>> tom: more and more town as crossing america are feeling the pinch of the tough economy. >> we have a dual hit this year where we had a 17% decrease in revenues. and on top of that we had a decrease in state aid. >> susie: we look at how two new jersey towns are handling big cutbacks as we continue our series, bluj blew blues, you're watching fightly business report for thursday, september 9th. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening and thanks for joining us. one word describes the mood of american businesses these days-- "uncertainty." susie, many companies are flush with cash, but they're not spending it or using it to hire workers because they're uncertain about the outlook on a host of important issues. >> susie: whether it's taxes, tom, new regulations, or health care reform, executives are not sure how these policies will impact their businesses. many economists say that uncertainty is a significant

obstacle to economic recovery. >> tom: lawmakers return next week to washington, and republicans are expected to reopen debate on parts of healthcare reform. as stephanie dhue reports that'll add even more uncertainty to the business environment. >> as the november election draws near, senate republicans are sharpening their differences with democrats on health care. senator mike johanns says new requirements for small business tax filing have to go. he's making a case for that on youtube. >> this will mean a mountain of new paperwork for as many as 40 million businesses and other entities. >> reporter: that tax provision was added to generate $20 billion to help pay for health care reform. johann's proposal to do away with the extra tax paperwork has the support of the national federation of independent business. the group also opposes the health care reform bill. >> right now, with so much uncertainty and with businesses struggling to get out of the

recession, they don't need a new requirement to basically file a form for every transaction they make. this is the kind of stuff that got tacked into this health care bill that needs to go away. >> reporter: johanns would pay for his proposal by cutting funding for wellness care and changing the mandate on individuals to buy insurance. consumer advocate larry mcneely says that would restart the health care debate. >> it's really less a solution to a concern that's been raised by some small businesses about reporting requirements than it is an attempt to unravel the health care bill that did pass this spring. >> reporter: democrat bill nelson proposes smaller changes, exempting businesses with fewer than 25 employees from the extra paperwork. nelson's proposal would be paid for with a tax on oil companies. the senate is expected to vote next week on the competing proposals. analysts say it's a preview for the battles to come in the next two years as the administration works to implement the health care reform law, a battle that

will leave businesses with few answers about their future costs. stephanie dhue, "nightly business report," washington. >> susie: the president has been looking to small businesses to fuel the economic recovery and hire millions of unemployed workers. but those businesses need to be able to build and expand in order to hire. to do that they often need loans, which have also been increasingly hard to get in this economy. that difficulty has some small business owners getting creative when it comes to financing. jamila trindle explains. >> kind of started to realize the vision-- this is where i wanted to be. >> reporter: but getting from there to here... >> this is looking good here... >> reporter: ... ended up a being a longer road than seasoned restaurateur john andrade had anticipated. in 2007, renovations started and andrade found some investors and had successful talks with banks about securing the rest of the funding he needed to open. >> that changed after the recession hit. >> reporter: andrade talked to ten banks, but now they wanted more collateral, either a house or a deposit of the same amount as the loan in a cd at the bank.

>> if i had the money in cash, why would i ask to borrow that? >> reporter: and then he had to make a decision. >> am i going to give the bank enough money or put up my house as collateral, or am i just going to reach out to additional investors to compensate what the bank is clearly unwilling to do at this time. >> reporter: bankers say the lending window is still open, but the conditions have changed. bob seiwert of the american bankers association says lenders now often want a secondary source of loan repayment, like a personal guarantee or collateral. >> there's a certain amount of debt that each of us as an individual or a business owner can handle. they may have been successful in the past in handling that debt, but they need to understand that, through this economic crisis, the landscape has changed. >> reporter: considering the new economic landscape is a basic part of prudent lending says eagle bank c.e.o. ron paul. >> lending is still out there-- we're doing a lot of start-up businesses. we're requiring more equity, but again, the loan and the ability to borrow that money is definitely out there.

>> reporter: just maybe not with conditions that work for every new business. >> i definitely did an extensive bit of homework, and ultimately concluded that dealing with the banks just really was not the way to go, certainly not now, and potentially in the future for these sort of situations. >> reporter: when banks pulled out, john andrade took his idea back to the neighborhood and found local investors who thought he had the right concept for this up-and-coming area. >> i'm a big fan of investors, i'm a big fan of community-based local investors, and i love the fact that i can bring them all together and make them a part of this organization. >> reporter: and bankers agree-- sometimes, you need a partner who can stomach a little more risk, an investor rather than a bank. >> if you really have the passion and the belief, don't be afraid to give up part of the upside and limit your downside. bring in that equity partner. >> reporter: and paul says a

success, no matter where the startup capital came from, will make it that much easier to get a bank loan in the future. jamila trindle, "nightly business report," washington. >> susie: here are the stories in tonight's n.b.r. "newswheel." stocks moved higher today following a series of stronger- than-expected economic reports. the dow added 28 points, the nasdaq rose seven, and the s&p 500 up five. the gains came on lighter trading volume as the number of shares trading hands fell on both the n.y.s.e. and nasdaq. investors were inspired by news of a surprising drop in weekly jobless benefits. claims for new unemployment benefits fell by 27,000 in the past week to their lowest level in two months. economists expected claims to drop by only 2,000. today's jobs reading gives more credence to the camp that believes the economy will avoid a double-dip recession. another encouraging report showed exports climbed in july to their highest level in nearly two years. that helped narrow the trade gap significantly.

imports declined as exports of u.s.-made planes and other manufactured goods jumped. and federal funding for stem cell research will continue, at least temporarily. a federal appeals court has put on hold a judge's ban on that funding while the obama administration files an appeal. >> tom: still ahead, with the yen near a 15 year-high versus the dollar, what's driving the currency from the land of the rising sun? we talk foreign exchange with j.p. morgan strategist rebecca patterson. >> susie: new jersey today applied for $268 million in federal education funds, a move that could help send hundreds of laid-off teachers back to work. it could also help make up for the $800 million cut from the state's education spending this year. all week, we've been looking at the struggles facing state and local governments with our series, "budget blues." tonight, scott gurvey tells us how some new jersey towns are coping with budget shortfalls

and some problems unique to the garden state. >> reporter: for states throughout the nation, the worst recession since the 1930s has caused the steepest decline in revenue on record. the washington-based center on budget and policy priorities projects the shortfalls will continue, even as the economy recovers. in montclair, new jersey, a culturally and economically diverse community a 45-minute train ride from manhattan, mayor jerry fried says layoffs couldn't be avoided. >> we had this dual hit this year where we had a 17% decrease in revenues, and on top of that, we had a decrease in state aid. so we saw major layoffs in our schools. we had about 85 layoffs in the schools, and really for the first time, we've had layoffs on the municipal side, as well. >> reporter: many states have responded to the shortfalls with tax increases. but in new jersey, republican governor chris christie, who defeated democrat john corzine last fall, has repeatedly

accused local governments of waste and mismanagement. he has moved to cap property tax increases at 2% a year. joseph martin, the manager of verona, next to montclair, says his township has balanced its budget by cutting a dozen high- paid jobs in the last few years, but he still worries about the cap on property taxes. >> my concern about a cap is one of the strengths of verona and many neighboring towns is that we have an excellent investor rating from moody's investor services, and there is some concern by the rating agencies that the caps will lesson the financial strength of municipalities. >> reporter: by far, the biggest expense for new jersey's local governments are the public schools, considered by many to be some of the best in the nation, but also the most expensive. the governor is taking aim. >> whave the highest property taxes in the nation. we're the most taxed people in america-- more than california, more than new york, more than

illinois. and we are not getting the return on that investment across the school system >> nearly 60% of our state aid goes to 30 fating districts. >> reporter: state mandates to equalize spending between rich and poor communities add to the funding problems. >> as difficult as it is to manage a town, it is much more difficult to manage a board of education budget. their choices are fewer, their revenue streams are limited, and every parent is an expert on education. >> reporter: the state also has mandates on health insurance and pensions for government workers. >> the challenge really for us is that things like our health and our pension contributions are so huge, and the state of new jersey is not funding its own contributions to its pension. so when we have the governor essentially pushing the blame down to the municipalities and saying, "okay, we're going to

put a 2% cap on you and that will prevent you from doing reckless spending," i would love to see the state assume that same responsibility and say, "we're only going to have a 2% increase." that's not happening. >> reporter: ultimately, mayor fried says it is up to the people to decide where they want to live. >> there are a lot of people who choose to live here and understand that there is a premium that you pay when you live in a diverse community, particularly economically diverse. >> reporter: talk of cutbacks and layoffs drew relativity little public outcry over the summer. that may change after this week as schools open across new jersey, and the talk becomes reality. scott gurvey, "nightly business report," montclair, new jersey. >> susie: tomorrow, we wrap up our series, "budget blues," with one state's search for new revenues and the impact of budget cuts on a staple of middle america-- the county fair.

>> tom: a choppy session on light volume, but the major indices ended in the green with two defensive sectors leading the way. telecom service stocks were back in front. at&t put up a 1.5% gain to its highest price since january.

frontier communications added almost 1.5% verizon gained more than 1% to its highest price since april. telecom stocks have been among the market leaders recently as investors have been attracted to dividends. healthcare stocks also found buyers, driven by a hospital, an insurance company, and a medical device maker. tenet healthcare jumped 5.5%. last week, that stock was at a 52-week low. concerns about patients paying their bills have hurt, but the company raised its earnings forecast this summer. wellpoint is at a one-month high with today's 3% rally. and boston scientific added almost 3%. b-s-x shares also hit a new low just last week. leading the s&p 500 today was software company adobe. it appears its chilly relationship with apple is thawing a bit. apple relaxed some of the restrictions it places on software developers who create

apps for iphones and ipads. it now allows those developers to use abode's popular software to create new apps. still, the new apps have to be translated into a different language that is approved by apple into order to be used on the iphone or ipad. that still means flash web sites will not work on the iphone and ipad. that hitch didn't seem to bother adobe stock today, up 12%. apple's decision reverses an earlier effort that kept adobe software out of the app development business. toan tran of morningstar thinks the change will help adobe. >> if apple were to lock out adobe from selling its tools to make these programs, that is lost revenue for adobe. now that developers can use flash or other adobe tools they're familiar with to write iphone applications, its not a bad thing for adobe. >> tom: from software to semiconductors-- national semiconductor turned in a strong

quarter after the close. the bottom line beat the street as revenues rebounded and gross margins were a record. but its revenue forecast was a disappointment. the stock marked time ahead of the earnings release. after the disappointing outlook, the stock fell almost 6% after hours. if that pressure holds through tomorrow, it would take the stock down to a new low. fellow chip maker texas instruments gave its mid-quarter update, which held no surprises. shares saw a fractional gain today on decent volume. the leading loser for the dow industrials was mcdonald's. august sales continued growing, but at a slower pace than earlier this summer. shares fell 2.25% on heavy volume. it may be a case of some profit taking, as m-c-d stock hit a new all-time high yesterday. finally, gun maker smith and wesson fell into the sights of sellers after the close. while earnings were a penny above estimates, margins and sales dropped. but the lackluster outlook hurt. the stock is down 30% over the past year, and looks to add to

those losses. after the close, it fell 10% from today's closing price. and that's tonight's market focus. >> tom: 15 years ago the u.s. economy was rolling around, the stock rally was just starting and the japanese economy was trying to dig out of recession. today both japan and the u.s. economies are limping along but the japanese yen is at a level against the dollar last seen a decade and a half ago. rebecca patterson back with us, global head of

currencies and commodities at jpmorgan private bank. welcome back to nbr, nice to see you. >> thank you. >> tom: so 15 years we are back at these level force the yen versus the dollar. what is behind the appreciation? >> well, i think it's largely a u.s. event, not a japanese event. with the u.s. economy showing signs that it's moderating pretty early in its recovery, we have seen a fall in u.s. yields. and dollar/yen that exchange rate tends to take its coups quite a bit from the differential, the difference between the u.s. and japanese interest rate. so 10 year us-- u.s. yields down towards the crisis lows that has been something that weighed on the dollar broadly but especially against the yen. >> tom: let's look at a 12 month chart of the dollar against the yen n may it took 59 yen to buy one u.s. dollar, today closer to 83. that is but about a 12% drop if the dollar's value yens the yen. does it show any signs of stopping? >> i think this is a patience game for a lot of

investors who already started selling the yen. but i do think at some point the yen is going to weaken. it is just a 3459er of when, not if. why it is a when, in the case of japan you have entrenched deflation. the strong yen makes that work. interest rates are already ten basis points. they can't cut them much further. they are already trying quantity at that timeive easing to add liquidity and create some inflation in the market. there is not much left they can do to try to get some inflation going in their economy to support growth except the yen. and we're starting to hear that drumbeat growing louder. japanese finance minister, prime minister, commerce minister, you name it, they're all out there saying hey, if the market doesn't do it for us we're goinging to help it out. >> tom: growing concern in japan that you hit upon that some of the japanese profits that japan companies make in america are worth less than they bring back home. what is the impact for u.s. companies doing trade in japan? >> oh, this is a huge plus for u.s. firms.

and definitely a drag for the japanese. we're seeing the japanese stock markets lag the u.s. equivalent. and we're seeing japanese exporting firms crying louder and loud per it because it is, as you said, eating into their profit margins. so to the degree you have american firms exportinging to japan, this definitely is a help. unfortunately i don't think there are as many of those today as there might have been in the past. >> tom: i would be remiss not to ask you about the euro and dollar. we just have 30 seconds left and we'll take a look at a chart. it has been a little less volatile compared to earlier in the year. is the stability to stick around even through the election in the u.s.? >> good question. i am still a seller of euro on rallies. we got short and we recommended selling the euro in february of this year when it was trading around 1.37 or so. and any time we get back above 1.30 around that level we are selling it again. i don't think the troubles in the europe are over. the u.s. elections are going to create some volatility this fall but i think the bigger slew is the

structural challenges europe faces and they're not over. >> tom: you have been spot on with the euro-dollar call all year. we appreciate the insights from the currency desk. our guest rebecca patterson, global head of currencies and commodities at jpmorgan private bank. >> susie: here's what we're watching for tomorrow: a report on july wholesale trade inventories from the commerce department. also, investing in a politically sensitive and choppy stock market. our friday "market monitor" guest will be here with a handful of stock picks. he's robert drach, publisher of "the drach weekly research report." mortgage rates for 30-year loans inched higher last week for the first time in three months. the increase came as investors' fears about the economy eased. freddie mac says the average rate for a 30-year fixed loan was 4.35%, up from 4.32% the week before. the average rate on a 15-year loan was unchanged at 3.83%. that's the lowest rate on record

since freddie mac started tracking the 15-year in 1991. >> tom: the food and drug administration is putting makers of electronic cigarettes on notice-- it claims they use illegal marketing practices. the f.d.a. sent letters to five companies today saying, because e-cigarettes are marketed as tools to help people quit smoking, they should be regulated as drugs. the f.d.a. wants the companies to prove e-cigarettes are safe, and whether those devices are effective in helping people stop smoking. so far, no comment from the companies. bupupututuuuuuu?

>> susie: political analysts are predicting a divided congress after the november elections. that could be a good thing-- tonight's commentator explains why washington thrives on gridlock. he's todd buchholz, author of "lasting lessons from the corner office." >> what's more boring than a bunch of pundits bemoaning the lack of bipartisanship in washington.? guess what? our founding fathers designed washington for gridlock. checks and balances, vetoes, annual elections. it's all about gridlock. even the streets in washington guarantee it. you can't drive from the white house to the capitol without getting stuck in traffic behind taxis, pedi-cabs, and tourist mobiles that look like amphibious ducks. sometimes, we do better with gridlock. as we head into election season,

we might finally get the obama stock market rally. oh, it won't be based on the president pushing his plans through congress. no, it'll be based on his programs getting stuck in a congress with enough republicans to step on the brakes. history shows that the stock market prefers a divided government. amid the mess, i must point out one surprising and hopeful bit of bipartisanship-- i am impressed that senator ron wyden, democrat of oregon, and senator judd gregg, republican of new hampshire, have put together a sensible tax reform plan. it's simple and it's fair, and it could help the economy. following ronald reagan's lead, they cut the number of tax brackets to just three: 15%, 25%, and 35%. they cut out that dastardly alternative minimum tax, flatten the corporate tax, and take a machete to corporate welfare. simple is better. the i.r.s. admits that americans spend 6.6 billion hours figuring out their taxes. 6.6 billion hours! that's like kidnapping 10,000 people each year and forcing

them to spend their lifetimes filling in 1040 forms. life is too short to devote it to the i.r.s. i'm todd buchholz. >> susie: that's "nightly business report" for thursday, september 9. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson. good night, everybody. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> more information about investing is available in: to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org. >> be more. pbs.