Thank you. Ifill the federal government moved another day closer today to 85 billion in automatic spending cuts. And as political charges and countercharges flew, Federal Reserve chief ben bernanke raised new fears about the potential economic fallout. The fed chairman told a Senate Committee that forcing acrosstheboard spending cuts could slice half a percentage point off economic growth. I think an appropriate balance would be to introduce these cuts more gradually and to compensate with larger and more sustained cuts in the longer run to address our longrun fiscal issues. Ifill bernanke said the sequester was supposed to be a doomsday weapon designed to spur compromise. It was done to be sort of like dr. Strangelove, you know, the bomb that goes off. So obviously if you can find a way to, you know, in a bipartisan way to make it more effective and better prioritized, that would be a good thing. Ifill instead the spending cuts could begin to take effect at weeks end. President obama, speaking at a shipyard in new port news, virginia, delivered fresh warnings today that the spending cuts would result in painful, selfinflicted wounds. Because of these automatic cuts, about 90,000 virginians who work for the department of defense would be forced to take unpaid leave from their jobs. So thats money out of their pockets. Money out of their paychecks. And then that means theres going to be a Ripple Effect on thousands of other jobs and businesses and services throughout the commonwealth. Ifill the president pressed for a compromise that combines targeted spending cuts with increased tax revenue. There are too many republicans in congress right now who refuse to compromise even an inch when it comes to closing tax loopholes and special interest tax breaks. And thats whats Holding Things up right now. Ifill the administration announced today another response to the impending cuts. The release of hundreds of detainees held at immigration detention centers. Republicans called it a ploy. And back at the capitol, House Speaker john boehner said mr. Obama cannot be trusted. The American People know the president gets more money, theyre just going to spend it. The fact is that hes gotten his tax hikesment its time to focus on the real problem here in washington and that is spending. Ifill boehner complained that the president is busy holding Campaign Rallies while Senate Democrats do nothing. In the last congress the republicancontrolled house passed two alternatives. We should not have to move a third bill before the senate gets off their ass and begins to do something. Ifill Senate Majority leader harry reid shot back. I think he should understand who is sitting on their pose tear i dont remember. Were doing our here to pass something. And the reason hes not bringing up something over there is because he cant pass it. He cant get his caucus to agree on anything. Ifill but republican senator roy blunt of missouri said democrats have to face facts. The spending cuts are going to happen. And the option now for the president is, do you want to work for a different way for these same savings to be achieved . And thats very doable. Ifill friday is not the last deadline. Another one looms in late march when government funding runs out. For more on whether political paralysis in washington is spilling over onto the economy, we turn to nariman behravesh, chief economist for i. H. S. , a research and forecasting firm. We have heard in the last couple of days, weeks, surveys, polls that show that a lot of americans to the extent theyre following this story do think theres a problem here with this socalled sequester but they dont necessarily think its going to affect them. Are they right some. Well, i think it will affect some americans but its not going to have a broad impact. It will affect certain industries, for example, those that are suppliers to the defense industry. It might affect the airlines if there are air Traffic Control delays. It will not have a broadbased effect. It will be very targeted at least the way its currently being proposed on some key industries, defense in particular. Ifill when ben bernanke says it will. It will apply a half percentage point drag on the economy, measure what that means for us. What does that mean . I think the good news here is that the u. S. Economy is actually growing at probably about a 2 rate. So if the full sequester goes in and stays in place for the full year between now and the end of the year, then its essentially what mr. Bernanke is saying growth will be 1. 5 instead of 2 . I doubt very much thats the way its going to pan out. Eventually some kind of compromise will be worked out. But again the good news is that the u. S. Consumers, u. S. Businesses, are beginning to spend, are beginning to hire in the case of businesses, and that momentum seems to actually be picking up a little bit. So even in the worst Case Scenario were not talking a recession. Were talking Slower Growth which isnt good. Ifill not good at a time when youre recovering. So when people look at this debate thats going on now, how do we look at it . Do we look at it longterm, short term . Do we look at the reality or the possibility . What is the greatest, most damaging part of this . Well, i think the damaging part of it is, you know, this is a very, very bad way to run a government. But the other reality is we have racked up a lot of debt. We do have very big deficits. We have to start cutting them. And so. We cant keep postponing the cuts or the tax increases, however we decide were going to do this. Its going to hurt growth. This notion that only spending cuts hurt growth and tax increases dont is a bit of a false dichotomy here. However we cut the deficit, it will hurt growth. So the question is when should we start doing it . And i think so far weve kind of postponed things. At some point in a National Financial market its going to lose pairns with the u. S. And will punish it by raising Interest Rates or demanding higher Interest Rates. We cant keep postponing it. The question is, is 2013 the right time to be doing this or should we wait another year or two . I suspect markets will start to get impatient with the u. S. If we dont have a credible plan in place very soon. Ifill lets talk about that credible plan. Whether theres one in place or not, certainly its looking less and less likely by friday. Whether theres one in place at some point. What effect does it have on Consumer Confidence . How much does consumers and businesses worry about the uncertainty here become a selffulfilling prophecy . You know, thats an excellent question. I think the good news bad news however you want to say it is that consumers and businesses are beginning to shrug this off. Theyre beginning to shrug off the dysfunctionality in washington. Weve been through two of these episodes already. This is the third one. Ill give you two interesting tidbits of information. The first is today Consumer Confidence bounced right back after having dropped two months in a row. And those two drops were having to do with the fiscal cliff and the increase in payroll taxes so basically consumers are shrugging this off. Maybe she shouldnt but they are. The other is that the pace of hiring between the third and Fourth Quarter accelerated even though u. S. Businesses were worried about the fiscal cliff. So i suspect this next round in terms of the sequester, a lot of businesses again will sort of say, oh, theres washington at it again. So the good news is right now at least this doesnt seem to be affecting business and Consumer Confidence that much. Ifill youre saying when we look at these serial showdowns whether its the threat of a government showdown or a fiscal cliff or this sequester or another round at the end of this month, people are shrugging it off rather than saying, getting hopelessly paralyzed by it themselves . That is, the individuals and the private business . Well, undoubtedly some businesses those that are in the cross hairs, if you will, of the sequester and, you know, people who are worried about losing their jobs, are paralyzed or are taking actions. Im not saying nobody is. But if you look at the economy as a whole, the evidence is as each of these showdowns, as you call them, sort of passes and nothing horrible happens, theres a tendency on the part of businesses and consumers to say, you know, here we go again. Oh, well. I mean, again i know im being a little facetious but i think thats what were seeing right now. Ifill thank you so much for helping us out. Thank you. Woodruff still to woodruff still to come on the newshour, voting to confirm the next defense secretary; collecting d. N. A. From criminal suspects; previewing the elections in kenya; plus, Gloria Steinem on the women who make america. But first, the other news of the day. Heres hari sreenivasan. Sreenivasan wall street bounced back today. Stocks rose after news that new home sales in january were the best since july of 2008. The Dow Jones Industrial average gained nearly 116 points to close at 13,900. The nasdaq rose 13 points to close at 3129. J. P. Morgan chase will cut some 4,000 jobs this year, about 1. 5 of its work force. The banks announcement today said the reductions will come mainly through attrition, but there will be layoffs as well. Meanwhile, profits at u. S. Banks grew 37 from october through december, compared to a year earlier. It was the best fourthquarter showing in six years. The second blizzard in a week paralyzed parts of the country from oklahoma to the great lakes today. More than 100,000 homes and businesses lost power, and kansas city declared an emergency. The storm had already battered the texas panhandle. Winds there reached hurricane force, and piled drifts more than two feet high in some places. Negotiations on Irans Nuclear program restarted today for the first time in eight months. The twoday talks opened in kazakhstan. The u. S. And other world powers offered to ease some international sanctions, if iran will limit activities that could lead to nuclear weapons. It addresses International Concerns on the exclusively peaceful nature of the iranian Nuclear Program but its also responsive to iranian ideas. We hope very much that iran will seize this opportunity and come to the talks with flexibility and a commitment to make concrete progress toward building steps. Sreenivasan in response, iran said it will make a counteroffer during the talks. In egypt, at least 19 people were killed in one of the deadliest ballooning accidents ever. A hot air balloon carrying tourists caught fire over the ancient city of luxor and crashed in a field. The dead were from europe and asia. In addition, the egyptian pilot and one british man were hospitalized with burns. Italys politicians searched for a way forward today after an election that left a political stalemate. That, in turn, generated new fears of economic fallout. We have a report from Jonathan Rugman of independent television news. Reporter the news from rome has sent shock waves across europe. A rebellion against austerity, a rebellion, too, against their fossilized politicians. This man has upturned the old order. A comedian, with a 20hour working week, tax cuts and a referendum on the euro. The clown turned potential king maker here. This taxi driver backed him. It was a protest vote, he told me. He might be a comedian but he cant be worse than what weve got. The extraordinary success of his Grass Roots Movement has taken italy by complete surprise. If youre looking for a Party Headquarters for him here in rome you wont find one. All there is this room in the basement of a rome hotel. And if its poll. If its politicians wont do the job, italy is at risk of becoming ungovernable. The stock market tumbled almost 5 today and any halt to economic reform here endangers the rest of the euro zone. Germanys foreign minister now urging italy to form a stable, functioning government and to do it quick. The centerleft leader says hell try to do that. He won the lower house of parliament. But whether he can now form a grand coalition to run the country is anyones guess. And it could be political suicide to strike a deal with Silvio Berlusconi who staged a political comeback from the dead last night and who today hinted at compromises for the sake of italy. Sreenivasan google and the government of spain went before europes highest court in a privacy fight that could have farreaching implications. The case involves whether google can be forced to erase search results that people feel violate their privacy. The company says it should not have to delete lawful content which it did not create. A ruling is expected by the end of the year. Those are some of the days major stories. Now, back to judy. Woodruff the senate ended a contentious fight over a key cabinet nomination today, and confirmed former nebraska senator chuck hagel to be the next secretary of defense. 12 days later, nothing, nothing has changed. Senator hagels exemplary record of service to his country remains untarnished. Woodruff in short, Senate Majority leader harry reid said, chuck hagel should have been confirmed before the president s day recess. At the time, the senates 55 democrats could not get the 60 votes needed to end a republican filibuster against fellow republican hagel. Democrat dick durbin of illinois condemned the g. O. P. Opposition today. Theres no question that there are some who bear some negative feelings torgd chuck hagel because of his independence and some of his votes in the past, even his support of president obama in the last president ial election. But this has been taken to a level that i never expected. Woodruff still mississippis roger wicker and other republicans charged again that hagel is too willing to compromise with iran. And too willing to criticize israel. Either we should disregard everything that the senator has said and stood for as merely hyperbole or this is a nominee with a very unsettling and naive world view. You cant have it both ways. Woodruff just five days ago 15 republican senators wrote to president obama asking him to withdraw the hagel nomination. But on sunday arizona senator john mccain said president obamas choice deserved an up or down vote. I do not believe that chuck hagel, who is a friend of mine, is qualified to be secretary of defense. But i do believe that elections have consequences. Woodruff today 18 g. O. P. Senators joined with democrats to end the filibuster. Hours later, the Senate Confirmed hagel, 5841. Mainly along party lines. For more we turn to mark thompson, time Magazines National security reporter. Welcome back to the program. So after all the storm and the fury from republicans, enough of them voted to let this confirmation takes place. What was this all about . Basically it was on valentines day that the senate would not let this proceed to an upordown vote. Instead basically the republicans were looking for something to derail the nomination so for 12 days the nation waited essentially leon panetta was running over to nato and back to his walnut farm. We really didnt have a true secretary of defense other than this lame duck. Today finally the republicans decided, hey, weve waited this long. We cant wait any longer. The president does deserve an upordown vote on his candidates so they let it proceed. Woodruff meantime they sent a message. Yeah, i mean it is a disconcerting message. We had the republican and the democratic whips talking about vote counts but, you know, foreign nations and people in the pentagon can count votes too. Weve never had a defense secretary with this many opposing votes. Now this is something he can shake off, but its going to take some time. Woodruff thats right. I mean he has the fewest confirming volts of any defense secretary since the job was created. Mark thompson, how does that affect his ability to do his job . Well, it will depend. It will affect it in a big way if he acts as he did in his con for megs hearing which by all accounts he did not do well. Conversely, i talked to people in the pentagon. The lower in ranks you go, the more they like this guy. The more they like the sense that an enlisted man is going to run the building. If you can use that as a springboard hes facing immense challenges from sequestration to afghanistan to a nuclear iran but its an opportunity for him to seize the moment. If he does, people will forget this pretty quickly i think. Woodruff what about the sour relations or whatever lingering effect there is from this loud vote of no confidence from republicans in the senate . Does that affect his ability to do his job . I think the important thing for people to realize is its a perceptions game. If he lets it bother him, it will. But conversely, if he doesnt and if he moves on out, i mean, senators today were talking some are saying, this will wound him like senator graham of south carolina. Others like the chairman of the committee senator levin said no it wont. Were all about tomorrow. We dont focus that much on the past. The truth is somewhere in the middle. It will affect him. If he achieves, it will be because of his own efforts. Woodruff from talking to folks in the pentagon, and you were just telling me hes been working out of an office there which is typical for folks who are nominated for that position. Is there an early sense of how they think hes prepared to handle this job . I think just like the lawmakers, no one knows because weve had defense secretaries who have come from the hill who have done very well. Dick cheney being the most recent example. Leon panetta. Then weve had folks like les aspen who came from the people whom people thought would do real well and who really didnt. You cant tell. It takes about six months before you realize whether or not this person has the moxie for the job. Woodruff when you say, do well, whats the measuring stick . The measuring is grappling with the cuts that are coming this friday. The question is how smoothly can we withdraw from afghanistan without being bit on our way out . And dea