The MacNeil/Lehrer NewsHour

Intro

JIM LEHRER: Good evening. In the headlines today, President Reagan said the tax system is the biggest tax cheat of all. Another Walker family member was accused of selling secrets to the Soviets. The State Department was cool to a Middle East peace conference with the Soviets. And the second round of arms talks opened in Geneva. Robin?

ROBERT MacNEIL: On our NewsHour rundown tonight after the summary of today's news, three focus sections and an update. First, as Congress begins asking sharp questions, we examine the political reaction to the Reagan tax reform plan. Then we look at reasons for the violence that cost 38 lives in a soccer match yesterday in Belgium. From Minnesota a report on an unusual battle between workers and management in one of the country's biggest meat packers, Hormel. And we close with sculptor Natan Rapaport describing the inspiration for his massive new monument overlooking New York Harbor. News Summary

LEHRER: President Reagan hit the road today to sell his tax reform proposal. His first stop was colonial Williamsburg, Virginia, 155 miles south of Washington. He used the historical setting to make the point that "the tax system is a cheat" and "it is time for rebellion," among other things.

Pres. RONALD REAGAN: Our federal tax system is, in short, utterly impossible, utterly unjust and completely counterproductive. It's earned a rebellion and it's time we rebelled. But what is the broader purpose of our tax proposal? Well, I'm glad to be standing in front of the House of Burgesses as I address that question. The members who spoke in this capital said no to taxes because they loved freedom. They argued, why should the fruits of our labors go to the crown across the sea? Well, in the same sense we ask today, why should the fruits of your -- of our labors go to that capital across the river?

LEHRER: Next stop was Oshkosh, Wisconsin, and the steps of the Winnebago County Courthouse. There he used a cheese analogy to make the tax reform pitch. He said, "The current system looks like Swiss cheese -- big holes no matter how you slice it." Robin?

MacNEIL: While the President was selling the bold outlines of the plan to the American public, Treasury Secretary James Baker began the detailed selling to Congress. Appearing before the House Ways and Means Committee, Baker ran into skepticism, starting with the co-sponsor of a rival Democratic tax reform plan, Richard Gephardt of Missouri, chairman of the House Democratic Caucus.

Rep. RICHARD GEPHARDT, (D) Missouri: My concern with your proposal is the seeming shift or retreat from where you were at Treasury I and where we've been in our bill with regard to the tax relief that goes to the middle class and the reduction in rates for the middle class. My simple point is that in the shifts that you made in the bill, it seems to me the losers were the people in the middle class.

JAMES BAKER, Treasury Secretary: The bottom line is that the overwhelming number of winners -- there's an overwhelming number of winners in any class that you take under this proposal. Almost everybody wins. We have 79.1% of all taxpayers either being better off or at least as well off as they are under current law.

MacNEIL: In our lead focus section after this news summary, we'll hear more of Baker's exchanges with the committee and three key members of Congress will tell us how the political reaction to the Reaganplan is shaping up.

LEHRER: Disciplinary action was taken today in the case of the $660 ashtray. Defense Secretary Weinberger said three high-ranking Navy ofjficers, a rear admiral and two captains, were relieved of their duties and transferred. The three were stationed at Miramar Naval Air Station in California, where the high-cost plastic ashtrays were purchased from the Grumman Aerospace Corporation. Grumman lowered the price to $50 after the whole thing became public. Speaking today at his first general news conference in one year, Weinberger said he was prepared to clamp down hard on defense contractors and military and civilian personnel.

CASPAR WEINBERGER, Secretary of Defense: Just this morning we have relieved and transferred three people at the Miramar Naval Air Station, including the base commander, the wing commander and the supply ofjficer. And that is going to be a standard practice, because we cannot and will not pay any price, regardless of how it's computed or what overhead is in it or what costs are alleged to be attributable to it, unless that price bears some reasonable relationship to the value of the item procured.

MacNEIL: In Geneva the United States and the Soviet Union resumed their arms control negotiations after a five-week recess for consultations in Washington and Moscow. Max Kampelman and Viktor Karpov, the leaders, and the members of the two delegations exhanged greetings cordially at the Soviet Embassy and then went on to a conference room for another round of handshakes for the cameras. But the meeting lasted only an hour and 50 minutes, and some delegates left even earlier. This round of talks is expected to go on for about eight weeks.

LEHRER: The Reagan administration stopped short today of endorsing King Hussein's call for an international conference on peace in the Middle East. A State Department spokesman said the United States was particularly opposed to participation by the Soviet Union. Hussein, in talks with President Reagan yesterday and again today with congressional leaders, said the Palestine Liberation Organization was prepared to accept Israel's right to exist and that a peace conference involving all of the central parties was the way to proceed. The Palestinians would be a part of a joint delegation with Jordan. Also, other ofjficials, described only as "senior" State Department ofjficials, told reporters the Hussein proposal is significant but that it will never go anywhere unless the PLO was willing to make its statements about Israel itself and in public.

MacNEIL: In Britain, Italy and Belgium, public figures and private citizens expressed shock and dismay today at the riot that took 38 lives in a Brussels soccer stadium yesterday when fans of a British team fought fans of an Italian team. The British and Belgian cabinets held emergency meetings. Queen Elizabeth and Prime Minister Thatcher sent messages of condolence to the prime ministers of Belgium and Italy. The Belgians threatened to bar British soccer teams. Flags flew at half-staff in Turin, where most of the dead lived, and demonstrators marched on a British trade center there. Pope John Paul II sent telegrams to the Roman Catholic bishops in Italy and Belgium expressing "vivid horror" and condemnation. In London, Mrs. Thatcher expressed her feelings at an informal news conference.

MARGARET THATCHER, British Prime Minister: I watched what people were saying, I felt exactly the same. I wish we could get those responsible, get them before a court and stiff sentences so that they stop anyone else. I think we're all -- itisn't that we're numb, we're worse than numb. We witnessed that agony. And if I might say so, it's even worse after nearly 24 hours than it was when we saw it, because the full enormity is coming home as we saw those scenes on television.

MacNEIL: There was also heated reaction in Brussels, where the riot took place, and in Turin, home of the Italian team, called Juventus, which eventually won the soccer game. Here are two reports from the BBC.

CHRIS MORRIS, BBC [voice-over]: The official investigation has already found how supposedly strong crowd barriers simply buckled and collapsed, how the brick wall on the terrace crashed down to block the side gate where many of those trapped might have escaped. This afternoon the sad and shattered Liverpool team left for the journey home, a hostile sendoff from Italian fans still in the Belgian capital. At the site of the disaster there's not much left to show now except the rubble and an anonymous tribute.

After the tragedy, now the reckoning. This morning, Belgian government ministers and officials of EUAFA, the ruling body of European football, met in emergency session to decide on what action to take. And afterwards the interior minister announced an indefinite ban on British clubs from playing in Belgium until their fans behave and violence is halted.

CHARLES-FERDINAND NOTHOMB, Interior Minister, Belgium: I'm afraid that we can make no discrimination. Sorrily enough, the Belgian population don't want that what did happen, happen again. I don't wish to have match where there is a so big risk of stupid violence.

KATE ADIE, BBC [voice-over]: They won, a sour victory, a half-hearted flourish of the trophy on the team's return this morning. The Juventus players insisted they hadn't even wanted to play. It's not far short of reality to say that all of Italy had been watching television last night. After what they saw, they watched their victorious team return in silence. In Italy, the word used to describe the event is "massacre." All were sharing a widespread and mixed emotion of shock and resentment. Amidst the reunions, recriminations against the English fans. "Drunks," said the returning fans.

ITALIAN FAN: I'm Italian. I would like to say to all the English people that they are very famous in the world for their education and self-control and so on. We have now the proof that all over in continent, everybody say, "Don't be like English people."

MacNEIL: There'll be more reaction in a focus section later in this program when we look at the reasons behind last night's tragedy and the soccer fans' violence that has become commonplace in Britain.

LEHRER: Another member of the Walker family has been arrested in the Navy spy case. Arthur Walker, a 50-year-old former Navy ofjficer, appeared before a federal magistrate in Norfolk, Virginia, today and was ordered held without bond. The FBI said Walker admitted selling confidential information to the Soviet Union for $12,000. He allegedly said he joined a spy ring with his brother in 1980. His brother is John Walker, also a former Navy ofjficer, who was arrested last week for spying. His son, Michael, Arthur Walker's nephew, has also been charged. Michael is a 22-year-old Navy enlisted man.

There were also three arrests today in the $8 million Wells Fargo robbery in New York City last month. The FBI said the three were arrested in New York, but none of the money, all in unmarked bills, was recovered with them. And in Pensacola, Florida, today, two men convicted in the Christmas Day abortion clinic bombings were each sentenced to 10 years in prison. Two women convicted of conspiracy in the same case were given five-year probated sentences. The two men were also ordered to pay $353,073 each in restitution to the two doctors whose offices were destroyed in the bombing.

MacNEIL: From the economics beat, the Commerce Department reported today that its main forecasting guide went down last month for the first time this year. The index of leading indicators dropped two tenths of 1% in April. The weakest area was contracts and orders for new plants and equipment; the average number of hours worked in a week and the number of new building permits were also down. Commerce Secretary Baldrige called the report "disappointing." Taxes & Politics

MacNEIL: As President Reagan moves out into the country to sell his tax plan, political reaction on Capitol Hill has begun to jell. The shape it finally takes will determine what kind of tax reform, if any, becomes law this year. While leaders in both houses have been generally supportive, leading tax reformers have voiced objections. Treasury Secretary James Baker kicked ofjf the congressional battle today when he argued the administration's case before the House Ways and Means Committee.

Rep. THOMAS DOWNEY, (D) New York: I of course have some minor problems with the deductibility of state and local taxes, and it is on that that I'd like to ask you some questions. Because it appears as though in this revolution that not only will New York and other high state taxes be its victims, but a lot of the middle-income taxpayers, at least on Long Island, and I don't say this in any partisan sense -- I suspect that Mr. McGrath will agree -- are going to be Tories in this revolution. And I'm a little concerned.

Sec. JAMES BAKER: We frankly don't think that it's fair for all taxpayers in low-tax states to subsidize the itemizers in high-tax states.

Rep. WILLIAM COYNE, (D) Pennsylvania: Last week, as I'm sure you're aware, LTV's steel-making component took out full-page ads indicating that in Aliquippa, Pennsylvania, an area that I represent, they were going to have to lay off 1,300 additional employees in a plant that at one time employed 10,000 steelworkers. I wonder how any of those newly laid-off individuals, those 1,300 additional who are going to be laid off, can have any hope, given the proposal that we have here today that will do away with the investment tax credit, accelerated depreciation provisions. Is that something that those steelworkers can take comfort in, the fact that their jobs will come back at some point?

Sec. BAKER: It may not be something that they can take comfort in, but as I've said before, it seems to me that the cause of layoffs such as that certainly are not suggestions that we reform the tax system. The system isn't law, so that couldn't have caused the layoffs. There are more fundamental problems having to do with our trade competitiveness, and these are serious problems that we need to address in this government -- the executive branch, we as well as you. And I don't deny that for one minute, but we don't address them, it seems to me, and we shouldn't try to correct those imbalances through the tax system.

Rep. RONNIE FLIPPO, (D) Alabama: I think it raises questions as to whether or not it's fair to shift the burden from the financially weak sectors of the economy to provide benefits for those with a brighter outlook. If your proposal more favorably impacts businesses, one sector than it does another, that's an economic and a political reality that must be addressed, and I think it would be helpfulto address it early.

Sec. BAKER: What I would be reluctant to do, Congressman, is to embark upon a program of trying to determine who's hurt and who's helped by each specific proposal in here. That's what we simply don't have the resources or, frankly, the inclination to do, if it's all right.

Rep. FLIPPO: Well, I think that's the essence of tax reform, is who's helped and who's hurt, and I'm going to be looking at what happens to the average working man and working woman in this country.

Sec. BAKER: We -- don't misunderstand me, we do too. I agree with your statement. But who's helped and who's hurt across the board, nationally, as a matter of the United States of America. And a state-by-state analysis would be extremely difficult for us to do.

Rep. FLIPPO: Well, a regional analysis, then, because we have different types of economies in different regions.

LEHRER: President Reagan has made his decision on tax reform and how he wants it done. Now it is up to Congress to say yes, no, maybe so. Three central congressional figures in arriving at that answer are with us now. Senator Robert Packwood, Republican of Oregon, chairman of the Senate Finance Committee. He will be conducting hearings next week on the President's plan. The senator is with us tonight from public station KOAP-Portland. Congressman Jack Kemp, Republican of New York, co-author of the Kemp-Kasten tax reform bill and one of the earliest congressional advocates of tax reform. And Congressman Tom Downey, Democrat of New York, a member of the House Ways and Means Committee, who as we saw was sharply critical of at least part of the President's proposal today in that session with Secretary Baker.

First to you, Senator, out in Portland. Generally you support the President's proposal, correct?

Sen. ROBERT PACKWOOD: Generally I do, so long as you look at it as an overall program. You can't pick out a piece and say, "I don't like this piece," and therefore the entire program doesn't work. Basically, overall, I like it.

LEHRER: What about if you were pressed, as I will do now, to pick out a piece that you don't like? What is it in there that you don't like that you're going to try to change?

Sen. PACKWOOD: Well, let me give you an example of one of the things I find here in Oregon where people will pick out something and then say, "I don't like the plan because of it." And I know Congressman Downey and Congressman Kemp may share some of the same feelings. State and local taxes. Somebody will come up and say, "Well, gosh, Senator, I deduct my state and local taxes, and if I can't do that my taxes are going to go up." And I say to the person, "Well, now, wait a minute. Why don't you go through your past returns for the last two or three years and take the deductions you had then and the taxes you paid and then compare them against the new tax proposal of the President and see if you come off better or worse." Most people come off better, even if they itemize. But I think people are looking at what they're losing and are not thinking about the new rates and the lower rates.

LEHRER: Well, now, Congressman Downey, you are very much opposed to the state and local tax deduction elimination, correct?

Rep. THOMAS DOWNEY: Yes, for several reasons. First of all, it's been in existence for many years and it's been part of the fiscal balance that we've had between -- and part of the federalism that has existed in this country. And if you do what Senator Packwood has done on Long Island and in New York, you find out that not only do you wind up paying a lot more, but I think over the long run, New York as a state will be less competitive for business, and individuals will be forced to probably see less in the way of education and less in the way of services.

LEHRER: What about Secretary Baker's point? He made it at the House Ways and Means Committee today, made it on this program last night, that the rest of the states, the low-tax states, are subsidizing the people in the state of New York?

Rep. DOWNEY: I think that's crazy. If you take a look at the amount of money that New Yorkers pay in federal income tax versus how much they get back, you find out that New Yorkers contribute a lot more to the federal government than they ever get back. So if we are somehow in a small way subsidized for that by state and local tax deductibility, we deserve it, number one. Number two, we are a nation, and New Yorkers and those of us in the Northeast have historically, over the years, paid for roads that go out west, the bridges and dams that are out in Oregon and other places. This is part of our federal system. And we don't want any of that money back; we just want a recognition that in our state we want to provide quality education, quality services, and we should have an opportunity to do that.

LEHRER: Congressman Kemp, you also represent a district in the state of New York, but you see this issue differently, correct?

Rep. JACK KEMP: Well, I see it in -- I see it essentially in the same way Tom does. But I see the answer a little bit differently. First of all, cutting the tax rates at the federal level will have a very beneficial impact upon a state like New York in which people are nominally in higher brackets than most of the other states in the country. So anything that lowers the rates --

LEHRER: Because their incomes are higher.

Rep. KEMP: Yeah, nominally the incomes are higher. Therefore, anything that raises taxes at the federal level hurts New York proportionally worse than other states and causes this redistribution, in fact, that Tom Downey was talking about. But again, looking at the other side of the coin, as Bob Packwood has asked us to look at, what happens if the rates are cut? I hope they are cut. My reservation about this is that they're not coming down enough in the simplification package. But having said that, bringing the rates down and simplifying the code dollar for dollar leaves more money in a high nominal income state like New York. So we've got to do what Bob asks us to do, and others have asked us to do; indeed the President asked us to do; look at the whole package and how it afjfects an individual family or taxpayer. And I think the President gave a marvelous speech. I've sent my "Dear Rostie" letter to the chairman. Pleasure to work with him.

LEHRER: What did you say?

Rep. KEMP: I said, "Dear Rostie: Let's go for it." It's got to be bipartisan. I hope that Downey and Kemp and Rostenkowski and Gephardt and Bradley and the rest of us can find -- can take the bill that the President presented and strengthen it, not just throw stones and bricks at it.

LEHRER: But you're going to try to get the state and local tax elimination out of there, right?

Rep. DOWNEY: We're going to try and get part of it, and I --

LEHRER: Are you going to vote against it if you don't get it? In other words, is this a non-negotiable item for you?

Rep. DOWNEY: No. I don't think that any portion of this proposal should be non-negotiable. And there's really a great sense in the Ways and Means Committee among Democrats and Republicans that we want to do a tax reform bill. There's a lot in the President's bill that's very, very good, and not withstanding the fact that I'm a New Yorker and concerned about New Yorkers, I'm also an American and I'm also concerned about what this -- the fact that the code is a mess and needs to be changed and there are people who don't pay taxes. Those are things we should do. I'm confident that we will be able to convince a majority of the members of the Ways and Means Committee and a majority of the members of the House of Representatives that portions of the state and local tax deductibility must remain for purposes of federalism, and that we're prepared to make some accommodations to see that happen.

LEHRER: Senator Packwood, what is your feeling, at least in the Senate? Do you think the state and local tax thing is going to become a big enough deal that you're going to have -- you and the President and others are going to have to give on it?

Sen. PACKWOOD: Oh, there's no question it's a major issue. But very honestly, you're going to have a difficult time lowering the rates, even as far as the President has lowered them, if you eliminate the state and local taxes. I mean, if you let them continue to be deducted, it causes the bill to lose so much money that you can't lower the rates far enough. I'm inclined to agree with Congressman Kemp. I wish we could get these rates down to 30 or 25 percent. At some stage -- I don't know where it is, although I've been asking the question -- at some stage the maximum tax level gets low enough that people don't care about deductions anymore; they don't make investments on that basis. And 25% is very close to it. If we can get down to that figure, most of this argument about deductibility, I think, would disappear.

Rep. KEMP: Ah, music, music to my ears.

LEHRER: Well, you wanted -- you say 30, and the President says 35 --

Rep. KEMP: Well, Kemp-Kasten is 24; Bradley-Gephardt is 30. Around 30 it begins to make sense for New York and the rest of the country.

Sen. PACKWOOD: I've been asking the question --

Rep. KEMP: Bob? I'm sorry, I was just going to suggest that the statement has to be made here that the New York income tax rate is just too high. It is too high, and they should be talking about in the state of New York something like the modified flat-tax approach that the President and Bradley and Gephardt and others have talked about, or Kemp and Kasten and Packwood. So I would hope that this would get New York to rethink the high marginal tax rates that are killing the working men and women of Bufjfalo, New York, and the rest of the state, Long Island included.

LEHRER: Let's talk about what you want to do on lowering the rate. You said when this thing first came out that you supported the plan, but you couldn't support it as long as it was at 35%. Now, what does that mean?

Rep. KEMP: Well, for the same reason that Tom Downey discussed his reservations. I want to be a part of the process, like everybody else. I think the President was -- gave us a magnificent first start, and I think it's a good bill; it should be made stronger. And the way to make it stronger is to make sure that those rates are lower --

LEHRER: How does that make it stronger?

Rep. KEMP: Well, it makes it lower -- it makes it stronger because the deductions, as Bob Packwood pointed out, become less and less important as you bring down the rates. Every deduction, every credit, every loophole in the tax code, is in there for one reason, to protect the taxpayer from the efjfects of a high marginal tax rate. So clearly as you bring down the rates, you reduce the effectiveness or the need for a deduction or protection against the federal government taking away all your income.

Rep. DOWNEY: I mean, ideally we can get the rates down to 10% --

Rep. KEMP: That sounds good.

Rep. DOWNEY: The problem is that we have a country --

LEHRER: Kemp's going to make a deal with you right here.

Rep. KEMP: Fifteen. I wouldn't go beyond 15 right now.

Rep. DOWNEY: The problem is that we do believe, at least some of us, in a progressive tax code, that people who are capable of paying more, pay more, and that at 25%, as Secretary Baker pointed out today, at anything under 35%, you run into what is known as, politely, distributional problems. And those are political problems.

LEHRER: You mean the rich get richer and the poor get poorer.

Rep. DOWNEY: The rich get --

Rep. KEMP: And pay more tax, Tom.

Rep. DOWNEY: Well, that's true, Jack, but the rich get enormous tax breaks as you move below 35%.

LEHRER: Why?

Rep. DOWNEY: Simply because, as Jack pointed out, they are paying more tax and they will get larger percentages of the tax break conceivably than middle-income people will. That's why the Treasury Department, the Republican Treasury Department, I might add, doesn't want to go below 35%, because they see that as a political problem. And I see that as well. Senator Packwood, Chairman Packwood, made a very good point. He said, "Look, you're not going to be able to retain the state and local tax deductibility and maintain the rates." Well, Jack, I don't want to be the purveyor of bad news, but a lot of the Republicans on the Ways and Means Committee are not as enamored with the 35% and would be frankly quite happy -- and I can't speak for them; they'll have to speak for themselves -- to see that rate maybe go up a percentage point or two to pick up some revenue so that we can retain part of state and local tax deductibility, maintain the balance between state and local and federal financing. So that's going to be a very important battle.

LEHRER: Senator Packwood, what do you think's going to happen on the rate?

Sen. PACKWOOD: I think we can get the rate to the 35%. The question is, is there a way to get it lower? Congressman Kemp's got it at 24% on the flat tax; Senator Bradley and Congressman Gephardt have it staggered between 14 and 30 percent. I would like to do everything possible to get the rate low enough that people no longer consider investing in the tax shelters, they'd just say it isn't worth the trouble. What I'm not sure of is what that rate is.

LEHRER: What about the political problem that Congressman Downey raised, the idea that this gives too much of a tax break to the rich?

Sen. PACKWOOD: Well, you can counter that on the other end, and the administration's done a very good job on this, by raising the personal exemptions, by raising the, we used to call it the old standard deduction. You can drop out of any tax obligation people below a certain level, and I think the administration's bill does a good job. Just because you lower the rates doesn't necessarily mean you're favoring the rich.

Rep. KEMP: Well, that's -- I'm sorry.

LEHRER: Yeah, go ahead.

Rep. KEMP: I was just going to say, that is a good point. I would -- well, it is a good point.

Rep. DOWNEY: But the Treasury Department says that that is precisely what you do.

Rep. KEMP: Well, let me make my point. It was a Democrat, Broadhead, I think, of Michigan, who helped drop the 70% bracket to 50 in 1981. We didn't lose revenue. We didn't do something for the rich other than to get them to pay more revenue into the federal treasury. The system is actually, Jim, more progressive today after the rate reduction than it was prior to it. And as Bob Packwood pointed out, doubling the exemption for every family in America from one to two thousand dollars shifts $4 billion back into the pockets of New York taxpayers. And I don't know what it's going to do for Oregon, but it's a very pro-family bill that the President has advanced.

LEHRER: Let's go to some of the other things. Senator Packwood, I read today, and I think everybody's read today, that this business about not eliminating, but tightening up on entertainment and business deductions, everybody says that'll never last, that you all will cave on that one right at the beginning. Is that true?

Sen. PACKWOOD: Well, I'm not going to cave on anything at the beginning, and I'll tell you why.

LEHRER: I don't mean you personally; I mean you generally.

Sen. PACKWOOD: Well, you know, again, we'll be holding hearings in the Senate almost simultaneously with the House. We're going to start in about 10 days. We won't start to mark up our bill, as we call it in Congress, until the House finishes. But to start going through this and saying, "I don't like the limitation on the business lunches, I don't like the limitation on the deduction of state and local taxes, I don't like the limitation on the investment tax credit, let's wipe all of those out" -- well, if you wipe them all out, you're wiping this bill out. And I think you might as well make a decision at the start, which way do you want to go? Do you want to go toward broadening the base and lowering the rates, or not? And if the answer is "or not," don't worry about it. But if the answer is "yes, I want to," you can't start going through this picking them ofjf one at a time and still keep the rates down.

LEHRER: But isn't that -- is that what's going to happen in the House? Isn't that what's already started in the House Ways and Means Committee, picking those things out?

Rep. DOWNEY: I think that Senator Packwood has the advantage of the other body, of always taking the broad view and letting the House go through the process, the very grubby process of looking at this point by point. It'll be interesting to see in a couple of months' time, as the Senate has hearings and starts to work its will, whether it's going to come to any difjferent conclusions than the House. There are some real tough problems here. You know, the business deductions, the entertainment allowances -- you know, I've never had a businessman come in and ever say to me, "Look, you've got to allow me to keep my baseball tickets or my theater tickets or my deductions for lunches." Who comes in are the barmaids, the bartenders, the people who work in the restaurants, the actors and the actresses who have a real tough time, the entertainment industry. All of those folks make very powerful cases that if you hurt them, you're going to hurt some broader scheme -- the economy of New York, the economy of Los Angeles or Portland.

LEHRER: And do you all, as members of Congress -- you have to listen to those people, don't you, Mr. Kemp?

Rep. KEMP: Sure. There are legitimate interests that Tom Downey was mentioning.

LEHRER: What are you going to say to them?

Rep. KEMP: Well, I would say what I say to my folks in Bufjfalo: look, what would you rather have, the short-term preference of the tax code that gives you a minor break from the massively high tax rates at the federal and state level, or a sharply lower rate with more after-tax income and less of an efjfort on your tax? The President has struck a very powerful theme. I don't think Chairman Rostenkowski or Bob Packwood, who are two good politicians from difjferent parties, or Bradley or Gephardt or Kemp or Kasten or Downey, don't recognize that the American people are fed up with the status quo, they want change, and we've got to find a way to give them what this economy desperately needs: fairness, simplicity, pro-family, but we also need to keep our eye on another goal, which is to get this economy back on a high-growth track and to create more jobs and economic expansion well into the next decade. That is the reason why I think that 35% bracket is just too high to get the entrepreneur to come out of his shelter and start a widget factory in Buffalo or Long Island, New York, or Oregon.

LEHRER: In a word, Congressman Downey, is there going to be tax reform?

Rep. DOWNEY: Yes, there's going to be a tax bill; there should be; we're going to get it done this year and I hope the Senate does it as well.

LEHRER: Do you agree, Senator Packwood, it's going to happen?

Sen. PACKWOOD: Oh, absolutely. I think we can have this through the Congress and to the President by the end of this year. Not next year, this year.

LEHRER: Well, Senator in Portland, thank you very much; Congressmen here, thank you all. Robin?

MacNEIL: Still to come on tonight's NewsHour, we focus on the reasons behind the soccer violence that killed 38 people in Brussels; a report from Minnesota about an unusual labor-management test in the meat-packing industry; and the philosophy behind the new monument overlooking New York Harbor. Soccer Violence: Why Did It Happen?

MacNEIL: For our next focus section tonight, we go back to the tragedy at the Brussels soccer stadium yesterday and the shock that has gripped Europe today at the deaths of 38 people there. The event has stunned the continent and brought statements of dismay and incredulity from the Queen of England, the King of the Belgians, the Pope, the prime ministers and politicians at all levels. What went wrong was a question asked around Europe today. This is how Lawrence McGinty of Britain's Channel Four addressed that question.

LAWRENCE McGINTY, Channel Four: The riot seems to have been started by Liverpool fans, but it's doubtful whether the individuals responsible for turning what should have been a classic football confrontation between Europe's premier sides into an unparalleled carnage will ever be found. Those who died were simply crushed and trampled to death, desperate to escape the melee but unable to reach exits. Today, sorrow turned to concern about the safety at the Heysel Stadium, the adequacy of the police's response to the riot, the way that tickets for the game were sold, and whether right-wing fascist groups organized the violence.

[voice-over] The riot broke out at one end of the Heysel Stadium, where both Liverpool and Juventus fans were standing along with neutral spectators. The barriers separating opposing fans was easily scaled by Liverpool's supporters, who invaded Juventus territory after an exchange of missiles between the two groups. In the crush that followed, fans surged forward through gaps in the crash barriers and were pushed up against a low wall near the only exit from that section of the stand. The wall collapsed. So the first question to be answered is, was the Heysel Stadium safe? This morning, Liverpool Secretary Peter Robinson was sure it wasn't.

PETER ROBINSON, Liverpool Secretary: It's a very old stadium, and I don't think, looking at it, that it would get a certificate under the General Safety Act in Great Britain.

McGINTY [voice-over]: The second question is whether the police mishandled the riot. Partly because the Heysel Stadium isn't divided into pens, the police could not get onto the terrace itself in significant numbers to separate the rival supporters. They had to try to handle the riot that developed from the running track surrounding the pitch.

The third question is, why weren't the fans kept apart? One reason is that, against the regulations of the European Football Union, EUAFA, tickets for the match were sold on the day, here by ticket touts. That meant that those fans and those who broke into the ground couldn't be kept separate from rivals. Sports Minister Neil McFarland agreed about segregation. Before the match he sent this message to EUAFA. He said he was concerned at reports that tickets will be available at the stadium on the day of the match, threatening to disrupt the segregation of rival supporters.

The fourth question is whether the fans are simply out of control. Seeing the chaos at what is, after all, Europe's most important match of the year, it's difjficult not to conclude that hooliganism is out of control. But there may be more subtle and political influences at work from the far right. This racist leaflet was reportedly distributed before last night's game. It was published by the British National Party, and Liverpool ofjficials say extreme right-wing elements infiltrated their supporters.

JOHN SMITH, Liverpool Chairman: It was a handful, many of whom were from the National Front in London.

REPORTER: You believe the National Front --

Mr. SMITH: I have got evidence.

MacNEIL: The soccer tragedy especially shocked the city of Liverpool. Here's how British television reported the mood there.

TREVOR McDONALD, BBC [voice-over]: It seems hardly adequate to state that the mood here in Liverpool this evening is subdued. On no other occasion has the famous football team come back to this city with less ceremony. The tragic deaths in Brussels last evening have eclipsed the natural exuberance of this place. That mood will never be more poignantly expressed than at the moment the Liverpool manager, Joe Fagen, came down the steps of the airplane bringing his team back to the city after last night's catastrophe. The proud, strong Fagen, in his final moments as manager, in tears.

[on camera] But there's also a tragic irony, because until now, the sporting reputation of this city has been one of football's more glorious chapters. Michael Crick has this report.

MICHAEL CRICK [voice-over]: Liverpool fans have been arriving back on Merseyside since the early hours of this morning. Many accepted that Liverpool followers were responsible for what happened last night, but said that they'd been under extreme provocation.

ENGLISHMAN: I looked across to where the Juventus fans was, and there was a young Liverpool up there, he couldn't have been much above 10 years old, and he was getting kicked -- kicked something powerful by Juventus supporters because he was in with them and he'd been singing.

CRICK [voice-over]: Since 1964, Liverpool have played in Europe every season, more games than any other English club, and they've won six European trophies. Good behavior by their fans off the pitch has gone with considerable success on the field. But some thing last year's European Cup final against Roma, when Liverpool fans were viciously attacked, may have created a desire for revenge against Italians. Sociologist John Williams is an expert on soccer violence.

JOHN WILLIAMS, Leicester University: When the game in Romawas lost, a lot of Liverpool supporters were attacked outside the ground, quite a few weenge, so to speak?

Mr. WILLIAMS: Well, I think it might well be possible when they met the Italians for the game as they did in the final yesterday, there might have been elements of revenge involved, certainly.

CRICK [voice-over]: But Liverpool fans today denied any desire for revenge, stressing that before the game they'd even been playing football with the Italian supporters.

MacNEIL: Earlier this afternoon I talked by satellite with New York Times London correspondent R.W. Apple, who has been covering Britain for nine years.

How would you characterize the reaction in Britain today?

R.W. APPLE, Jr: Well, people are quite genuinely horrified. It's been a bad year for this sort of thing in this country. The violence on the picket lines during the coal strike astonished people. The fire at Bradford, where during a soccer match a large number of people were killed. And now this. I think I hardly need say that this is not behavior characteristic of the mass of British people. A lot of the spectators, indeed, in Brussels last night were interviewed on television and went so far as to say they would never go to another football match as long as they lived because of the way the hooligans were behaving. All the politicians have denounced it, and all of the people in football have denounced it.

MacNEIL: How would the crowd at a big British football match compare with an American crowd at a big game here, a Super Bowl or a World Series baseball game or something?

Mr. APPLE: Well, I think there are two or three important differences. One, a lot of them, in some cases a majority of them, are standing up on what are called terraces -- just a series of risers, without seats. As a result there's a lot of jostling and pushing at best. Second, I think it's fair to say there's a great deal more drinking. Third, I think that you tend to get more of a hooligan or thug element, again, in recent years at most matches than you do in America.

MacNEIL: Is it only soccer? Is soccer the only sport that attracts this kind of crowd and this kind of behavior?

Mr. APPLE: Soccer seems to attract most of it. There's relatively little of it at rugby matches, although there have been one or two isolated outbursts. None of it at cricket, and certainly none of it at Wimbledon.

MacNEIL: The explanations coming forward today, apart from drinking, which you've mentioned, are -- one of them was high unemployment among Britain's youth causing a lot of frustration. Is that a plausible explanation of this kind of behavior?

Mr. APPLE: Well, you know as well as I do, Robin, that the politicians and the sociologists have been arguing about this for a long time. As for myself, I think it's inevitable that when you have enormous numbers of unemployed, unemployable people, kids, young people in cities like Liverpool -- Liverpool in some central districts has as many as 60% unemployed under the age of 21. When these people have no real prospect of getting a job in the next five years and when many of them are convinced that they'll never get a job, this breeds cynicism, an acceptance of violence, a lot of drinking, a lot of drug use, and the kind of what I think can be called a social underclass. We had an example of this in this country a few years ago, quite apart from football, when we had riots in most of the major cities. Liverpool suffered very badly in those. They stopped; it was just that one summer; they haven't recurred. I think that's rather surprising.

MacNEIL:One story today suggests that the National Front, the neofascist group in Britain, may have had some agents provocateurs in the crowd at Brussels yesterday. Is that credible to you?

Mr. APPLE: Not really. It may well turn out to be true, but I certainly don't think that the National Front has had agents provocateurs at all of the matches, both international and local, where this sort of thing has happened. This was a particularly bad episode last night, Robin, largely because a wall fell down and crushed people. But there have been bad incidents right across the continent where British teams were playing, and indeed where British teams weren't playing, in other countries for the last three or four years.

MacNEIL: So this is not just a British phenomenon?

Mr. APPLE: It is not just a British phenomenon. I think it's fair to say that it is much more serious here than it is in other countries in Europe, in continental countries. But it has happened in Spain, it's happened in Italy, it's happened in Holland, it's happened in Germany.

MacNEIL: Some of the people who were in Brussels yesterday, some of the British people, are blaming lack of security by the Belgian authorities. What kind of security is common at big British matches now?

Mr. APPLE: Well, this country, as you know, is not as security-conscious as the United States is, so you don't have a mass police presence. But it certainly has increased greatly. You're quite likely at an ordinary match now to have 100 policemen on duty. I think when they're talking about last night's episode, though, they're talking about a specific thing. The sports ministers from the European countries, the countries competing in European football, agreed some time ago that there should be careful segregation of the crowds. That is, all the Italians here, all the British there, with strong fences between the two. This means that you'll have to sell the tickets well in advance, because you can't be sure, if you're selling tickets on the day of the match, who's buying them. It's charged, it's alleged by Neil McFarland, the British sports minister, and by some others, that a lot of tickets were sold yesterday and that in some sections of the stand there were mingled British and Italian supporters. It had been the intention to avoid this.

MacNEIL: I see. Well, Johnny Apple, thank you very much for joining us from London.

Mr. APPLE: Pleasure.

[TEXT OMITTED FROM SOURCE] Bucking the Boss

LEHRER: Next tonight, a focus report from Austin, Minnesota, about an unusual labor campaign. The campaigners are workers at the George A. Hormel meat-packing plant who are trying to reverse a company decision to lower wages. Hormel, long known as an industry leader in pay and benefits, said the dire straits of the meat-packing industry left it no choice. Carol Levinson of public station KTCA-Minneapolis-St. Paul is the reporter.

CAROL LEVINSON, KTCA [voice-over]: What may appear to be just another union dispute may be the birth of a new trend in American labor relations. These workers are meat packers, employees of the George A. Hormel Company in Austin, Minnesota. They're angry because the Hormel Company cut their wages by 23% last October, from $10.69 an hour to $8.25. The company cited a national pattern of concessions in the meat-packing industry and said they needed to trim wages to remain competitive. But the workers say Hormel's 1984 profits of nearly $30 million don't justify the company's cutback strategy.

LARRY WILSON, Hormel worker: We have a company that's making a lot of money. They had no need to cut our wages by 23% and our benefits.

RAY ROGERS, labor consultant [at meeting]: That's what we're talking about here today, is power. How you can get it and how you can use it.

LEVINSON [voice-over]: To fight Hormel to restore their pay, the union hired this man, New York labor consultant Ray Rogers. His program, called the Corporate Campaign, confronts power with power, putting pressure not only on a company but on the banks that support it as well. For him this campaign really centers around the unfairness of Hormel's wage cut.

Mr. ROGERS: They use the catchword phrase "we must remain competitive." That's what they figured they were going to wage this whole campaign around and really pull the wool over the eyes of the public. What we said is it's greed.

LEVINSON [voice-over]: This isn't the first time Rogers has headed a Corporate Campaign. In fact, since the mid-1970s he's led others against companies like Campbell's Soup, RCA and J.P. Stevens. In the campaign against Hormel the union is directing most of their efjforts against the company's management. They protest against what they call the unfair wage cuts and unsafe working conditions by leafleting at other Hormel plants and in their own community. The second target of the campaign is the First Bank System, one of Hormel's bankers. They hope that putting pressure on the bank will force bank ofjficials to urge Hormel to settle its dispute with the workers. Hormel president Richard Knowlton says this approach is futile because he says the First Bank System has no control over the internal operations of their company.

RICHARD KNOWLTON, Hormel Company: Their relationship and their involvement in all of this is only as a trustee. And as far as the allegation that they are big lenders to this company, the two major outstanding loans that we have are not with First Bank. They are in fact with others.

LEVINSON [voice-over]: Another target of the Corporate Campaign is what the union calls the interlocking board memberships between the two organizations. Hormel president Knowlton sits on the board of First Bank Minneapolis, a subsidiary of First Bank System. And First Bank president Pete Ankeny is on the board of Hormel.

D.H. "PETE" ANKENY, First Bank System: I was elected by the Hormel shareholders to serve as a director of the Hormel Company. I serve in that capacity as an individual. I do not serve as a representative of First Bank System. And I -- and as one of 12 directors at Hormel, they attribute to me powers that I certainly do not have, to be able to control the destiny of that company.

LEVINSON [voice-over]: Critics of the Corporate Campaign have called it a suicide mission and say it's already begun to backfire -- not scaring Hormel or First Bank System as planned, but succeeding only in splitting the community of Austin, where many are afraid Hormel, the major employer, will decide to leave town. Union president Jim Gayette doesn't think the campaign is failing, but he admits there has been a backlash of fear.

JIM GAYETTE, UFCW Local P-9: What we've said all along is there's an incestuous relationship in this town which is not unlike any other one-horse-town situation, where a company can come in and dictate the rules and say, "Look, you don't want to play the way I want to play, I'll pick up and move." I'm tired of being held hostage. I was born and raised here, and I've heard the threats and all of that sort of thing, and I don't like living in fear.

LEVINSON [voice-over]: Dr. Larry Maier, a local psychologist, hasorganized a group of concerned citizens opposed to the Corporate Campaign. Called the Committee for Positive Action, they recently bought an ad in a local newspaper sharing their views and inviting others to mail back coupons indicating support for their position. Sixteen hundred coupons were returned.

Dr. LARRY MAIER, Committee for Positive Action: Well, the union itself has a membership of about 1,700. On those 1,700 there are 13 or 14 of us who service those folks, who pump gas, who sell groceries, who provide medical care, psychological care. And so when you put it in that context the union is not Austin; the union is a part of Austin, it's an important part, but in no way can it equate to the value that Hormel poses and presents for this community. Hormel can go anywhere in this country. If Hormel leaves, though, Austin won't replace it and it'll kill Austin, I think.

LEVINSON [voice-over]: The workers behind the Corporate Campaign aren't just meeting opposition in their own community. Their own international union also refuses to support them, saying the campaign could have a negative efjfect on the meat-packing industry nationwide. But despite their opposition the union says they've been successful thus far, causing the Hormel Company to move their annual meeting out of Austin for the first time in 93 years and buying local TV time to explain their position. The union also thinks they've succeeded in putting pressure on First Bank System, protesting recently at their stockholders' meeting in St. Paul.

Mr. ROGERS: We're going to raise the stakes so high for Hormel and First Bank that they're going to have no choice but to take what we call the low road to morality. They're going to be forced to do the right thing but for the wrong reasons. It's going to be power politics.

LEVINSON [voice-over]: Mario Bognanno is a labor analyst and professor at the University of Minnesota, and like most labor leaders in the state has been following the Hormel situation closely. He agrees that the concept of a Corporate Campaign can work, but he has doubts about the success of this one against a company like Hormel.

MARIO BOGNANNO, University of Minnesota: The Corporate Campaign has been used with some degree of success in situations such as the J.P. Stevens textile situation, where we had a company who had -- who clearly was pursuing a policy of union avoidance. Now, in the case of Hormel, we have a situation where you've had, what, 53 or 54 years of labor-management relations that have been uninterrupted by strike. The company and the union have always been a part of the industrywide pattern of bargain, where wages have always been at the top of the scale for meat-packing workers. You have a situation where this company and its employees have enjoyed such unique relationships such as a profit-sharing plan. So it's a very difficult situation, and my counsel would be for the union and the company to get back to the bargaining table and straighten this mess out.

LEVINSON [voice-over]: Hormel says they'd be willing to offer the workers up to $10 an hour by September, but the union will only be satisfied with a full restoration to the original $10.69. So for now there isn't any bargaining. The union plans to continue the Corporate Campaign through the summer, until negotiations for their new contracts begin in the fall. Until then it's business as usual.

LEHRER: That report by Carol Levinson of KTCA-Minneapolis-St. Paul. Robin?

MacNEIL: Once again, the main stories of the day. President Reagan charged that the present income tax system encourages honest citizens to cheat. A third member of the Walker family was accused of selling naval secrets to the Soviet Union. The State Department turned aside King Hussein's proposal to give Moscow a seat at a Mideast peace conference. The second round of Soviet-American arms talks opened in Geneva. Update: Rapaport's Liberation

MacNEIL: Finally tonight, an update. Last year we told you about sculptor Natan Rapaport and his statue called Liberation. Today, a year later, the completed statue was dedicated.

[voice-ove] Several thousand people crowded Liberty Park, New Jersey, for the dedication of Rapaport's statue celebrating the liberation of the survivors of the Holocaust by the American Army. The ceremony was attended by members of veterans' organizations, the National Guard, high school students and those who'd worked for the past three years to make the monument a reality. Governor Thomas Kean accepted the gift of the monument on behalf of the people of New Jersey.

Gov. THOMAS KEAN, New Jersey: This monument says for all time that we as a collective people stand for freedom, and we as Americans are not and never will be oppressors, and we as Americans will never go to war for the purpose of conquest, but we will fight, and we will fight to preserve and to promote the very precious things that are important to us in this democracy.

MacNEIL [voice-over]: The sculptor of Liberation is 74-year-old Natan Rapaport. He was born in Poland, and his other monuments are scattered around the world. He moved to the United States in 1959 and became a citizen. Liberation is his first major monument in America. We spoke with him last year as he was putting the finishing touches on the statue before it went to the foundry.[TEXT OMITTED FROM SOURCE]

NATAN RAPAPORT, sculptor: How do I have to make him? What does he want from me? How should he be? I made him tall, strong, noble. It's a fusion between this wonderful young man and the weightless and almost lifeless body of a concentration camp prisoner. He came from a land of plenty to save Europe from tyranny. He restored life, freedom, joy. It's really a tribute to the American liberators. So I can't make him an Apollo, but he's beautiful in my eyes. I didn't make him, you know, a victor coming with a gun. He don't have a gun. He's a human being; he came to save another human being.

A gentleman came here. The moment he saw this sculpture he said, "It's me. It's me. They liberate me exactly like this. We should have -- be dead in a few hours. In the last moment the American soldiers saved me." He start to cry. "It was me," you know. So I think I had to do this. It was not a commission. Nobody asked me to do it. It just came out. I'm working for 35 years. And it is just like an apotheosis of the whole, you know -- the beginning of course a man cries. We have to cry. Nobody can teach you how to cry. You are crying as it comes to you. And then little by little you don't have any more tears and you can see more clearly what was it all about. And I said, "My God, but we forgot those who liberated us. We are crying all the time about ourself, but it's about time to say thank you," and that's what I'm doing. It's a tribute to the American Army, the American people.

MacNEIL: Good night, Jim.

LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.