Transcripts For KQED PBS NewsHour 20100827

>> brown: from iraq, margaret warner updates a violent week as the u.s. combat mission winds down. >> woodruff: betty ann bowser returns to new orleans to find out how three families are coping five years after katrina. >> i think we've done a great job considering all the odds that were against us. >> brown: and mark shields and david brooks offer their weekly analysis. >> woodruff: that's all ahead on tonight's newshour. major funding for the pbs newshour has been provided by: and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> brown: there were new signs today of a continuing and prolonged economic slowdown, even as federal reserve chairman ben bernanke said the central bank was prepared to take further measures. under increasing pressure to respond to fears about the economy's fragile state, chairman bernanke delivered a much-anticipated speech today at the fed's annual conference in jackson hole, wyoming. he said he continues to believe there will be "some pickup" in growth next year, but that "growth recently appears somewhat less vigorous than expected." bernanke stopped short of committing to any immediate moves, but raised the possibility that the fed would make substantial purchases of securities and government bonds to lower long-term rates and boost lending. his remarks came shortly after more bad economic news, as the commerce department announced that gross domestic product expanded at a 1.6% annual rate last quarter, less than the 2.4% pace it had previously estimated. and that followed evidence this week that housing could be falling into a second slump, as new home sales fell 12.4% in july to the lowest level in nearly a half-century. chairmen bernanke also spoke of the high unemployment rate, saying it: "poses risks to the sustainability of the recovery itself through its effects on households' incomes and confidence." despite the gloom, wall street today seemed to focus on the fed's willingness to act. the dow jones industrial average gained 165 points to close at 10,151. the nasdaq rose just under 35 points to close above 2,153. for the week, though, the dow lost six-tenths of a percent; the nasdaq fell 1.2%. we get two assessments now of the economy and the fed's response to it: paul krugman is an economist at princeton university and a columnist for "the new york times." douglas holtz-eakin is a former director of the congressional budget office and, most paul krugman, i'll start with you. you wrote in your column today, this isn't a recovery in any way that matters. so did you sense today that benn bernanke agrees and is tacking the right steps? >> well, he may agree, but he's not taking the right steps. i mean there was no sense of urgency in his talk. yes, he said we'll do something if the situation warrants. but here we are, you know, this is, we're now 32 monthss into the slump. unemployment is disastrously high. growth, the economy needs to grow about two and a half percent annual rate just to keep unemployment from rising. it's not doing that. what would it take to justify action. so you know t was a good signal that he is saying you know, the fed is kind of sort of willing to do something maybe which is better than previous statements. but if this isn't the situation that warrants action now, what would be that kind of situation? do we have to have a whole great depression to get the fed moving. >> brown: what did you hear from the fed today? >> well there was a little bit in there from everybody. he said we recognize the economy's struggling. and thus tried to make sure people didn't think the fed was out of touch. he told those who were worried about the economy going down in double dip that they had things they could do and he outlined them. then at the end he told the people worried about inflation, believe it or not, look we're not promptsing higher inflation. united states is not going on the record for that. i thought was a talk carefully designed to appeal to lots of audiences. >> brown: carefully designed but what about the state of the economy that paul krugman sees in dire straits needing more. >> the economy is not in good shape. i think about that. there ought to be great agreements. but the key is that the fed has done all it can do. it did a tremendous job in propping up the economy during the crisis. it is now badly extended. the key is now that we have an economy that is growing. it's been growing for about a year but it is growing too slowly. we ought to rethink this not as a crisis sort of stimulus issue but one where we have to concentrate on long-term growth and do you will at things to make the economy grow faster. >> brown: that gets to the none of the argument, paul krugman. what should the fed do. what do you want to see it do? >> i think it should be throwing everything including the kitchen sink at the problem. i mean doug is saying that the fed has done all it can do. s this's not what the fed says. the fed says it has ammunition. it continues to have the ability to act. so we should take them at their word and see them actually act. they could do purchases of long-term bonds. they can raise their inflation target which, you know, ben bernanke when he was a princeton economics professor advocated for japan when it was in a similar situation. >> brown: explain, to the audience what that means and what impact it would have. >> sure. the fed has... it has in its mind and more or less publicly an idea what it wants the inflation rate to be over the next five years. that's believed to be about 2%. if the fed were to make it known that look, we actually think it should be 3% that would at least give some incentive for people, corporations that are sitting on piles of cash, to say you know that cash will be less. we should spend more. make it a little bit more attractive for people deciding we have a good investment project but they're not really sure whether they should borrow for it. it will make them think t will be easier to service that debt. it's something that can move decisions at the margin. there is a whole list of things that the fed can do. they are all uncertain because we are in unchartered territory. we haven't been in this kind of situation where short-term interest rates, which the fed really controls directly are basically zero. we haven't been in this situation since the 1930s. but that's not a reason not to act. and yet the fed is sort of saying well, you know, things are uncertain. maybe things will improve. and this may not look like a crisis to the fed but to the very large number of people who are unemployed, to the near-record number of people who have been unemployed for more than six months. and more than a year. this is a crisis. i'm amazed that there is no greater sense of urgency. >> brown: respond to that. >> the first thing the fed is going to say an i think probably, is look, we'll hold on to am o things in reserve in case the economy actually goes down again and then we will act. i that i appropriate. let's look at this economy. we're not in unchartered territory. lots of economies have gone through financial crises and what is characteristic of them? they grow slowly coming out of them. you don't get a v shape recovery. you grind out over a long period. the u.s. is doing that. it has a household secretary their is very weak. had a lot of debt going in. houses aren't worth what they used to be, portfolios aren't worth what they are used to be it is to the going to spend its way out this he are to the going to power us out. governments are in the same shape. a lot of problems with long-term federal budget. states are in bad shape. there is one healthy part of the economy. it's the business sector. they've got cash. they've got the capacity. and instead of scaring them into spending it as raising inflation target might do, we ought to give them some positive incentives. and the business community has been very vocal about how they feel this administration has been anti-business and it's hurting them. >> brown: but you earlier said you didn't think the fed even had much in the way that it could do. now is that the argument or is it that they can do certain things as they suggested today, but those might pose new risks. >> i think they can do more things. they said it clarely in the speech. paul is right about that. but we ought to hold on to those in case the economy actually begins to go into a recession again. >> we have been growing for a year. and it's important to think about this problem correctly. and i think the administration has misdiagnosed it. this is a growth problem. the united states has been growing for a year. it's growing too slowly. so we need to throw everything at taking the long-term budget deficit off the table. control spending so businesses aren't worried about higher taxes, higher interest rates or both. get some trade agreementsment don't just talk about it, do it so we can sell to other customers. keep taxes low on, you know, savings and investments. these are important issues for business. and they have a long list of gripes about the policy agenda with this administration that is not imaginary, it's real. and it's hurting their ability to drive this economy. >> brown: paul krugman, come back. >> it's imaginary, doug. this is something that is paid up it is their lobbyists who have that long list of problems. but when you look at surveys of businesss who are asked why are you not investing, why are you not hiring, they say it's lack of demand. the economy is not strong enough for them to start hiring. we need to do something to make this economy stronger. not five years from now, not ten years from now, but now. we need to prop this up. yes, it's true that the aftermath of financial crises is usually a long period of poor economic performance. but that's not something to just accept. we're supposed to do something different. when japan had a somewhat similar situation in the 1990s after its bubble burst, american economists, american officials were caustic about the unwillingness of the japanese to take strong action to deal with their problem. the way they were just sitting there. and now we're doing the same thing. we are turning japanese. our economic policy. this is not something we should be accepting. this s it's very easy for comfortable people like all of us, right, in this discussion to say well, you know, these things take time. not necessarily. and we should be trying to do better, not just sitting and accepting this prolonged period when productive workers, men and women who want to work can't find jobs. >> brown: you also wrote today about the politics. i mean the other thing that one could look to and often have in the past with the stimulus from the government. you see the politics as taking that off the table right now? >> unfortunately, i think so. i think that the economic case for doing more fiscal stimulus is very, very strong. the markets are not worried about u.s. debt. they will willing to lend at low-interest rates to the federal government but relistically given the way the u.s. political testimony works, your chance of getting 60 senator force another major stimulus is something less than zero. so i'm, you know, i would be all for it but i don't think it can happen. >> brown: what do you see on that? >> i do not think anyone should be complacent. i absolutely agree about this. this a situation where we need to do things differently and actually grow faster. stimulus will not be the solution. this is no longer an economies that's falling and needs the government to step in and prop it up. it's growing. it's just not growing very well well. have to think of it as a growth problem and to do what japan did which is spend a lot and raise taxes, exactly the mix you are hearing the administration talk about is to become japanment we can't go that route. so take the tax increases off the table. don't rely on government spending. let the private sector drive this thing. and it's not imaginatio imagination-- imaginary to look at things the administration wants credit for, increased emphasis on clean technologies. increased health it, those aren't stimulus. those are costly changes in the american economy. they're trying to do in the name of stimulus, that's not helpful. >> brown: douglas holtz-eakin and paul krugman, thank you both very much. >> thanks a lot. >> woodruff: still to come on the newshour: the humanitarian crisis in pakistan; margaret warner in iraq; the people of new orleans, five years on; and mark shields and david brooks. but first, the other news of the day. here's hari sreenivasan in our newsroom. >> sreenivasan: an american prisoner jailed for illegally trespassing in north korea is back in the united states. former president jimmy carter negotiated his release in pyongyang, and the two departed there earlier today. aijalon mali gomes was greeted by his family and friends on the tarmac in boston. gomes had been teaching english in south korea before crossing into the north last january for unknown reasons. homemade bombs killed three u.s. troops in afghanistan today. the attacks were in the south and the east, but no more details were given by nato. 35 americans have been killed in afghanistan so far this month, as fighting there has escalated. nato announced today a joint force has wrapped up a week long offensive northeast of kabul, killing about 40 taliban fighters and capturing key operatives. the first video of 33 men trapped in a mine in chile shows them healthy and in good spirits. they've been trapped underground since the mine collapsed august 5. the footage was shot by a tiny camera lowered down through a small emergency shaft. we have a report narrated by rohit kachroo of independent television news. >> reporter: it is cramped and dark, and the only light comes from their mining helmets. but there's little about their spirit to indicate the depth of their ordeal. ♪ they sing the national anthem; then, some of the men they take the chance to send a message home. "i am here, my mother," says one man; "i am okay, my friends," says another. then, with similar optimism, each one speaks into the camera as they stand shirtless in the heat. they play dominoes to help stimulate their minds. along with food and medicine, a video camera was sent through the bore hole to take us through the keyhole of their underground home. and it shows how a mini- community with daily routines has formed. they've divided the space into separate areas-- one to eat, one to sleep, another to wash, and another for leisure activities. they have a daily meeting and there's daily prayer. they keep busy by cleaning and sorting their provisions. and as well as dominos and cards, they're encouraged to sing and make videos for their families submariners arrived near the mine today. life in "the deep" is the nearest thing to the underground shelter. and the men have been told that those with waists of more than 35 inches won't be able to squeeze out of the escape tunnel. they appear to have coped well for 22 days. but there may be a hundred days more underground. >> sreenivasan: chile's state- owned mining company is drilling the escape tunnel, and the chilean government is footing the bill for the rescue efforts. the company that owns the mine has said it can't afford to pay its miners and may go bankrupt. mexican president felipe calderon said today a state prosecutor investigating the massacre of 72 migrants is missing. the graves were discovered on tuesday, and the prime suspect is the zetas drug cartel. the prosecutor and a police officer involved in the initial investigation disappeared on wednesday. also, the u.s. state department told its diplomats in monterrey, mexico, to remove their children from the area. two weeks ago, there was a shoot-out in front of an american school there, and kidnapping threats are on the rise. the u.s. birth rate has dropped to its lowest level in a century. the national center for health statistics estimated 4,136,000 children were born in 2009. that's down nearly 3% from 2008. researchers said the economic crisis may be partly to blame, prompting people to delay having children. those are some of the day's major stories. now, back to judy. >> woodruff: we turn next to the catastrophe in pakistan, where flooding is spreading further south. the united nations estimated another one million people have been displaced. in the north where the devastation began, survivors cling to life in desperate conditions. special correspondent jeffrey kaye is there and filed this report. >> reporter: on july 29, a village died. over the course of an hour, flood waters engulfed the village of zareenabad. just about all of its 11,000 residents escaped to higher ground, but three people died and dozens are unaccounted for. now, below the foothills, along a windy strip of land, sharing space with the local graveyard, is a settlement called, in pashtun, keem-abasty new-cally, which translates as "new village of tents." >> we have provided 370 tents >> reporter: najeeb ullah, project director of a pakistani aid group called idea, says as many as 6,000 people are now refugees in their own neighborhood, camped out on land that sits between a hillside and their flooded village. supported by care, the international relief organization, the villagers have received tents and cooking utensils. water is delivered by trucks. but this is a public health nightmare. people get enough food for about one meal a day. waterborne diseases and skin infections are on the rise. one reason is the absence so far of sanitary facilities. right now, there are no toilets. for how many people? >> 5,000 to 6,000. >> reporter: 5,000 to 6,000 people without toilets. >> yeah, without toilet. in kyber pahtunkwhwa province in the north, where floods first began health workers are confronting a variety of immediate medical concerns. dr. guido sabatinelli, an epidemiologist, is with the u.n. world health organization, which is helping to fund the medical assistance. >> the water they use for washing themselves, or they don't wash. they go days without washing. look at this children. this is scabies. look at that. >> reporter: and how serious is this? >> this is a very heavy infection. >> reporter: and spreads? >> and spreads all over the body, of course, and of course it spreads inside the community, because also this is contagious. this is a family-- probably all the family has the same. so this is just the child, but the mother, the father, all the other children, they are in the same condition. >> reporter: health dangers are compounded when the tents are pitched, as they often are, close to standing pools of water. what does that mean in terms of the health risks? >> very soon, we will have, if they are not already present, mosquitoes. i can check. yes, look at that. this is a anopheles. this is a larva. malaria will occur, of course. in pakistan every year, there are one million cases of malaria. we are expecting to have five times as much, five million cases, and we are preparing for that. >> reporter: not only do the smallest insects pose big risks, so too does living in proximity to livestock. in poor rural areas, large animalare substantial investments, often the only precious property salvaged from the floods. by living next to animals, people risk contracting infections from their animals. pakistan's widespread devastation is straining the country's already inadequate medical system. not only have the floods increased the need for services, they have damaged or destroyed about 500 health facilities, according to the u.n. as a result, the government has turned many schools and colleges into shelters and clinics. among them is the government college of technology in nowshera, also in the north of the country. classroom buildings are becoming temporary hospital wards. people come here with medical conditions, flood-related and not. "when the water level started rising, we left our home," she explained. she and her family went to a relative's house, and then came here where she gave birth to a premature baby girl. she also brought her daughter, who is suffering from malnutrition. on a cot not far away, another woman was caring for newborn twins. >> 50,000 to 60,000 delivered in the next three months, so that needs to be supported and deliver in a proper... >> reporter: is there a capacity for that? >> not presently. >> reporter: some 300 tents house families displaced by the floods. this tent city has facilities not found in the some of the impromptu settlements established by flood victims. a bicycle-powered filter purifies water for drinking. there are facilities for women to do laundry. oxfam has provided toilets, separate ones for men and women while the world is focused on the immediate needs of pakistanis-- health issues, homelessness, rebuilding, et cetera, this is also a slow motion emergency. the long-term well-being of millions of pakistanis is in jeopardy. >> there are millions of people in an acute humanitarian crisis right now. the world needs to do everything we can to save those lives and protect individuals, but at the same time, we need to think about how to help pakistan build back. >> reporter: dr. rajiv shah, the administrator of the u.s. agency for international development, came to pakistan earlier this week. he says the international community needs to help pakistan in a rebuilding effort. >> building back in an environment that is more resilient to floods and heavy rainfall, as well as building an agricultural economy that can be more effective when the rains don't fall. part of the reason we have this crisis is that, for 10 to 12 years, they had lower than average rainfall, and people didn't maintain the flood protection systems that had been in place. >> reporter: another long-term problem is the damage inflected on the country's valuable agricultural industry, a pillar of the economy. more than 200,000 farm animals were killed by the floods. millions of acres of crops have been lost and millions more inundated by floodwaters. not only has this crop been lost, the prospects for next year look bleak. the dim outlook is reflected in the attitudes of people now consigned to tent living. >> ( translated ): i've lost everything that was there, including my shop. all the tools that i had, i have lost that, too, and i cannot work anymore. >> reporter: akbar kahn watched most of his house fall apart in the flooding. his family of 12 now lives in a tent adjacent to the building. a barber by trade, khan lost his tools, his shop and his meager life savings. so its up to allah and to people like you who can come and help us, because we have lost everything. we have nothing left. >> reporter: how much longer can you provide assistance before you run out? >> actually, we have for funds for two and a half months. >> reporter: the humanitarian crisis is having a growing political dimension. according to the u.s. agency for international development, six to eight million people need immediate humanitarian assistance, but only about one and a half million have received it. little wonder that people like akbar shah and others in his graveyard village feel trapped and helpless. >> woodruff: next, margaret warner continues her reporting from iraq. i talked with her earlier today. margaret this has been a very violent week coinciding with the final drawdown of u.s. combat troops. what's the fallout been in terms of national politics and the psyche of people you've talked to? >> well, jeff, the reaction here first of all is mirrored in the various voices in the media here. so it depends what political persuasion a particular situation is reflecting in terms of what kind of sound bites they get from people. and just the drift of the stories. so for instance, the stations that support the government of prime minister maliki are saying this is sort of a desperate attempt by the terrorist elements to sew lack of confidence in the people it will totally fail. then you have other satellite networks here that reflect the feeling that in fact the government can't protect the people. talking to people ourselves, what we are hearing is some nervousness that the iraqi security forces can handle this on their own. with the drawdown of american forces here. what is interesting is what it hasn't triggered. it has not triggered as spectacular terrorist incidents did say in '07, a wave 6 sectarian reprisals. and in fact what you are hearing from all voices it no matter where they are on the political spectrum is this message which is this is a very difficult, challenging time for iraq because it's a time of transition, both in terms of troops but also in terms of putting together a government. and that's important for all iraqis to stick together. and that's a new tone. and so far it seems to be holding. >> brown: a lot of the violence is targeted to police, right? >> warner: absolutely. and much greater rate than before. in the first five months of the year, there were 180 security forces, iraq security forces killed in this kind of thing. just in the last three months, and the third month isn't quite over there have been something like 20 70. so the police-- 270 so the police are very much the target. what we're told is that this is clear, or at least the u.s. military believes a clear strategy on the part of anti-government elements to strike at the weakest link. it's really hard for them now to cause much damage to u.s. forces. and even to the iraqi army. but the police are on the front lines in check points all over this country. and this city of baghdad and elsewhere. and they're the buns who are pulling cars over and searching them to try to protect the city. those very check points are now becoming perilous places themselves. >> brown: now president obama has, of course, scheduled a prime time address next week to talk about iraq. what are the expectations or hopes that you pick up there about what he might say, and what the american stance might be going forward. >> warner: well, again, you hear a complete range of views. last night in najaff, one woman said to me, she hoped that, in fact, president obama would announce that america's not going to abandon iraq. but more common was, were comments that we heard from other people who were there breaking the fast at the schryne of ali, one of the holyest shiite shrines in this country, a young woman studying english literature trade said to me i just want him to announce when all u.s. forces will be out. and one man was particularly interesting, who said maybe in other countries, what he has to say on iraq will be of great interest. but he said here in iraq, whatever he says isn't going to solve our electricity problem. it isn't going to put together a government for us. and it really isn't going to fix anything that affects our ode lives. so again, there is a diversity of opinion, i think, there was what was really remarkable to me. >> brown: finally, mark ret, speaking of next week, tell us about some of the stories you are preparing for us. >> jeff, we're going look at first of all the military draw down what does that mean for u.. and iraqi forces, whether they are ready. and the daily life of ri rackist. how safe do they feel. we'll look at the mystery of why most iraqis dedespite billions and billions spent on the electricity grid don't have adequate electricity in 120 degree heath. and we'll also look at this political issue, without going inside the baghdad beltway why six years after voters went to the poll they don't don't-- still don't have a government. >> brown: margaret warner is in baghdad, take care of yourself. >> warner: thanks, jeff. >> woodruff: before president obama makes his iraq speech next week, he and the first lady will travel to new orleans sunday to mark the fifth anniversary of hurricane katrina. newshour correspondent betty ann bowser returned to the louisiana coast recently to revisit three families we first met in 2005. >> i think we've done a great job, considering all the odds that were against us. >> there's always some good going to come out of the bad, so i'm praying and hoping for the good. >> there was no serious, "we'll help you come back safer, stronger, smarter." those were empty words and slogans. >> reporter: three families who managed to survive the chaos of katrina. five years later, they're back home, but the journey has been littered with roadblocks and empty promises. and today, they're still not whole, emotionally or financially. we first met helena and melvin jones in november of 2005, when they escaped the floodwaters to live with one of their seven children in an atlanta suburb. their ponchartrain park home of 40 years on the east side of new orleans had been completely destroyed, along with their retirement dreams. back then, a family-owned gift shop in the french quarter had to be closed, and melvin was frustrated at how slow the recovery was moving. >> here we are over three months away from what happened back then and, really, nothing has happened, absolutely nothing. >> reporter: some weeks later, they did come back, but to a rented apartment in algiers, across the mississippi river in an area where they knew no one. they reopened the store and tried to piece together enough money to fix their shattered home. >> i would come every day and sit in that back room and just cry, wondering if we were ever going to get back. it brings back memories. >> reporter: eventually, they did. with a $75,000 check from the state's "road home" program and their life savings, they rebuilt their ranch home, where they live today. but many of their neighbors didn't have enough money to do the same thing. >> most of the homes are empty. in fact, most of the area of ponchartrain park, i'd say 60% of the people have not returned. >> reporter: why did most of them come back? >> well, the government didn't really reach out to help them. we went into this owing $100,000 and we still owe $90,000. >> the federal government should have been a little fairer with all the people, to try to make people whole again, people who are our age who really want to come home. and a lot of them are dying because of the stress they are going through and can't come home. >> reporter: the road home program was funded by the federal government, but it was administered by the state. it gave grants to homeowners to help rebuild. technically, it ended earlier this summer, although counselors are still processing a few hundred outstanding claims. the program has been mightily criticized for being inadequate, inefficient, and discriminatory against black home owners. but director robin keegan defends its record, saying it spent over $8 billion and helped 127,000 families. >> the road home program was not to make people whole; it was to assist people in their recovery plan to help them reoccupy their homes. unfortunately, the state was not given enough resources to make everybody whole who was impacted by these storms. but we've made sure people can get as much money as possible through this program. >> reporter: the program did help many people return, and parts of the city, like the french quarter and uptown, are thriving today. according to a study by the university of new orleans, the city's population is at 78% pre-storm levels; 70% of the jobs have also returned. and the public school system is undergoing a complete transformation. but many challenges remain. there has been a 49% increase in rental rates, and nearly 65,000 vacant residential units are scattered all over the city. most of the neighborhoods that were underwater look like this one. they are a patchwork quilt of empty lots, new construction, and houses like this one that haven't been lived in in five years. nowhere is that more evident than in the ninth ward, where empty, overgrown lots are adjacent to beautiful, brand new houses built by actor brad pitt's "make it right" foundation. the foundation has also built playgrounds, like this one next to barber bo field's house. when we spoke to field in 2007, he had just discovered the road home program was only going to give him $52,000 to rebuild, about half of what he said he needed. >> i'll tell you, when they got through with me, i was more upset. i was more angry than i was the day of the flood. >> reporter: but now, five years after the flood, field has been able to make enough repairs on his own that he moved back in. so there are still things you'd like to do? >> yeah, i got plumbing work i got to do. >> reporter: and he's become more content. >> five years ago, i was frustrated. it took some time for me to stop being angry. and not really knowing what you're angry about. but i am much better today. i mean, we're thankful for what we have. we're thankful for where we have made it to. but it could have been a much easier ride. >> reporter: no one would agree more with that assessment than retired software engineer k.c. king. we first met him when he was living in an r.v. parked next to his destroyed home in the gentilly neighborhood. he had applied for $100,000 from the road home, and was stunned when he was told no. >> they said they were very sorry, but there was no grant available to help me rebuild my home. >> reporter: king refused to give up. eventually, he got over a 100,000 road home dollars. that he cobbled together with much of his retirement money, and built this tribute to elevation. so, how much higher did you rebuild above what you were required to do? >> we're 11 feet off the ground, and i think seven feet above what was required, which of course is a major issue, because they don't want to pay you for the extra safety. >> reporter: how much extra did it cost you to do that? >> that's about $70,000 worth. >> reporter: and that was just for the elevation part; the whole thing cost upwards of $400,000. some people might say that was foolish, given the fact that his property is adjacent to a flood wall that has not been improved since katrina. but king says he thinks he's safe from any future storms. >> my house and its contents will survive, because of the height we built and the materials we used and the design concepts. we're about as flood-proof as you can make a house. >> reporter: but king says he can't say the same about his neighborhood or the rest of the city. he says there's been no comprehensive plan to prevent another disaster from happening. >> the thing that frustrates me even more is that when they made the decision to value growth over safety. >> reporter: who is the "they"? you're saying there was more interest in getting people home? >> yes-- constituents, fodder for real estate developers, customers for merchants. getting people back to have a vibrant recovering economy has been more important than getting people back feeling safer than they did before katrina. >> reporter: king feels that way, in spite of the fact that the federal government is spending $15 billion to shore up the city's flood walls and levees. what no one knows is what would happen if another killer hurricane came through. but in spite of that the jones family, bo field and k.c. king all say it's good to be home. >> woodruff: and finally tonight to the analysis of shields and brooks-- syndicated columnist mark shields and "new york times" columnist david brooks. gentlemen, good to have you back after a few week as way, you look well rested. >> thank you. >> woodruff: mark, let's start, just a word on the economy, some news today, the growth earlier this year not as good as had been thought. ben bernanke of the federal reserve said today they stand ready to move if needed. we talked about this at the top of the show. but what other thought do you have on this? >> well, it just seemed that chairman bernanke said that the recovery train late. it's not on schedule. but it will come. it's still on its way. it hasn't been derailed. and it attempted to reassure without any positive action statement to it. and the question is, what are the actions that the fed could really take at this point. >> woodruff: should we feel reassured? >> a little. he's showing he is aggressive. but it's all on the fed now. there was a lot of hope i think earlier in the year that the stimulus package and the fiscal policy would be able to boost some demand. when the thing was passed, the obama administration projected that unemployment would be coming down quite substantially by now. that didn't turn out to be true. then they another set of projections where they called this the summer of recovery and joe biden said we will be creating up to $500,000 a month. that's clearly not happening. so it has been disappointing what is happening to the stimulus package. so now the fiscal policy as my colleague paul krugman said earlier in the show there is no political will. there is no reason to do it. it's just not effective. i think it is all on monetary policy. what we have to expect is what financial crises is are like, long, slow recoveries. one final thing, the money that crystallizes this is the amount of personal debt that is floating out on individual households. for decades it was like 45% of gdp. as we went through the consumption boom it went up to 133% of gdp. huge amounts of household debt. we had to wind that down. we're only down to about 12. so that's just going to take a long time to get down. and that's why i think this is going to be a longing slow, grinding recovery. >> a lot of family debt. >> a lot of family debt. a lot of pain. and a lot of hurt out there, judy. it, politically it, the recovery summer, unfortunate predirection-- prediction. >> woodruff: on the obama. >> on the obama folks, a self-inflicted wound. no one ever heard of recovery summer before. and it reminded me of the rosie scenario in ronald reagan 30 years ago when cascading tax revenues were going to come in. and the economy was going to jump and there would be no inflation. and the budget would be balanced. and rosy scenario emerged, not an interpretive dance at a gentlemen's club but an overly optimistic protection-- projection of the future. the problem with making the recovery summer statement or rosy scenario is it it's one thing to say what is going to happen long-term, next generation. don't ever say it's going to happen this summer, you know, or in the next six months because that's when you really get caught jz. >> woodruff: they thought something was going happen. >> they obviously did. better to have it happen and take credit than predict it and not have it happen. >> it was the foundation for the policy. they had these models based on the multiplier effect. you put a dollar in and you get $1.4 dollars of stimulus or 1.2, whatever the model is and that was the model on which the whole policy is based and it seems, and there is a big debate about this but it seems that to me that the multiplier is not that high. that the effect is not that big. and that's why it is not just a political mistake, though it is, it is a policy mistake. >> the omb this week did argue that the stimulus had had an impact almost up to 4% on gdp growth which would not have happened without it. and that the unemployment would have been greater. >> woodruff: this is the budget office. >> yes, the office of management budget-- the congressional budget office which is nonpartisan-- partisan, not part of the administration. and it had created up to 3.3 million jobs. i guess what was not accounted for was how bad it was. >> that is because they use the same models. they are running the models. it clearly helped, there no question about that it clearly has not helped as much as a lot of us thought. >> woodruff: you did have the house minority leader, john boehner weigh in with what he called a major speech this week on the economy. did we get a sense from that of what, if the republicans take over the house in november, whater this's going to do. >> in a word, no. and that i guess is the theme of the speech, no. obama is doing this. we're not going to do that. obama is creating all these programs. we're not going to do that but how the republicans are going to address the long-term problems there are two issues here. there is the fiscal crisis. but then, we've had problems in the labor markets for a long time. we've had wage stagnation for a long time. i don't think the republicans are there yet. doug holtz-eakin on the show earlier said we have slow growth. how are we going to improve the growth. john boehner said nothing about that. so basically what he saids with a political message. you don't like what the obama folks are doing. we won't do that stuff. that was a political speech. i expected a little economic thought going into the speech, whether it is fiscal conservatism, somethingment you but i would say sub stand-- . >> woodruff: how did you read it. >> it was an elevation of vagueness and generality to high politics, any time a politician somebody like john boehner says things like we're going to have to make tough choices, that tells you what and never tells what you tough choices might be, ought to be that is the kind of speech it was. he came out strongly for tax cuts. and against regulation of business. buts there what no real hook upon which to hang any kind of lipp lepp. >> the republicans are doing so great right now, they figure why mess with the script and that was the speech. >> woodruff: we do have primarys to talk about. five states voted this week. it's interesting, david, in two states, you have the conservative, more conservative republican candidate do better, in fact in florida in the governor's race, beat the establishment republican and then mark in alaska, the, it looks as if the incumbent republican senator lisa-- is in trouble. >> that's right it was a very big day for sarah pinl, no make no mistake about it. >> woodruff: she had endorsed. >> she endorsed joe miller against lisa mccowski. she beat frank mcyou couldski, her father in '92 006, that recent, 2006 republican primary for governor of alaska. and she won obviously the governorship. and then resigned the governorship at which time lisa gave the comment she was abandoning the people of alaska, sarah palin. sarah palin settled the score by embracing joe miller, a veteran, graduate of yale law school but a total unknown. and a real tea partyer. somebody who has-- the constitutional of unemployment benefits for workers. and she did that at the same time she insulated, inoculated john mccain against a charge on the right early on down in arizona. so i think it was a big, i mean, it's been a big spring for sarah palin. and i think that she has to be given some credit for taking real chances in a lot of primaries whether it is nikki in south carolina, in new mexico. >> i think she had a validating affect. i'm not sure she had that much effect. the reason joe miller won, he was helped by sarah palin no question. but there were a lot of issues, there was an abortion issue there. and then to me the most interesting thing is mccowski is on the appropriations committee. she stands for the old ted stevens style of politics it, i'm going to bring some money up here to alaska. and voters aren't liking that this year. at proceed operations committee is being decimate maed. robert bennett and many others are lossing from that committee. so people want a more, we don't want the pork any more. we just want no spending. and at least in the republican primaries. >> this will be a real test because alaska gets $6 from the federal treasury for every $1 it sends to washington. and that's how politicians have lived up there, don yong and ted stevens over the years. and it is really fascinating whether joe miller who is on that side, as david says, against federal spending, whether he is going toing outspoken and say we don't want washington's money any more. >> woodruff: but again in arizona, david, no surprise that john mccain held off jd hayworth. >> if you had asked me six months ago was i sure, no. i think smart pem were not sure. i think there from a couple factors. mccain was really aggressive. he didn't take anything for granted. he ran against jd hey water before hayworth even started. hayworth as we knew was a flawed candidate hurt badly by an infomercial he did saying i can get you some free money from washington. which is not what the tea party people want to hear. but mccain was assigned that if you are an establishment candidate, if you run hard and in some ways, not necessarily true to your best self, that you can win this thing. and he just campaigned hard and won. >> he didn't run on his record. he ran-- . >> woodruff: mccain. >> john mccain, which is an interesting record over the years. he chose to run on jd hayworth's flaws, foibls and shortcomings. and it was a target-rich environment. >> woodruff: speaking of the tea party and sarah palin, glen beck, david, is holding a rally in washington this weekend. it happens to be the anniversary of martin luther king's i have a dream speech. they are having it at the lincoln memoriasglyçv about restoring honor. sarah palin is going to speak. what do you expect? >> well, the question will be whether al shampton is going to be there with a group and how many people find it extremely distasteful that he is doing it on this day, on that site. you know one of the things to me, though that i'm beginning to think more and more about it is sort of the demographic chasm between people and the tea party movement and who they perceive as the elites and they feel that both parties, the media, all of washington and new york is controlled by people with a tiny deliver from america, of highly educate kd, more affluence and-- affluent and that those people feel unrepresented by the entire system so there is a political element which we've talked about a lot, an economic element, a anti-government element. there is also a class element in this. and that has the potential, i think to get much more nasty and long-lasting if that class element is really there and frankly i think there is some basis to it i do think a lot of people in the country look at a lot of people in wash toon say those people were not me. and that's one of the newer themes i will be looking for. i'm going to try to go tomorrow and see what it is all about. >> woodruff: are you going to go. >> i'm bringing mark with me. >> i plan to go. i disagree with david in the sense, that i think that the tea party is really a nation apart. i mean nationally americans asked asked how do you feel about barack obama personally. and this is david's own paper's pull of tea party members and the general public and it is really too favorable on obama, personal qualities. and 88 to 7 unfavourable upon tea party members. and glen beck is 10 to 1 their hero. he gets very divided feelings in the country. and i just, i think that tomorrow the test will be there is only two speakers of really national prominence, glen beck an sarah palin, will be the optics and atmospherics as much as anything else, not that either one of them is going to say anything that schoolchildren will be learning and reciting a generation from now like martin luther king did, but i think will be whether, in fact there will be the signs. whether there will be the buttons. whether there will be the disparaging and sometimes racially charged pla cards that have showed up at other tea party events. i hope it is not the case. they are trying to prevent it. they said there will be no guns there, which is reassuring. so and would be in violation of washington d.c. law anyway. but so i think it is. i think it is important. but i think this is a group apart. and to the degree it becomes the face of the republican party, in 2010. >> woodruff: they said they want to take over the republican party. >> i think poses problems. i think it posed a problem already. provided great energy but candidates frankly in races they should win, they their lech able is open. >> i was at the rally last year t was a family atmosphere. it was nice actually. but the question will they hurt the gop by moving so far to the right. i think there is a case in nevada, the harry reid, sharron andal race, there is evidence they have done that there. is there broader evidence around the country, haven't seen it yet. the republicans are still looking pretty good for the fall. so it hasn't happened yet. >> colorado may be an example where they might have been a great republican shot but didn't turn out to be that, the governorship in particular. >> woodruff: the two of you are looking presentee good to pick up on what david said. thank you for being here, and coming back. we'll see you next week. thank you. >> brown: again, the major developments of the day. federal reserve chairman bernanke said the central bank is ready to prop up the ailing american economy, if needed. flooding spread further south in pakistan, and the united nations estimated another one million people have been displaced. and homemade bombs killed three u.s. troops in afghanistan. 35 americans have been killed there this month. the newshour is always online. hari sreenivasan, in our newsroom, previews what's there. hari. >> sreenivasan: check in later this evening to see more from mark and david, and find out what former house majority leader dick armey has to say about tomorrow's rallies on the mall in washington, d.c. also on the rundown, read spencer michels' blog about his reporting from slidell, louisiana, one week after hurricane katrina. watch a slide show of pictures jeffrey kaye took in pakistan. click on the "teacher resource" tab on our home page to find lesson plans and youth voices about iraq. and on "art beat," jeff talks to nicolas carr, author of "the shallows: what the internet is doing to our brains." all that and more is on our web site, newshour.pbs.org. judy. >> woodruff: and that's the newshour for tonight. on monday, margaret warner begins a week of reports from iraq. first up, a look at the drawdown of u.s. forces. i'm judy woodruff. >> brown: and i'm jeffrey brown. "washington week" can be seen later this evening on most pbs stations. we'll see you online, and again here monday evening. have a nice weekend. thank you and good night. major funding for the pbs newshour has been provided by: and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. captioning sponsored by macneil/lehrer productions captioned by media access group at wgbh access.wgbh.org

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