The NewsHour with Jim Lehrer

RAY SUAREZ: Good evening. I'm Ray Suarez. Jim Lehrer is off this New Year's Day. On the NewsHour tonight, a summary of the news, some historical perspectives on 2002, a computer-age crime known as identity theft, new proposals for clamping down on telemarketers, an encore report on getting fit for life, and an E.E. Cummings poem about the passing of the year.

NEWS SUMMARY

RAY SUAREZ: The U.S. military has ordered another 11,000 troops to deploy to Kuwait, with tanks and attack helicopters. It's the latest move to make ready for a possible war with Iraq. An army spokesman said today the remainder of the Third Infantry Division would depart Fort Stewart, Georgia. Some 4,000 troops from the division are already in Kuwait. The deployment includes combat troops, plus headquarters and support units. All told, it's the largest U.S. ground deployment in the Persian Gulf region since the Gulf War in 1991. North Korea urged South Koreans today to join in standing against the U.S. In a New Year's message, the Communist government in Pyongyang said, "there exists only confrontation between the Koreans in the North and the South and the United States." In recent days, the North has moved to restart a nuclear reactor, violating an agreement with the U.S. A South Korean envoy arrived in China today to ask that China pressure the North to alter course. Authorities in Yemen have arrested scores of Muslim militants in the wake of two deadly attacks. The Associated Press reported that today. On Monday, three American missionaries were killed at a Baptist hospital in the southern town of Jibla. Two days earlier, a prominent Yemeni politician was assassinated. Government officials have blamed both attacks on a terror cell. Brazil inaugurated a new President today. It was a party for the people in the capital, Brasilia, as tens of thousands of revelers welcomed working class hero Luiz Inacio Da Silva to the presidency.

GROUP: Ole, ole, ola, Lula, Lula

RAY SUAREZ: Popularly known as Lula, the 57-year-old former shoeshine boy and factory worker with a grade school education was cheered as he took his oath of office in Brazil's Congress. Cuban President Fidel Castro was among more than 100 world dignitaries on hand for the ceremony. Da Silva and his leftist workers party won more than 60% of the vote in October elections. He campaigned on a promise to create more jobs for Brazil's nearly 175 million people, 30% of whom live in poverty. Today, during his inauguration speech, Da Silva promised a radical change of direction for brazil's economy, the ninth largest in the world.

PRESIDENT LUIZ INACIO DA SILVA ( Translated ): "Change," this is the key word. This was the great message of the Brazilian people in the October elections. Hope finally overcame fear. And the people decided that the time had come to follow new paths. Among the priorities of my government, a program of food security-- to lift man from hunger-- was my first commitment after my election. If, at the end my term, all Brazilians have the possibility of having breakfast, lunch and dinner, I will have succeeded in my life's mission.

RAY SUAREZ: This afternoon, President Fernando Cardoso handed over the Presidential sash to Da Silva. The new President is faced with pulling Brazil out of an economic recession that's plagued most of Latin America. Three new governors took office today across the U.S. In Michigan, Democrat Jennifer Granholm was sworn in as that state's first female governor. She called her election, "a great message for our daughters and our sons." In New York, Republican George Pataki began his third term as governor. He warned his state faces "historic, grave and daunting" economic problems. And in New Mexico, Democrat Bill Richardson took the oath of office. He was formerly ambassador to the United Nations and Energy Secretary in the Clinton administration. Pope John Paul II began the year with a new appeal to end the conflict in the Middle East. In his New Year's Day Mass, the leader of more than one billion Catholics worldwide was interrupted by rare applause as he declared "peace is possible and right." Later, he greeted worshippers from around the world. The U.S. Military today confirmed details of a clash Sunday along the Afghan-Pakistani border. A man dressed as a Pakistani border guard fired on U.S. and Pakistani troops, wounding one American. It was unclear if the shooter actually was a border guard, but a U.S. plane bombed a building where he fled. A Pakistani military spokesman dismissed reports that a bomb fell inside Pakistan, but pro-Taliban lawmakers condemned the U.S. for the incident. India and Pakistan exchanged lists of nuclear sites today in another move easing tensions. The exchange was part of a 1991 agreement that pledged the two countries not to attack one another's nuclear facilities. Last year, India and Pakistan came near war after Islamic militants attacked the Indian parliament. India blamed Pakistan for backing the raid. The Pakistanis denied it. Illegal fireworks touched off a deadly fire last night in Mexico. The blaze in Veracruz killed at least 28 people and injured at least 50 more. We have a report from Richard Vaughan of Associated Press Television News.

RICHARD VAUGHAN: What should have been the start of the New Year celebrations here ended in disaster. As revelers queued to buy fireworks in a local market, one of the stalls ignited. ( Explosion ) The blaze quickly spread to other stalls, before engulfing nearby cars and buildings. Witnesses said fireworks could be heard exploding over the roar of the flames. (Fireworks exploding) Above the inferno, families left their possessions and tried to make their escape. Fireworks are a hugely popular part of New Year festivities in Mexico. Many are sold by illegal vendors who set up stands in streets and markets. Authorities say they had tried to close down the illegal stalls before Christmas, but it's thought they backed down after threats were made against them by the stalls' owners.

RAY SUAREZ: Mexican Television reported today that police had arrested two men after the fire. They were accused of illegally storing three tons of fireworks. Some two dozen surgeons walked off the job today in northern West Virginia, protesting the high cost of malpractice insurance. As a result, four hospitals in the region were forced to send surgery patients elsewhere in the state, or out of state. A similar job action was averted in Pennsylvania. Governor-elect Ed Rendell promised to work for $220 million in aid to help doctors cope with insurance costs. That's it for the News Summary tonight. Now it's on to 2002 in review, identity theft, clamping down on telemarketers, fit for life, and farewell to the old year.

FOCUS 2002 PERSPECTIVES

RAY SUAREZ: We begin tonight with some reflections on the year gone by. Jim Lehrer conducted this discussion just before the old year ended.

JIM LEHRER: Our look back at 2002 with presidential historians Michael Beschloss and Richard Norton Smith, director of the Robert Dole Center at the University of Kansas, journalist and author Haynes Johnson, and Roger Wilkins, professor of history at George Mason University.

JIM LEHRER: Richard, what are you going to remember most about the year 2002?

RICHARD NORTON SMITH: Oh, boy. Well, it was a year of contradictions in some ways. It was a year when a lot of institutions disappointed a lot of people, whether it was the sex scandals in the Catholic Church, corruption on Wall Street, questions raised about the competency of the FBI, the CIA; even figure skating judges proved to have feet of clay. And yet at the same time it's a year when a lot of the institutions designed to expose such wrongdoing, including the press, did their job -- and when the political process for example Congress and the White House met together very quickly this summer to try to put at least a floor of confidence under the investor community. If you look at the Church scandals, the Boston Globe deserves a Pulitzer Prize and then some for almost single-handedly exposing a sickening subculture in that Church, someone the hierarchy would have liked to cover up. So it's a year in which I suppose, on the one hand, you could be disillusioned by some of the things we learned, but I think if you step back and try to put into broader perspective, the system and the systems worked pretty well.

JIM LEHRER: And that's where you would put your own view, you're more of a system worked this year, rather than it didn't, and it failed us?

RICHARD NORTON SMITH: I think the system worked and I think a lot of institutions worked, but I also think the individuals that make the institutions I mean, if you look at the presidency, I'm sure we could talk about this later, but the presidency hummed along with a remarkable ability from you know successful Presidents have a way of turning adversity into advantage. The war on terror is the most obvious example, but look at Trent Lott. I mean, forget Clonaid these people who giving whole new meaning to the phrase "weird science" before this year is out, the President of the United States cloned himself a new Senate Majority Leader.

JIM LEHRER: Michael, what hums and sounds did you hear that are important from this year?

MICHAEL BESCHLOSS: Well, you know, I thought about the fact 10 years ago a little bit more than that the Cold War ended and there was one scholar who said that we were now upon the end of history because we were at a time in which the world was likely to be peaceful and there were people domestically saying once the economy went up in the 1990s that maybe we had gotten over these old economic cycles. People were saying that even 15 months ago. Look how much has changed. We're now in a time where our values what we're interested in is almost entirely the opposite of what it was a year and a half ago. Not only in politics are we more interested in the world, a little bit more serious one reason why I think whistleblowers are more important is that in a serious time people are more interested in ideas of character and ethics because it means more --what kind of person leads us I think means more than it did before. But, you know, one thing that shows when a period changes is how it affects other areas of life, not just politics. You look at science and medicine. Nowadays people are worrying about things like anthrax and smallpox, wouldn't have happened a year and a half ago. The art is more serious; the music is more serious, we all are, and that is a result largely, needless to say, of the horrible tragedy that occurred on 9/11, but also the fact that the wheel of history always changes and we're seeing that really before our eyes.

JIM LEHRER: What do you think we're seeing before our eyes, Roger, that matters?

ROGER WILKINS: Well, the globalization paradigm really took hold this year.

JIM LEHRER: What's that mean?

ROGER WILKINS: Well, everything is globalized information, culture, disease, greed, oppression, and even the nuclear seepage is beginning to be globalized. I mean, we've been worried about proliferation for a long, long time, and this last year India and Pakistan stared at each other over there batches of nuclear weapons, and North Korea started playing nuclear politics with us, so that terror is globalized, and I think that's the paradigm shift that proves Michael's point that there is no end to history as long as human beings are around to make problems. And I'd say that the President kind of globalized the election this year. He ran against Saddam Hussein and he won.

JIM LEHRER: What do you think of Richard's point that, yes, there've been a lot down to be more domestic about it for a moment there have been a lot of down times here, a lot of institutions failed, but basically things got corrected, or at least they were in the process of being corrected, because the system worked. Do you buy that?

ROGER WILKINS: No. I don't think that the FBI and the CIA are really corrected. I think that the administration kind of walked up to the edge of real corporate reform, and then when the subject was changed, it backed off.

JIM LEHRER: You mean, Iraq changed the subject

ROGER WILKINS: Yeah. Well, Iraq basically changed the subject and people were worried about security; that became the issue in the campaign. So while I think that it was perfectly appropriate for "Time" Magazine to name the three whistleblowers as people of the year, because that kind of courage, that kind of integrity should be rewarded, I don't think the Catholic Church is out of the woods. I mean, a lot of these institutional breakdowns are being addressed, but whether they will be addressed successfully remains to be seen.

JIM LEHRER: All right, Haynes, you're an old journalist. If you were to fill in this blank, the year 2002, will be remembered no, forget the comma the year 2002 will be remembered for _____ -- how would you fill it in?

HAYNES JOHNSON: Anxiety.

JIM LEHRER: Anxiety.

HAYNES JOHNSON: Everything we talked about: corporate corruption, war in Iraq, changes in the world, globalization; they're all bound together. Usually we sit around the table at the end of the year like this, and pick out "a" story, something happened that year that that was the dramatic event.

JIM LEHRER: Like last year.

HAYNES JOHNSON: Pearl Harbor up to 9/11 that would define it. Now it's everything. It's the possibility of war with Iraq, and then all of a sudden the genie comes up in North Korea and it's related. How do you deal with it? The same way with the economy is in a tailspin -- $7 trillion worth of value has been lost I wish I could agree with Richard that the system worked in correcting the corporate excesses, which were the worst since 1880. We've seen "perp" walks going before our screens of these guys who have looted their companies, corporations, and they're still out there. They're not in jail; it hasn't happened yet. I wish I could say the press had been done as well, but I think if you look at the coverage of the Trent Lott thing, they missed the big story, right up until it came up later, so I don't think that I don't feel as positive about that. But more than that, this sense of anxiety and uncertainty, no matter whereyou look, it's the little things like in the night, the sniper attack comes on and sends this ripple of fear and terror. We worry about Iraq; we worry about North Korea. We don't know where it's going, and everything is

JIM LEHRER: Pensions too, things like that, in the economic area.

HAYNES JOHNSON: Absolutely. Unemployment has been rising. I don't mean to be a Cassandra here or anything, but the reality is that we face all kinds of colliding problems that are not unresolved yet. I think everything is up for grabs domestically, politically, socially, internationally, and it's very hard to see where it's going.

JIM LEHRER: Richard, unless I missed something, I don't think any one of your three colleagues agreed with what you just said. Defend yourself, sir.

RICHARD NORTON SMITH: Well, that's why we call this the real America.

JIM LEHRER: I got you; I got you. I got you.

MICHAEL BESCHLOSS: There's no demagoguery.

RICHARD NORTON SMITH: There's no demagoguery here. You know, it's funny, a friend of mine said to me at the time of the whole Trent Lott affair, you know, he said to me, this is a defining moment for the administration and you couldn't disagree with that. And I thought to myself, you know, since 9/11 in particular there have been so many defining moments that after a while you think the administration would be defined, and in fact I think I think that's really sort of the back story to 2002. I think it was a major -- maybe "the" major factor in the off-year election, even more than specific issues about policy in Iraq, or the economy. I think most Americans got it very quickly after 9/11 and I think 2002 was the year when it really began to sink home and to become part of the new landscape of our lives that this is a different world in which we live; it is a more menacing world and I think

JIM LEHRER: So you'd agree with Haynes that anxiety is part of this?

RICHARD NORTON SMITH: But I also think at the same time I also think one reason why Bush had such a successful year is because of a critical mass of Americans, including people who may agree with all of policies, are comfortable with him in dealing with the forces of their anxiety. It's a little bit like the Reagan phenomenon in the 80's. Remember, people would say, well, you know, I don't agree within the economics; I don't like his environmental record, or I don't much care for his civil rights record, but he's a strong leader; he's a man of conviction; he makes me feel in some ways secure. I think 20 years later something of that is going on, and I'm not sure the press always picks up on it.

JIM LEHRER: Does that make sense to you, Michael?

MICHAEL BESCHLOSS: It does, and maybe the best way to say it is this: 1942, the election of 1942 was a Congressional election; it was only about ten or eleven months after Pearl Harbor, and you would have thought that Franklin Roosevelt's party, the Democrats, would have done wonderfully because here we were fighting World War II in which FDR was doing pretty well as a war leader, yet the Democrats lost seats in Congress. This is not an automatic thing that a President like President Bush this year would have done so well. I think the hazard of this is this, and it's not a partisan thing, it's just the way the system works, and that is that when you have one issue is, and it should be, so overwhelming as the war against terror, things like the kind of things that Haynes was talking about, corrupt corruption, and what Roger was saying, some of these other issues which normally would be addressed by all of us in the political system they tend to get muscled because we're so focused on the overwhelming danger, and that's always a problem.

JIM LEHRER: Roger, what do you make of Richard's thesis that's been explained also by others about President Bush and the year 2002, whether or not he came into his own are you comfortable with him, are people more comfortable with him than they were, even those who were opposed to him?

ROGER WILKINS: Well, I think so. I am not personally comfortable with him, but I think that the person who people were able to buffoon the first year, or a person who couldn't command the English language or who didn't know the president of Pakistan was, that person is gone; that person has disappeared from the stage, and instead there's this plain-speaking, direct fellow, who does I think give a lot of people comfort. The problem is that there are an awful lot of problems on his plate that are very, very difficult, and it's possible that they didn't all need to be there, but Iraq, al-Qaida, North Korea, that's a heck of a trifecta, and then you come home, and you've got the states in terrible economic shape, all of them, and therefore the cities. You've got the baby boomers advancing rapidly toward elderhood, and you've got Medicare unraveling and you've got no fixes for Social Security and of course you've got the larger issue of the economy. So this President needs all of this persona that he has gathered over this year because there's a whale of a set of problems facing him.

JIM LEHRER: Haynes, what would you add about George W. Bush?

HAYNES JOHNSON: He's the President and he really wasn't the President until this last year in everybody's mind; there's no question. He is the leader of the United States. I think he has respect of the country; people do feel comfortable with him. But what I was trying to suggest earlier, as opposed to Richard, I think that it's not about the President. These problems we're facing are all related, and we don't know where they're going to come out. I suspect I will not be surprised if 20 years later, God help us, we sat around a table and we looked back at the end of the year, 2002, what was the most significant event, it may have been something like promulgating presidential order or the edict that we will now have regime change and with unknown consequences in American foreign policy and actions in the world we don't know that. But we don't know where

JIM LEHRER: I'm sure people like Michael Beschloss know

MICHAEL BESCHLOSS: Well, invite me back in 20 years. But in a way that's it because why was there not an attack against America this year, was that because al-Qaida decided not to do it, or because our system is working? Final point is, you know, we always used to complain we have for years on this program that people were not enough involved in the political system because it seemed irrelevant to their lives. Well, folks, the political system is absolutely relevant to life or death, and during the next year or two what we would love to see or at least I would would be that people finally say now we really have to get involved because the stakes could not be higher.

JIM LEHRER: Well, we'll see we'll come here and talk about it a year from now and see what happened. Thank you all four very much and Happy New Year

RAY SUAREZ: Still to come on the NewsHour tonight, a new age crime problem, rules for telemarketers, fit for life, and an E.E. Cummings poem.

FOCUS STEALING IDENTITIES

RAY SUAREZ: There was yet another reminder this week of the growing problem of identity theft. Federal regulators warned tuesday that a massive theft of 500,000 computer records in arizona could add up to the largest such case in U.S. history. Spencer Michels has our report on this troubling crime epidemic.

SPENCER MICHELS: Tracey Thomas, a 32-year-old computer programmer from Berkeley, California, had her identity stolen two years ago. She had gone to the hospital emergency room and presented her insurance card, which contained her Social Security number, to the admitting clerk.

TRACEY THOMAS, Identity Theft Victim: Her name is very similar to my name, and her age is very similar to my age. So, you know, when I presented my insurance information, she just stole it, wrote it down and made off with it.

SPENCER MICHELS: Thomas, who has since become an advocate for identity theft victims, discovered her loss several months later, but it was too late. Her imposter had opened charge accounts in Thomas' name and didn't pay the bills, ruining Thomas' credit.

TRACEY THOMAS: I was prevented from buying a house. I had... my finances were destroyed, I could not get credit in my own name because of all the fraud that was on my credit report.

JAMES COMEY, U.S. Attorney: We are determined to find those criminals who are using this information to rip off the consumers.

SPENCER MICHELS: The Justice Department says 700,000 Americans were victims of identity theft in 2001, some in big scams like that perpetrated by Phillip Cummings. He was arrested in New York in November, and charged with illegally downloading private information on 30,000 people from credit bureaus, using passwords he obtained in his job. All the 9/11 hijackers had false identities, though they used them for terrorism and not for personal profit. Their attacks heightened public awareness of the problem. Identity theft occurs when someone takes pieces of someone else's identifying information-- like a driver's license or Social Security card number-- and in most cases uses it to make money or order goods. Although victims are not responsible for paying off fraudulent credit card bills over $50, the costs in time and worry are vast.

TRACEY THOMAS: It takes an enormous amount of time, headache, trial, tribulation. It's very difficult to clear all those frauds off of your credit report. All of this was the research that I did when I was investigating this crime.

SPENCER MICHELS: Victims spend an average of nearly two years clearing up their credit. Thomas invested months investigating her own case, and she finally tracked down the woman who stole her identity. The woman was arrested and convicted.

SPOKESMAN: Florida.

SPENCER MICHELS: The district attorney in San Francisco uses this book of fake driver's licenses, all manufactured by the same criminal, to illustrate how one thief can steal the identity of somebody else and use it to cash checks. Assistant D.A. Jerry Coleman:

JERRY COLEMAN: The same guy, but different licenses from all around the country. Here's Florida and Colorado. And for each of the driver's licenses he's got, he's got checks to go with it that he cashes for small amounts of money. But on one given day he can get hundreds and hundreds of dollars from these check cashing companies.

SPENCER MICHELS: Coleman himself was an identity theft victim.

JERRY COLEMAN: Curiously, my case was a dirty desk clerk at a hotel in San Jose where I was giving a lecture to cops on identity theft, who ripped me off by skimming-- that's... that's a huge form of identity theft, skimming-- all the information off the back of my credit card, the magnetic stripe on my credit card, onto a hotel room key, and then he sold the room keys along with the credit card numbers that he got by imprinting the card to a bunch of his druggie buddies in the South Bay.

SPOKESMAN: Well, your honor, I believe we have a proposed...

SPENCER MICHELS: In Superior Court, Coleman has prosecuted many cases of ID theft, including recently that of a 34-year-old drug user and his female codefendant.

JERRY COLEMAN: He had in his possession five different forms of both stolen and counterfeit ID's-- driver's licenses, many of them; credit cards; checks; Social Security cards, and passports.

SPENCER MICHELS: The DA worked out a deal with the public defender, who addressed the judge.

SPOKESMAN: He wants to enter pleas of "guilty" to the charges of conspiracy to commit identity theft.

SPENCER MICHELS: The defendant agreed to an interview in the county jail on condition that his personal identity was protected.

SPOKESMAN: I've always had a thing for a second ID; I've had collections of them over the years.

SPENCER MICHELS: How did you learn how to make them and how did that progress?

SPOKESMAN: You just... making them... making them's easy. Anybody... you know, any good art student can make an ID I call it magic. Myself, you know, it does take, you know, some people have a knack, and some don't.

SPENCER MICHELS: He got much of the private ID Information he used in garbage dumpsters.

SPOKESMAN: You find the garbage somewhere and sift through it. I've seen a signature card with an account, the account holder, the account number, the amount of money in the account, where the business is located, their taxpayer ID number for the business.

SPENCER MICHELS: And this was all in the garbage.

SPOKESMAN: This was all on one sheet of paper.

SPENCER MICHELS: That was in the garbage.

SPOKESMAN: That was in the garbage at the bank.

SPENCER MICHELS: He and other identity thieves would use computers, scanners and printers to concoct new identities and fraudulent checks, which, he says, banks accept without much scrutiny.

SPOKESMAN: There's not a bank in the world that's going to want to throw one of their clients in jail. And if they look at that piece of paper, and it all matches up, then they're basically obligated to pay you. And there are certain limits that they... each bank has, some's $500, some's $800, you know, at the teller, which means no manager approval required.

SPENCER MICHELS: San Francisco fraud detail inspector Earl Wismer says crimes like that keep police phone lines busy with complaining consumers.

EARL WISMER: Well, that scenario happens probably around 50, 60 times every single day. We have a limited amount of resources, a limited amount of personnel. In the identity theft arena itself, we are unable to assign most of the cases.

SPENCER MICHELS: While police departments often can't keep up, law enforcement criticizes many banks, credit card companies and credit reporting services for offering easy credit and not cracking down harder on identity theft.

JERRY COLEMAN: Many businesses feel that it's a lot easier to us to get credit out there to people and get money from the 98% of the people who are willing to pay money over time and bear the cost of the 2% who are committing crimes.

SPENCER MICHELS: Banks disagree. Anissa Yates is Vice President of the California Bankers Association.

ANLISSA YATES, California Bankers Association: Identity theft is a very high priority in the banking industry. Our financial institutions, our member banks, we loose billions of dollars a year because of identitytheft, and that is not an acceptable loss for us. We would like to see this eradicated.

SPENCER MICHELS: Still, banks, which issue most credit cards, say they want the freedom to solicit new business by sending out pre- approved credit card applications, even though thieves can get a hold of them.

ANLISSA YATES: Identity theft is a crime. Stealing this information is a crime. Offering somebody credit is not a crime.

SPENCER MICHELS: In the past few years, most states and the federal government have passed laws criminalizing identity theft. Now, the California legislature is considering a bill by State Senator Jackie Speier that would make it harder for financial institutions to share or sell private financial information about clients. Speier says protecting privacy would reduce identity theft.

JACKIE SPEIER: It just makes common sense. If more people have access to this information... and this is not just your name and your address, this is your Social Security number, this is your credit card number, your balances on your accounts, they have all that information. They can recreate your identity. And they can take that identity and use it to run up big bills.

SPENCER MICHELS: Banks and credit companies have strongly opposed the privacy bill, arguing that it is an infringement on the right to market their services. And, says Fred Main of the California Chamber of Commerce, the bill would not reduce identity theft.

FRED MAIN, California Chamber of Commerce: We don't think that that's a bad thing that you're being marketed to. It's not what leads to identity theft. Identity theft leads to criminals stealing things, even inside criminals stealing information that whether you have this bill passed or not, will still occur.

SPENCER MICHELS: But experts say consumers can take certain precautions: Shred or burn financial records and advertisements for credit, monitor personal credit reports twice a year, avoid giving out Social Security numbers when possible. While Tracey Thomas endorses those safety measures and others, she says her imposter has made her a permanent victim.

TRACEY THOMAS: It's not over. It's never going to be over. She still has my information. She could have sold it, she could have given it away; you know, a million other people that I've done business with have my Social Security number. This could happen again. There's no way I can protect myself against this.

SPENCER MICHELS: Still, Congress and some states are considering increasing penalties and otherwise toughening the laws against identity theft.

FOCUS HOLD THAT CALL

RAY SUAREZ: The government puts telemarketers on hold. Margaret Warner has that.

MARGARET WARNER: The average American gets about 300 telemarketing calls each year, hawking everything from credit cards, to phone service to charitable causes. For consumers, it's a huge annoyance. For companies, it's a big business. In 2001, American consumers spent more than $275 billion on purchases from telemarketers. The telemarketing industry says that's about 4% of total consumer sales. Consumers who don't want these calls can demand that that company never call them again, and some states have do-not-call lists. But many consumers want more, and last month the Federal Trade Commission unveiled new telemarketing rules to reduce the flood of unwanted calls. Among the changes: Create a national do-not-call registry-- consumers would sign up with the FTC; require telemarketers to transmit caller ID information; and sharply restrict computer-dialed calls that produce dead air when the homeowner answers because the company doesn't have enough sales people to service the calls. Violators could be fined up to $11,000 per call. Charities and some kinds of companies would be exempt. Here to discuss the proposals are Eileen Harrington, associate direct for marketing practices of the Federal Trade Commission's Bureau of Consumer Protection; and Matt Mattingley, director of government affairs for the American Teleservices association, a telemarketing industry group. Welcome to you both.

First, Ms. Harrington, just a little news consumers can use. How will consumers be able to sign up for this?

EILEEN HARRINGTON: They can't sign up yet, but when the registry is operative, consumers will be able to sign up online or by a toll-free number.

MARGARET WARNER: And when will it be operating?

EILEEN HARRINGTON: About seven months after we receive what we expect will be quick approval from Congress for funding and to collect fees to offset the funds that we expend to set up this registry.

MARGARET WARNER: You're going to actually charge the industry to pay for this?

EILEEN HARRINGTON: That's right. That's right.

MARGARET WARNER: Now, what about the other two features, the caller ID and the end to this, what i guess is called predictive dialing that produces those dead-air calls?

EILEEN HARRINGTON: What we're really talking about is a return address, if you will, for phone calls, for telemarketing calls. Caller ID is the way that consumers can tell who's calling, and by requiring a transmission, then consumers will be able to look on their caller ID and get a useful telephone number.

MARGARET WARNER: But how soon will that go into effect?

EILEEN HARRINGTON: Telemarketers will have to transmit that information within a year of the effective date of the rule, which is any day now.

MARGARET WARNER: So your organization obviously does not like this rule. What's your argument?

MATT MATTINGLEY: I think our reservations would be in two areas. First of all, we already have a national do-not-call policy that's been in effect since 1991. You alluded to it in your opening remarks. Any tele... any consumer who objects to being called by a telemarketer can ask to be placed on that company's do-not- call list, which the company must then maintain for ten years. The other area that we would object to is that experience in the states that have these do- not-call lists in effect show that they don't work. The premise that the consumer is given is that you sign up for this do-not-call list and telemarketers won't call you anymore, but, in fact, that's not the case.

MARGARET WARNER: Why isn't it the case?

MATT MATTINGLEY: There are exempted categories in all of these states, indeed with the Federal Trade Commission's proposal. Typically, for example, politicians are at the top of every exempted list. They're free to call you and ask you for money at any time. Non-profits and charities are also typically exempt. Customers with whom you have an established business relationship you can call. The Federal Trade Commission does not have jurisdiction over banks and financial institutions, over common carriers, over the insurance industry. These are all big users of telemarketing. So the premise, again, that the consumer has that he's not going to be called is not going to happen. They will continue to be called.

MARGARET WARNER: All right, Ms. Harrington, two arguments he's made. One is there already is a system; and two is, at least in the states do-not-call lists do not work.

EILEEN HARRINGTON: The system we have isn't working for consumers. The company by company opt out, in many instances, doesn't result in fewer calls because oftentimes the telemarketers hang up before you can finish your sentence, "Would you please put me on the do-not-call list?" We have over 64,000 written comments from individuals in this rule-making, which is a phenomenal number of comments for people around the country to send to an agency in Washington, D.C., that many of them have never heard of before. And the overwhelming sentiment in these comments is that the existing system simply doesn't work for consumers. Now, what we're talking about doing, really, is giving consumers choices. They can choose to opt out on a company-by-company basis. That choice will still be available. They can do nothing, and they will continue to get the calls that they receive now, or they can put their phone number on the national list, and it will result in a very significant reduction in the calls that they receive. The exemptions that Mr. Mattingley talks about are very few in the FTC rule, and the biggest one for existing business relationships is one that his association and other industry groups lobbied hard for during the rulemaking. It simply gives businesses an opportunity to contact their customers for 18 months after a purchase is made, but even during that 18-month period, if a consumer doesn't want more calls, they can say, "don't call me anymore," and the calls have to stop.

MARGARET WARNER: So in other words, if your cable company, which you obviously have an existing relationship, wants to call you, say, to sell you Internet services, you can say, "look, not only don't I want it, i don't want to you call me anymore"?

EILEEN HARRINGTON: That's right. Now, as Mr. Mattingley, and you, I think, mentioned, there are state laws, state, "do not call us." If the call is an intrastate call that's coming from somewhere in your state, that's not going to be subject to the federal law because it doesn't involve interstate commerce. The 27 states have do-not-call laws, and that call would be covered by the state law. We expect that more states will enact their own laws.

MARGARET WARNER: And what percentage... if there's 100 million, 105 million households in America, what percentage do you expect will sign up for this?

EILEEN HARRINGTON: Well, if we look at the state experience, we could have well over the half of the residential phone subscribers sign up. In some states, well over that percentage has signed up. I'm not sure where matt gets the notion that these do-not-call registries don't work in the states. Everything that we see is that they've worked quite well and that the citizens of the states that have enacted these laws are quite satisfied with them.

MARGARET WARNER: Mr. Mattingley, in a lot of these states, I mean, i know a number have new rules going into affect January 1 of 2003, already more than half the homes have signed up, for instance, in Minnesota. What does that tell you?

MATT MATTINGLEY: Well, it tells me that there's a difference in how the states monitor and establish their programs. You say in some states as many as 50% of the households sign up, but in other states, it averages 5%. What's the difference? The difference we find in the signup rates between these two types of states are those states which charge a nominal registration fee, typically $5. Those are the states in which an average of 5% of the consumers sign up. Where it's free is where you have 50% or more that sign up.

MARGARET WARNER: What if their view is they just don't want the calls? They want to read newspaper ads or they want to go on the Internet, but they don't want to be called at home.

MATT MATTINGLEY: Because they're reacting to a stereotype and a vague generalization as opposed to a specific product offer. I would say that of the $275 billion in sales last year from telemarketers, probably not one of those consumers that purchased from a telemarketer woke up that morning and said, "I hope a telemarketer calls me today." It's when they are presented with a specific offer that they react and accept. If I say to you, "would you like a telemarketer to call you today?", your reaction is probably going to be negative. But if I make that specific, an offer for children's books or for fishing gear, then it becomes specific, and the consumer then makes that decision based on a specific offer, not a vague, nonspecific offer.

MARGARET WARNER: But you don't want to give the consumer the choice of whether they'd rather make a blanket "no" versus what you're suggesting, which is a company- by-company or offer-by-offer "no"?

MATT MATTINGLEY: Our position would be that anyone who signs up for a blanket do-not-call program deprives themselves of the choice of making a determination based on specific information.

EILEEN HARRINGTON: Well, I think consumers are going to continue to buy books and fishing gear and whatever else they want with or without the federal do-not-call registry. The issue here is who has the authority to decide whether a phone in my home is going to ring. Do I have the authority to make that decision, or do telemarketers have the sole authority to decide when my phone is going to ring? We think consumers should have a choice. We think consumers can make informed choices and have confidence, that consumers will do exactly what they want to do with these choices.

MARGARET WARNER: Will this wipe out your industry if this becomes a national...

MATT MATTINGLEY: Well, I don't think there's any question that if you take 60% of the customer pool out of the marketplace, it can't help but have an adverse effect on the industry. And that is what concerns our industry more than anything else is the sheer size of such a list. And it returns once again to the premise that the best decision is an informed decision, not a generalized decision. And that is where we think the current proposal on the table here by the Federal Trade Commission goes off... off base. You mentioned we have 27 states that have lists now. We already have an existing national program that's been in effect since 1991. There is a nationwide voluntary industry list that's maintained by the Direct Marketing Association. The Federal Communications Commission is also considering a national do-not-call policy. How many lists does it take to oversee an industry? We're layering layer upon layer of bureaucracy on an industry to accomplish something that we can accomplish already now with better enforcement and better education.

MARGARET WARNER: Eileen Harrington and Matt Mattingley, thank you both.

EILEEN HARRINGTON: Thank you, Margaret.

MATT MATTINGLEY: Thank you.

RAY SUAREZ: More information on the national do not call list, as well as how to sign up for state and industry lists can be found on our web site.

ENCORE FIT FOR LIFE

RAY SUAREZ: New Year's resolutions often include spending more time at the gym, working off those extra pounds that appeared over the holidays. But for some Illinois school kids, the exercise is part of the curriculum. Elizabeth Brackett of WTTW-Chicago has this encore report on a new kind of physical education program aimed at helping children live healthier lives.

ELIZABETH BRACKETT: 30 kids clad in gym clothes pour into the room for their daily physical education class in this suburban middle school west of Chicago, but this doesn't look like the gym class most of us remember. This looks more like the local health club, which is exactly what it is supposed to look like, says Phil Lawler, the PE instructor who pioneered the concept of the new PE.

PHIL LAWLER, Physical Education District Coordinator: It used to be that we were meeting the needs of about 30% to 40% of our population. Those were the athletes. And the others were brought along. They were forced to take what we were offering, but really saw no value in it, really didn't enjoy it. You're a long ways up there!

ELIZABETH BRACKETT: So now PE is more than volleyball and competitive sports as in the past. New PE students at Madison Junior High in Naperville, Illinois, spend their 40-minute gym period scaling the climbing wall, running on treadmills, and using the weight machines.

CARRIE HESNESS, Student: I like this because you get, like, more opportunities to do more exercises and work out your body in different ways and stuff.

ELIZABETH BRACKETT: Do you feel like it's keeping you in better shape?

CARRIE HESNESS: Yes.

ELIZABETH BRACKETT: Lawler's program is seen as a national model for the new PE movement that is taking hold in schools across the country.

SPOKESMAN: This is where your heart rate was when you were doing the cardiovascular workout.

ELIZABETH BRACKETT: 30% of the schools in Illinois have new PE programs. The impetus for the change, says Lawler, comes from the nation's health statistics. Obesity among children has doubled in the last decade, according to the Centers for Disease control. Also on the rise, diabetes and high blood pressure. Now, video games built into the exercise equipment can help even the couch potatoes. Also on the exercise can change those statistics.

ELIZABETH BRACKETT: Does this make it easier to exercise?

STUDENT: Yeah, not as bored.

ELIZABETH BRACKETT: Cardiologist Vincent Bufalino became a big booster of Lawler's program after screening area children and finding that an astonishing 40% had high cholesterol readings.

DR. VINCENT BUFALINO, Cardiologist: The interesting correlation for us with the children was that it was not so much genetics that we found in those kids. It was really fast food restaurant use and lack of exercise that were two of the biggest predictors as to which kids had high cholesterol or not.

ELIZABETH BRACKETT: The worsening health statistics come at a time when the overall trend in physical education is to cut back.

SPOKESMAN: Let's go!

ELIZABETH BRACKETT: Illinois is one of the few states in the country to require daily PE, but five years ago, Chicago public schools asked for a waiver. Like most urban school chiefs, Chicago CEO Arne Duncan is under intense pressure to increase academic performance and test scores.

ARNE DUNCAN, Chicago Public Schools: The goal was really to increase the academic requirements for graduation as we up the requirements for math, as we up the requirements for science, as we up the requirements for PE, we had to find time during the school day to do that, and so rather than doing the four years of PE, we reduced that to two years so we could have the more stringent, more rigorous academic requirements for our students.

ELIZABETH BRACKETT: Lawler says educators who trade gym time for academics are unlikely to get the results they want. He points to recent brain research thatshows better brain function after exercise.

PHIL LAWLER: In Naperville, with the daily delivery of physical education, our students in the Tims test finished number one in the world in science. We finished sixth in the world in math, and they didn't do that in spite of us. We truly feel we were a contributing factor to those test scores with the brain research that says physical activity affects the brain.

ELIZABETH BRACKETT: Lawler has found corporate support for the new PE movement from Chicago-based Wilson sporting goods. President Jim Baugh admits that he first got involved to promote his products and the sporting industry. But it grew to more than that.

JIM BAUGH, Wilson Sporting Goods: You have to condition people. Just like you're teaching kids how to read or write or arithmetic, you have to teach them how to develop an active lifestyle. So this is where it switched from what's right for sporting goods to what's right for our country, and we've been on this crusade for years.

ELIZABETH BRACKETT: Two years ago, Baugh founded PE For Life, a national non-profit advocacy organization to promote funding for daily PE programs across the country. The Naperville district is now the showcase PE for life site. Physical education has often lost out in terms of education funding. But thanks to lobbying efforts by PE For Life and others, $50 million in grants to upgrade PE programs was included in the recently passed education appropriations bill. The $50 million is up from the $5 million in physical education for progress, or pep grants, available last year. Lawler says "new PE" programs must show measurable results just as academic programs are measured by test score results. At Madison, a fitness profile is developed for each student.

PHIL LAWLER: Don't measure this against any other student. Just measure it against your own ability. This is going to stay in a file. We'll test you again in the spring, and you'll get tested next year at central.

ELIZABETH BRACKETT: Heart-rate monitors are worn so teachers and students can monitor their effort level. Results are downloaded after class and become a part of the student's fitness profile. The monitors taught Lawler that even slow-moving students may be exercising at their maximum level of effort.

PHIL LAWLER: In the old days, everything was, "let's run a mile, and if you can't run a mile under eight minutes, you're a failure." Well, how many people in this country were turned off to exercise by those standards? I put a heart rate monitor on this young lady, and based on a 13.5-minute mile, she was a failure. But when I downloaded her heart rate monitor, her average heart rate for 13 minutes was 187. She was working too hard -- my observation she wasn't doing anything. Well, technology proved that my judgment in that case, I was wrong, and I was wrong for several years. Now, with this technology, we won't make that mistake again. We will personalize it and we'll give kids credit for what they do.

ELIZABETH BRACKETT: Far better to measure a student's progress now, says cardiologist Dr. Bufalino, than to wait until the news is much grimmer.

DR. VINCENT BUFALINO: If we don't teach the kids how to exercise early, we're not going to get them to do it when they're 40 or 50, when I see them and they're ready for their bypass surgery. And we have to put a scar on their chest to convince them they should start exercising-- something wrong with that.

ELIZABETH BRACKETT: The Department of Education will begin taking applications for pep grants at the end of February.

FINALLY THE PASSING OF THE YEAR

RAY SUAREZ: Finally tonight NewsHour regular and former Poet Laureate Robert Pinsky reads a New Year's poem.

ROBERT PINSKY: E.E. Cummings sometimes wrote a perfectly conventional poem. Here's his sonnet, expressing very well some commonplace feelings about the turning of the old year into the new. "The Passing of the Year." "The world outside is dark, my fire burns low. All's quiet, save the ticking of the clock, and rustling of the ruddy coals that flock together hot and red to gleam in the glow. The sad old year is near his overthrow and all the world is waiting for the shock that frees the New Year from his dungeon lock, so the tense earth lies waiting in her snow. Old year, I grieve that we should part so soon. The coals burn dully in the wavering light, all sounds of joy to me seem out of tune, the dying embers creep from red to white. They die, clocks strike, up leaps the great plaid moon. Out peal the bells. Oh year, dear year, good night." I wish you a glowing New Year.

RECAP

RAY SUAREZ: Again, the major developments of the day. The U.S. Military confirmed it has ordered another 11,000 troops to deploy to Kuwait. The move was the latest in a buildup for possible war with Iraq. North Korea urged South Koreans to join it in confronting the U.S. The Bush administration has demanded the North halt its efforts to restart a nuclear reactor. And the Associated Press reported authorities in Yemen have arrested scores of Muslim militants. That's after fatal attacks on a Yemeni politician and three U.S. missionaries. A correction before we go, earlier in reporting the Yemen story we showed the images of four American missionaries. One of them -- Donald Kasswell -- survived the attack: We'll see you online, and again here tomorrow evening. I'm Ray Suarez. Thanks, good night.