>> lehrer: good evening. i'm jim lehrer. democrats spoke optimistically about passage of the health care bill on sunday. >> brown: and i'm jeffrey brown. on the newshour tonight, kwame holman reports on the president's pitch at a virginia university, and efforts by house leaders to round-up votes. >> lehrer: and mark shields and

david brooks analyze the democrats final push toward a health care bill. >> brown: then, we have a debate on turning the student loan program over to the federal government with congressman george miller and sallie mae executive, renee mang. >> lehrer: margaret warner previews her upcoming series of reports from yemen. >> brown: and paul solman examines big science on a very small scale. >> lehrer: that's all ahead on tonight's newshour. major funding for the pbs newshour is provided by:

>> lehrer: the head-counting in the house was in high gear today, 48 hours before a sunday showdown on health care reform. newshour congressional correspondent kwame holman has our report. >> holman: democratic leaders sounded full of enthusiasm as they began the day. house majority whip jim clyburn, the party's chief vote-counter, said he's confident of getting a majority of 216 votes to pass the health care legislation.

>> i feel very sure that we'll vote sometime after 2:00 sunday and the bill will pass. >> holman: at a briefing later, speaker nancy pelosi echoed the optimism. >> i'm very excited about the momentum that is developing around the bill. i say to you every time i see you-- one day closer to passing historic legislation, which will make history... of course, but progress for the american people. >> holman: the house leaders posted their final version online yesterday. the so-called reconciliation bill shares features with the measure that already passed the senate. both would extend coverage to more than 30 million americans; require every american to obtain insurance by 2014 or face a penalty; provide subsidies to buy coverage for families of four earning less than $88,000 a year; and ban insurance companies from denying coverage for pre-existing conditions.

the house measure also makes changes to the senate bill. it would drop a special medicaid deal for nebraska and add more medicaid funding for all states. >> we do want the language to be closer to what we had in the house bill, because that represented a compromise between those who have a legitimate concern about the reimbursement to their states being unfair, and they are... and those who say, yes, but we're dealing with large populations of poor people and cultural diversity and the rest. >> holman: other fixes in the reconciliation bill would gradually close the gap in medicare's coverage of prescription drug costs; impose a medicare tax on investment income for families earning more than $250,000; and delay the tax on high cost health insurance until 2018. as lawmakers digested the details at the capitol, the

president made one more pitch for congressional action at a rally in northern virginia. he painted the fight in stark terms. >> if this vote fails, the insurance industry will continue to run amok. they will continue to deny people coverage. they will continue to deny people care. >> holman: mr. obama appealed to supporters to add their weight to his own lobbying efforts. >> make some phone calls and knock on some doors, talk to your parents, talk to your friends. do not quit, do not give up. we keep on going. we are going to get this done. we are going to make history. we are going to fix health care in america with your help. ( applause ) >> holman: president obama's appearance here at george mason university was the public part of the final push leading up to sunday's vote. behind closed doors, mr. obama continued to press wavering democrats in meetings and calls this afternoon. one lawmaker he won't have to

call, ohio's john boccieri, who became the fourth house democrat to say he'll switch his vote to yes. >> a lot of people are telling me this decision could cost me my job. there's been a lot of lies and fear-mongering. this town is wrought with that these days, but i'm standing up today and i'm doing what i believe in. >> holman: but other democrats were proving harder to convert. michigan's bart stupak leads a dozen anti-abortion members. he reiterated today they want stronger restrictions to make sure there's no federal funding of abortion. >> if they had the vote today, i'm still a "no" vote. i mean, you know, a lot of promises are made around this town. you've got to lock them down. and there has been no lock-down yet. we're still negotiating. >> holman: republicans uniformly oppose the bill, and minority leader john boehner warned the opposition is reflected nationwide. >> americans are jamming the phone lines here on capitol hill. they are screaming at the top of

their lungs that they "stop, just stop." republicans are listening, and we're standing with them. >> holman: if the house does pass its package this weekend, the senate bill will go to the president. the reconciliation bill, containing the house fixes, will go to the senate for final approval. >> lehrer: and how it all looks to shields and brooks-- syndicated columnist mark shields and "new york times" columnist david brooks. >> lehrer: this going to happen, mark? >> it's going to happen, jim. i think there is a good chance of it happening but it's far from locked down. i mean in spite of the projections and optimism on the part of mr. clyburn and the speaker. it's a tough list. >> lehrer: not locked down. >> they have to be publicly confident. if they are not it all collapses. but i guess the people i talk to think it's likely. but i'm hearing the same thing mark is hearing, that there is a lot of nervousness. >> lehrer: where are the-- who are the problem democrats left right now. we know about the stupaks and the antiabortion folks. who else? >> well there are 39

democrats who opposed it the first time around. and that was, you know, a big list. and four, they lost four members, from that group through death or attrition or resignation or whatever. so you have people who have-- congressman stupak and others, matter of conviction, what they believe. you have people who are terrified in their district, many -- >> are they mostly what you call blue dog moderate democrats. >> a few liberals here and there. >> well, you get some liberal criticism. steve lynch who is a democratic sort of blue collar democrat , represents a mostly largely liberal district n massachusetts, had come out, voted for it. came out against it, said it didn't go far enough. most of them, jim, the thing they have in common is they represent districts that john mccain carried. and so they're tough. they're tough politically. >> rooney: . >> lehrer: do you go along with the convention 58

wisdom and what has been said, david that congressional careers really are seriously on the line on this one vote in. >> yeah, i mean it's quite unpopular. i think the latest pew poll had 10% more disapproving than approving am but for the house members they don't think about the national numbers, they think about their own districts. and there are a lot of districts in ohio, north carolina, south carolina n those mccain seats. i think there are like 80 mccain seats. in some of those districts it is profoundly unpopular. so i expect there will be a chunk and i think most political analysts expect there will be a lot of people. charlie cook, sort of the dean of this thinks the republicans will take over the house. i think he's a little out front on that. >> lehrer: you mean come november. >> come november. but i think a lot of people will lose their seat because of this and all the other stuff. >> there is a counterveiling argument that is used. and that is, jim, "the wall street journal" nbc poll done by democrat peter hart, republican bill mcentire show that by 46-45 people said yes, let's pass it, even though there is the opposition that david speaks

of. let's just pass it because the status quo is increasingly unacceptable to people. two things, first the insurance companies breathed life back into this. it was dying after scott brown's election. but 39% rate increases gave this legs. >> lehrer: you think so, you think it would have died after that. >> i think it was in big trouble it was on life-support. i don't think there is any question about. that gave it a revitalization. my goodness this is what is going to happen. but the second thing is democrats are really worried about this election. in this sense. when mcinturf and hart asked in the poll how interested are you in the campaign in 2010, 67% of republicans self-identified as very interested. and only 46% of democrats. and democrats by 4 to 1 backed the obama thing. so democrats have to do something to energize the base of their party to reengage them. and i think they see this as support of this as one way of sort of awakening democrats who are kind of turned off. >> lehrer: do you think

that's a possibility, david, that i mean from the democrats point of view, they have to now sell this as something that is good for the country, and they took a courageous stand and they voted for it, and let's move on. >> yeah, well, they will make that case. i happen to have a perverse view. i think 9 loser in the short term, the winner loses, if it passes people will say hey they proposed this reform. my insurance rates are still going up. costs are still going up. what happened. if the republicans defeat they will say hey my insurance rates are still going up, those dwys defeated a reform effort. think one thing to be sure of over the next several years nothing much will happen for a lot of people. there will be some changes but for most people the premiums will still be going up. the costs will still be going up and they will blame whoever they think is responsible. >> lehrer: that's just because of the nature of the legislation. >> right, right. >> lehrer: because somebody isn't going to intentionally do all this. >> right, exactly. and in the intermediate term you will have this phenomenon that because you ensure 30 million more people you will have an

increase in demand, no increase in supply and providers, that will be another cost boost as supply hits demand. and that is also going to create political problems. >> mark, what do you make of the thesis that democrats can argue hey, this was history. we made history. assuming it passes, okay, for discussion purposes it passes on under in the house and it goes all the way, that democrats can say hey, look, it was time to reform the health-care system and we did it. and the republicans, despite republican opposition, do they have-- is that a salient point to somebody who is right now, who is trying to decide whether to go? >> sure, it is. and that's one of the arguments that is used along with we'll help you out in your campaign. or your own legislative agenda. but the president's made the argument, he made it specifically to dennis kucinich, he made it to others, look, if this goes down, whatever you are interested in, you know, education or anything else in the future, it isn't going to happen. this cripples, rules this

presidency so severely. the selling job, the idea that this is really historic, that's the president's. and that's why, i mean democrats on the hill were relieved, they were astonished that he was still talk go-going to indonesia, australia, and new zealand that is something he will have to time to do. if this goes down i will have time to be a world traveler because he won't have much of a domestic agenda to push. he's got to sign the bill as soon as it passes. and then push the senate. >> lehrer: explain that. >> okay. >> lehrer: this is a -- >> this is the senate-passed bill. you can only use reconciliation on enacted law. a law that has been passed so you have to pass this into law. and -- as soon as the house passes the president has to sign it. the changes that the house makes then go to the senate to be acted upon. the republican strategy in the senate is to delay. if you delay with amendments, a couple hundred amendments it can take you into the

jewish holiday and that is a killer. i mean because that ends the whole thing. and so he has to be here and as soon as it does pass finally, to be able to make the case to the nation, what this is about, why we should be proud of what we have done, it proves, it would prove in a wonderful way that the system in washington is, which is deadlocked and can't do anything has done something. has done something big and large, that presidents and teddy roosevelt has talked about. >> let's look at it from the other side, here again for discussion purposes it passes and eventually goes. what are the politics for the republicans who unanimously oppose this all the way. how do they handle it? >> well, they say listen, we had a year and a half debate on this. and most people, especially independents by almost a 2 to 1 margin think it's too expensive. it will be a fiscal catastrophe. it will not cut costs and it centralizes too much power in government. and that is pretty much locked in. the polls have narrowed a little in the last couple of weeks.

but not tremendously. and so that is-- that argument seems to be locked in. and so they'll hit that argument again and again and again. they may run on repeal. i doubt they will actually get to repeal, if not wholesale. but they may run on repealing it. and then they'll just hit it again and again. they are absolutely convinced it is a complete winner issue for them. >> lehrer: in other words, they would continue to argue that after they've already lost. in other words, after -- >> we're happy to run on this issue, along with all the other things that centralize power in washington. the country is not exactly thrilled with washington these days. >> lehrer: yeah. >> i will be happy to buy dinner for david and any listeners of his election if anybody thinks the republicans are going to run a repeal. i mean the first image you are going to see, this is a six-year-old girl who had been denied coverage under the existing system because of a new law as soon as it is passed, preexisting conditions in children is gone. and now she gets, she and her family can get insurance coverage for her illness.

that is a major change. no republican is going to say we're going to change that in the fall. and no one is going to run on it. and no one is going to talk about the process that we've gone back and forth on this, and is it wrong or is it right. the republicans on this remind me very much of oscar lavantz great line of doris day, i knew her before she was a virgin. we froze the clock in 2003 the three hours in the house of representatives to switch five votes on the floor to pass prescription drug. >> the process actually does matter. the nebraska compromise and all these deals that were cut, that actually matter to people. people i find the demon past this idea that we're not going vote on it, we will deem it past and vote on the amendments i find it so repulsive i'm out of my skin with anger. >> why. >> you take responsibility f you support something you vote for it. then you vote for the amendment. and you take responsibility. the idea that you are dodging responsibility, the nancy pelosi, i have a quote. she said i like it deem and pass because pem don't have to vote on the senate bill

that is a betrayal of everything we teach our children about democracy. and the fact that people are thinking about this means they're so deep in the weeds about trying to get this passed they've decided the ends justify any means. >> lehrer: besides that has been threatened what we are talking about here is the possibility that they do get 216 votes. >> right. >> lehrer: then that doesn't swing. >> they still-- it depends how they want to do it. whether they just want to deem it passed and then still have to get 216 votes for the amendments. >> lehrer: yeah. >> but they think it would make it slightly politically easier if the american people were stupid enough to say i didn't vote for the bill, i just voted for the amendments, for some members. i find this a totally insult to the democratic process. >> lehrer: . >> i'm not recommending the process. i'm simply saying the process in the final analysis-- i mean, jim, for three hours they held the clock on the floor. tom delay went up to nick smith, the republican congressman from michigan who was retiring, his son was running for his seat, and promised, and threatened

him, and promised money. he was reprimanded by the ethics committee for doing it. they changed votes, physically. now once prescription drug for medicare was passed, i mean democrats said we're going to revisit this, this is terrible. did anybody do it? did you see a democratic candidate in 2 2004 or 2008 run on repeal of the prescription drug plan? once it's in line. i am not recommending deem it past, which is now dem on past, it sort of sounds diabolical in the public language. >> lehrer: do you think they would use it. >> you are voting to pass the health-care bill or you are voting against it. that is what the vote is going to be. that is how people are going to -- >> vote for the damn bill if you support it, vote for the bill. don't dodge t is just terrible. and by the way, whether they do deem and pass, they have taken the senate down another degrading road through reconciliation. we have the senate as separate from the house because simple majority does not rule in the senate.

barack obama, joe biden, and hillary clinton were all against simple ma jor tarianism when the republicans were in control. now it will be just like the house where the only need 51 votes that gives tremendous power to the leaders. it totally undermines any thought that we should ever have cross party negotiation. >> i'm to you going to exercise the tremendous power i have to say thank you, gentlemen, we'll see what happens. >> thank you. >> brown: now, the other news of the day. here's hari sreenivasan in our newsroom. >> sreenivasan: a federal judge in new york city has rejected a settlement for those who worked at ground zero after 9/11. it would have compensated thousands of police, firefighters and others for sicknesses caused by toxic dust and smoke. the settlement could have totaled $657 million, but the judge ruled too much of the money would go to pay legal fees. international diplomats urged israel and the palestinians today to return to peace talks. secretary of state hillary clinton joined envoys from russia, the united nations and the european union at a meeting in moscow.

clinton repeated her criticism of israeli moves to add more jewish housing in east jerusalem. >> the goal of the quartet, like the goal of the united states government, is to get the proximity talks relaunched. we do not think unilateral actions by either party are helpful, and we have made that very clear. >> sreenivasan: the quartet of powers called for a final deal within two years, leading to an independent palestinian state. the northern plains states braced today for major flooding on the red river this weekend. it's expected to crest sunday in fargo, north dakota, at nearly 20 feet above flood stage. residents worked around the clock this week to shore up protective barriers. hundreds of volunteers and city workers stacked sandbags and built levees on both sides of the river. a major snowstorm spread across the rockies and headed east on this day before spring officially begins. denver, colorado, drivers faced snow throughout the day.

and possible blizzard conditions were also forecast for oklahoma city and elsewhere. wall street finished the week on a down note. the dow jones industrial average lost 37 points to close below 10,742. the nasdaq fell nearly 17 points to close at 2,374. for the week, the dow gained 1%; the nasdaq rose a fraction of 1%. those are some of the day's main stories. i'll be back at the end of the program with a preview of what you'll find tonight on the newshour's web site. but for now, back to jeff. >> lehrer: now, a preview from margaret warner of her reports from yemen. she's there to report on the growing presence of al qaeda, among other things. ray suarez spoke to her earlier today from the southern city of aden. >> suarez: parg receipt, well come. let's begin with the efforts of the government in yemen. have they been stepping up their attacks on al qaeda in the arabian peninsula. >> warner: they have very much, ray. in the last few months they've launched both raids on suspected hideouts as well as air strikes. one here on sunday was very well placed.

they hit two men on a motorcycle in the province not far from here in aiden and killed both of them. there was another strike on monday. so clearly they are stepping up the level of attacks. and they say it's going to continue. >> suarez: does the yemeni government see al qaeda's presence in yemin as the kind of threat the united states does? >> yes, they do, ray. though they have competing sets of threats because as you know they have they had a rebellion in the north. currently there is a cease-fire and a secretary sessionist movement in the south. the central government, is also concerned with the threats that the president believes pose to his stability. but ever since there were some threats against members of the yemeni security forces last summer i'm told that that was the catalyst that made them take the threat of al qaeda extremely seriously. >> suarez: have there been any new developments in the story of sharif mobly, the

new jersey man arrested in yemen for terrorist ties? >> well, he is in custodys as you know. he is being interrogated. i've not been able to find out whether he is giving up anything useful. what i have learned is that both yemeni and u.s. security forces, but at first just the fbi and u.s. intelligence has been tracking him for some time. he's been here for at least a year. and at some point they alerted yemeni security officials. it's not clear there they wanted him picked up right away. he was in contact with al-alaki and there was hope that he might lead security officials to al-leki but the other telling detail is that there are other americans of arab des sent, muslim-- descent muslim states who are said to be here who fit the same profile and they are following. >> suarez: one thing the story of sharif mobley has in common with 9 attempted

christmas bomber on the jet to detroit and the accused shooter imagine ar hasan in texas is sheikh al-alwaki. tell us about the search for the american born in yemen. has there been any progress in the attempt to catch this man. >> woodruff: al they believe him-- they believe he has gone from an inspirational, urging young muss lems to wage jihad in the west to being operational, he is actively recruiting via e-mail on the internet and also giving tactical and technical advise. one u.s. official says he is dangerous because he understands the west and u.s. better than most yemenis. sow in their inn their sights but holded up in a mountainous region. he is said to be operational savvy in terms of how he communicates and he is guarded and protected by his own tribe, the alawas who are not only very powerful

in the region but in fact were the sultans of the region back in the british era. so he is going to be very difficult to dislodge. >> suarez: and finally, margaret what will you be doing on your reporting trip in yemen. what stories are you preparing for your series? >> warner: well, ray, i came here because yemen is regarded as the u.s. puts more pressure on al qaeda in afghanistan and pakistan, the al qaeda in the arabian peninsula here in yemen is believed to be the most potent of the new al qaeda franchises worldwide so we are going to be looking at the strength of al qaeda here, what the u.s. and yemeni governments are doing to try to combat it, and finally more broadly as much as we can in just two weeks here, what makes yemen tick. >> suarez: thanks, margaret. stay safe. >> warner: i will, ray. thanks a lot. >> lehrer: still to come on the newshour: the student loan debate; and paul solman on small things and big science. but first, this is pledge week on public television. we're taking a short break now so your public television station can ask for your support.

>> lehrer: now, newshour economics correspondent paul solman explores the mega implications of nano science. it's part of his continuing reporting on "making sense of the economy." >> its an image of flight patterns. you are actually seeing the patterns of airplanes going from city to city. >> reporter: felice frankel is photographer for a new book, "no small matter." the point of her imagery-- to illustrate the eerie beauty of science at the smallest, normally non-visible, scale. but what struck us was that her subject, nano-technology, is also key to america's economic future. if airplanes connected us in ways we could plainly see... >> ... now, we are connecting in

other ways as the image below it indicates, and that is the way the internet is connecting us. >> reporter: connecting us via circuitry measured in nano- meters, each of which is one- billionth of a meter; a millionth of a millimeter. but back to the bigger pictures and chemist george whitesides, who wrote the book's text. >> one is the flow of airplanes, one is the flow of bits. and the world is now moving with bits because, rather than going to beijing, it's a lot cheaper to fly the information there, if i can use the word, with bits through optical fibers or satellites. all the functional devices in those are on the nanometer scale now. it's truly astonishing. so, nano is the physical basis of the internet. >> reporter: cyberspace is a technology developed by u.s. government investment, and then mostly made in america. but that doesn't guarantee an economic advantage as the internet takes over the world. >> we pioneered it, no question. for interesting and complicated

reasons, as a country, we are now behind some-- not many, but some-- countries in installations which make it possible for every household and every child to be connected. so the trouble with being a first adopter is that you're also the first to grow obsolete. >> reporter: maintaining america's position in the world's economic networks, it turns out, depends more and more on smaller and smaller. >> a hair is about 100,000 nanometers in width. so, if you want to think about a nanometer, think of a hundred- thousandth of a hair. >> reporter: and if you don't want to think about a nanometer, says whitesides, who runs one of america's top research labs at harvard, with more than a little help from his government, it could cost the american economy. because, what the public doesn't understand, it might no longer support, while other countries invest in the next phase of technology. >> the united states has had a long history of economic prosperity, which has come, in part, from innovation. we've been very good at taking

science, which comes out of the research universities and out of industry, and converting that into new ideas, new devices, and then commercializing those, and taking advantage of the fact that the new part of it gives us a proprietary advantage in the technology. and nano is one of the areas in which this kind of innovation is taking place and has the potential to take place in the future. >> reporter: in fact, economics sort of boils down to doing more with less. conserving space and materials, for example, as recording shrinks from phonographs playing vinyl albums-- this is a groove from the beatles' "eleanor rigby"-- to ipods the size of bedbugs; as computers shrink from room-sized to micro-chip. and the incredible shrinking continues. consider this robot, a one- centimeter bee. >> and the idea behind it is that that bee can sense signals that will tell it to go

somewhere, and sense smells and other kinds of chemistry. >> and this object, this bee makes a point, which we didn't really know how easy it was going to be. could you make a robot that was able to lift itself off the ground and hover? this thing can lift itself off the ground, it can hover. >> reporter: and where does the united states stand with regard to other countries with respect to robots? >> we're probably ahead in many areas of research; we're probably behind in many areas of implementation. the biggest implementations are in manufacturing, and a lot of manufacturing has gone offshore now. but, for example, in robotic surgery, the united states still leads, and in exploratory ideas like micro-robots and soft robots and autonomous robots, were doing some of the best research still. >> reporter: the "best research," in both robots and in an industry that may

increasingly define the global economy in this new decade, bio- tech, especially now that the human genome has been sequenced. frankel depicted it as a phone book, listing all the amino acid combinations out of which we not-so-humble humans are made. >> the idea was to try to show the enormity of the information in our genes, and you've seen gazillions of base pairs shown, but how do you really give a sense of the quantity? >> the problem now is we've got to figure out what it means. >> reporter: we've got to crack the code, that is, and then figure out how to tinker with our genes at the nano-scale to make our cells behave as we wish. >> these are cells that are labeled with things called quantum dots that are made in the laboratory, and when you put it under u.v. light-- ultra- violet light-- you're exciting the material and you actually

see them fluorescing. >> and the information that's there is information about what the proteins are that are positioned on the surface of the cell. what we have to do is to figure out what that collection of proteins is telling the cell, how it tells the cell, and then how the cell reads that information and does something in response. >> reporter: not to sound nationalistic here, but how is the united states doing economically in this area? >> the u.s. does very well in fundamental biology and in innovative medicine. we still lead the world in this area. one consequence of that is that, although were doing terrifically well in terms of innovation, we also have a very, very expensive healthcare system. so there's a push and pull in this that we're developing a very sophisticated understanding of biology from the molecule to the organism, and the second is that that's being expressed in terms of the very expensive set of technologies. >> reporter: one expensive american nano-technology is that

blue blob, a statin, designed to keep heart arteries from clogging with cholesterol. >> so what you see is something in which the little blue piece of chewing gum has wedged itself into a part of the big molecule that helps to make cholesterol and block it from doing its job. the statin market-- i don't know, but i think its $5 billion to $10 billion a year. this is a product of the american pharmaceutical industry. >> reporter: and is that where a lot of the action is in nano- technology now? >> yes, it is a frontier of nano-technology, but so is information, so is energy, so are other things. > reporter: other things that could well determine america's place in the world economic order in the decades ahead. >> brown: finally tonight, another major piece of legislation attached to the healthcare bill that may also be voted on sunday. this one would make the federal government the main player for getting student loans.

for decades, private lenders have provided most of the nation's student loans, with a guarantee by the federal government, which bore the risk of default. president obama has argued that these banks and other financial institutions have become expensive middlemen, draining valuable funds away from education programs. he made the case for change in his state of the union address. >> to make college more affordable, this bill will finally end the unwarranted taxpayer subsidies that go to banks for student loans. instead, let's take that money and give families a $10,000 tax credit for four years of college and increase pell grants. ( applause ) >> brown: in the bill's latest form, the government would make loans directly to students. private institutions could service, but no longer originate, those loans. the congressional budget office estimates savings of $61 billion over the next decade. $36 billion of that would go to

the popular pell grant program, and pell grants to individuals would be raised by $425 to $5,975 by 2017. more than $4 billion in savings would go to community colleges, and to historically black colleges and other institutions that serve minorities. the rest, close to $20 billion, would be used for non-education purposes, offsetting healthcare reform expenses and reducing the federal deficit. the measure's fortunes are now linked to those of the healthcare bill this weekend. we get two views of this now >> -- from tampa renee mang senior vice president for sallie mae, the country's leading student lender she qming oversees loan origination and servicing operations. jason, starting with you who would benefit from this and how?

>> well, i think the main beneficiaries of the change are students from low income families who are going to receive larger pell grants under this piece of pending ledgegation-- legislation. as was mentioned at the beginning of the segment, the increase will be fairly significant, it isn't is an expensive program. but the pell grant would approach $6,000 in several years. and there would also be an immediate infusion of cash into the program to shore up the more immediate grants that are coming in the next year or two. >> reporter: renee mang, how do you see making this switch. what would be wrong with cutting out the middleman and making the loan directly from the government right to the students? >> well, there is a number of things that's really wrong with that. and thank you for allowing me the opportunity to come on your show. first of all, i wanted to be clear that sallie mae has support ed student loan reform for quite some time.

however we believe it can be achieved without significant job loss which is the current path we are heading down. i'm here today to represent the 700 employees in panama city specifically whose jobs are at risk because the jobs that we do in panama city are the exact jobs that the federal government plans to take over in direct lending. in addition to that, on behalf of all the sallie mae employees which are 8500 employees at sallie mae and employees across the entire country, there will be a significant impact if this legislation passes. >> reporter: well, let's start with the jobs issue. you are talking about the employees that would be hit by direct lending. but part of this would keep you in the process, right, because you would be involved with processing loans? >> we would not be doing the loan originations. we are one of four department of education servicers. so we would certainly service the loans, post disbursement after direct lending. but frankly again we are one of four. and so there's just not significant enough volume there to prevent job losses

at salal-- sallie mae or for that matter at other institutions in the country. >> reporter: what about the job loss potential here in. >> well, i always say on this particular point that the student loan program has one singular purpose, and that is to make sure students get favorable loans at low-interest rates, with flexible repayment terms to attend colleges all across the country. that's the only goal. and i think taxpayers want congress to run the program at the lowest cost possible which means with as few employees as possible. so i think that the jobs argument is sort of a secondary issue here. >> reporter: jason, one of the criticisms i've heard certainly out there is government shouldn't be taking this on at all. it's governments not very good at this. it's a program that with all its flaws has gotten loans to millions of people in the past. >> yeah, and i've heard that argument a lot. and i think it's very misleading. you have to remember that

the loan terms issued to the borrower are identical under both loan programs. all right, so you have on the one hand you have sallie mae making loans to students. the terms are set by the government. on the other hand you have the direct-loan program making loans to students at the exact same terms. so you have one federal program. and i think claiming that the federal government is taking over its own program doesn't make sense. sallie mae runs the federal program. >> reporter: go ahead , mismang. >> if you would allow me to jump in here, the direct-loan program is not a new loan program. it started in 1993. and frankly students and schools and parents are have voted for the last 17 years. and they have chosen the private sector 75% of the time. i have been in this business for 32 years. and i have talked to thousands, probably hundreds of thousands of parents and students over the years. and i certainly talk to schools every single day. and they want choice. and they want to choose who they want to do business

with. i mean literally we have thousands of students who have applied for loans at sallie mae that are being denied the right today to take those loans because the schools are being forced to go to the direct lending program. it is not a government takeover-- it not a government takeover, why would we need legislation to change it. >> reporter: all right go ahead. >> it an important point. she mentioned that, you know, students are choosing private lenders to disperse their loans but she also mentioned that schools are choosing. under current law, under the current program no student has a choice of which loan program they want to use. the school chooses which loan program they will use, whether they be direct loans or guaranteed loans dispersed by sallie mae. so students are stuck with whichever program their school has chosen for them. so it's not the case of consumers voting with their feet and choosing one program over the other. this is an administrative decision that's being made at the financial aid office on which program they prefer.

so it's not an issue of consumer choice. >> i disagree with that. because -- >> do you know of any student -- >> we have prefer lender lists but there are many students who want to do business with sallie mae and frankly, other lenders that are being denied that right today. >> reporter: let me touch on one other issue here which is what to do with the savings. a lot of it as i said in that introduction would go to pell grants. but some of it goes to noneducation needs. jason delisle, starting with you s that a good way to use the savings? a lot of it is going to health care and to deficit reduction. >> yeah, i have looked at the cbo, the congressional budget cost estimate and to me it looks like the education portion of the bill saves money on net every single year except one. so it looks to me in my interpretation of that analysis that the health-care bill is actually subsidizing a small piece of the education bill, and not

the other way around. >> reporter: what do you see in terms of the savings? >> i see it very differently. i mean what i saw in the law today or the current legislation was $9 billion would go toward health care. and as you probably are well aware, sallie mae and other institutions have put forward a community proposal that has similar savings and delivers on what president obama is asking for but still provides choice for schools, for students, for parents and preserves the jobs of the great people that do this job today. >> reporter: but it would maintain the direct lending from private institutions as o toes-- opposed to the government? >> i'm sorry. >> reporter: your proposal, the way would you prefer to do it would maintain the system as is in terms of the direct loans coming from financial institutions and not the government. >> that's exactly right, uh-huh. >> reporter: do you think, jason delisle because this has been put forward several times in the past, what are the prospects now?

>> i think they're good. i think congress is in a tough spot. we have back-to-back trillion dollar budget deficits, two years in a row. but there's a lot of need for a strong pell grant program to at least maintain the grant level currently. and for future increases. the best way to get that funding is to reduce subsidies or eliminate them all together to lenders. the key point here though is that we're cutting spending in the student loan program, butev ree single student who is going to receive a loan last year will receive one next year. that's the key point. that's the key point in this argument is that these two loan programs disperse the exact same loans to students. so students aren't being harmed in anyway, shape or form here. we're freeing up eck secretaries subsidies that are going to go to pell grants. >> we have to leave it there. and see what happens this weekend. jason delisle, rene mang,

thank you both very much. >> thank you. >> lehrer: again, the major developments of the day: the final push was on to pass health care reform in a house showdown on sunday. democratic leaders sounded increasingly confident they'll have the votes. and at a rally in virginia, the president warned that, if the vote fails, insurance companies will "continue to run amok." the newshour is always online. hari sreenivasan, in our newsroom, previews what's there. hari. >> sreenivasan: there are more images from the book about nano- technology that paul mentioned, "no small matter." on health care reform, read gwen ifill's take on the role of deadlines in the legislative process and everyday life. watch for margaret's dispatches from yemen in advance of her stories next week. and on "art beat," jeff's conversation about the largest art heist in history, still unsolved 20 years later. all that and more is on our web site, newshour.pbs.org. jeff. >> brown: and that's the newshour for tonight. 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.

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