open the door to releasing the charges altogether. but her attorney says she stands by her story. >> the victim, from day one, has described a violent sexual assault that dominique strauss-kahn committed against her. she has described that sexual assault many times to the prosecutors and to me. and she has never once changed a single thing about that account. >> patently false. i think if he were being accurate, i don't think the district attorney's office would have moved to completely exonerate his bail. i think there's an agenda here, ours is to see that justice is served in this case and he has a client who has a financial interest in making this case something that it's not. >> ron allen is live in new york with the latest astounding developments, developments that have repercussions in terms of foreign policy, international, global finance, and, of course, the french presidency. but more importantly, right now it is a criminal case in the new york court, and this is a huge setback for a prosecution and potential tragedy for all concerned. >> reporter: interesting you point out those global issues. people in europe are still talking about this case, yesterday, of course they're talking about it even more so today. it it's really hard to know what to make of where things go from this point forward. the district attorney here, cyrus vance, jr., spoke. he said the charges still stand. he said that the investigation would continue, and that the -- they go where the facts seem to lead. but he's said there are credibility issues with the alleged victim. dock neek strauss-kahn's attorneys say there's been a rush to judgment, they've been saying that all along, and this points that out. and the attorney for the alleged victim spoke the longest, and the most vehemently. he said that she will now come forward to talk to the press, to talk to the public, to tell her side of the story. and he says the bottom line is that regardless of what happened to her before this, regardless of what happened to her after this, the bottom line, he claims that she was still a victim of a violent attack, and she insists the prosecution of this case should go forward. >> ron allen, we'll obviously be following this throughout the day, tonight and in the future. thanks, ron. for more on the sturning turn of events in this case, let's bring in editorial director of the peterson i institute for economics, reporting from washington. what do you make of this? there was already a complete cultural divide between france and the united states on this issue and it raised huge questions just about the male/female gender divide, and now we have this, strauss-kahn no longer under house arrest, no longer this huge bail, free on his own recognizance. it's clear this has not been what it seemed. >> thanks, andrea. i think that divide is going to continue, but not only on cultural and sexual and male and female gender issues, but also the credibility of the criminal justice system. the french were very dubious about the rush to judgment, but maybe they will now see that at least the prosecutors were willing to confront evidence that contradicted their case, and they took the initiative, it appears, to let him go out of house arrest. but i think in terms of the international monetary fund, which strauss-kahn was forced, in effect, to resign from, this is water under the bridge. the fund has new leadership, it faces grave crises in europe and elsewhere. whether it's water under the bridge for french politics and french/american relations is another question. >> do you think there is any chance, if he is exonerated of these charges, private sexual behavior is another question. but if he's exonerated of the criminal charges, do you think there's any political future? because he was the leading contender to challenge sarkozy and was in fact returning to france to launch that campaign when all of this happened. >> it's difficult to speculate on that, andrea. but i do note from the news reports that his supporters in in france are talking about reviving his candidacy, which, if he's exonerated, would seem to make that possible. on the other hand, if you read "the new york times" this morning, it said that there was some kind of a sexual encounter, and there was physical evidence of such an encounter, so his future in french politics may depend on the nature of that encounter, which we don't know yet. it's murky and it may remain murky. >> well, the charges have not yet been reduced, but certainly this signals -- what happened today in court, does signal that the accusations are on much less solid ground and if anything this might end up being a misdemeanor. still he's not allowed to -- yeah? >> i see. as a practical matter, you know, you're talking about a jury in new york. okay? and it's going to be very hard to convict somebody if his only accuser is somebody whose credibility has been damaged. but on the other hand, if there's evidence of a physical encounter of some kind, that's going to weigh, even if it ends up not being a factor in a criminal charge, that's going to weigh on his political future. don't you think? >> indeed. well, fascinating case, but again, the human drama behind it all is sort of overwhelming. it's what reminds us that we should not -- >> it's shocking. >> it's shocking and people should not rush to judgment. thank you so much for joining us. >> i was just going to say, for anybody in the news business, it's a humbling episode as well. >> exactly. it is a teaching moment, unfortunate live at the expense of the real people involved. and thanks, steve. tim geithner now says that august 2nd is a real deadline to raise the debt ceiling or else the u.s. will go into default and face potentially catastrophic results. republicans say geithner is crying wolf. chuck todd, kelly o'donnell, capitol hill correspondent, both join us now. chuck, first to you. the white house says that the deal has to be done by july 22nd in order to get it passed by august 2nd. they say it is a real deadline. address that and also of course the talk about whether or not tim geithner, now that we know his son is going to return to high school, they never were able to sell their house in west chester county, new york. whether or not he's looking for an exit strategy. >> let's take on first the part about the july 22nd deadline. this is, according to the way the white house puts it, is that this is the only way, if you want to meet august 2nd, you've got to get it basically done by july 22nd, because to get the bills written, to get them marked up, to get them passed through both the house and the senate, get those three-day waiting period, you put all that together and essentially that's what they're saying, that in order to get to august 2nd you need to back it up. so that's how they've come up with july 22nd. now, over the next few days, we are expected to hear from the treasury department about a new estimate of when we hear the debt ceiling. one of the reasons the number has been moving is because tax receipts, because of the slowly-improving economy, have actually increased, and that is why it's shifted, for instance, from may as it was when the year started, to now august 2nd. the assumption is it will be somewhere around maybe the 9th or the 10th. now, as for the geithner speculati speculation, this is more personal than professional, and it's my understanding he's not necessarily looking to leave, it's just that there's some pressure being put on at home that might be doing that, that he himself doesn't want to leave. i can tell you this, there's going to be a lot of pressure on him not to leave. bal because the last thing this white house needs going into a presidential election is a confirmation hearing on the president's economic and stimulus policies. that will be a nightmare. and that is what this white house will be very worried about. that's why you heard geithner quickly quash that yesterday with bill clinton. >> and, of course, there would be no way to get anyone else confirmed in election cycle. kelly o'donnell, that brings us to capitol hill. first of all, the strong reaction up there to the rhetoric of the president that took place at the news conference, republicans really reacting strongly. is this just more theater, or are they really offended by the way the president took them on? >> there certainly is a theater quality to it, but underneath that, there really is a frustration, even an anger. possibly even a resentment, if you want to go that far, that they believe the president is not being realistic. they're trying to say that something that would include tax increases in order to come to a deal would not pass the house where there are a lot of independent spirits who would not be willing to vote for it and also in the senate. they think that raising taxes is an argument not only popular among their republicans to not see that happen, but also some democrats who are up for re-election in tight places. so they think the president chiding them in a way that painted them kind of like schoolgirls because he referenced his own daughters, that hit a nerve and they pushed back very hard in a coordinated way with a lot more of a personal tone coming back toward the president than we usually hear. so there's a frustration that the president also declined the republicans' offer to come and visit with them. that was something that made the gesture itself may have been for political purposes but now they can also say he didn't accept their invitation. >> we'll have to see what happens when they get back to talks next week. have a great holiday weekend, i hope, off, kelly o. and chuck todd. thanks so much. we'll see you on "hardball" tonight filling in for chris. >> you've got it. see you at 5:00. >> thank you. >> enjoy as pen. >> thank you. what's not to enjoy? leon panetta was sworn in as the new defense secretary taking charge of two wars and facing severe budget cuts under any scenario. here with me now, jane harman, now president of the bipartisan woodrow wilson center. great to see you, jane. thanks so much for being here. first of all, leon panetta taking on the pentagon, we know there will be budget cuts, he knows where the money is, but he has said today in a very strong message to the troops that he's not going to preside over a hall lowing out of the army. it won't be the fears many of them experienced frankly in the beginning of the '90s, with the beginning of the bill clinton administration. what do you think his biggest challenges are? >> three things about him. first, he knows what he doesn't know. this is not a guy who's going to fake it. and i think people respect him for that. secondly, he has exceptional political skills and is very popular on capitol hill. and the third point about him is this budget cutting expertise. there are ways to cut the defense budget responsibly. there are legacy systems that are defended by members of congress because they create jobs. >> they're in every district. >> sure. and the contractors have been sworn about this. but the contractors can make new things that give us the capability we need now and in future wars, rather than stick to the old cold war centric acquisition budget. he has the skills to per situate the members of congress and contractors to change and he will be able to cut some of the waste out of the pentagon budget. >> we should point out in previous life he was a congressman from california. >> he sure was. >> so you know that whole -- >> worked with him closely. got one of his bipartisan awards, actually. i was pretty proud of that. >> let's talk about afghanistan, one of the hot wars and the fact that we had the bombing, the attack against the intercontinental in kabul which is a real signal from the taliban and network they can go to a target right in the heart of the capital. if the karzai forces we've been training up can't defend -- they responded well in the emergency, we're told, but if they can't respond in kabul, isn't that a signal it's going to be a long haul, and maybe there is no legacy end of the tunnel? >> i think the reset of our afghan policy last week by the president was correct. i think it was long in coming. i was never a fan of the surge or the counterinsurgency doctrine. karzai is not a willing partner. last week this mumbai style shooting attack, it could have been worse. i would give the afghans a little credit, but it was staged by the hakani gnat wornetwork, protected group, protected by the pakistani government. that group comes over the border regularly, kills our troops and obviously now is prepared to shoot at big targets in afghanistan. it's a bad signal about how ready the pakistanis are to confront terror networks in their own country. >> jane harman from the woodrow wilson center, thank you very much. and up next here, the arab uprising and the secret weapon being used to get around governments trying to silence the masses. and still ahead, education nation, the battle over no child left behind in congress. my conversation with arne duncan here in aspen. 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[ female announcer ] wake up to sweetness with honey nut cheerios cereal. kissed with real honey. and the 100% natural whole grain oats can help lower your cholesterol. you are so sweet to me. bee happy. bee healthy. ♪ ooh baby, (what) can i do for you today? ♪ [ female announcer ] need help keeping your digestive balance? align can help. only align has bifantis, a patented probiotic that naturally helps maintain your digestive balance. try align to help retain a balanced digestive system. try the #1 gastroenterologist recommended probiotic. align. in lithuania today, secretary of state hillary clinton tried to encourage democratic uprising that held so much promise last spring throughout the middle east and north africa. >> it is too soon to tell whether democratic institutions, pluralism and the rule of law will emerge, or if those hopes will prove little more than a mirage in the desert. >> one key to modern revolution, if preventing regimes from controlling access to new media, there may be hope however in technology as the obama administration tries to help reformers in places like iran and china fight censorship. richard lobo is director of the international broadcasting bureau, an independent agency, and welcome to you. first of all, let's talk about iran, the green revolution. we saw what happened. there were fledgling attempts through cell phones. this was two years ago, and it was completely stifled. how have we managed to work around or trying to work around all this to help the iranian reformers rise again? >> women, first of all, i think more and more people in that region have gotten access to cell phones, to laptops, to mobile devices of all kind and we're trying to capitalize on that. our agency started almost 70 years ago as a radio short wave agency. as people's media habits have changed we've migrated with them and we're finding television and new media are the platforms of the future. we want to be there. so we are developing along with private sector people in this country some very good internet sir customervention tools and we're having a good deal of success primarily in china and iran of all places. we're just doing gangbusters. we have a many program, for example, that we produce on our persian news network, part of the voice of america, it's a half-hour show. >> we've seen it on "the daily show," because jon stewart interviewed these incredibly creative ex-pats, these iranians. >> they try to jam us there, but it's got a great audience and they get us via satellite. but the best news we've had so far and we just announced it ed why, is they have 500,000 youtube friends. their material each week is downloaded. >> 500,000? i mean -- that's amazing. >> it is amazing, and that's great news for us. we also had a great deal of success during the egypt uprising. we have a network, this country has a network called alhura and they really came into their own during the events in cairo. we had about 25% of the audience there beating many times cnn and some of the other traditional networks. we also found that we could get messages through our television broadcasts to people on the street and tell them what was going on and tell them to go to our website and feed us video, feed us information, give us feedback so we could get that on television. >> how do you counteract the jamming? i know there's technology, but you've figured out ways so these mobile devices can still be used by the rebels in the streets. >> first of all, we have a very small but successful internet c. >> about seven or eight months ago we got $1.5 million from the state department to help us in our efforts. we have a few companies that applied for grants or for money from us for contracts, and they are now providing people in china, iran, vietnam, all over the world, proxy servers. and virtual private networks they're using very effectively. through traditional media, radio and television, we get the word to the people, to audiences around the world, we have these proxy servers, these vpns available, and they're using them extensively. >> that's great news. i know senator kerry has been a huge supporter and you're getting more money from congress separately as well. thank you very much, we will follow this and do more stories on it. >> appreciate it. thank you for having me. up next, how do you define happiness? 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