The NewsHour with Jim Lehrer

JIM LEHRER: Good evening, I'm Jim Lehrer, on the NewsHour tonight, Betty Ann Bowser recounts the presidential contest day in the courts, Gwen Ifill discusses power sharing in the Senate with Senators Shelby, Gramm, Reid and Murray, and Ray Suarez looks at why Alan Greenspan speaks with such power, it all follows our summary of the news this Wednesday.

NEWS SUMMARY

JIM LEHRER: This was another busy presidential end game day in the courts. In Florida, Democrats challenged thousands of absentee votes in Seminole and Martin Counties. If they're thrown out, Vice President Gore would win the state and the presidency. And lawyers for Gore and Governor Bush filed briefs with the state Supreme Court. It hears oral arguments tomorrow on Gore's challenge to the statewide results. In Atlanta, a federal appeals court rejected efforts by Bush and his supporters to throw out hand recount results in Florida. The Republican-controlled Florida legislature today called a special session for Friday. Its leader said it would act to choose a slate of 25 presidential electors only if all court appeals have not been resolved by next Tuesday. They said wanted Florida represented in the electoral college even if legal challenges to the election results continue. We'll have more on the election fight right after this News Summary. Governor Bush today warned enemies of the United States against trying to exploit uncertainty over the election outcome. He commented at the Governor's Mansion in Austin, while meeting with Condoleeza Rice.She's expected to be his national security adviser if he becomes President.

GOV. GEORGE W. BUSH: I have all the confidence in the world that the Clinton administration and the next administration, which I hope is the Bush administration, will do whatever it takes to send a chilling signal to terrorists that we'll protect our property and our people. And the warning ought to be that as we decide this election people should not try to take advantage of our nation.

JIM LEHRER: Hours before Bush spoke, the prime minister of Yemen said as many as six people will be tried next month, in the attack on the U.S.S. "Cole." Seventeen U.S. sailors were killed by a suicide bomb blast in the port of Aden, in October; 39 were wounded. All the suspects are from Yemen. There were no details on their alleged roles in the attack. An American businessman was convicted of espionage in Russia today. Edmond Pope was sentenced to 20 years in prison for illegally obtaining blueprints of a high- speed torpedo. In Washington, State Department Spokesman Richard Boucher said the case had cast a shadow over relations with Moscow.

RICHARD BOUCHER: We're very disturbed by the conviction. We think it's unjustified. We think it's wrong -- both the conviction and the sentencing on espionage charges. As we said in the past, we see no evidence that Mr. Pope violated any Russian laws. In terms of diplomatic steps we will continue to press and raise this issue. And in terms of decisions we hope the Russian government will make the right decision and release him.

JIM LEHRER: Pope has maintained his innocence. He's also asked to be freed on health grounds because he has bone cancer. The Environmental Protection Agency today offered a $460 million plan to remove polluted mud from the upper Hudson River in New York State. It would be one of the largest dredging operations in U.S. History. The pollution comes from chemicals known as PCB's once used in electrical transformers. On Wall Street today, stocks fell, amid new concerns about high-tech earnings. The Dow Jones Industrial Average lost 233 points to close at 10,665 - 2 percent drop. And the NASDAQ Index fell 93 points, to 2796, a decline of more than 3 percent. The losses wiped out much of the gains from Tuesday. The markets had rallied then on encouraging words from Federal Reserve Chairman Greenspan. We'll look at the Greenspan influence at the end of the program tonight. Between now and then, another important presidential election day in the courts and sharing power in the Senate.

FOCUS - LEGAL LABYRINTH

JIM LEHRER: Betty Ann Bowser has the day's presidential election round- up.

BETTY ANN BOWSER: In two Tallahassee courtrooms today, Democrats weren't trying to get thousands of votes recounted; they were trying to get them thrown out. In the courtroom of Leon County Circuit Court Judge Nikki Clark, Attorney Gerald Richman challenged the legality of all 15,000 absentee ballots cast from Seminole County. Richman claimed Republican officials added voter identification numbers to 2,100 incomplete GOP absentee ballot applications. And he charged similar applications from Democrats were thrown out.

GERALD RICHMAN: This is the process in Seminole County: Request comes in here, then it goes through the process of being validated. They look to see whether or not all the statutory requirements are there. If they don't have it... if they have it, it goes here and it's entered into the system. And once it's entered into the system, then they print the label, they issue the ballot, and it goes to the voter. Those that decide to vote return the ballot. The ballot gets counted and it ultimately gets entered into the precinct books. But here is the problem in red. When you get to the validation process, we had one batch for rejected Republicans and everyone else gets put elsewhere. And guess what? There is no arrow here, because they stopped at that point. But here, the Republican operative comes in and he moves these along in terms of disparate treatment to get entered into the system. That is the crux, illustratively, of what happened.

BETTY ANN BOWSER: Richman singled out the actions of election supervisor Sandra Goard, a registered Republican. Goard did not testify today, but a portion of her deposition was read aloud.

SPOKESPERSON: (reading of Goard deposition) As the requests came in, we put the post card in one specific box.

SPOKESMAN: So you took post cards which you knew were from the Republican Party and put these in a box separate from the other absentee ballot request forms that were rejected, is that correct?

SPOKESPERSON: Correct.

SPOKESMAN: And did you ever follow that procedure before?

SPOKESPERSON: No.

SPOKESMAN: Why is it you followed that procedure in this case?

SPOKESPERSON: Because we were requested do allow an individual to write the voter registration number on those postcards that had been mailed out.

SPOKESMAN: Who made that request?

SPOKESPERSON: The Republican Party.

SPOKESMAN: And with regard to those postcards did somebody sort out the ones that had come in before he arrived there so that they would be made available to him when he arrived?

SPOKESPERSON: Yes.

SPOKESMAN: Who did that sorting out?

SPOKESPERSON: Most likely that would have been my administrative assistant Charlene. She's the one who handles the mail that comes in.

SPOKESMAN: At any time was anyone from the Democratic Party made aware of the fact that the representative of the Republican Party was doing this?

SPOKESPERSON: No.

SPOKESMAN: What was happening is, is a representative of the Republican Party was the one who was going ahead and resubmitting them after having added information to those cards without the knowledge of the Democratic Party and without any provision of the statute that says they could do so, isn't that correct?

SPOKESPERSON: Yes.

BETTY ANN BOWSER: But Terry Young, an attorney representing both the Seminole County canvassing board, and Sandra Goard, spoke in her defense.

TERRY YOUNG: She's no different than any other supervisor of election in the state of Florida in that she has some type of party affiliation, just like every judge in Leon County probably has party affiliation. That doesn't taint her in the performance of her duties of her office. She has no vested interest in the outcome of the election; she has no vested interest in that whatsoever. Her only vested interest is that every legally cast vote -- absentee vote -- that was timely received and compliant with the law as an absentee ballot is counted.

BETTY ANN BOWSER: And Daryl Bristow, an attorney for the Bush campaign, argued the evidence doesn't warrant throwing out 15,000 ballots.

DARYL BRISTOW: This is a case that has to do with the question of the integrity of the ballot that was cast. If we were talking about some problem with integrity of the process, we might be talking about some case to throw out an election, which is not something this court is in a position to do. We are talking about a ballot to question the process of an election and then to punish 15,000 voters who had nothing to do with the issue complained of is improper disparate treatment.

BETTY ANN BOWSER: An almost identical case, this one challenging nearly 10,000 absentee ballots from Martin County, began pre-trial hearings at 7:00 this morning right next door in the courtroom of Circuit Court Judge Terry Lewis. In fact, several lawyers are participating in both cases.

JUDGE TERRY LEWIS: Well, by my count, from what I looked at in the file, I have about 19 motions. And we don't have a whole lot of time. Judge Clark will begin in 3D at 8:30 so I need to quit about 8:20 to give you all a chance to move over. Whoever is left standing after this we should be over in 3D when we reconvene, so it's a lot easier and everybody doesn't have to go back and forth. Does that sound all right?

BETTY ANN BOWSER: In this case Democrats charge 669 ballot applications were tampered with and in some cases removed from the election supervisor's office. Later in the day, Judge Lewis ultimately decided to delay further action in his trial until the case before Judge Clark had been presented. Al Gore is not a party in these court contests. But either case could swing the results of the presidential election in Florida. George W. Bush beat Gore by a margin of 2,815 absentee ballots in Martin County, and by 4,797 absentee ballots in Seminole County. Late this afternoon leaders of the Republican controlled Florida legislature explained why they will convene a special session on Friday.

TOM FEENEY: We have a duty to protect Florida's participation in the electoral college, and I have a hope I believe most of my colleagues in the House, that the electoral issues may be resolved without the necessary of the legislature taking final action. But there appears to be a great risk that our electors are now not within the safe harbor that the United States Supreme Court described the either day in referring to Title III of the United States code.

BETTY ANN BOWSER: A top Florida Democrat called the special session a travesty.

LOIS FRANKEL: I think this will set a dangerous precedent for this country. What if any state legislature that was dissatisfied with the results of an election would call their members together to go around the will of their voters? And I believe that would create a very chaotic situation in our electoral process.

BETTY ANN BOWSER: And tomorrow the Florida Supreme Court will hear oral arguments in Al Gore's appeal of a lower court decision that prevented hand counting thousands of South Florida ballots.

FOCUS - POWER SHARING

JIM LEHRER: Now power sharing in the Senate, and to Gwen Ifill.

GWEN IFILL: The latest fallout from this year's astonishingly close election is playing out in the United States Senate, where Republicans and Democrats are likely to split the chamber right down the middle, 50/50. The stakes are high, with fights looming over legislation, committee chairmanships, even office space. Democratic Leader Tom Daschle says the Republicans should split power with Democrats. He spoke today at a news conference with newly elected Senators.

SEN. TOM DASCHLE: The essence or the real nub of what we are talking about is bipartisanship. That is what we want. And we want it in two contexts. We want it first when it comes to representation in committees. We want to reflect the makeup of the Senate in the makeup in the committees. That's all we ask, that's all that there has ever been in precedent for 200 years in the United States Senate. We've always reflected in committees the membership on the floor. The second issue is also a question of bipartisanship. How do we decide what the agenda should be? How do we decide just how we proceed with regard to bills and amendments, either in committee and on the floor? There has to be some degree of ability for both parties to have a say in that, to have a voice in that.

GWEN IFILL: Not so fast, says Republican Leader Trent Lott. Such negotiations, he said, should take place behind the scenes, not in front of the cameras.

SEN. TRENT LOTT: I'm not going to get into details here until we've had a chance to talk to all of our conference members and the committee chairmen, and take a look at the ratios and discuss that with Senator Daschle, and work through what their needs are and what ours are. And we're going to work very hard to do it in a way that is fair, but also a way that allows the Senate to get its job done. In the end, you have to have designated leadership. You have to have chairmen. And one party or the other will be in the majority, and the Republicans will be in the majority, whether it's President Bush and Vice President Cheney or President Gore and Vice President Lieberman. But I understand that they're going to try and get as much as they can, and we're going to be as cooperative as we can. But also, there is the matter of having a situation where you can get your work done. Somebody has to be in charge.

GWEN IFILL: Twenty-seven state legislatures have coped with deadlock. In Wyoming, a 1974 a tie was broken with a coin toss.

GWEN IFILL: In fact, Senator Daschle and the Democrats could actually hold majority for 17 days in January. While Al Gore is still Vice President, he would technically be the tie-breaking President of the Senate as well. Joining us tonight to talk about power-sharing in the Senate, are lawmakers from both parties: Democrats, Harry Reid of Nevada, the number two Democrat, and Patty Murray of Washington State; and Republicans Phil Gramm of Texas, and Richard Shelby of Alabama.

Senator Gramm, you were once a Democrat, as quietly as it's kept. What is your sense of what 50/50 governing would mean?

SEN. PHIL GRAMM: I think would be unworkable. We've organized the Congress 106 times; it's never happened. We've had a tie in the number of members, the chamber before. That tie has been broken by the Vice President, so how the new Congress will be organized that there will be an organizing resolution set up by the majority leader. It's amendable. The Democrats can offer a substitute. They'll be a vote. If all members of the two parties vote with their party leadership, there would be a tie vote that would be broken by the Vice President. I don't believe that all the Democrats will vote for a resolution trying to impose some sharing of power, but I believe and am confident that every Republican will vote so that there is a Republican majority, I believe it will be one vote on each committee, Republicans will be the chairmen. We will have a Republican Vice President to vote. It's easy to predict 51 to 50. That's a majority.

GWEN IFILL: Well, Senator Reid, the point that Senator Phil Gramm makes if George W. Bush is the President Dick Cheney isthe tie breaker you have a Republican majority. And if Vice President Gore is the President and Senator Joseph Lieberman retains his Senate seat or gives it up and filled by a Republican you still have a Republican majority. How can you press for this kind of power sharing?

SEN. HARRY REID: We'll take the hypothetical but we're going to wind up 50/50. Let's assume for the purposes of this discussion that Bush is going to be President. If we do that, it takes simple mathematics to understand that 50 and 50 it equal. Our rules say that in committees it should reflect what the membership of the Senate is. It's very clear that should be 50/50. We're going to have 50 Senators that are Democrat and 50 that are Republicans; we're going to have our on committees equal numbers of Democrats and Republicans. We feel that there should be equal funding, equal staffing; we feel the Conference Committee should be equal. We should have an opportunity to look at who is going to be the secretary of Senate, who is going to be the sergeant-at-arms. I think most of us are pleased with Reverend Ogilvie, and he will remain the chaplain. But I think that Republicans are in denial if they think that they are going to be in the majority. They're not in the majority, and, simply stated, in response to my good friend Phil Gramm it's not as simple as setting it up and having Democrats vote one way and Republicans the other and then see if the Vice President will break the tie. For organizational matters you have to have enough to... you have to 60 votes. They don't have 60 votes, and there is no way that we're going to get ten Republicans and they are not going to get ten Democrats to break that. So we're going to be here in a situation where we have to do what's fair. The fair thing is to have the Senate Committee structure divided just like the Senate equally.

GWEN IFILL: Senator Shelby, you also are a former Democrat. Now, when you listen to what Senator Reid just said, how can you make the case to the American people that this Senate is going to be able to get anything done?

SEN. RICHARD SHELBY: Well, that's the real question. I hope we will. A lot of us are planning to reach across the aisle with our colleagues and put the interest of the country first. I believe early on it's going to be whether we can work with our Democratic friends assuming that Bush is elected President of the United States and sworn in and we have a 50/50 Senate and Vice President. If we do, we have control, because he votes in the case of a tie. I think we ought to have equitable sharing. I think we should look for bipartisan solutions to a lot of things. But at the end of the day some party has to have a majority of the committee --even one -- to make the process work.

GWEN IFILL: Senator Murray, the reason you are even in Washington right now is because you're in the middle of a lame duck session because you couldn't get the budget passed. Do you think that this kind of standoff could continue now that there's an even narrower margin in the Senate?

SEN. PATTY MURRAY: It could but doesn't have to. I think if all of us step back and look at the message voters send us, they didn't send a overwhelming majority of Democrats or a majority of Republicans. They split us evenly, 50/50, and I think one of the messages we ought to be hearing is that they want to us work together. They want to us work fairly and they want us to move forward on the nation's agenda; and we can do that by splitting 50/50 and by working across the aisle, as Senator Shelby said, to work with each other on what we agree on. There certainly will be issues we disagree on and we'll have to set those aside. They probably won't get done in the next session of Congress. But there is a lot we can agree on -- on the budget and appropriations bill if we take the time to listen to what the American people said, which is we want you to work together.

GWEN IFILL: Senator Gramm, how do you envision this working - with a one vote majority in each committee? How would that work?

SEN. PHIL GRAMM: Well, it's going to work the way it has always worked. In 1953, there was a tie vote on organizing the Senate. The Republican Vice President broke the tie. The committees were organized with one more Republican than Democrat on every committee and a Republican was chairman. What the Democrats are asking for is something that has no precedent in 106 Congresses. It has never happened before. It is unworkable government. And let me explain why. If we had an equal number of Democrats and Republicans on the Banking Committee, I would be chairman but I would be chairman without any authority. I would have responsibility without authority -- that is unworkable government. We work on the basis of precedent, and I don't believe that every Democrat will vote to break precedent. I don't believe they'll get 50 votes to override a reasonable organization of the Senate where we end supermajorities on committee. That's call for by the election, and we will have one more Republican than Democrat on every committee -- we will have I think a fair sharing of staff. I think we will be forced to reach across the aisle to pass anything. But we live on precedent and that's why we have a system that works.

SEN. RICHARD SHELBY: Gwen, if I could interject...

GWEN IFILL: I was going to just ask you to respond. Senator Reid.

SEN. HARRY REID: Thank you very much. Again, Phil and the others -- Republicans are in denial. Not all Republicans; I had to two senior Republicans come to me today and say they agree with us - that they feel there should be a 50/50 sharing. It's not only these unnamed Senators but take for example, Alan Simpson, one of the persons we respect on both sides of the aisle. He said last Friday that he felt that the American people would demand a 50/50 split. He further went on to say that he believed there should be a consideration to sharing chairmanship -- alternating a year at a time. This is something that Phil talks about there hasn't been precedent. This is the first time in the history of the country that we have had an elected Senate that's evenly divided. We have had people that have switched parties like my two Republican friends here, and we've had people become independents that's thrown the make-up of the Senate off like Wayne Morris did in the 50's, but this is the first time we've had an elected Senate that's evenly divided. Again simple math -- 50 Democrats, 50 Republicans - that means equality.

GWEN IFILL: Senator Shelby, you wanted to say something.

SEN. RICHARD SHELBY: Yes. I have been on the Intelligence Committee for six years and chaired the committee for the last four years. We have the only bipartisan committee that I know of in the House or the Senate. We try work together. We have a chairman and vice chairman. We reach across party lines. We look at the interest of the country. I believe, though, at the end of the day you have to have a one vote majority. If you don't, the system will not work; it will break down.

SEN. HARRY REID: The Ethics Committee is divided 50/50. The chairman, co-chairman, Indian Affairs Committee is set up so that you have a chair and vice chair. This is not something that's precedent setting. We've done this before.

GWEN IFILL: Let me bring Senator Murray back into this, because on the other side of the capital, Senator Murray, the House Majority Whip, Tom DeLay, was - you were talking earlier about the possibilities of bipartisanship and working together - this is what he was goat quoted say, we have the House; we have the Senate; we have the White House, which means we have the agenda. Where do you see room for cooperation there?

SEN. PATTY MURRAY: Well, that's one Congressman talking. I think there are a number of Senators who agree with Harry Reid and I and others who believe that the 50/50 split means that our committees should be 50/50 and that we should share the making of the agenda, the budgets and all the decisions that go in with that. I would agree that if Bush becomes President, certainly Dick Cheney will preside over the Senate and be there to take any tie-breaking votes, but that doesn't occur in committees. In committees we can make it work with 50/50, with the chairmen working across the aisle to make sure that at least one Democratic Senator is accommodated in order to get a bill out. And I think that is what the message of a 50/50 split is.

GWEN IFILL: Senator Gramm, is there room in this search for some way to accommodate each other for something that goes father perhaps than bipartisanship, something called say constructive partisanship? Is there room for that?

SEN. PHIL GRAMM: Oh, look. I think we're going to have to work together to pass anything. Any committee chairman is an idiot if they don't write bills that will get at least one Democrat vote on the floor in the Senate. But we have a vote on organizing the Senate. The Majority Leader sends a motion and that motion will go to the floor, the Democrats can amend it but the idea that the Democrats are going to filibuster and not let the Senate operate when the vote on that resolution is 51 to 50, I think in the end will not stand up. I don't speak for any Democrats, but I don't believe that they have every Democrat member of the Senate that is willing to vote to break precedent and demand something that has never existed before. If in 106 Congresses it has never been done before, I think that's a pretty good indication it probably won't work. In 1953, there were an equal number of votes for the Democrats and Republicans. The Republican Vice President broke the tie, and the Republicans organized the Senate -- a Republican was Majority Leader. The Republicans were chairmen, and there was one more Republican than Democrat on every committee. That's the precedent; that's exactly what's going to happen here.

GWEN IFILL: Let's ask Senator Reid, who does speak for Democrats, whether you're willing to filibuster issues or committee organization or control of the Senate in order to get your way.

SEN. HARRY REID: First of all understand that we're not trying to get our way; we're trying to get what is fair. The Senate is divided with 50 Republicans and 50 Democrats, and it's not a question of getting our way; it's getting what we feel is fair and what the American public - certainly they can do that math also. We know the situation in 1953 came about as a result of a Republican Senator switching parties. He became an independent; then he became a Democrat. That was a different thing. We have had an elective Senate that's divided 50/50. I would also say that the burden is on the Republicans. If, in fact the scenario goes through we have a Republican President and a Housethat's evenly divided almost, I think it is very important that they understand and not be in denial that the Senate is not their majority. I would also say when we get over this hump I think there is real possibilities of doing constructive things for the country. That's divided 50/50. I think the people of this country in Nevada, Washington, Alabama, and Texas have said to work together for a change. We can do that with the Senate divided 50/50.

GWEN IFILL: Senator Shelby, are the Republicans, as Senator Reid says, are you in denial?

SEN. RICHARD SHELBY: Oh, I think absolutely not. But I'll say this publicly and to the nation, if the Democrats were in the situation that we hope we will be 50/50 plus a Vice President to break a tie, they ought to have one vote, in my opinion, on every committee, because they worst majority and that's what the precedent that Senator Gramm has been talking about says.

SEN. PHIL GRAMM: And that's what they would demand, and we would expect them to get it. If that were the circumstances, they should get it and they would get it, and I don't think we would be doing this.

GWEN IFILL: Final - excuse me -

SEN. HARRY REID: Let's not do the hypothetical - let's do what is the reality. The reality is it's split 50/50.

GWEN IFILL: Final question to Senator Murray: Do you have any fears or expectations of party switches which could tip the entire balance for you?

SEN. PATTY MURRAY: I certainly think there is always possibilities but I doubt if that will happen. I think again we have 50 Republicans, 50 Democrats; we have the reality of that; we have the reality that this is the first time ever it's been 50 Republicans; 50 Democrats. And we're going to have to work together to get anything done, and I hope that our two leaders along with the support of their caucuses can make that happen for the American public.

GWEN IFILL: In the course of this conversation did you get a sense of that's going to happen?

SEN. PATTY MURRAY: Well, you only have four members here. And I certainly think are a lot of members who want to show the American public that just because we're divided doesn't mean we can't work together, and I hope we can work things out before January.

GWEN IFILL: Senators, I wish you all good luck on that. Thank you very much.

JIM LEHRER: Still to come on the NewsHour tonight, a few words from Greenspan.

FOCUS - THE GREENSPAN MAGIC

JIM LEHRER: Finally tonight, the Greenspan effect, and to Ray Suarez.

RAY SUAREZ: Market watchers listened closely to Alan Greenspan yesterday, for hints about the direction of interest rates. The Federal Reserve Board chairman spoke to a group of New York bankers.

ALAN GREENSPAN: In periods of transition from unsustainable to more modest rates of growth, an economy is obviously at increased risk of untoward events that would be readily absorbed in a period of boom. The sharp rise in energy prices, if sustained, is worrisome in this regard. With equity prices weakening in response to reduced earnings from higher costs, and a more moderate pace of sales, the so-called "wealth effect" that spurred consumer spending is being significantly attenuated.

RAY SUAREZ: The chairman didn't promise anything, not in so many words anyway. But the markets read into his comments an impending cut in interest rates. By day's end, stock prices-- which have been shaky of late-- shot up. The Dow Jones Industrial Average closed up 3%, and the NASDAQ climbed 10%, it's largest one- day gain ever, by any measure. Over the years, the words of the Fed Chairman have been regularly parsed and pored over. Greenspan-speak is notoriously hard to distill, and often includes a number of, "on the other hands." But at times, his words and actions have had dramatic and immediate effect. Soon after being appointed Fed Chairman by Ronald Reagan in 1987, Greenspan faced his first major test-- a 23% stock market plunge. Interest rate cuts helped stock prices recover within a year. In fact, not only did prices rebound, over the next years they soared. By 1996, Greenspan issued a famous warning.

ALAN GREENSPAN: How do we know when irrational exuberance has unduly escalated asset values?

RAY SUAREZ: Still, the boom continued, and today the Dow is four times its value than when he took office. In 1998, a new test: The Asian economic crisis threatened to go global. The Fed responded by lowering interest rates three times, and the U.S. expansion continued. And in mid-1999, the Greenspan Fed began to cool things off, with the first of five interest rate hikes. This past January, Alan Greenspan was appointed by President Clinton to his fourth four-year term. Come this January, he will be working with a new President, the fourth in his years as Fed Chairman.

RAY SUAREZ: Now, three who write on the chairman of the Federal Reserve: Bob Woodward is an assistant managing editor at the "Washington Post," and author of the new book, "Maestro: Greenspan's Fed and the American Boom"; Justin Martin has also written a new book about the Fed chairman titled, "Greenspan: The Man Behind Money"-- he is a former staff writer for "Fortune Magazine"; and Gretchen Morgenson, she covers the stock market for the "New York Times." Justin Martin let me start with you: How does a passage in a longer speech, I statement from one man, create a couple of billion dollars of equity in the space of few hours how does that happen?

JUSTIN MARTIN: I think it's really important to make a separation between Greenspan's words and Greenspan's deeds. Greenspan's words -- it's a fascinating almost sociological phenomenon you see -- that they are parsed by the markets, parsed by the pundits, and it results in, as you said yesterday, a jump in the NASDAQ, the largest jump in the NASDAQ's history, a jump in the Dow. But you also see the sort of ephemeral nature of the words when you look today and both markets, both major indexes are down considerably. What's more crucial I think - the distinction needs to be made -- is his deeds -- and with respect to his deeds he has had interest rate policy, the right interest rates, the right level throughout this ten-year expansion. That to me is more critical than the words although they are fascinating to see how it works.

RAY SUAREZ: Bob Woodward, do you think that this is intentional, that the chairman understands that his words move markets and chooses them accordingly?

BOB WOODWARD: Certainly he does. But if you read that speech or listen to the whole thing, not only is he hinting that there may be an interest rate cut in the near future but he is being very optimistic about the economy. He says that the productivity growth that we have experienced in recent years could likely continue for years. He says the banking system is quite sound, thematically he is saying that he is slowing down the economy and it's possible to have a soft landing, meaning no recession, which of course is his main goal in all of this.

RAY SUAREZ: But that obsessive attention to the things that he does say in public -- he doesn't give on the record interviews, does that sort of chase him further into the hole in a way, make him even more reluctant to make open statements beyond the ones he has to make to Congress?

BOB WOODWARD: No I think he wants the soft landing. But if you look at his time as Fed chairman, you find he appears at the critical points more often than anybody else in determining the economic conditions that we live in. The other thing that's interesting about him is that he's changed. Here is this very conventional Republican conservative economist who came in and formed an alliance essentially with who else other than Bill Clinton. He is somebody we should all be 74 and have as open a mind as he does.

RAY SUAREZ: Gretchen Morgenson, who's the constituency? I think we should step back a little bit and talk about who it was that made the NASDAQ go wild and the Dow jump up yesterday afternoon. Who is listening to what Greenspan has to say?

GRETCHEN MORGENSON: I think everyone is listening. We've got small investors who hang on his every word; we have the professional investors who are right in there with them. You know, the investing public is extremely powerful and the moms and the pops of Main Street are now -- maybe even more dominant than Wall Street professionals. So I think you had it up and down the line. The remarkable thing to me about the speech yesterday was that Mr. Greenspan sort of said the market is too big to fail. He is here to backstop it almost. We had seen a dramatic plunge in the NASDAQ, almost 50% from its highs earlier this spring, and this is really the first time he has said that falling asset values in the stock market are a worry and the stock market is now driving much of the economy.

RAY SUAREZ: Justin Martin asked us to remember how ephemeral leaks can be. What was the market saying today by still keeping some of the gains but dropping a bunch of --

GRETCHEN MORGENSON: Well it had a second thought about it. I think that yesterday many investors were waiting for a reason, any reason to buy. We had had so much negativity and so many down days that anything would have appealed to them. And certainly Alan Greenspan has sort of taken on a deity respect from people in the markets.

RAY SUAREZ: Well, maybe that march to deity-hood, Bob Woodward, started shortly after he became chairman. Tell us the story of the massive drop in late 1987 and how a statement from the chairman sort of calmed the waters.

BOB WOODWARD: Well, it was the stock market crash of October '87 and Greenspan had only been there two months. And it was panic everywhere. No one knew what to do. In the White House, Howard Baker, who was Reagan's chief of staff was, in a sense, lost. Greenspan, under the advice of some other people in the Federal Reserve system, put out his famous one sentence statement, which essentially said the Federal Reserve will guarantee unlimited credit to banks and to everyone else, and that calmed the waters. And it was Howard Baker who later said the White House couldn't do anything, Congress couldn't do anything, individual investors couldn't do anything. But that word and that pledge from the Federal Reserve was what stabilized the system. And we could have lost American capitalism or a portion of it in that week.

RAY SUAREZ: Justin Martin, is that a real departure from the chairmen of the past? There have been people who have served long tenure in office, but did they get the kind of attention to every word, or in this case a one-line press release that Alan Greenspan does?

JUSTIN MARTIN: Absolutely not. In fact, the impressive thing to see is that Paul Volcker was considered sort of the gold standard for Fed chairman. And when Greenspan came in in this 1987 it was actually thought that it would be very, very hard for him to top Volcker, and he has. Part of what has caused Greenspan to have a great run is the fact that at this point everyone -- such a large percentage of the U.S. populous is involved in the stock market that at this point his decisions affect everyone, every household nearly, when in the old days, particularly under some of the older Fed Chairmen back in the old days, such as William Machesney Martin, there was such a small number of people invested that the decisions that were made had a less of an effect on Greenspan. That has led to Greenspan having an almost cult like status.

RAY SUAREZ: Well, we both -- we just completed a presidential season in which both major candidates talked about the Fed Chairman and his retention or possible retention, commented on the job he was doing. Have you ever had heard that in the campaign before?

JUSTIN MARTIN: I don't think it was ever part of a campaign before. It was really fascinating to see. And as some people have suggested, we may be due for a next presidency which may be a Greenspan presidency.

RAY SUAREZ: Well, Gretchen Morgenson, you have talked a little bit about the kind of bind that this also can put the chairman in -- referred to it as a moral hazard. Explain that.

GRETCHEN MORGENSON: What the Chairman has done so successfully, as you alluded to in the lead-in, was that in all of these financial crises that we have had in recent years he has stepped up to the plate and really reassured investors that he would be there. What this produces, however, is the potential that investors are going to become reckless about the risks that they take, call it a moral hazard. By thinking that the Great Alan Greenspan is always going to be there to protect them from the disaster means they can take greater risks and maybe not be as careful in the scrutiny of their investments. That's where the risk lies.

RAY SUAREZ: Do you agree with that, Bob Woodward?

BOB WOODWARD: Yes. I think that's true. There are people within the Federal Reserve and to a certain extent Greenspan himself ponders and worries about how he is read and how much in a real way he has an incredible track record. There is no one in Washington in a position of authority who has had that long a good run. And, so what's interesting about him, I think, is he is continually rethinking and looking. We are talking about the economy, not just the stock market, because really he has to focus on the real economy, what is the level of inflation, what is the level of unemployment. What is the level of growth and he's trying to even things out so we don't have these big ups and the big downs, which really hurt people. And it's worked so far and we are in the midst right now of Greenspan attempting to execute this second soft landing. If it works, it will only add to the myth in the sense of that, as Justin was suggesting, the real President, ladies and gentlemen, is Alan Greenspan.

RAY SUAREZ: Justin also was talking about the how the chairman is perceived to have grown the job. Does that transform it for whoever has it from now on?

BOB WOODWARD: He's got it until 2004, which means that whether Bush or Gore become President to a certain extent they are taking office in a Greenspan era that the economy so much affects so many people in the country, in the world. His presence is there but are they training somebody to take over? Not to my knowledge. He learned a lot on the job. This is a sense in his personality of restraint. He very infrequently, and I really couldn't find any instance of the time he has been at the Fed, where he confront people. He avoids confrontation, because he realizes to do so, to confront someone is to empower them, and if you keep your cool, you can do your job.

RAY SUAREZ: Justin Martin, will he hand on a transformed job from the one he was handed by Paul Volcker?

JUSTIN MARTIN: He absolutely will. The job will have a new sort of public component almost - and you saw that of course at work yesterday where comments he made will be even more parsed in our hyperactive media society -- and the Chairman has to be aware of how comments that are made are going to play out over in the markets, and so the next person will really have to get a handle on that for sure.

RAY SUAREZ: And, Gretchen Morgenson, quickly, your impressions on that same question, a different kind of job now that he has had it?

GRETCHEN MORGENSON: Well, I guess I think he's more of a media star than anyone else who's been in the role and so I think to the degree that that will continue you'd better be a good looker on the camera and have a sound byte or two for reporters. I think it will be a different job going forward.

RAY SUAREZ: It's amazing how you can become a media star while refusing to give interviews. But, thank you, guests, all.

RECAP

JIM LEHRER: And, again, the major stories of this Wednesday: This was another busy presidential end game day in the courts, Democrats challenged thousands of absentee ballots in two Florida counties. A federal appeals court rejected Republican efforts to throw out hand recount results. And the Republican-controlled Florida legislature called a special session for Friday. Its leaders said it would name presidential electors if the court appeals are not finished by next Tuesday. We'll see you online and again here tomorrow evening with full coverage of the Florida Supreme Court's important session on the Gore appeal. I'm Jim Lehrer. Thank you and good night.