they'll also challenge the ability of these researchers of having their legal standing to bring this thing up. >> this is not a constitutional principle. it's a law. it's something congress wrote. congress can write a new one, right? are they likely to? >> well, you know, there are several members of congress that told me this week they think they can do it. and the reason they say that is they have some confidence. twice before in 2006 and 2008 there's been a bipartisan bill that would basically put into law a solution to this problem. it twice as passed the congress, both the house and senate but

was twice vetoed by president bush. well, they got a new president in office now. president obama who actually changed the policy on stem cells. what president bush had said is, ok, you can have federal money to do research, but only on stem cell lines that already exist. what president obama said last year is, we're going to allow you to do new research on new stem cell lines. and the initial thought was, well wow, this judge's ruling affect what's president obama has done. but there are many people who looked at the ruling and said, no, it actually affects everything, including what president bush started. >> so you said this was kind of a sleeper case. i missed it if it was in the pipeline somewhere. where did this case come from in the first sflace >> it came from a whole bunch of folks who have a whole number of different restem cells. what it came down to is a different kind of stem cells, adult stem cells. their legal claim is we are in competition for a limited amount of money for the national institutes for health and it's

wrong, it's legally wrong to give any federal research money to embryonic stem cells because of the congressional limitation, so, therefore, it hurts us when they get the money we should be getting. gwen: and they're the researchers who standards are being challenged? >> well, who may be challenged, right. >> i wanted to come back to karen's question, if congress might change that, presumably there's not enough time in this congress >> that's not -- >> they can do it that fast? >> i should allow you to finish your question but there are these folks who have tried this before would think they can either do it or are optimistic they request do it when congress comes back from the labor day recess or maybe even in the lame duck congress. and even if they don't think they can get it through, there are many democrats who want to be seen as having this fight. gwen: it is a very emotional -- go ahead. >> i'm sorry. republicans have the chance of taking over maybe the house, maybe even the house and senate. i would think those who don't want a pass would be holding back the range. maybe there's not enough of those. >> conversely those who want congress to try to fix this

realized with that prospect, they better give it a shot this time. gwen: this is also an emotional issue as we say famous hollywood celebrities, everybody getting involved. has there been a lot of reaction to this or has it been just too sleepy a psalmer week for that? >> you know, it's funny, contacting many of the groups you're talking about, michael j. fox's foundation, alzheimer's association, they all say they're working on statements or point you to their past statements. the alzheimer's association, for example, say they're opposed to any kind of limitations on stem cell research. so the question is, if this money is cut off can you get enough private money to continue? and nobody knows. gwen: ok, we'll be seeing. thank you, everyone. we have to go for now but the conversation continues online. just go to pbs.org where you can check out our "washington week" webcast extra. you can read my weekly blog and you can keep up with what our reporters are covering every day. the pbs newshour is your place for daily developments, including live coverage of tuesday's presidential primetime oval office speech.

then we'll join you around the table again next week on "washington week." good night. >> every thursday get a preview of our topics and panels with our "washington week" e-mail alert, available at "washington week" online at pbs.org. >> funding for "washington week" is provided by -- boeing, exxonmobil, e-harmony, the ethics and excellence in journalism foundation, the annenberg foundation, the corporation for public broadcasting, and by contributions to your pbs station from viewers like you. thank you.