Transcripts For KQED PBS NewsHour 20111223

>> this morning kate spade, $400 handbag, business was great. this afternoon, jack 99 cents for, lollee mop, 99 cents, swiss great. what's going on. >> brown: ray suarez examines a call to keep some research on the deadly bird flu secret. >> woodruff: that's all ahead on tonight's "newshour." major funding for the pbs newshour has been provided by: >> computing surrounds us. sometimes it's obvious and sometimes it's very surprising where you find it. soon, computing intelligence in unexpected places will change our lives in truly profound ways. technology can provide customized experiences, tailored to individual consumer preferences, igniting a world of possibilities from the inside out. sponsoring tomorrow, starts today. and the william and flora hewlett foundation, working to solve social and environmental problems at home and around the world. 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. >> woodruff: there was word late today of a break in the stalemate over extending the payroll tax cut. house republican leaders agreed to call a new vote on a stop- gap, two-month extension that already passed the senate. until now, they'd been insisting on a one-year bill. but they reversed course after a statement by senate republican leader mitch mcconnell. in it, he said: six hours, house republicans >> when everybody called for a one year expension-- extension of the payroll tax deduction, when everybody wanted a full year of extended unemployment benefits, we were here fighting for the right things. it may not have been politically the smartest thing in the world, but let me tell you what, i think our members waged a good fight. we were able to come to an agreement. we were able to fix what came out of the senate. >> moments later president obama issued his own statement welcoming the end of what he called the partisan stalemate. covering today's late-breaking developments is todd zwillich from the takeaway on-- and he joins you now. so todd what happened, what changed the speaker's mind and the mind of the republicans around him? >> judy, there's been a study drumbeat for the last few days coming, of course, from democrat, that's predictable. but also from republicans leaning on house republicans to relent here and go with the two month extension. it started, really, with the senate vote. let's go back a few days. remember 89-10, huge bipartisan vote on a two month extension, a deal cut by mitch mcconnell. house republicans didn't want to go for it. after that several individual republican senators saying hey, house, take it. after that "the wall street journal" editorial board in an editorial yesterday, a friend to republicans, frankly, "the wall street journal" saying this is turning into an embarrassing political situation for republicans, hey, house republicans, take the deal. they still didn't. and then finally today as you said, judy, republican leader mitch mcconnell who had already sent a very strong message with that 89-10 vote said it in words. said it explicitly. take the deal. after that, it was a little bit difficult, in fact, probably impossible for the speaker to maintain this posture that they were going to keep block the two month extension and find. but i do want to say something that's important. the speaker has agreed to move the two month extension. we don't want to say yes, that all republicans have. the speaker is going to try to use a procedure called unanimous consent "unanimous" is the key word. some republicans in his lanks are angry about it. they don't like this deal. they are up set with him. one of them or more can object to this. and if they do the speaker says the house comes back next week to actually vote on it. so not everybody's agreed to this yet. >> woodruff: so how-- why did the speaker then, himself, go along if he's not sure that he's got the rest of his members behind him? >> well, he's sure that he will be able to pass this with allots of democrats and a handful of republicans if he needs to. there's really not much danger of this not passing. the question is does he get it through in a way that keeps him politically viable. that's really the concern. the speaker is in charge. he's the speaker of the house. and he's the leader of his conference, of the republicans. he's in charge of cutting deals with the opposition. he's in charge of cutting deals with the president and harry reid. that's what he has done here. it's up to the speaker to determine when the political moment is right to take a deal that's difficult, that he may not like or to fight. all the reporting from after that 89-10 senate vote was that john boehner actually thought it was the best deal they were going to get and he faced a revolt among conservatives, some tea party member, conservative members in his own conference and had to fight on. that fight is now over. >> woodruff: todd t is so unusual to see this kind of open split among republicans to have the top republican in the senate going in one direction, the house speaker going in another direction. how do you account for this? how did this happen? >> well, i think what you are seeing is a reprieve of some of the same dynamics that we've seen during this 111th congress, republican house leadership. john bayne certificate an institutionalist. he's been in the body a long time. he's an establishment republican. he was swept into power with the help of-- with tea party members and other freshman conservatives who have a-- who are reform-minded, to put it in the mildest way possible. some of them, you say behind the scenes want to tear the house down. they don't care about the way things are done normally, if they don't like a deal f they don't like the speaker at the table with joe bideen or harry reid or nancy pelosi or barack obama, all of their political enemies, they say so. and you've seen this dynamic during the debt limit fight, during spending negotiations, during the threat of a government shutdown back in march. a very similar dynamic. this one went right up to christmas and people are much more vocal now, if you talk to those conservative republicans, many of them are extremely fed up. and this, of course, spells trouble for speaker boehner and his control over his conference. you don't know what kind of trouble or how big. it needs it to play out, but it's trouble. >> woodruff: well, if he had to change course, change his mind, what give was there on the democrats side, on the side of the white house, any? >> there was a little bit. very little real give. they agreed to change this two month extax-- extension around in some technical ways that will make it easier for accountants and employers to do the withholding in a way that doesn't mess up the way they calculate withholding. remember on this two month extension, they are forcing a decision on the keystone xl oil sands pipeline in 60 days. the president and the state department had already put off that decision for environmental concerns. but also, let's face it, a politically difficult decision for the white house to meet. environmentalist os on his left saying we don't want this thing and we won't come out for you if you approve this, mr. president. what's in this deal is that they now have to make a decision in the secretaries 60 days. the obama administration says well, that decision will be the same regardless. but they have to get headlines about it, again. it will come back and republicans will capitalize on it. the democrats got -- important here with this two month extension, judy. the state of the union address is on january 24th, on tuesday. and republicans are afraid and rightfully so that the president will be out in front of the country, out in front of the house joint session, during prime time, wagging his finger at republican members for being obstructionist and further isolating the american middle of the ground voter from tea party conservative movement. >> woodruff: and just in, a couple of words todd da will itch, what is the prospects for this two month extension they will take up in the new year. >> everybody wants it. everybody says they wants it, everybody has agreed to appoint a conference committee to negotiate it. i would not have very high hopes for that conference committee producing a result. the sides are far apart. this will probably be worked out again between leaders. we might be back here having a similar conversation in two months, judy. >> woodruff: that would be shocking. todd da will itch -- >> wouldn't it? >> woodruff: todd da will itch of the "the takeaway", thank you very much. >> my pleasure. >> brown: still to come on the "newshour": a wave of deadly attacks in baghdad; mistakes by nato forces in pakistan; stores targeting high and low end shoppers and the top secret bird flu research. but first, the other news of the day. here's hari sreenivasan. >> sreenivasan: the economy showed new signs of life in new numbers released today. the labor department said first- time claims for unemployment benefits last week were the lowest in three-and-a-half years. and, a separate report lowered the estimate of third quarter growth, but it was still the best this year. on wall street, the dow jones industrial average gained nearly 62 points to close at 12,169. the nasdaq rose 21 points to close at 2,599. the prime minister of egypt called today for a national dialogue and a two-month respite from protests. kamal el ganzouri spoke after recent days of violent clashes between protesters and soldiers that left at least 100 dead. ganzouri said the military, which appointed him to the job, is eager to return power to civilian rule. another major protest rally is scheduled for tomorrow in cairo. in italy, the new government-- led by prime minister mario monti-- won a vote of confidence, helping to ease one part of the debt crisis in europe. the italian parliament approved the government's nearly $40 billion package of tax hikes and pension changes. monti told lawmakers that italy is now setting a new example. >> ( translated ): italy will bring its contribution to stability in europe, but also increasingly strong elements of reflection and action on economic policies needed by our peoples. there is no growth without financial discipline. there is no stability if public debts are not in order. meanwhile, across europe, travelers heading out for christmas faced delays caused by strikes against austerity measures. part of the eurostar train service was halted through brussels, after belgian transport workers walked off the job. and in france, a week-old airport security strike meant delayed flights. a preliminary hearing wound up today for army private bradley manning, accused of giving reams of secret documents to wikileaks. in closing arguments at fort meade, maryland, a military prosecutor charged that manning violated the nation's trust. the defense said the soldier was a troubled young man and that the leaked material did no real harm. manning was then taken back to a military jail. he could get life in prison if he is court-martialed and convicted. a new army report says there are 64,000 discrepancies between grave markers and their corresponding paperwork at arlington national cemetery. officials reported the findings to congress today. the cemetery has been under fire over misidentified and misplaced graves. to address the problem, officials compared all of the nearly 260,000 headstones to army records and logs going back to the 1800s. in the u.s. presidential campaign, republican mitt romney picked up the backing of a former republican president. george h.w. bush told "the houston chronicle," "i just think he's mature and reasonable, not a bomb thrower." romney also rejected a challenge by newt gingrich to debate-- one on one-- before the iowa caucuses on january third. he said it's premature to narrow the field to just two candidates. those are some of the day's major stories. now, back to jeff. >> brown: the capital of iraq was plunged back into death and chaos today. at least 16 bombings shook baghdad, leaving more than 70 dead and well over 200 wounded. the attackers used a variety of tactics to strike all over the city. it was the worst outbreak of violence in months and came just days after the last u.s. troops withdrew. we have a report from inigo gilmore of "independent television news." >> reporter: thick plumes of smoke and the wail of ambulances sirens signaled the onset of a massive barrage of coordinated attacks. the first blasts ripped through baghdad just as iraqis were heading to work early this morning. both car bombs and improvised explosives were used; hitting markets, grocery stores, schools and government buildings. the attacks sent a shudder of terror through the capital as one neighborhood after another was targeted: ten in all. at least 18 people were killed here, in the up market karrada neighborhood, where the bomber drove an ambulance laden with explosives. >> tom: rwe are innocent people. what have we done wrong. what crime have been committed. if they're unable to run the government, they should just leave it. >> reporter: there is growing anger at the country's political leaders as a crisis threatens to cripple iraq's government, and spill over into a new round of sectarian bloodshed. no group has yet claimed responsibility for today's attacks, but they were mostly directed at shia neighborhoods suggesting a sunni insurgent group could be to blame long fractious relations between iraq's senior shia and sunni political leaders are now close to complete meltdown. the prime minister nouri al maliki, a shia, this week accused the country sunni vice president, of organizing bomb attacks against political targets and using his bodyguards in hit squads. >> reporter: the vice president's bodyguards have be politicized. he should face just at this time-- justice, either will refute the case or he will be convicted. we will not bargain in this case. >> the president's bodyguards have a pair-- appeared on state television where they allegedly confessed to a series of assassinations saying their former boss was behind them. >> taric e tariq al hashemi himself, has now fled to the semi-autonomous kurdish region. in his own defiant press conference, he denied all the charges. in turn, he has accused mr. al maliki of being behind the trumped up trial-by-television confessions this crisis erupted >> brown: the latest violence and political infighting adds new sparks to a long debate about what the u.s. gained from its nearly nine years in iraq. for that we go to megan o'sullivan, who served on the national security council staff in the bush administration. she's now a professor at the kennedy school at harvard university. and john mearsheimer, a professor at the university of chicago, a west point graduate and former air force officer. he's written extensively on strategic issues. john mere shirm, start with you, what does the new violence say about where iraq is just days after the u.s. pulled out? >> well, i think it's quite clear evidence that we are in serious trouble in iraq and that we are, in in effect, going to lose the war. we were hoping that when we finally left iraq that we would leave behind a unified and stable and democratic iraq that was essentially pro-american. at this point it's hard to see how iraq over the next few years is going to be a stable country, much less a meaningful democracy. and i even doubt whether it will be pro-american. so i think that this is all just evidence of what critics said in the run-up to the war. that going into that country was a colossal blunder. >> brown: margaret o'sullivan how do you see the current situation tying it into the longer scope of the war? >> sure, i agree with john that this is a critical moment in iraq. those of us who have worked on iraq a long time is have a habit of saying that. but this, in fact, really does seem to be a turning point in some fashion. i would, however, caution people against writing the end of this political moment. because i think we don't know how it's going to end. iraqis have a history of resolving political issues once they have come to the head. i'm not assured that they will be able to do it this time. but the potential is there. and really what we can say is that how iraq manages this particular political moment will really be a harbinger for what its politics are going to look like a few years down the road. if they manage to overcome this and revolve it in a way that reinforces their post-saddam institutions, then we can feel a little bit more confident that they can gradually consolidate gains. if this political conflict, however, ends with the prime minister consolidating power at the perception of most iraqis that he has done it outside constitutional measures then i think, you know, we can expect more political crises to come. >> do you think megan, and i'm sorry i called you margaret in our introduction here, but do you think that what's happening now-- now suggests that we should have stayed longer? is that still an issue? >> sure, margaret's actually my real name so it is's fine. >> brown: okay so, i got it right, okay. >> yeah, i think it does really point out that the american military presence had a vital role not only in terms of helping iraqis with security, but in terms of psychology. that basically the american military presence was a psychological ballast to the post-saddam institutions. and so these institutions are stronger than they were in 2003, but still quite weak. and iraqis, you know, they were always in constant tension. these institutions in iraq's traditional political culture, which is more authoritarian, more centralized. and whenever these two tensions come into play, the fact that america was there was an indication that the united states had an interest in seeing these institutions sustained. and it kept certain iraqi political players from revolume-- resolving issues or conflicts through sort of more traditional methods, koups, power grabs, those types of things. and so what we're seeing in remarkably short order is the removal of that psychological ballast and the consequence of actually still very, very weak institutions. so yes, i do think it suggests that we perhaps removed ourselves before these institutions had sufficiently consolidated. >> brown: and john mearsheimer, your point is it is not how we ended it here but just the going in in the first place? >> yeah, i think going in in the first place was foolish. because it was inevitable, in my opinion, that we would end up in this situation. i think with regard to megan's point, that there is no question that if the united states were to stay in iraq that we wouldn't be having these troubles. and as long as the united states is in iraq, it would serve a pacifying function. but the fact is we can't stay in iraq forever. we face this same situation in vietnam. we were in vietnam for roughly eight years with large scale american forces. and when we finally left, the place came undone. and that was because the political system that we left behind was basically dysfunctional. it wasn't capable of running the government and dealing with the north vietnamese. in this case, we have a similar situation. we're leaving behind a dysfunctional government. you want to remember here, the obama administration was not anxious to get out. it is the iraqis who basically forced us to get out because they wouldn't negotiate with us on this whole question of whether or not american servicemen could be put on trial by the iraqi government. that's what forced us out. we would have liked to have stayed. and the reason that we wanted to stay is that we were well aware that this place was likely to blow apart when we left. and what's amazing is how quickly that's happening. >> brown: megan o'sullivan, what about picking up on this larger question of whether it was worth it, when you talk about the u.s. standing in the region, u.s. standing in the world today, nine years after going into iraq. >> well, it would be disingenuous for me, particularly on a day like today, to make an argument that the hopes that america or iraqis have held for iraq have been fully material iced. that's evidently not the case and iraq i would say continues to fall short of its potential. but that said, the evaluation on american involvement in iraq is going to continue. it doesn't end today and it goes beyond an american military presence. where i would disagree with john, the point about the u.s. troop presence and how long we were expected to stay, i didn't see the choice as either leaving completely or staying forever. i think there's quite clearly a very long time line. we see for new institutions taking root in post conflict societies which is what iraq was and still is. and i think that we can really point to places where their institutions had maturity. take their military forces, principles. they were very, very poor a few years ago and now they're much better than they were. and we can expect that with the right kind of support they would be even better in a few year's time. i think that can be true for many other kinds of institutions, so i would discourage people from thinking about our choices as having been either stay at high numbers or leave immediately. there certainly were some medium term options. >> brown: john mearsheimer what is your response on this question about the impact of the u.s.'s standing in the region and the world? >> well, i think that it's been very damaging. first of all, it's very important to remember that when we went into iraq we left the job in afghanistan's unfinished. and we're reaping what that decision meant today. we should have stayed in afghanistan and finished the job and to the gone into iraq. furthermore, we have improved iran's situation in the region o almost everybody agrees on this point that if there is any country that was a winner as a result of this war, it was iran. it certainly wasn't iraq. and with regard to our standing around the world, the united states looks like it's the gang that can't shoot straight given what's now happening in iraq and given what's happening in afghanistan. it's never good for a country to go into wars and to lose those wars. you want to win the wars that you fight. and that's why you want to pick your wars smartly. and we made a huge mistake here in deciding to opt into this foolish war. and now we're paying the price. and of course as i said initially, we're also paying the price in afghanistan as well because we took our eye off the ball. >> brown: so megan o'sullivan, just in the last minute here, when you say, you argue that this is all still in play, we still have to look at the long arc of things here, how long? what do you look for to happen to know where this is going to end up? >> well, let me just point out that one of the things we're seeing is that iraqis, they're having a major political crisis. and so far they're looking to resolve their crisis through politics. that is a pattern that was not true. even a few years ago. so we see progress in that direction. and to me that's actually what i would be looking for. i'm not expecting the iraqis to resolve every outstanding political issue they have before anyone can declare a success. i'm expecting them to make progress on a host of very intractable issues over time through a political system. to you again, this is a moment of serious political crisis in oy rack. and what happens and how things are resolved will really have major bear on its overall trajectory. but what i'm saying is simply that there are a lot of things that could still unfold, for good and for bad that i think would be part of any ultimate evaluation. and i will just finish by asking the question of, what we haven't talked about the arab spring. but what would the arab spring look like. what if it had unfolded been saddam been in power. i think that is an interesting question and that in some ways points to that there have been regional gains that we haven't accounted for fully. >> brown: all right all right, that is one we have talked about. and i promise we will talk about more. megan o'sullivan, john mearsheimer, thanks so much. >> thank you. >> you're welcome. >> woodruff: next, the u.s. admits mistakes in an attack that worsened relations with its sometime ally pakistan. margaret warner has the story. >> warner: ties between the two countries have been in a tailspin for months, especially after u.s. special forces found and killed osama bin laden in pakistan in may. then, late last month u.s. aircraft struck two pakistani outposts near the afghan border, killing 24 troops. outraged, pakistan shut down crucial nato supply routes into afghanistan. initially, the u.s. insisted the airstrikes began only after a pakistani military representative gave the all- clear. but today, after a weeks-long investigation, the pentagon did concede some american errors. >> the investigating officer found that u.s. forces, given what information they had available to them at the time, acted in self-defense and with appropriate force after being fired upon. nevertheless, inadequate coordination by u. is is and pakistani military officers operating through the border coordination center, including our reliance on incorrect mapping information shared with the pakistani liaison officer, resulted in a misunderstanding about the true location of pakistani military units. this, coupled with our gaffes in information about the activities in placement from units from both sides contributed to the tragic result. >> warner: the pentagon expressed regret for the loss of life and the inadequate coordination in what's been the deadliest friendly fire incident of the afghan war. for more on the story, we go to "wall street journal" reporter adam entous. >> warner: adam, welcome. so set the scene for us. what happened that deadly night? >> well, what happened was is we had what appeared to be a routine operation, about 120 afghan and u.s. commandos came into a valley. they land in helicopters. it's pitch-black. there's no moon that night. and they begin to ascend. as they're winding up these narrow trails they take fire from overhead and that's when the-- that's when this engagement begins and the mistakes begin to add up. >> warner: well, the general who did brief reporters today said there were two critical, i think he called them points of failure on the part of the u.s. let's take the first one. what went wrong in the first place? >> this was a classic case of miscommunication. the commander on the ground asked, relayed back to his command to ask whether there were any pakistani military forces in the area after they had taken fire. what he got back was a message that was only partial. it said that there were-- that they were seeing no-- they were following no pakistani military troops in that area. and with that information, the attack commenced. >> warner: and we should point out that they were still ascending but on the afghan side but the fire was coming from the pakistani side of the border. >> that's right t was coming from over their heads. >> warner: and why was the information incomplete. >> it's unclear at this point. we don't really have a full sense of what happened, why the message was relayed in this way, and why they only got part of the message. the first part of the message that they miss was that they were still checking to see if there were fact standi troops there. >> warner: what was its second point of failure. >> the second point, this is after the the a a-- the attack had initiated. the information about where this was taking place was to a border kpun case center where there are liaisons there from the afghan side, the americans as well as the pakistanis. while the nato force officers there had the complete coordinates, they were-- . >> warner: of where this fire fight, first of all was taking place. >> exactly. but they were-- they were not told to share that exact information with the pakistani side. so what they gave instead was general location. then you had a classic map malfunction where they literally overlayed the wrong map on top of the accord nationals. >> warner: this is the u.s. >> or the nato officer there, shared with the pakistani representative there, the wrong area to which was about nine miles north of where the actual fire fight was taking place. so the representative had no way to know that he had troops in that area. >> warner: now at what point did the forces, the u.s. and afghan commandos call in the air strikes? >> that started initially after they were engaged. they began by first using these aircraft that were already in the area, to send off flares to try to ward off the attack. when that did not work, and then they miscommunication, the first miscommunication occurred. and they were-- the commander on the ground was told that there were no pakistani military troops in the area, then the attack began at that stage. >> warner: now the dod statement started out basically the substantive part, saying, however, that u.s. forces give them the information available to them, acted in self-defense and with appropriate force. what is that based on? >> this is based on the contention by the u.s. that the firing began on the pakistani side of the border. this was an unprovoked attack on these could-- commandos as they were doing their operation. and by-- you know, they were responding to try to prevent their own forces from being hit. >> warner: now the general in charge of the investigation said to reporters today, and in fact i think it's in the statement, that another major contributing factor was just the mistrust that exist between the u.s. and pakistan. in what way? >> well, this has been an incredible year in the relationship between the united states and pakistan. and couldn't be worse, the relationship. >> warner: but i mean how did it play into this? >> they, for example, the u.s. side didn't know that these border posts were there. they say. the pakistanies had not shared that information, updated information with the americans. at the same time, u.s. forces, you know, while they are supposed to share information with their pakistani counterparts are very nervous doing so because of instances where they feel like the pakistani counterparts tipped often surge ents and as a result comprised this operation. so both sides don't trust each other. >> so they're both holding back and then you have this confusion. >> exactly. >> warner: now the pakistanies have been insisting o on an apology in return for, you know, reopening say the border crossings. depend-- the pentagon expressed regret today, did they consider that one, an apology. two, is there more coming? and three, did the people you talked to hope that this is enough to have the pakistanis reopen these border crossings? >> i think they were optimism-- optimistic earlier this week that having this more conciliatory report come out that the pakistanis were going to be inclined to open the border crossings as early as next week. and i think at this stage they are waiting to see what happens. it's all very complicated because of pakistani public opinion. and pakistani public machine is-- opinion is so anti-american right now, it will be very hard for the pakistani leadership to back down from this and accept anything less than a full apology which at this point we don't necessarily see coming from the u.s.. >> warner: and briefly, do your dod sources expect any kind of disciplinary action on the u.s. side? >> it's hard to see. because at this stage, they've said that their response to the fire was legitimate. and they were acting in self-defense. at the same time, you can see several layers of mistakes occurred. but all of them seem to be mostly technical and maybe it was a kpun case issue where literally radio communications were broken off too early. at this point we don't know. and that's not the job of this investigation. that's going to be up to up to the commandes now. >> warner: well, adam entous of "the wall street journal," thank you. >> thank you. >> brown: as shoppers make their last-minute holiday purchases, much attention is on just how much consumers will spend this holiday season amid a weak economy. at the same time, our economics correspondent paul solman is finding a fundamental change taking place in the world of retail. it's part of his ongoing reporting: "making sense of financial news." >> the kate spade shopper loves color and she loves sparkle. >> reporter: c.e.o. bill mccomb runs the liz claiborne company, which owns premium brand kate spade. >> this is a sparkle gia bag which is selling out at all of our stores right now. >> reporter: at $95, a steal, since kate spade bags can cost $500. >> this is one of our classic items. it's a quilted paneled leather with a beautiful chain with leather inside. >> reporter: in a limping economy, $298 shoes? >> but it's not just a regular pump. look at the twist on the back. >> reporter: once a 50-brand conglomerate, in the fall liz claiborne inc. announced that the teetering mid-market company would unload almost all of its divisions, including those that catered to its once core middle- income shoppers, like the liz claiborne brand itself, sold to j.c. penney. >> what you're finding in the market place today is that those who are chasing the value customer and those that are in effect pursuing the high end customer are doing the best. those in the middle are really getting squeezed at both ends. >> reporter: and that's what liz claiborne was. >> liz claiborne was absolutely focused in that middle. it became very clear, sort of a blinding clarity, that we needed to pick a direction to go because that middle was no mans land. >> reporter: so, the firm went upscale and is staking its corporate life on provisioning the posh: kate spade, lucky brand jeans and juicy couture. >> our focus on great brands brought us to a market segment of the higher end, accessible luxury consumer. and even though the economy's bad, they're spending money. they have disposable income to spend. >> reporter: it should come as no surprise to those following the economic inequality debate: retail is increasingly bifurcated into high end and low, with an ever shrinking middle, forcing do-or-die decisions on companies like liz claiborne. >> if we were still supporting the 50 brands that we had, we would have had to declare bankruptcy. >> reporter: but designer jeans are still selling. direct to consumer sales at lucky are up 23%, year to year, because it has status value. >> one of the staple trademarks is the lucky you label, right inside the zipper. >> reporter: investors also seem to like the high-end trademarks. since the liz claiborne makeover, its stock is up dramatically. now, an upscale focus is no guarantee of future performance. though sales are up at kate spade and lucky jeans, they're not at juicy. and the company still posted a loss last quarter. but the point is, liz claiborne could see clearly that the middle market had lost its luster. luxury spending by contrast is on the on the up and up. >> it's been up since 2010 and it's been essentially for many brands, 10%-15% in the u.s. >> reporter: milton pedraza tracks high-end consumption. >> there's been a flight to quality and a flight to pedigree. so the guccis of the world, the louis vuittons, the chanels, all the brands that we think as classic have done far better than brands that are let's say not so pedigree, don't have a long history, don't have classic products. >> reporter: the well heeled can and will up the ante to demonstrate their prosperity in a high-low economy, it seems, and sales are climbing at high- end retailers. saks fifth avenue stores are up 9%, year over year. c.e.o. steve sadeove on fox business news. >> we're seeing very good performance in things like handbags shoes, accessories, jewelry. and we're seeing the best full- priced selling that we've seen in years. in fact, what we're seeing is the customer going towards the most special, differentiated, best, unique products. >> reporter: at neiman marcus, profits in the most recent quarter surged 88% over last year. and fantasy gifts in neiman's annual christmas book are selling like hot cakes. exorbitant hot cakes. a custom library for $125,000 sold. all five $5,000 private johnny walker tasting packages, gone in two days. ten special edition ferraris with custom-made luggage to match the cars leather interior- - $395,000 apiece. snatched up in 50 minutes. in an increasingly high-low economy, says luxury maven pedraza, such spending may even pay off. >> when somebody walks into a negotiation, and they get out of their ferrari, enzo ferrari and they may have a very high-end watch, it isn't just showing off, it is showing off to make a point. >> reporter: and what's the point that's being made? >> that i have power, i mean for example, louboutin shoes with the red soles, extremely conspicuous, right? and when we asked women, "well, why?" they said, "it shows that i have power because i can afford these products, i've made the money myself, and i'm still feminine, frankly i'm still sexy." >> reporter: meanwhile, unemployment and stagnant wages continue to hammer the middle class and the middle-priced retailers who have long catered to it. j.c. penney, new owner of the liz claiborne brand, is a current casualty of mid-income malaise, says stock analyst anthony chukumba. >> the j.c. penneys of the world, the kohls of the world; they're struggling. in many cases, their sales are really not growing at all and their profit margins are declining. >> gotta go to kohls on black friday, everybody's going there at midnight. >> reporter: case in point: thanksgiving sales began earlier than ever this year and deep discounts have continued since thanksgiving. layaway is back. free shipping is up; profits, down at wal-mart, the gap and best buy to name a few. but as at the top, at the bottom, business is really good. at jack's 99 cent store in manhattan, the joint was jumping. why? >> the prices, of course. >> because of the economy and the way things are, you have to try to watch every penny. >> my hours have been cut. i own a home and all that so everything has to be budgeted right now. >> reporter: analyst chukumba, who's been tracking dollar stores for 14 years, says they're benefiting from what we, among others, have called the hourglass economy. >> they're growing their sales; they're growing their profit margins; they're growing their earnings; and the stocks are reflecting that as well. in addition to their core low income customers, you have a lot of middle income customers who are trading down to the dollar stores. >> reporter: at dollar general, the largest national chain, profits were up last quarter by 34% sales at family dollar stores and dollar tree, also booming. and jacks 99 cent store was doing a brisk business, too, especially for a weekday afternoon. >> given the time of day and the day of the week, i'm very surprised by the amount of traffic here and as you can tell, it's not people browsing, these people are shopping. i see a lot of full baskets, a lot of full shopping carts and it's not just the person paying with food stamps. >> reporter: and dollar stores are investing to serve the pinched consumer. >> it's not that they've just been sitting around counting their money, they've been aggressively opening stores, renovating stores, improving the store experience, bringing in more national brands. >> reporter: what products are popular in stores like this? >> they're definitely focusing a lot more on needs; your health and beauty care items, your household cleaning products, and less on wants. they're catering to what the customers buying. >> reporter: so then, as the holiday shopping season enters its final few days, the retail takeaway seems pretty obvious: aim low or aim high but don't mess with mr. in-between. >> woodruff: finally tonight, just how much research about a deadly flu virus should be made available to the public? it's a question many are asking this week in the fields of science, bioterrorism and national security. ray suarez has our own conversation on the subject following some background. >> suarez: hong kong, 1997-- a virus that kills chickens and other fowl is seen for the first time in a major outbreak among humans. since then, there have been several other occurrences of the h5n1 "bird flu," mostly in asia. overall about 600 people have contracted the disease and more than half have died. the good news so far: the virus is hard to transmit from person to person. and health officials have been largely able to contain outbreaks. >> on day one there were two people, and then four, and then 16. >> don't talk to anyone, don't touch anyone, stay away from other people. >> suarez: in the popular imagination and films like this year's "contagion," viruses mutate and multiply relentlessly through the population. in fact, scientists have looked into whether something like that could happen with avian flu, in part to better understand how it might then be combated. researchers at the university of wisconsin and erasmus medical center in the netherlands were able to create a highly transmissible form of the virus in ferrets. but this week, in an unprecedented step, a government panel that reports to the national institutes of health and other agencies-- called the national science advisory board for biosecurity-- asked prominent journals, "science" and "nature" not to publish some of the details of the biological experiments recommending that: the question of publishing all the details of the studies has stoked a debate over balancing the need for open scientific dialogue and concerns about national security. we look at those questions now with two principal players in this story. doctor anthony fauci is the head of the national institute of allergy and infectious diseases. his institute co-funded some of the research. and he speaks on behalf of the n.i.h. tonight. and bruce alberts is the editor- in-chief of the journal, "science," who's deciding what to publish and not publish about this research. dr. fauci, let me start with you. as an arm of the federal government ever asked scientists not to publish the fruits of their research in. >> in the biological scientists in science, this truly, ray s, it's a new paradigm. it's unprecedented. so we've really got to get it right. i mean there's an absolute need to do kinds of research that will help protect the general and global public but there are times as is the case now where the result, if gotten into the hands of people with nefarious purpose kos, in fact, be dangerous to society. so we need to strike a balance, an appropriate balance of not impeding the science but at the same time protecting the general public who has concerns over the possibility that information like this may get into the hands of people who would use it for nefarious purposesment but the answer to your question is, there is the first time and this advisory board that you mentioned, the national science advisory board for biosecurity made the recommendation to the healthand human services department and to the authors and the journal editors to publish the data but to leave out the details that would allow people who might use it for purposes that are not purposes for the public health for nefarious purposes. they would not have ready access to thisment but also it's important to point out that the scientists and public health officials particularly those who are surveying and looking at this virus, particularly in southeast asia, have access to the information at its fullest. and that's really the discussion right now, how do we do that? how do we get that delicate balance between open scientific intercourse as well as safety of the general public. >> suarez: and that question, i guess, bruce alberts, lands in your lap. this is a request, they can't make you not publish it. how do you walk that line between what can be released and what should be released? >> well, that's a great question, ray. it's what we've been struggling with. science flourishes because of its openness and the ability of other scientists to reproduce and build on results. but in this case, the advisory board which i should point out that was set up on the recommendation of the national academy of sciences shortly after nine nooib-- 9/11 and contains outstanding scientists as well as security experts, this is the first time after looking at many other cases over the past seven years, this is the first time they came down on this side of the decision, that is to restrict some of the information so first thing i think as the supreme court, so to speak, of this decision macking process, the journal should try very hard to comply with their request. on the other hand, we have to make sure that they have the means and we're waiting for them to demonstrate that, they have the means to get this information for those in asia and elsewhere around the world, who have a real need to know the details. >> suarez: dr. fauci this specialist information going out to a pretty selective reading audience. could a paper on lab work with viruses really be useful to someone who wants to create a superbug? >> well, if you have the mutations that are associated with easy transmiss ability from animals to animal n this case ferrets, as you mentioned, ray, as well as maintaining its vir lens or-- its virulence or lethality, someone with a degree of expertise, it's not somebody who will do this in their backyard, but you don't want to have the blueprints for that to be out for individuals who might have nefarious purposes. but as dr. alberts mentioned very appropriately, the entire-- entire basis of the scientific enterprise is to share information so that others can verify it and go to the next step so that the ultimate public health good will be attained. so that's the balance that we are dealing with. but information such as this could possibly and i say possibly. there's not-- remember now, we're dealing with an animal model and in an a bundance of caution, the advisory board made the recommendation to withhold this information. and i think what people need to know there's no guarantee whatsoever that this virus has it exists would be transmitted. but it has characteristics in a mammal model that is the closest we get to a human model, not a perfect model, but as close as you get. it does maintain and develop these characteristics, which are of concern if the ability to make such a virus gets into the hands of people who would use it for nefarious purposes. >> bruce alberts, you heard dr. fauci's misgivings, do you think someone reading your magazine could figure out how to create a superbug if they didn't already know how to do it? >> hopefully not, that's what we are dealing with. we don't want to put the information that's very useful to terrorist organizations into its public if we can be convinced that the people who need to know that information will have it. to me this experiment which scientists say have very surprising results, it wasn't supposed to be so today do this. and you know, relatively small number of mutations apparently will allow this flu virus to become transmissable through the air, through aerosols. and that could cause enormous pandemic in the human population so to me this work was important to do. and it has a major message which is we have to do even more than we're now doing protect the world against this virus. i have been on many programs in the last few days talking to flu experts. and many of them feel that this is by far the greatest threat to our public health from infectious diseases. and i think this is a call to action by scientists, even scientists who have never worked with flu, to work even harder and more effectively on protecting the public. >> suarez: well, quickly before we go, i'll ask you both, gentlemen, first you anthony fauci, whether now that this is done, can the information that's been derived from this research be given to those who really need it, who are combatting dangerous flu viruses without it gradually seeping out into a wider world? information doesn't seem to be like that in 2011. >> that is a concern, ray. very clearly when things get out there, there certainly is a possibility. if not a likelihood that sooner or later this is information that's going to get out. in fact, you know, in innocence, not thinking that this would be voted to be held down by the board, the investigators actually made a partial presentation of the data at a meeting outside of the country of regular scientific meeting of exchange of information. so although we'll try our best to get to that balance that dr. alberts and i have been speaking at, there's no guarantee that when information gets passed back and forth to scientists, even those that have a need to know that it might ultimately leak out. because as we know from experience in other disciplines t is very, very difficult to keep something secret when it's information. >> suarez: quickly bruce alberts, same question. you can keep information bottled up? >> not not forever, for sure, and this will leak out eventually. i think this is a wake-up call to the scientific and health communities to be more prepared than we are today for such outbreaks and i would like to make sure that we focus on that going forward. >> suarez: bruce alberts, anthony fauci, gentlemen, thank you both. >> you're welcome. >> thank you. am >> brown: and it's science thursday on the newshour online. winter is now officially upon us and there, you'll find a story about the science of snowflake formation complete with a snowflake slide show. that's on our website. >> woodruff: again, the major developments of the day: house republicans reversed course and agreed to accept a short-term deal to extend the payroll tax cut. at least 16 bombings shook baghdad killing more than 70 iraqis and wounding well over 200. and the u.s. military blamed bad communications and map information for an airstrike that killed 24 pakistani soldiers last said. it also said the pakistanis triggered the incident by firing first. online, we look at the mood in south korea following the death of the north korean leader. hari sreenivasan explains. hari? >> sreenivasan: "there's a sense of calm," says journalist stella kim based in seoul. find our interview with her on the rundown. there's a follow-up to paul's story about the boom in high- and on art beat, jeff recaps the year in pop music with randall roberts of the los angeles times. all that and more is on our web site: newshour.pbs.org. judy? >> woodruff: and that's the "newshour" for tonight. i'm judy woodruff. >> brown: and i'm jeffrey brown. we'll see you online and again here tomorrow evening with mark shields and david brooks, among others. thank you and good night. major funding for the pbs newshour has been provided by: ♪ ♪ moving our economy for 160 years. bnsf, the engine that connects us. >> 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. captioning sponsored by macneil/lehrer productions captioned by media access group at wgbh access.wgbh.org

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