american cities hit hard by the economic downturn. tax revenues are down. layoffs are up. good evening. i'm judy woodruff. >> ifill: and i'm gwen ifill. on the newshour tonight, looking at jobs, home prices, and foreclosure rates, we use our partnership with patchwork nation to discover which regions are hurt most, and why. >> woodruff: then we assess the surge in health insurance premiums-- up 9% this year-- with health analyst susan dentzer of the journal "health affairs." >> ifill: jeffrey brown reports from a missouri community still picking up the pieces after a deadly spring tornado. >> this new mural tells the story that joplin is the very portrait of widespread destruction and hope in rebuilding. >> woodruff: margaret warner examines heightened tensions between the u.s. and pakistan over allegations of links between afghan terror attacks and pakistani intelligence. >> ifill: and ray suarez takes us to the washington monument, where engineers are rapelling down the walls in search of

earthquake damage. >> we're going to literally by human eyeball have to determine whether those individual cracks need to be repaired. >> woodruff: that's all ahead on tonight's newshour. major funding for the pbs newshour has been provided by: >> okay, listen. somebody has got to get serious. >> i think... >> we need renewable energy. >> ...renewable energy is vital to our planet. >> you hear about alternatives, right? wind, solar, algae. >> i think it's got to work on a big scale. and i think it's got to be affordable. >> so, where are they? >> it has to work in the real world. at chevron, we're investing millions in solar and biofuel technology to make it work. >> we've got to get on this now. >> right now. >> and by bnsf railway. the william and flora hewlett foundation, working to solve

social and environmental problems at home and around the world. and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> ifill: as the nation's economic woes mount, evidence of continuing trouble can be found in cities, where government workers are being laid off, to housing, where foreclosure rates remain high. the combination paints a bleak picture, with only the occasional bright spot. one glimmer of hope for the u.s. economy came in the housing sector which was bolstered by the peak home- buying season. home prices rose for a fourth straight month in most major cities in july. that's according to the kay schiller index of 20 metropolitan areas.

but the housing market, weighed down in part by high foreclosure rates, is still weak. overall home prices are down this year. at the same time, a series of new reports have begun to show how much the economic slowdown has resonated throughout the country. a national league of city survey found that nearly a third of cities, crippled by declining revenues, will be forced to lay off workers this year. two-thirds of city finance officers are delaying or canceling infrastructure projects. and many say they have had to raise fees for city services. while cutting spending on public safety. new census data released last week also show that in many parts of the country household incomes continue to drop in 2010. according to the brookings institution, incomes fell in more than 80 of the nation's 100 largest metropolitan areas. and unemployment levels remain high across much of the country with regional jobless rates topping out well above

the national average of 9.1%. the highest unemployment figures can now be found in the south and the west with the very worst rates located in nevada and california. workers in the beleaguered rust belt are still struggling to get hired, but the jobless rates there have eased somewhat. so what do those numbers tell us about how troubled the economy actually is? for that, we turn to christopher hoene, director of research at the national league of cities, which surveyed municipal financial officers across the country. dante chinni, director of patchwork nation, a reporting collaboration with the "newshour" and others that examines economic, social, and political trends. and howard wial, who directs the metropolitan economy initiative at the brookings institution. welcome to you allment daupt eye chinni, i want to start by just asking you to walk us through this foreclosure map that we have been provided. help us explain what it has to do with the state of the economy.

let's take a look at it over here. >> well, the first thing you notice is there's a heck of a lot of red. >> ifill: which means? >> those red counties are the counties with the highest foreclosure rates in the u.s. those are places experiencing a lot of difficulty. the thing that is most troubling about that map is a couple months ago if you looked at it, the housing problem has been bad for a while but it would have looked less red. the thing that is significant about august, these august numbers is there was an uptick in foreclosures. as we've noted in some of the reporting we've done the uptick has come in some places you don't want to see it. it's come in places the wealthy sub urban areas and metropolis communities we call them and the boomtowns that were once growing and now aren't. why is that significant? because those places have higher than average median household incomes. if they're seeing an uptick in foreclosure rates they'll be less willing to spend. if they don't spend it's hard for the consumer economy to get going. wot a consumer economy going in the united states there really isn't much of an economy at all. >> ifill: a bad circle as it were.

>> yeah. >> ifill: let's talk about unemployment numbers. we've seen the degree to which the unemployment rate is bad news. it's bad in pacific... specific regions of the country. what are we seeing here? >> it's especially bad news in california, nevada, and in florida and some of the surrounding states. and most of that problem begins and ends with housing. housing and things that are related to housing, like construction, was a huge part of the economy of those places before the recession. they rode the housing boom. they suffered from the crash of their housing markets and the rest of their regional economy has crashed with it. >> ifill: there's no way these things are separate. they are all intertwined. >> absolutely. >> ifill: chris hoene we go to the cities. there are all the stresss on the cities which start with housing and property taxes and expand how. >> that line plays out in city finances in a number of ways. first their revenues are now down for several years in a row. that's fueled right now mostly by property tax revenues that

are related to the foreclosure problems and the housing market problems that have just been outlined. they're also there because people aren't spending as much. consumer confidence is low so the revenues are hurting. in response what cities are doing is they're cutting people. they're cutting personnel because that's where aateate low of the money is. they're delaying infrastructure projects because they have control of these major expenditures. and they're drawing down the reserves. the problem for the economy in all of this is that those are all decisions that exacerbate the overall effects on the economy. they're good prudent budget balancing measures but not necessarily the best thing for communities or for recovery. >> ifill: i was looking at your numbers. you've surveyed 272 municipalities, right? 57% said they're worse off now than in 2010. last year that number was 87%. in some ways it's not good but it's not as bad? >> right, right. it may be the lone bright spot in some respects in you're results. what we think it points to is it could be a change in the

curve just like the housing numbers we heard earlier in terms of the summer numbers. it's the fact that things got bad the last couple of years and it's the fact that they may be saying they're not going to get worse. our baseline droppeded a bit. we have a ways to go before we're out of the woods. they're saying things are getting markedly better. >> ifill: you mentioned in passing, dante, that the foreclosure numbers had actually gotten better for a while. they had lost the force of speed. now it seems like they're getting worse again. what happened? what changed that? >> there was... everybody remembers, well, maybe not. this robo-signing problem we had where banks were giving out foreclosure. everybody took a step back for a while. the foreclosure activity cooled off. for a while we've been waiting for the other shoe to drop. like okay. we know there's a backlog. when is it going to happen? the august numbers look like okay we're going to start... they're going to start coming again now. the thing that is most troubling about it is when we

were waiting for that next wave to come through, the question was where were they going to come? if they come in these places it makes things very difficult. one thing about kay schiller, it's good. we'll take any good number right now. the thing that is disconcerting about it is they're july numbers. the kay schiller index lags a couple of months. that was before when everything took a dip in the summer in august. remember those are closings that took place in may, june and july. that's the way it works. which means some of those closings were actually initiated even in like april, may, june. the question is what's the next kay schiller index look like and the one after that? i'm a little disheartened. >> ifill: a little pessimistic about that. howard, let's look at that map again about unemployment because different regions of the country have a different problem with the unemployment crisis. let's look at the southeast. what is going on there with all those brown states down in the southeast? >> as i said before in florida the problem is housing. to some extent that spills over into georgia, but there are other problems.

manufacturing, which has been a bright spot over the last year-and-a-half in places further to the north, hasn't recovered quite as quickly in the carolinas and in georgia. in part because those places didn't suffer from the crisis of the detroit three auto makers earlier and so they're not getting the rebound of the detroit three auto makers now. >> ifill: is there a rebound in the rust belt? >> there is indeed a rebound. even though you see michigan has above average unemployment, some of the other areas of the midwest, you see unemployment near or even below the national average. that's being driven by manufacturing. >> ifill: actually something is coming back. it's just not now. other places are feeling the back wash of the same issues we've been talking about. >> that's right. >> ifill: okay. dante, the increased foreclosures, it seems to me in some way they must deal with some of the numbers we've been hearing about increased poverty. is there a connection?

>> well i think that the increased foreclosures i'm not sure how much they're leading to increased poverty numbers but they're leading to the increased unemployment numbers. i think that it's hard for people to understand. foreclosures are bad in a lot of ways. they're a huge psychological factor in how you spend money. i go to these communities and visit them. you had an entire economy that was built on housing. so i did like carpent rework and somebody else did hvac work. we made a lot of money during the boom and we were trading money with each other. it seemed like things would be good forever. we all bought bigger than we probably should have. the music stopped. and the housing values fell. and the unemployment rate goes up. it's the compounding factor that the unemployment rate gets higher. people can't afford to move anymore so they're kind of stuck in a place where the unemployment is high. unemployment rate is high because they can't move and go some place else for a job. it's a pernicious fact on the entire economy. >> ifill: we had this deadly merry go round of bad economic

news especially in cities which do have a to deal with a disproportionate number of the urban poor. what can they do to try to get off of that? >> a lot of what they do is try to connect different sectors of the economy with other parts that might be growing. a lot of what cities need to do in the case of these foreclosures or the vacant properties they're dealing with is they need to map them and know where they are. they need to then track that with where the people that have lost jobs are and looked and see where there might be some job growth or industry growth where that might be occurring. so if there's some manufacturing going on and connect people with skills to sectors that might be growing. connect people that need housing to places where there might be housing. a lot of it is about putting the right people in the right room together at the right time. >> ifill: there's there government job loss too? >> absolutely. since the peek of local government hiring in 2008, cities and counties and other local governments around the country have cut about 550,000 jobs. we likely have a little ways to go yet before we turn the

corner. in some respects their own budget-balancing decisions are only exacerbating the larger problem nationally. >> ifill: is there a bottom in sight? if so, who is poised to recover first? >> well, i don't see a bottom for the government budget cuts in the short term. right now it looks like the places that are recovering the most strongly are some of the places that weren't hit that hard during the recession to begin with. so the energy belt from texas up through north dakota, which is still riding out an energy boom, and hadn't suffered big government job cuts until much more recently. then some of the outer parts of the northeast off the coast you don't necessarily see that on the map because you have states like new york and pennsylvania that mix different regions but they also are recovering pretty strongly.

and even... this is before michigan the upper midwest even though they have a long way to go before they get back to where they were before the recession, they have a huge hole to dig out of. they're recovering pretty strongly right now on the strength of the rebound of the domestic auto industry. >> ifill: dante, where do you see rebound possibilities? >> i don't know. (laughing). >> ifill: oh, really? >> when you look at it right now, i just feel like we're going to be... you know, it's interesting talking about what's happening in the cities. yeah, we're not declining anymore so maybe they feel it's not getting any worse. it feels to me like we're going to be bumping along here for a while. i don't know what pulls us out. the one thing that does appear, places around... with many educated people and people in the high-tech sector seem to be doing okay, fairly well. i mean if you look around georgia, atlanta may not be doing that great. fulton. but the counties around there are still doing okay. counties around columbus are doing okay. you need places with tech, education, health care. those places probably with strong economies in those

areas will do a little better first. >> ifill: dante chinni, howard wials, thank you both very much. >> woodruff: still to come on the newshour, health insurance premiums on the rise; joplin, missouri, on the mend; pakistan's deadly terrorist network; and the washington monument closed indefinitely. but first, the other news of the day. here's hari sreenivasan. >> sreenivasan: despite doubts about the national recovery, the mood on wall street was decidedly upbeat again today. the dow jones industrial average gained nearly 147 points to close at 11,190. the nasdaq rose 30 points to close near 2547. european markets also scored their biggest gains in 16 months. investors took heart as leaders from germany to greece to britain insisted they're working to resolve the debt crisis. in berlin, german chancellor angela merkel said her government will do whatever it can to help greece get out from under its cloud of debt.

>> the all important thing is-- and we will provide every assistance that is is wanted from the german side-- that greece wins back confidence, that we get out of this terrible development that there is bad news every month, and that the impression arises on the markets that greece is on the right track. >> sreenivasan: merkel met later with the greek prime minister, george papandreou. he guaranteed that greece would meet its commitments, through new austerity measures that >> is there any hope were we to ultimately succeed? include pension cuts and taxes. >> sreenivasan: as part of that effort, the greek parliament approved a new property tax. it is being added to electricity bills, so those who refuse to pay the tax could have their power cut off.

the u.s. congress has avoided a government shutdown for now. last night, the senate approved a deal to keep federal agencies running through november 18. the house is expected to approve that bill next week, when it returns from a recess. a smaller one-week spending bill is covering things until then. an impasse over disaster aid ended monday when the federal emergency management agency said it has enough money to finish out the fiscal year, which ends friday. rebel fighters in libya gained ground in moammar qaddafi's home city today. tanks pushed into the eastern outskirts of sirte ready to do battle with gadhafi loyalists, who continue to offer strong resistance. the rebels also set up checkpoints to arrest any of qaddafi's troops who try to slip out with fleeing civilians. the government of israel has approved construction of 1,100 new housing units in a jewish enclave in jerusalem. at the same time, prime minister benjamin netanyahu ruled out a new freeze on settlement. the chief palestinian negotiator, saeb erekat, said the decision amounted to "1,100 nos" to the resumption of peace talks.

and in washington, state department spokesman victoria nuland joined the criticism. >> you might-surprised that we are deeply disappointed by this morning's announcement. we consider this counterproductive to our efforts to resume direct negotiations between the parties. we have long urged both parties to avoid actions which could undermine trust, including in jers salem and will continue to work with the parties to try to resume direct negotiation. >> sreenivasan: the israeli announcement came just days after the palestinian national authority asked to be recognized as a full member state at the u.n. in the philippines, a powerful typhoon killed at least 16 people and caused catastrophic flooding. the majority of the deaths were in the sprawling capital city of manila, hit by downpours and winds gusting to 93 miles an hour. the downtown was flooded, including hotels and the seaside american embassy. the philippines is hit by about 20 pacific storms and typhoons each year, including one that killed 500 people in 2009.

more than 270 people were hurt today in a subway crash in shanghai, china. a moving train rear-ended a stopped train during a signal failure. emergency workers rushed to help the injured while others were able to evacuate the cars. above ground, police set up road blocks to clear a path for ambulances as people were brought out on stretchers. it was the most recent in a series of problems for china's growing transportation system. those are some of the day's major stories. now, back to judy. >> woodruff: and to the rising cost of health insurance, which appears to be surging once again. a new survey of businesses found that annual premiums for a family of four climbed to $15,000 this year. the kaiser family foundation, which releases the annual survey n increase of 9%, upurance, from 3% last year. the report also documented a dramatic decade-long rise for both employers and employees. annual employee contributions

now total more t ave that's more than 130% higher than back in 2000. the survey also found that to cut costs, more employers are enrolling in high-deductible policies that cut annual premiums, but require employees to pay more out of pocket for here to tell us more about all this is susan dentzer. she's the editor-in-chief of the journal "health affairs," and a health analyst for the newshour. susan, good to see you and have you with us again. >> great to be here, judy. >> woodruff: let's start with a clarification. we're saying that the premiums that employers pay went up 9% in the last year. does that mean that employees are paid that much more? >> actually what went up was the total cost an employer's health coverage package for an employee. all of that went up 9%. we know that, as you said, on average many employees will be paying only about $4,000 or so

toward that $15,000 cost for the coverage package. for about 50% of american workers, you have employer coverage, they are paying 50% of the amount of the coverage. so actually what we see in the most recent year is that employers were picking up more of that cost increase than employees in this particular year. that's not always the case but it was the case this year. >> woodruff: what's behind the increase? >> there are lots of things that go into this seeming cauldron of higher health costs. one issue clearly is that we just have more chronic disease. chronic disease cost is driving about 75% of our total health spending as a country. we have now lots of diabetes, lots of cancers that are now considered increasingly a chronic disease. of course the biggest won is cardiovascular disease. we know that we pay more than other countries in terms of prices for health care.

so that's causing some of the increase. in fact, there was an increment in drug prices, inflation, that.... >> woodruff: the costs are going up. >> underlining health care costs are a big share of this. there is some effect from higher health insurance premiums, but it's not the biggest driver. the clearest way you can see this is you think about large employers in particular. most large employers who are employing 200 people or more don't usually buy insurance technically for their workers. they pay those health could haves out of their own pockets. what's called self-insured. well their costs are going up just as fast as those costs of people who actually have insurance policies. so that's what tells you that it's really not insurance that is driving most of this increase right now. it's really the underlying cost of health care and health spending. >> woodruff: as we mentioned it's part of a trend. we're seeing it go up over the

last decade. it's not knew but it seems to be a big increase. >> it was clearly a big increase. we've had a couple of years where the increases had been much more moderate. it should also be said that there are signs on the horizon that there's downward pressure on health spending and on insurance. for example, the white house has pointed out that the federal employees health benefits plan which covers about 8 million federal employees and their dependents, their cost for the next year are only going to go up about 3.8%. so we're seeing a kind of a mix of signals with kaiser surveys looking back over the last year when we look forward we see some downward pressure on health spending that could actually be quite beneficial. >> woodruff: when you see this notion that almost a third of covered workers now in high deductible plans that increasing employers are saying, okay, your premium may be less but you're going to have to pay more an individual treatment that you get. >> actually in many

circumstances it's the employees themselves opting for those high deductible plans and for a very simple reason. they cost less. the premiums are lower for that. than more comprehensive coverage. and for 17% of covered workers they actually have not only a high deductible plan. they have a health savings account or something like that associated with it so they can actually put dollars aside to pay for health expenditures. in some instances it's very much the employee deciding, hey, i can get a break on my health insurance costs by going into these policies. why not take it? >> woodruff: i hear what you're saying about why all this is happening. of course there's political noise today as well. republicans are out there saying, well, aha, this is connected to the obama administration's new health care law. the white house is saying no that it has something to do altogether with pricing. i mean, how much is the new health care law a factor or is it? >> it's a minimal factor. again if you look at just the

insurance piece of this, when... the clear thing we know has happened in the past year is that 2.3 million more young adults are now covered. they got coverage through their families, their parents' insurance plans typically because of the specific provision in the affordable care act. which now enables individuals who are not offered an employer coverage themselves, young adults can actually stay on their parents' policies up to the age of 26. we know that that was one clear impact of the affordable care act. young adulls are some of the cheapest people to insure. >> woodruff: because they're healthy. >> because they're relatively healthy. that really could not have driven the cost increase. the best guess is maybe, maybe 1 or 2 percentage points of this 9% increment was possibly due to the affordable care act. but more likely it's these other factors that are driving the situation. >> woodruff: quickly, susan,

all this takes place with a back drop of the idea that there are less overall employer-sponsored health care coverage, that that is less and less a part of the health insurance picture. that fewer employers want to do that. it's my understanding that's a trend that's taking place even as we focus today on the cost of employer-sponsored care. >> that has been a long-term trend especially for small companies. if you're working in a company that has 200 or more employees, about 97 to 99% of those firms continue to offer health insurance. if you drop down to very small companies, three employees, nine company... employees, that coverage has been eroding. last year in the same survey there was a big uptick of coverage that seems unexplainable. that's disappeared. now we see again coverage for the smaller firms has been eroding. now we are several years away from the full implement takes

of the affordable care act. we'll have to see what happens when subsidies begin to kick in and other things take effect to broaden insurance coverage. >> woodruff: a lot of factors in play. we're glad to have you here to help us understand it. susan dentzer, thank you very much. >> thank you, judy. >> ifill: now, a missouri city struggles to come back after being wiped out by a deadly tornado just four months ago. jeffrey brown reports. >> i just want to overlap it just a little bit. >> brown: the story of joplin, missouri, a mural in progress. its founding in the 1870s as a small mining community to a city 50,000 strong of families and faith. and there's this. a moment in history that changed everything here when the trees fell and the winds from a gigantic tornado blew down about a third of the town. leaving residents, old and

young, reeling and hoping for a brighter future. >> i just hope that all the damaged areas will be rebuilt and everyone will be able to have a good home again. >> brown: the tornado struck at 5:40 p.m. on may 22. it killed 162 people and destroyed or damaged some 7500 buildings. four months later, residents are still literally picking up the pieces. >> it certainly is clean compared to what it used to be. >> reporter: jean cage, a business owner and chairwoman of a citizens commission to rebuild joplin, took us on a tour. are people going to rebuild? >> you know, it's an excellent question. in the beginning i think everyone said, i want to rebuild my house. and now people are faced with the reality that what they wanted, you know, their neighborhood and their friends may not be in that same spot.

>> brown: if there's a symbol of what happened here and what could come from it, it's this. the mangled wreckage of joplin high school. the once proud home of the eagles a daily reminder of the incredibly destructive force of the storm. but the school has also come to stand for hope. and what hard work and good will could bring this city in the future. that hope begins here, just two days after the storm with more than half of joplin's classrooms wiped out, superintendent c.j.huff made a promise that the school would start on time in the fall. and it did. with the new joplin high in an abandoned department store. >> it became a rallying point for the community. we a lot conversations about how we could make that happen. we got everybody intensely focused on a fwol. >> brown: you set a high bar and the whole community is watching. >> and an entire nation was watching. >> brown: it's a temporary space but one designed as a blueprint for what a high-tech

educational experience could be here. it didn't hurt that each student was given a new laptop computer, a gift from the government to the united arab emirates. >> we've been talking about 21st century learning, skills and high school. and we saw this as a great opportunity to test drive a new school prior to actually building a permanent school. >> brown: emma cox who lost her house as well as her school said getting back to class was a return to normalcy, but one with a twist. >> we're going to be the first class that graduates from a mall. i mean i've never heard of anything like that. i mean i guess there's a first time for everything so we're just very excited to set the standards high. >> $2 is your change. >> brown: many in the business community were also determined to return to some sort of normalcy. david's pharmacy was completely destroyed on that sunday in may. but just six days later, he had leased a new space,

installed shelves, ordered inventory and opened his doors for business. >> you had customers that were dependent on me to get up and go as quickly as possible. i just couldn't see sitting around. it was, i think, vital for our business not only for my personal business interests but for the community and my customers as well that, you know, we get up and go. >> brown: but not everyone has been so fortunate. we met ray and terry malcolm at the empty concrete slab where their day care center had stood for 20 years. they say a tangle of regulations has made it hard to rebuild. >> red tape. >> brown: red tape. >> red tape is exactly what this is. we wanted to get started really quick, and it's been a matter of deal ing with the insurance companies which has been a nightmare. >> our first playground was massive. we built it by hand. now you can't do that. they don't want wooden items because they can't be sanitized.

and now just for a slide alone, $36,000! and that's... we don't got that. >> brown: money, of course, and more than most insurance settlements will provide, is one of the huge challenges going forward. the city has already received $175 million from fema for emergency rebuilding. but it will need much more for the long term. at one of the city's leading and now destroyed institutions, st. john's mercy hospital, jane cage told us that future aid is critical. >> this is a hospital that was built in the '50s and '60s. it's not the way health care works in the 21st century so we have a chance to build a hospital that meets needs today. >> brown: that's going to take money. that's going to take a lot of resources. >> it is going to take a lot of money. i will tell you that i believe everyone in joplin is working as hard as they can work. we're not waiting for help.

but we know that it's a task that's beyond us. we can't do this all ourselves. >> brown: in the meantime the emotional healing continues. >> and this was.... >> brown: oh, boy. >> this was his office. >> brown: walking through her severely damaged home, joan mueller said the storm left so many here confused and unsettled. >> it's just been an amazing sense of loss. even for people who didn't live right there in that zone. you come across things that don't make any sense. you know, the landmarks are gone. it gets you. it gets you right here. >> brown: one way people learn to cope, she says, is by sharing their stories. as the director of joplin's 60-year-old center for the arts, mueller is giving them that chance. look at this. >> pretty amazing. >> brown: she's asked people to send objects and mementos

for a planned exhibition that will tell the story of the storm. >> the first thing that came in was this bible. this leather bound bible. it was a gift from the husband to the wife on their wedding anniversary. their home was completely obliterated. they went back and found this. we expect to have poignant things, humorous things. it all will lie in the stories that we are told about these items. >> brown: the center has also mounted an exhibit called "on the other side" featuring both professional and amateur artists who have created new work in response to the tornado. mueller's own piece reflects on the loss of her cherished family photos. many works depict the stripped and deformed trees left in the twister's wake and there's this. a sculpture of items collected in and around the destroyed childhood home of evelyn.

do you remember the first thing you picked up here. >> the first thing i picked up was this over at my parents house from their clock. >> brown: monopoly houses, an old 45 record. pieces of neighborhood life. evelyn duval hardly considers herself an artist. she works at a mental health center. this work, she says, came from need to pick up those pieces and pay tribute. >> i had bags full of stuff. it was like, you know. and then the idea came. of what to do with it. >> brown: and then it became a work of art. >> and then it became a work of art. >> brown: did that surprise you? >> it surprises me a lot. it does. >> brown: that's not who you are. really or who you think of yourself. >> that's right. >> brown: and she says the act of creating became her own path to healing. >> it helped me cope with what had happened. i think that that's important. we all have to find our own way to deal with it. >> brown: emotional and

physical scars everywhere. but planning for the future is now in high gear. both st. john's hospital and joplin high hope to have new buildings by 2014. >> woodruff: next, the escalating tensions between the u.s. and pakistan. margaret warner has that story. three bloody recent attacks in afghanistan claimed many lives, but the greatest casualty may be the u.s. alliance with pakistan. in late june insurgents laid siege to kabul's inter-continental hotel killing 11. earlier this month, a truck bomb wounded 77 u.s. troops in eastern afghanistan. days later back in kabul, insurgents fired grenades and automatic weapons at the u.s. embassy and nato compound. 16 died in the 20-hour

assault. against this back drop last week admiral mike mullen chairman of the joint chiefs of staff went to capitol hill and dropped a bombshell. >> the network for one acts as a veritable arm of pakistan's internal services intelligence agency. with i.s.i.support, they conducted and planned that truck bomb attack as well as the assault on our embassy. in choosing to use violent extremism as an instrument of policy, the government of pakistan and most especially the pakistani army and i.s.i. jeopardizes not only the prospect of our strategic partnership but pakistan's opportunity to be a respected nation with legitimate regional influence. >> warner: it was a u-turn after years of u.s. reluctance to publicly accuse pakistan's military and intelligence service of working with anti-u.s. anti-afghan terrorists.

his testimony drew an angry response. the next day pakistani defense minister challenged the u.s. to produce evidence of any link between the hakani terrorist network and the i.s.i. interior minister did the same on sunday. >> we have no relations with the hakani network. they are in afghanistan. if they are operating, they are operating from afghanistan. if anybody has got any evidence to this effect, please bring it to us. we are cooperate ing with the u.s. >> warner: u.s. assistance to pakistan totaled nearly 4.5 billion dollars last year, more than half it going to the military. but trust between the two has been waning. in may president obama chose not to alert islamabad before sending u.s. special forces to find and kilo osama bin laden at a safe house near a pakistani military academy. today a report surfaced in the new york times on a 2007

incident saying pakistanis meeting with u.s. military officers in a border village turned their guns on the americans, killing one and wounding three. now there are growing calls for a tougher line on pakistan from people like zelmay, former u.s. ambassador to afghanistan. in an opinion column this year in "newsweek" and the daily beast he wrote, "washington needs islamabad to change its behavior and change it now. if pakistan fails to cooperate, washington must cut off assistance to its military and intelligence services." the pakistani prime minister remains defiant. meeting today with a chinese official, he warned against unilateral american action to hunt down hakani militants inside pakistan. late today white house press secretary jay carney added to the warnings saying the pakistani government needs to take action to deal with the links that exist there. carney also said we are obviously always reviewing our

aid programs. when asked if the u.s. might curtail its aid to the pakistani military over this. for more we turn to jack keane, army vice chief of staff when the u.s. invaded afghanistan in 2001. he now has his own consulting firm. and nasr, a professor of international politics at tufts university fletcher school. he also served as senior advisor to u.s. special representative for afghanistan and pakistan richard holbrook from 2009 to 2011. welcome back, gentlemen. both of you. beginning with you, most americans know what the taliban is but explain if you could what is this hakani network and what is its objective? >> the hakani network was born actually during the afghan resistance to soviet occupation of that country. it was one of the mujahadin factions. after the end of the soviet occupation it gradually became quite a vicious lethal insurgent group that in recent

years has developed ties with al qaeda and also has a tight relationship with the taliban. it is situated in sanctuaries in north waziristan which is in pakistani territory and then operates from there into eastern afghanistan and then now as we can see all the way to the capital kabul. >> warner: what is its aim? >> to fight the u.s. presence in afghanistan and also to promote the taliban agenda in that country. first in southern afghanistan controlling its own territory in the east but also to destabilize the karzai government. >> warner: general keane, first of all, is it a given that what admiral mullen said is true, that the hakani network is supported by pakistani military and i.s.i.? if that's the case why? why when pakistan is cooperate ing with the u.s. at least ostensibly in the whole afghan conflict, is it funding such a really vicious group that really makes or has a real skill in targeting u.s. and

afghan forces? >> well, the pakistani military ol garky has been supporting not only the hakani network whose sung areas in pakistan but also the taliban whose sanctuaries south of kandahar also in pakistan. this has been a known fact that the military leadership of pakistan has been complicit in aiding and in abetting the hakani network and the taliban for years. why are they doing it? they're doing it because they have never accepted the fact that the united states is serious about its commitment to an afghanistan. they've been very concerned geopolitically about what would happen with a weak government in afghanistan which they see the karzai government unduly influenced by india, they're concerned about it. >> warner: their arch rival. >> that's exactly right. eventually the taliban regaining control as the united states exits.

so they have had their strategic interests here as far as they're concerned is to minimize the risk of that undertaking. >> warner: why did admiral mullen-- as you said, this has been known for years. we talked about it privately. why did admiral mullen come out and say this publicly. >> first of all what admiral mullen said was only the latest of a number of public complaints by the united states about pakistan's alleged support for extremist groups. >> warner: blunter than anything. >> blunter and at a hard level in front of the u.s. senate. it has a lot more weight associated with it. this is a major shift in u.s. policy because as you mentioned none of this is is new. we knew it all along but we always calculated that you have to deal with this issue privately on the assumption that we need certain basic stability in pakistan-u.s. relations if we are to achieve even the minimal goal that we have in afghanistan. now the united states has decided to actually shift its calculus and deal with this issue publicly. therefore you have these

public statements by high-level american officials. >> warner: so what, general, can the u.s. do about it? the one, what do you think of admiral mullen saying this publicly? where does this lead? two, the u.s. has been saying for a long time pakistan has to do more. what can actually the u.s. do now? >> well, first of all, i think it's a recognition that the relationship is changing. we've tried to what i call the so-called soft approach. which is confronting the leadership, pakistani leadership, with this evidence for a number of years. they have been denying it for all of those years as well. i mean, they've been lying in our face just like the soviets lied in our face for years. the reality, i think, began to fundamentally shift after we took osama bin laden down. and the harsh reality, i think,, the leaders don't talk about it publicly. but the fact of the matter is that military ol garky was shielding bin laden for five years. it seems pretty obvious although we may not have the

case on it. that made us begin the shift. i think the other thing that is causing the shift in policy, frankly, is from a military perspective and the department of defense perspective the president's what i consider premature withdrawal of surge forces puts at risk the mission that we're conducting right now against the network. it puts at a premium pulling pakistani support from that network or conducting military operations against that sanctuary in pakistan. i think these realities are forcing the shift in our policy and why you have such a public declaration by a high government official. >> warner: where does the u.s. go from here? >> i don't think there is a very clear game plan. as general keane said, we have already made a decision to withdraw our troops which removes our leverage. and at the same time the pakistanis are not likely to respond to pressure because the stakes in afghanistan for them is very high. what they want is to be included in our thinking about

how we're going to finish this war and what will replace u.s. departure from afghanistan. until they get that access, which they may not be willing to give it to them, they're not likely to change course. the problem is in my opinion is that everything that we have calculated about afghanistan-- our strategy up to date and even our exit strategy-- has been premised on the assumption of certain stability in u.s.-pakistan relations. if that stability isn't there, as we are seeing that it's collapsing today, that puts the question, a lot of the assumptions that we have going forward in afghanistan. this is not only about u.s.-pakistan relations. it really puts the question, the u.s.'s position in afghanistan. we have to rethink our schedule of exit. our ability to exit. if we are going down a path of con tron confrontation with pakistan. >> warner: do you agree that taking this path puts the whole schedule at risk in afghanistan. >> it does. i also agree that it's time to really confront the pakistanis

about this kind of behavior, what it's meant for us. frankly it's quite outrageous. in terms of the lives we've lost as a result of this complicity and how it's protracted the war. i think we should be really put some conditions on the table to effect their behavior. i'm not suggesting to give up on the relationship. i'm just suggesting we will change the terms of the relationship. >> warner: be more specific. are you talking about the aid? >> i'm talking about aid. i'm talking about the influence we have with the world bank and the i.m.f.and our influence with other countries in the region to include saudi arabia and other countrys that have influence over pakistan that we start to turn those wheels. to gain some influence over them. the soft approach that we've been trying for years has failed. >> warner: do you think the u.s. has this leverage? >> the u.s. has the leverage but we also have to be clear what is our objective. many of the things that the general mentioned requires us to stay there, to have stamina, to have perseverance and see

this through. pakistan will more than likely not respond in the short run to pressure of aid or diplomatic pressure. we have to be willing to apply this pressure over time. we also have to be clear what is our short-term objective? is it to get out of afghanistan quickly? and with relative degree of quiet and stability or is it to fundamentally change pakistan's behavior so that that region will have peace and stability in the long run? and these two things are not necessarily on... within the same policy framework right now. i think we have to choose. >> warner: you don't think we've gone down the path of no return. >> with pakistan? >> warner: with what mullen said? >> i think we are in a very different phase with pakistan. it's very difficult to undo what has happened so we have opened something we have to see it through now. >> warner: thank you both. >> thank you. >> ifill: finally tonight, a

national landmark, shuttered indefinitely by last month's east coast earthquake. ray suarez tells the story. >> suarez: high atop the washington monument today, engineers rigged ropes so they could rapel down the sides of the structure. tourists watched as they used a hatch at the pinnacle 550 feet up with windows on the observation deck just below to gain access. u.s. park service ranger gordie kito was one of those watching the delicate operation. >> what they will do is rig the ropes from the upper part of the pyramid on swings that are up there. the evaluators will then exit out of the windows that are below the pyramid. they'll ascend the ropes to the upper part of the pyramid which they're rigging over to a lower system and then lower themselves down while doing the evaluation of the exterior. >> suarez: the engineers are members of the difficult access team from chicago engineering and architectural firm wise, jany, elsener.

their mission to make meticulous checks for cracks and other damage to the marble exterior from the earthquake that shook the nation's capital last month. bill line is also with the national park service. >> we're going to literally, by eyeball, the human eyeball, have to determine whether there are any small cracks or shards of stone or shoals is what the terminology is, that could expand into larger cracks in three years, five years, 15 years, 20 years from now and make a determination as to whether those individual cracks need to be repaired. >> suarez: yesterday for the first time the public got a look at what it was like inside the monument as the quake hit. the park service released video from a surveillance camera in the observation deck. it captured the entire structure shaking violently as terrified visitors fled for safety from debris falling from the ceiling.

the ranger inside the observation deck that afternoon:. >> the biggest indicator was that the metal apparatus to the elevator began to shake. it was moving before the building was even shaking. i had never seen that before obviously. then i began to feel the floor under my feet shaking. my first thought was i'm going to run, get out of here. then i realized i'm responsible for the 20 lives that are around me right then. so my next thought is i don't know if it's an attack. if it's an earthquake, whatever it is we need to be at the bottom. that will be the safest place. >> suarez: when the ground started shaking back in august it posed pretty big challenges to one of the world's best known buildings. more than 130 years old it wasn't built to any modern seismic code. it's many times taller than broad at the base so swaying was going to be a problemment the exterior is marnl. most of the interior granite. two of the materials not known for their flexibility. on monday national mall superintendent said first

indications are the damage was relatively slight. >> the good news is the monument is structural sound and is not going anywhere. it is a testament to the original builders that the monument has withstood not just this earthquake but an even larger one in the late 1800s. they obviously knew what they were doing. the better news none of our visitors were hurt during the earthquake. >> suarez: just the same, the monument has been closed since the earthquake hit and will stay closed indefinitely. leaving more than a few visitors disappointed. >> with our family, me explain to go the kids, it's kind of hard. >> suarez: the park service says it's all in the interest of public safety. stephanie meeks, president of the national trust for historic preservation, agrees that safety has to come first. >> the other thing that i would hope that comes out of this is sort of a reawareness

on behalf of all americans about these significant structures, that we all sort of take for granted. they're in our backyards here in washington d.c. but really important national monuments across the country and remember that they are vulnerable to natural occurrences like this and that they need our very best care and support. >> suarez: the rapeling operation is expected to last about five days. park service officials hope to have an in-depth assessment of the damage by next month. for now there's no timetable for completing repairs and reopening the washington monument to the public. >> woodruff: again, the major developments of the day. home prices rose for a fourth straight month in july, but a new survey of american cities found many are laying off workers and canceling public works projects. stocks gained around the world on new pledges of assistance to heavily indebted greece.

the dow jones industrials rose more than 140 points. and a typhoon in the philippines flooded the capital, manila, and killed at least 16 people. find more online about economic disparities across the country. hari sreenivasan has a preview. hari? >> sreenivasan: explore maps and analysis from patchwork nation on the rundown blog. and find two more takes on the economy on paul solman's making sense page. read a q&a on social security's future and explore the changes in home prices in 20 metro areas. plus the conversation continues on the spike in health care premiums. we talked to a reporter from kaiser health news for details on the numbers. that's on our health page. all that and more is on our web site, newshour.pbs.org. judy? >> woodruff: and that's the newshour for tonight. on wednesday, we'll look at the politics and the economics of social security. i'm judy woodruff. >> ifill: and i'm gwen ifill. we'll see you online and again here tomorrow evening. thank you, and good night. major funding for the pbs

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