captioning spoored by wpbt >> paul: mrosoft and yahoo team up to take on googl but some analysts and instors aren't connced the strategy will work. >>uzanne: a health care compromise osorts in congress could get heal reform to the presidens desk this fall. the key to moving forwar a puic option. >> paul: tonight's "stre critique" guest ill thinks cash is king, evenith the recent run-up in stocks. shs hilary kramer, chief market stratist at greentech research. >> suzanne: sh for clunkers hopes to jump start les at the nation'suto dealers and improve e nation's fuel efficiency. but as those dealersre finding out, the program h some problems. >> paul:'m paul kangas. >> suzanne: and m suzanne prt.

susie ghib is off tonight. this is "nigly business report" for wednesda july 29. "night business report" is made possible by: this program was madpossible by contributions to ur pbs station from viewers like yo thank you. >>uzanne: good evening everyone. investors are calling it "mio- hoo," a search and adversing deal betwe microsoft and yahoo. but they're also cling it a disappntment, and that sent yahoo's stock plunging2% today. the problem is theimited scope of t agreement and the lack of

cash going from microsofs pockets to yahoo's. as scott gurvey explainsthe deal teams up microsoft's ing" sech engine with yahoo's ad expertise to better fight th 800-poungorilla of the internet. >> reporter: me no mistake, this deal is drin by google, which but onto the scene ten years agto knock yahoo! for a loop and become thorn in miosoft's side. according internet research firm comshare, yaho had nearly 20% the primary search market last month, microsoft just or 8%. twe mbthcoo edalin tot ls the two mbined tal less lf of gole 65% share while microsofand yahoo companies argue their panership will be good for consumers and adrtisers, in separate video statements haed out to reporters, the e.o.'s made tir motives clear. >> right now, there's one compy that really dominates the worlwide market for search and online advertising the partnership we a nouncing today will help to eate a stronger number two a increase competition in the search area.

>> yaho and microsoft the scale necessary to compete against ogle, which dominates re than 70% of all search. >> reporter: yah and microsoft have been dancg around the idea of combining foes for nearly three years that dance included a hoile takeover bid for hoo! by crosoft. under the terms of tay's ten year deal, microsoft wilsupply the search thnology used on yahoo! while yahoo! will handle sale to advertisers the companies ll share ad revenue. yahoo! says the parership willave operating expenses and increase sales. but investors punished i stock, ty're disappointed microsoft isn't payi money up front or buying any yao! shares. standard a poor's scott ssler says it looks as if yahoo! simply decided to give up on search. >> over time it might end up being a very, ry good deal for yahoo! but if you look at the termand what they did and did not include, it reallyuggest to us that yahoo! probably could ha, and perhaps should have done better than thedid. reporter: microsoft and yahoo! expect rulators to

lo closely at the agreement but ey don't expect any anti- trust oblems. commenting on its rils' deal, goog says competition is good. scotgurvey, "nightly business report," new york. >> suzan: after a near-death experience, heth care reform isoving forward again in congress. a dealas brokered by the white house,ongressional leaders and conservave house democrats. it procts small businesses. requiring ly firms with a paoll over half a million dollars to provide health insurance. as darren rsh reports, the de also clearly defines the role of a governme run health plan >> reporter: the health ca logjam broke afterhe idea of a public option-- essentially government heah plan offed to all americans--on critical backing from four conservave use democrats. onof them, arkansas's mike ro, was quick to add the support comes wi conditions. >> theublic option is just th, it's optional. it ges consumers more choices. it is not mandat on any of them. the puic option will be

required to negoate with providers just like prive insurance industry does so w have a level playing field >> rorter: the public option iso politically sensitiv president obama is telling tn hall meetings acss the country he has no plans for the governmento take over health care. >> if you ke your health plan, u keep your health plan. these people nd to stop scaring people. >> rorter: the compromise reachetoday would let states seup health care co-ops to compete wi private plans. it also eps any government health insance plan from using its clout toet prices. ofourse, setting prices is al a way to hold down costs points out health carenalyst joantos. >> it's poible, i think, to have a public planhat doesn't do that, but it ist very likely that we'll ha a successful publiplan that doesn't e its pricing authority in ways that wil undercut competiti. reporter: there are also limits to how low even a govement plan can go.

in the short run, a public pn mighbe able to push costs down. but in the long run, gernment plans like medicare often e costs rise as heal care providerpressure congress to raise reimrsement rates. and, maned care analyst dave shovsays even the government is subje to economic reality. >> the huge problem with the public plan idea is that if there is a public plan and is cheapethan private insurance, everybody is goi to buy it. people are economic cision makers and if eryone buys it, it costs t government too much money. >> repter: right now, the cost of the health ca bill itself is going down. a compromiseffort in the senate is expected soon and should come out below the politically sensitive trilli dollar mark. darren gersh, "nigly business repo," washington. >> paul: wall stet headed moderately lower this rning as investors took profitsor a third straig day. early selling s also prompted by a much bigger than pected 2.5% decline in june durle goods orrs.

byidday, the dow was off 64 points and t nasdaq down 16. then, a poly received five- year treasury-note ation drove stocks lower. but a late buying spe trimmed the cling losses. the dow ended the day downust 26oints at 9,070.72. the nasdaq fell 7.75 to 1,967.76. the s&p 500 lost 4.47 to 9755. in the bond mark, the 10 year note gaine6/32 to 95-19/32 putting the yield at 36%. >> suzanne: a multi-stat crackdown on medare fraud todanetted 32 arrests in

hoton, boston and miami. it's the third major sweepn two months. and the busts are workin the feds have arreed 145 peop, and recovered more than $370 million medicareelebrates its 44th anversary tomorrow, and as je yastine reports cutting medicare fud could help pay for health care reform. >> reporter: medicare aud. it'seen a problem almost since the beginning the program. today, fraud steals $70 llion a year fm federal healthcare funds. consider just a feof the typical ams. there's the "rent-a-paent" scheme. set up storefront business for pain treatments, diabetes injections, or medical equipment. reuit people off the street as patients pay them a little mething for their timend trouble. then bill medicareor big bucks; millions upon millis of dollars. another common fra:

"upcing." every mecal procedure has a numbered medare billing code, but as former federal prosutor marcella auerbach explns, it's easy to bstitute a different code, onthat conveniently has a higher reimbursement re. >> for example, if a medare patit goes to a doctor and complains of a cou or a cold, the doct looks at the patient for 10 mines and says, "you've goa cough and a cold" and the patient goes home. the doct turns around, or a hospital turns around anbills medire, for example, for severe bronchitis, an ur long isch v w do vit which ocourse never took place, and a nebulizer. >> reporter: auerbach, n in private practice, says healthcare fraudxtends to otherwise legitimateompanies. mek and tenet healthcare are cent examples, both paid hundreds of llions to settle frd allegations. >> the reason that hpens and the reason it's so devastang to the stem is the cost to the

system are so much higr. they've deded to take the mble. they think they're notoing to t caught. and fortunately, in most cases they don get caught. >> repter: which brings up a final question can cracking down medicare fraud rely pay off? south floridis often considered capital for medicare fud. over the past four yrs, federal teams recovere$350 million dolls. the st recent data shows the medica trust fund recoups nearly $800 millioa year from fraud investations. as the nation bates health careeform, and how it's paid for, former prosecors like auerbach say recoverg more money from medicare fraucould make a big differenc >> for example, ght now with the effortthe federal governnt has undertaken in fighting medare fraud, there's a returnf $15 for every dollar spent on investigators a prosecutors, and that's much

bettereturn than i've heard about on anythinlately. >> reporter: returns the fedal government will ed as it tries to make every healthcare dlar cot. jeff yastine, "nightly biness report," miami. >> suzanne: vi charged ahead late today with beer than expeed earnings thanks to consers increasing their use of debit cards. cluding charges, visa earned 67 cents share, three cents more than analysts were expecting. revenue incread 2% to $1.65 billion. that's bause there are more visa cards in e. a total of $1.7 biion credit

cards worldwe now have a visa logo. vi and rival mastercard are insulad from rising credit card delinquencies, cause they procestransactions without taking on the risk associad with making los. ul? >>aul: suzanne we'll see how mastercard idoing tomorrow when it reports quarrly results. now les take a look at some stocks in the news tonht.

>> paul:onight's "street critue" guest says being careful and conservave is still the way to g she's hilary kramer, chi market analy at greentech research anduthor of "ahead of the curve." hilarywelcome back to n.b.r. >> thankou, paul. pleare to be here. >>aul: you've been sing that cash is kingor months no with ocks up se 40% from their march ls, do you still like the sidines, and if so, why? >> paul, i think it's imrtant, more thaever, to beery, very careful whent comes to your money. the reason is thate hav negative influencethat will eventuallyring down thearket e mean, we will have a recovery five to 10 years down the road, butouave unemployment which is ver seris. it'such higher than 9.4%. 's in the 15% rangeecause 're not even including those who have-- are n longe eligible for uneloyment benefits. and en the bigger problem, ev besides csumers not being able to spend because they don't

have jobs, is that there's no available crit out there--ot for consumers an not for small business and even big companies are findg very egregio terms on wall street when they want go for loan. >> paul: so you fee the market is far too high considerg what the economy isoing. >> thas aolutely right becauswe have a jobless revery-- if, indeed, w do have a recovery. >> paul: what are earnings telling you? we have seen pretty decent earnings, have we not? no, we hav't. to me tho earnings were a farce. they're an absolute joke, and the reas is they're all about cutting costs. in many waysit was really earnings that had to with unemployment--eople were laid f, companies cut the fat out, and in se ways that was good. it was effective and many corporationeeded to do that, but the end of the day, only 22of all companies that had reported really dales that were the same or up. the top lineasn't there >> paul: interesting observation. the fed's lest beige bk out tawd stz the recession is

becong less severe i most regions of t country. are yo seeing anyigns of recove? >> well, t only recovery i'm seeing has tdo with the fact that there no longer fear in the streets. the banks have stabilized. the nks aren't goingnder. we're not fring global implosion anymore and,uite frankly, the nancial institutions are doing quite well. but the fear is gone. >> pau now at sectorso you ke for the upcoming recovery? >> well, we've been talng about th banks. no again the banks are printing money ey get to borrow at0% and lend out at whaver terms and to whom th want at 7%. so think theinancial institution, especially th big vestment houses tt may see a recurrence in merger and quisition, itial public offerings and have noore competition fro lehmann brothers a bear sterns and wachovia. th will do very, veryell. i think the other sector that mit benefit ase eventlly come outf this recessi will be technology because technology

n be very nimble. it's abo efficiencs. 's not expensi the wayor a company is it might to y ne plant and equipnts to try to have financing and the technology compani themselves dot have to go to abank and borrow in th same way, let's say, a utility s to. >> paul: so the tech stocks not cash intensive, iother words. >> absolutely. so that's a nice area go for. and i real think it's imrtant to be careful of the energy sector, energy seices, and even health care, whe a lot of my expert friends are saying-- , "oh, that is whe yo neeto be." >>aul: very good. hilaryhanks for joining us again. >> paul, thank you so much. >> paul: my guest hilary kramer ofreentech research. >> suzne: tomorrow, the doctor is out on house call. we profile a medare program saving mon through home care. >> suzanne: bernard maff's wife may soon find herlf in urt. ruth madf is being sued for

$45 miion by the trustee seeking to recover her husnd's assets. s. madoff isn't accused of knowing about her husband' fraud, but the lawit says she ved a life of splendor using money that belond to her husband's customer ruth madoff'attorney says today's action is ote, "wrong as a matteof law and fairne." >> paul:t looks like more investorare gaining confidence in the market. $11 billion flowednto mutual funds last wk, that's the biggt weekly investment since early june. thinvestment company institute tracks the nbers. it says much of that moneyent to stock funds as investors responded to a string oftrong earnings repts.

>> sanne: here's a look at what's happening tomorro we'll see weekly jobss claims ana host of quarterly results. exxon mol, kellogg, motorola and walt disney are among th companies scheled to report. >> suzanne: many.s. car deals are crushed with customs, thanks to the government's new ch for clunkers program. it kicked off friday, offeri consumerrebates to trade old gas hogs for more fuel eicient vecles. the idea is jumpstart car and truck sales. but as dne eastabrook reports the program alreadfaces some bumps in the road.

>>eporter: bernard rossbach is saying goodbye to hirusty old station wagon anhello to a shiny new sedan. >> it hathe features that i need. it has t easy entrance and exit for my wife whos handicapped. >> repter: rossbach is among thousands of aricans taking advantagof the government's car allowance rebate system- better known as cars or ca for clunkers. thprogram offers up to $4,500 for consumers who scraold gas guzzlers for more fuel efficnt rs and trucks. rossbachot 3,500 dollars to trade in his 1986 oldsmobile custom cruiser f a new chevy imla. >> it made it more cvenient to get rid of the car at this time since it bught in more money on a trade-in. >> reporter: since cash fo clunkers started friday, consumers have been flking to 22,000 dlers in the program. at this kia dealersh, owner mark scarpelli sd two vehicles in the hour we were on h lot. >> our traffic andolume has

increased about 50% sie the program got stted. reporter: but, the program which en november 1 has hit some speed bumps. >> the hp desk cannot address program questions. >> reporter: abill stasek chevrolet, empyees couldn't get help froa call center when they had trouble electronicay submitting rmbursement claims. how longave you been working on this one transaion? >> t hours. >> reporter: and y're frustrated? >> only a ttle. >> reporter: oer bill stasek thinks part of pblem is 41 pages ofules that dealermust foll in order to submit a cars claim. >> they want a lot of docuntation and all that has to be provid. when you provide it and you don'get everything right, it ge rejected and then you have too to the back of the line. >> reporte many industry watchers tnk the program itself is flawed. j.d. per and associaties president finbar o'neill tnks there ould be fewer restrictions on the rs eligible forhe scrap yard. >> the biggest problem ithe trade-in has to beorth less

than $4,500 which ishe maximum voucher d that is a big liting factor. only abo 38% of vehicles acally qualify. >> reporter: exper think in e weeks ahead the government coultweak or even extend cash r clunkers, but dealers hope y changes won't make an alreadconfusing program, even more consing. diane eastabro "nightly business repor" antioch, linois. >> paul: recapng today's market action: a late ying spree cuts wall street closing loss. the dow dropped 26 points and the nasdaq losseven points. to learn more about thstories in tonight broadcast, to watch our streaming video anto take part in our daily blog, go t ightly business report" on pbs.org. u can also email us at nbr@pbs.org. >> suzanne: anfinally tonight, despere times call for desperate measures. so the state of arizonis coming up with some pret original wayto raise cash. lawmakers there are nsidering selling the ate house and

sete buildings in phoenix, along withozens of other state-owned operties. but, the plan isn't liquidate the properties. instead, officia hope to sell them and lease them ba over several years. ulmately, assuming ownership again. that could ge the state a cash infusion of morehan $700 million. paul? >> paul: thawould qualify, i assume, as a capital gain. >> very, very cute. it's ptty amazing wn you consider the sta of the real esta market in phoenix is pretty dperate. >> paul: little convoluted but i hope it work >> me, too. >> sanne: that's "nightly business report" for wedsday, july 29. i'm suzanne pratt goodnight everyone, d good night to y too, paul! >> pl: and you as well suzanne. i'paul kangas wishing all of you the best of gooduys. "nightlyby:de possible by:

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fifty et off the ground. it was funit was different. you're halfway scared, but at that age you're too db to be scared. pole bpole, road by road. ja was literally linking ople together. when iirst started, was just supplying power for the porch light. d now it's so much more. the flow of power rely is the flow of infoation. and puic tv is one of the best sources. it gives you a chance toearn something that you never kwn before. it makes a better-educed public. guys like me laid the groundwork, and we wanto see it put to good u. that's why jack includedis public television stion in his will. tevision to span generations.