this is "world news" and tonight, super failure. no deal for the super committee charged with reducing america's debt. markets fall around the world. you tell washington what you think of the mess and we explain what failure means to you. spy disaster. a devastating blow to american security. two cia spy rings exposed. at least a dozen secret agents captured and feared killed. abc news has the exclusive details. lone wolf. the terror suspect taken down, police say, one hour away from completing a bomb that could decimate a car. arrested in his mother's new york city home. is it a sign of the terror threat to come this holiday season? loaded words. the first lady booed at a nasa

event. now rush limbaugh weighs in hurling a racially charged word at michelle obama. girl power. the 90-pound spit fire who proves she can hold her on on ice and in cyberspace. good evening. we have breaking news to tell you about tonight. the super committee, 12 members of congress, responsible for coming up with a plan to cut america's debt by $1.2 trillion has quit in defeat. the market saw it coming dropping all around the world. the dow by almost 250 points. this loss of confidence on wall street fueled by more gridlock in washington. after the committee gave up president obama came to the white house briefing room to lay the blame on republicans. >> there's still too many republicans in congress who have refused to listen to the voices of reason and compromise that are coming from outside of

washington. they continue to insist on protecting $100 billion worth of tax cuts for the wealthiest 2% of americans. >> many felt there was plenty of blame to go around. you let congress have it telling washington exactly how you feel about the super committee's super failure. >> you need to drop the rhetoric. you need to droop the ideology and in particular you need to listen to the economists. >> i'm disappointed. angry but i can't say i'm surprised. >> follow the rules that everybody else does. live within your means. >> wake up. it worked for us. you work for us. you don't work for yourselves and currently you're only working for yourself. >> stop the hassle and the arguing and, you know, work towards common ground. >> we can't keep borrowing on this pay as we go. >> jon karl has more on the impact of the failure and, jon,

i guess it wasn't a huge surprise but what happens next for everyone watching? what's going to be the impact. >> reporter: what this means right now our political system as it stands right now is utterly unable to deal with the biggest problem now facing the federal government, the runaway national debt. this super committee was given special powers over taxing and spending to come up with a plan to start reducing the deficit. the best chance really in a generation to fix the budget mess and in the end they couldn't agree on anything. the biggest deal breaker, george, came down to democrats insisting that they needed to raise taxes on the wealthy before they would agree to spending cuts and republicans saying they would only agree to close some tax loopholes but no more. absolutely deadlock. >> the president pointed out they built in a failsafe. the $1.2 trillion is set to come through a sequester, half from defense and half domestic spending but don't take effect until next year. >> reporter: yeah, but these cuts will be harder to undo. there is no super committee to

help them through this. $1.2 trillion. the biggest hit to defense, this pentagon defense secretary leon panetta will be such deep cuts it will force him to cut weapons systems, personnel turning the u.s. military into a paper tigerser giving us the smallest u.s. ground forces we've seen since before world war ii. these are real cuts that congress would have to come to an agreement to do. >> and the president said he would veto any attempt to undo these cuts. also tonight abc news learned of a devastating setback to america's security. a story that reads like an international spy thriller except it's all too real. at least a dozen u.s. undercover agents have been captured and are feared executed. tracking this story is brian ross. this is something. >> reporter: indeed, george. intelligence analysts say the u.s. is flying blind in iran and lebanon after those dozen u.s. paid spies in two distinct networks have been caught with fears they have been or soon

might be executed. in iran the loss is a huge and embarrassing intelligence set back especially with the country building a nuclear weapon. >> the united states blind in the middle east could only hurt this country's national security and in a very significant way. >> reporter: the cia only realized how bad it was after viewing a news story on state run tv in iran. usually labeled lies and propaganda by the u.s. american officials say this broadcast actually revealed some cia sources and methods. the program even showed the websites of several companies that the iranians said were cia fronts used for covert communications. >> u.s. agents used these identities to confront citizens who they targeted for covert operations. >> reporter: in lebanon, loss of the cia's spy network inside the terror group hezbollah has also been compromised. u.s. officials said today. part of the blame, they say,

goes to sloppy procedures by cia officers in beirut. >> we lost our touch with espionage. >> reporter: it turns out the cia met many of its spies in the same places, a pizza hut and a public beach and failed to detect two double agents sent in by hezbollah who learned of the secret locations. abc's alexander mar cat is in beirut. >> they were able to figure out who the u.s. diplomats and handlers were. >> reporter: in washington today, no one wanted to talk publicly about the massive cia failure. at the state department -- >> i'm certainly not going to comment on anything having to do with intelligence relationship or at the white house. >> i'm not going to comment on intelligence matters from here. >> reporter: the only public comment comes from an unnamed u.s. official who said that failure can always be expected in a risky game of espionage but the exposed u.s. assets failure will most likely mean a death

sentence. for the u.s. it means a dangerous gap in what two determined u.s. enemies are. >> especially in iran where we already had a gap. one other got action. the president signed in -- a young woman was murdered in 2009 after she blew the whistle on a fellow volunteer who she believed was molesting young girls and this will protect them. >> exactly. very important bill for people to be able to come forward and not expect to be harmed because they did say. >> kay puz. zi's mother said it restored her faith in humankind. this one here at home, police in new york are holding a man they call a lone wolf terrorist in custody they say they got him just before he finished building a bomb that could flatten a car. abc's senior justice correspondent pierre thomas has the story. pierre? >> reporter: george, talk about

homegrown terror, the suspect was building a bomb on his mom's couch in the building behind me. jose pymeningtel was an hour away from having a powerful pipe bomb ready to explode in new york city. the replica revealed deadly intentions. >> he talked about killing u.s. service member returning from iraq and afghanistan and bombing post offices in and around washington heights and police cars in new york city. >> reporter: authorities began investigating the 27-year-old recent convert to islam after he created this extremist website. on it he expressed support for osama bin laden and the radical american born cleric awlaki. >> what set him off was the elimination of awlaki. >> reporter: he is described as a classic lone wolf unemployed living with his mother. >> i'm very disappointed with

what my son is doing. >> reporter: he used online truc instructions from the group. the nypd counterterrorism division which rivals the fbi has tracked him since 2009 under 24-hour surveillance for 30 days with police watching as he went to home depot to buy bombmaking components. >> it only takes one person to be successful and to mount an attack. >> reporter: surveillance photo shows jose pimental in the act. so while this is a holiday season for fun and family, for law enforcement, it's a time to worry. george? >> have to be vigilant. thanks very much. we turn to that video that sparked a firestorm over the weekend. police officers at the university of california davis aiming pepper spray at peaceful protesters just sitting down. the university president is facing tough questions about whether the police went too far and today the campus was flooded

with thousands of protesters. cecilia vega was there. >> reporter: the images have gone viral. protesters sprayed directly in the face by campus police. today thousands showed up at that same spot to protest what they call police brew twalt. abc news has learned the police chief is now on leave along with two officers. the chemical in pepper spray is the same as in tabasco sauce by 20 times more concentrated. >> it felt like my face was peeling off. it felt like my hands were on fire. >> i spent the next hour dry heaving and vomiting and i still have a harsh burn in my -- throughout my body and my nose and in my mouth. >> reporter: it causes burning of the skin as well as uncontrollable coughing and gagging. if it gets in the eyes the lids cannot be opened. in the throat it causes swelling, restricts breathing and makes people weak ef that on

the face of this elderly prot t protester last week. many officers know what it feels like too. they get sprayed in training. some law enforcement experts say it was an appropriate use. protesters who had locked arms and refused an order to leave. >> they did not comply and the police officers were empowered to use force and did just that but nothing compared to what we've seen in other situations where batons are swinging and people's heads are being split open. >> reporter: today the chancellor of the university apologized. >> i feel horrible for what happened on friday. >> reporter: now in spite of growing calls for the chancellor to resign she said today she plans to stay on the job and it appears the number of students plan to stray on this plaza. a handful just directed some tents. >> thanks very much. we have a major announcement in the penn state child abuse scandal. they tapped louis freeh to run

its investigation into the allegations against former assistant football coach jerry sandusky. freeh said his investigation will reach back as far as 1975 to look for evidence that anyone at the university knew that sandusky was abusing children. overseas now to egypt and what's being called an arab autumn. earlier protesters took over tahrir square and several thousand have come calling for the military to hand over power to a civilian government. egypt's cabinet resigned and police fired tear gas into the crowd. 24 protesters are dead. nearly 2,000 wounded and lama hasan was in the middle of the chaos. >> reporter: nine months since the euphoria has disappeared only to be replaced by more anger and louder chants. the military counsel to hand over to a civilian-led

government. still ahead on "world news," michelle obama booed at a nasa event and rush limbaugh hurls racially charged words at the first lady. the feisty young hockey player who became the face of hockey around the world. i got mine in iraq, 2003. u.s.a.a. auto insurance is often handed down from generation to generation, because it offers a superior level of protection and because u.s.a.a.'s commitment to serve the military, veterans, and their families is without equal. begin your legacy. get an auto insurance quote. u.s.a.a. we know what it means to serve. [ slap! slap! slap! slap! slap! ] [ male announcer ] your favorite foods fighting you? fight back fast with tums. calcium rich tums goes to work in seconds. nothing works faster. ♪ tum tum tum tum tums

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crowd of nascar fans in florida. he attacked the first lady with words some are calling racially insensitive. here's jake tapper. >> boos and jeers were hurled at first lady michelle obama and dr. jill biden at the nascar race on sunday. >> now, please welcome our grand mar surveillance, sergeant andrew barry and family, first lady of the united states, michelle obama and dr. jill biden as they deliver the most famous words in motorsports. >> reporter: they were there to promote a program for military families but now the razzing of the first lady has received more attention than the winner of the race. don't worry, nascar fans, rush limbaugh is here to defend your honor and make things worse. >> nascar people as are most people in this country are mature, tolerant people who fully understand when they're being insulted and condescended

to. they know that in their hearts the obamas don't like them. >> reporter: much worse. >> they understand it's a little bit of uppityism. >> reporter: uppity, a word that means presumptuous loaded with racist connotations often used to describe african-americans who don't know their blaise in the view of white society. >> it is the high-tech lynch for uppity blacks and it is the message that unless you kowtow to the old order this is what will happen to you. >> reporter: jeering politicians whether at baseball games or other events is as american as apple pie. whether booing president obama or president bush or sarah palin. why the booing? president obama himself has written some gestures politicians make to convey values including visiting a

nascar track have become so standardized it's difficult for the public to discern between honest sentiment and political stagecraft. >> nascar community. >> reporter: the first lady said she was happy to stand up for military families at the nascar race and would happily do so again. even with booing. jake tapper, abc news, the white house. >> and when we come back, remember this movie scene, hugh grant hounded by the press? it had a real-life actor today. the actor's shocking allegations he said london tabloids are breaking the law for scoops. the neighborhood. weo ♪ [ male announcer ] how do you say... can you believe it's been 20 years since college? ♪ [ male announcer ] nothing says "you're special" like boursin, a creamy, crumbly blend of real cheese and savory herbs, boursin makes any moment more memorable. even if you're saying... my mother has the kids tonight.

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campbell's. it's amazing what soup can do. hollywood leading man hugh grant played a different kind of role today. the star is in a sweeping investigation. grant said he had been victimized by newspapers willing to break the law for the sake of a scoop and that it happens all the time to people who aren't movie stars. abc's kelly kobe watched it all. >> reporter: the star witness, actor hugh grant. >> i hugh grant do solemnly -- >> reporter: after years of being hunted by tabloids it was his turn to take aim. >> its main tactic being bully and intimidation and blackmail. >> reporter: he told a panel that newspapers hacked his phones, stalked him, even broke into his london home for a scoop. >> the license that the tabloid

press has had to steal british citizens purposely for their commercial profit is a scandal. >> reporter: the actor even alleged that the dab wloid paid off hospital staff for his medical records. >> which to me is a gross intrusion in my privacy. >> reporter: earlier in the day the panel heard from the parents of murdered british schoolgirl milly dowler. rupert murdoch's tabloid the news of the world hacked her phone deleting her messages giving her family hope she was alive. the hacking of her foul outraged britain, brought down murdoch's newspaper and mutt his media empire in the hot seat but the tabloid industry here is alive and well and very profitable. the question for the panel now, whether it's time to rein them this. harry potter creator j.k. rowling will testify too. she sued a paper for printing a photo of her son in 2004. and actress and hagging victim

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finally tonight hockey is sport filled with body checks and brawls but this year's most important hockey fight wasn't with fists but words from a 90-pound, 14-year-old girl. abc's john berman has her story. >> reporter: lexi peters lives outside buffalo where she skates for the purple eagles. she loves hockey. on ice and on screen. she's been playing hockey video games for years. well. >> you got that guy out. last year about the nhl's hugely video game bugged her. a feature allows a player to be a character in the game. lexi found out that virtual character could only be a guy, not a girl. >> i made long hair on it but it still doesn't look like a girl. >> reporter: with 65,000 girls

playing hockey in the united states she didn't think that made sense so wrote a letter to electronic art, the creator of the game. >> it is unfair to women and girl hockey players around the world. i have to be represented by a male. that is not fun. >> reporter: what is fun, weeks later the company sent her a shocking e-mail. hi lexi, you know what, we agree with you. >> pretty cool. >> reporter: more than cool really because not only do they put girls in the game. >> that's me right there. >> lexi is the face of the female players. >> they have like a birthmark right here like above my left eye. >> reporter: on screen she skates with gretzky and gordie howe. you think i have a future in hockey? >> yeah. no. >> reporter: cut me a break. >> reporter: she says she has learned an important lesson. >> if you have something to say and think it is important, go for it. >> reporter: a hockey fight we

can all be proud of. john berman, abc news. >> pretty cool. that's all for us. we're always on at abcnews.com and don't forget to watch "nightline" later. i'll see you tomorrow on "gma."

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