captioning sponsored by macneil/lehrer productions >> woodruff: good evening. i'm judy woodruff. the obama administration struggles to deal with public anger over airport screening measures. >> brown: i'm geoffrey brown. on the newshour tonight, margaret warner chronicles the back lash at the start of the holiday travel season. >> woodruff: then we get the latest on the political and financial turmoil in ireland. we look at the implications for europe and the u.s.. >> brown: ray suarez begins a series of three reports from an african nation with big promise and big problems.

>> suarez: mozambique is one of sub saharan africa's star performers posting tremendous economic gains yet most of its people are working harder than ever and not getting ahead. >> woodruff: we get another view on cutting the deficit from illinois democratic representative and presidential dead reduction commissioner jan schakowsky. that's all ahead on tonight's newshour. >> major funding for the pbs newshour has been provided by the best companies are driven by new ideas. >> our future depends on new ideas. >> we spend billions on advanced technology. >> it's all about investing in the future. >> we can find new energy, cleaner, safer. >> collaborating with the best in the field. >> chevron works with the smartest people at leading universities and tech companies. >> it really pays off. >> paying off every day. >> this was me, best ribs in

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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: the obama administration acknowledged today the government will consider the public's concerns and complaints as it evaluates rigid new airline boarding security checks. margaret warner has the story. >> warner: criticism of new, stricter airport screening measures provoked a round of mixed signals from federal officials today. homeland security secretary janet napolitano voiced empathy for passengers' concerns but said there are no current plans to back away from the procedures. >> most americans are not used to a real lawen, foment patdown like that. so as we move forward, of course, we will listen to concerns.

of course, we will make adjustments or changes when called upon but not changes or adjustments that will affect the basic operational capability that we need to have to make sure that air travel remains safe. >> warner: on abc, transportation security administration chief john pistol seemed to suggest the agency was open to some revisions. >> we are constantly adepartmenting. so what i am doing is going back and looking at, are there less invasive ways of doing the same type of screening. >> warner: but on cnn he said.... >> in the short term there will not be any changes. >> warner: later in the day white house press secretary robert gibbs said the government's position isç evolving. >> i think we are trying andç tsa is trying desperately to strike that balance. that will evolve, and again the evolution of the security will be done with the input of those that go through the security.

>> i think the tsa is out of control. >> warner: uproar over the new screening measures seem to mount this weekend as the thanksgiving travel week kicked into high gear. two methods are at issue. first at some u.s. airports, the use of full body scanners which reveal images of the naked body and subject travelers to a small dose of radiation. second, for passengers who refuse the scans, intrusive full-body patdowns that involve touching the most private areas of a passenger's body. reaction has been mixed. >> i would rather do the full body scan than having somebody handle me. >> i'm not looking forward to being patting down but it doesn't really bother me. >> i think it's just fine. no problem with it whatsoever. it's a good thing if it keeps us secure that's fine. >> warner: since the scanners are found in just 70 of the nation's 450 airports and not at every gate a majority of travelers are not yet subject to them. still horror stories are

circulating the internet. this video of a father taking off his young son's shirt for a patdown has become a you-tube sensation. saturday night live took its shot. >> the tsa, it's our business to touch yours. >> reporter: while supporting administration policy, secretary of state hillary clinton said yesterday she's glad she's not had to endure it. >> but would you submit to one ofhese patdowns? >> not if i could avoid it.ç no, i mean, who would? (laughing). >> warner: on saturday president obama said he understands travelers' frustrations but the measures are critical to assure airline safety. >> the procedures that they've been putting in place are the only ones right now that they consider to be effective against the kind of threat that we saw in the christmas day bomber. >> warner: last friday the tsa agreed to let pilots skip the scans and patdowns with proper identification. today delta asked that flight

attendants be exempted too. two websites are urging passengers to opt out of the scans on wednesday the day before thanksgiving. that could snarl traffic on the busiest travel day of the year. and we get two views now on the merits of this screening approach and the outcry. kate hanai is the founder and executive director of the passenger advocacy group flyers' rights dot-org. the website posted an open letter to secretary napolitano protesting the measures and clark kent irvin is former inspector general for the department of homeland security in the bush administration. he's now director of the aspen institute's homeland security program, and he sits on an advisory council for secretary napolitano. welcome to you both. kate, let me begin with you. tsa chief john pistol, secretary napolitano say these necessary to deal with thelutely emerging threat that is posed

on airlines. what is your response to that? >> well, we don't believe that the body scanners are effective at catching the kind of bombs that terrorists would most likely be using which would be cavity bombs or bombs hidden below one-tenth inch of skin. we're concerned about radiation issues. we feel these measures are absolutely unamerican and too intrusive for the flying public to handle on an ongoing basis. most people have not been through the scanners or the patdowns yet. they're about to find out over the thanksgiving and christmas holiday just how horrifying it is. our group is receiving about a thousand emails and hot line calls a day from people who are saying they simply won't fly if these are the only two options available to them. >> warner: what do you say to that, clark kent irvin? what evidence is there that these measures are effective for not only the current threats but emerging ones. >> right, margaret. certainly it's the case that there is no technology other than these full body imagers, body scanners that are effective at detecting

explosives. the metal detectors that have been in use since the '70s do not detect explosives. they're metalic detectors. there is nothing right now better than these full body imagers that can detect explosives. it's pretty clear from those who looked at this issue, experts, that the case would have been detected by whole body imagers, the christmas day bomber. i think the two key issues is related. different things are being conflated. secretary clinton said she wouldn't subject herself to a physical patdown if they didn't have to. the point is most people don't have to. it's only if you go through a metal detector and you alarm that you have to go through a patdown or if there is a bodyç scanner at the checkpoint. !rough the body scanner. most people who are given the choice elect the body scanner, 80% of the people in polls say that they would make this choice. i think that every legitimate effort has been made by tsa to minimize the security, the

privacy risk by muting the image, the person looking at the image as it's removed from the checkpoint. they're not stored. also as far as radiation is concerned both the fda and johns hopkins have certified that the radiation risk is really minimal. if there were an alternative right now it would be deployed. but the fact of the matter is there's nothing better. >> warner: what about that point, kate? people can go through the scanner if that's one of the options presented to them and that the tsa has taken great steps to make sure that the individual's identity can't be associated with the image. >> well, we don't believe that. we do believe that the images have the ability to be stored or that a tsa agent could take a photograph very easily of someone's naked body and store it. that's really beside the point. the issues addressed and i and our group disagree with it. the rapid scan scanner in particular had a faq on their

website that clearly stated that these ewen is would only go 1-10th into the skin which means any cavity bomb which is the most likely bomb that could be used by a terrorist could not be detected. thegovernment accountability officeç stated that it was unclear if meese machines would have detected a bomb like the christmas bomber. why are we implementing that instead of other technologies like biometric data which was available at the time that they were rushing to implement these scanners, was run all the way up the flag pole by many experts at tsa who went all the way up to the highest levels and said, you know, we really should be looking at expanding global entry domestically or fly clear or, you know, the retinal scans and the fingerprints in order to create a low-risk group of travelers that can smoothly move through security and possibly deal with the higher risk travelers and using the scanners and patdowns as a secondary method of scan. >> warner: you've used a number of terms. rapid-scan is the company that

makes a lot of these scanning machines and global entry and these clear cards were... are organizations or... you have the ability if you're willing to subject self-to a lot of security screening in advance to go through based on your fingerprints or your receipt retinal scan. clark kent, back to you, what about this point that whether or not and i don't know that we can settle it tonight, that this could have caught the underwear bomber, the next step is hiding the bomb in a body cavity. this wouldn't catch that anyway. if terrorists know that this kind of technology is being used they'll just move on to the next level. >> that's right, margaret. it is the case thatç this technology would not detect aç bomb hidden in a body cavity. that's right. what that means is we have got to work overtime to develop other technology that can detect explosives in body cavities. trace detection, for example, holds the promise of being able to do that. there's technology right now in the labs at the department of homeland security that can

do it. i think we need to urgently develop that technology and deploy it. it's more effective and it's less intrusive in the time to accelerate these efforts is right now. but as i said earlier, as to other bombs, the kind of bomb that mr. ... this technology is the only technology that can detect it right now. as to the point that was just made about our focusing instead of the screening procedures on people who are most likely to pose risk, the problem with that is that it sounds wonderful in theory. we can't do it in fact. we don't know who is the person to focus on. we don't know who the most risky people are. people can pass background checks. people can have clear records as far as terrorism is concerned. people can submit biometrics and such. those people can still be the people who actually would carry out terror attacks. in the absence of perfect intelligence, we have got to deploy the best technology that we've got. now i think tsa did not roll this out in the most adroit fashion. certainly some screeners have not been as sensitive as they must be to the traveling

public. but security is a right too. al qaeda is determined to attack us as we approach the 10th anniversary of 9/11. we are where we are, we've got to deploy this technology now it seems to me. >> warner: briefly and we don't have a lot of time left, there's been this flurry, we have aate lot of activity on the internetç, but do you think thatç this outcry will continue and build or do you think it will be something that after thanksgiving the public will just kind of tacitly aseed to? >> as people go through the scanners and the patdowns in particular, i believe this outcry is going to get far worse. i think because it was rolled out about a month ago prior to the heavy travel season during a month where travel is relatively low that after people go through the patdown, which i've been through the patdown and i have to tell you i had to literally check out mentally in order to get through it. i think most people feel the same way. many people don't have even that amount of tolerance. i think you're going to see some issues over this week. i think you're going to see

protesting also possibly some arrests because i've had a lot of people email me and say that they just won't put up with having their genitals touched. they may have a knee-jerk reaction to slapping a hand away. i think people have hit the tipping point where they're saying it's unamerican. it's violating my civil rights and my rights to privacy and that we have to find a different way. >> warner: quickly to you, mr. irvin. if she's right and the outcry continues and builds at some point does the government have to be responsive in some other way? >> well, i think the some other way is as i said developing this technology which is automated technology so that a person does not have to determine whether you've got an explosive on you. we've got to develop this technology urgently but in the meantime the key point here is that most people don't have to endure the physical patdown.ç that's what really is at the root of most of this. body scannersç are safe. they're effective. most people would choose them. i think after we get through

this holiday season, people will see that for themselves at the airports. most people will choose the whole body imagers. i think they'll see they're safe and effective. the number of people who choose the patdowns will be very small indeed. >> warner: to be continued. thank you both. >> thank you. >> brown: still to come on the newshour, the political and financial costs of the irish bailout. mozambique's growing economy still grappling with poverty. and congresswoman schakowsky on cutting the deficit. but first the other news of the day. here's kwame holman in our news room. >> reporter: u.s. officials played down reports of a new highly sophisticated uranium enrichment facility in north korea. a visiting american nuclear scientist recently was shown the once hidden site at the north main nuclear complex. today the u.s. special envoy for north korea, steven bosworth met with south korean officials and said he was disappointed but not surprised at the revelation.

he hoped disarmament talks could be resuscitated. >> i do not believe in engagement just for the sake of engagement. or talking just for the sake of talking. we have to begin to make progress, and it is fundamental that the north reans demonstrate that they approach the dialogue and the discussions and the negotiations with that same measure of seriousness. and willingness to actually make hard decisions. >> reporter: north korea claims it has installed 2,000 centrifuges inside the newç facility. u.s.ç defense secretary robert gates warned that could help the regime build a number of nuclear devices. more than 330 people died in a surging crowd in cambodia, according to the country's prime minister. more than two million people were in the town for a three-day water festival marking the end of the rainy season. the crush of people, some panicked and the stampede ensued. hundreds more were injured. nato reported the deaths of two more service members in afghanistan. they were killed in a bombing

in the south. there was no immediate word on their nationalities. at least 45 nato soldiers have died in the country so far this month. 38 of those deaths were american. one of the world's most wanted nazi suspects has died in germany before facing trial. samuel kunz was under indictment on allegations he participated in the killing of more than 400,000 jews at a concentration camp in occupied poland during world war ii. the german court overseeing the case announced today that he died last thursday at the age of 89. the case against kunz only came to light as prosecutors prepared for another case against the retired auto worker from ohio. stocks on wall street endd the day slightly lower. they managed to pare back earlier losses from worries about europe's financial crisis and the widening federal probe into insider trading. the dow jones industrial average lost 25 points to close at 11,178. the nasdaq rose nearly 14

points to close at 2532. those are some of the day's major stories. now back to jeff. >> brown: and we turn to those worries about europe centered right now on the nation of ireland. yesterday the irish government accepted a multi-billion dollar bailout and its european union partners and the international monetary fund. late today ther)jish prime ministerç relented to pressure to call new national elections early next year. we begin our look at all this with a report from dublin. the correspondent is faisal islam of independent television news. >> reporter: economic collapse and now seeming political collapse too. ireland, a nation looking for someone to blame. the natural justice tonight, and not just the protesters who broke through police lines into the courtyard of the government's buildings. across dublin locals were beginning to sense that their fate was no longer entirely in its nation's hands but also in

that of the e.u., the international monetary fund and the european central bank. >> the government.... >> reporter: the prime minister came under fire announcing the rescue. >> the reality is-- and everybody seems to know this-- you're a liability not just to your party, not just to your government but to the country because nobody believes you. and also people know you're the guy most responsible for the chaos that has been caused. >> don't you owe us, as an act of patriotism to the irish people to get out now? >> sorry. i don't accept the premise of what you're saying. >> reporter: the irish leader has been meeting his ministers today in order for the i.m.f.and e.u.rescue to pass. he'll have to muster the votes for controversial budget policies instead a 10% cut to welfare a one euro cut in the minimum wages, tens of thousands of public sector job cuts but this isn't just about

ireland. stock markets across europe were down today as fears spread beyond the emerald isle. here it is the cause of all the trouble. perhaps the euro. when this was created just over a decade ago, there was one concession offered to the member countries including ireland.ç the tails are the sameç but the heads are different. that's italy's. here's spain's. this is the german's. and this famous half of ireland. and for so long many people just assumed that the euro was this, a reincarnation of the deutsche mark. this year we realized it also had element of lira and other money, that it was backed by some countries with very high deficits and debt. the question now that the irish have been saved is that will this crisis really just stop and not spread to portugal, italy or even spain? in the first place of the

irish republic a new monument not to ireland's independence but seemingly the size of its financial mismanagement and it's everybody's problem. >> brown: a short time ago i spoke to dineen, business editor of the irish independent newspaper from dublin. welcome. so why did the irish government suddenly seek to bailout after insisting even in the last few days that it wasn't necessary? >> well we had a dramatic turn of events over the weekend where our prime minister came out and finally admitted that the country will need a bailout. this seems to center around our banking problem. and the banks are now too big of a problem for this country to deal with on their own because there are such high losses throughout our entire banking system that the country simply cannot deal with them and will not be able to pay for them. >> brown: was that a surprise because even a few days ago the prime minister said a bailout would not occur. >> sure. he was, we believe, hoping to come forward with a

counterproposal that would mean that he would be able to deal with the banks themselves or we as a nation could deal with the banks. as you can imagine, this has been somethingç that as a nation we want to do. he wasç fighting tooth and nail not to have to approach this. after the weekend there seemed to be somewhat of a capitulation where he was either forced by his e.u.counterparts and forced by the threat of problems that are in our banks after the i.m.f.and the e.u.arrived in the country to go through the bank books. he was forced to to ask for the bailout. >> brown: this has led to a political crisis, with the prime minister seemingly fighting for his life. where do things stand today? >> as we speak the prime minister came out just a little over an hour ago and said that he would go and dissolve our parliament and run for an election again in january. he pretty much... his days are numbered. he's come out and said, i will try and push a budget that we

want to go on for next week. after that he'll run for re-election and call an election for january. >> brown: that budget you just referred to will be a tough austerity budget. you've had these austerity measures for several years now. what's coming and how big a problem is all this for the irish economy? >> not looking good for the next number of years i'm afraid. wednesday, the day after tomorrow, we're hoping that the government will come out with what is called a super budget. so it's a four-year plan which they will outline 15 billion euro of cuts and taxes that will be taken out of the economy. over the next four years. >> brown: and explain for us how and who this hits. how is irish society, its businesses and workers, how are they all affected? >> absolutely. this is going to hit people right from the very top right down to the very bottom. when you're looking at 15 billion over four years, which is essentially 10% of the economic growth of this country, nobody is going to be left untouched by this.

you're talking taxes, increased tax bands which will bring in those who earnç very little into the tax band. it means that thoseç who earn an awful lot at the very top, they will be paying more. middle-income ireland they will probably get caught the worst because child benefits will be cut. pensions will be cut. social welfare will be cut. it's not going to be pretty. >> brown: what about the nation's psyche? just a few years ago ireland was being held up as the so- called celtic tiger with the booming economy, brimming confidence and optimism. what's happened now? what do you see around you? >> things have just turned full circle. the celtic tiger unfortunately is well and truly dead at this stage. there are a lot of for sale signs. people are trying to sell their homes. immigration is increasing. the number unemployed is increasing. there's a lot of concern. people are very worried. they're waiting for this budget to come out until we see exactly where we stand, but there's an awful lot of

concern there at the moment. >> brown: and is the depth of the crisis in the banking system even now understood? is it clear what needs to happen or what will happen with the banks? >> no. unfortunately it's not. like you said up until the weekend, the government were denying there was any need for a bailout. then over the weekend has emerged that our banking crisis was too big for us to deal with. that it became too big an issue for our country alone. so everybody is wondering, well, what is the issue? where are the big holes in our banks? as we speak the imf and the european commission are here. they're going through the bank books. they're pinpointing what to look at and where exactly are the holes. there is a large concern. the next crisis will surround mortgages and people whoç are unable to pay their mortgages. >> brown: isç the depth of the crisis in the banking system even now understood? is it clear what needs to happen or what will happen with the banks? >> sure. we're not alone on this.

this is either the joy or the problem of being part of the euro zone. ireland has bailed out now. greece was bailed out a couple of months ago. concern and focus is now shifting to portugal and spain. whether they will be the next group of countries that will be under the focus of the bond markets and the borrowing markets. >> brown: ms. dineen of the irish independent, thank you very much. >> thank you. >> brown: for a broader look at the potential fallout from the irish crisis here and globally i'm joined now by jacob kierkegaard an economist at the peterson institute for international economics and the director of the european union research center and professor of international finance at george washington university. welcome to both of you. help us understand ireland's situation. in what ways is it similar or different to what we've seen in other countries in the last couple of years. >> there's a lot of similarities in terms of what happened with greece in may. essentially european

leadership has failed us again. the irish economic problem is different than what happened in greece. public finances were a disaster in greece. in ireland it's a weakend banking sector which is a fallout from the housing market crash. there are two very, very different problems. this is a crisis of fear. in fear all the countries look alike. the european leadership has forgotten that in this type of crisis clear-cut, crisp action isç required. they've done the sameç thing again they did last spring. they denied. they delayed. and now they're going to have to throw more money at the problem. the problem is just compounding itself. >> brown: what's your analysis? >> i would largely agree with what we just heard that there is a very different situation. i mean ireland clearly exemplifies that you can do everything right but if you get your banking system wrong, then you're going to end up in the same situation as greece was in. but i don't actually think that it's fair to say that the european union leadership has failed us again because if we look at the timeliness of this package, it came much sooner

than the one we saw in greece. therefore, there is a chance that, yes, there will be money thrown at the problem. it doesn't solve necessarily in the first order the ultimate solvency issue of ireland's banks and its own government. but it does, i would believe, go somewhere along to contain the contagion through the european banking system. >> brown: how does one judge the success or failure of this action, the bailout? >> well, if we start to see the same kind of silent bank run that we have actually seen in ireland which is also what has caused this crisis with large corporate depositors leaving other european banks because of the fear that these banks are exposed to ireland, if we start seeing that in spain, in italy, in germany and france, then we will know we will have failed but i will contend that so far we haven't seen that. i don't believe that we will see that. >> brown: what are you watching for to know? you're seeing that the e.u.came to this late. now what?

>> portugal. we watch portugal toç see if thisç bailout actually works because the whole point now is to stem the infection. >> brown: and? i mean, so we wait to see if it spreads to portugal. >> if it spreads to portugal then the real dangers will be spain. spain is really too big to fail here. >> brown: before we continue on with europe, let me ask about the u.s. are there complications for us here? why do we care about what's going on? >> i think two-fold. one, europe... the european union is the largest trading block in the world. the obama administration wants to double its exports. this is a major trading partner. we don't want to seem weak to europe. secondly as a by-product when europe falls the dollar gets stronger. this hits us in terms of us wanting to double our exports in the next four years. >> brown: what do you see for the implications for the united states? >> there are non-trivial exposures of the u.s. financial system itself to ireland. i mean.... >> brown: the banking system. >> the banking system. there are about 60 billion in

direct exposures according to the data on these issues but at the same time the real fear here is that ireland will trigger a systemic banking crisis in europe that will ultimately engulf the entire global financial system and obviously also the one in the united states. >> brown: the entire global financial system. >> exactly. if this becomes a systemic banking crisis in europe which i believe will not happen but you cannot rule it out then that is what we're talking about. >> brown: you were about to talk about portugal and spain. i mean, when you look at the potential for contagion, you look at portugal and spain? >> yes. i mean certainly i look at portugal. because this is a country where you have to ask, given the very poor growth record that this country has had over the lastç decade, i mean, even before the economic crr3rz, it's not clear that portugal at this level can sustain its current debt level but at the same time i think... i don't quite frankly worry so much about portugal because

portugal will get the same kind of or can get the same kind of a financial assistance in my opinion without many problems from the european union and the imf. there is, quote unquote, enough money there. the real issue is whether or not spain is the next target, so to speak, by the financial market. if contagion spreads to spain as well. what we have to ask ourselves is the circumstances and the events in greece, ireland and portugaling about to make it more or less likely that spain gets into the same situation? i think if you look at the actual actions that have taken by spanish government, the kind of reforms that they have implemented, pre-emptively so to speak, i think you have to conclude that the situations in the smaller countries make it less likely that spain gets into this situation. >> brown: are you that hopeful? >> i'm a little more pessimistic. i think there's a basic problem going on here. the financial markets have somehow got it in their heads that if there's no austerity programs in all of europe,

those countries are going to be weak and they should be attacked. the problem is austerity programs in the short run shrink an economy. if there's no growth there's no recovery. it's a contradictory situation going on right now in terms of what's going to happen down the road. >> brown: you know, we talked about this when greece got its bailout. >> that's right. >> brown: does all of this raise questions about the survival of the euro? >> no, no. >> brown: no? >> i don't think that's really an issue byç but i think theç euro zone and europe in general is in for difficult times in the short run and perhaps for the medium term. >> brown: meaning. >> meaning joblessness, slow anemic growth and with austerity programs being the mantra of the day and i don't think it's appropriate for all the countries. i think the markets will wake up and say these huge budget cuts were not the most appropriate measures for some of these countries.

perhaps a stimulus is more appropriate. >> brown: do you see implications for the euro? >> no, i don't think any of this what we see here doesn't lead to the break-up of the euro in my opinion under any circumstances. the short answer to me at least is that no democratic government will ever voluntarily leave the euro. you can't be excluded. you can't be kicked out. essentially what you have to ask yourself is will it lead to a situation where one of these countries will have to default or restrek tour its debts but it will happen inside the euro? what you are looking at is a different type of euro zone because the euro as a political project was always sold, if you like, as this great vision of a positive, you know, rising welfare level, rising income, et cetera, convergence. everybody would become as rich as luxembourg. that story is going to end. it's going to be essentially a story that we have stuck with the euro because we can't afford to leave.

so it goes back to machiavelli.ç better fear than love. >> brown: sold is theç key word going back 20 years or so. but if you're a citizen now in germany or in one of the wealthier countries and you're look ating at your hard-earned tax dollars going to bail out country s is there a potential for a back lash there. >> angela merkel is going to have to face this again. i think what you have a two-tier europe. this is not the idea initially. the richer countries and the ones perceived to be weaker will pay a price for this. >> brown: thank you both very much. >> thank you. >> a pleasure. >> woodruff: next ray suarez begins a series of three reports from the southern african nation of mozambique. amid much poverty, ray and our global health unit found some signs of economic growth.

>> suarez: a country with 1400 miles of indian ocean coast line, neighboring six countries gifted with natural resources, mozambique is wrestling to find its place in the world economy. after a long struggle for independence and nearly two decades of civil war in the 1990s mozambique finally began to enjoy peace and stability. the ruling party turned its back on marxism, opened the country up to investments and imports. in the last several years has posted rapid economic growth.ç in the past 15 years, theç economy here has grown 8% on average and despite a slip due to the global economic downturn, this year mozambique projects 7% growth. signs of construction and bustling commerce can be seen throughout the country's capital city. former portuguese colony, mozambique is often held up by

the international community as a model for post conflict african states. sometimes called a donor darwin, the country has gotten billions of dollars in foreign aid. carlos is an economist with the institute for social and economic studies in the capital city. >> it was very hard to find a success story. congo has an ongoing war. angola has maintained levels of corruption. nothing compared to mozambique. if you compare mozambique with some of the other african countries, mozambique is a much better place. >> suarez: early in the transition, the mozambique government was eager to earn trust with donor nations like the united states. this person served as prime minister until january of this year. >> we promised we are going to put education, health, and we

fulfilled it. we did exactly what we promised to do. so the international finance like to work with the country. we deliver. >> suarez: international aid now accounts for more than 50% of mozambique's budget. this year alone foreign aid will total $1.6 billion.çç but this past fall, the world watched as mow zoom beakians took to the streets to protest a sharp rise in the cost of food, fuel and energy because the central government suddenly stopped heavy subsidies on consumer goods. police opened fire on protesters killing 12. several days of rioting followed bringing the capital to a standstill. so while mozambique's roaring economy has put it on the map,

the riots highlighted the ongoing problem of acute poverty. >> you have an economy that is growing too fast. it's been growing fast for the last two decades. and yet poverty isn't reduced at all in the last seven years. >> suarez: the national average income per person is less than $500 a year. >> there are people in this country that cue an entire day to be able to work. to get enough money to make a meal for the day for their entire family. that's the level at which they live. if they fail, if they fail to get wednesday work, they won't eat at all. >> suarez: more than eight out of every ten workers here scratch out a living in what's called the informal economy. physical labor, peddling on the streets to make ends meet. 28-year-old sells shoes to

support his wife and two children. >> i arrive at 7:00 a.m. and i stay here about 10 hours trying to sell my shoes. >> suarez: and if you have a day where you don't sell any shoes?ç do you eat that night?ç >> if i don't sell any shoes, i'll have to borrow money from my friends and then pay them back the following day in the hopes that i will sell shoes. >> suarez: in makeshift markets like this one on the outskirts of the capital, people re-sell used clothing, mend garments and even here sales are down. this 30-year-old works a sewing machine. >> i make blouses for women. but it's becoming more difficult. i'm running out of clients. they are spending so much of their money on food, they don't have enough to pay me. >> the largest industrial project ever undertaken. >> suarez: the big jumps in economic growth, the% averages, come mostly from mega projects oferned by foreign investors

like the aluminum mining company owned by an australian- based multi-national company. this person is the chief editor of the magazine independence. he says profits from foreign vechls move to europe, australia and asia and do little to help mozambique's poor. >> the most capable projects of paying for the economy are exempt from paying the tax. those projects can contribute to the economy of the country. >> suarez: but renegotiations are a tricky proposition. >> no city or country, no city or state negotiates contracts because it loses credibility. >> suarez: one of the promising investments the country hopes to capitalize on is tourism. >> tourists will be the first industry in mozambique because the impact affects supply.

for me the key industryç in mozambique is tourism.ç >> suarez: the historic hotel in the capital city spent $25 million on a face-lift to appeal to international luxury travelers. manuel, owner of costa dell seoul, a waterfront family restaurant since colonial days says mozambique offers a unique travel experience. >> we can bring in people here to show them our multi-cultural, multi-racial integrated society. it's a real rainbow, a social rainbow. african cosmopolitan latino kind of society.

there's a vibe to it on the streets. >> suarez: but the real holy grail of tourism here is the beaches. mozambique is home to over 1,000 miles of undiscovered beach. here, travelers find pristine beaches of white sand, crystal clear indian ocean waters that stay warm year round. while mozambique's protracted civil war devastated the country's infrastructure the shoreline was ignored protecting coral reefs from overuse, much to scuba divers' delight. >> you have whale sharks and mantras that are very prolific. that's one of the big draws. we have some of the best sightings of big game fish and marine fish anywhere in the world. >> suarez: 16 years ago dave law created barra resorts, a group of tourist destinations including the flamingo bay

water lodge.ç law says in the lastç five years tourism here has quadrupled. he and his partners are now looking to invest in $70 million more. >> and you can do tourism and wildlife. so you go to the beach in the morning and then in the afternoon you see the lion, the elephants drinking water in the river. it's this that places mozambique on the map of tourism in africa and in the world. ♪ >> suarez: but while tourism hey play an important role in mozambique's future, the country is still finding its way up and out of decades of devastatingly dire economy. >> brown: ray's next report

will look at the continuing aids crisis in mozambique where one in eight adults is h.i.v. positive. >> woodruff: finally the latest in our series of conversations on the country's debt and deficit problems. that is here in the u.s. tonight a progressive proposal from democratic congresswoman jan schakowsky of illinois. she's a member of the president's bipartisan commission. but she released a plan of her own that differs substantially from that of co-chairser skin bowls and alan simpson. it would reduce the deficit in 2015 by $441 billion. but would not make any changes in benefits to social security or medicare. her blueprint relys on $132 billion from closing or limiting a variety of corporate tax breaks, $110 billion from cuts to defense spending and generating more than $ 150 billion in other new revenue including taxing capitqlç gains as ordinary income.ç

representative schakowsky joins us now from chicago. good to see you. thanks for joining us. >> thank you. >> woodruff: why go off and come up with your own plan? why not just go along with this bipartisan proposal by your co-chairs? >> well, i thought it was important to put forth a proposal that says we don't have to go after the middle and lower classes in our country in order to pay for deficit and debt that they had nothing to do with creating. and that we yet could take this problem seriously down the road to reduce the deficit and the long-term debt. i thought the proposal put forward by the co-chairs of the commission actually penalized mainly elderly people and people who have already sacrificed. you know, we talk now about shared sacrifice but how about shared opportunity? because for a very long time all of the benefits of our economy have flowed to the

wealthiest americans. i thought that it was reasonable to do the kinds of revenue increases and the kinds of reasonable cuts that i proposed. >> woodruff: you mentioned revenue increases. it is the case that you do rely more heavily than they do on tax increases. two thirds of your plan would come from higher taxes on corporations, on individuals earning over $100,000 a year. why that focus? >> well, you know, we have right now the greatest december parity in income from the rich to the poor and middle class than we have had since 1925. right before the great depression. and this kind of income inequality is is not good for our economy. it's certainly not good for people who have seen their incomes stagnant or falling over the last couple decades. in fact all of the growth in wealth went during the bush years to the top wealthiest people in our economy. it is not a good situation for

us to be as nicholas kristof has called like a bananaç republic. >> woodruff: but do youç worry, congresswoman, that with over $200 billion in new taxs on the corporations and the wealthy that that could create a drag on the economy just at the time when it needs a spark and it needs more hiring? >> what it needs is demand. it needs the business community, the corporate community needs customers. the way that we achieve that is by putting money into the pockets of people who are actually going to go out and spend it. that's why this debate going on right now in the congress about extending unemployment insurance benefits is so very, very important. the republicans are talking about tax breaks, yet more tax breaks, for the wealthiest, extending those bush tax cuts. and that doesn't do much for really creating jobs and sometime outing the economy.

... stimulating the economy. putting money into the pockets of millions of people that are about to lose their unemployment insurance, that actually would be good not only for those individuals but for the economy as a whole because you better believe they're going to go out and spend that money. it's going to help all the small and larger businesses as well. >> woodruff: of the one-third of your plan that does go into cutting spending, most of that comes under the heading of the defense departments. why is that the focus? >> that's right. well, actually my plan for cutting the defense budget is only about 10% higher than what the bowles-simpson deficit reducing plan suggested. they talked about $100 billion. i talk about $110 billion. mainly i am directing that at cold war weapons systems that we don't need anymore. let's remember this is all public spending. we could better spend it in a way that puts people to work but not for weapons systems that we don't need.

even the secretary gates hasç recommended significant cuts. not as high as mineç, in the defense budget but what i don't do, i don't tamper with military pay, which their proposal does in cutting it. or freezing it. nor military health care. tri-care which their proposal does to again another slap at the middle class. i don't think we needed that that in order to balance our budget. that was the point i was making. >> woodruff: you also don't touch, as i read it, medicare. you don't touch social security benefits. i guess the question is aren't you going to have to event ally go after these programs because that's where we see this unsustainable growth pattern for the next, as far as the eye can see? >> i do have a proposal to put a public option back on the table which will lower health care costs to have the government negotiate with the

pharmaceutical companies for lower cost drugs like the veterans administration does and therefore their costs are a fraction of what seniors are having to pay for. to take it out on the elderly who currently make an average of $18,000 a year, that includes private pension, savings and investments, and to say that they're the ones that are going to have to pay is, i think frankly, immoral. i think that it is not necessary to go that route. social security is not part of the deficit problem. down the line in 2037 we're going to have to do something about it. but i would say again that wealthier people who don't pay into the social security trust fund can certainly afford to do so to make social securityç solvent for the next 75 years.ç but seniors? the average benefit is $14,000 a year. you know, nobody is getting rich. >> woodruff: you mention the public option.

of course that was something that was debated and went off the table early in the health care reform debate. is it politically realistic to think that that is going to come back on the table especially after the mid terms where republicans did so well. >> again even in the bowles- simpson proposal they say it ought to be an option if health care costs don't go down. i say let's put it in right up front. but i don't think that it is politically saleable to the american people to say let's cut social security, medicare and medicaid. if members of congress think that, i think they're going to be sorely mistaken when older voters get ahold of this kind of idea. this is not popular even among younger voters that we should cut social security and medicare. this is very unpopular beyond the belt way. no question about it. >> woodruff: all right. we're going to have to leave it there. representative jan schakowsky

joining us from chicago. she's a member of the president's debt reduction commission. thanks very much. >> i appreciate it, judy. >> brown: again the major developments of the day. the obama administration acknowledged the government will consider public concerns and complaints about new airline screening procedures. the irish government called elections for early next year after a day of political turmoil in the wake of an economic bailout from the european union.ç and the imf. and more than 330 people diedç in a stampede in cambodia during a water festival to mark the end of the rainy season. and could kwame holman in our news room for what's on the newshour online. >> reporter: find out about new health insurance rules that force providers to spend more on patient care. watch an interview with the producer of a current tv documentary on the mexican drug wars. it takes viewers on an illegal border crossing with a human trafficker known as a coyote.

get a behind the scene look at the experimental radio program that uses art to explore science. all that and more is on our website newshour dot pbs dot org. >> woodruff: on tuesday we'll have an interview with new york city's outgoing school chancellor joel clyne. i'm judy woodruff. >> brown: i'm geoffrey brown. we'll see you online and again here tomorrow evening. thank you for watching. good night. >> major funding for the pbs newshour has been provided by. >> opportunity. it's a powerful force. set it in motion and it goes out into the world like fuel for the economy. one opportunity leading to another and another. we all have a hand in it. because opportunity can start anywhere. and go everywhere.

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