Woodruff those are just some of the stories were covering on tonights pbs newshour. Major funding for the pbs newshour has been provided by my customers can shop around; see who does good work and compare costs. It can also work that way with healthcare. With united healthcare, i get information on quality ratings of doctors, Treatment Options and estimates for how much ill pay. That helps me and my guys make informed decisions. I dont like guesses with my business and definitely not with our health. Thats health in numbers. United healthcare. Supported by the john d. And catherine t. Macarthur foundation. Committed to building a more just, verdant and peaceful world. More information at macfound. Org 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. Ifill the Federal Reserve is ready to begin winding down its economic stimulus. Chairman ben bernanke announced today the central bank will start reducing the bondbuying program next month. He said the economy has strengthened enough to make it possible. Well hear some of what bernanke said, and dig into what it means, right after the news summary. The feds finding of economic progress sent wall street soaring. The Dow Jones Industrial average gained 292 points to close near 16,168 a new record. The nasdaq rose 46 points to close at 4,070. The senate gave final approval today to a twoyear budget agreement, 64 to 36. It erases 63 billion in automatic, spending cuts, and replaces them with targeted cuts and additional revenues. Nine republicans joined 55 democrats and independents in voting aye, after supporters and opponents jousted over the measure. I think one of the problems we have around here often is that we dont know how to declare victory. We dont celebrate our successes. Im not prepared to declare victory in the fight for fiscal responsibility, but i am prepared to declare progress. We have before us a bill today that is a purported compromise. But i want to describe who its a compromise for. Its a compromise for the politicians. Its not a compromise for the american people. Because what it really does is increase spending and increase taxes. Ifill the budget bill now goes to president obama for his signature. An outside review board has presented a raft of recommendations to the president on curbing the governments surveillance programs. The proposals today target the National Security agencys sweeping collection of phone and internet data, here and abroad. Well get the details later in the program. The Prime Minister of ukraine insisted today that a russianfinanced bailout will ensure his countrys economic stability. Yesterday, russian president Vladimir Putin pledged to buy 15 billion worth of ukrainian bonds and slash the price of russian gas. In kiev overnight and today, antirussian demonstrators again accused the Ukrainian Government of selling out. Theyve been camped out in Independence Square for weeks. Ethnic fighting is threatening to tear apart the worlds newest country south sudan. Government officials in the african nation said today at least 500 people have been killed since sunday this report is narrated by Lindsey Hilsum of independent television news. Reporter the foreigners are fleeing. Aid workers and diplomats gathered at juba airport this morning trying to get on flights to neighboring countries. Few south sudanese have that option. The u. N. Says up to 20,000 people have sought protection in their two compounds in juba where they hope therell be safe but although fighting eased today, just running for shelter has at times been deadly. translated most reporter Government Forces appear to have retained control after fighting broke out between two factions of the president ial guard on sunday. The government calls this was a coup attempt but it seems to be more a political and ethnic power struggle. President salva kiir, an ethnic dinka, appeared on tv on sunday and again today, offering to talk to his enemies, specifically the former Vice President , riek machar, whom he sacked in july. Machar, an ethnic nuer, denies that he tried to overthrow his former boss. He has reportedly returned to his home area, north of juba. Today, the u. N. Secretary general spoke to the president. I also called on him the need to dialogue with the political opposition. I welcome the reports from this morning that president salva kiir is willing to enter into such talks. Reporter on the streets of juba and now in other towns, south sudanese fear what will come next. Already some nuer say theyre being targeted by dinka soldiers loyal to the government. In 2011, south sudan celebrated independence from the north after decades of war. Citizens wept in joy but they could equally have shed tears of rage. Their leaders are dragging them back into conflict, condemning them to endless poverty and strife. Ifill in egypt, prosecutors brought new charges against ousted president Mohammed Morsi today. Hes accused of plotting with hamas in gaza and hezbollah in lebanon to wage a campaign of violence after he was overthrown. Morsi is already on trial for allegedly inciting the murders of protesters last december. The u. N. And European Union aid agencies are calling for a humanitarian ceasefire in syria. They said today they need to deliver critical supplies to people facing another harsh winter. Meanwhile, a government assault on the besieged city of aleppo continued with a fourth day of air strikes. Activists say more than 100 people have been killed in that time. A main figure in the great train robbery 50 years ago died today in britain. Ronnie biggs was part of a gang that held up the glasgowto london mail train in 1963. They got away with more than 50 million in todays currency. Biggs was caught, but escaped and spent 35 years at large. He returned to england in 2001 and won his release from prison in 2009. Ronnie biggs was 84 years old. A georgia woman will get half of last nights huge prize of 648 million in the Mega Millions lottery. Officials identified the woman today as ira curry of stone mountain. She bought her ticket at a tiny newsstand in buckhead. The other Winning Ticket was sold at a gift shop in san jose, california. Ticket holders have 180 days to claim the prize. Still to come on the newshour the fed pulls back from its stimulus; new changes for a major government spy agency; the slow pace of recovery in the typhoonstricken philippines and the White House Press corps pushes for more access to the news they cover. Plus, looking ahead to next years midterm elections. And paul solman ventures into Virtual Reality. Woodruff the Federal Reserve has been warning for months it would shift and reduce the size of its role in spurring the economy. But right up to this afternoons announcement, many were still wondering when the fed would dial back and how it would do so. Ben bernanke came to his last scheduled News Conference as fed chairman, as the central bank announced it will start scaling back its longrunning Stimulus Program. Todays policy action reflects the committees assessment that the economy continues to make progress, but it also has much farther to travel until conditions can be judged normal. Our modest reduction in the pace of asset purchases reflect the committees belief that progress towards its economic objectives will be sustained. Woodruff the fed has been buying 85 billion in Treasury Bonds every month to hold down Interest Rates and boost economic growth. Starting next month, that amount will be reduced by 10 billion a month. At the same time, a benchmark shortterm Interest Rate will stay near zero. The fed says that policy will hold well past the point when the Unemployment Rate falls below 6. 5 . Its now at 7 . The job market has continued to improve, with the Unemployment Rate having declined further. At the same time, the recovery clearly rings far from complete with unemployment still elevated and with both underemployment and long term unemployment still major concerns. Woodruff for bernanke, the announcement is a climax to an eightyear tenure thats been marked by big moments in u. S. Financial history. He took over as fed chair from Alan Greenspan in 2006. Two years later, the housing bubble burst and foreclosures exploded. Mortgagebacked securities collapsed, taking down some big banks and sending shock waves through the stock market. Bernankes fed responded with massive bondbuying, starting in 2008, known as quantitative easing. Now, the challenge is to wean the economy from that support. But, bernanke cautioned today, it all depends on how the economy does. The steps we take will be data dependent. If we are making progress in terms of inflation and continue job gains and i imagine well continue to do probably at each meeting a measured reduction. If the economy slows for some reason or we are disappointed by the outcomes we could skip a meeting or two. On the other side if things really pick up we could go a little bit faster. Woodruff bernankes term ends on january 31. The senate could confirm his successor janet yellen later this week. We examine todays moves and the larger impact of the feds Stimulus Program with three people who watch this all closely. Adam posen worked on the Monetary Policy committee from 2009 through 2012 for the central bank of england. He is now the president of the Peterson Institute for international economics. John taylor is a former undersecretary of the treasury during the george w. Bush administration. He is a professor of economics at stanford university. And david wessel is an economics editor at the wall street journal and the author of in fed we trust. Welcome to you all three. David wessel to you first, what would you add to the explanation of what the fed did today exactly . Well, i think the fed is beginning the end of what has been an extraordinary period of Monetary Policy when ben bernanke became chairman, they had a portfolio of 800 billion. Today its 4 trillion,s that 4 trillion, that is just unprecedented but he made clear they dr. Going to keep interests rate very low for a long time. And that seems to be what the market is focused on. Because the stock market was just jumping for joy at this announcement, not fearing that the dreaded tapering. Woodruff and david, why did they do it now . Well, mr. Bernanke said that they did it now because the economy had reached the point where they thought it was time to start turning the dials. The labor market had improved substantially. He insisted it had nothing to do with the fact that hes leaving office in january. But its very hard for me to believe it wasnt a factor in their mind it would be good to get this going before he handed the gaffe told janet yellin, his likely successor. Woodruff is this the right move . Its a mild mistake. The cart is before the horse in what david just said it wasnt an extraordinary period in Monetary Policy, it was an extraordinary period in the economy. And the moan tear policy tried to react to that. s coming to the end of that extraordinary period. So were shifting a bit. Probably the fed is tapering a bit too soon. Because theres no inflation in sight and the unemployment is still high. Its not a huge deal one way the the other. Woodruff you think they should have kept their foot on the pedal. I think they should have. I think there was very little risk and it would be possible to dial it back later. But as you and david acknowledged, there wasnt the kind of ripples through the market we saw in may when the fed first talked about tapering. I think its not just theyre used to, but the news has been generally good about the u. S. Economy. Woodruff john taylor, what how do you read this, is it the right move in your mind . I think is i think the quaint tative easing has not been very effective. Its Interest Rates are higher now than they were when quantitative easing 3 began. The purpose was to lower Interest Rates. So i think its a good move to begin to get off of this. And hopefully the economy will actually be working a little better now. I dont think its helped the economy. Your comment about the feds actions during the panic in september, october 2008 are well takenment but after that i think the interventions theyve had had not really helped the economy, unfortunately. Its been a low recovery by any measure. And unemployment has only come downgrade allly. And would be even much slower if so many people had to the dropped out of the labor force. Woodruff adam posen, how do you respond to those comments . I think john is missing the point. Weve seen in other countries like greece, like spain, where they didnt ease Monetary Policy subject to the same shock and things got much worse. When we say that the quantitative easing, i believe quantitative easing made a huge difference. We had fiscal tightening at the state and local government level. And then at the federal level outside of 2009. We had european crisis, we had household saving extra amounts. So we only recovered in large part because the fed did this we got ourselves back towards normal because of qe, not despite it. Woodruff john taylor . No, i think about the purpose of the quantitative easing as stated was to lower longterm Interest Rates and, if again, look at q e3, it began just in december of last year, september of last year. And rates are higher now than they were then. So how you can say it helped. LowInterest Rates have not been the result. I would say again the distinguish between these actions taken in september, october 2008. And Everything Else since then. Those actions are were classic central banking. They were good. Ben bernanke did a good job at that point. But since then i just think theres not evidence. And i think the market is going to do better basically when the fed gets off of these extraordinary unprecedented policies. Davids right, theres nothing like this been done before in Federal Reserve history. And when these kinds of actions have to the been taken, when theyve been avoid, weve had a much better recovery. This is the worst recovery. Woodruff adam pos en. It is disingenuous of john. Because the idea that the economy is going to get better proves the qe stopped working is backwards. The reason they are easing up on qe is because the economy is improving. Playing that game doesnt make any sense. More importantly, its not reasonable to focus focus on the rather than the goals. What matters is the state of the economy, not what tools they use. Woodruff john taylor you want to come become and then i will go to david wessel. There is absolutely nothing disingenuous. Look at the data, look at american history. You can see what works and what doesnt. This policy has not worked. I actually think thats why a lot of people want to get off of it. Its not some of that the economy looks better. Its that this is an opportunity to get back to a more normal policy like we had in the 80s and 90s which worked very well. A lot of people had been skeptical about the qe. Its not just me, its what we see when we look at the data. The market buying u. S. Bonds and the economy is responding and look at the Housing Market and labor data that Benn Bernanke cited. Youre just ignoring the fed. Woodruff david, give then debate that is still raging out there about what the fed did, any more light you can shed on how they came to this decision . Well, i think that there was some data at the fed among some people about whether it was really doing any good. I think in response to john taylor they say the question isnt are rates lower now than they were when they began q e3. The question is what would rates have been had the fed not had done this. But there are people on the fed who thought this policy had outlived its usefulness. And it was causing more concern inside the fed which is why they decided to pull back. But at the same time, to emphasize, and i think its really important, that the shortterm Interest Rates, their traditional tool will remain low for a very long time. Probably until 2015 if not 2016. And thats a pretty big deal. And it may give the economy some support as they begin to get to more normal situation. Woodruff we know that Benn Bernanke is going to be around a little more than another month. So its not the end of his term but were nearing the end. And this is a moment when we can look, i think just briefly adam posen, at his record. What has he accomplished. Has he accomplished what he set out to accomplish . I think chairman bernanke did an incredible job. There were a couple of errors. I think the mishandling of the taper announcement last may. Certainly his role in the excessive deregulation, loose up supervision in the early 2,000 but Everything Else was great. They reacted to the panic in 2008 2009. They got International Agreement on loosening policy. He increased the transparency of the fed. He creatively came up with new methods when they couldnt cut Interest Rates below 0. And he has spobly hoo tucked to the american people, i think he has done great. Woodruff john taylor, how would you size up ben bernanke at this point . I think the actions taken during the panic in september, october 2008 were good. Classic central ban