PBS NewsHour - 2009-03-02
Channel: malgent
Transcript
Language: English (original, YouTube automatic captions)
[0:15] [music]
[0:20] Good evening. I'm Jim Lara. On the
[0:22] NewsHour this Monday, the lead story,
[0:25] new losses and more government help for
[0:27] insurance giant AIG. Plus, another
[0:30] tumble on Wall Street. Then the other
[0:33] news of the day, including the massive
[0:35] snowstorm [music] on the East Coast,
[0:38] arguments about DNA evidence at the US
[0:40] Supreme Court, the selection of Kansas
[0:43] Governor Kathleen Sibelius as Secretary
[0:46] of Health and Human Services, and the
[0:48] latest on the Afghan elections for
[0:50] Margaret [music] Warner in Kbble.
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[2:06] American [music]
[2:09] International Group, AIG, as it's
[2:12] called, reported huge new losses in its
[2:14] insurance business today. The
[2:17] announcement helped trigger a fourth
[2:18] round of government aid. It also helped
[2:21] push the stock market into another
[2:23] headlong retreat. Jeffrey Brown has our
[2:26] lead story report.
[2:29] The towering insurance giant began the
[2:31] day by reporting the largest quarterly
[2:33] loss in US history. $61 billion for the
[2:37] final months of 2008. With that, the
[2:40] government announced a new rescue
[2:42] package amounting to $30 billion. That's
[2:45] on top of 150 billion AIG has already
[2:49] received. Chief Executive Edward Litty,
[2:52] who joined the company in September,
[2:54] spoke on CNBC. We
[2:55] >> We are being consumed by the same issues
[2:57] that are driving house prices down and
[2:59] 401k statements down and Warren
[3:02] Buffett's investment portfolio down.
[3:04] Asset values are in a freef fall around
[3:07] the globe. We're the largest insurer in
[3:09] the United States, one of the largest,
[3:11] arguably the largest in the world. We
[3:13] have a massive investment portfolio. All
[3:15] aspects of those assets are going down
[3:17] in value. When they go down in value, we
[3:19] take that decline through our P&L. The
[3:22] housing crisis triggered staggering
[3:24] losses at AIG, leading to the initial
[3:27] government rescue last September. The
[3:29] company was heavily involved in
[3:31] so-called credit default swaps, ensuring
[3:34] mortgage back securities against
[3:35] default. Ultimately, AIG could not cover
[3:39] billions in swap insurance when that
[3:41] market collapsed. CEO Litty said he
[3:44] hoped today's installment would be the
[3:46] last, but he offered no promises. I
[3:48] >> I would like to say 100% yes to that,
[3:50] but it's difficult to do that. Uh it
[3:52] really depends upon what happens to the
[3:54] capital markets from here. Let me just
[3:55] say since September, we've made enormous
[3:57] progress.
[3:58] >> Administration officials defended
[4:00] today's action. White House press
[4:02] secretary Robert Gibbs.
[4:04] >> I wonder what we'd be talking about
[4:05] today if we let something like um an AIG
[4:10] default on the massive amount of debt
[4:12] that it that it has and what that might
[4:15] do to the economy and to the markets.
[4:17] Some private analysts echoed the warning
[4:20] that major institutions would have to
[4:21] write off billions in assets insured by
[4:24] AIG if the company goes down. Just how
[4:28] precarious the system is was evident
[4:30] again today on Wall Street. The Dow
[4:32] Jones Industrial Average dropped 299
[4:35] points, more than 4% to close at 6763,
[4:40] the first time it's finished below 7,000
[4:43] since 1997.
[4:45] The NASDAQ fell 55 points to close at
[4:48] 1322.
[4:50] The sell-off was also fueled by fears
[4:52] over major banks after HSBC, Europe's
[4:56] largest bank, reported profits fell 70%
[4:59] last year.
[5:01] And we look first at the markets and
[5:03] another dramatic drop. We're joined by
[5:05] Lizanne Saunders, chief investment
[5:06] strategist for Charles Schwab. Well,
[5:09] first tell us what you're seeing. How
[5:10] broad are the losses in the market in
[5:13] terms of sectors?
[5:15] Well, you know what? That that's one
[5:16] thing. If there's any silver linings to
[5:18] what is otherwise a very dire situation
[5:20] market and economically, it's that this
[5:22] latest leg down, which obviously took us
[5:24] down through the lows that we had seen
[5:26] in the latter part of November of last
[5:29] year, that was a very, very broad-based
[5:31] decline. Interestingly, this time it's a
[5:33] little bit less broad-based. In fact, if
[5:35] you look at the 10 sectors in the S&P
[5:37] 500, only two of them are down more than
[5:40] the S&P 500 overall. And that would be
[5:42] financials. not a big surprise down 40%
[5:45] and industrials down somewhere in the
[5:47] 20s. Every other sector, so the
[5:49] remaining eight have performance
[5:51] actually better than the market. So the
[5:53] selling seems to be more concentrated in
[5:55] those sectors where the fundamentals are
[5:57] most dire.
[5:58] >> Well, that I mean it's interesting
[5:59] because you've been on in the past.
[6:00] We've talked about the degree to which
[6:02] some of this is so-called panic selling.
[6:04] You're not you're not seeing that now.
[6:06] Well, I still think that there's an edge
[6:08] of panic, but it seems to be
[6:09] concentrated in those sectors where
[6:12] there seems to be or the perception is
[6:14] that there's absolutely no hope. I think
[6:15] some of the indiscriminate selling that
[6:17] characterized the fourth quarter of last
[6:20] year was driven by major redemptions
[6:22] coming from into mutual funds, into
[6:25] hedge funds, the deleveraging that was
[6:27] contributing to a lot of force selling.
[6:29] There seems to be less force selling.
[6:31] Now, that doesn't mean we're not getting
[6:32] panic on the part of investors, but
[6:33] they're kind of concentrating their
[6:35] panic a little bit more.
[6:36] >> Do you sense though a new fear that uh
[6:39] no one seems to know where the bottom is
[6:41] at this point? And this is just a few
[6:42] weeks after it seemed as though the
[6:44] market had gone up for a bit.
[6:46] >> Yeah, I think there had been some hope
[6:47] that built when we had a decent 25%
[6:50] rally or so off the November 20th lows.
[6:53] And certainly that built in some
[6:54] expectations that maybe those lows would
[6:56] hold and we've clearly wiped out a lot
[6:58] of those expectations. Look, I would
[7:00] love to know where we go from here.
[7:01] Nobody does. But we have said all along
[7:04] that bottoms are processes over time,
[7:06] not moments in time. And even the bare
[7:08] market, the last bare market that ended
[7:10] in 2002 occurred over a multi-month
[7:13] period where you really had three
[7:15] waterfall declines. Ultimately, the low
[7:17] was in October O2, but you had one in
[7:20] July of O2, you had one in October of
[7:21] O2, you had one again in March of 2003.
[7:24] And at best, we're probably going to be
[7:26] in a pattern like that where you don't
[7:28] get this Vbottom. you go through an
[7:30] extended period of time where you go
[7:32] through these tests.
[7:33] >> And Liz, lastly, uh I mentioned in our
[7:36] in our setup piece, our lead story piece
[7:38] about the bank in Europe. This is
[7:41] clearly an international story still at
[7:44] this point. Very much right.
[7:46] >> No question about it. The the crisis
[7:48] really was not solely born in the United
[7:50] States. The European banking system not
[7:53] only had as much exposure to these toxic
[7:55] assets that we're trying to clean up
[7:57] now, but they had leverage ratios quite
[7:59] a bit higher than the US banks. And of
[8:01] course, the economic problem is turning
[8:03] out to be a very broad global problem.
[8:06] And there really is almost no one that
[8:08] has been unscathed through this.
[8:09] >> All right, Lizanne Saunders, thanks very
[8:11] much.
[8:12] >> My pleasure. Thank you.
[8:12] >> And and now two more on the AIG story.
[8:15] And for that we turn to Frank Port
[8:17] Partno, excuse me, director of the
[8:19] center on corporate and securities law
[8:21] at the University of San Diego. And Joe
[8:24] Oera, a business columnist for the New
[8:26] York Times. He also writes the papers
[8:28] online executive suite blog. Well, Frank
[8:31] Partnoy, first remind us what AIG did to
[8:34] get into so much trouble.
[8:36] The key thing AIG did was to abandon its
[8:38] traditional insurance business in favor
[8:40] of a second business in derivatives, the
[8:43] credit default swaps that were referred
[8:44] to earlier. AIG was the world's largest
[8:47] insurance company. It was a safe
[8:48] company. It was trusted. It had roughly
[8:51] a trillion dollars of value uh uh in
[8:54] terms of assets and it shifted about a
[8:56] decade ago towards a much riskier
[8:58] business. its subsidiary, AIGFP, its AIG
[9:02] financial product subsidiary, began
[9:04] writing large numbers of credit default
[9:06] swaps. And that business was largely
[9:08] opaque. It was undisclosed. People
[9:09] didn't know about it. And that's the
[9:11] business that carried the seeds of
[9:13] disaster that we're seeing now and over
[9:14] the recent few months.
[9:16] >> So Joe Nera, what would you add to that?
[9:18] I mean, we keep referring to this as an
[9:19] insurance company. Is that is that just
[9:21] wrong?
[9:23] >> Well, there's a couple of things I would
[9:24] add to that. First of all, Frank's
[9:26] description is really a good one. you
[9:28] know the the FP unit in London was 350
[9:31] people out of you know a 100,000
[9:34] employees and uh you know this is
[9:36] typical throughout this crisis very
[9:39] small numbers of people have essentially
[9:41] brought down the financial system
[9:43] secondly you know credit default swaps
[9:46] are a form of insurance when you really
[9:48] get down to it because they're basically
[9:50] saying I accept the risk of loss in your
[9:53] portfolio um but they were not regulated
[9:57] like insurance pro products and and AIG
[10:00] was not uh was not responsible for
[10:03] having reserves uh in case there were
[10:06] losses because they didn't think there
[10:07] would be any losses. That was the
[10:10] absurdity. So they thought this was free
[10:12] money and now of course it's turned out
[10:14] to be anything but free money and the
[10:16] reason you have to keep AIG propped up
[10:18] is because if they were to default all
[10:22] of the banks on the other sides of those
[10:23] trades would be in even worse trouble
[10:25] than they're in today. Well, pick up on
[10:27] that, Frank Partnoy, because that's the
[10:30] that's the next question is the
[10:31] government had given them a lot of
[10:33] money. Now they're giving them more.
[10:35] It's out of a sense of of of feeling
[10:37] that it has no other choice. Explain
[10:39] that.
[10:40] >> I think that's right. I think the
[10:41] government initially decided it was
[10:43] going to have to support AIG. I think
[10:46] AIG was probably insolvent a long time
[10:48] ago like many of the banks. Uh but the
[10:51] government decided AIG had tentacles
[10:54] stretching to so many institutions that
[10:57] it had to support it. It had to make
[10:58] sure that AIG didn't go under. If AIG
[11:01] goes under, then many other institutions
[11:04] suffer losses.
[11:04] >> Can you give excuse me can you give us
[11:06] an example to make that a little bit
[11:07] more concrete? I mean what give us a
[11:09] sense of the chain here if if AIG goes
[11:12] down?
[11:12] >> Yes, absolutely. So for example, AIG has
[11:15] swap contracts with many banks. um it's
[11:17] entered into these private contracts and
[11:20] payment on those contracts would be
[11:21] triggered if AIG goes into default. In
[11:24] fact, payment on those contracts would
[11:25] be triggered even if AIG's credit rating
[11:27] is downgraded slightly. One notch would
[11:29] trigger an extra$8 billion worth of
[11:32] liabilities at AIG. And I think the the
[11:34] government looked at AIG and said
[11:36] there's so many contracts here. The
[11:38] derivatives market overall is $600
[11:40] trillion. And AIG had half a trillion
[11:42] dollars worth of credit default swaps.
[11:44] and they looked at those mind-boggling
[11:46] numbers and said, "We really don't know
[11:47] what will happen if AIG goes under and
[11:49] so we have to prop it up. We have to
[11:50] support it because of the worry that the
[11:53] risks would spread." There was a similar
[11:55] worry before the bankruptcy of Lehman
[11:57] Brothers and I think the same worry has
[11:59] carried over for AIG.
[12:01] >> Well, Jo Sarah, [clears throat] do we
[12:02] know yet what happened to the first $150
[12:06] billion that's been given to AIG? What
[12:09] happened to all that money?
[12:11] >> Well, in a general sense, we do know.
[12:13] This gets a little complicated, so bear
[12:15] with me a little. Okay. A
[12:17] >> AIG had something in its in its
[12:20] contracts called collateral triggers.
[12:23] And that meant if certain events took
[12:25] place such as ratings downgrades of AIG
[12:29] or of the of the securities that they
[12:32] were insuring that AIG would have to put
[12:35] up cash collateral
[12:37] uh a against uh the assets. So these
[12:42] events have taken place. The the you
[12:45] know there's been a lot of ratings
[12:46] downgrades and AIG has had to put up
[12:48] tons and tons and tons of c of
[12:50] collateral. Now that's not where it all
[12:52] went but that's where a lot of it went.
[12:54] So basically the money's been handed
[12:56] over to the counterparties. You know
[12:58] there's there's a saying now you hear on
[12:59] Wall Street which is that it's not a
[13:01] bailout of AIG. It's a bailout of the
[13:03] counterparties. Now who are these
[13:05] counterparties? In fact, we don't know
[13:07] precisely because the government won't
[13:08] tell us and AIG views this as uh
[13:12] information as a trade secret.
[13:14] >> You know, you mentioned the uh the
[13:15] credit rating uh downgrades, but there
[13:17] was a lot of a talk about that today in
[13:20] terms of a reason for the government
[13:22] stepping in today in the sense that the
[13:24] credit rating agencies would have
[13:26] downgraded AIG. That would have caused
[13:29] even more problems. Can you explain can
[13:31] you explain that especially for the
[13:33] layman who doesn't understand and I'm I
[13:35] mean me
[13:36] >> why why the credit rating wouldn't have
[13:38] gone down already given AIG's problems.
[13:42] >> Well first of all their credit rating
[13:43] has gone down. It used to be AAA it
[13:45] isn't anymore. Second of all what
[13:47] happened today was really quite
[13:49] different at least uh qualitatively
[13:52] different from what's happened in the
[13:53] past. In the past, the money was used
[13:56] basically to shore up uh this this this
[14:00] coming disaster because of the ratings
[14:01] downgrade to to supply the collateral.
[14:04] This time, what the government did was
[14:06] they said they're going to have the
[14:09] biggest quarterly loss in the history of
[14:11] the world, and we need to show the
[14:14] rating agencies that we're doing enough
[14:16] to prevent yet another ratings
[14:18] downgrade. As I said before, every time
[14:21] there's a ratings downgrade, AIG has to
[14:24] find fines suddenly tens of billions of
[14:27] dollars and put it up as additional
[14:29] collateral. So what happened today was
[14:31] an was an effort to prevent a ratings
[14:34] downgrade which would then prevent more
[14:37] billions upon billions of dollars being
[14:39] handed to the counterparties which would
[14:41] have been you know instead of 30 billion
[14:43] extra dollars it would have been 50 or
[14:45] 80 or 100. I mean who knows how I mean
[14:48] It is. It It's almost to infinity.
[14:51] >> Well, well, Frank Partnoi, who knows? I
[14:53] mean, does anybody know how deep that
[14:55] hole is?
[14:57] >> Unfortunately, we don't know. People
[14:58] have referred to AIG as being a black
[15:00] hole, and I think that's an apt
[15:01] metaphor. The money keeps going in, and
[15:03] we don't know how much more is needed. I
[15:05] do think this focus on the credit rating
[15:07] agencies is important. The fact that
[15:09] they were brought into the fold early
[15:10] on, that they were told about what this
[15:12] new round would look like and that their
[15:15] agreement was secured initially is
[15:16] really extraordinary. You think about
[15:18] how poorly the rating agencies have
[15:20] performed, that they rated all of these
[15:22] complex instruments, AAA, many of which
[15:25] are now in default. And yet we continue
[15:27] to turn to them. We continue to rely on
[15:29] them. It's not just the government, but
[15:30] it's private individuals and
[15:32] institutions continue to rely on
[15:34] standard and pores and Moody's yet
[15:35] they've performed so poorly. And I think
[15:37] one of the big lessons from today and
[15:39] the collapse of AIG is that we need to
[15:41] rely a lot less on credit rating
[15:43] agencies.
[15:44] >> Well, well, uh, Jo Sarah, just to just
[15:47] to bring us to a conclusion here, I
[15:49] mean, we keep talking about the
[15:50] government stepping in, but this is
[15:52] really taxpayer money that's now more at
[15:54] risk. Correct.
[15:56] >> Well, well, it certainly is. And and
[15:58] just to you know not to put some small
[16:00] glimmer of hope here. One of the things
[16:02] that did happen today is that two
[16:04] profitable divisions of AIG were put
[16:06] into trust or are going to be put into
[16:08] trust and ultimately the government is
[16:10] going to be able to sell those
[16:12] divisions. And you know they're actually
[16:14] hoping that that's the way they'll be
[16:16] able to pay back some of these loans.
[16:18] Will the taxpayer wind up losing money
[16:20] uh because of its involvement in AIG?
[16:23] You bet they are. And really what
[16:25] they're what it's all about now is just
[16:26] trying to staunch the bleeding for both
[16:28] the taxpayer and for AIG.
[16:30] >> All right. Well, on on that note, we
[16:32] will end. Joe Nosera and Frank Partnoy.
[16:35] Thank you very much.
[16:36] >> Thank you.
[16:38] >> In other news today, a late winter
[16:40] snowstorm hit the eastern seabboard. It
[16:43] shut down schools, grounded flights, and
[16:46] triggered hundreds of accidents,
[16:48] including four fatalities. NewsHour
[16:50] correspondentWami Homeman narrates our
[16:53] report.
[16:55] >> March did indeed roar in like a lion
[16:59] as blizzard-like conditions rolled up
[17:01] the coast.
[17:03] Parts of the deep south got 8 in on
[17:06] Sunday. Elsewhere, totals reached a foot
[17:08] or more as the storm moved north today.
[17:12] It triggered a pre-dawn traffic jam in
[17:14] North Carolina that stretched for 15
[17:17] miles. And there were hundreds of
[17:19] highway accidents. For many though, the
[17:22] heaviest snowfall of the season wasn't
[17:24] all bad.
[17:24] >> I'm done with winter, but a a good snow
[17:27] is always fun. The first day, the second
[17:29] day, when everyone else comes out, it's
[17:31] a problem.
[17:32] >> Up and down the coast, snow plows and
[17:35] shovelers were out in full force
[17:37] clearing streets and sidewalks. At
[17:39] times, they worked in the face of winds
[17:41] that created dangerous white out
[17:43] conditions. Air traffic wasn't much
[17:45] better off. More than 900 flights were
[17:48] cancelled up and down the east coast.
[17:50] Hardest hit were major airports in
[17:52] Boston and the New York City area.
[17:55] Scores of schools also were snowed out.
[17:57] In New York City, a million public
[17:59] school students enjoyed a rare snow day.
[18:02] Their schools were closed for the first
[18:04] time in 5 years. [screaming]
[18:07] >> The storm also left a trail of power
[18:09] outages, especially in the south. Some
[18:12] 300,000 customers were in the dark
[18:15] across the Carolas and Virginia. The
[18:18] nominee to be US trade representative
[18:20] Ron Kirk has agreed to pay an estimated
[18:23] $10,000 in back taxes. That word came
[18:27] from the Senate Finance Committee. It
[18:29] said the problem involved speaking fees
[18:31] and deductions for season tickets to pro
[18:34] basketball games. The former Dallas
[18:36] mayor is the latest in a string of Obama
[18:38] nominees to have tax problems. Secretary
[18:42] of State Clinton spent this day in the
[18:44] Middle East and she voiced doubt about
[18:46] nuclear diplomacy with Iran. The Obama
[18:50] administration has signaled a
[18:51] willingness to engage Iran. But a senior
[18:54] State Department official traveling with
[18:56] Clinton said she is doubtful Iran will
[18:59] respond. The secretary attended a
[19:01] meeting in Egypt on reconstruction in
[19:03] Gaza. 70 countries pledged to donate
[19:06] around $5 billion.
[19:09] Talk radio pioneer Paul Harvey died over
[19:12] the weekend at a hospital in Phoenix,
[19:14] Arizona. His career began in the 1930s,
[19:17] and his popular news and comment show
[19:20] had been heard nationally since 1951 on
[19:24] the ABC radio networks. At his peak, his
[19:27] distinctive voice and staccato delivery
[19:30] reached more than 24 million listeners
[19:32] daily. Paul Harvey was 90 years old.
[19:43] Gwen Eiffel has our Supreme Court story.
[19:46] The use of DNA testing to prove
[19:49] innocence or guilt has become a widely
[19:51] accepted legal practice, but the state
[19:53] of Alaska has asked the Supreme Court to
[19:56] decide whether the Constitution
[19:57] guarantees a convict's right to have
[20:00] such a test. The court heard the
[20:02] arguments today and Marcia Coyle of the
[20:04] National Law Journal was there. She
[20:05] joins us now. Welcome, Marcia.
[20:07] >> Thank you, Gwen.
[20:08] >> Perhaps I've been watching too many uh
[20:09] episode dramas on television, but it
[20:11] seemed to me that it was a slam dunk
[20:13] that DNA testing was everybody's right.
[20:16] >> Well, it seems on the surface it would
[20:18] be a very logical thing, very fair thing
[20:21] to say that there is a right. But there
[20:23] are competing legal doctrines at in
[20:26] tension here. uh you have the state's
[20:29] interests in finality of convictions. Uh
[20:33] this is a state that doesn't have a DNA
[20:36] stat testing statute. Uh the state of
[20:40] Alaska argued today before the Supreme
[20:42] Court that it has the traditional habius
[20:44] corpus procedure that this particular
[20:46] prisoner could have used uh but did not
[20:49] use. Had never made a formal declaration
[20:51] that he was actually innocent. And so
[20:54] there was the the there there was not to
[20:56] be a federal constitutional right to DNA
[21:00] testing if this prisoner would not avail
[21:02] himself of what the state had to offer.
[21:04] >> Let's talk about the facts of this case.
[21:06] William Osborne is the prisoner and he
[21:08] was convicted of rape.
[21:09] >> That's right. Rape and assault. Uh he
[21:11] and another man allegedly uh raped,
[21:14] beat, and even shot in the head. a
[21:17] prostitute left her for dead, buried in
[21:19] the snow outside of the Anchorage
[21:22] airport in Alaska. Uh but she was able
[21:24] to she wasn't killed, she was able to
[21:26] get help. Uh he was convicted by a jury.
[21:30] There was DNA testing done of a condom
[21:32] that was that the prostitute said was
[21:35] used during the rape. Uh it wasn't the
[21:37] sophisticated uh very powerful DNA test
[21:41] that we have today. And it indicated the
[21:43] results were that it was consistent with
[21:46] his own DNA, William Osborne's DNA. Uh
[21:49] there were other uh there was other
[21:50] evidence uh the prostitute eyewitness
[21:54] identification of him. Uh but he claims
[21:58] his lawyer said that he has claimed
[22:00] throughout this ordeal that he is
[22:03] innocent
[22:04] >> except he confessed at a parole here.
[22:06] That's right. This is a murky case.
[22:07] >> It is. It's it's uh it's he's probably
[22:09] not a poster boy for DNA testing uh or a
[22:13] constitutional right for DNA testing. He
[22:15] confessed twice at parole hearings. And
[22:18] uh as his lawyer today pointed out to
[22:20] justices who raised that very point that
[22:22] under Alaska law, in order to get
[22:24] parole, you have to take responsibility
[22:27] for your crime. And his lawyer said he'd
[22:29] like to think if he had been standing in
[22:31] Osborne's shoes that he'd be principled
[22:33] enough to say, "No, I'm innocent. But if
[22:36] it's the only way out of prison, he
[22:38] confessed.
[22:39] >> So, was the argument today that the
[22:40] state was making in its defense
[22:42] basically about states rights? And how
[22:44] did how did the justices react?
[22:46] >> The the state's argument is basically uh
[22:49] no, we don't have a specific DNA
[22:51] statute, but we have state habius corpus
[22:54] and this prisoner should have used that
[22:57] process. So, the justice's questions
[22:59] really focused on what exactly happens
[23:02] in the state procedure. uh Justice
[23:04] Stevens pointed out that uh one in the
[23:08] procedure the p prisoner would have to
[23:10] make a claim that he was actually
[23:12] innocent and have to put forth certain
[23:14] evidence to support that. But the catch
[23:18] 22 is he doesn't have that evidence
[23:20] unless he has access to DNA testing of
[23:23] the evidence from his trial. So really
[23:26] you know what what can he do here? Uh
[23:30] the justices um you know also see tried
[23:33] to see if the state could reach some
[23:35] kind of a middle ground here. Justice
[23:36] Brier for example said well what if we
[23:39] had um a constitutional right that
[23:42] basically only applied to outlying state
[23:44] outlier states as you know that uh I
[23:48] believe only six states now do not have
[23:50] DNA testing statutes. And I think what
[23:53] he was suggesting was let's say there is
[23:56] the federal constitutional right to DNA
[23:58] testing but that right is satisfied if
[24:01] the state has particular procedures that
[24:04] allow you to to get your DNA tested uh
[24:07] adequate fair non-arbitrary procedures.
[24:10] But the state of Alaska's lawyer
[24:13] continued to say that we have a
[24:16] procedure that this inmate should follow
[24:18] and he never made a declaration that he
[24:20] was actually innocent.
[24:21] >> So Alaska is not alone. There are six
[24:22] states altogether that don't 44 states
[24:24] that do are there other states which are
[24:27] poised who are watching Alaska closely
[24:29] and would perhaps support Alaska in this
[24:32] in this case even if they have this sort
[24:34] of law on the books
[24:35] >> there there is a lot of activity going
[24:37] on in the states right now on DNA
[24:39] testing also on the issue of preserving
[24:42] DNA evidence uh the state of Alaska was
[24:45] supported today in the court by the
[24:47] Obama administration uh the deputy
[24:49] solicitor general told the justices that
[24:52] they should not constitutionalize a
[24:54] right to DNA testing because there is so
[24:57] much activity going on in the states and
[24:59] also because this case in particular was
[25:02] a poor one to base a constitutional
[25:04] right on.
[25:05] >> Is there any way to quantify exactly how
[25:07] much of a difference DNA testing has
[25:09] made in postconviction appeals like this
[25:11] one? Uh actually um there have been I
[25:16] believe 236 exonerations
[25:20] uh based on DNA testing and that did
[25:22] come out during the oral arguments. In
[25:24] fact, Mr. Osborne's attorney in response
[25:27] to some skeptical questions by Justice
[25:29] Scalia and others said that there has
[25:33] actually been exoneration in cases where
[25:36] there was overwhelming evidence of
[25:38] guilt.
[25:40] >> And so that's what they're saying. This
[25:41] guy has a right to Ted.
[25:42] >> That's right. And the justice's
[25:44] questions to Mr. Osborne's lawyer
[25:47] basically tried to probe how broad a
[25:49] constitutional right should we give?
[25:51] Should there be limits here? The chief
[25:53] justice, for example, said, should we
[25:55] require the prisoner to swear under
[25:57] threat of uh uh perjury penalty, that he
[26:00] is innocent before he can get uh DNA
[26:03] testing just as the federal law
[26:05] requires. And Mr. Osborne's attorney
[26:07] said yes. He said the main thing here is
[26:09] it's the overwhelming consensus of all
[26:12] the states that what Alaska does is
[26:14] irrational.
[26:15] >> Marshia Coyle, National Journal,
[26:17] National Law Journal. Thank you very
[26:19] much.
[26:19] >> My pleasure, Gwen.
[26:21] >> Still to come on the NewsHour tonight,
[26:23] the governor of Kansas in for Health
[26:25] Secretary and Margaret Warner in
[26:28] Afghanistan. But first, this is pledge
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[31:10] >> [music]
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[31:22] >> [music]
[31:33] [music]
[31:43] >> Next tonight, the president's new health
[31:45] care team. Health correspondent Betty
[31:47] Anne Bowser begins our report.
[31:51] >> For the second time in less than a week,
[31:53] President Obama emphasized how high a
[31:56] priority healthc care reform will be on
[31:58] his agenda.
[31:59] >> If we're going to help families, save
[32:01] businesses, and improve the long-term
[32:03] economic health of our nation. We must
[32:06] realizing that fixing what's wrong with
[32:08] our health care system is no longer just
[32:10] a moral imperative, but a fiscal
[32:12] imperative. Healthcare reform that
[32:15] reduces costs while expanding coverage
[32:18] is no longer just a dream we hope to
[32:20] achieve. It's a necessity we have to
[32:22] achieve.
[32:23] >> Kansas Governor Kathleen Seelius is the
[32:26] president's second nominee as Secretary
[32:28] of Health and Human Services. Former
[32:31] Senate Majority Leader Tom Dashel
[32:33] withdrew after admitting he had tax
[32:36] problems. If confirmed, the 60-year-old
[32:39] Selius will take on an agency with
[32:42] herculean responsibilities.
[32:44] Everything from Medicare and Medicaid to
[32:47] food and drug safety to the National
[32:49] Institutes of Health. President Obama,
[32:52] who last week proposed setting aside
[32:54] more than 630 billion in new health care
[32:57] spending over the next 10 years, said
[33:00] today that the Democratic two-term
[33:02] governor and former state insurance
[33:04] commissioner is up to the challenges
[33:07] ahead.
[33:08] >> She's won praise for her expertise from
[33:10] stakeholders across the spectrum, from
[33:12] consumer groups to insurers. Over eight
[33:15] years as state insurance commissioner,
[33:17] she refused campaign contributions from
[33:19] insurance companies and protected the
[33:22] people of Kansas from increases to their
[33:23] premiums by blocking a takeover of the
[33:26] state's largest insurer. She helped
[33:28] draft a proposed national bill of rights
[33:31] for patients and served as the president
[33:33] of the National Association of Insurance
[33:36] Commissioners. And as a governor, she's
[33:38] been on the front lines of our
[33:39] healthcare crisis. She has a deep
[33:41] knowledge of what the burden of crushing
[33:43] costs does to our families and
[33:45] businesses. That's why she fought uh to
[33:48] guarantee canons access access to
[33:50] quality affordable healthcare and sought
[33:52] to secure it for every Kansas child from
[33:55] birth to age five.
[33:56] >> Governor Kathleen Selius of Kansas,
[34:00] >> an early Obama backer, Selius was on the
[34:03] campaign trail and gave a speech at the
[34:05] Democratic National Convention in Denver
[34:08] last summer. Selius is a Roman Catholic
[34:11] who supports abortion rights, a position
[34:14] for which she's been criticized by her
[34:16] local archbishop,
[34:18] >> Barack Obama.
[34:20] >> She also comes from political stock in
[34:22] the Midwest. Her father served as both a
[34:25] congressman and governor of Ohio. Her
[34:28] father-in-law, a Republican, is a former
[34:31] congressman from Kansas.
[34:33] >> I share your belief that we can't fix
[34:35] the economy without fixing healthcare.
[34:38] The work won't be easy, but bringing
[34:41] about real change rarely is.
[34:45] Business and labor leaders, teachers and
[34:47] health care providers, policy makers at
[34:50] the state, local, and national level,
[34:52] parents and children are ready to join
[34:54] this effort. This isn't a partisan
[34:57] challenge. It's an American challenge
[35:00] and one that we can't afford to ignore.
[35:02] To work handinhand with Sibelius, the
[35:05] president chose Nancy Anne Dearl as
[35:08] director of the new White House Office
[35:09] of Health Reform.
[35:11] >> As commissioner of the Department of
[35:12] Human Services in Tennessee, she saw
[35:15] firsthand our health care systems impact
[35:17] on workers and families. In the Clinton
[35:19] administration, she handled budget
[35:22] matters for federal health care programs
[35:24] and took on the tremendous task of
[35:26] managing Medicare and Medicaid.
[35:28] President Obama introduced his health
[35:30] care team just days before he convenes a
[35:34] White House summit on health care later
[35:36] this week. Representatives from the
[35:38] health insurance industry, drug
[35:41] companies, consumers, and lawmakers from
[35:43] both parties are expected to attend.
[35:46] >> Judy Woodruff takes it from there.
[35:49] >> Given the considerable political
[35:51] obstacles ahead, what kind of experience
[35:53] and limitations does the president's new
[35:55] team bring to the table? We get the
[35:57] views of two who have worked with both
[35:59] appointees. Berdett Lumis is a professor
[36:02] of political science at the University
[36:04] of Kansas. He worked in Governor
[36:06] Sibelius's office in 2005. And Len
[36:10] Nichols is director of the health policy
[36:12] program at the New America Foundation.
[36:15] He served as senior adviser for health
[36:17] policy at the office of management and
[36:19] budget in the Clinton White House where
[36:21] Nancy Anne Dearl was his supervisor.
[36:24] Gentlemen, thank you both for being with
[36:26] us. And uh, Professor Lumis, I'm going
[36:28] to start with you in Kansas. What were
[36:30] the main things that Governor Sibelius
[36:32] has tried to do there with regard to
[36:35] healthcare?
[36:36] >> Well, I I think that she's uh definitely
[36:38] tried to uh expand health care uh uh
[36:43] increase quality and and keep costs down
[36:45] as a governor has to do in in dealing in
[36:48] a a balanced budget situation.
[36:51] uh she was working with a Republican uh
[36:54] uh legislature for the most part and
[36:57] honestly many of her initiatives uh such
[37:00] as expanding SHIP or getting increased
[37:03] cigarette taxes uh uh didn't come to
[37:06] fruition. Uh I think in large part
[37:08] because of partisan opposition.
[37:10] >> So on balance, how well would you say
[37:13] she succeeded?
[37:15] >> I think overall as an administrator she
[37:17] did a lot of smalish things. Overall, I
[37:20] think that you'd have to say that she is
[37:23] uh she would be somewhat disappointed in
[37:25] her overall impact. And I think that's
[37:27] one of the things that uh has led her to
[37:30] take the HHS job that this is a great
[37:33] opportunity to operate uh on a larger
[37:36] scale uh to uh make some successes where
[37:39] she's had uh less success uh in Kansas.
[37:42] She
[37:43] >> she was described, at least what I was
[37:45] reading today, as someone who took on
[37:47] the insurance industry. Is is that how
[37:50] you'd characterize it
[37:51] >> as insurance commissioner? Absolutely.
[37:53] And in particular uh she took on uh the
[37:56] Anthem Corporation which wanted to buy
[37:58] out uh Blue Cross Blue Shield. And uh
[38:01] she was very tough on that. And I think
[38:04] uh it demonstrated her ability to
[38:06] combine politics and policy uh in in a
[38:10] very convincing way. And that's one of
[38:12] her great strengths. and and you uh you
[38:15] mentioned uh your state of Kansas as a
[38:17] Republican leaning state, the the state
[38:19] legislature majority uh Republican.
[38:24] She didn't have necessarily all
[38:26] successes, but how well did she work
[38:28] with Republicans? I think she worked as
[38:31] well as she as she could and
[38:33] particularly when she had the chance to
[38:35] have some leverage uh in particular on a
[38:37] big school finance project where the
[38:40] courts ordered uh much more spending. I
[38:44] think she worked very effectively uh
[38:46] with uh moderate Republicans to forge a
[38:49] really substantial change in school
[38:52] finance.
[38:53] >> Well, Lynn Nichols, let's bring it to
[38:55] Washington now where Governor Cibilius
[38:57] is going to be coming. But I want to
[38:58] also ask you about Nancy Anne Dearl. You
[39:01] did work with her in the Clinton
[39:03] administration. What does she bring to
[39:04] the table?
[39:05] >> Well, you know, Nancy Anne brings a
[39:07] wealth of experience in Washington. In
[39:09] some ways, she compliments Governor
[39:11] Selius almost perfectly. Governor Selius
[39:13] comes with having run a state, having
[39:16] really been in charge of a Medicaid
[39:18] program, with having worked with the
[39:19] legislature on some tough issues, but
[39:21] also creating some administrative
[39:23] apparatuses that are probably going to
[39:25] serve Kansas well as they move forward.
[39:27] but she doesn't have Washington
[39:29] experience. Nancy Anne Deal on the other
[39:31] hand as you heard in your opening
[39:33] segment was at OM under Clinton ran
[39:36] Medicaid in Tennessee but more
[39:37] importantly for the current struggle ran
[39:40] Medicare and Medicaid for the Clinton
[39:42] administration. She oversaw the
[39:45] implementation of the balanced budget
[39:46] act which had profound implications for
[39:49] the Medicare program and I think it's
[39:51] fair to say across the aisle and among
[39:53] stakeholders and consumers earned a lot
[39:55] of respect for the hard work she did. So
[39:57] she brings a Washington insider view
[39:59] that complements Governor Cibelius
[40:01] administrative and and political
[40:02] experience.
[40:03] >> And we know of course Medicare is going
[40:04] to be a big part of the battle over
[40:06] reforming health.
[40:07] >> You know, one of the amazing things,
[40:09] Judy, is how uh a number of commentators
[40:11] have come to see the vision that I think
[40:13] was first articulated by Peter Orzac
[40:16] when he was then chairman of the
[40:17] Congressional Budget Office. Healthc
[40:19] care reform is Medicare reform. Medicare
[40:22] reform is healthcare reform. You can't
[40:24] do them separately. You must do them
[40:26] together. And that means bringing all
[40:27] that experience together is the only way
[40:29] to solve the problem.
[40:30] >> So how do do you have a sense Lynn
[40:32] Nichols of how the two will divide this
[40:34] up? Because as we know originally
[40:36] President Obama's choice was Tom Dashel
[40:38] and he was going to have both of these
[40:40] jobs. The running health and human
[40:42] services and hing office. Do you have a
[40:45] sense of how these two uh Kathleen
[40:48] Sibelius and and Nancy Andarl are going
[40:50] to divide it up or do we just wait and
[40:52] see? Well, since they've been nominated
[40:53] for about an hour and a half together,
[40:54] [laughter] I think I won't speculate too
[40:56] much, but I think you can look naturally
[40:58] at what the department does. What the
[41:00] department does, it's a it's a
[41:02] multiplicitus place, but it essentially
[41:05] has a number of fingers in our health
[41:08] care system in lots of different ways.
[41:10] So what the secretary will bring to any
[41:12] table about policy discussion whether it
[41:14] be in the white house or on the hill is
[41:16] knowledge deep knowledge not only from
[41:18] her own experience as governor of Kansas
[41:20] but what she will know and learn as
[41:22] sitting at top the department for
[41:24] medicare the department for health and
[41:25] quality the department the NIH and so
[41:27] forth. Nancy de parl on the other hand
[41:30] brings a Washington insiders view of how
[41:32] congress works and maybe how to talk to
[41:35] congress and how to work with congress.
[41:36] As you know, the president in his budget
[41:38] very clearly laid out, I would call it
[41:41] both a carrot and a challenge. He said,
[41:43] "Come work with me to make this health
[41:45] reform work." Nancy, just like I know
[41:48] from the past, you have to work better
[41:50] with Congress than we did in 9394. So, I
[41:53] think she will bring fundamentally an
[41:55] awareness of how to do that. So, I see
[41:57] them again as complimentary, not
[41:58] non-contradictory.
[41:59] >> Uh, Professor [clears throat] Lumis, let
[42:01] me come back to you. the the only one
[42:03] the the only one of the two who's going
[42:04] to face confirmation hearings is
[42:07] Governor Sibilius. Any sense of what the
[42:10] tough part of that is going to be for
[42:12] her? Do you expect her to sail through?
[42:14] I know we're just this is just a few
[42:15] hours old, but what's your sense of it?
[42:18] >> My sense is she will do well and
[42:20] probably will get through pretty easily.
[42:22] I think it was a great indicator that
[42:24] both uh Senator Pat Roberts, Senator Sam
[42:27] Brownback, uh two relatively
[42:29] conservative, maybe very conservative
[42:31] Republicans came out with a extremely
[42:34] positive statement about her candidacy.
[42:37] I do think that pretty clearly the uh
[42:40] the rough waters will will come with uh
[42:43] anti-abortion activists. uh and uh she
[42:46] has had uh a series of uh confrontations
[42:50] in in the state uh focusing on uh uh a
[42:54] third-term uh abortions and has had uh
[42:57] lots of opposition both from groups but
[42:59] particularly uh in the state uh from the
[43:02] Catholic Church and she is a Catholic
[43:05] >> and what's uh what's the how would you
[43:07] describe her relationship right now with
[43:09] the church and with the strong uh
[43:12] anti-abortion groups? Yeah, I think they
[43:14] the groups is pretty straightforward.
[43:16] They oppose her on her policies and and
[43:20] and she would like to have abortions be
[43:22] as rare as possible, but as a policy, I
[43:25] think she uh supports uh the Obama
[43:27] position and certainly supports Roie
[43:29] Wade. I think with the Catholic Church,
[43:32] I think it's been personally very
[43:33] difficult for her as a observant
[43:36] Catholic. she has come in for some harsh
[43:39] criticism from uh the archbishop and uh
[43:43] I think that's been difficult uh on on a
[43:46] personal level. Uh so at the same time I
[43:49] she's been steadfast uh and uh women's
[43:52] groups support her uh strongly and you
[43:55] know she's a tough cookie and uh she'll
[43:58] get through this.
[43:59] >> Lyn Nichols, how do you see this
[44:00] confirmation uh uh battle or process
[44:04] from the Washington perspective? Well, I
[44:06] certainly agree with Professor Lumis. I
[44:08] expect Governor Cibilius to sail through
[44:11] uh as these things go, but I do think
[44:13] this will be in some way the opening
[44:15] salvo of the debate about healthcare
[44:18] reform. The president clearly has made
[44:19] it a priority. We're having a summit
[44:21] this Thursday, but in some ways her
[44:23] confirmation hearing may lead to some of
[44:24] the questions that are going to be part
[44:27] of our dialogue on this show and
[44:29] throughout the nation over the next six
[44:31] to 18 months. And I think you can expect
[44:33] those things to come up and they will be
[44:35] things like what should be the role of
[44:36] the federal government versus the state.
[44:38] Again, a governor is very well
[44:40] positioned to talk about how you may
[44:42] want federal rules, but you may want
[44:44] state flexibility. What should be the
[44:45] role of Medicaid? What's the role of
[44:47] private insurance?
[44:48] >> And very quickly, finally, Len Nichols,
[44:49] her closeness to President Obama, she's
[44:51] not as close to him as Tom Dashel uh was
[44:54] is, but how important will that be in
[44:58] trying to do this job? If you're going
[44:59] to try to change the health care system
[45:01] of our nation, you are going to need to
[45:04] have the full faith and confidence of
[45:06] the president of the United States when
[45:08] you go to speak for him in front of the
[45:11] members of Congress who will really make
[45:13] these decisions as well as in front of
[45:15] the American people as well as in front
[45:16] of stakeholders. So I think having his
[45:18] full faith and confidence is extremely
[45:20] important. He clearly manifested that
[45:22] today. I know she was an early supporter
[45:23] of his. So, I would assume and and very
[45:26] much expect that she has that confidence
[45:28] or she wouldn't be in front of us today.
[45:31] >> Len Nichols with the New America
[45:32] Foundation. Thank you. And Professor
[45:34] Berdett Lumis, we thank you. We
[45:36] appreciate it.
[45:36] >> Thank you, Judy.
[45:37] >> Thank you, Judy.
[45:42] [music]
[45:45] And finally tonight, Margaret Warner
[45:47] reports from Afghanistan. Ray Suarez
[45:50] talked with her earlier today about
[45:52] President Cararzi's attempts to change
[45:55] the election dates.
[45:57] >> Margaret, welcome. What has Carzi done
[46:00] and has it shaken up Afghan politics?
[46:03] >> Absolutely, Ry. When he issued this
[46:05] emergency decree this weekend saying
[46:07] that election should go ahead and be
[46:09] held uh essentially probably in the next
[46:11] month or six weeks before his term ends
[46:13] in May 20th, it caused complete uproar
[46:16] in Afghan political circles. Now, he and
[46:19] the opposition have been locked in this
[46:20] struggle over the fact that his term
[46:22] ends May 21st, but elections hadn't been
[46:24] scheduled till late August. And there
[46:26] were good reasons for that. The US,
[46:28] which is going to provide the security,
[46:30] and the UN, which is helping with voter
[46:32] registration and ballots, said they
[46:34] weren't ready. And in fact, I'm told
[46:36] that Ambassador Hullbrook and General
[46:38] Mccieran, Ambassador Hullbrook being the
[46:40] special representative for Afghanistan,
[46:42] Pakistan, and General McKernan being the
[46:43] commander of the forces here, went to
[46:45] see him and said August is the earliest
[46:48] we can do it. Uh but kind of belatedly,
[46:51] the political opposition was saying,
[46:53] "Well, fine, but Carzi, you still have
[46:54] to step down. May 21st, we'll have a
[46:56] little interim government and someone
[46:58] from parliament will run it. I think the
[47:00] head of the Senate." So Carzi
[47:02] essentially called their bluff and this
[47:04] weekend said you want to abide by the
[47:06] constitution fine let's have the
[47:07] election very quickly and plenty of time
[47:10] before May 21st. So that said he doesn't
[47:13] really have the power as president to
[47:15] order the elections to be to take place
[47:18] on a certain date that is still up to
[47:19] the independent election commission. So
[47:21] there are a lot more acts in this play
[47:23] to unfold.
[47:24] >> So what's he up to? How does calling an
[47:26] election just before the end of his term
[47:28] benefit him? Well, there are two uh
[47:31] interpretations right now of what he's
[47:33] up to. The opposition and we we've seen
[47:35] some of these figures already as we've
[47:37] been here say it's nothing but a power
[47:39] grab because though Carzi is deeply
[47:41] unpopular here, the fact is that there
[47:44] are no other candidates who have any
[47:45] kind of campaign going yet. And uh if
[47:49] there were essentially snap elections,
[47:51] he might well win. He has to get 50% to
[47:54] avoid a runoff, but still he'd have a
[47:56] huge leg up.
[47:57] >> [snorts]
[47:57] >> The other interpretation which now US
[48:00] diplomats are offering is that in fact
[48:02] Carzi knows full well that it's
[48:04] undoable. He is uh expecting the
[48:07] election commission to go back and say
[48:08] it's undoable but that he's essentially
[48:10] bulletproofed himself against the charge
[48:12] that he's trying to unconstitutionally
[48:15] extend his own term.
[48:17] >> Now you've mentioned that the president
[48:19] is unpopular. Has that unpopularity
[48:21] spurred the development of a political
[48:23] opposition in Afghanistan? Are there a
[48:26] lot of people who want Hammed Carzi's
[48:28] job?
[48:28] >> That is the problem for the opposition,
[48:29] Ray, is that there are a lot of people
[48:31] who want Hammed Karai's job. And because
[48:33] this is such a green democracy, I mean,
[48:36] such a new democracy, they don't really
[48:38] have a political party system. So though
[48:41] there's sort of one coalition of
[48:43] opposition figures, there are a lot of
[48:44] others. And none of these candidates
[48:47] have any campaign going. As I mentioned
[48:49] yesterday, we went to see Ashraf Ghani
[48:52] who's appeared on the NewsHour in
[48:53] Washington. Former finance minister has
[48:56] now said belatedly Saturday night after
[48:58] the decree he is running. He hasn't
[49:01] started at all and as we left he was
[49:03] meeting with members of sort of elders
[49:06] from his uh political group and his
[49:08] tribe to talk about it. So uh I think it
[49:12] will be difficult though not impossible
[49:14] for someone to defeat Carzai if there
[49:16] were a snap election. But there is there
[49:19] is yet to emerge a sort of one pivotal
[49:23] figure who has emerged as the Carzai
[49:25] alternative.
[49:26] >> Now this big political development came
[49:28] when you were already in Afghanistan.
[49:30] What are you working on over there for
[49:31] the NewsHour? Well, Rey, I am I'm here
[49:35] because uh we decided, as you know, that
[49:38] uh since the Obama administration is
[49:40] about to is in the process now of
[49:42] increasing US forces, probably doubling
[49:45] US forces here to try to defeat this
[49:48] ever growing apparently stronger
[49:51] insurgency. I thought it was a good time
[49:53] to take a look at what seven years of US
[49:56] involvement here has already meant for
[49:58] Afghanistan and also take a snapshot, a
[50:00] kind of benchmark of where this new era
[50:04] is starting in Afghanistan.
[50:06] >> And we look forward to those reports.
[50:08] Margaret Warner, thanks a lot.
[50:10] >> Thanks, Ray.
[50:18] And again, the major developments of
[50:20] this day, insurance giant AIG reported
[50:23] it lost more than $60 billion at the end
[50:26] of last year, and the government
[50:28] announced another 30 billion in aid for
[50:31] the company. The Dow Jones Industrial
[50:33] Average fell 299 points and finished
[50:36] below 7,000 for the first time since
[50:39] 1997.
[50:40] and a late winter snowstorm hit the
[50:42] eastern seabboard shutting down schools
[50:45] and grounding flights. We'll see you
[50:47] online and again here tomorrow evening.
[50:49] I'm Jim Lara. Thank you and good night.
[50:57] Major funding for the NewsHour with Jim
[50:59] Lara is provided by
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