The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, Ray Suarez explores the impact the Internet is having on the American job market. Kwame Holman reports on what Congress faces this year. Gwen Ifill looks at a new report on combating terrorism. And an Atlanta professor recites her favorite poem. It all follows our summary of the news this Tuesday.

NEWS SUMMARY

JIM LEHRER: Israel and the Palestinians agreed today to new peace talks in the United States. Secretary of State Albright made that announcement after meeting with Palestinian leader Arafat in the West Bank. She said the two sides will return to the Washington area next week. They're trying to break a deadlock and reach a final settlement by mid-September.

MADELEINE ALBRIGHT: Neither side will be able to have 100% of what it wants. But the Palestinian and Israeli track is at the core of the issues to achieve a comprehensive peace, and we want to see as much work and dedication given to this as possible. It's something that the United States cares about because the people of this region care about peace so deeply.

JIM LEHRER: President Clinton will meet with Arafat at the White House on June 14. Today he left open the possibility of a Camp David- style summit with both sides. American jobs related to the Internet increased by more than one-third last year to $2.5 million. That's according to a new study released today. It was funded by Cisco Systems, a maker of Internet equipment. It said the industry generated more than $520 billion in revenue, about $200 billion more than the year before. We'll have more on this story right after the news summary. High-tech executives today urged Congress to focus more on education and research. They said federal funding for research has dropped in the last decade, and universities have turned out fewer graduates with high-tech degrees. Microsoft Chairman Bill Gates was among those addressing the Joint Economic Committee.

BILL GATES, Chairman, Microsoft: Maintaining our goal of leadership and stimulating further growth will depend largely on our ability to produce and expand a competitive workforce. The life blood of industries is not capital equipment but human capital. And one of the key challenges all these businesses face is attracting and retaining the best among our ranks.

JIM LEHRER: Gates did not mention Microsoft's anti-trust fight against the government, and the panel did not ask him about it. The national D-Day Museum officially opened today in New Orleans. Some 10,000 World War II veterans and others gathered for the ceremonies. They included a parade and a fly-over by 54 military planes. The opening marked the 56th Anniversary of the allied invasion to liberate Western Europe from the Nazis. And that's it for the News Summary tonight. Now it's on to Internet jobs, the do-what Congress, fighting terrorism, and a favorite poem.

FOCUS - .COM JOBS

JIM LEHRER: Ray Suarez has the Internet story.

RAY SUAREZ: To what extent is the Internet driving economic growth and new jobs? A new study out today offers an answer. The study was funded by Internet equipment giant Cisco Systems. Here to discuss it is Anitesh Barua, a co-author of the study and associate director of the Center for Research in electronic commerce at the University of Texas; Jay Whitehead, CEO and president of Employeeservice.Com, which provides human resource services to hundreds of dot.Com companies; Robert Reich, former Secretary of Labor in the Clinton administration, and now professor of social and economic policy at Brandeis University; and John Battelle, CEO of Standard Media International, which publishes "The Industry Standard," a magazine covering the Internet economy. Professor Barua, let's start with you. What were the major findings of the study?

ANITESH BARUA, University of Texas: Ray, we found that the Internet economy is having a profound impact on the overall economy by all measures. As we have indicated in our study, jobs grew 650,000 to a total of about 2.5 million, representing a 36% growth, across all aspects of the Internet economy, but I think even more interesting is the fact that jobs grew up to 48% for high-tech companies who are providing sort of the plumbing pipes of the Internet, who are Providing the application software, consulting services that make business happen on the Internet. And when you look at it along with the fact that revenues are up big time to the tune of 72% and that sales for every employee that you have rose 19% across the board, and sometimes actually much more, I think it's painting a picture of high productivity, lots of opportunities being created, and also, it's pointing to the opportunity cost of not joining this new economy.

RAY SUAREZ: John Battelle, should we be concentrating more on the fact that the jobs grew by 36% or that they still Only add up to about 2% of the American workforce?

JOHN BATTELLE, The Industry Standard: Well, I think actually what's very interesting about this study is as large as these numbers are getting, what's even more astonishing is what's not in the study, which is the broader economic base of corporate America and global, the whole world, in terms of how the Internet economy is affecting companies like Nabisco, for example, or Johnson & Johnson. So while this points to astonishing growth in companies that are involved in the creation of what we're calling the Internet economy, it really, I think, only is the tip of the iceberg when it comes to the effect this is having on the entire global economy.

RAY SUAREZ: So by defining it as jobs directory created, we're actually using a very narrow definition, and in your view it might be a lot more?

JOHN BATTELLE: Well, I think, as years go by, we'll have an interesting task in cracking this story, because these companies are becoming segmented. They're becoming financial services companies. They used to be dot coms, and now they're financial service companies or they're retailers, or they're perhaps in the business-to-business marketplace in steel. So they're becoming part of the steel industry. And therefore, the steel companies are having to deal with that and become Internet economy companies, as well. That's very interesting. And we see that story continuing through the next few years.

RAY SUAREZ: Jay... Go ahead.

ANITESH BARUA: I would like to point out that we are including lots of bricks and mortar companies. In fact, we had over 50,000 companies either selling goods or services on the Internet or providing electronic intermediary type of services. So we take a much broader perspective. We're not Limiting ourselves to the dot coms, but whoever is playing in this overall space, even if you can r clicks and mortar, you're likely to be sampled.

RAY SUAREZ: And for people who aren't following the jargon, clicks and mortar means?

ANITESH BARUA: You're a traditional company but doing part of your business using the Internet.

RAY SUAREZ: Jay Whitehead, the workforce we're trying to measure goes up by 700,000 people. What kind of people are we talking about?

JAY WHITEHEAD, EmploeeService.com: Well, you're talking about highly educated people who generally are highly driven to go from the bricks and mortar world into the clicks and mortar world. That was just referred to. But there's a real downside to the lifestyle that the Internet economy has thrown upon a lot of the workers. You've got people who are working 16, 18, 19 hours a day for weeks, months, quarters, and even years on end to reach horrendous financial heights. And this brings up three real down sides to life in the Internet economy for employees themselves. One is that people really are looking to their jobs for their entire personal life. The second is that you've got a stock option economy that's forcing people to really look at jobs in terms of what stock options they can get. If you don't have stock options to get, to give to an employee, you don't get that employee. You also don't have a lot of loyalty in this marketplace. Jobs are being hopped from one by one over time. To go back to the first point about not having a life, there is no life for a lot of these dot com workers. In fact, there's a term in Silicon Valley that people don't have a personal life, a sex life anymore. And there's a term called Internet Interruptus that has affected many, many employees.

RAY SUAREZ: So Secretary Reich, you're a labor economist. You know how workers deal with this. Is this a finite kind of work life they're going to have to figure out some new way of dealing with?

ROBERT REICH, Former Labor Secretary: Well, Ray, it's an exhilarating work life, if you have the stomach for it. I'm not sure I understand exactly what Internet Interruptus means for everybody, but I can tell you that a lot of young people in their 20's and early 30's are finding they're making a lot of money, not as much money as they thought they were making two months ago. There are a lot of new jobs being created with titles of which we have never heard before in this country. It is shaking up old, bricks and mortar and clicks and mortar companies. The Internet is becoming ubiquitous and pervasive. And talking about Internet jobs now is something akin the talking about electricity-related jobs in 1910.

RAY SUAREZ: So there are a lot 06 people, you're suggesting, that don't even realize they're working in Internet-related jobs?

ROBERT REICH: Absolutely. We are all indirectly working at Internet-related jobs. A lot of clerical, secretarial workers, they may discover that actually they are downloading from the Internet, whether they are Internet workers or not is really anybody's guess. Big business is increasingly substituting all fixed cost, big bureaucracies, for what are called business-to-business sort of various... on the Internet, various ways of finding bargains, various ways of actually reducing transaction costs. And that also is changing the nature of our bureaucracies. They're no longer big bureaucracies. They're coming to be sort of networks in which companies are partnering with other companies.

RAY SUAREZ: So Anitesh Barua, some of the people that are being counted in your studies are doing old economy jobs, truck drivers, warehousemen, people who lubricate machines?

ANITESH BARUA: Unless those products are actually being sold in one area or the other in conjunction with the Internet, yes. A lot of the jobs we are talking about are new jobs that are created in the high-tech sectors as high-tech companies hire people to build the plumbing pipes and the software infrastructure. And then there are a lot of new jobs that are being created by some of the electronic middlemen that Secretary Reich was kind of referring to. And those are really new jobs. But then a lot of job transformation is taking place. You know, when we did this study one year ago, we went to large companies and asked them, "how many full-time equivalents in your company are, in your assessment, involved in your Internet business operations?" And we heard from some huge organizations numbers like four. Obviously they were thinking of the web developers and the Internet programmers, whereas when you kind of go and ask, so how many people in your finance area, in your accounting area, in your marketing are devoting their time to Internet part of your business, you see there is a new realization and new recognition that, gee, I mean, a lot more people in my organization are actually involved in this. And Ray, I'd like to take this opportunity to point out that, you know, we see 48% job growth with some of the high-tech companies who are playing in the Internet economy space, but we don't even count the hundreds of thousands of jobs that are associated with the U.S. Internet economy based on outsourcing. Okay -- because you cannot find enough high-tech labor in the U.S. to fulfill those roles. And this gets back to a point that Secretary Reich actually made some four years ago, pointing to a potential shortage of high-tech workers in the U.S. economy. And that has deep implications in terms of how we want this new economy to grow even faster.

RAY SUAREZ: Jay Whitehead, will this also mean that a conventional resume is going the start to look a little different, that being fired or being part of a company that went belly up won't be the kind of black mark it might have been at one time?

JAY WHITEHEAD: In fact, that's a great point, ray. Failure is something that is actually valued in the Internet economy. There's a saying in the Internet economy that "we want to fail fast, because that way we learn faster." So there are so many jobs in this space, in fact, in Silicon Valley, the unemployment rate among web workers is Negative 3% -- that means there are many, many more jobs than there are people to fill them. And like the old bank robber, Willie Sutton said, "I rob banks because that's where the money is," workers are going to the Internet economy because that's where the money is. In fact, there is a glut of venture capital out there. I'm here in Chicago for a venture capital conference today, in fact. and that glut of venture capital has created a lot of dot bombs. So there's a lot of... not dot com, but dot bombs, I said. And that means there's a lot of displacement of workers. People are being displaced from jobs in but months on the job because the company ran out of money. In fact, that Internet economy, that venture capital frenzy has created what's called the Barney Deal. The Barney Deal is that it was a company that was funded because the venture capitalist said, "I love you, you love me, let's give you whole bunch of money," and that created an over funded but undersubstantial business model. So there's a lot of displacement.

RAY SUAREZ: But, John Battelle, is that something that we're starting to see at least having more geographic spread, not the stereotypical company that's located somewhere between San Francisco and Santa Cruz?

JOHN BATTELLE: Right, 50 miles from San Francisco. And I think also pulling back a little bit and putting this in context, we're absolutely in the middle of something, something relatively large, and I think this University of Texas study is proving it. We're in the midst of a significant transition And requiring of how business is being done. That means we have the try a lot of stuff and screw a lot of stuff up and get it wrong and try again. And the economy is encouraging people to do that and rewarding people for doing that, and I fundamentally think that's a good thing. It sure makes for a good story. And so therefore, when you have an almost -- a cultural vision that things are changing and we've got to figure out how to get ahead of this thing, you're going to see capital formation occur to encourage that. I think it's very, very good for our economy and the global economy that we're committing capital to trying new stuff. And certainly a lot has failed. Certainly a lot has worked. And that's very exciting. And it makes for a great story.

RAY SUAREZ: Well, Secretary Reich, speaking of dot bombs, you brought up the electricity industry in the early part of this century. Was there a lot of boom and bust then right along with the large run-ups in the size of the labor force and the amount of capital being spent?

ROBERT REICH: Certainly there was, Ray. In fact, we are seeing in the dot com parts of the Internet industry a period right now of consolidation, things are settling down a little bit. Some of the stocks that were very, very high-flying are now low-flying. They may come even lower in the future. But generally the bottom line is this: If you are young and well-educated, the sky's the limit. This is an extraordinary economy. The Internet economy provides opportunities that are really unprecedented. If you are older and if you are less educated, if you are poorly educated, it's another story entirely. We are seeing, again, that two-tiered economy we have had and have been developing in this country. The digital divide is real. The Internet economy is wonderful, but we've got the look beyond the Internet economy, as well.

RAY SUAREZ: But if demand keeps growing at the rate that it has been, why won't potential employers go in search of, let's say non-traditional labor pools, train them up, create the expertise?

ROBERT REICH: Ray, they will as long as unemployment stays down and the market stays very tight. As long as there is a tremendous shortage of Internet workers and high-technology workers, employers are going to be up-scaling and training a lot of their employees, and that's terrific. There is also going to be a steady drum of demand by employers to open up the American immigration to high-tech workers abroad. To some extent I think that's necessary. But we don't want to do it to such an extent that we reduce the incentive on employers to upgrade the skills of American workers.

RAY SUAREZ: Professor Barua, if we're looking at this as a maturing industry in its growth period now, how many more years of this kind of growth will we look at before things start to cool down a bit?

ANTHONY BARATTA: Ray, I think we are still seeing the tip of the iceberg only. And the technology is the driver. You know, it's kind of unpleasant to say that. We always like to think of business strategies and we somehow use technology to drive it, but technology is the driver. And just think about the endless possibilities with wireless and with broadband, which has already begun in Europe and in Asia. And we are just beginning to see the initial phases of that, that revolution, kind of still brewing. And I kind of get back to the comment that Secretary Reich made about the digital divide. You know, what happens when you have $100 devices that connect you in a wireless mode to the Internet with really easy-to-use applications that are all being developed and this media-rich content that's zooming to your hand-held devices? I think it will help us gap that digital divide and we will see much higher growth rates driven by new technologies and application.

RAY SUAREZ: Gentlemen, thank you all very much.

JIM LEHRER: Still to come one the NewsHour tonight, the do-what Congress, fighting terrorism, and a favorite poem.

FOCU S - GLOBAL THREAT

JIM LEHRER: Now, a question: What will Congress accomplish this election year? Kwame Holman reports.

KWAME HOLMAN: On any given day, groups of citizens troop to the U.S. Capitol to petition Congress for action on any number of issues. One day last month, it was the National Council of Senior Citizens, demanding federal help for seniors who can't afford their prescription drugs.

BERT SEIDMAN: We pay more for prescription drugs in this country than anywhere else in the world, and the people who pay the most-- and it doesn't matter whether they are low-income or moderate income-- the people who pay the most are the seniors who are not under any kind of drug plan.

KWAME HOLMAN: The seniors, most from Baltimore and Philadelphia, got a warm, personal welcome from Capitol Hill's two top democrats, house minority leader Dick Gephardt and his Senate counterpart Tom Daschle.

SEN. TOM DASCHLE: We're here because more than anything else in this session of Congress, we want this Congress to pass a meaningful prescription drug benefit bill.

KWAME HOLMAN: Congressional Republicans say they, too, want to help seniors, and have set aside $40 billion in their budget plan to provide the lowest-income seniors with help in paying their drug bills.

REP. DICK ARMEY: We can get access to prescription drugs available to all seniors with subsidies to the low-income seniors, and with stop-loss caps on the high ones, so that nobody would have their life's fortune destroyed by the high cost of prescription drugs.

KWAME HOLMAN: Gephardt complains the Republican plan is too limited.

REP. DICK GEPHARDT: We want it to apply to everybody. We want it to be a substantial benefit through Medicare. We don't want to just ask insurance companies to try to cover this.

KWAME HOLMAN: Whether Congress will act on a federal prescription drug benefit is likely to be determined by the shifting fortunes of election-year politics. The same holds true for other major bills that enjoy broad support in Congress. And with major political party conventions coming in August and members' need to go home and campaign for reelection, little time remains for Congress to get much done.

SEN. LARRY CRAIG: When we return from the memorial day recess, we have 12 working weeks left before adjournment.

KWAME HOLMAN: Idaho Republican Larry Craig, chairman of the Senate Republican Policy Committee, says the shortened session has forced this Congress to be less ambitious.

SEN. LARRY CRAIG: While there were important issues for all of us, certainly education, a balanced budget, and strengthening and maintaining Social Security were high on our agenda. We knew the timing in getting our work done and closing this place down by late September was every bit as important to all of our colleagues.

KWAME HOLMAN: Minority Leader Daschle, however, says republicans intentionally have avoided important issues.

SEN. TOM DASCHLE: They've all gone unattended, in large measure because we're not in session, in measure because the Republicans don't want to take on the tough issues, and in large measure because they don't have those as their priority.

KWAME HOLMAN: So of the major legislative issues that remain, how many is Congress likely to act on before it adjourns? Managed care reform was approved by the house back in October, and by the Senate a week later, but without the House provision granting patients an expanded right to sue their HMO's. The two bodies still are trying to work out their differences in a Conference Committee.

REP. DICK ARMEY: Well, the question you have over the whole question over the right to sue is the Republicans take the point of view that you look at the family, you look at the patient, and you address most immediately and most definitively their right to a review. Our problem is the Democrats want to put the right to sue up ahead of the right to review. And we think that's being less than fully responsive to the most immediate worries of the family when they have somebody in intensive care in the hospital. So what we see here is just really a contest of priorities.

REP. DICK GEPHARDT: We're willing to vote for anything that makes sense. We're not willing to vote for something that doesn't get the job done, that isn't effective.

KWAME HOLMAN: A provision requiring a three-day waiting period for background checks on those who buy guns at gun shows was approved by the Senate more than a year ago, but the house rejected it. The issue has tied up a juvenile crime bill which also sits dormant in a Conference Committee.

SEN. LARRY CRAIG: Juvenile justice was a bill that spent several years being worked out, and it is a very comprehensive bill to help with juvenile crime in this nation. And tragically enough, all of this work on juvenile justice disappeared under this very loud, bright cloud of an effort of gun control.

SEN. DICK GEPHARDT: Sure, we want to get safety locks. They can put a safety lock, child safety lock bill on the floor alone. It would pass in ten minutes. We could get that out tomorrow. But we don't want to do that, because there's a lot of proponents of that legislation on both sides of the aisle. We don't want to just use that as a way of killing an effective end of the gun show loophole.

KWAME HOLMAN: The whole bill could go down over this deadlock?

REP. DICK ARMEY: There's clearly a will. I mean, if you talk to the American people, you'll see their... first and foremost their worries for their children come out. We saw that when we had the Million Mom March. They came here and said, "guys, you're big shots in Washington, get over yourselves and get over your politics and get this law done so we can make our children safe."

KWAME HOLMAN: Why not do that and leave the gun show for next year?

SEN. TOM DASCHLE: Well, that may ultimately be what happens. I'm not prepared to say it's all or nothing. We've got to be able to deal effectively with the issues we can agree to and go on.

KWAME HOLMAN: The House approved the Democrats' call to increase the minimum wage, but only after Republicans attached it to a series of business tax breaks. The Senate has yet to move on either item.

SEN. TOM DASCHLE: We will not leave here if we haven't resolved the minimum wage issue. We will not take up other matters at some point, this session, unless we've dealt with minimum wage. We are adamant. We are determined. We're going to get this done one way or the other.

KWAME HOLMAN: Gephardt isn't as convinced.

REP. DICK GEPHARDT: Well, we're not going to vote for a minimum wage increase, even though we very much are for that, if the price is attaching a whole bunch of tax cuts primarily for the wealthy, which will erode our ability to pay down back debt and save social security and Medicare.

KWAME HOLMAN: The House also approved marriage penalty tax relief in February, but Senate democrats, prevented from offering non- germane amendments to the bill, are holding it up.

SEN. TOM DASCHLE: Clearly that's the only way that we can address our agenda, is through the amendment process-- forcing votes where we can, but making sure that people know we're fighting for the things we really believe in.

SEN. LARRY CRAIG: Sometimes in these kinds of years, where the opposition feels it more important to make a political statement than a substantive policy change, you can only go so far in debating them before you decide that you can't get there.

KWAME HOLMAN: Tensions have been simmering, particularly in the Senate, over the issue of gun control. They finally reached full boil just before the Memorial Day Weekend.

SPOKESMAN: The regular order has been called for. A Senator may object or not object.

SPOKESMAN: I reserve the right to object.

SPOKESMAN: The Senator has no right to reserve...

SPOKESMAN: I object.

SPOKESMAN: I object.

SPOKESMAN: I object.

SPOKESMAN: An objection is heard.

SPOKESMAN: I object.

SPOKESMAN: Mr. President...

KWAME HOLMAN: Democrats, using the momentum of the Million Mom March, tried to force Senators to go on record for or against stronger gun control measures. Even though the vote was purely symbolic, Majority Leader Lott blocked the effort, angering Democrats.

SEN. TRENT LOTT: Feelings on this side, the inability to debate issues we think are important, whether they be gun control or edge, are reaching the boiling point. And I fear that if we are throttled any further, that the whole order and comity of this body will break down.

KWAME HOLMAN: Lott took personal offense to the democrats' response.

SEN. TRENT LOTT: I'm getting real tired of people questioning my commitment to the Senate and to the opportunity for debates, and I'm trying to be a rules committee of one. I tell you, what I am trying to do is find a way for the Senate to do its work. These charges that are leveled against me are nonsense.

KWAME HOLMAN: Lott went on to speak for ten minutes. Senator Daschle then took his turn on the floor.

SEN. TOM DASCHLE: It is outrageous, outrageous. How many more times do we have to limit ourselves to debate on the Senate floor, and how many other ways are we going to limit debate and expression and gag United States Senators? That is wrong. That is absolutely the wrong way to run the Senate. We hear a lot about cooperation, but I am telling you, there will not be cooperation unless we understand that the minority has to have its rights, too. Those rights have to be respected. But I am telling you, we have drawn the line. We are not going to be conducting business as we have in the last several months. That is over. That is behind us. We can do it the Senate way, or we are not going to do it at all.

SEN. TRENT LOTT: We can just draw the line and, you know, we cannot get any work done. We can just not have cooperation if that is the way they want it to be. But it extends across the board. I don't think that is the way to proceed. I am not going to be threatened and intimidated by the minority in trying to get our work done. If you want to shut down everything, then everybody loses in that process.

NORM ORNSTEIN: The relations between the majority leader and the minority leader in the Senate have frayed beyond anything I can remember in the last 30 years.

KWAME HOLMAN: Congress watcher Norm Ornstein:

NORM ORNSTEIN: Daschle and Lott are grownups. They're going to use their political power and play hardball when necessary. But where it's in their common interests to get something done, they'll do it, too. But you can expect an awful lot of brinkmanship in the Senate.

KWAME HOLMAN: The next test of civility in the Senate could come during the debate and vote on legislation granting permanent normalized trade relations with china. And in addition, there is some work that must be done.

SPOKESMAN: We have at least 12 appropriations bills to finish. We have to do those to make our government run and function.

KWAME HOLMAN: But even there, Daschle has threatened a slowdown by forcing the Senate to follow tradition and wait for the House to approve its version of each of the 13 spending bills before the Senate acts.

SEN. TOM DASCHLE: We'll have to take them one step at a time and try to make our best judgment as to what makes the most sense with each bill and each week.

NORM ORNSTEIN: Democrats in Congress at one level would like to push these issues to the max and then have it all fall apart, especially if it's disagreement among Republicans. Republicans want a record of accomplishment, but at another level, these are issues that are mostly pushed by Democrats, and they want things done in areas they care about. And in some of these areas, there is great Republican unease, and if they could have their druthers, they'd be able to neutralize the issue without having a policy action that deep down many of them believe would really be unwise.

KWAME HOLMAN: Meanwhile, those watching with interest from the sidelines will have the opportunity to register their opinions on November 7, election day.

CROWD: In November, in November, in November!

FOCUS - GLOBAL THREAT

JIM LEHRER: A new report on dealing with terrorism, and to Gwen Ifill.

GWEN IFILL: On a single summer day in 1998, bombs ignited within hours of each other in East Africa, rocking two American embassies. The terrorist attacks carried out in Nairobi, Kenya, and Dar Es Salaam, Tanzania, killed 224 people, including 12 Americans. More than 5,000 people were wounded. And harsh new questions were raised about how the United States was protecting its interests abroad. The 1998 bombings just two in a string of terrorist attacks in recent years. In 1988, a bomb in checked luggage on Pan Am Flight 103 exploded, and the airliner crashed over Lockerbie, Scotland. 270 people were killed, including 189 Americans. In 1993, a bombing at the world trade center in New York killed six and wounded about 1,000 people. Investigators determined that the terrorist response for that attack had also planned to cripple other parts of the city's infrastructure, including tunnels leading into New York. And in 1996, a truck bomb exploded outside the U.S. military barracks in Saudi Arabia. Six U.S. citizens were killed, more than 500 people were injured. After the embassy bombings, Congress created a ten-member bipartisan commission on terrorism to make new recommendations on how to combat the problem. Their 64-page report issued this week warned that the threat of terrorist attacks continues to climb.

L. PAUL BREMER: The most important finding, I think, is that the threat of international terrorism is becoming more deadly, and terrorist organizations are becoming more diffuse, more difficult to detect and to penetrate, and to disrupt.

GWEN IFILL: Among the commission's recommendations: Allow the military rather than civilian agencies to lead the U.S. response to domestic terrorism. Give the CIA additional leeway to recruit foreign informants, even if they have unsavory backgrounds. Consider monitoring foreign students studying in the United States, and threaten sanctions on Greece and Pakistan for failing to fully cooperate on terrorism investigations. Some Arab American groups have voiced concern over the commission's proposals, especially the plan the monitor students. The Washington-based council on American-Islamic relations said in a statement: The fight against terrorism is one that should be undertaken, but that struggle should not be based on stereotypes. If the past is any indication, all or most of these new provisions will be used to target Muslims in this country and worldwide. But Juliet Kayyem, a member of the commission who is Arab-American, said the panel had taken those concerns into account.

JULIETTE KAYYERN: I think the war on terrorism has for many Americans taken on an ethnic identity, which is Arab, Arab-American, or Muslim. And I think it's important that this commission recognize that, say that it is wrong, and attempted to balance some of the divisions that exist between the Arab-American community and the national security community.

KWAME HOLMAN: Secretary of State Madeleine Albright appearing Sunday from Moscow on CNN's "Late Edition" also expressed reds innovations about the report's conclusions.

MADELEINE ALBRIGHT: Obviously we are very concerned with terrorism, and how to fight it. And in fact, it's been very much a part of the discussions here in Moscow. But I think that in looking at how to fight it, we have to remember what kind of a society we are. We have to look at what the appropriate means are to deal with this.

GWEN IFILL: Although the report urges Congress and the president to implement new anti-terrorist policies, no major legislation is now under consideration on Capitol Hill.

GWEN IFILL: For more, we are joined by the commission's chairman, Paul Bremer, and by Larry Johnson, who served in the State Department's and the CIA's offices of counter terrorism during the Bush and the Reagan administrations. He is now a consultant. The major premises, Ambassador Bremer, of this study is that terrorism is an increasingly more lethal threat. Can you tell us how you reached that conclusion?

L. PAUL BREMER, National Commission on Terrorism: Yes. I think there's a pretty wide consensus among experts in and out of government that the threat is becoming more deadly. In effect, what's happening is while the number of international incidents is going down over the last decade, the number of casualties per incident is going up. And one can quibble about whether these statistics mean anything. The problem is that it means the terrorists are looking at different motives. And in the 1970's and 80's they tended to want to only kill tens o twenties of people. Now we're concerned they may want to kill hundreds or even thousands of people.

GWEN IFILL: Larry Johnson, do you agree this problem is getting more lethal instead of less?

LARRY JOHNSON: No. Actually, I think it has become less of a problem. Part of that is due to the work Jerry starting back in 1987. Look, the number of deaths fell from 4,800 in the 80's to 2,500 this last decade. People focused on is the number of people injured has climbed from 12,000 to 19,000. But 70% of those injuries were caused in only five incidents. That's out of 3,800 incidents in the last ten years. What we've seen is, and Jerry is right it has become more diffuse, but those groups willing to kill and cause mass casualties really are less potent because they do not have the backing of the states which enabled groups in the 80's to cause a lot of damage to Americans. Right now the largest loss of life in a terrorist incident remains the attack on the Marine barracks in terms of U.S. lives, the attack on the marine barracks in Beirut in 1983, and the single largest loss of life was the downing of an Air India plane in 1986. So I think to characterize it as it's getting worse is to ignore the good news in quelling state sponsorship and con fining these groups to a small number of countries.

GWEN IFILL: Ambassador Bremer, what about that? In fact, the United States has doubled its counter terrorism budget to $10 billion this year. Is that money that's not being well-spent?

L. PAUL BREMER: We looked at that budget, and basically did not have time in the six months which Congress gave us to go into any detail. So we couldn't reach a judgment. The GAO has done several studies on it and thinks that there is probably money not being well-spent. We didn't take a position on that. We do think that there is a need for greater resources to be spent, particularly to intelligence collection for CIA and FBI and for the national security agency. And we make that recommendation in our report.

GWEN IFILL: How do you know that more money is needed if you don't know how the money that's currently allocated has been spent?

L. PAUL BREMER: We looked at the particular budgets of those three agencies rather carefully. And in the case of CIA, the problem is that the budget appropriation system has been a little bit haphazard. It's been sporadic and not even. It makes it hard for CIA to plan and deal with the increased operational tempo they've been faced with. In the case of the FBI, They need higher technology, and in the case of the National Security Agency, we were very impressed by a study that the Senate Select Committee on intelligence had commissioned that showed there's a real danger of NSA not being able to keep pace with the changes in technology.

GWEN IFILL: Let's talk for a moment about some of the findings one by one in the report. Larry Johnson, one of the things the report is calling for is that the CIA be allowed to recruit more heavily for intelligence purposes, even including people with what are called unsavory backgrounds. What's your thought about that?

LARRY JOHNSON: I think there needs to be additional effort on that front. The problem is now that the CIA Is not equipped or geared up to penetrate those groups. It's one thing to try to penetrate Soviet diplomats at a cocktail function in a foreign country. It's a different matter to go after people that are religious fundamentalists, and the case of Aum Shinrikyo in Tokyo, they weren't hanging out at diplomatic cocktail functions. It requires a different for the CIA to go after that. I agree with Jerry, the money needs to be spent there. The problem with the money is ever government bureaucracy in Washington is finding a mission in combating terrorism. This is utter nonsense. It is a misallocation of resources. There are some areas where money needs to be spent, but just doubling the budget so everybody can get to the Hill and say, we're going to combat terrorism, there's not a member on the Hill that will vote against that. Who is going to vote against protecting American lives in an election year.

GWEN IFILL: Ambassador Bremer, I just want to tell the world that your nickname is Jerry, so if everyone is wondering who is jerry, I thought I'd let everybody know.

L. PAUL BREMER: You just revealed a state secret.

GWEN IFILL: I think your partner there just revealed it, but let's talk about that whole question of whether the CIA has enough support. Humans rights groups have complained that what you're doing is opening the door in this recommendation to allowing people who have a bad track record or a record as bad actors to suddenly take part in our intelligence function.

L. PAUL BREMER: Well, what we're saying is this: For decades the CIA had a set of procedures which allowed the CIA to make a judgment before it hired a terrorist spy. That's what we're talking about -- to make a judgment about the spy's access to information, his reliability, and the value of the information to the U.S. Government. We believe that those procedures should be reinstituted in a case of engaging informants within terrorist groups. The fact is if you're going to find out what a terrorist group is planning so you can stop them from killing Americans, you have to have somebody in that group who is spying for you, and by definition, those people are not going to be very savory. They will probably have committed crimes. They may even be murderers, but after all, ever every city police department in the United States does the same thing, gets informants into organized crime and uses them as a way to try to catch bigger fish and stop other crimes. We're just suggesting the CIA ought to go back to that procedure and not be so overly cautious as they've become in the last five years.

GWEN IFILL: Secretary of State Albright, Ambassador Bremer, also expressed some concerns about another recommendation in your report, that's that you treat Greece and Pakistan, generally considered to be our allies, as... we should cite them and sanction them for not being fully cooperative in an anti-terrorism investigation.

L. PAUL BREMER: What we did was deal with the fact that before 1996, the law in the United States essentially was a black or white law. You either were a state which supported terrorism or you got a good housekeeping seal of... a good house keeping seal of good housekeeping. It was either you were on the list or not. Congress recognized this was an inflexible system and in 1996 established a third category called states which are not fully cooperating. The administration has not made good use of that category, and we looked around and said, "here are a couple countries which you ought to consider." We did not make a judgment they should be put in that category, but they should be considered. In both the case of Greece and Pakistan, there's a lot more they could do in terms of fighting terrorism; and we suggested the administration consider it. I understand the secretary has said they don't intend to. I hope when she has a chance to reflect on the report, she'll see that it's worth at least thinking about it.

GWEN IFILL: Larry Johnson, another part of your report suggests that we begin to more actively monitor students, foreign-born students studying in the United States. Is this something that you would support?

LARRY JOHNSON: As long as it's applied equally across the board. I think the Arab Americans have a legitimate complaint. I mean, one of the... we had no problem as a country sanctioning Hezbollah and Hamas, but one of the terrorist groups that was left off the list of designated terrorist groups, prohibit them from raising money was the Irish Republican Army. The message we sent to the world is if you're Irish Catholic, it's okayto be a terrorist. If you're a Muslim, that's bad. If it is applied equally across the board, irregardless of religion or ethnic background, then it's worth doing. But, again, we need to keep it in context. We're not looking at a burgeoning of incidents, rising death toll. I think we've got to manage a policy that has been successful.

GWEN IFILL: Ambassador Bremer, Larry Johnson raises the point, Muslim Americans fear being demonized by this sort of stepped up vigilance, is this something you think it's your role to address?

L. PAUL BREMER: Well, we addressed it in the fourth paragraph of the report, as a matter of fact. We said very clearly that we do not think the fight against terrorism should ever be an excuse for discriminating against or picking on any group on the basis of their ethnic or religious national background. We couldn't have been clearer.

GWEN IFILL: How do you enforce something like that?

L. PAUL BREMER: Well, how do you enforce any law or any guidelines? You enforce it by basically saying, that's the rule. In the case of the students, for example, we did not propose anything new. The law in 1965 established that every university must keep the immigration authorities informed of foreign students in this country, basically to be sure that they're still obeying their immigration status. They come as students and they're supposed to remain students. Until 1996, this was done in a 19th century style with pieces of paper and for all I know shoe boxes. In 1996, the Congress said, "isn't it time for the INS Immigration authority to come into the 20th century before we reach the 1st century and make this an automated computerized data bank?" That's all we're calling for. We're that saying the same information which universities have been required to report on all foreign students, irrespective of nationality, for more than 30 years should now be put into an automated computer data bank. It's not discriminatory against anybody. It's not collecting any new information that hasn't been collected for 30 years. It's simply automating it.

GWEN IFILL: Larry Johnson, overall is the United States simply too risk-averse, as the commission says, to mount an effective counter terrorism program?

LARRY JOHNSON: We've got the equivalent of Alzheimer's Disease when it comes to looking at our counter terrorism policy. Back in the mid-80's, you could not go three weeks without a major attack against the United States. And I'm talking about airplane hijackings, bombings of airplanes, attacks at the Rome and Vienna Airport -- hijacking of the Achille Laurel. What we've seen the last major attack against this country was August of 1998. We have a very sound system in place. What has happened is once the threat of the Soviet Union disappeared, we've got a lot of national security bureaucracies and other bureaucracies that are looking for a way to justify their existence, and many are scrambling to get the counter terrorism bonanza. Frankly, I think it's not so much throwing nor money at the problem, it's more effective management. On that front I think we're lacking.

GWEN IFILL: All of that is about the bare bones of how the U.S. foreign policy is constructed. But Ambassador Bremer, you conclude in your report, you say, "an astute American foreign policy must take into account the reasons people turn to terror." What do you mean by that?

L. PAUL BREMER: What we mean is that fighting terrorism is not just a question of dealing with the criminals and the crimes they commit, that there are reasons why some people turn to terrorism. There are political reasons, there are economic reasons. Some people are simply criminals. And an astute foreign policy would not ignore the context out of which terrorism springs. But we believe that doesn't mean we shouldn't fight terrorism any more than you would say, "well, we need to understand why people are committing crimes on the streets of Washington and New York. And until we can understand why they're committing crimes, we're going to let them continue to commit the crimes." No. You have to have a police force that tries to deal with the sometimes, just as you deal with the underlying reasons people turn to crime.

GWEN IFILL: Larry Johnson and Paul or Jerry Bremer, thank you very much.

FINALLY - FAVORITE POEM PROJECT

JIM LEHRER: Finally tonight, another poem from poet laureate Robert Pinsky's project of asking Americans to read their favorite poem. Tonight's reader is from Atlanta. (Singing opera)

NANCY NERSESSIAN: My name is Nancy Nersessian. I live in Atlanta, Georgia. I am a Professor of Cognitive Science at Georgia Tech, and in my spare time, I sing opera and classical music. (Laughter) Well, I'm a schizophrenic, right? No. Actually, I don't believe in right-brain, left-brain stuff, but I do feel that there are two aspects of my being that really need to be satisfied and addressed. So I really need the intellectual work, and although I love the music, and the music speaks to my soul and it gives me an outlet for emotional expression, it's not something that I could do to the exclusion of being able to sit back and think about how scientists think. My mother died when I was young, and so my brother and I were in foster care. My father was a truck driver, and in those days, a single parent, a male single parent didn't have any way really to raise children. So he had us in foster care, in separate foster care, but on weekends and on holidays we spent the time together. For boys of that generation and of those circumstances, the military is really the way out. If you can find a way to get to college, or you get to the military and do your college that way. I found a way to get to college, and my brother planned on doing all of that through the military. And so when he graduated at Fort Benning, he graduated as the youngest commissioned officer they had ever had. When you think about it, I mean, 19 years old, a commissioned officer, and being sent off to the battlefield in Vietnam. Although he had the smarts to do it, I doubt he had the emotional maturity or anybody had the emotional maturity at that age. "The Sentence" by Anna Akmativa. "And the stone word fell from my still-living breast. Never mind. I was ready. I will manage somehow. Today I have so much to do. I must kill memory once and for all. I must turn my soul to stone. I must learn to live again. Unless summer's ardent wrestling is like a festival outside my window. For a long time, I have foreseen this brilliant day. Deserted house." When I first came across the poem in the late 1970's, it was at a time when I was beginning to come to the realization that my brother's life would never be the life that we had envisioned before he went off to Vietnam. My brother's name is David Edward Nersessian. Edward was named after my father. He was beautiful. He was blonde-haired, blue-eyed, and for a little Armenian boy, that's a little strange. He just was sunshine. He had so many dreams, he had so many things he wanted to do. He was somebody you always noticed because he was always lively and full of energy and always there. And the brother who came back from Vietnam was quite a contrast in that my brother who left before was full of life, and my brother who returned didn't have any life in him. He was very edgy and jumpy, and everything bothered him. It was difficult for him to concentrate. Everyone thought that he would settle down. And then the realization sunk in that he had, in fact, become addicted to heroin while he was in Vietnam. He went into a treatment program and actually managed to kick that addiction. He never went back to heroin again. But the other problems never went away. The Fourth of July, 1970, was the time in which I date David's death, even though David didn't die until 1997. He had been out on a mission and he was very, very tired. And he decided to ask a friend of his if he would walk point for him that day. And when Billy Sullivan walked point, Billy Sullivan died. And David never, never recovered from that. He always felt that he should have died that day. And every Fourth of July after that, he had a terrible time. I mean, he was always... flashbacks, nightmares. And I feel that I spent the next 30 years helping him to live as best he could. And he did live. You know, he married. He had children. He did do that. But he was never able to pull his life together. He was always a broken man. When I think about killing your memory, turning your soul to stone, these are inhuman tasks. And so I think that the poet Anna Akmativa knew personally what this kind of trauma could do to you. Towards the end of the poem there, she talks about, you know, this, "unless the summer's ardent wrestling outside the window." But I feel when I read that that what's she's saying is not that there's a parade out there and I'm going to join it, but that she can't be part of it. And that's what I feel about my brother. It feels that my brother got a sentence. He got a life sentence when he went to Vietnam. "Today, I have so much to do. I must kill memory once and for all. I must turn my soul to stone. I must learn to live again."

RECAP

JIM LEHRER: Again, the major stories of this Tuesday. Israel and the Palestinians agreed to new peace talks in the United States. And a new study found U.S. jobs related to the Internet increased by more than one-third last year to $2.5 million. We'll see you online and again here tomorrow evening. I'm Jim Lehrer. Thank you, and good night.