captioning sponsored by macneil/lehrer productions >> lehrer: good evening. i'm jim lehrer. president obama signed legislation today extending tax cuts for all americans. >> brown: and i'm jeffrey brown. on the newshour tonight, ray suarez outlines the $850 billion package, and reports on last night's debate and vote in the house. >> lehrer: then, margaret warner looks at the u.s. push to get pakistan to root out insurgents within its borders. >> brown: special correspondent stephanie hanes reports from the dominican republic on haitian immigrants living in a legal limbo. >> lehrer: outgoing white house economic advisor lawrence summers gives his take on the tax cut deal and more.

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>> lehrer: a midnight vote led to a mid-afternoon bill signing today, extending tax cuts and jobless benefits. ray suarez has the story. ( applause ) >> suarez: the signing ceremony climaxed a two-week push to preserve the bush-era income tax breaks for two years and keep jobless benefits going through next year. >> not only will middle class americans avoid a tax increase, but tens of millions of americans will open their first paycheck in the new year to see it larger than the one they get right now. this is real money that is going to make a real difference in people's lives >> suarez: the plan arrived on the president's desk after a house debate that went late into the previous evening. >> on this vote, the yeas are 277, the nays are 148. the motion is adopted. >> suarez: those 277 votes for

the measure included 139 democrats and 138 republicans. but even with that strong bipartisan tally, more than 100 democrats opposed the bill in a contentious debate on the floor. they argued it was a giveaway to the wealthy. and some, like texas congressman lloyd doggett, said it would not work, in any case. >> this deal borrows from our future to throw tax money at problems, with the efficiency of most of its provisions that you would get if people stood and shoveled out cash at the front door of the capitol. >> suarez: some of the 36 republicans in the "no" column, like mike pence of indiana, insisted the bill does not go far enough. >> we all know what we should be doing, and that's to vote to extend all the tax cuts permanently. uncertainty is the enemy of prosperity. >> suarez: but party leaders on

both sides warned delay could do serious harm to the economy. >> i know some of my friends want to wait until january, when republicans are back in the majority, because they think that we can get a better deal. that is as misguided as it is politically callous. >> i will vote for this bill, because i don't want to see middle-income working people in america get a tax increase, because i think that will be a depressant on an economy that needs to be lifted up. >> suarez: many house democrats, including hoyer, were angered by an estate tax provision. it exempts estates up to $10 million of value, with a top tax rate of 35% above that amount. the democratic alternative-- a $7 million cap, with a top rate of 45%. house speaker nancy pelosi said the more generous exemption in the bill would protect a select few at the expense of middle- class families.

>> the republicans insisted that $23 billion in benefits go to 6,600 wealthiest families in america. 6,600 families holding up tax cuts for 155 million americans. is that fair? does that meet any test of fairness that we have? >> suarez: but wisconsin republican paul ryan said that's a wrongheaded view of fairness. >> i hear all this talk about the death tax, the estate tax-- this is going to give a windfall to these people, all this money going to these privileged people who have built these businesses, made all this money. it's their money. >> suarez: in the end, the estate tax amendment was voted down, 233 to 194, clearing the way to final passage.

>> suarez: for now at least, the tax cut issue is resolved. but the two-year extension guarantees the debate will start again during the 2012 presidential campaign. >> brown: still to come on the newshour: the fight against insurgents in pakistan; haitians living in the dominican republic; white house advisor larry summers; plus, shields and brooks. but first, the other news of the day. here's hari sreenivasan in our newsroom. >> sreenivasan: more than $7 billion is going back to victims of bernard madoff's multi-billion dollar ponzi scheme. it's the largest forfeiture recovery in u.s. history. the widow of a florida man agreed today to return the money. jeffry picower had been the single-largest beneficiary of the scheme. he died last year. for more on is, i talked to diana henriques of "the new york times" a short time ago. first question has got to be who is jeffrey pickhauer and how is it he had $7 billion of investments with bernie maddoff? >> well, the late jeffrey

pickhauer, he died a-- october a year ago, was probably one of the quietest, richest men in america. 's sellabled an enormous wealth by one estimate he had $10 billion in one trading account at goldman sachs in the 1990s. and traded elsewhere. he traded legitimately in publicly traded stocks. he engaged in mergers and acquisitions, speculation and accumulated very, very quietly this enormous sum. he also invested with bernie maddoff and is is that money that is being returned now so that it can be distributed among maddoff's victims. >> suarez: which of those victims will be getting access to this capital? >> well, that's a good question. because it's not everybody. the way ponzi scheme arithmetic works, the people who will be compensated will be those who put in more cash than they were able to take out before the ponzi

scheme could lapsd had. there were many people who just left their fictional profit as cummulate. they never took anything out. and so they lost all the cash they put in those accounts. they are at the front of the line. they're going to be the ones who will share in this recovery. >> suarez: how is the trusty irving picard doing in recouping funds? well. >> well, without a doubt this is a good day for him with. this payment he will be close to $10 billion in the bank. he's also filed lawsuits, as you know, seeking another $50 billion from major banks, big hedge funds, other investors. and he hopes that some of those defendants will come to the bargaining table and enter into settlements like this so that he can collect even more money. but those are likely to be longer fights. some of those big banks are going to fight to the last fence so it's going to take some time. >> diana henriques from "the

new york times"s. thanks for joining us. >> sreenivasan: wall street closed out the week on a quiet note. the dow jones industrial average lost seven points to close at 11,491. the nasdaq rose five points to close just under 2,643. for the week, both the dow and the nasdaq gained a fraction of 1%. california regulators have approved the nation's most comprehensive curbs on greenhouse gas emissions. a state board adopted the rules thursday evening. they set up a "cap-and-trade" system for utilities, refineries, and others to buy and sell pollution permits. supporters said it provides financial incentives to limit emissions. opponents said it would be a drag on the state's ailing economy. a political standoff gripped the west african nation of ivory coast today, amid fears of civil war. streets in the largest city, abidjan, were nearly deserted, and police were out in force. on thursday, protests over a disputed presidential election turned violent, and up to 30 people were killed. the u.s., the u.n. and the african union have said the opposition won last month's election. but president laurent gbagbo refused to step down, despite

fresh appeals today from the u.n. secretary general. >> the results of the election are null-- there was a clear winner. the effort-- to retain power and the public will cannot be allowed to stand. >> sreenivasan: the u.n. has had about 10,000 peacekeeping troops in ivory coast, a nation of 20 million people. the troops police a settlement that ended a previous civil war. an international scientific panel will investigate the source of the cholera epidemic in haiti. u.n. secretary general ban ki- moon announced today the group will be "completely independent". there's been speculation in haiti that the outbreak started at a base for u.n. peacekeepers from nepal. the cholera epidemic has killed more than 2,400 people since it began in october. those are some of the day's major stories. now, back to jeff. >> brown: and we turn to pakistan, the u.s. ally in the fight against terror, accused of

harboring terrorists. margaret warner has the story. >> warner: u.s. drone aircraft struck again today in a stepped- up campaign to secure pakistan's restive borderlands. pakistani officials said the missiles killed 54 suspected militants in the khyber district, near the afghan border. it's an area seldom hit before now. the attacks along the frontier came as the chairman of the u.s. joint chiefs was in the afghan capital, kabul. admiral mike mullen said he believes pakistan is capable of clearing out the pakistani safe havens from which insurgents flow in and out of afghanistan to attack u.s. and afghan forces. >> if i were to use a measure of what's changed over the course of the last two years in pakistan with respect to its military operations, its focus, i would say that i certainly

think it is very possible that the pakistan military can achieve that... achieve the goal, as well, which shuts down those safe havens. >> warner: the administration's afghan war review released thursday said a major challenge to the success of the u.s. war in afghanistan is pakistan's failure to fully shut down those havens within its borders. the u.s. has tried to win pakistan's cooperation with a massive influx of military and civilian assistance-- $9.5 billion over five years. the pakistani military did wage campaigns against pakistani taliban last year in the swat valley and the south waziristan tribal region. but so far, pakistan has resisted going into north waziristan and militant-ridden areas of the expansive southern province of baluchistan. even so, defense secretary gates said there is enhanced military-

to-military cooperation, and it is getting results. >> everybody knows that failure to deal with the safe havens does present a real challenge, but i would argue that we are in the process of dealing with those safe havens-- the pakistanis on their side of the border, and afghanistan and pakistan and us working together. >> warner: there's a decidedly different view from retired general jack keane, advisor to the u.s. commander in afghanistan, general david petraeus. on "the newshour" last night, keane said pakistan is double dealing. >> make no mistake about it-- the evidence is unequivocal that the government of pakistan, and the military leadership of pakistan, aids and abets those sanctuaries. we have clear evidence to that... that fact. that's the reality. it's not a question of unable or unwilling. >> warner: tension in the u.s.- pakistani relationship was reflected today in news that the cia station chief in islamabad has left the country. his cover had been blown when he was named in a lawsuit over the

drone attacks. the associated press quoted a pakistani officer who said the country's intelligence service knew the man's identity, but had no clue how it was leaked. so why won't u.s. ally pakistan root out insurgents within its borders? for that, we turn to shuja nawaz, directs the atlantic council's south asia center and authored its recent report, "pakistan in the danger zone." he just returned from a trip there, and meetings with senior military officials. and christine fair, an assistant professor at georgetown's school of foreign service. she was last in pakistan over the summer. welcome back to you both. beginning with you shuja nawaz, so what is the hangup here? despite entreaties from washington y is pakistan still harboring, essentially, anti-afghan militants within its territory? >> i think it's forces have been overstretched, this is

their view. and even after the success in south waz irstand earlier this year and in swat before that, there are remnants, sanctuaries, they believe on the afghan side of the border in kunar as well as in other parts of the tribal areas which they have to clear in order to be able to move additional troops into north waz-- waziristan where they have 3700 troops. >> warner: so you agree what they are saying publicly that they do think pakistan will do this? >> i believe they will. i think it's a question of timing. the winter has now set in and they need to clear these other sanctuaries before they can concentrate enough troops, largely because there's now a confluence between the afghan and the local taliban. >> warner: do you agree, overstretched but they're going to get to it? >> they are overstretched. i disagree, perhaps, with shuja in the sense that i think the militant market is much more complicated there

are certainly militant groups that the pakistanies are going at with everything that they can despite their being overstretched. but there's also a number of groups. that i don't believe they will go after and that will be the haqqani network with very tight ties to the afghan taliban and al qaeda, and the core leadership of the so-called afghan taliban,. >> warner: and these are all essentially afghan militants who found half then pakistan rather than being pakistani taliban. >> absolutely. and they are critical element force pakistan, ultimately because it is afraid of one thing in afghanistan, it's not us, it's india. >> warner: so explain this, and this is what everyone says, that somehow pakistan is hedging their bets against the future. what is the scenario they envision? why would having a bunch of guerrilla fighters in their border lands put them in better shape in the future? >> the biggest fear is that the u.s. will repeat its earlier mistake and leave the area in a rush. and if it does there will be

chaotic conditions in afghanistan. and that will allow india to come in and take control through the northern alliance which is their biggest fear. >> warner: one of the major military opposition groups to the taliban that is now part of the government. >> yes. however, i think i disagree with chris's analysis. i think that they will be ready to go against some of the afghan groups, particularly haqqani because the afghan groups are now intermingled with the local taliban. and even as we speak, pakistani soldiers have been attacked and killed by these groups. and so i believe that over time it's simply a question of waiting for the new year, there likely is going to be an operation in north waziristan. >> warner: what dow say to that? >> look there are components of groups that have been targeting the pakistan military for quite some time such at-- against him the pakistanies haven't acted

and they haven't acted against that group because its futile at this time in fighting india. my experience is pakistani has been very good at taking a group prorx tect its core when it is useful but when they step out of line, mow them down. i expect to see more of that, sort of trying to keep guy --. >> warner: trying to have it both ways. >> trying to have it both ways, keep their core in research because they might be some day use pfl in skilling indians because whack them when they get out of line. >> warner: so you agree with shuja's scenario that they are envision. somehow an afghan government under the influence of india, so in that case they want guerrillas there that would go destabilize that government s that-- the plan? >> i think the pakistanies have fears no matter what because of geography. if we stay, and i actually don't believe that there is this consensus that pakistan wants us to be there until complete stability is reached. i think pakistan has fears under both scenarios. yand is a free rider under our security up bell-- umbrella. the longer we are there

under the security umbrella india can do whatever they want to do. >> warner: let's go on to what with the u.s. can do about this, because the u.s. has tried aid, engagement across civilian and military and all kinds of civilian and military ways. it has tried trying to embarrass the pakistanies, what more account u.s. do about these havens. >> specifically or not waziristan which is most critical because that is where the group is, and they have been the ones most in tacking kabul and are closest to kabul, if the united states were to overwhelm the pakistanies by giving them what they need and they haven't received in the numbers that they need, helicopters, if they-- that is a force multiplyer. then pakistan doesn't have the excuse of waiting to release additional divisions of by grade-- brigades from elsewhere because helicopters in that terrain would give them the edge they need. >> warner: what with the u.s. is doing is cia run

drone attacks is that sufficient? i mean what from what gates was saying yesterday, it's not sufficient so far. >> no, it isn't. you need boots on the ground and there can be only pakistani boots because if the u.s. were to cross the border into pakistan, the kind of chaotic conditions that would emerge would destabilize the country and the civilian government. >> do agree with that because sending in there is always talk about this that either the u.s. has or may send special forces, covert ground sources in. >> that has happened. and when it's become public t has been outrage us it has been so inform-- they have a hard time tolerating the drones because of the misinformation about them. but there is one thing the drones can't do. and we always talk about sanctuary. as being in that area. we don't talk about karachi, the major cities were very high value targets have been apprehended. our drones and our special

operators can't go anywhere near those places. >> we're not going to be bombing-- the old home of the taliban mullah omar or karachi, do agree. >> that's absolutely right. the the territory is far too vast forth pakistanies to launch any major mill star stare-- military operation. >> warner: do you think the u.s. can achieve success in afghanistan as long as these havens exist s there a way to do that? >> unfortunately by focusing all of our attention on the safe havens we have taken our balloff karzai and off our successes, indidecisions and bad decisions we've made over the last nine years in afghanistan. this is somehow scape goating. >> warner: but do you think is fatal, an achilles heel without which solving we will either stay mired there or leave in a way we don't want to have to? >> the bigger issue is dealing with pakistan's intention. i believe contrary to shuja

that haqqani is an asset t is in our national interest, no state does anything that abrogates its core sovereign national interest. >> warner: do you think the u.s. could quote succeed in afghanistan as long as these exist? >> yes, i think it can. but will will mean having to move forces away from the south and against the north waziristan board tore try and effectively steal it from that side of the border which the u.s. has not done. they only have special forces there. no large regular forces. >> warner: but you've heard secretary gates say, he used to run a covert op out of pakistan into afghanistan against the soviets there is no way to seal that border. >> you can create a bigger problem for them and only have 46 kilometers of territory to cover. >> we have to leave it there. shuja nawaz and christine fair, thank you both. >> lehrer: next, we begin a series of reports about what

life is like for haitians, nearly a year after the earthquake there. tonight, we look at how haitians are faring in the country they share an island with, the dominican republic. this story was produced through a partnership with "usa today," the pulitzer center on crisis reporting, and the newshour. special correspondent stephanie hanes reports. haiti's earth quake and its aftermath have captured the world's attentionment but on the other side of this caribbean island a quieter, man-made disaster is unfolding. the u.s. state department estimates that hundreds of thousands of people here have become n effect, stateless. they are the children and grandchildren of haitian immigrants and are denied access to education, health care and employment. this debate leads thousands of people to be retroactively stripped of their nationality. people who are dominican.

dominican human rights activist sonia pierre is worried recent changes to the constitution will make it even harder to obtain citizenship documents. for years the dominican helpic had-- republic had a policy like the u.s. where almost anyone born in the country became a citizen. but the government has changed its laws. and now says parents must be citizens themselves for their children to be considered dominican. pierre says they are using this change to retroactively deny rights to dominicans of haitian origin who have lived here for decades. in this country, if you don't have a document, even buying a cell phone is difficult. you are also denied access to many rights that are considered inalienable human rights. even the right to move freely within the country. >> there are close to 1 million people of haitian origin, immigrants and their descendants in this country of 9.5 million. so the new laws touch those from all walks of life. people such as lauer and single mother ciani.

her parents were sugar cane cutters. for most of the past century, imported haitian workers fueled the dominican sugar industry. they lived in impoverished communities and their children born on dominican soil were considered dominican. ciani was one of these children. she grew up there but went to law school and has started her own practice. she is work out of a friend's beauty salon until she can pay for a proper office. >> this is the office. >> her law career has been delayed because of the government's new policy. only after ciani went to the media did the government release the documents she needed to graduate. today ciani is going to the civil reg tree to again test her rights as a dominican citizen. in the past, the government was under orders not to release birth certificates to children of foreigners.

my i.d. card, my passport, all say i'm dominican so i don't know why there is a problem. >> reporter: this is the first:. >> this is the first time i've requested a copy of my birth certificate since the new constitution was approved. >> reporter: proof of citizenship is required here for everything from marriage and driver's licenses to voting. for dominicans of haitian origin, obtaining these documents has become a legal and bureaucratic nightmare. after 30 minutes, ciani returns empty-handed. >> i was told to go see a judge because cases involving identity papers are resolved by a judge on a case-by-case basis. >> reporter: the dominican government says their new policy only targets foreigners and that nobody is stateless. >> this term, stateless,

does not apply in the dominican republic. because these people who are in transit, these people who are not legal residents, are supposed to register their names in the book of foreigners that exists at the joint electoral counsel office. >> reporter: the dominican government was recently called to the interamerican commission on human rights and questioned about the stateless issue. delegation leader senator said his country needs the new laws to fight illegal immigration. >> discrimination doesn't exist there. but there's a phenomenon that international organizations need to think about are with respect to the influx of haitians there are haitians that have been living in the dominican republic for 50 years. they come for a while, they go back to haiti, they return, and then they go back to haiti. we where a country with very limited resource. >> reporter: the border with

haiti is poor. since the earthquake, the government estimates that at least 60,000 haitians have migrated into the dominican republic. many dominicans are angry about this influx. and say haitians take jobs and financially burden public services. but human rights advocate say this is confusing the issue. in neighborhood after neighborhood, one finds dozens upon dozens of people who consider themselves dominican, using citizenship rights they had previously taken for granted. >> they're taking way the nationality of people who were born in the 1940s. >> some of these people have been in the country for more than 70 years. they may have three, four, five, six generations in this country. so they are leaving all these generations without documents. >> take the family of andre jean, the former sugar cane worker who entered the country with the legal work

permit. >> we've lived here since 1956. i am a 73 years old. i came to pick sugar cane during the time of trujillo. we were poor and they said they had jobs so we came. >> my father came here in 1956. and all of his children were born here. >> those diplomas are from my children. when they move out of the house, they leave their diplomas here on the wall. >> reporter: andre's children were born and grew up in the dominican republic. two of his sons joined the dominican police force. one died in the line of duty, clearing traffic for a presidential motorcade. now because of the new policies, the government says they are not citizens. >> it's been four years since my kids graduated from

high school. but they can't go to university because each time gi for papers, they don't want to give them to me. >> i felt bad. i felt like a nobody. i was born here. they shouldn't be able to deny my documents. >> with these documents, i could get into university and get any type of a job. >> from my high school class, none of the kids have a chance to go to university because they all have the same problem as i do. >> reporter: fundamentally, for us, having an i.d. card is the beginning of the right to have rights. >> swissity our web site for more coverage of life in haiti one year after the earthquake there are also links to the "u.s.a. today" and pulitzer center series. >> and now more on the tax c >> brown: now, more on the tax

cut deal and president obama's broader agenda. as director of the national economic council, lawrence summers has been a leading architect of economic policy for the last two years. he's leaving the administration at the end of this month to return to harvard university. i sat down with him yesterday at his office next to the white house. lawrence summers, welcome. is the tax cut deal good economics or just necessary politics? how do you think about it? >> well, i think it's very good economics. it's very good economics for the catastrophe that it averts. if we had not been able to reach an agreement and the middle- class tax cut had gone away, and family income taxes had gone up by $2,000, the risk to the economy would have been very, very great. moreover, the elements that are contained in this agreement...

that's going to provide an impetus. now, the bill is not perfect. >> brown: not perfect-- in fact, you call it a compromise, you've called it a compromise, no question, right? >> it's a compromise, from the president's perspective, and economics very much supports him on this. giving relief to the highest income families-- giving relief, in particular, on very large estates of a kind that only go to a few thousand people-- none of that is the best way to move the economy forward. >> brown: in fact, it's something he talked about as a core value. >> we think it's a real mistake. on the other hand, the country has to move forward. and we move forward by taking ideas from both sides. but i will tell you this: compromise that was right with a weak economy in 2010 will be very wrong two years from now as the economy recovers and progresses. >> brown: well, okay, that's... but you've been in washington a long time. i mean, do you think that, realistically, the politics change in what will be a presidential campaign, an election year? >> i think they do.

i think they do. i think they do change in important ways because i think they derive importantly from what the right economics is. and when the right economics is that the economy needs more demand, and recovery hasn't been as rapid as we like, then you have one kind of politics. and when we've had a chance to have a broad discussion of tax reform and of the tax system over two years, when the recovery has-- as i expect it will-- gained momentum, then you're going to have a very different kind of political context. >> brown: so compromise now, but not in 2010. >> not on the question of special tax relief for the wealthiest families. >> brown: earlier this month, we saw the latest jobs numbers, widely characterized as extremely disappointing. just 39,000 new jobs added. did you anticipate that the economic recovery would be as weak as it has? and what is your explanation, as we sit here? >> well, the first thing to say, i think, is that while that jobs

number was very disappointing, most of the statistics-- on industrial production, on retail sales, the weekly unemployment insurance numbers-- for the last couple months have actually been coming up better than expected. and that's why almost all economic forecasters have been revising their forecasts for the fourth quarter of 2010 and for the year of 2011 in an upwards direction. but i don't think there's any question that when you're going through the kind of crisis the united states is going through now, recovery doesn't come as rapidly as one would like. that's why the president believes we have to keep our foot on the accelerator. the tax bill is one part of that. investments in infrastructure are another. making sure that we're doubling our exports over the next five years is a third. we cannot be satisfied with where the economy is right now. >> brown: we had a stimulus plan, 2009. in retrospect, was there not enough put into that? do we... as you sit here now, do

we need more? >> well, i think right now the tax measures that we saw are very welcome. the president has put forward a range of other proposals, such as taking advantage of this moment when we have remarkably low interest rates-- close to 4% money for 30 years, when we have 20% construction unemployment. that is surely the right moment for the country to rebuild an infrastructure that is badly decaying. so i think there's a lot more that has to be done. the president will be talking about competitiveness. the president will be talking about doing what's necessary to preserve america as the envy of the world in his state of the union address. >> brown: now, were having this tax cut debate. we have the stimulus debate at the same time as there's this

rising fear about deficits and debts. and i think its confusing to people. when do we switch to acting on the deficit? >> great question. when recovery is fully and clearly established, it is imperative that we turn to deficit reduction. look, what we need to do is tilt the path. in the short run, we need to make sure were doing everything we can to support demand. in the long run, the problem is exactly the opposite. we need to make sure that spending and taxing are in much better parity. >> brown: in the longer run, you look now at what's going on in europe, where austerity is the name of the game. do americans face a future like that? do we have to be prepared for fewer government services, a kind of future of cuts at all levels? >> if you look at the scale of the adjustment that's necessary in the united states, it is important relative to our current political challenges and our current political process. but it is dwarfed-- by a factor

of four, five, eight-- by the magnitude of the fiscal adjustments that are necessary in many countries in europe. there will obviously be things we'll do that we wish we didn't have to do. but i don't think any of the kind of wholesale abdication of public responsibility that is being forced, because of extraordinary financial exigency on the european countries, lies in our future. >> brown: we look at the politics of today, which, to many people, look very toxic and very partisan. can washington get together to deal with the kind of long-term problems you're talking about so that we don't eventually face a europe-type situation? >> here's what i know. the president really wants to. you know, people have an enormous number of things that they're pessimistic about what washington can do, gridlock and all of that. and they've got reason for it. on the other hand, i dare to be hopeful. in the last month, we have seen a coming together on a major tax compromise.

we have seen a major trade agreement pass and be supported by a major union. we've seen, in the so-called bowles-simpson commission, bipartisan support from both parties for the idea that tax expenditures are expenditures, and that something needs to be done with respect to our tax system. so, i've been very gratified in this, my final six weeks in government, that during the period after the election, you actually see some convergence and some action on a significant range of issues. >> brown: and one last issue. what about the danger of replaying the financial meltdown? here we are two years later. people look and we see that some of the banks are bigger than they were. many of the corporate heads, the c.e.o.s, are still in place. this administration has faced some charges of being too cozy, at times, with wall street.

what do you say to people who feel that not enough has been done to prevent a future meltdown? >> well, i think you have to look at each institution. and i think what you'll find is that the capital ratios, the reserve that the institutions have, has been mandated to be far greater than it was coming into the crisis. i think what you'll find is that there are a whole set of restrictions that limit the ability of one institution in trouble to infect the entire system. for example, that instead of being traded in the shadows, derivatives now all have to be traded on clearinghouses and the like, where the parties are responsible for monitoring each other and where they're all liable if something happens. so i think the risks of financial strain are still there. and there are very serious problems in europe. there are problems in some

american municipalities. there are parts of the country where the housing issues have not been fully worked through. but if you look at where our major financial institutions are in terms of the size of their buffers, in terms of the value of their equity, it's really in a position that i don't think anyone would have dared to hope 18 months ago. >> brown: all right, lawrence summers. thanks for talking to us. >> lehrer: and to the analysis of shields and brooks-- syndicated columnist mark shields, "new york times columnist" david brooks. >> lehrer: the tax cut law or the tax cut deal is now the law of the land. and is all well in america as a result? >> jim, i think harmony and tranquillity is griping the continent. a couple of things. i mean victory legislatively and all that, not the toughest vote in the world, jim. to stand up and say i'm going to ask you one thing, jim lehrer, could you cast a vote to cut everybody's

taxes. mr. president, only because it's in the interest of the country will i do t i know it's my patriotic duty. i mean we have reached the point where a president has asked us to cut anybody's spending or to raise anybody's taxes. but that said, i thought that the best analysis was made by peter wells to democratic congressman from new york who said too much debt, too few jobs. and i think we all hoped it is going to generate economic activity. but i think there is skepticism from many democrats. >> lehrer: david, president obama speak of democrats is getting most of the credit for this having been passed. does he deserve it? >> he deserves some, i mean, it is an easy thing to spend tax cuts about. you have to crawl before you can walk. we haven't seen a lot of signing ceremonies with mitch mcconnell standing there. >> lehrer: this may be the first. >> that is a good point. >> lehrer: in the two years as the obama administration --

>> kentucky derby of the week. >> i think, you know, think about about the tone if they hadn't been able to reach this deal. if we have a republican congress very aggressive, very confrontational coming in. i think this has changed the tone a little. i think it at least opened the crack for future compromise. as to the substance, i don't think it's going to be a big stimulus. i think if we raised taxes it might have averted something. frankly, i think is a good deal t is probably good forth economy it will probably create a little boost. i spent a lot of the week in new york with the business and financial people and maybe they are living in a bubble but the mood there is way more confident about the economy. or optimistic. >> what do they say. >> that things are opening up. that the christmas season started out pretty well. they are suddenly saying we've had this period of contraction, is everything tamped down but now they've a feeling of release. >> and if that's true, i hope it's true, then this will look like a missed

timed stimulus but we can't be confident. i think the projections are slow growth maybe they are right but i was really struck by the complete difference in tone between washington conventional wisdom about the economy and new york conventional . >> coy make one dampener on that, that is jim, the law f it was allowed to go forward would have resulted in taxes being raised, especially on the wealthiest. there is no way taxes were going to be raised on middle income people. and if two years away from an election there wasn't the will or the backbone to do that, can you imagine seriously on election year 2012 when this expires, when the republicans take control of the house that you are going to stand up and say now's the time to increase taxes? i means that's the fear that these tax cuts have been made permanent. and we're talking about is in the short space of five years, that the interest on the national debt will be-- the interest will be

larger than the defense budget is today. i mean that is a-- that is such a sobering, really scary prospect. and i think that's -- >> that's why my hope is it will be sub-- in a much larger debate, a tax reform debate, and to have that debate you have to build up areas of trust. as the administration is looking forward to the state of the union, they are thinking we will have fights. but how can we build a fence. how can we build a fence against some issues where we think we can. i think the administration is pretty far advanced. i'm thinking about corporate rate reform. maybe some individual. i think the president would like to do some social security reform. so they are trying to think of areas where they can work together and build on at least the spirit of what has been done. >> lehrer: and fight about everything else. >> of course that is politics, that's normal. >> lehrer: sure. speaking of fighting, the earmarks problem, of course it's in this new spending bill and people are saying there is $8 billion out of the what is it, 1.2 trillion

spending bill is this something to get worried about? >> no, not particularly. earmarks have become the symbol of washington insider dealing and corruption. and i understand why that is i think if you started when the republicans toob the majority they were like 2,000 earmarks a year in the big budgets. and that raferpd up in those years to 14,000. and that was probably a problem. but a lot of that is just the grease you need to get things done. and lot of very good programs are funded by earmarks. if you look at the total budget situation, it's trivial. what matters is medicare. nobody wants to talk about medicare. so they get tough on earmarks. and so what's happened is a complete change in standards. what was acceptable three years ago when it comes to earmarks is now completely unacceptable but we should remember it's symbolic. if you want to be serious about deficits, you have to be serious about entitlements and taxes. a big thing. >> part of it is the most rank of all political character defects that is hypocrisy it is a little bit like the chairman of the citizens, just getting kauingt at coming out of a

pornographic movie theatre. you had in rather a magic moment in the senate press gallery, senator john-- of south dakota, a senator john cornyn of texas mentioned as a president 58 candidate standing it up there talking about this terrible bill, this omnibus bill that the democrats came up with, 1.2 trillion to fund the government. and being asked about the earmarks they put in it. 25 in boone case, 46 in cornyn's case, specific earmarks. and boone said he was for projects but against the bill. so the republicans have made earmarks a big issue. i happen to come down on the side of bob bennett the retiring senator from utah who pointed out look f you give up all earmarks, the congress does, you're transferring enormous power to any president, the administration. they're going to make all the spending decisions.

and yes congress, people talk about constitutional powers and checks and balances. they are just given enormous-- the idea of making them transparent and accountable and not for profit, i think is a legitimate that people have to stand up and say yes, i put that in there. and this why i did it but i think it really is an excess. >> the afghanistan-pakistan review what did you read in that that stuns you or surprised you or did anything to you? >> i wouldn't say it surprised me there has been a lot of good reporting outing of that area and we know they made, i guess everyone uses its word fragile progress on the military people and some are confident they are making real progress. but then the toob two problems are the sanctuary problems we heard earlier in the program on pakistan and the afghan government not being able to fill in and actually provide governance. i guess my view is that we won't really know until the spring or summer whether they are filling the military success with some political success. but i would observe in the tone of the president, much

less emphasis on the withdrawal and much more emphasis on 2014 which is the nato agreement. and so i think regardless of what is happening right now, at the moment our time frame has gone much long-term and we'll be there significantly. >> lehrer: you steit same way, mark? >> i think that is the way the administration sees it. popular support, jim, is eroding. it's now at a high of 60% do not think that sacrifice costs benefits are worth it and it dropped another int 8 points to only 34% think it is. and if you graft that out, you can see support for it going south. the president finds himself politically despite the arguments on either side, the merits of the case or whatever, the-- chiefage seems between the intelligence people who are more optimistic than the military people. but the president finds himself like de on the tax bill, seeking republicans to support his position. and i think will you see a

building at least descent on this issue. >> anti-war democratic. >> if there is going to be a challenge to president obama in 2012, and i would not bet that there would be, it will come on this issue. it will come based upon opposition to the war. and it would require the war going further south and more american casualties and a sense of chaos and disaster. but i mean nass's where it comes from. it won't come on a domestic issue, i do not believe. >> lehrer: what do you make of the pakistani haven issue that margaret discussed on the program earlier, you talked about it last night as well it was in the review. does that seem impossible to resolve or is that as important as they say it is or do you have a view. >> i think when one talks to the general they say you can't win a war when they can just retreat to sanctuaries across the border. and that border is uncontrollable. and yet i don't think anybody has an answer to

that i was really struck by not only what our guests said but what jack keenan said. and that is the way the pakistani government is. and we've been dealing with this problem for a long time and nobody has been able to sol of it because they have these interests. >> lehrer: speaking of a problem dd for some time, richard holbrooke died this week watch. do are your thoughts about that. >> outsized. no question about it he made us feel important because he was a total consumer of all press. anything that was said, written about any subject he was interested let alone himself. but two things about richard holbrooke that stand out to me, one, jim t this is a city where a lot of people come for a couple of years from their profession out of a sense of civic duty or to burnish their professional credentials, work in administration, go back with their professional pursuits. richard holbrooke pursuit, his passion was public service. he made a lot of money in the-- in his wilderness years when ronald reagan and the bushes were in power.

but he couldn't wait to get back and get back in the middle of it everyone talks about the dayton accords and they were a sing ale chievement and this other thing. the thing he did as deputy ambassador to the u.n. was to persuade through determination and skill jesse helms, the conservative chairman of the foreign relations committee from north carolina to come up to the back dues that the united states owd to the united nations which was crucial. >> lehrer: millions and millions of dollars. >> richard holbrooke did that. it was-- he will be missed, an empty place. >> i seem to recall a couple weeks ago last time he was on the program, i was describing a trip i was hoping to take to afghanistan. he said no, don't do it that way. and he went on for to 20 minutes how to do my job and excellent advice. another time we were sitting next to each other in a panel discussion and he started whispering about something, about vietnamment and he couldn't stop. he just kept going and talking he was so caught up. and that is what mark described. i think there was no distinction between his personal ambition and his

public service. that his self was so fused with government service that that is when he came alive. and those moments when he was most alive during vietnam, during the balkans thing and now during afghanistan, that is when he was fulfilled. and in a sense somebody made the point, he literally died for his country because he knew he had heart problems. >> he was pushing himself. >> lehrer: amen to you both. thank you. >> brown: again, the major developments of the day, including the president signing the tax cut bill. the estate of a florida man agreed to return more than $7 billion it made from bernard madoff's ponzi scheme. and u.s. drone aircraft attacks killed more than 50 suspected insurgents in pakistan. and to hari sreenivasan in our newsroom for what's on the newshour online. hari. >> sreenivasan: mark and david will be here later tonight for our doubleheader feature on the politics of sports and the sport of politics. we have a preview of ray's upcoming reports from cuba--

that's on the "rundown" news blog. on "art beat," jeff talks to rock legend patti smith about her national book award-winning memoir, "just kids." also there, you can submit your favorite books, films and music for a special year-end feature next week. all that and more is on our web site, newshour.pbs.org. jeff. >> brown: and that's the newshour for tonight. on monday, ray suarez reports on economic change coming to cuba. i'm jeffrey brown. >> lehrer: and i'm jim lehrer. "washington week" can be seen later this evening on most pbs stations. we'll see you online, and again here monday evening. have a nice weekend. thank you and good night. major funding for the pbs newshour has been provided by: >> this was me-- best ribs in nelson county. but i wasn't winning any ribbons managing my diabetes. it was so complicated. there was a lot of information out there, but it was frustrating trying to get the answers i needed. then, my company partnered with united healthcare. they provided on-site screenings, healthy cooking tips. that's a recipe i'm keeping.

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