The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight some perspective on the new confrontations with Iraq; an interview with the head of the Social Security Administration on the year 2000 computer situation; a report from California on a different kind of computer problem; and a look at why the cost of oil is so cheap right now. It all follows our summary of the news this Monday.

NEWS SUMMARY

JIM LEHRER: U.S. fighter planes exchanged missile fire with an Iraqi air defense site today. President Clinton said American pilots acted in self-defense after being fired upon first by an anti-aircraft position. The U.S. planes were enforcing the no-fly zone in Northern Iraq. Iraqi military officials claimed the U.S. planes fired first, killing four Iraqi soldiers, injuring seven others. President Clinton had this to say at a White House event on Social Security.

PRESIDENT CLINTON: The no-fly zones have been and will remain an important part of our containment policy. Because we effectively control the skies over much of Iraq, Saddam has been unable to use air power to repress his own people or to lash out again at his neighbors. Our pilots have the authority to protect themselves if they're threatened or attacked. They took appropriate action today in responding to Iraq's actions.

JIM LEHRER: We'll have more on Iraq right after this News Summary. The White House event was to announce the Social Security Administration had found a cure to the Y2K bug. Social Security Commissioner Kenneth Apfel described the problem.

KENNETH APFEL: As we all know by now, the year 2000 computer problem - or what we call Y2K in the techni business - is a systems calendar glitch that can affect computer systems worldwide. Computers use two-digit systems to track calendar dates. On January 1, 2000, some computers could read that double 0 as two - not as 2000 but as 1900. If nothing were done, computer systems could malfunction or possibly even shut down.

JIM LEHRER: Apfel said the agency's solutions would keep that from happening. We'll have more on the Y2K problem, including an interview with Commissioner Apfel, later in the program. There were several bad weather stories today. In Washington State, 4000 people were stranded by heavy snow. It and the threat of avalanches closed both ends of the Cascade Mountain pass last night. It was reopened this afternoon. Flooding and mudslides blocked roads elsewhere in Washington and in Oregon. In parts of Virginia, Tennessee, and Alabama, 120,000 customers are still without power after ice storms that hit last week. Three elderly Virginia residents died from the cold when their furnaces failed in the power outage. Ice-encrusted trees fell on electrical transmission lines, cutting off service. At one location in Tennessee damage was so heavy crews had to install an entirely new line. And that's it for the News Summary tonight. Now it's on to developments with Iraq, the year 2000 computer bug, collecting child support, and cheap oil.

FOCUS - WHAT NEXT?

JIM LEHRER: The Iraq story and to Elizabeth Farnsworth in San Francisco.

ELIZABETH FARNSWORTH: Today's exchange of missiles above Iraq was the sharpest face-off since the end of the 70-hour bombing campaign December 19th. Since then, the government in Baghdad has announced a ban on international flights over its territory, including military aircraft enforcing Northern and Southern no-fly zones and planes flying UN personnel; barred the return of UN weapons inspectors unless economic sanctions are lifted; and threatened to pull out of the UN's oil for food program, which allows Iraq to sell $5.2 billion worth of oil every six months in exchange for supervised distribution of food and medicine. We get three views now on these latest developments: Rolf Ekeus was executive chairman of UNSCOM, the UN inspection mission in Iraq from 1991 to 1997-he's now Sweden's ambassador to the United States; Denis Halliday was the UN humanitarian coordinator of the oil for food program from September 1997 until October. And Zalmay Khalizad was a Pentagon official in the Bush administration and is now director of the Strategy & Doctrine program at Rand, a research institution.

ELIZABETH FARNSWORTH: Ambassador Ekeus, we've just described a series of moves that have taken place since the bombing. What's your interpretation of these events?

AMBASSADOR ROLF EKEUS: Well, my interpretation is that the Iraq leadership is - has sense that there is no way out; they are now in the waiting mode. They tried to develop a situation where they would like to see the other side move, the Security Council to move and do something in response to them. They have decided to take a stonewalling position, it looks like, and I think that something has to be done in response to this.

ELIZABETH FARNSWORTH: And what do you think, Mr. Ambassador, that Iraq wants the Security Council to do?

AMBASSADOR ROLF EKEUS: Well, Iraq would like to have an assurance that the sanctions will be lifted. If Iraq gets that assurance, it will admit the UN weapons inspectors in, but they need the assurance first. That, of course, is the problem.

ELIZABETH FARNSWORTH: Mr. Khalizad, what do you - how do you interpret these most recent events?

ZALMAY KHALILZAD: I think that the attacks that took place have emboldened Saddam Hussein because of the opposition to the attack at the United Nations Security Council on the part of China, Russia, and to some extent France.

ELIZABETH FARNSWORTH: You're talking about the bombing?

ZALMAY KHALILZAD: Exactly. And also the opposition to the attacks in the Arab world is seeking to exploit that opening by putting everything on the table, if you like, and seeking to increase further the opposition to US policies in the Gulf and isolating the United States in the United Nations and in the Middle East.

ELIZABETH FARNSWORTH: So he's really trying to push it as far as he can here, you think?

ZALMAY KHALILZAD: That's right. I think that he knows that with the attacks the damage that was done to his capabilities was probably quite limited and that it will become harder for the US, given the opposition in the UN and in the Arab world, to attack again, so he sees an opening, an opportunity to push for some significant changes of the kind that Ambassador Ekeus talked about.

ELIZABETH FARNSWORTH: And Mr. Halliday, do you agree with that? You were there until October. How do you see these most recent events?

DENIS HALLIDAY: Well, I don't think we should be surprised by what's happened. I think after the military strikes when Iraq was shown to be very weak and incapable of any sort of response, this was a natural flow from that, and so as a result of political pressure within Iraq to show that Iraq is alive and well and able to respond to what it perceives to be more intrusive activity, and furthermore, for many months there's been an Iraqi position that breaking with the United Nations is what is necessary, that they need to go it alone, they need to show that Iraq is a country with national sovereignty and dignity intact, and to find a way to resolve its problems without further contact with the United Nations.

ELIZABETH FARNSWORTH: Ambassador Ekeus, is the inspection sanctions regime that we have known over the past years essentially ended now? Is it over because of the bombing?

AMBASSADOR ROLF EKEUS: No, I don't think so. As I said, I think it's holding time. The only way Iraq can get rid of the sanctions is by accommodating the inspectors, allow them to come back and allow them to do their work, and of course, to give up what remains of his weapons holdings, so that looks in the sense hopeless if I don't change tack, but I think one could help Iraqis somewhat to make clear that there are certain fundamentals, and I think necessarily they indicated that it should be clear to Iraq that Iraq's integrity and existence as a state should be preserved, that one should be clear that if Iraq does the right thing according to the resolution, it should be a relief of sanctions.

ELIZABETH FARNSWORTH: So you think, Mr. Ambassador, there is a possibility of still getting the UNSCOM inspectors back in and proceeding?

AMBASSADOR ROLF EKEUS: I think so. It is - of course, a third point is necessary - that is that the UN Security Council and especially the five permanent members put their act together and tried to find a common policy. I think all of them are in agreement that Iraq should have no weapons, but there are disagreements how the sanctions should be dealt with, and that, I think, is a cause for some high powered diplomacy here, which could help to clear the situation.

ELIZABETH FARNSWORTH: Mr. Khalilzad, how do you see the current state of the sanctions inspections regime?

ZALMAY KHALILZAD: I think the case of the inspections over the past several years shows that while it was rather effective at the beginning, it has not been very effective in terms of destroying all of Iraq's weapons of mass destruction and its long-range missile program. It appears that Saddam Hussein values these systems more than he does the relief of sanctions. So I think the solution is not really to go back to a watered-down or weaker version of what we had before the recent crisis, which was weakened already, but rather to come to a recognition that as long as Saddam Hussein is in power, Iraq is likely to come clean with regard to its weapons of mass destruction and missiles and to achieve that end, there is a need for a new government in Iraq that does not pursue the objectives of possessing weapons of mass destruction and missiles. Without that, we are likely to face the kind of situation that we have been facing for sometime now.

ELIZABETH FARNSWORTH: So, Mr. Khalilzad, you - even if it were possible to get the UNSCOM inspectors back into Iraq, you're saying their effectiveness is over and so some other policy has to be pursued?

ZALMAY KHALILZAD: Exactly. We've had inspectors in Iraq over the past several years, but we have not had full Iraqi cooperations all the time, and it does appear that Iraq is unwilling to fully cooperate with UNSCOM. That cooperation requires that Iraq come clean on its weapons of mass destruction and long-range missiles, and Saddam Hussein appears unprepared to do that. So I think if we and the international community want an Iraq that's free of weapons of mass destruction and long-range missiles, we need a new government in Iraq that can live at peace with the Iraqis and with the neighborhood and abandon its plans and capabilities in the area of missiles and weapons of mass destruction.

ELIZABETH FARNSWORTH: Mr. Halliday, what's your opinion about that? And then I want to ask you some more about how you think the current regime is at the moment, the regime of sanctions and inspections.

DENIS HALLIDAY: Well, I believe the Security Council has got to give more recognition to the cooperation that Iraq has had with UNSCOM for now on seven or eight years. A lot of progress was made in the early years under Ambassador Ekeus, and we were very close, I understood, to closing the files on nuclear weapons and on missiles. This, unfortunately, now has taken a new political twist. There are add-ons to the resolution calling for toppling of the president, Saddam Hussein, himself, and so on, which certainly I would say undermines the sincerity of any cooperative effort between the United Nations Security Council and the president of Iraq. In terms of sanctions, I find that there is no justification for continuing a program which knowingly is killing thousands of Iraqis, particularly young children, every month, and is sustaining malnutrition levels at over 30 percent. I don't believe the price that is being paid can be justified by anybody.

ELIZABETH FARNSWORTH: And what is the current status at the UN food for - the oil for food policy?

DENIS HALLIDAY: As I understand it, the team has gone back into Baghdad with presumably the agreement of the Iraqi authorities and will continue on the current program, which I think runs out in April. And, you know, there is a trend and there has been for some time to go it alone. We may see that Iraqis will decide they'll manage without oil for food, but I worry about that because the program has made a difference. It has brought in more than 8 million metric tons of foodstuffs and medicines. There would be a huge hole unless Iraq has some device, some capacity to sustain this sort of assistance for about 23 million people.

ELIZABETH FARNSWORTH: Well, you heard what Mr. Khalilzad said about what he thinks should happen now. Do you think Iraq needs to be contained, and, if so, how would you go about it?

DENIS HALLIDAY: No. I don't believe in this isolation and containment program. It leads to alienation. It identifies Iraq alone as a problem. There's a Resolution 687, which calls for the disarmament of the entire region for downgrading military capacity in the entire Middle East. That has been neglected by the Security Council. The focus is entirely on Iraq. I think we have to look at Iraq as part of the neighborhood of Arab states. We have to identify or they have to identify perhaps what are all the core issues that create the tension and mistrust amongst the Arab countries and try to address those issues because in the long run they need each other. As the oil revenues decline in the years ahead, there's a need for some sort of community of nations that can invest and support each other in sustainable development, other positive activities in the years ahead, and I think we should encourage that here and meantime lift the sanctions, take the risk, allow Iraq to rebuild its economy, rebuild, rehabilitate its power needs, its water and sanitation systems, which are so fundamental.

ELIZABETH FARNSWORTH: And Ambassador Ekeus, what about that as a way out?

AMBASSADOR ROLF EKEUS: Well, I think it's clear that - Denis was saying - that the situation is difficult. But thanks to the program, the immediate concerns about starvation, about also health is alleviated somewhat, so I think one should expand - that's my personal view - that one could expand further by allowing the Iraqi economy to come back on track. Now it is just receiving but it has not managed to get the production activities going. It should be possible with ongoing weapons monitoring, with an oil sense, which one could broaden the sets of items which could be imported, to give more than food and medicine, because the problem with the release of sanctions now is that that would give the same amount of money into the hand of the leadership, of the president, Saddam Hussein, and he has used - when he had this oil money - what did he use it for - he didn't use it for his people - he used it for one of the most dramatic expansions of weapons of mass destruction. He carried out the war for eight years with Iran. And the - that undercut and destroyed almost systematically the Iraq economy. We have to recall that. I'm not quite sure it would be better if I give the money back to him, and that is the problem with Denis Halliday's proposal.

ELIZABETH FARNSWORTH: And Mr. Khalilzad, what's your response to Denis Halliday's proposal?

ZALMAY KHALILZAD: I think that Iraq is not like any other Middle Eastern state. Iraq under Saddam's regime has used weapons of mass destruction against the Iraqis and as well against the Iranians. He has invaded another sovereign state, Kuwait, and he's in violation of UN resolutions that ended the war for the liberation of Kuwait. So I think it'll be an error to treat Saddam Hussein's Iraq as another state in the Middle East. However, I think over the longer term in a post-Saddam Iraq, an Iraq that does not seek weapons of mass destruction and long-range missiles, should be integrated into the Middle East and be treated like another state in the area.

ELIZABETH FARNSWORTH: All right.

ZALMAY KHALILZAD: As far as on the sanctions, let me say one word - that the Iraqis have had the worst of both worlds - sanctions and Saddam Hussein. And the way out is not only to relieve their sufferings in terms of food, but also their suffering in terms of their political life, and that means to help them have a regime and that they can participate in that will be different than what they have now.

ELIZABETH FARNSWORTH: Well, all right. Thank you very much, all three of you.

JIM LEHRER: Still to come on the NewsHour tonight, the year 2000 computer bug, collecting child support, and cheap oil.

UPDATE - MILLENNIUM BUG

JIM LEHRER: Paul Solman begins our update on the millennium computer bug.

PAUL SOLMAN: The headlines have been screaming "crisis" for more than a year now, and so you've probably heard of the year 2000 bug, may even understand it. But for those who don't, here's a brief primer. The problem was born back in the early days of computers. To conserve computer memory, then very costly, software writers would code dates with the fewest possible numbers: December 31, 1999--simply "12/31/99"--assuming for efficiency's sake that we would always be in the 1900's. Few in the computer industry expected such programs to last until now. But many did, leaving some 700 billion lines of old computer code to be fixed. If they're not, on January 1st, the year 2000, they will register 01/01/00--which a computer would be read as 1900. That's a problem because your bank's computer, say, could suddenly read your mortgage payment as 99 years overdue, in which case off with your credit! Electric companies' computers could suddenly think generators all over the country were a century overdue for repair and shut them down, thereby crippling the power grid. And the hundreds of thousands of government computers may be especially vulnerable, because so many different agencies depend on so many different computers, and have started to fix them so late.

PAUL SOLMAN: Economist Ed Yardeni worries about the year 2000 bug. Some call him an alarmist.

ED YARDENI: I'm not the alarmist. It's people like the commissioner of the IRS who says it's going to be an awfully close call; it's people like the chief information officer of General Motors who is quoted in Fortune Magazine saying that there are catastrophic problems-quote- -catastrophic problems- -unquote--at every GM plant.

PAUL SOLMAN: Yardeni's a sometimes quirky economic forecaster with a great track record. He thinks the odds are 60 percent the bug will cause a worldwide recession. He runs a year 2000 clearinghouse, and has identified problems from the power grid to--perhaps the scariest of all--the Pentagon.

ED YARDENI: In the early 80's, there was a false nuclear alert in the US, because of a malfunctioning chip. Well, we potentially could have quite a few of these chips malfunction.

PAUL SOLMAN:But how likely is it that New York, say, will be paralyzed by the millennium bug--that the food will run out, the lights go off? How likely is a phone shutdown, that disables Wall Street say and freezes the US. financial markets? Skip Patterson runs Bell Atlantic's year 2000 program: not just rewriting millions of lines of computer code, but replacing thousands of preprogrammed computer chips embedded throughout the system. Patterson says Bell Atlantic itself is on schedule. But--

SKIP PATTERSON: We're very heavily dependent upon suppliers, and we worry about them the way our customers worry about us. And we need them to succeed.

PAUL SOLMAN: Because?

SKIP PATTERSON: Because we will be operating, and if nobody else is operating, then what's the point?

PAUL SOLMAN: Still, Patterson thinks his system will work on January 1, 2000, and that firms like his, which solve the problem, will take business away from those that don't.

SKIP PATTERSON: If you're not operating, if you're dead in the water January 1, 2000, you're going to lose market share big time.

PAUL SOLMAN: So what about the doomsayers?

SKIP PATTERSON: Well, you know, Paul, there is more than a cottage industry out there that is feeding on the fear of Year 2000, so the more the Year 2000 fear is out there, the more business they are going to get, whether they are selling consulting services, remediation services, books or anything like that.

PAUL SOLMAN: If the phone company was cautiously optimistic, the electric company, despite its industrial setting and old fashioned exterior, was almost cocky. Wanda Skalba runs Consolidated Edison's state of the art computer operation. Skalba has been working on year 2000 since 1994. She says the critics are simply out of date.

WANDA SKALBA, Consolidated Edison: If you asked me this question three, four years ago, I probably would have said that I am worried because I was worried.

PAUL SOLMAN: But not anymore-and even though the power grid is linked together, a failure in one part of it won't cause a blackout of the 1977 variety, she says. Skalba claims Con Ed has built in all kinds of back-ups since then, as the map behind her shows.

WANDA SKALBA: That shows the list of the feeders that are right now being repaired, because they've been-the system that we have in Manhattan--it's called the network system, so when a feeder in a network is out, the other feeders in that network pick up the load. So we can very easily have feeders out and customers still have power.

PAUL SOLMAN: But what if key computer chips embedded within the system do go down?

WANDA SKALBA: What turned out in most of the cases is that these chips are not even date-dependent.

PAUL SOLMAN: Okay, we had our reassurances, so what did economist Ed Yardeni think of them?

ED YARDENI: Look, if the big companies aren't going to give us good news, then we're really in trouble. I'm not at all surprised by good news. However, every computer system on this planet basically has to be working properly. I mean, some may not matter that much, but there is so much interdependence of these computer systems--I'm saying that most companies will have it fixed. But some vital computer systems are not going to be ready in time, and they can have a domino effect and affect other companies.

PAUL SOLMAN: So, will the lights go out in New York, New Delhi, everywhere, anywhere? Well, we can finally end a story with that journalistic cliche, "only time will tell" and rest assured that in this case, on January 1st, the year 2000 time actually will.

JIM LEHRER: Today's announcement that the Social Security Administration has fixed its Y2K problems was celebrated at the White House. President Clinton congratulated the people who did the work.

PRESIDENT CLINTON: The reason we're here today is to announce that on New Year's Day 2000, and on very day that follows, people like Pauline can rest easy because the millennium bug will not delay the payment of Social Security checks by a single day. The Social Security system is now 100 percent compliant with our standards and safeguards for the year 2000. To make absolutely certain, the system has been tested and validated by a panel of independent experts; the system works, it is secure. And therefore, older Americans can feel more secure.

JIM LEHRER: And with me now is the commissioner of the Social Security Administration, Kenneth Apfel.

JIM LEHRER: Mr. Commissioner, welcome.

KENNETH APFEL, Commissioner, Social Security Administration: Great to be here.

JIM LEHRER: When did you all get onto this problem?

KENNETH APFEL: This problem was first identified 10 years ago within Social Security -- to put some perspective on how long we've been working on this activity - really heavy activity has been going on for almost half a decade now.

JIM LEHRER: How did you get onto it?

KENNETH APFEL: Well, basically, the first thing you have to do is identify the number of software lines that you have to take a look at. We had to look at over 35 million lines, over 300 computer systems that we have, so it's first identifying the different computer systems that had to be evaluated, ranking in terms of priority how to do that, try to - if there were any interconnections with other organizations, determine what they are and how they could affect your systems, develop contingency plans, it's been a long-term effort, a lot of work, a lot of people spent a lot of time on this.

JIM LEHRER: But back to - if you say you - and I read this today - that your administration found out about this - just started being concerned about it in 1989, when we just saw on Paul Solman's piece, Con-Ed didn't even get on to it till 1994, Bell Atlantic right about the same time. What happened at the Social Security Administration to put you so far ahead, even if other agencies of government as well?

KENNETH APFEL: Well, we have a long-term responsibility for the American public. Needless to say, we have 48 million Americans who rely on that check month after month, and we need to be able to plan well in advance, so that someone would say that it's fifty-nine or sixty, coming into our offices, looking about retirement in 62 or maybe at age 65, we needed to be able to get those systems up and ready for that person years in advance. So some of our systems had to be done and ready two and three and four years ago, so - because of the kind of businesses that we're in, which is providing this wonderful service to the American public, we had to be ready well in advance for some of our activities.

JIM LEHRER: So -

KENNETH APFEL: And we had to start early.

JIM LEHRER: But in the process - but the story I read today was that somebody in the process of getting ready not for the year 2000 problem but just getting ready normally came across this problem, am I correct, that somebody in one of your field offices who was putting all these things together said, my goodness, and went through and discovered those double digits, and went to 1900 and realized and spread the word within the agency. Did I read the story wrong?

KENNETH APFEL: That's right. Our systems people identified it and said, hey, we've got to spend some time here - we have to put aside other priorities and spend millions of dollars and a lot of work hours to resolve this issue, and it started many, many years ago, so that's what they did.

JIM LEHRER: Now, when you say they went through all these lines, I mean, how was that done? Who did that and what were they looking for?

KENNETH APFEL: Well, about 700 of our programmers spent time going through once the systems had been identified to go through each of those individual lines and to make the changes that are necessary. This is not rocket science; this is not incredibly hard work to do, but it is time consuming work, because there are so many lines involved - within Social Security I said about 35 million lines.

JIM LEHRER: And that means 35 million lines had to be checked or 35 million lines had to be changed in some way?

KENNETH APFEL: Checked and changed in most cases.

JIM LEHRER: And changed with new computer chips, right?

KENNETH APFEL: That's right - or the new system so the identification could be made in the year 2000 that it really was 2000 and it wasn't 1900.

JIM LEHRER: Now, just give us - give us a catastrophic view of what would have happened had you not been able to get a head start on this and you had not been able to correct it. What would have happened on the year 2000, January 1st?

KENNETH APFEL: Well, people would have come in to say retire, and we would - our computers would have read their retirement date or their date of birth not as - the retirement date not as 2000 but as 1900, so the system would not have worked. We wouldn't have been able to calculate their future benefits; we would not have been able to calculate any of the information that was necessary to determine them to get the payments that they are legally due.

JIM LEHRER: So the system would have collapsed?

KENNETH APFEL: It would not have worked, so that's why we spent the time that was necessary because, as I said, 48 million Americans rely on that Social Security check month after month after month, so we had to make sure that they were going to be able to continue to receive it, and they will.

JIM LEHRER: Now, is there a Social Security Administration way to do this that could be transferred say to IRS or to the Sammy Sue Bus Company or anything like that, or is it just - as you say - it's not a special system - it's just hard work, or what?

KENNETH APFEL: Well, I think there are lessons for other agencies and for other organizations as to how to first establish what your systems are; two, where the lines are; three, what your connections are to other organizations, say the banking community, et cetera, that we went through, and we've been working with other federal agencies to help other agencies address this issue, but, again, each organization is unique, and it is different, so there is a need to go in and look at each one of those systems independently and determine how to act.

JIM LEHRER: So you don't have a magic bullet that you gave to the president today that he can give to everybody else?

KENNETH APFEL: There is no magic bullet beyond hard work and commitment throughout the agency to make this a priority for the American public.

JIM LEHRER: Now, the president said with great certainty that your - your administration is not going to have a problem. Why are you so sure of this? Why are you and the president so sure of this?

KENNETH APFEL: Well, we conducted all of the activities that were necessary. We then had an independent consultant in to validate that it would work, and we actually tested it to make sure - let's go forward one year in the future - will the computers read correctly what is going on - and those independent validators looked at our systems and the Treasury systems that are necessary together - to work together - and the validation was made, so we are 100 percent certain that we are ready.

JIM LEHRER: Now, do you have a similar problem that Bell Atlantic has, that you are tied into other systems, that other systems could in some way taint yours if they're not also fixed?

KENNETH APFEL: We are in good shape. Most of our systems are independent; they're just ours. One of the areas that we're still working on is with the banking community because about 3/4 of all Social Security checks are electronically transferred to accounts, so we're working heavily with the banking community and they're way ahead of this issue too. The banking community spent a lot of good time on this to make sure that those checks will be deposited appropriately a year from now.

JIM LEHRER: Now based on your experience at Social Security - and you saw the piece that Paul Solman just had - where do you come down in general terms now? You're okay. Everything is fine at Social Security. How do you feel about the rest of the world on January 1st, the year 2000?

KENNETH APFEL: Well, there's a lot of work that has to be done. There's - the president said to us sometime ago for each federal agency let's get on with us, let's make this a priority for the American public. There's been a lot of work throughout the federal levels, at the state and local, government level, and now with the private sector, and different industries, the banking industry, the electronics industry, the telecommunications industry. We're going to have some problems out there. There's no doubt. Everything will not be fixed by the year 2000. I think the main activities are going to be resolved. I know that the commitments that we've made within Social Security have made it resolved. We're seeing that now throughout many other parts of the government and also through other industrial sectors.

JIM LEHRER: All right. Mr. Commissioner, thank you very much.

KENNETH APFEL: Great to be here.

FOCUS - COLLECTING CHILD SUPPORT

JIM LEHRER: Now, a different kind of government computer problem. Jeffrey Kaye of KCET-Los Angeles reports.

JEFFREY KAYE: Rebecca Foreman may be forced to go on welfare. She works as a teacher's assistant in San Diego but she's barely making ends meet because she says she's had high medical bills for her son and his father hasn't paid child support for a year.

REBECCA FOREMAN: We struggle. We were evicted out of one apartment because of this. So when the support first stopped, we were evicted, and it's just been downhill. We had to go back home and then we moved back out and the support stopped again. We're not making it enough and I don't want to go on welfare.

JEFFREY KAYE: Keeping mothers off welfare by going after deadbeat dads has been a cornerstone of welfare reform.

PRESIDENT CLINTON: One of the main reasons single mothers go on welfare is that fathers have failed to meet their responsibilities to the children.

JEFFREY KAYE: At a June bill signing President Clinton touted a record of accomplishment.

PRESIDENT CLINTON: We have waged an unprecedented campaign to make deadbeat parents live up to their obligations. Tanks to tougher laws, more sophisticated tracking, powerful new collection tools, we've increased child support collections by 68 percent in the last five years.

JEFFREY KAYE: But those powerful collection tools meant to aid the crackdown on deadbeats don't always do the job.

SPOKESPERSON: Do you have a case with us, ma'am?

JEFFREY KAYE: Caseworkers, who try to ensure child support payments get made, are often hampered by faulty computer equipment.

CASEWORKER: Okay. Did you get your full amount for May, because - I'm having a hard time here understanding what's on my system?

JEFFREY KAYE: Sharon Velasquez in Ventura County 60 miles north of Los Angeles says she is constantly frustrated.

SHARON VELASQUEZ, Ventura County District Attorney's Office: Actually, if you wouldn't mind holding, I can place you on hold and I will give the employer a call.

JEFFREY KAYE: She recently tried to trace a payment.

SHARON VELASQUEZ: Hi. I need to speak to somebody in payroll, please. Do you know when she'll be in?

JEFFREY KAYE: She ended up calling the employer of the delinquent parent because she says the computer system is so unreliable.

SHARON VELASQUEZ: I've had so many bizarre things happen - money being sent to the wrong people - money being sent to different counties in error - no way to really track it - checks being sent out for the wrong amounts - balances just disappearing into thin air and no explanation, and nobody knows why.

SPOKESMAN: It's had just a devastating impact on morale.

JEFFREY KAYE: Velasquez's boss is Ventura County Chief Asst. District Attorney Kevin McGee.

JEFFREY KAYE: How much has this cost you?

KEVIN MC GEE: In terms of lost collections we're talking probably $12 million. It cost the consumers, the customers, the families that are entitled to child support.

JEFFREY KAYE: McGee says work that should be computerized is done by hand. Congress has required states to betterautomate their tracking and collection systems but 10 states have failed to comply with the federal automation requirements and will pay penalties as a result. California's fine - nearly $11 million the first year - is the largest. California contracted with Lockheed Martin to build a $300 million statewide network, but after six years, the system never worked properly and hooked together only 17 of California's 58 counties. Last year, the state and the company scrapped the contract and sued each other. John Monahan is the number two person at the U.S. Administration for Children and Families, which certifies the state computer systems.

JOHN MONAHAN: Automation is an essential element of effective child support enforcement. I mean, our experience over the last decade or more has been that effective automation and effective business process improvement on the part of states will help get collections - identify parents who are - who owe child support, get their questions, and get that money to kids and their families.

JEFFREY KAYE: The failure to automate the child support enforcement process can have serious consequences for people in the system. In California, if a parent receiving child support moves across a count line, which right here could literally mean moving from a house in Ventura County next door to a house in LA County, the case won't automatically be transferred because the computer systems in the two counties don't speak to each other. That's exactly what happened in the case of Sheila Richardson. She moved with her daughter, Ashley, and her son from Sacramento to Los Angeles County in 1992. Her ex-husband was supposed to pay $200 a month child support but he didn't, and she couldn't get LA authorities to help her out.

SHEILA RICHARDSON: I applied for child support through LA County's district attorney office, and each time I would call to find out how - the status of my case, they would say, oh, we need you to complete this form again, or these forms again, because we don't have them, or your file got lost.

JEFFREY KAYE: So the file was never transferred.

SHEILA RICHARDSON: No. It wasn't transferred.

JEFFREY KAYE: After a job accident in 1996 with workers comp as her only source of income, and with two children to support, Richardson said she temporarily received public assistance.

SHEILA RICHARDSON: I got food stamps, which was embarrassing to go to the store, and have to use food stamps.

JEFFREY KAYE: But for families not receiving child support, long-term welfare is no longer an option. That's because the law now places time limits on welfare payments. Widespread frustration with the child support enforcement system has launched a movement among parents owed child support, parents such as Rebecca Foreman.

REBECCA FOREMAN: I said, well, what are you going to do, are you going to find him? Oh, you don't know where he's at? No, I don't know where he's at. Isn't that your job?

SPOKESPERSON: It is, and they're supposed to look quarterly -

JEFFREY KAYE: Nora O'Brien is California coordinator of ACES, the Association of Children for Enforcement of Support. She says nationally only 20 percent of families in the child support enforcement system receive payments, largely because of lack of coordination among the states.

NORA O'BRIEN: 36 percent of the cases involve more than one state, that's very difficult in that - the difference with state's rights is California cannot make Texas honor a wage assignment or can't make them serve a summons or, you know, and that Texas can't make New York do the same thing, and sowhen you have interstate cases that really slows the collection process down.

JEFFREY KAYE: O'Brien's organization is supporting congressional legislation to federalize the child support system and take the collection responsibility away from the states.

NORA O'BRIEN: What would happen is that the states would determine the amount of child support to be paid and so whatever that amount is, we create a national case order registering and they would do child support collections with payroll deduction and disperse it through Social Security Administration, and it's much more efficient than each state implementing a state-based system, it's - it's a system that it will come eventually because we're going to have to say that - we're going to - we've spent billions of dollars federally and so many states so still wouldn't even have their systems in place.

JEFFREY KAYE: But Florida Congressman Clay Shaw, chairman of the House subcommittee that overseas child support opposes federalization. He says the best system would be run by the states and coordinated by the federal government.

REP. CLAY SHAW: What we need to do and what I would like to see done is that we bring the present system into compliance -- if we can work for a better system later somewhere down the line - we will - but it's been very expensive to the states in order to come into compliance. But the federal government has funded the expense of bringing these states into compliance, so that this isn't an unfunded federal mandate. We're working together; we're getting great cooperation from the states, and I'm sure this whole thing will be worked out with only a few states not complying this year, and in the next couple of years I would say virtually all the states will be in compliance.

JEFFREY KAYE: California officials have complained about federal requirements but are now promising an automated system within three years. And Congress has enacted legislation to provide more federal funding for states that move families of welfare if they do a better job collecting child support.

FOCUS - CHEAP OIL

JIM LEHRER: Cheap oil for the holiday. We begin with a report from Elizabeth Brackett of WTTW-Chicago.

ELIZABETH BRACKETT: There are lots of smiles at the gas pump these days.

MAN: I think they're great - 87 cents a gallon - 97 cents - can't beat it.

ELIZABETH BRACKETT: When a cup of coffee costs more than a gallon of gas, as it does at this Northwestern Indiana gas station, spending habits change.

MAN: I love it. They're - I put premium - normally I use special - but with these prices I go for the gusto.

ELIZABETH BRACKETT: How much money do you think you've saved over the -

MAN: Every time I come I put 20 to 25 dollars' worth. I used to have to put 40 dollars' worth of gas.

ELIZABETH BRACKETT: It's a far cry from 25 years ago when gas shortages sent prices soaring and brought long lines to the pump. Today it's cheap gas that is stacking up customers and concerns about fuel efficiency are in the past.

ELIZABETH BRACKETT: Now when you bought this Thunderbird, did you think about the low gas prices?

CONSUMER: Yes. I did, because I do have a V8, but I'm in the car a lot of miles.

ELIZABETH BRACKETT: So, would you have bought a car like this if it had not been for the low gas prices?

CONSUMER: No. I would have gotten a car with a smaller engine.

ELIZABETH BRACKETT: An analysis by the American Automobile Association in Chicago shows that in the Midwest, as in the rest of the country, gas prices have dropped dramatically. In January of 1997, the average gas price in the Chicago area was $1.45 a gallon. By February of 1998, the price had dropped to $1.14 a gallon, and in December of 1998, the average price fell to $1.10 a gallon. But low prices have meant big savings for the airline. United says its fuel costs were down 13.7 percent in 1998. It costs less to run city buses too. The Chicago Transportation Authority reports a $4 million drop in diesel fuel costs in 1998. Diane Swonk, deputy chief analyst at BankOne Corporation in Chicago, says not only is this good news for the consumer, it's good news for the economy as a whole.

DIANE SWONK: When oil prices are falling it shows up in everything from low mortgage rates - because those are based in part on inflation and inflation is low - of course, it's helped to low costs of heating bills to low costs of fueling up your car at the gas station pump. And these are all major portions of a consumer budget. When they don't have to spend as much there, of course, they have more money to spend on everything else in the U.S. economy.

ELIZABETH BRACKETT: University of Chicago economist Robert Aliber says there are two reasons behind the current glut of oil on the market.

ROBERT ALIBER: We've had two sorts of shocks; the first shock was the Asian shock, that reduced demand; and the second shock is the cartel has sort of come apart. And that means that some cartel members, some members of OPEC, are producing more than they had agreed to produce, and they are doing that because the decline in the oil price due to the demand shock made them less well off, and they needed to recoup the money.

ELIZABETH BRACKETT: Not everyone's a winner with low fuel costs. For oil producers, like AMOCO, rock bottom prices for crude oil have meant mergers and potential layoffs. The $63 billion merger between AMOCO and the British Petroleum Corporation is expected to mean the layoff of at least 6,000 employees. Swonk says it's easy to see the bind oil producers are in.

DIANE SWONK: Producers are in a very tough position when oil prices go down; they're really subject to whims of the market when you're dealing with something like a commodity like oil. They can't change their cost of production as rapidly as the cost of oil changes, and as a result, they get squeezed dramatically when prices fall. They still have to pay their workers the same amount of money, yet the cost of the -the price of the good that they're selling is going down dramatically. That's just one of the toughest environments to try to compete in.

ELIZABETH BRACKETT: Oil distributors are hurting too. John Sweeney is the third generation of Sweeney's to serve the Chicago area market. He says business is down by half.

JOHN SWEENEY: We've had a double whammy, which would be the last year being one of the warmest winters in a hundred years here in the Midwest, and also this year starting out the same way, right through December, where, I mean, we're 22 percent warmer than we were last year, which was 33 percent warmer than the 30-year norm. We've taken a tremendous hit, just in deliveries alone.

ELIZABETH BRACKETT: Sweeney stays in business by hedging his oil contracts by locking in prices on the Chicago Futures Exchange. Like everyone else, he wonders how long the low oil prices will last?

JOHN SWEENEY: Could last three weeks, could last three months, but at some stage the cartel is going to reorganize; output will be curtailed; exports will be curtailed; and the price will go back to 14 to 16 dollars, and perhaps 18 dollars.

ELIZABETH BRACKETT: And the impact on the U.S. economy will be -

JOHN SWEENEY: Will be that we'll have less money to spend on other things because we'll be spending more on energy, and that the inflation rate could be somewhat higher as a result of the increase of oil prices.

ELIZABETH BRACKETT: But until that happens filling up the tank will continue to be a pleasure.

PHIL PONCE: Phil Ponce takes it from there.

PHIL PONCE: Joining me now are Larry Goldstein, president of the Petroleum Industry Research Foundation, and Csaba Csere, editor-in-chief of Car and Driver Magazine. Gentlemen, welcome.

PHIL PONCE: Mr. Goldstein, first of all, a quick point of information. Looking at it in the big historical picture, is - where is the price of gasoline right now? How would you describe it?

LARRY GOLDSTEIN, Petroleum Research Foundation: Gasoline in real terms are at historical lows. We've never seen prices at this level, and that includes federal and state taxes, which are rising steadily over the forecast period, and throughout history. Federal taxes on gasoline used to be 4 cents a gallon and state taxes were 9 cents a gallon. Today, the comparable numbers are 18 cents and 20 cents, and despite the inclusion of these higher taxes, gasoline prices are the best buy they've ever been.

PHIL PONCE: So, Mr. Goldstein, this is as cheap as it's ever been.

LARRY GOLDSTEIN: Yes, it is.

PHIL PONCE: And how about the - how about the price of oil, itself, crude oil per barrel?

LARRY GOLDSTEIN: Adjusted again for real terms it's probably at a 35-year low. While we have seen lower prices in the 1950s, crude oil was selling around $2 a barrel, but from the 70s on we haven't experienced this price in that 35 year period.

PHIL PONCE: Mr. Goldstein, we heard one explanation in Elizabeth Brackett's taped piece as to why the price of oil was so low. How do you explain it? Walk us through it.

LARRY GOLDSTEIN: It's relatively simple. The Asian economies have been responsible for about 3/4 of the growth of petroleum demand historically, and this year the Asian economy's declined. Demand suddenly collapsed. Supply doesn't respond as quickly as the change in demand, so what we've seen is an accumulation of inventories in 1998 to the tune of about a million barrels a day, and the reason that prices are as low as they are is that million a barrel a day inventory build was on top of a million barrel a day accumulation in 1997. So we have an excessive situation with inventories, and it's this very high burden of inventories that are pressing down on price. And we're not likely to see a substantial change in oil prices until the Asian economies either improve, which is not likely to be seen in 1999, or the OPEC producers realize that the only way prices can change is if they can take control of supply and cut production.

PHIL PONCE: Mr. Csere, what has been the impact on consumers? Are people driving more? Are they buying more gasoline?

CSABA CSERE, Car and Driver Magazine: I don't think they're necessarily driving any more now than they would have been otherwise but American consumers have been steadily driving more for the past several years. Back in 1990, the average motor vehicle covered about 10,600 miles per year. Today it's more like 11,600 miles per year, and if we go out to 2010, it's going to be more like 14,000 miles per year. This isn't really being directly affected by this low oil price, but if we didn't have this low oil price, then I think we'd see a few changes in that trend.

PHIL PONCE: By the way, Mr. Csere, do you buy what seems to be conventional wisdom as to what is causing these low oil prices, the fact that demand dropped in Asia, that prices dropped, and some of the oil producing companies kept producing oil, adding to the inventory, and on top of that a warm winter, does that sound right to you?

CSABA CSERE: Well, it makes perfect sense because it certainly hasn't been any reduction in demand on the part of the American motorists. Not only are they driving more per car per year, but there is more of us. The U.S. population was about 250 million in 1990. It's going to be 300 million in 2010. The percentage of those people who actually have driver's licenses and drive is steadily increasing because we have an elderly population. The elderly are going to be healthier and more affluent than they have been in the past, and we also have urban sprawl in the United States and people simply have to drive further to get where they're going, so it is - the explanation for this reduction in demand isn't from American motorists, it has to be from some other sources.

PHIL PONCE: Mr. Csere, how about - what it is Americans are driving - is this cheap and plentiful gas causing people to buy some of these sport utility vehicles and other so-called gas guzzlers?

CSABA CSERE: In part, it's helping that trend, but that trend has been going on for a long time. The American preference for trucks began in about 1955, and it's been following a steady upward curve since that. The only thing that really broke that trend was from about '75 to '80, which was during the time of the first fuel crisis with an enormous jump in price. After 1980 again people went back to trucks and certainly the low oil price is helping to fuel that, but this is an underlying trend that's going to be continuing virtually under any circumstances.

PHIL PONCE: Mr. Goldstein, how about the impact on oil companies? Explain the connection between these lower gas prices and the mergers that we're seeing, the proposed mergers, like the one between Exxon and Mobil.

LARRY GOLDSTEIN: This trend for mergers is a trend that developed in the early 1990's, so it's not the result directly of lower oil prices, but the industry has to compete in a global competitive environment and the exploration for cost savings are dominating the move for mergers. What oil prices have done, however, is create a political environment that's conducive to allow these mergers to occur. The public is not upset about the mergers; they're very happy with the prices at the pump; and if the public is not unhappy, then the political system is - sits back and is more relaxed about the process. So the regulators are allowing this natural development to continue to occur.

PHIL PONCE: But the stated reason for the mergers is what, since profits are lower, companies have to combine to what, gain greater efficiencies to continue to operate profitably, is that the rationale?

LARRY GOLDSTEIN: That's completely the rationale. If you can't control your price, then you have to look at what you can control and what you can control in this environment is cost.

PHIL PONCE: Mr. Goldstein, earlier you talked about how long these low prices might continue. Any impact on what's happening in Iraq, for example, on oil prices in the near future?

LARRY GOLDSTEIN: No. Remember, the humanitarian oil sales; the UN allows Iraq to sell a dollar amount of oil so that Iraq can sell up to $5 billion every six months, but Iraq is capacity-constrained for the moment, and, therefore, we know how much oil we're going to see from Iraq, and Iraq's production is about 2.3/2.4 million barrels a day. That's not likely to change on the upside anytime over the next six months.

PHIL PONCE: And Mr. Csere, what is your guess as to how long these low prices might be around?

CSABA CSERE: Well, I'm not the oil expert, but I think everyone in Detroit here hopes it lasts for a while because it's been great for the car business. This year, we're going to see roughly 15.7/15.8 million sales of motor vehicles. This will be an unprecedented fifth consecutive year with about 15 million sales, so it's been great for the automotive business.

PHIL PONCE: Mr. Goldstein, do you ever foresee events like those that happened in 1973 with the lines at the gas pump and that sort of thing, is that - could that happen again?

LARRY GOLDSTEIN: It could happen again, but we don't anticipate it. What the public has learned, that prices can not only go up but they also can go down, and when crude oil prices change, they get reflected very quickly at the pump in both directions.

PHIL PONCE: And is there any sign that we should look for that would tip us off that gas prices are going to start inching their way back up, Mr. Goldstein?

LARRY GOLDSTEIN: The futures markets are a good leading indicator of the direction of prices, if not the levels, and there's a big meeting coming up on March 23rd by the producers, if, in fact, they agree to cut production, we could see 3 to 5 dollar higher crude oil prices towards the second half of 1999; if they don't, prices are going to sit in the 12 to 14 dollar range indefinitely.

PHIL PONCE: Well, gentlemen, thank you both very much.

RECAP

JIM LEHRER: Again, the major story of this Monday, U.S. fighter planes exchanged fire with an Iraqi missile site. President Clinton said American pilots acted in self-defense after being fired upon by the anti-aircraft position. We'll see you on-line and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.