The NewsHour with Jim Lehrer

MARGARET WARNER: Good evening. I'm Margaret Warner. Jim Lehrer is away. On the NewsHour tonight, assessing the economic outlook as the Dow Jones Average flirts with the 9,000 mark; the debate over importing workers for high-tech businesses; the political fallout from the Paula Jones case, with NewsHour regulars Mark Shields and Paul Gigot, plus historians Doris Kearns Goodwin, Michael Beschloss, and Stephen Ambrose; and a celebration of poetry month by Poet Laureate Robert Pinsky. It all follows our summary of the news this Friday.NEWS SUMMARY

MARGARET WARNER: The Dow Jones Industrial Average broke through the 9,000 point mark today for the first time. But by the closing bell the Dow was down 3 points from yesterday's close to finish at 8983. In other economic news today Wall Street's inflation fears were eased slightly by a small uptick in the unemployment rate. The Labor Department reported the jobless rate rose .1 percent in March to 4.7percent. We'll have more on the economy right after the News Summary. At the White House today President Clinton criticized the 1.73 trillion dollar budget plan adopted by the Senate The vote--taken late last night--was 57 to 41. He was joined by several cabinet members in the Rose Garden just 11 hours after returning from his trip to Africa. Mr. Clinton said the Republican plan does not meet what he called urgent national priorities for new spending on education and child care. Senate Majority Leader Trent Lott said the bill did have more money for education but just did not adhere to the president's wishes. In addition, Mr. Clinton urged Congress to pass the bipartisan tobacco bill approved by the Senate Commerce Committee this week. He also called on cigarette makers to support the legislation.

PRESIDENT CLINTON: I still believe that the incentives are there for the tobacco companies to do this. With each new revelation of the strategies that have been vigorously pursued to market cigarettes to children I think they have an enormous interest in trying to reverse the record of the past, to try to put this unforgivable chapter behind them, and to start off on a new path.

MARGARET WARNER: The bill proposes to raise the price of cigarettes $1.10 a pack by the year 2003. It would fine the industry billions more if teenage smoking continues to rise. Mr. Clinton also expressed concern about Japan's economic situation. He urged the Japanese government to take bold action to stimulate the economy. The Tokyo stock market fell today after the leading credit rating service downgraded its outlook on Japan from stable to negative. A fired CIA employee was charged with espionage today. Douglas Fred Groat was accused of informing two foreign governments that the U.S. had cracked their code systems. The countries were not named. Groat was also charged with trying to extort $500,000 from the CIA in return for not disclosing its secrets. Groat worked for the agency for 18 years. He was arrested by the FBI Wednesday night and was held without bond. If convicted, he could face the death penalty. In Iraq today United Nations weapons inspectors reported finding no sign of any outlawed weapons-making material after their first search of presidential compounds. Saddam Hussein agreed in February to open the eight sites, which were previously off limits, if the inspectors were accompanied by diplomats. The chief diplomatic observer spoke about the U.N. Special Commission's work.

JAYANTHA DHANAPALA, Chief U.N. Observer: I'm happy to report that yesterday the group of UNSCOM NIA experts, accompanied by the group of senior diplomats, were able to complete their visit to the republican palace in Baghdad, as well as to Sejud presidential site. And, with that, we have concluded the round of initial visits to the presidential sites, all eight of them.

MARGARET WARNER: Iraq's deputy prime minister Tariq Aziz said the inspection results were a triumph for the truth over falsehood. That's it for the News Summary tonight. Now it's on to assessing the economy; importing high-tech workers; the political impact of the Paula Jones case; and what is poetry. FOCUS - STRENGTH IN NUMBERS?

MARGARET WARNER: Phil Ponce has the economy story.

PHIL PONCE: For the world's largest economy, the United States, the way of the Dow is up. It went up past 9,000 today for the first time in history before closing about 20 points lower. How much higher will the Dow go? Are there signs a correction might be in the offing? For analysis we turn to Gail Dudack, chief investment strategist at UBS Securities, an investment bank in New York, and Joseph Battipaglia, chief investment strategist at Gruntal & Company, a New York brokerage firm. And welcome both.Mr. Battipaglia, speaking from the growth perspective, why is this happening?

JOSEPH BATTIPAGLIA, Gruntal & Company: Good evening. The reason it's happening is threefold. First, we've conquered inflation, so expectations about the future are quite bright. We've gone from thinking about 4 percent inflation to talking about 2 percent or less as the ongoing inflation rate, very powerful financial asset or financial asset performance. And secondly, we've had a globalization going on under Communism, the adoption of mercantile activity, economic commerce as the way of the world, and that has benefitted the United States, or has gone through a dramatic restructuring to be a leader in the world. And what that leads to is a third element of this, an explosion in corporate profits. In the last five years alone profits have expanded by 60 percent. All of these factors coming together have led us to a dramatic market, making 9,000 just another milestone on our way to 10 and beyond.

PHIL PONCE: Ms. Dudack, he's painting a near perfect picture. Is that how the bears see it?

GAIL DUDACK, UBS Securities: Well, I think there's--what Joey said is actually true. What I disagree with is that this is some kind of new era or new paradigm because I think that the 90's are very much like the 1960's. In the 1960's, though, we had a nine-year economic expansion with lower inflation than we have right now, lower interest rates than we have currently, better productivity than we have, a higher savings rate than we have today, lower dead as a percent of GDP. In fact, we had a better environment than we have today but today we have stocks trading at record multiples. The S&P is trading at over 23 times trailing operating earnings. We've never seen that kind of valuation before, and even in the 60's we never got above 22, and that was when earnings were falling in a recession. The other thing about profit margins--and I think it's true--we've had a wonderful expansion in profit margins--they're now at 1966 peaks, and I think they have peaked. That's the key problem here. So I don't think companies will be able to gain productivities, and earnings may slow down pretty dramatically in the next couple of years.

PHIL PONCE: So is the earnings portion, Ms. Dudack, the portion of this equation that concerns you the most?

GAIL DUDACK: Well, I think it's going to end up being the underlying problem for the stock market in the long run. There are other things too I think that are somewhat of a problem, which is that a lot of people are banking on demographics as the reason to buy stocks because baby boomers have to save, and they have no place to go but to equities. There's two problems with that. And I've been a part of that belief that there's two things. One is that interest is very low today. It was recently at a 68-year low, so the demographics aren't working. The other thing is that the savings that the public has found they've put narrowly into equities, and so the average investor now has over 50 percent of their financial assets in equities so that their need to continue to force the money into stocks is certainly diminished. And their cash ratios are actually quite low.

PHIL PONCE: Mr. Battipaglia, along the lines of participation, participation in the stock market is also high, in addition to the level of the Dow Jones, yes?

JOSEPH BATTIPAGLIA: Well, it is, and it should be, because investment flows will go where the returns are the best. We've found that throughout this century. And in this period of time the best place to be is the U.S. stock market, so it goes hand in hand. I would say that the most interesting development with all of this is that we have a situation like the 60's, except that we will not have the 70's on the tail end of this, as opposed to being topped out in the competitive field by the Japanese, as went through the 70's, as opposed to having the Vietnam War to deal with, and thirdly, having not one but two oil shocks during the 70's, we actually have a world that is more like the U.S. model in many respects, rudimentary democracies, the expansion of commercial activity, the opening of borders to trade. So I would argue that we are still in a transition of a positive nature, where inflation stays very low, where savings starts to build rather dramatically, helped along by a rising stock market, U.S. competitiveness means global profitability for American companies, which when added to the domestic profitability continues what has been enforced through the 90's. And if wages continue to rise, I view that as a very positive element because it helps the consumer with the savings rate, lowering the debt balances, and also to keep the consumption going. So we have a scenario of ongoing improvement without some sort of cliff that we're going to go off of any time soon. There is the difference between the 1960's.

PHIL PONCE: So, Mr. Battipaglia, how much longer do you think this ascendancy will continue?

JOSEPH BATTIPAGLIA: As long as these conditions remain in force, the bull market will continue to rise with no particular cap in sight. And if we have our sights set on 2 percent or less inflation for goods and services and that we continue to open up economic activity on a global basis, and the United States still exhibits the ability to be a technological leader, we will see 10,000 fairly soon and well beyond that, and, indeed, our path may cross with the Japanese. Their Nikkei Index has been rolling backwards. Their economic model does not work. The ascendancy here is rather obvious.

PHIL PONCE: Ms. Dudack, 10,000 pretty soon?

GAIL DUDACK: The market seems almost destined to go there like a magnet because the market, I think, is driven more by psychology than fundamentals, and I'm the last one to underestimate psychology, but kind of following up on what Joe said, one of my biggest concerns is related to Japan, and not just the Japanese economy, which is a problem down the road, but also that the U.S. stock market does have many similarities to the Japanese market or the 80's, where the market disconnected from fundamentals went to 44 times earnings on the belief that the economy in Japan would continue as it was forever. It turned out that the Japanese market was way overvalued and then it crashed about 40/50 percent. So I think that you can disconnect from fundamentals for the short-term but not in the long run. And I think that investors should really, you know, take a hard look at valuations right now.

PHIL PONCE: Speaking of Japan, yesterday the chairman of Sony made a fairly strong statement. This is the Sony chairman Noriogo, who said, "The Japanese economy is currently facing its most difficult time ever. I am concerned that if Japan falls into a deflationary spiral, it would affect the Asian economies. In that case, not even the U.S. economy would be able to maintain its healthy state." Mr. Battipaglia, does that statement concern you?

JOSEPH BATTIPAGLIA: Well, I want to go back to Gail's statement, which concerns me, and that is that we have a construct similar to Japan. I'd like to point out that their economy is closed, so the price for goods and services in that country are out of kilter with the rest of the world. Secondly, they chose not to have open competition for business. So, in effect, their model fumbled in an economically competitive environment. As to the prime minister's remarks, I would say that, indeed, the Japanese will work harder to import more of the goods that they do buy from the U.S. because that helps their economic engine, which is an export engine. So in order for them to be in global markets, they need to continue to import the goods from the U.S. that they use. However, they don't import a tremendous amount of other goods from the U.S. for the consumer side of things. So they will rely on their export engine to help their economy along. They do have to make fundamental changes in the consumer part of their society to regulate their financial institutions to make up for the lost ground. So, in effect, a deflation in Japan will only bring their prices into where they should be on a global basis, and I don't believe it goes beyond the borders of Japan.

PHIL PONCE: So you don't think Japan's troubles would affect the U.S. market that much. Ms. Dudack, do you agree with that?

GAIL DUDACK: Not really. It's hard to say that the second largest economy in the world won't impact other economies in the world, even the U.S., although I think the U.S. is probably less immune, but I think that it does point out one key thing, that if the 90's are like the 60's, like I think they are, it's true, as Joe said, that it's not going to be--the stock market won't be broken down by inflation because the baby boomers created the inflation partially of the 70's but it could be deflation. It could be that the real risk out there is deflation, and so many of the things that this generation is looking at to end a bull market cycle won't materialize, i.e., inflation or higher interest rates may not be the catalyst for the end of the bull market cycle. It may be a lack of earnings, and that's the source of my concern.

PHIL PONCE: Staying with Japan just for a second, explain in lay terms how the economic troubles in Japan could conceivably hurt an American investor.

GAIL DUDACK: Well, I think we saw in October with the Asian currency crisis how interlinked most stock markets and economies are. And the biggest risk right now to what happened in Asia is to Japan, and, more precisely to the Japanese banking system. The Japanese banking system has really a series of problems, going back to the fact when their economy was doing very well, they over-invested in real estate throughout the world, and that was a source of one problem. They invested in throughout Asia, and they now have some very bad loans in Asia, and they're also very linked to the stock market. Banks in Japan can hold capital in stocks, and their stock market this week is falling. If it falls below 15 percent, that all puts pressure on the banking system in Japan. Clearly, if you have a weak or a crumbling financial system that's bad for the economy, and it could create a credit crunch that could then circle around the world. So it's going to be, I think, a situation that deserves some monitoring going forward.

PHIL PONCE: Mr. Battipaglia, what kinds of advice are you giving to your clients--to stay where they are, enjoy the ride so to speak?

JOSEPH BATTIPAGLIA: Well, understand how we got here and that we have a reason to be here. Be watchful for the return of at any time of inflationary tendencies. Be watchful for recession in the major industrialized countries, particularly Europe and the United States. I leave Japan out of this. And there are opportunities in the market because it has been very rationale. Companies that don't meet their earnings expectations are taken out and literally shot. There are industrial sectors that have under-performed. There are companies that are in transition. There are still great opportunities in the bull market, so that I see more investment coming, and I also see new investors who have money to invest moving away from fixed income vehicles and money funds to take advantage of what equities, opportunities are presented to them. So as long as the mix of fundamentals does not change, there is an opportunity to get the 11 percent or so per annum performance out of equities that have been the historical norm not just for a five-year period of time but for a sixty-year period of time.

PHIL PONCE: And, Ms. Dudack, what advice are you giving to your clients?

GAIL DUDACK: I think it's very important for people to take a look at what they have in terms of their assets. And I think stocks are 20 percent overvalued, and if the stock market were to have a 20 percent/25 percent correction, would they still feel as comfortable with their asset mix they have today? If they do find-- because I do think that on the long run the U.S. economy is in very good shape--but I do think that there will be a lot of volatility in the next 12 months.

PHIL PONCE: Well, thank you both very much. That's where we'll have to leave it.

MARGARET WARNER: Still to come on the NewsHour tonight, importing workers for high-tech businesses, the political fallout from the Paula Jones lawsuit, and what is poetry. FOCUS - HIGH -TECH WORKERS

MARGARET WARNER: Spencer Michels has the high-tech workers story.

SPENCER MICHELS: When these computer science students at the University of California at Berkeley graduate, they will have their pick of high-paying jobs.

COMPANY RECRUITER: If I were to find a position outside the California area, could you relocate for that, or do you need to stay here?

STUDENT: I actually don't think I would be willing to.

COMPANY REPRESENTATIVE: I'm sorry?

STUDENT: I wouldn't be willing to.

SPENCER MICHELS: At this job fair it is the recruiters for information technology, or IT companies, as the computer-related firms are called, who are competing for the student talent. Jos Barnett is a recruiter for SPL Worldwide Consultants.

JOS BARNETT, Recruiter: Definitely there is a shortage of skills because we're all looking for people that are ideal for our positions. There are six or seven different IT companies here today. We're all after the same good guys.

SPENCER MICHELS: For these youngsters in computer programming and engineering starting salaries range up to $50,000 a year--not bad for a 21-year-old. According to the industry, the problem is there aren't enough of them to fill all the slots in the booming information technology field. The U.S. Commerce Department says firms in California's Silicon Valley and elsewhere will need 1.3 million new high-level workers in the next 10 years and that computer science departments at American universities are producing only 1/4 of that number. A new General Accounting Office report alleges the study was flawed because it looked only at computer science students, ignoring those in math and engineering, who often enter the high-tech field as well. Nevertheless, the industry continues to claim it is having a hard time filling the open slots. At Cypress Semiconductor in San Jose, CEO T. J. Rodgers says his firm cannot hire enough engineers to grow at its full potential.

SPENCER MICHELS: Why do you need foreign workers? Why can't you hire Americans to do this?

T. J. RODGERS, CEO, Cypress Semiconductor: We hire all the Americans we can get, but if you look at the needs of the high-tech industry versus what's coming out of the college, we're off by more than a factor of two, so we hire every American we can get. The unemployment rate of engineers is .4 of 1 percent, and we're still short 75 engineers right now.

SPENCER MICHELS: Rodgers and other high-tech executives have asked Congress to allow more foreign workers into the U.S. They worked with Republican Senator Spencer Abraham on an immigration bill.

SEN. SPENCER ABRAHAM, [R] Michigan: We're trying to move legislation that would allow on a temporary basis a larger number of skilled foreign engineers and specialists to come into this country to fill the gaps for the short-term that we have in terms of these jobs. In the long-term we obviously have to improve our education system to produce more native-grown talent. But we can't do that overnight, and if we fail to expand the number of temporary workers coming to this country, I think it will hurt the economy very seriously.

SEN. SPENCER ABRAHAM: [speaking at hearing] There is a significant debate going on as to the access to skilled labor in the industries which you all represent.

SPENCER MICHELS: Abraham's bill, which runs counter to the recent tide of bills limiting immigration, came up for discussion recently at a Senate hearing. The proposed law would increase by 25,000 the number of six-year visas for highly skilled workers. Currently the ceiling is $65,000 a year, with many of the high-tech workers coming from Asian countries. High-tech executives say the quota will be reached long before the end of this fiscal year.

BILL GATES, CEO, Microsoft: Microsoft is in strong agreement that raising these caps to allow very skilled legal immigrants to come in would be a good thing for the technology industry and for the country.

JIM BARKSDALE, CEO, Netscape: Senator, we very much, as we told you, would like to see the limits raised. We employ an awful lot of legal immigrants, who are very bright people and make a great contribution, and more than earn their keep and would like to see their limit raised.

MICHAEL DELL, CEO, Dell Computers: We're disarming the economy of the United States of America if we don't allow these folks to come and stay in this country.

SPENCER MICHELS: T. J. Rodgers claims foreign workers will increase American employment.

T. J. RODGERS: I promise that every time I get one of those engineers I will create five more jobs right here in America for Americans to build and sell those products.

SPENCER MICHELS: Opposition among congressional Democrats to increased importation of high-tech workers has recently softened, and a compromise seems likely, but organized labor continues to lobby against Abraham's bill. Labor leaders say there are plenty of Americans who could be trained or retrained to fill the vacant jobs. Tom Rankin is president of California AFL-CIO.

TOM RANKIN, President, California AFL-CIO: We're not convinced there is a shortage of high-tech workers. There are a lot of instances of older workers not being able to get jobs, workers who have been laid off in the industry, and younger workers who somehow don't meet the perceived needs of the industry, which are basically, I think, they want someone who's in to the latest programming, the hot technology, and they don't want to spend money training people to meet their requirements.

SPENCER MICHELS: Professor Norman Matloff, who teaches computer science at the University of California at Davis, calls the high-tech labor shortage a myth.

PROFESSOR NORMAN MATLOFF, Computer Science Professor: We don't have a shortage. Look, for example, at the hiring rates. The hiring rates are about 2 percent, meaning they only hire about 2 percent of their applicants for software positions. There's no way to reconcile the claims of a labor shortage with, you know, minuscule hiring, like 2 percent. You know, if they were that desperate, they just couldn't be so picky.

SPENCER MICHELS: The industry says it needs to be picky because its work is so specialized. And that may be a problem for out-of-work computer programmers and engineers. About 200 men and women gather every week in Silicon Valley to listen to tips on getting hired and to swap experiences. Although the overall unemployment rate here is below 4 percent, these former or would-be high-tech workers are not finding job hunting easy.

FIRST MAN: I'm not sure what you want to do.

SECOND MAN: Well, I'm not sure either.

SPENCER MICHELS: They use the services of a federal, state, and city-funded employment center called NOVA to search for jobs on the Internet, to find retraining classes at nearby colleges, and to hone their skills at resume writing and interviewing techniques.

WOMAN: Could you tell me a time that would be good for me to come and talk with you?

SPENCER MICHELS: We gathered several of them to talk about the job market.

LARRY HICKEY, Physics and MBA Graduate: I've responded to about a hundred ads in the six months or so I've been out of work. I've had 12 interviews and only a couple of second interviews. So I'm not really sure why I get screened out. I've got good credentials. I've still got a good ten or fifteen years of work ahead of me. And yet I'm not getting any offers.

BOB GAMMELL, Sales and Marketing: Your resume, for example, no one wants to see anything on your resume that's beyond 10 years' experience. Right away, that takes out the gray hairs.

SUSAN HEIST, Chemist, Tech Writer: I don't think I really buy completely into the age thing. I think the biggest thing is retraining and keeping current. I think that's really what people have to go for. And my past experience, the company retrained you. Now, it seems that you have to take responsibility to get yourself retrained.

BOB GAMMELL: The industry has changed so fast that you have to change with it, which means re-education. Re-education to that field to upgrade my skills will take me approximately one year. And that's what I've decided to do.

SUSAN HEIST: I'm wondering in my mind am I going fast enough that I'm going to be able to get that job when I finish my training.

LARRY HICKEY: You know, another factor is we may have to re-think our salary expectations. If we're competing with these people from third world countries, they're going to have a lot less salary expectation than we do.

SPENCER MICHELS: There is debate and not much research on whether foreign workers are paid less. Federal law prohibits that. And there is hot debate on whether experienced American workers, like these, can be retrained to take the open jobs industry wants to give to foreigners. Professor Randy Katz is chair of the Computer Science & Electrical Engineering Department at Berkeley.

PROFESSOR RANDY KATZ, UC Berkeley: This is a field which is moving very rapidly and something that a 50-year-old computer programmer may have learned 30 years ago is not as current as a 22-year-old coming out of our programs today.

SPENCER MICHELS: For example, Katz says that the new programming language called Java, which allows programs to run on any computer, may be easy for his students to learn but difficult for older workers.

PROFESSOR RANDY KATZ: The analogy that I like to use is I always wanted to learn Swedish. And it's harder for me as a forty-two-year-old to learn Swedish today than if I learned it when I was six years old, or if I tried to learn it when I was eighteen. And the same thing is true about these modern ways of programming computers.

NORMAN MATLOFF: Are you saying that the people who are trained earlier, their brains are fried, and now they can't do it? It's just absurd. It's like saying that somebody who's been a Chevrolet auto mechanic all his or her life suddenly can't learn to work on Fords. And that's just not true.

SPENCER MICHELS: Some companies, like Cypress, don't believe it's their responsibility to retrain American workers for new technology, though they do some training. Here, the work force comes from dozens of countries. These are highly specialized engineers with Ph.D.'s and M.A.'s whose salaries range up to more than $100,000 a year. The development section is headed by Jose Arreola, a Ph.D. from Mexico.

JOSE ARREOLA, Director, Cypress Development: The wafers that I make are very complicated to make. They require about a hundred steps involving chemistry, plasma, you know, the most sophisticated thing that you can imagine. And not everybody has that kind of skills.

SPENCER MICHELS: Why not train people in those skills?

JOSE ARREOLA: Because I'm not in the training business. That's what universities are for. I'm in the making silicon business, which is what I do. So, you know, I don't want to spend my time training people. I want to find them, you know, and put them to work and making, you know, money for us.

SPENCER MICHELS: Given the industry's preference for young, freshly trained college graduates, the burden for educating them falls to American universities, where the number of computer science students declined from 1983 to 1997. But now, according to Professor Katz, it's climbing extremely fast.

PROFESSOR RANDY KATZ: It's a boom and bust sort of industry. It follows cycles, as anything else in our economy, and right now the computer industry is in a big boom.

SPENCER MICHELS: Do you think the boom is going to continue or not?

PROFESSOR RANDY KATZ: I think that this dramatic boom will almost certainly dissipate at some point, and we'll go back to sort of normal growth. But, in the meantime, we are planning to hire aggressively new computer science faculty to meet the current demand.

SPENCER MICHELS: Nevertheless, the universities aren't attracting enough engineering students, say industry executives like T. J. Rodgers.

T. J. RODGERS: If you ask about our colleges and universities, who's the best in the world, you give me an American engineer any day over any engineer I can find anywhere else and I've already hired all of them I can hire. We don't--we don't create enough American engineers, so one thing is I would like to see a lot more engineering students come out.

SPENCER MICHELS: Rodgers admits that it is a long process, involving reform of the American school system. So for now, he says, his firm and thousands of others will search for trained high-tech workers by posting jobs on the Internet, by recruiting vigorously at top schools, and by lobbying Congress to allow more foreigners to work in the information technology industry. FOCUS - LASTING IMPACT

MARGARET WARNER: For four years Paula Jones' sexual misconduct suit has dogged the president. Now, with this week's dismissal of her case we assess the impact it has had on our politics and society. We begin with Shields & Gigot. That's syndicated columnist Mark Shields and Wall Street Journal columnist Paul Gigot.Mark, when news was announced, Mike McCurry, the president's press secretary, called this a vindication. He said the president considered it a vindication. Was it, in political terms?

MARK SHIELDS, Syndicated Columnist: No. It wasn't a vindication, but it was an enormous relief. It was liberating for Democrats. For 70 days, Margaret, there have been nothing but bad stories about the president, and ugly stories, and stories that were apparently believed by a large majority of the American people. The prospect of a trial, with testimony every day in this year's trial of the century in Little Rock, that was obviated. So for Democrats there was a sense of liberation, rather than vindication, I think especially Clinton Democrats.

PAUL GIGOT, Wall Street Journal: It was an emotional easing for Democrats. Certainly it helped morale at the White House, just the prospect that he won't face this sex trial has got to be helpful. But you can tell that there's still concern by the way the White House talks. You can kind of tell the way the White House is in trouble by who James Carville is targeting and how loud he's screaming. And he went right after Ken Starr, after this case was dismissed, thereby suggesting, look, this is still a problem for us and Ken Starr's investigation is a problem; it's ongoing. And rather than dealing with sex, which this case was, and had kind of been a political diversion from the real problem, which Ken Starr is pursuing, which is perjury and obstruction of justice, and witness tampering, and that's going to keep going.

MARGARET WARNER: What do you think it does to the Starr investigation, dismissal of the Paula Jones case?

MARK SHIELDS: It certainly puts pressure on Starr. It pushes, I think, it closes Starr's timetable down. Now there is a certain sense in the country that the country would like to have this behind them. And I think that works for the president. I think that means when Ken Starr does come in, you already have Republican Senators like Arlen Specter saying he'd better come in with something that is a lay down hand where the president would have to resign it is so serious, I think it complicates life for Republicans, Margaret. The 10 weeks of revelations, the admissions of past dalliances and worst by the president have simply reinforced the zeal and zest of the anti- Clinton--especially among the anti-Clinton sentiments--among the most conservative, traditional, and religious Republicans. They are, if anything, more fired up than they were 10 weeks ago, whereas, the pragmatic Republicans, the ones whose names are going to be on the ballot this November, see the president's job rating still high, see the Republicans, if anything, having been hurt over the last three months, and so they're a little less eager to engage. That also complicates Ken Starr's life, because he's going to be dealing with a Congress, with a Republican majority that is deeply conflicted and deeply divided.

MARGARET WARNER: Do you agree, Paul, that--it sounds like what Mark's saying is, one, it puts pressure on Starr to wrap it up more quickly, but also raises the bar of what he has to demonstrate?

PAUL GIGOT: I don't think it changes much for Starr of what he has to demonstrate. Starr is only going to be able to demonstrate what the facts allow him to demonstrate. I mean, he can go off on all the rhetorical rifts he wants, but what's really going to matter is how good's the case.

MARGARET WARNER: As he did this week, talking about--

PAUL GIGOT: Well, he said he was going to purse the facts, and that lying mattered, and that that is the focus of his investigation, but, in the end, it's not the conclusions that Ken Starr draws as much as the power of the case itself, and the facts and the contradictions, or whatever the case is that's going to matter, and it's going to matter to Republicans. Republicans are going to--they have a lot of ways they can handle this. I would agree with Mark at one point, and that is that this probably makes it less likely that Bill Clinton is going to be--going to have impeachment hearings.

MARGARET WARNER: And why is that?

PAUL GIGOT: Well, because psychologically there's a--it's harder--it raises the bar a little bit politically, makes Republicans a little more skittish. About a week ago they started to defend Ken Starr in much more aggressive terms. Now I think that will stop a little, but there are a lot of different ways Ken Starr could approach it. What if he indicts Monica Lewinsky for something and says the president is an unindicted co-conspirator, which is what happened in the Nixon case. I'm just laying this out as a possibility because there's a lot of things Ken Starr could do, and the Republicans don't have to pursue impeachment hearings right away; they could have informational hearings. What if we just tell--ask Ken Starr--come on, tell us what you found, tell us what you think it means, and then depending on how the public reacts, how the White House responds, leave it at that, so there's a lot of uncertainties here. I don't think it's cut and dried right now.

MARGARET WARNER: It sounds as if Paul's saying that he thinks the president is still in some real political jeopardy in terms of at least what more can come out and how the Republicans could use this.

MARK SHIELDS: Margaret, Paul doesn't know, I don't know. Nobody knows what Ken Starr has. He's got the Filegate and he's got the travel office; he's got Whitewater; he's got all of this stuff. I mean, we don't know what he has. We don't know if he's going to come in there with something that looks like double parking outside an orphanage on Christmas Eve or if it looks like something that Lizzy Borden in drag--I mean, we don't know what he's going to have. So until he does--I think informational hearings would kill the Republicans. I mean, if they come up with something and that's all you've got is informational hearings, there really is going to be a drumbeat of this is enough. And if you turn it over, I mean, once informational hearings start, then the people that we've described and I think agreed are full mooners on that committee, they would take that as a green light on the House Judiciary Committee. The cameras would turn on, and these people would turn into three-headed ogres, and the Republicans don't need that. Republicans have to understand, Bill Clinton right now is more popular than Ronald Reagan was at any point in the second term. The Republican Congress--the Republican Congress is popular, and its leadership is not. It has no policy. It has no program. This was its campaign strategy for 1998. They've got to figure out what--they've got an election coming up. The numbers in the poll out today hurt them, show that they're worse off than they were six months ago. So they've got to figure out--they were going to ride this horse in. They were just going to say this guy's in trouble, I mean, he's been disgraced, he's got to be drummed out of office, and then in the final analysis that doesn't look like it's going to be a route between now and November for them; they've got to come up with something.

MARGARET WARNER: All right. For some additional perspective, let's add two NewsHour regulars to our discussion, presidential historians Doris Kearns Goodwin and Michael Beschloss, and joining them tonight is historian Stephen Ambrose.Michael, what effect do you think this--the Jones case has had on this president?

MICHAEL BESCHLOSS, Presidential Historian: Well, first of all, it's raised the noise level of some of the allegations of impropriety in his private life that have dogged him really for the last six years. But I think in a larger sense it really is going to depend on what Ken Starr really turns in and whether this is related to what was discovered about Monica Lewinsky. I think if Starr does come up with evidence that opens Clinton to really serious allegations that can lead to impeachment hearings, in a way the language of the last day or two--vindication--will seem a little bit hollow because that's what people will remember. I think the most promising thing for Bill Clinton is that there is a history of recent presidents who have had serious scandals in their second terms and have been able to emerge from them. Truman in his second term, mink coat scandal; Dwight Eisenhower's chief assistant, Sherman Adams, was accused of bribery; and perhaps most famously Ronald Reagan in 1987 was able to emerge from this very serious scandal--Iran- Contra--and have two of the most important years of his presidency during which the Cold War effectively ended.

MARGARET WARNER: Doris, what effect do you think this case has had and is going to have on Bill Clinton's next two and a half years, the last two and a half years of his presidency?

DORIS KEARNS GOODWIN, Presidential Historian: Well, it'll depend in part on what he does with this presumed vindication. You know, it's been a very tawdry time, and it's been very denigrating to him and to the presidency. I still think if he had to do it over again, he would have been better off settling with Paula Jones at the beginning and using these last few years to do something that he clearly wanted to do for the country. But that's long behind him. Now the question is: Can he say to himself, look, I'm more popular now than I've ever been before. This is not the way my pollsters would have told me to get my popularity, and instead decide I'm going to use that popularity; I'm not going to garner it anymore; I'm not going to look after it anymore; my whole life I've been doing that; I'm going to try and use it now to do some things in these last couple of years, maybe really stand behind the Democrats and really try to win that Congress in the November election, maybe stand for some large things, rather than the smaller programs that the pollsters have told 'em is all the country will stand for, really talk about what he wants to do with race, deal with campaign finance right up front. I know probably pollsters will tell him don't do this, don't rock the boat, but in a certain light the only real positive thing he can get out of this whole embarrassing scandal is to decide to damn the torpedoes, whatever that means, about popularity, use that popularity up, and know that he's only got 18 months left to really shape thatlegacy.

MARGARET WARNER: Stephen Ambrose, do you think that this case and then also its dismissal leaves Mr. Clinton equipped to do what Doris and Michael are talking about, which is somehow transcend all this and in the next two and a half years?

STEPHEN AMBROSE, Historian: No. I think that he and Ken Starr are locked in a death embrace and that we are going to be stuck with it two years ahead of us, are talking about what Bill Clinton did. We're not going to be able to concentrate on the future; we're going to be stuck with the past, with did he do this, did he do that, it depends on what Starr reveals, of course, as has been said, but this is going to be, it seems to me, very much like Nixon's second term, a history lesson, history examination, a research into the past, rather than leaping forward into a bright new future in the bridge into the 21st century and all of that stuff.

MARGARET WARNER: Do you agree, Paul?

PAUL GIGOT: I tend to agree with Stephen Ambrose on that. I think the political wreckage of this Paula Jones case for the president is severe. His credibility, if you look at his personal favorable numbers, what they think of the president, people think of the president as a human being, as an admirable leader, they don't admire him. They don't try--they don't believe he's honest. Now, they think he's doing a good job. The poll numbers are good when it comes to the economy, when it comes to his general stewardship, but that difference affects his ability to do difficult things. And there's one other way in which this whole case affects his ability to take the kind of risks that Doris talked about, and that is his last defense, his best defense is a high approval rating. Second-term presidents, a lot of them will use that, as Doris suggested, spend the capital to try to do things on entitlement reform or something. He can't take the risk as long as this case hangs over him of gambling that high approval rating, of taking on different interest groups because if he does, and that goes down, the Democrats and Republicans might look at them and say now is the time to pounce.

MARK SHIELDS: I think two things: First of all, just in the factual category, Bill Clinton's personal ratings in terms of honesty and integrity are the same today as they were in 1992. They've never been high. He's never been a hero with the American people. They are the same in the Wall Street Journal poll today as they were in October of 1992, so he hasn't--he hasn't suffered. I agree that certainly esteem for him is down over the past 70 days, there's no question about it. People believe worse about him than they did then. But I don't think it affects the presidency. I think that's a mistake we make.

MARGARET WARNER: You're talking about now as an institution.

MARK SHIELDS: As an institution. Remember Jimmy Carter, the Congress was muscularly assertive in the late 1970's, after Nixon, Ford, Carter, Ronald Reagan came in crying the country, the establishment said we can only have one six-year term, a president couldn't run for re-election; Ronald Reagan proved that the job worked; that he could do it; that it wasn't too big for one man. The same thing after Richard Nixon, we find in the next fellah what we're looking for. We found in Gerry Ford emotional health, emotional equilibrium, sort of a decency and a family life that we could identify with. Whoever the next president is we will find that in him if that or her--if that president is up to the job. That's all it is. The office is remarkable. The Congress is not assertive now. At 1995 it was, but this Congress right now is a pretty docile, tame tabby cat. It's no tiger.

MARGARET WARNER: No damage to the president? I was just turning to Michael, and then I'll get to you, Doris. No damage to the presidency as an institution, no change?

MICHAEL BESCHLOSS: I think the presidency has shrunken in the last six years, and one of the reasons obviously is the end of the Cold War. Also, presidents are seen in much more trivial terms. A Franklin Roosevelt or a Dwight Eisenhower did not have to have their private lives dissected and illuminated, even if their private lives might have been a little bit more resistant to this kind of scrutiny than Bill Clinton's, but the other thing is that Bill Clinton has suffered--Mark is absolutely right--since 1992 by the fact that he has not had the strength that most presidents get from the fact that there are role models. When you've got a little kid in Iowa whose parent says, I want you to be like the president, that gives the president a degree of authority. Bill Clinton has never had that as long as he's been president, and the result has been that he hasn't had the kind of power he otherwise might have had to do the kind of things that we're talking about. And the other thing is that he hasn't gotten the credit that he might have gotten for some of the good things that he has done. That's not something that's permanent. You might have someone come in in 2001 who's very different, who might have that kind of authority, and that can all change.

MARGARET WARNER: Doris, you--do you think there's been really no impact on the institution of the presidency from all of these salacious revelations, all this prying into the president's personal life?

DORIS KEARNS GOODWIN: Oh, I have no doubt that it has reinforced the cynicism that we feel about leadership in general. We're in a troubling period right now where there's not a great engagement on the part of the citizenry with politics. It's almost like politics has become a spectator sport, and that's what allows people to say, oh, Bill Clinton has won, because Paula Jones lost, or Bill Clinton is up and Ken Starr is down. There's very little deep connection with the political system the way there was in the 60's, the way there was at the turn of the century, the way there was in the 30's. And to that extent I think it's reinforced the soap opera quality of our public life. I had a dream the other night that Ken Starr was investigating the Roosevelt unconventional relationships in the White House with Eleanor and Franklin side by side with Roosevelt's secretary, Missy LeHand, and Winston Churchill drinking all day long, and it was a terrifying dream, but it's not simply the press that's brought this on. It's the leaders we've had in there have not been able to live up, as Michael said, to that kind of authority model. So altogether, we've got a very disengaged society. And I think that's going to take a real leader to turn around.

MARGARET WARNER: Stephen Ambrose, do you think that disengaged society has been made even more so by what happened in this case, or is this something that's an ongoing trend, and this is just a blip in it?

STEPHEN AMBROSE: I think the society is disengaged in politics because politics just aren't very important right now. But the only thing I know for sure about the future, talking about the effect of this case and the Clinton presidency on the future of the presidency, the only thing I know for sure about the future is it's going to be different, and we're going to have a new president in 2001. And he or she is goingto lead us in new directions, and none of us know what the crises or the lack of crises might be at that time. I don't think for a minute that this dismissal of this lawsuit or the bigger issue, Clinton and his behavior as president and before, is going to have an effect on the presidency of any permanency whatsoever.

MARGARET WARNER: Michael, we keep hearing--I certainly hear from normal people not in the press, not in politics, that they have been disgusted by all of this, by the coverage, by the wallowing in all the details, and by the further coarsening of the dialogue, and I know we talked about coarsening of the dialogue before this happened, but--

MICHAEL BESCHLOSS: We sure did.

MARGARET WARNER: Is this just going to get more and more so this way, or do you think--I mean, there are really three players in the political discourse here--the players, themselves--there's the media and there's the public--I mean, are we all just moving in this direction? Do you think there'll be a pulling back?

MICHAEL BESCHLOSS: I think it's all going to depend really on how this investigation ends. And although the president had a victory the other day, this investigation is not over, and we do not know whether this is something that's going to still get very serious. If two or three years from now we look back and see that Paula Jones, Lewinsky business turned out to be a diversion, it was not very serious, Bill Clinton did not do anything very bad, then I think people will say, what were we talking about here, why were we so enmeshed in something that was so trivial and tawdry? On the other hand, if this leads to serious impeachment hearings that do jeopardize his presidency, it's going to look extremely difficult. Take a look, Margaret, at the summer of 1973. Let's say that the hearings on Watergate in the Senate ended with only the testimony of John Dean making accusations against Nixon and there were no tapes, and Nixon stayed in office, Watergate would have been seen as a blip and also people might have said, Nixon was right in saying that there was a big left-wing conspiracy against him.

MARGARET WARNER: And that the press has overreached?

MARK SHIELDS: That the press had overreached. There's a major difference in the way we view our president. On election day 1992, George Bush told both Marlin Fitzwater, his press secretary, and Bob Teeter, his campaign manager, he was sure that the American people would not elect Bill Clinton. Why? Because Bill Clinton had been a draft avoider and a draft evader and George Bush had grown up at a time when the president was the commander-in-chief, the thumb on the nuclear trigger, who could affect every one of us. In 1941, Margaret, when Joe DiMaggio hit straight in 56 consecutive games, the New York Yankees played Cleveland in a night game in Cleveland's municipal stadium with 80,000 people. Franklin Roosevelt gave a 15-minute fireside chat. It was played over the loud speaker system. Eighty thousand people sat in their seats and listened attentively to the President of the United States. It is unthinkable--whether it's Bill Clinton or who it is--George W. Bush or Steve Forbes--that people are going to sit--and the president can't get on cable now. I mean, it's--I mean, forget it--pop up videos are going to supplant the president--he really is a less commanding, a less compelling figure, and made so certainly by the terms of the debate.

MARGARET WARNER: Yes, you're trying to get in here.

DORIS KEARNS GOODWIN: Well, it seems to me that there's some truth to the fact that the fragmentation of themedia makes it much harder for any leader to command our attention. The state of the union messages--except this last one, which had a little sex into it, have been decreasing in attendance listening--the convention speeches don't have that same hold--but nonetheless, in my optimistic moments, what I think is that this whole debate may make us figure out a better standard for what part of the private lives of our public figures really matter, make it relevant to their leadership. To go back 20 years in their old lives in some affair they had 20 years ago is just idiotic. It really would have taken Roosevelt away; it would have taken Eisenhower away, and maybe the public is going to figure out a better balance with the media, but I don't know if I trust my optimism. The Red Sox have won two games. Now I think they'll win 160 more.

MARGARET WARNER: Stephen Ambrose, do you--

STEPHEN AMBROSE: If I could just--

MARGARET WARNER: Yes, please.

STEPHEN AMBROSE: --on that one--I think it's just dreadful what has happened to this country and the point that we've gotten to. And I've got 12-year-old grandchildren, and I can't imagine what to tell them about what's on the evening news. Now, when I was a kid, we were-- everybody knows, God created man with a penis and a brain and gave him only enough blood to run one at a time. And that's why we used to have dormitories that separated the boys and the girls, and we had chaperones at the dances, and all that is apparently gone now, and it's apparently all right to go grope if you stop when the woman says no, or if she says yes, it's all right to give her favors and privileges and benefits afterwards. And I just want to say for myself, I just think it's dreadful. And I do think it matters what a president's character is, and I think it mattered that Jack Kennedy had all those different girls all the time. I think it's just sick when that sort of thing happens, and I think it hurts us all. But the American people are obviously ready to cut a great deal of slack on this sex business in a way that they wouldn't on breaking into your competitor's office or tapping your rival's telephone line.

MARGARET WARNER: All right. Thank you, Stephen Ambrose, and Doris, and Paul, Mark and Michael. FINALLY - WHAT'S POETRY?

MARGARET WARNER: Finally tonight, April is National Poetry Month. Here to celebrate is Poet Laureate Robert Pinsky.

ROBERT PINSKY, Poet Laureate: A question I often here is: What's poetry? The poet, Heather McHugh gives a pretty good answer in this poem. Here, for Poetry Month, is Heather McHugh's poem, "What He Thought," for Fabbio Doplicher:

We were supposed to do a job in Italy/ and, full of our feeling for/ourselves [our sense of being/Poets from America] we went/from Rome to Fano, met/the Mayor, mulled a couple/matters over. What's "cheap date"/they asked us,/what's "flat drink?"/Among Italian literati we/could recognize our counterparts: the/ academic,/the apologist, the arrogant, the amorous,/the brazen and the glib. And there was one/administrator [The Conservative], in suit/of regulation gray, who like a good tour guide/with measured pace and uninflected tone/narrated sights and histories/the hired van hauled us past./Of all he was most politic--/and least poetic-- so/it seemed. Our last/few days in Rome/when all but three of the new world/bards had flown,/I found a book of poems this/unprepossessing one had written: it was there/in the pensione room [a room he'd recommended]/where it must have been abandoned by/the German visitor [was there a bus of them?] to whom/he had inscribed and dated it a month before. I couldn't/read Italian either, so I put the book/back in the wardrobe's dark. We last Americans/were due to leave/tomorrow. For our parting evening then/our host chose something in a family restaurant,/and there we sat and chatted, sat and chewed, till,/sensible it was our last big chance to be Poetic, make/our mark, one of us asked/"What's poetry?/Is it the fruits and vegetables/and marketplace of Campo dei Fiori/or the statue there?" Because I was/the glib one, I identified the answer/instantly, I didn't have to think-- "The truth/is both, it's both!" I blurted out. But that/was easy. That was easiest/to say. What followed taught me something/about difficulty,/for our underestimated host spoke outall of a sudden, with a rising passion, and he said:/The statue represents/Giordano Bruno, brought/to be burned in the public square/because of his offence against authority, which is to say/the Church. His crime was his/belief/the universe does not revolve around/the human being: God is no/fixed point or central governmentbut rather is poured in waves, through/all things: all things/move. "If God is not the soul itself,/he is the soul OF THE SOUL of the world." Such was/his heresy. The day they brought him forth to die/they feared he might incite the crowd [the man/was famous for his eloquence]. And so his captors/placed upon his face/an iron mask/in which he could not speak./That's how they burned him./That is how he died,/without a word,/in front of everyone. And poetry--/[we'd all put down our forks by now, to listen to/the man in gray; he went on softly]-- poetry/is what he thought, but did not say. RECAP

MARGARET WARNER: Again, the major stories of this Friday, the Dow Jones Industrial Average broke the 9,000 point mark for the first time but then fell, closing the day at 8983. The Labor Department reported unemployment rose .1 percent in March to 4.7 percent. And President Clinton urged Congress to pass the bipartisan tobacco bill approved by the Senate Commerce Committee this week. We'll see you on-line and again here Monday evening. I'm Margaret Warner. Thank you and good night.