ANNOUNCER: Tonight on NOW…

From deep inside the White House, secret documents from the President's lawyer and advisors raise questions about whether what happened in Iraq was a few bad apples or a new government policy to ignore international treaties.

HORTON: It's only now that you can see the clear connection between decisions that were taken at the top of government and the abuses that have occurred in the detention facilities in Iraq.

ANNOUNCER: Scott Horton. He got the call from lawyers inside the military worried about what could happen.

And 70,000 women released from prison each year. A lucky few make it to Greenhope, a place of second chances.

BUSTAMONTE: You have to deal with it and you have to say okay, this happened and I will move on now.

ANNOUNCER: And the chief of the WALL STREET JOURNAL's editorial page is back.

GIGOT: I think there's enormous concern in the public right now about how the war is going and they're looking for the President to give them a sense of how we get out of this and how we prevail.

ANNOUNCER: Paul Gigot, a Bill Moyers interview.

MOYERS: Welcome to NOW. As much as we'd like to put it behind us, the story of the Abu Ghraib prison continues to command attention. Just when we think it can't get worse…it gets worse.

Today, the WASHINGTON POST shows new images of the torture and humiliation. And the WALL STREET JOURNAL reports the Red Cross officials who encountered naked and filthy prisoners last year considered the inspections in Iraq among the most shocking and extraordinary since World War I. They are now America's image around the world.

BRANCACCIO: And there's more. In recent days, some high-level secret documents have emerged that stand on its head international law concerning the treatment of war prisoners... They also call into question America's commitment to being a country governed by the rule of law.

The documents are internal administration memos obtained by Michael Isikoff of NEWSWEEK magazine. They indicate a chain of decisions made at the highest levels of the White House to ignore international treaties protecting prisoners, including the Geneva conventions.

BRANCACCIO: The Geneva Conventions, signed in 1949, specified that prisoners of war must always be treated humanely. For over 50 years, the U.S. sought to scrupulously observe the Conventions in every conflict.

Then came the War on Terror. And this: a 42-page Justice Department memo to the Defense Department, first obtained by Newsweek. The magazine broke the story that in January, 2002, in the midst of the Afghanistan war, Attorney General John Ashcroft's team made a legal case for abandoning Geneva when it came to al Qaeda and the Taliban. Co-author Deputy Assistant Attorney General John Yoo argued that stateless terror groups like al Qaeda fall outside the framework of Geneva. And even though Afghanistan had signed the Geneva Conventions, the memo argues:

"….Afghanistan was a 'failed State' whose territory had been largely overrun and held by violence by a militia or faction rather than by a government. Accordingly, Afghanistan was without the attributes of statehood necessary to continue as a party to the Geneva Conventions."

Two weeks later, the anti-Geneva arguments got a boost from top White House counsel Alberto Gonzales. Newsweek obtained the Gonzalez memo written to the President. It said: "In my judgment, this new paradigm renders obsolete Geneva's strict limitations on questioning of enemy prisoners and renders quaint some of its provisions…."

The State Department strongly opposed the change. In a memo of his own, Secretary of State Colin Powell wrote that adopting the Gonzales position would "…reverse over a century of US policy and practice in supporting the Geneva conventions and undermine the protections of the law of war for our own troops…"

Powell's argument fell on deaf ears. President Bush approved the new approach. In Afghanistan and Guantanamo Bay, hardball interrogation techniques became the standard.

Yesterday a Washington Post editorial said the White House position abandoning Geneva showed "contempt for the rule of law," and argued that the interrogation techniques had rapidly "filtered into the [Iraqi] theater."

The White House has publicly stated that the Geneva Conventions do apply in Iraq. But many experts say some of the official interrogation rules used there, like threatening prisoners with military dogs, denying food and sleep, or solitary confinement for more than 30 days, violate the conventions.

BRANCACCIO: Scott Horton has been a forceful advocate of applying human rights to international law for two decades. Top military lawyers turned to him when they became increasingly worried about what could happen inside interrogation rooms in Iraq. He set out to write a 110 page report released last month that analyzes international laws and makes recommendations about how the U.S. should interrogate detainees. Scott Horton, welcome to NOW.

HORTON: Happy to be here, David.

BRANCACCIO: Tell me about these military lawyers, JAGs that you watch the fictionalized program on on commercial television, a few years ago. They come to your office, how did they find you, what did they need from you?

HORTON: They wanted to draw the attention of the bar association to this issue. That is, the standards that were being… they were being issued by the Pentagon for interrogation in the war on terror. They were very concerned about what had happened.

One of the statements that they made to me was that the uniformed services had a 50 year tradition of upholding the Geneva Convention. This was something they were very proud of. And that this had come to an end. And they saw tremendous potential for abuse.

BRANCACCIO: What is the legal philosophy when you take a look at these memos that are now out about how the administration tried to look at this law that normally governs war?

HORTON: Well, it's really only in the last few days that documents have been circulated publicly. They've been circulating amongst legal scholars and lawyers and a few journalists. And I'd say the reaction is largely one of shock. I think no one really understood the breadth and scope of the rejection of the Geneva Conventions system that was being contemplated, particularly in the Department of Justice memorandum. In fact, when you read them, the first thing that comes to mind is this isn't a lofty statement of policy on the behalf of the United States. You get the impression very quickly that is some very clever criminal defense lawyers trying to figure out how to weave and bob around the law and avoid its applications.

BRANCACCIO: Well Scott, this is my new hobby in the last couple of days is curling up with the Geneva Conventions from 1949. I was trying to understand the administration's take on this, the Justice Department's take. What is it about their new take that you find so shocking?

HORTON: Well, there's just a generally dismissive attitude towards them. There's the statement that the Geneva Conventions are obsolete or are quaint or that they somehow will impair an effective and aggressive management of the war on terror. There is a failure to understand the positive side of the Geneva Conventions. They are the bedrock in a certain sense of international law.

BRANCACCIO: But when you look at those Conventions, they really do, in a sense, talk about a different time. They dwell a lot on classic war, belligerence between nation states, the World War II variety. They also talk about a kind of civil war, what to do in the case of, the key word we hear now in Iraq, insurgency. But when it comes to terrorism, al Qaeda, non-state bad guys, the Bush Administration's reading of the law seems to think that there is, call it what you want, wiggle room?

HORTON: The Bush Administration's approach here is to find a way to evade application of the Geneva Conventions altogether. And they do this through a very narrow reading of many of the provisions of the Conventions. But I think that's not fair.

And that's not a correct interpretation of the Conventions. If you look back at these documents, you look at the authoritative commentaries that have come from the Red Cross and others and from the United States over the years, there's a clear understanding that these Conventions are designed to deal with armed conflict in all of it's manifestations around the world and to provide a minimum level of treatment for everyone who's involved in that armed conflict, not just prisoners of war but others as well, civilians, humanitarian aid workers. Even spies and saboteurs are expressly addressed in the Geneva Conventions.

BRANCACCIO: So, you're saying to get to these conclusions, the Justice Department has had to ignore case law that's emerged internationally and even laws in Congress since the Geneva Conventions?

HORTON: Well, the most striking thing about the major Department of Justice analytical memorandum is that it's ignorant. It's ignorant of the basic elements of the Geneva Conventions and how they work together. And it's ignorant of established United States policy towards those Conventions.

But the most striking thing is it doesn't appreciate why the U.S. has adhered to those Conventions. The Geneva Conventions protect American service personnel. That's our major interest there. And we historically have applied what we call the golden rule. That is…

BRANCACCIO: Do unto others?

HORTON: That is exactly… We will not apply a standard of treatment to detainees of another nation that we are not prepared to see applied to our own service personnel.

BRANCACCIO: Well, this Justice Department memo that I've been struggling through also offers another reason why the Geneva Conventions may be an impediment to administration policy. There seems to be a recognition that if they do apply, U.S. officials might be accused or prosecuted for war crimes?

HORTON: Well, that's absolutely correct. I mean, of course, the Geneva Conventions impose a standard conduct on those who prosecute wars. And it imposes a standard of conduct on occupying powers as well, which, you know, the United States, of course, is an occupying power in Iraq.

And these standards go from issuing tooth brushes to detainees and maintaining certain health standards to restrictions against torture, murder, summary execution and cruel and inhuman punishment. The more serious offenses would constitute what are known under the Conventions as grave breaches. And grave breaches are war crimes under United States domestic criminal law. So, that those who commit war crimes can be prosecuted in the United States courts.

BRANCACCIO: But now there are these handy briefs that should take care of this problem in the future?

HORTON: I would say the major thrust of one of these analytical memoranda by the Department of Justice is assuming that war crimes might be committed by political leaders and soldiers, how do we avoid any possible prosecution in the United States. And they counsel taking the position that the Geneva Conventions simply do not apply so that neither political leaders nor soldiers can be held to account under the standards of the Geneva Conventions. It is a breathtaking withdrawal from responsibility.

BRANCACCIO: So, do you think it could work?

HORTON: No, I don't think it works legally. And, in fact, I think the entire notion is disgraceful and preposterous.

I think the responsibility of the Attorney General of the United States is to vigorously uphold and enforce the laws of the United States which include the Geneva Conventions and the War Crimes Act. And I think that the Attorney General would continence and issue memoranda of the sort which have been issued here is shocking.

BRANCACCIO: But it is a new world. I mean, this is a different world after September 11th. Don't you think that we need to somehow loosen the rules when it comes to some of the techniques that can be used to get information that save lives?

HORTON: I would say, for instance, if there were an individual at Grand Central Station in New York with a nuclear device, and you needed to get the code to shut the device off, on a moral level I think any tactic that would result in getting that information could be justified.

The problem is once you establish a level regime that authorizes torture and physical abuse, it will wind up being invoked 99 time improperly for every one time when it could be possibly properly invoked. That an important dilemma. And you also have to consider is torture effective?

A lot of people have studied this closely. Over many, many years. The uniform conclusion of the studies is that torture does not work. Torture gets a detainee to say what the torturer wants to hear. Not the truth.

BRANCACCIO: This thing didn't really catch fire in the public consciousness until these photographs started coming out of the prison in Iraq.

HORTON: I can only say that for months we've been going and talking to journalists about this and about how important it is. And we thought the uniform response which is what this is very technical legal gibberish. And you know none of our viewers or readers would be interested in it. That all changed about ten days ago.

BRANCACCIO: Iraq. Iraq is different from Al Qaeda. Although some people may try to conflate the two. Taliban, that's an Afghanistan issue. The President of the United States said last June that the Geneva conventions will apply in Iraq. Problems happened anyway. Why is this a Geneva Convention issue, what we're seeing coming out of these prisons.

HORTON: That's a very good question and that point to guidance coming from the top, frankly, because the directions that came from the top of the Pentagon and for the White House on this point, were not as clear-cut as you presented them.

Yes, it's true they made statements that the third and fourth Geneva Conventions would apply to the war on Iraq. They also made innumerable statements that the Geneva Conventions would not apply to the global war on terror. Those statements were made much more loudly than the ones about the application of the Geneva Conventions.

And of course they said that the war in Iraq was a constituent part of the global war on terror. So what's the result on the ground in Iraq? A lot of confusion and a lot of people who don't seem to think that conventions apply. It's not just on the ground in Iraq that we have that confusion. It's at the pinnacle of power in the Pentagon that we have that.

BRANCACCIO: So you see a kind of… really kind of infection thinking that went into battling the war on terror infecting decisions and policy as they're applied in Iraq?

HORTON: The Armed Forces in the United States for 50 years religiously applied the Geneva Conventions. There are manual guidelines and procedures that do it. There was a decision by this administration essentially, to take that and throw it out the window. And what came in its place? Nothing. And that produced the chaotic conditions that we see in Iraq.

BRANCACCIO: The President at some level, they said, abides by this Geneva Convention. What more could he do?

HORTON: It's the President's responsibility and it's Secretary Rumsfeld's responsibility to provide unambiguous guidance, training, and enforcement. And what we see in Iraq is the abuses and the violations are so consistent and they've occurred in so many places, there are reports of abuses that parallel very closely what happened in Abu Ghraib. And the notion that somehow some kids, 19, 20 year old kids from Appalachia came up with these ideas all on their own in Abu Ghraib prison and did them, and then independently a bunch of MPs and MI personnel at Al Assad prison came up with the same procedures and techniques is impossible to swallow.

BRANCACCIO: In fact if you search online databases, news articles over the past week or two, for the phrase "bad apples" in regard to this, it comes up a lot lately. The "bad apples" explanation of this.

HORTON: Absolutely. In fact I think you can say that there's a script that's been developed by the Pentagon. We see the same phrases being used over and over and over again. If I had to summarize this script, I would say there are three elements to it. The first element is that to keep the camera on these lurid photographs and the cases of abuse. Draw attention away from any discussion of the policy decisions that were taken away at the Pentagon.

The second element is let's just talk about six or seven rotten apples who have shamed us all. Over and over again. And the third element again is to portray the Geneva convention as a web of hopelessly complicated legal technicalities that no one could be expected really to understand and even the lawyers disagree about them.

And if you look, in fact, Secretary Rumsfeld's statements over the last two weeks, you see the scripts played out over and over and over again.

BRANCACCIO: Where does this leave us as a people here, a couple of years after September 11th. These memos that show a deliberate effort to erode the power of international agreement like the Geneva Convention?

HORTON: Well, I think if adherence to the Geneva Convention becomes a political issue in this country, we have fallen into a deep moral gutter. The Geneva conventions are fundamental. They reflect basic values of our country. And adherence to those conventions is extremely important. And I'm shocked to see the first signs now. That there is some sort of political dialogue over this.

But I'm also encouraged because I see on both sides of the aisle in Congress a strong leadership standing forward insisting that the Geneva Convention be adhered to.

BRANCACCIO: Scott Horton, thank you very much.

HORTON: Thank you.

ANNOUNCER: There's more to come on NOW...

War-time tax cuts. Moderate Republicans refuse to fall into line.

GIGOT: You're beginning to see where the President's poll numbers are down. He has a harder time bringing along members of Congress on this sort of thing.

ANNOUNCER: The WALL STREET JOURNAL's Paul Gigot.

MOYERS: We turn now to a story on prisoners here at home.

Every year, 630,000 prisoners are dumped back on America's streets after serving their time. Most will be on their own, left to their own devices to stitch a life back together. Hard enough.

But a new study finds parolees are also sabotaged at every turn. The Legal Action Center says there are laws on the books in every state that hamper ex-convicts' ability to either find a job, a place to live, or a chance to start all over again.

In recent years, more and more parolees are women facing problems of drug addiction. For many of them, it will be a short trip back to prison. But there is another way. Our report was produced by NOW's Kathleen Hughes, with ABC correspondent Juju Chang.

CHANG: Watching Mychelle Bustamonte work up a sweat, it's hard to imagine just how far she has come. How lucky she is to have made it here at all.

BUSTAMONTE: I'm doing this in a good way. And it's healthy for me. And I feel good about myself. I sleep at night. I eat right.

CHANG: She's lost weight.

BUSTAMONTE: 17 pounds! If you do like five of these a day, your stomach gets rock hard…but I can't even do two.

CHANG: It's been a complete makeover. A remarkable transformation for someone who started as a teenager working the bars of New York…and the street.

BUSTAMONTE: When I was 14, I got a job in a bar stripping and hustling champagne. And then I would get up on the stage and dance and take my clothes off, and more guys would want to buy champagne to sit and talk with me.

CHANG: Mychelle says she began using drugs at age twelve, when she shared a joint with her mother. Before long, she was hooked on crack. Stripping gave way to prostitution, then robbery…anything to feed her drug addiction. After 34 misdemeanors, she drew a mandatory three-year sentence for burglary. Doing time in upstate New York did nothing to prepare her for life on the outside.

BUSTAMONTE: You have a tough exterior. You have like, "Yeah, well I just got back from upstate, and I did this and I did that." And you have no clothes, no money, no place to live. Basically, people don't trust you. Now you have a record to live with. What are you gonna do? What are you gonna do? You're basically a reject from society.

CHANG: Just days after her release Mychelle picked up a crack pipe, and was in trouble again. A failed drug test could have sent her back to prison. Instead, Mychelle's parole officer gave her an option that would change her life, a chance at an alternative to prison…New York City's Project Greenhope.

RHETT: What are some of the healthy things that are happening for you opposed to what was going on before?

BUSTAMONTE: When I came in here I was twisted because I just wanted to be part of someone's life, because I had no life.

CHANG: It's one of the nation's few residential treatment centers for female offenders.

ELLIOT: They do have to prove to us that they want their sobriety and they want their recovery.

CHANG: Anne Elliot is the Project's executive director.

CHANG: Why is it so hard for women to be straight and stay straight when they get out of prison?

ELLIOT: Well, most women are not blessed to have a program like Project Greenhope. They're gonna go back to the same places and the same people that they were involved with before they got back to prison. They will not have the tools to stay off the drugs.

CHANG: Greenhope recently gave NOW extraordinary access, a unique opportunity to witness first hand a program which provides addicts services for every step along the way toward re-entering society.

WOMAN: They teach us to go out and do healthy things.

CHANG: It's a real shot, a second chance to overcome their addictions and the government policies stacked against them.

Greenhope is non-religious. Sessions often begin with a standard feature of recovery, the serenity prayer.

WOMEN: …the courage to change the things I can.

CHANG: The 50,000 female drug abusers released from prison each year walk out onto a high wire. For the 60 women here, Greenhope offers a safety net.

LEGAL AIDE: Could you have the judge give me a call back?

CHANG: A web of services, from legal aid to parenting classes.

COUNSELOR: So, this is your first parenting class.

ELLIOT: So when they hit our doors, our first goal it to make sure they can live and negotiate society on society's terms. A lot of them… I mean, haven't dealt with those issues of personal budgeting, haven't dealt with issues of learning how to wash your laundry, haven't dealt with issues of learning how to pay a bill, have never had a bill.

COUNSELOR: Do you know how to make it all caps?

CHANG: Elliot oversees job training and medical care. Basic education is crucial. Sixty percent of these women have a fourth grade education and little experience living a normal life.

CHANG: But you're talking about basic human skills.

ELLIOT: Yes we are and so in many cases I always say we're talking about habilitation and not rehabilitation.

CHANG: Greenhope prides itself in being a nurturing program, a place that's not about punishment, but healing. Mychelle was given a roommate, Mona Johnson. Back when they were addicts living on the street, neither woman was able to have meaningful relationships.

BUSTAMONTE: You can't have friends, because you're all out for yourself, it's only you.

JOHNSON: Exactly.

BUSTAMONTE: Like you live for drugs, and that's it.

CHANG: But at Greenhope, over time, they learn to trust people again.

BUSTAMONTE: Mona is very special in my life, she will always be very special in my life.

CHANG: These two became devoted friends or "bunkies" as they call themselves.

JOHNSON: I was selling drugs, I was selling my body, I was stealing, doing just about everything I had to do to support my habit. You know, it was a lot of days I prayed to God that, you know, that I could stop getting high, you know. I did things that I wouldn't normally do. Things that I'm not proud of. I stole from my mother, you know. I stole from my daughters, you know. I stole, I mean, I would do just about anything to get the next hit. You know…

BUSTAMONTE: It's so… you know, there… and being in the streets and being degraded day after day after day and doing whatever you have to do to get drugs, it's degrading. And you-- you learn and people teach you that you're nothing. You're nothing.

WOMAN: I really didn't know who I was.

CHANG: The addicted lifestyle robbed them of their dignity. Greenhope aims to give it back. The biggest priority for the women here is staying off drugs for the long haul.

WOMAN: And I don't want to go back there.

RHETT: Okay.

CHANG: To succeed, counselors say, they need to understand how drugs and alcohol have changed their body's chemistry, hijacked their brains…

BUSTAMONTE: My mother had it. My father had it. My brother had it. My grandmother had it. And everybody I know in my life has been an addict.

CHANG: To get sober, to get well, they need to learn that addiction is a disease.

BUSTAMONTE: I mean it's a disease that you can not stop on your own. That if you don't get treated for this disease, the ends are always the same, jails, institutions and death.

CHANG: You said it's like cancer. What do you mean?

BUSTAMONTE: It goes into remission.

JOHNSON: Right.

BUSTAMONTE: But it doesn't ever go away.

JOHNSON: Exactly.

BUSTAMONTE: So that means you have to keep treating it and treating it and treating it.

COUNSELOR: When we say low self-esteem, what is esteem?

CHANG: That treatment involves getting the women together to share their stories and one-on-one sessions with a counselor like Gerald Rhett who helps them recognize and change their behavior.

JOHNSON: I'm going through like little problems like with my brother. My brother is getting high.

RHETT: Okay.

JOHNSON: Okay? And my mother wants me to be there for him. And I be telling her, "Mommy, I can't."

RHETT: Identify the feeling that, he'll probably take you backward before you can move him…

CHANG: Gradually they begin to trust their counselors and each other. The hard shell they brought from the outside world begins to soften…

JOHNSON: That man put me through so much downstairs in his office until I was like, oh, I can't stand him. He get on my nerves. I be like Mychelle, I don't know who he thinks he is, but I want to hurt him…

CHANG: Confronting their own stories can be a painful process. The staff here says six out of every ten have been sexually abused. An overwhelming majority have been physically abused. Many were abandoned as children. This mirrors the female prison population as a whole. It's a legacy each woman struggles with.

BUSTAMONTE: Gerald Rhett has you write a life history, like from the time you were a little girl until now. God, it was painful for me to write this.

CHANG: Writing this journal helped bring back one of Mychelle's most painful memories — the day her mother abandoned her.

BUSTAMONTE: Mom was drunk most of the time. It was my last day of seventh grade. I came home and she was gone. All her stuff was in the house, but she was gone and she didn't come home again. And I get thrown into these foster homes, and group homes. If it was someone else's story, and I read it, I would cry, you know?

CHANG: This therapy forces Mychelle to confront her childhood trauma, she realizes she'd been using drugs and alcohol to blot out the pain of her abandonment.

BUSTAMONTE: But you have to deal with it and you have to say okay, this happened, and I will move on now.

CHANG: Greenhope has helped hundreds of women move on. Government and independent studies show treatment is a more effective way than prison of returning non-violent drug offenders to society. Despite this, state legislatures continued passing punitive "tough on crime" laws throughout the nineties. The upshot? Nearly half of all people released from prison are re-arrested within three years. But now state budgets are no longer able to pay for the costs of incarceration. Politicians are finally paying attention.

PRESIDENT BUSH: This year some 600,000 inmates will be released from prison back into society.

CHANG: In policy circles the buzz is not so much about rehabilitation, but "re-entry." President Bush made it a priority in his last State of the Union address.

PRESIDENT BUSH: So tonight, I propose a four-year, $300 million prisoner re-entry initiative to expand job training and placement services, to provide transitional housing, and to help newly released prisoners get mentoring, including from faith-based groups.

CHANG: Advocates applaud President Bush for raising the issue but they say his plan ignores the elephant in the room…addiction. There's no provision for comprehensive drug treatment for ex-cons. Worse, they charge his plan does nothing to address laws that continue to punish ex-cons long after they've left prison.

ELLIOT: If we're committed to corrections, it's supposed to be corrections. And when they finish correcting, they should be able to get on with their life when they get on the outside. But we have these post conviction obstacles that we put in their way, that they're not able to get on with their lives. So what are you encouraging them to do but go back to prison?

CHANG: Case in point: in most states, in an effort to keep drug dealers out of housing projects, ex-cons can't qualify for it. But without a place to live it's tough for a person fresh out of prison to get back on her feet.

RHETT: And so they're forced to get rooms and stuff like that that may cost them $100 a week. So now how much latitude did someone have when they're making $150 a week maybe, and then they have to pay $100 or $75 a week for a room? So that's a problem.

CHANG: In many states ex-felons can't get food stamps, drivers' licenses or student loans. They're barred from dozens of jobs that require state licenses, such as hairdressers or bus drivers.

WOMAN: That's frustratin'. How are you gonna do what you gots to do when nobody's bringing in no money?

CHANG: The counselors at Greenhope say it amounts to a catch-22 for their clients, the majority of whom also have children.

RHETT: You can't get housing without having money. You can't get your kids back without having an apartment. .

CHANG: And you can't keep your kids if you lose contact. A federal law says that if your kids go into foster care, you can lose custody if you fail to see them for 15 months. That's a real problem when the average time served is 19 months. Many of the mothers at Greenhope have been cut off from their children.

WOMAN: The year 1997, to be exact, that was the last time I seen my oldest two children. So, that was… they were… one was five. My daughter was four years old and my son was five. My son is 13 years old. My daughter is 12.

CHANG: Whether or not they gain custody, the parenting class helps women face up to how their addictions have damaged their families.

COUNSELOR: Hi ladies…

CHANG: If the women are to stay sober, counselors say, it's crucial that they not only come to terms with the pain they've caused their children, but deal with their profound guilt and shame.

COUNSELOR: Worthlessness, shame, fear, regret, heartache.

JOHNSON: I beat myself up because what was I thinking that I had to be separated from my son? You know what I'm saying?

CHANG: When she went to jail, Mona left her eight year old son behind with family members.

JOHNSON: I always thought that I was a good mother. You know, even though I was using drugs, as long as I would leave my son with my mother, right? Because I'd be out two, three days, getting high.

CHANG: I think people would say, well, if she's a crack addict, how could she have been a good mother?

JOHNSON: That's what the disease tell you. My disease told me that I was good mother, using, you know? But I know now that I was abusive. Not physically but as far as leaving him for three days, regardless of it was with my mother or not, that was abusive.

CHANG: Mona and her bunkie Mychelle have both moved up to phase two of the program, called "aftercare." They're now living on the outside but they still come here three times a week for counseling.

RHETT: Out there is a learning process as well. The process is continuous.

BUSTAMONTE: I still look at normal women on the train and on the subways, you know, do I have too much make up on? Or am I dressed, you know, all right? And just trying to fit into society. You don't know how to fit in. You know, you have to learn these things. These are things they teach you here.

CHANG: You sound like you feel like you're an alien from another planet.

BUSTAMONTE: Totally, totally.

WOMAN: Everybody just get into position.

CHANG: It's Friday morning at Project Greenhope, time to unwind and celebrate sobriety…at least for now. The success rate for completing this program is 70 percent, double the rate for less comprehensive programs. But how effective is Greenhope once the women move on? Just ask Renee Davis.

DAVIS: This is my daughter-in-law, and my grandson, my son, and my grandson, my son and daughter-in-law.

CHANG: Today she's a productive and reliable executive secretary. Davis is a far cry from the hopelessly crack-addicted ex-con she was just four years ago.

DAVIS: I was married on Valentine's day. And we had a beautiful wedding. I'm fifty years old. Come on. I never thought I would get married at this late state in life. Life's good.

CHANG: Compared to prison, Greenhope works, but only for a precious few. Of the roughly 100,000 women currently behind bars experts believe that 70 percent are addicted. Only a small percentage of them receive any treatment at all.

DAVIS: I go back to Project Greenhope because I want to give them that hope and just show them by example, the treatment works. You know it really works, you know?

CHANG: How much does it cost to salvage a person's life? Greenhope costs roughly 20,000 dollars a year for each woman, paid for by a combination of state money and private contributions.

COUNSELOR: That's your undo button.

CHANG: The irony is that the therapy and treatment is far cheaper than the 32,000 dollars a year it costs taxpayers to keep a non-violent drug offender behind bars.

DAVIS: A lot of girls know me. Whether it be from the streets or the penitentiary, a lot of them know me. And for them to see me today compared to who they knew before, it's such…there's really not much I have to say, you know?

CHANG: As for our bunkies, Mona says each day is a struggle. She recently found an apartment in New York City and landed a job caring for handicapped people. Money's short but that's okay for now.

JOHNSON: This is the first time I ever worked in my life, okay? My… at a legal job, right? Ok, and to be doing something…

CHANG: What did you do when you got that first paycheck handed to you?

JOHNSON: I wanted to frame it.

CHANG: And she has a new bunkie, her eight year old son, Elijah.

JOHNSON: Are you finished playing your game now?

CHANG: Meanwhile, Mychelle's makeover is indeed extreme, but no where near complete. She's working at an upscale deli in downtown Manhattan.

BUSTAMONTE: These are my recipes, my homemade recipe. What would you like with that ma'am?

CHANG: She's living in a halfway house for recovering addicts while she goes to school and searches for a permanent place to live. Her felony record disqualifies her from of public housing.

BUSTAMONTE: The salary started at $6 an hour. And I went up to $6.50 an hour. But I started with no experience, nothing to put on a resume. Nothing. It barely pays my bills but, hey, that's all I need right now. So, you know, when I have one voice inside my head telling me, "Oh God, this is… I can't take it. I can't do it. Go ahead. Go get high." I have another voice telling me, "You're gonna lose everything that you've worked for..." And I'm not willing to let it go.

ANNOUNCER: Next week on NOW WITH BILL MOYERS...

For many immigrants, the American dream starts here. But each year, it gets harder and harder to move up the economic ladder And there are cruel choices: To head north where the crops are ripe or stay and let your child finish the school year.

VANESSA: We weren't gonna go this year. We were planning on staying this year. But I guess now my parents are sort of thinking differently and they're seeing that we really need to go.

ANNOUNCER: Next week on NOW.

ANNOUNCER: And connect to NOW at pbs.org.

Find out more about the Geneva Conventions. Read the administration's secret memos. Learn how tough-on-crime laws affect women. Connect to NOW at pbs.org.

MOYERS: The President faced a mutiny in his own party this week. A small mutiny, but a mutiny nonetheless. Moderate Republicans in the Senate refused to pass the $2.4 trillion budget that would move toward a permanent extension of his tax cuts. They and Democrats are insisting that any new tax cuts be paid for with either spending cuts or other tax increases.

It got so nasty that two powerful Republicans were virtually shouting at each other across Capitol Hill. Speaker Dennis Hastert, the conservative leader of the House, who argues for the giving the President what he wants. And Senator John McCain, who attacked the "fat cats," his words not mine, for refusing to make sacrifices while fighting a war. Paul Gigot is here to discuss these and other matters with us. He's the editor of the editorial page of THE WALL STREET JOURNAL and one of the most influential voices in the country. Thanks for coming back, Paul.

GIGOT: Good to be here.

MOYERS: That was some spectacle. Senator McCain scolding his fellow Republicans for passing tax cuts for the rich while American soldiers are fighting and dying in Afghanistan and Iraq. And Dennis Hastert, Speaker Hastert saying, "If you want to see sacrifice, John McCain, go to the hospital here where all the wounded are." Do you think Hastert forgot that John McCain spent five and a half years in a POW camp in Vietnam?

GIGOT: Yeah, I do think he forgot. Otherwise he wouldn't have said that. I mean, one thing you don't do about John McCain is challenge his service or imply that you're doing so. But the, but challenging his tax policy is another thing. And I think that's where the fundamental disagreement here is.

I mean, House Republicans in the Bush administration believe I think with some reason that the tax cuts have got us out of a very rough economic period. And of course John McCain has been opposed to tax cuts now for some time. So, there's that fundamental disagreement.

MOYERS: Here's the question McCain asked of the President, the Congress and the country, quote, "Throughout our history war time has been a time of sacrifice. What have we sacrificed now?" What's the answer to that?

GIGOT: Well, I don't know why some people think that the only answer to sacrifice or at least the first answer to sacrifice is raising taxes. I mean, what we really need to prevail in a war is a strong economy. And I would argue that without the tax cuts we would have a weaker economy and then would be much less able to finance the war in Iraq, to pay for this $87 billion and now the $25 billion that we need for that and for other things on defense.

The question of sacrifice is an interesting one. And it's a difficult one because unless you reinstitute the draft, you can't have universal service. I've been struggling with how to engage the country in this effort because we do have this voluntary military. And it's a very good military. But I don't know quite know how to do that.

MOYERS: I read an analysis this week that shows that personal taxes on earnings are now two and a half times greater than taxes on investment income so that the financial burden in effect of supporting the war on terror one could claim is clearly falling the hardest on people who live paycheck to paycheck. So, isn't John McCain right?

GIGOT: I don't think he's right, Bill. We have a very, very progressive tax system in this country. The Bush tax cuts only reduced the top marginal rates from 39.6 to 35 percent. The rich still pay the vast majority of taxes in this country. I can't remember the precise figures but it's an enormous share of the tax burden.

So, that's built in the cake already. What these Bush tax cuts did — and not all of them, I didn't agree with every one of them — but what the marginal rate tax cuts did and the dividend tax cuts did is they started to give business some confidence again after the shocks of 9/11, after the shock of the corporate scandal, after the bubble had burst. And I would argue that without them we'd be in a lot worse situation economically and we wouldn't start to be having the beginning of this jobs boom that we're now having.

MOYERS: But can the jobs boom issue… can the recovery be real unless the benefits are spread broadly among the people? And the fact of the matter is it is the wealthy, it is the people who are doing well who have received the largest share of the tax cut?

GIGOT: Well, ultimately, sure. Any economic growth has to be widely spread. And it will be. I mean, this is typical of what you see in any kind of recovery. We heard the same arguments in the eighties after the recession. This at the beginning of the recovery. We heard the same arguments in the nineties when you had a Democrat who was in the White House.

It takes a while. Once you get corporate profits up, once you begin to get confidence restored again you see hiring return. And that's what you're seeing. The economy, I think, is arguably a success story, a big success story in the last couple of years. That's the remarkable thing is how resilient it's been and how it's coming back again with confidence.

We've had a 1.1 million jobs added since August and I think that's gonna continue. Personal income is rising smartly. Enough growth, by the way, that the Federal Reserve is now saying, "Wait a minute. We're surprised and we're worried a little bit about inflation coming back so we may have to raise rates."

MOYERS: The Bureau of Economic Analysis is out with a report that says after tax profits for corporations are at an all time high, and compensation for labor, for working people, is at a low of forty years. That doesn't seem quite cricket to me.

GIGOT: Well, one thing you always see at the beginning of any recovery is that before corporations hire they want to make sure that their bottom lines are better. Before they spend on marketing, before they add new employees, before they do really a kind of confident building investment that is gonna create a long expansion, they have to make sure that their bottom lines are firmer. And that's… I think one of the reasons behind that number, I would suspect, is that we're at that moment in this economic expansion. And as it continues you're gonna see job growth expand and the benefits of growth spread.

MOYERS: I'm old enough to remember that it was conservatives who called for fiscal prudence and responsibility during the Vietnam War and before that too. Now it's conservatives who have pushed the accelerator to the floorboard with one tax cut after another heading us over the cliff of those huge deficits. Doesn't that concern you as a conservative?

GIGOT: Bill, over the cliff? I mean, come on, what cliff? How can you define this as a cliff when we've had growth of almost eight percent in the third quarter of last year? Over four and a half percent in the fourth and now we have four percent growth here.

And the second quarter… in the first quarter, and the second quarter is gonna look like it's gonna be roughly the same. I mean, I think you can make a very good critique, and I certainly have, of the spending habits of this Republican Congress. I think they have spent too much money and in that sense they've abandoned their fiscal responsibility.

MOYERS: You know, I can't define what the cliff is of where deficits are taking us but the Committee for Economic Development has done a pretty good job of it. That's a pro growth, pro business organization, highly respected, headed by one of the first George Bush's top assistants, Charles Kolb. This report from the Committee of Economic Development says quote, "We're in danger of placing the country on a path of ever-expanding deficits and declining growth in our national output and living …" That's what they call the cliff. The point of no return when deficits take over and drive everything.

GIGOT: Well, if what they're saying is that in the long term we can't continue with a $500 billion deficits you know, they're right. But I don't think as the economy expands that we're gonna be there. And if we got a modicum of spending restraint from Congress we wouldn't be there.

I mean, remember all the dire predictions in the eighties? The deficits would never end. They went down. Remember the dire predictions in the early nineties? The deficits would be there forever far as the eye could see. They went away with growth.

I mean, we do need both sides of the budget ledger addressed. What we need is spending restraint and we need the tax cuts to continue to spur the economy.

MOYERS: And hasn't the President failed at governance he can't restrain the spending, the war's going badly, the United States image abroad is really taking a beating among friends and foe so that even his own party, as you say, is now willing to buck him?

GIGOT: Well, I mean, I fundamentally disagree with that. I mean, I think that he's taken two big risks. Bush, whatever you think about him, knows what he thinks and he has been firm in his policies. And he has taken a couple of major policy gambles.

One is tax cuts. I'd argue that that has paid off enormously. We've got a good economy, Bill. We're doing very well. It could have been a lot worse given where we started in 2000 and given the shocks of 9/11 and other shocks.

The other risk he's taken is Iraq. Now that's proved to be more difficult than he would have hoped, certainly I would have hoped, a lot of people would have hoped. But we don't know the outcome of that and I think it is linked to the war on terror. And I think we've gotta fight this war until we win it. So, I think your dire description of where this presidency has taken us is fundamentally wrong.

MOYERS: Well, we disagree on the war of course because I think that going to Iraq diverted us from the war on terror and that it took on something else that has actually created a terrible problem for the war on terror. Why isn't John Kerry able to exploit the difficulties that the President is having right now?

GIGOT: Well, I don't think John Kerry has found his voice. By that I mean I don't think he's found a policy or a position that can define him. You know, I mean, Bill Clinton in 1992 had-- "It's the economy, stupid, and don't forget healthcare." Ronald Regan in 1980, another President who beat an incumbent had, you know, "Peace through strength." And "I'm gonna get inflation under control and tax cuts to spur the economy."

Voters, when they went into the booth, knew that, "If I take a risk on them, I know at least they're gonna try to do those things." Can you identify a single policy position that John Kerry has made his own that he's saying, "If you vote for me, this is what's gonna happen?"

MOYERS: Like Bob Dole who had been in the Senate for a long time. You have to make so many small marginal decisions and vote here and vote there are a little extraneous things over this that it's hard to develop a persona. Barry Goldwater did it be he came to the Senate convinced of who he was.

GIGOT: Well, and your Dole analogy would not be consoling to many Democrats at this stage.

MOYERS: What would you advise John Kerry to do if you were running against George Bush?

GIGOT: Tell people what you really think about Iraq. Don't try to finesse it because you're, you know, well, Ralph Nader on the left is telling me to pull out but the poll suggests maybe we shouldn't. I'll finesse it down the middle.

The AFL-CIO on trade is telling me, "'You better be protectionist. Don't support the Australian agreement.' But my voting record is that I'm a pretty free trader." Look inside your gut and tell the American people what you think. I mean, I think they'll admire that and support that. They're looking for a leader. And rather than hem and haw and cut it so thin just tell your people what you think.

MOYERS: Where is Bush the most vulnerable?

GIGOT: He's most vulnerable right now on Iraq. I mean, I think that there's enormous concern in the public right now about how the war is going.

And they're looking for the President to give them a sense of how we get out of this and how we prevail. And I think John Kerry has an opportunity to step up and say, "Here's how I would do it and here's how I would win this. And I would manage this war better than George Bush is."

MOYERS: He's not doing that because many of the Democrats I know who have been on this show have said he sounds a little more like Bush than Bush when it comes to extending our military presence there.

GIGOT: Well, I think that's a lack of certainty in his own mind about what he really thinks. I mean Dwight David Eisenhower in 1952 said, "I will go to Korea." Now, he had enormous credibility because he had already won one war in Europe.

MOYERS: Our audience… a lot of our audience is so young they don't remember who Eisenhower was or Korea.

GIGOT: Well, he…

MOYERS: But what he was saying is, "I'll end this war."

GIGOT: That's right…

MOYERS: "Trust me."

GIGOT: That's right. And if John Kerry believes that we should do that then he oughta say that and we'll have a big debate over it. If he doesn't then I think he has to say, "Here's my alternative strategy." Or if he is, as you suggest, just gonna cut it, you know, a five percent degree of difference with Bush then it probably, you know, he's not gonna be able to win on that issue because what's the voter choice. And he'll fight it on the election on other terms.

But I think that Iraq is such a big issue. And it's going to be. I mean, I don't see the violence going away between now and November. I think that both candidates have to address it head on. The voters are gonna be pretty ruthless on a candidate who doesn't look like he's willing to face up to that big challenge.

MOYERS: To be continued. Paul Gigot of THE WALL STREET JOURNAL, thank you for coming back.

GIGOT: Thanks, Bill.

BRANCACCIO: Three weeks ago NOW brought you a report on the unsavory politics behind the new Medicare law. Since our story aired, there's been plenty of fallout and plenty of news, including findings of government illegalities and widespread confusion about the new prescription drug card.

We reported on the General Accounting Office investigation into Medicare's Video News Releases. In essence, government press releases for the new law dressed up to look like news reports. They were paid for by taxpayers and featured a beaming President Bush. Viewers had no indication they were produced by the government. Forty stations around the country aired them; in this case, introducing one as if it were a reporter's work.

LOCAL ANCHOR: In this morning's news, Karen Ryan helps us sort through the details.

BRANCACCIO: It turns out, Karen Ryan is a public relations consultant posing as a reporter. We showed you Comedy Central's spoof of the affair on its DAILY SHOW.

CORDDRY: Jon. They created a whole new category of fake news — a hybrid. Info-ganda.

BRANCACCIO: But no one was laughing in the general accounting office, which just this week determined that the video news releases were illegal, violating federal laws prohibiting the use of taxpayer funds for "covert propaganda."

Then there was the case of a beleaguered civil servant, Richard Foster, Medicare's chief actuary. Last June, calculating an early version of the bill, foster wanted to tell Congress the legislation would cost at least a hundred billion dollars more than it was estimating. But Richard Foster was muzzled by then-Medicare chief Thomas Scully.

In a report made public this month, the Congressional Research Service, a nonpartisan arm of Congress, said efforts to prevent Mr. Foster from sharing his cost estimates with lawmakers "would appear to violate a specific and express prohibition of federal law."

Finally, since those new drug discount cards came out this month, there have been reports of chaos at the Medicare hotline, huge phone delays.

HOTLINE: Due to high call volumes, all of our agents are currently busy….

BRANCACCIO: Then there are shifting and outdated drug prices and as for the cards themselves? A daunting 73 options to choose from, leaving seniors frustrated and overwhelmed.

That's it for NOW. Bill Moyers and I will be back next week. I'm David Brancaccio. Thanks for joining us.