The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight: A summary of today's news; a look at the evidence that says the recession is over; the latest on ABC's desire to replace "Nightline" with David Letterman; a report on a reason for that: The lust for the youth market; and the weekly analysis of Mark Shields and David Brooks.

NEWS SUMMARY

JIM LEHRER: There were fresh signs today the recession has ended. The Commerce Department reported consumer spending rose 0.4% in January. It accounts for two-thirds of all economic activity. The Department also reported construction spending jumped 1.5%, the most in a year. And the private Institute for Supply Management said manufacturing activity grew in February, for the first time in 18 months. The economic news sent stocks higher on Wall Street. The Dow Jones Industrial Average rose 262 points to 10368, a gain of 2.6%. The NASDAQ Index gained 71 points, more than 4%, to close at 1802. We'll have more on all of this in a few moments. A "shadow government" has operated outside Washington since September 11. President Bush confirmed that today, during a trip to Des Moines, Iowa. He did not give details, but the "Washington Post" reported up to 150 government officials were working at fortified sites along the East Coast. The plan was designed in the 1950s, to ensure the government survived a nuclear attack. It had never been implemented, but Mr. Bush said it was needed now.

PRESIDENT GEORGE W. BUSH: I have an obligation as the President and my Administration has an obligation to the American people to provide, put measures in place that should somebody be successful in an attack on Washington, D.C., there's an ongoing government. That's one reason why the Vice President was going to undisclosed locations. This is serious business. And we take it seriously.

JIM LEHRER: Mr. Bush also said again the United States will get Osama bin Laden. But he said most people understand the war on terror is greater than any one person. On Thursday, Senate Majority Leader Daschle said the war will be a failure if bin Laden isn't found. Some Republicans sharply criticized his remarks. Today, Daschle said they were being "hysterical." The United States may send troops to Yemen. Officials there said today more than 100 U.S. soldiers would help train local forces to hunt al-Qaida members. That was according to wire service accounts. President Bush said today he had told Yemen's leader: "We expect results." Russia today softened its stance against having U.S. military advisers in neighboring Georgia. Russian President Putin said it would be "no tragedy." The situation in Guantanamo Bay, Cuba, was calmer today. The U.S. military reversed a ban on letting Afghan war captives wear turbans. Nearly 200 had gone on a hunger strike to protest the policy. In Washington, a Pentagon spokesman said inmates will be allowed to wear turbans, subject to inspections.

BRIG. GENERAL JOHN ROSA, Deputy Operations Director, Joint Staff: Our two primary goals are humane treatment for the detainees and the security of our own folks. So we have to be careful and draw that balance. I spoke to the folks down at South Town this morning and the commander and the chaplain have been out and around speaking to the detainees. The tensions have eased, in their opinion, less than 70 of them refused meals this morning.

JIM LEHRER: The General also said there was evidence enemy forces were regrouping in eastern Afghanistan, near the city of Gardez. He said the military has observed hundreds of fighters gathering there. He said no action has been taken yet. A third day of religious violence swept western India today. Nearly 300 people have died there since Wednesday, in fighting between Hindus and Muslims. We have a report from Paul Davies of Independent Television News.

PAUL DAVIES, ITN: On the blood- stained streets of Ahmedebad today, mobs of Hindu men set out to kill their Muslim neighbors. Over the last 24 hours, the local authorities have appeared unwilling or unable to stop them. But now the Indian army has intervened. Here, soldiers of the rapid reaction force moving against Hindu activists suspected of attacking and setting fire to Muslim homes. This part of the Gujarat state capital now resembles a battlefield, but atrocities have been committed here that break all the rules of war. Dozens of men, women and children have perished-- burnt alive as the mob set fire to their houses. In one particularly savage act, a Muslim man and seven members of his family, including young children, were trapped inside this car, which was also set alight, killing all inside. The attacks are revenge for the slaughter of more than 50 Hindu activists killed when a Muslim crowd set fire to this train.

JIM LEHRER: The violence is linked to plans by Hindu nationalists to build a temple in northern India. In defiance of court orders, the mob destroyed a site a mosque on that site ten years ago. They were ordered to delay construction of the temple. Israeli forces pushed deeper into two west bank refugee camps today. Six more Palestinians and one Israeli soldier were killed. Israeli troops, backed by tanks and gunships, moved house-to- house, looking for weapons and Palestinian militiamen. A number of homes were damaged or destroyed. The Israelis said the camps shelter bombers and gunmen. The Palestinians said Israel wants to derail a peace initiative by Saudi Arabia. The U.S. Energy Department should release documents on the administration's energy task force as quickly as possible. President Bush said that today. He said he is "not concerned at all" about complying with a federal court order in a private lawsuit. He said he still opposes letting a congressional agency have the documents, as a matter of constitutional principle. In Boston today, the Roman Catholic archdiocese agreed to release the names of alleged victims of sexual abuse by priests. It will also give prosecutors details of the reported assaults. Cardinal Bernard Law had already identified 80 priests accused of molesting children over four decades. The Cardinal has acknowledged he moved at least one of the priests from parish to parish, despite the allegations. And that's it for the News Summary tonight. Now it's on to an is-the- recession-over update; is Letterman going to replace Koppel; lusting for the youth market; and Shields and Brooks.

FOCUS - END OF THE RECESSION?

JIM LEHRER: Margaret Warner has the recession story.

MARGARET WARNER: There were signs this week that the lagging U.S. economy may already be on the rebound. That was certainly the message Wednesday from Federal Reserve Chairman Alan Greenspan in testimony on Capitol Hill.

ALAN GREENSPAN: Despite the disruptions engendered by the terrorist attacks of September 11th, the typical dynamics of the business cycle have re-emerged and are prompting a firming in economic activity.

MARGARET WARNER: Greenspan predicted that the U.S. economy will grow 2 1/2 to 3 percent this year, that inflation will remain low at about 1.5 percent, and that the current 5.6 unemployment rate will rise to 6 or 6 1/4 later this year. If he's right, the recession, which officially began last March, would be the mildest in U.S. history, but, Greenspan cautioned, the recovery would be more subdued as well.

ALAN GREENSPAN: An array of influences unique to this business cycle, however, seems likely to moderate the speed of the anticipated recovery.

MARGARET WARNER: Economic reports since Greenspan's testimony seemed to bear out his analysis. On Wednesday the government said orders for big-ticket durable goods, like vehicles and appliances, rose 2.6 percent in January, the third monthly increase in a row. Yesterday the government said the economy grew 1.4 percent in the final three months of last year, far more than the .2 percent originally estimated. And today, as we reported, there were more upbeat reports in manufacturing, consumer spending, and construction. Stocks responded strongly to the news the Dow Jones Industrial Average closed at its highest level today in more than six months. Does all this mean the recession is over?

Joining me now to explore that are Allan Meltzer, professor of political economy at Carnegie Mellon University; he served on the Council of Economic Advisers in the Reagan Administration. Edward Montgomery, professor of economics at the University of Maryland. He was chief economist and deputy secretary at the Department of Labor in the Clinton Administration. And Bob Walberg, chief equity analyst at Briefing.com, an on-line research and analysis firm. Welcome, gentlemen.

So, Bob Walberg, is the recession over?

BOB WALBERG: Well, Margaret, I think so. I think we've seen the end of the recession. I think this has already been evidenced in a number of the series of data that have come out in the last few months. Consumer spending has been strong. We've seen housing stand strong, retail sales strong, and now we're finally seeing the recovery in the manufacturing sector, I think. As the manufacturing sector continues to rebound, you're going to see modest but sustainable growth in the economy going forward.

MARGARET WARNER: Allan Meltzer, do you agree that the recession is over? And also, if we've only had one quarter of negative growth, was it even a recession?

ALLAN MELTZER: It may not be by the time they get around to revising the record books. I think they were premature when they dated the recession at the National Bureau of Economic Research, and I believe that it doesn't have many of the characteristics of the standard recession. The standard recession, as you say, usually has two quarters of negative growth, but it also is generally described as where the pattern of weakness in the economy is widespread. This time we've had weakness in investment, and sharp cuts in inventories, but we haven't seen it in consumer spending and certainly not in government spending.

MARGARET WARNER: Mr. Montgomery, Alan Greenspan, though, did say that unemployment will not only continue, but will continue to rise. Does that mean the recession isn't over for everyone?

EDWARD MONTGOMERY: I think that's true. For the average worker, you'll see unemployment still rising. They'll still feel the effects. Even last month, when the unemployment dropped, that was because the labor force fell by a million workers. And if you took that out, the rate already would be 6.2%, and I would expect it would continue to rise for another two or three months.

MARGARET WARNER: Mr. Walberg, now let's go to the second part of what Alan Greenspan had to say, which is that the recovery will also be unusually mild. That wasn't his word, but will be slow, will be subdued. Why is that?

BOB WALBERG: Well, I think that's probably focusing on the fact that this is investment remains week, and that was obviously the driver of the economic downturn. Until we see corporate profitability return, we're unlikely to see a big spike in business investment. And since corporate profits aren't expected to start recovering until about the second half of this year, I think there is some concern that this economic recovery will be somewhat modest, at least in its origins.

MARGARET WARNER: But put that in layman's terms; what does that mean when you say the business sector is... the business investment hasn't picked up? What aren't they investing in? What is really happening there?

BOB WALBERG: The companies right now aren't investing in new plant and equipment, they're not investing in new computers, they aren't making big investments that they were making a few years ago when we saw business investments surge due to, you know, concerns over y2k, and the growth of the Internet. We saw a lot of new computer being purchased, new networking equipment. A lot of those companies bought that stuff and now, with relatively new products, don't need to be doing it again. And so, consequently, there's very little demand on the business side for new computers and new technologies. And also, because of a sluggish economy, there hasn't been a big growth in demand for new plants or equipment. So until demand picks up, you're unlikely to see a big spike in business investment.

MARGARET WARNER: What would you add to that, Mr. Meltzer, in terms of why... first of all, do you agree that the recovery will be not terribly robust, at least at the beginning, and, if so, why?

ALLAN MELTZER: No, I don't agree that the economy will be especially weak at the beginning. We've had an enormous, rapid correction in inventories. I can't remember when inventory adjustment was so large and so quick. If we just stop cutting inventories, we are going to add about 1.25% to GDP growth just in stopping...

MARGARET WARNER: Let me... let me interrupt you there. Now, explain what you mean by that, about inventories.

ALLAN MELTZER: Inventories.

MARGARET WARNER: In layman's terms.

ALLAN MELTZER: Sure. In layman's terms: Companies, wholesalers, whole stocks of goods on sale to be sold to consumers and other businesses; when recession comes, they reduce their holdings of those stocks because they don't expect good sales. Now, in the fourth quarter, they were very, very much reduced. They cut to the bone the holdings of goods for future delivery. They're going to have to replace those because consumer sales have been going along very well. That alone will add quite a bit to the start -- to give momentum to the start of the recovery. I agree that it is almost universally true that small downturns generate small upturns, and so this upturn may be weak for that reason, but I don't believe that it is going to be particularly weak. And Greenspan's number was that we would be at trend rate of growth by the end of the year.

MARGARET WARNER: What's trend rate of growth?

ALLAN MELTZER: Trend rate of growth is about 3 to 3.5 percent.

MARGARET WARNER: Mr. Montgomery, your predictions about the strength and robustness of the economy?

EDWARD MONTGOMERY: I guess I would agree more with Mr. Walberg. I'm concerned that we had lots of investments in IT and...

MARGARET WARNER: Information technology.

EDWARD MONTGOMERY: Information technology and new computers in the late '90s. I think there's an overhang for that. That gave us lots of our growth in the '90s, and I would be concerned how quickly businesses are going to go back to that kind of spending. And without that, I think we're running a risk of having a sort of a u-shaped, a more weak recovery, much like we had in the '90, '91 recession.

MARGARET WARNER: Now, Alan... go ahead.

ALLAN MELTZER: Remember-- we have to remember... that there's a tremendous amount of monetary stimulus and fiscal stimulus in the economy now, and second, we have to remember that the computer and high-tech sector is about 6 to 7 percent of the economy. There's the other 90-odd percent that might do better.

MARGARET WARNER: But, Mr. Walberg, Alan Greenspan also mentioned that because consumers had kept spending through this recession-- in fact, the third quarter of last year was up 6 percent, I guess they were buying all these cars at 0 percent financing-- that there is not the same kind of pent-up consumer demand that you often see at the end of a recession when consumers have held back.

BOB WALBERG: Well, I think that's true. There is not a pent-up demand, but there doesn't appear to be any slowing of demand, either. You continue to see robust consumer spending in all areas and whereas the, you know, the cheap financing money may have stolen sales from future months of cars, we are still seeing strong sales with apparel, we're still seeing strong sales in housing, we're still seeing strong sales in appliances. So we're seeing consumer sales in a lot of areas. And I would suggest that there is no sign of slowing in that area, so I think the consumer side of the economy remains solid.

MARGARET WARNER: So who are the workers who-- why is unemployment still going up? If we talked about who in the work force is going affected, are they the people at the lower end?

BOB WALBERG: Well, the unemployment will usually continue to go up because it is a lagging indicator. Even though the economy--.

MARGARET WARNER: But explain that. What do you mean "lagging?" Why?

BOB WALBERG: I'm doing that. As the economy will expand, corporations will kind of hold back before they have new hiring until they see that the economy is indeed on solid footing. As we said, we're in the early stages of the economic recovery so there's unlikely to be any new hiring for at least another quarter or so. I think if the economy continues to expand over the next few months, you'll see businesses gradually go back to hiring new people so that they can meet the new demands. So hiring is almost... or, employment, is almost always a lagging indicator, and I think that's the case there.

MARGARET WARNER: Mr. Meltzer, Alan Greenspan-- again, going back to what he had to say-- he talked about the amazing resilience-- I think he called it remarkable resilience-- of the American economy, particularly after the terrorist attacks. I'm just wondering whether you think there is something larger going on here, that our... that the recession was milder and shorter than any other one since World War II, but that the recovery might be, also -- of course, I know you don't totally agree with that, but is there anything at work-- fundamental in the American economy-- that might be evening out the swings, or not?

ALLAN MELTZER: Yes, there are two things. I think there are two things, or three, that are quite exceptional about the present situation. One is we have never seen a counter-cyclical monetary policy like the one where we've been going through. I mean, the Fed eased quickly, it eased by larger amounts than it ever did before. Back in the 1960s and '70s, I often accused them of being pro-cyclical, that is making business cycles worse. They certainly didn't do that this time. They really responded very well to producing lots of money, lowering interest rates. Second, we've had a lot of fiscal stimulus. The tax cuts, there are more tax cuts to come, the government is spending a lot of money for defense, new materials, and so on. They're short of some of the equipment, so there is going to be a lot of government spending that's coming along, and that's certainly going to add strength to the economy. And the third thing, which we shouldn't forget, is that we've had this remarkable surge in productivity in this country, productivity growth did not show any signs of backing down during the recovery. So on one side we have strong stimulus to demand, on the other side, we have strong output growth... potential output growth, because of the productivity rise. And those things are going to make for a better outcome than people expect.

MARGARET WARNER: Do you think, Mr. Montgomery, that that productivity growth-- all that investment that was made in the late '80s and early '90s that made businesses more efficient-- did that help carry the American economy through this recession?

EDWARD MONTGOMERY: Absolutely. I mean, I think it helped extend... remember, we just came off the longest expansion in our nation's history. Many people didn't think that we would have, through the whole decade of the '90s, that kind of sustained growth where even into year 2000 we were getting, in some quarters, 6 percent rates of growth. So that was the direct product of the productivity growth that we had, which enabled us to have both rising wages, rising productivity, increasingly rising output. That, I think, is the kind of stuff that we should probably expect to see in turnaround when we start getting back on our feet now.

MARGARET WARNER: And Bob Walberg, your thoughts on whether this economy is fundamentally different in a way that is evening out these cycles.

BOB WALBERG: Well, I think the other two gentlemen have hit on some key points. One is obviously the improvements in productivity growth and then the second one would be the immediate and somewhat drastic response by the Fed in reducing rates. They moved very quickly, very sharply, and obviously that's helping to shorten this downturn. However, I would caution that the increase in government spending is something we can't count on going forward. And it will be somewhat of a drag on economic growth in future quarters, that I think if you're going to have a robust recovery, has to be offset by business investment. If it's not, then I think you're looking at, you know, relatively modest economic growth.

MARGARET WARNER: All right, gentlemen. Thank you, all three, very much.

JIM LEHRER: Still to come on the NewsHour tonight, Letterman in for Koppel?; The search for youth, and Shields and Brooks.

FOCUS - LATE NIGHT SHAKEUP

JIM LEHRER: The big late night television story; there were confirmed reports today that ABC is trying to entice David Letterman to leave CBS for a similar 11:30 slot on ABC. That would mean, among other things, the demise of ABC's news program, "Nightline" with Ted Koppel. Media correspondent Terence Smith has the story.

TERENCE SMITH: Joining us now is Bill Carter, the chief television correspondent of the "New York Times," who broke the story in today's paper. Bill Carter, welcome.

BILL CARTER: Nice to be here.

TERENCE SMITH: Reading your story, it sounds like Macy's raiding Gimbel's. What is going on here?

BILL CARTER: Well, it's essentially a network that has a successful late night show a long-term franchise but one that feels is not the best idea going forward, looking at the landscape and saying here is the really big star in late night who is available and we're going to go after him to improve our standing and make more money.

TERENCE SMITH: And did anyone consult Ted Koppel or ABC news?

BILL CARTER: They did not. In fact until last night when I started making my calls to let people know what was going to be in the paper today, Ted Koppel and his staff and the management of ABC News had no idea that the management of the network was negotiating with Letterman to give away the "Nightline" time slot.

TERENCE SMITH: Why would David Letterman who makes a handsome salary where he is, want to leave CBS for ABC?

BILL CARTER: Well, there are a lot of little factors that are in play that aren't about money, which are his standing vis- -vis Jay Leno and whether or not he could be more competitive on ABC, whether ABC's audience matches up with his audience. CBS's audience has always been older and more rural than his audience, which is obviously an urban and younger audience. He always tends to have difficult relations with his employers, and that's been the case here a bit, too.

TERENCE SMITH: But it sounds like, at least from ABC's point of view, it is about money.

BILL CARTER: Well, it is about money because they don't think the franchise going forward with "Nightline" and "Politically Incorrect" is competitive financially. In fact, they say it's losing money, about $10 million a year. The entertainment show could maybe generate $50 million in profits.

TERENCE SMITH: That could be a huge difference in the bottom line.

BILL CARTER: Exactly. And ABC needs that because they're suffering through a very difficult year. Their prime time is performing very poorly this year.

TERENCE SMITH: Maybe I'm na ve, but wouldn't ABC be criticized or would they be criticized for sacrificing a very well established news program?

BILL CARTER: There's no question that's a factor. This is not just a well established news program. This is a legendary program headed by one of the biggest figures in recent television news history, Ted Koppel. So they had to calculate the risk of that versus the possibility of the upside of getting David Letterman. And they were willing to take that chance and go even further because they had to convince Letterman that he would not be the reason they were dropping "Nightline" but they intended to drop "Nightline" whether they got Letterman or not. They have gone the extra mile and basically said that to me, that they're committed to make a change in late night whether they get David Letterman or not.

TERENCE SMITH: And what does that tell you about the priorities of the network in terms of the news, where they stand in the pecking order?

BILL CARTER: I think it says that right now, especially at ABC, which is in a bad financial position, they can't afford to take the position that news is more important than profits. Right now profits seem to be the most important thing to ABC.

TERENCE SMITH: And those profits would be greater, as I understand it, from your article, because even though the ratings of the two broadcasts, "Letterman" and "Nightline" are quite similar, in many respects, the Letterman audience is the more desirable?

BILL CARTER: Correct. They both have about 4.5 million viewers for that half hour period. Letterman of course is an hour-long show and "Nightline" is half an hour. But the audience for Letterman is younger; it's particularly good in young men. And those are very hard to reach for advertisers. So they'll pay a premium to reach them. The news audience tends to be a 25-54-year-old audience. And there are a lot of them available in television. You can find them all over the place. So that makes them less valuable to an advertiser. They want to find younger audiences, particularly younger men.

TERENCE SMITH: IN fact, we have something coming up in the next segment about younger audiences. From "Nightline"'s point of view is there another place on the schedule, another place to go?

BILL CARTER: Well, I don't know whether "Nightline" would accept that. Certainly ABC wants to present some possibilities to Mr. Koppel and to "Nightline" and I think you could argue that "Nightline" might be a valuable property elsewhere, perhaps, somewhere else in television. There are a lot of cable news networks out there. If they could afford a "Nightline", I'm sure they would love to have Ted Koppel. So I don't think this means the end of Ted Koppel's career. I hope not. I think it only means that they want-- if they can get David Letterman, they're going to do anything they can to get him.

TERENCE SMITH: Would it be fanciful and silly to expect CBS to turn around and bid for it?

BILL CARTER: To bid for "Nightline"? It would be fanciful and silly, I'm afraid. They would go for an entertainment show as well because they've now established a late night entertainment franchise with Letterman. They never had one before. I think they would instantly try to hire someone else in the entertainment realm, if only to challenge Letterman because if Letterman leaves, they're not going to be happy.

TERENCE SMITH: So that sounds like the money talking again.

BILL CARTER: It sure does.

TERENCE SMITH: Tell me this. ABC News and "Nightline" certainly and ABC news itself, is actually a small could go cog in a much large herconglomerate -- Disney. How much of a factor is that when it comes to the pecking order we were talking about before?

BILL CARTER: I think it is a significant factor in the sense that unlike the cable network, cable news networks, ABC News is now in a diminishing world. It can't cover news the way the cable news networks do, so it has-- it has only a certain number of programs it can do. There is a limited upside to that. So its priority inside a big company like Disney, obviously diminishes compared to what it would be if they had a 24-hour news network. ABC did try to establish that at one point, and it didn't go through. If it had, I think their news would have a lot more influence inside Disney.

TERENCE SMITH: The "Nightline" viewers, these 4.5 million people you've been talking about, have they been heard from?

BILL CARTER: They haven't fully weighed in yet but they've been sending e-mails and letting their opinion be known. I think what you have to realize is this is not a fate accompli because Letterman has not decide what had he is going to do and if he doesn't do it, I don't think ABC has an easy alternative, and probably would at least for the time being say "we're sticking with "Nightline"" because they don't have another alternative to Letterman, an entertainment alternative. It is a little bit complicated. I do think there is a big question whether Letterman will take this because it is a risky deal for him.

TERENCE SMITH: Give us a probability on the scale of one to ten.

BILL CARTER: I'd give it a two.

TERENCE SMITH: A two? Very low then.

BILL CARTER: I think it's about a 20% chance right now.

TERENCE SMITH: Okay. Bill Carter, thank you very much.

BILL CARTER: Nice to be with you.

FOCUS - SEARCHING FOR YOUTH

JIM LEHRER: And to explore a point just made, ABC is not the only news organization searching for younger viewers. And it's a subject Terence Smith had been looking at prior to the Letterman development. Here is his report.

TERENCE SMITH: For years now, newspaper readership has been dwindling nationwide, and the audience for news on television has been fragmenting.

SPOKESMAN: You haven't seen any more video from Philadelphia, right?

TERENCE SMITH: Most ominously for the long-term future of news organizations, surveys show that people under 35 are reading and watching less traditional news all the time.

SPOKESMAN: Stand by, camera one, robin.

TERENCE SMITH: To counter this trend, news managers are avidly searching for their version of the fountain of youth.

SPOKESMAN: 15 seconds, guys.

TERENCE SMITH: The quest for 18- to 34-year-olds, prized by advertisers, is so intense that it's changing the look and content of the newspaper you read and the news shows you watch.

JACK CURRY, USA Weekend: It is a problem of reinventing the wheel without breaking the car.

TERENCE SMITH: Jack Curry is executive editor of "USA Weekend Magazine," which is distributed in 580 newspapers across the country. His mandate: To deliver younger readers.

JACK CURRY: Newspapers-- be they in Chicago, be they in Asheville, be they in Honolulu-- face the same problem: How do we get this new generation of reader to our publication without completely alienating the people that make up our core business?

TERENCE SMITH: "USA Weekend" profiles youth icons and gears its stories to younger Americans. Curry says young people are interested in news, just not the news as it's being delivered.

JACK CURRY: They do care about jobs, they do care about family, they do care about, you know, finance, building a future, but they want to do it with a little attitude. You have to... it's everything from the way you design the pages, to the authors and bylines you offer them.

TERENCE SMITH: Even when stories appeal to older readers, editors take generation "Y" into consideration.

JACK CURRY: Now, of course, when we have Robert Redford, we make sure that we have Brad Pitt in a sidebar saying why Robert Redford is cool. So you really can edit, so you get it both ways.

SPOKESPERSON: Do you have a phone number and a contact that I can get back to you?

TERENCE SMITH: The search for a younger demographic is even more pronounced at television networks where, in a trend that appears to be accelerating, the Internet is cutting into the young TV audience.

TOM WOLZIEN, Sanford C. Bernstein & Co.: More and more young people are spending time online. In fact, a recent study by the University of California indicated that 14-year-olds are watching less television and spending time online instead.

TERENCE SMITH: Tom Wolzien is a senior media analyst for financial investors. He says 18- to 34-year-olds are targeted by print and TV advertisers because they are harder to reach and have not yet developed brand loyalties.

TOM WOLZIEN: The 18- to 34-year-olds are starting households, they are perhaps more impressionable. They are deciding on what type of baby diaper to buy for the first time, they are establishing a household, deciding what type of toothpaste, what type of soap... so advertising there has the potential of establishing a long-term relationship.

TERENCE SMITH: Just how important is that younger group?

TOM WOLZIEN: An advertiser will probably pay at least double, if not triple, to reach young people-- 18 to 34-- than reach people over 55.

TERENCE SMITH: But many young viewers may not get their news from newscasts at all.

ANDREW HEYWARD, President, CBS News: There are people who get their sense of the news from late night comedy shows, from radio, just from the buzz. It is a kind of meta-news, if you will, that is out there that tells them when something big is happening, and then they might turn to a more traditional source.

TERENCE SMITH: Andrew Heyward is President of CBS news. His hope is that younger Americans will eventually find their way to network news.

ANDREW HEYWARD: To some degree, time is on our side in that as you get older, you tend to get more interested in the world around you. When you have a mortgage, when you have kids in school, you care more about tax policy, the economy, certainly education, crime in the neighborhood, and so on. So I think you become more engaged with society as you get older. That makes you more interested in the news. But, having said that, we can't just sit around and wait.

TERENCE SMITH: As part of media giant Viacom, CBS news has entered partnerships with other Viacom properties that already attract youthful audiences. The news division's "48 Hours" has done two shows in cooperation with MTV...

SPOKESMAN: Anyone can bring them a pill...

TERENCE SMITH: It hopes to do more. Vh-1 pop entertainment stories are regularly distributed to CBS News affiliate stations.

ANDREW HEYWARD: It's part of your menu of choices. We certainly cannot replace MTV or VH-1 or UPN in the affections of their loyal viewers-- nor would we want to-- but there is the opportunity for us to become an added feature, when people feel the need for network news.

TERENCE SMITH: CBS News has also offered to assist Viacom's younger skewing UPN network, and is currently working with BET, Black Entertainment Television, on its revamped late news show. But inside CBS news, efforts to attract younger viewers have met with mixed results. When its "Early Show" was launched two years ago, producers featured younger lifestyle reporters and segments.

ANDREW HEYWARD: It does represent both the potential and the perils of moving aggressively toward younger viewers.

ANCHOR: Welcome to the "Early Show."

TERENCE SMITH: The show's new look lost loyal, older watchers and remains a distant third in the morning news race, but with a boost from David Letterman at night and segments on "Survivor"...

SPOKESMAN: Survivors ready-- go!

TERENCE SMITH: ...A hit with younger viewers, the "Early Show's" ratings are now rising.

ANDREW HEYWARD: The program is much more successful financially than it was, and the audience comp, the percentage of younger viewers has improved. But along the way, in the early going, there is no question that some older and much older viewers deserted us, and we will never know whether there was a way to be a little more gentle here.

TERENCE SMITH: Cable News Networks, whose 24/7 approach may better suit the lifestyles of young Americans, are actively courting them.

ANCHOR: The Pentagon said U.S. forces were fired upon...

TERENCE SMITH: CNN's headline news was totally revamped in august, expressly to target a young audience. Its creator, Teya Ryan:

TEYA RYAN, CNN: What we looked at were areas that I think this demographic is very interested in, and we made a conscious effort to focus on those areas, which would be environment, sports, business, technology, health, and entertainment culture.

SPOKESPERSON: Local newsbreak coming up for some, and for everybody else, a Britney Spears fix.

TERENCE SMITH: With 17 cameras and a state of the art "in the round" set, it is a multimillion dollar gamble.

ANCHOR: Who was cooking the books at Enron?

TERENCE SMITH: The fast-paced show, with young anchors and screens crowded with information, was soundly panned by critics. But its ratings are up 104% among 18- to 34-year-olds.

SONG: Hey, Mr. D.J. put a record on

I want to dance...

ANCHOR: You know, the latest in audio technology may just blow you away-- that's sound we're talking.

TERENCE SMITH: To critics who say headline news panders to the young, Teya Ryan makes no apologies.

TEYA RYAN: It was our own blinders on to say that that was soft news, lifestyle news, versus that's where this audience actually lives. That's what they're interested in, that is what they'll gravitate to. So, as we hold on to what our old definition of news is, we simply watch this audience fade away as a news audience.

TERENCE SMITH: Headline News viewers only watch for an average of 15 minutes at a time.

TEYA REYA: They can dip in, they can dip out, all throughout the day, get what they want and move on with their lives.

TERENCE SMITH: The show's dizzying pace and changing data are, the young anchors say, what their

ROBIN MEADE, CNN Headline News: You're coming from a generation that kind of grew up between eighth grade and twelfth grade watching MTV. That was the new thing. It seemed so fast-paced. Now that seems like a regular pace type of thing. You can tell by the speed at which I talk that life is kind of fast for me.

KRIS OSBORN, CNN Headline News: There are people that like to multi-task. I like to do a number of different things, whether I'm running on the treadmill, or I want to put the sound down, or I want to read different information or look down at the graphics.

TERENCE SMITH: More traditional news shows are co-opting headline news' "crawls" and graphics, and mainstream media's efforts to attract an Internet- based generation will inevitably give all news a different look. The transformation, says Jack Curry, has already begun.

JACK CURRY: There is color on the front page. The idea that there are stories about women and men and how they relate on the front pages of newspapers. The fact that Mariah Carey's music deal was on the front page on the "New York Times," these are not stories that would have occurred 25 years ago.

TERENCE SMITH: What news organizations must do now, he says, is make generation "Y" aware of what the news media has for them.

JACK CURRY: If you build it and promote it, they will come.

TERENCE SMITH: Perhaps. But the question remains whether traditional news organizations can move fast enough to capture the Internet generation.

FOCUS - POLITICAL WRAP

JIM LEHRER: Finally tonight, some old-fashioned analysis by Mark Shields and David Brooks. Their first subject is t exchange of words this week between Democrats and Republicans over the terrorism war. Kwame Holman sets it up.

KWAME HOLMAN: The tempest began stirring midweek with the first substantial public criticism of President Bush's antiterror campaign from senior Senate Democrats. Robert Byrd, chairman of the Appropriations Committee, worried about the cost: "We seem to be good at developing entrance strategies, not so good at developing exit strategies. If we expect to kill every terrorist in the world, that's going to keep us going beyond doomsday. How long can we afford this?" Joseph Biden, chairman of the Foreign Relations Committee, said of the Bush Administration: should lay out a strategy. "People are willing to give them the benefit of the doubt for a while if they... have a real plan. The longer the time moves on and the less you see of the details of the plan, you're going to hear more and more people - Democrat and Republican - saying, 'Whoa, wait a minute.'" Yesterday, Senate Democratic leader Tom Daschle stood by the sentiments of his colleagues and made comments of his own.

SEN. TOM DASCHLE: I have said all along we need to ask the tough questions. There may be support in general for the President's request for defense, but somebody's got to ask tough questions and no one does a better job of that than Senator Byrd.

KWAME HOLMAN: Daschle also set a marker for measuring success.

SEN. TOM DASCHLE: Clearly, we've got to find Mohammed Omar, we've got to find Osama bin Laden, and we've got to find other key leaders of the al-Qaida network, or we will have failed. I think that it's critical that we keep the pressure on, we do the job that this country is committed to doing. But we're not safe until we have broken the back of al-Qaida, and we haven't done that yet.

KWAME HOLMAN: Immediately after Daschle spoke, Senate Republican leader Trent Lott issued a statement saying: "How dare Senator Daschle criticize President Bush while we are fighting our war on terrorism, especially when we have troops in the field." Daschle's office responded, saying: "Some have chosen to characterize remarks Senator Daschle made this morning on the war on terrorism as critical of President Bush. In fact, the transcript of Senator Daschle's remarks indicates no criticism of President Bush or his campaign against terrorism." Nonetheless, on the NewsHour last night, Senator Lott again challenged Daschle's comments.

SEN. TRENT LOTT: Any crack in the show of support for our commander in chief on this war I think is not helpful. We also need to be supportive of the necessary funds for the defense budget. Should the Congress raise questions about, okay, do you need all of this and exactly how is this going to be used, surely that's part of our job. But if you say that, if we don't get bin Laden, if we don't get Mullah Omar, then it has been a failure, or begin to raise questions about what was needed to do this job, I think it is not helpful.

KWAME HOLMAN: Today, Senator Daschle was quizzed again by reporters.

SEN. TOM DASCHLE: I think the Republicans' reaction is nothing short of hysterical. I'm amused, frankly. I'd ask them to look at what I said, because I stand by what I said. The Congress has a constitutional responsibility to ask questions. We are not a rubber stamp to this President or to anybody else. We must do what the Constitution and what our best judgment requires, and we'll continue to do that.

KWAME HOLMAN: At an event in Iowa today, the President himself was asked about the Democratic criticism of the cost and pace of the antiterror effort.

PRESIDENT GEORGE W. BUSH: Well, I think most Americans understand that... that it's going to... this is a... that it's going to take a while to achieve all our objectives; that by far, the vast majority of Americans are patient. They know when you're looking for one person who may be hiding in a cave, it may take a while.

JIM LEHRER: And to syndicated columnist Mark Shields, and the "Weekly Standard's" David Brooks.

Mark, so, did Senator Daschle and the Democrats do something wrong, or have the Republicans gone hysterical as Senator Daschle accused them of?

MARK SHIELDS: Jim, I just think it's long past the time we ought to have a debate in this country. The dimensions and the direction of post-September 11 have changed profoundly. We're talking about places now that were never on the radar before -- places like Yemen and the Republic of Georgia and the former Soviet Union, as well as some talking blithely about going into Iraq, an enterprise at minimum would require 250,000 troops according to people on the military planning. So I think it's time for a debate. It's a question of, you know, what are we going to do? The country, I think is ready for it in terms of what is the cost. How that cost is going to be distributed both in blood and in treasure and just-- I think it's -- Senator Lott really either through inadvertence or conspicuous misinformation chose to equate dissent from on Tom Daschle's part with treason - I mean saying that Tom Daschle is dividing America at a time when the country is difficult sided. I mean that was just -- that was a silly statement. And Bob Byrd and Joe Biden -- they disagree. Joe Biden, the chairman of the Foreign Relations Committee, said we need more commitment, more involvement in Afghanistan and Bob Byrd, the chairman of the Appropriations Committee, both Democrats are saying no we need an exit strategy out of Afghanistan. And that's a debate. I mean what does Afghanistan mean? What does it involve? What do we have to do?

JIM LEHRER: David, how do you see it?

DAVID BROOKS: I basically agree with that. President Bush escalated the war on terror. He said we're going after regime changes in Iran, Iraq, and North Korea. He said we're going to worry about weapons of mass destruction. That is an important change; we should debate about it. And this is not a device -- this doesn't weaken the country; this strengthens the country. There's a historian in California named Victor Davis Hansen, who wrote a book about why democracies make such lethal armies. And it's not because we are so well disciplined but it's because wehave internal debates and that leaders actually have to defend their policies. And that's what Daschle was doing. Bush -- if anything -- has been deficient in defending his policies since that State of the Union. You can't just give one speech about Iraq. You have got to give a bunch of them. He hasn't done that. If there is a weakness in the Democratic position, it is this. Tom Daschle has to figure out where he stands on Iraq, or where the polls indicate he should stand because he sort of said well we have to have clarity, but he has not given a firm speech about what he believes about the axis of evil. Lieberman has given a speech in favor of Bush. But no Democratic politician has emerged and said okay, I'm starting the debate. Somebody will do that, and it will be up to Daschle to react.

JIM LEHRER: But what about on the other side? Why are the Republicans not willing to engage in this debate, or do you think they are, they just haven't been approached properly?

DAVID BROOKS: I thought the Lott and Tom DeLay comments were just a cheap shot. But--.

JIM LEHRER: Tom DeLay - we didn't have that in there - Tom DeLay said that it was disgusting.

DAVID BROOKS: Right. Always wanting to make Trent Lott look good -- make him look worse. They can win this debate. I completely agree with the Republican position. I don't think you can fight the war on terrorism as Tom Daschle indicates that you can by focusing on two individuals. I mean Iraq is a really bad regime. They really threaten us with weapons of mass destruction. It seems to me a debate the Republicans should be eager to have and not try to stifle.

JIM LEHRER: Let's pick up on that one, Mark. On the substance issue that Daschle said, that this is going to be a failure if we don't get Osama bin Laden and Mullah Omar. Is he right? Do you agree with him?

MARK SHIELDS: I mean I don't agree with him quite frankly, but he is laying down the same premise Jim that was laid down by the President of the United States: Wanted dead or alive. Dick Cheney has repeated this time and again. The Vice President of the United States -- Donald Rrumsfeld is on the record as saying he goes home at night and his wife asks him when are you going to get Osama bin Laden. He said I don't want to hear about it anymore. That was the target; that was the mark established by the Administration. Do I think that is important? No. I truly don't. But I think a debate about whether the United States is going to commit a quarter of a million troops and once we occupy, if in fact that is successful, whatever blood and treasure is involved--.

JIM LEHRER: In Iraq?

MARK SHIELDS: In Iraq -- 100,000 troops to occupy Iraq, Jim. I don't know. Are Americans going to be the western Christian pro-Israeli occupying force in Iraq? You think the Brits in Northern Ireland had a tough time, let me tell you, that's an assignment that I think ought to be debated and ought to be determined by free debate in the country.

JIM LEHRER:: Engaging in debate, David, on this issue of Iraq.

DAVID BROOKS: There are 25 new democracies in the last 20 years. What the U.S. has done is created a world order which is allowed local heroes like Cori Aquino, Nelson Mandela, Lech Walesa to create their own democracies. I would say that's something that's something that's possible in Iraq. That's something that's happened 25 times in the last 30 years. It is plausible to think we can happen in Iraq and think of the upside; think what happens if there is a democracy in Iraq; think what happens if we export our ideas that all human beings haveinalienable rights to Iraq, to the middle of the Arab world. It seems to me that revolutionizes the world, so the risks are tremendous but the upside is also tremendous and I think that sort of effort which Bush envisions brings out the best in the country.

JIM LEHRER: And your point is that if you have the debate, that it will refine, in other words, end up being kind of halfway between what you all may be talking about?

DAVID BROOKS: No It will be what I say and Mark will be wrong.

JIM LEHRER: Okay. But it is conceivable that it could come out in the middle, right?

DAVID BROOKS: -- conceivable-- It is like the Cold War, the debates are in some ways the same. Should we try to roll back Saddam Hussein or should we contain him? Should we have unilateralism, should we have coalition building? That was a 40-year debate. Bush is talking about a long war so let's have a debate.

MARK SHIELDS: Jim, we're not arguing about ends. We're arguing about means. There is no question about it. I mean every one of the examples of the triumph of freedom, of the preservation establishment of human dignity and every one of those countries David mentioned in the United States played a role. In none of them did we send in the 82nd Airborne. I mean that's a big, big difference. If Iraq is worth that, then, my God, we are entitled to a full and free debate in this country saying this is what the cost is going to be. This has been an ouchless, painless thing, Jim. It's the first and only war since the Mexican War that we've gone into without no increase in taxes and no draft.

JIM LEHRER: You also mentioned Yemen for instance, which there was an announcement not from the United States but actually some guy in Yemen said there were 100 U.S. troops coming in and the thing with Georgia -- maybe not troops but we are going to eventually maybe send some troops. The Philippines we already have a few hundred. Does that concern you as well?

MARK SHIELDS: It concerns me, Jim, because it is a commitment and it's a commitment that we haven't debated and decided. We have 2.5 million fewer men and women in the United States military than we had during the Korean War. I don't know if that is fully grasped--.

JIM LEHRER: Say that again.

MARK SHIELDS: 2.5 million fewer American men and women in the American military than there were during the Korean War where we were fighting on one battlefield. I mean that's the kind -- you're talking about getting stretched thin and who is going to bear the burden, who is going to pay this price -- and I think that's the debate that has to be held.

JIM LEHRER: How do you get around the problem though that clearly that, for instance, Senator Lott less so than the President, but others not just Senator Lott but others in the Republican-- who do equate this kind of debate or even asking these kinds of questions, that it does hurts us. In fact, in an interview last night on the NewsHour, Senator Lott said to expand on the clip we showed -- he said that it unsettles our allies -- that we are asking our allies to come in and help us and they can say well wait a minute, you haven't even got Daschle on board. You don't have your leadership on board.

DAVID BROOKS: I can't believe that argument passes the laugh test. Our allies are democracies. They understand - they have internal debates. Do you think the people in Germany and France mind that Tom Daschle is saying some of the things they say? I'm sure they're ecstatic about it. Listen, one of the things about the whole issue that has clarified for me is an argument that Paul Kennedy made - he had a story in the Financial Times saying never before in human history has the disparity between the greatest power and the second and third and fourth greatest power been as large as it is today. The United States spends more on defense than the next nine nations. We are richer -- with 30 percent of the world GDP is American. This seems to be a central fact that coordinates this whole debate. Do we see this as a tremendous opportunity that we can take advantage of our amazing power, or do we have to worry about hubris, we've got to worry about overbearing the world? And this is a fundamental values debate, which we are now seeing the micro version of, which will expand.

JIM LEHRER: Back to the Daschle thing for a moment. Daschle really does seem to get under the Republican's skin, doesn't he? Is that part of this too, do you think?

MARK SHIELDS: I think it is. The Republicans have decided, as political parties do, that they have to put a face on the Democrats. The Democratic Party is a party without a face. They continue to run against Bill Clinton. Ari Fleischer had to apologize - the White House Press Secretary -- for that yesterday. They can't run against Al Gore.

JIM LEHRER: We ought to - we have got to explain that. He made a suggestion that maybe it was the Clinton Administration's overreaching for peace that has caused the violence now. Then he retracted it and he got his hand slapped by the President apparently for saying that.

MARK SHIELDS: That's right. But that was kind of a convenient punching bag. You have got to put a face on the Democrats. Al Gore has disappeared. He is with Judge Crater somewhere, and hasn't been heard from. So they said well look, the Democrats did this to us with Newt Gingrich. Well Newt Gingrich was combative explosive, mercurial, volatile, obnoxious. Tom Daschle is none of the above. But there is no question he does get under their skin. I was on the Hill yesterday and I found most fascinating I had Republicans saying to me there is not consultation on the part of the administration and the White House. It's not just the grumbling of Tom Daschle or Bob Byrd or Joe Biden. There is a sense that unilateralism, call it what you want, is the policy as far as the Congress is concerned perhaps as well as the allies.

JIM LEHRER: We talked about this before, David, there's the Daschle element in all of this. But you could even reverse it. I would reverse the question to you, just watching Daschle a minute ago in the tape. Clearly they're getting under his skin. They're calling hysterical -- he was a little, you know, a little annoyed, which he has made a career out of not showing annoyance.

DAVID BROOKS: For him, that was a blow-up. That was a tantrum.

JIM LEHRER: All right. But Daschle really is in their sights, is he not?

DAVID BROOKS: Yes, he certainly is. And for that reason, if you have a parking accident with somebody and you are screaming at them and they're saying yes, yes, you just get madder and madder. But Daschle is in a very tough position; as Mark said. Democrats are all over Lott on this and he somehow has got to be the leader. So it is a very difficult job that he faces. I'm sure the pressure is on him, too.

JIM LEHRER: Yeah. A quick question about this "Washington Post" story today that the President confirmed about shadow governments on September 11 and secret plates. What do you think about that?

DAVID BROOKS: I find it a little creepy. It is a hardship on Mark and I because we have to go to West Virginia in case of nuclear war, the punditry flow will not be impeded. I actually did find it a little creepy; the story is that members of every single cabinet department are going in 90-day shifts to some mysterious underground bunker government. It seems to me if you have got a democracy, a decentralized system, the one thing you are really good at is being flexible, flexible in a time of crisis, that the government flows from the bottom up. And you don't need some sort of bureaucrat in a bunker running the country in a time of crisis. I will say the one important thing it shows is how Bush is obsessed with this war or focused on this war.

JIM LEHRER: Quickly.

MARK SHIELDS: Quick, Jim, it is a little eerie and a little jarring to read about it, no question about it, especially after watching the Vice President on Jay Leno kidding about his own secure location and his own hibernation. It is a reminder of how seriously the Administration has obviously taken this.

JIM LEHRER: Okay. Gentlemen thank you both very much.

RECAP

JIM LEHRER: And, again, the major developments of this day: There were fresh signs the recession has ended. New measures of consumer spending, construction and manufacturing were up. And President Bush did confirm, as we just, there is a "shadow government" in place, and it's been there since September 11. It is a precaution in case of an attack on Washington. A reminder: "Washington Week" can be seen on most PBS stations later this evening. We'll see you online, and again here Monday evening. Have a nice weekend. I'm Jim Lehrer. Thank you and good night.