The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Friday, the nation's unemployment hit 7 percent, the highest in nearly five years, and the European Community banned arms and economic aid to Yugoslavia. We'll have the details in our News Summary in a moment. Judy Woodruff is in Washington tonight. Judy.

MS. WOODRUFF: On the NewsHour tonight our first two focuses are economic. Here in the U.S. as unemployment remains high, Paul Solman revisits a Massachusetts town hit hard by recession to look for signs of a turnaround. Then fromthe Soviet Union, Charles Krause reports on economic reforms and economic problems. Next, the Clarence Thomas nomination to the U.S. Supreme Court. We'll get the views of six newspaper editors from across the country, and wrap it up with our weekly political analysis team of Gergen & Shields. NEWS SUMMARY

MR. LEHRER: The U.S. unemployment rate went to 7 percent in June. That was a .1 percent increase over May and the highest it has been in almost five years. Labor Department forecasters predicted, however, that it should soon start back down. Janet Norwood, the commissioner of labor statistics, also said the average American is working longer hours. We'll have more on this economy story right after the News Summary. Judy.

MS. WOODRUFF: The Yugoslav republic of Slovenia today began freeing captured federal army soldiers, but the break-away republic has so far refused to withdraw its troops from combat positions. At an emergency meeting in LeHague, the 12 nation European community froze a billion dollars in aid to Yugoslavia. It also banned all arms sales to the country until the crisis is resolved. We have a report from Yugoslavia by Alex Thompson of Independent Television News.

MR. THOMPSON: Conflicting images continued to emerge from Slovenia. Yesterday when we visited this Customs post it was empty. Now the Slovene flag flies. And close by new blockades across the main road to Ljubljana. It's now believed most main roads are shut. International borders, however, with Italy and Austria remain open and trains are also running, though traffic is understandably light. At the same time with no hostility evident, federal army prisoners of war were loaded aboard buses for the return journey home. They left many wondering if the recent violent episodes will be the only such action as Yugoslavia tries to break itself apart. Meanwhile, federal army commanders in Belgrade continued the constant refrain the army has the constitutional duty to defend the territorial integrity of Yugoslavia. Everyone's playing for high stakes and the debris of recent conflict litters Slovenia, but already people hardly seem to notice. The Slovene flag's raised at every opportunity and so too the Croatian flag, but some now believe public faith is gone in the country finding its own political solutions. As the federal army bides its time, now mostly returned to barracks, many Slovene and Croatian politicians want international security measures.

MS. WOODRUFF: A delegation from the European Community leaves for Yugoslavia tomorrow. It will attempt to monitor the truce between the federal army and the two break-away republics.

MR. LEHRER: German Chancellor Kohl talked about aid today with Soviet President Gorbachev. They met in the Soviet city Kiev. We have a report narrated by Tom Brown of Worldwide Television News.

MR. BROWN: President Gorbachev and Chancellor Kohl together again. They've developed a strong rapport over the past two years, their most notable agreement the agreement they struck on German unity. Then last November, a friendship treaty committed with two countries' leaders to an annual meeting. The greeting at Kiev Airport included a pro-independence rally. The Ukraine has a strong nationalist movement and demonstrators were protesting against Gorbachev's visit. They want all ties with Moscow cut and say Gorbachev is violating the Ukraine sovereignty by being there. The meeting was held just outside Kiev, topping the agenda Gorbachev's address to the leaders of the G-7 industrial countries at their summit in London later this month. He's expected to appeal for massive Western aid to help the ailing Soviet economy. Kohl says Germany can do no more. Bonn has already given lavish credits to Moscow, but says the limit has been reached.

MR. LEHRER: Former Soviet Foreign Minister Shevardnadze said today he doubted Gorbachev would join him in quitting the Communist Party. Shevardnadze resigned yesterday after setting up a democratic reform movement with other former Gorbachev associates. He predicted other reasonable people would join him.

MS. WOODRUFF: Iraqi President Saddam Hussein today promised the United Nations full access to his country's nuclear sites by Monday morning. He made the promise in a letter to the UN Secretary General. Iraq last week defied UN cease-fire resolutions by repeatedly blocking UN inspectors from seeing nuclear related equipment. Earlier today in Washington the White House reiterated President Bush's belief that he can launch a military strike against Iraq if it continues to defy the cease-fire resolution. Spokesman Roman Pompadou said, "We have the right and the international groundwork for enforcing those resolutions."

MR. LEHRER: Nelson Mandela was elected president of the African National Congress today. He was unopposed at the ANC meeting in Durbin, South Africa. The outgoing president, Oliver Tambeau, has been in poor health since suffering a stroke two years ago.

MS. WOODRUFF: That's it for our News Summary. Just ahead, searching for an economic recovery, economic reform in the Soviet Union from the bottom up, six newspaper editors on the Clarence Thomas Supreme Court nomination and Gergen & Shields. FOCUS - BACK IN BUSINESS

MR. LEHRER: The economy is first tonight. It was put there by today's unemployment news. The rate went to 7 percent in June, a five year high. It came amidst encouraging words about the recession about to end. The chairman of the President's Council of Economic Advisers, Michael Boskin, said today, "Anybody looking at this report sees that there are a variety of mixed messages. We are very concerned about the unemployment rate but we would like to see people have an understanding that this turnaround is coming. We believe the recovery has begun." There are also mixed messages on Main Street. Last fall, Business Correspondent Paul Solman visited Sturbridge and Southbridge, Massachusetts, to document the life of an area in the midst of recession. Recently he went back to look for signs of recovery.

MR. SOLMAN: Last October, the leaves were tumbling, and so was the national economy, especially the economy of New England. Well, it has been a beautiful summer in New England and so we thought we'd return to the same area, in fact, the same tree, to see if the seasonal metaphor for the economy holds, that is, subsiding in the fall, dormant during the winter, reborn come spring. Our first stop then is where we began our economic tour last October at the tourist recreation of 1830's New England known as Old Sturbridge Village. The director of this living museum is Crawford Lincoln.

CRAWFORD LINCOLN, Old Sturbridge Village: We're running ahead for these past four weeks of last year. We ended the fiscal year in the black, so we're very optimistic. I think we will meet our budget handily for the year ahead. All we need are a few more days like this and a little revival in the consumer confidence and we'll be there.

MR. SOLMAN: We also returned to Galileo Electro-Optics. During our last visit, the company's president, Bill Handley, warned his employees about tough times ahead.

BOB HANDLEY, Galileo Electro-Optics: We're all watching the dollars we spend these days and we're keeping spending under control, anticipating a pretty rough 1991 as far as the economy is concerned.

MR. SOLMAN: His words proved prescient. In March, the company cut its work force by 25 percent.

MR. HANDLEY: Of those people that we were talking to in our large meeting when you were here the last time doing your taping, about 150 of those people were laid off.

MR. SOLMAN: But now Handley feels his company is on the way back.

MR. HANDLEY: We have called back about 25 of those people at this point in time, have plans to call back another 10 in the near future here, so that's, that's a very positive sign.

MR. SOLMAN: For Handley, this is a first small step on the road to a general economic recovery.

MR. HANDLEY: We call people back. People begin to make more money. They're still a little hesitant about spending that money so they put it in the bank, they save. Now the bank has more money. The bank then wants to lend that money so that they can make money on that money. So there's more money available to lend. The individual because interest rates are low starts to borrow that money. They borrow that money to buy cars, make additions to their homes, or buy new homes, because home prices are in good shape.

MR. SOLMAN: That's just what happened to Bob Zietkowski. Last October, he'd just been laid off by Galileo and was cutting back on everything.

BOB ZIETKOWSKI, Former Galileo Employee: [October 1990] Expenses that you normally wouldn't worry about, you would figure, how do I justify this. Many nights just rented a videotape instead of going out to see the movies, things like that.

MR. SOLMAN: Now he has a new engineering job and instead of renting tapes, he's out shopping for a new home in the town of Southbridge, Sturbridge's next door neighbor.

MR. ZIETKOWSKI: I do have some money and it's time to buy a house, but it's still small and it's going to be a starter home I hope. It's a small -- we're looking for like a two bedroom, hopefully a three bedroom, if we can afford it.

MR. SOLMAN: Words like that are music to the ears of realtor Joan Lacoste.

JOAN LACOSTE, Realtor: Things have come back tremendously well for me. I work twice as hard. I show five times more homes than I normally do. I have to prove my worth. I have my highs and my lows, as all people do in sales. I -- right now I'm on a high. I've had a very nice sale recently.

MR. SOLMAN: Nick Perna, an economist with Shawmut Bank, which has branches throughout New England, including Southbridge, says it's not only Joan Lacoste who's seeing a real estate upturn.

NICK PERNA, Economist: In the greater Boston area, which is a very large market for New England, year to date, that's through May, sales of, or pending sales of existing homes through binders and contracts are up some 80 percent over a year ago. That's a terrific rebound.

MR. SOLMAN: That's good news for banks like Shawmut because many of their loans were to real estate developers, loans which because of the recession had been written off.

MR. PERNA: There's a potential with the New England economy for some boot strapping, as it were, even within the banking system. You know, if there's some success in dealing with some of the problem loans, those that could be converted from problem loans into conforming loans, that generates loanable funds to a bank.

MR. SOLMAN: That's exactly what happened here at Treasure Island, a condominium project near Southbridge. A few months ago its developer was out of luck and out of money. Bank of New England, itself about to go broke, had cut off the funding needed to finish the project. What was it like here, oh, I don't know, six months ago?

ED RENAUD, Developer: It was devastating. All the buildings were starting to deteriorate, vandalism. There were windows being broken. The decks weren't being maintained. The black top wasn't being maintained and the grounds.

MR. SOLMAN: Multiply this project by several thousand and you can see how money seemed to vanish during the recession. It just sat in bricks and mortar doing no one any good. And as it sat, it deteriorated and more money was lost. But there's been a recovery here too. A local company, Commerce Insurance, bought the project and finished it.

BOB BLACKMER, Commerce Insurance Company: We looked at the project as a local company and we felt it made economic sense to get involved and felt that we could put in a reasonable amount of money and get the project back on its feet.

MR. SOLMAN: How good a bargain did he get?

ED RENAUD, Developer: He got a good bargain and we got a great deal.

MR. SOLMAN: Because you were screwed otherwise?

MR. RENAUD: Absolutely, yeah. We were down on our knees, down on our knees.

MR. SOLMAN: Since Commerce took over, almost 40 carpenters, electricians and plumbers are back at work finishing the project and half of the units have been sold. As people buy the condos, they restore the treasure to Treasure Island, raising the values here, maintaining the property, even paying off the lender.

MR. PERNA: It's one hand washes the other. In other words, the economy helps make the loan situation better, but the loan situation helps make the economy better in New England.

MR. SOLMAN: If real estate prices stop falling, homeowners feel a little less pinched and a little more willing to buy. So we stopped by to see Lorraine Langevin of Langevin Jewelers. For her, as she told us last October, the recession was the worst ever.

MR. SOLMAN: What percentage is business off?

LORRAINE LANGEVIN, Store Owner: [October 1990] I would say about 40 percent.

MR. SOLMAN: Business is off 40 percent?

MS. LANGEVIN: Yes, definitely, and that I don't think it's just us. I think it's all over Massachusetts.

MR. SOLMAN: That's an amazing drop.

MS. LANGEVIN: That's right. It is a big drop.

MR. SOLMAN: Did you ever expect it would happen?

MS. LANGEVIN: Never expected, not this bad.

MR. SOLMAN: Now she sees light at the end of the tunnel.

MS. LANGEVIN: We did have our 42nd anniversary sale which was this spring. And it was tremendous. It was better than last year.

MR. SOLMAN: Unfortunately, you never know just when a recovery begins until well after the fact when all the data are in. Any economy has lots of little ups and downs, as well as big ones. Here in Southbridge, for instance, we found some stores still empty -- as well as some new vacancies. And when we stopped to re-examine what people were telling us, we realized that maybe their words weren't quite as optimistic as we'd first thought. Joan Lacoste had said she was on a high, but then we considered what else she said.

MS. LACOSTE: I work twice as hard. I show five times more homes than I normally do. I have to prove my worth. [MS. LACOSTE SHOWING HOME TO PROSPECTIVE BUYER]

MR. SOLMAN: In short, she's working a lot harder to make the same amount of money she did before the recession mostly because the middle and higher priced homes with their nice commissions still aren't moving.

MS. LACOSTE: It's those middle prices that are still a little bit too high and might have to come down a wee bit more -- almost there -- not quite.

MR. SOLMAN: Langevin agreed that people are still in a somewhat thrifty frame of mind.

MS. LANGEVIN: I think that people look for a lot more buys these days. You know, anything that's on sale is attractive. So this is why our sale I think was very good.

MR. SOLMAN: But to get a really good read on the local economy, there's no better place to go than the town newspaper. When times are good, ad sales are up. You get help wanted ads, real estate ads, car ads, so we checked back with Loren Ghiglione, who owns several papers in the area.

LOREN GHIGLIONE, Newspaper Publisher: Real estate seems to be getting better, but other categories seem to be getting worse. But you go from month to month not knowing, not being able to predict what's going to happen. For example, there was a blip upward after the war was over and in April and May. And my sense is that June is not -- that the blip upward is not continuing, that we're sort of leveling off and we may be going back down. We're worried again about July, so it's hard to know where we are.

MR. SOLMAN: So maybe we're seeing the first signs of the upward spiral. And then again maybe we're not. After all, the most famous economist of the 20th century, John Maynard Keynes, essentially made his reputation by pointing out that when an economy spirals down, it doesn't automatically readjust. But in that case, said Keynes, all government has to do is higher people to build post offices, clear the countryside, even he said to dig holes and, if necessary, have them fill the holes up again to put money in people's hands so they can spend it and rev the economy. The only problem with Keynes's solution, however, is that it was made in an era of balanced budgets. Today with government in deep deficit pressure is to spend less money, not more. You don't have to look far to see signs of the squeeze on government. The city of Bridgeport, Connecticut, just declared bankruptcy and most of the states in the Northeast are running huge deficits. Economist Nick Perna admits this won't help a recovery.

MR. PERNA: But the consensus among forecasting economists is that that's one of the major factors that slows the recovery but doesn't make it impossible. To the extent that we're able to factor it in, to the extent that my forecast reflects higher state and local taxes, and they're in there, and lower state and local spending, it gives me a slower recovery, but it doesn't -- there's enough positive force coming from other areas of the economy.

MR. SOLMAN: Don't tell that to Southbridge School Superintendent Albert Lanni. When we checked in with him last fall, he just eliminated all funding for athletics. Students here paid to play. Since then, Lanni has watched the new Massachusetts governor make further cutbacks.

ALBERT LANNI, Superintendent, Southbridge Schools: I don't see anything happen to spur the economy. What I see is a governor who came in who said I am going to cut government down and he has systematically gone about reducing every single agency in the state regardless of what it is or what it does. So his, the answer to the economy is down size, not to create work.

MR. SOLMAN: That down sizing has hit home in Southbridge. Next fall there will be 33 students per high school classroom. They're even losing math and science teachers.

MR. LANNI: Right now I'll tell you it's about as depressing a situation as one could imagine. There is no hope that we can see for the future.

MR. SOLMAN: But economist Nick Perna thinks the town and the economy in general are on the rebound. He also disagrees with experts who say this recovery will be slower and less impressive than those of the past.

MR. PERNA: Do you realize that that's exactly what they were saying in late 1982, that the -- the recovery was obviously about to start, was going to be one of the mildest on records, and by the time we got into 1983, it blew our socks off. Part of the reason is because it's like microwaves. You can't see 'em. You can't see many of the dynamic forces that are there, but they're there. They're operating right now.

MR. SOLMAN: Well, just to be sure, we thought we'd go back to pre-microwave Old Sturbridge Village and talk to the banker there, George Harwood, a retired banker in real life, who gave us a little perspective by recalling the panic of 1837 and the recovery that followed.

GEORGE HARWOOD, "Village" Banker: The banks of Massachusetts, contrary to the law at the time, just quit playing out gold and silver. They suspended the payment of gold and silver. And they retrenched their activities. They shortened their maturities in their loans. They encouraged repayments, most of them survived. Most of them made a modest profit throughout the panic of '37. Most of them probably became stronger institutions because of the enforced discipline of reviewing what it was that they had been doing. And I like to think maybe the same thing is going to happen again.

MR. SOLMAN: In other words, we pretty much know the economy will bloom again some day, not just here in Sturbridge, but throughout the country. What we don't know is if it's already happening -- and finally, just how fast or slow this particular recovery is likely to be.

MS. WOODRUFF: Still ahead on the NewsHour, economic reform Soviet style, the Clarence Thomas nomination, six views, and Gergen & Shields. FOCUS - SOVIET ECONOMY

MS. WOODRUFF: Now to the Soviet economy. Correspondent Charles Krause is in Moscow and he prepared this report on how the Soviets are dealing with recession, unemployment, and private business, which in the past were considered the symbols of capitalism.

MR. KRAUSE: Western demands for more rapid and more radical economic reform in the Soviet Union come at a time of confusion and crisis in the Soviet economy. According to the government's own statistics, the Gross National Product fell by 8 percent during the first quarter, productivity was down 9 percent, and foreign trade down 33 percent. But statistics barely tell the story. Everyday life has become barely tolerable. In Moscow and throughout the Soviet Union, the government has deliberately raised prices to increase supply and reduce demand, part of an earlier attempt by Gorbachev and his advisers to begin the transition to a market economy. But so far, the Kremlin's halfway measures haven't worked and according to the polls, Gorbachev's popularity has plummeted from a 40 percent approval rating last year to just 15 percent today. Nikolai Popov is director of political surveys at the Soviet Union's leading polling organization, the Soviet Center of Public Opinion and Market Research.

NIKOLAI POPOV, Pollster: This combination of inflation and shortages unheard of in other countries, it's really fully bothering people day by day and they are very fearful of the situation getting worse.

MR. KRAUSE: And again they blame Gorbachev for the deterioration of the economy.

MR. POPOV: Generally speaking, yes. The government led by Gorbachev, Moscow center, union government, and Gorbachev symbolizes that.

MR. KRAUSE: But according to many observers, it's not the people's reaction or the polls Gorbachev is most afraid of. His reluctance to implement a radical economic reform program has much more to do with hardliners in the Communist Party. Andrei Kortunov is a political analyst at the USA-Canada Institute.

ANDREI KORTUNOV, USA-Canada Institute: It seems that he's concerned more about the reaction of these elite groups which are still powerful and which can undermine his own political standing and undermine the goals of his political and economic reforms.

MR. KRAUSE: More concerned about these elite groups than the people --

MR. KORTUNOV: I think yes.

MR. KRAUSE: For more than 70 years, it was illegal to be unemployed in the Soviet Union. Workers have been in the vanguard of the revolution and after 1917, it became an article of faith that if nothing else, Communism could provide enough jobs for everyone. But this week, the government and the party were forced to recognize yet another reality. There has always been unemployment here and now as a result of the growing economic crisis, it's expected to get worse. Last Monday for the first time ever, unemployment offices opened in Moscow. Sergei Merzich was one of the first to apply for benefits. Some 300,000 workers, 5 percent of the work force, are expected to lose their jobs in Moscow alone before the end of the year. Igor Zaslavsky, a mid-level Communist Party member, now heads the unemployment system in the Soviet capital.

IGOR ZASLAVSKY, Director, Moscow Unemployment Office: Without unemployment, without inflation, without structural exchanges, we can have transition to freedom to market economy.

MR. KRAUSE: And you think the people accept that as the price of this transition?

MR. ZASLAVSKY: Yes. It is a price to the transition to the freedom and market economy.

MR. KRAUSE: Popov says that support for free market reform is reflected in the polls.

MR. POPOV: People don't believe in Communism as a future and only a small minority, like less than 20 percent, support socialism. So on the ideological plain, the Communist Party, at least in its old, old inclination, does not have much base.

MR. KRAUSE: What, in fact, seems to be happening in Moscow and other large Soviet cities is that individuals are not waiting for the government. With or without Gorbachev, they're creating a market economy on their own. At the Benalucia Train Station in Moscow, for example, small entrepreneurs and even gypsies have set up stalls that would have been prohibited even two or three years ago. On Dorkey Street, Western products, advertising and companies have arrived and are in evidence as never before. And at municipal buildings throughout the capital, Muscovites schooled under Marxism are registering new capitalist cooperatives by the thousands, restaurants, art galleries, even some private doctors. Perhaps most impressive, the beginnings of private industry. Not long ago, Boris Itseksen patented a new way to produce reinforced concrete blocks for the Soviet construction industry. His son, Vladimir, raised enough capital to build a fully computerized prototype machine to produce the new product. Today Bear August Corporation is also producing air and oil filters. It has 15 full-time employees. If all goes well, The Itseksens and their partners hope to soon become ruble millionaires, a new class which now exists in the Soviet Union.

MR. KRAUSE: Do you think that the government will continue to support privatization by the businesses, the private economy that's begun to grow in this country?

VLADIMIR ITSEKSEN, President, Argis Corporation: [Speaking through Interpreter] Our government has undertaken not enough effort in this direction and we'd like them to do more. Now everything is up to us.

MR. KRAUSE: Andrei Kortunov says that entrepreneurs like the Itseksens represent an important step forward for the Soviet economy.

MR. KORTUNOV: My feeling is that people in the West underestimate the speed at which the new system is emerging in this country. After all, we have at least 20 or maybe even 30 million people directly or indirectly engaged in private economy. They produce at least 50 percent of the national GNP right now and I think it's - - it's very important that it's not just disintegration, it's not just economic decline, but the new system is emerging in this country, and this is something that should be recognized and I think this is something that should be promoted by the West.

MR. KRAUSE: But how to promote the changes, especially if hardliners in the Kremlin refuse to back them, remains a tricky problem for the West. Still, some decisions must be made before July 17th, when President Gorbachev is scheduled to meet Western leaders in London to discuss economic reform and the crisis in the Soviet economy. UPDATE - EDITORS' VIEWS

MR. LEHRER: Now how the nomination of Clarence Thomas to the U.S. Supreme Court looks five days later. It was on Monday that President Bush announced the selection of the black conservative to replace black liberal Thurgood Marshall on the highest court in the land. Reaction has been flowing and ricocheting ever since, particularly among blacks. We sample some of that now with five of our newspaper editor regulars plus one. The editors are Lee Cullum of the Dallas Times Herald, Clarence Page of the Chicago Tribune, Gerald Warren of the San Diego Union, Cynthia Tucker of the Atlanta Constitution and Erwin Knoll of The Progressive Magazine in Madison, Wisconsin. The plus one tonight is Noah Griffin Jr., a columnist for the San Francisco Examiner. Clarence Page, how do you feel about the Thomas nomination five days later?

MR. PAGE: Well, it seems to have been a master political stroke on President Bush's part. Remarkably in some ways, Clarence Thomas can be viewed politically as a black version of Robert Bork. And he is quite conservative in his views, as much as we know about his views. But we're not seeing the kind of opposition well up that we saw well up against Bob Bork partly because black Americans appear to be somewhat divided. My own father-in-law, if he's any indication, is thrilled that President Bush named a black man, whether he's a conservative black man or not. I think a lot of other black Americans feel the same way. Over time, I think we'll all get a closer examination of his beliefs as opposed to his background and some of that support may fade, but black leadership is not coming out with both barrels against him and I think we're going to see some -- he may get an easier ride at this point than Bob Bork.

MR. LEHRER: Noah Griffin, you are less than thrilled by this nomination, correct?

MR. GRIFFIN: I'm not thrilled at all and I don't know any African-Americans who are thrilled. I think unfortunately Clarence Thomas represents a new breed of conservative African-Americans who don't know who they are, where they are, or how they got there. Sadly enough, he's not reflective of the mainstream black thinking. He's not even on the shore. He's out in the desert somewhere walking a path that somebody else has paved and calling himself a pioneer.

MR. LEHRER: Meaning he's a conservative and blacks shouldn't be conservative?

MR. GRIFFIN: No. I think if you're going to have somebody on the Supreme Court who's reflective of the black experience, who brings that great deal of sensitivity that Clarence Thomas says that he has as a result of growing up black and poor and impoverished in the South, he ought to represent the mainstream of black thinking. Every group has their quisling and unfortunately, I think Clarence Thomas is ours.

MR. LEHRER: Cynthia Tucker, do you agree he's a quisling?

MS. TUCKER: No, I don't think so. I think that's a bit unfair. I think that Judge Thomas's experiences growing up black and poor in the segregated South are very authentic. He remembers where he came from. He happens to disagree, however, with the mainstream of black thought. That does not mean that I am one of those who agrees with his views. I have long admired him, but I disagree very vigorously with his views. But there is something else about his nomination that we haven't talked about yet. I think that Dutch Thomas and his backer and promoter, President Bush, have managed to impale themselves on a bit of a contradiction. Judge Thomas is known for being a vigorous opponent of affirmative action. Well, the fact of the matter is -- and conservatives have tried to tiptoe around this -- but Judge Thomas has been selected precisely because he is black for all those reasons that Clarence Page talked about earlier. President Bush understands that it is more difficult for civil rights groups to oppose a black conservative than a white one. If Judge Thomas were white, he would still be sitting on the federal bench, taking a few more years to get some experience on the bench. None of this means that he is not qualified. I think he has the minimum qualification. But he's been noticed by conservatives because he is black.

MR. LEHRER: Do you agree with that, Noah Griffin, that if he was a white man, he would not have been appointed?

MR. GRIFFIN: I think that's absolutely true. I think that Clarence Thomas couldn't carry Justice Marshall's law books at the time that Justice Marshall or Thurgood Marshall as an attorney was nominated to the court. He was a judge on the circuit court. He was solicitor general of the United States. He'd argued successfully 29 of 32 cases before the high court. I think we've got someone here who claims that he's against affirmative action, yet, in every specific instance in his life, he's been the beneficiary of affirmative action. In the late '60s and early '70s, there was a specific move afoot to bring blacks in greater numbers to the law schools such as Yale. He was a beneficiary of that program. He's someone who had a tax background and ecology background, yet, he was put in positions of assistant secretary to civil rights, in the Department of Education, head of the EEOC. There again, race played a major factor in those appointments. So for him to think that race played no factor and that he was just imminently qualified I think is wrong.

MR. LEHRER: Gerry Warren, how does it look to you from San Diego, the Clarence Thomas nomination and this particular argument we've just been hearing?

MR. WARREN: Well, I think that argument we've just been hearing is, are people struggling for reasons to oppose what I think is a very good nomination. I think Clarence Thomas is a product of this system. He is proof that this system works. He has shown great independence and some of that independence is galling to the civil rights leaders today. He's shown that he can do a lot of different jobs. I think he's a very good appointment.

MR. LEHRER: Do you agree though that he is a product of affirmative action?

MR. WARREN: I think he's an opponent of the way affirmative action has been applied by the civil rights hierarchy, that you must hire certain numbers because that's the only way that blacks can succeed or can prosper. I think he opposes that and he should oppose that. He is ample evidence that that is not the case.

MR. LEHRER: Erwin Knoll, how does it look to you?

MR. KNOLL: Well, I think we ought to begin by acknowledging that the Supreme Court is a political institution, despite all the mythology to the contrary, and that Presidents, including this President, make ideological appointments to that institution, and Judge Thomas suits the President's ideology. He's a perfect fit. Furthermore, he is black, and that means that the liberals who would oppose vigorously a white candidate with the same views are not going to oppose him that vigorously. But I think from the perspective of the country, he's a terrible choice because we have really serious problems in this country. We do have disadvantaged minorities. We do have people who without the active intervention and protection of the government are going to be in terrible trouble, are now in terrible trouble. And to put on the Supreme Court still another person who says I'm all right, Jack, and devil take the high most is a terrible mistake.

MR. LEHRER: But as a practical political matter, Erwin Knoll, wouldn't you not expect a conservative Republican President to appoint a conservative Republican to the court?

MR. KNOLL: I certainly would, Jim. I said that. I think it is a political appointment. I think every President makes political appointments. I certainly hope that nobody is going to waste time with foolish chatter about whether this man has enough judicial experience or judicial temperament, and those are not the considerations. The considerations are, will this particular judge when he's on the Supreme Court come down the way the Bush administration wants him to. The obvious answer is yes, so he's a good appointee from the President's point of view and I think a terrible one from the point of view of the American people.

MR. LEHRER: What about the point of view of Lee Cullum and the Dallas Times Herald?

MS. CULLUM: Jim, we view the nomination with skepticism. Now I am going to waste some time on qualifications, even though Erwin Knoll doesn't want me to. I regret that we've come to the point where the best experience is no experience and the best record is no record. There's something absurd in all of this. I realize it's the way to get a candidate past the Senate. I also take issue with him as an affirmative action candidate, nominee. He has a distinguished educational background. He's come a long way from where he started. I think that's admirable. And given the views he apparently holds, I think he certainly might have been nominated had he been white.

MR. LEHRER: You think he would have been?

MS. CULLUM: Yes, I do.

MR. LEHRER: Do you believe that he should be questioned directly and severely about his views on other matters like abortion say?

MS. CULLUM: Yes, I certainly do. I think his views on the Constitution are certainly germane. His views on the right of privacy, which was the basis of the abortion ruling are germane. I would also say freedom of speech figures in when you think of what doctors may or may not say now in federally funded clinics. I think separation of church and state is an issue in the choice matter. I think we ought to know how he feels about these issues.

MR. LEHRER: But as a practical matter, he's already said and already thus far said and there have been indications that he will do exactly what David Souter did, which was not reply to any question that relates to something that could come before the Supreme Court. So then what?

MS. CULLUM: Then what? Well, the Senate has a right to advise and consent and I think if they don't have adequate information, perhaps they should not consent to this appointment.

MR. LEHRER: Clarence Page, do you see any signs that a serious effort will be launched against the Clarence Thomas nomination by civil rights leaders or anyone else?

MR. PAGE: Well, I see the rudimentary signs of it in terms of a lot of feverish investigations that are going on. Also, the groundwork was laid in the, in the hearings by the Senate Judiciary Committee for Thomas's appellate court appointment when Sen. Paul Simon from Illinois and others indicated that they were going to give him a voice vote in his support now but if he comes up for the Supreme Court, that's a different matter. A lot of investigations are going on now by the press, by independent organizations looking at Thomas's background, trying to figure out what his beliefs are on critical questions like abortion and others. Over the next few months, the news about his background will be old news in terms of his Horatio Alger struggles. The story about his beliefs will be the new news. And I think we may see some more opposition welling up. I still don't think it'll be enough to stop his confirmation, however.

MR. LEHRER: I noticed today that NOW, the National Organization for Women, announced their formal opposition. Clarence, how do you respond to Noah Griffin's statement, strong words about Clarence Thomas being a quisling to his race?

MR. PAGE: I think at this point in time it's beside the point, Jim. Questions about quislings or Uncle Toms are really name calling a person for the person as opposed to their beliefs. Whether you're talking about Clarence Thomas or Shelby Steel or Thomas Soul or Walter Williams, there are black conservatives out there. It is true, they are outside the black mainstream. It's also true they're probably closer to the white mainstream. But I think Clarence Thomas, certainly his nomination and what I think is going to be his appointment, they're going to give a new level of credibility to black conservatism. It's not my philosophy, but it's one that needs to be looked at, debated, fully put out there on the table, and I think a lot of black Americans too, it is true that - - I mean, I do know of some black Americans who like Thomas. I do know of opinion polls that show a lot of support for Thomas among black folks who don't agree with his beliefs. So I think that there's a lot of room for debate and at this time, Erwin Knoll is right, we do have serious problems out there. I'm not going to say liberals have a monopoly on the answers and I think maybe Thomas might open the doors to some serious debate and vigorous discussion that we need.

MR. LEHRER: Noah Griffin.

MR. GRIFFIN: Well, I think serious debate and serious discussion is one thing, but the Supreme Court has been the court of resort for which the black community has always turned when the executive and the legislature has not had the -- the legislative branch has not had the political will or the courage to act, it's been the Supreme Court that has given black people the right to have a cup of coffee at a lunch counter, the Supreme Court that's given black people the right totake their -- send their children to integrated schools, the Supreme Court that's given the black community the right to send their children to libraries, et cetera. So it's very, very important who's on that court and what views they represent, so to me, it's just not a matter of esoteric debate or intellectual concern, it's a question of what person is going to be on there and what views do they hold and are those views going to be consistent with the sensitivity that I expect and would like from somebody who's a black appointee to that court.

MR. PAGE: May I take just one quick point?

MR. LEHRER: Yes.

MR. PAGE: Whether it's Thomas or somebody else, it's going to be a conservative. We know that. And if Thomas were to be rejected, that will free President Bush to name somebody else who undoubtedly will not be black, may not even have the kind of background in poverty and struggle and the readings of Malcolm X, et cetera, that Clarence Thomas has. So I think it may be a toss up between the devil we know and some devil we don't know. And in that regard, I think that's why a lot of black Americans favor his confirmation.

MR. LEHRER: Let me ask Cynthia Tucker, beyond your own views, Cynthia, how do blacks thus far after five days, how do blacks in Atlanta feel about this nomination? Has there been any reporting done on that in your city?

MS. TUCKER: We haven't done any reporting specifically. I can only respond by telling what friends of mine have said and what some lawyers around town have said. And that is that they respond much as Clarence Page reflected earlier. There's an ambivalence. And I think one of the things that you will see is that it will be abortion rights groups that will take the lead in opposing Judge Thomas's nomination. I think civil rights groups are hanging back, at least for now, because Clarence is right, President Bush's nominee is going to be a conservative. The person appointed to the seat is going to be a conservative and so I've heard many of my friends say while they disagree with many of Judge Thomas's views, they admire his background, his struggle to get where he is today, they'd rather see a conservative who grew up poor and who understands the vicious force of discrimination. And I think one of the things that we need to bear in mind is that Judge Thomas has never said that he's not been discriminated against. He's made it very clear that he's faced racism. At least he understands what that's about. And many of my friends say it's better to have that kind of Justice on the bench than a Justice who does not understand racism at all.

MR. LEHRER: Gerry Warren, what would you say to those who have suggested that, that Clarence Thomas and other black conservatives are being used by white conservatives by being appointed to jobs like this and thus eliminating liberal opposition and all that sort of thing? You know what the argument is.

MR. WARREN: I think there are specious arguments. I think for any group in the United States to say there can be no diversity within this group, there can be no new ideas brought into this group is a terrible, terrible mistake. President Bush was asked to appoint someone who brought diversity to the bench, to appoint someone who is independent in his thinking. Clarence Thomas does both of those things.

MR. LEHRER: Erwin, would you see a major effort being mounted against this man, no, is that right, do you think that he's going to make it and that this is almost an academic exercise at this point?

MR. KNOLL: Well, I think both. I think there will be a major effort made particularly by women's groups to recognize that this is sort of the hour of trial on the issue of choice and abortion and they will make a very strong effort. I don't think it's likely to succeed. I want to make the point, Jim, that of course, it's correct to say that Judge Thomas has had the experience of hardship, of discrimination, of bigotry. He's made it the hard way. But some people who make it the hard way conclude from that that everyone can make it the hard way. And that's simply not true. And so where Clarence Page -- I think Clarence by the way is soft on people named Clarence -- but Clarence Page is absolutely right when he says that liberals don't have all the answers to these terrible problems we have in America. The difficulty with Judge Thomas is that he doesn't even seem to realize that the problems exist.

MR. LEHRER: Lee, your view of that, that Clarence Thomas doesn't understand what the problems are in this country?

MS. CULLUM: Oh, I don't see how that can possibly be true. You don't come from where he came from, you don't have the discrimination that he had at the seminary, the seminary where he was supposed to learn the laws of God, and was insulted, you don't have those experiences and forget them. I just don't think it's true. I do want to say that women have the most to lose in this appointment. I really do. I think the right to choice is the issue here. I think civil rights certainly is in some jeopardy but not nearly the jeopardy that right to choice is. The die may already be cast where that matter is concerned, but women's groups I think will be critically concerned with this nomination.

MR. LEHRER: And mount the major opposition?

MS. CULLUM: Oh, yes, I think so.

MR. LEHRER: All right. We have to leave it there. Thank you all very much. Noah Griffin, thank you for joining us from San Francisco. FOCUS - GERGEN & SHIELDS

MS. WOODRUFF: Next, some end of the week political analysis from our regular team of Gergen & Shields. That's David Gergen, editor at large at U.S. News & World Report, and Mark Shields, syndicated columnist with the Washington Post. Gentlemen, let's pick up on this discussion we were just listening to. David, what about this Thomas nomination, was this a smart move by the President?

MR. GERGEN: It's a smart move and I think he's going to be confirmed fairly handily. Politically he'll have the Republicans with him, not only the conservatives in the Republican Party, but Sen. Jack Danforth of Missouri, of course, who's been leading the fight to get a civil rights compromise on the civil rights bill is very firmly and will be the best friend of Clarence Thomas in the Senate. He'll rally a lot of moderates. And beyond that, the people who sank the Bob Bork nomination were Southern Democrats and I think a lot of those Southern Democrats are going to vote for Clarence Thomas.

MS. WOODRUFF: And, Mark, what about the opposition, are they going to rally? I mean, today we have the National Organization for Women saying they're going to fight this thing tooth and nail.

MR. SHIELDS: Yeah, the National Organization for Women and the National Abortion Rights Action League I think are the only two groups that are out so far and Sen. Metzenbaum has indicated and Sen. Cranston, I think it's going to be a lot tougher -- I think David's right -- I think it's going to be a lot tougher than any fight was against Bob Bork, where you could put together a coalition of labor and the Southern moderates in the Democratic Party. I think Southern Democratic Senators are going to be hard pressed to vote against Clarence Thomas for the reasons, some of the reasons we heard in the discussion. I think the other thing, Judy, that was masterful was the introduction of him to the public. Contrast that with the introduction we got of Dan Quayle in 1988 where he was brought up on a river boat in New Orleans and he was kind of too excited and too happy and too animated and then defensive about questions, here's a man we learned about in the first few hours that he grew up fatherless in the segregationist South, taught by white nuns who risked being called "nigger sisters" to teach him. It's an absolutely marvelous story and he thanks his grandparents, was without indoor plumbing till the age of seven. I think that's going to be awfully tough for Senators who grew up on winter vacations, tennis camps, and room service to suggest that he doesn't understand civil rights.

MR. GERGEN: Let me go beyond that. Clarence Page made an interesting I think good point in the last discussion, and that was, the initial stories about biography, and his biography is an inspiring one, but increasingly we in the press are going to start looking at what he believes. And I think as we take a closer look at what he believes, particularly in civil rights, he will be a more compelling candidate.

MS. WOODRUFF: Why is that?

MR. GERGEN: Well, because I think a lot of what we just heard by say Noah Griffin, calling him a quisling, and Mr. Knoll saying he was an I'm all right Jack school, he's forgetting his roots and so forth. That simply is not true. This is a man who has come up the hard way, very much remembers people at the bottom, is not particularly a close friend of the middle class, but still fights for the people at the bottom, and who is in nobody's camp. He leans conservative but he is not a quisling of the Reagan or Bush people. When he was in the Reagan administration, he openly attacked the administration for dragging its feet on the Voting Rights Act. He attacked the administration for its decisions on Bob Jones and Bob Jones University. He attacked the administration for not offering him a positive vision. He was almost not reappointed to the Equal Employment Opportunity Commission because the Reagan administration wasn't sure he was their man. And even on the court of appeals when he went to the court of appeals, there were some questions in the Bush administration because they couldn't count on him. This is a very independent fellow, a fellow who is going to be very tough on people who won't help those at the bottom, but he's also going to be very tough on liberals whose help seems to create dependency, rather than true help.

MS. WOODRUFF: Well, Mark, that just bolsters your case. This is going to be a very tough one for the Democrats and for the liberals to put up a fight against.

MR. SHIELDS: I think it will be. I think he will be confirmed, barring some smoking guns on disclosure.

MS. WOODRUFF: You do?

MR. SHIELDS: Yes, I really do. I don't see the will or the political resources to put it together. I think the discussion should not overlook two patent untruths that come from the White House, that race was no factor. I mean, George Bush was --

MS. WOODRUFF: David, you're nodding your head.

MR. GERGEN: Yes.

MR. SHIELDS: I mean, that certainly was a factor and it was nice to see George Bush recognize that affirmative action does work and that there are qualified people who do represent diversity and all the rest of it.

MS. WOODRUFF: Even though the President said it was not a factor?

MR. SHIELDS: Even though the President said it was not a factor. The other one was that the President never asked him about Roe V. Wade or his position on it or anything. I'm sure the President didn't, but I don't think anybody would have been brought in the Bush bedroom at Kennebunkport that there wasn't at least a suspicion as to where he might come down on that issue.

MS. WOODRUFF: On abortion.

MR. SHIELDS: I mean, I think that's an issue that is of some concern and his judicial philosophy is, and I think, no, George Bush didn't ask him about it. I think George Bush had the cloak of deniability that he could invoke.

MS. WOODRUFF: Well, the Vice President was quoted today as saying that he wasn't asked about it.

MR. SHIELDS: Yeah.

MS. WOODRUFF: What level we don't know.

MR. GERGEN: I think Mark is right though. I do think that his race did play a factor. I think it was much more a question of balancing, which has been very traditional in appointing people to the Supreme Court. We talked about that last week. But I also feel that Mark is right about abortion perhaps being a more controversial aspect of his views. I don't know what he feels about abortion. I don't think he's fully on record on that subject. But I do think when it comes to civil rights, this man represents a fresh voice. And I think a lot of people are going to find it a very attractive and compelling voice.

MR. SHIELDS: Judy.

MS. WOODRUFF: Just a couple of --

MR. SHIELDS: I'm sorry, just one thing I'd just add and that is the Democrats I think the lesson that's been driven home is if you want to influence Supreme Court decisions, you've got to win the White House, you can't lose it five out of six times and expect to have some sort of a perpetual lock on a liberal majority in the Supreme Court.

MS. WOODRUFF: Another subject I want to bring up, we just have a couple of minutes, is the economy. We had new unemployment figures come out today. It's up again against I think the expectations of many economists. The White House says, no, we're still on the verge of a recovery. David.

MR. GERGEN: Well, I think the White House pointed out quite correctly that unemployment tends to be a lagging indicator. In other words, after the economy has already started to turn around, unemployment still goes up a bit and then it starts to turn around too. I think the truth is we're not quite sure whether we're coming out of the recovery yet. There are some mixed signals. The White House --

MS. WOODRUFF: We saw in the Paul Solman report --

MR. GERGEN: Exactly. The White House, I think, thinks that we're coming out and there are some solid indications that we are, but I don't think we can all take comfort in that. I do think within the next two weeks we'll have the reappointment from the White House of Alan Greenspan as the chairman of the Federal Reserve Board. I think that will bolster the markets. I think it will shore up the markets because they have a lot of faith in his capacity in his leadership of the Fed.

MR. SHIELDS: Anybody who thinks government doesn't influence the politics or the economy is crazy. I mean, what we have now is we have an administration that boasted -- two administrations -- of 87 months of success over economic growth and prosperity and all the rest of it and now we're into that mantra's been dropped, obviously, for compelling public reasons, but we're in a situation where because of the budget deal, there are no arrows left in the economic quiver, that you can't suggest one of the traditional remedies of the deficit, of cutting taxes to spur economic growth,deficit spending of a large public works project because of the budget agreement that was forged last fall.

MS. WOODRUFF: So you're saying it has to get better. I mean, they're out on a limb at this point is what you're saying.

MR. SHIELDS: Yes. I think they're very much out on a limb and I think they run the risk of having predicted seven of the last six non-recoveries. I mean, you know, each time it's the rosy shades and the brightest scenario. It's back to David Zuckman in 1981.

MR. GERGEN: This is their political vulnerability and their problem is going to be because the recession has been more shallow than past recessions. The recovery and even in minds of many of the people at the White House may not be a booming recovery, it may be a very modest recovery, and that is going to create continuing hardships for a lot of people.

MS. WOODRUFF: Just quickly, people still aren't blaming the President presumably?

MR. GERGEN: Not yet.

MR. SHIELDS: Ironically they're not, Judy. I mean, this is traditionally and historically it's been the other party that's been the beneficiary party and power that's suffered, but still the last Wall Street Journal poll I saw, it showed by a margin of 2 to 1, they thought the Republicans were better at getting out of the recession.

MR. GERGEN: It's the governors who are having to take this in the neck right now.

MS. WOODRUFF: We're going to be talking about that. David Gergen, Mark Shields, thank you both.

MR. SHIELDS: Thank you.

MR. GERGEN: Thank you. RECAP

MR. LEHRER: Again the major stories of this Friday, the nation's unemployment rate went to 7 percent in June, the highest it has been in nearly five years, and the European Community voted to stop all economic and arms aid to Yugoslavia until the current crisis is resolved. Good night, Judy.

MS. WOODRUFF: Good night, Jim. That's our NewsHour for tonight. We'll be back Monday night with a conversation with Washington Post editor Ben Bradley. I'm Judy Woodruff. Thank you and have a good weekend.