>> susie: hundreds of billions of dollars in spending cuts, a pay freeze for federal workers, and pushing the retirement age to 68. that's what the president's deficit commission says is needed to cut the nation's massive red ink. a look at the panel's recommendations, and what they mean for you. you're watching "nightly business report" for wednesday, november 10. this is "nightly business report" with susie gharib and tom hudson.

this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> susie: good evening everyone. tom hudson is off tonight. a sweeping plan announced today to drastically reduce the nation's enormous deficit.

among the recommendations: raising the nation's retirement age to 68 and getting rid of the tax break for home mortgage interest payments. the cuts, suggested by a special commission appointed by president obama, would reduce the deficit by $4 trillion over the next decade. so, how will the proposals impact you? our washington bureau chief darren gersh has been studying the report, and he joins us now. >> susie: darren, this is quite a provocative plan. could it really happen? >> well, provocative is one way to put it. the list provokes just about everybody, doesn't it. i would say it is a serious plan, although the odds of it becoming law right away -- i think we have to say right up front are extremely low. the initial reaction from republicans and democrats was pretty divided. there is a lot in this plan that is going to upset both sides. the way to read this plan is pretty much this way: this is what it would take

for the nation to tackle the budget crisis and the deficit problem. many, many people in washington know this is what is needed. the difference is today the co-chairs of this commission se said it. >> susie: darren, let's go over that $4 trillion of savings. break down the numbers for us. >> reporter: it is a huge number, almost impossible to understand $4 trillion. to put that into perspective, $4 trillion is roughly one year of federal spending. everything the federal government spends in a year. now, they're talking about that cutting that over an eight-year period from 2012 to 2020. to break it down even further, they're looking at $2.2 trillion in spending cuts, roughly a trillion dollars in tax increases. that's the balance between how manhow muchpay in taxes and

how much would come out of the spending cuts. the balance would come out in savings on interest expense on the national debt, which would not have to be issued under this plan. but let's look at where all these spending cuts will come from. trimming back social security benefits, particularly for those people who are in the top half of the income distribution, those people would see their promised benefits cut back. trimming health care spending, talking about medicare, and the tax breaks we talked about. the mortgage deduction would get trimmed back, employer provided health care, retirement savings, and a lot of goodies. every sacred ox has been gored in this plan. >> susie: we have to remind everybody this is a preliminary plan, a draft proposal. >> right. >> susie: from the people that you have been talking to, what are the odds of what stays in and what goes out? >> reporter: well, this is put forward by the two

co-chairs. under the commission's rules, they have to get 14 out of 18 commissioners to approve a proposal to send it along to the president. and then nobody has to do anything with it, really, but tha that's what they have to do to get it forward. most of those 14 people would have to come from elected officials. they don't seem like they're going to come on board. the way to look at this is that some of these cuts are the things that i'm sorry to be the bearer of bad news are probably likely to happen when the budget crisis -- when spending becomes such a problem that the political system has to respond. so these things are all the ideas that are out there. there are no easy solutions, and that is what the commission co-chairs are really trying to say. >> susie: what are are the commission chairs trying to say? what's the message here? are they telling the world that the u.s. is getting

its financial house in order? >> reporter: i think they're trying to say there is a difficult path forward, but the alternative is that we're going to spend a trillion dollars on interest rate payments, if the budget is not tamed. the message to the rest of the world is that there are serious plans out there. however, i'm cognizant of the pact that it is possible the world will take away a different message, which is that republicans don't want the tax increases that this kind of plan would require. democrats don't want the spending cuts this would require. this plan shows what the middle ground would look like, and analyst andy laperier was saying that this could show that there is not a middle ground here. there is not support for the middle ground on deficit reduction. >> susie: it sounds like there is going to be a lot of debate coming up, and you'll be reporting on it, thanks so much, darren.

darren gersh reporting live from washington. now looking at trade deficits, they are a big issue on the eve of the g-20 group of nations meeting in seoul, south korea. financial officials from germany to china have lashed out against the federal reserve's plan to buy u.s. treasuries. as stephanie dhue reports, the issue is front and center on the global stage. >> reporter: president obama stepped off "air force one" in seoul into a g20 battle over global currency. china and other nations have criticized the fed for driving down the dollar with its plan to purchase $600 billion in u.s. treasuries. the peterson institute's william cline says the bigger issue is china's refusal to let its currency rise. >> the situation has become complicated by the fed's easing, but actually the movement of the dollar now has brought it to about the right level. it was overvalued before, it's now at a level that's consistent with a moderate trade deficit.

>> reporter: experts say the fed's move wasn't meant to weaken the dollar, but rather to boost the u.s. economy. brookings fellow barry bosworth says the fundamental problem is a weak recovery. >> the united states has to either start exporting more or importing less. countries like china, that have a big current account surplus, have to either export less or import more. i think we all hope that this can be worked out by an expansion of global trade, not a contraction of global trade. >> reporter: but getting to an agreement on global trade now will be tough. >> the big difficulty in the world economy right now is that everybody thinks that the way out of their difficulties is to export more. it's not the best of time to try to make this rebalancing, so to speak. >> reporter: rebalancing is just a fancy way of saying countries like india and china need to import more from the u.s. and europe. treasury secretary timothy geithner tried to cool tensions ahead of the meeting, saying

he's optimistic leaders will broadly support a framework for stronger global growth. but cline says that's easier said than done. >> the countries that have been unwilling to allow their currencies to adjust-- and it's not just china, it's china, malaysia, taiwan, singapore, hong kong that have been running trade surpluses-- need to join the rest of the world and let their currencies rise when they have these huge trade surpluses. they cannot continue to count on the united states and other countries running big deficits. >> reporter: analysts expect the g2o leaders to agree on bringing trade into better balance, but they don't expect any specifics on how to do that. stephanie dhue, "nightly business report," washington. >> susie: here are the stories in tonight's n.b.r. newswheel: on wall street, stocks staged a comeback after being in the red most of the day.

the dow rose ten points, the nasdaq added 15, and the s&p 500 up five. trading volume basically unchanged on the n.y.s.e. versus yesterday, while nasdaq volume dipped slightly. a bigger-than-expected drop in the number of new claims for jobless benefits in the last week, down 24,000 to 435,000. the labor department reported the weekly claims a day early, because of tomorrow's veterans day holiday. the federal reserve said it's ready to get going with its plan to buy government bonds. details out today: the new york federal reserve bank will kick things off by buying $105 billion in treasuries over the next month. and more privacy concerns at google. regulators at the federal communications commission are investigating whether google broke the law when its street- mapping service mistakenly collected consumers' personal data. the federal trade commission has already looked at the same issue, and took no action.

still ahead, business is booming in the lap of luxury. find out why retail is rebounding in high-end stores like these. general motors signaled more good news for wall street today, just a week ahead of its expected i.p.o. the automaker posted a third- quarter profit of $2 billion, its third successful quarter in a row. g.m. made most of that money in north america. closing plants, shedding jobs and launching new products. as diane eastabrook reports, g.m. hopes the good news will convince investors to buy its stock again. >> reporter: analysts credit g.m.'s profitable third quarter to cost-cutting and getting higher prices for its products. with fewer vehicles rolling off assembly lines and better products-- like its new chevy cruze-- g.m. commanded higher sticker prices. jeremy anwyl from edmunds.com also thinks g.m. has been cashing in on consumers trading down in a sour economy. but, he questions if that will continue.

>> the question is, as the economy recovers, are consumers going to go back to perhaps the normal pattern-- being the lexus buyer buying the lexus-- and some of that upselling that we've been seeing disappears. >> reporter: even g.m. cautioned the current quarter may not be as strong as the last three, blaming higher launch costs for the chevy volt and engineering expenses for future products. still, the company hopes potential investors will look past that warning when it goes public. shares of g.m. stock are expected to start trading next week for the first time since the company filed bankruptcy and got a government bailout. the i.p.o. will let g.m. sell some shares of the company currently owned by the u.s. treasury, canadian government and u.a.w.'s retiree benefits plan. some industry watchers think the government's continued stake in g.m. will turn off some investors. but morningstar's david whiston doesn't think it should. >> i believe all of those overhang issues are short term in nature. i don't believe the government will be involved in g.m. permanently. it's going to be a couple of

years before they can get rid of all of their shares. it's not a permanent overhang issue. and, the veba has to sell its monetized holding-- most of it's investment-- or all of its investment in order to repay retiree healthcare issues over time. >> reporter: last week g.m. said its stock should begin trading somewhere between $26 and $29 a share. diane eastabrook, "nightly business report," chicago. >> susie: a u-turn for wall

street today, as stocks managed to turn early losses into tiny gains. let's take a look in tonight's "market focus." we start things off with something that's likely to impact tomorrow's trading: we're talking about cisco's latest earnings after the bell. the networking giant reported better-than-expected earnings on revenues of $10.8 billion. cisco earned 42 cents a share in its fiscal first quarter, 2 cents higher than estimates. sales surged 19%, but c.e.o. john chambers still calls the economic environment "challenging." and while chambers says capital spending is moderating, he still plans to continue hiring. here's what cisco shares looked like heading into tonight's report, trading at almost $24.50 a share.

it was down though 13% in after- hours trading. since septemebr, cisco shares up 20%. looking at how it stacks up against its tech rivals: apple up over 50% year-to-date. microsoft down on the year, and google basically flat. now another tech stock in the spotlight, blackberry maker research in motion. shares rising over 6% on high expectations for the launch of its playbook tablet computer early next year. the device is designed to go head to head with apple's ipad, with a price tag of under $500. turning now to the best sectors in today's trading, we're talking about financials and energy. the financials were up 1.5%. banks gained ground as the u.s dollar rose in value. and energy up just over 1% on the back of another sharp gain in oil prices, they're nearly $88 a barrel.

that's the highest level this year. high flying las vegas sands retreated from multi year highs there are reports chinese regulators may be close to wrapping up an investigation into the gaming firm's dealings with vendors in china. the agency has reportedly set a preliminary fine of $1.6 million. two big i.p.o.s today, both of them new chinese issues. the first, noah holdings, is an investment brokerage. the shares soared more than 30% in its market debut. noah has more than 28 offices in china's fastest growing cities. and shanghai-based r.d.a. microelectronics raised $67 million in its initial public offering, shares popped 19%. r.d.a. makes chips for cellphone handsets and other wireless applications. lets go window shopping among the retailers. b.j.'s wholesale club spiking more than 10%. volume trippled on reports the struggling warehouse club, which has hired morgan stanley to explore other options. macy's latest quarter shows its turnaround plan is gaining traction. third quarter profits 8 cents versus a loss a year ago, and 3 cents above analysts'

projections. but the department store chain says gross margins are improving as it ramps up its holiday promotions. macy's shares this week backing off multi-year highs. ralph lauren also sewing up strong results. tonight, shares in the apparel maker and retailer jockeying to an all-time high thanks to a rebound in global demand for its popular luxury brands. the results welcome news for investors ahead of the holiday shopping season. erika miller will have more on the comeback in luxury retail in just a moment. and that's tonight's "market focus."

as we saw with ralph lauren's blockbuster earnings, there's a surprising little secret about the u.s. economy: consumers who buy luxury goods are back! they're expected to be a bright spot in an otherwise ho-hum holiday for retailers. erika miller went shopping to find out why. >> reporter: on madison avenue, you still see a few empty storefronts. but you will also find plenty of luxury stores teeming with shoppers. handbag designer lana marks has locations here, palm beach's worth avenue and rodeo drive in beverly hills, among others. she says what's selling best is the top priced merchandise, including this $25,000 purse. >> people are wanting the highest end. the highest level of workmanship. the most expensive of what we do. they may buy a little less in terms of the variety, but they

are buying. >> reporter: a few blocks away, audemars piguet sells luxury watches, including this one for $800,000. company president francois-henry bennahmias is certain this will be a banner year-- with sales up at least 15%. >> we know pretty much now what's going to sell, because people pre-order some of the items. they don't come in the store on the 22nd of december and say, "oh, i'm going to buy a watch." no, they come to us in november and say "i've seen that $46,000 watch. can you put one aside for me? i'm going to put a deposit down and pick it up in december." >> reporter: don't expect to see many sales signs in the windows of luxury stores this holiday season. many learned last year that deep discounting can backfire-- by making the goods seem less exclusive. customers at top tier stores tend to be less price sensitive than the overall population, and they spend disproportionately. according to retail consulting firm bain and company, households earning more than $100,000 are only about 20%

nationwide, but they drive almost 40% of total retail sales. retail strategist john long of kurt salmon also says the wealthy tend to be more optimistic: >> even though they themselves may not be significantly financially better off, they've certainly been able to manage their finances better. they have less of a concern-- particularly customers buying luxury items-- that they are going to lose their jobs, which 18 months ago was not the case. >> reporter: but that doesn't necessarily mean now's the time to buy luxury stocks. retail analyst paul swinand believes the shares of most companies in the sector are too expensive, with one exception. >> one of the things i like about coach is that i think that there is some upside. as they are just entering the european market for the first time, and they are also growing the store base very rapidly. >> reporter: but even if you are not a fan of luxury stocks, you can still admire the merchandise.

actually, that's not always true. the $800,000 watch we showed you has a three-year waiting list. erika miller, "nightly business report," new york. >> susie: here's what we're watching for tomorrow: it's veteran's day, and the bond markets are closed. as we mentioned, world leaders are meeting at the g20 summit in south korea. also tomorrow, quarterly results from viacom and walt disney. and, could late night classes be the solution to overcrowding at community colleges? we'll visit one school that's putting a new spin on midnight madness. former disney c.e.o. michael eisner is teaming up with a.o.l. to produce entertainment programs for the internet. eisner's web studio vuguru will produce half a dozen scripted web series, including comedies and dramas. the partnership is a.o.l.'s latest attempt to put original video on its home page. financial details were not disclosed. expect bigger, and much more graphic, health warnings on cigarette labels.

federal health officials unveiled them today. the warnings show the effects of smoking. they will cover half the front and back of each pack. the food and drug administration will collect public comments on 36 proposed images, including these, until early january. once the final warnings are chosen, they'll be required on cigarette packs beginning two years from now.

to own, or not to own? that's a real question these days when it comes to buying a home. with foreclosures still high and home prices weak, tonight's "money file" commentator thinks renting may be a better option. he's ramit sethi, author of "i will teach you to be rich." >> i recently ran a small test. i analyzed 1,200 money questions that my readers sent me and found that a full 25% of those in financial trouble traced their problems back to one reason: their purchase of a house. homeownership in america is heralded as one of the best investments we can make. we hear this from banks, parents, nosy neighbors, and even the highest levels of our government. the trouble is, homeownership isn't all it's cracked up to be. 1. as an investment, buying a

house is overrated. yale economist robert shiller notes that "from 1890 through 1990, the return on residential real estate was just about zero after inflation." most of us find that hard to believe, but when we factor in phantom costs like mortgage interest, taxes and maintenance, real estate often turns out to be a cost, not an investment. 2. even worse, homeownership restricts our flexibility. whereas we used to live in one place for years and years, my readers, mostly in their 20s and 30s, are increasingly unlikely to buy because they value flexibility above owning property. buying a house can be a great choice for many reasons. but in the largest purchase of our lives, we can't be swayed by simple slogans like "buy to get the tax cut." fortunately, an increasing number of americans are beginning to question the accepted wisdom of homeownership.

>> susie: that's "nightly business report" for wednesday, november 10. i'm susie gharib. good night everyone, and thanks for watching. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:

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