The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. I'm Jim Lehrer in Washington.

MR. MacNeil: And I'm Robert MacNeil in New York. After tonight's News Summary, we look at the political landscape and the Perot phenomenon at the end of the primary season with our regional editors and analysts, Gergen & Shields. Then a report on the vote in Czechoslovakia, is it one nation or two? Finally, Business Correspondent Paul Solman looks at a manufacturing company with a policy of no layoffs. NEWS SUMMARY

MR. LEHRER: The nation's unemployment rate rose to 7.5 percent in May, the Labor Department reported today. That was the highest level since August 1990, and an increase of .3 percent over April. Three hundred and thirty thousand more people were looking for work, bringing the total number of unemployed to 9 1/2 million. Labor Secretary Lynn Martin and House Majority Leader Dick Gephardt had these reactions.

LYNN MARTIN, Labor Secretary: Today's figures on unemployment remind us that traditionally employment growth lags the positive developments that we have been able to see in the economy over the past few months. We are beginning to see job creation, although not nearly enough. We are also seeing, and certainly part of today's figures, due to more people feeling that the economy is recovering and trying to come back to the work place.

REP. RICHARD GEPHARDT, Majority Leader: Last night, the President said the economy is getting better, but the people don't realize it. Actually, unemployment is getting worse and the President doesn't realize it. The President can say how much he cares time and again, but unless he is willing to back up the warm words of caring with action to help jobless people, the cynicism of the American people will grow along with the hurt of those the President is unwilling to help.

MR. LEHRER: The Labor Department report said the unemployment rate for blacks was 14.7 percent, 11.3 percent among Hispanics. For black teenagers, it was nearly 43 percent. Robin.

MR. MacNeil: President Bush said today he supports his environmental protection administrator, William Reilly, who heads the U.S. delegation to the Rio Earth Summit. The New York Times reported today that Reilly had petitioned the White House to reconsider its opposition to the summit's biodiversity treaty, designed to protect endangered animals and plants. The Times said Reilly was rebuffed by the administration when he suggested that the U.S. sign the treaty with slight modifications. His confidential memo was leaked by a White House official. President Bush spoke about his position and the treaty this morning during a picture taking session at the White House.

PRES. BUSH: I must as President and will as a human being keep in mind the needs of American families to have jobs. And I must - - I am the one that is burdened with finding the balance between sound environmental practice, on the one hand, and jobs for American families on the other.

MR. MacNeil: The President's position, which he'd emphasized during his press conference last night, was the subject of debate today in Brazil at the Earth Summit. We have a report by Bill Neely of Independent Television News.

MR. NEELY: The President's prime time attack on a summit treaty and Rio's environmentalists hasn't gone down well here. They say he just doesn't understand what the summit's about.

CLIFF CURTIS, Greenpeace: President Bush is completely isolated on this and every other issue facing the Earth Summit. The biological diversity convention isn't a convention that threatens jobs for the environment.

GORDON SHEPARD, World Wildlife Fund: The reality is this conference is designed to make industries sustainable in both rich and poor countries. If America doesn't sign, then American industry which is currently using unsustainable practices will not be able to continue as it is and that will put people's jobs at risk.

MR. NEELY: America's caution viewed here with more suspicion by the day, because money's the rub.

SEEISO LIHPO, Delegate, Botswana: We believe that the Northern countries should see the whole question of the transfer of financial resources as a means of investing in sustainable development. You are not talking about the age old transfer of resources to African countries, because African countries would like to have handouts. We are not talking about handouts.

MR. NEELY: Britain says the U.S. is being misunderstood at the summit. It's trying to build bridges. But its own expected signing of the biodiversity treaty will only isolate the U.S. still further.

MR. MacNeil: Also at today's meeting, the World Bank announced it would increase low interest loans to developing countries for conservation projects. Member nations would have to pay for most of the $4 1/2 billion plan.

MR. LEHRER: Russia and seven other former Soviet republics signed an arms treaty today with countries of NATO and the former Warsaw Pact. It was done at a meeting in Oslo, Norway. The treaty commits them all to cutting stockpiles of tanks, artillery and other non- nuclear weapons. It was first agreed to two years ago but was never implemented because of the collapse of the Soviet Union. The U.S. House of Representatives approved a $270 billion military budget today. The vote was 198 to 168. It gives conditional approval to the President's request to build 20 more Stealth bombers. But it cuts about $10.5 billion from the President's overall fiscal 1993 proposal, taking money from SDI, the anti-missile defense system, among other things. The bill now goes to the Senate.

MR. MacNeil: President Bush signed an order today imposing a trade embargo on Yugoslavia. The oil represents U.S. compliance with United Nations sanctions ordered last week. The sanctions are intended to end aggression by the Serbian-backed Yugoslav army against the former Yugoslav republic of Bosnia-Herzegovina. This afternoon U.N. officials in Bosnia reached agreement with the warring parties to take control of Sarajevo's besieged airport. It would be reopened only for relief flights. Voters in Czechoslovakia went to the polls today to decide whether to split their country in two. A wave of nationalism has recently swept the Eastern European nation. The Czech and Slovak regions could separate as a result of the two-day vote. President Vaclav Havel strongly opposes such an outcome. Final results are expected next week. Poland has a new prime minister. Peasant Party Leader Valdemar Pawlak replaced Jan Ocevsky, whose government was ousted today, just five months after it took power. The 32-year-old Pawlak, a farmer, was deposed by President Lech Walesa. After his confirmation, Pawlak vowed to push long-stalled legislation to lift Poland out of its economic slump. He is Poland's fourth prime minister since the Communists were toppled in 1989.

MR. LEHRER: And that's it for the News Summary tonight. Now it's on to how Perot looks to six regional editors and commentators, Gergen & Shields, the vote in Czechoslovakia, and dealing with unemployment. FOCUS - EDITORS' VIEW

MR. MacNeil: The Presidential primary period all but ended this week, with nominations pretty well assured for George Bush and Bill Clinton. But their victories were eclipsed by the extraordinary attention commanded by Ross Perot. We're going to talk about that first with our regular group of editors from around the country. We're joined by Clarence Page of the Chicago Tribune, Ed Baumeister of the Trenton, New Jersey Times, he's in Los Angeles tonight, Lee Cullum of the Dallas Morning News, Erwin Knoll of The Progressive Magazine in Madison, Wisconsin, Gerry Warren of the San Diego Union Mirror, and Cynthia Tucker of the Atlanta Constitution. Cynthia, President Bush was peppered with questions last night at his news conference about Ross Perot. And afterwards, Perot adviser Tom Loose said Perot is really going to drive the agenda for the whole country. Do you agree with that? Is Perot driving the political agenda right now?

MS. TUCKER: I'm not sure he's driving an agenda, but he's certainly driving the Presidential campaign at the moment. Bill Clinton is worried about having his campaign completely eclipsed by Ross Perot. Clinton can hardly get his name in the newspaper, and President Bush is clearly very, very worried. While the President refrained from directly criticizing Perot in his news conference the other night, many members of the White House and the Bush campaign have begun to attack Perot fairly aggressively. So both made the Presidential nominees or likely nominees of both parties are clearly responding to Perot. And at the moment, I think Perot is in the driver's seat.

MR. MacNeil: Do you agree with that, Clarence Page?

MR. PAGE: I don't think Perot is setting the agenda, because in order to set an agenda, you first must state one and Perot has cleverly eluded taking firm positions on the issues. But there's no question that he is driving the President and Bill Clinton bananas. He's causing a great deal of panic in their campaigns, it appears. They're groping to try to find some way to recapture the public's imagination. I think Perot is speaking to what I call a post Cold War yearning for change right now. I think the American people detect that without the threat of the bomb and the button hanging over their heads, they're willing to take a chance with a President now, the kind of a chance they wouldn't have taken in past years since World War II. And I think as a result, Perot's capitalizing on that, and very cleverly.

MR. MacNeil: Lee Cullum in Dallas, who do Texans think Perot is talking to, or what he is talking to, given that it's also George Bush's home state, at least political home state?

MS. CULLUM: Robin, it's a very interesting position in which Texans find themselves. There is loyalty to George Bush here, but I have to tell you that he had a fund-raiser in Dallas last Saturday night that went all but unnoticed. He gave a very good speech, so I'm told, on domestic issues that went all but uncovered. Perot is the man of the hour. Everybody is talking about Ross Perot. There's a euphoria. People believe that he will be elected President of the United States. They can taste the possibility of it. And a carpenter I talked to today said it's going to be wonderful to know someone in the White House.

MR. MacNeil: Gerry Warren, somebody who's worked in the White House yourself, why is Perot able to drive Presidential politics at this stage, particularly to drive a sitting President into the shadows?

MR. WARREN: It is precisely because the American people have decided that the politics of today are not working. The politicians of today are not working. They're almost irrelevant. The people do want change, but they want action. And Perot senses this and he senses it better than the two main line candidates. And as a result, he, I believe, is, indeed, driving the agenda of this, of this Presidential campaign, which is an agenda for change to get things done, to make things work.

MR. MacNeil: Erwin Knoll, do you believe that Perot senses it better than the other two candidates?

MR. KNOLL: Well, I think Perot has two tremendous strengths right now. One is that he's not a Democrat. And the other is that he's not a Republican. I think his candidacy reflects nothing so much as the bankruptcy, the moral, the political bankruptcy of the two- party system that we've been ruled by for such a long time. All the truck I hear about Perot is not so much positive for him as it is negative for the Republican Party, the Democratic Party, and their respective candidates for President.

MR. MacNeil: Ed Baumeister, is that what you hear, that the support for Perot is mostly negative to other people?

MR. BAUMEISTER: It has some relation to negativity, Robin. But I don't want to be a contrarian here, but I think Ross Perot, if he's driving anything is driving the press giddy. We have sort of a fresh -- a possibility of a fresh start. I've been with a lot of reporters and editors today out in Los Angeles and we are in agony over how badly we've handled the campaign so far. One of our members today said, listen, here's a guy we can now examine from, you know, foot to ear. He is only beginning. There's a piece in the Los Angeles Times today in which he calls our economics problems a "multi-piece equation." Now he's beginning to talk like the others. I think we're -- there are two ways to fall in love. One is to just fall in love on looks and the other is to fall in love on knowing some more about him. And I think at the moment we and maybe we in the press and many people who seem to like him are falling in love on looks.

MR. MacNeil: Are we giddy, Cynthia Tucker?

MS. TUCKER: Well, let me disagree with Ed just a little bit. I think it would be terribly elitist for those in the press, the mainstream press, to not pay a lot of attention to Ross Perot, because he is exciting people. Average voters are very excited by the possibility of this man. Now, as a journalist, I have some deep skepticism about Ross Perot. But we have to pay attention to him. Otherwise, we are ignoring what many voters around the country are very interested in.

MR. MacNeil: Are we being swept away, Erwin Knoll, we, the whole media?

MR. KNOLL: To some extent I think so. It's a different thing. It's news by any definition of news. And he is a fresh face and he also has one attractive quality besides the two I mentioned, that he's not a Democrat or Republican, he's a man who clearly says things that he believes. And that too is quite a change from what we've grown accustomed to over the years from our candidates for higher office who seem to say whatever they're programmed to say by their pollsters and their advisers and so on. Now that may change in Perot's case too now that he's hired on professionals to tell him what people will want to hear. It may be that his big move the other day of hiring Hamilton Jordan and Ed Rollins may mean then his campaign peaked and now it starts going downhill.

MR. MacNeil: Well, that's the central question, isn't it, Lee Cullum? What do people in his home state think about -- I mean, Perot talks about this, himself. He told a rally in Florida the other day, his supporters, you're not morning glories, you're not going to fade by noon. But that's what most of us what to know. Is Perot going to peak and then fade as third party candidates have traditionally done?

MS. CULLUM: No. I don't think so at all. There are those who compare Perot to Theodore Roosevelt in 1912, who got about 27 percent of the vote. Kevin Phillips compared him to the emergence of Abraham Lincoln in the 1850s and the formation of the Republican Party. I compare him to Andrew Jackson, who came out of the Southwest of the United States as Tennessee was then in 1824 and 1828, won without a platform, won against entrenched interests, and we have entrenched interests now in Washington, and prevailed. I don't think he's going to fade at all. I think those who wait for him to fade or to fail will wait in vain.

MR. MacNeil: Clarence Page, Teddy Roosevelt, Abraham Lincoln, Andrew Jackson.

MR. PAGE: Well, since my newspaper started Lincoln's campaign back around 1847, '48, I see a key difference there in terms of issues. That was certainly issue driven. But Lee Cullum is right in that there are parallels to Andrew Jackson's campaign. What intrigues me is we're sitting here talking about the press being giddy about Perot. I've seen just the opposite. Members of the press are rather befuddled by him. He doesn't answer our questions and we find that to be rather ridiculous for a candidate and he keeps going up in the polls. Even when he took a sabbatical to go out and figure out what he believes, he went up in the polls again and crept ahead of Bush and Clinton. I think there's something going on here that defies our traditional methods of covering campaigns. Ed Baumeister touched on something there. This is a bottom up campaign. I don't even think Ed Rollins and Ham Jordan are going to be the handlers. I think that Perot is probably going to handle his own campaign and seek advice from those gentlemen. If he does that, I think he can stay ahead of the pack. If Bush and Clinton never figure out what's happening to them and what's happening in the country, they can pull ahead.

MR. MacNeil: Gerry Warren, is Perot going to fade?

MR. WARREN: No, definitely not. He will be in it till the end and he'll do better than Teddy Roosevelt did by a long shot. It all depends on the two, the incumbent and the Democratic challenger. If either one of them -- and it looks like George Bush has a better chance than Bill Clinton -- but if either one of them can reclaim the center and prove to the center, the great center of this country, that he can solve some of these problems and knows how to do it, if he can do that, he can win. And I'm talking primarily about George Bush. If not, I think Ross Perot could be the next President.

MR. MacNeil: Well, let's go around on that. Which one, Bush or Clinton now, has the better chance of reclaiming the center, do you think, Cynthia?

MS. TUCKER: Well, at the moment, it certainly seems as though Bill Clinton is the one who's utterly and absolutely disappeared. I think that one of the things that is functioning here is that the American public can't pay attention to three Presidential candidates. We're not used to talking about three-way races for President. We're used to talking about two-way races. And when you have three candidates, but you can only hold two in your minds, then the one who disappears is certainly not the President of the United States, however, let me say that George Bush does have time to do something that so turns the voting public off that Bill Clinton can grab headlines again.

MR. MacNeil: Yeah. Ed Baumeister, who has the better chance of dealing with the Perot phenomenon now, Clinton or Bush, do you think?

MR. BAUMEISTER: This may be a simplistic view, Robin, but I think Clinton simply because he is not the President. If he is elected, he also represents change and if you've heard him over the last couple of days, every fifteenth or sixteen word from him is change. I think he senses -- I have a pollster friend, Andy Cohart, a neighbor in Princeton, and he calls Perot the Roshaw candidate. You know, we look at the ink blot and we see in it, yeah, that's the guy. But as Perot has to sort of decode the ink blot and start using phrases like "multi-piece equation," I think he'll begin to fade back, and I think Clinton's the one with the chance.

MR. MacNeil: Erwin Knoll, who do you see having -- if it has to come down to two candidates, who has the better chance against Perot?

MR. KNOLL: Well, I say it without cheer or enthusiasm, but I think President Bush has, just because it's going to be one outsider against one insider. And I don't think Bill Clinton can win the changed sweepstakes against Perot. So I'm afraid it's going to be that. I heard Mark Shields say the other night on the NewsHour that the Democrats might dip below 25 percent of the vote this year, a startling thought, but I think not an unlikely prospect.

MR. MacNeil: Well, we'll hear Mark again in a few moments so he can pick up on that. Clarence Page, which of Clinton or Bush do you think has a better chance of dealing with Perot now? Or is there a possibility that it's going to remain sort of fairly level, three candidates, all the way?

MR. PAGE: It may come to that for Clinton to try to hold off the Perot onslaught just enough to throw it into the House of Representatives. That's a very tough game to play.

MR. MacNeil: Let me ask you a question, Clarence. There's a lot of talk that the one thing Clinton would have left for him would be the black vote, because he's done very well with that so far and that might with a sliver of the white vote let him squeak through. Does Perot have any appeal, do you think potential big appeal to black voters?

MR. PAGE: I think there's a potential there but he hasn't made the outreach and this is why we haven't heard about it. Traditionally, politicians appeal to the black community through black leaders. Perot hasn't done that. So he's not being talked about by black leaders, most of whom have thrown their endorsements to Bill Clinton. I do detect a ground swell from the bottom up among black voters for Perot, but it's still a small one. I think he's still untested goods as far as black community issues are concerned. He's going to have to make some pretty specific stands about urban affairs, for example, to appeal to black voters.

MR. MacNeil: Lee Cullum, if it comes to the three-way race, who runs a better race against Ross Perot now?

MS. CULLUM: There's no question in my mind it's President Bush. You know, there's a new book out called "The Vital South" that says that the Democratic Party has as Presidential base at this point Minnesota and the District of Columbia. You can't get very far from that base. I don't think Bill Clinton can build on that base. It's a Bush versus Perot race in my mind.

MR. MacNeil: Let me just go around each of you quickly. Start with you, Lee. Can Perot be elected President?

MS. CULLUM: Yes, of course, he can be elected President. No doubt in my mind.

MR. MacNeil: Cynthia, do you have any doubt about that?

MS. TUCKER: I still think it is unlikely but it is certainly possible.

MR. MacNeil: Gerry Warren, what do you think?

MR. WARREN: He can be elected President, yes.

MR. MacNeil: Ed Baumeister.

MR. BAUMEISTER: I think it's possible, but I don't think it'll happen.

MR. MacNeil: Erwin Knoll.

MR. KNOLL: I agree. I think it's certainly within the realm of the possible; very unlikely.

MR. MacNeil: Who didn't I ask?

MR. PAGE: My vote, Robin. I'm going to say flatly that I don't think it's going to happen. I think that Perot could -- even if he keeps up his strength, by the time November rolls around, a lot of people are going to walk into that voting booth, look at those choices and say, no, I don't think I'm going to go for Perot. But that could change. But at this point I don't think he can win.

MR. MacNeil: I'm confused. Did I ask you, Erwin?

MR. KNOLL: Yes, you did. And I said I didn't think it would happen.

MR. MacNeil: Okay. Thank you, all six of you. Jim. FOCUS - '92 - GERGEN & SHIELDS

MR. LEHRER: Yes. And that brings us to Gergen & Shields, David Gergen, editor at large of U.S. News & World Report, and syndicated columnist Mark Shields. David, is Ross Perot going to be elected President in November 1992, yes or no?

MR. GERGEN: None us knows at this point. We don't know what this fellow --

MR. LEHRER: What do you think now?

MR. GERGEN: I'll tell you this. I think if the election were held next Tuesday, Ross Perot would be elected. He'd win Florida, Texas, California, New York, Ohio. He'd be elected with enough votes, electoral votes to spare. I think the only person who can beat Ross Perot right now is Ross Perot.

MR. LEHRER: Mark.

MR. SHIELDS: On the eve of the 1945 World Series, Detroit Tigers against the Chicago Cubs, last wartime World Series, 4-F players, 17-year-olds, guys with missing limbs playing, Warren Brown, the great sports writer of the Chicago Daily News wrote and he said, I don't think either team can win this World Series. All right. I don't think Bill Clinton can win. I don't think George Bush can win. In other words, I don't see anybody there that's a 50 percent candidate at this point. I'm not sure there's a 40 percent candidate. So can Ross Perot, could I rule him out? Absolutely not. I mean, I think this thing is totally up for grabs and it's totally winnable or losable.

MR. GERGEN: He's got the momentum now, Jim. And he can lose it. He can self-destruct. In 1968, we had the last business person to get into politics was George Rowney, came out of American Motors, was elected governor of Michigan, there was a citizens movement behind him. Then there was a citizen movement to elect him President. He was ahead in all the polls. He went to Vietnam just before the New Hampshire primary, came back and he talked to one television reporter in Detroit, said, I was brainwashed in Vietnam, it blew him out of the race. That sort of thing can happen to Ross Perot here. At the moment, the momentum is with him.

MR. LEHRER: But he was blown out -- correct me if I'm wrong here, Mark, if my history's wrong -- my recollection is Rowney was blown out of that race because he told the truth, No. 1, and No. 2, the press blew him out of the race. The people never got a chance to really --

MR. SHIELDS: He pulled out before the New Hampshire primary, but he dropped like a rock in the polls as a result of that story and he was very much on the defensive and the campaign just really never caught on. It was a great concept and a great crusade, but it never really did become a campaign. I think David's touched on something, but I'd add to it about Perot, that is, that people don't want to hear bad news about him right now. I mean, the New York Times has basically become a pop stand. I mean, do you want to know anything bad about Ross Perot? I mean, you know, was he a bad guy? Did he rip the tag off the mattress? Did he double park outside the orphanage? I mean, the New York Times is going to run a story on him. And I got to tell you --

MR. LEHRER: And nobody seems to care.

MR. SHIELDS: And nobody seems to care. I mean, people are not in the mood to listen to bad news about him.

MR. LEHRER: One thing, we don't know what's going to happen on November, but we do know what's happening right now. And do you agree with the statement that we just heard that whatever else Perot's doing, he's driving Bush and Clinton bananas?

MR. GERGEN: I thought Clarence Page was right on target. There's no question about that. I mean, there's no doubt that George Bush held that press conference last night because of Ross Perot. There's no doubt in my mind that Bill Clinton went on Arsenio Hall this week because of Ross Perot.

MR. LEHRER: Played the saxophone.

MR. GERGEN: Played the saxophone. Bill Clinton's going to be on the Today Show next week answering questions on a "call in" basis for an hour. So who's driving it? What's the style behind that? Perot. Bush goes on with a balanced budget amendment. Now, he's shown some interest in that in the past, but there's no question that Perot has thrust that issue forward. He hasn't answered how he would do it. He hasn't provided his answers, but he is driving both the style and substance of the race at the moment.

MR. LEHRER: Do you agree?

MR. SHIELDS: I agree. George Bush went before a national television audience last night for the second time in three years in a press conference and did not mention cutting the capital gains tax. Now, George Bush had a capital gains tax cut to improve declining Sunday school attendance. I mean, there's nothing in the world that it wasn't going to take care of. And David's right. He's talking about Ross Perot. What's Ross Perot been saying? They're out of control in Washington, they don't know what to do about the deficit. So there's George Bush last night, singing the balanced budget constitutional amendment from a fellah who's never submitted one. I mean, it's a little bit like a guy with a six-pack of Smirnoff saying what we need is prohibition in this country. I mean, the President --

MR. GERGEN: You're really cooking tonight.

MR. SHIELDS: But the President can submit a balanced budget amendment.

MR. LEHRER: A balanced budget?

MR. SHIELDS: A balanced budget. And David's absolutely right as well about Bill Clinton and what he did to Clinton was so cruel on Wednesday. I mean, here's Bill Clinton. He's just won the nomination, the biggest day of his political life, and what does he do? He announces Hamilton Jordan, Jimmy Carter's campaign manager, and Ed Rollins, Ronald Reagan's campaign manager, are going to be his co-chairs. And it dominates the news. That's all anybody's talking about.

MR. LEHRER: It's the lead story in the New York Times and the Washington Post.

MR. SHIELDS: I mean, the day -- yeah, there's Clinton. You're supposed to be speculating about a Vice President and who's going to be in the cabinet and what he's going to do. Instead, he's back to Page 9.

MR. GERGEN: But this goes to the question of leadership. And that's what this race -- it obviously has a lot to do with this race. And I think Perot has shown so far that he knows something about leadership and I don't understand what's happening in the White House, Jim. I didn't understand it -- as I said the other night -- I didn't understand why they called the news conference. Then they called it and they were embarrassed because the three commercial networks decided not to cover this. It's like giving a party and nobody comes. Then they let the President go out and talk about how the economy has turned around. And today, within less than 24 hours, we get the announcement the unemployment rate is up sharply, up the highest level in eight years. The White House had those numbers before the President went on the air. Those numbers are available to the President of the United States 24 hours in advance.

MR. LEHRER: I didn't know that.

MR. GERGEN: To let him go out and say the economy is turning around in that fashion suggests to me somebody out there is asleep at the switch and they are not running a good campaign. Only two weeks ago, Jim, as you recall, he went out and gave a speech to the housing industry. And he said, as housing goes, so goes the American economy. The next day we had a report on housing starts down 17 percent, the lowest level in eight years.

MR. LEHRER: And he had to know that too.

MR. GERGEN: They know that. Those numbers are available. What in the world is going on over there?

MR. LEHRER: In that category, what's going on? The President said at his news conference, I'm not going to talk about, I'm not going to criticize Ross Perot, I'm not going to criticize my opponents, and yet, his official spokesman, not the political spokesman, but the official spokesman of the White House, handed Perot his head yesterday, the Vice President of the United States. Can he get away with that by saying, hey, I'm not going to do anything, but -- I didn't think so.

MR. SHIELDS: He can't. He can't. And Perot has been very shrewd in how he's handled it. Hey, want to get in the ring with me, come on in, fellah, I mean, don't send your surrogates up. I mean, Mrs. Quayle has already taken a couple of shots. No, no, let's go. You want to get in the ring, come on in. I mean, and that's --

MR. LEHRER: That's old fashioned politics.

MR. SHIELDS: It's old fashioned politics and it's mono ah mono and it looks like George Bush is hiding behind Marlin Fitzwater and doesn't want to engage him, wants to do it after the convention, he's saying, but he actually commended both the Vice President and his press secretary last night for what they were saying about Ross Perot.

MR. GERGEN: You know, Jim, I've come to the view that maybe the Los Angeles riots were a turning point, that there was the failure of the President to respond decisively to those riots. And, by the way, he never talked about the riots last night.

MR. LEHRER: Nobody's talked about them.

MR. GERGEN: It's like it's disappeared.

MR. LEHRER: Exactly.

MR. GERGEN: You have to say, are we serious or are we not serious, gentlemen, about getting something done about the inner cities? What is this all about after all? But the fact that he didn't respond decisively, I think disappointed a lot of his own people. Ed Rollins now cites that as one of the, an incident that sort of drove him over the side. And I think to the same extent, Bill Clinton missed that opportunity. I think both candidates now as a political matter, not to speak just to the moral issue, and the moral failure, as a political matter, by failing to respond, then they may have lost a serious opportunity.

MR. LEHRER: As a political matter, is Clinton right to do what Perot is doing, which is to go on the talk shows and play the saxophone on late night shows and all of that sort of thing? Now, Perot doesn't play the saxophone. I want to correct that. But he's run basically a television, radio show kind of campaign up till now and Clinton's apparently going to do the same thing.

MR. GERGEN: You know, the Arsenio Hall Show made me feel old for one of the first times because I think it all depended on how old you were. If you were young, you probably thought that was hip and a cool thing to do, you're with it, but for someone like me, you know, to come out there with the shades and to play the saxophone - - I'm glad he plays the saxophone, but come on now, if you really want to be elected President, let's be serious. I miss the days - - I'm nostalgic for the days when the Democratic candidate after winning the nomination would go to places like London and Paris and Moscow and talk about the future world peace and trying to build something -- we're leaders. I mean, the difference in the gap between Arsenio Hall and going and talking to someone like John Major to me is so dramatic it suggests they don't yet have a handle on what it takes to be President.

MR. SHIELDS: Let me defend Bill Clinton here. I think Bill Clinton is in a situation where he has to reach out and try and get a hearing. He's -- CBS had a poll this week that showed him at 15 favorable and 40 unfavorable. I mean, those are --

MR. LEHRER: Forty unfavorable.

MR. SHIELDS: Forty unfavorable. Those are just three to one.

MR. LEHRER: That wasn't among Democrats. That was among all voters, right?

MR. SHIELDS: All registered voters, that's right. So I mean -- so you've got to do something. And one of the cards that is available to Clinton is a generational card. I mean, if you're really talking about change in this country, then are you going to get it from a World War II figure like George Bush, or even a fellow like Ross Perot, who's over 60, that Bill Clinton somehow has to tap in, in a generational sense, to those voters, the baby boomers --

MR. LEHRER: The way Gary Hart did.

MR. SHIELDS: The way Gary Hart did. And he has not been able to in the primaries, but he's got to use the vehicles available. I personally, from my old days, would not have had him with the shades on. I thought the sunglasses didn't work. I'll be honest with you. I really didn't. I mean, I thought it looked like the Blues Brothers Revisited or some sort of a John Balushy out take.

MR. LEHRER: You know, Clarence Page made a point a while ago about that the people are willing to take a risk on Ross Perot because it is post nuclear button time and it's okay to maybe risk. Do you agree with that?

MR. GERGEN: I thought his point was well taken. You know, had it not been for Mikhail Gorbachev, you would not see Ross Perot in this ring today. It's because people feel we don't have that nuclear threat that for the first time they feel we can experiment with something different and look to someone who doesn't have that international experience, look to someone very, very different as an agent of change. And let's open the door to him.

MR. LEHRER: Do you agree, Mark?

MR. SHIELDS: It's not part of the job description immediately in people's minds. And I think you can see it at the next level, Senate races all across the country, where national defense and issues like that have not come into play, and the concentration and emphasis upon domestic issues, health, education, well being, and the economy have helped women candidates.

MR. GERGEN: That's a good point.

MR. LEHRER: All right. Mark, David, thank you. FOCUS - BREAKING UP?

MR. GERGEN: Next tonight, the election in Czechoslovakia. Voters there went to the polls today to determine the future of their nation which was created from separate Czech and Slovak regions after World War I. But now the fall of Communism has unleashed nationalist sentiments that threaten the power of the central government in prague. We have a background report from Nik Gowing of Independent Television News.

MR. GOWING: In Bratislava, 200 miles Southeast of Prague, building workers put the final touches to Slovakia's new parliament. If the opinion polls are right, the majority of Slovaks want great powers for their parliament and their government, sovereign independence from Prague. The 5 million Slovaks consider themselves a separate nation, which has taken second place to the Czechs. Slovakia briefly enjoyed independence during the Second World War. Then it was forcibly bound by the authoritarian shackles of 40 years of Communism and Stalinist heavy industry to the richer, more populous Czech lands in the West. It is the Slovak wish to break those shackles to have separate but equal Czech and Slovak states within one federation, which is the main campaign issue in this second, fully democratic election since Communism was overthrown three years ago. This is Vladimir Meshaw, the politician who is galvanizing the Slovak vote. This former boxer and Communist is the demagogue with sharp awareness of how to catch supporter Slovaks, disillusioned by the hardships brought on by the economic reform program imposed from Prague, an acute eye too for the political stunt.

REPORTER: [Speaking through Interpreter] can an independent Slovakia survive economically?

MR. MESHAW: [Speaking through Interpreter] Of course, both economically and politically.

REPORTER: [Speaking through Interpreter] Under what conditions?

MR. MESHAW: [Speaking through Interpreter] Under all conditions. After the election the process of emancipation begins. If the Czechs don't accept it, we will begin separation.

MR. GOWING: Meshaw posters have been defaced with the words "doctor" and "STB," based on allegations in the Czech press that under the code name "Doctor" he worked for the Communist secret police, the STB. But as the Meshawcampaign machine makes its way through Slovakia's rural outback methodically from small town to village, the allegations have not stuck. Instead, the majority of Slovaks are enthralled by his carefully crafted electioneering which plays on Slovak fears. He recites the same jokes at each stop. He promises what he carefully calls "emancipation," but tantalizingly never clarifies precisely how far he will press Slovak sovereignty. The man ousted as Slovak prime minister last year for alleged incompetence and blackmail, the man who claims that politicians in Prague conspired to overthrow him last year, has turned every point of adversity to political advantage.

MR. MESHAW: [Speaking through Interpreter] We want the emancipation of both Czechs and Slovaks.

MR. GOWING: The prospect of a new sovereign line being drawn here between Slovakia and the Czech republic looms over this election to the delight of many Slovaks and the horror of most Czechs, especially President Havel, because of the destabilizing effect such a political fissure between the two republics would have on Czechoslovakia's efforts to be embraced fully in the new Europe. It is a concern even echoed by John Major to President Havel during his visit to Prague last week, a rare, outside dabbling in domestic politics of another nation at the height of this election campaign. The campaigning is respectful and low key. But Czechs and the federalists are deeply concerned by the headless, political monster being unleashed in Slovakia. Vaclav Klaus, currently the finance minister and the Thatcherite architect of Prague's controversial short, sharp economic shock reform program, has been traveling Slovakia, trying to change minds. The likely future federal prime minister after this election is warning of the price Slovakia will pay domestically and internationally for economic and political fragmentation.

VACLAV KLAUS, Civic Democratic Party: I am definitely worried and support of not only Mr. Meshaw, some other separatist parties in Slovakia. The break up will create dramatic problems in this country. Whether in the long run, the solution would be feasible for both parts of Czechoslovakia, that's another story, but we are definitely doing maximum to maintain unity in Czechoslovakia.

MR. GOWING: Such Czech concerns about the populous Meshaw line do find support among some Slovaks, especially the middle classes.

WOMAN: I don't want new Slovak. I want to live in Czechoslovak together.

MAN: [Speaking through Interpreter] It's the older people who want the Federation to split. I think they're wrong. My generation think that Europe should be united. There is no need for Czechoslovakia to split.

MR. GOWING: But the populist appeal and the show biz razzmatazz of the Meshaw campaign have struck a chord with vast numbers of Slovaks still coming to grips with these strange new phenomena, democracy and economic upheaval.

WOMAN: [Speaking through Interpreter] What the Czechs do to us is too much. I think it's a shame what the Czechs do to us.

MAN ON STREET: Slovak nation has to ride to -- as all nations has to ride to sovereignty.

MILAN FTACNIK, Democratic Left Party: The results of the reform are really much more worse in this part of the land so the people believe that there is possible change in the direction of the economic reform and they believe that the reform could be socially more acceptable for them.

MR. GOWING: Vladimir Meshaw plays on such sentiments even more strongly, believing he can ride the surge in ethnic and economic resentment. Others though fear he has opened up a new and explosive Pandora's Box of nationalism in Central Europe, which cannot be controlled. FOCUS - SHARE & SHARE ALIKE

MR. LEHRER: Finally on this night when the U.S. unemployment rate was reported at an eight-year high, our business correspondent, Paul Solman of WGBH in Boston, looks at one company's solution to dealing with recessions.

MR. SOLMAN: There's trouble in Paradise. At Lincoln Electric, long an example of manufacturing success, some workers are upset.

WORKER: We have lost approximately one dollar out of every five we used to make. And that bottom line is staggering. That's why we're here.

MR. SOLMAN: The recession hit Lincoln hard, but almost unique among U.S. manufacturers, there were no layoffs and haven't been since World War II.

DON HASTINGS: Now, you got to understand we're doing well, I think, as a company. All you've got to do is drive around here and look at the plants that are empty. You know, that's why we bought the plant across the street, the one next door, is that they went broke. This system is doing something good, isn't it?

MR. SOLMAN: Don Hastings, who is about to become the CEO, runs a lean, rugged company. There is no union here. There aren't even any paid sick days. But with an absolutely secure paycheck, workers seldom leave. Moreover, if rust belt America can remain competitive in manufacturing, Lincoln Electric may well be the model. Dawn at Lincoln's main plant just outside Cleveland. Inside most workers seem satisfied.

CYNTHIA DARGAJ, Worker: Oh, yeah, yeah. I mean, I'll be here forever, I hope. You know, it's a great job. It really is.

MR. SOLMAN: When you get a job at Lincoln, after three years, it's for life, a dazzling feature of this rust belt firm, considering that they manufacture arch welding equipment here, the kind of work America's been losing for decades.

CARL ONISI, Worker: You have a weight off of you because you know you have job security. And that's the greatest feeling ever, the greatest feeling, when you can go out and spend your money without worrying about, geez, am I going to get laid off next month.

ANDY CHOM, Worker: I'd rather go on a four-day week or move to a different machine than go out and look for another job.

MR. SOLMAN: Now, the key to Lincoln's "no layoff" policy is profit sharing. You're guaranteed 30 hours a week and a share of the profits in the form of a yearly bonus. The average worker here made $23,000 last year, another $19,000 in bonus on top of that. And for Lincoln, that was a low bonus because profits were down due to the recession. But the bonus would have to vanish completely before they'd need to lay anyone off. Harvard economist Martin Weitzman.

MARTIN WEITZMAN, Economist: The mechanism is that the pay adjusts automatically so that a worker is being paid less when times are bad and is automatically being paid more when times are good. So the system is adjusting through pay, rather than through numbers of workers employed.

MR. SOLMAN: Weitzman calls this system "a share economy," in which every firm shares both the risks and rewards by giving workers a large part of their pay based on the profits of the firm. It's already true of farmers, for example.

MARTIN WEITZMAN: If farming were run in the analog of a factory system where a farmer was paid a fixed wage, farmers would be laid off during bad times and we wouldn't have as much food in the world as we have.

MR. SOLMAN: The same holds true for authors. Most of them get only a modest advanced payment from publishers. Any additional income is paidas a percentage of profits, when there are any. If publishers paid a fixed salary instead --

MARTIN WEITZMAN: They'd be much more cautious. There'd be far fewer books written. There'd be far fewer authors employed by book publishing companies.

MR. SOLMAN: The point is profit sharing keeps people working, lowers the incentive to lay them off when times get tough. And, in fact, Lincoln is hiring these days.

SPOKESMAN: [interviewing] Okay, Curtis, why the interest in Lincoln Electric Company?

JOB APPLICANT: Well, I've heard you're a very reputable company and you take care of your workers and you're a good company to work for.

MR. SOLMAN: It may sound rehearsed, but, in fact, if this guy gets hired and makes it through the first 90 days -- one in three people finds it too tough -- then odds on he'll be a lifer at Lincoln and a loyal one. Turnover here is extremely low. The average employee has been here 18 years virtually every day.

MR. SOLMAN: How long have you worked here?

EMPLOYEE: Twenty-four years.

MR. SOLMAN: How many absences?

EMPLOYEES: Two days that I can remember.

MR. SOLMAN: Two?

EMPLOYEE: Two.

MR. SOLMAN: Just think of it, two days absent in 24 years. Profit sharing means no layoffs. No layoffs means loyal workers. And research on profit sharing firms suggests that they are generally more successful as well. But profit sharing by itself isn't likely to make American manufacturing more competitive. First, most profit sharing systems don't share anywhere near the portion of profits that Lincoln does. Second, most profit sharing companies don't deal with the so-called "free rider" problem, that is, if you work in a profit sharing firm, there isn't much incentive to generate greater profits because they have to be shared with everyone else in the firm. So the little voice of self-interest whispers, "Let the other guys do it, I'll get a free ride on the profit they generate." Lincoln Electric, however, has an answer to the free rider problem, the discipline of piece work, because at Lincoln more than half its 2700 employees have no base wage at all. They're paid strictly by how much they produce. The more pieces they make, the more money they make. That's one reason they work so hard at Lincoln, says Theresa Melti, whose male workers teased her with a pink hard hat when she became their foreman.

THERESA MELTI, Foreman: I very seldom have to remind anybody of it. They come home with their paycheck after two weeks and, you know, hand it over to their wife or something and if it's not big enough, I'm sure she reminds them.

MR. SOLMAN: Piece work is a powerful incentive. Robert Nicholson, for example, lunches while he works, never escaping the noise.

ROBERT NICHOLSON, Worker: This place keeps a lot busier, you know. They give the bonus at the end of the year and everything so it makes it nice, you know. So it's nice and I don't mind doing it. The company does well. I do well.

DON HASTINGS, President: Yes, they work hard, but in piece work, it's not just you do it harder, you get smart. I mean, you learn ways to become more efficient just in the way you do your own job and that person who does that every day, day in and day out, learns how to do things that will help his time and motion and effort. So it's not just hard work, but it's smart work. And that's what makes them money. And we want that to happen. We want them to actually come in and try to beat the system we've set up for them, because the more they make, obviously, the more the company's going to make.

MR. SOLMAN: Now to compete with lower wage foreign manufacturers, Lincoln has to keep cutting its costs. So it keeps lowering its piece rates, the amount it pays each worker per piece. The company installs new machinery to help workers produce more per hour and thus, make back the money. But those workers you saw at the start of this story had their piece rate cut a year ago and their pay still isn't back to what it was.

STEVE SIMCAJ, Worker: I started here 27 years ago. They used to stand on a pulpit when they gave us our bonus and tell us you're the highest paid worker for any given job in the world. Since then, we've gotten cuts. I'm making what I made 20 years ago. My mailman is making more than I am.

DOUG WILLIAMS, Worker: We've gone through price cuts in 27 years, but we've always been able to survive and make out and we eventually made back the money.

MR. SOLMAN: They keep talking but it's five minutes to the 4 o'clock shift change and no one is late at Lincoln. John Rogers now joins from the day shift.

JOHN ROGERS, Worker: There's nowhere in the world with a high school education that I could have made the money that Lincoln has offered me or provide me or has left there for me to make.

MR. SOLMAN: So they're not complaining about the system; they're just complaining about this one particular price cut.

JOHN ROGERS: The system has provided me with luxuries, vacations, more than my neighbor, more than this that, but this is a particular area that we feel that needs to really be looked at, because we're kind of, more or less, going backwards.

MR. SOLMAN: So who's being blamed for the price cut -- a familiar scapegoat in America's industrial history, the time study man. Early this century, jobs were first timed and rated by experts, workers paid by the rate per piece. By the 1950s, the time study man had become a cliche, as in the great musical about the textile industry "The Pajama Game."

ACTOR: ["The Pajama Game"] Get to work. I'm an executive. I'm a time study man. I've got my stop watch on you. Can't waste time. Hurry up.

MR. SOLMAN: Here at Lincoln, time study men are somewhat less colorful but still controversial. In its constant effort to raise productivity, Lincoln may occasionally push too far, especially with the third key part of the Lincoln system, the report card. To put it graphically, there are three interrelated parts to the Lincoln system: Profit sharing, piece work and your personal report card. Your yearly bonus depends on total profits and your twice yearly grade or rating. You're graded on a curve against fellow workers. The company average has to be 100. Grades range from about 70 to 130, based on quality, output, dependability, and cooperation.

DON HASTINGS: The key element is that the rating is competitive. And this is why I think the Lincoln system has survived since 1934 when most other profit sharing plans and bonus systems have gone down the tubes, is that it's competitive and each individual is fighting for points, which then turns into money. And so that competitive nature is what keeps this thing alive, in my opinion.

MR. SOLMAN: Every employee, save the top three managers, gets rated by a supervisor. As elsewhere, people complain about their ratings, but here people compete against each other for their grades, even the managers.

THERESA MELTI: I've never gotten as high a merit rating as I deserved. I always deserved more than what I got. I'm rated just like everybody else is.

MR. SOLMAN: And you honestly have never been rated as highly as you should be?

THERESA MELTI: Oh, no. I always deserve more. That's how -- I think everybody feels that way. I feel that way. I think all the guys that work for me feel that way. There's only so many points to go around and, you know, you use it as a motivational tool as much as anything else.

MR. SOLMAN: Of course, there's a down side to competitive rating systems. Lorand Jackson has gotten low grades, unfairly he says, and thus, a low bonus, although even he believes in the system, just now how it's sometimes implemented.

LORAND JACKSON, Worker: Our merit rating system allows the company to control basically half of your income and give it to you back at the end of the year. That's kind of the idea. When a person can have that much influence over your income, he can limit you as to how outspoken you're going to be, he can limit you as to, as to -- you can limit your freedom is what it amounts to. And unless you're willing to take risks and pay the costs, most people will not speak out.

MR. SOLMAN: Jackson's case illustrates how arbitrary a highly competitive environment can seem to be. So does the case of those angry workers, finally confronting the soon to be CEO.

WORKER: I started here fifteen years ago and my first four years my income was greater than this year's income's going to be. Now another 15 years, I won't be able to pay my Blue Cross.

DON HASTINGS: Let me make one point. You know, the guys out there in the time study methods group, if we don't continue to make changes, make improvements, you know, we can't be competitive worldwide. We've got people making electrodes, you know, in Mexico, and China now coming at us, and if we don't continue to get our costs down, those low labor countries are going to whip us.

WORKER: Yeah. We understand that, but we don't want to have to make the same wages that the Chinese people are making.

MR. SOLMAN: Of course, these workers aren't just feeling the effects of the time study man. U.S. factory wages have been under siege for years. The Lincoln system has protected all of these jobs but not all of the wage gains of the past.

WORKER: I'd like to say that give us a seven man gang and you can take your fourteen best Mexicans or your fourteen best Chinese, or your fourteen best whatever, and we'll double their production, seven men, we'll double them. I'll guarantee it.

MR. SOLMAN: Well, maybe these workers are more productive, but for how long? The company now has a factory in Mexico and using the Lincoln system, productivity there is rising dramatically. The challenge here is to keep the pay from falling.

WORKER: You've got to show us why, if we're so good, you've got to show us why we're not making any money. That's the bottom line. That's the bottom line.

MR. SOLMAN: After the meeting broke up, we tried out on Hastings what had struck us about Lincoln Electric, a dynamic tension between cooperation in the form of profit sharing and the competition in the form of piece work, price cuts, and grades.

MR. SOLMAN: You really are balancing community and competition all the time?

DON HASTINGS: All the time. All the time. It is using a balancing act too.

MR. SOLMAN: Part of the balancing act is a very narrow pay range. The workers with the time study gripe make between forty and sixty thousand a year, without fringe benefits, remember.

MR. SOLMAN: How much do you make?

DON HASTINGS: I made a little over three twenty last year.

MR. SOLMAN: What's the lowest person in the company make?

DON HASTINGS: I don't know what the lowest is, but the average is I think forty-four. And our top ten would be someplace in the seventies.

MR. SOLMAN: When you look at the pay ratio of Lincoln's top executive to the average worker, it's only fourteen to one. Again, to put it graphically, that compares with a ratio of about twenty to one in the Japanese economy, somewhere around a hundred to one in the U.S. overall. It's Lincoln's spirit of sharing again, in delicate balance with the spirit of competition. This balance makes Lincoln about as persuasive a competitive model as we've run into. It doesn't rely on fashion or a charismatic leader or romantic products. For a business reporter, it's just a hard- nosed, realistic vision of business success. But for many, the Lincoln system may be too hard-nosed. Recently, the company tried to buy a GM engine plant in Dayton, Ohio. GM's closing the plant in the fall. General Motors approved, the International Union of Electrical Workers approved, but Don Hastings insisted that the rank and file workers, themselves, vote for the Lincoln system before he'd agree to take over.

DON HASTINGS: And they voted us down 84 percent to 16. And it was just incredible to us that American workers, aged around 30, would turn down jobs, guaranteed employment for life, versus nine months of unemployment benefits. But that happened in an industrial city in our heartland. And that scares the hell out of me.

MR. SOLMAN: What could be even scarier, however, is that those workers might see something Don Hastings doesn't, not just that the Lincoln system isn't for everyone, but that high wage manufacturing just can't make it in America, given the low wage competition. And so those GM workers in Dayton, for instance, might as well just take the unemployment money and run. On the other hand, if good factory jobs can be preserved in America, it may well be along the lines of the Lincoln system, in which layoffs are avoided through profit sharing, motivation is spurred by piece work and the grading system, and there's always a dynamic tension between the spirit of cooperation and the spirit of competition. RECAP

MR. LEHRER: Again, the major story of the day was a Labor Department report that the U.S. unemployment rate went to 7.5 percent in May, the highest it has been in nearly eight years. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour tonight. We'll be back on Monday night have a nice weekend. I'm Robert MacNeil. Good night.