on the broadcast tonight, cash for clunkers. the government car program so successful it nearly went broke. tonight the dash for cash at america's dealerships. how long will the money last? hitting bottom. new numbers show the recession may be nearing an end. what about jobs? flu fears. why some think a nasal spray may be the answer. making a difference, how a

loyal battlefield friend is helping to heal america's wounded soldiers. helping to heal america's wounded soldiers. "nightly news" begins now. captions paid for by nbc-universal television good evening. i'm david gregory in tonight for brian williams. it has been called the great recession. tonight there is evidence it may be easing though for a lot of americans this doesn't feel much like recovery. the government reported that the economy shrank less than expected in the second quarter of the year. even as the obama administration scrambled to restore funding for a rebate program called cash for clunkers which had become so popular among consumers it almost ran out of money. we'll start there and begin our reporting with kelly o'donnell on capitol hill tonight. kelly. >> reporter: good evening, david. the white house and congress had an unusual problem today. they had a government spending program that was popular and

then suddenly it was in trouble. today congress tried to give cash for clunkers a fill-up. today with unusual speed, congress found another $2 billion to keep new car sales coming. >> the ayes -- >> reporter: rushed vote after the announcement last night the popular car incentive program, cash for clunkers was out of cash. today the president said it had exceeded all expectations. >> it is working so well there are legitimate concerns that the fund in this program might soon be exhausted. >> reporter: concern that had top white house officials scrambling. >> i can tell you there is a flurry of activity this morning working with the agencies, working with congress to make sure there is the funds for it. >> reporter: the plan -- move money already set aside for a different project, renewable energy research, and use it now to extend cash for clunkers. >> we're working that through. hope that is going to continue. >> reporter: the program gives consumers up to $4,500 to buy a new more fuel efficient car when

they trade in an old gas guzzler. officials expected 250,000 new cars would be sold but were stunned the demand drained the program in less than a week. so today the house tripled the size of cash for clunkers and notably democrats and republicans voted for it. >> finally we have a bailout not for the big businesses, not for wall street, but a bailout for main street. >> it is the one thing that we have done here in this congress that is absolutely working. >> this is a win-win-win for our country. one of the great programs to create jobs. >> most of the naysayers are even admitting it is the best $1 billion in economic stimulus funds that the federal government has ever spent. >> reporter: but there are critics who argue taxpayers have already done too much, especially for the auto industry. >> maybe we should have a cash for cluckers program and pay people to eat chicken. then after that we can have a program to pay people to buy tvs, and then a program to pay

people to buy lumber. >> reporter: well next week's senators get to weigh in. we already know it will be a harder sell. david we can tell you that democrats and republicans on the senate side also raise questions about spending another $2 billion for this program. david? kelly o'donnell on capitol hill. kelly, thanks. because nobody knows how long the cash for clunkers will last, the rush to cash in is on and some dealerships are overwhelmed by buyers who want to trade in and trade up. nbc's chris jansing in los angeles at largest ford dealership in the world with more on that. chris. >> reporter: thank you very much, david. behind me are some of the 150 cars already turned in here at the dealership, an indication of how successful the program has been. but it has also been chaotic with dealers and customers wondering how long until the money runs out. sharon bellio was back at the dealership today after a long night last night. >> it was a madhouse.

it was crazy. >> thank you for holding. >> reporter: phone lines have been jammed with customers. >> thank you for calling -- >> reporter: nervous customers anxious to buy cars before the money runs out. >> last night was a big night with the confusion if the program was on or off. we did 30 vehicles last night and had people here until 3:00 in the morning. >> reporter: business based on promises from the president. that if you sell it, the money will come. >> sell some cars. >> let's go! >> reporter: reimbursements to dealers have been slow. enrich. que gomez turned in his gas guzzler yesterday and picked up his new car today. >> very excited, very happy about the deal i just made. >> reporter: buyer number 50. and toyota is worried because they're on the hook for more than $200,000. >> we are warning dealers that you are potentially assuming some risk if you do a cash for clunkers transaction. >> reporter: the fed admit the

system has been overwhelmed. >> nothing could have prepared us for the extraordinary demand on the part of the american people. >> reporter: or prepared dealers wading through 136 pages of regulations. >> so for the average car salesman that's a big chunk of time to read a bunch of legalese and comprehend it. >> reporter: on the heels of the worst sales slump in a quarter century, most dealers are ecstatic. >> thank you. >> congratulations. >> it's been great. we have done over 250 units so far. >> a flood of traffic and people doing car deals has been outstanding. >> reporter: for sharon bellio -- patience paid off. >> i love it! it's pretty cool. >> now dealers are hoping theirs will too. and car dealerships all around the country are gearing up for what they expect will be a very busy weekend. but there is an unanswered question, if cars for clunker a one-time shot in the arm or start of a revival for the u.s.

auto industry. david. chris jansing in los angeles. thank you. turning to the broader economy and the report on gross domestic product, a key indicator of where things stand. it turns out, things were a lot worse than first thought at the beginning of the year. but the news from this spring is quite a bit better. cnbcs trish regan has our report. >> reporter: the first 12 months of this recession was much worse and cut much deeper than previously believed showing bigger declines in consumer spending and housing. >> it was almost like the economy was skydiving. felt like a free fall. this is a decline in the second quarter but it kind of feels like somebody pulled the ripcord. >> reporter: there is a silver lining. the u.s. economy shrank at a less than expected annualized rate of 1% between april and june, a big improvement over its 6.4% contraction in the first three months of the year. >> today's gdp is an important sign that the economy is headed in the right direction. >> we are going to see in the economy we are going to get more

growth than people expect but less growth than we need. >> reporter: one reason for the expected rebound, companies are beginning to rebuild their inventories after having depl e depleted them to bare bones levels. meantime on wall street, growing optimism amid stronger than expected corporate profits. the dow up 17 points today, saw its best july since 1989, surging 8.5% for the month. still it is clear the economy is not out of the woods yet. according to, today's data, consumer spending which accounts for more than 2/of 3 the overall economy, dove 1.2% in the last three months. americans are tightening their purse strings amid sst the worst job market in decades. >> unemployment rate in june was 9.5%. it is not likely to stay there. it will go the higher. our judgment is, we are close to the top but it will probably be 10%. >> this is really stagnated and dropped off. >> reporter: watching closely is michael degali whose company

makes office furniture. >> the minute jobs stopped being produced in the economy, we got affected. >> reporter: like many executives these days, degali remains hopeful. >> it is all about optimism if people think the economy is going to get better they will start planning for six months and next year. >> reporter: hopefully the anticipated economic rebound will follow. for more now on what we should make of all these numbers, cnbcs, senior economic reporter joins us now. steve, the president this week talked about the beginning of the end of the recession is that how we are supposed to understand these reports? >> david, most see this as the last negative quarter. we have done four negative quarters in a rope. the minus 1% probably the last one here. the worst recession of the postwar era. two things about the number. the first one, as trish reported, better than expected. some stuff inside it were also worse than expected. the thinking is they rebound in the third quarter, restock of shelves, maybe the trade numbers also improving, and perhaps

consumption as companies rebuild their inventories they have to produce more and may be hiring people. and the hope here, david, is that ultimately, unemployment is capped at 10% in terms of how high it goes. >> the cash for clunkers program it underscores how difficult it is to drive up consumer spending it has to be a real fire sale we are seeing with the give back program to get people motivated to spend. they don't want to diet. >> that's right and matter of confidence. the hope among economists and the administration, david, when good things happen good things keep happening. people get confidence. employers don't lay off more people. better number of gdp in the third quarter and you may save tens, hundreds of thousands of jobs because employers have the confidence to keep the people on the payroll. it its getting into a cycle and getting out of the vicious cycle that we have been in. all right, thank you very much. a quick program note here, the economy is one of our main topics this week on "meet the press" i will be joined by the president's top economic

adviser, larry summers, this sunday on "meet the press" here on nbc. veteran democratic senator chris dodd of connecticut announced he has early stage prostate cancer and will have surgery in early august. he expect a fast and full recovery and said the diagnosis won't stop him from running for re-election next year. dodd has been playing a key role in the democrats' efforts on health care reform stepping in for his friend ted kennedy battling a brain tumor. word from manila, the former president of the philippines has died. she was a housewife who brought down a dictator, ferdinand marcos, suffering from colon cancer. she was 76. when "nightly news" continues on this friday evening, what could be a key development in the race to make an effective swine flu vaccine. and later, a new way to help americans recover from the wounds of war. grandma, take me there. but with my occasional irregularity

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we have been reporting this week on the race to develop a vaccine for swine flu before the peak of the season. well tonight there is news that if and when an effective vaccine does become available, the best way to get it may not be through a shot. here's chief science correspondent robert bazell. >> okay, are you ready? >> reporter: it could become one of the major defenses this fall against a swine flu pandemic. >> doesn't hurt i promise. >> reporter: an inhaled liquid vaccine that substitutes for a

flu shot and it now seems there will be a lot of ate available for swine flu soon. >> any vaccine that comes in early and we can deliver to a very large number of people will help us blunt the transmission of the h1/n1 virus. >> reporter: companies making shots against swine flu, or h1/n1, have had big production problems. but the flu mist production is going so well the company has run out of the sprayers that deliver it. >> we have about 150 million doses surplus. and we are working with the fda to actually develop a new device to administer the doses. with a dropper. >> reporter: since first introduced in 2004 for flu, flu mist has been a commercial failure. mostly because it was licensed for people, 2 to 49 years old who often don't get flu vac seen. but that same age group is now the major target for a swine flu vaccine. meanwhile, swine flu continues to spread widely in the southern hemisphere and there are still

substantial number of cases here in the united states according to data released to day by the cdc. usually visits to doctor's offices for flu are very low at this time of year. as they were last year. but this year, they spiked when swine flu hit in may and have remained relatively high. and public health officials say we need to prepare for a much bigger spike cases as schools across the country begin to open in the coming weeks. robert bazell, nbc news, new york. after 16 days in orbit and difficult repair job to the international space station, seven astronauts from the space station and that mission are back here on earth. the space shuttle "endeavour" made a smooth landing today in florida. there are new pictures to night of the air force one incident that triggered panic here in the new york city area in april. these stills show what it looked like when the president's plane and two f-16 fighters flew low over parts of new york and new

jersey. so air force photographers could take publicity photos high above new york harbor and over the statue of liberty. as you will recall, the problem was nobody notified the people here. ultimately the white house apologized and the official response. some young people are pushing for a new law, to help them achieve their dreams. still out of line? trigle then you may not be seeing the whole picture. ask your doctor about trilipix. statin to lower bad cholesterol, along with diet, adding trilipix can lower fatty triglycerides and raise good cholesterol to help improve all three cholesterol numbers. trilipix has not been shown to prevent heart attacks or stroke more than a statin alone. trilipix is not for everyone, including people with liver, gallbladder, or severe kidney disease, or nursing women. tell your doctor about all the medicines you take and if you are pregnant or may become pregnant. blood tests are needed before and during treatment to check for liver problems. contact your doctor if you develop unexplained muscle

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we are back now with our ongoing series we the people and a look at young people fighting to keep their dreams alive. many of them have been living in the u.s. since they were young, even though they may have done all the right things they suddenly find out they cannot stay here. that there is a bill in congress that could change that. the story from laurie montenegro of our spanish language network, telemundo. >> reporter: all his life, he felt like any child in new haven, missouri. >> reporter: his mother brought him from mexico to the united states at the age of 4. though it wasn't until he was 17 and tried to enlist in the military that he found out he was undocumented. >> they told me that my social security wasn't real. that it had -- it belonged to somebody else that was already

in the military and had passed away. i was shocked. >> reporter: his dreams of becoming a doctor were shattered. >> it shut me down completely. >> reporter: now fearing deportation, they are rallying around a bipartisan bill called the dream act. >> what do we want? >> reporter: that would allow undocumented students to remain in the united states and attend public colleges and universities at in-state tuition prices. most importantly, it could provide a path to legal residency. advocates say the bill would help 360,000 undocumented young people who must have good moral character and earn at least a two-year degree or enlist in the armed services to qualify. >> it is an investment. i think they will get that money back many times because of the high earning rate that a student will have, having a college education. >> this is the fifth time the dream act has been introduced here on capitol hill over the past eight years. but this time with the white house and congress controlled by democrats, supporters hope the

bill will pass. awe all. sa! >> reporter: not everyone agrees. >> does it really make sense to legalize thousand or hundreds of thousands of illegal aliens so they can go to college at taxpayer subsidized rates? >> reporter: in the meantime, he is writing his congressman to plead his case. >> the dream act actually gives me a new insight, an inspiration for me, it pushes me to go to the limit and achieve it. >> reporter: his high school graduation this year was bittersweet. because while he reaches one dream, another one remains on hold. when we come back on this friday evening, the sure-footed friend making a difference for america's wounded warriors. (announcer) for people with copd including chronic bronchitis, emphysema, or both, great news.

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tell your doctor if you are taking other medications, or if you have any muscle pain or weakness. this may be a sign of a rare but serious side effect. i was caught off-guard. but maybe you can learn from my story. have a heart to heart with your doctor... about your risk. and about lipitor. final leap tonight our making a difference report. helping americans wounded in the wars in iraq and afghanistan recover both physically and emotionally. since the wars have gone on, the toll on american forces has gone up. but now thanks to a simple

observation by one caring adviser, some of the injured veterans are finding a whole new way to heal. it is happening on a farm between baltimore and annapolis, maryland. nbc's nora o'donnell has our report. >> reporter: meet army specialist conrad wit and his horse, apollo. >> apollo. >> reporter: wit is recovering from wound he suffered in iraq. they are emotional as well as physical and apollo is part of his rehabilitation. wait a minute you used to be scared of horses? >> let's not say scared. i'm a soldier. i had a phobia about horses. i wasn't scared. >> reporter: the change the horses bring to the soldiers is dramatic. >> you are, by using the gait of the horse, enabling them to improve their balance, improve

their core strength development, work on muscle tone, work on self-confidence. >> reporter: this therapeutic riding program lasts eight weeks. >> breathe. >> reporter: helping soldiers like specialist robert rodriguez. >> reporter: how did it make you feel? >> more relaxed. lot more relaxed. >> reporter: rodriguez served three tours in iraq, shot in the chest and hit by an icht ed. do you mind me asking how you felt with some of your post-traumatic stress disorder? >> that, i am still having a hard time with. >> reporter: got to work on it every day? >> yeah, take everything, one step at a time. >> reporter: these sure-footed horses serve up a type of healing that can't be found in a hospital. it all happens here at maryland therapeutic riding and it started with an idea. if they can help children with special needs, they could help heal our soldiers too. >> we have seen children who have autism, the only time they

speak is when they're on a horse. >> reporter: the horses for heroes program was the brain child of colonel ken mccready. >> i cam to this program bringing a group of special needs children from fort mead here. >> reporter: he decided next time he would bring wounded warriors. >> when you see the soldiers their faces are transformed like the young riders. the confidence levels are different. there is a pep in their step. >> reporter: with that new confidence, these soldiers are giving back. volunteering on weekend to build a trail for those children to ride on. and helping care for the horses who have helped them heal. nora o'donnell, nbc news, crownsville, maryland. that's "nightly news" for this friday night. thank you for being with us. brian williams will be back here monday. i am david gregory. i will see you sunday on "meet the press." i will see you sunday on "meet the press." good night.

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