SUMMARY: Soon, some of the mystery surrounding Pluto, the distant dwarf planet, will be lifted. NASA’s New Horizons spacecraft, speeding through space for almost a decade on a mission to capture a myriad of data, is believed to have finally made a successful Pluto flyby. Science correspondent Miles O’Brien reports.
MILES O’BRIEN (NewsHour): Ready or not, it is finally time for Pluto’s closeup. Once a full-fledged planet, now considered something less, it remains an intriguing mystery 85 years after its discovery, but not for long. The picture is growing clearer as a fast-moving spacecraft arrives at the solar system’s underdog.
ALAN STERN, New Horizons Principal Investigator: It was always the planet with the little question marks everywhere. We didn’t know anything. And because it’s the last in the public mind, it takes a special place.
MILES O’BRIEN: Pluto has taken a special place in planetary scientist Alan Stern’s mind since 1988. That’s when he first began pushing NASA to send a spacecraft to what was then the ninth planet in our solar system.
The three-billion-mile journey of the New Horizons spacecraft began in 2006. It left the Earth faster than any spacecraft ever, making a beeline for Pluto, getting a gravitational kick from Jupiter as it bulleted past, snapping pictures all the while. And now, after nearly a decade in space, New Horizons is finally there.
HAL WEAVER, New Horizons Project Scientist: I like to call this a mission of delayed gratification, because it takes nine-and-a-half years to get all the way out to Pluto, but we’re almost there. And the opportunity to transform Pluto from a little pixelated blob into a world with complexity and diversity is just going to be amazing.
SUMMARY: Today, NASA released the first ever close-up photographs of Pluto. The images showed icy mountains and a mysterious pale patch shaped like a heart. Judy Woodruff speaks to science correspondent Miles O’Brien about what we have learned about Pluto so far.
SUMMARY: Greece struck a debt deal after a long night of negotiations with European creditors. According to the preliminary deal, the nearly bankrupt country will receive a $95 billion bailout over three years, and be subject to tough austerity measures. Special correspondent Malcolm Brabant reports from Greece and Judy Woodruff gets reaction from Eswar Prasad of Cornell University.
JUDY WOODRUFF (NewsHour): The nation of Greece and its creditors reached a preliminary deal to avert immediate financial collapse, but it demands that the struggling country make major concessions and means continued sacrifice and hardship for its people.
NewsHour special correspondent Malcolm Brabant has this report.
MALCOLM BRABANT (NewsHour): Prime Minister Alexis Tsipras emerged after a long night of bitter negotiations.
PRIME MINISTER ALEXIS TSIPRAS, Greece(through interpreter): Until the end, we battled to get an agreement to get the country back on its feet. We were faced with a very difficult decision within hard dilemmas. We took the responsibility to decide in order to avert the most extreme plans by conservative circles in the European Union.
MALCOLM BRABANT: German Chancellor Angela Merkel was one of those conservatives who ran a hard bargain with the Greeks. They seemed ready to quit until European Council President Donald Tusk, who is also president of Poland, persuaded them to keep at it.
DONALD TUSK, President, European Council: The decision gives Greece the chance to get back on track with the support of European partners. It also avoids the social, economic and political consequences that a negative outcome would have brought.
MALCOLM BRABANT: Meanwhile, in Athens, pensioners saw no reason to celebrate, as they queued up to withdraw money outside closed banks.
SUMMARY: Video conferencing technology can now connect patients and physicians almost instantaneously, offering convenience, efficiency and savings. But what happens to the doctor-patient relationship if you're never in the same room? Hari Sreenivasan reports.
JUDY WOODRUFF (NewsHour): Videoconferencing has become so commonplace that we have grown comfortable communicating with one another through pixels on a screen.
That comfort, combined with rapid advances in health monitoring technology, is fueling a new boom in telemedicine. Teladoc, a big player in providing video and telephone medical consults, had an extremely successful launch when it went public on the stock market earlier this month. It raised more than $270 million on the first day.
As Hari Sreenivasan explains, telemedicine is beginning to transform the way we experience the medical system. It’s the latest in our Breakthroughs series on invention and innovation.
HARI SREENIVASAN (NewsHour): A simple ritual, like gardening on a hot summer day, is something Tom and Trisha Uhrhammer don’t take for granted anymore.
TRISHA UHRHAMMER: Can you use some basil?
HARI SREENIVASAN: Just a year ago, Tom had a massive stroke.
TOM UHRHAMMER: I was sitting right next door here in this room watching TV. Time to go to bed. So I got up and walked up the stairs, and I didn’t make it. I collapsed short of the bed.
HARI SREENIVASAN: The paramedics took Tom, who was paralyzed on his left side, to nearby Mercy General Hospital in Sacramento. With blood seeping into his skull, creating enormous pressure on his brain, time was of the essence. That’s when a telestroke robot was deployed to the E.R.
SUMMARY: Puerto Rico’s financial crisis has been well-documented over the last few weeks, but a new report in the Washington Post sheds light on how Congress may have played a role in the fiscal troubles being felt in the U.S. commonwealth. Michael Fletcher of The Washington Post joins Hari Sreenivasan from Baltimore with the latest.
HARI SREENIVASAN, PBS NEWSHOUR WEEKEND ANCHOR: Now to financial trouble in Puerto Rico, where leaders want to declare bankruptcy, but cannot, unless the U.S. Congress changes the law.
Puerto Rico announced last month it simply cannot pay $72 billion in debt. Congressional Democrats want to allow limited bankruptcy relief, but Republicans say it’s not enough and that leaders need to address the territory’s underlying budget issues.
Ironically, a new report in The Washington Post says Congress has actually played a contributing role in the fiscal trouble of the U.S. commonwealth.
Joining us now with the details, from Baltimore, is Michael Fletcher, who has been covering the story.
You were just down there a few weeks ago. So, what’s the U.S. responsibility in this crises?
MICHAEL FLETCHER, THE WASHINGTON POST: Well, it’s interesting. The political economy has been skewed for years by U.S. taxpayers essentially. In many ways, early on decades ago, that led to a kind of a development of the island as kind of this manufacturing hub, which is a very generous tax break.
The first ones to clothing and shoe manufactures. Then in 1970s, it kind of shifted to more capital-intensive businesses like pharmaceutical manufacturing. And that made Puerto Rico into one of the top prescription drug manufacturers in the world. At one point, something like 13 of the top 20 prescription drugs are actually made in Puerto Rico.
And in many ways, that development took away from other things the island might have done naturally, like develop more, its tourism sector or what have you.
It was fine as long as the tax break lasted, but then in 1996, Congress did away, it began to phase out that tax break, and ti was fully phase out since 2006. And since then, Puerto Rico’s been in recession.
HARI SREENIVASAN:And they can’t declare bankruptcy like Detroit can.
MICHAEL FLETCHER: They can’t. They’re treated just like states are under bankruptcy law.
[Un]like municipalities and hospital districts, things like that. They can — they can declare bankruptcy which gives them breathing room to reorganize their debts, and Puerto Rico cannot do that.
SUMMARY:New York Times columnist David Brooks and Washington Post columnist E.J. Dionne join Judy Woodruff to discuss the week’s news, including whether presidential candidate Donald Trump is hurting the Republican party, the historic removal of the Confederate flag from South Carolina’s state house and whether Sen. Bernie Sanders’ momentum poses a viable challenge to Hillary Clinton.
SUMMARY: Greek Prime Minister Alexis Tsipras is now offering concessions to creditors, such as a higher sales tax and pension changes, in hopes of winning a new bailout worth nearly $60 billion. Jonathan Rugman of Independent Television News reports on the response to the controversial package in Greece.
JUDY WOODRUFF (NewsHour): Now, the drama in Greece heading toward a climax at a Sunday summit of European leaders.
The Greek prime minister has now offered concessions to creditors, ranging from a higher sales tax, the so-called VAT — VAT — to pension changes. The goal? A new bailout worth nearly $60 billion.
Jonathan Rugman of Independent Television News reports.
JONATHAN RUGMAN, Independent Television News: Climbing the steps of Greece’s Parliament today, the members of a government forced into a last-minute climb down. Days ago, they were railing against Greece’s creditors. Today, they were talking up the chances of a new deal with them this weekend.
OLGA GEROVASILI, Greek Parliament Member (through interpreter): I am certain we will reach an agreement. There was never any doubt. The battle was lengthy and long and will reach its conclusion by taking the steps you already know about.
JONATHAN RUGMAN: And greeted like a conquering hero, Alexis Tsipras, the prime minister, who is now pushing through Parliament the kind of austerity 61 percent of Greek voters rejected last weekend, because money or lack of it talks.
These banks could be bankrupt by Monday, and so the government, it seems, has blinked. Greece’s proposals are on time and to the kind of budget a wary Eurozone might accept, giving into more austerity, with a standard VAT rate at 23 percent beginning in October, reducing the 30 percent VAT tax break applied to tourism-rich Greek islands, corporation tax rising from 26 percent to 28 percent, as Greece’s creditors demanded, and raising the standard retirement age to 67 over the next seven years.
But what is Mr. Tsipras hoping to win in return? Well, 53.5 billion euros in loans over three years and, crucially, restructuring the repayment of Greece’s vast debt, though the 13 billion euros in tax rises and spending cuts is at least four billion euros more than the package Greeks on Sunday voted against.
A new and lasting deal with Greece will depend on the Greeks actually doing what they say they will and not buckling under the weight of more austerity. And Germany will need to agree on some form of debt relief which doesn’t leave German taxpayers feeling shortchanged. But whatever the outcome of this weekend’s talks, Greece is heading for years of economic hardship and the debate over its Eurozone membership is very unlikely to stop.
Perception is our brains INTERPRETATION of our world, not world reality itself. Also, Mexico is NOT SENDING people, they come for better lives to support families.
SUMMARY: Incendiary comments made by Donald Trump and a random killing of a California woman have added fuel to national debate on the contributions of and concerns about undocumented immigrants. William Brangham speaks to Marielena Hincapié of the National Immigration Law Center, Marc Rosenblum of the Migration Policy Institute and Jessica Vaughan of the Center for Immigration Studies.
WILLIAM BRANGHAM (NewsHour): The firestorm started when in his announcement that he was running for president, Donald Trump turned to the topic of immigration.
DONALD TRUMP (R), Presidential Candidate: When Mexico sends its people, they’re not sending their best. They’re not sending you. They’re not sending you. They’re sending people that have lots of problems. And they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.
WILLIAM BRANGHAM: In the weeks following, major businesses connected to Trump backed away from partnerships and projects with him. They included NBC, Univision, Macy’s, ESPN, and the Professional Golf Association.
For his part, Trump stood by his comments. But then a tragedy in San Francisco added fuel to the fire; 32-year-old Kathryn Steinle was shot and killed at the end of last month. Undocumented immigrant Juan Lopez-Sanchez confessed to a reporter that he shot her, but said it was an accident.
All this has just inflamed the debate about immigration in the U.S., whether immigrants are a positive force in the country or whether they should be feared. There are currently more than 41 million immigrants in America. Over 11 million are estimated to be here illegally.
To help us understand what we know about the nation’s immigrants, legal and illegal, I’m joined by three people who have studied the research.
Marielena Hincapie is the executive director of the National Immigration Law Center, an immigration rights group. Marc Rosenblum is from the nonpartisan Migration Policy Institute. And Jessica Vaughan is with the Center for Immigration Studies, which advocates for tougher border security.
SUMMARY: After 54 years flying at the South Carolina state house, the Confederate battle flag is coming down. The state legislature voted to remove the flag after pressure grew in the wake of a mass shooting at Emmanuel AME Church in Charleston. William Brangham reports on how the change is resonating in Washington.
WILLIAM BRANGHAM (NewsHour): It was a moment that many, on both sides of the issue, thought would never come: the Governor of South Carolina signing a bill to remove the Confederate Battle Flag from the state capitol grounds.
GOV. NIKKI HALEY (R), South Carolina: We are a state that believes in tradition. We’re a state that believes in history. We’re a state that believes in respect. So we will bring it down with dignity, and we will make sure that it is put in its rightful place.
WILLIAM BRANGHAM: Governor Nikki Haley’s actions mean the flag will be lowered tomorrow and taken to a museum for display. All this follows 13 hours of debate in the state House that went into the early hours of this morning. Lawmakers from both sides gave impassioned pleas, many of them, like Representative Jenny Anderson Horne, in favor of bringing down the flag.
JENNY HORNE (R), South Carolina State Representative: I cannot believe that we do not have the heart in this body to do something meaningful, such as take a symbol of hate off these grounds on Friday.
WILLIAM BRANGHAM: Others, including Representative Eric Bedingfield, objected to its removal.
ERIC BEDINGFIELD (R), South Carolina State Representative: I understand that there are differing views on what a symbol represents. It grieves me too that some people see that in a hurtful and dishonorable fashion.
SUMMARY: More than 21 million Americans had personal data stolen from files held by the Office of Personnel Management. Anyone who went through background checks to apply for a government position since 2000 has been affected, according to the OPM. That makes the data breach six times larger than was originally disclosed. Gwen Ifill learns more from Josh Lederman of the Associated Press.
GWEN IFILL (NewsHour):More than 21 million Americans had personal information stolen from government files in a data breach that was six times as large as originally disclosed. The information was hacked from the Office of Personnel Management, or OPM, which said today it is highly likely that anyone who went through background checks to apply for a government position since 2000 was affected.
Joining us to fill in the blanks is Josh Lederman of the Associated Press, who has been covering the story.
In terms of scope, we know this is huge, but how is it different from the earlier hacks we have heard about, Josh?
JOSH LEDERMAN, Associated Press: Well, what we’re finding out now, Gwen, is not only were many more Americans affected than we previously knew, but just what kinds of data.
We’re talking about very personal data that most people would be very uncomfortable knowing is out there. We’re talking about health histories, their criminal histories, their educational and residency backgrounds, as well as interviews that they conducted with members of OPM, Office of Personnel Management, or other people conducting background checks in the process of applications to get a security clearance.
SUMMARY: Today college is seen as crucial for career success and prosperity. "Will College Pay Off?" is a new book by Peter Cappelli, and the answer, he suggests, is that it depends -- on the price tag, how fast a student finishes and what job they get afterwards. Economics correspondent Paul Solman talks to Cappelli about finding an educational path that makes financial sense.
PAUL SOLMAN (NewsHour): Graduation day for the class of 2015 at Philadelphia Academy, a charter school in Northeast Philly.
MAN: The greatest senior class in Philadelphia Academy history.
(CHEERING AND APPLAUSE)
PAUL SOLMAN: Since history here only goes back 12 years, the greatest might actually be a true superlative, but this is also a fairly typical senior class in America these days with about three out of every four grads attending college in the fall. The national average is 66 percent.
STUDENT: I’m going to Temple University.
STUDENT: Delaware University.
STUDENT: Bloomsburg University.
STUDENT: Community College Philadelphia
PAUL SOLMAN: And since everyone knows college is crucial for career success, these kids will prosper, right? After all, it was in the 18th century that Benjamin Franklin, who founded the University of Pennsylvania here in Philadelphia, said, an investment in education gives the best returns.
PETER CAPPELLI, The Wharton School, University of Pennsylvania: You can do enormously well going to college in the U.S., the right kids going to the right college. And you can do really poorly as well.
PAUL SOLMAN: Peter Cappelli, a professor at Penn’s Wharton’s Business School, is the author of “Will College Pay Off?” He says that, from a strictly economic point of view, the answer isn’t always yes.
SUMMARY: The U.S. government wants to be able to read certain data that's inaccessible to intelligence agencies due to encryption. At a Senate hearing, FBI director James Comey said the privacy technology can be a double-edged sword, detrimental to public safety. Gwen Ifill speaks to former Homeland Security Department official Stewart Baker and Susan Landau of the Worcester Polytechnic Institute.
GWEN IFILL (NewsHour): Earlier in the day, the Obama administration went to Capitol Hill to make its case to allow government great access to encrypted information. Essentially, the government wants to be able to read certain data that intelligence agencies cannot get now because it’s been protected with special codes. That’s at the heart of an ongoing battle with tech companies.
JAMES COMEY, FBI Director: Encryption is a great thing. It keeps us all safe. It protects innovation.
GWEN IFILL: But, FBI Director James Comey warned at Senate hearings today, it’s also a double-edged sword. That’s because the technologies that seal off smartphones from surveillance also impede efforts to track criminals and terrorists.
JAMES COMEY: We are moving inexorably to a place where all of our lives, all of our papers and effects, all of our communications will be covered by universal strong encryption. And that is a world that in some ways is wonderful and in some ways has serious public safety ramifications.
GWEN IFILL: Google, Apple and other tech firms have ramped up data encryption in the wake of Edward Snowden’s revelations of sweeping government surveillance. They’re also responding to stepped-up hacking coming from Russia and China.
But, at the same time, Islamic State followers and other militants are now using encrypted communications to recruit at a rapid pace. Deputy Attorney General Sally Yates underscored that point today.
SALLY YATES, Deputy Attorney General: ISIL currently communicates on Twitter, sending communications to thousands of would-be followers right here in our country. When someone responds and the conversations begin, they are then directed to encrypted platforms for further communication.
And even with a court order, we can’t see those communications. This is a serious threat. And our inability to access these communications with valid court orders is a real national security problem.
GWEN IFILL: And the FBI’s Comey suggested it’s just a matter of time before that leads to a terror attack.
JAMES COMEY: We are stopping these things so far through tremendous hard work, the use of sources, the use of online undercovers, but it is incredibly difficult. I cannot see me stopping these indefinitely.
SUMMARY: Last week, the U.S. Export-Import Bank’s authority to conduct new business expired. Congress is debating whether the government agency, which helps foreign companies buy American goods, should continue to exist. Is it a government giveaway, or a critical competitive tool for American business? Judy Woodruff gets one view from Rep. Brad Sherman, D-Calif.
JUDY WOODRUFF (NewsHour): From financial problems abroad to a big money debate in this country.
Last week, the United States’ Export-Import Bank hit a political wall. Its authority to conduct new business expired, as Congress hotly debates whether it should exist. The bank is a multibillion-dollar government agency that helps foreign companies buy American goods.
Here’s how that works. An American company wants to sell goods to a foreign corporation. The Export-Import Bank then gives the foreign company a loan or loan guarantee, and that company buys the goods from the American business. Ideally, the loan gets repaid, but there is a risk to taxpayers that the foreign company could default.
Who exactly benefits? Well, last year, the bank financed nearly $30 billion worth of U.S. exports. The single largest winner? Boeing and the aircraft industry. Thousands of small businesses also gained with more than $10 billion in financing. But the 81-year-old bank faces an uncertain future.
Some conservatives argue that it is a bloated government giveaway, while others insist it is a critical competitive tool for American business.
Joining me now to discuss all this from Capitol Hill are two members of Congress, Democrat Brad Sherman of California, and we hope to be joined shortly by Republican Jim Jordan of Ohio.
SUMMARY: Greece traditionally has had a low suicide rate, but over five years of austerity, the country has seen an increase in the number of people taking their own lives. And if the crisis gets worse, the number of suicides and other preventable deaths from lack of medical care or drugs is likely to rise. Special correspondent Malcolm Brabant reports from Athens.
GWEN IFILL (NewsHour): Now another look at Greece, this time how its strained economy is affecting its people.
For the first four months of 2014, the budget for Greece’s 132 hospitals was $735 million. This year, that number dropped to $50 million, a precipitous decline that has placed predictable stress on the nation’s medical system. Now psychiatrists and other medical practitioners warn that deepening poverty will lead to an increase in suicides and preventable deaths.
NewsHour special correspondent Malcolm Brabant reports from Athens.
MALCOLM BRABANT (NewsHour): It’s a letter that no one should have to read. The suicide note left by 77-year-old pharmacist Dimitris Christoulas is now a treasured possession of his daughter, Emmy.
EMMY CHRISTOULAS, Daughter of Suicide Victim (through interpreter):“If one Greek was to take up a Kalashnikov, I would be the second. But since I am too old to react actively and physically, I find no other solution than that of a dignified exit before I begin searching through the garbage for my food. I believe that, one day, because the younger generation have no future, they will take up arms and hang the traitors of the nation, just as the Italians did in 1945.”
MALCOLM BRABANT: Christoulas shot himself beneath this pine tree in Athens’ Syntagma Square, where opponents urged Greek voters to reject the international austerity program in last weekend’s referendum.
One of the first on the scene was doorman Panos Kyriakopoulos
PANOS KYRIAKOPOULOS (through interpreter): Everyone who works around here was dreadfully upset, as well as those who were passing by. It was so unexpected, a man blowing out his brains in Syntagma Square. It was terrible, just terrible.
SUMMARY: When Omar Perez was 25, he found out his father was the revolutionary Che Guevara. For Perez -- a poet, artist and musician -- the revelation didn’t much change his outlook on life, or on Cuba. Jeffrey Brown talks to Perez in Havana about the Cuban Evolution, art and how closer ties with America may change his country.
JEFFREY BROWN (NewsHour): Omar Perez is an artist, a musician, and a poet.
OMAR PEREZ, Poet: It’s very much in the culture. There’s no difference between a song and a poem. The brain gets active when you listen to a melody. So that’s exactly what happens with poetry, too.
JEFFREY BROWN: And Perez has another claim to unusual fame. He is the son of revolutionary Che Guevara. His mother was a student at the University of Havana in the 1960s. Both she and Guevara were married at the time of their affair, and Perez grew up unaware of who his father was.
OMAR PEREZ: When I was 25 years old, I was already a human being, and then somebody told me, did you know your father is Che Guevara? I said, no, I don’t. What am I going to do now? I’m 25 years old, I’m a writer, I’m a poet, I’m a translator. Should I change now?
What should I become? Should I become something different? I didn’t want to become anything different. I was — that’s what I wanted to be, a poet.
JEFFREY BROWN: Generations of Cubans have lionized Che Guevara, the Marxist revolutionary from Argentina who, alongside Fidel Castro in the 1950s, overthrew Cuba’s government. His image is still seen all over Havana.
Omar Perez lives in one of the once elegant, now crumbling buildings alongside the city’s famous seawall, the Malecon. For his part, he doesn’t seem to hold on to a romantic view of Che Guevara or the Cuban Revolution.
SUMMARY: Hundreds of miles off the coast of Oregon and Washington, there's an undersea volcano known as Axial Seamount. Two months ago when it began spewing lava, it wasn't a secret to a group of scientists engaged in a groundbreaking research project. Hari Sreenivasan reports on their Cabled Observatory -- a network of sensors, moorings and cameras that offers views of a little-known world.
HARI SREENIVASAN (NewsHour): What if a volcano erupted and nobody knew about it? That used to be the case 300 miles off the coast of Oregon and Washington for undersea volcano known as Axial Seamount.
But two months ago, when it started spewing lava, these scientists knew instantly.
You have 25 sensors sitting on the lip of a volcano, and it’s all feeding information back here.
JOHN DELANEY, Oceanographer, University of Washington: That’s right. It’s really exciting.
HARI SREENIVASAN: University of Washington oceanographer John Delaney is the director of a groundbreaking research project called the Cabled Array, also known as the Cabled Observatory, that has, in effect, turned Axial Seamount into the world’s first wired volcano.
JOHN DELANEY: Well, we’re standing in our control room that allows folks that are here on campus at the University of Washington to actually interact with the instruments that might be as much as 400 kilometers, 300 miles offshore.
HARI SREENIVASAN: On the day of the eruption, a network of sensors on the volcano started measuring more than 8,000 small earthquakes, and the seafloor dropped seven feet.
DEBBIE KELLEY, University of Washington: We have been waiting our whole lives to have that kind of information come in.
HARI SREENIVASAN: Debbie Kelley was one of those closely watching the eruption data. She’s a chief scientist on the team who studies underwater volcanoes.
This volcanic ridge is like thousands of miles of ridges that circle the Earth beneath the oceans. It’s also a spot where two tectonic plates pull apart, making it an ideal location to study. Kelley says that the Cabled Observatory, which will eventually send back real-time data and images anyone can access, will finally give scientists, and the general public, insight into a complex world they know very little about.
If there were ever a time not to bet the moon on the stock and bond markets, it’s now, with U.S. stocks at near-record highs and interest rates on quality bonds at near-record lows. But Wall Street is urging state and local governments to do just that — and they’re listening.
Despite the risks, governments are lining up to issue billions of dollars in new debt to replenish their depleted pension funds and, as a bonus, take some pressure off strapped budgets. In some cases, the borrowing makes their balance sheets look vastly better. Bankers, who make fat fees for raising the money, are encouraging this borrow-and-bet trend. Their sales pitch is that borrowing at today’s low interest rates all but guarantees a profit for the governments because they can invest the proceeds in their pension funds and for decades earn returns higher than the 5 percent or so in interest that they will pay on the bonds.
But there’s a catch: If the timing is wrong, these so-called pension obligation bonds could clobber the finances of the government issuers. Pension funds and beneficiaries will be better off because pensions will be more soundly financed. But taxpayers — present and future — might be considerably worse off. They will be running huge risks and could get stuck with a massive tab.
“It’s sold as a magic bean,” said Todd Ely, a professor at the University of Colorado at Denver who has studied pension bonds. “But when it goes bad, it’s not free. Then it isn’t really magic. If it could be counted on to work as often as it’s supposed to, then everyone would be doing it.”
Plenty of takers are bellying up to the borrowing bar. Governments sold $670 million worth of pension bonds through the first half of this year, more than double the $300 million raised for all of last year, according to deal-trackers at Thomson Reuters.
That total would more than double if Kansas completes a pending $1 billion deal, which would be its biggest bond issue. A $3 billion sale is under consideration in Pennsylvania, that state’s largest as well. Lawmakers recently rejected record multibillion-dollar deals in Kentucky and Colorado, but those proposals are expected to resurface. And new proposals are being pitched to other governments.
Pension bonds have waxed and waned since the 1980s, but the current boom is different. An examination by The Washington Post and ProPublica found that it’s being driven not only by the prospect of investment profits but also by a new accounting quirk that has largely escaped public notice while morphing into a major marketing tool for Wall Street banks.
The quirk stems from a rule change that was meant to force governments to more clearly disclose the health of their pension funds. But a side effect is to allow governments with extremely underfunded pensions to slash reported shortfalls by $2 or more for each $1 borrowed.
Here’s how: If a pension plan is so poorly funded that it is projected to run out of cash, the new rules require it to make less optimistic projections about future returns. That increases the reported pension shortfall. But if governments infuse a big slug of borrowed money into the fund, they can resume using optimistic projections, and the shortfall shrinks.
It’s like getting a new credit card, borrowing on it to pay off part of an existing loan, then having the total amount owed magically shrink by more than what is borrowed. Sounds impossible — but it’s true.
The impact can be dramatic. In March, the town of Hamden, Conn., reduced its unfunded pension amount by about $320 million with a $125 million pension bond and promises of future payments, according to an estimate by ProPublica and The Post. The Kentucky Teachers’ Retirement System said it estimates that a $3.3 billion bond issue plus payment promises could carve $9.5 billion off its unfunded liability.
Those figures don’t reflect the decades of debt and risk placed on taxpayers.
The rule change, from the Governmental Accounting Standards Board, has been in the making since 2006, but is only now starting to take effect — and to be noticed. So GASB is fast becoming a recognized acronym in state capitals.
“GASB is certainly a huge concern,” said Beau Barnes, deputy executive secretary of the Kentucky System. Until this year the term was unfamiliar to state legislators, he said, “but in 2015 when you say ‘GASB,’ most of them have an idea that it’s going to be bad.”
It’s not clear whether anyone involved in the long rulemaking process realized that the change would encourage governments to sell bonds to improve their balance sheets.
We asked GASB Chairman David Vaudt about this but couldn’t get a clear answer. His response was, “We follow our due process, and the input that we consider is from our stakeholders: the preparers, auditors and users” of governmental financial statements.
The question of whether governments will come out ahead in the real world — as opposed to the accounting world — with pension bonds is far from clear. In large part, it depends on governments’ willingness to make substantial payments to their pension funds after the bonds are sold.
A review by ProPublica and The Post of the 20 largest pension bonds issued since 1996 found that in three-fourths of the deals, governments did not make their full required contribution in the years after the bonds were sold. Those bonds account for nearly two-thirds of the pension debt issued since 1996, according to Thomson Reuters. In more than half the deals, some proceeds even went on to make annual pension contributions — borrowing from the future to pay today’s expenses. Because of the underfunding, most of the pension funds now are worse off than before the bonds were issued.
In all five recent or proposed bond sales examined — by Kentucky, Kansas, Pennsylvania, Colorado and the town of Hamden, Conn. — the issuers and potential issuers said they were planning to make less than full payments for many years.
“These bonds are pernicious,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. “They discourage pension funding. They shift costs forward to future generations.”
SUMMARY: The U.S. women’s soccer team made a record-breaking victory against reigning champion Japan in the final game of the 2015 World Cup. Judy Woodruff speaks to Deborah Slaner Larkin of the Women’s Sports Foundation, and Cheryl Cooky of Purdue University about the win, and whether it will help to promote equality for women in sports.
JUDY WOODRUFF (NewsHour): The U.S. women’s soccer team set itself apart last night with a historic achievement.
What does this win mean for the future of women’s professional soccer in the U.S.?
We turn to Cheryl Cooky, a professor of women’s studies at Purdue University, who has published studies on the differences between the way men’s and women’s sports are seen. And Deborah Slaner Larkin is the CEO of the Women’s Sports Foundation, which works toward safe and equitable sports opportunities for girls and women.
And we welcome you both.
Deborah Larkin, to you first. How big a deal is this women’s World Cup?
This really started from 1999, when we won the second World Cup, and the next generation of girls who looked up to those stars are playing today, so it’s not only those athletes, but it’s the next generation of girls and boys in all sports who want to play.
JUDY WOODRUFF: Cheryl Cooky, how do you see the significance of it?
CHERYL COOKY, Purdue University: I think of this as a tremendous moment, not only for the U.S. women’s soccer team, but for all those fans out there, all the aspiring young girls and boys who want to be athletes. I think this is a tremendous moment for them.
I think it’s a tremendous moment for our culture as well, that we can all join together and celebrate the tremendous accomplishments and prowess in female athleticism that we saw displayed last night.
SUMMARY: Over three days, the legendary, era-defining Grateful Dead offered a series of final concerts at Chicago's Soldier Field. Jeffrey Brown reports on the rock band's long, strange musical trip that has inspired an almost cult-like following among its fans.
JUDY WOODRUFF (NewsHour): What a long, strange trip it’s been. After 50 years, the legendary rock band the Grateful Dead bowed out in a series of concerts this weekend. There was history, some controversy, and a whole lot more in the air. And it was, no surprise, one of the summer’s toughest tickets.
Our Jeffrey Brown was there.
JEFFREY BROWN (NewsHour): It was a weekend of extended guitar solos, era-evoking sounds, and “High Times” images updated into the digital graphics age.
There were good vibes of the multigenerational time.
MAN: It’s the last show. We have got to see it. I have got to pass that on to him.
JEFFREY BROWN: And a certain amount of nostalgia, including from band members looking back 50 years.
BILL KREUTZMANN, Grateful Dead: We were just really gung-ho, wanting to play. And that’s what — that’s how you feel about every day. Any day you had a chance to play music, you got together and played.
JEFFREY BROWN:It was all part of a major happening that played out over three days and into long nights.
It’s called “Fare Thee Well,” a series of final concerts for a band that blazed its own path on the way to becoming part of rock ‘n’ roll history. We got here to Soldier Field in Chicago ahead of the celebration to talk to some of the people who are putting it on and taking part. ----- GREG KOT, The Chicago Tribune: I think the Grateful Dead were a social phenomenon as much as a musical phenomenon, and that the combination made them truly unique in rock history. I don’t there’s ever been a band quite like them.
JEFFREY BROWN: Greg Kot is music critic for The Chicago Tribune.
GREG KOT: It was a caravan. It wasn’t just a band. It was about the band and the fans. Most bands, when they go out on tour, they basically establish a set list and play the same songs in the same order every night.
The Grateful Dead never played the same songs in the same order, much less even in the same way. They reinterpreted their catalogue constantly, so every show was different.
SUMMARY: Syndicated columnist Mark Shields and New York Times columnist David Brooks join Judy Woodruff to discuss the week’s news, including what we learned about the Supreme Court this session, new presidential candidates Gov. Chris Christie and former Sen. Jim Webb, as well as controversial comments made by Donald Trump about immigrants.
JUDY WOODRUFF (NewsHour): And, as we do every Friday, we turn to the analysis of Shields and Brooks. That’s syndicated columnist Mark Shields and New York Times columnist David Brooks, who joins us today from Aspen, Colorado.
So, gentlemen, the Supreme Court, I think you could say it went out with a bang this week, David, issuing historic decisions on everything from same-sex marriage to the president’s health care law, much more, and with some interesting divisions among the conservatives.
What have we learned about the court, do you think, from this session, and how much of an issue is it going to be on the campaign trail?
DAVID BROOKS, The New York Times: Well, the interesting one to me is the same-sex marriage decision, which hit a lot of social conservatives extremely hard.
A great sense of fear that they are going to be labeled as bigots if they disagree with gay marriage, a sense that the culture war they have been fighting is one they have lost. And I’m — interesting to see how they reacted.
My basic view is that for 30 years, a lot of social conservatives have been fighting a culture war oriented around the sexual revolution, around contraception, gay marriage and other issues having to do with sexual activity. And I do think that that’s sort of not the fight they’re going to win anymore. The country is moving pretty far to the left on that.
And I would like to see social conservatives do in public what they do in private, which is to do a lot of work for — show work for the poor, heal the social fabric, tithe to the poor, heal the lonely and really address some of the economic and social dislocations we’re seeing in the country. That’s an endemic part of the social conservative lifestyle, but it hasn’t been part of their public message.
And that’s been a disaster for them. So I guess I think the wise choice, both from a Biblical and also from a political point of view, is to emphasize to the public that the key cultural revolution we need now is one to repair the social fabric, and the sexual revolution and views on the definition of marriage are important. And no one’s asking anybody to renounce them, but should be second-order businesses, given the actual problem we face today.
SUMMARY: In the nation’s worst oil disaster, 134 million gallons of crude gushed into the Gulf of Mexico, coating beaches and barrier islands, killing thousands of animals and decimating fisheries. Now nearly five years later, oil giant British Petroleum is facing a record settlement of $18.7 billion. Judy Woodruff discusses the deal with Rep. Garret Graves, R-La.
JUDY WOODRUFF (NewsHour): It was the nation’s worst oil disaster and came to be known as the BP (British Petroleum) spill. After a long and bitter fight that played out in the courts, a record settlement was finally announced today.
The oil gushed from BP’s Macondo well for 87 days. Now, almost five years since the well was sealed, the company aims to settle with the federal government and five states, Alabama, Florida, Louisiana, Mississippi, and Texas.
Alabama Governor Robert Bentley:
GOV. ROBERT BENTLEY (R), Alabama: With the agreement reached today and the compensation BP will pay for their responsibility, we are taking a significant step forward in our state and in especially the Gulf Coast areas to move forward with the worst environmental disaster in U.S. history.
JUDY WOODRUFF: In all, 134 million gallons of crude fouled the Gulf’s waters, and coated beaches and barrier islands, killing thousands of animals, and decimating local fisheries.
The projected deal totals $18.7 billion; $5.5 billion would go toward restoration efforts, as part of a federal Clean Water Act penalty. Another $7 billion would cover natural resource damages. And nearly $6 billion goes to economic and other claims by the five states and 400 local government entities.
In a statement today, U.S. Attorney General Loretta Lynch called it the largest environmental settlement in U.S. history. For BP, the settlement will effectively add about $10 billion to the $44 billion it already set aside for cleanup costs and penalties.
The oil giant had revenues of $15 billion last year, and will spread the settlement costs over the next 15 to 18 years. In a statement today, BP’s CEO, Bob Dudley said: “This agreement will resolve the largest liabilities remaining from the tragic accident and enable BP to focus on safely delivering the energy the world needs.”
The agreement is still subject to final approval by a federal judge.
I am Retired U.S. Navy (22yrs) and a Vietnam Veteran. After my Navy retirement I was in the computer related industry, now retired. In 2000 I was a registered Republican and voted for George W. Bush. Six months of having Bush in the Whitehouse forced me to re-evaluate my political stance. I had always thought of myself as a Moderate Republican, but was a Republican by "default" NOT because of close examination of the GOP. Due to what has happened in America since 2000, I now consider myself a progressive, and registered as a Non-Affiliated voter.
*Anti-First Amendment policies that attempt to turn America into a theocracy by enshrining ANY religious belief as law.
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