for those of you expecting to see "60 minutes," you're watching the nfl on cbs. the game between the titans and the chargers. ian eagle, dan fouts, the rest of our cbs crew, 33-25, san diego leading tennessee. "60 minutes" will be seen immediately after the game, except on the west coast. where it will be seen at its regularly scheduled time. chargers are 2-5 trying to put an end to a three-game losing streak. they are 10 back at their own 2-yard line. most on the ride side from tennessee. left side of san diego. jacob ford busting through. [closed captioning made possible by cbs sports division] [closed captioning made possible by cbs sports [the captioning on this program is provided as an independent service of the national captioning institute, inc., which is solely responsible for the accurate and complete

transcription of program content. cbs, its parent and affiliated companies, and their respective agents and divisions are not responsible for the accuracy or completeness of any transcription or for any errors completeness of any transcription or for any errors in transcription.] dan: the officials did not see wilson move, or did they? referee: there was a false start. by number 81. of the offense. prior to the defensive player coming across. half distance to the goal. first down. ian: it was the other tight end, randy mcmichael. here he is, number 81. watch him flinch right here. and that gets ford into the neutral zone. good communication by the officials to catch that one. ultimately the key is to get it right and they got it right. dan: and more pressure on the offensive line and rivers and the ball carriers coming out of their own end zone. ian: 3:45 to play. rivers throwing.

rivers getting it to jacob hester and just got out of the end zone. gerald mcrath nearly had a second safety on the day. dan: that would be weird. we started date with a safety. why are we going to end -- are we going to end one with safety? great play by mcrath. quick pass by rivers out to hester answered barely gets out of his own end zone. ian: the chargers have found themselves in some strange situations this season. dan: no kid withing -- kidding. ian: second and long now. tyronne green is in there. inside handoff and a pass to the middle by hester. multipurpose back. won the national championship with the tiger and able to secure the football, setting up third and 7. dan: tennessee has two time-outs. they'll probably be content to let this go down to -- or they're going to use a time-out right there. that's heads up.

they have another stoppage of the clock at the two-minute warning and they anticipate having great field position, only down by eight. ian: line of scrimmage is just short of the 5. coming up next here on cbs, we'll have "60 minutes" for you immediately after this game. except on the west coast where it will be seen at its regularly scheduled time. vince young injured on the previous possession for tennessee. they are icing the left foot, high ankle of young. he had trouble with that two weeks ago. got injured against jacksonville. collins started last week, led tennessee to a victory. got in on the last possession. but they were unable to convert on a third down. forced to punt and then off the penalty san diego backed up deep in its own territory. you see what san diego has done in this second half. they have dominated tennessee. yet the titans have been able to hang around.

some miss cue, including an extra point, on a bobbled snap. it was a busted play. instead of taking a nine-point lead, it's an eight-point lead. on third down, sproles up the middle. and sproles will come up short of the first down. penalty marker thrown at the 5-yard line. tennessee with one time-out remaining. 2:46 left on the game clock. dan: it's going to be holding against san diego. referee: holding, number 85 offense. penalty is declined. fourth down. ian: so the clock stops on that flag thrown, 2:46 left. and norv turner's team will punt it. tennessee is going to have excellent field position but they will not have their starting quarterback running the offense. and we know that san diego has had problems on special teams

throughout the season, including punting the football. scifres with mariani standing at his own 38. scifres gets it off. it's a high punt. mariani moves forward, fair catch answered brings it in at the 42-yard line of tennessee. dan: kerry collins had a tough start to begin last week's game against philadelphia but boy did he come on strong in the second half. most of those 276 yards passing happened in the second half. he did throw three touchdown passes, all to kenny britt. but remember britt is out with a hamstring problem. but collins with a lot of experience, still a live arm and good field position to start this drive, again trailing by eight. ian: one time-out remaining for the titans. since this franchise moved to tennessee in 1997 they were 0-5 against san diego, outscored by an average of 31-13.

titans trying to rally. collins throws. it's offline on a sideline route to nate washington. clock stops, 2:34 left in the fourth quarter. dan: remember the titans needed to try to go for a two-pointer the last time they scored after the washington touchdown. young missed a wide-open chris johnson in the flack. now they need a touchdown and two-pointer to tie this one up. ian: kerry collins two,-time pro bowler in relief of vince young -- two-time pro bowler in relief of vince young. johnson in the back field, on a second and 10. clins sets it up for johnson. johnson taking it -- collins setting it up for johnson. johnson taking it to the outside and modest gain there on second down as he ducks out of bounds. kevin burnett over there defensively for san diego. it's going to bring up third down and 6. dan: and eric weddle as well on that screen pass.

weddle got to -- got to him early. forced him to go laterally and then burnett with good speed posts him to the sideline and out of bounds. ian: 2:27 to go in the fourth. dan: titans just 3-10 converting third downs today. ian: third and 6. shotgun for collins. protection is there. collins throws. terrific throw to damian williams. and williams gets up and gets extra yardage after the catch. it's a first down into san diego territory. brought down at the 37-yard line. dan: they're going to back him up to where he was down. there was contact after the catch. so he doesn't get that extra 10 yards or more. ian: we hit the two-minute warning. ♪ i got a brand-new pair of roller skates ♪ ♪ you got a brand-new key

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♪ another dollar ♪ daylight comes [ dogs barking ] ♪ i'm on my way ♪ another day ♪ another dollar ♪ working my whole life away ♪ another day ♪ another dollar ian: a big third down conversion for the titans.

pick up an extra five yards. there really is no challenge here from the titans. because there's not a good enough picture to see if weddle or cason had touched williams. tennessee has one time-out remaining. first and 10 at the 37-yard line of san diego. 33-25, chargers in front. collins, look at him in the pocket. all kinds of time as he throws to the sideline and it's hauled in by hawkins. kerry collins put that ball on time. dan: this is right on the sidelines. we'll see if he has his feet in. makes the catch and he lands, appears he lands out of bounds. that should be an incomplete pass. this has got to be reviewed by the booth upstairs in the last two minutes. hawkins got the ball and landed on the white part of the grass. ian: the right side of his body was clearly out of bounds on that catch. so while we were focused on the

feet, the body was not inbounds. dan: his feet were up in the air, too. both feet off the ground. the ball on the ground out of bounds. this is a short gain for tennessee. so i would have suspected this would come back. ian: they will take a look at this upstairs. we've seen definitive looks that he clearly lands on the white. lavelle hawkins, third year wide receiver out of california. a possession receiver. there's a fourth round pick in 2008, acquired in the pacman jones deal. and lavelle hawkins out of bounds. so they'll take a look at it. that's where bill is right now.

booth review under two minutes to go. 1:54 remaining in the fourth. san diego with a 33-25 lead on tennessee. this tennessee offense, kenny britt lost early, vince young lost late. it's kerry collins to the likes of damian williams and lavelle hawkins. others trying to step forward now for tennessee. bill has seen enough. dan: this will either be second and 10 or second and 6 1/2. referee: the ruling on the field is confirmed. the receiver's left elbow was down inbounds. it's a catch. ian: the left elbow inbounds. dan: boy. i'm not sure if they can hide under that hood or not. his left elbow did hit first.

ian: so that's considered completing the catch, with your left elbow. dan: one elbow equals two feet, i guess. ian: there you go. it's going to stand for tennessee. we'll call it a second and 6. collins throws. incomplete. he had williams streaking down the sideline. dan: he had a whole face full of pressure, too. looked like antwan applewhite came right up the middle and put his helmet right in the chest of number five. watch number 90 come late on the blitz. here he comes and that's why this is not a touchdown pass. great delayed blitz by applewhite, having his speed to get to the quarterback. just in time. ian: damian williams was able to get outside and get open. collins was unable to deliver it on time.

third and 6 for tennessee. rush coming. collins gets away. collins directing traffic down field. throws, incomplete. he was look thatting for lavelle hawkins -- he was looking for lavelle hawkins who was forced to the sidelines out of bounds. it's first down for -- fourth down for tennessee. dan: once kerry collins gets out of the pocket, as he is right here, watch this action on the top of the screen here. lavelle hawkins going to get pushed out of bounds and that's a legal play by paul oliver. ian: so here we go with 1:40 left. san diego with a 33-25 lead on tennessee. the chargers trying to hold on. fourth and 6 for the titans. collins operating out of the gun. deep drop. collins looks. collins throws and a comebacker. lavelle hawkins with a catch and a first down across the 25.

clock is moving, 1:27 to go. this drive continues for tennessee. they convert on fourth down with kerry collins. dan: and no need to come up and spike the ball. he can call play here. a lot of time left and one time-out for tennessee. ian: a lot of scrimmages at the 23-yard line. collins steps, throws to the far side, hits johnson and johnson gets buried on the outside. dan: and kept inbounds. clock running. great mobility by collins on the previous play, to just back peddle and find a receiver very patiently. still having a strong arm to pick up that first down and fourth down. ian: tennessee need as touchdown and two-point conversion. collins throwing. outed to sideline. nate washington short of the first down and he's out of bounds. 42 seconds remaining here in the fourth. dan: titans 3-3 converting

fourth downs this season. look at the mobility, buying time with the fade-away throw over the middle to hawkins. what a play by collins. ian: vince young on the tennessee sideline, on the bench, nursing that injured -- injureded left leg. -- injured left leg. kerry collins, the 16-year veteran, is in. and now facing a third and 2. his team down by eight. from the gun this play whistled dead. dan: san diego called time-out. referee: time-out called by san diego. ian: it stops the clock with 39 seconds left. don't forget tonight on cbs, all new beginning with "60 minutes" followed by new episodes of "the amazing race," "undercover boss" and "c.s.i.: miami." dan: that was a smart time-out by san diego for a couple of

reasons. it gives them a chance to get some fresh body ins -- bodies. >> the game. and those in the game to catch their breath. plus it gisks them a chance to talk over what they just saw as far as the formation so, they can predict what the titans may do on this next play. a heads up use of the time-outs by norv turner that time. ian: norv turner, i think you hit it on the head. a chance to give his defense a breather, catch their breath and now facing a third and 2. shotgun for collins. on third down, collins throwing, end zone, too high. washington the intended target. in a matchup with antoine cason and it's fourth down with 37 seconds left. dan: and how important now is the injury to kenny britt back in the first quarter? britt is 6'3", a great leaper,

scored three times last week. won in this exact -- one in this exact type of situation. got roud by washington and an overthrown pass by kerry collins. he had cason beat to the corner. ian: on fourth down for tennessee. it's a fourth and 2. collins throws over the middle. it's dropped by johnson. tennessee turns it over on downs. dan: and kevin burnett made the play. he got a hand right on the back of johnson as that ball was coming in. ian: 30 seconds left. san diego in front. 33-25 and they've got the football. dan: here's johnson out of the backfield. here comes burnett closing. that ball should have been caught, perfect throw from collins. right to the hands of johnson. he just couldn't haul it in.

and finally norv turner has something to cheer about. ian: san diego has been on the other end of a lot of these types of games. right now it's the chargers in control with 30 secretaries to play. tennessee only has -- seconds to play. tennessee only has one time-out left. six dropped passes today for the titans. this will be eight straight wins for san diego over the titans. and that's it. san diego, a desperate team, old friends norv turner and jeff fisher. and it's the chargers surviving and holding on for a 33-25 win. tonight on cbs, "60 minutes," "amazing race," "undercover

boss" and c.s.i. miami d. for dan fouts and the rest of our cbs crew, this is ian eagle. have a happy halloween, everybody. chargers win it. you've been watching the nfl on cbs. do woodchucks chuck wood? (high-pitched laughter) man: hey you dang woodchucks, quit chucking my wood! vo: geico. fifteen minutes could save you fifteen percent or more on car insurance. >> here's the geico play of the day. >> with 9:51 left in the quarter, gerard throws deep.

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captioning funded by cbs and ford-- built for the road ahead. >> pelley: you know, the economists say that the recession is over. >> really? they should come to newton, iowa. ( laughs ) >> pelley: and this is what they would see in newton, iowa. a maytag plant where 2500 people worked, now abandoned. this was the chrysler dealer, the chevy dealer, the tractor supply company. it helps explain why there is so much anger in the land ahead of tuesday's election. >> i'm sick and tired of people going to congress in washington d.c. and making a living out of it while we starve to death. >> now, i believe we ought to make the tax cuts for the middle class permanent. >> we have now got both parties essentially telling a big lie with a capital "b" and a capital

"l" to the public. >> cutting taxes. >> cut taxes. >> make the tax cuts permanent. >> the republican party, as much as it pains me to say this, should be ashamed of themselves. >> stahl: this from ronald reagan's old budget director, architect of the largest tax cut in american history. >> it's rank demagoguery. we should call it for what it is. >> simon: the life story can be told in one line. she does not know how to lose. but the first thing we noticed about zenyatta was not her might but her magnificence. she is quite simply the most splendid creature we've ever seen, and she's about to hit the track for the last time. it will determine her place in racing history. >> i think she could arguably go down as one of the greatest if not the greatest horse of all time. >> simon: the greatest horse of all time? >> definitely. >> i'm steve kroft. >> i'm lesley stahl.

>> i'm bob simon. >> i'm morley safer. >> i'm anderson cooper. >> i'm scott pelley. those stories and andy rooney tonight on "60 minutes." how are those flat rate boxes working out? fabulous! they gave me this great idea. yea? we mail documents all over the country, so, what if there were priority mail flat rate... envelopes? yes! you could ship to any state... for a low flat rate? yes! a really low flat rate. like $4.90? yes! and it could look like a flat rate box... only flatter? like this? you...me...genius. genius. priority mail flat rate envelopes. just $4.90. only from the postal service. a simpler way to ship. being a leader means moving fast. across the country when the economy tumbled, jpmorgan chase set up new offices to work one-on-one with homeowners. since 2009, we've helped over 200,000 americans keep their homes.

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battle and memory... looks more beautiful than ever before. the amazing retina display. only on the iphone 4. >> pelley: two years ago, most americans voted for change, and if the polls are to be believed, they're about to do it again. in the latest cbs news/"new york times" poll, 80% said they want most incumbents out of congress, regardless of whether that incumbent is a democrat or a republican. there's a grim mood among people who were counting on a recovery

that's now fallen flat. the economists who decide such things say that the great recession ended back in june of 2009. but since then, we've lost another half million jobs. which helps explain why there is so much anger in the land. we saw a lot of it right in the middle of the country, among the people who've endured the recession longer than anyone. what's surprised you the most about this recession? >> dave mcneer: i think the depth of it and the length of it. i think what surprised me the most about this one is it doesn't want to end. >> pelley: you know, the economists say that the recession's over. >> mcneer: really? they should come to newton, iowa. ( laughs ) >> pelley: dave mcneer's advertising company is like a lot of small businesses-- it's getting smaller. maxim advertising in newton, iowa, puts its customer's logos on nearly anything, and business had only grown for 22 years, until 2007.

and what was all of this? >> mcneer: this was filled-- maytag, maytag, maytag, maytag. >> pelley: maytag invented its washing machine in newton 103 years ago. 5,000 people worked for maytag here. but newton lost all of those jobs. maytag was bought out, and by 2007, the factory was closed. many of the jobs went to mexico. no one knew it then, but these were the opening days of the great recession. now, layoffs that started with corporations are cascading into mom and pop shops. how many employees did you have at the top? >> mcneer: 22. >> pelley: and today? >> mcneer: ten. >> pelley: do you remember the first person you had to lay off? >> mcneer: one of the very hardest days of my life. my wife and i stayed up all night long. we... we talked, we prayed, we... we struggled. and you know what? man, that's... that's a gut- wrenching feeling. you hate it.

i hate it. and i never wanted to have to do it again. >> pelley: i wonder, when you look forward now, what you think about rehiring people? >> mcneer: when we hire somebody, we're... we're definitely going to need them. i mean, we're not going to hire one person until we need two or three, and we're probably not going to hire two until we need four for five. >> pelley: and that's why the recovery is lifeless. big and small, businesses have settled into doing more with fewer people. >> mcneer: and you ask people to step it up and... and, you know, work harder, work longer, make less. >> pelley: is it sort of a new normal? >> mcneer: i think, for now, it is. >> pelley: take a quick look around newton. gary forbes laid off half of his 60 employees, closed two locations, and switched from selling top quality furniture to scratched and dented. web site designer cindy brunner laid off six of her 14 employees. this was the chrysler dealer...

the chevy dealer... the tractor supply company. since the recession, we've seen a lot of troubled towns in the country, but nothing that looks quite as broken as newton. even the local chapter of the optimists club has closed. >> chaz allen: i want to tell everybody that we're a company town where the company left, but we're going to thrive. >> pelley: chaz allen is the mayor of this town of 15,000 people. it's a part-time job, pays about $4,000 a year. allen walked us through an abandoned maytag plant that, at its peak, held 2,500 factory workers building washers and dryers. if anyone out there is interested, the mayor has more than 1.7 million square feet to rent. >> allen: it is available. it is available. we'll make you a good deal. >> pelley: the mayor's been trying to pull new jobs into town. he made a run at green energy, and got a company that makes wind turbine blades. but every time he gets a few hundred jobs, he seems to lose a

few hundred. this fall, a telecom company called windstream had two layoffs. >> allen: it was 60, and then it was 146 the next time. >> pelley: how's that affect people around here? >> allen: you know, it's a roller coaster. i want to say that, i mean, i was affected in the first layoff. i was one of the ones at windstream that was affected in the first... first round. >> pelley: wait a minute. >> allen: yeah. >> pelley: they laid off the mayor? >> allen: yeah. >> pelley: are you working now? >> allen: no. >> pelley: his town is shrinking. this year, they closed an elementary school, and they're slashing the city budget. have you already lost policemen? >> allen: yes. >> pelley: firemen? >> allen: yes. >> pelley: what about the hospital in town? >> allen: it's being reduced in size, as well. >> pelley: and that is the backdrop for tuesday's election. in our national poll, we asked "what's the most important issue in america?" 54% said jobs. healthcare came in second at 7%. only 1% said the war. newton's congressional district is bipartisan country.

it voted for george bush in 2004, and then for president obama. but now, democratic congressman leonard boswell is fighting for his job. he's been re-elected here six times, but this week, his race against republican brad zaun is too close to call. >> mcneer: my wife and i watched the news last night, and i think every ad was a political ad. >> who do you trust with your money, with your future? it's not brad zaun. >> leonard boswell-- too wrong for too long. >> incredibly, bruce braley supports building a mosque at ground zero. >> pelley: well, how much relevance does all of that have to you? >> mcneer: nothing, nothing. doesn't have a bit of relevance to me. >> pelley: we invited some of the folks in town to the legion hall. how many of you would say that you're are angry about politics right now? >> yes, yes. >> pelley: oh, that got a big yes. >> i'm sick and tired of people going to congress in washington, d.c., and making a living out of it while we starve to death.

>> pelley: does it matter much to anyone in here whether the republicans or the democrats control the house, for example? >> nope. no. no. >> pelley: it doesn't matter? >> no. >> if a republican says it, the democrats don't listen. if the democrats say it, the republicans don't care what they're saying. >> what gets done in washington? what gets done at... at the iowa state house? very little gets done. i mean, everything comes down to either abortion issues, gay marriage issues. it needs to go above and beyond that. >> i don't have a job. that's all i care about. i don't care about the republicans or the democrats. i care about newton, iowa-- the job situation, the financial situation . >> pelley: we went to the foreclosure auction the other day. nobody bid on anything. >> nobody has any money. >> help us. do something about the economy. it's... it's really hard out here. >> todd meyer: the economy is not spurring jobs. >> pelley: todd meyer was laid off from the same telecom

company that laid off the mayor. you served in the gulf war? >> meyer: i did. >> pelley: you were in the navy? >> meyer: yep. >> pelley: in combat there? >> meyer: yep. u.s.s. "george washington." >> pelley: and now, you're unemployed? >> meyer: yes. >> pelley: meyer and his wife, teresa, are raising three kids. their daughter caitlin is the first in the family to go to college. >> teresa meyer: i get emotional about it, because it's just, you know, we never expected to be in this position. but, you know, i look at my daughter and i just think, how do i keep her in college? >> pelley: it's every parent's dream to send their child to college, especially if that parent didn't have the same opportunity. >> caitlin meyer: i've had this dream since i was really little, and my parents have done everything they can. and it's just starting to get hard. and i'm going to try and help out. but it's hard to see that dream slip away. >> pelley: how many of you think that your children will enjoy the same standard of living that you did?

this worry-- pessimism, really-- weighs on families who had seen a different future. how many employees did you have at the peak? >> scott creech: 22. >> pelley: how many do you have now? >> creech: i'm down to seven. half pepperoni, half pineapple. >> pelley: scott creech bought his own pizza franchise in newton 21 years ago. how many hours are you working? >> creech: last week, it was 82. >> pelley: 82 hours in a week? >> creech: correct. yeah. >> pelley: how long can you do that? >> creech: until i die. >> pelley: sales have slipped to a place that's sometimes dangerous for his family. >> creech: once you get down around this area, i may be able to file for food stamps. >> pelley: his wife julie is working at a school to take some of the pressure off. >> julie creech: he's 52 years old now, and i worry about him every day. his brother died of a heart attack when he was in his 40s and i worry about that all the time. >> pelley: his son parker is ten.

creech comes home to put parker in bed, but then he heads back to the shop. he washes up and closes up about 1:00 am. i wonder what the stress has been like for you. >> creech: i've been blessed... you know, you have guilt. >> pelley: guilt about what? >> creech: you'd like to have that 8-to-5 job, holidays off, but... >> pelley: you can't do that now. >> creech: no. >> pelley: nationwide, the number of small businesses going bankrupt each year has tripled since the recession. there were 60,000 bankruptcies last year alone. when you're looking for the path out of this flat recovery, there are a couple of things that strike you. one, small businesses create most of the jobs in this country-- 65% of all new jobs. but lending to small businesses is actually declining.

in the second quarter of this year, lending to small businesses and farms dropped by $13 billion. that's nearly 2%. so three years after the beginning of the great recession, with interest rates the lowest they've ever been in history, banks are lending less money to the engines that create jobs. have you gone to the bank? >> mcneer: yeah. that's amazing, because, you know, you hear stories about how lending is going to be more friendly and, you know... and even the president himself is, you know, going to tell banks that they need to understand what businesses are going though. there's no banks... banks don't understand anything. they won't loan me a dime. >> pelley: you went to the bank and they said what? >> mcneer: "come back when you have a couple of good years behind you." really? because i won't need you then. >> alan yegge: you know, they'll offer money to you when you don't need it. but when you need it, you can't get it. "perfect"-- we like to hear that.

>> pelley: alan yegge has been losing money at this jewelry on the court house square for a year and a half. he makes a lot of his own jewelry. and to try to match his customer's falling income, he switched from gold to silver, diamonds to beads. his employees, darlene swank and tina kono, even volunteered to cut their hours. you're going to have to let tina and darlene go. >> yegge: it's hard. it's hard. >> pelley: do you remember when you had to sit down and explain it to them? >> yegge: yeah, i talked to darlene first. i didn't have to say anything; she knew. you know, she does our books, and she knew. >> pelley: and what did the books tell you? help me understand. >> yegge: you just can't keep doing what you're doing. you know, as hard as it is, we tried. >> pelley: his store closed this weekend. more layoffs reduce demand, which create more layoffs.

change may be coming again to washington, but in newton, many believe the struggle will stay the same as family businesses work to steal another day from the great recession. >> cbs money watch update sponsored by:. >> mitchell: good evening. the bernard madoff bankruptcy trustee spent $27 million to recover only $849,000 for madoff victims. much of it went to the trustee's law firm. after 48 years gm pontiac brand drove off into history today. on this halloween weekend-- 3-d won the weekend box office. i'm russ mitchell, cbs news it. hit the courts... and explore new places. i'm breathing better with spiriva.

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>> stahl: when congress returns after the elections on tuesday, it will face one of the most hotly debated issues in the campaign-- raising taxes on the rich. that's president obama's position-- to keep the bush tax cuts in place, except for those on the wealthiest 2%, as a way to reduce the dreaded deficit. it's an idea already percolating among the governors. eight states have increased so- called "millionaire" income taxes so far as a way of avoiding drastic budget cuts on health and education. and on tuesday, voters could make washington state the ninth. but with our national debt in

the trillions, budget experts will tell you that just taxing the rich isn't enough. one republican brave enough to go public is david stockman, president reagan's budget director. he says all the bush tax cuts should be eliminated, even those on the middle class. and he says his own republican party has gone too far with its anti-tax religion. "tax cutting is a religion." what do you mean by that? >> david stockman: well, it's become, in a sense, an absolute, something that can't be questioned, something that's gospel, something that's sort of embedded into the catechism. and so, scratch the average republican today and he'll say "tax cuts, tax cuts, tax cuts." >> cut taxes... >> cutting taxes... >> make the tax cuts permanent. >> stockman: it's rank demagoguery. we should call it for what it is. if these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the

problem is $1.3 trillion. so to stand before the public and rub raw this anti-tax sentiment, the republican party- - as much as it pains me to say this-- should be ashamed of themselves. >> stahl: this, from ronald reagan's old budget director, architect of the largest tax cut in american history. but he doesn't let the democrats off the hook. he says he cringes when he hears the president say things like this. >> president barack obama: i believe we ought to make the tax cuts for the middle class permanent. >> stockman: we have now got both parties essentially telling a big lie with a capital "b" and a capital "l" to the public. and that is that we can have all this government-- 24% of g.d.p., this huge entitlement program, all of the bailouts-- and yet, we don't have to tax ourselves and pay our bills. that is... that's delusional. >> stahl: why isn't this statement correct? we cannot really deal with the deficit until we get our

recovery underway? >> stockman: the recovery has already happened. it is weak, it is tepid. >> stahl: how can you say the recovery has happened when we have 10% unemployment? >> stockman: the unemployment rate is not going to drop by any material amount any time soon. and we're going to be in a period of austerity. we've had a 30-year spree of really phony prosperity in this country. >> stahl: now, our national debt is growing by $100 billion a month. for those who say cutting spending is the answer, stockman says both parties have thrown in the towel on that. >> stockman: finally, even republicans have said there's nothing significant we want to cut. they don't want to cut social security entitlements; they don't want to cut medicare reimbursements to doctors, farm subsidies, education loans for middle class students; certainly not defense. >> stahl: many of the states are in the same boat, facing huge deficits with few prospects for

cutting, which is why washington state is joining the movement across the country to tax the rich. on tuesday, voters will decide on initiative 1098 that would create an income tax, but only on the wealthy, of whom there are many-- 133,000 millionaires and seven billionaires, including bill gates of microsoft. >> bill gates: thank you. >> stahl: his father, bill gates, sr., has poured his own money into backing initiative 1098. >> bill gates, sr.: some people say initiative 1098 is about soaking the rich. >> stahl: the tax would bring in $3 billion a year, to be spent mainly on education, which has suffered cutbacks as the state reels under a massive deficit. >> gates, sr.: vote yes on 1098. it's good for washington. >> stahl: washington is one of only seven states without any income tax. the proposal would create a 5% rate on income over $200,000 for individuals and $400,000 for couples.

a 9% rate kicks in at half a million dollars on individuals and a million for couples. let's say a couple earns $500,000. >> gates, sr.: okay. >> stahl: how much do you think they'll have to pay? >> gates, sr.: well, they would pay $5,000, because that's 5% of the $100,000 on which they would pay. >> stahl: oh, they would only pay on $100,000. they're exempt up to the $400,000. >> gates, sr.: precisely. >> stahl: so they'd only pay on $100,000. >> gates, sr.: precisely. >> stahl: well, that's not very much... >> gates, sr.: precisely. >> stahl: ...if you earn that kind of money. >> gates, sr.: precisely. >> stahl: his son bill is on his side, along with the public employees unions. the other side is a who's who of the state's big businesses: boeing, amazon and even microsoft. bill gates is still chairman, but the ceo steve balmer opposes the initiative, which is why they're calling this the battle of the billionaires. is it awkward?

>> gates: the word "awkward" fits, yes. >> stahl: balmer's side argues that the "soak-the-rich" tax would stifle high-tech innovation and lead to businesses moving out of the state. we asked microsoft, amazon, and boeing for interviews, but they all declined. businesses are saying they'll leave. >> gates, sr.: yes. the real truth of the matter is that the people that own businesses are the people who will be paying the tax. and my analysis is they don't want to pay the tax. >> stahl: the rich guys don't want... >> gates, sr.: the rich guys don't want to pay the tax. >> stahl: are you saying you just think they're greedy? >> gates, sr.: no, because it... ( laughs ) no. they're defensive. they're... i guess you could call it greed, i suppose-- wanting to... wanting to not write another check, sure. >> stahl: steve ballmer? >> gates, sr.: yeah. >> stahl: he's worth $14 billion. you don't think he... >> gates, sr.: he's a very fine guy, too. the fact of the matter is there are 43 states in this country that have a state income tax.

and the... in those states, the microsofts or the abcs, whatever, have not fled the state. i mean, it's just... it's just a gross exaggeration. >> stahl: but entrepreneur bryan mistele begs to disagree. >> bryan mistele: this initiative really is a nail in the coffin of small businesses and start-ups in our state. it really impacts the tech community very heavily. >> stahl: nail in the coffin? you mean, kill it off? >> mistele: that's correct. >> stahl: mistele is the ceo of inrix, a software company that monitors traffic around the world, and provides data for g.p.s. systems and sites like mapquest. he says businesses would leave the state, especially high-tech companies like his that deal in data and aren't tied down by factories or assembly lines. he'd consider moving some of his 60 employees to other states where he has offices. what are the states? >> mistele: massachusetts, florida, california... >> stahl: massachusetts-- income tax.

go ahead. california-- income tax. >> mistele: texas, florida, michigan, colorado. >> stahl: okay, four out of the six have income taxes. i mean, i've heard a lot of businessmen say what you're saying, and i keep wondering, "well, where are they going to move if they leave?" >> mistele: well, each state has its own competitive advantages. so by adding this additional burden, it makes us much less attractive. >> stahl: adam stites is another entrepreneur who opposes the initiative. five years ago, he moved his company, istores, from portland, oregon, across the columbia river to vancouver, washington, just nine miles away. >> adam stites: it broke down to taxes. there... oregon has the highest income tax in the united states, and washington has the lowest at 0%. >> stahl: istores is the largest online retailer of paint ball equipment. stites has been hiring staff for a new company he acquired that sells prank novelties. this is for halloween? >> stites: it is for halloween, or for any times you need to be a man-eating shark. >> stahl: under the new tax, he would have to pay $50,000 a

year, and that, he says, would hamper his ability to expand any further. this money, if it passes, will go specifically to education, because they've been cutting schools and things like that. so what is washington state supposed to do about its schools in terms of revenue? >> stites: i think the state, in aggregate, needs to take a look at its expenses. >> stahl: like? >> stites: i've had opportunity, in portland, to see cars being washed by third-party washing firms, cleaning cars on the weekends, for state vehicles. i don't have someone who cleans my car in a van and waxes... >> stahl: that's in portland. >> stites: it's in portland, but i think it's indicative of government spending. >> stahl: but the state budget has already been cut by $5 billion, and the governor, christine gregoire, says they're at the bone. >> governor christine gregoire: to cut people off hospice, i think, is immoral. to cut children off health care,

to cut their education so they don't have a chance at a decent future, i think that would result in an immoral budget. >> stahl: she says she doesn't understand why so many of the state's high-tech c.e.o.s, who are always complaining about the woeful state of american education, are so opposed to paying this tax for schools. these businesses that want the educated workforce, they're against this. what do they say to you when you challenge them on this? >> gregoire: i tell them i have the utmost respect for them. these are great c.e.o.s. and i say to them, "here is the... the problem. you always want us to invest more in education, and now you say no. so, my question to you-- if not this, then what? don't just tell me no." >> stahl: well, what do they say? what do they say...? >> gregoire: they don't have an answer, lesley. >> stahl: the initiative was way ahead in the polls, until the opposition started airing ads saying 1098 is a slippery slope. >> it can be extended to you in just two years. >> stahl: polls now show the

middle class thinks they too will be hit with income taxes. and the high-tech entrepreneurs we met say there's a fairness issue-- bill gates got to start microsoft without an income tax. and this is something you hear a lot-- that they find it curious gates is supporting an income tax now. >> mistele: i believe the gateses have already made most of their money, so they wouldn't be taxed under a new income tax structure in our state. >> stahl: they wouldn't be taxed at all? no. >> mistele: well, for people who've already made their money and paid taxes in this state, that money wouldn't be taxed again. it's only for people who are earning new money in this state. >> gates, sr.: well, that's ridiculous. i mean... i mean, my son will pay a huge, huge income tax. >> stahl: he will? >> gates, sr.: come on, he's the richest man in the country. what... what... >> stahl: no, but i'm asking... >> gates, sr.: how could anybody think he isn't going to pay a huge income tax? >> stahl: what is the income? >> gates, sr.: what does a person with $50 billion have for income? this conversation isn't making any sense. >> stahl: bill gates would pay multi-millions in taxes on the

income from his investments. and he wants to. he's told you that? he's for this. >> gates, sr.: well, "wants to" is a little strong. >> stahl: okay, he's for this. >> gates, sr.: he's... he is for it. he's very willing. >> stahl: but, as david stockman will tell you, that attitude is hard to find. >> stockman: we've demonized taxes, all right. we've created almost the idea that they're a metaphysical evil. >> stahl: still, he says there should be a one-time 15% surtax on the wealthy that he estimates would cut the national debt in half. >> stockman: in 1985, the top 5% of the households, wealthiest 5%, had net worth of $8 trillion, which is a lot. today, after serial bubble after serial bubble, the top 5% have net worth of $40 trillion. >> stahl: oh, my god. >> stockman: the top 5% have gained more wealth than the whole human race had created prior to 1980. >> stahl: of course, it would never pass.

there's the rub. >> stockman: there's the rub. >> stahl: the antipathy to raising taxes or making any real spending cuts, whether in washington, d.c., or washington state, is so intense, stockman despairs that, when congress returns after the election, they'll do what they often do-- nothing. i remember that great expression, "let's kick the can down the road." >> stockman: yes. >> stahl: that became kind of the mantra. >> stockman: yeah, and it still is today. >> stahl: "just kick it down the road. we'll... we'll solve it tomorrow." >> stockman: kicking the can down the road, except it's no longer a can. it's a giant junkyard. >> hello, welcome to the cbs sports update. i'm james brown in new york with the scores from around the nfl today. the patriots take a one game lead in the afc east beating brett favre and the vikings. the jets shut out by the packers. the chiefs win in overtime. cowboys fall to 1-and-6.

the rams reach the four win mark for the first time in four years. the chargers hit a three game losing streak. the dolphin goes to 4-and-0 on the road. for more news and scores log on the road. for more news and scores log on to cbssports.com. how to get. ♪ so why would you let something like erectile dysfunction get in your way? isn't it time you talked to your doctor about viagra? 20 million men already have. ♪ with every age comes responsibility. ask your doctor if your heart is healthy enough for sex. do not take viagra if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. side effects may include headache, flushing, upset stomach, and abnormal vision. to avoid long-term injury, seek immediate medical help for an erection lasting more than four hours. stop taking viagra and call your doctor right away if you experience a sudden decrease or loss in vision or hearing. this is the age of taking action.

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