The MacNeil/Lehrer NewsHour

INTRO

ROBERT MacNEIL: Good evening. Better unemployment figures came out today. President Reagan liked them, and we hear from him. Business leaders say there are still economic storm clouds ahead, and we hear from them. We also look at why one of America's most successful companies is still laying off workers. And we examine the Washington process that leaves Interior Secretary James Watt twisting slowly in the wind. Jim?

JIM LEHRER: Robin, the economy and James Watt were about it for hard news today, other than a first step toward avoiding a labor-management shoot-out at Eastern Airlines and a military development in El Salvador and a rhetorical one in Nicaragua. It gives us an opportunity tonight to look back on how the recent floods in Arizona did further psychic as well as physical damage in a town already hurt by a strike, and at the life, times and impact of a world figure named Menachem Begin.Caterpillar's Recession

MacNEIL: The Labor Department reported today that the unemployment rate fell last month to the lowest figure in 17 months. The September rate dropped to 9.3%, two-tenths of a percent lower than in August. Last December, before the economy began to pull out of the recession, the rate was 10.8%, the highest in 42 years. During the month of September, the recovering economy provided jobs for nearly 400,000 unemployed Americans. President Reagan used the latest figures in a speech today, defending his economic policies and blaming the large federal deficits on the Democrats in Congress. Mr. Reagan was speaking to the convention of the National Federation of Republican Women in Louisville, Kentucky.

Pres. RONALD REAGAN: The number of people holding jobs in September increased by 382,000. The trouble is, some people just won't open their eyes. Our opponents refuse to see any progress. They refuse to admit that America's getting well, refuse to recognize the recovery that is getting stronger all the time. These critics seem prepared to drown recovery in pessimism. Their speciality isn't solutions, it's scare tactics about deficits. The path to lower deficits is not paved with tax increases and unilateral disarmament. We will reduce deficits by encouraging growth and handcuffing the big spenders.

MacNEIL: The President said that the same Democrats who decried the deficits every day claimed that a balanced budget would wreck our economy and, he added, "That's like saying good exercise, three square meals a day and plenty of sleep at night will destroy your health." Jim?

LEHRER: Not everyone looks at the economy and sees the same thing Mr. Reagan does: Democratic members of Congress and Democratic candidates for president, to name just a few who don't. But not all of the voices of caution are partisan Democratic. Just today, in Hot Springs, Virginia, an organization of 200 top business executives called The Business Council weighed in with its own assessment. The Council said the economy is gaining momentum and predicted there would be continued expansion through 1984. But it warned against two dark clouds -- big federal deficits and the widening foreign trade gap. The group also said unemployment should get better but not nearly enough to erase unemployment as a critical public issue.There are some folks in Peoria, Illinois who would shout amen to that.

In Peoria, unemployment is a private as well as a public issue because economic recovery has yet to come to that city and to its principal employer, the Caterpillar Tractor Company. And the end result is an unemployment rate almost double the national figure. Charlayne Hunter-Gault tells us what's happened in Peoria and why.

CHARLAYNE HUNTER-GAULT [voice-over]: More than 600 workers at Caterpillar Tractor plants around Peoria were laid off last week. They joined more than 20,000 other Caterpillar workers who have been let go in the past year. Most of them have no idea when, if ever, they will return to their old jobs.

JAMES JOHNSON, bank chairman: The authorities say that the economy's picked up, working well. Not so here.

BARBARA ELLIOTT-COBB, former worker: So they tell us they have to make "economic adjustments." That's what our layoffs are referred to as -- economic adjustments.

HUNTER-GAULT [voice-over]: Caterpillar sells more than half its earth-moving equipment overseas. In past recessions, foreign sales have kept the company flush and kept Peoria's jobless rate way below the national average. But not in the recession of 1982. Every major development in the world economy has landed on this company. The oil glut forced wealthy oil-producing countries to cut their orders for Caterpillar's goods. The international debt crisis made it impossible for other Third World companies to borrow more and buy more from Caterpillar. U.S. embargoes on trade with the Soviet Union have cost Caterpillar its position as the principal supplier of heavy construction equipment to the Russians. The strong dollar has hurt U.S. exporters, such as Caterpillar, making their goods more expensive overseas. In contrast, the Japanese yen is undervalued, giving their firms a competitive edge. Caterpillar now faces strong competition from the Japanese firm of Komatsu, which has already captured Caterpillar's half-billion-dollar Soviet business, and which is fighting it for markets all over the world. At home, a seven-month strike and high interest rates also cut into sales.

The result? In 1982, Caterpillar posted its first losses since the Depression. It will lose money this year, too. Caterpillar's return to profitability depends partly on a global turnaround, which has been much slower coming than the U.S. recover. Even so, no one disputes the view that Caterpillar still has a worldwide market for its products and reasons for optimism.

LEE MORGAN, chairman, Caterpillar: We think, with respect to the longer term outlook, that we are in a business that fills basic needs of the world as it relates to energy and housing and food and water and the development of natural resources. So I have a great deal of optimism about the long-term future of our industry and of our company.

HUNTER-GAULT [voice-over]: But Caterpillar's future also depends on its strategy of cutting costs, especially labor costs, double those of its Japanese competitor. Caterpillar is an industry leader in automation. One worker at a console can operate a vast complex of machines. The company is investing millions in research and development, in computerization. The approach is to enhance quality but also to cut costs and to improve productivity. All this would mean a smaller payroll, even when business starts picking up again. As chairman Morgan says, productivity involves a tradeoff.

Mr. MORGAN: We want to make it easy for our people to be productive and efficient because only through the route of being a profitable, competitive company can a real answer to job security be provided.

HUNTER-GAULT [interviewing]: So what you're saying is that it would mean job security but for fewer workers.

Mr. MORGAN: It would mean job security for fewer workers, and we think that's a very important consideration, and that is that the jobs that do exist be with a healthy, profitable company rather than having, for example, a larger number of jobs at a company that is not profitable and competitive.

HUNTER-GAULT [voice-over]: Matt O'Conner covers Caterpillar for the Peoria Journal Star. He says Caterpillar's cost-cutting pleases Wall Street but worries Peoria.

MATT O'CONNER, Peoria Journal Star: Wall Street is happy to see Caterpillar cutting bank on employment. We've seen the local union employment go down from 23,400 in 1979 to about 10,000 today in the Peoria area. Obviously that's a great concern here in Peoria, but on Wall Street it's a sign that the company is coming to grips with the problems -- the cost problems that it faces.

HUNTER-GAULT [voice-over]: So Peoria awaits Caterpillar's recovery, it hopes by next year, but it knows that recovery will not bring back all the old jobs.

Mr. O'CONNER: We'll see some callbacks, I assume, in 1984 and beyond, but there are Cat workers on layoff today, and they know it, that will never be returning to Caterpillar plants in the Peoria area.

HUNTER-GAULT [voice-over]: Even if business improves, even if Caterpillar tractors come off the assembly line at a faster clip than they do now, fewer workers will be on that line. The unemployed are being forced to make other plans.

DAVID DURBIN, United Auto Workers: You know, there comes a point in time when you have to face reality and see what's going on, and some of the brothers and sisters have been off for over a year now. And their unemployment is running out; there is no other jobs available in the community, basically, and I think it just -- it's scary to them and slowly they are realizing that they're going to have to find other communities, other employment.

HUNTER-GAULT [voice-over]: John Backes worked his final shift last Saturday. He doubts that any other job in any other town will bring the rewards -- the salary, the house and the boat that came with seven years of working at Caterpillar.

JOHN BACKES, laid-off worker: When the American industry was really going great guns they just kept saying yes, and then really went a little overboard. But now my lifestyle is geared to that and I've just got to really tighten the belt. But, you know, I grossed $538 a week, and if I go work in a restaurant for minimum wage and tips, you know, I won't even gross half that.

HUNTER-GAULT [voice-over]: Barbara Elliott-Cobb received her layoff notice two weeks ago after four years on the job. For her the readjustment may cost more than money.

Ms. ELLIOTT-COBB: I would hope that maybe by spring or early summer of next year that things would be good enough that I would get back to work, but I'm not going to sit around in the meantime. I'm going to be right out canvassing for jobs. But I think after a couple of months chances are I'll head south. That may involve a divorce for me, but I've got to work.

HUNTER-GAULT [voice-over]: Nonetheless, Caterpillar, a fundamentally strong, innovative and competitive company, appears to have a turnaround almost within its grasp. But the company's recovery is really out of its hands; its fate is tied instead to policy decisions about the dollar and trade. Those decisions are made in Washington, Tokyo and Moscow, and Caterpillar has little or no control over them.

LEHRER: For the record, Peoria's sad economic situation is leading to its demise as a test city, a place where new products and sales ideas are routinely tried out. Last week a national marketing company which ran those kinds of tests scratched Peoria from the list, saying the city's high unemployment and other problems made "how it plays in Peoria" no longer relevant nationally.

It will be of no help or solace to those people of Peoria, but there was good news today on Eastern Airlines and its attempt to stay in business. Officials of the company and its four unions announced a deal. Independent financial analysts will be hired to examine the airline's financial situation and make recommendations on what can be done about it. Both management and labor will abide by those conclusions. The deal averts a labor-management show-down next Wednesday, the date company president Frank Borman gave the unions to accept a 15% pay decrease or face a company shutdown or a filing of bankruptcy. Today's announcement was made in Miami shortly after Eastern reported third-quarter losses of $34.4 million, bringing the loss to $128.9 million for the first nine months of the year. At a news conference Borman said the arrangement for a settlement is an unusual approach to solving a labor relations problem.

FRANK BORMAN, chairman, Eastern Airlines: This is a historic occasion, and it seems to me in its essence it's a proper way to solve a problem in a democratic, publicly-owned corporation. We can argue for years about how we got here or why we're here. The fact is that the problems are real, and what you've seen today is an enormous movement on the part of four groups -- in essence, the non-contract people are here with us on this platform. It's an enormous movement to join together and say let's fix it and go forward. And, from our standpoint as management, we intend to do exactly that.

LEHRER: One final economic note: Brazil and 60 of the 800 banks it owes money have worked out a financial aid package. The tentative agreement on new loans and other debt relief was reached last night at a meeting of the International Monetary Fund. If it goes through -- it will go through if the other 740 banks approve. Brazil has a total foreign debt of $90 billion, the largest of any Third World country. Robin? Clifton, Arizona

MacNEIL: A moderate earthquake woke the Northeast this morning. Buildings shook, dishes rattled and beds swayed from Pennsylvania to Vermont, and into Canada. There were no reports of heavy damage, but nuclear power plants in New York state and Vermont went on special alert. The quake was centered in the Adirondack Mountains of upstate New York, and measured 5.2 on the Richter scale.

In the Southwest parts of Arizona braced themselves for more possible flooding, following National Weather Service warnings of heavy rain from the tropical depression Priscilla. Thirteen people have died, two are missing and presumed dead, and thousands are homeless in Arizona's worst flooding of the century. One place that was particularly hard hit was the town of Clifton, site of the Phelps-Dodge copper mine and a long, drawn-out strike by union workers. As it happened, we had a camera crew in Clifton covering the human consequences of that strike. When the flooding came, they recorded the new tensions. Our report is narrated by Kwame Holman.

KWAME HOLMAN [voice-over]: In Clifton, Arizona, the San Francisco River over-flowed its banks and poured water into the streets, homes and businesses of this community of 4,200 people. Water rose more than five feet in buildings near the river. After the water receded, 600 houses had been ruined or damaged. But this natural disaster is not the only crisis facing the people of Clifton.

Since July, union workers have been on strike against Phelps-Dodge, the copper plant which is the major employer in the area. When the company hired replacement workers, violence erupted, pitting union loyalists against the company and against those crossing the picket line. Picketers have been heckling workers going to and from the plant for three months, but since the flood, the antagonism has intensified.

The company and company housing sit high on a hill above the town. They escaped the flood. But many of the strikers' homes had severe flood damage. With no source of income, strikers like Ray Aganaga face an even more uncertain future.

RAY AGANAGA, striking worker: I don't have a job, I don't a house, and that's period. It seems like a nightmare, you know, but you have to leave your own place. The river is natural, you know; we can't do anything about that, but the company could do something about our ordeal here. It seems to me like they don't care about us. You know, I've lost a lot of faith and the hope that I used to have for our company.

JAIME AGUILAR, striking worker: We're the people -- our generations are the ones that built that company. Our sweat and blood. We're the people that live here. This is our little corner of the world, our little nest egg, and people from out of here are coming in to take our jobs.

HOLMAN [voice-over]: Jaime Aguilar's home is virtually destroyed, but more than the mud, he and other strikers resent the company and the replacement workers.

Mr. AGUILAR: Well, there was an incident. Some scabs are coming down from work. They said to some women and children and some men, they said, "You lost your jobs, now you lost your homes," and they were like, like "Sucker!" you know. How would you feel if you just lost your home and everything and somebody told you that? Rubbing your face in the mud. That's how we feel about the scabs. The scabs are no better than that silt on the ground.

HOLMAN [voice-over]: The flood itself has caused tensions to increase. Strikers say that the company used helicopters and other rescue equipment to ferry workers to the plant instead of helping stranded people in Clifton.

3rd WORKER: We had a few old people up on this hill in the rain for three hours waiting, and they were both sick. One's a diabetic and the other one's real sick, and they were transporting scabs into the mines.

REPORTER: And that's why people are mad, do you think?

3rd WORKER: Oh, I think so. When they took the food up here to the scabs instead of bringing it to the people in the flood division, that made them a little mad, too.

HOLMAN [voice-over]: Phelps-Dodge plant manager John Bolles denies any wrongdoing and says the company rented a helicopter for its own use and did not divert rescue equipment.

JOHN BOLLES, Phelps-Dodge plant manager: Much of the problem is simple lack of communication and some very difficult communication. During the flood the local radio station went off the air. It was no power for it. There was almost no means of communication available to us. On Sunday and on Monday morning the National Guard had three helicopters and the DPS had another helicopter in the area. Those were used totally by the -- for the benefit of the people who had been flooded. Phelps-Dodge had no benefit whatsoever from those helicopters. The only helicopter use at all was that of our own rented helicopter, which arrived here at about 5 o'clock Monday afternoon.

HOLMAN [voice-over]: For the first few days after the flood, the natural disaster had only aggravated the human conflict, but as the need for mutual help developed, the union leadership showed a spirit of cooperation.They organized to provide food and clothing to the entire community, not just the strikers. They're helping in the cleanup and they are sandbagging the river against future floods.

MEMBER, miners' auxiliary: These are the kind of people that are used to struggling, and they're so strong that they follow through with their beliefs, and we fight for our rights, somethings with our neighbors. But, when it's over with, we get back to talking to each other and start working.

HOLMAN [voice-over]: The union may have been strengthened by the flood, but the question remains, will the strikers still be on the picket line after the mud is cleared? Plant manager John Bowles thinks they should leave.

Mr. BOWLES: If I were a striker out there right now with no prospect for a job, I'd go somewhere and look for one.

RAY ISNER, union leader: Well, of course they want the striking people to leave town, you know, but we're not going to leave town. We're going to stay here and we're going to support the strike for as long as it takes.

MacNEIL: In the meantime, the weather forecast for the Clifton area does promise more rain, but only as scattered showers.

We'll be back in a moment.

[Video postcard -- Peoria, Illinois]

LEHRER: The Korean airliner tragedy made a brief reappearance in the news today. The State Department said the U.S. has not made a final judgment on whether the Soviets knew it was a commercial airliner they were shooting down. The question was raised by a story in The New York Times this morning which said many intelligence expertsnow believe they did not know. That, at least, was the experts' conclusion after reviewing all available evidence and data. The Times said the intelligence people think the Soviet fighter was below and behind the airliner when it fired its rocket, and from that vantage point identification would have been difficult. Here's what State Department spokesman Alan Romberg said about the report.

ALAN ROMBERG, State Department spokesman: I will say that nothing has changed our view that whether or not the Soviet pilot and his commanders knew that KAL 007 was a commercial airliner, it's clear they did not fulfill their obligations under international law and established the ICAO procedures to identify the aircraft or warn it effectively. There is simply no justification for the shooting down of a civilian airliner. And as I have said here many times before, if they didn't know it, they should have.

LEHRER: Romberg went onto say the Soviets were negligent or incompetent or both for not taking further steps to identify that aircraft. Robin?

MacNEIL: In Lebanon, Druse and Shiite Moslem leaders today agreed to the use of European troops to oversee a ceasefire in the civil war. The agreement specified that the Europeans might come from any nation in the 10-member European Economic Community except France. That cleared the way to draw upon British and Italian contingents in the present four-nation peacekeeping force. There was some skirmishing between the Lebanese army and Shiite militiamen on the outskirts of Beirut. One soldier was killed by sniper fire. But in a more peaceful mood, Christian militiamen returned 27 Druse hostages, and the Druse's returned 16 Christians.

In Washington, government sources are telling reporters that the Soviet Union is arming Syria with ground-to-ground missiles with a range of 70 miles, far enough to hit targets in the central parts of Israel. The missile is the SS-21 which is capable of carrying a nuclear warhead. However, the sources said there was no indication that the Soviets had given the Syrians atomic warheads. Jim?

LEHRER: On Central America, there were a couple of developments. First, on Nicaragua, the Sandinista government reacted angrily today to reports the CIA is directing attacks against it from Honduras and other neighboring countries. Yesterday a captured pilot made the charge at a Managua news conference at which the government put him on display. The U.S. has had no official comment on the situation. Today we interviewed the Nicaraguan foreign minister, Miguel D'Escoto, at the United Nations in New York. Here's what he told our reporter, Pat Ellis, about the matter.

MIGUEL D'ESCOTO, Nicaraguan Foreign Minister: We now have in the last few weeks about -- what is it? about eight or 10 by now such bombings, and it has been made very clear. There was that article on the front page of the Times yesterday showing how that airplane that bombed my house and subsequently bombed the airport was a CIA plane, registered here in the States and acknowledged by the company, which is a CIA company. It's a matter of public record. This is -- I find it very hard to believe how, in the face of that and in spite of it, the U.S. -- someone like Mrs. Kirkpatrick saying that Nicaragua is trying to play the victim, that nothing is happening, and that this is the ideas of pointing to the CIA can only by the product of a very fertile tropical imagination. You can be sure --

LEHRER: And in El Salvador, the government today claimed a major military victory over the leftist guerrillas. The defense ministry said a U.S.-trained army unit ambushed a rebel column less than 30 miles from the capital, San Salvador. One hundred and fifty rebel soldiers were killed in the operation, according to the report. Robin? Democrats at Town Hall

MacNEIL: Today in Lousville, as we heard, President Reagan accused the Democrats of sabotaging his efforts to balance the budget. Last night the Democrats had their turn. All the Democrats who wanted to be president gathered in New York for a forum designed to show interested party members how they compare.

[voice-over] The forum took place in the historic Town Hall in Manhattan. It was the first time all seven candidates had shared the same stage: Reubin Askew, Alan Cranston, Gary Hart, Ernest Hollings, John Glenn, Walter Mondale and George McGovern. They were questioned by author Theodore White, political scientist James David Barber, and former Congresswoman Barbara Jordan; Edwin Newman of NBC was the moderator for an audience of some 1,500 hardcore Democrats and the press. The candidates responded to a wide variety of questions. The issues providing most of the substance of the debate were arms control and a nuclear freeze.

Sen. ALAN CRANSTON, (D) California: The President of the United States and the top Soviet leader should meet with, of course, their top aides and start from scratch and reach agreement, reach the habit of agreeing, and then say, "What do we do about it?" And then get to the task of first, if possible, agreeing to freeze testing and deployment, production of nuclear weapons at present levels. We do not need more. And then work together to find a way to make a dramatic cutback.

REUBIN ASKEW, former Governor of Florida: I do not believe that the nuclear freeze is the best way to secure an effective arms control agreement. I believe that the approach to do it is to go ahead and be strong as you selectively modernize, as you give much greater sense of priority and have the bipartisan approach that's finally developing, it looks like, in this Congress.

Sen. GARY HART, (D) Colorado: I strongly support the notion of freezing or stopping the production and deployment of new nuclear weapons systems, as I do the ratification of the SALT II treaty and a comprehensive test ban treaty and a number of other initiatives, some of which are prepared for ratification at the present time. But before the freeze resolution was introduced, I proposed a negotiating framework from which I, as president, intend to operate, that addresses not only the overall limits or numbers of nuclear weapons systems and warheads that both superpowers possess, but addresses uniquely and for the first time in the negotiating process the question of the use of those weapons.

Sen. JOHN GLENN, (D) Ohio: A freeze that's mutual and verifiable -- and those are two great big qualifiers -- I'm sure everyone here would like to see, and I would like to see that also. They are two big qualifiers, but that at least would place a stop on things, and I do not agree with the President that that would stop at a place that would leave the United States in an inferior position. I too want to remain strong. I think the balance that was set by the SALT II treaty was reasonable. If there was one factor alone that mitigated against voting for that at that time: we were blind.

WALTER MONDALE, former Vice President: I worked on the preparation of SALT II and handled in part the dealing with the Senate at the time. I don't have the slightest doubt in my mind that SALT II was adequately verifiable. Everyone of the Joint Chiefs of Staff, both publicly and privately and repeatedly, testified that it was so.

MacNEIL [voice-over]: One thing all seven agreed on was the necessity to beat Ronald Reagan, and the difficulty of doing that if the Democratic Party did not develop a new vision. No one found that an easy task.

Sen. ERNEST HOLLINGS, (D) South Carolina: And I am disturbed listening here tonight. I hear the same election that we had back in 1980, and the question is not, "are you better off than what you were four years ago?" but "are we as a nation better off?" We Democrats have been appealing to the individual interests at the expense of the common good and resolved ourselves into the party of special interests. Now, I have served for 30 years and I resent it. And I think we need someone who can reach out and give us that sense of purpose, dwelling on our real strength, and that is our unity of purpose.

MacNEIL [voice-over]: It was friendly; they bantered back and forth, and the lightest moment came when it was Cranston's turn to question Hollings.

Sen. CRANSTON: Fritz Hollings, why do you think the press keeps calling this a two-man race between Mondale and Glenn? [applause].

Sen. HOLLINGS: You and I have been losing out and Governor Askew, Gary Hart, all the rest of us, have had a veritable struggle with the press's attitude and approach to the whole thing, that the race is all over, just look at the numbers and money. They've always gone to the mechanism -- who's your pollster, how much money, who's your advance man, and everything else -- and they don't even want to discuss the issues until you're like Mo Udall and you're down and out, and they they say, "Oh you're a pretty good fellow and you had a lot of good wit and humor. Wasn't he nice?"

MacNEIL: The forum followed seven separate appearances by individual candidates under the auspices of the state Democratic Party. That process has helped New York Democrats, who will have the second largest delegation at the convention next summer, to remain uncommitted so far. Jim? Watt: Ready to Quit?

LEHRER: The saga of James Watt was back on the front page of The Washington Post and other newspapers today amidst indications the issue of his staying on as interior secretary really is coming to a head, maybe as soon as this weekened, or maybe by Monday or maybe before Congress comes back from its Columbus Day recess. It's all a bunch of maybe's, frankly, but they add up to a fascinating story of Washington at political play, as Judy Woodruff now explains. Judy?

JUDY WOODRUFF: Almost from his first day in office, Jim, James Watt has been the most controversial member of the Reagan administration. Between his policies at the Interior Department and his occasional observations on people and society, the born-again Christian Cabinet secretary has managed simultaneously to alienate liberals and environmentalists and endear himself to arch-conservatives. But when he made this comment before a Chamber of Commerce a little more than two weeks ago, even many of his fans assumed that it was the last straw.

JAMES WATT, Interior Secretary: I've appointed the Linowes Commission, five members -- three Democrats, two Republicans, every kind of mix you can have. I have a black. I have a woman, two Jews and a cripple. And -- [laughter]

WOODRUFF [voice-over]: The reaction was immediate and it was predictable.

Rep. DAN GLICKMAN, (D) Kansas: Mr. Watt assaults human dignity. Mr. Watt has no shame. Mr. Watt should go.

Rep. JOE MOAKLEY, (D) Massachusetts: James Watt has done what Don Rickles in his best skit could never do -- offend nearly our entire population in just one sentence.

WOODRUFF [voice-over]: Even Republicans joined in the chorus.

Sen. ROBERT DOLE, (R) Kansas: As a Republican, and fairness being the number-one or at least very high on the list of issues in the upcoming campaign, we need to be positive, and we just can't stand about every two or three months Mr. Watt making some comment to offend another 20, 30, 40 million people.

WOODRUFF [voice-over]: At the While House there was no rush to comment, but when he finally did, the President said it was "unfortunate, but not said in the sense of any bigotry or prejudice." News reporters were told Watt would stay, and headlines told that story. It looked at this time last week as if he'd ridden out the storm. The reality then, though, seen in private polling done by Republicans, was that it was just a matter of time before Watt would have to go. Why did the White House let it drag on so long? Primarily because of what had happened to this woman -- Anne Gorsuch Burford. You remember to messy scenario earlier this year in which Reagan aides played a visible role in forcing her to resign as EPA administrator. This time the President's aides didn't want their fingerprints on the deed, and besides, they assumed others would do their dirty work for them. Sure enough, Senate Democrats obliged with a resolution condeming Watt. Republicans picked up the ball from there. Feeling the political heat from their home states and worried about next year's close races, GOP senators starting abandoning Watt in droves.

Sen. SLADE GORTON, (R) Washington: He not only has outlived his usefulness to the Department of the Interior, but he is greatly harming his President, the person he is here to serve, and that the greatest service he could provide for his President as well as for his country is to resign.

Sen. JOHN WARNER, (R) Virginia: And in my judgment the Secretary's standing and his credibility before the Congress has eroded to the point of no return.

WOODRUFF [voice-over]: Ironically at the end, it was Democrats and environmentalists who, while opposed to his policies, said they were sorry to see Watt go, and worried about who would be picked to replace him.

LOUISE DUNLAP, Environmental Policy Center: Our fear is that they will be more sophisticated in choosing someone who does not make inappropriate remarks in public and who is more subtle and skilful in carrying out the agenda.

DOTTY LYNCH, Democratic pollster: You get a visible symbol like a Jim Watt who is so easy to attack from so many different directions that you can have a very easy way of personifying what's wrong with the politics. So to that extent, I'll be a little sad to see Mr. Watt leave.

WOODRUFF [voice-over]: One more little piece of irony: if White House aides wanted to prove to conservatives that it was not they who were responsible for Watt's demise, they didn't quite succeed.

RICHARD VIGUERIE, conservative analyst: Initially the administration looked like they were going to, I think, defend Jim Watt stronger, but as the liberal volume increased, the administration seemed to back away from Jim, and they seemed to leave him slowly twisting in the breeze, as we have seen other administrations do to people who were supportive of the President.

WOODRUFF: We can continue to speculate for days about whether Watt left on his own or was forced out. The fact is, like so many other Washington controversies, once it happened it took on a life of its own, and there was virtually no way to stop it. By the way, Jim, we still don't know when he plans to submit his resignation.

LEHRER: Judy, thank you. And that's what the James Watt story looks like tonight from here, here being Washington. Now we're going to see how it looks from Arizona and New Hampshire, as seen by two conservative newspapermen who work for two conservative newspapers, and who disagree on James Watt. They are Jack Casserly, editorial writer for the Arizona Republic in Phoenix, who is with us tonight from Denver, and Joseph McQuaid, editor of the Manchester, New Hampshire, Union Leader, who is with us from the studios of public station WGBH in Boston. Mr. Casserly, you think Mr. Watt should stay, correct?

JACK CASSERLY: No, I do not think he should stay. The opinion generally among Westerners is it's an open question. Jim Watt, all things considered, has been a plus in terms of policy for the West and for the Reagan administration. I think his personality has been a negative factor, to some extent, and I think a good many Westerners believe that that negative factor has caused some difficulties for the administration. I think Jim Watt right now is about 60-40 in the West. That is to say, about 60% of the people are for him, maybe 40% against.

LEHRER: What's your own view? You just heard what's going on here in Washington. How does that strike you?

Mr. CASSERLY: Well, I think you have to go back to Watt's entire record. Judy Woodruff did that, and I'd like to try it from slightly another angle. When Watt inherited the job, Interior was in an administrative mess. There was an environmental tilt; at least most Westerners felt that way -- strongly pro-environment. When Watt came in there was a furor because he let these people go immediately. But Westerns were positive about that because they felt the tilt was definitely there. I'd say also that Watt defused the Sagebrush Rebellion, and that was very important to Westerners because they felt that they did not have a sufficient voice in Western problems under Cecil Andrus and Jimmy Carter. They were angry because of the so-called hit list on water problems, but you've got to remember that land in the West is extremely emotional, and when Westerners can't have a sufficient voice in their own destiny, when 90% of the land in Nevada and some other states -- 44% in my own state of Arizona -- is held by the federal government, the issue becomes so emotional that it's difficult to perceive things in the East as we do here in the West. I understand --

LEHRER: Let me --

Mr. CASSERLY: Sure.

LEHRER: I want to, speaking of the East, I want to get Mr. McQuaid involved in this. Your newspaper has called for Mr. Watt to resign. Why is that?

JOSEPH McQUAID: For two reasons: insensitivity -- not only insensitivity to the groups involved, but a political naivete that borders on numbness on the part of Mr. Watt to think that the liberal media was going to let this pass after his other problems with the press.

LEHRER: Do you think he is a victim of the liberal media?

Mr. McQUAID: I think to a certain extent he is. I do not think, and I don't think in any of the newspaper stories or television programs that I've watched after his remarks, that anybody has been able to show any trace of bigotry in James Watt's background. But the way he puts words together come out sounding like a very tasteless ethnic joke, and I think insulted a lot of people as a result. But furthermore, I stress again the insensitivity of Mr. Watt to his leader's political problems, and a good soldier he is not unless he steps down right away. Now, I don't know the view in the West, and as I sat here listening to Mr. Casserly, I figured perhaps that Reagan is weighing votes in the West versus votes in the East, but the last time I checked the geography there were more votes in the East, and as hardball politics as this is to say, I think that President Reagan is going to get the votes in the West anyway.

LEHRER: Is that true, Mr. Casserly, that he would not be hurt -- in other words, he, being President Reagan, would not be hurt politically if James Watt now resigns?

Mr. CASSERLY: I do not think that Ronald Reagan will be hurt, but I have to distinguish between personality and policies. In the West, most Westerners are not looking at Jim Watt's personality. We have to live with the policies for years and years that are made at the Interior Department. We feel --

LEHRER: Sure, I understand that, but I'm just trying to get to the policy --

Mr. CASSERLY: Specifically, no. If Ronald Reagan changes, gets a new secretary, it will not hurt him in the West.

LEHRER: Is it a big thing -- Mr. McQuaid, is this a big issue among conservatives? You heard what Richard Viguerie told Judy Woodruff, that he believes that the White House has not played this well and that there could be some kickback on it. But you see that differently, right?

Mr. McQUAID: Well, I think that overall President Reagan's policies in general are becoming a big negative issue with conservatives, ourselves included. We do not like what's been going on in the past couple of years, and perhaps some of the more conservative among us feel that Watt is sort of a last bastion of speaking out on the conservative issues, and it's sad to see him go, but I think that President Reagan can find somebody to articulate the conservative issues better with his foot out of his mouth rather than in.

LEHRER: Thank you. Robin?

MacNEIL: Yes, Mr. Casserly, back to the questions of the issues. You mentioned the environmentalists, who you said had captured the Interior Department before Mr. Watt. Some people, like Russell Peterson, who is now the head of the Audubon Society, say that Democrats and environmentalists would like to keep him there because he's such a good fundraiser for them.He's such a focus for their energy -- a positive focus for their energy. How do you feel about that?

Mr. CASSERLY: Well, I think that's accurate. I think they are being absolutely truthful. I think Jim Watt has generated considerable sympathy and strength for the environmental movement. But unfortunately that was not his purpose, I mean, in the sense of his own political future.

MacNEIL: So do you feel, with your own particular interest, in the handling of land and so on that you've mentioned, that in view of those interests it would be better if he went? In other words, you could get better --

Mr. CASSERLY: I think politically Ronald Reagan has to say to Jim Watt, "Thanks, you did a good job for us." The administration obviously is larger than any Cabinet secretary. Whether -- I think Ronald Reagan is too decent a man to force Watt out. The question now, as I understand it from associates of Jim Watt, is a question of grace. It's a question of dignity. The Westerners are willing to give him that grace. We're willing to give him that dignity. Give him a month.

MacNEIL: Is that how it's being put to him, according to the people you know who are taking to him? It's being put to him that --

Mr. CASSERLY: Ronald Reagan has told Jim Watt it's his own decision. There's no doubt about that. And Jim Watt has said to me and other people that he would never be a burden to the President. At the same time, Watt is a deeply religious and family-type person, and he does not want his name disgraced. Don't be deluded, however, to think that Reagan's policies are going to change, or that Westerners want Ronald Reagan to change his policies. They don't.

MacNEIL: I understand your point. Mr. McQuaid, do you think that, politically speaking, Mr. Reagan could afford to give Mr. Watt a month for grace?

Mr. McQUAID: I think the sooner he cuts his losses, the better. I think it will be a non-issue next year, no matter if he does it now or in another month. I like Ben Bradlee's taste of front page stories: James Watt was what? a four-column headline on the front page today in the Post?

MacNEIL: Where was he in the Manchester Union Leader?

Mr. McQUAID: I don't know if he was there at all today in the Manchester Union Leader. We had more local fish to fry, I think. It sounds like Mr. Casserly's talking about death with dignity for Mr. Watt. I think a point that's being missed by a lot of the media in this story -- and naturally because it's from them -- is that there seems to be a double standard involved with Mr. Watt's remarks, as opposed to remarks from others in government and in the media.

MacNEIL: I see. Well, I'd like to thank you for joining us in Boston, a way from Manchester, New Hampshire, and Mr. Casserly, in Denver from Phoenix. And back to you, Jim.

LEHRER: Speaking of 1984 and President Reagan, there were confirmed reports today that Mr. Reagan has given his okay to form a re-election committee. The committee would go into business officially on October 17, and its major initial task would be to raise money. White House aides emphasized that it does not definitely mean Mr. Reagan will run again, but the committee will be there if and when he does so decide. And we'll be back in a moment.

[Video postcard -- Minneapolis, Minnesota] Begin's Life and Times

MacNEIL: On Monday, Israel's new prime minister apparent, Yitzhak Shamir, will present his new coalition government to the Parliament in Jerusalem. If the Knesset approves, Shamir will immediately be sworn in as prime minister, and thus will end a dramatic period in Israel's short history -- the era of Menachem Begin, who resigns because of ailing health and faltering spirits. Tonight we conclude with an assessment of Begin, the man and his leadership, from people who worked with him and knew him well. Charlayne Hunter-Gault has her report.

MENACHEM BEGIN, former prime minister of Israel, [June 7, 1982; United Jewish Appeal dinner in New York]: We always remember a million and half a million of Jewish children whom nobody defended, torn away from the arms of their mothers and brought to a wanton death.That will never happen again.

SOL LINOWITZ, former Special Ambassador to the Middle East: And he carries with him, therefore, this fear, this insecurity of yesterday and this deep-inside commitment that never again shall this happen. That more than anything else seems to dominate his thinking and was responsible for his policies and for the way he conducted himself in office.

CHARLAYNE HUNTER-GAULT [voice-over]: It was the ghost of the Holocaust and the elusiveness of peace with his Arab neighbors that consumed Menachem Begin for more than five decades. Now to many it seems that the man who once fought all odds appears to have simply run out of fight. Whether or not that is actually the case, Begin's decision to stop down comes in the midst of still another battle, the so-far futile search for peace in Lebanon.

Amos Perlmutter, a close associate of Begin's and one of his American biographers, offers one of the more critical assessments.

AMOS PERLMUTTER, Begin biographer: There is a man whose political career spans over five decades of Zionist and Israeli history, who for four decades was in the margins of politics, and in the last decade came, united the nation behind a peace with Egypt and ends a career in a fiasco in Lebanon, an economic situation which is intolerable -- 150% inflation -- a nation more divided than ever, and he in effect has deserted the nation.

HUNTER-GAULT [voice-over]: That assessment may not be shared by everyone, but there is general agreement that Begin is battle weary. Israel's invasion of Lebanon to drive out the Palestine Liberation Organization has vexed Begin for the past year. In a recent interview, his secretary says Begin feels betrayed by both his own advisers, who promised a swift campaign, and by the Lebanese Christian government, which he expected would sign a peace treaty with Israel.

EDGAR BRONFMAN, World Jewish Congress: And it became quite clear that somebody had miscalculated. And I think I could see it in his eyes that somehow 517 Israeli boys were killed, well over 2,000 were wounded -- and some of them very seriously, a lot of them very seriously -- and, in a sense, for not very much.

HUNTER-GAULT [voice-over]: When the PLO army was driven out of Lebanon at the end of last summer, Lebanese Christians moved into the refugee camp. There was a slaughter of hundreds of the civilians left behind at the Sabra and Shatila camps. An impartial Israeli commission said the Begin government was indirectly responsible for the messacre.

Mr. BRONFMAN: There's no way that Prime Minister Begin, in my view, was responsible for what happened. But when you invade a territory and you're occupying a territory, you just automatically have to take responsibility when something like that takes place, and this clearly could have been prevented.

HUNTER-GAULT [voice-over]: Begin's grief over Lebanon was compounded by his grief over the death last summer of his wife, Aliza. She had been a source of strength and counsel for 43 years, many of them years of suffering and danger. Some say her death has added to his weariness.

Mr. BRONFMAN: They were a real team. It's almost like a swan loses its mate, it's never the same again.

HUNTER-GAULT [voice-over]: Begin's generation, with its strong-willed defiance, brought Israel into being.Begin says he has survived 10 wars, two world wars, one Soviet concentration camp, five years in the underground and 26 years as an opposition leader in the Jewish Parliament.

Mr. BRONFMAN: Nobody foresaw that Prime Minister Begin would have, after all those years in opposition, would be the one to sit down at Camp David and finally sign a peace treaty in Washington with Sadat.

HUNTER-GAULT [voice-over]: The Camp David agreement was the high point of Begin's stewardship of Israel, but it had not been an easy negotiation, as Begin teased then-President Carter.

Mr. BEGIN, [September 18, 1978]: And the President worked. As far as modern historic experience is concerned, I think that he worked harder than our forefathers did in Egypt building the pyramids.

HAROLD SAUNDERS, former Assistant Secretary of State: I remember President Carter at Camp David at one point saying, "I don't know quite how to wrap this up. I don't know how we get out of here. Every problem I solve, Begin has three more."

HUNTER-GAULT [voice-over]: Harold Saunders was an assistant secretary of state at the time. He recalls Begin's penchant for detail.

Mr. SAUNDERS: He had his larger purposes; he held to them, but he did so by making every issue along the road the most important issue in the negotiation, no matter how small. So that his opponents, or his negotiating partners, if you will, were really exhausted at the end of the process.

HUNTER-GAULT [voice-over]: Sol Linowitz conducted the followup talks with Begin and Sadat.

Mr. LINOWITZ: I remember I once said to him, "You know, when I deal with Sadat, Sadat has a way of saying no and make it sound like yes, and you have a way of saying yes and make it sound like no."

HUNTER-GAULT [voice-over]: Begin honored his commitment to return the Sinai Peninsula to Egypt, even removing Israeli settlers there by force when necessary. But he would not cede back the West Bank, captured from Jordan, claiming Israel's biblical right to the land he calls Judea and Samaria. Israeli settlements there grew, despite the opposition of the United States and the Arab nations in the region. And it is the question of what to do with the Arabs of the West Bank that has become Israel's biggest riddle.

Mr. SAUNDERS: If Israel ends up trying to absorb a 40% Arab minority and if they give them full political rights, then it changes the character of the Jewish state forever. If they don't, and Israel has to control or repress or expel those people, then there is a major human rights violation on the Israeli record.

Mr. PERLMUTTER: It's important to Israel to live with the Palestinians, maybe not with the PLO, but with the Palestinians of the West Bank. And you cannot close the option door and settle it to a point from which there is no return. He has created conditions of no return. You need a mighty leader to change it.

HUNTER-GAULT [voice-over]: And the matter of the West Bank is one of the few issues on which American Jews have publicly disagreed with the Begin government.

Mr. BRONFMAN: I think that basically American Jews feel that whatever the government of Israel -- and it's freely elected government -- decides to do, it will do and should do. The thing that I don't know, and I don't think anybody knows, is how many Jews were turned off by this sort of passionate dedication to annexation and didn't say anything, just kind of opted out.

HUNTER-GAULT [voice-over]: Rabbi Alexander Schindler, a prominent American religious leader, says Begin's leadership has also brought a measureable change in attitude toward the West Bank among American Jews.

ALEXANDER SCHINDLER, Union of American Hebrew Congregations: There's been a decided shift to the right in the American Jewish community. A recent study, concluded only a week or two ago, shows that a majority of American Jews now feel that it would be the better part of wisdom for Israel to retain these territories, that it has every right to retain them. This is something which did not obtain five or six years ago.

HUNTER-GAULT [voice-over]: Rabbi Schindler says Begin's tenure has had a decided impact on world Jewry, as well as Israel itself and on U.S.-Israeli relations.No one expects major changes in the new government of Yitzhak Shamir. One says it will be Beginism without Begin: Begin's policies without, perhaps, his pragmatism. Almost all agree that Begin has left an indelible legacy for his successor.

Rabbi SCHINDLER: -- one of the strong leaders of the Jewish people, one of the strong statesmen of Israel; moreover, a statesman who had the courage to take enormous risks for peace.

Mr. BRONFMAN: -- the single most powerful prime minister in terms of the amount of authority that he had.

Mr. PERLMUTTER: -- a leader of men, heroic, courageous, historical vision, but without political vision.

Mr. LINOWITZ: This man, whether you agree with him or not, stood up resolutely, asserted what the rights were of his country and his determination to preserve those rights, and the world listened.

LEHRER: In the category we call breaking news, this Friday did not produce that much. The economy was the main exception, as the unemployment figures for September showed a decrease down to 9.3%. Eastern Airlines and its unions took a significant step toward heading off bankruptcy, and President Reagan and The Business Council said the economy looks good, but the Council said federal budget and foreign trade deficits indicate possibleprolems ahead. And there are growing signs, but still nothing definite, that James Watt may soon resign as interior secretary. Also, in a late-developing story involving the embattled Legal Services Corporation, President Reagan said today he was sending a slate of candidates for the corporation's board to the Senate. A spokesman said the nominees are in tune with Mr. Reagan's view that the corporation should limit its mission. Since January, the Legal Services group has operated with vacancies at the top. The Senate had refused to approve other board members picked by the President. Good night, Robin.

MacNEIL: Good night, Jim. That's our News Hour for tonight. We'll see you on Monday night. Have a nice weekend. Good night.