captioning sponsed by wpbt >> paul: microsoftnd yahoo team up to take on ggle, but some analysts aninvestors aren'tonvinced the strategy will work. >> suzanne: a health care compromi of sorts in congress could get alth reform to the president'desk this fall. the key to moving forward: publ option. >> paul: tonight's "street critique" guest stl thinks cash is king, even wh the recent run-up in stocks. she'hilary kramer, chief market strategt at greentech research. >> suzanne: ca for clunkers hopes to jump start sas at the nation's ao dealers and impre the nation's fuel efficien. but as those dears are finding out, the progr has some proble. >> pl: i'm paul kangas. >> suzanne: d i'm suzanne pratt. susigharib is off tonight.

this is ightly business report" for wednday, july 29. "nhtly business report" is made possible by: this program wasade possible by contributionso your pbs station from viewers likyou. thank yo >> suzanne: good evening everyone. investors are calling itmicro- hoo," a search and aertising deal bween microsoft and yahoo. but they're al calling it a dippointment, and that sent yahoo's stock plunng 12% today. the problem ishe limited scope the agreement and the lack

cash going from microft's pockets to yahoo's. as scott gurvey explns, the deal teams up microsofs "bing" search engine with yahoo's a expertise to better fighthe 800-und gorilla of the intern. >> reporte make no mistake, this deal isriven by google, which burst onto the sne ten years ago to knock hoo! for a op and become a thorn in microsoft's side according to internet rearch firm cshare, yahoo! had near 20% of the primaryearch market last month, crosoft just over 8%. th o e edcotwalmb the two combed total less than half of google's 65% sha. while microft and yahoo companies argue their partnership will be good for consumers anadvertisers, in separate video statementhanded out to reporters, e c.e.o.'s ma their motives clear. >> right now, there's e mpany that really dominates the rld wide market for search and online adverting. the partnership are announcing today will helpo create a stronger number t and increase competition in e search area.

>> hoo! and microsoft the scale necessary to cpete against gole, which dominates mo than 70% of all search. >> reporter: yahoond microsoft have been dancinaround the idea of combining forc for nearly three years. that dance included a hoste takeover bid for yao! by miosoft. under the terms of tod's ten year deal, microsoft will pply the search tecology used on hoo! while yahoo! will handle sales to advertisers. the companies wi share ad revenue. yahoo! says the ptnership wi save operating expenses and increase sales but investors punishedts stock,hey're disappointed microsoft isn't pang money up front or buying any hoo! shares. standardnd poor's scott kessler says it looks as if yaho simply decided to give up on search. >> over time it might end being a veryvery good deal for yaho but if you look at the tes and what they did and did not include, it real suggest to us that yaho probably could ve, and perhaps should have done better than ty did. >> reporter: microsoft and yahoo! expectegulators to

ok closely at the agreement buthey don't expect any anti- trusproblems. commenting on its vals' deal, gole says competition is good. sct gurvey, "nightly business report," new york. >> suzne: after a near-death experience, alth care reform moving forward again in congress a de was brokered by the white hous congressional leaders and consertive house democrats. it ptects small businesses. requirinonly firms with a yroll over half a million dollars to provide healt insurance. as darregersh reports, the al also clearly defines the role of a governnt run health pl. reporter: the health care logjam broke after thedea of a puic option-- essentially a vernment health plan offered to all americans-- wonritical cking from four conservative housdemocrats. one ofhem, arkansas's mike ross, s quick to add the support comes with cditions. >> the pubc option is just that, 's optional. it givesonsumers more choices. it is not mandated oany of them. the publicption will be required to negotiatwith

providers just like private insurance industry does soe have a level playing fie. >>eporter: the public option so politically sensite, president obama is telling town hall meetings acrosshe country he has no plans for the government to ke over health care. >> if you likeour health plan, you ep your health plan. these people need stop scaring people. >>eporter: the compromise reacd today would let states t up health care co-ops to compete with pvate plans. it also keepany government health insuran plan from using its clout to setrices. of coue, setting prices is also aay to hold down costs points out health care anast joe ans. >> it's possib, i think, to have a public plan thadoesn't do that, but it isn't ry likely that we'll have a successful public pl that doesn'use its pricing authority in ways that wl undercut competion. >> reporter: there are also limits to how low even a gornment plan can go.

in the short run, a publiclan mit be able to push costs down. but in the long run,overnment plans like medicare oftesee costs rise as heth care provids pressure congress to raise rebursement rates. and, maged care analyst dave she says even the government is subct to economic reality. >> the huge problem with t public plan idea is that i there is a public plan andt's chear than private insurance, everybody is gng to buy it. people are economidecision makers and ieveryone buys it, it costshe government too much money. >> rorter: right now, the cost of the health re bill itself is going down. a compromi effort in the senate is expected soon an should come out below the politically sensitive trilon dollar mark. darren gersh, "nhtly business rert," washington. >> paul: wall reet headed moderately lower thimorning as investors took profi for a third straht day. early sellinwas also prompted by a much bigger thaexpected 2.5% decline in june dable goods ders.

midday, the dow was off 64 points andhe nasdaq down 16. then, a orly received five- year treasury-noteuction drove stocks lower. but a late buying ree trimmed the osing losses. the dow ended the day do just points at 9,070.72. the nasdaq fell 7.75 to 1,967.76. the s&p 500 lost 4.47 to75.15. in the bond rket, the 10 year note gned 6/32 to 95-19/32 putting the yield 3.66%. >> suzanne: a multi-ate crackdown onedicare fraud day netted 32 arrests in

houston, boston and miami. it's the third major sep in two months. and the busts are woing. the feds have rested 145 ople, and recovered more tha $370 milon. medire celebrates its 44th anniversary tomorrow, and as jeffastine reports cutting medicare fra could help pay for health care reform. >> reporter: medicare frd. it's bn a problem almost since the beginning ofhe program. today, fraud steals $70 biion a year fro federal healthcare funds. consider just a few the typical scs. there's the "rent-a-patit" scheme. set up atorefront business for in treatments, diabetes injections, or medical equipment. recrt people off the street as patients. pay them a little sothing for their time a trouble. then bill medicare f big bucks; millions upon millionof dollars. another common fraud

"upcodg." every medil procedure has a numbered medice billing code, but as former federal prosecor marcella auerbach explai, it's easy to sutitute a different code, one at conveniently has a higher reimbursement rat >> for example, if a medice patiengoes to a doctor and complains of a coughr a cold, the doctorooks at the patient for 10 minut and says, "you've got cough and a cold" and the patient goes home. the doctorurns around, or a hospital turns around and lls medica, for example, for severe bronchitis, an ho long is doctorisit which of course never took place, and a nebulizer. >> reporter: auerbach, nown ivate practice, says healthcare fraud eends to otherwise legitimate cpanies. mercand tenet healthcare are rent examples, both paid hundreds of miions to settle frauallegations. >> the reason that hapns and the reason it's so devastati to the sysm is the cost to the

system are so much highe they've decid to take the gale. they think they're not gng to gecaught. and unrtunately, in most cases they don'tet caught. >> reporr: which brings up a final question. can cracking down onedicare fraud real pay off? south florida often considered aapital for medicare fra. over the past four yea, federal teams recovered 50 million dollar the mo recent data shows the medicarerust fund recoups nearly $800 million year from fraud investigions. as the nation detes health care rorm, and how it's paid for, former prosecuts like auerbach say recoverinmore money from medicare fraud uld make a big difference. >> for example, rit now with the efforts e federal governme has undertaken in fighting medice fraud, there's a return o$15 for every dollar spent on investigators and prosecutors, and that's a ch

better rurn than i've heard about on anything tely. reporter: returns the feder government will ne as it tries to make every healthcare dolr coun jeff yastine, "nightly busess report," miami. >> suzanne: visaharged ahead late today with bett than expect earnings thanks to consums increasing their use of debit cards. exuding charges, visa earned 67 cents ahare, three cents more than analysts were expecting. revenue increase2% to $1.65 billion. that's becse there are more visa cards in us a total of $1.7 billn credit cards worldwidnow have a visa

logo. visand rival mastercard are insulatefrom rising credit card delinquencies, beuse they process ansactions without taking on the risk associate with making loan paul? >> paul: suzanne we'll see h masterca is doing tomorrow when it reports arterly results. nolet's take a look at some stocks in the newsonight.

>> pl: tonight's "street critiq" guest says being careful and conservati is still the way to go. she's hilary kramer, chief market analystt greentech research and ahor of "ahead of e curve." hilary, lcome back to n.b.r. >> tnk you, paul. easure to be here. >> paul: you've been saying that cash is king for monthnow. with stocks up some 4 from their march lows, do you sll likeheidelines, and if so, why? >> paul, i think it'simportant, morehan ever, to be very, very careful en it comes to your money. the reon is at weave negative influces that will eventuly bring down the market eye mean, we will he a recovery five to 10 years down the road,ut you have unemployment which isery rious. 's much higher tha 9.4%. it's in the 15% range because we're not even including tse who have-- are no lger eligible fornemployment benefits. d then the bigger proem, even besides consumers not being able to spend becau they don't have jobs,s that there's no

availablcredit out there-- not for consumerand not for sma business a even big companies are findin very egregiouserms wall street when they want to go for a loan. >> paul: so you feel thearket is far too high considerinwhat the economy is dng. >> that' absutely right because have a jobless recory if, indeed, we do have a recery. >> paul:hat are earnings telling you? we have seen pretty decen rnings, have we not? >> no, haven't. to m thoseearnings were a farce. they'r an absute joke, and the reason is ey're all about cutting cos. many ways, it was really earningshat had to do with unemployment-- people were ld off, coanies cut theat out, and in some ways that was good. it was effectivend many corporation needed to dohat, but at the end of the day, only 22% of all compaes that had ported really had sales that were the sam or up. the to line wasn't there. >> paul: interesting observatn. the fed's latest beige bookut tawd shotz the recession

becoming lesssevere in mo regions of the country. are you seeing any signs of recovery? >> well, the only recovery'm seeing has to do with the fact that there's longer fear in the stets. the bas have stabized. the banks aren't going under. wee not fearing globa implosion anymore and, qte frankly, the fincial stitutions are doinguite well. but the fear is gone. >> paul: now wh sectors d you li for the upcoming recovery? >> well,e've been talki about the banks. now, again the banks are printing money. th get to borrow at and lend out at whaterterms and to whom theyant at 7%. so ihink the fancial institution, especially the big instment houses tha may see a recurrence in mergers and acisition, inial public ferings and have no me competition from lehmann brothers and bear sterns and wachovia. theyill do very, very wl. i think the other sector that mighbenefit as w eventuay come out othis recessionill technology because technology

cabe very nimble. it's about efficiencie it not expensive the way f a company is it might be to bu new plants and equipmes to try to have financing and the technology companieshemselves don'have to go to a nk and borrow ithe same way, let's say, a utilit has to. >> paul: so the ch stocks not cash intensive in other words. >> absolutely. so that's a nice aa to go for. and i ally think it important to be careful of the energy sector, energy serves, and even health care, whera lot of myxpert friends are saying-- , "oh, that is where youeeto be." >> pl: very good. hilary tnks for joining us again. >> paul, thank you so much. >> paul: my guest hilarykramer of gentech research. >> suzan: tomorrow, the doctor is out on a use call. we profile a medice program saving moneyhrough home care. >> suzanne: bernard mado's wife may soon find herse in cot. ruth madofis being sued for

$45 milln by the trustee seeking to recover her husba's sets. mr madoff isn't accused of knowing about her husband's fraud, but the lawsu says she lid a life of splendor using money that belongeto her husband's customers. ruth madoff's torney says today's action is que, "wrong as a matter law and fairness >> paul: ilooks like more investors e gaining confidence in the market. $11 billion flowed io mutual funds last wee that's the biggesweekly investment since early june. the vestment company institute tracks the numrs. it says much of that money wt in stock funds as investors responded to a string of song earnings repor.

>> suzne: here's a look at what's happening tomorrow. we'll see weekly joble claims and host of quarterly results. exxon mobi kellogg, motorola d walt disney are among the companies schedud to report. >> suzanne: many u. car dealerare crushed with customer thanks to the government's new casfor clunkers program. kicked off friday, offering consumers bates to trade old gas hogs for more fuel effient vehies. the idea is toumpstart car and truck sales. but as dia eastabrook reports the program already ces some mps in the road.

>> rorter: bernard rossbach is saying goodbye to his sty old station wagon and llo to a shiny new sedan. >> it has e features that i need. it has theasy entrance and exit for my wifeho is handicapped. >>eporter: rossbach is among thousands americans taking advaage of the government's car allowance rebate sysm-- better known as cars or cashor unkers. the ogram offers up to $4,500 for consumers who scrap d gas zzlers for more fuel efficie ca and truck rossch got 3,500 dollars to ade in his 1986 oldsmobile custom cruiser for new chevy impa. >> it made it more connient to t rid of the car at this time since it broht in more money a trade-in. >> reporter: since casfor clunkers started friday, consumers ha been flocng to 22,000 dears in the program. at this kia dealershipowner mark scarpelli soltwo vehicles in the hour we were on hisot. >> our traffic and vume has

increased about 50% sincthe program got stard. >>eporter: but, the program which endsovember 1 has hit me speed bumps. >> the heldesk cannot address program questions. >> reporter: at ll stasek chevrolet, emploes couldn't get help from call center when ey had trouble electronicall submitting reiursement claims. how long he you been working on this one trsaction? two hours. >> reporter: a you're frustrat? >> onla little. >> reporte owner bill stasek thinks part problem is 41 pageof rules that dealers st follown order to submit a cars claim. >> they want a lot of documeation and all that has to be provided when you provide it and you don't t everything right, it gets rejected and then you he to go to the back of the lin >> repter: many industry watchers thi the program itself is flawed. j.d. pow and associaties president finbar o'nei thinks the should be fewer restrictions on e cars eligibleor the scrap yard. >> the biggest probl is the trade-in has tbe worth less

than $4,500 whicis the maximum voucr and that is a big liming factor. only about8% of vehicles actuly qualify. >> reporter: expertshink in thweeks ahead the government could eak or even extend cash foclunkers, but dealers hope anchanges won't make an already nfusing program, even more confung. diane eastabrooknightly business report,antioch, ilnois. >> paul: recappi today's market action: a late bung spree cuts wall street'slosing losses the dow dropped 26 points and the nasdaq lost ven points. to learn more about the ories in tonight'sroadcast, to watch our streaming video and take rt in our daily blog, go to "nightly business report" pbs.org. you can also email us at nbr@pbs.g. >> suzanneand finally tonight, deerate times call for desperate measures. so the state of arona is coming up with some etty originalays to raise cash. lawmakers there e considering selling e state house and

senate buildings in phoenix, along th dozens of other state-owd properties. but, the plan ist to liquidate the properti. instead, offials hope to sell them and lease them backver several years. ultitely, assuming ownership again. that could givthe state a cash infusion of more tn $700 million. paul? >> paul: that uld qualify, i assume, as a capital gain. >> very, very cute. it's prey amazing whe you consider the statef the real estatearket in phoenixs pretty desrate. >> paul: a littleconvoluted but i hope it works. >> me, too. suzanne: that's "nightly business report" forednesday, july 2 i'm suzanne prat goodnight everyo, and good night you too, paul! paul: and you as well suzanne. i'm paul kangas wishing all u orthe best of od buys. "nightly biness madeblosbye si tmade posblby:

is program was made possible by contributio to your pbs station from vwers like you. thank you. captioning sponsored by wpbt captioned by media access group at bh access.wgbh.org >> we are pbs.