tv PBS News Hour PBS February 25, 2010 6:00pm-7:00pm EST
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and by contributions to your pbs station from viewers like you. thank you. >> lehrer: the president and the republicans staked out their health care ground today in a nationally televised summit. >> woodruff: there was an air of suspense as the day, and the long-awaited event, got underway. >> looking forward to listening. >> woodruff: president obama was upbeat this morning as he walked from the white house across the street to blair house. once inside, he and other top administration officials joined more than 40 democratic and republican congressional leaders, in a bid to revive health care reform. >> we all know this is urgent. and unfortunately, over the course of the year, despite all the hearings that took place and all the negotiations that took place, and people on both sides of the aisle worked long and hard on this issue, and you know, this became a very
ideological battle. it became a very partisan battle and politics, i think, ended up trumping practical common sense. but what i'm hoping to accomplish today is for everybody to focus not just on where we differ, but focus on where we agree, because there actually is some significant agreement on a host of issues. >> woodruff: mr. obama laid out his own bill on monday, much like the one senate democrats had produced. making health insurance mandatory for most americans, but with subsidies for those who need it; covering 31 million now-uninsured americans and creating a federal body with the power to block premium hikes. the president noted today that republicans have ideas on many
of the same points. and he made a plea. >> in each of these areas, what i'm going to do is i'm going to start off by saying, "here are some things we agree on." and then let's talk about some areas where we disagree and see if we can bridge those gaps. i don't know that those gaps can be bridged, and it may be that at the end of the day, we come out here and everybody says, "well, you know, we have some honest disagreements. but i'd like to make sure that this discussion is actually a discussion and not just us trading talking points. i hope that this isn't political theater, where we're just playing to the cameras and criticizing each other, but instead are actually trying to solve the problem. >> woodruff: tennessee senator lamar alexander was asked by the g.o.p. leadership to lead off for his party. he explained why republicans oppose the obama plan. >> we believe we have a better
idea. and that's to take many of the examples that you just mentioned about health care costs, make that our goal, reducing health care costs, and start over, and let's go step by step toward that goal. we have to start by taking the current bill and putting it on the shelf and starting from a clean sheet of paper. now, you've presented ideas, but it's said it's a lot like the senate bill. it has more taxes, more subsidies, more spending. so what that means is that when it means that for millions of americans premiums will go up, because those... when people pay those new taxes, premiums will go up, and they will also go up because of the government mandates. our country is too big, too complicated, too decentralized for washington, a few of us here, just to write a few rules about remaking 17% of the
economy all at once. that sort of thinking works in a classroom, but it doesn't work very well in our big, complicated country. and it doesn't work for most of us. >> woodruff: alexander outlined a limited republican plan for health care reform that would: allow americans to buy insurance across state lines; limit lawsuits against physicians; expand health savings accounts and help people with pre- existing conditions get health insurance. and he challenged democrats to drop the idea of pushing reform through with a simple 51-vote majority: a procedure called reconciliation. >> and my request is this-- is... is before we go further today that the democratic congressional leaders and you, mr. president, renounce this idea of going back to the congress and jamming through on a bipartisan-- i mean on a partisan vote through a little used process we call reconciliation your version of the bill.
you can say that this process has been used before, and that would be right. but it's never been used for anything like this. it's not appropriate to use to write the rules for 17% of the economy. >> reporter: senate majority leader harry reid responded. >> no one has talked about now, we as leaders here, the speaker and i, have not talked about doing reconciliation as the only way out of all this. of course, it's not the only way out. but remember, since 1981, reconciliation has been used 21 times. most of it's been used by republicans for major things, like much of the contract for america, medicare reform, thest tax cuts for rich people in america. so reconciliation isn't something that's never been done before. >> woodruff: president obama clashed with senator alexander over one of his main assertions.
>> so lamar when you said premiums are going to go up, that is just not the case. >> if you're going to contradict me, i ought to have a chance to... the congressional budget office says premiums will rise in the individual market as a result of the senate bill. >> no, no, no. let me... and this is an example of where we've got to get our facts straight. >> warner: sparks flew when arizona senator john mccain criticized the democrat's process for arriving at their overhaul plan. >> now both of us during the campaign promised change in washington. in fact, eight times you said that negotiations on health care reform would be conducted with the c-span cameras. i'm glad more than a year later that they are here. unfortunately, this product was not produced in that fashion. it was produced behind closed doors. >> let me just make this point, john. because we're not campaigning anymore. the election's over.
>> (laughs) i'm reminded of that everyday. >> warner: with giant stacks of more than 2,000 pages of the democrats' bills piled in front of him on the tables, republicans repeatedly zeroed in on differences rather than any agreement. >> there is a reason why we all voted no. and it does have to do with the philosophical difference that you point out. >> it's just a fundamental disagreement between us. does washington know best about the coverage people should have or should people have that choice themselves? >> woodruff: as they waited for their colleagues to return from a lunch break. senate leaders engaged in animated talk in the garden room of the blair house. once the summit got back underway, the chair of the senate's health committee, iowa's tom harkin, dismissed republican calls to take a step- by-step approach to health care reform. >> we're sinking. we're drowning in this country on health care. an incremental approach is like a swimmer who's 50 feet offshore
drowning and you throw him a ten-foot rope. you say, well, it didn't reach him but we'll get it back in and throw him a 20-foot rope next time. then we'll throw him a 30 foot. by that time the swimmer's drowned. >> woodruff: also on the agenda was how reform would impact the country's growing budget deficit. vice president biden said the key was lowering the cost of entitlements-- including the medicare plans sold through private insurers, known as medicare advantage. >> what was the rationale for medicare advantage? the rationale for medicare advantage a decade ago was that private insurers could provide insurance... better insurance cheaper than the government can do it. they can do it better. we said the reason why we're going to pay them more than what they're going to give at the front end is to insent vise them to get in the business of doing it. and so we paid them $1.15 for every dollar's worth what we
could have bought for a dollar. we did that and it was a rational thing to try. we did that because we wanted them to get engaged in the business wehought government didn't do as well as the private sector did. well, here we are, we're overpaying insurance companies about 15 cents on the buck that we can buy for a dollar and we call for eliminating that. and so the other point i'd make, mr. president, is that we here in a situation here where at the end of the day nobody in this room-- i don't think anybody this room-- is going to say "you know something? we are really going to be reforming the health care system without affecting the affect on the long-term deficit." >> woodruff: the top republican on the house budget committee-- wisconsin's paul ryan-- said the democratic bill does not accomplish that goal. >> this bill does not control
costs. this bill does not reduce deficits. instead, this bill adds a new health care entitlement at a time when we have no idea how to pay for the entitlements we already have. let me go through why i say that. the majority leader said the bill scores as reducing the deficit $131 billion over the next ten years. first a little bit about c.b.o., i work with them every single day. very good people, great professionals, they do their jobs well. but their job is to score what is placed in front of them. and what has been placed in front of them is a bill that is full of gimmicks and smoke and mirrors. now what do i mean when i say that? well, first off, the bill has ten years of tax increases, about half a trillion dollars. with ten years of medicare cuts about half a trillion dollars to pay for six years of spending. >> woodruff: ryan's assertion was challenged by democrats. about half of the democratic bill would be paid for by cuts to medicare advantage. the president pointed to
weaknesses he sees in the program. >> the medicare advantage program-- which is what we are proposing to reform-- is actually not a good deal for taxpayers or for seniors and certainly not a good deal for the 80% of seniors who aren't in medicare advantage because, by the way, they're paying an extra premium of about 90 bucks a year to subsidize the 20% in medicare advantage. >> mr. president, john mccain would like to address that issue. >> i'm sorry, if somebody else wants to address it. >> i'd just make one comment. why in the world, then, would we carve out 800,000 people in florida that would not be... have their medicare advantage cut? now, i propose an amendment on the floor to say everybody will be treated the same. mr. president, why should we carve out 800,000 people because they live in florida to keep the medicare advantage program and then want to do away with it? >> i think you make a legitimate point. >> well, maybe... thank you,
thank you very much. (laughter). >> woodruff: but that point of agreement with short-lived with house republican leader john boehner returning to his party's most frequent claim. >> this right here is a dangerous experiment. we may have problems in our health care system, but we do have the best health care system in the world by far. and having a government takeover of health care-- and i truly believe that's what this is-- is a dangerous experiment with the best health care system in the world that i don't think we should do. so why not... why did i bring this bill today? i tell you why i brought it. we have $500 billion in new taxes here over the next ten years. at a time when our economy is struggling, the last thing we need to do is to be raising taxes on the american people. secondly, we've got $500 billion worth of medicare cuts here. i agree with kent conrad, we need to deal with the problem of medicare, but if we're going to
deal with the problem of medicare and find savings in medicare, why don't we use it to extend the life of the medicare program as opposed to spending that $500 billion creating a new entitlement program? >> john, you know, the challenge i have here-- and this has happened periodically-- is we're... every so often we have a pretty good conversation trying to get on some specifics and then we go back to the standard talking points that democrats and republicans have had for the last year. >> reporter: >> woodruff: after hours of trying to get participants to focus on where they agree, the president tackled some prime differences, including who gets coverage. >> can america-- the wealthiest nation on earth-- do what every other advanced nation does, which is make sure that every person here can get adequate health care coverage whether
they're young or old, whether they are rich or poor. >> i do believe we have the best health care system in the world. that's why the premier of one of the canadian provinces came here just last week to have his heart operated on. he said "it's my heart, it's my life, i want to go where it's the best." and he came to the united states. it's where a member of parliament, a canadian member of particlement with cancer came to the united states for her care. they all have coverage there, but what they want is care so coverage does not equal care. >> woodruff: in the end, before the session finally concluded, the president said he is unshare whether he can bridge the gap with republicans. we take a reporters' look now at how the day played out, both in terms of politics and whether any common ground on policy was reached. with us are two who watched the proceedings closely: ceci connolly, national health policy correspondent for "the washington post. and karen tumulty, national
political correspondent for "time" magazine. thank you both for being with us. i have to say, i have a bit of a news update, and that is after the summit broke up about an hour ago in washington, the democratic leader harry reid came out and said "it's time to do something, we're going to do it," sounding fairly discouraged. and the republican leader mitch mcconnell came out and said he was discouraged and he's renewing the call they start all over again. so having said that, karen tumulty, what do you make of this day? >> well, i think that it was pretty clear that no minds were changed, no votes were changed, and there was a lot of discussion about process, which i think probably most americans could care less about. but what the two sides did, i thought, a really good job at was, as the president kept saying over and over again, spelling out their philosophical differences. the democrats have one approach for improving the health care system that involves a big role of government in setting... in setting some standards as to who
gets covered, what people's responsibilities should be, what health insurance should look like. the republicans' idea is that the west way to improve the system is to essentially let people go out and use the forces of competition to shop for themselves, find out for themselves what is the best kind of health care for themselves. >> woodruff: but ceci connolly, did we learn anything today? i mean, these were principles that both sides have been talking about for months. >> well, absolutely, judy. and i'm sure if you haven't been following this closely for the past year, as some of us unfortunately have been, it could have been fairly edifying. i have to say that it was a fairly substantive conversation for a full day. as karen pointed out, we really got a good introduction. .. more than an introduction really of the different philosophical approaches to something like this. but there was not any news that came out of today's conversation. and what really struck me about
the gathering was that if it had taken place, say, in june of 2009, maybe nine months ago or something like that, it could have had a very meaningful impact on the process. but this sort of thing generally happens at the beginning not at the end. and so it was very difficult to imagine after all of this talk and the back-and-forth for a full day what would be the logical next step to happen. >> woodruff: and given that, karen tumulty, did the white house get what it wanted out of this? >> i think what the white house wanted to do was to be able to turn to the country where public opinion polls, as the republicans kept reminding us over and over again, suggest that people are really turning away from this health care plan, it's losing support, they want to be able to turn to the country and say "look, we took our last shot with the republicans and now, as harry reid said in the aftermath, and now we're going to get this thing done." >> woodruff: as both of you were saying, i watched as much as i could and it was a remarkable exchange for six
hours. but given what both of you are saying at the same time, ceci, was this... was this something that moved the ball along? was there more... i don't hear either one of you saying there was any more agreement. so did it just cement both sides in the position they were already in? >> well, or, judy, to use the favorite term at the obama white house, was it a game changer? i don't really think so. there's nothing to suggest that. the one important group that will need to take the temperature of in the next couple of hours and days-- and i think president obama at the very end kind of obliquely referenced this, and that is the swing democrats in the house in particular. because if president obama is now going to somehow get this piece of legislation through congress, it is probably going to come down to a critical few dozen house democrats who are waiverring, who are maybe in tough congressional districts back home, not certain whether or not they want to cast this
vote again. it was very difficult for speaker pelosi to get her 218 vote it is first time around in november. she's got to do some very difficult soul searching with her members now about whether or not they want to cast another vote like that. >> woodruff: and, karen, whether it's waiverring democrats or others who were listening, what would they have heard today that might have tilted them, say, in the president's favor? >> i think absolutely nothing today. the most important development of the week, i think, is the one that speaks to what ceci was talking about, and that was when the president put out his own plan earlier this week. this was designed to take the senate bill and make some relatively minor changes, particularly in the financing, in ways that would appeal to some of these house democrats and bring them aboard. and that, i think, was in many ways the more crucial development. >> woodruff: there were a number of interests backs and forth and i just want to touch on one and that is this question
of whether premiums are going to go up. karen, you were just saying, you know, we had a clear difference of opinion among this group today on that. >> and in this case if you listen... this was the first sort of exchange we had like this, it came in the first hour between senator lamar alexander and the president as to what this bill would do to health insurance premiums, which has been a big subject in the news in the past few days. and they were both right if you parsed their sentences. basically senator lamar alexander was talking about the congressional budget office's study about what would happen to health insurance premiums in the individual market. this is the 9% or 10% of the population that has to go out and buy their health insurance because they don't get it from their employers. c.b.o. says their premiums would go up but because they get so much di asianal assistance their costs would go down. as for the rest of us who are lucky enough to get health insurance where we work, the c.b.o. says, as the president pointed out, that, in fact, our
premiums are likely to stay the same or go down. >> woodruff: were there any other substantive exchanges, ceci, that you think would sway those democrats who have to make up their mind in the next few days? >> well, i don't know, again, if it was a particular exchange in the summit. i would point to a couple of things, though, judy. one, again, as karen was pointing out about that 11-page document that the white house released at the general electric beginning of the week. it largely represents the compromises that were struck between the house and senate versions of the legislation. if you are a centrist democrat in the house who is not thrilled with the house version of the bill, there's reason to think that those individuals might like this 11-page compromise proposal from the president a little bit better in part because of some of what it does around tax exclusion for insurance coverage, some different tweaks that were made kind of inching over in the direction of the senate bill
that could be attractive to them. the other thing as karen's pointing out, with> woodruff: politically, karen tumulty, it does look like the democrats are going to go for reconciliation. that is 51-vote procedure in the senate. is that something that the democrats are pleased to be doing? >> oh, they are not pleased to be doing it this way. but what they want more than anything else is to get past the
process, get past all the ugliness and the fighting and arguing over parliamentary procedure and get this thing past so they can move on to actually selling the product. and while the polls are going against them now, they believe that once this thing is passed, that they will be able to convince their constituents that it was a good thing to do. >> woodruff: and what are the challenges, quickly, ceci, that they face in doing this? >> well, there are any number of parliamentary challenges that await them trying to do that process that you referred to known as reconciliation. yes, it only requires 51 votes, but there are all sorts of rules about the fact that it's supposed to be items that relate to the budget and to the deficit. there will be all kinds of arguments, you may have to have vice president joe biden sitting in the chair ruling for hours if not days. so it will not be an easy process by any means. >> woodruff: a remarkable event today at the blare house. ceci connolly, karen tumulty,
thank you both. >> lehrer: and still to come on the "newshour": tears from toyota's chief; tensions in turkey and u.s. banks and greece's economic crisis. >> lehrer: but first, the other news of the day. here's hari sreenivasan in our newsroom. >> sreenivasan: the government of afghanistan officially claimed control over a key taliban stronghold today. officials raised the national flag over a central market in marjah. hundreds of residents were on hand to watch the ceremony. u.s. marines and afghan troops continued working to clear the last of the taliban from the northern part of the town. in pakistan, intelligence officials reported a u.s. missile strike killed a taliban commander on wednesday. he was wanted in the bombing of a u.s. consulate in 2006, which killed an american diplomat. pakistani officials also said nearly 15 senior and mid-level afghan taliban figures have been captured in recent weeks. one was the militant group's top commander in eastern afghanistan. snow piled up in parts of the northeastern u.s. today and high
winds were close behind. at least eight inches of snow fell from pennsylvania to new york to northern new england. and forecasters put much of the east coast under wind advisories through the night. as a result, airlines around new york city, newark, new jersey and philadelphia canceled hundreds of flights. wall street gave some ground today. the dow jones industrial average lost 53 points to close at 10,321. the nasdaq fell more than a point to close at 2,234. those are some of the day's main stories. i'll be back at the end of the program with a preview of what you'll find tonight on the "newshour's" web site. but for now, back to jim. >> lehrer: now, the very public apology and tears of toyota's c.e.o. "newshour" correspondent kwame holman begins with some background. >> reporter: it was a washington moment fraught with symbolism thousands of miles away in japan. the head of toyota grew emotional before his american dealers last night, after a long
day of criticism from a u.s. house committee. >> at the hearing, i was not alone. you and your colleagues across america, around the world, were there with me. >> reporter: for the 53-year-old akio toyoda, grandfather of the founder and scion of the automaking dynasty, it was a rare public moment. in fact, the media-shy president originally had planned to send another representative from the company. but in the end, toyoda himself journeyed to washington, and apologized for his company's safety lapses speaking through a translator. >> ( translated ): i feel deeply sorry for those people who lost their lives or who were injured by traffic accidents, especially those in our own cars. i extend my sincerest condolences to them, from the bottom of my heart. >> reporter: public apologies from corporate figures are common in japan and u.s. audiences too are familiar with
public figures and athletes giving their own mea culpas. >> i am deeply sorry for my irresponsible and selfish behavior i engaged in. >> reporter: still, toyoda's statement to u.s. lawmakers yesterday drew attention in japan, even the prime minister commented on it. >> i think it is good that the president himself has appeared at the committee. really, it is best that the president himself speaks in these situations. >> reporter: and on the streets of tokyo, some said the apology was an issue of national import. >> ( translated ): toyota became a global company. so i hope he, as the japanese president of the company, succeeds in expressing his message well, especially as this is a matter which involves people's lives. >> reporter: today, toyoda continued his tour of the u.s., traveling to kentucky to visit the carmaker's biggest north american plant. >> lehrer: for more on this, we talk to ayako doi, an independent journalist and the former founder and editor of
"japan automotive digest." good evening. the apologies have a special purpose and meaning in japan, do they not? >> well, i'm not sure whether it's a special meaning, but apologies are very, very important in japan, whether it's a corporate scandal, the problems like we are facing now or athletes not living up to their expectation of the country in olympics or something about the... between husband and wives. the apologies makes society run. >> couric: and has that always been the t case or part of the japanese culture? where does it come from? >> i think it is... it's been that way ever since i was born in japan. the corporate presidents, you know, of course there have been
many scandals and misconducts and failures of japanese corporations or the plane crashes and things. every time the presidenttor chairman of the company go in front of the camera and bow deeply, 45 degrees to express their sincere feelings, con traeugs, apologies, whatever, without that, corporations cannot survive. it's that important in japan. >> lehrer: and they literally have to bow at least 45 degrees? is it that specific? >> well, yes, it usually happens in press conference settings and the press, the photographers will almost demand that... please, give a deep apology to express the... express your
feelings to the japanese public. it's just customarily done so. >> lehrer: is it unusual also to cry as... to break down as mr. toyoda did speaking to the dealers last night? >> no, it has happened before. i don't know whether the japanese are more emotional people than the americans or what, but it happens and it's seen as a... as an expression of their feelings and people expect that. people expect that to happen, especially in the plane crash cases or in this case it's auto companies and people have died. so i don't have any reason to believe that mr. toyoda's tears today or yesterday were not
sincere. but it helps soothe the public feelings. >> lehrer: put mr. toyoda, his family and his company into the japanese context. how important are they? >> well, toyota, first of all, is the big t biggest corporation in japan. and it's not just the biggest corporation but it's in a class of its own. toyota comprises... toyota's production in japan-- including all the related parts companies and so on-- comprises about 1.3 president clinton of g.d.p. and therefore since this recall scandal broke even the japanese government, the economic ministries were sort of unable to make the predictions of what the effect of this... to the
japanese economy would be. so it's that important in an economic sense. but it's also legendary company founded by a legendary inventor of the automatic loom. and it went from there to be the world's largest auto company. so it's a very important company. >> lehrer: does it make a difference to the people in japan, do you believe, that he, mr. toyoda, apologized to the american dealers, to the american people and he has not yet done that to the japanese people, has he? has he done a similar thing in japan? >> he (mark) has aneared a press conference and said the public apology there. although i should say perhaps the level of anger and concern about the safety may be less in
japan than in the united states. partly because of the number of deaths and the accidents are much greater in the u.s. -z this is problem of unintended acceleration as i understand it wasn't much of a problem in japan. so, you know, it's a less of an issue in terms of safety, although they have issued some recalls in japan. >> lehrer: but there's no question that mr. toyoda's coming to the united states and his apology is a huge event for the japanese, correct? >> oh, no question about that. no question. yes. >> lehrer: good to see you again, thank you very much. >> thank you. >> woodruff: next, new political storms in the nation of turkey. margaret warner reports.
>> reporter: turkey's top civilian and military leaders came together today in a rare meeting aimed at defusing tensions over an alleged coup plot. the smiles for the cameras belied the high stakes for all three men: prime minister recep tayyip erdogan, president abdullah gul and the military chief, general ilker basbug. the three-hour meeting came on the heels of monday's stunning arrest and detention of more than 50 current and former senior officers. by mid-week 20, including eight retired admirals and generals, had been formally charged with plotting to topple erdogan's islamic-leaning government. but today, a judge in istanbul released two of the most prominent suspects-- the former chiefs of the navy and the air force. still, says henry barkey, these arrests have dealt a body blow to turkey's historically powerful military. >> this is a very big deal,
because this is about the role of the military in turkish society. the turkish military has always had an inordinate amount of influence in turkish politics. >> reporter: zeyno baran, director of the center for eurasian policy, agrees these developments mark a watershed for the country's military and for turkey itself. >> these arrests are unprecedented because they include three of the top generals in turkey, so at least to concern now whether we are starting to see another round of tension between the military and the government, possibly. nobody wants another crisis because it affects economic stability, political stability, but it's too early to tell. prosecutors allege the plot-- dubbed "operation sledgehammer"- - was hatched in march of 2003. they say it included plans to bomb mosques and other civilian targets, and provoke a new crisis with greece.
the goal: to sow enough instability that it would justify a military coup. in the end, no attacks ever occurred, but prosecutors have not said why they think the plot fell apart. so far, the turkish military has so far, the turkish military has strongly denied there was such a plot, though they haven't denied that they have engaged in scenario planning of various kinds. henri barkey, says there's little doubt the conspiracy existed, at least at some levels. >> they never succeeded in doing it, but they planned it. they organized for it, and just because they did not execute them does not mean they did not break the law. and this is what this is all about. >> what we do know is that when it came to the top leadership it
was stopped, whatever attempt there may have been there. it was a routine, military, internal planning, but because of the mood and the tension already in the country that was really underway, it risks now becoming a major crisis again. >> reporter: after today's meeting, general basbug and the president and prime minister sought to reassure the country. their joint statement said, in part: "the public must be assured that matters will be handled in line with the law and everyone should act responsibly not to damage institutions. " tensions have been building between the military and the government ever since prime minister erdogan's islamic- leaning a.k.p. party was elected in 2002, a year before the alleged plot. in his first term, he proclaimed a conservative but secular agenda. building on his country's strategic location as the bridge between europe and asia.
he also pushed for turkey's entry into the european union. but in the years since, the party's islamic roots have begun to show in the foreign policy of nato's only muslim member. erdogan has strengthened ties with the muslim world-- meeting with leaders from iran, iraq, syria, pakistan and afghanistan. while turkey's historically friendly relations with israel have cooled. at home, the government has been accused of trying to impose an islamic social agenda. it attempted to lift a decades- old ban on wearing muslim head scarves at secular universities, but was overrulled by the courts. other steps included trying to limit alcohol sales, islamicize public school textbooks and make adultery a crime.s all this alarmed the country's powerful secular elite. the nation's 70 million people are overwhelmingly muslim. but in 1923, out of the ruins of the ottoman empire, mustafa
kemal ataturk, created a rigorously secular state. strict limits were imposed on religious dress, education and practices. in the decades since then, the turkish military has seen itself as guardian of the country's stability and its secularism. >> reporter: barkey says those fears are overblown. >> this government is very attuned to it's core pious conservative constituency. it thinks very much in islamist terms. but it cannot, and i don't think it really wants to, islamicize turkish society. even if it wanted to, it can't. turkey is much too large, much too diverse.
and there have been concerns by the military and the establishment that there's been what's called creeping islamization in the country for several years now, since the erdogan government came into office. and reducing the military's powers and really crediting them could be one of the attempts and really undermining the main defender of secularism. >> woodruff: finally tonight, the connections between wall street and greece as the fallout of the economic crisis continues. jeffrey brown has the story. >> brown: the greek debt crisis extended to both wall street and washington today. greece is facing the possibility of a default and the certainty
of austerity measures that have already sparked protests over job, wage, and service cuts. there are also now increasing questions about the role that wall street banks might have played in, first, helping greece mask its real problems. and, more recently, harming its chances for recovery. all that came up at a senate hearing today with fed chairman ben bernanke. >> we have a situation in which major financial institutions are amplifying a public crisis for what would appear to be for private gain. i want to ask you here whether or not you think there ought to be limits on the use of credit default swaps to prevent the intentional creation of runs against governments. do you have any quick comments on that? >> using these instruments in a way that intentionally destabilizes a company or a country is... is counterproductive, and i'm sure the sec will be looking into that. we'll certainly be evaluating what we can learn from the activities of the holding companies that we supervise here in the u.s. and joining me with the latest on all this is roben farzhad, senior writer for "bloomberg business week" magazine.
in general terms first, what exactly is chairman bernanke promising to look into? >> this has for the better part of the decade been the great big unknown, this world of derivatives which are largely unregulated secondary investment vehicles. they're almost train of thought. it's whatever an investment bank can come up with. we saw the derivative situation blow up with respect to a.i.g. where there was an oversight and now the concern not only here in the united states and in greece but in the rest of the world and in the capital markets is that the banks in parallel practice this with governments to help them duke the debts. >> brown: go back a few years to 2000, 2001. the first issue is whether and how these banks and financial institutions greece mask its true problems. how did they do that. >> greece in 2000, 2001, very
much wants to become a euro member and to do that it has to be able to show its financial stability and a certain measure of austerity, it has to have, for example, a budget gap that is no more than whatever percentage limit was back then if it was 6% or 7% or 8%. to do that it was very much in the market for covering its warts, hiding its sin, if you would. there is the tough measure of going back to your electric, going back to the unions, the public service workers and saying we need to tighten our belts and behave ourselves and get ready to become members of the euro, european monetary union where it will accrue great benefits to us, trade wise in terms of our borrowing cost. that's the hard way of doing it especially with the left-of-center government. a more seductive way of doing it is bringing in the investment banks and asking them is there any way that you could push out the loans, make it look like my owns aren't due within the next five years or in the case with
goldman sachs what's being argued here and alleged is that a lot of the debt was concealed within withins soes taeurbg...s esoteric currency trades to make it look like it wasn't debt at all. so the argue system greece looked more hale and hearty and credit worthy than it was. >> brown: not so different than what we've been finding out about what happened with many companies, with the housing market, but in this case it's an entire country. >> yes. it's an entire country. and it shows you the universality and similar mill tuesday here is that wall street is paid writ large and paid a lot to be opportunityistic, to game the system, to find the tiniest, most esoteric loopholes and to explait them to the max until the situation doesn't become untenable. if this sounds familiar to a lot of people out there, enron was a great strong company that pursued this type of alchemy through off balance sheet accounting. we saw a lot of this very recently with subprime in the housing bubble, make certain homeowners and barroers look a lot more credit worthy than they
were with the securitization process and the great fear here is that it was done with a lot of countries and with governments who were complicit as well. >> brown: to bring this up to date to even recent times, now the discussion is to what degree financial institutions, including goldman sachs, would have contributed to greece's problems or at least to make it harder for them to get out of it, right? through the use of credit default swaps and derivatives, those things we heard about a lot over the last couple of years >> yes. an investment bank like goldman sachs which often bets on its house account enjoys both sides of the trade, both selling the securities and the vehicles to the investor or the government or the company on the front end and being able to bet on the down end. you know, for example, this happened with real estate. it helped swell subprime and then it bet that housing would collapse very successfully. in this case you have collateralized... c .d.s., collateralized debt swaps what they're effectively insurance
policies that have to be taken out on greek's credit worthiness and it makes us especially prohibitive for greece to refinance its debt. it needs to raise about $25... 25 billion euros to refinance its debt. but if borrowers out there being r being charged almost use yours you amounts to go out there and be an active participant in greek debt they won't do it and they'll take it out of greece's hide and say "you need to sweeten the pot and pay us a much higher interest rates for us to pay you the time of day." the argument here is that goldman sachs is participating in that market and ensuring greek debt at the same time. so it's both ways of the trade. >> brown: but if bernanke says we're going to look at this, the s.e.c. is going to look at this, is it illegal? what is he saying in illegal? immoral? or just this is the way wall street does business but we need to look at it. what exactly are they looking at >> this is the roark shack here
rorschach. the derivatives were unregulated this was a wild, wild, wild west. and to look at this ten years after the fact is cold comfort when this is unfolding realtime and germany's on the hook, german banks, french banks, swiss banks, the entire global capital market system is waiting for baited breath to see if greece is going to get bailed out so it's not very comfortable to hear angela merkel or brussels or ben bernanke saying we're going to look into it. obviously regulators again must try to be ahead of the curve when it comes to these esoteric derivatives because once again wall street no matter firm is paid to game the system. so it pays just an ounce of prevention, an ounce of forethought pays back in spades. >> brown: briefly at the same time wall street stock exchanges continue to watch this warily. we saw that today. the market went down quite a bit for a while today and people were talking about that as link to worries about greece and europe. >> this is systemic. what happens, i again, german
banks, french banks, swiss banks have something i think of 150 or 175 billion dollars of exposure to greek debt that was just passed along the system. it was very fungible after these initial deals were signed and what happens if greece defaults? would there be a change reaction? would ceci this type of contagion spread to other weak players in a very weak economy such as spain, portugal, italy. what happens when angela merkel or some of the rulers of these other countries have to come in and bail out their banks once again. so you have to imagine how difficult it is for the ruler of a germany to go to their people and say we need to help bail out a european cousin here because this is bound to recourse to us. at the same time, the germans are saying well, the greek have to tighten their own belt. so it's exceedingly difficult and fraught with tension. >> couric: roben farzhad, thanks again. >> thank you, jeffrey, appreciate appreciateit.appreci.
>> lehrer: again, the other major developments of the day: the president and the republicans staked out their health care ground in a televised summit that was testy at times. and the government of afghanistan officially claimed control over a key taliban stronghold. the "newshour" is always online. hari sreenivasan, in our newsroom, previews what's there. hari? >> sreenivasan: on health care, you can ask three policy experts your questions about where the reform effort goes next and read our live blog reactions to the summit. all that on "the rundown" blog. also, judy woodruff continues her series of climate change conversations with a view from canada. saskatchewan premier brad wall discusses clean coal and cross-border environmental issues. on "art beat," we have a narrated slideshow of "families of abraham"-- a photography exhibit at duke university that captures families of different faiths in their daily lives. all that and more is on our web site, newshour.pbs.org.
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