The MacNeil/Lehrer NewsHour

INTRO

JIM. LEHRER: Good evening. In the headlines today, the State Department said it appears two U.S. government employees have been killed by the air hijackers in Iran. The official death toll in the India gas tragedy continued its rise. And President Reagan and congressional leaders may take pay cuts to help reduce the budget deficit. Robin?

ROBERT MacNEIL: Here's your NewsHour table of contents tonight. We open with a summary of the news of the day. In our first focus section, key congressmen go over President Reagan's plans to cut federalspending. We have a documentary report on why San Francisco wants a battleship. We have a newsmaker interview with Texas oilman Boone Pickens, who wants to take over Phillips Petroleum. And we close with a kind of profile: one year in the life of the world's only sextuplet girls.News Summary

LEHRER: The State Department said late today it appears two Americans have been shot to death in the air hijacking tragedy in Iran. Officials said the two were employees of the Agency for International Development. The department said they could not absolutely confirm the fact nor the names of the victims. They said their information came from Swiss diplomats at the airport. Earlier today the five hijackers marched a man off the plane, forced him to beg for mercy, and then shot him dead. An Iranian news service report said before he was shot, the man identified himself as a U.S. diplomat. Six Americans were believed to be on the Kuwaiti Airways plane, which was hijacked Tuesday on a flight from Kuwait to Karachi, Pakistan. Five people are reported to have been shot thus far, but there is no firm confirmation of that. Robin?

MacNEIL: The worst is over, an Indian state official said today, as victims of the most lethal chemical disaster in history began returning to their homes in Bhopal, 340 miles from New Delhi. Indian news agencies reported the death toll had now exceeded 2,000, as more bodies were discovered in the stricken area. Doctors treating the victims of the cyanide gas poisoning encountered a grim new aftereffect -- fetal deaths in pregnant women. In other developments, Indian police in Bhopal seized factory records today as the state government there filed a criminal negligence suit against the company. A team of Union Carbide investigators sent to India was denied access to the plant. At Union Carbide's headquarters in Danbury, Connecticut, a company spokesman provided an update and he denied reports that untrained Indian workers had abandoned the plant or that the company could face bankruptcy as a result of liability claims.

JACKSON B. BROWNING, Union Carbide: The current information we have from our people in India -- and our source there is the all-India news media -- is that the death toll is now at about 2,000. The same source reports that it has been confirmed that there are no more leaks and that people in Bhopal are returning to their homes. So perhaps some part of this tragedy is behind us. To the best of our knowledge the plant was staffed in a normal fashion, which means that there were supervisors there who understood the operation of the plant and were trained to deal with any emergency.

The incident in India has raised a number of questions and speculation in the press about its impact on Union Carbide. While the Bhopal tragedy is without precedent, it is believed that considering both the insurance resources available and other resources, the financial structure of Union Carbide Corporation is not threatened in any way. The company categorically denies that it is considering seeking protection under the bankruptcy laws.

MacNEIL: The spokesman did concede that Union Carbide had not installed a computerized safety system at the Bhopal plant as it has in its West Virginia plant.

LEHRER: It was Share the Symbolic Burden Day at the White House as President Reagan and Republican congressional leaders discussed cutting their own pay as a gesture toward holding down federal spending. White House spokesman Larry Speakes said 10% was the amount of the cut discussed.It would apply to the President, the Vice President, members of the Cabinet and the Congress, and other high officials of the government. After the meeting there was this reaction from House and Senate Republican leaders.

Rep. ROBERT MICHEL, House Minority Leader: How many times have we heard out there from constituents, "Well, you fellows, you know, if you just take the lead out there and show some dent of efort on your own part, maybe the rest of us woul fall in line."

Sen. ROBERT DOLE, Senate Majority Leader: In fact, I'd suggest that probably -- at least we discussed it yesterday on our side -- that members of Congress take a 10% cut and those in high places. And of course the alternative is, is losing jobs. I mean, it's going to be one or the other. We're either going to try to do it with pay restraint or I assume there'll be a -- the federal work force will be made smaller.

LEHRER: The nonsymbolic part of the $34 billion reduction plan includes freezing, cutting and eliminating various government spending programs. A Republican who was also at today's presidential session and a Democrat who wasn't will be with us later in a focus segment on the White House plan.

MacNEIL: Secretary of State George Shultz today told countries of the Caribbean and Central America that the President's Caribbean Basin Initiative is working and that the aid program will continue as long as it's necessary. Speaking to a Caribbean trade conference in Miami, Shultz gave the basic pitch for the free enterprise system as the way to ensure stability and guarantee economic growth in the region.

GEORGE SHULTZ, Secretary of State: I'm calling here for the reversal of state ownership and anti-import policies. These policies have placed stifling controls on private agriculture and industry. They have made them dependent on restricted markets. They have built costly protectionist barriers at national frontiers. And they have produced inefficient state enterprises that divert resources from more productive activities. I call instead for a development strategy that works through an open economy when it rewards initiative, investment and thrift. Societies with stagnant or shrinking economies are vulnerable to violent upheavals. Security cooperation can help shield against Communist adventurism, but there must be something there to shield.

LEHRER: The incoming chairman of the Senate Foreign Relations Committee joined the South Africa protest battle today. Senator Richard Lugar of Indiana wrote a letter urging President Reagan to take a stronger stand against South Africa's apartheid racial policies. The letter was co-signed by another Republican, Senator Nancy Kassebaum of Kansas, who chairs the Senate subcommittee on Africa. Senator Lugar released the letter following a Capitol Hill meeting with the Reverend Jesse Jackson. The White House had no comment on the Lugar letter, but confirmed President Reagan will meet tomorrow with Bishop Tutu, the anti-apartheid South African who won the 1984 Nobel Peace Prize.Tutu has been strongly critical of the Reagan approach toward South Africa. The protest marches and arrests at the South African embassy in Washington continued today as well.Three teenagers, including two of the late Robert Kennedy's children, were arrested.

MacNEIL: Former Defense Secretary Robert McNamara today broke his long public silence about the Vietnam War. He appeared in court to defend former Vietnam commander General William Westmoreland in a $120 million libel suit with CBS. The retired general claims CBS libeled him in a documentary which said he conspired to suppress facts about enemy troop strength in Vietnam. On the stand today, McNamara said he'd repeatedly warned the CBS producer involved that the thesis of the documentary was wrong. McNamara said, "I kept repeating that I did not believe the data had been fake. I did not believe the data had been suppressed.I did not believe General Westmoreland had conspired to deceive the President, Lyndon Johnson, and me."

LEHRER: Our last news summary item tonight is about lunch, one eaten together today in Washington by the Vice President of the United States and his election opponent, Geraldine Ferraro. On Election Night, Mr. Bush invited Ms. Ferraro to join him for lunch, and today it finally came off. They were joined by their respective impersonators, attorney Bob Barnett, who played Bush in debate rehearsals for Ferraro, and Congresswoman Lynn Martin, who did Ferraro for Bush. A good photo opportunity was had by all. Living with Less

LEHRER: Our first focus segment tonight is on what President Reagan has in mind for the 1986 federal budget. It's all still in the unofficial trial balloon stage, but everybody knows what the proposal is. Mr. Reagan discussed it at length again today with Republican leaders of Congress. Budget director David Stockman is also busy explaining the various options to members of Congress as well as Cabinet members and others. In rough terms here is what is on the table:

Thirty-four billion dollars in domestic cuts by eliminating the Job Corps, Legal Services, the Small Business Administration, revenue sharing and most mass transit programs.

By cuts in farm price supports, energy, housing, education and Medicare as well as federal workers pay.

And by freezing cost-of-living increases and government pension and benefit programs -- Social Security being exempt.

There is talk of an $8 billion cut in defense spending, but that decision has yet to be made.

One of the Republican leaders who was at that White House meeting today was the House minority whip, Congressman Trent Lott of Mississippi. He is joined here tonight by Congressman Leon Panetta, Democrat of California, a leading member of the House Budget Committee.

Congressman Lott, what I outlined, is that basically what you heard today or what is on the table?

Rep. TRENT LOTT: Those are some of the major portions of it. I think one thing that should be noted at the beginning is that we're looking at the entire budget. We're looking at what has been referred to as a freeze-plus. But those are several of the items. There are a lot more on the list that are being considered. I think it's important to note that at this point it's still a proposal, a blueprint.There's still give and take, changes being made by the President, by Cabinet recommendations, and by congressional input.

LEHRER: What's your reaction to it in general terms?

Rep. LOTT: Well, first I think you've got to start from the premise that something's got to be done. The deficit is serious. We have problems with the dollar. We have trade problems. We want to continue economic growth. We need to look at ways to encouraging that continued economic growth.But we also have to recognize the deficit's a problem, and it's going to be going up in the next three years -- it's not going to level out and come down, unless we make some hard choices. I think that the idea of an across-the-board freeze -- and I think it's got to be really across the board, with the exception of Social Security. Defense has got to be included, whether it's -- maybe at a standstill rather than a freeze, but at least it's got to be a part of the plan so it'll be fair and credible. And you can't say "Include Leon Panetta's program but don't include mine." There are some programs in there that I feel very much favorably disposed toward, but I think that a cap for one year or some reduction or reform of many of those programs can be accomplished -- if the President will make a complete proposal and if we can find a way to work together in the Congress. It needs to be done, because deficits are a problem. We want to encourage growth, but that's not going to be enough.

LEHRER: Congressman Panetta, what do you think of it in general terms? We'll get to the specifics in a minute.

Rep. LEON PANETTA: It certainly disposes of the myth from the campaign that you can grow out of the deficit. That's for sure. I think the President is recognizing the problem of the deficit, and I think there is a need to address it. These are elements, obviously, that in part have to be considered. I think there's a bipartisan consensus on the Hill that you have to look at the entire budget, that it has to be fair and that it has to be equitable. What concerns me about what was released today is that these are a lot of the same pieces that had been submitted to the Congress in the past and that basically were dead on arrival. Because both Republicans and Democrats said these are areas, particularly those impacting on the poor and on children and on elderly, that we simply are not going to cut back on.

LEHRER: You mean like Medicare, food stamps --

Rep. PANETTA: Medicare, food stamps, nutrition, women's, infants and children supplement program. These are basic programs that serve the poor.

LEHRER: Not even if defense is included, you wouldn't go along with that.

Rep. PANETTA: Well, I think the problem is that these are programs that really are targeted at the needy, and we've always argued that those are safety net programs that ought to be protected. Even the President basically took that position. The problem I always see is that as the administration proposes their budget, we still don't see the consideration of the defense area. Obviously that's still being discussed, and we'll wait and see what happens on that. But you can't pass a package like this unless it's across the board, unless it includes defense, and very frankly I think the bottom line also includes revenues. But those are two elements that were excluded during the campaign.

LEHRER: Now, did you -- we'll get to the campaign in a minute. But at the meeting today at the White House, Congressman Lott, did you say what you just -- did you tell President Reagan what you just told me, which is it's got to include defense, and defense ought to be frozen as well?

Rep. LOTT: Absolutely. And I added one other thing, and that was foreign aid to programs, which includes --

LEHRER: What did he say?

Rep. LOTT: Well, he understood that. He made it clear to us that defense was being considered, that he recognizes that maybe we can't get in this Congress and with the budget needs we have, all that he'd like to have or all that I'd like to have in defense. I certainly would -- I think we've been doing the right thing in defense, and I don't want us to disarm ourselves. I think that would be counterproductive to the arms control negotiations that are coming up. But I think there are some things that can be done in defense, and I think it's got to be significant. But I'd like to emphasize now that Medicare is not one of those programs that you mentioned a while ago -- it is not being proposed that that be frozen or that there even be deep cuts. There were some --

LEHRER: There would be some cuts.

Rep. LOTT: Some cuts, some very moderate reform on the provider side with regard to hospital costs and doctor fees, not on the patient's side. And I think it's important to emphasize that.

LEHRER: What about the safety net point that Congressman Panetta made?

Rep. LOTT: Well, again, I think that -- first of all I think we're approaching from the standpoint of a freeze. Some of the proposals go beyond a freeze into a reduction or even eliminations of some programs. But I counter by saying this. If we include defense and if we include tax reform, which could be very helpful in encouraging growth -- if we get everything else on the table, are they going to say that they can't even support a freeze on some of these social programs or even some reforms or eliminations of some of them that really now have been replaced or can be replaced by privatization, such as in housing?

Rep. PANETTA: I don't think there's any question that those areas have to be considered as part of an overall package. My sense right now after having worked on the budget for six years is that the only way you're going to get a significant deficit reduction package adopted by the Congress is if it is a kind of freeze approach that goes across the board including defense, and that includes some revenues as a short-term way to address the deficit. We've got to do that, we've got to take that step. The concern I have with this package that's being discussed, however, is that this is pretty much a repeat of what we saw the last few years. There are the same programs that David Stockman has addressed before. These are the same programs that the President has submitted to the Congress before as being cut. I don't see the expansion into defense. I see the struggling and the counterarguments, but I don't see it there yet, and I certainly don't see revenues addressed. And in that context --

LEHRER: In fact, he said today specifically, no tax increases, right, Congressman?

Rep. LOTT: Well, now, of course, you can address revenues and you can address the tax code without necessarily raising taxes. You can broaden the base, you can close some loopholes, you can take actions that encourage growth and certainly would be helpful to middle-income people. It could be helpful to the overall economy, which helps bring down that deficit in itself.

LEHRER: Is that what you have in mind?

Rep. PANETTA: Well, let's let's face it.There's a bottom line that has to be addressed here, and everybody's afraid of calling it taxes, but the fact is that that's what it is. And whether you call it tax reform or revenue enhancement or all of the other names that have been used, the bottom line is we need additional revenues, we need additional taxes. We're going to have to address defense, and we're going to have to address these other programs. But they all have to be part of a single package. And what concerns me right now is that we see the same kind of budget dance that's gone on in the past, that on one part there are all the programs that deal with domestic areas and deal with the poor and the elderly and children, and we don't really see those other areas addressed.

Rep. LOTT: Leon, where were you this fall? Did you miss the election? The people made it very clear they don't want tax increases. And the problem is not enough revenue; the problem is too much federal spending, which includes defense. If we don't do something about fiscal year 1988, we're going over the one trillion dollar level for federal expenditures. Now, that's what's the problem is: the government is still bloated. As a matter of fact, we in Congress haven't done our job, including Republicans, in cutting spending. We've made it look like we were really reducing spending, and yet the rate of federal expenditures, as you know better than I do, have continued to go up, year after year after year. All we're trying to say is let's work together, let's use the freeze proposal, which is not a new idea -- a lot of Democrats have been talking about this for four years, including Fritz Hollings several years ago. Let's try to level the spending out that year. Let's hold it to no more than what we spent last year. And let's try to get it headed on just a slight, if at all possible, downward trend so we can avoid this trillion-dollar expenditure that is looking us right in the face and is going to hurt the economy -- and the poor.

Rep. PANETTA: Well, again, Trent, I think the important thing is that we have to set aside the myths that are raised during a campaign. And you know as well as I do that things are said during a campaign that really are not the bottom line. Because the fact is the President did say with regards to the deficit that we don't have to worry about cuts, we can simply grow out of the deficit, we're in a strong recovery. Well, if that's true, then why the need for $43, $46 billion in deficit reductions? Because that is a fact. We're going to have to reduce spending. We're also going to have to increase revenues. You know as well as I do that the reason we're facing this kind of deficit is because of increases in spending in defense, because of a loss of --

Rep. LOTT: And in other areas.

Rep. LOTT: In other areas -- a loss of revenues, and increases in terms of interest payments on the debt. Those are the basic areas that are increasing the deficit right now, and they have to be addressed.

Rep. LOTT: Now, one of the reasons why we want the budget process to proceed before the tax reform package, or flat rate tax --

LEHRER: Did you tell the President that, by the way, today?

Rep. LOTT: He told us that he wanted them to proceed on separate tracks, because --

LEHRER: Separate but not equal, right?

Rep. LOTT: Well, the idea is that if we don't deal with the problems of the spending, the budget first, there will start being these tradeoffs -- "Look, we'll raise a little taxes here and we'll spend it over here." We won't wind up applying it to ways that will encourage economic growth or to reducing the deficit. We'll find more ways to spend it.

LEHRER: That, of course -- he's right about that, isn't he?

Rep. PANETTA: It's the old argument. But the fact is that you have to address the revenues and you have to address them to the deficit. I think there's a way to do that. I think we're fooling ourselves if you think that the Congress is going to engage in tax reform without considering revenues. Because the primary issue, as Trent has said, and I think as everybody has admitted, is that the primary problem is the deficit. And that's what has to be addressed.

Rep. LOTT: In the tax code, we don't need more taxes; what we need is a fair and simpler tax code so that people understand it.

LEHRER: Well, what we need is more time, but we haven't got it. Gentlemen, thank you very much. Robin? Battleship Missouri: In Hot Pursuit

MacNEIL: Next on the NewsHour, we focus on an unusual competition among three citieson the West Coast. They all want to be the home port for the refurbished World War II battleship Missouri. Stephen Talbot of public station KQED-San Francisco tells us why that city is so eager.

STEPHEN TALBOT [voice-over]: The USS Missouri, one of the great World War II battleships, scene of the Japanese surrender to the United States ending the war.

VOICE: The long and bitter struggle is at an end.

TALBOT [voice-over]: The Navy, as part of its current buildup, has taken the Missouri out of mothballs and will soon put it to sea again, newly armed with nuclear cruise missiles. The Navy has announced it will home port the refurbished Missouri in one of three cities: Long Beach, California; Honolulu, or San Francisco -- and San Francisco is going all out to win the competition.

DIANNE FEINSTEIN, Mayor of San Francisco: My colleagues in government who are here tonight and I really want to warmly welcome the United States Navy to San Francisco for the fourth annual Fleet Week.

TALBOT [voice-over]: Fleet Week is San Francisco's annual affair with the Navy, a tradition scorned during the antiwar '70s but recently revived by Mayor Feinstein. It has become an extravaganza of military pomp and civilian adoration. The daredevil Blue Angels dazzle even the urbane and the jaded, and the mayor can't resist taking a ride in the Navy's Skyhawk jet fighter.

Commodore LEON EDNEY, U.S. Navy: San Francisco is a Navy town, and therefore it gives me great pleasure on behalf of the officers and men of battle group Fleet Week '84 to present this small token of our appreciation.

TALBOT [voice-over]: This year the October Fleet Week celebration became part of the elaborate pitch to attract the battleship Missouri and the money and jobs it would bring to the city.

JIM LAZARUS, deputy mayor: There would be, conservatively, 500 jobs created. Beyond that there are probably close to 4,000 Navy jobs, that you have a Navy payroll of perhaps $60 million, that that Navy payroll is spend numerous times in the civilian economy.

TALBOT [voice-over]: Deputy Mayor Jim Lazarus drafted the city's bid to get the Missouri. The proposal commits San Francisco to spending at least $1 million to dredge the harbor and promises that new roads and up to 2,000 housing units will be built for the Navy. The mayor's office claims the Missouri is its best hope for reviving San Francisco's languishing ship repair industry.

Deputy Mayor LAZARUS: The Navy is planning a 600-ship Navy. Some of it's under construction right now. This is an opportunity for San Francisco to get the door open, so that we get not only these five ships, but perhaps a significant larger contingent over the next 10 years.

TALBOT [voice-over]: This is where the Missouri would be docked, the Hunters Point Naval Shipyard, which prospered during World War II and Vietnam but now has fallen on hard times. The Missouri battleship group would bring 4,000 Navy personnel here and another 3,000 dependents, as well as the prospect of 500 jobs for civilian blue-collar workers.

[interviewing] Would you like to see it happen then?

WORKER: Oh, yeah. If you've got jobs, you've got money, and then you can live. It's a better living than unemployment. I mean, that's what counts.

TALBOT [voice-over]: For San Francisco's shipyard workers, the Navy may offer the only alternative to a civilian merchant marine that used to provide steady, good-paying jobs. But the U.S. maritime industry has moved overseas in search ofcheap labor. For shipbuilders today, the military may be the only game in town. Ironically, this bid for military money and nuclear armed battleships is taking place in a city that voted overwhelmingly for a nuclear weapons freeze. That contradiction has not deterred Mayor Feinstein, but it bothers San Francisco Congresswoman Sala Burton, who does not want the Missouri home ported in her city.

Rep. SALA BURTON, (D) California: This is a conscience thing with me, and I cannot change my view on that. I voted against deploying missiles in Europe. Why would I want to have deployment of missiles right here in our own backyard?

TALBOT [voice-over]: Burton has also raised the safety issue, saying cruise missiles on board the Missouri could cause a nuclear accident in the San Francisco harbor. But her main point is that San Francisco should not support the escalating nuclear arms race.

Deputy Mayor LAZARUS: I'm not saying that we support that, and I'm not saying that we believe that massive rearmament is the way to go. But I will say the Tomahawk missile and the cruise missile concept was supported by the last two presidents of the United States, both presidents Carter and Reagan, and is the policy of the federal government. And that ship and those missiles are going to go to San Francisco, Long Beach or Honolulu.

TALBOT [voice-over]: Mayor Feinstein ridicules opponents of the Missouri, calling them victims of a Dr. Strangelove syndrome who want to take San Francisco out of the 20th century. At the City Hall Fleet Week celebration there was no talk of nuclear war or nuclear accidents. It's the patriotism of prosperity San Francisco is after, and with Ronald Reagan in the White House for the next four years, the mayor is determined San Francisco will get its share of the military bonanza.

LEHRER: That report by Steve Talbott of KQED-San Francisco.If you live along the Gulf Coast, you know that a similar contest among 16 Texas, Louisiana, Mississippi and Alabama cities is also under way for the battleship Wisconsin, which is also shopping for a home port.

Still ahead on the NewsHour tonight, an interview with T. Boone Pickens, the man from Amarillo who is after another big oil company, and a report from Britain on a first year with sextuplets. Robin?

MacNEIL: This is pledge week on public television, and the NewsHour is taking a short break now so that your public television station can seek your support. Your pledges help to keep programs like the MacNeil-Lehrer NewsHour on the air.We'll be back shortly.

[fundraising intermission] T. Boone Pickens: Christmas Shopping

MacNEIL: Next on the NewsHour, we have an interview with Texas oilman Boone Pickens, who went public this week with an effort to take over Phillips Petroleum. Phillips, based in Oklahoma, is the nation's 12th largest oil company. With two partners, Pickens' Mesa Petroleum is offering $60 a share for about 10% of Phillips stock. Phillips stock, which shot up yesterday on news of the tender offer, close down three-quarters of a point today at 52 3/4, due in part to the news that an Oklahoma judge issued a temporary restraining order blocking the bid, at least until a hearing next week. The market has been expecting another takeover bid by Pickens since he failed to gain control over Gulf Oil earlier this year. That wasn't considered a setback; Pickens and his investors made an estimated $500 million from buying and reselling Gulf stock. Late this afternoon I talked with Pickens about his latest move.

Withthe judge's restraining order in Oklahoma today, the stock of Phillips went down. Has this taken the wind out of your sails?

T. BOONE PICKENS: Oh no, it's not anything that we are surprised about. I'm in a position where I can't talk about litigation too much, and I'll attempt to exchange with you on it, but it doesn't -- it's not anything that surprised us.

MacNEIL: No. Well, there's one obvious question. The Phillips suit, which caused the restraining order and which will be the subject of a hearing a week from tomorrow, says that you had an agreement -- Mesa, your company, had an agreement with Phillips which had five years to run, and that this bid by you to take over Phillips violates that agreement.

Mr. PICKENS: Well, I have a copy of that agreement with me, and I'll be glad for you to have it. There's no agreement with Phillips at all. The agreement's with General American Oil Company.

MacNEIL: Yeah. General American Oil, which has any relationship to Phillips?

Mr. PICKENS: Phillips acquired General American.

MacNEIL: I see. So you would only be -- under that agreement you'd only be prevented from bidding for the stock of General American --

Mr. PICKENS: Exactly.

MacNEIL: -- in your view.

Mr. PICKENS: Yes, that's correct.

MacNEIL: I see. You said before the restraining order that you hoped to have the financing for your takeover bid completed by the end of this week. Is that restraining order going to interfere with that?

Mr. PICKENS: I don't see why it'd have anything to do with that financing.

MacNEIL: I see. So you're still going to go ahead with this.

Mr. PICKENS: Yes. We're right on schedule.

MacNEIL: What is the purpose of trying to take over Phillips?

Mr. PICKENS: Well, again, just to comment about the oil industry. The industry's struggling right now, and we are managers in the industry of oil companies, we've got to make the best use of stockholders' funds that we possibly can. And in this case, after we looked over a number of companies and, you know, this is not the first time we've been involved in these situations, it may surprise you that the first time we did it was in 1969 when we acquired Huegegen[?] Production Company, which was 20 times our size. So we've had a long history of looking for undervalued assets and then doing something about it. And here again, we looked at Phillips; it was undervalued. The company's appraised value is up to about $80 a share. The stock was selling in the high 30s, and we felt it had an opportunity to come in and upgrade the market value of that stock for all the stockholders -- the Phillips stockholders and also certainly the Mesa stockholders would prosper by it.

MacNEIL: What about upgrading it for yourselves particularly? It was widely reported when you attempted to take over Gulf earlier this year and failed, that by buying a lot of Gulf stock and then selling it back to the company at a premium, you and your partners made, or fellow investors, made about $500 million. Is it true that you made a big profit out of that situation?

Mr. PICKENS: Well, let's go back and review the Gulf situation just briefly. We made a legitimate offer for Gulf at $65 a share, which was $8 over their all-time high of 57, which they reached in late 1980. So our offer was topped by Chevron. We did not sell any stock back to the company. We sold out -- in fact, we were the last stockholder to sell out, of the 400,000 stockholders at Gulf Oil, back to Chevron. So 400,000 stockholders at Gulf Oil actually made $6 1/2 billion in profit.We happened to be one of the stockholders in that group, and the profit that our company made in it was a little over $400 million pretax.

MacNEIL: I guess my question really is, is this a greenmail effort? Are you trying to bid up the price of Phillips stock so that when you've got a lot of it, you can sell it and make another killing like that?

Mr. PICKENS: Well, you see, we never participate in greenmail. In the Gulf deal we said we would not sell out unless the same offer was made to all the stockholders. We have made that same announcement here on the Phillips offer. We've offered them $60 a share, which is right at their all-time high, which they again reached in late 1980 or early '81. And we have said that we would not sell our stock back to the company, but the only way that we would sell out would be if all stockholders got the same offer.

MacNEIL: I see. So if the company did offer a premium above the $60 to buy the stock back, you then might consider selling it back.

Mr. PICKENS: The only way we would consider selling back the company is if they made the same offer to all stockholders.

MacNEIL: It's widely reported in the press today that you are saying that if you acquire control of Phillips, you would fire all 16 men on the board of directors. I don't know they've all men, but all 16 members of the board of directors.

Mr. PICKENS: There are 16. They have a 16-person board, and what we would expect to do would be to take control of the company and have a seven-person board. We would have four people on that board and Phillips would appoint three of their people to be on that board. We weren't talking about firing anybody. We were talking about actually that we would take over the board; a seven-person board then would have four of our people, three of theirs.

MacNEIL: Do you think Phillips has been badly run as it stands now?

Mr. PICKENS: No, I don't think Phillips has been badly run, and I've not been critical of their management. The problem that they have is the appraised value was about twice what the market price was. And here I feel that management, it's incumbent on management to move that market price closer to appraised value. The stockholders -- I come from a stockholders' standpoint all the time. And so the stockholders, the way I see it, the stockholders are the owners of the company. Managements do not own these companies. I work for Mesa Petroleum -- I know who I work for, I work for the stockholders. I'm an employee of Mesa. I also have a sizable interest in Mesa. And I want these managements to move that market value closer to appraised value. And here we see that opportunity, so we have made a $2 billion commitment to this project.

MacNEIL: The criticism is made that this kind of exercise doesn't do any real good for the oil industry, because it just forces companies like Phillips to go to great expense to defend themselves against takeover offers. For instance, to go out and buy some other property to make themselves less vulnerable.

Mr. PICKENS: Well, I can't imagine that a management would do anything that would hurt the stockholders again. And the stockholders here are quite pleased with our $60 offer, and there's no doubt that it will be oversubscribed if we go ahead -- if we aren't topped, if there's not a competing offer that's higher than ours, and our $60 offer goes to the Phillips stockholders -- it will be oversubscribed, which is an indication to me that the stockholders are very pleased with the offer.

MacNEIL: You've said that if you could gain controlof a sizable oil company like Phillips, you would be interested in restructuring the oil industry. Restructuring it how?

Mr. PICKENS: The oil industry, or the company?

MacNEIL: The company.

Mr. PICKENS: Yeah, I can't restructure --

MacNEIL: Well, that part of the oil industry.

Mr. PICKENS: Yes. We would make some changes, but at this time I don't know the Phillips company all that well, and to start talking about what we would do to change it, I'm confident that our management style is much different than the management at Phillips. And also I'm not going to preclude that we could not work with the Phillips management -- I think we could. But again, I come back to, here we have assets that are appraised considerably higher than the market value of the stock. I want that market value up. I think we can get it up.

MacNEIL: Appraised, because of their reserves, the reserves they own.

Mr. PICKENS: Exactly.

MacNEIL: I see. Well, Mr. Pickens, thank you.

Mr. PICKENS: Yes.Thank you. Sextuplets: Sleepless Nights

LEHRER: Our last major item tonight is a special report from Britain on a very special first birthday. It was done for the BBC by special correspondent Bernard Falk.

BERNARD FALK [voice-over]: A year ago, Janet and Graham Walton from Liverpool had just achieved something which made them unique among parents anywhere in the world. They came to the city's maternity hospital to visit their first-born child -- and their second and their third, their fourth, their fifth and their sixth. Married for six years, the couple were desperate to start a family. Janet, a 31-year-old bank clerk, went on a course of fertility drugs. After 18 months, she conceived -- and conceived, and kept on conceiving, and 32 weeks later, a team of doctors and 14 midwives delivered the Waltons' family. The odds were 104,857,000 to one, but this is what they got. Hannah, Lucy, Ruth, Sarah, Kate and Jenny -- the only all-girl sextuplets in the world.

Handling six babies at once required a lot of training, some prayer, and a little bit of help from nurses and relations, who worked shifts day and night to satisfy half a dozen ever-demanding appetites. When born, the smallest baby weighed only two pounds one, and the biggest was three pounds eight. But six weeks later, the babies were collectively galloping through nearly a gallon of milk a day and had gained more than 20 pounds in weight. Early in January this year, Janet and Graham prepared with some apprehension to bring the babies home. For the nursing staff, it was a proud moment if a little sad, as the first two babies, Jennifer and Kate, left the hospital where they were born. The babies left at intervals to give their parents time to readjust to a domestic life which would never be the same again, and to an uncertain financial future.

It was purely coincidental that for-sale signs suddently sprang up in the street where the Waltons lived. Home was a two-bedroom suburban terraced house. And inside it soon resembled an Aladdin's cave for the needs of babies.

GRAHAM WALTON: We're going to get it right.

JANET WALTON: Well, we've got enough nappies here, I think.

Mr. WALTON: We'd have enough room if we didn't have the babies to bring home.

FALK [voice-over]: The spare bedroom was packed to overflowing, with diapers, cots and bottles, shawls, toys, blankets, even elephants. Horrified by a statistic that it can cost up to $100,000 to bring up a child to the age of 21, the parents began to work out how long their supply of baby goods would last.

Mrs. WALTON: I think we've got about enough nappies for two weeks, with six, and enough bottles for two weeks, which is 280. And I think we'll just have to -- well, we haven't got enough room in the house to get any more stuff in to begin with. We'll just have to buy as we go along.

FALK [voice-over]: Three months after the children were born, this was a house where 24 hours a day there was always someone up. Nurses were provided to help in a nonstop routine of sleeping, washing and feeding. The home became an encampment in which the adult occupants were hostages to the task of bringing up six demanding and ever-vociferous babies. Janet and Graham, experiencing the sheer joy of parenthood for the first time, worked out a system. They worked and worked, while the children consumed over a gallon of milk a day, with diaper changes running at 540 a month. Graham Walton was once undisputed master of his own home. But he had to take time off his work as a painter and decorator to become a baby nurse and spend most of the day in what used to be his bedroom.

Mrs. WALTON: Sometimes we get a coffee break. Sometimes we don't.

Mr. WALTON: If I make it.

Mrs. WALTON: Yeah. And then we have about an hour's break for lunch, and sometimes we can skip the bath and go out for a walk. And we try to fit in shopping and things as we go along. It's very hard to get out without being recognized. Everyone stops you. You can't really get on with what you're supposed to be doing. And really, it's a very hard day, but as soon as lunch is over for us, it's time to start all over again. And of course we have to fit in washing, ironing, cooking, if we're lucky. And it seems as if, when you talk about it, there's not a lot, but the whole day flies by.

FALK [voice-over]: Four months after the births, the family left the confines of their home for the first time on a tentative and experimental excursion into the outside world. It meant parading en masse before the astonished gaze of the general public, and the Waltons stopped the traffic in more ways than one. Janet was proudly returning to the bank where she used to work to show the staff her new family. It was a foretaste of things to come. In a world in which rarities can expect some public attention, the babies were a sensation wherever they went. Janet and Graham brought very beautiful but unique babies into the world, and when they met the public they were gawked at and admired by incredulous crowds of people who wanted to touch and stare. And while it was nice to have admirers, this kind of excursion forced Janet and Graham to stay away from the crowds. The family had another, more important priority on their minds: how to raise the cash to keep their family and find money to move to a bigger home. They realized the babies had commercial value, providing they weren't exploited.

[interviewing] Do you have worries, Graham, about what could be described by some as the exploitation of the children?

Mr. WALTON: Yes. Utterly. I've got worries about that. But at the moment I think everything's done nice. The kids are not getting exploited at all at the moment, and they're quite happy. And I'm quite happy with things at this time, at the moment. But I'll be very careful indeed that I don't go too far with things.

FALK: What do you mean by that? What will you do?

Mr. WALTON: I'm very, very conscious of this fact that things could turn a little bit nasty if I don't watch it.

FALK [voice-over]: To watch it on their behalf, the parents hired a lawyer to promote and protect the babies. Rex Macon negotiated financial deals with newspapers and television, and all of them wanted an exclusive.

REX MACON, attorney: I felt that I was kind of a siege victim against the media. It was my duty to protect these children and their parents from the vicissitudes that befell them because of this spectacular event, and do my very best for them.

FALK [voice-over]: Picture stories in papers, magazines and on television brought in nearly $100,000. And soon the advertising promoters wanted the babies too.

MAN [commercial]: Hello, I'm John Fathergill from Syndico[?]. We're supplying the Walton family with all their nursery requirements. This is just one item. They are starting off with three lie-back, twin push chairs, and the babies can all go out together.

MAN [commercial]: We are going to supply shoes to the sextuplets for the first 12 years of their life.

FALK [voice-over]: When they were six months old, the babies had earned enough money for the family to move to a bigger, four-bedroomed house in a leafy suburb. Not that this lot showed much appreciation. But the family hadn't struck it rich. The money only bought the house and some furniture. They could have made a fortune opening supermarkets, but the family wanted privacy and the chance to lead an ordinary life. The last time they allowed cameras to film the babies was in May this year, when they prepared for the biggest family christening ever held in Britain and posed the babies in their christening robes.

These are the babies today, a year after their birth. They're all fit and healthy, and they've learned to feed themselves. They've also got through 11,000 diapers, but now they're teething, and there's only another 122 teeth to grow between them.

The first birthday party was a modest little affair for several hundred people, with a cake, naturally, with six candles and six sides. And it gave the Walton family a chance to look back on the most extraordinary year of their lives.

Mr. WALTON: It's been a very hard year for us all, you know. But it's been a totally different year for me in particular, because I've given up working at me trade and I'm not full-time nursemaid to the babies -- me and Janet, you know. And it's something that I never dreamed I'd be doing full time. It's crazy, really, when you think about it. But it's so enjoyable. It's fabulous, you know. I enjoy every minute of it. You know, even the bad times -- changing nappies, and even the screaming when they do scream. It's great, I think.

Mrs. WALTON: Looking back on the year, some of the highlights have been just the ordinary little things that they've learned to do. It's hard to pick out special moments, but everything that they learned to do is a highlight for us, because we're teaching them everything. And the fact that they're all so good together, so well behaved most of the time just -- we're trying to be ordinary. Although it's hard, the ordinariness is a highlight for us when it does happen. They're just lovely little girls. I mean, to us they're not the sextuplets; they're just our family, they're just our girls.

LEHRER: That BBC report by Bernard Falk. Robin?

MacNEIL: Once again the top stories of this Thursday. Hijackers of a Kuwaiti airliner have executed several hostages. The State Department said two Americans, officials of the Agency for International Development, are apparently among the dead.

The death toll is still rising in India as Union Carbide officials tried to solvethe deadly riddle of Monday's cyanide gas leak.

And Republican congressmen swallow hard at the President's proposed budget cuts, including plans for pay cuts for government workers.

Good night, Jim.

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