taking his prescription for health care reform directly to the people, with a prime time news conference. toping his agenda, finding the cost cuts needed to pay for the trillion dollar overhaul. >> suzanne: speaking of doctors, this man has been known as doctor doom, predictor of the financial crisis and mortgage meltdown. tonight, we ask economics professor nouriel roubini where the economy is headed next. >> paul: what do gas masks and the credit crisis have in common? coming up, we introduce you to a new jersey company that knows the answer. >> suzanne: tonight's "street critique" guest says he'd rather be in this market than sitting on the sidelines. he's david garrity, principal at g.v.a. research. >> paul: i'm paul kangas. >> suzanne: and i'm suzanne pratt. susie gharib is off tonight. this is nightly business report for wednesday, july 22. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you. >> suzanne: good evening everyone. president obama will tell the nation tonight that health care reform is central to repairing the economy. if it fails, the president warns your insurance premiums and out of pocket costs will skyrocket. health care reform is bogging down in congress, and tonight's news conference is part of an effort to get it back on track. but as darren gersh reports, the key unanswered question is still how to control costs. >> reporter: with negotiations over health care reform in intensive care, house democrats like xavier becerra stressed the need to cut costs in a system everyone agrees is inefficient.

>> in a two and a half trillion dollar system, you should be able to find the savings you need to pay for any reform. >> reporter: health care experts do agree on where to find a chunk of those savings. starting with medicare, where more efficient delivery of services could save more roughly $120 billion a year. reducing the employer tax incentive to offer health insurance, some $250 billion a year, would also save money by forcing businesses to seek out more efficient health plans, hospitals and doctors to treat their employees. there is just one problem with saving money in health care says the heritage foundations stuart butler. >> somebody has to make the decision. somebody has to stop certain things from happening. and either the government is going to do that or the market is going to do that. it's got to be one or the other. each of them require changes, very profound changes, in the way in which we organize health care. the problem in congress is they don't want to make those decisions.

>> reporter: under prodding from the obama administration, drug makers and hospitals have volunteered to trim $235 billion from their part of the health care pie. sounds like a lot, but that's less than 1% of spending over the next decade. what is needed, wilensky says, is a fundamental change in medical. that means doctors working in teams across specialties, paid not per visit or procedure, but by the bundle to treat a patient's disease. >> it's a lot of changes and it's much tougher than saying we have 7,000 codes we pay physicians under medicare and we're going to take them down by 5% or 10% or $10 across the board. that's the kind of thing congress thinks about when they want to save money. >> reporter: if health care reform is to succeed, congress may need to come up with some new ideas and fast. as the baby boomers age, they are requiring more medical care.

and analysts agree the country can't wait another decade or two to address rising health care costs. darren gersh, "nightly business report", washington. >> suzanne: joining me now with his thoughts on healthcare and the economy is nouriel roubini. he is the economics professor at nyu's stern school of business, who forecasted the housing bubble, way before everyone else. professor roubini, welcome back to nightly business report. >> pleasure being with you tonight. >> suzanne: i want to start with health care. what do you think if there is health care reform and we see something in the near future, it's likely to do to economic recovery in this country. >> we need universal health care but in a way that controls the fiscal costs. the new bill the cost at a trillion in a half over the next two years. one is to make sure the government works with companies direct and reducing the cost of

medicines and the system gives incentive to doctors with too many test and procedures because they're paid on that and control and change that system. >> suzanne: so what is your forecast for the recovery right now. i've been hearing par growth. what does that mean? >> first of all, in my view the recession is going to continue through the end of the year it's not over yet and the potential growth rate for the u.s. economy is three percent i expect the growth rate for the economy will be anemic on one trend and one percent for the next two years. you have u.s. consumers are shopped out and spending less and they're not going to consume very much. you're financial system is severely damaged and credit growth is going to be limit and you have the relieve rathing of the public sector with a large budget deficit and increases in public debt will crowd out the economic recovery of the private sector. i don't see a lot of economic

growth ahead of us. >> suzanne: are you worried about a double-dip recession? >> yeah, the risk is by the end of the next year if it remains large around one and a half trillion and if the feds keep printing money to increase interest rates expect inflation is go to go up and if it were to go up mortgage rates will go up and barrowing coughs fo barrowi and affect recovery so there's a recognition being of a double-dip recession. >> suzanne: is there a percentage you'd be willing to put it at? >> it will depend on the decisions made about exit strategies from the massive monetary easing and fiscal easing. it will be difficult because if you reduce the fiscal stimulus too much too soon and raising tax and cut spending the economy will tip in the recession. if you wait to long and the deficit remains too large the

market will worry about rising inflation and deficits and you'll have recession again so the timing and the sequencing and when to do it will be a very difficult policy proposition. >> suzanne: if you're economic projections are correct and i have to point out they're below consensus it would seem the stock market may have gotten way ahead of itself at the current levels. do you agree with that? >> yes. the stock prices are justified because they're void of the risk of a near depression that's the race bein risk in the first quarter and if the economy is going to be weaker and profits won't recover as fast and if you have weaknesses in the rest of the world, europe, japan i think there will be down-sized risk from the stock market with this points on. >> suzanne: what are you looking for your money overseas or u.s. equitiys to do the best. >> my mind is still in cash

because i think there's risk on equities on credit and commodities. i think the downside is too many risky assets it's better to wait for a mow robust recovery. >> suzanne: what would you expect the stronger signs to be. what do you look for? >> well, we have to look whether there will be stablization of the job market and unfortunately i see unemployment rate well above ten percent in year and close to eleven percent at the peak next year and there's a massive weakness because of consumers being hit by the housing wealth and falling labor income and rising debt and that's why i'm some how bearish about the recovery i expect it to occur anytime soon and that will be a negative for the markets. >> suzanne: very interesting thoughts from you. thank you very much for joining us. >> pleasure being with you. >> suzanne: my guest this evening professor nouriel

oubini. >> paul: wall street went from a strong open to a mixed finish as investors focused on the continuing flood of corporate earnings. the dow opened with a 31 point advance while the nasdaq was up 11 points. but after a week of gains profit takers moved in and by noon the blue chip dow was in negative territory. the techs managed to hold on giving the nasdaq its 11th straight session to the upside. but the dow slumped to a closing loss of 34.68 at 8881.26.

>> suzanne: small businesses are still reeling from the credit crisis. the national small business association said today nearly 40% of its members can't get the financing they need to run their companies. that's up from a third at the end of last year. as we continue our "reviving the economy" coverage, scott gury shows us how one small business is facing its own credit challenges. >> 60-year-old and family owned ames in hamburg new jersey does things with rubber. it makes gas masks for the army, copying machine rollers for xerox. it coats the insides of engines for the f-35 jet fighter. it's working on a prosthetic device. in the last 15 months the $25 million company has seen sales grow 20% and now employs nearly 200 people. if you're looking for green shoots, ames seems a likely candidate. the company is adding to its payroll and it wants to expand its products and increase production.

the problem with the credit markets in their current state, is getting the financing. while ames has been doing business with the same local bank for 40 years, that bank is now part of a much bigger banking giant. and ames c.e.o. charles roberts says that giant likes doing business with bigger firms, rather than a smaller one like his. >> certainly they're looking at their risk profile and what are they willing to take on. and you know, maybe as a small business, we don't fit that profile nice and neatly and its being, you know, looked as from is this now an asset based lending risk as opposed to a traditional lending opportunity. >> reporter: the market for asset based lending is virtually frozen. as it's biggest player, c.i.t. group, is struggling to stay afloat. few banks are rushing to relieve the credit crunch for hundreds of thousands of small businesses. one exception is new york based sterling bancorp. c.e.o. louis cappelli says his company sees opportunity. >> we would take customers on from anybody, any other institution, not necessarily from c.i.t..

and, our appetite for different businesses is very wide. we do manufacturers, distributors, importers, professional firms, and so our scope is rather deep. >> reporter: the small business administration reports some thawing in the market for loans it backs. but issuers of credit cards, often used by small businesses to carry short term expenses, are raising interest rates and cutting credit lines. ames c.e.o. roberts says it is important the bankers appreciate how small businesses impact the economy. >> these lending institutions need to understand and help us to achieve and continue this employment and growth stream that we're on, because at the end of the day we're going to help accelerate the turnaround of the current economic doldrums that we're in. >> reporter: roberts says ames would like help in the form of easier credit, but is not looking for a handout. scott gurvey, "nightly business report", hamburg, new jersey.

>> suzanne: when it comes to regulating "too big to fail" financial firms the obama administration wants to share the load. the treasury today sent congress a proposed bill calling for a council of regulators to address systemic risk in the financial industry. the financial services oversight council would include an alphabet soup of regulators including the heads of the treasury, the federal reserve, the s.e.c., the f.d.i.c., the c.f.t.c. and the federal housing finance agency.

now let's take a look at our stocks in the news tonight.

>> paul: tonight's "street critique" guest is seeing strength in the tech sector. he's david garrity principal at g.v.a. research david welcome back to n.b.r. >> thank you, paul. good evening. >> paul: before we get into

technology. what's your opinion on the market and the economy in general? >> on the market we're over weight equities we think the central banks are supportive and the equities will be the class that out performs. divided opinion how strong the economy will be and the market will continue to benefit. >> paul: so you're a bull at the moment. >> yes, sir. >> paul: we saw big technology names this week. how do you feel the sector is going overall. >> we're seeing strong expense control and though revenue hasn't been as robust as analysts hope for as we start to see growth unfold such as windows 7 from microsoft we think there's nice leverage for investors to look forward to. >> paul: speaking of microsoft it posts results tomorrow. what are you expecting? >> we're looking for 36 cents versus 46 cents a year ago and the big story is the interduction of windows second

in the second half. >> paul: we're been hearing with the google-microsoft competition. how do you feel it's moving out? >> the competition from google in 2010 is going to intensify with two operating systems google said they'll introduce in the market. >> paul: and tomorrow amazon reports results and today it bought online zappos for $850 million. what's your take on that deal. >> amazon has increased the number of products to their site and it will make an interesting addition especially if we see consumer incomes rise. >> paul: any other particular names you like now and why in the tech sector? >> certainly, are we spect to tech names, crisco we think is well positioned and we see them as attractively val you'd with smart phones and research in motion opposed to apple or palm provides a better risk tradeoff for investors.

? csco the symbol on nasdaq and go ahead, david. >> yes, and then last but not least we think yahoo as we start to see a display recovering in the second half of the year looks attractive and with regard to yahoo they may have a trans, with microsoft. >> paul: do you own any of the stocks we mentioned here? >> certainly. we own microsoft as well as crisco in personally and in our portfolios. >> paul: thank you for sharing your insights, david. >> thank you, paul. >> paul: my guest david jarrity of dva research. >> suzanne: tomorrow, ford c.e.o. alan mulaly joins us with an update on the automaker's turnaround. >> suzanne: it appears bailed out insurer aig learned a lesson from its bonus scandal. the firm withheld $2.5 million in bonuses to its senior managers last week. aig is reviewing bonus payments with washington's compensation czar.

in march, aig sparked national outrage when it paid $165 million in retention bonuses. after taking $200 billion in government aid. >> paul: chrysler is looking to clear its showrooms of 2009 models by doubling the government's "cash for clunkers" incentive. the automaker will offer up to $4500 in cash or zero percent financing for six years to consumers who trade in their gas guzzlers for new vehicles. that's in addition to a federal voucher worth up to $4500 towards a fuel-efficient car. "cash for clunkers" and the chrysler incentives start tomorrow.

>> suzanne: here's a look at what's happening tomorrow: in the "money file" tonight some sneaky credit card practices to watch out for. here's harriet johnson brackey personal finance columnist at the "south florida sun sentinel." >> you probably haven't noticed, but there's a major new law on the books that's designed to reform credit cards. well, of course you haven't noticed. because it hasn't taken effect yet. and that's the key reason why the credit card companies continue to play their hijinks. and consumers continue to suffer.

most of this new law wont touch the industry until next february. but credit card companies are looking at the calendar and slipping into place now some big penalties and a few things that wont be allowed if they wait until next year. such things as: -lowering credit limits. -significantly increasing the minimum payments. -raising the credit score required to get a card. and, in a punishing trend, some big issuers of fixed-rate cards have switched to variable rates. the reform law will force credit cards to actually tell their customers before a rate goes up. but, if its a variable rate card, they can just slip it in there, no notice required. net result: you'll never know today what rate you'll be paying tomorrow. credit card companies seem to be doing their level best to show us the bad behaviors that we need to regulate out of existence. yes, reform is needed. now.

not next february. congress needs to rewrite the rules for them, again. i'm harriet johnson brackey. >> paul: recapping today's market action a split decision on wall street: the dow lost 34 points. while the nasdaq logged its eleventh session to the upside gaining 10 points. to learn more about the stories in tonight's broadcast to watch our streaming video and to take part in our daily blog go to "nightly business report" on pbs.org. you can also email us at n.b.r. at pbs.org. >> suzanne: that's "nightly business report" for wednesday, july 22. i'm suzanne pratt goodnight, everyone. and good night to you, paul. >> paul: goodnight suzanne. i'm paul kangas wishing all of you the best of good buys. "nightly business report" is made possible by:

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