PBS NewsHour; September 1, 2011 6:00pm-7:00pm PDT

September 4th, Experience Color Fest, and Extravaganza of Light Color and Perception. Use your member card for one free child admission with paying adult. Exfinity with TV, Internet and Voice Services that work together so you can access and enjoy everything you love, anytime, anywhere, and any way you want. Learn more at xfinity.com. New data showed a mixed economic picture today with some glimmers of hope in manufacturing and retail sales. Good evening, I'm Jeffrey Brown. And I'm Margaret Warner. On the New Sour tonight, Ray Suarez has noticed on the economic ups and downs a day ahead of the release of new jobless figures. Then from Tripoli, we get an update on the war as more Margadafi vows not to surrender and we assess what's next for the West campaign to oust him. We examine a new report showing tens of billions of dollars in waste, fraud and abuse by private

contractors in the Iraq and Afghanistan conflicts. From the economist film project, we get the story of a radical environmentalist who faced domestic terrorism charges. You saw the mills, where you going into the forest, you stumbled upon a clear cut. Sometimes when you see things you love, you just want to destroy those things. When I full-talks to historian Richard Norton Smith and journalist Carl Cannon about defeated presidential candidates, who changed history? There are people who lost in the immediate sense, but who turned out not only to be ahead of their time, but in fact were catalysts for political transformation. When we close with another in our series about economic inequality in America, tonight Atlantic magazine writer Don Peck on the disappearing middle class, and that's all Ed on tonight's NewsHour. Major funding for the PBS NewsHour has been provided by... Our company's make huge profits.

Last year Chevron made a lot of money. Where does it go? Every penny and more went into bringing energy to the world. The economy is tough right now, everywhere. We pumped 21 billion dollars into local economies, into small businesses, communities, equipment, materials. That money is making huge difference. And by BNSF Railway. And by the Bill and Melinda Gates Foundation dedicated to the idea that all people deserve the chance to live a healthy, productive life. The economy sifted through a new pile of data today on the state of the U.S. recovery,

and the Obama administration lowered its expectations for what's to come. Ray Suarez has our report. With the August jobs numbers coming tomorrow, today's raft of reports offered differing clues to the economy's direction, whether it was manufacturing, retail sales, or unemployment claims, those first-time applications for benefits fell to 409,000 last week for the first time in three weeks. The figure has to drop below 375,000 to stimulate long-term job growth. And major retailers reported better than expected sales in August. Even as those numbers suggested some bright spots in the economy, other data released today were more of a mixed bag. Britain's spending dropped by the most in six months to a level half of what economists think of as healthy. On the other hand, manufacturing, which had been expected to contract in August, grew for the 25th straight month.

As to what it all means, here's Brookings Institution Economist, Martin Bailey. The numbers you mentioned were maybe a little bit better, but we certainly haven't had a sustained set of indicators yet that we're going to get better growth going forward. I hope we will. We surely can't get much that much worse growth than we had in the first half of the year. But the concerns about a possible double dip, I think, are real. For its part, the White House budget office revised its projections on the economy down, putting growth at just 1.7 percent this year off a full point from a forecast in February. It also forecast a 9 percent unemployment rate for next year. That'll be cold comfort to millions of unemployed, including the 10,000 who lined up at a jobs fair in Los Angeles yesterday. I have applied for, I would have to say, pretty close to over 300 jobs in the last year. Economist Bailey says there are still two big obstacles to a full-blown recovery.

One is the debt that's still hanging over a lot of households, they took on too much debt. And the other is we built too many houses, and we just haven't yet reached the point when you add in the foreclosures as well, where we can get construction spending going again. President Obama now plans to detail his jobs plan before a joint session of Congress next Thursday night, September 8th. He initially wanted Wednesday. The same night as a Republican presidential debate, House Speaker John Boehner objected. White House Press Secretary Jay Carney laid down the timing skirmish today. So I chose don't matter, the economy matters, the American people matter, jobs matter, and that's what we're focused on. That's why, you know, the Thursday is the day. Thursday is the day. We want to give the speech. The jobs issue also remain front and center on the presidential campaign trail. And hopeful former Utah Governor John Huntsman delivered his job creation blueprint in a Wednesday speech in New Hampshire.

There is no more urgent priority at this point in our nation's history than creating jobs. And strengthening our economic core, everything else revolves around it and is dependent on it. Another Republican former Massachusetts Governor Mitt Romney is expected to outline his jobs plan in Las Vegas next week. Still to come on the news hour, what's next for the U.S. and NATO in Libya, waste in wartime contracts and environmental activists charged with terrorism, losers who made a difference and the erosion of the middle class. But first, the other news of the day, here's Harry Schrinivasson. Wall Street backed up today after a four-day rally, stock slump late in the session as investors hedged their bets against tomorrow's unemployment report. The Dow Jones industrial average lost nearly 120 points to close at 11,493. The Nasdaq fell 33 points to close at 2546. Thousands of people spent another day slogging through the floods and wreckage of Hurricane

Irene. The long, slow job of cleaning up, gathered momentum up and down the East Coast. Across the Northeastern New England, swollen rivers have mostly crested by now, but remain far above flood stage. In the ravaged city of Patterson, New Jersey, the Pasek River was still surging out of its banks today as hundreds of home and business owners tried to cope with the damage. You can never prepare for a disaster. You can always try to prepare and do your best, but you can never prepare for something like this. The swollen Pasek also engulfed parts of Wallington and Lincoln Park, New Jersey. President Obama was scheduled to visit the area this Sunday to see the wreckage firsthand. Meantime, in Vermont, repairs were underway on washed out roads and bridges, while people cleaned ruined belongings out of flooded homes. There's nothing left. I have a small pile-out back of stuff that we're keeping, and I could fit that in the front seat of my car.

The flooding in Vermont had stranded entire communities until National Guard helicopters and truck convoys began arriving with much-needed relief. They brought in loads of food, blankets, and bottled water. We're trying to get supplies over to some of the outlying towns that don't have road access at this time or limited road access. Farther south, the damages continue to add up today. In Beaufort County, North Carolina, for example, Hurricane Irene tore up a local marina, destroying the dock slip and flipping boats. And along the state's outer banks, people salvaged whatever they could. For many along the east coast, the cleanup proceeded without benefit of power. Hundreds of thousands were still in the dark today, as outages from the storm persisted. Forecasters were also keeping an eye on tropical storm Katia far out in the Atlantic. It had been a hurricane, briefly, and could still grow into a major storm by the weekend, but its path remained uncertain. An atropical depression was brewing in the Gulf of Mexico. It could bring much-needed rain to Texas and other states, suffering from prolonged drought. A top Syrian legal figure resigned today and condemned President Bashar al-Assad.

The Attorney General for Hama in Central Syria appeared in a YouTube video. He said security forces killed 72 protesters and activists at a local jail in July, and another 420 people in August. In a second video, he denied the regime's claim that he had been kidnapped by rebels. I am Judge Adnan Bahamed Al-Bakur, previously the Attorney General in Hama. I declare that I have resigned from my position to protest the cruelty of the regime against peaceful demonstrators, but the Syrian regime has announced about me being kidnapped is not true, and I am now under the protection of the rebels and in good health. Al-Bakur said he plans to leave Syria soon and will give more details of the government crackdown when he does. There were no U.S. troops killed in Iraq last month. The first time that has happened since the war began in 2003. At the same time, new figures showed that death toll among Iraqis remains high. 2600 civilians, police and soldiers have been killed in the last 12 months since U.S. forces formally ended combat operations.

The last American units are scheduled to leave by years end, but Iraqi leaders are discussing having some stay on as trainers. Those are some of the major stories. Now back to Jeff. On a day in part devoted to planning for a post-Kaddafi Libya, the story took another turn with the apparent reappearance of the long-time leader. Lindsay Hilsom of Independent Television News begins our coverage. Cockpit video from an RAF strike on a barracks at Bani Walid. That's where Gaddafi's closest associates, and maybe the man himself, are thought to be he popped up in message form on Syrian television. Seeing you here is lies, don't believe it, fight it with guns, fight it with bullets. Let bullets speak on behalf of the Libyan people. If they want to enter into a long war with us, let it be so. We are listening to these nonsensical comments, which we consider to be those of a dead man dancing. The collapsing former regime has neither power nor any forces anymore.

At the beach house of his son, Saadi, we found fighters enjoying the facilities. Last night, Saadi said he had been authorised by his father to negotiate with the new National Transitional Council. But another son, Saif Al-Islam, said to Arabic television that they would take triple back a sign of confusion and disunity in the family. Saadi doesn't seem to have been as hated and feared as some other members of the Gaddafi family. But one man has just said to me, as long as any of the Gaddafi's are alive and in Libya, we'll be looking over our shoulders. The fighters who took triply ten days ago are now nearing Colonel Gaddafi's hometown of Sert. A spokesman for the new authorities said Saadi's deadline for surrender would be extended by a week. In the hope that whatever the Gaddafi's say, his supporters will now crumble. In the meantime, in Paris, top officials from 60 countries gather to discuss a post-war

Libya, including releasing Libyan money now frozen in Western banks. But they acknowledge that the victory of the anti-Kaddafi rebels is not yet complete. Secretary of State Hillary Clinton and other leaders said the NATO military campaign would continue. What happens in the coming days will be critical. And the international community has to help the Libyan people get it right. Just as I told my counterparts earlier today, we need to continue NATO's military mission as long as civilians remain under threat of attack. For the sake of the Libyan people, we have called on Gaddafi and those around him to recognize that their time is over and lay down their arms. And we look more at the role of the West now with Robert Malley. He worked in the National Security Council in the Clinton White House and is now programed director for the Middle East and North Africa at the International Crisis Group. Welcome to you.

When you listen to Secretary Clinton there and you think about how the U.S. and the West can help Libya now, what are the main considerations? I think the first consideration is what's happening in Libya today. What are the main challenges? Then you work backwards and see can the international community help. Number one is to make sure that the country remains together. In other words, that you don't have these divisions, you don't have a witch hunt, you don't have part of the country that feels that the other part is taking revenge. And that's something we have experienced in Iraq and that's the international community could encourage the new leaders to be as inclusive as possible as forgiving as possible. When you say the new leaders, part one, I guess, is determining who we're dealing with. That's the other question. I mean, the West and the U.S. has recognized a transitional national council as the legitimate representative. But that begs the question of whether they are united and whether there are other forces who are going to participate in the scramble for spoils and for power. And the other thing, outsiders can do is really encourage them to come together and avoid the kind of internal divisions that would be harmful for the future.

Though they're unavoidable, any revolution is followed by a scramble for power. That's what they're about. Well, particularly when there's been one man, one party, one man rule for so long, lots and lots of people worked for and with this guy, right? Well, that goes to the first point about justice and reconciliation. A lot of people had to work for him. Again, let's take that page out of the book on Iraq. A lot of people had to work for the Barthas regime in Iraq. A lot of people had to work in this system. You can't exclude them. That's a point that Secretary Clinton has made repeatedly. You can't exclude them. Otherwise, number one, you're going to the prime yourself of real talent. And number two, you're going to sow the seeds of a possible future insurgency. What about the security factor? And as the conflict continues, there got to be a lot of concerns about it. And again, we have various models to look back at, right? Well, I mean, the person who works for me in Libya and in Tripoli tells me the security situation is much better and getting better by the day. And that's obviously good news.

I mean, you know, it's not like Baghdad was after, after the fall. On the other hand, this is a country in which almost everyone has weapons. It's a country where they are a division. And it's a country where people are going to be fighting because there's a big fight that they want to get a piece of. So disarming the militias, trying to get the weapons and gathering them. And again, making sure that you include as many people as possible is going to be challenged number one for the people who are going to rule the future of Libya. Now, U.N. Secretary General Ban Ki-moon today called on the Security Council to deploy a civilian mission to help stabilize Libya. Now, what would it do and how would it do it coming from the outside? Well, that's, I mean, the first point is you don't want to do too much from the outside. There's another lesson from Iraq. I mean, the diplomats said recently there are lessons to be learned, there aren't lessons to be taught. In other words, let's be modest in how we try to go about telling the Libyans what to do. That said, their need of some assistance, technical expertise in certain technical areas and governance, it's still, you know, in, in, in triply itself, there still is a shortage of water and electricity.

So they're things that they're going to need, outside help, they're going to welcome outside help. I think it has to be done with a very modest touch to avoid the impression that outsiders are coming to tell them what to do. Not to have a heavy hand, not to show it to we know better or we're running the show, certainly. Because we often don't know better. I think, again, history shows that. The, another issue, of course, is the money issue. That was discussed today in, in, in Paris. And in that press conference, not in what we showed, but I was watching, and Secretary Clinton said the money will be dispersed, but she said it must be clear to Libyans that this money is being used to help the Libyan people. Now, that's an example that you're talking about, right? You're sure that it's being used correctly, because it is not always used that way, right? And one of the things, again, that outside help couldn't provide is ensuring transparency and where the money goes, how it's spent, who's using it? We've seen, again, too many cases where money gets used in ways that there wasn't intended to be. Libia will have a lot of money, once all the frozen assets are unfrozen, but that money is going to have to be spent wisely, and it's going to have to be spent both on immediate

improvements, but also in the longer term in ways that Libyans will feel is accountable. They know where it's going, and they know that it's going to benefit them. Now, what do you make of the continued NATO involvement at this point? What kind of debates or discussions must be going on at that level about what exactly they'd be doing? Well, the military phase is phasing out. One would hope. I mean, Secretary Clinton said we're going to continue that, and they're providing assistance. I would hope to see that reduced as quickly as possible to minimum, and to make this less of a military enterprise and more a political attempt by the new Libyan leaders to be as inclusive as I said, as inclusive as possible. There is a risk, and some of these pockets of resistance, that they see the rebels or the new leaders not as liberators, but as subjugators, that they're seeing that they're coming to impose their way. And the more it's a military confrontation, as opposed to a negotiation, the worse it will be, which is why I think it's a good thing that we heard today. The Libyan rulers say the new authorities are going to extend the deadline. You don't want to go in forcefully and simply antagonize cities or villages that are still

loyal to Gaddafi. Now, when you look longer term, you talk about business ties, cultural ties, so on. Do you plant the seeds for those things now? Are there ways that we've learned from experience that you get that going now, even as the fighting continues? Or is that just not worth thinking about it? I mean, the fighting is continuing in some pockets. Well, the things you could do, I just think that we need to be very careful about thinking that what in the U.S. or the West, by helping certain groups, the human rights group, democracy activists, that we're going to predetermine who are going to be the future rulers of Libya. That's going to be decided by Libya, and I think as in all these revolutions, in fact, in all revolutions, the people who come out ahead, or the people who leave the revolution, are not necessarily the ones who are going to rule after the revolution. However much we might want to help certain groups, we're not the ones who are going to decide. It's going to be decided over there, and we're going to have to live with whatever the outcome is.

All right, Rob Malley. Thanks so much. Thank you. Now, waste, fraud, and abuse of taxpayer money during a decade of war in Afghanistan and Iraq. After a three-year investigation, a Congressionaly mandated commission yesterday issued a blunt finding that between $31 billion and $60 billion has been misspent on the two wars. That's up to one quarter of the entire $206 billion outsourced to private contractors, for everything from security to food preparation to reconstruction projects. The last 10 years have brought more than 260,000 such contractors to work in war zones, where they sometimes outnumbered soldiers. The panel urged quick action on 15 recommendations to tighten controls. And for more on all of this, we turned to Dov Zakim, one of the commissioners. He was the Defense Department's controller from 2001 to 2004 at the onset of both wars. And Mr. Zakim, thank you for joining us.

This was a pretty stunning finding on your part. I mean, up to one out of every $4 spent on contractors was misspent. First of all, give us a flavor. What are you talking about? Well, out of that $60 billion, about $40 billion is what you call waste. Again, that's an estimate that ranged from about $20 to about $40. And waste is simply money that you spend, that you needn't have spent. For example, a road in Afghanistan that should have cost about $85 billion wound up costing over $170 million. We were paying workers in Iraq contractors for a full day's work when, in fact, they were working 15 percent of the time. That's simply waste. It's no different from hiring a contractor to fix your house, getting overcharged and paying for it. The rest of the $60 billion, about anywhere between $10 and $20, depending on whether it's a $30 billion or a $60 billion estimate, the rest of that is pure fraud, criminal fraud, people making off with money that they shouldn't.

That's how we got to the numbers. And that might be either the contractor getting paid for something he didn't do or what is an extortion over in Afghanistan or Iraq? Well, in Afghanistan, clearly that's the case. When I was over there, together with one of my fellow commissioners, we were handed a copy of a bill, an invoice that was charged to a contractor and was issued by an outfit that called itself the Islamic Republic of East Afghanistan. We've reprinted it in our report. It has a phone number to call. If you want to be safe, call this number. We're paying people to kill our kids. Now how, you were at the defense department. How was this allowed to happen? Well, in Afghanistan, the basic problem was that for the first couple of years or so, we really didn't put very much money in it all. So we didn't have that kind of a problem. When we then went into Iraq, because it was so harried, we drew up contracts that were not specified the way a contract normally is. It's understandable it was the beginning of a war.

But then happened is that we didn't have enough people to monitor, to supervise, to oversee what was going on, to fix the contracts up. And that was due in part to the fact that many of the acquisition professionals and contracting professionals had been let go in the 1990s. So you had, in effect, the perfect storm, not enough people because they had been let go in the 90s and too many contracts for too much money, not provided in a specific way in the beginning of the Iraq war. And that continued because, again, we just didn't have the people to monitor the contracts, to let them properly, to force competition. And of course, with all of that, you lose money. But I mean, in the huge defense department budget, that's certainly a question of what priorities were set. I mean, Pentagon doesn't lack for personnel. Well, it doesn't lack for personnel, but you have to have the right personnel. And one of our major recommendations is that the leadership, be really focused on this issue.

You just heard about Libya. Rob Malley was talking just a minute ago about how there's going to be a need to reconstruct Libya. That country has money. But we've got the possibility of going into other countries. We've been fighting what are called contingencies pretty much on an annual basis for more than the last two decades. And if we don't have the experts, if we don't train them, if our leadership is not focused on them, then we're going to make the same mistakes over and over again in our commission, which, by the way, was bipartisan, actually nonpartisan. We all agreed on every recommendation. We believe that, unless there is top level focus on this, unless the culture has changed, unless commanders recognize how important it is that contractors are just as much a part of their force as the people wearing uniforms. And no, by the way, thousands of contractors have been killed, and they don't get ceremonies at the over-air force base. Unless there's a focus on contracting in a proper way, we're going to make the same mistakes, waste the same money, and the debt crisis shows us that we don't have the money to waste. Could that problem even be exacerbated as the U.S. draws its troops down from Iraq and

in the next couple of years or three years, Afghanistan and say State Department or AID become even more dependent on private contractors for security, for example? Absolutely. In fact, there are two ways that the problem is getting worse. One is the challenge of starting projects that the Iraqi government or the Afghan government cannot sustain. We've built a power plant, excuse me, a water treatment plant in Iraq that has intermittent power and that is not being used. We've built a prison that is not being used. The Iraqis don't want it. We have built schools in Afghanistan without teachers. Both clinics, over 130 of them in Iraq, without the proper equipment and supplies. So you've got the problem that we're building stuff that won't be maintained. And at the same time, if you rely on security contractors in places with this corruption, where there's danger, where maybe the contractors themselves are a danger, then you've got a problem as well.

And we've recommended that instead of simply focusing on the narrow issue of whether this is something government can or cannot do, you focus on the risk involved, then we will clearly identify places where we just shouldn't have contractors. Now, some of your recommendations, first of all, require congressional action and require spending more money, hiring more people, as you're saying, or an IG and Inspector General for all wartime contracting. At a time of budget austerity, do you think Congress is going to go for that? I believe so. We're not talking about big bucks here. When you look at waste that amounts to over 40 billion, or could, and fraud that amounts to as much as 20 billion, then to spend the kind of money we're talking about for a relatively small number of people, you would only get more of them once the contingency started. But you'd have a core that would watch over those who are contracting out and managing to ensure that we don't make the same mistakes. Again, we're talking about millions and not billions. This is a penny wisely spent, and we'd be pound full as if we didn't spend it.

Well, Gov.com of the Commission on wartime contracting. Thanks so much. Thank you for having me. Next another story from our economist film project series. Tonight, a film about eco-terrorism. The Earth Liberation Front, a radical environmental activist group, was named a domestic terrorist threat by the FBI in 2001. In this documentary, Academy Award-winning filmmaker Marshall Curry follows the story of a former ELF member, Daniel McGowan. The McGowan was arrested in 2005 for involvement in several fires and placed under house arrest in New York City to await trial. Here's an excerpt from the film If a Tree Falls. In Vale, Colorado, the nation's busiest ski resort was hit today by a fire. Arson is suspected.

You may have heard of the Earth Liberation Front, and the attorney general himself says it's a domestic terrorist organization, the FBI, says it is one of the most dangerous groups in the country. The ELF has claimed responsibility for more than two dozen major acts of eco-terrorism since 1996, fire bombings include attacks on lumber mills, wild horse corrals, and two meatpacking plants. So far, not one of the cases has ever been solved. And authorities acknowledge they know next to nothing about the membership or the leadership of the organization. In 2001, I was involved with the Earth Liberation Front, and I was involved in two separate arson's in one year. There was no way that any of these facilities, no one got hurt, no one was injured, and yet I'm facing life plus three and thirty-five years. I was born in 1974 in Brooklyn.

I moved to Rockaway when I was around three, Rockaway Beach in Queens. It's mostly working class, people. My dad was a cop in the New York Police Department. And I was a track runner, and I got scholarships and stuff like that. And then when I got to college, I was like, oh, I guess I'll measure in business because that's practical. I moved to I'm Western in October of 98, and I started becoming a really different person. I had never seen trees like that before, and had a really profound impact on me. I have memories of, like, for the first time seeing log trucks, you know, and be like whoa. You saw the mills, or you going into the forest, and you stumbled upon a clear cut.

Like, it just blew me away. I couldn't believe the fact that people accepted what was going on, just the arrogance of it. You know, it made me think like, why are we being so gentle? Why are we so gentle in our activism when this is what's happening, you know? Sometimes when you see things you love, you destroy it, you just want to destroy those things. The more radical environmental community have, in my opinion, a misconception about this industry and what we do. Does it have an impact? Certainly. Nobody likes the looks of a fresh harvest, but we really do regrow these trees. You know, I'm a third generation lumberman. You can't be in the lumber industry without having trees to cut, so it's ridiculous

for people to think we're going to go out there and cut the last tree. We were quite surprised that we had been targeted. I went up to Portland and wrote the communique and sent it in. Even then, it wasn't real. It was just like still like kind of this cartoonish thing. And I wasn't real until I really saw the newspapers, seeing the man from the company, I think Steve Swanson just walking through this like charred remained and I was just like, holy crap. It's like when you're involved with it and you're in the thick of it, it's hard to look at like all the consequences and like the real repercussions of that. Like, you know, did this action push them in a better direction? Did it scare them? Did it help the movement in any capacity on Oak Rough Log? There's lots of questions, but I don't think at the time I was asking those questions

too much. A federal judge must determine whether the fires qualify for something called the terrorism enhancement. If the judge rules that Daniel's fires were terrorism, Daniel could be sent to a new ultra-restrictive prison that was set up after 9-11 to house terrorists. In the media and in the courtroom, the question is debated. Ecoserrorism, terrorist acts by radical groups, eco-terrorism, environmental terrorists. People need to question like this buzzword and how it's being used and how it's like just become the new communists, it's become the new, you know, it's the boogie man, it's a boogie man word. It's like, whoever I really disagree with is a terrorist. Some people have the problem with, you know, calling this terrorism that when you're basically making the threat where people go home at night wondering if they're going to be a target, that's what terrorism is.

After the fire for a long time, you really looked over your shoulder. And we put all our answers in our home and things like that that before we hadn't thought about. You know, being a New Yorker with experiencing such serious terrorism firsthand is like, how are you going to call someone who sets fire to an empty building, a terrorist? It's just inappropriate in every way and it's an insult. The word terrorism to me is about killing humans. It's about ending innocent life. And that is the antithesis of what these people did. Concerned for life was a very big part of the plan and implementation of these actions. And is why no one was ever harmed or injured in them. 1200 incidents are being accredited to the ELF and ALF in this country and not a single injury or death.

Those statistics don't happen by accident. Terrorist acts under the definition of the law can vary all over the board. There's no requirement for purposes of terrorism that you physically endanger another person's life. I mean, you don't have to be Bonnie and Clyde, to be a bank robber and you don't have to be al Qaeda, to be a terrorist. I don't think these people are terrorists. I think the people and the agencies and the industry that they're fighting are the true terrorists. When you've got big timber companies coming into the Northwest, clear-cut and old-growth forest, big oil companies with their big oil spills that cost billions and billions and billions of dollars, you don't see the FBI rating these executive homes or anything like that. They aren't being threatened with life and prison. All they really do is just pay a fine and move on to the next quarter. The old adage that one man's terrorist is another man's freedom fighter is true. If you agree with their motives, wow, they're a hero, they're not a terrorist at all.

If you disagree with their motives, then they're a terrorist. That's tough. Okay. That's why it's a whole lot cleaner to deal with crimes. Crime non-crime. Okay. I'm good with that. I can do that. Arson on it. It's a crime. Good. I can do that. Is it terrorism? We'll find out. McGowan pled guilty to Arson and conspiracy charges in 2007. The judge sentenced him to seven years in a special prison designed to hold terrorists. He has allowed limited communication with the outside world. The film, if a tree falls, heirs on the PBS series POV on Tuesday, September 13th, please check your local listings. Now in this political season, we turn to campaigns past and ask, are there reasons to remember the losers? A new C-SPAN series looks at failed presidential candidates who changed history.

Gwen Eiffel explains. U.S. presidential campaigns always produce a winner, 43 men have served. One of them twice as the nation's commander in chief, history books pay less attention to the losers, even though many had an outsized impact on the election and on the national debate. A good number of them turned out to be ahead of their times. Beginning September 9th, a new C-SPAN series titled The Contenders, they ran and lost, but changed political history, will examine 14 of the losers who turned out to be influential, even in defeat. Richard Norton Smith, scholar and resident at George Mason University, is an advisor to the series. And Carl Cannon is Washington editor for the political website, realclearpolitics.com. Richard Norton Smith, isn't the point to win? Why do we care about the losers? Well, it is, it is famous we've been said, the winners write the history books, and there's a lot of truth to that. Turns out winning and losing are relative terms.

All of these 14 people, there are a number, and we could debate who, who went on perhaps ultimately to have greater impact than the people who, quote, won. More important, there are people who lost in the immediate sense, but who turned out not only to be ahead of their time, but in fact were catalysts for political transformations. The most recent examples are certainly being Barry Goldwater, who carried six dates against winning Johnson in 1964, and yet who planted the seeds of a conservative movement that arguably has yet to crest. Carl Cannon, who are your favorite catalysts when you look back over these 14? Well, Barry Goldwater's hard at top, but you know, a more recent, a wannabe president was Ross Perot. And he finishes third, he doesn't do much, he doesn't carry a single state, but he plants his seed, and the seed he plants is the government spending too much money. You can't go to one of these Tea Party rallies, or even a Republican gathering today without hearing things you heard in Ross Perot's 1996 campaign and his 1992 campaign.

And he got 20% of the vote, so without that, the Bill Clinton may not have been president. Well, that's right, Bill Clinton, you know, there was a period there where Bill Clinton most of that summer of 1992 was running third behind President George H. W. Bush and Perot, and then Perot dropped out of the race for a while, and then Bill Clinton picked Al Gore. They had the best, most unified Democratic convention in my lifetime. Clinton emerges from that in number one spot, and I don't know that Bill Clinton has ever trailed a Republican in a head-to-head poll since then. Oh, thanks to the guy who lost. So let's go back, Richard, but any of these losers had made good presidents? Oh, a number of them. I think Henry Clay may be the best president we never had. How is that? Well, Abraham Lincoln said he was my bow ideal of a statesman. He was a constructive force, first part of the 19th century. He's the bridge between Alexander Hamilton and Abraham Lincoln.

The idea that government had a significant role to play, which is curious, conservatives in the 19th century believed in using government as an agent of capitalist development. Not so much now. Absolutely. Just the opposite. Clay was elected Speaker of the House on the day he arrived in the House of Representatives. He, of course, known as the Great Compromiser, the last one in 1850, arguably delayed the Civil War for 10 years, which gave the North an opportunity to become that much stronger, and equally important allowed Abraham Lincoln to emerge from obscurity. Let me throw out a couple of names. I'll start with you again, Richard. Al Smith. Al Smith, in many ways, is the father of the modern Democratic Party, before Franklin Roosevelt. Al Smith. You know, the last Republican presidential candidate to carry New York City, Calvin Coolidge, in 1924. Four years later, the candidate is Al Smith, a Catholic with the immigrant experience, the modern before the New Deal.

It's Al Smith, who is beginning to forge this coalition that also rejecting the old Jefferson Jackson's small government. That's in the 19th century believed in small government. Al Smith, as a legislator in government of New York, believed in the progressive agenda, and in many ways, weighed the groundwork for Franklin Roosevelt. Carl, Adly Stevenson. Stevenson is an egghead famously, and he runs against Dwight Eisenhower, loses to him twice in 1952 and 1956, and after it's over, the Democrats sort of decide, oh, the public isn't ready for an egghead. The Republicans decide this too, and Dwight Eisenhower's president begins to very subtly and surreptitiously dumb down his speeches. And so Fred Greenstein, the great political scientist, who wrote the hidden hand presidency, documents this many years later, but it leads to a series of presidents, Ronald Reagan and George W. Bush, who are famously supposedly not as smart as the people they defeat.

So the point is, is that the public, both parties realize that the public, prefers street smarts in a president, maybe to book smarts. What about the vice presidents who ran and lost? Hubert Humphrey, Walter Mondale, Al Gore, people who were supposed to be anointed to rise? Well, Hubert is the president that you asked Richard who he thought would have been the best president that never was, and Hubert Humphrey would be my answer to that. Hubert's a heroic figure in American history. I would say largely forgotten now by the young generation. He's the one who leads the way at the 1948 convention, Democrats. He's mayor of Minneapolis, and he lays down the gauntlet to those who said that don't rush civil rights, and he says, we're not rushing civil rights, we're 170 years too late, and it's time for the Democratic Party to emerge from the shadow of state's rights and march forthrightly into the sunshine of human rights. This is the man who looks like all along he's going to be president.

He's elected Senate to the Senate that year, he's then becomes the vice president, Johnson picks him as vice president, but the Vietnam War bogs him down, he loses his voice as vice president and never becomes president. Richard, who is the most consequential losing candidate who most people have never heard of? Oh, that's a great question. Charles Evans Hughes. That's true, I've never heard of him. A very successful government reformer beginning of the 20th century, then he was put on the Supreme Court, left the court in 1916 to run a very close race against Woodrow Wilson. He went back to service in the 1920s as Secretary of State under two presidents, but his greatest contribution, arguably his greatest historical significance, came in 1937 when FDR tried famously to pack the Supreme Court. Hughes was in chief justice, employing all of his old political vials.

He almost single handedly managed to thwart the president's effort to change the court in a way that I think a lot of people today, and certainly even then, regarded as radical. Is it possible that any of these people we're talking about here today could have actually changed the course of history, or were they just ahead of their times, and this was not to be? When they turned that around a minute, Henry Clay could not have prevented the Civil War. And one of the lessons, Richard, I both think this series is a wonderful idea, but we don't want to be too polyannish here. One of the lessons of history is that there are larger forces at stake. The great compromiser could not have prevented that war, and so they also remind us, the winners as well as the losers, that there were an extra forces in American history, and that one person can only do so much. But to delay it was a major contribution. The Tom Dewey, someone who's tends to be written off as the guy who lost a little bit, who lost it to Harry Truman.

If Tom Dewey had been elected in 1948, I think you would never have heard of Joe McCarthy. Because. Two things. One, Dewey as a prosecutor, the first national political debate in America was in 1948. Tom Dewey in Oregon against Harold Stassen, the question being, shall we outlaw the Communist Party of America? And Dewey, ironically, the old prosecutor took the Civil Libertarian position. But beyond that, Dewey was a boss. He was used to having his way. A Joe McCarthy would not have been allowed to become the phenomenon that he had. Dewey would have taken care of it, and Dewey would have cut McCarthy off at the knees. Fascinating. All fascinating. We'll watch it all on C-SPAN, Richard Norton Smith, Karl Cannon. Thank you both so much. Thank you. Finally, tonight, in the last several weeks, we've been looking at the problem of income inequality in America, focusing on the extreme top and bottom.

Recently, I talked with a writer who studied what he sees as the erosion of the vast middle. Don Peck's cover article in the latest issue of the Atlantic magazine asks, can the middle class be saved? His new book on the subject is titled Pinched. Here's our conversation. Don Peck, welcome back. It's a pleasure to be here. Now, we've been talking a great deal of late about the ongoing jobs problem. You're making the case that there is something even bigger going on. Yeah, absolutely. You know, if you look at the structure of job losses in this recession, what you find is that overwhelmingly, the jobs lost on net are what economists call middle-skill jobs. These are the jobs in manufacturing, in non-managerial office work that have traditionally provided a middle-class life to people with a high school diploma, but not a college degree. Those are the ones who hit hardest now. They've been hit hardest in this recession. Companies have pulled forward restructuring decisions and offshoring decisions that otherwise

would have taken years to play out. And so that group of people, high school graduates, really, have been hit extremely hard in this recession, but that's really just an acceleration of a trend that's been happening for a long time. Yeah, that's what I was going to ask you, because we have talked about some of these things over time. So, this is long-term trend, now it just gets worse. Exactly. If you look at the odds in general, wages were not rising for people with high school degrees, job growth was quite flat. That was really covered up to a large extent by the housing bubble and by rising housing prices, which gave people a sense of progress. But of course, that fig leaf has now blown away. Can you give me an example? You went out in the country and you talked to people? Yeah, you know, well, so I talked to one guy outside of Reading, Pennsylvania. I call him Frank Misoli in my book, and he's an Italian-American in his mid-40s. He's worked outside for much of his life, began in factories, now had more recently worked as a construction foreman.

And he lost his job, you know, as the recession started. And, you know, he's a great guy. He adopted eight kids, you know, with his wife before they split up. But he really struggled when he lost his job. He knew there were retraining opportunities available to him, but he told me, you know, I've never been much of a classroom guy. I struggled in the classroom, and it's been a long time. Anyway, I feel like I'm too old for retraining. You know, an interviewing coach sponsored by his church group tried to help him interview and she told him, you know, Frank, you're just not going to get a job given your very gruff style of self-presentation outside of construction. But that's what he was used to. And so he didn't really know what to do and what he ended up doing was essentially rooting through his neighbor's trash for a year and a half or so. He learned the trash pickup schedule for his neighborhood, his town, and surrounding towns, he would go out and his pickup sometimes with his kids at night and try to scavenge all the appliances that he could resell for scrap.

So, you know, and his plight really, I think, is representative of the plight of many middle aged people, especially blue collar middle aged men who have not only been struggling in this recession, they've been struggling for a long time as the economy has evolved. Well, when you look, put this together in a larger picture, you write America's classes are separating and changing. So a tiny elite, a professional class that is going sideways at best, I guess. And then this kind of, what you're calling the non-professional class, which is going backwards. Exactly. You know, I talk to a lot of college graduates and parents of college graduates who are really worried about their futures or their children's futures. And with good reason, with the economy, so weak, few people are getting ahead outside of the economy's upper echelons. But I think that problem is one that's temporary and related to current weakness. There's something more worrying going on for people who don't have a college degree,

whose skills have been devalued by globalization, and even more so by the encroachment of technology. And I think as a society, we need to recognize that many of the people who are falling out of the non-professional middle class without help are not likely to regain it. One of the aspects that you look at here is, I think you refer to as a kind of geographical segregation. You can see what you're talking about in specific places. Yeah, absolutely. I mean, if you think about the recession and the recovery, they've both been very uneven. So Washington, D.C. is the most optimistic city in the U.S. right now, as to the state and future of the economy. You know, wages in Manhattan and Silicon Valley have been growing remarkably rapidly. In the places where the meritocratic elite, the most highly educated, highest skilled people have increasingly congregated over the past 20 years, the recession was lighter, housing, fell less, recovery has begun.

In many of the former middle class mechas, though, places like Tampa and Phoenix and the Las Vegas, where people with modern education, limited savings tended to go over the last 20 years to try to get in on a middle class lifestyle, we see tremendous pain. Many of you know about Tampa specifically here. Yeah, well Tampa, Tampa has really, you know, collapsed. A lot of its growth was predicated on housing and it built out more and more housing. People took out home equity loans and now what you see is a shrunken economy. You know, Tampa doesn't have a particularly high base of human capital, fewer productive, highly productive industries than many cities. And in the excerpts of Tampa in particularly, you really see a lot of pain, a lot of disappointment. And the other aspect, I mean, this sort of in looking at this longer term and maybe more provocative side to this is the, I think you referred it as a cultural segregation, the long-term implications of what this could mean for a large segment of our population

culturally. That's right. You know, when you look at the cultural habits and family structure as well of people with high school degrees in the US, you know, their families, their outlooks in the 1970s closely resembled those of college graduates, today the families of high school graduates closely resemble those of high school dropouts in terms of the happiness of marriage, the likelihood of divorce, the prevalence of single family, of single parent households. So as life has become more insecure for the non-professional middle class, their family and cultural habits have also changed, and I think this is profoundly worrying because children who grow up in unsettled households don't do as well as children who have very stable childhoods.

And increasingly, you're seeing big class divisions, big geographic divisions in the families and communities in which these children are growing up. You know, that could have big implications for the whole idea of opportunity and upward mobility in America. And let me just ask you briefly, is your sense that, because we've just come after this big political debate here in Washington, is your sense that leaders, Republican and Democrat across the board have a sense of these long-term trends, or is it just the focus on the here and now? You know, I think there's not as much recognition of these trends as there should be. In part, there's a very myopic focus right now on the budget and on the debt. But I also think because of the geographic segregation that we've seen, the most influential people in the U.S., and including its political class here in D.C., they don't see many of the struggles of everyday Americans. They don't see the family problems that a lot of people have. And I do think that has led them to focus less, perhaps, on many of the cultural problems

and long-term problems that are really plaguing the nation today. All right, Don Peck's work is in the Atlantic magazine and in the new book, Pinched. Thanks very much. Thank you. In our next story, we'll look at whether the inequality gap is growing as much as conventional wisdom has it. Again, the major developments of the day. New economic data showed a mixed picture while White House budget officials lowered their projections for growth this year by a full percentage point. And Mollemar Gaddafi warned that his loyalists in Libya will keep fighting. In a broadcast from hiding, he insisted we won't surrender again. On our website, we have a history exam and images from Hurricane Irene. Harry Srinivasan has the details. Test your knowledge with famous failed presidential candidates by taking a trivia quiz on our politics page and find a narrated photo essay on recovery efforts in Vermont after Hurricane Irene

from a new Hampshire public radio reporter who's been covering the story on the scene. Plus, we check in with a global post reporter in Mexico for a preview of President Felipe Calderón State of the Union-style address to his nation tomorrow. That's on our world page. All that more is on our website, newshour.pbs.org. And that's the news hour for tonight. I'm Margaret Warner. And I'm Jeffrey Brown. We'll see you online. And again, here tomorrow evening with Mark Shields and David Brooks, among others. Thanks for joining us. Good night. Major funding for the PBS NewsHour has been provided by Chevron. We may have more in common than you think. And by BNSF Railway. And by the Alfred P. Sloan Foundation, supporting science, technology, and improved economic performance and financial literacy in the 21st century. And with the ongoing support of these institutions and foundations.

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