The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Friday, there were events marking the fifth anniversary of Lebanon hostage Terry Anderson's abduction and Pres. DeKlerk announced talks with Nelson Mandela about a new South Africa constitution. We'll have the details in our News Summary in a moment. Judy Woodruff is in Washington tonight. Judy.

MS. WOODRUFF: After the News Summary, we go first to a debate about labor unions. With Greyhound buses still rolling despite a drivers' strike, [FOCUS - STRIKING OUT] we get differing views on organized labor's clout from labor leader Lynn Williams, president of the United Steel Workers, and Mark DeBernardo of the U.S. Chamber of Commerce. Then a News Maker interview with the military leader [NEWS MAKER] of the Nicaraguan contras, "Comandante Franklin". Next our regular Friday analysis team of Gergen & Shields [FOCUS - GERGEN & SHIELDS], and finally, a report on the upcoming elections [UPDATE - HISTORIC ELECTION] in East Germany.NEWS SUMMARY

MR. LEHRER: It was five years ago today that Terry Anderson was taken hostage in Lebanon. The 42 year old Beirut correspondent for Associated Press is the longest held of all the Western hostages. Today in Lebanon, television stations broadcast a video tape of Anderson's four year old daughter, Solo Mae, who was born after his abduction. The anniversary was also marked by services in Washington and other cities. There was a ceremony in Lafayette Park across the street from the White House. It was attended by schoolchildren, journalists and hostage families. Pres. Bush voiced his concerns for the hostages and their families. He spoke to reporters while viewing the cherry blossoms at Washington's Title Basin.

PRES. BUSH: It concerns me every day that I'm alive, and I said this yesterday, a message aimed at all the hostage families. We'll keep on talking about it and keep on trying, sometimes quietly, sometimes publicly, but I will do everything I can to get those hostages out of there.

MR. LEHRER: Former President Jimmy Carter also spoke about the hostages. He said more opportunities exist now for their release than ever before. He made the remarks in Damascus after a meeting with Syria Pres. Assad. Judy.

MS. WOODRUFF: South African President F.W. DeKlerk has invited the exiled leaders of the African National Congress home for talks next month. Nelson Mandela is expected to lead the ANC Delegation. DeKlerk said the talks will be aimed at removing stumbling blocks to black-white negotiations on a new constitution. In the Soviet Union, Pres. Gorbachev sent a terse telegram to the leaders of Lithuania, saying they had three days to start undoing their declaration of independence. There was no word what would happen if they refused. Also today Gorbachev invited radical reformers to a meeting about the future of the Communist Party. The radicals want the party removed from government and the work place. Party leaders said the proposals would bring about the destruction of the Communist Party.

MR. LEHRER: Talks resumed today between union and management in the Greyhound bus strike. Federal mediators met with each side separately in Tucson, Arizona. Face to face talks are scheduled for tomorrow. There was another shooting incident today in Phoenix. One shot was fired at the windshield of a New York to Los Angeles bus with 43 passengers on board. No one was hurt. And in Connecticut, a striking Greyhound driver was arrested today. He was charged with shooting at a bus in Farmington, Connecticut, last Monday. Northwest Airlines today fired three of its pilots accused of flying while drunk. The three were arrested last week after landing a 727 jetliner in Minneapolis.

MS. WOODRUFF: Two economic numbers came out today. The Labor Department said wholesale prices held steady in February after a big jump in January. And the Commerce Department said that new home construction fell 7 percent last month. It increased 24 percent the month before mainly because of warm weather. That's it for our News Summary. Now it's on to a debate about organized labor's clout, an interview with the commander of the contras, Gergen & Shields, and this Sunday's elections in East Germany. FOCUS - STRIKING OUT

MR. LEHRER: We begin tonight with a look at the latest development in the labor-management wars. It's called staying open for business during a strike, thus making the strike ineffective and irrelevant. The nationwide Greyhound bus line strike now in its third week is the latest and most dramatic example. Greyhound management immediately began replacing its striking drivers with new workers. One-third of its bus service is now operating. The company plans to have it back to full service by the end of March if the strike is not settled. It is a technique Continental and Eastern Airlines, Boise Cascade Paper Company, Phelps Dodge Corporation, and many others have used in recent years. Then Pres. Reagan also employed it in the 1981 strike of 11,000 federal air traffic controllers. We debate its use now with Lynn Williams, president of the United Steel Workers of America Union, he joins us from public station WQED in Pittsburgh, and Mark DeBernardo, director of the Labor Law Action Center at the United States Chamber of Commerce in Washington. Mr. Williams, is it fair and proper to hire replacement workers in a strike?

LYNN WILLIAMS, President, Steel Workers Union: [Pittsburgh] Well, I don't think so at all. Of course, a strike is the end or development in a collective bargaining issue. We believe in collective bargaining in America. It's in the law. We believe in the right to strike. I believe workers should be permitted to withdraw their labor and the focus should be on settling the dispute, not in trying to find a way to escalate warfare.

MR. LEHRER: Why should the company not be allowed to hire replacement workers and continue to operate their businesses?

MR. WILLIAMS: Well, of course, the real issue today is a question of hiring permanent replacement workers which has added a whole new dimension to this. It's been an opportunity that's been out there for a long time, but only in the terrible circumstances of the '80s have the companies, some companies, not all of them, attempted to use this kind of a procedure to divide the issue. And here the issue is not so much hiring replacement workers, but hiring them permanently and in effect putting them ahead of those who are out on strike and in that way distorting and changing the whole focus of the collective bargaining issue, which is to try to find a settlement, or ought to be to try to find a settlement, not to find a way to try to destroy the workers and take away their jobs and destroy their union, which unfortunately President Reagan encouraged at the beginning of his term office, his first term, with the PATCO circumstance, and he did a great disservice to America, and this whole question of permanent replacements does a great disservice to America, since it divides us and encourages confrontation and dispute, rather than focusing on what are the problems the workers have, what are the issues of concern, what needs to be done to settle a dispute.

MR. LEHRER: Mr. DeBernardo, do you agree that hiring permanent replacement workers is a disservice and divides rather than brings people together and points toward a settlement?

MARK DE BERNARDO, U.S. Chamber of Commerce: Well, I agree with Lynn Williams that, in fact, the collective bargaining process and the right to strike should be preserved. That's fine. I have no squabble with that. What I do have is a squabble with the unions wanting to change the rules now that they're losing at the game. In the '50s, and the '60s, and the '70s, back when strikes were nine and ten times more prevalent than they are today, the unions were not known to go on strike because their trump card was trump. They could play that ability to strike and had a lot of intimidating influence over employers. Now the trump card is no longer trump. Many employers in many parts of the country no longer intimidated by that threat to strike, unions have to think twice. It's lawful, according to longstanding legal precedent, for employers to be able to try to continue operations. They should have that right. That's a factor that the unions take into account when they go out on strike and they should live by the rules.

MR. LEHRER: What has happened, Mr. DeBernardo, to cause its use more than -- as you say, it used to be when a union went on strike, the company usually shut down, and then there was bargaining and then the strike was settled, and thenthey went back to work, and that was it. Now that doesn't happen anymore. What has caused this change?

MR. DeBERNARDO: Well, I'll tell you what's happened which is that in the United States there are large pools of skilled workers available in most industries. That wasn't the case, and let me give an example of construction, in 1965, more than 80 percent of the construction workers on major construction projects were union members. Today it's 27 percent. The simple fact is not just in construction but in other industries there are large pools of skilled workers willing to work at what are high paying wage jobs in many cases and they're available as replacements. And let me say what is not the cause, which is I think a very simplistic and misleading approach, which is to say it was the PATCO strike. I have to disagree with Lynn Williams very strongly because all of the barometers of meaning influence were showing steady declines in meaning influence far before 1981 when we had that PATCO strike.

MR. LEHRER: So in a nutshell, what you're saying it's the unions fault, their own fault. They have lost the strength and this is just a reflection of it.

MR. DeBERNARDO: Yeah, unions represent just 12.4 percent of the private sector work force. They lost 3.2 million members in the last 10 years. I mean, let's face it. The unions are in rapid decline in the United States. They simply don't have the leverage. So now what they do is they come to Washington, they go to Congress, they want to change the rules, rules that they abided by for 50 years, they want to change those rules in Congress because of their plight.

MR. LEHRER: Mr. Williams, are you all losing it?

MR. WILLIAMS: No, no. We're not in anything like the terrible decline that's being described. Certainly it's been a difficult decade in the 1980s, there's no doubt about it. We've lost members not because people didn't want to be in the labor movement, not because they didn't want to be represented, but because there's been a tremendous destruction of America's industrial base, and the loss of jobs and the loss of good jobs in America, and all kinds of people who had good jobs and were good union folks and would like to be again have been pushed out. It's been a terrible time in the economy. And there are employers out there who have been determined to try to take advantage of this by attacking the unions, trying to destroy them. So the question, if we believe in collective bargaining, then we shouldn't be talking about tactics that attempt really to destroy the union and we should be talking about procedures that help collective bargaining to work.

MR. DeBERNARDO: Now, these tactics, if, in fact, we prohibited the hiring of replacement workers, what you would embark on is a natural policy --

MR. WILLIAMS: Let's get --

MR. DeBERNARDO: -- that encourages strike activity. They would encourage unions to go out because their members would be insulated from potential loss of jobs.

MR. WILLIAMS: Let's get on the issue we're really --

MR. LEHRER: Just a moment. Mr. Williams.

MR. WILLIAMS: Let's get on the issue we're really discussing. We're not talking about whether there's a right to have replacement workers. We're talking about the right that the companies have been exercising in the '80s which they never exercised before to have permanent replacement workers, to say during a strike that they can bring in scabs, bring them across the picket line, and they can permanently take the jobs of the people who are out on strike trying to settle according to the laws of the landand according to something we all believe in by the decent procedures of collective bargaining a dispute they have with their employer. That's what the issue is about, whether the employer ought to be able to move somebody in, call him a permanent replacement, and put him ahead of the workers whose job that person has taken.

MR. LEHRER: Mr. DeBernardo.

MR. WILLIAMS: And that's what believe to be wrong and --

MR. LEHRER: Let him --

MR. WILLIAMS: -- what we're attempting to change in Washington, and that's a procedure that doesn't exist in any other advanced country in the world. There's no other country in the world that deals with strikes this way and encourages employers to bring in permanent replacements. And there are a great many employers in America who don't believe in that.

MR. LEHRER: Let Mr. DeBernardo respond to that point precisely. The new trend toward permanent replacements, you heard what Mr. Williams said, what has caused that to happen and what is the purpose of that if it is not to destroy the union?

MR. DeBERNARDO: Jim, at the top of the broadcast, there was a report on Greyhound. We know that there's been numerous shooting incidents at Greyhound. We know the violence that can occur on the picket line. The fact of the matter is if an employer is going to have a legitimate shot at continuing operations either with management employees and/or union members crossing the picket line -- and I think Lynn does a great disservice to those employees' interests, because when you're talking about seniority of those returning to work who don't agree with the strike crossing the picket line, those interests have to be taken into account as well, the rights of those employees, and third, you have, you know, the ability to attract workers to come to the job in what is a very intimidating, threatening, and sometimes physically abusing atmosphere. What are the chances the employer is going to have to continue operations which are the employer's lawful right if you ban permanent replacement workers?

MR. LEHRER: What about the point, Mr. DeBernardo, that the practice of hiring, as Mr. Williams says, permanent replacements immediately once there is a strike flies in the face of a momentum towards settling that strike, in other words, it goes against that from the very beginning?

MR. DeBERNARDO: You know, the relative strength and merits of the parties' positions going into the strike is what should determine the outcome. Typically what happens is the employer negotiates with the union in regards to how many and at what level the employees are brought back when a strike is settled. I think we should have policies that encourage resolution of those disputes. I don't think upsetting the balance of labor-management relations and giving tremendous more leverage to the unions, because they know they can go out on strike and be insulated from the effects of that strike because they're not going to lose their job, I don't think that's going to contribute to --

MR. LEHRER: Is that what you want, Mr. Williams? Do you want the protection of jobs?

MR. WILLIAMS: Greyhound is a perfect example of the difficulty. Without really effective negotiations going on or anything happening really to try to settle the strike, Greyhound is out across the country advertising for replacement workers and therefore insisting on confrontation in an argument without devoting their energies and time to trying to resolve the dispute. To suggest, as Mark is, that somehow workers on strike, this is all kind of a lark and there's no penalty for going on strike unless the employer has this kind of unbridled power to try to destroy the workers is of course ludicrous. Striking is not a pleasant experience. Workers don't choose to strike, they don't choose to give up their living, except under the most serious circumstances, under circumstances in which they haven't been able in any other way to attempt to resolve their legitimate problems.

MR. LEHRER: Now you do want legislation, do you not, Mr. Williams, that would prohibit the hiring of permanent replacements in a legal strike, is that correct?

MR. WILLIAMS: Exactly right, prohibit the hiring of permanent replacements.

MR. LEHRER: And prohibit what Greyhound is doing now in the Greyhound strike?

MR. WILLIAMS: Exactly, and in that way encourage a more civilized kind of approach, encourage Greyhound not to be thinking about hiring permanent replacements, but to get on with the business of negotiating a settlement.

MR. LEHRER: And what would be the effect of that, Mr. DeBernardo?

MR. DeBERNARDO: A great increase in strike activity. In the United States, we've gone from four hundred and fifty strikes a year, major strikes, a thousand or more workers back in the early '50s, steadily declining to fifty strikes a year, in that range. If that legislation were enacted, you would be giving a green light to the unions to go on strike.

MR. LEHRER: Is that correct, Mr. Williams?

MR. WILLIAMS: No, I don't believe that for a minute. That suggests that people want to strike and so on. People want settlements. They want to work disputes out. I think we're paying a terrible price in America in a global economy in terms of international competitiveness and all those kinds of concerns, because we devote so much energy to these kinds of battles as we had in Greyhound, as we had in Pittston, which the unions won. The labor movement will rally behind the Greyhound workers in exactly the same way, but it means that all kinds of energy will be focused --

MR. DeBERNARDO: You know --

MR. LEHRER: Let him finish, Mr. DeBernardo.

MR. WILLIAMS: -- on one dispute rather than working things out.

MR. LEHRER: Yeah. Mr. DeBernardo.

MR. DeBERNARDO: I'm just saying I think you've misstated what Greyhound is all about. The Greyhound Corporation has lost $20 million over the last three years. They offered $63 million in raises over the next three years, despite the fact that they've lost nearly 20 million over the last three years. Typically what we're talking about is companies that are either unprofitable, or are on a very very tight profit margin, they're having a tough go of it. Nobody likes a strike. The company doesn't want to go into that strike situation. Let me say, most companies don't want to hire permanent replacement workers either. We know that if you have permanent replacement workers side by side with the union members when they come back, that can cause friction. This is not the ideal situation. This is not employers going into this willy nilly and trying to bust the unions. That's not the situation. It's employers in a bad economic situation trying to do the best they can. I think that Greyhound, I think in Eastern the same situation, you had unions trying to get blood from a rock. You can't do it. These are --

MR. WILLIAMS: Mark is misstating, in my view, misstating the Greyhound situation. One of the major issues isn't an economic issue in terms of wages or benefits or that kind of thing. It's the subcontracting out of the work. One of the issues is that Greyhound wants to subcontract out thousands of the drivers' jobs. And the problem is that it's taken two weeks, for example, into the strike to get these folks back to the bargaining table. Just today they're talking to a mediator.

MR. LEHRER: Today they went back.

MR. WILLIAMS: They should have been doing that from day one. And the permanent replacement issue just encourages the employer to keep going to see if he can't really run over the union and run over the people and get his own way without dealing with them in a decent constructive collective bargaining fashion as the basic laws of the land contemplate.

MR. LEHRER: Gentlemen, Mr. Williams, Mr. DeBernardo, I am the mediator here and I have to call these talks over. Thank you very much.

MR. DeBERNARDO: Thank you.

MR. WILLIAMS: Thank you. NEWS MAKER

MS. WOODRUFF: We turn next to the Nicaragua story and to a News Maker interview with the military commander of the anti-Sandinista rebels known as the contras. There are about 12,000 of them and most have been based in camps in Honduras, with a few operating inside Nicaragua. Their leader, Israel Galiano, known as "Comandante Franklin", came to Washington to discuss the future prospects of his American-backed fighters now that Daniel Ortega and the Sandinistas have been voted out of office. Correspondent Charles Krause has our report.

MR. KRAUSE: The comandante met this morning with Vice Pres. Quayle, who's just back from South America, where he met with Ortega. Afterwards, Franklin and Quayle explained their positions to reporters. The contras reject the U.S. view that they should begin demobilizing before Nicaragua's new government takes office next month. We asked "Comandante Franklin" if the contras will demobilize after the new government is inaugurated.

"COMANDANTE FRANKLIN", Contra Military Commander: [Speaking through Interpreter] That's a lengthy process. It's one thing for Mrs. Violeta to assume the Presidency and it's another thing for her to be able for her to guarantee the security and the other guarantees that we need of the citizens.

MR. KRAUSE: In other words, you are, in effect, saying you are refusing, you will not demobilize either before or immediately after Mrs. Chamorro takes office, even if she and the United States request that you do so?

"COMANDANTE FRANKLIN": Yes, we will be observers of the process. The democratizing process in Nicaragua, we will be its observers, and we will put down our weapons when we are certain that the vote that the people gave has been achieved.

MR. KRAUSE: But what right have you to remain a military force and threaten the new government, which was elected, after all, by the people of Nicaragua?

"COMANDANTE FRANKLIN": The election in Nicaragua was not thanks to the Sandinistas. It was thanks to more than 60,000 dead in the country, thanks to the pressure that we have been exerting for eight years and it suggests that we now be asked to leave your only guarantee which are your weapons and thanks a lot. We need something more, more than that, the guarantees as citizens and safety.

MR. KRAUSE: What kind of guarantees would satisfy you?

"COMANDANTE FRANKLIN": When all the Sandinista weapons have been deposited with an international organization and a national police has evolved and that there will not be a system of repression, such as the Ministry of the Interior.

MR. KRAUSE: The Secretary General of the United Nations today released a proposal for a UN presence that would demobilize your forces and then continue to patrol as a kind of guarantee for the security of your men after they've resettled into the country, into the civilian life. Is that the kind of guarantee that might help in this process?

"COMANDANTE FRANKLIN": The first step must begin with a cease- fire, bilateral cease-fire, with oversight by a separation of forces where the Sandinistas will get back to their barracks, the resistance, the contras will remain in their areas, geographically, there are areas of operations in the country, and from there, begin a process of demobilization.

MR. KRAUSE: At this point, based on your meeting with Vice Pres. Quayle, what can the United States do to help you and your men end this war and return home?

"COMANDANTE FRANKLIN": Immediately, what we want is to ensure aid to those who have suffered, the family of the combatants, and the orphans of war, and those who have suffered physically in war, outside the country, and then within Nicaragua with guarantees, social guarantees for all.

MR. KRAUSE: How did you respond to Vice Pres. Quayle when he said to you we want you to demobilize now, before the inauguration next month?

"COMANDANTE FRANKLIN": That there was an easy way, let them withdraw all the U.S. aid assistance, the combatants of the family members and the orphans, because there's no one to fear here. In Nicaragua, we do have someone to fear. To give you an example, there is a snake in Nicaragua that has a mashed tail. So that is what Sandinista is.

MR. KRAUSE: Now let me make sure I understood you. What you told Vice Pres. Quayle was that if they want an immediate demobilization of the contra forces that the United States would have to bring all of the men and their families to the United States?

"COMANDANTE FRANKLIN": That is so.

MR. KRAUSE: And what was his response?

"COMANDANTE FRANKLIN": They are supporting with a program of this type but within Nicaragua, and that if we are, have a demobilization imposed on us, I don't think that the project will work, at least not within Nicaragua.

MR. KRAUSE: Did Vice Pres. Quayle bring any messages to you or any proposals from Pres. Ortega?

"COMANDANTE FRANKLIN": Just to apprise us that he had talked with Ortega, and that he had the promise that there would be a peaceful transfer of power on the 25th of April.

MR. KRAUSE: Do you think the Sandinistas will attempt to retain their power through the police and through the army?

"COMANDANTE FRANKLIN": If the Sandinista army at present continues acting as it is, I doubt that there will be peace.

MR. KRAUSE: What do you think the future holds for your country?

"COMANDANTE FRANKLIN": Possibly the Sandinistas have been sincere and that there will be a civil war.

MR. KRAUSE: That's what you think may happen?

"COMANDANTE FRANKLIN": That is what I believe.

MR. KRAUSE: Thank you.

MS. WOODRUFF: That was Charles Krause speaking with "Comandante Franklin". Still to come on the Newshour tonight Gergen & Shields and a report on East Germany's elections this weekend. But first this is pledge week on public television. We're taking a short break now so that your public television station can ask for your support. That support helps keep programs like this on the air. PLEDGE BREAK SEGMENT - TERRY ANDERSON CEREMONY

MR. LEHRER: For those stations not taking a pledge break, the Newshour continues now with excerpts from today's ceremony in Washington marking the fifth anniversary of Terry Anderson's kidnapping in Lebanon. One of the speakers was the Reverend Lawrence Jenco, a former hostage. He was held with Terry Anderson. He began today with a psalm they recited in captivity.

REV. LAWRENCE JENCO, Former Hostage: The Lord ismy shepherd. I shall not want. He makes me lie down in green pastures. He leads me beside still waters. He restores my soul. He leads me in paths of righteousness for His name's sake. Even though I walk through the valley of the shadow of death, I fear no evil for Thou art with me. Thy rod and Thy staff, they comfort me. Thou prepareth a table before me in the presence of my enemies. Thou annointeth my head with oil. My cup overflows. Surely, goodness and mercy shall follow me all the days of my life and I shall dwell in the House of the Lord forever. Amen. Gentle Shepherd take away all fear from Terry. Embrace him with our love and Gentle Shepherd, bring him home.

LOUIS BOCCARDI, Associated Press: I was with Terry in Cairo one week before he was taken. We spoke of the dangers he faced, but he wanted to speak much more about the story, about his story, and about the brave Lebanese journalists who worked at his side. And so he remained at his post, fired by a dedication to tell the story of the dedication of the Lebanese people, a dedication that has cost him five years. He's paid this price because he believed that light needed to be shed on the suffering he saw. How ironic that this man who risked his life as he huddled with fearful Lebanese in Beirut basements now sits captive in a dungeon in that same place.

PEGGY SAY, Sister of Terry Anderson: Stay strong. Keep the faith. We send you love and courage. And we who know what your life has been like stand in awe of your strength and your faith and your dignity. There are thousands of Americans praying as we speak today that someday soon God willing we will put our arms around you and we will take you home.

SEN. DANIEL MOYNIHAN, [D] New York: As we affirm and assert our concern for the hostages, which is a term we will use in everyday talk, let us also and above all affirm that each is an individual, each is a person, sacred unto God, and special and unique among us all. In a spirit of peace and hope, I will read the names of those held hostage in Lebanon. As I read their names, a photograph of each hostage will be raised by one of the children. From the United States, Terry A. Anderson, Thomas Sutherland, Frank Herbert Reed, Joseph James Cicippio, Edwin Austin Tracy, Alann Steen, Jesse Jonathan Turner, Robert Polhill. FOCUS - GERGEN & SHIELDS

MS. WOODRUFF: It's Friday and that means political analysis from the team of Gergen and Shields. That is David Gergen, Editor at Large for U.S. News and World Report. And mark Shields Syndicated Columnist with the Washington Post. He joins us tonight from Salines, California. Gentlemen this seems to be the season we have a democrat going out on the limb a week. Last week it was Dick Gephardt who was not embraced by the White House. This week it was Congressman Dan Rostenkowski Chairman of the House Ways and Means Committee and he rather was embraced by the White House. What is going on here David?

MR. GERGEN: Well among the Democrats I think it is the season to make a 1000 flowers bloom. And the White House has simply chosen one that it thinks is a vehicle that it thinks might lead somewhere. Let me just say a word about that. There are a lot of Democrats who think this is a trap. That the White House is trying to trap them in to standing for higher taxes.

MS. WOODRUFF: We should say what we are talking about is Rostenkowski's proposal to balance the budget.

MR. GERGEN: I am sorry. This is the Rostenkowski plan to balance the budget. It calls for reductions in the budget deficit of 500 million dollars over the next five years and it does that by both increasing taxes, consumption taxes as well as getting rid of this so called bubble on the upper income people. It also does that by cutting spending with some cuts in Social Security benefits or freeze of social security increases. And the President this week to the surprise of many said in fact that he was open to further discussions, that it was a step forward and of course you had his Budget Director Richard Darman on you show this week and he talked about it as well. Now there are some democrats that think the White House embraced it as a trap. That they are trying to get the Democrats out now in support of taxes. I don't think that is the case. I think the White House would genuinely see budget negotiations and they are seizing on the Rostenkowski Plan as the best way to get them. We have to give Mark a chance here to take a shot at that proposition.

MS. WOODRUFF: Mark do you want to weigh in on that? What is going on here?

MR. SHIELDS: I do want to weigh in on that. I think first of all Dan Rostenkowski himself has been motivated by an increasing frustration, a genuine concern that the deficit and the unhampered deficit is contributing to the demise of the United States. He has expressed his deep concern for children and grand children. He is frankly tired of coming each year with a 9 to 12 to 15 billion dollar package of new revenues to reach the Graham Rudman targets. He was moved by this and what is really real is the deep cleavage in the Democratic Party of those like Rostenkowski, the Chairman of the Ways and Means Committee, who still see the Democrats in large part as the governing party. Those on the other side who are very skeptical about the White House's embrace of the Rostenkowski Plan for fear they will be labeled once again the tax and spend party. And I believe that it is interesting because of you look at the dominance of the Republicans on the Presidential level over the last quarter of a century it lasted on three central values. One strong anti communism gave strength to the Republicans and less so to the Democrats. Two an anti tax proposal and three traditional values. The Supreme Court decision on abortion and I mean communism two of those three legs on the stool but the Republicans still very much own the anti tax, that they are the anti tax party. Maybe the idea that Rostenkowski is doing George Bush's dirty work has crossed more than a few Democratic minds.

MR. GERGEN: Let me tell you why I don't think that. The White House I think did essentially want to try to use a Gramm Rudman device of automatic cuts later in the year. They didn't mind if they didn't negotiation. I think that conditions have changed over the last three months. I think the slow down in the economy the deterioration of the economy and the high international interest rates have darkened the out look on the deficit. Darman testified yesterday before the Congress that in 1991 the deficit is going to be at least 6 billion dollars higher than anticipated and probably 15 billion dollars higher. That makes the process of Gramm Rudman much more painful. They would like to get in to negotiations as a way to settle this.

MS. WOODRUFF: Including a tax increase?

MR. GERGEN: I will have to say this. No one at the White House will say. I think that the door has cracked open slightly this week. I am not sure that we will get a tax increase this year but I think that the prospect are now growing that the House will look seriously at gasoline taxes, alcohol taxes and that sort of thing next year and they will callthem user fees because after all these people are using the highways and they pay higher gasoline taxes. Now another part of this Judy is that the White House feels that the Democrats who would be ordinarily at the table leading these negotiations namely Jim Sasser the Budget Chairman in the Senate and Leon Penetta are people they can not work with particularly Sasser. They are trying to seize on Rostenkowski and Llyod Bentsen to be at the center of those negotiations.

MS. WOODRUFF: Real concerns on the part of the White House Mark that they could not work with the other Democrats?

MR. SHIELDS: Well I think the initial reaction was quite frankly the other way around. George Mitchell the Senate Leader barely conceals his distrust of Dick Darman based on a very sour experience last year on the drug Bill. Jim Sasser the Chairman of the Senate Budget Committee has less that high regard, minimal regard for Dick Darman. So David is right the White House is trying to designate the hitter. George Bush has a long personal relationship with Danny Rostenkowski and they would like to deal with Danny Rostenkowski but that creates another problem because they scorched and scalded Gephardt last week. He isn't the guy you want to talk to. And the question become for the Democrats now who is going to choose who our leaders are and who our spokespersons are. Certainly the Chairman of the Ways and Means Committee is a very important figure but is the White House going to designate this is the Democrat that we can do business with.

MS. WOODRUFF: And at this point the White House is doing the picking?

MR. GERGEN: Well they are trying to. They are trying to move the process. At this point you have to say negotiations are a way away. We are not still ready for negotiations. I think that the President is going to have to call for negotiations much more clearly than he has to get it done.

MS. WOODRUFF: Mark just a quick comment and then we are going to move on.

MR. SHIELDS: David did touch on something very important. Dick Darman is sort of a deep throat of this whole process. He wants this to work. he wants the Rostenkowski proposal to go forward. There are two reasons for it. One the Japanese are putting pressure on us about our deficit and they are picking up our paper every time we need our deficit financed and secondly the Federal Reserve is looking for a signal before they will loosen interest rates to correct that sluggish economy David mentioned.

MS. WOODRUFF: Alright before we get anymore deeper into high finance. You both spent some time in Texas this week where a very interesting Gubernatorial primaries. On the Democratic side and the Republican side. Mark explain what is happening there. We had a very interesting Republican win in the primary.

MR. SHIELDS: We did have a very interesting Republican win in Clayton Williams a self made millionaire rancher, oil man, communications whiz from West Texas. An Aggie from Texas A&M. Texas A&M has never produced a Governor before. He is a sort of anti TV, TV candidate. He is not a pretty face, he has no blown dry look about him but he just blew away his opponents. He won by a 4 to 1 margin and he very shrewdly did two things. First of all he ran against the incumbent Republican Governor blaming the status quo for all the problems while kind of passing over the fact that the Republicans have controlled the Governorship for eight of the twelve years in Texas. And secondly he was able to evoke through the very adroit use of Texas myths and legend and sort of tradition an optimism for the future. He identified his own personal success that way. He is not to be underestimated. I asked somebody how strong he was and he said that Williams is stronger than 40 acres of garlic.

MS. WOODRUFF: Alright David top that. talk what happened on the Democratic side.

MR. GERGEN: It is hard to top that but nonetheless I think this has been a major step forward for the Republican Party perhaps the best one they have had in the last twelve months because the Democratic party wound up split in its own primary. The former Governor Mark White actually fell out of the pack and they are down to a run off between Ann Richards and Jim Maddox and those two ran very close together in the primary with a very low turn out.

MS. WOODRUFF: And Richards is the one in trouble now.

MR. GERGEN: Ann Richards is the current State Treasurer who gave the Address that kicked off the Democratic Convention and kicked George Bush pretty hard in the shines in 1988. Jim Maddox the current Attorney General who boosts that he has personally supervised the executions of 30 people since he has been Attorney General. But nonetheless in my visit to Texas I could not find anyone who thought the Democrats could win in the finals. They think that Ann Richards will take the run off in four weeks but Clayton Williams is so well bankrolled with his own money. He spent about 10 million dollars on this race which translates to about 19 dollars a vote.

MS. WOODRUFF: Mark do you agree with that number one and what is the national significance of what happened in Texas?

MR. SHIELDS: The national significance of it first of all Judy is that Texas politics is the imitative of all art forms and I think the 1990 campaign in Texas reflects very much the success of George Bush's 1988 campaign. Everybody runs as the education governor while pledging that their total opposition to any Texas State income tax. This sort of a gains without pains. This generic platform they are running on and this time spotlighting the intellectual and moral squishiness of your opponent which is quite frankly the formula for 1988 when Bush won by not being Michael Dukakis and Dukakis being nominated because he was not Jesse Jackson. I think that David has been talking to the wrong people in the liberal section in Houston again where the Democrats can win. Trady Williams is a little bit of a loose cannon. He pledge to guarantee 2 years of free college education to every Texas Student with good grades and when asked how he was going to finance it has come up with one of the proposals to cut off State bureaucrats air conditioners at 5 p.m. So I think there is more to be heard from him. Ann Richards would be a formidable challenger to Clady Williams in the run off.

MS. WOODRUFF: Just quickly David.

MR. GERGEN: The macro significance three key states in the South have gubernatorial elections this year. They have a lot to do with redistricting in the future. I think the first has now moved toward the Republicans. I think California is heading toward the Democrats. Can I talk about the micro implications.

MS. WOODRUFF: Go right ahead.

MR. GERGEN: Texas politics Mark has been there after tasting the garlic. There was a wonderful column today in the Houston Posy commenting on Texas Politics commenting that Lloyd Bentsen's nephew has now made a run off for Chairman of the Harris County Democratic Party. His opponent is Leslie Ellane Perez a convicted murder and confessed transsexual was with in four hours of being executed by the State. Was put in a San Antonio Mental hospital and escaped ready to lead theDemocrats in Harris Country.

MS. WOODRUFF: Mark you get the rebuttle for two seconds.

MR. SHIELDS: I would like to first of all wager a six pack of diet Pepsi with David on the outcome.

MR. GERGEN: Which outcome.

MR. SHIELDS: On the outcome of November. I don't think that it is over by any means but we are looking at between now and April 10th the Republicans have had a great break because the Democrats are under the Texas Chain Saw Massacre.

MS. WOODRUFF: Mark we will continue this next Friday. Mark Shields and David Gergen thank you both. UPDATE - HISTORIC ELECTION

MR. LEHRER: Finally tonight an update from East Germany where Sunday there is the first free and multi party election since 1933. Dick Gowing of Independent Television News Reports.

MR. GOWING: They are still removing and destroying the reminders of 40 years of communism and Honicker's discredited years of abuse. Symbols of the Stalinist ideology are being replaced. A distorted history is being rewritten. But in these final two days of the campaign the popularity of Communist Prime Minister Modrow continues to build. A quickie book on his first 100 days is being snapped up by 10s of 1000s of admirers. Many are under 30 and as their reception for Modrow shows they believe in the reborn Communist party as a political force.

SPOKESPERSON: I hope it will be a strong opposition because if their isn't any strong opposition, the others can make what they want.

MR. GOWING: For the past four months Mr. Modrow has had the thankless job of steering the East German State towards its own demise. He is widely seen as having done so with integrity and honor. The PDS which the Communists are now called are seen as the party that will insure that the preservation of policies to guarantee living standards and to guarantee employment in East Germany.

SPOKESMAN: There have to people fighting for the left wing, fighting for justice for all people.

MR. GOWING: Support for the PDS is underestimated and they will help slow down the process of unification.

HANS MODROW, Prime Minister: [Speaking through Interpreter] I think a new party of democratic socialism has been formed, a party that feels responsible to the people. And with the result of the election, I am convinced it will be a strong left wing opposition.

MR. GOWING: At Communist Party Headquarters a multi colored wall painting has replaced the drab Stalinist slogans which adorned the facade under Honecker, but as officials admit the modern upbeat image will not secure them a place in the likely coalition however big their support.

WOLFGANG MEYER, Government Spokesman: But I am a realist and I think also [speaking German] we want to be a strong opposition.

MR. GOWING: At one of the final Christian Democrat Party rallies last night a vocal section of the crowd voiced resentment at the pace of German unification being forced by West German Political Leaders like the Bundesbank President Rita Sussmuth. Fear of the unknown has become a factor in this campaign. The Communists are promoting it but the Big parties do not give way.

RITA SUSSMUTH, President, West German Parliament: We will not be in coalition because the Social Democratic as well as the Alliance already said don't go in coalition with the PDS.

EGON BAHR, West German Social Democrats: We might have a coalition of 2/3 of the majority and this will exclude the Communists.

MR. GOWING: As investigators and citizens committees continue their dig through the enormous apparatus of the Stassi Secret Police this has become a dirty election campaign. Preliminary analysis of the security records held on computers and files is beginning to reveal the true web of agents and reformer. In doing so it is turning up incriminating evidence against Leading political figures in East Germany. This week Wolfgang Shure leader of the main party in the conservative alliance told voters I am your next Chancellor. He was forced to resign after confirming his Stassi connection. Today in West Germany the mass circulation Bilt Zitum alleged that Gregor Geisse was involved in doctoring the Stassi files to help protect his communist party colleagues. As Channel Four news put these allegations to Mr. Gysi he dismissed them as rubbish. Not only had he been elsewhere at the time he said that he did not prepare such a document and if he had it would have been crazy to think that it could be kept secret. He said that it was part of a smear campaign.

DR. GREGOR GYSI, Chairman, PDS: Some one has gone to great lengths to find material against me and since they haven't they have to invent something.

MR. GOWING: But in the Public perception the mud is tending to stick. There is then a nasty political edge as officials dust off the ballot boxes which guaranteed Honicker's Communist party consecutive landslide victories. The excitement of the free first ever election is tinged with apprehension. The view of up to 40 percent of the electorate still are believed to be undecided.

HANS-HENDRICK KASPER, Politics and Economics Institute: I think East Germans still have to learn how to behave in a democracy. It is, we are still at the beginning of a democracy.

MR. GOWING: For forty years the East German State proudly kept Western technology and commercial interests at bay. Now the international media circus has been invited in without restriction. Corridors in the Parliament have been turned over to the Western Press. Chambers and halls are filled with television studios. Where once Erick Honecker's party rubber stamped decisions of this Stalinist dictatorship tonight the analysts and observers are grappling with the results from rallies and straw polls searching for clear signals to the likely final result. RECAP

MS. WOODRUFF: Once again the main stories of this Friday there were events in this country and abroad marking the 5th anniversary of Hostage Terry Anderson's captivity in Lebanon. And South Africa's President De Klerk announced talks in April with the Africa National Congress about a new Constitution for South Africa. nelson Mandella will likely lead the ANC Delegation. Good night Jim.

MR. LEHRER: Good night Judy. Have a nice weekend. See you on Monday night. I am Jim Lehrer. Thank you and good night.