The NewsHour with Jim Lehrer

MR. LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, Bob Dole wins big again as seen by Mark Shields & Paul Gigot [Update - Campaign '96 - Fallout]; part three of our look at economic insecurity [Focus - Corporate Responsibility], Paul Solman runs a discussion on corporate responsibility; a major appeals court decision on affirmative action, Elizabeth Farnsworth debriefs Stuart Taylor [Focus - Texas Longhorns - Affirmative Action]; and U.S. and other troubles with the South American nation of Colombia, Charles Krause reports and talks to Colombia's President [Focus - Under Fire]. It all follows our summary of the news this Wednesday. NEWS SUMMARY

MR. LEHRER: The two major candidates for President met at the White House today in their official capacities. President Clinton and Senate Majority Leader Dole talked about legislative issues that should be dealt with before Congress takes a two-week Easter recess the first two weeks of April. It was their first meeting since Dole clinched the Republican nomination. He won four Midwestern primaries yesterday, bringing his total to more than the 996 delegates necessary for the nomination. Today's White House meeting was with the full bipartisan congressional leadership. Afterward, the Republicans held a news conference back at the Capitol.

SEN. BOB DOLE, Majority Leader: We had a good visit with the President, about an hour and ten minutes. We outlined what we thought would happen before the Easter recess. We believe we've got a fairly full plate between now and the end of this month, and then we come back after Easter and work with the President, if we can, on trying to achieve a balanced budget agreement. So my view is that we had--we laid out our priorities, the President laid out his priorities, and hopefully together we can work out America's priorities.

MR. LEHRER: White House spokesman Mike McCurry said President Clinton was pleased with today's meeting. Later, Democratic leaders also held a news conference.

SEN. THOMAS DASCHLE, Minority Leader: We agreed that we would attempt to finish the debt limit issue, the continuing resolution. We will probably take up the Social Security earnings limit and the line-item veto and perhaps the farm bill prior to the time we finish next week. That's a very aggressive agenda, but I do believe that there is bipartisan interested in trying to achieve a resolution to all of those issues, so we've got our work cut out for us. I don't think it would be appropriate for us to leave Washington prior to the time we've finished that work.

MR. LEHRER: In economic news today, retail sales in February were up by .8 percent. The Commerce Department reported a strong rise in new car sales was the main reason. The U.S. Supreme Court today upheld the results of the 1990 Census. It rejected a lawsuit by local governments to adjust for an under-count of minorities. In Los Angeles today, Eric and Lyle Menendez were convicted of murdering their parents six and a half years ago. They now face the death penalty or life without parole. The brothers were heirs to a $14 million fortune. They were tried separately two years ago. Both trials, which drew wide publicity, ended in hung juries. Overseas today, the Chinese concluded live fire exercises off the Coast of Taiwan but continued a series of military maneuvers 11 miles from Taiwan's outlying islands. The war games coincided with Taiwan's presidential campaign. The election is Saturday. We have more in this report from Ian Williams of Independent Television News.

IAN WILLIAMS, ITN: The war games that rattled Taiwan and angered Washington. Tonight, Beijing released these pictures, the tightly- edited highlights of nine days of exercises in the Southern part of the Taiwan Strait. China described them as a success which showed the country's powerful military might and its determination not to allow any division of the motherland. Beijing says its first round of exercises has now ended, though a second is already underway in the Northern part of the strait close to a series of small Taiwanese-controlled islands. In Taipei, a nervous city government was taking no chances, demonstrating how they'd evacuate their main building in the event of a nuclear attack from the mainland. President Lee Teng-Hui claimed China's actions are uniting the island's people, but he said he remains committed to eventual unity on Taiwan's terms.

MR. LEHRER: A U.S. Navy aircraft carrier group has been monitoring the military exercises. Other American ships are expected to arrive Saturday. In Southern Lebanon today, an Israeli soldier was killed in a suicide bombing. At least one civilian was injured. The attack on the Israeli patrol occurred two and a half miles from the Israeli-Lebanese border. The Iranian-backed guerrilla group, Hezbollah, has claimed responsibility. A statement said the attack was in response to the anti-terrorism summit in Egypt last week. And that's it for the News Summary tonight. Now it's on to some Presidential politics, economic insecurity part three, an affirmative decision, and the President of Colombia. UPDATE - CAMPAIGN '96 - FALLOUT

MR. LEHRER: The Dole wrap-up is first tonight. Yesterday, Senate Majority Leader Dole won primaries in Illinois, Michigan, Ohio, and Wisconsin. The 209 delegates he won, according to the Associated Press, bring his delegate total to 1,005, more than enough to win the Republican nomination. Here is some of what he told supporters at a rally last night here in Washington.

SEN. ROBERT DOLE, Republican Presidential Candidate: [Last Night] I think it's safe to say now that I will be the nominee. [cheers from crowd and applause] That's only the first step. That's only the first step. And we're going to need a lot of help from people in this audience and Americans everywhere as we go to work the rest of this month, and April, May, and June, July, then the convention, and then the final lap to victory which will start about Labor Day in 1996.

MR. LEHRER: Now some analysis by Shields & Gigot, syndicated columnist Mark Shields, "Wall Street Journal" columnist Paul Gigot. Paul, it's over. Bob Dole, on paper at least, has the Republican nomination. Any surprises, anything of note that we should remember about what happened yesterday?

PAUL GIGOT, Wall Street Journal: I don't think it was a great surprise. I was a little surprised that Pat Buchanan didn't do better, frankly. Once it got down to a two-man race, and you get close to the nomination, there's often something that people calls "buyer's remorse" sets in a bit. Jerry Brown won some primaries late. Gary Hart won some primaries late in 1984, against Walter Mondale, but Pat Buchanan just really hasn't been able to, to mount that kind of a challenge. Even his best state, Michigan, he only got 37 percent of the vote. So these states which are critical to November for Bob Dole, he has to win these states--if he wins these states, he probably will be President--this was a good showing for him.

MR. LEHRER: Mark.

MARK SHIELDS, Syndicated Columnist: Bob Dole, putting it in perspective, Jim, four weeks ago today was bruised and battered. He had lost New Hampshire for the second time in eight years. He had fired his pollster. He appeared to be reverting to style. And he came back. He came back and won the nomination in four weeks' time. Carl Lubesdorf of the "Dallas Morning News" said that this confirms the conventional wisdom is right, that the Republicans always nominate the front-runner, they nominate the candidate with the most money, they nominate somebody who's run before, they nominate somebody that the party leaders like and endorse, all of that--all that worked out this year, and of course, the conventional wisdom looked pretty shaky about four weeks ago, but it's, it's an impressive victory for Bob Dole. You know, I guess the glass is half-full, half-empty. I thought Pat Buchanan was going to get, according to most polls, 18 or 20 percent. He doubled that in a couple of states, and I don't--it's certainly--Bob Dole thus far, winning the nomination, impressive, has managed only to coalesce around his candidacy the George Bush constituency, and that's not enough.

MR. LEHRER: Yeah. Do you agree, he's got a lot of work to do?

MR. GIGOT: I believe he has work to do. There's no question about it. I think the biggest--

MR. LEHRER: Where? On the right, in the middle, or everywhere?

MR. GIGOT: He has problems on the cultural right, which I think is still the bedrock of the Buchanan support, and he's got to make sure that that comes in. He can do that in a variety of ways, by bringing Buchanan into the tent, a pro-life running mate, a variety of things, and he's also got problems among independents and Perot voters. I mean, I think that--the string of primaries for the last three weeks have all shown that Bob Dole has not done as well as he would have liked among Perot voters from '92 and self-described independents. He does great among the Republican partisans. He even does fairly well among some Democrats. But he's got to do better to reach out to the swing portion of the electorate, which are the, the independents.

MR. LEHRER: Speaking Perot, in the "Washington Post" at least this morning, the lead story--I wish I had--I should have brought it with me--but the lead story says Dole, you know, has won the nomination, but the sub-head says, "But Here Comes Perot," or words to that effect.

MR. GIGOT: Raining on his parade.

MR. LEHRER: Raining on his parade. This is a serious matter, is it not? I mean, he's--Ross Perot is now saying--he said a couple of days ago, reaffirmed it, that if his folks, if his party, the reform party, asked him to run, he would do it.

MR. SHIELDS: If they get 50 ballots--and it looks like they're going to in some fashion or another--some places they won't be able to get their party on, but they'll be able to get a candidate on, and that candidate, of course, until somebody else better comes along, will be H. Ross Perot. Jim, it is--it is a wild card challenge. The Democrats at the White House are kind of whistling a happy tune. They think it's terrific, there's no way Bob Dole can do it. Look what it did to George Bush. A couple of interesting things overlooked; first of all, Ross Perot's constituency is not a static constituency. Only 45 percent of the people who were with him in 1992 are in the 16 percent who are now with him in 1996. The people who supported him in 1992 and are with him now when asked to choose between Bill Clinton and Bob Dole choose Bob Dole. All right? Their Republican profile, that's the conventional wisdom, but the newcomers to Ross Perot, the 55 percent who weren't with him in 1992, by a margin of six to one, when forced to choose, they choose Bill Clinton over Bob Dole, which means he's cutting, he's pulling right now from the newcomers to his band wagon overwhelmingly from the Democrats. And I think Democrats are very short-sighted when they think, wow, we're home free if Perot's in the race.

MR. LEHRER: You're shaking your head.

MR. GIGOT: I haven't talked to a single Republican here, in the West Coast, East Coast, or anywhere, and frankly, not many Democrats who think that--who agree with Mark on that. The conventional wisdom, their conventional wisdom, and I agree with the conventional, but there's a lot of polling data.

MR. LEHRER: Let's hear it for the conventional wisdom occasionally, right?

MR. GIGOT: Every once in a while it's right. Everyone says Mark- -as Mark suggested.

MR. LEHRER: About Dole.

MR. GIGOT: Is that it's predominantly a Republican constituency, particularly as you get above the 10 percent into the 20--10 to 20 percent, Perot got 19 percent in 1992. These are primarily people who vote on the economy. A lot of them voted for Reagan twice and for Bush, and they tend not to be socially conservative. They tend to vote mainly on economic issues, and it's very hard if you are splitting the anti-incumbent vote to win an election if you're Bob Dole, the challenger, and that's what I think--the threat that Ross Perot presents.

MR. LEHRER: Is he a threat if he doesn't go above 16 percent to anybody?

MR. SHIELDS: Sure, he's a threat, and it depends solely where it comes from. The Democrats, Jim, in the United States over the past 20 years have never gotten more than 47 percent of the vote in a Presidential election. Michael Dukakis is the all-time champion of Democratic vote getters in the past 20 years. He got 47 percent. Democrats basically get around 43, 42. What--

MR. LEHRER: Clinton got 43.

MR. SHIELDS: 43. What Paul is looking at, I think he's looking at through a rear view mirror; he's looking at the Perot vote of 1992. It's an entirely new vote in 1996, and in a "Wall Street Journal"/NBC Poll, what you're seeing is an entirely different group. If Ross Perot spent $60 million in 1992, $60 million, he made the case so--

MR. LEHRER: That compares with say Steve Forbes, who spent 25, right?

MR. SHIELDS: Forty.

MR. LEHRER: Forty. Okay. All right.

MR. SHIELDS: But Perot spent that $60 million making the case for change against the status quo. All right. He made the case so compellingly for change that you couldn't vote for George Bush. You could vote for Ross Perot, you could vote for Bill Clinton. Now, in--he's got $50 million he's going to spend in 1996; if he is the nominee, if he is going to run, he doesn't have the personal animus toward Bob Dole that he had toward George Bush. I mean, there's no question about that. I mean, they had that--they have a close relationship. If he would make that case, Jim, on the administration's economic policies, on their, their dealing with China, or whatever the heck else, that changes the whole dynamic of the race when you get a three way. It changes the debates when you get a three way.

MR. LEHRER: But what does he run on?

MR. GIGOT: Well, that's a mystery because what was the issue that he deserves credit for putting on the agenda in 1992? The balanced budget.

MR. LEHRER: Balanced budget.

MR. GIGOT: A government that cannot get itself under control. All right, so--

MR. LEHRER: The size of the government, shrink the size, get the- -

MR. GIGOT: Efficiency, sure, but really it was that sense of, of out of control, irresponsibility.

MR. LEHRER: You're right.

MR. GIGOT: Lack of accountability, that was centered on, on a runaway deficit. So he puts that on the agenda, President Clinton tries his best to put it, you know, to do something about it in the first two years, at least claimed to, and the Republicans come in and they actually vote for a balanced budget. They vote on the toughest thing you can possibly vote on, Medicare. I mean, they ran right up and put their heads on the chopping block and said, chop it off, and the Democrats are basically sawing, and where's Ross Perot? He's nowhere. He's griping about gridlock. He's saying, yeah, where was he when the really tough decisions were made, so if Ross Perot now decides to join up on the balanced budget with Republicans, that would be a help to the Republican candidate, but right now, he's talking about campaign finance reform. He's talking about process political questions. He shifted his entire focus.

MR. LEHRER: So how does he appeal to the folks this time?

MR. SHIELDS: Jim, the desire, first of all, the anti-Washington constituency in this--in the United States of America is deep and pervasive.

MR. LEHRER: Is still there.

MR. SHIELDS: All right. Neither Bill Clinton or Bob Dole can address it. I think we have to stipulate that. They both are in the two triple O zip code somewhere. I mean, that's where they are. They get their calls answered at 202 area code. All right. Ross Perot taps in. He has greater credentials going into that. As far, as far as the money and politics issue, you can call it a process issue if you want, there is no question, you look at soft money, and the millions of dollars that both parties have lined up and tin-cupped with, Perot has a long record and a believability and a credibility and authenticity on that that neither of these two candidates can even talk about.

MR. LEHRER: But does that sell?

MR. GIGOT: Well, he wants to limit everybody else's ability. He wants to limit everybody's ability to spend money on politics apparently, except his own. I mean, he doesn't mind spending $50 million of his own. So I think his credibility on this is, is suspect, frankly, because he's going to go in and spend whatever he wants, and I don't know that that issue, which is a limit issue, it's not about the size of government, it's not about your personal livelihood, I don't know that that is enough to sustain a real Presidential candidacy that can get past any chance of winning. Could it be a spoiler? Yes. But winning? Hard to say.

MR. LEHRER: And it does change the, as you said, the nature of the campaign.

MR. SHIELDS: It changes--

MR. LEHRER: I don't know how yet, but--

MR. SHIELDS: Well, I'll tell you one thing it does. It makes Bob Dole, who's been tagged as being old, it makeshim that three-way debate, Jim, it makes him sort of a calming figure. I think as Ross Perot and everybody knows, he's quick, he's abrasive, he's confrontational, he's mercurial, Dole, Dole in that three-way would look entirely different from the way he would look in a one-on-one against Clinton.

MR. LEHRER: Yeah.

MR. SHIELDS: Okay. I mean, it's an entirely different dynamic once you get a three-way.

MR. LEHRER: Okay. Well, he's supposed to talk more about this at the end of the week. We'll see what happens. Thank you both very much. SERIES - ECONOMIC [IN]SECURITY? CORPORATE RESPONSIBILITY

MR. LEHRER: Now, part three of our series on economic insecurity. The subject tonight is corporate responsibility. Our economics correspondent, Paul Solman, of WGBH-Boston is in charge.

MR. SOLMAN: What is good for the country is good for General Motors, and what's good for General Motors is good for the country. Well, that 1952 quote may have been something of an exaggeration, but it is true that throughout the 20th century, American corporate profits and wages have been more or less in sync, both rising in the good times, falling in the bad. But now the relationship seems to have dissolved. Since the late 1970's, there's been a growing gap between corporate profits, which have been rising, and wages, which adjusted for inflation, have actually be falling for almost 20 years. The wage-profit gap became part of the political landscape this year when Pat Buchanan struck a nerve and temporarily pay dirt early in the campaign.

PAT BUCHANAN, Republican Presidential Candidate: [February 28] The middle income, the median income of Americans, is not going up the way it used to when I was a boy. It's going down. But the corporate profits are soaring. I don't mind corporate profits soaring, but why aren't the working men and women and the American families sharing if the times are good?

MR. SOLMAN: Buchanan is no longer the lone Republican addressing the wage-profit gap. Of late, Bob Dole has started using more populist rhetoric on the campaign trail.

SEN. BOB DOLE, Republican Presidential Candidate: [February 13] Corporate profits are setting records, but so are corporate layoffs. And middle class families feel less and less secure about the future. And there's a wide and growing gap between what the government statistics say about our economy and how Americans feel about it.

MR. SOLMAN: Indeed, the latest government statistics might suggest that everything is just dandy. Since 1979, only 43 million jobs lost compared with 70 million jobs created. But, of course, the problem is what kind of jobs, with what kind of benefits, and how long will the new jobs last, compared to those being downsized at places like good old General Motors, itself? Seventy-four thousand layoffs announced back in the early 90's, and then in succession, IBM, 63,000; Sears, 50,000; Boeing, 28,000. Most recently, it's been AT&T, 40,000, a number the company's been struggling with ever since it was announced in January. What's allegedly vanishing with these jobs is the sense we once had of economic security. And as if to add insult to anxiety, pay for top executives has shot up in the 90's, while wages have continued to trail inflation, even though inflation is running at 3 percent or less. Compensation consultant Graef Crystal quotes a recent survey.

GRAEF CRYSTAL, Compensation Consultant: CEO pay among the top 100 companies in the United States has rise 23 percent in the last year alone between 1984--94 and '95, and that compares to about a 2.7 percent increase for the average American worker. In the study I did back in '94, the ratio of pay to the average CEO of a major company to the average American worker was about 187 times. And it's just been growing and growing and growing.

MR. SOLMAN: So add corporate pay packages at the top to the continuing wave of corporate downsizings below and you've got a recipe for insecurity which mainstream politicians for the first time in a long time have begun asking corporations responsibly to address.

PRESIDENT CLINTON: [March 4] And we need people to really think about whether it's the fair and right thing to do when you see these downsizings. If they have to do it to keep the business afloat, every American can understand that, but no one should lose a job for short-term considerations that are not necessary for the long-term well-being of the profitable enterprise. We all need to do our part to keep America growing and growing together.

MR. SOLMAN: Now, corporate responsibility as seen by two businessmen and two economists. Al Dunlap is the former chairman and CEO of Scott Paper Company; Aaron Feuerstein is the owner of Malden Mills, a Massachusetts textile company; Heidi Hartmann is a labor economist and president of the Institute for Women's Policy Research; and Andrei Shleifer is a professor of economics at Harvard University. Welcome to you all. Mr. Dunlap, you became famous for your turnaround at Scott Paper, which entailed laying off thousands of people. What's your definition of corporate responsibility?

AL DUNLAP, Former CEO, Scott Paper Co.: [Boynton Beach, Florida] A corporation is in business to make money for its shareholders. That's the essence of the free enterprise system. Business is not a social experiment. Socialism has failed the world over. In fact, we have one of the lowest unemployment rates we've had in recent history.

MR. SOLMAN: So it's just absolutely cut and dry for you, there is no social responsibility, except the responsibility to make profits for shareholders?

MR. DUNLAP: Here, a corporation that makes profits for its shareholders will, in fact, have the best product, the best facilities, and the best people. Corporations are responsible. The problem is because it's a political year, we're having this constant barrage by the politicians and the media demonizing executives in the free enterprise system. It's time that other executives, in addition to myself, speak up.

MR. SOLMAN: Okay. Well, Mr. Feuerstein, nobody's demonizing you. You became famous for paying employees money even when you didn't have to when Malden Mills burned down. What does corporate responsibility mean to you as a CEO?

AARON FEUERSTEIN, Malden Mills: [Boston] Corporate responsibility to me means yes, you must, you must take care of the shareholder, but that is not your exclusive responsibility. The CEO has responsibility to his workers, both white collar and blue collar, as well, and he has responsibility to his community and city. And he has to be wise enough to balance out these various responsibilities and to, and to act justly for the shareholder, as well as the worker.

MR. SOLMAN: But it cost a shareholder money in the case of you, you as shareholder having to pay to keep these people employed even when the mills were shut down and there was nothing for them to do, right? I mean, it cost it shareholder?

MR. FEUERSTEIN: Yes, it did cost the shareholder, nonetheless, the, the quality, the quality and the efficiency that we get in our factories is critical to the health of our company. And so I make it my personal business to see to it that I have loyalty and goodwill amongst my people. And that's what we enjoy at Malden Mills, and they're the valued asset. They're not just a cuttable expense. They're the people who make the quality for us, and our products, our polar tech products in the performance outer wear marketplace is the best in the marketplace, and only because I have very good workers, and I'm not about to tear that apart and to break that down for some short-term gain.

MR. SOLMAN: Okay. Ms. Hartmann, is it the downsizing, such as we've heard about at companies like Scott Paper, that you think is causing the economic insecurity that we're hearing so much about and talking so much about?

HEIDI HARTMANN, Labor Economist: Well, I think it's not only the downsizing, it's also the fall in real incomes, real wages have been falling for men and most recently for women also, and also the families in the bottom of the income distribution are also losing in real terms, so they're insecure not just because they may be laid off but because they see their real incomes falling.

MR. SOLMAN: But do you think that corporate responsibility has something to do with this in the sense that people don't feel that corporations are being as responsible as they should be, and that that's making them insecure because they might be next? I'm just posing the question.

MS. HARTMANN: Well, the polls certainly show that people feel there is a corporate responsibility. I mean, at least 1/3 of households have had a direct experience with a direct layoff, either theirself or someone else in their household, and that's quite a large number of households to be affected.

MR. SOLMAN: So which of these two positions do you like, Mr. Feuerstein's version of capitalism, or Mr. Dunlap's?

MS. HARTMANN: Well, I think Mr. Feuerstein's is right on the mark. I mean, we as a society collectively allow corporations to exist. We set the legal and economic and political frame work in which they can operate, and we have the right as a society to demand something back from them.

MR. SOLMAN: Prof. Shleifer, you teach this stuff, you theorize about it. What do you feel when you hear the three people you've just heard on the two sides of the issue?

PROF. ANDREI SHLEIFER, Harvard University: [Boston] Well, I think the absolutely important thing to understand is that Mr. Feuerstein and Mr. Dunlap don't really disagree. They both seem to think that the principle responsibility of the corporation is to address the needs of the shareholders. Now, Mr. Dunlap gets called into companies which are in trouble, which are overstaffed, which are sleepy, which need a shake-up. They need somebody to come in and perhaps lay off some people and, so to speak, clean them up, and that's when he gets called in, and that's what maximizes the value of the shareholders in these companies. Mr. Feuerstein, who of course owns his own company, has made the decision that it is in his interest as the owner of that company to keep his people so that they're around, so that they receive some training, so that when his factory gets rebuilt, they're there to produce the goods that he can keep his market, so both of them are acting completely rationally, both of them are helping their shareholders, and the market system is working. The point here is that there are some companies that need the layoffs, and there are some companies for which the best strategy is to keep their people.

MR. SOLMAN: Let me put the question to Mr. Dunlap. Do you believe that you are like Mr. Feuerstein, doing--believing in the same thing, and in which case, why didn't you take Mr. Feuerstein's approach? Why didn't you, uh, not play to Wall Street but play to the security of the workers instead?

MR. DUNLAP: Here, you have a failed argument there. You're, you're playing to the fears of the people.

MR. SOLMAN: I'm not making an argument. I'm asking a question.

MR. DUNLAP: Let me tell you something. I created six and a half billion dollars of incremental value. That $6 1/2 billion enabled people to buy houses, buy cars, and to realize their dreams.

MR. SOLMAN: Explain what you mean by--

MR. DUNLAP: That was my role.

MR. SOLMAN: Excuse me. Explain what you mean. The $6 1/2 billion, you mean the increase in the value of the shares in the Scott Paper Company and, therefore, the shareholders had-- were worth $6 1/2 billion more than before? Is that what you mean?

MR. DUNLAP: And the shareholders, our own employees owned $250 million of stock in that company, and it tripled. Here, if it were not for restructuring, and most people don't understand what restructuring is, restructuring is a great deal more than firing people. It's about getting the best management, the best products, the best facilities, and the best balance sheet. And without restructuring, America would have continued its downward trend of the last ten or twenty years, where we lost our basic shoe industry, our small appliances, our television industry. But for restructuring, the present unemployment would be double what it is. It is an important element of the free enterprise system, and without the free enterprise system, God help the American worker.

MR. SOLMAN: Well, do you like what Mr. Feuerstein did, for example? I mean, do you think that he--he says it's in the interest of his company, of his shareholders and so forth, the long-term interest, to have really devoted workers.

MR. DUNLAP: There's--our workers were very devoted. He had a factory that burnt down, and, therefore, he had to keep his workers on. I had a corporation where every person stood the chance of losing their job, so I got rid of 35 percent of the people. But 65 percent of the people have a more secure future than they've ever had, and one of Americans largest corporations is now merged with another corporation, creating the second largest consumer products company in America, and I am very proud of that. Our workers are proud of that, and we did this without a single labor interruption or a single grievance. We must have been doing something right.

MR. SOLMAN: Mr. Feuerstein, can you see yourself doing what Mr. Dunlap has done?

MR. DUNLAP: Never, never. I can't imagine that his workers are satisfied with what he did. What Malden Mills always did in, in the past, we understand as well as Mr. Dunlap does that a--there is a legitimate necessary downsizing as a result of computerization and better machinery. Technological advance requires the reduction of, of people. If you have a machine that once made 20--that needed 20 people and now you have it and it only needs 10 people, so you have to cut back. We understand that, but we at Malden, because we were sensitive to the human equation and worried about our people, we always tried--not always successfully--but we always tried to take the cutback at the same time that we were expanding some part of our business, and in that way we're able to alleviate the pain. And we concentrate less on--and I don't know what their situation was- -I can only talk for myself--we concentrate less on the cuttable expense of the labor and more on research and development to make better quality products and to differentiate ourselves--and to innovate and to differentiate ourselves from our competitors in the market place. And that's where the real profit can be made, and we couple that with marketing and merchandising and branding so that we are able to, to have a profit, together with our workers enjoying prosperity. We pay more than the average mill does, and so that's fine, because we don't concentrate on the pay, we concentrate on where the real profit is in making the product better.

MR. SOLMAN: Prof. Shleifer, that sounds like a difference, I think, to most people in our audience, what the two people are saying here. So is it--are we missing something again, or are they really saying the same thing, or is there a difference in those two approaches?

PROF. SHLEIFER: Look, Mr. Feuerstein has an innovative, lean company, and he can afford--it's his best strategy--he can afford to keep all his people. Not all companies are so fortunate. There are companies like AT&T who see a lot of the competition coming in. They don't need the same staffing as they had before. There are companies like IBM who face a huge decline in demand for the large computers because people want to buy PC's. The essence of a market economy is that there are companies that don't need all the people that they have that can, that, therefore, have the ability to have the labor that they need, not all the people that they used to have. And it's very nice that Mr. Feuerstein is in this position, and he sounds like he's a great executive, but just because he hasn't laid any people off doesn't mean that nobody should lay people off.

MR. SOLMAN: Okay. Heidi Hartmann, if you don't like Mr. Dunlap's form of capitalism as much as you might like Mr. Feuerstein's, is there something that government can do? I mean, is there something that we as a society, in other words, can do, and do you think we ought to be doing it to lessen the insecurity, to make things more stable, as they clearly are in Mr. Feuerstein's company?

MS. HARTMANN: Yes. I think there's two issues. One is when is the downsizing necessary, and it obviously sometimes is for technological and other reasons, but is it sometimes a fad, is it sometimes just something that looks good to Wall Street in the short run but is really hurting the company in the long run? And I think what it--what the government's role is, is to really try to get the best behavior out of corporations to move the corporation to the, to the behavior that will help us all in the long run.

MR. SOLMAN: I want to get one more issue in here, if I can in the time we have remaining. Mr. Dunlap, you've also gotten a lot of flak--I don't keep meaning--meaning to keep baiting you here, but about your CEO--about your pay package--it was like $100 million- -or that was what was reported--and do you think--do you have any misgivings in the sense that, you know, that people feel that that's unfair, that, you know, people were laid off while you came away doing extremely well?

MR. DUNLAP: As I said before, I created $6 1/2 billion of value. I received less than 2 percent of the value I created. I also took a great personal risk with my own funds by buying stock, and I'd also like to comment that God forbid we get the government anymore involved in industry. They have the worst balance sheet, products nobody wants, a bloated cost structure, and they're horribly mismanaged.

MR. SOLMAN: Mr. Feuerstein, do you as a CEO--how do you as a CEO feel about CEO pay these days? We were hearing--seeing that skewing or the incredible rise in CEO pay in the last few years that Graef Crystal was talking about.

MR. FEUERSTEIN: I really think it's unconscionable that at the very time that you have so much suffering amongst the workers as a direct result of the downsizing that the CEO would take so many times more than ever was heard of before. And I also would like to add that the--I said that the downsizing, technological downsizing was something that we have to do. There are other kinds of downsizing. There's the downsizing where you close up one company and you open up in a foreign country at, at very low rates. There's the business of outsourcing, contracting downsizing, where you get rid of your own workers and you hire in contractors at half the pay.

MR. SOLMAN: Well, we'll hear--

MR. FEUERSTEIN: The workers of America can understand the technological downsizing, but they cannot understand the other, and it breaks their spirit and their feeling that the American dream is for them as well.

MR. SOLMAN: Well, thank you all very much. We've run out of time, as usual.

MR. LEHRER: We'll look at the political responses to the economic insecurity issue tomorrow night. Still to come on the NewsHour tonight, an affirmative action decision and problems in Colombia. FOCUS - TEXAS LONGHORNS - AFFIRMATIVE ACTION

MR. LEHRER: Now a federal appeals court ruling on affirmative action. Elizabeth Farnsworth has that story.

MS. FARNSWORTH: Yesterday, a U.S. Circuit Court of Appeals struck down an admissions policy at the University of Texas Law School which gave preference to Blacks and Hispanics. The Court ruled that the law school's affirmative action program violates the U.S. Constitution's equal protection guarantee. For more on the decision, we're joined by Stuart Taylor, correspondent for the "American Lawyer," and for "Legal Times," and a NewsHour regular. Welcome, Stuart.

STUART TAYLOR, The American Lawyer: Nice to be here.

MS. FARNSWORTH: We're talking about this case because it has very wide implications, doesn't it?

MR. TAYLOR: It certainly has very wide potential implications because the holding of this three-judge court is, in essence, that racial preferences in universities, admissions at the University of Texas Law school in particular, but also nationwide, are unconstitutional and must be abolished. Now if this case goes to the Supreme Court of the United States, which it almost certainly will, and if the Supreme Court adopts a similar rationale, it would have a dramatic impact. It would bar consideration of race in university law school, graduate school admissions for state institutions, not private institutions. And it would result in a dramatic reduction in a number of racial minority group members, at least Black and Hispanic Americans in those institutions.

MS. FARNSWORTH: What are the facts of the case?

MR. TAYLOR: It started when four white applicants to the University of Texas law School who were rejected filed suit, saying they had been victims of racial discrimination. They said that Black and Mexican-American applicants who were dramatically less qualified than they were in terms of grades and test scores were admitted ahead of them solely on grounds of race. And they have carried that now to the U.S. Court of Appeals for the 5th Circuit, where they've just won a very big victory.

MS. FARNSWORTH: And this was a three-judge panel of the 5th Circuit. What was the decision?

MR. TAYLOR: The decision, in essence, was that racial, that race may not be considered by the University of Texas Law School in its admissions process at all, that racially preferential admissions have to be done away with entirely and the Court used a very broad and sweeping rationale that would rather clearly apply to virtually every state institution in the country if it were--if the same rationale were applied in other cases.

MS. FARNSWORTH: What was that broad and sweeping rationale?

MR. TAYLOR: Well, the two main arguments that are usually mounted in favor of the constitutionality of consideration of race in admissions are to have a diverse student body and to make up for past discrimination. This Court held for the first time that any court has clearly held, I think, that the pursuit of a diverse student body is not a good enough reason ever to consider race in admissions, that you can consider people as individuals, you can consider things they have to bring, but race, itself, can't be the proxy for diversity. They also said that while race can be used to make up for past discrimination, it can only be used in the very narrowest sense. They, in essence, said if you had an institution that admits that it has blatantly discriminated against Blacks say very recently, why then maybe they could have a racial preference to make up for that. That isn't true of any institution in the country that I know of.

MS. FARNSWORTH: Now, this is a court of appeals which has jurisdiction over three states. Explain why this could become a national phenomenon.

MR. TAYLOR: Well, as of now, this court has Texas, Mississippi, and Louisiana in its jurisdiction, and courts in other states may be persuaded by their approach but aren't bound by it. If--it will go to the Supreme Court, however, which has not heard a case since the famous Baake case in 1978.

MS. FARNSWORTH: You're sure that the University of Texas will now appeal this?

MR. TAYLOR: They have said they will.

MS. FARNSWORTH: Uh-huh.

MR. TAYLOR: And they could make an intermediate stop by appealing to the full 17-judge appeals court, or they could appeal directly to the Supreme Court, which would have the option of hearing it or not hearing it. It's almost certain, I would think, that the Supreme Court would hear it because of the importance of the issues.

MS. FARNSWORTH: I don't like--I don't want to ask you to predict, but I'm going to. What do you think would happen in the Supreme Court? You know how the judges have been voting on these things.

MR. TAYLOR: It's hard to predict. I think it's clear the Supreme Court wants to cut back on affirmative action. But Justice Sandra Day O'Connor, who tends to be the swing vote, the fifth vote, the anti-affirmative action people need to get, has never indicated she wants to abolish it entirely. I would be surprised if she and, therefore, the full Court, went as far in wiping out affirmative action in university admissions as this lower court has, but I would expect to see them put a tighter squeeze on it than has been true in the past.

MS. FARNSWORTH: Because this is--this decision in, in Texas is kind of part of a whole series of decisions about affirmative action. Can you just briefly give us a couple of those.

MR. TAYLOR: Well, of course, the Supreme Court had two big decisions last year in which it squeezed affirmative action, said it has to, you have to have very important reasons for it, and it's presumptively unconstitutional and left it for lower courts to work out the details. Meanwhile, all around the country, there are other developments not necessarily in the courts. In California, the University of California regents have voted to do away to a large extent with consideration of race, and there is a ballot petition in California that the voters will pass judgment on in November that would eliminate consideration of race in all state programs.

MS. FARNSWORTH: Okay. Thank you very much, Stuart.

MR. TAYLOR: Thank you. FOCUS - UNDER FIRE

MR. LEHRER: Finally tonight, the United States and the South American nation of Colombia. The U.S. said officially three weeks ago that it was not satisfied with Colombia's fight against drug traffickers. Charles Krause has the story that includes a Newsmaker interview with Colombia's embattled President. This report, by the way, marks Charles' return to the NewsHour after a four-month leave of absence for a writing project in Mexico.

CHARLES KRAUSE: When Ernesto Samper was inaugurated President of Colombia in 1994, the United States already suspected his campaign had taken millions of dollars from the Cali Cartel, said to be the largest and richest drug trafficking organization in the world. At a meeting in New York, Samper denied the charges, but he also reportedly promised the United States that once he became President, he would work to remove any lingering suspicions by taking strong measures to counteract the drug traffickers. In fact, the Colombian police made significant progress during Samper's first year in office, confiscating large amounts of cocaine and arresting six of the Cali Cartel's seven top leaders. One of them, Miguel Rodriguez Orejuela, is shown here shortly after his arrest. Another of the drug lords, Jose Santacruz Londono, was shot to death by police just three weeks ago after successfully escaping prison in January. [music in background] But despite the progress, U.S. doubts about Samper, himself, continued to deepen. U.S. officials told the NewsHour that on a number of occasions last year, the President and his ministers conspired with corrupt members of the Colombian congress to thwart key narcotics legislation. Then last January, Samper's former campaign manager and long-time friend, Fernando Botero, confirmed the earlier allegation that Samper's campaign had, indeed, taken money from the drug dealers. Specifically Botero accused the President, himself, of having known and approved the decision to go to the cartel for nearly $6 million during the final days of the campaign. Botero's testimony broke the case wide open, and last month, Colombia's chief prosecutor, Alfonso Valdivieso, formally charged Samper with illegal enrichment, with violating Colombia's campaign spending limits, and with attempting a cover-up. The charges are now being investigated by a committee of the Colombian House of Representatives which, as in the United States, will decide whether or not Samper should be impeached, then tried by the Colombian Senate. It was against this backdrop of allegations and growing scandal that President Clinton decided to certify Colombia earlier this month. The certification is the official way of saying Samper's government is not cooperating with the U.S. war on drugs. While the U.S. statement did not specifically charge Samper with having taken money from the drug lords, U.S. officials have made clear they consider that to be the problem. Decertification means Colombia is no longer eligible for foreign aid. But the administration held back from taking the more serious step of imposing trade sanctions. Still, Colombia's economy is beginning to soften due to uncertainty. With public opinion in Colombia split over whether the United States had legitimate cause to decertify Colombia and whether or not Samper should remain in office, we interviewed President Samper in Bogota last Thursday.

MR. KRAUSE: Just for the record, how is it possible that your campaign manager and the finance manager of your campaign apparently accepted $6 million, according to their own testimony, from the Cali Cartel, and you didn't know about it?

PRESIDENT ERNESTO SAMPER, Colombia: [speaking through interpreter] Very simple. First, because the financial structure of the campaign was made to have the candidate detached from the financial affairs of the campaign. I was the product, and the campaign handled the product. Second, because it is still to be established if those funds did enter the campaign because investigations suggest that part of these funds and eventually all of them could have been diverted to personal accounts of those who are currently under investigation. That is why the truth will only be revealed when Mr. Botero's bank account in the U.S. and other trade operations made on his behalf by the treasurer of the campaign are investigated.

MR. KRAUSE: So, in other words, you're suggesting that perhaps this money, while the Cali Cartel may have thought it was giving it to your campaign, in fact, was being used by your campaign manager and finance minister for their own purposes?

PRESIDENT ERNESTO SAMPER: [speaking through interpreter] It is there where these investigations should lead us. Of course, I am not able to release any information, due to the confidentiality of the process. They are working on that hypothesis, and until they clearly establish these facts, the truth on the campaign will not be known.

MR. KRAUSE: Even if you didn't know about it and even if the two gentlemen we've been talking about took the money and used it for their own purposes, if the Cali Cartel gave them $6 million, it must have given it to them for a reason. What do you think that reason was?

PRESIDENT ERNESTO SAMPER: [speaking through interpreter] That is very simple. All the mafias in the world, those which have operated in the U.S., in Italy, or in Colombia, seek ways to buy political powers. They pursue ways to influence decisions in their favor. Then the real answer to your question would be if the government of President Samper has favored the Cali Cartel. Did they give that money in order for me to imprison them? Did they give that money for me to judge them? Did they give that money for me to chase Mr. Santacruz, for me to present a law on money laundering to be passed by the congress in order to take away from them any possibility to circulate their money? That would be absurd. It would be an act of historic masochism.

MR. KRAUSE: In that case, why is it that the United States Government or at least very high officials in the United States Government, believe that you have been bought, that you are influenced by the drug mafias in this country?

PRESIDENT ERNESTO SAMPER: [speaking through interpreter] I don't have an explanation for that. It may be an attempt to show my government is weak and to demand greater commitments within the drug war, but it is quite a censurable way to request results from any government. I assumed a frontal position against drug trafficking since I took office one year and a half ago, and I am going to fulfill my commitment with or without the U.S., with or without certification. I am an honest man. I am not a rich man. Anyone in Colombia can talk about my personal belongings or about my life, because it is an open book, therefore, if U.S. officials believe that by questioning me or by trying to weaken my government they are going to obtain greater commitment, they are wasting their time, because it is precisely those commitments which we are going to fulfill, regardless of any international pressure.

MR. KRAUSE: How has decertification affected relations between Colombia and the United States?

PRESIDENT ERNESTO SAMPER: [speaking through interpreter] Above all, it means the destruction of the alliance we have had for more than 15 years between Colombia and the United States to combat drug trafficking. I believe this is one of the main and more concerning effects. Of course, it may have some economic effects, which we are trying to counteract, but to me, the most important effect is that it breaks the alliance we have had for 15 years in the fight against drug trafficking.

MR. KRAUSE: When you say that it's ruptured the alliance, do you mean that your country will sever its relationship with the United States regarding the war on drugs in this country?

PRESIDENT ERNESTO SAMPER: [speaking through interpreter] We are prepared to maintain this alliance on the basis of concrete conditions. First, Colombia's right to have its own policy against drugs must be respected. The second condition is that the U.S. also assumes an honest position regarding its commitment, because the problem is not only ours. If there was no drug consumption in the United States, Colombia would never have faced this drug trafficking problem. The United States must reflect on its commitment because its sole policies must not be that of demanding explanations from drug producing countries. The U.S. must win their own battles, the fight against domestic drug traffickers. Who is selling Colombian drugs in New York, in the streets of Miami and San Francisco? Who is consuming Colombian drugs? To me, the two basic conditions under which we may constructively reestablish the alliance is that we understand that first that it should be made on a basis of confidence and second, that each country must accomplish its own part.

MR. KRAUSE: Has the decertification made it more difficult for you to govern this country?

PRESIDENT ERNESTO SAMPER: [speaking through interpreter] In some aspects, it has. In some others, it hasn't. Of course, it is difficult not to have a smooth, free, and spontaneous relationship such as that I would like to have with a country which is so important to Colombia as the U.S. is. And it implies problems within the handling of foreign policy in general. But on the other hand, this decertification decision, which I consider unfair to Colombia, has created a huge feeling of national unity, of national dignity, because decertification was a blow to the heart of the Colombian people who feel betrayed in their long- running fight against drug trafficking. We have buried too many people in this country because of drug trafficking. I was a victim myself. As you know, I was almost killed some years ago. So in that sense, it has awakened a feeling of national dignity which is obviously being tantalized through the President.

MR. KRAUSE: Do you expect to be able to finish your term as President?

PRESIDENT ERNESTO SAMPER: [speaking through interpreter] It is not a matter of expecting or not. It is my decision to complete the commitments I assumed before the Colombian people who elected me for a four-year term. If the people of Colombia say that I should leave because they believe I cannot govern the country, then I will leave. But I cannot leave because my detractors ask me to do so. It would be an act of cowardice to abandon the country in a moment of crisis.

MR. KRAUSE: President Samper, thank you very much.

MR. LEHRER: Today, Colombia's congress voted to make its investigation of Samper a public proceeding. Yesterday, the foreign minister temporarily stepped down pending an investigation of his role in diverting drug cartel money to the Samper campaign. RECAP

MR. LEHRER: Again, the major stories of this Wednesday, President Clinton and Senate Majority Leader Dole held their first meeting since Dole clinched the Republican nomination last night. They discussed pending legislative issues. Retail sales in February were up by .8 percent, and the U.S. Supreme Court upheld the 1990 Census count. It rejected a plea by local governments to revise it upward because of an under-count of minorities. We'll see you tomorrow night with part four of our series on economic insecurity, among other things. I'm Jim Lehrer. Thank you and good night.