>> tom: republicans unveil their 2012 federal budget. its aim-- cut the deficit by about $5 trillion in the coming decade. >> our goal here is to leave our children and grandchildren with a debt-free nation. >> susie: meantime, talks at the white house fail to reach a deal for this year's budget, just three days before a potential government shutdown. you're watching "nightly business report" for tuesday, april 5. 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. the clock is ticking toward a government shutdown friday. under pressure to reach a deal on the nation's budget, president obama met with congressional leaders, but they couldn't agree. >> susie: meanwhile, tom, republicans in the house rolled out a longer-range budget plan for the next decade. it's called the "path to prosperity". it was drafted by representative paul ryan; he chairs the house budget committee. it limits federal spending, with dramatic cuts in programs like medicare and medicaid. it also slashes nearly $5 trillion from the budget over

the next ten years. >> tom: ryan's proposal is stirring up debate not just in washington, but across the country. darren gersh reports. >> reporter: farmers will feel the cuts. so will students and businesses building roads. the house republican budget touches almost everyone in the country. house budget committee chairman paul ryan, the plan's author, says there is no other choice. >> our budget is our plan to tackle this country's greatest problems. if we don't take on these fiscal challenges head on, we will not be able to do this under our own terms. >> reporter: to head off a debt- driven economic crisis, house republicans propose what they call a "path to prosperity." there are no tax increases; instead, deductions and loopholes are cut, bringing the top individual and corporate tax rate down to 25%. there are no new reductions in defense, but house republicans propose cuts of more than $900 billion over the next decade from the president's plans for

education, clean energy, and other non-security spending. another $1.8 trillion in savings come from cuts to programs like food and housing assistance. but ryan's deepest reductions compared with the president's budget are in health care: $1.4 trillion in savings from repealing health care reform; and $735 billion in medicaid savings by reshaping the current open-ended spending program into a fixed, lump-sum payment to states. another $389 billion is saved by restructuring medicare. beginning in 2022, new beneficiaries will get a fixed payment, called premium support, to buy private health care coverage. but democrats say this will put future medicare beneficiaries at the mercy of insurance companies. maryland's chris van hollen called the republican plan a scheme to privatize medicare. >> the value of the voucher or the premium support or whatever you want to call it does not rise at the rate of health care

inflation, and what the republican budget does is say to seniors "you're on your own." >> reporter: alice rivlin was bill clinton's budget director, and worked closely with ryan to develop the premium support model for medicare. rivlin says the key question is how fast the government allows those premium support payments to grow. >> if the cap is set too tight, it will be very hard on seniors. if it is kept too loose and the program continues to grow much faster than the economy is growing, then it is not sustainable. so the point is to get a balance. >> reporter: at its core, house republicans are proposing a much more limited and smaller government, but one that could pay almost a trillion less in interest over the next decade. darren gersh, "nightly business report," washington. >> susie: here are the stories in tonight's "n.b.r. newswheel." inflation and what to do about it was hotly debated at the

federal reserve's policy meeting in march. according to the fed's minutes released today, policymakers are mixed on what to do after its $600 billion bond-buying program wraps up. several members fear inflation, and urged moving toward raising interest rates later this year. concerns about higher rates led to a mixed close on wall street. the dow slipped six points, the nasdaq gained two, and the s&p 500 was off a fraction. as for trading volume-- 829 million shares on the nyse volume, up modestly from yesterday; about two billion shares on the nasdaq. and china's central bank has raised rates for the fourth time since october. it's the latest effort to cool inflation and ensure sustainable economic growth. >> tom: still ahead, with summer vacation season approaching, the word on the street is "travel." we'll have three travel stock ideas for your portfolio. >> susie: as we mentioned earlier, president obama and top

congressional leaders meeting at the white house today could not agree on a budget deal. the president wants both sides to keep talking until an agreement is reached. how far apart they are? depends on who you ask. we're fighting for the largest spending cuts possible. we're talking about real spending cuts here. no smoke and mirrors. >> president obama: we are now closer than we have ever been to getting an agreement. there is no reason why we should not get an agreement. >> susie: joining us now for more analysis-- dean baker, co- director of the center for economic and policy research; and doug holtz-eakin, president of the american action forum and former director of the congressional budget office. >> thank you so much for joining us tonight. >> thank you. thanks for having me on. >> so the president says he wants lawmakers to come to a compromise. let me begin with you, doug. what do you think is a fair deal? >> i think the important thing to recognize is

that, in fact, both sides have agreed on two very important principles. number one, it is important to keep the government open. to close it is not desirable. and two, the cuts are necessary. both sides have agreed to that. we have seen the degree of spending cuts, and the degree of agreement about them grow overtime. i'm optmistic they'll get a deal. i'd say the most important thing is not the dollar value of the cuts, but the kinds of cuts that are made. you want to preserve the available-forward-looking investments, and the president has made that a priority. and you want to cut out other items. >> susie: dean, do you agree with that, or is there a number that has to be acceptable to both sides? >> i think doug is right, there has got to be a lot of agreement. here it is, you have close to 25 million people unemployed, underemployed, or given up looking for work all together because of collapse of the housing bubble. this is an economy that

needs more stimulus, and the fight in washington is over how much to cut. we don't have to look far. in the united kingdom, we have a government that is really big on cutting the budget. and it's economy has almost ground to a halt. you wish you could get people in washington to look around and go, hey, our main problem is that unemployment. you're going the wrong way. >> susie: what are you saying, these deficits are okay? and we don't need to cut so much? >> the deficits at the moment, we don't need to cut at all. the financial markets are agreeing with me. the american financial markets can borrow 10 points on one bond. on the other side, we have the politicians in washington making this problem over how much you can cut. >> susie: doug, let me ask you this, because one of the controversial questions of the provincial that the republicans put out is to

cut dramatic cuts in medicare and medicaid. poll after poll shows that the american public doesn't want to cut these programs. what do we have to do to have them recognize this is a financial issue for the country. >> i think there are three real answers to that. number one, the debt that has been facing us is called a national moment of truth by the president's only fiscal position. it is driven by these very programs. they're bad for the budget. they're bad for the economy. the potential for a large fiscal crisis is a threat at the moment. removing that threat would be good for economic growth. but, most importantly, doing nothing is bad for the beneficiaries. both medicare and medicaid are broke programs that are going to be bankrupt. social security, the folks would face a 22% cut across the board, and doing nothing is unacceptable. you thought of thoughtful proposals that don't just cut these programs, they

reform them so they can provide the services, which these beneficiaries deserve, and for the next generation. >> susie: dean, what do you think the chances are there will be a budget deal by friday? >> i think we will at least see a short-term shutdown by the government, but i suspect we'll have a deal not too long after that. people that go to washington to go to the smithsonian are going to be upset. >> susie: dean, you're a democrat, and doug, you are a republican. if you were to give one piece of advice so we can get a deal why friday, what do you think it would be. doug, you're first. >> i think he has waited too long. on budget, he has shown no presidentship in three years. >> susie: dean, in just a few words, what would you tell the president? >> start talking about boosting the economy. it's unacceptable that

25 million people are unemployed or underemployed because the people in washington don't know what they're doing. >> susie: a complicated issue. i thank you both for coming on the program. we've been talking to dean baker, and douglas holtz eakin, president of the american action forum. >> tom: it's been hard to miss the monstrous rally in gold prices. the yellow metal has more than doubled in less than five years,

and now trades above $1,450 an ounce, hitting a new record high today. still, this story is not about where prices are headed next. that's for another time. if you've already decided to add some glitter to your portfolio, the question is in what form? suzanne pratt reports. >> reporter: precious metals dealer michael haynes has come to manhattan with a million dollars in gold, and some extra muscle. haynes is promoting his new smartphone app for gold bugs, but he's also encouraging investors to purchase physical gold. >> that's probably half a million right there. >> reporter: wow. haynes says there's a convenience to buying gold coins or bars, not to mention global acceptance. >> physical gold itself is a currency without a country. it's known in every country of the world. it's one of the few words that translates easily into every language around the world, and every currency around the world

is convertible into gold. >> reporter: buying gold coins also means paying a markup over the asset's cash price, but that hasn't slowed their popularity. according to the world gold council, 995 metric tons of the yellow metal was bought globally last year. that's a 34% increase from 2009. those numbers exclude e.t.f. and mutual fund demand, bringing us to the other ways to buy gold. those include gold futures and options, and gold mining stocks, either individually or through mutual funds and e.t.f.s. analyst doug groh prefers gold mining shares, which have under- performed gold bullion this year. >> what's interesting is the profitability of these mining companies is really quite significant, given the gold price. they're generating a lot of cash flow. they're deploying that cash flow to build out their operations. but they're also returning a lot of that cash flow to investors. >> reporter: financial planner lewis altfest likes e.t.f.s over the hard asset.

>> they're liquid. you can get in and out every day. gold bars are expensive, and you have to store, unless you're like some people in foreign countries who put them in their backyard. >> reporter: if you're still not sure what form to buy your gold, some experts recommend a bit of each. they say there's no reason why you shouldn't own physical gold, gold shares, or gold derivatives in the same portfolio. suzanne pratt, "nightly business report," new york. >> tom: material stocks were hot today, thanks to the record price of gold. let's get you updated in tonight's "market focus." the rise in gold was certainly helped out by the minutes from the last federal reserve meeting and the talk about inflation. we can see how this played out in the stock market with the jump in mining stocks. newmont was the leader of the materials sector, gaining almost

4.5%. with this rally over the past three weeks, newmont shares are now at the top of the downward sloping trend they have been in since last fall. gold wasn't the only commodity hitting new highs. silver continues to reach 31- year highs, corn grew to a new high, and live cattle dropped a bit from an all-time high hit yesterday. apple stock saw a fair amount of volatility today. in pre-market action, it was trading around $330, but finished the regular session with just a small loss. this is the past 180 sessions. the drop puts apple back to its march low. the initial weakness was due to the nasdaq 100 stock index undergoing a special rebalancing. under the old weightings, apple had grown to 20% of the entire index. with the rebalancing, apple's

influence drops to just over 12% of the index. as apple's influence was reduced, other big technology stocks saw their weightings increase. microsoft, oracle, intel, and cisco all saw their weightings in the index increased. as the weightings change, managers of funds mimicking the index have to either buy or sell to re-balance their own funds. by the way, intel's 1.1% move was the second best today in the dow industrials. after last night's buyout announcement in microchips, texas instruments g a vote of confidence with shares rising almost 2%. it's buying fellow analog chip maker national semiconductor in a $6.5 billion cash deal. texas is paying $25 a share for national semi, sending n-s-m sky-rocketing-- up 71%, but still below the buyout price. another analog microchip maker, intersil, has a deal with sony

for security surveillance cameras. that sent intersil shares up 8% as volume tripled. one more chip deal of a different sort-- diamond foods is buying the potato chip brand pringles. owner procter and gamble gets $1.5 billion. diamond stock gained almost 7% to a new 52-week high. p&g lost about 1%. talk of a possible takeover helped boost cubist pharmaceutical shares by 15%. the stock broke through resistance in the mid-20s, and on 12 times average volume. the takeover chatter comes a day after settling a patent infringement lawsuit with teva pharmaceuticals over an antibiotic drug. and that's tonight's "market focus."

>> tom: southwest airlines wrapped up inspecting all of its 737 planes today that are similar to the one that made an emergency landing last week after its roof ruptured. the airline found planes five had small sub-surface cracks. meantime, the f.a.a. has ordered airlines inspect three models of boeing 737s after 35,000 takeoffs and landings. that bring us to tonight's "word on the street," "travel. " robert walberg is the chief market strategist at thestreet.com. >> nice to see you, bob. what about the state of travel here. $4 gasoline, and the airline inspections, what do you make of it? >> tom, with some general

fear of oil prices over $100, we're going to see a softer holiday season, similar to what happened in 2008. i don't think that is going to happen. i don't think the "staycation" is going to be a theme in 2011. i think you're going to see people travelling largely because employment is up. and consumer confidence continues to improve. and we have a weak dollar drawing in foreign tourists. >> tom: so vacation is strong for the summer season. you're looking at the house of the mous. disney, d.i.s., off of an all time high in the mid-'40s, what do you have for a price target. >> the price target for disney is 52 over the next 12 months. about a 20% gain. and the reason for that is we continue to expect strong theme park growth, largely due to the growth in tumotourism for the summer season and the rest of the year. and disney has strong growth in the movie areas.

>> tom: and you're going shopping in the hotel space with starwood resorts. h.o.t., better known for its brands westin and sheraton. the stock has come off its highs from the mid-60s, more downside to come, do you think? >> i don't think so, tom. i think what we simply saw was a correction. starting to pop up again. i think as fears subside about a weak summer travel season, i think you'll see the stock move up to the 71 area, and largely due to, again, strong domestic growth. and then the strength in its overseas markets, particularly china. >> tom: mentioning china, and the las vegas sands, despite its name, is doing more and more business in macou, china. what do you expect for l.v.s. in the summertime. >> it is a very volatile stock. after having a pullback, due to the f.c.c.

investigation into the firing of steve jacobs, the former c.e.o. of las vegas sands china, i think the stock basically rallies off of this news, as we see continued strength in singapore china, and rebounding in las vegas markets. i think those result in strong earnings growth. and it runs about $60, to $62 a share. >> tom: what about ownership? >> we actually just own las vegas sands. >> tom: but not the other two? >> not the other two. >> tom: it's word on the street, our guest tonight, robert walberg with thestreet.com. >> susie: here's what we're watching for tomorrow: quarterly results from bed, bath and beyond, monsanto, and ruby tuesday. we'll also see what's happening with mortgage applications, and crude oil and gasoline supplies. and hilary kramer is our "street critique" guest. email your questions to "street critique" at nbr.com.

>> tom: if you bank or shop online, you may have gotten an email warning your email address has been stolen. texas marketing firm epsilon manages customer email services for many name-brand companies. hackers breached its security and got a hold of email addresses for customers of j.p. morgan chase, barclays bank, target, walgreen, tivo, and others. epsilon says less than 2% of its clients were affected, but it doesn't say how many email addresses were taken. lee neubecker is c.e.o. of hacker investigations firm forensicon. he says the risk is when hackers send out scam emails that solicit passwords and account numbers. but there is an easy way to protect yourself. >> first and foremost, i'd encourage everyone from the list of companies that have had a password is not the same as any other passwords from the list of companies. that have had a security breach. >> tom: now, there are more ideas. >> tom: there are more ideas on how to protect yourself on our web site, nbronpbs.org.

>> susie: nearly one out of four homeowners is underwater on their mortgage, meaning they owe more than the house is worth. there are a few programs through banks or the federal government to help homeowners, but their success has been modest at best. here with some different ideas to repair the housing market is john wasik, author of "the cul de sac syndrome."

>> in most places, the home market is like a cat on its tenth life. home sales and prices are dismal. the market is not going to come back without some serious economic catnip. remember last year when congress offered those big tax credits for new homebuyers? bring them back, only sweeten the pot. buying a foreclosed home? get an extra two grand. still living in a foreclosed home? get a rent-to-own deal. underwater on your mortgage? get a one-time tax write-off on lost principal. we have to move on and work off that nine-month inventory of unsold homes. to do that, we have to treat homes differently. look, if you were a company, you'd get to write down a money- losing unit, take an earnings hit, and move on. why not do this with homes? it's about time we treated homes like economic assets and liabilities. we should be able to write off their losses like stocks and bonds. yes, i know-- home ownership is the most sacred part of the american dream. but if homes are truly investments, then we need to stop fooling around and change their tax treatment. i'm john wasik.

>> tom: finally tonight, he started an airline, has set records in hot air balloons, is ready to send tourists into space, and now is heading to the bottom of the ocean. who else but adventurer richard branson? the originator of the virgin brand will head into the pacific ocean's mariana trench in a single-person submarine later this year. that's 36,000 feet down, and is deeper than mount everest is high. and susie, branson is also planning to launch a larger sub that can hold more oceaneering tourists-- for a fee, of course. >> susie: when you hear stories like this, don't you sort of feel you're not doing enough in your life? >> tom: sign up as space tourism or deep see tourism. those are next. >> susie: that's "nightly business report" for tuesday, april 5. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson. good night, everyone. 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 >> be more. pbs.