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tv   PBS News Hour  PBS  January 18, 2012 6:00pm-7:00pm EST

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captioning sponsored by macneil/lehrer productions >> woodruff: the obama administration has rejected the plan to build a controversial oil pipeline from canada to texas. good evening, i'm judy woodruff. >> warner: and i'm margaret warner. on the "newshour" tonight, juliet eilperin of the "washington post" explains the reasons for the decision and what happens next. >> woodruff: we discuss the pressure on g.o.p. front-runner mitt romney to release his tax information in advance of the south carolina primary. >> warner: we debate the risk of sliding into war with iran, as the west tightens sanctions against its nuclear program. >> woodruff: spencer michels reports on how fog and tourism are threatening to destroy the historic murals in a san francisco landmark.
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>> the quality of art is amazing here. it's really indicative of the time period of the early '30s and for the public art, public mural movement of that time period. >> warner: and we debate the impact private equity firms have on jobs and the economy. >> woodruff: that's all ahead on tonight's "newshour." major funding for the pbs newshour has been provided by: >> and by the bill and melinda gates foundation. dedicated to the idea that all people deserve the chance to live a healthy productive life. and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you.
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>> woodruff: president obama today denied the application for a hotly debated oil pipeline project. the keystone pipeline would have carried oil 1,700 miles from the tar sands of canada to refineries in port arthur, texas. hari sreenivasan has the story. >> sreenivasan: the president had postponed consideration of a permit last summer, citing environmental concerns. but republicans demanded a decision, as part of december's deal on extending the payroll tax cut. in a statement today, mr. obama said he would not support the pipeline now because in his words: but house speaker john boehner criticized the decision, saying:
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juliet eilperin has been covering this story for the "washington post" and she joins me now. what was the larger rationale for the administration to oppose this pipeline? >> their argument is that they had been looking at an alternative route through nebraska which has environmentally sensitive habitat and a place called the sand hills rejohn and they had asked trans-canada to work with nebraska's department of environmental quality and look for a new way to do this and had predicted that this would delay a final decision on this pipeline permit until early 2013 when the republicaned forced a decision by a deadline that was actually february 21, the administration said there's no way we can do it. we're not even going to go through the pretense of analyzing it and we are rejecting this. >> brown: so the administration is not saying no to the pipeline just the fact that they could don't this in 60 days. >> exactly and they had said that trans-canada, the firm that proposed this project, could reapply, although this would
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start a new pro sfesz they did that. >> we heard john boehner's criticism and one republican after another lined up. why did they come out so strongly against this decision? >> well, if you talk to them they would say they see this as a great way to drive economic growth in the united states which wouldn't be at taxpayer expense and this could create construction jobs as well as longer term jobs but it's also become a key republican talking point at this presidential campaign as well as just in the broader congressional campaign and so this is something that they think can help them and so they're going to hammer away at this for months. >> sreenivasan: is there any concrete idea of how many jobs are at stake? when you read the company's press release they say 13,000 and 7,000. when you look at the blogosphere it balloons to 130,000 jobs. why is there that discrepancy? >> my colleague and i have done an analysis of this at the "washington post" and what we found when you look closely at the numbers is that transcan day d.a. is talking about 20,000 jobs here, but that could
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mean you have people working on it for one year and people working on it another. so when we talk to the c.e.o. of trans-canada it became clear that we're talking more in the range of 6,500 construction jobs for both the first and second year of the project and they've already spent some money that would cut into the supply chain job. when you're talking about those big numbers, that includes everything kind of indirect jobs including who's going to be serving these construction workers' dinners to other things. >> sreenivasan: help us put this in perspective if someone is joining the story today. this has been a long process. what's at stake? what are we talking about getting? what oil from canada to port arthur? how does that matter? >> we are talking to some extent about the future of our energy supply and whether, for example, we want to import the kind of crude oil that's produced in canada, which is more greenhouse gas intensive therefore contributes more to climate change and things like that. but clearly would be allowing us to get oil supply from a friendly neighbor, canada. and the refinerys do need this
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oil at some point. they don't need it now. they basically need in the a decade from now. so one of the questions is if this pipeline doesn't go through immediately, will they find other ways to bring in this oil or will they export it elsewhere and what will we do to promote our energy security? >> sreenivasan: and you've got the oil and gas industry on one side with an unlikely partner in labor and then environmentalists as well as land owners in nebraska on another side. how does this administration push this balancing act? >> well, it has been a tough balancing act and headache for the administration. they basically have concluded they're better off at this point siding with the critique of the environmentalists, some nebraskaens as well as a few smaller unions that back the idea of rejecting it rather than pleasing, say, a handful of unions and the business community who's argued very strongly they see this as an important project. >> reporter: the news came out of the state department because it crosses the border. what's canada's reaction been to this? >> canada said they were
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disappointed. both the president himself called president harper in canada who indicated that he will try to see whether there are other customers for this oil and that he was disappointed. the minister after natural resources basically issued the same statement saying that... mentioning they don't think this is dead but they will continue to see if there's a way to construct a pipeline even if it's a different pipeline to bring the oil from the oil sands down to the united states. >> sreenivasan: how about trans-canada? what are they planning? >> they also indicate they're going to keep pressing ahead for this and that they would like to have this pipeline up and operational by some point in 2014, whether that's doable remains to be seen. >> sreenivasan: what about the process here? if they reapply, which they're welcome to do, what happens to the clock? >> the clock starts ticking from the beginning. the state department will be able to look at some of the environmental only ease that they've done already but the senior state officials were very clear this would be a new process and they couldn't say
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that they would expedite the process which is really what trans-canada and the canadian government has been asking for. >> sreenivasan: juliet isle prynne from the "washington post," thanks so much for your time. >> thank you. >> warner: still to come on the "newshour": the south carolina primary battle. are we inching toward war with iran? preserving pieces of san francisco's past and the risks and rewards of private equity firms. but first, the other news of the day. here's kwame holman. >> holman: the republican majority in the u.s. house voted today against raising the national borrowing limit by $1.2 trillion. it was symbolic only, since the democratic-run senate is not expected to go along. but the issue still sparked an afternoon of argument, as republicans railed against the increase, and democrats argued the deal was already done. >> where i come from down in north charleston, south carolina, we have a trouble digesting exactly what $1.2 trillion really means. why is it so hard to simply say, "we can't afford it?"
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simple question! why is it so hard to say that we can't afford another $1.2 trillion of debt? >> this is all monday night quarterbacking. it's after the fact. the money has been spent. the money has been spent; 147 republicans voted in december to spend $915 billion in the and now the credit card bill has come in january, and here they are saying, we don't want to pay that bill. >> holman: president obama notified congress last week that the debt ceiling increase was needed. under last summer's debt and budget agreement, the increase is automatic, unless both houses of congress vote against it. the world bank is warning that europe's continuing debt troubles could trigger a new, global downturn that would especially harm emerging economies. in a report today, the bank said
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countries such as brazil and india should brace for a global recession potentially worse than the crisis of 2008. the bank projected world economic growth of 2.5% this year. that's down a full percentage point from an estimate last june. wall street rallied today on encouraging news about factory output and housing. the dow jones industrial average gained nearly 97 points to close just under 12,579 -- its best finish since july. the nasdaq rose more than 41 points to close above 2769. that wrecked cruise ship off northern italy shifted again today, forcing rescue workers to call another halt to operations. the problem was highlighted by a satellite image from "digital globe", showing the huge vessel on its side, just off the island of giglio. we have a report from martin geissler of independent television news. >> reporter: the costa concordia is unsteady at its resting place. the search for the missing stopped again today. another massive blow.
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the movement was tiny but enough to cause genuine concern for the safety of rescue teams and the stability of the ship. this relief map of the coast shows where it's believed the it's being held up by two rocks with water flowing underneath. there is a 70-meter drop below. it is particularly vulnerable to strong currents from the south which could cause it to sway and slip. and tomorrow night a storm is forecast from precisely that direction. giorgio chiamenti is an engineer specializing in shipwrecks. he has real concerns for the weeks ahead. >> if sea is strong, problem is probable. >> reporter: it's probable that the ship will fall? >> yes, yes. >> reporter: there are more than 2,000 tons of oil onboard the concordia held in tanks not built to withstand deep water pressure. and this is europe's biggest conservation area. a spill here could cause untold damage.
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specialists have been brought in to pump the oil out but even in good conditions that will take more than a month. >> it's not like emptying a garden pool. it's a thick oil containing 20 tanks of a ship laying on side. it's thick. it has to be preheated before it can be made pumpable. >> reporter: the first victim was officially identified today. sandor fehar was a hungarian violinist who played onboard the ship. pictures of missing have been posted on walls around giglio, the relatives desperate for news. this wreck still holds the answers to many questions, agonizingly close to shore but out of reach. >> holman: 11 people were killed when the cruise liner hit the rocks on friday night. the number of missing was reduced today to 21 after a german passenger turned up alive and well back in germany.
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some web sites went ahead with blackouts today to protest anti- piracy bills in congress. "wikipedia"-- the user-edited encyclopedia service -- blocked access to its english-language articles for 24 hours. google placed a blacked-out bar over its home page logo, but the site remained active. and users of the social news service reddit were denied access for 12 hours. the websites oppose calls to regulate sites that share copyrighted material. by this afternoon, several leading sponsors of the anti- piracy bills withdrew their support. and in washington state, nearly a foot of snow fell in olympia, the state capital, by late morning. the snow cloged roads, shut down schools, and wiped out flight schedules. those are some of the day's major stories. now back to judy.
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>> woodruff: g.o.p. front runner mitt romney came under increased pressure from friends as well as opponents to release his tax information today, in advance of saturday's republican primary in south carolina. for the romney campaign, today was about trying to change the subject away from the taxes he pays. but it wasn't so easy. after the former massachusetts governor and businessman acknowledged he pays about 15% of his income in taxes. >> my income comes overwhelmingly from investments made in the past rather than ordinary income or rather than earned annual income. >> woodruff: this morning in winnsboro, south carolina, former house speaker newt gingrich joked that he would re- brand his flat tax proposal in honor of romney. >> ironically, it turned out yesterday that mitt romney pays about a 15% rate, so we're going to name our flat tax "the mitt romney 15% flat tax." ( applause ) >> woodruff: the republican frontrunner also faced pressure to release his income tax returns now, instead of waiting until april. new jersey governor chris
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christie, a top romney supporter, spoke this morning on nbc's "today show." >> if you have tax returns to put out, you know, you should put them out sooner rather than later because it's always better in my view to have complete disclosure, especially as the front-runner. >> woodruff: and gingrich said today he would release his tax returns tomorrow. >> we do know-- we've gone through this three times now to make sure-- i paid 31%. we're pulling together the documents and we hope to get it out sometime tomorrow. >> woodruff: in fact, romney has never released his tax returns-- going back to 1994, and a failed bid to unseat senator ted kennedy. instead, he challenged the veteran democrat to release his returns to prove he had nothing to hide. today, romney tried to move to other issues. in spartanburg, south carolina, he charged gingrich has overstated his role in creating jobs, as house speaker in the 1990s. >> government doesn't create
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jobs, the private sector creates jobs. congressmen taking credit for job creation is like al gore taking credit for inventing the internet. >> woodruff: and elsewhere, rick santorum accused gingrich of arrogance for urging others to quit the race, so conservatives can coalesce around him. >> everybody who wants to be in this race should be in this race. i'm not going to be somebody who points my finger at someone and says "i'm better than you, you should get out." >> woodruff: texas governor rick perry, meanwhile, held a pair of meet-and-greets in south carolina, while texas congressman ron paul returned to washington so he could vote against raising the national debt ceiling. for more on how mitt romney has handled the tax issue, we're joined by michael kranish, the deputy bureau chief of the "boston globe" and co-author of the book "the real romney."
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let me just say, this is not the first time romney's income and taxes have been an issue when he's run for office, is it? >> no, it's not, judy. if you look back in the clippings, for 18 years, when romney ran for the u.s. senate in 1994 he challenged edward kennedy, his opponent, to release his income taxes and questioned whether kennedy had something to hide. sounds familiar. kennedy didn't release his taxes but romney said if kennedy would he would do so himself the same day, it just never happened so he didn't release his tax returns back in 1994. then again when romney ran for governor in 2002 he was asked about his income taxes and he said he was not going to release them for "privacy reasons." the "globe" has asked romney for his tax returns really for almost two decades on a regular basis, whatever he's run for public office and he's always refused so it's an issue that has been around for a very long time. there's a saying in politics about get it out, get it out
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early. in this case he's kept it private, hasn't released it. now he says he's going to do so but we'll wait and see what happens. >> woodruff: what are the questions people have had about his income, the money he's made and the kind of taxes he's paid? >> well, there are a lot of questions and they mainly come up because he ran bain capital from 15 years, from 1984 to 1999. so i read today romney said if he does release his taxes this april he intended to release one year of taxes from last year. and that, obviously, will not satsdz phi a lot of people. you know, this apparently started according to the white house when george romney, mitt's father, ran and released 12 years of tax returns. so if mitt romney in april releases only one year of tax returns, it will not cover the time period when he was at bain capital and really that's when the questions would be raised. you'd want to see what he was doing, where specific profits came from during those years. so last year's tax returns wouldn't show most of that. >> woodruff: so the questions would be not only how much did
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he make but one kind of investments did he make them off of and other questions about how he, for example, charitable donations. >> well, we know he gives 10% to the mormon church. that's something he has to do and certainly has done and may well be more generous than the 10%. that's a different issue. as far as his tax rate, it's zero surprise to anybody's who's followed mitt romney's career that his income tax level is basically the capital gains tax rate. so when he left bain capital, the income tax rate was about 39% and capital gains tax rate was about 20% at that time and now it's lower. so in the book we write about how he was paying that lower tax rate. >> woodruff: can you expand any more on what explanation romney has given for not releasing... i mean, you said? 2002 he said for privacy reasons. has he expanded on that at all? >> as far as i know those are the reasons he's given. there may be information there that would be interesting for
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our book. i looked into the 15 years of deals for bain capital and it's hard to determine whether it worked for mitt romney because we don't know what his personal profit was. for example there's a deal i write about in a very secure company where one of his partners said mitt may have made as much as $40 million. that's the kind of thing you would know best from a tax return because not only did bain capital invest, but at bain capital, partners were allowed to make what's called side investments. so if you liked the deal you were doing with the investment group and the fund, you can take your personal money and co-invest in the a parallel investment. that's the kind of thing you would only know about from a tax return. so there may be all sorts of really interesting answers about specific companies that romney himself personally profited from and then link those two. were jobs lost or created. you can do that much more of a transparent look at what romney did and how he personally
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profited at those companies. >> woodruff: clearly a lot of questions. michael can fish at the "boston globe," thank you very much. >> thanks for having me. >> now to gwen ifill following the came in south carolina. gwen, you are in rock hill and we just learned there's a new "time"/cnn poll showingomney's lead shrinking in south carolina. you've just come from a romney event. how is he reacting to all this new focus on his taxes? >> that's right, judy, his lean has gone from 20 points to 10 points. still a significant lead but obviously he feels newt gingrich breathing down his back. newt gingrich has been saying, you know, listen, my plan is to have a 15% tax rate for everyone and so therefore we just want to do what mitt romney did. but mitt romney should release his taxes it's that tax return issue which seems to have residents from the people we're talking to on the ground here we
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can also see both candidates are feeling the heat. newt gingrich is attacking romney calling him stupid and silly, or at least calling his attacks that. and romney has unleashed a bunch of surrogates and press releases attacking newt gingrich. so what we see here is a tightening race i haven't heard anyone who thinks romney won't win on saturday but there's more nervousness than this time last week. >> reporter: you mentioned what people on the ground are saying. what are the voters, the people of south carolina, how are they reacting to this kerr flufl over the taxes? >> well, judy, there's no question this debate certainly focused people's minds. newt gingrich had a good night. he at least poked through in a way maybe voters haven't been paying attention to. the dilemma right now for newt gingrich and rick santorum and rick perry is that they are splitting three ways that conservative/evangelical vote here in south carolina that helped mike huckabee do so well here four years ago among republicans. so result even though newt
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gingrich is closing the gap, he still has other people who will peeling off, including ron paul, peeling off substantial portions 10%, 12%, 15%, which will make it hard for him to catch up with mitt romney. but i talked to a political science professor the other day who said mitt romney's problem is he says something like "oh, i don't make a lot of money in speeches." well, he made more than $300,000 in speeches which for most south carolinians is a lot of money, maybe what they make in ten years. so that sort of thing resonates in a way that arcane discussions about private equity might not. >> woodruff: and santorum who got that endorsement from the evangelical group meeting in texas has not yet paid off for him? >> you know, it's interesting. rick santorum reacted angrily to someone's suggestion that he and rick perry drop out of the race. now, newt gingrich was saying today i'm not saying they should drop out, i was dead in july and june so i know what it means to hang in there. but on the other hand, rick
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santorum is also saying "listen, i'm not the guy who's been losing these races so i'm sticking in." right now it looks like he's in it-- at least he says-- through florida. of course, this time last week jon huntsman was telling us the same thing. so we'll wait and see how this plays out. but they feel there is fertile ground in south carolina for the kind of message that they're bringing and they theme mitt romney has some weakness they can exploit. >> woodruff: just remind us, those of us who paid a lot of attention from iowa and new hampshire, what's different about south carolina other than the fact it's in the south? >> well, because it's in the south i think 50% of republican voters here are... call themselves conservative or very conservative. so if you are mitt romney and people are attacking you as newt gingrich has for being a moderate, for being more like obama, i saw a new ad that the superpac that newt gingrich's supporters put out today which in an animated way that imagine det debate between barack obama and mitt romney in which barack
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obama says "mitt romney and i are a lot alike" and mitt romney, the animated mirnl can't get a word in edge wise. that's the kind of issue they want to make because they know more than anything else whether it's pro-romney, anti-gingrich, pro-gingrich, ain't gingrich, they all want to defeat barack obama so the worst thing you can say about a republican candidate here is that you're like barack obama. >> woodruff: our own gwen ifill in rock hill, south carolina, following the campaign right up until the primary on saturday. thanks, gwen. >> thanks, judy. >> warner: more sanctions, more rhetoric and the risks of war between the u.s. and iran. from iran's naval exercises, to its latest nuclear announcement, to new sanctions by the u.s. tensions are on the rise, and so is talk of a today, tehran claimed ayatollah ali khamenei, the country's supreme leader, had received a letter from president obama,
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containing threats and an offer of new talks. in washington, white house spokesman jay carney did not neither confirmed nor deny the claim. >> our position has not changed. any communication we may have had with or may have with the iranians are the same in private as they have been in public. >> warner: lately, much of that communication has consisted of saber-rattling like iranian naval maneuvers. and after president obama signed legislation late last month to isolate iran's central bank, which collects payments for its oil exports. the country's military leaders threatened to block oil shipments through the strait of hormuz. one-fifth of the world's oil production flows through the strait. iran's news agency said today the first part of the obama letter warned that closing the strait was washington's red line. u.s. defense secretary leon panetta said as much today, leaving open both diplomatic and military options. >> we have always made clear
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what our policies are there with regard to iran, both in terms of their not obtaining nuclear weapons and not closing the strait of hormuz. it takes two to be able to engage. and we've always expressed a willingness to try and do that. but we've always made clear that in terms of any threats to the region, in terms of some of the behavior they've conducted in the region that we'll also be prepared to respond militarily if we have to. >> warner: iran has been showing off its own determination-- test-firing a new, longer-range cruise missile in the gulf. and announcing it had begun enriching uranium at a second site-- underground. back in the u.s., many republican presidential candidates have been vowing they'd be even tougher with tehran. former senator rick santorum spoke on nbc's "meet the press":
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>> i would be saying to the iranians, you either open up those facilities, you begin to dismantle them and, and make them available to inspectors, or we will degrade those facilities through airstrikes and make it very public that we are doing that. >> warner: but texas >> warner: adding to the debate about the advisability or danger of outright war with iran. a flurry of dueling opinion pieces in leading foreign affairs publications, some advocating a military strike against iran's nuclear program sooner rather than later. and others warning against the prospect. and yesterday, longtime analyst leslie gelb-- writing in "the daily beast"-- warned that america is once again stumbling toward war. for now, secretary panetta says the u.s. military is taking no special steps to prepare for conflict or crisis with iran, because american forces in the region are already fully prepared. are the u.s. and iran sliding to war? we explore that with vali nasr, a professor at tufts
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university's fletcher school. until last year, he was a senior advisor at the state department. and dennis ross, who served in the national security council and state department in four administrations. most recently he advised president obama and secretary of state clinton on iran and the middle east. welcome to you both. professor nasr, beginning with you. so the basic question: do you think the u.s. and iran are sliding toward some sort of military conflict? >> i think we are in a place where we haven't been with iran before. we are in a situation that the two countries have no relations with one another, there's no hotline between them. there is a great deal of pressure on iran and the iranians for the first time have begun to react to this pressure by threatening either closing straits of hormuz, putting economic pressure on the west or as they did in response to the killing of a scientist in iran that they may retaliate outside
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of the middle east and in this kind of a situation you may end up in war not because the united states decides it's time to hit iranian nuclear target bus because you might have a misunderstanding or a situation of escalation that gets into a conflict. >> warner: how big a dang dore you think that is, dennis ross? even if it's not intention that these tensions ratchet higher and higher and could lead to involuntary escalation. >> well, i don't think you ever take threats lightly. particularly not when they come from the iranians. but i also think that you take a step back and take a look at the situation it's true the iranians are responding with bluster because they're under fresh you but at the same time they make those threats they make it clear they're prepared to return to talks with the five plus one, the permanent five members of the security council and germany. they make it clear by the same token they're inviting the i.a.e.a. to come in, a delegation to come to iran, and
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they will address questions that the i.a.e.a. has been posing. so not withstanding the fact that you have a heightened level of rhetoric and you certainly is the imagery of a crisis, you also have the iranians at the same time sending mixed signals. >> warner: they have been signals in the last couple weeks they're ready to resume talks. >> well, the reason iran is both sending signals that they're ready to resume talks and also heightening the rhetoric is to deter the united states from going forward with these much-tougher sanctions. so on the one side, they are holding the prospect that there might be talks. on the other side they are sending signals that there is a cost to be paid by the west if they go through with sanctions. so they have a strategy and that's to prevent talks from going forward. but if they're not resumed in a short order the united states is going to move ahead with talks and the iranians are basically left to react to an entire
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situation which can cut off their oil income, cut them out of the oil markets in the long run and i think then there is a certain incentive for them to rock the boat. >> woodruff: and by rock the boat, just briefly, do you think the conflict at the strait of hormuz is where they would first lash out if the pressure were too intense? >> well, just threatening to close the straits of hormuz can keep escalating oil price and have an impact on european and american economies but they could try to cause trouble using hazard in lebanon, in iraq, in afghanistan and as they have threatened outside of the region. i think we're at a point where iran has made a decision that the best way to deal with western pressure is by showing the very tough uncompromising threatening face. and that's a very risky maneuver. at some point the iranians may feel compelled to actually act on those threats. >> warner: dennis ross, clearly the administration was worried
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to send this letter to khamenei warning of any funny business in the strait of hormuz. is it risk glee whether it's the revolutionary guard or some faction could lash out in a way that would destabilize oil prices. >> i think there's the reality that the command-and-control situation on the iranian side is not always such a good one and we know if you go back to the war between iraq and iran and things that were done in the gulf at the time, sometimes the revolutionary guard acted very much on its own. having said that, i suspect... i don't know that a letter was sent. i'm... i would be very surprised if there weren't messages that were conveyed and i also think the iranians talking about such messages is another way for them to say the americans are now dealing with us and this is the way to deal with their own internal audiences and constituencies. so i think what you have right now is the administration doing what is prudent. you don't want a confrontation through inadvertence.
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you don't want the iranians to miscalculate and think they can do certain things and it won't have a consequence. so convey messages that are very clear that spells out you take this step, you deal with consequence which is you won't be happy about. >> warner: but van i, professor nasr also the noted iran expert gary sic has said if you hamstring their central bank and u.s. persuades all these other customers not to buy iranian oil that could be thought of as a part act of war on the part of the iranians. is that a danger? >> the iranians continue to pursue a nuclear program and unmistake fwli many that is a nuclear program whose spurp to achieve nuclear weapons. that has a very high danger, a very high consequence so the idea that that they could continue with that and not realize it at some point they have to make a choice and if they don't name choice the price they're going to pay is a high one, that's the logic of increasing the pressure. and there is a history, by the
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way of when the iranians are under pressure that they look for ways out. it isn't to say there's no risk, of course there's a risk, but you have to think about what's the risk of not changing their behavior on the nuclear program. >> warner: value i nasr, respond to that if you'd like but is there a point at which... i mean while all this is going on and the sanctions are biting on iran still they continue to make progress on their nuclear program. is there a point at which the military option is no longer viable? >> we could actually assume that even now. the iranians may have passed the point where a simple strike on their facilities would actually end this program. especially if they are taking the program into hidden sites within mountains outside of the city of homs. but i think the key should... then it's raised and we have to deal with is that for the past
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two or three years, sanctions have been a stable strategy of putting pressure on iran. in other words there was an assumption that the more they hurt economicedly more likely it is that they would engage the international community on the nuclear issue. that hasn't happened. we've now reached a point where the sanctions are no longer stable and no longer al an ternive the to going to war or to engaging iran much more suspect matally, diplomatically. so we have to sort of sit back and rethink this strategy. clearly iran is you should a lot of pressure but the sanctions are not working in the way they did before and they're not stable in terms of averting conflict, not hurting the international economic situation not impacting oil prices. so for us to persist on this strategy assuming there's no blowback, no cost to us and that there is no risk of conflict there i think is not prudent. >> well, i certainly think you
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don't pursue a strategy where you don't take into account the risk. obviously you take into account the risk. one of the reasons you've also and seen the development of capability that secretary panetta referred to is we need to put ourselves in a position where the iranians would understand. >> pelley: u.s. military capability. >> we have these kind of options. the point is if you're trying to induce the iranians to giving up the nuclear program, that's hard to do because they value that program more than any inducements that you can offer. we have made efforts to reach out to them. we have made efforts to pursue negotiations with them. so the natural correlation or complement to that is you build the pressure and build the pressure to the point where they decide it's in their interest to find a way out. no guarantees in this because the fact is they do seem bent on a certain path. that said their history also tells me, at least, that when they find the price too high as they measure it they look for ways out. >> woodruff:.
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>> warner: we have to leave it there. dennis ross, value i nasr, thank you both. i val i. >> woodruff: now, a look at efforts to preserve some priceless art works in a san francisco landmark. "newshour" correspondent spencer michels reports. >> reporter: perched atop telegraph hill, coit tower has dominated the san francisco skyline since it was dedicated in 1933. it's a familiar symbol of the city-- a beacon at a spot where residents in the 1850s used to signal to ships in the bay. but there is historic treasure inside as well. more than 75 years ago, ruth gottstein watched as her father, bernard zakheim, along with other artists, painted frescos on the walls of the tower-- murals that depicted the life of america in the early 1930s. the murals, in which gottstein
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appears as a young girl, were funded by a predecessor of the federal government's w.p.a. program, begun by president franklin roosevelt to keep artists working during the depression. >> as a little girl, i was fortunate enough to be here at different times when they were actually at work. i guess i could never quite believe that it would still be here and that all the work my father did, all the artists did, are still here intact, and speaking so clearly to their times. >> reporter: nationally, in the '30s, 2,500 murals were created in post offices, schools and elsewhere-- 60 buildings in san francisco alone. many have been destroyed, and the impending closure of nearly 4,000 post offices could signal that more will be junked. coit tower's art works are regarded as among the best of the genre. they depict scenes as different as the grim reality of city life, the pastoral beauty of
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california agriculture, and the worlds of food and leisure. allison cummings is an art historian for the san francisco art commission. >> you've got works by 25 different significant artists from that time period, working together to create a cohesive depiction of life in california in the early '30s. >> reporter: lillie hitchcock coit-- an eccentric wealthy widow who wanted to beautify her beloved san francisco-- left money that the city decided to use building the tower. it was constructed in 1934, for $125,000. its design was unique: not a clock tower nor a lighthouse, but a simple, fluted shaft. artist diego rivera mentored many of the artists, and his and their politics, often pro-labor, or leftist, is reflected in some, but not all, of the murals. how about the quality of the art? >> it's fantastic.
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the quality of art is amazing here. it's really indicative of the time period of the early '30s, and sort of public art, public mural movement of that time period. >> reporter: but today at 89, gottstein and others are worried about those frescos and whether they will survive the ravages of weather and neglect. and she also says the city doesn't treat the tower as it should. >> if it were treated as a museum, if the walls were kept secure, if the entrance was guarded so that people could walk around as in any other museum of any importance in the world, it would be secure. and it's not. >> reporter: cummings agrees there are problems, partly because of fog that often envelops the tower. so most of this looks pretty good but right up there you got this real problem right? >> right, we have this area of moisture damage or evidence of moisture damage, where moisture has penetrated the back of the
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mural and is evaporating through the face and leaving behind what we call efflorescence or basically salt crystals. >> reporter: in addition, visitors-- there are about 200,000 a year-- occasionally touch the works and damage or chip them, either accidentally or maliciously. in an second floor section, closed off from the public, maintenance workers recently damaged frescos with their equipment. those problems, cummings says, are solvable, given enough money. >> there is no climate control in here at all. we're in the very early planning stages of this, working an a treatment assessment and coming up with estimates of how much it's going to cost. >> reporter: but a whole new approach is needed, says attorney jon golinger, who heads the telegraph hill dwellers association. >> you walk in the front door and there's no one there to greet you and say, "here's what these murals are all about, and here's what you can do to help
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protect them." water is dripping from the ceiling, paint is peeling. it's an integral part of the city, and if it's not being treated and the murals are falling apart, i think, that's something people are going to be upset about. >> reporter: to spread the word, golinger and a group of residents have begun collecting signatures to place a measure on the city ballot to call attention to the plight of the tower and the murals, and to insure that most money generated at the tower-- $900,000 last year-- be used to preserve it. much of that money comes from a $7 fee to ride the elevator to the top of the tower, collected at the concession stand on the main floor. golinger is skeptical of city plans to raise more funds by renting out the top room, with its beautiful views of the bay area, for occasional small parties. >> it shouldn't be. just another corporate party venue, that could be used you know for years to come without
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the public being allowed to enjoy it the same way as those who are willing to spend thousands and thousands of dollars. >> reporter: limited rentals won't harm to tower, says phil ginsburg, head of san francisco's recreation and parks department. and he admits that it's tough to find money to fix the murals in today's hard economic times, much like the times when they were painted. >> i wish the city could do more to protect and preserve them. the parks department has about a billion dollars worth of deferred maintenance needs throughout system. we're actually going to be giving the arts commission about a quarter of a million dollars from our capital fund to help them preserve the murals. >> reporter: ginsburg says the proposed ballot measure isn't needed. but ruth gottstein supports it as a way to insure the survival of what she considers a national treasure. >> i think it's extraordinary. it's amazing; it's a capsule in time.
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>> reporter: in a city noted for its political activism, coit tower and its murals have become the latest battleground. activists have until february 6 to gather enough signatures to put their advisory proposal on the ballot. >> woodruff: finally tonight, we return to an issue raised by the focus on mitt romney's taxes. how he made his money, as the head of a so-called private equity firm. those firms invest in other companies often troubled ones and try to turn them around. but there is great debate over whether private equity activity is more focused on short term profits or the long-term health of the company. we have our own debate about that with stewart kohl. he's the co-c.e.o. of the riverside company, a private equity firm that manages more than $3 billion in assets. and josh kosman, the author of the book, "the buyout of
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america: how private equity is destroying jobs and killing the american economy." we thank you both for being with us. josh kosman, just so that we understand what we're talking about here, how big a role does private equity play in the u.s. economy? >> private equity firms own companies employing about one out of every ten americans. so they are hugely important. they're america's biggest employers and up until recently they've been largely ignored. and, judy, just one thing that i need to jump in and say, i think it's a fallacy and it's what the mitt romney defenders are trying to throw up in the air that private equity firms buy troubled companies. they're almost always buying profitable businesses, not troubled businesses. >> woodruff: well, that will be part of the question that i ask stewart kohl now. because let's have a basic understanding of what private equity is about. it's a group of outside investors who put their money together, borrow a lot of money, buy a company then try to make
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that company profitable, sell it so that they then can make a profit. is that fair, stewart kohl? >> it is, judy. we collect money from pension funds and endowments for colleges and foundations and the like and firms like the riverside company invest that into, as josh says, mostly healthy companies with the objective of making those companies a bigger and better over an extended period of time so that companies become more valuable so that they can be sold then eventually for a higher price which allows us to generate attractive returns for those colleges, universities, foundations and the like. >> woodruff: but you agree it's mostly healthy companies that are invested in? >> yes, there's a subset, a segment of private eck we they focuses on troubled companies, companies that are struggling. i have a lot of respect for those firms. that's hard work and it's not something that the riverside
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company does but it is a small but important part of private equity. >> woodruff: josh kosman, you're critical of the way most, if not all private equity operates. why? >> most. and i have a lot of respect for stewart's firm which mostly buys companies not with a tremendous amount of leverage and, really, the only way stewart's firm makes money is by growing the businesses because they traditionally have brought relatively small businesses. but the way mainstream private equity works, which includes bain capital. they buy companies by putting them in deep debt then the record shows-- i did fuel years of full-time investigative work on my book-- that they don't improve the businesses. 52% of the companies acquired in the 25 biggest buyouts of the '90s ended up going bankrupt. i looked at the ten biggest buyouts of the 1990s, so i wasn't cherry picking. and in six of the ten cases it's clear that the company would have been better off if they had never been acquired. in three cases it was mixed.
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in one case the p.e. firm did improve the business. in this decade, moody's came out with a report just last month that showed in the 40 biggest buyouts that occurred between '05 and '08, those companies had grown revenues since being acquired by 4% while their strategic peers, their peers, had grown revenue 14%. so to me... go ahead. >> i was going to say let me break in if i may and ask stewart kohl if given that picture that we just heard painted it sounds like these private equity firms are destroying more than they're building up. >> i disagree and here's why. private equity relies on its ability to attract capital from the pension funds and others and to attract that capital means to generate good returns. to generate good returns it needs to invest in companies that grow and prosper and that
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is overwhelmingly what private equity has achieved over the several decades it's been around. we went through a very difficult period after 2007. the global financial crisis, the resulting recession, the worst since the great depression and surely some private equity transactions struggled. surely some privately held companies struggled as well. but overall private equity wouldn't be continuing to attract the capital that attracts if it wasn't able to generate consistently good returns which it does in one way which is by making the companies its invests in bigger and better. >> woodruff: josh kosman, if that's the case-- and it dund sound like it squares with what you were saying-- how does you square that and what does this mean for jobs? >> i think for bain 22% of the money they invested in funds raised from '87 to '95 during the time mitt was there where
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companies which bain and their investors made $578 million, the bulk of their profits and all those companies ended up going bankrupt. unfortunately, when you buy a sizable company and load it up with debt and then take money out, have the company after you raise earnings in the short term through cuts borrow money and pay yourself dividends in the short term and set up those companies for failure, they can fail and you can still make a lot of money. >> woodruff: let me bring in stewart kohl on that point. about the short-term turnaround, the pressure on these companies to make a profit and the investors get out. >> the investment that private eckkyty firms make is, of course equity. it is the last claim on the cash flow and earnings and value of the company. in order for that equity to be valuable the company needs to
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succeed it needs to service and over time retire its debt. the amount of debt a company borrows is a function of the profitability of the company and where we are in the cycle and the willingness of banks to lend surely there are periods when banks will lend higher amounts and lower amounts and there's sometimes situations such as we saw in 2008/2009 when companies that had performed splendidly in 2005, 2006 and 2007 struggled and the amounts they borrowed in this period looked high. those companies worked hard to become successful. again, the private equity businesses that invested in them worked equally hard to make those companies successful because if they weren't able to do that, they would not be able to raise their next funds. >> woodruff: it sounds like you're painting a picture of a healthy set of transactions
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whereas josh kosman, you're painting something different. what am i missing here? josh kosman? >> i don't think... in my view the facts don't justify what stewart is saying, with all due respect to stewart. what private equity defenders now are doing is throwing out a lot of nice terms. "we build businesses" but not a lot of facts behind it. private equity firm returns-- according to several good academic studies-- are no better than the s&p 500 and if we look at bain, which has gotten the most scrutiny lately, four of bane's ten biggest investments under mitt romney ended up going bankrupt and yet bain made a lot of money. so i think there's very little evidence that for the big large private equity firms that they build any value in their businesses. >> woodruff: you get the last word, stewart kohl, to bring us around to your argument on how you see this >> i'm reticent to talk about bain, i'm not an investor or familiar enough with their results although i will say bain has been able to continue to
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attract capital which would lead me to believe that most of their transactions have worked well enough. at riverside that has been the case and i'm proud of the hard work my colleagues have done to help us build companies that have added jobs. in the last two years alone we've added almost 1,500 jobs. that's a 15% increase in the employment of the companies we've invested in in north america and if we looked at the companies that we have invested in, whether it's crisis prevention institute in milwaukee or a smart comp in washington, pennsylvania, these are growing, profitable companies that are... have benefited greatly from private equity and if you asked their founders, their managers, people like david and shannon, they would agree. >> woodruff: we are going to have to leave it there. it's a big subject and we'll continue to look at hit in the
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days and weeks to come. stewart kohl, josh kosman, we thank you both. >> warner: again, the major developments of the day: president obama rejected the plan to build a controversial oil pipeline from canada to texas and republican presidential front-runner mitt romney came under increased pressure to release his tax information. and to kwame holman, for what's on the "newshour" online. kwame? >> holman: we have more about today's internet protests against anti-piracy legislation from congress. that's on the rundown blog. on his "making sense" page, paul solman writes about his interview with richard cordray, head of the new consumer financial protection bureau. and on our "world" page, we track the buzz in foreign policy circles about whether the u.s. is heading toward military conflict with iran. all that and more is on our website: margaret? >> warner: and that's the "newshour" for tonight. on thursday, we'll have a conversation with jordan's king abdullah about syria and other issues. i'm margaret warner. >> woodruff: and i'm judy woodruff.
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we'll see you online and again here tomorrow evening. thank you and good night. major funding for the pbs newshour has been provided by: 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. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. captioning sponsored by macneil/lehrer productions captioned by media access group at wgbh
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