on the broadcast tonight, stranger than fiction. the sexual assault case against dominique strauss-kahn teeters on the edge of collapse as prosecutors question the credibility of the woman who made the charges in the first place. home for the holiday. many people hit the road, but even more are staying put for this fourth of july weekend. lights out. minnesota state government shuts down over a $5 billion budget deficit. and "making a difference." bringing the gift of hearing to kids in need, even if it means traveling to dangerous places. plus, new rules for air traffic controllers, will you

feel safer if they're listening to music on the overnight shift? "nightly news" begins now. captions paid for by nbc-universal television good evening, i'm kate snow in for brian. today the former head of the international monetary fund was released from house arrest after prosecutors said the woman who had accused him of sexual assault in a new york hotel room may have serious credibility problems. strauss-kahn still faces charges, but today ace move could be the beginning of the end of a case that seized attention from new york to paris. ron allen is at the courthouse in lower manhattan where it all unfolded today. >> reporter: it was an amazing day down here, especially because prosecutors seem so confident in their case against

strauss-kahn and they never expressed any doubts publicly about the alleged victim's story. today they reveal she's been giving conflicting accounts about what happened that night and conflicting accounts of other aspects of her life. now it seems this case may be falling apart. dominique strauss-kahn left court free on a $6 million bond. he returned to his luxury townhouse, but he's no longer required to stay there under house arrest, which cost him some $200,000 per month. a dramatic contrast to the may perp walk that led to his resignation as head of the imf and seemed to ruin his chances of becoming president of france. today his attorneys claimed vindication. >> it's so important in this country that people, especially the media, reserve their judgment on the facts of a case until they're all in.

>> there will be no rush to judgment in this case. >> reporter: in court, prosecutors had admitted strauss-kahn's accuser a 32-year-old from from west africa has made numerous conflicting and false statements, starting with being gang raped. in a letter, prosecutors wrote, she stated that she fabricated the statement. and in may, after the alleged attack at this luxury hotel, the woman had said she ran into the hallway and reported the crime to a supervisor. but prosecutors say she later admitted she proceeded to clean a nearby room and then returned to suite 2806, strasse kahn's room and began to clean before reporting the incident to a supervisor. >> after the indictment against the defendant was filed. we continued as an office to investigate the case rigorously as we do, and are obligated to do. that investigation raised

concerns about the complaining witness's credibility. >> reporter: sources close to the investigation say the woman called a suspected drug dealer after the incident to discuss how to profit from it. her attorney pleaded her case before a crush of international media. >> it is a fact that the victim here made some mistakes, but that doesn't mean she's not a rape victim. >> reporter: he claims she was bruised, her stockings torn and that there's forensic evidence of a sexual attack. >> the interesting thing will be to determine whether a jury will ever be allowed to weigh strauss-kahn's word against the hotel maid's word. or whether prosecutors will decide to dismiss this case. >> reporter: that's exactly what the woman's attorney fears, that the prosecution will not go forward now. she will soon come out of hiding to plead her case publicly and plead for justice. kate? >> ron allen reporting. thank you. what will prosecutors do next?

rik rikkicleman joins us live with more. >> the case is going downhill and it is going to fall apart. it may be kpleemtly over, perhaps as soon as the next court appearance or not. what you have inside vance's office, he's got to look at this alleged victim, look at her story, look at these statements, talk to her again, continue his investigation, meet with the defense lawyers, see what the defense has to offer, and then he has to use the most prominent tool in his toolbox, which is pros ecutorial discretion. and at this point in time looking at her problems, it may mean that he has to dismiss this case. >> as her lawyer pointed out, even if the female accuser has been inconsistent or she's told lies or cheated on her taxes, it's still possible she's a victim of sexual assault, no?

>> well, of course. you could have a prostitute that could be a victim of sexual assault. a liar, a cheater a drug dealer can be a victim of sexual assault. however, in this particular case, you have to look at, she's not only lied, she's lied about the fact that she says she was raped before in her political asylum application. she's lied to the grand jury about fundamental facts, including the fact that she went back and cleaned the rooms. so it's not like the grand jury got the real person. this is a different set of circumstances for this d.a.'s office. should they go forward? well, sure, they can throw prosecutorial discretion out the window and say, let a jury decide. but that may be an abdication of responsibility. >> the attorney says he's concerned the manhattan d.a. is afraid to try this case and lose. the bottom lining was this case treated any differently because

of who dominique strauss-kahn is? >> i think if it was treated any differently, it goes to the detriment of dominique strauss-kahn not the benefit. the only thing that was really different here was he was going to leave the country. they immediately felt and knew what they had at the time, and that was all they could do, if he was going to flee the country they had to get him off the plane, otherwise, you've got a situation where he should be treated like every other person and that means if you don't have the evidence, you do justice. now to france, where before the sexual allegations against him, dominique strauss-kahn was a political force, a likely challenger to president sarkozy. the scandal changed all that and led to a national dialogue about french attitudes toward women and sex. now the shock of this latest news. martin fletcher joins me now from paris. martin? >> reporter: hi, kate.

france is buzzing today, nobody here is saying strauss-kahn is guilty or innocent. but they do say that the rush to judgment was never fair, and the latest news proves it. the news hit france, as they say here, like a thunderbolt, special reports on all fv networks. the case has rivoted france. it brought down the man who was favored to be the country's next president. to some in this cafe, the sudden twist is a morality lesson. one should have waited before judging people and destroying someone's life in seconds. others were less kind. >> i feel anyway his image is rocked. >> reporter: nevertheless there is a fever of speculation today in france. will strauss-kahn come home vindicated? might he still have a shot at being president? his political colleague a former education minister thinks so. >> he's a good man, a good

candidate. >> reporter: it isn't just politics, though. after strauss-kahn was arrested, hundreds of french women took to the streets in paris in support of the alleged victim and a nationwide debate began on the status of women. elaine's new book is called le seduction. how the french play the game of life. women suffered a major blow. >> this is an incredible moment for france, because women are starting to say, enough. i really think the fact that she is a less credible witness is going to harm the debate. >> reporter: if the charges against strauss-kahn are dropped, his social supporters say he could play a major role in their party. but the president of france? one bar patron seemed to sum it all up. >> translator: there will always be a doubt, she said. i don't think anyone wants a sex-crazed president. >> reporter: strauss-kahn withdrew from the presidential

race, so anyway, he can't run. political analysts are saying if the charges of sexual assault are dropped, he could still play a major role in french politics. kate? >> martin fletcher, thank you. still overseas, to libya, where protesters were rallying in support of the ruling regime. after months of fighting between rebels and pro-gadhafi forces, just where do things stand? stephanie gosk is in tripoli, libya tonight. stephanie? >> reporter: good evening, kate. this is one of the largest rallies we've seen in recent weeks. thousands of supporters came out with guns and flags to show their support. gadhafi phoned in to state tv to address the crowd and to warn nato if they continued with this bombardment, that their countries would be next, their homes, offices and families. this speech was just 24 hours after his daughter told french tv that the government is actually in informal talks with the rebels. she then went on to call the

rebels the devil. not exactly diplomatic language. kate? >> after months, where do we stand now? are the rebel forces making any gains? are we any closer to gadhafi stepping down? >> reporter: well, if the idea is that rebel forces will make a big push into tripoli and force him to step aside, that's unlikely to happen any time soon. they have been making progress southwest of here. they've been battling over the city of bir al ganan. when they want to, they can outgun the rebels. there's a sense that gadhafi is doing what he can to drag this conflict on. he's holding the rebels back, but not going on the offensive, he's used a large security force to control this city. a strategy that seems to be working even with these large air strikes. >> thank you. back in the u.s., the fourth of july weekend getaway is underway. while we promise not to use the

word staycation, americans just aren't traveling great distances on this holiday. nbc's aditi roy joins me from santa monica. >> reporter: it seems this year we're choosing holiday destinations that are closer to our backyards. for carrie, getting away means staying at a hotel with a deal only 30 miles away. >> it's like taking a little vacation somewhere, not very far away. >> we're actually traveling very cheap. >> reporter: this family is traveling by air, but no hotel. >> we're getting picked up from the airport instead of having to rent a car, and we're staying at a family's house. >> reporter: marcella is staying home. >> i cannot afford any more to go anywhere.

>> reporter: gas prices have dipped 45 cents recently, but they're still 80 cents higher than they were this time last year. that with raising hotel and car rental rates has car travel down. >> you will have some people who will economize by traveling shorter distances, shortening the duration of their trips. >> reporter: people aren't the only ones cutting back, cities like chicago and austin have cancelled fireworks displays because money is tight. weather conditions, drought and wildfires have snuffed out fireworks in arizona, texas and new mexico. >> with the high heat and very dry conditions that we find ourselves inning it could be an incredibly dangerous thing to do. >> the mercury's rising. temperatures across much of the country will be 5 to 10 degrees above average. >> it's going to be a tough weekend to be outside. a lot of people are going to want to be near water. >> reporter: for those looking for says ilon the grill. the average cost of a cookout

this year is $161. up $6 from last year. there's still skiing at mammoth mountain. america's holiday destinations are bountiful, even if american's pocketbooks are not. the top three travel destinations this year are orlando, new york and right here on the beach in los angeles. kate? >> aditi roy, thanks so much. not just time off for the holiday this weekend. the land of 10,000 lakes is shutting down lakeside parks and a whole lot more. later, "making a difference" for kids with hearing loss. even risking his own life in the process. a day when we can eat what we want, drink what we want, and sleep soundly through the night. finally that day has arrived with prevacid®24hr. just one pill helps keep you heartburn-free r a full 24 hours.

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this may sound familiar, democratic and republican lawmakers in a stand-off over the budget and neither side wants to budge. tonight in minnesota, the stand-off has turned into a shutdown. here's john yang. >> reporter: as the holiday weekend begins, minnesota state parks and campgrounds are locked shut. >> we decided to come out here one last time. we heard it was going to shut down, so we got out here at 3:30 to go swimming one more time. >> reporter: also closed? state offices like driver's license exam stations, highway rest stops, even the state lottery. 23,000 state workers are laid off. all because the republican-controlled state legislature and the democratic governor can't agree on closing a projected two-year, $5 billion

deficit. governor mark dayton says any deal has to raise taxes. >> the republicans insist that inequality continue so that millionaires do not have to pay $1 more in taxes. >> reporter: like their counterparts, minnesota say savings should only come from spending cuts. >> this is about shutting down government for a political purpose. very disappointing. >> reporter: the national conference of state legislature says at least 30 states began the current budget season with deficits totalling more than $86 billion. >> the fact that this fiscal crisis affecting state budgets has gone on for well over three years means that the decisions about what to do get harder each year. >> reporter: as the economy improves, there may be different kinds of fighting. in south carolina, republican governor nikki haley and republican lawmakers are

fighting over where higher than expected revenue should go, to restore spending cuts or cut taxes. a problem many governors and lawmakers would probably love to have right now. john yang, nbc news, chicago. even as governments wrestle with budget problems, there was euphoria on wall street this week in the wake of another bailout for greece. the dow was up 168 points on the day, capping its biggest weekly gain in two years. a month's worth of losses have been regained in just five trading days on all three major indexes. the nasdaq up 6.2% and the s&p 500 up 5.6%. that is one huge week. when we come back, another royal wedding. this one a bit more low key than the last one. consider this: over 70% of firefighters are local volunteers... these are our neighbors putting their lives on the line. and when they rely on a battery,

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as america gets ready to celebrate independence day, today was the big holiday just to our north. canada day hosted a couple very special guests this year, prince william and his new bride kate took part in the ceremonies. kate middleton sporting a patriotic red and white ensemble. wearing a brooch the queen wore on her first trip to canada. there is one somber note, today would have been the 50th birthday for william's mother princess diana.

in other royal news tonight, monaco's prince albert married his long-time girlfriend in a low-key civil ceremony. the bride is a former olympic swimmer from south africa. the 53-year-old groom the son of prince rainer and princess grace. the former grace kelly who died in 1982. here's one of brian's favorite topics, airline travel. after a rash of air traffic mishaps caused by controllers sleeping on the job, the faa and the controller's union agreed to some new rules aimed at helping night shift workers stay alert. one change will allow controllers who feel too tired to request leave or be assigned to other duties. the one that reilil really caug attention today, they will be allowed to listen to the radio or read appropriate material between the hours of 10:00 p.m. and 6:00 a.m. in order to keep from drifting off.

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no heartburn in the first place. great. time now for our friday "making a difference" report. and a man whose mission is to help children who suffer from hearing loss, but don't have the resources to fix it. he's had to deal with some tricky political situations and dangerous terrain. the payoff, allowing a child to hear for the very first time, well, that's really making a difference. here's john ray. >> reporter: it's a scene that could be played out in any school yard, with one difference. you notice the quiet. even when 11-year-old badir has

life changing news, it's his hands doing the talking. he's telling his friends that soon he'll be able to hear. news that's got everyone excited. what's interesting right here, it's like any other playground conversation, except it's conducted in almost total silence. what are they telling me now? what does that mean? >> i love you. >> i love you. >> reporter: the kids have so much to offer. but they're trapped in a silent world that can seem confusing, even fright thing. >> he's very afraid from the outside, from when he's small. he's afraid to go outside alone. he says i know nothing, because he didn't hear. >> reporter: from 5 and a half thousand miles away in minnesota -- >> the good news, we can fix

this. >> reporter: he's been providing hearing aids for the hearing impaired in some of the poorest places on earth. >> it's the most incredible thing in the world to be able to give somebody a birth right, a connection to life. >> reporter: this is his first mission to the west bank, which means crossing israeli army checkpoints and in working with israeli doctors discovering barriers that can be harder than deafness to overcome. >> this is practically the only contact they have with israelis. >> reporter: walid is about to make his first contact. >> is it good or is it too loud? >> he says it's not too loud, it's good. he likes it. >> reporter: his journey into the world of words won't be easy. >> he has to hear the words to develop the vocabulary. >> reporter: play time no longer passes in silence. and when friends call his name, walid is listening.

john ray, nbc news from the west bank. that is our broadcast for this friday night. thank you for being with us. i'm kate snow in tonight for brian. have a happy and safe fourth of july weekend. have a happy and safe fourth of july weekend. good night. -- captions by vitac -- www.vitac.com