The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the "NewsHour" tonight, a NewsMaker interview with General Wesley Clark, the Supreme Allied Commander of NATO; the story of the longest independent counsel investigation of them all; a farewell conversation with Treasury Secretary Robert Rubin, and a Roger Rosenblatt essay about America and the Fourth of July. It all follows our summary of the news this Thursday.

NEWS SUMMARY

JIM LEHRER: NATO's commander said today there's little evidence Yugoslav President Milosevic will be overthrown or forced to step aside. U.S. Army General Wesley Clark testified before the Senate Armed Services Committee. He said Milosevic remains in firm control of the military.

GEN. WESLEY CLARK: President Milosevic is attempting to re-legitimate himself by portraying himself as the victor in the conflict, by promoting reconstruction, by reaching out to whatever friends he can still find to try to bring them in and gain international stature and undercut the impression that he's an indicted war criminal.

JIM LEHRER: We'll have a NewsMaker interview with General Clark right after this News Summary. In Kosovo today, KFOR troops secured the site of another suspected massacre. It's one of more than 100 sites under NATO investigation. German soldiers found the graves of more than 119 people in two villages near Prizren yesterday. Local ethnic Albanians said Serbs murdered villagers a day after NATO started its bombing campaign against Yugoslavia in March. The Northern Ireland peace talks continued today in Belfast. They were to have concluded last night at midnight. The main obstacles remained sharing power and disarming the Irish Republican Army. In Washington, President Clinton spoke about the situation at a joint news conference with visiting Egyptian President Mubarak.

PRESIDENT CLINTON: We've been in virtually constant contact with the parties there, and I spent a lot of time on it yesterday and late late last night and this morning early. They are in negotiations as we speak, and the mood seems to be reasonably positive, and they are exploring some new ideas. I offered my suggestions for possible resolution of the sticking points with the benefit of all the folks on our national security team, we've been working on that. And I'll say this, it is a very difficult problem for the parties, but it will be very hard for the world to understand if this breaks off, since they have -- everyone's agreed to the fundamental elements of the Good Friday agreement.

JIM LEHRER: On a domestic subject, Mr. Clinton said campaign finance reform was needed. He was asked about the fund-raising of Republican Presidential Candidate George W. Bush. The Texas governor and son of the former President has raised $36 million for the 2000 campaign. He's ahead of his Republican rivals and Vice President Gore, who has raised $18 million. The Congressional Budget Office announced its ten-year federal surplus estimate today. It was $996 billion, slightly less than the trillion-dollar figure President Clinton projected on Monday. He proposed channeling part of it to Medicare, Social Security, and paying down the national debt. Republican House Speaker Hastert said this largest surplus in history should also finance major tax cuts. The House passed the Y2K lawsuit bill today. Senate passage was expected later. It would protect businesses by limiting suits for damages caused by possible year-2000 computer glitches. Congressional and White House negotiators reworked the original legislation, and President Clinton has said he'll sign it. U.S. and Canadian Airlines said today their Y2K precautions were 95% complete. They said the work would be done by summer's end, and the Federal Aviation Administration said its air traffic control computers have been also tested and fixed. The Senate confirmed Lawrence Summers to be Treasury Secretary today. The vote was 97-2. Summers had served as Deputy Treasury Secretary. He's a former Harvard economics professor who joined the Treasury Department in '93. We'll have a conversation with outgoing Secretary Rubin later in the program tonight. 20 people were killed today in a cable car accident in the French Alps about 40 miles South of Grenoble. The private gondola plunged more than 260 feet and crashed onto the rocky slopes of a ski resort. There were no survivors. The victims were French citizens on their way to work at an observatory. Authorities said it appeared the gondola's cable suddenly went slack, causing the car to fall. And that's it for the News Summary tonight. Now it's on to General Clark of NATO; the longest independent counsel investigation; and a farewell conversation with Secretary Rubin.

NEWSMAKER

JIM LEHRER: Margaret Warner has our interview with U.S. Army General Wesley Clark, the Supreme Allied Commander of NATO. She spoke to him earlier this evening.

MARGARET WARNER: Welcome, General.

GEN. WESLEY CLARK: Thank you, Margaret.

MARGARET WARNER: I want to talk to you first about the KFOR mission in Kosovo. Secretary of State Albright said yesterday when she was up at the U.N. the people of Kosovo are not safe. Is that true?

GEN. WESLEY CLARK: Well, I think that this is a period of sorting out that's going on. There are hundreds of thousands of people coming back. There have been some terrible things done in that country. There are all kinds of emotions running rampant. And there are Serbs still there, some of whom may have participated in that, others who are just afraid they're going to be taken for guilty because of their ethnicity. There are Gypsies who are also being discriminated against. And so there is some legitimate effort to get property back. There's some revenge taking, there's some score settling. One doesn't really know, but it's a very difficult time. Our troops are there. We're doing everything we can, but of course we're not police.

MARGARET WARNER: Why can't the KFOR troops control that more? I mean, there are reports that as many as half the Serbs have already left.

GEN. WESLEY CLARK: Well, I think that's probably an accurate figure; about half have left. Perhaps some will return. We certainly hope so. But no matter how well trained, organized, equipped, and led our troops are, they're simply not a substitute for local police in terms of knowing the neighborhoods, knowing the patterns of activity, knowing the people, knowing how to stop individual events. And so they're doing the best they can, going to where the intelligence tippers indicate there might be trouble. We've put curfews in place in some cities; we're stopping people that are armed; we're enforcing the de-militarization of the KLA, for example, and this afternoon we picked up some Serb soldiers who had wandered into the area without an invitation to do so. And so we're out there. There's probably an awful lot we're preventing happening that you'll never know about, but it's a big place, despite the fact that it's only the size of Connecticut. And you're dealing with a million and a half people.

MARGARET WARNER: If you had the full KFOR strength, could you do more to control the violence?

GEN. WESLEY CLARK: Well, of course we could, but even with the full strength we're not going to be able to prevent individual acts of violence, any more than a police force in an American city can prevent all acts of violence by being on duty.

MARGARET WARNER: It does raise the question, though, it's been nearly two weeks -- it has been two weeks since the agreement was signed, but only half the KFOR forces there -- why is it taking so long?

GEN. WESLEY CLARK: Well, it normally takes anywhere between forty-five and ninety days to deploy forces, and even though we had hoped that Milosevic would give in much sooner, the end still came rather suddenly in terms of the processes. I think some countries are simply having trouble getting their forces ready. Others need time to organize the transportation. Normally, a force has to be assembled from volunteers; it has to be organized; and it takes a period of three to four weeks to train it. In some countries they're given home leave before they're deployed, and then there's a time for the equipment to be shipped. So 60 days is not an unusual period of time for some of the forces to be there.

MARGARET WARNER: You said you hope some of the Serbs that left would come back. Does the fact that so many Serbs have left, though, does it make your job harder, or in some ways easier?

GEN. WESLEY CLARK: Well, I think it cuts both ways, honestly, but we do believe that this should be a multi-ethnic society; we believe that people who are there and who are not war criminals should stay there, and we believe that all these people should get along together as best we can; we know that's an idealistic hope. It's an expression of hope. In reality, there are all kinds of feelings on the ground, and we know there has to be a period of genuine acceptance by the Serb people of what they did. They have to accept it. They have to ask for forgiveness. They have to be repentant to this. They can't deny it.

MARGARET WARNER: That's a tall order.

GEN. WESLEY CLARK: Well, it is a very tall order. We're seeing the first signs of this out of the Serb Orthodox Church, by the way. There's been some courageous Serb Orthodox Church leadership already asserted, and maybe that will help. It's going to be a very difficult thing for the people of Serbia, as well as for those who left Kosovo, to recognize and accept what their own leadership caused to happen.

MARGARET WARNER: Do you think if Serbs continue to leave and they don't come back, do you think that in anyway undercuts the credibility of what NATO went to war for, this multi-ethnic ideal, as you put it?

GEN. WESLEY CLARK: Well, I think we have to temper the ideal with reality. And we don't know how widespread Serb popular participation in the atrocities really were. And so maybe a lot of these people helped themselves to their neighbor's property, or participated in some mass banditry and worse mischief while the ethnic cleansing was going on. We just don't know, and so some of the people that are leaving may well consider themselves as real targets for international justice, as well as for Albanian revenge, so it's a little hard to generalize, but, as I said, the ideal is we'd like to promote a multi-ethnic society. By the way, the KLA leadership has called for the same thing.

MARGARET WARNER: And do you think they're genuine?

GEN. WESLEY CLARK: I think they are.

MARGARET WARNER: Let's talk about a few lessons of war. First of all, in fact, you had to fight a war with 19 political bosses from 19 NATO countries, and General Malon, the head of the NATO military committee as he retired said, look, it automatically leads to the lowest common denominator decision. How severely did it constrict you and your ability to wage this war?

GEN. WESLEY CLARK: Clearly, we had to have political consensus at the outset, but NATO is a very adaptive institution, and member nations found ways to give me greater freedom and flexibility and striking targets, and so along with the intensification of the air campaign, as we ratcheted up the number of aircraft, we also got a lot more freedom in the target selection process.

MARGARET WARNER: But if you were to design how should the alliance fight a war in the future, would you suggest some changes in that in sort of the way political control was exercised?

GEN. WESLEY CLARK: I think we need to look at this very carefully. There's a great deal of virtue in the principle of consensus. It kept all of the allied nations onboard and committed. They were just as committed as we were to the success and to the final outcome, and that's really the strength of the NATO. The alliance cohesion was a greater impact on Milosevic, I think, than any single target that we attacked.

MARGARET WARNER: Another very controversial point was the emphasis on no American casualties. Now, as a military man, does it bother you, do you think there's something sort of ignoble about the United States being the most powerful nation on the planet and using that technological superiority to wage a war of low risk to our own soldiers, even if it means higher risk to civilians on the ground?

GEN. WESLEY CLARK: Margaret, all of this talk about avoiding American casualties, most of it came from the press. I never got any guidance in that respect. In fact, Secretary Cohen and many others were very clear that this was a high-risk operation, or at least there were high risks involved in parts of it, and that we would likely have losses. In my setup of the air campaign, I set up four measures of merit that were designed to make sure we had an effective air campaign. One of these was to avoid the losses of aircraft. and the reason is very simple, because if you start losing aircraft at the start of an air campaign, you're going to have the clock ticking against you, and people are going to say, well, how long can this go on, and so it was a military imperative to - I mean, think of the converse. What air campaign, what military operation do you ever know where we sought casualties?

MARGARET WARNER: But what you're saying then is in a way it was to avoid having political pressure to maybe end it prematurely that led you and your civilian masters, I guess, we'd say, to want to minimize casualties as much?

GEN. WESLEY CLARK: Well, I look at it more in the impact on the adversary. As you may recall at the beginning of the campaign, President Milosevic was trumpeting how many NATO aircraft had been shot down. We shot down 13 today; there have been 73 shot - they didn't. And it was their inability to reach out and affect us while we were able each time to strike them, and it was this succession of blows, which created the inevitability of NATO's success in the minds of the Serbs and, no doubt, in the minds of President Milosevic, so this was not a political factor, primarily; it was primarily a war-fighting factor. It's the way we sold the success of the campaign to our adversaries.

MARGARET WARNER: So, for better or worse, are you saying this is the war of the future?

GEN. WESLEY CLARK: Not necessarily. Every war is different. It's of its own kind. You have to set your objectives for that particular time and place, for that mission, you have to operate within the political constraints that are given you with forces that are available. Every situation is going to be unique. But I think one thing is clear, that our air power, our precision weaponry, and our ability to strike in the darkness, and even in adverse weather conditions with brave and well-trained airmen from all the services, we've added a new dimension to warfare here, and that's very clear. I also want to be clear, though, that Task Force Hawk, with our 5,000 American soldiers that were deployed on the ground in Albania, was a significant factor in contributing to the ultimate outcome as well. It sent a long and strong message throughout the region that the United States and NATO were there; we were there to stay; we were there to win; we really meant it. We stiffened the resistance in Albania to Serb incursions across the border; we gave them the opportunity to put their army forward to defend their own frontiers; and we sealed in President Milosevic's mind that he could somehow intimidate and de-stabilize neighboring states; we weren't going to permit it.

MARGARET WARNER: There was a sort of assumption throughout the war that the American public and the European public couldn't stand either a long war, or a bloody war. Now, I mean, you're not a pollster but you're an American. Do you think that's true? Do you think the American public is that - is that squeamish, that unwilling to sacrifice?

GEN. WESLEY CLARK: Well, I think the American public has tremendous common sense about these things, and as the horrors in Kosovo begin to unfold, I think there was a surge in resolution and determination in both Europe and the United States. I'm convinced that NATO would have done whatever it took ultimately to prevail in this conflict.

MARGARET WARNER: And would you say, in fighting future wars, that the political leadership shouldn't assume that Americans are unwilling to take casualties?

GEN. WESLEY CLARK: I think that will depend very much on the circumstances, the objectives and the whole nature of the conflict itself.

MARGARET WARNER: Finally - and this is something we're doing with a lot of our guests on the show -- are there issues coming out, all these issues we talked about tonight or others out of the conflict that you think should be publicly aired and debated in the next presidential campaign?

GEN. WESLEY CLARK: Well, I hope we'll talk about in the next presidential campaign foreign affairs. I think America's role in the world vital, and I think there are some wonderful opportunities coming up for Americans in terms of business relationships, of education, of development through our exchanges and our interchange with other nations. There are great dreams afoot of Atlantic free trade areas -- of what we can do with technology- sharing and Internets worldwide. And all of this depends on international understanding, cooperation and really a growth in interdependence. And that has some particular responsibilities for the United States. We are the world's superpower whether we like it or not. And people around the world look for us to assure them of their security and to assure the international system of its stability. I think that's an issue that needs to be worked, and there are many more.

MARGARET WARNER: All right. Well, thank you, General, very much.

GEN. WESLEY CLARK: Thank you, Margaret.

UPDATE - DECADE OF INQUIRY

JIM LEHRER: The Independent Counsel Law was not renewed by Congress, and at midnight last night, it went out of existence. As a form of P. S. to its expiring, Kwame Holman now tells the story of the longest independent counsel investigation of them all.

KWAME HOLMAN: Through most of his 78 years, Judge Arlen Adams manage to live and work in the shadow of his home town, Philadelphia. That includes college, graduate and law schools, 22 years as a senior partner at a law firm and 19 years of service on the third circuit of the United States Court of Appeals. What finally succeeded in luring Adams away from Philadelphia was a phone call he received nine years ago.

JUDGE ARLIN ADAMS, Circuit Appeals Court [Ret.]: I got a call one day from a special court, the District of Columbia. They asked me if I would be willing to come down and talk to them about a special assignment. I was naive enough to accept the invitation. I got on the metro liner. And there I was confronted with three of my former colleagues, all distinguished judges, and they mentioned the HUD problem.

KWAME HOLMAN: The HUD problem was evidence of profiteering and influence peddling inside the Department of Housing and Urban Development during the Reagan administration. And it appeared the abuses emanated from the Office of Housing Secretary Samuel Pierce. Then Attorney General Richard Thornburg decided an independent counsel, not the Justice Department should handle the investigation.

JUDGE ARLIN ADAMS: The crimes allegedly committed by a cabinet officer, the Honorable Samuel Pierce appointed by the president, and there was a fear that the public would not have confidence unless an outsider made the investigation.

KWAME HOLMAN: And that outsider was Judge Arlin Adams. Adams said his former appeals court colleagues persuaded him to take the job.

JUDGE ARLIN ADAMS: I think I asked them what was your estimate as to how long I'll be away, and I think one of them said, "oh, we guess about six months."

KWAME HOLMAN: The panel suggested about pix months? What have you come to think of that prediction?

JUDGE ARLIN ADAMS: Well, it was way off the mark. I was there for five years.

KWAME HOLMAN: And the investigation continued long after Adams handed it off to his assistant in 1995. In fact, it ended only after the court issued this order of termination dated June 3, 1999.

REP. TOM LANTOS: It blows one's mind.

REP. CHRISTOPHER SHAYS, [R] Connecticut: We can say good things about Judge Adams. He did a wonderful job, but even then, both Tom and I have a problem with the amount of time and the amount of money spent. But the last I looked, it cost them $28 million to do where we really did the bulk of the job at no cost to the government.

KWAME HOLMAN: Due largely to the efforts of representatives Tom Lantos and Christopher Shays, Congress already had established a factual base for the independent counsel's work. The House Subcommittee on Employment and Housing began its investigation in the spring of 1989 and continued for more than a year. Shays was the committee's ranking Republican; Lantos, it's Democratic chairman.

REP. TOM LANTOS: The decision makers at HUD appeared to have carried paper work reduction to the extreme. There are practically no records for how decisions were made involving hundreds of millions of dollars of taxpayers' money.

KWAME HOLMAN: The primary focus of the committee's investigation was a program to improve housing for low-income residents who received federal rent subsidies. By design, HUD would ask local public housing authorities to apply for federal housing funds based on need. The PHA's then would invite local developers to rehabilitate housing units; in return for a long-term guarantee rents would be subsidized. But in practice, well-heeled developers or their politically connected consultants often went directly to high-ranking officials at HUD and got renovation money quickly approved for their own projects. Dealings with the local PHA's became just a formality.

WILLIAM CONNOLLY, New Jersey Director of Housing: Let's not make any mistake about it. We were honoring the letter of the HUD rules because we felt we needed to do that. There's absolutely no question that the process had already been stood on its ear by HUD.

KWAME HOLMAN: The hearings exposed several former HUD officials turned developers who profited handsomely from the scheme, including then U.S. Ambassador to Switzerland, Phillip Winn.

AMB. PHILIP WINN: I did not deal with the housing agencies per se -- and again this is not my expertise -- but I understand in one of the projects there were six bidders, so there was competition.

SPOKESMAN: We can't let you get away with that, sir.

AMB. PHILIP WINN: You don't think that's true?

SPOKESMAN: No, that's not true. There was not competition. There were - you had a number of units here that were locked in. There was no competition. If there was advertising, it wasn't competitive because your project had basically been selected by the central office.

KWAME HOLMAN: The hearings also revealed that several prominent Republicans collected hundreds of thousands of dollars in consulting fees by using their influence to get projects approved by HUD with little review. Fred Bush, a top Republican fund-raiser and the ambassador-nominee to Luxembourg, received $500,000 for his efforts on behalf of a developer in Puerto Rico.

FRED BUSH: We were hired by the developer to advocate this project.

REP. BARNEY FRANK: What was it you were going to do, specifically? What did you do?

FRED BUSH: Well, I called Ms. Dean.

REP. BARNEY FRANK: But what were you trying to do for her, for the developer in that conversation?

FRED BUSH: To find out what the procedures were.

REP. BARNEY FRANK: You went to the executive assistant of the secretary to find out the procedures. That is the most preposterous answer I have ever gotten. You did not. I just don't believe you.

FRED BUSH: I was very used to going to the person at the top, if I could get to that per son.

REP. BARNEY FRANK: To talk to them about the procedures?

FRED BUSH: To talk about anything .

REP. BARNEY FRANK: If you were going to mail a letter, do you go to the postmaster? That is extraordinary. And as a matter of fact, Mr. Bush, it demonstrates precisely the point, that you were using your political influence.

KWAME HOLMAN: Ronald Reagan's former Interior Secretary -- James Watt -- was paid $300,000 by a Maryland developer.

JAMES WATT: My credibility was used to get a result.

SPOKESMAN: Right, therefore you were engaged in influence peddling.

JAMES WATT: If I were a Democrat, I would say that Jim Watt engaged in influence peddling.

REP. TED WEISS: And if you were an objective Republican, would you also believe that that was-

JAMES WATT: No, I would say there's a skilled, talented man who used his credibility to accomplish an objective.

REP. TED WEISS: Morally? Morally and ethically?

JAMES WATT: That, by definition, is also there.

KWAME HOLMAN: The person at the center of the controversy, Housing Secretary Samuel Pierce, was remorseful under a barrage of sharply-worded questions from both Democrats and Republicans.

SAMUEL PIERCE: We should have gotten rid of this program too.

REP. TOM LANTOS: Well, should you have gotten rid of it, or should you have cleaned it up? I mean, you made the decision, or people in your office made the decision, that if you can't terminate it, then milk it?

SAMUEL PIERCE: No.

REP. TOM LANTOS: I mean there were many other ways to go.

SAMUEL PIERCE: I didn't make that decision.

REP. TOM LANTOS: Well, somebody did because it was milked.

SAMUEL PIERCE: But it was too bad, and that's sorry -- I'm sorry about that.

REP. CHRISTOPHER SHAYS: Some people at HUD thought they had almost this divine right to have a certain number of allocated housing projects that they could get for themselves or give to someone else and make a bundle of money in the process.

JUDGE ARLIS ADAMS: Now, I had to take steps to apprehend those responsible and in some cases to punish them.

KWAME HOLMAN: But first, Judge Adams had to find office space.

JUDGE ARLIS ADAMS: So had do collect a whole new library. We went to various government agencies and borrowed the books. We had to order books and order pencils and order desks, and then they should have had a list of people who would be interested in serving, and I had to start from scratch. And that took a great deal of time. I would estimate that it took four or five months to cover what I've just described.

KWAME HOLMAN: Judge Adams then went through files at the Department of Housing and Urban Development and subpoenaed documents.

JUDGE ARLIS ADAMS: And there were several million documents, and just to go over several million documents just takes a lot of time.

KWAME HOLMAN: And then there were witnesses to interview, those who already had testified before the Lantos Committee and many more.

KWAME HOLMAN: I saw in your report 2,000 witnesses?

JUDGE ARLIS ADAMS: Oh, yes. We interviewed so many people.

REP. TOM LANTOS: Judge Adams did it without the slightest touch of partisanship. He did it in a professional fashion. If I am to criticize him and some of the others, and I do, it is their willingness to take advantage of the total lack of budgetary and time constraints.

JUDGE ARLIS ADAMS: It should have been expedited. It took us too long to get organized. The courts took too long at rendering decisions. And as a result -- and also, our mandate was amended a number of times. Put all those together, it lasted longer than I expected and, frankly, longer than it should have.

KWAME HOLMAN: But Judge Adams quietly got results. His final report, issued in October, contained these findings: $10 million in misappropriated housing funds recaptured, $2 million in criminal fines collected, and beginning in 1993, the first of 17 criminal convictions. Among them, Assistant Housing Secretary Thomas Demry, Former United States Treasurer Catalina Villapondo, and U.S. Ambassador to Switzerland, Phillip Winn. Fred Bush was not indicted, but his nomination as ambassador to Luxembourg was withdrawn. As for former Interior Secretary James Watt, he was indicted on 25 felony counts, pleaded guilty in 1996 to a single misdemeanor, and received five years probation and a $5,000 fine. It was determined that Samuel Pierce's executive assistant, Deborah Gore Dean, actually made most of the project decisions in the abused housing program. She was convicted on 12 felony counts and sentenced to 21 months in prison. However, repeated appeals continue to keep her out of jail and, according to Judge Adams, are the primary reason the investigation extended through the 1990's. Housing Secretary Samuel Pierce was not indicted.

JUDGE ARLIS ADAMS: Well, that may have been the most important thing I had to decide; from a criminal standpoint, I did not find that he had obtained any money improperly. I did find that he had not managed the department as efficiently as he should have. I also found that he was quite ill at the time. And when I weighed the consequences of an indictment and the fact that the case against him seemed to be "weak" in the legal sense, I thought it was my responsibility not to proceed with an indictment.

SPOKESMAN: He wasn't making money off the system, and in that sense, he wasn't abusing the system.

REP. TOM LANTOS: And I think Judge Adams made the right decision. I would have made the same decision.

KWAME HOLMAN: Looking back on the process, Judge Arlin Adams says his long investigation of HUD was at times tedious and frustrating. But he does hold a rare distinction as a result; he's one of only two dozen or so Americans who have served as independent counsels. And with the expiration of the Independent Counsel Statute last night, membership in that club is closed.

NEWSMAKER

JIM LEHRER: Treasury Secretary Robert Rubin. Mr. Rubin was a successful Wall Street investment banker before coming to Washington in 1992. He first headed the newly formed National Economic Council for President Clinton and then was named Treasury Secretary in '95. His successor, Lawrence Summers, was confirmed by the Senate late this afternoon. I spoke with Secretary Rubin from the Old Executive Office Building a short time later.

JIM LEHRER: Mr. Secretary, welcome.

SEC. ROBERT RUBIN: Nice to be with you, Jim.

JIM LEHRER: The Senate just confirmed Larry Summers as your replacement. So your last day is what, tomorrow?

SEC. ROBERT RUBIN: He was just confirmed 97-2, and he'll be sworn in sometime tomorrow, at which point he will be Secretary.

JIM LEHRER: Okay. So I can still call you Mr. Secretary tonight, though?

SEC. ROBERT RUBIN: You can call me Mr. Secretary or anything else that you'd like, Jim.

JIM LEHRER: All right, sir. The Federal Reserve decision yesterday to raise interest rates-- how do you read the impact of that so far?

SEC. ROBERT RUBIN: Well, as you know, Jim, we never comment on the Fed, and that's part of our more general policy of respecting the independence of the Fed. But if you're asking me more generally what I think is going on in the economy, I think that it looks to me, at least, as if inflation is likely to remain low, and growth solid. But that's subject to normal ups and downs, and subject to risks of one sort or another.

JIM LEHRER: So you don't -

SEC. ROBERT RUBIN: And I think it is always very important to remain watchful with respect to inflation.

JIM LEHRER: But you don't see the same dangers of inflation that the Fed does down the road?

SEC. ROBERT RUBIN: Well, as I said, Jim, I'm avoiding commenting on the Fed but really just expressing my own views, and I don't think that my views are necessarily inconsistent with their views. But I -- as I said a moment ago, I'm really just expressing my views.

JIM LEHRER: Sure. How would you describe the relationship you had with Federal Reserve Chairman Greenspan?

SEC. ROBERT RUBIN: We have had an extraordinarily good working relationship, Jim, and it's really been Larry Summers, Alan Greenspan and myself, the three of us, we have lunch or breakfast once a week, it usually lasts about an hour and a half. A fair bit of it is spent discussing whatever's in front of us. Some of it is more general discussion about the economy or whatever else is of interest at the moment. And that relationship, I think, has really been enormously useful when we've had to deal with crises and with serious issues. The Asian financial crisis, for example, and the American - the United States leadership that was essential to dealing with the Asian financial crisis, would, I think, have been far different had we not had that relationship.

JIM LEHRER: Now, how do you explain that relationship? Alan Greenspan, a lifelong Republican, worked in prior Republican administrations. You're a lifelong Democrat. You've been a key person in a Democratic administration. So what's the deal?

SEC. ROBERT RUBIN: Yes, but I think, Jim, that it's a good example of how people can have, as you correctly say, different political views, and if they share a seriousness of purpose-- which all three of us certainly do-- and if they put their egos aside in dealing with each other-- which all three of us certainly do-- and if they go at issues analytically, and make as their sole purpose the effort to try and think things through, then people can work together despite having very different political views. And then secondly, I think just very good chemistry. You know, we sit and we talk about all kinds of things, and it's good-humored, and sometimes even very funny, although the jokes might not be the kind of jokes that most people would enjoy. Jokes about the yield curve, for example, are not maybe broadly amusing, but we find them funny.

JIM LEHRER: Alan Greenspan, as an individual aside, a lot of people believe that the Federal Reserve has too much power over the U.S. economy. Do you agree with that?

SEC. ROBERT RUBIN: No, I don' agree. I think that you have to look back over the history of not only this country, but other countries, Jim, and what you find is that it is very difficult very often for political systems to deal effectively with the problems of inflation. And I think what an independent Fed does is to give you a capability independent of the political system for dealing with inflation. I think that that's extremely important, and I have enormous regard for the importance of the independence of the Fed to our economic system, and to most effectively dealing with economic issues that this country faces.

JIM LEHRER: But why should it be independent? I mean, you've got the Congress of the United States, which is a democratic body, elected, responsive to the people, the executive branch in which you serve. Why should there be one element of all of this that is completely independent?

SEC. ROBERT RUBIN: I do believe that economic policy should be the province of the elected administration and the elected Congress. That's how a Democratic society works. But I still think that there is a set of issues that are not best addressed in that context, and it's particularly these issues around inflation, because there is an enormous tendency, I think, in any Democratic society to want to do more than is fiscally prudent. And the best counterbalance to that, it seems to me, is an independent central bank, and the best evidence of the validity of what I say -- or what just said -- is that if you look around the world, you will find that economies that have not had central -- independent central banks -- are tending toward greater and greater independence for their central banks. So I would say that this issue of monetary policy is an exception to the general rule that accountability of an elected administration, elected Congress, is how economic policy should be dealt with.

JIM LEHRER: On more general grounds on the economy, the economy has been going great guns here the last few years, and the economists on our program and elsewhere say, "Oh, wait a minute, you've got to get ready for this, for it to drop, there's a cycle," and they predict based prior history. Is it possible we're in a whole new world of economic cycles where this thing could go on good like this for a long time?

SEC. ROBERT RUBIN: I don't think anybody knows the answer to that question, Jim, and I think five, ten, and fifteen years from now, people will be writing Ph.D. theses and books about this period, and I suspect what you're going to find is that there have been forces at work that none of us know. But I think what you can say is that there are certain actions that could be -- that have been taken in the private sector and in the public sector that have contributed enormously to good economic conditions that we've had. And I think it is very important that the private sector continue to focus on being competitive, which they've done a very good b on over the last, say, 15 years or so, and the public sector continue to focus on fiscal discipline, on investing in our public schools, our inner cities, so that we have a productive workforce, and very, very importantly -- although it's not always popular -- on American leadership with respect to the broad range of issues in the international economy that affect what happens here at home economically.

JIM LEHRER: But a layman looks at this and says, "wait a minute, can this last forever like this?" Ad what's the answer?

SEC. ROBERT RUBIN: The answer is, Jim, that nobody knows. But the fact that nobody knows, nevertheless, still leaves you in the position of asking the question, "what can we do best," or "what can we o to best promote strong economic conditions?" And that's the issue that I just addressed.

JIM LEHRER: Sure. Mr. Secretary, on a more personal basis, there's been much conventional wisdom around Washington for some time that you were very tempted to resign out of disgust with President Clinton over the Monica Lewinsky matter, but you chose not to because you were concerned about what your resignation -- the impact that resignation would have on the markets and the economic system. Straighten us out on that. What are the facts there?

SEC. ROBERT RUBIN: That assumption, if - actually I have not heard too much of that -- but if that is some people's assumption, the assumption is totally untrue. The President made terrible mistakes, he acknowledged he made terrible mistakes. I have tremendous regard for this President, Jim. He came into office knowing what he wanted to do in this broad set of issues that faced our economy -- came in at a very difficult time. He's made a lot of very tough decisions. Many of them, like the Mexican support program, the 1993 deficit reduction program, NAFTA, GATT, many of the issues around the Asian financial crisis, were politically unpopular, but he made the decisions, he fought his heart out to implement those decisions. I have a great deal of respect how he handled himself during the Monica Lewinsky impeachment problems. Those problems would have crushed a lot of people, and he came in -- I was there. I was with him. He came in every day; he worked at the issues that were so terribly important to this country -- and remember, a lot of the Asian financial crisis went on during that time. And we would have hour or two-hour meetings on these issues and he was focused on what he needed to be focused on to be an effective President. So I have tremendous regard for him.

JIM LEHRER: You had no problem separating that dark side, that personal thing, as you said, he admitted he made some mistakes, from what he was doing as President of the United States in his relationship with you?

SEC. ROBERT RUBIN: Jim, I think we're all highly imperfect, and I guess I tend to relate to other people from the context of that kind of a view. But it didn't affect my respect for him. I fully share his views that he made some terrible mistakes, but I actually think it's a tremendous testament to his character that with all of the enormous pressures on him, he continued to persevere as President of the United States in dealing with the issues that were in front of us, and they were very important issues with enormous potential impact on our economic well-being and our well-being in other respects. Then, no, it did not affect the bottom line of my respect for him as President of the United States and as a person, fully acknowledging the mistakes that he made.

JIM LEHRER: Now, Mr. Secretary, he is going to be replaced here in about 18 months with a new President. We're about to go into a presidential campaign. What do you think this next election should be about?

SEC. ROBERT RUBIN: Oh, I think that it should be about the enormous challenges and issues that we face as a country if we're going to continue to be successful economically, and if we're going to be secure in terms of our national security, and if we're going to have the kind of society we want to have. And just a few of those issues are in front of us right now. What do we do with this enormous surplus, which is an historic opportunity to promote national savings, but is also an opportunity that we could squander? What do we do in a post Cold War world with respect to an effective foreign policy to promote our values and our national security? What do we do to have a public school system that will produce the work force that we're going to need if we're going to be competitive 10, 15, or 20 years down the road?

JIM LEHRER: How do we, the rest of us, make sure that those kinds of issues are discussed in this election?

SEC. ROBERT RUBIN: Oh, I think there are probably a lot of answers to that, but I think maybe the single most important answer really lies in the hands of people like you, Jim. If the media focuses on those issues and insists that the candidates address those issues, then those are the issues that they're going to address, because in the final analysis, they are going to beery much affected by what gets covered and how it gets covered.

JIM LEHRER: A lot of people have said on this program-- because we've been talking about this over the last several weeks-- that this could be a very important election, because there is a relatively clean slate in many ways in terms of the economy and our national security. Do you agree this is an important election?

SEC. ROBERT RUBIN: I think it's important for that reason, but I think it's also important for another reason, Jim. I think there are some very big and very controversial issues out there that need to be debated in the public domain, and I think on your just prior question, if the media covers these large issues, it really can be an opportunity for the American people to try to think through what kind of international economic policy they believe in -- what do they believe about trade policies? Should we leave our markets open, which I think is enormously in our economic interests, or should we have more restrictive trade policy? What should we do in a post-Cold War world in terms of our foreign policy? What should we do about having a better society, better schools? What should do we do about inner cities? It's a point in our nation's history --where it seems to me there are a lot of very large, very controversial issues out there, and an opportunity for a real public debate that could be very meaningful and very important.

JIM LEHRER: Now, Mr. Secretary, you clearly just demonstrated you care deeply about these kinds of issues; you just devoted seven years of your life to many of them. Are you hanging it up in terms of public life now?

SEC. ROBERT RUBIN: Well, it's been a remarkable six and a half years, Jim. I'm going to spend the next two or three months trying to figure out what I do, and I do have -- I have begun to have some framing ideas. But whatever I may do-- and I'm not sure what the specifics will be -- I certainly would expect to remain very involved in these kinds of issues in one way or another -- but not as a public official, and most certainly not in elective office.

JIM LEHRER: Yes. Most certainly not in elective office? That's just not your thing?

SEC. ROBERT RUBIN: That's right, Jim. I just don't think that I am suited for it as an individual. I have great respect for people in elective office. It's a very difficult and very challenging profession in many ways that I think it's hard to realize until you work with these people on a day-in, day-out basis. It's just not me.

JIM LEHRER: When you leave here now, what are you going to be the most proud of?

SEC. ROBERT RUBIN: Well, I think there's a lot that we can all be proud of that we've done together. I tend not to think of it -- and this is probably just me as a person, but I tend not to think of it in terms of me. I tend to think of it in terms of what we have done. And I am very proud, and I think that all of the people in the administration should be proud of what we have done in the economic arena to change the course of this nation's -- to change the course of the nation -- but particularly to go from a period of large deficits that I think were really undermining the economic position of the country, to the period of large surpluses we now have, and what we have done in the international arena to deal with what is in many respects a new global economy and the enormous challenges that that international economy poses to us. The Mexican support program is very unpopular but critical. A lot of what we did during the Asian crisis was I think probably in many respects unpopular but critically important. Keeping our markets open under all the pressures that we've had, I think is enormously in our interest but not easy politically.

JIM LEHRER: Rewarding experience for you personally?

SEC. ROBERT RUBIN: It has been an enormously rewarding experience, Jim, both in terms of being part of or contributing to what I think is an enormous record of accomplishment, but also all that I've learned about how government works and about the government, the processes of government and about the issues that - really the vast number of issues that I've been involved with and have seen those issues in a different way, seeing them from the perspective of the broad range of views that exist in this country that I really was far from fully cognizant of before I got here.

JIM LEHRER: Politic service a noble calling, Mr. Secretary?

SEC. ROBERT RUBIN: I think public service is an essential calling for the well-being of the American people. And I think that one thing, Jim, that we have got to do, we have got to do is -- to make sure that public service receives the support and respect that it deserves so that we continue to attract strong people at all levels of government. One of the things that is most surprising about my time in government is how many strong -- how many capable, dedicated, effective people I've met. But if we're going to continue to get those kind of people, we have to respect them, and we have to support them, whatever our views may be, as to the appropriate scope of government.

JIM LEHRER: All right. Well, Mr. Secretary, good luck and thank you, sir.

SEC. ROBERT RUBIN: Thank you very much, Jim.

JIM LEHRER: We continue our special emphasis on what the 2000 presidential election should be about. You saw it just now with Secretary Rubin and earlier with General Clark and previously in the last several nights with others. We'll continue to ask such questions of individuals and groups over the next several months. A reminder that you can also participate by visiting our web site at pbs.org/newshour.

ENCORE - SWINGIN'

JIM LEHRER: And finally tonight, a NewsHour encore. A Spencer Michels report about the return of swing dancing.

SPENCER MICHELS: In clubs across the country where punk or disco or just plain rock'n roll once ruled, the tempo has shifted to swing. The sounds and steps of the 30s and 40s - updated, to be sure - are rocking dance halls like Broadway Studios in San Francisco. Swing has sprung, and it isn't just the seniors who are swinging. V. Vale has written and published a book about swing and has been following the fad since it started up slowly about four years ago and then really took off.

V. VALE, Writer/Publisher: This has become "the" way to meet people socially. You couldn't do it at rock clubs anymore because they're too loud. You have to wear ear plugs at rock clubs. People also got tired of just standing there, watching a band on stage playing. They want to do something.

SPENCER MICHELS: Today's swing music is nearly the black magic that got people swinging back before World War II, when Count Bassie and Duke Ellington and later Bennie Goodman and Glenn Miller used a new sound to energize the crowds. Eighty-four-year-old Frankie Mann, who still teaches dancing, was there at the beginning, at the swing dance contest in New York's Harlem.

FRANKIE MANNING: The very first I ever walked into the Savoy ballroom and I heard that music swinging and the floor was just crowded with people dancing, and it just seemed like the music was just pounding, and everybody was just - was just moving with that rhythm, and I just stood there with my mouth open.

SPENCER MICHELS: Manning became a top swing dancer specializing in the Lindy Hop, inventing what came to be known as aerials, which were featured in this 1941 film, "Hell's A Poppin'."

FRANKIE MANNING: I remember the first time I did aerials. That was one momentous moment, I'll tell you. When we actually did a step, it was like - you know - it was like quiet - like nothing - like to say - what happened, what did he do? You know, and then all of a sudden the Savoy just erupted, and everybody started screaming and hollering and stepping and carrying on. And I said, oh, wow, man, because, you know - I mean - from the excitement that they generated I said, oh, man, maybe I did something, you know.

SPENCER MICHELS: Manning danced to swing music that he says had its roots in African-American jazz of the 20s and 30s. Big bands like Bennie Goodman modified the jazz they were playing and moved into swing, making the music more easily danceable. John Coppola played trumpet with some of the original swing bands and still plays today on the West Coast, where the revival began.

JOHN COPPOLA, Trumpet Player: Swing is a word that means the music is being propelled. So-called "swing" bands were jazz bands. Bennie Goodman was a jazz band, Fletcher Henderson, Count Bassie, they're all jazz bands that swung, which means that the rhythm is being propelled forward, you could dance to it.

SPENCER MICHELS: Coppola's wife, France Lynne, was part of the swing scene too, singing in USO clubs during World War II, and with Gene Krupa and other swing musicians afterwards.

FRANCES LYNNE COPPOLA, Singer: We didn't even know how marvelous it was when it was going on and we were in it. We didn't know that this was so great.

SPENCER MICHELS: Coppola credits Louis Armstrong with transforming New Orleans jazz to swing, as on this early 40s recording of "Jubilee."

JOHN COPPOLA: What Louis does, he began to take it another place rhythmically speaking. So we have now is floating over the whole rhythm section, which, of course, influenced the great Leslie Yago, influenced Charlie Parker, who influenced John Coltrane. It was another concept of not being strictly on the beat, which he's doing here.

SPENCER MICHELS: This kind of music that we're listening to there, is that almost the same as the swing we're hearing today, or is there a big difference?

JOHN COPPOLA: I think there's a big difference, really. I have to be honest with you.

SPENCER MICHELS: What's the difference?

JOHN COPPOLA: Well, we don't have any geniuses like that today, I'm afraid.

SPENCER MICHELS: What there is today is an explosion of interest in swing music and dancing. TV outlets like MTV are playing videos by a swing band called "Big Bad Voodoo Daddy," whose first album has sold nearly 1/2 million copies.

[MUSIC IN BACKGROUND]

SPENCER MICHELS: The trendy national clothing store, The Gap, has capitalized on the craze and pushed it along with a swing TV commercial set to Louie Prima's, "Jump, Jive An' Wail."

[MUSIC IN BACKGROUND]

SPENCER MICHELS: In clubs, from San Francisco to New York, bands like Lavay Smith and Her Red Hot Skillet Lickers perform old classics and new tunes, while hundreds of dancers revive the steps of 50 years ago. The piano player and band leader for the Skillet Lickers is Chris Siebert, who has his own theory about the popularity of swing.

CHRIS SIEBERT, Band Leader: Maybe it's even a ration against technology and our lives are raw, which can have a dehumanizing effect. I happen to think that the artistic standards of that period were incredibly high. You know, the musicianship was high. Now we have mass-produced music, and maybe this is a little bit of, you know, searching for something that's not so mass-produced but maybe more hand crafted or that sort of thing.

LAVAY SMITH, Singer: You look at the singers today and they're very blatant. There's nothing funny about Madonna or in her lyrics, her sexual lyrics. She's very blatant, and, you know, like Bessie Smith, I need a little sugar in my bowl. Those lyrics are funny and they're much more intelligent.

SPENCER MICHELS: Band leader Siebert says swing musicians, unlike some of their rock'n roll counterparts, really have to know music.

CHRIS SIEBERT: People couldn't just like, you know, pick up a guitar and in two months be on MTV. I mean, you really had to work at an instrument. You cannot pick up a saxophone and sound good in two months.

SPENCER MICHELS: Swing breaks out regularly at spots like The Great American Music Hall, where 550 San Franciscans show up every month for a week-night swing session. Beer takes a back seat to martinis and cosmopolitans, stylish drinks of yesteryear. Across the room proprietors of the Shoeshine Stand try to evoke nostalgia at 5 bucks a shot. And on stage before the band comes on two twenty-somethings teach the crowd the moves of their grandparents. One dance hall in Pasadena reports 600 dancers show up for lessons like this every night. What's new for many of these dancers if the concept of actually holding their partners. Johnny Swing and Cari Elizabeth have been teaching swing for two and a half years.

JOHNNY SWING, Dance Teacher: Partner dancing is definitely a different thing for everybody now. And it's more like communicating to somebody while you're dancing, whereas, before, you know, you were just maybe dancing for yourself.

CARI ELIZABETH, Dance Teacher: They can ask anybody to dance without it seeming to be like I'm picking you up or I want to go out with you. It's just I want to dance with you right now, I want to have a good time right now.

SPENCER MICHELS: Today's swing scene involves more than just learning the steps, it includes a return to the hairstyles of the 40's, a landscape Betty Grable or Veronica Lake, and it features clothes from that same era. Kids who were born three decades after swing went into eclipse are trying to revive that old look. Vintage clothing stores have become part of the movement, along with the music. Enthusiasts say the swing craze is just now hitting its stride. Those in the scene claim that new bands, new clubs, new songs, and a glorious history should keep this retro fad from fading too fast.

JIM LEHRER: That encore report replaced the Rosenblatt essay we originally planned to air. We'll reschedule that one.

RECAP

JIM LEHRER: And, again, the major stories of this Thursday: On the NewsHour tonight, NATO Commander, General Wesley Clark, said political leaders never pressed him to avoid U.S. and allied casualties during the air campaign against Yugoslavia. Also on the NewsHour, outgoing Treasury Secretary Rubin said a strong independent Federal Reserve is needed to deal with inflation. And the Senate confirmed Rubin's deputy, Lawrence Summers, to be his replacement. We'll see you on-line, and again here tomorrow evening with Shields and Gigot, among others. I'm Jim Lehrer. Thank you and good night.