stopped in his tracks. what police say a new york terror suspect was planning. protests against the latest use of pepper spray against the occupy movement. ben tracy is covering. and mark phillips on the parents of a murdered teen testifying about how reporters hacked her phone messages and gave them false hope. >> i heard her voice and i was... it was just... "she picked up her voice mail! he's alive!" captioning sponsored by cbs this is the "cbs evening news" with scott pelley. >> pelley: good evening. both parties-- republicans and democrats-- failed today in the most basic function of government: managing the budget. it started six months ago when congress refused to raise the nation's borrowing limit until budget cuts were made. the nation came so close to defaulting on its debts that the

federal government lost its top-notch credit rating. the borrowing limit was raised in return for the creation of the so-called supercommittee of the congress, charged with finding more than a trillion dollars in budget cuts by this week. today the supercommittee announced it had failed. there's a lot ott stake. we begin our coverage with nancy cordes on capitol hill. nancy? >> reporter: scott, the truth is that the supercommittee never came close to reaching a deal, despite hundreds of hours of closed-door meetings. this evening, the leaders of the supercommittee released this paper statement saying the nation's fiscal crisis needs to be addressed, they just couldn't do it. supercommittee members took a break from finger pointing today for a last-minute flurry of negotiations that went nowhere. >> we're still talking about different ideas. >> reporter: a fight over taxes was at the root of the stalemate-- just as it was when president obama and speaker boehner tried to broker a similar agreement to cut the

debt this summer. republicans on the supercommittee were pushing to make the bush-era tax cuts permanent for everyone, while democrats like massachusetts senator john kerry wanted to let the tax cuts for top eners expire next year. >> this is not a tax cutting committee. this is a deficit reduction committee. and we do not believe that the wealthiest people in america should get another tax cut. >> reporter: the supercommittee was seen as the best chance to break through the partisan gridlock grip in washington. it was created after congress clashed over raising the debt limit this summer-- a standoff that triggered a downgrade of u.s. debt by standard & poor's. >> this process has become a joke. it is a disgrace. >> reporter: senate leaders gave the supercommittee unprecedented powers and packed it with senators and congressmen who know how to make a deal. in an attempt to cut a modest $1.2 trillion from the nation's $15 trillion debt. budget expert maya macguineas

said both sides made some sacrifices but couldn't meet halfway. >> members of the supercommittee put good ideas out there, they pushed themselves out of their comfort zone in order to come up with a deal and the fact that they couldn't make it across the finish line is just sad. it's a sad moment where they could have done something great and they fell short. >> reporter: the failure of the supercommittee triggers automatic across-the-board spending cuts of up to 10% to nearly every government program in 13 months. it's an outcome nobody wanted and it was supposed to be the sword hanging over the heads of the supercommittee to force them scott, to make a deal. >> pelley: nancy, stay with us just a minute. you told us last week that some in congress are already talking about changing the law and lifting those mandatory cuts. well, late today at the white house the president weighed in on that idea. >> my message to them is simple: no. i will veto any effort to get rid of those automatic spending

cuts to domestic and defense spending. there will be no easy off ramps on this one. >> pelley: no easy off ramps, nancy shoushgs that playing on capitol hill? >> reporter: it's not unexpected scott. congressional leaders from both parties reiterated their support for keeping those cuts in place as well. unless, they say, members of congress can actually get together and figure out a more sensible way to cut $1.2 trillion from the deficit by the time the spending cuts are supposed to go into in effect 13 months. >> pelley: unanimous six thanks very money. the failure of u.s. and european governments to deal with their debts sent stocks sharply lower today. the dow fell 248 points, or more than 2%. it's the market's fourth straight losing session and it puts the dow just over into negative territory for the year, down three-tenths of 1%. the supercommittee was expected to deal with extending

unemployment benefits and extending the payroll tax cut which benefits many working families. we wondered what happens now that the committee has failed, so we turned to our senior business correspondent anthony mason. anthony? >> reporter: scott, if the payroll tax cut is not extended, it essentially acts as an immediate tax increase. the payroll tax cut has a broad impact. it's benefiting 121 million families this year. if it's not extended, the average household's paycheck will decrease by about $934 a year starting on january 1. if congress allows long-term unemployment benefits to expire, 1.8 million americans will be cut off immediately in january and that number will rise to more than six million by the end of 2012. >> pelley: so if taxes go up and unemployment benefits are cut back, does that increase the chances we eel fall into a recession? i >> by some estimates scott, this could cut our g.d.p., our

economic growth, by a full percentage point or more. before this, the federal reserve's own forecast had the economy growing at just a little over 2.5% next year, many economists think that's too optimistic. so, yes, not extending the programs will increase the risk of the economy slipping back into recession. >> pelley: anthony, thank you very much. tonight, a suspected terrorist is being held without bail here in new york city. he's charged with plotting to attack police stations and american soldiers. homeland security correspondent bob orr tells us the police believed they had to act quickly. >> reporter: the new york police described 27-year-old jose pimentel as a lone wolf al qaeda sympathizer intent on carrying out a one-man bombing campaign across new york city. pimentel, a natural ides u.s. citizen, was arrested saturday after police photographed him allegedly putting the finishing touches on three pipe bombs. his mother carmen sosa reacted with disbelief saying pimentel

is a regular young man who made a mistake. >> i'm sorry about what my son did. i didn't tell them to do this. he did that by himself. >> reporter: police say pimentel, who also goes by muhammad yusuf planned to attack police cars, postal facilities and u.s. soldiers returning home from the wars in iraq and afghanistan. to demonstrate the potential power of pimentel's explosives, new york police built and tested what they said was a similar bomb. but pimentel never came close to carrying out his jihad. police have had him under surveillance for two years and a confidential police informant worked with pimentel over the past several months buying bomb parts and building devices. pimentel was following an online al qaeda magazine article called "make a bomb in the kitchen of your mom." prosecutors say he also drew inspiration from al qaeda operative anwar al-awlaki. and al-awlaki's death in a september drone strike was a trigger point for pimentel says new york police commissioner ray

kelly. >> the death of anwar al-awlaki is what motivated him and made him increase his tempo significantly. >> reporter: police say this is the 14th terror plot against new york since 9/11. it's not as serious as those targeting times square and the city's subways but the pimentel case does underscore the persistent threat from home-grown lone wolves living in our midst. it's important the note the f.b.i., which handles almost all terror cases, declined to get involved with this one. sources tell us, scott, federal officials privately questioned the strength of the evidence and pimentel's ability to carry out any kind of attack. >> pelley: bob, thank you very much. in egypt it turns out the revolution isn't over, at least 24 people have been killed in three days of new rioting. protesters overthrew a dictator back in february. now they say the army has been too slow to transfer power to civilians. elizabeth palmer is in the heart of cairo at tahrir square

tonight. >> reporter: for the past three days, the struggle for democracy in egypt has looked more like a war with the front lines once again here in tahrir square in the heart of cairo. thousands of protesters vented their anger at egypt's ruling generals who took power temporarily this spring. they promised to hand over to an elected government soon, but they've since been dragging their feet, fueling suspicion they have no intention of giving up control. >> they want to take the power. they want to give us a new dictator, military dictator. and we don't want. we want a civil government. >> reporter: the running street battles have left almost 2,000 people injured and at least 24 dead. this violence recalls the vast popular uprising last february which toppled egypt's authoritarian president hosni mubarak. back then, soldiers were welcomed as heroes for siding with the people not anymore.

cell phone video posted on youtube shows them alongside riot police beating demonstrators. here dragging a woman along by her hair until an officer intervenes and shoos her into the subway. later the military spokesman general sayed abbas tried to down play the role. "some of them may have been provoked" he says "with stones and molotov congress cocktails." that's no excuse to millions of egyptians who have lost faith and don't believe the general's commitment to the democratic election which was supposed to start in just a week. tonight the entire civilian cabinet that was helping the military run egypt has offered to resign which has thrown everything, including the election schedule, into doubt. >> pelley: the revolution continues, liz. thanks very much. the obama administration slapped new economic sanctions on iran

today to try to pressure it to stop it development of nuclear weapons. nothing has worked so far but secretary of state hillary clinton and treasury secretary tight says the new measures target... tim geithner says the new measures target companies that support iran's oil and pet r.o. chemical companies. the victims in britain's phone hacking scandals have to say. and the debate over police and pepper spray when the "cbs evening news" continues. [ male announcer ] it's that time of year. time for campbell's green bean casserole. you'll find the recipe at campbellskitchen.com. ♪ campbell's. it's amazing what soup can do. i habe a cohd. and i toog nyguil bud i'm stild stubbed up. [ male announcer ] sorry, buddy. truth is, nyquil doesn't un-stuff your nose. what?

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♪ tum tum tum tum tums >> pelley: the chief of the campus police at the university of california, davis, was placed on administrative leave today. she joins two officers who were suspended after using pepper pray on students during an occupy protest. ben tracy reports that video of the incident last friday has raised questions about police tactics. >> whose university? >> our university! >> reporter: more than a thousand people packed the central quad at u.c. davis today. >> our university! >> reporter: outraged by what happened here friday. >> i'm right here. i've just been sprayed. >> reporter: david and other students were protesting twice hikes, part of the occupy movement. when police tried to move them, they sat down. >> just then a police officer sprayed us with paper, he stepped over us and we did not

impede him. he shook up the can of pepper spray, held it up the crowd. i had my eyes closed, my arm was around my girlfriend, i kissed her on the forehead and all hell broke loose. >> reporter: police say they felt surrounded after warning the students, two officers shot pepper spray directly in the faces of more than a dozen protesters. >> my entire body was covered in pepper spray. my entire body. i was coughing up blood. i was puking. >> reporter: this is the latest example of police using pepper pray on occupy protesters. in seattle, an 84-year-old woman was sprayed and in portland, liz nichols got a face full of pepper spray at close range. >> it felt like my face, my ears were on fire. >> reporter: pepper spray irritate it is eyes and causes burning in the throat and nose. it's designed to be used to escape an attacker. richard lichten is an expert on police tactics. he spent 30 years at the l.a. county sheriff's department. he says the use of pepper spray

at u.c. davis seems to be unjustified. >>? f officers can step over these folks without any kind of problem, if, in fact, the officers encircled were not being held there and could leave at will, then i have a problem with that. >> reporter: here at u.c. davis, the chancellor has called for an investigation into the police response and their pepper spray policies. meanwhile, many students are calling for the chancellor's resignation. but when she addressed the students today, scott, she did not offer that. instead she offered a tearful apology for what happened. >> pelley: ben, thank you very much. in los angeles, a coastal highway has become a disaster zone. have a look at this! a landslide washed away an 800 foot stretch of the road yesterday following days of heavy rain. no one was hurt. the road had been closed since the spring when cracks first appeared. today city officials said it is probably too damaged to fix. tabloid hackers don't just target celebrities. the parents of a murdered teen

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make yourself comfortable. alright everybody, now when i was in the military, i learned that if you stand together, you can stand up to anything! no matter where i was deployed, i always knew that somebody had my back! you boys are your own band of brothers! you have each other! just like i had navy federal credit union... 24/7... live customer support! let's go! let's go! 3 1/2 million members. 3 1/2 million stories. navy federal credit union. >> pelley: britain today began an official investigation into the phone hacking scandal. one by one, victims told how their right to privacy was violated by tabloid reporters in search of a scoop. mark phillips is in london. >> reporter: parents of a murdered daughter who were deceived into thinking she was still alive.

the first of a parade of celebrities furious over how tabloid newspapers have invaded their private lives. the misery it caused made personal. >> at first we were able to leave messages and then her voice mail became full. >> reporter: sally dowler is millie dowler's mother. millie was a teenager who was abducted and murdered. but because a newspaper-- the "news of the world"-- was illegally hacking into her cell phone and listening to and deleting voice mails of those trying to find her, her parents reached a cruel impression she was still alive. >> i rang her phone and it clicked through on to her voice mail so i heard her voice and i was... it was just like i was like... she picked up her voice mail! he she's alive!" >> reporter: the hurt caused to the dowler family was at the center of the outrage the phone hacking scandal caused now that hurt has a face and a voice. a family already in anguish being toyed with for the sake of an already tragic story.

the actor hugh grant also joined the battle. he's become a poster boy for the hacked-off campaign, calling britain's tabloid press a privacy invasion industry. >> when the story has been obtained by hacking the phone of a murdered school girl i find that cowardly and bullying and shocking. >> reporter: the papers will get their hearing later. but this was the victims' turn to describe the horror of what phone hacking has done to them. >> you'll replay everything in your mind and just thinking, oh, that makes sense now, that makes sense. >> reporter: except for for the dowlers, the loss of their daughter, and the false hope they were given makes no sense at all. mark phillips, cbs news, london. >> pelley: rupert murdoch's "news of the world" newspaper is now closed. it was accused of intercepting the voice mail messages of more than 6,000 people. more than a dozen journalists from the paper have been

arrested. trustees at penn state today named former f.b.i. director louis freeh to head up their investigation into the child sex abuse scandal. former assistant football coach jerry sandusky is charged with sexually assaulting eight boys over a 15-year period beginning in the mid-'90s, but three said today that his... freeh said his inquiry will go back as far as 1975. he is a man who knows how to manage money. up next, we asked the c.e.o. of american express why washington up next, we asked the c.e.o. of american express why washington can't seem to manage ours. to this. when my asthma symptoms returned, my doctor prescribed dulera to help prevent them. [ male announcer ] dulera is for patients 12 and older whose asthma is not well controlled on a long-term asthma control medicine, like an inhaled corticosteroid. dulera will not replace a rescue inhaler for sudden symptoms. dulera helps significantly improve lung function. this was shown over a 6 month clinical study.

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slow kettle. new from campbell's. it's amazing what soup can do. >> pelley: with our elected officials so far unable to solve the country's economic problems, we've been consulting with the c.e.o.s of some of america's most successful corpses. tonight, ken chenault of american express. "fortune" magazine calls am mex one of the most 20-add michael ryder companies and chenault was choice for the a fantasy executive league. i asked chenault what the failure of the supercommittee would mean. >> i think our country a very resilient country and i think we will go on. but it will be an incredible

missed opportunity and i think our leaders need to be held accountable. >> pelley: well, the democrats believe they have it right, the republicans believe they have it right and republicans believe this is a battle to see who wins. >> i think what's really important and we do have something we can follow and that's the bowles-simpson commission which i think was a real example of principled compromise. >> is it your opinion that there has to be compromise on cutting and tax increases? there has to be some of both in order to move the country forward? >> i don't see how you can have absolutist positions on either side and that's what bowles-simpson was all about and if we simply have both sides go to their respective currenters the fight never takes place and no one wins. so we need principled

compromise. >> we asked chenault how to create jobs. one idea, he told us, was to support small business. american express is promoting something it calls small business saturday, november 26, when chenault says everyone should do their holiday shopping in small, community stores. mom-and-pop shops. >> small businesses create half of the jobs in the private sect and, in fact, have created 65% of the net new jobs over the last 17 years. and what small business is all about is the where the individual can help our economy because we need to create jobs and if people support independently owned small businesses in their community, they can make a difference. >> pelley: your message to washington then is what? >> my message to washington is simple: face reality, be leaders

demonstrate accountability, engage in principled compromise and understand your job is to find solutions. the stakes are too high and failure is not an option. >> pelley: ken chenault told us he hopes small business saturday will become as important as black friday which is the traditional start of the holiday shopping season. and that is the "cbs evening news" for tonight. for all of us at cbs news all around the world, good night. ca this is 9news now. on capitol hill tonight, the budget cutting super committee admitted total defeat and the president threatened to veto any move by congress to get around those automatic spending cuts that will go into effect one year from now.

democrats and republicans were unable to agree on any tax increases and budget cuts and bruce leshan reports, both sides blaming the other. >> having last minute discussions. >> super committee members at least put on the appearance of trying until the end for a breakthrough. shortly after they announced defeat, the president blamed gop. >> there are too many republicans in congress who have refused to listen to the voices of reason and compromise. >> mitt romney, a presidential candidate blamed a do nothing white house. >> i would have anticipated that the president of the united states would have spent every day and many nights working with members of the super committee to find a way to bridge the gap. instead, he has been out doing other things. >> republicans unwilling to accept decreases and unable to reform social security and medicare and medicaid without them. >> the whole idea is being held hostage that the