>> doing nothing on the deficit is just not an option. our debt has grown so large that we could do real damage to the economy if we do not begin a process now to get our fiscal house in order. >> susie: president obama lays out his plans for reducing the nation's debt by $4 trillion over a dozen years. >> tom: the proposal includes changes to the defense budget, health care spending and higher taxes for some americans. you're watching "nightly business report" for wednesday, april 13. 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. captioning sponsored by wpbt >> susie: good evening everyone. it was the president's turn to present a deficit reduction plan today. president obama unveiled his long-term blueprint to reduce the nation's massive deficit by $4 trillion over 12 years. tom, besides spending cuts the president proposed to raise taxes on wealthy americans. >> susie: susie, that tax idea

is a clear difference between the white house plan and last week's republican budget proposal to tackle the red ink. obama says his idea includes $3 of spending cuts for every $1 in higher taxes. and while he wants to slash medicare and medicaid by $500 billion, obama proposes no changes in social security. >> susie: president obama's speech at george washington university was tough and forceful, and as darren gersh reports, it laid out a very different view than the republican proposal offered last week. >> reporter: the president today tried to regain the offensive on the budget, offering what he called a "strong" critique of house republican plans to lower taxes on upper-income americans while cutting spending on popular programs like medicare. >> they want to give people like me a $200,000 tax cut that's paid for by asking 33 seniors to each pay $6,000 more in health costs?

that's not right, and it's not going to happen as long as i'm president. >> reporter: the new spending cuts are a modest increase over what the president offered in january. the big change is how mr. obama hopes to reach a budget agreement. the president called on congressional leaders from both parties to begin holding regular meetings with the vice president, producing a deficit reduction plan by the end of june. to enforce that agreement, the president is calling for a "debt failsafe." that failsafe would trigger automatic cuts in spending and increases in taxes if the nation's public debt has not stabilized by 2014. steve bell was a senior republican senate staffer during the budget battles of the '80s. he says tough budget enforcement like that has been missing for more than a decade. >> you need to have some teeth to cause some pain or the folks on the hill-- either party-- just will really not do it. >> reporter: and house speaker john boehner made it clear a failsafe-- or any other plan that raises taxes-- is

unacceptable. >> i think president heard us loud and clear. if we're going to resolve differences and do something meaningful, raising taxes will not be part of it. >> reporter: whether markets worried about a potential debt crisis are impressed will depend on the details of the failsafe, says m.f. global's chris krueger. >> as an idea, it probably has some merit, but you're really in the very early innings in this and i'm not even sure congress will go along with it. >> reporter: but bell thinks the debt failsafe may help resolve the issue that worries global markets most, the risk the united states might default if congress doesn't raise the nation's debt limit this summer. >> if you don't have a plan in place, but you do have an enforcement mechanism in place, you might be able to get more votes for the debt ceiling than you anticipated beforehand. >> reporter: the president called his debt failsafe an incentive to act boldly rather than kick the can down the road. darren gersh, "nightly business report," washington.

>> susie: joining us now for more analysis on the president's plan, dean baker, co-director of the center for economic and policy research, and doug holz- eakin, president of the american action forum and former director of the congressional budget office. nice to have you back on the program again. >> thank you. >> susie: dean, let me dpin with you. the president today really addressing democrats, says doing nothing on the deficit is not an option. we have to do something. did he sell you on that? >> well, i'm afraid not. the point is the immediate problem facing the economy continues to be jobs. we still have 8.8% unemployment, 25 million people unemployed, under employed or given up looking for work. the deficit at the moment is not a problem. over the longer term it is a problem, as health care costs and everybody know this is. so i give a mixed bag here, it could have been worse, but he still isn't really addressing the immediate problem of the economy. >> susie: doug, how about you? what will your reaction, your

take away on the president's plan? >> this is terribly days pointing. if you look at what he proposed he says let's get four members appointed by each leader of congress. we've already had a commission. another commission won't help. he said let's do an across the board cut on everything except social security, medicare, medicare, that's everything except the problem. and then he's got this notion that somehow he can take the affordable care act, which no one thinks is going to lower health care spending, lean on it harder and lower health care spending. so in the end, this was a speech that was full of theatrics, but not full of details about how we actually solve the problem, very disappointing. >> susie: and the president proposing that you get both side to go into a room and sit down with vice president bide skpen work it out over the next couple of months. there are hundreds of billions of dollars apart on them. so, doug, how do you see this playing out, this debate? >> what this issue needs is presidential leadership, that's what it has needed from the beginning. this is always a partisan town

and only the white house can provide cover to its own party and outreach to the opposing party to get bipartisan deals done. this president has been missing out twice, first the budget, now the speech, it's a lesson they need to learn. have you to put the politics aside, this might an peeling for getting reelected but it won't solve the problem. >> susie: dean, your reaction to that? >> well, he did propose some fairly specific cuts, there are a lot of things i didn't necessarily like. in terms of health care he proposed controlling costs on medicare, medicaid, fairly stringent cost controls, fairly concrete as far as that goes. he proposed big cuts to domestic discretionary spending, $800 billion over the next 12 years, and not something i like. he had twice as much in terms of cuts in domestic discretionary as he did to defense spending, but he put both on the table, they're there. i don't like everything that's there, but that's reasonably specific. now, when you get to more detailed level, that would have to be hammered out. about that to my mine looks like a pretty good outline. >> susie: there will be some things that won't be popular with the american public. a new gallup poll says the

american public is overwhelmingly opposed to big cuts in medicare. so will we see any kind of substantive changes in medicare at the end of the day? what do you think, doug? >> absolutely. the one thing the president said is that doing nothing is not an option. social security, medicare, medicaid, affordable care act, all those cannot survive to the next generation. so we will see changes, and if people don't like the changes that are on the table now in congress, they need to provide an alternative. >> susie: let's also talk about tax increases, doug. the president saying that he wants to see lots in the waive tax increases, the republicans saying that's a deal breaker. how do you compromise on something like tax hikes? >> we've seen this movie before. it's the same tax proposals that the president campaigned on, came into office talking about and then turned around and extended in the lame duck session last december. he's not going to raise taxes until after the election, and when it gets to after the

election we'll see if he does it then. >> susie: a quick question to both of you. starting with you, dean. do you think that we as a country have moved closer now to the idea that we have to do something about our budget and deficit cutting? >> i sure hope not because it really not true. the immediate problem we're in this deep hole because the economy collapsed and the housing bubble collapsed. over the long-term we have to fix health care and that really is the point. >> susie: all right. doug, quickly, in a few words, are we closer to some kind of agreement on deficit reduction? >> of course we are are. the president of the united states was compelled to address the issue today, even if i don't like his proposals we're talking about the right topic and the american people are learning that. >> susie: all right. this is a topic that will continue, we hope to get you both back again. thank you so much, gentlemen. >> thank you. >> susie: we've been speaking with dean baker for the center of economic policy and research and doug holes eke in, president of the american

action >> tom: here are the stories in tonight's n.b.r. newswheel: stocks closed slightly higher after some encouraging news on the economy. the dow rose seven points, the nasdaq added nearly 17 and the s&p 500 up a fraction. big board volume just under 900 million shares, nasdaq was similarly light at 1.75 billion shares. the u.s. economy is showing moderate improvement this spring, but companies are being stung by higher energy prices. that's what the federal reserve finds in its latest beige book report. all 12 regions surveyed show busier factories and increased hiring. another sign of improvement? sales at u.s. retailers rose last month by 0.4%. the slight increase eased concern higher food and fuel prices would cause consumers to but the brakes on spending. still ahead, it's not too late to buy the best-performing dow stock this year. so says our "street critique" guest. she's hilary kramer of gamechangerstocks.com. >> susie: a bounceback in its credit card and investment

banking business helped j.p. morgan chase post a 67% increase in its first-quarter earnings. it's the first major bank to report earnings this season. looking at the numbers, j.p. morgan earned $5.5 billion or $1.28 a share, 12 cents higher than analyst estimates. but mortgage and foreclosure problems still plague the bank. it recorded a $650 million expense for increased foreclosure costs and $420 million in losses related to mortgage repurchases. >> tom: j.p. morgan chase is one of 14 financial institutions in a deal with the federal reserve over botched foreclosure practices. lenders have been ordered to overhaul their foreclosure processes and pay fines, but no dollar amount has been decided yet. as erika miller reports, today's settlement could be a big deal for big banks and the overall economy. >> reporter: the agreement covers just 14 mortgage servicers. that may not sound like a lot, but these are the titans of the industry. j.p. morgan chase, bank of

america, citigroup, wells fargo and u.s. bancorp are among those included. together, all the firms involved hold roughly $7 trillion in mortgages, nearly seven out of r.b.c. analyst gerard cassidy says the deal is a big win for financial firms. >> by lifting this cloud, it is certainly going to give stock investors the ability to say "okay." the dollar amount has been quantified, it's going to occur in 2011 earnings, and as we look about to 2012 and 2012 those charges will not be present. >> reporter: the settlement will also benefit some homeowners facing foreclosure. that's because banks will repay borrowers if they lost money due to bungled paperwork. the firms will also have to hire staff, upgrade document tracking systems and have an independent audit of their foreclosure practices. most big banks temporarily suspended foreclosures during the government's investigation, but now they are likely to resume those actions. that's bad news for some

delinquent borrowers. economist bob brusca thinks foreclosures won't impact the recovery in the housing market and overall economy. >> the economy isn't getting better that rapidly. we're only starting to create some job growth, and so that's why i look at this and don't think it has very widespread implications. i think it a lot better-- the banks are going to be forced to obey the laws and not rush people through some meat grinder foreclosure process. >> reporter: no fines were announced today, but the fed says they're coming. mortgage servicers are also facing a separate investigation of their foreclosure methods by the attorneys general in all 50 states. erika miller, "nightly business report," new york.

>> tom: the major indices saw slim gains after better-than- expected earnings from j.p. morgan and the strong regional economic report from the federal reserve. let's get to tonight's "market focus." stocks were held down by the financial sector after j.p. morgan's results. and while better than expected, they were helped by a drop in the money the bank set aside to cover bad loans. j.p. morgan was among those pressuring the dow. shares here fell almost 1% on pretty heavy volume.

three times over the past year, j.p.m. has been turned back around the $48 dollar level last april, in february and earlier this month. bank of america is the next big bank to report earnings, due out friday. shares were the worst among dow stocks, falling 1.5%. that takes the stock just below some resistance from january and march. now the technology sector had the strength. dell led the way with almost a 5% jump. among the most active. volume almost doubled. storage giant e.m.c. added more than 3%. earnings are due next week. a goldman sachs analyst said he expects better-than-expected numbers. and apple added more than one percent. we learned today its iphone maker, based in china, is considering an investment in brazil, which could help apple in the latin american market. alcatel-lucent continues its recent breakout. shares rallied on strong up more than 7%.

on strong volume. that puts the stock at a new 52- week high and its first close over $6 per share since the summer of 2008. the company continues to get a better reception on wall street. just this week morgan stanley raised its rating to over-weight and s&p revised its credit outlook. now lucent has benefited from higher demand since the beginning of the year for new wireless technology. we saw a huge volume spike in m.g.m. resorts and the shares hopping, up 8.6%. a nice move. the buying breaks m.g.m. out of the range it has been in over the past month. this is the past 90 sessions. trying to get out of this downward trend it's been in. the casino has a deal with the 50% owner of its joint venture in macau china. it gives m.g.m. majority control of the chinese operations after it goes public in hong kong as soon as next month. also breaking out on strong volume? video game retailer gamestop.

best perfroming in s&p today. shares up 6.6%. with this strong rally since early march, it now sits just below its 52-week high set last april. a janney capital markets analyst asks if it's the next netflix with digital video games. and one deal today. graham packaging will be bought by fellow packaging maker silgan for $1.25 billion in cash and stock. graham jumped more than 32%. showing just how much investors like this deal, the buyer, silgan, jumped almost 19% to an all-time high. and that's tonight's "market focus."

>> tom: the best-performing stock included in the dow jones industrial average so far this year may come as a surprise. it isn't an energy company or industrial firm. it's drug maker pfizer. and tonight's "street critique" guest is buying the rally. she's hilary kramer, editor of gamechangerstocks.com. always nice to see you. up 17% so far this year for pfizer of why this one, why now? >> well, pfizer may be up this year, but let me tell you, this was a stock that was $48, it's only $20 now. there's all this value, tom, in pfizer. i've been buying pfizer recently, waiting for an 18-month to two-year play as the companies new c.e.o. starts to spin off some of these valuable assets, buried within pfizer, like the nutrition, consumer product. it's a great stock for any person to hold in their

portfolio, regardless of your objectives, especially with this 3.9% dividend yesterday, you've got some growth, some value, you have some catalyst. you want to own pfizer. >> tom: you mentioned an 18 to 24 month time frame. what's the price target in that time frame? >> we could see $30 if we eventually add up the value of the spun oven it's the. so if you're an owner of pfizer shares you're going to receive new shares. but $30 could be the up side here. i'm telling you, this is a good one and this has been dead money for decades. >> tom: for a long time for pfizer shareholders. a different kind of health care firm, animal health, ahii, february 16, you liked it at 3.80 per share. it got a buy at four and a quarter, do you take the money? >> i am holding on, it was only 11% premium acquisition, there's more up side here i'm expecting. >> tom: some more updates. jim wrote us, asking what's your latest advice on optimer as a result of the april 5 f.d.a. panel approval, what's

when the f.d.a. advisory committee okayed a new antibiotic drug for c-diff infections. you liked on december 1 below 10rks tonight over 12.5. do you buy some more, do you sell some? >> i'm holding my shares, but if you're not in it you could buy and buy for the take over, but you're not going to get a 50%, you're going to have three bucks or so but you can take it. >> tom: trans 1, another firm in the medical field, up 54% from when you physician recommended it. is it time to take some money off the table? january 13 you liked it at 2.82 per share, tonight over 4.5. again, do you take the money off the table and go home and look for new opportunities? >> anyone who is conservative should take their profit and run and redeploy it. in my case i'm waiting for the takeover, i'm waiting for the event, they're in a sweet spot and as there's more announcements of trans 1 of

rebishop burstments with insurance companies you'll see the stock higher. >> tom: of the stocks we mentioned do you own anything? >> yes, i own all these stocks and i'm going to build a position in pfizer. >> tom: if you want to get your questions to us, just e-mail us. streetcritique@nbr.com. or you can send us a note via twitter at my feed, @hudsonnbr, or n.b.r.'s feed. and facebook too. we'll feature some of your questions next wednesday. our guest this evening on "street critique"? hilary kramer with gamechangerstocks.com. >> susie: here's what we're watching for tomorrow: weekly jobless claims and an update on inflation from the march producer price index. also tomorrow, google reports its first quarter results. investors will pay close attention to new c.e.o. larry page to learn more about his plans and strategy for the search engine giant. >> susie: if you think you're seeing more and more ads on the internet pages you're surfing these days, you're right. price waterhouse coopers says revenue from web advertising

reached $26 billion last year, a record. the most popular ad placement, by far, was on search engines. almost half of the total. that growth is being driven by the rising popularity of digital videos and social networking. >> tom: ford motor company says getting parts from japan after last month's earthquake and tsunami is complicated but workable. and so far, the disaster doesn't look like it will dent ford's bottom line. the automaker has idled plants and cut back some paint colors to deal with a parts shortfall. in recent months, ford sales have been on a roll. it outsold rival general motors in the u.s. last month for only the second time in more than a decade.

>> susie: this year's tax season is in the home stretch. federal returns have to be postmarked by monday. but we have a few more tax tips before then. here's kevin mccormally, editorial director at "kiplinger's personal finance," with help on decisions for roth conversions. >> last year was a big one for roth i.r.a. conversions. it was the first time folks with incomes over $100,000 were allowed to convert traditional i.r.a.s to roths. and anyone who did can split the tax over their 2011 and 2012

returns rather than paying the bill with the return due next week. no matter when you decide to pay the tax, you must report a 2010 conversion on your 2010 return, using form 8606. in general, this is an either/or deal. either pay the tax on the full conversion with your 2010 return, or pay half the tax with next year's return and the rest when you file for 2012. but if both a husband and wife converted i.r.a.s in 2010, they have the option of spreading the extra income over three years. the husband can pay the tax on his conversion on the 2010 joint return, for example, while the wife pays half of hers on their 2011 and 2012 returns. you need to crunch the numbers to make sure you pay the smallest tax bill possible. since tax rates are expected to be the same through 2012, most people will be better off putting off the tax bill. whatever decision you make, you can change your mind as late as until october 17.

one final point: if you choose to postpone the tax bill, be sure you check if you need to make estimated tax payments for 2011 and 2012 to cover the tax bill on the extra income. you don't want to be slapped with an underpayment penalty at this time next year. i'm kevin mccormally. >> susie: just a reminder-- if you have questions for kevin, please send them via our website at nbr on pbs.org. but, this his last day answering your emails. so if you need answers, send your question tonight. >> tom: finally tonight, general electric has a tax problem, but not the one you might think. for weeks, the conglomerate's been embroiled in a flap over its low u.s. tax bill. today came word g.e. would send its $3 billion tax refund back to the government. but don't believe it. the official-looking news release announcing the move was a hoax. it was the work of an activist group called "yes men," known for doing this kind of thing. g.e. admits it didn't pay much in taxes last year, but it

didn't get a refund, susie. >> we all avoid the tax man. that's "nightly business report" for wednesday, april 13th. i'm susie guard ib. -- gharib. "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