The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MS. WOODRUFF: And I'm Judy Woodruff in Washington. After our summary of the news this Wednesday, we have a Newsmaker interview with Treasury Sec. Brady on the just concluded summit of the economic super powers. Next, a documentary report on a controversial jet fighter sale to Saudi Arabia worth billions of dollars and thousands of U.S. jobs, then Spencer Michels reports on the I.O.U.'s California is being forced to issue. And finally, another in Charlayne Hunter-Gault's conversations about race. NEWS SUMMARY

MR. MacNeil: The leaders of the world's seven largest industrial nations today wrapped up their three-day summit in Munich. They did not agree on removing obstacles to a new world trade agreement, but they did press ahead with a $24 billion aid package for Russia. Nik Gowing of Britain's Channel 4 News reports from Munich.

MR. GOWING: The leaders had spent their final session approving a sweeping economic declaration which included clear guidelines for what the West can and cannot do now for Russia, the former Soviet states and Central Europe, in other words, how far Boris Yeltsin could expect them to help Russia out of its economic catastrophe, and Moscow has to understand the limits.

PRES. BUSH: I don't know that there's enough money in the world to instantly solve the problem of the Russian economy.

MR. GOWING: The G-7's message, as Mr. Yeltsin arrived to brush shoulders with them, there is cooperation; there will be cooperation; but not at any price. It will be conditional. If Russia meets IMF targets for tough, painful economic reforms, then the West will respond with state releases of the $24 billion package already agreed, Western help for Russian self-help. So this afternoon, the nations who remembered President Gorbachev's appearance last year as woolly, rambling and too diplomatic sat down to quiz Yeltsin on where his reforms were going, how hyper inflation would be suppressed, and more significantly, how he would cope with the risks of failure and a social backlash which might unseat him.

MR. MacNeil: Yeltsin did not get his main request, a two-year moratorium on repayment of the estimated $70 billion former Soviet foreign debt. Before leaving, he made a last minute pitch to the summit leaders offering to trade Russian property, energy resources, and land for elimination of the debt. He said he was optimistic that negotiations on the issue later this year would be successful. Judy.

MS. WOODRUFF: The Conference on Security & Cooperation in Europe today suspended Yugoslavia from the 52-nation group over the fighting in the former Yugoslav republic of Bosnia. The suspension will be permanent if Yugoslavia fails to help stop Bosnia's civil war within 100 days. President Bush and other heads of state have begun arriving in Helsinki, Finland, for the two-day summit portion of the conference meeting. Bosnia and other conflicts in Europe and the former Soviet Union will be at the top of their agenda. In Bosnia, heavy fighting continued today. Artillery battles raged across the capital of Sarajevo. A Bosnian news agency said two people were killed and twenty-nine wounded by Serbian shells fired on a suburb near the city's airport. Canadian leaders have reached a breakthrough agreement in the country's constitutional crisis. The heads of the nine English speaking provinces struck a deal last night which accommodates Quebec's demands for more autonomy. The French speaking province had threatened to secede if it was not recognized as a distinct society in the Constitution. Among other things, the new draft constitution transforms the Canadian Senate from an appointed body to a more powerful elected one, with equal representation for each province. Canada's parliament will consider ratification of the draft at a special session later this month.

MR. MacNeil: Paul Tsongas today formally endorsed his formal rival, Bill Clinton, to be the Democratic Presidential nominee. He said Clinton was the best choice to improve education, protect the environment, and safeguard a woman's right to abortion. He was asked at a news conference in Boston how he could reconcile his differences with Clinton over economic policy.

PAUL TSONGAS, Former Democratic Presidential Candidate: What I did was I sat down to look. Here is George Bush. He cannot be re- elected. I spent the last year and a half trying to alert this country to the threat to it. And four more years of George Bush is not acceptable, to my mind. And when you look at the areas of common agreement, choice, the environment, education, et cetera, those count. Now, yeah, are we going to squabble over economics? We sure are. And I will take my case around the country for the next several years. But that doesn't mean that that alone says these things don't count.

MR. MacNeil: Tsongas said he will not have his name placed in nomination at the Democratic National Convention next week and he has released the delegates pledged to him. Also today, Bill Clinton picked up the endorsement of the National Education Association, the largest -- the nation's largest teachers' union. He received 88 percent of the vote, the highest percentage ever given to a candidate by NEA members.

MS. WOODRUFF: Astronauts aboard the space shuttle Columbia will spend an extra day in space, extending their record setting mission to 14 days. NASA officials postponed today's scheduled landing because of rain at Edwards Air Force Base in California. Columbia will try again tomorrow morning. It has enough food and fuel on board to last until Saturday.

MR. MacNeil: More than half the nation's cities expect a budget shortfall this year, despite having raised taxes and cut services. The National League of Cities released its annual survey of urban fiscal conditions today. It showed 72 percent of the cities responding had either raised taxes and fees, or imposed new ones. The organization's executive director told a Washington news conference that federally mandated programs were as much of a burden on city budgets as the economic recession.

MS. WOODRUFF: The House of Representatives today passed a new trade bill. The vote was 280 to 145. The bill would force the administration to retaliate against countries imposing major barriers to U.S. exports. It would make the now voluntary quotas on car imports from Japan. And it would require Japanese cars assembled in the U.S. to contain at least 70 percent U.S.-made parts. Republican leaders oppose the bill, calling it "Japan bashing." The Senate has yet to take up its version of the legislation. That's our News Summary. Now it's on to a Newsmaker interview with the Treasury Secretary, fighter sales to Saudi Arabia, California's I.O.U.'s and a conversation about getting along. NEWSMAKER

MR. MacNeil: As we reported in Munich today, the leaders of the world's seven richest democracies wrapped up their annual economic summit. The world leaders grappled with a global economic slump and a trade deadlock. Their three-day meeting produced agreement on several broad principles, but little else. The leaders pledged to work for policies to create jobs and economic growth without spurring inflation; to cut government budget deficits in order to encourage lower interest rates. On the critical issue of breaking the deadlock on the so-called "Uruguay Round" of GATT trade talks, the leaders said they were convinced a balanced agreement is within rich. At a press conference today, President Bush talked about the six-year-old negotiations designed to revise the rules which govern international trade.

PRES. BUSH: We had a frank exchange on views, of views on trade. We all recognize that completing the Uruguay Round will give a major boost to world growth by expanding trade for all countries, developed as well as developing. And I've worked hard over the past year to identify constructive solutions to tough issues. It's natural that as we get close to the end, the going gets tougher. But I will persevere because the benefits of success are tremendous. And all summit leaders expect that an agreement can be reached by the end of the year. Now, one thing stands out clearly from our discussion. The triumph of the ideals of democracy and free markets throughout the world means that distinctions between domestic and international economic policies are increasingly meaningless. This is particularly true for the U.S., where over 70 percent of our growth in the last five years has come from exports. Over 7 million American jobs are related to exports and clearly, America's well-being is tied closely to the health of the world economy.

MR. MacNeil: Treasury Secretary Nicholas Brady was with President Bush at the Munich summit and I talked with him late this afternoon. Sec. Brady, thank you for joining us.

NICHOLAS BRADY, Treasury Secretary: You bet, Robin.

MR. MacNeil: Is President Bush in his comments suggesting that after the French referendum on Europe in September and the American election that a deal on GATT can be struck?

SEC. BRADY: Well, what he said was he came here to Munich ready to deal. And that would include tomorrow, a week from now, or after the French referendum, or any time that the negotiations could proceed. He's ready to go.

MR. MacNeil: Do you believe that it will be easier for the French to make any further concessions after the European referendum in September?

SEC. BRADY: Well, I would certainly think that that would have a positive bearing on the matter, Robin. It obviously has slowed it down now. Their minds aren't on it. They're probably cautious on the matter. So I assume if they got a positive vote, which they expect they will get, that that will make a difference, and we can move forward. Now we've got one part, as you know. We've got the common agriculture policy settled, but we're not making enough progress on tariffs and export subsidies.

MR. MacNeil: The EC say they're awaiting some American move to meet the concessions that they've made in reducing some of the, some of the tariffs. Is the U.S. going to make no move to make a compromise?

SEC. BRADY: I think if the President saw real light in the eyes on the EC side, then he'd make a move. But certainly that wasn't the case here. As I said, he came ready to make a move, if you can make a move at a two-day conference. So it -- I think that the truth of the matter is it'll move forward when we get the idea that it's possible for the Frenchto join the conversations in full force.

MR. MacNeil: Yeah. So you didn't see the light in their eyes this time you're saying?

SEC. BRADY: I don't think it was there. I think everybody agrees on that.

MR. MacNeil: What is the specific issue now, if you can put it in simple terms, that is holding up a GATT agreement?

SEC. BRADY: Well, obviously, the first part of it is trying to finalize the negotiation on agricultural policies because that's the most difficult thing to do. If you get that done, then you start to hammer out the details. Right now, we've got an egg and we need an omelet. We have one part of it and we need to get the other two parts flushed in. The ball's in the EC's court. I think they know it, although the press may not come out that way. And the President has a genuine desire to move. In fact, he was the guy that really pressed the matter at this conference.

MR. MacNeil: If the GATT agreement is so crucial -- and the President said today again it was because so many benefits are supposed to flow from it and exports are so important to the U.S. economy now -- is it smart to make agriculture such a -- the kind of Holy Grail of this thing if it actually prevents agreement?

SEC. BRADY: Well, I mean, you really -- it's such an important part of the total financial benefit that would derive out of an agreement, you've got to crack that problem first. It just simply - - I mean, the rest of it will fall into place, not overnight, but those things will become the other matters, intellectual property and the like, will become easier to do if we get the concessions on agriculture.

MR. MacNeil: Crack that to the point of making the Europeans actually back down and do what the U.S. actually wants, or crack it by meeting them somewhere in the middle?

SEC. BRADY: I would say the latter. The President is willing to compromise. He said so. He said he came to Munich ready to deal and he made that very clear in the beginning. As you say, the Uruguay Round is enormously important because it's the -- it replicates the way the world is going to go round. It's going to be the order of business in the '90s, trade between nations, exports fueling jobs, and providing investment. Everybody knows that. It's kind of sad that more progress wasn't made. I know he felt that it was a disappointment to him.

MR. MacNeil: Turning more generally to the G-7 summit, Mr. Bush said today the U.S. is the sole super power, but can't dictate. In fact, doesn't the $400 billion budget deficit greatly reduce American influence today in these gatherings?

SEC. BRADY: No. I don't think so at a all. Really, people look to the United States. I mean, the idea that the United States is some kind of an economic back water just is totally off course. Discussions take place, but there isn't any question when it comes right down to getting the job done that the United States is the country that can do it. The President, because of his style, doesn't choose to flaunt that. But it's a fact of life.

MR. MacNeil: Well, how did that fact of life show itself at the summit? I mean, where did American power or whatever have -- clout have particular influence? Where did it move things?

SEC. BRADY: Well, I would say, first of all, on the matter of world growth, which the President has been extraordinarily strong on, because we have to have growing nations with whom we can join in export trade, this summit, kind of an arcane point, made a big stride forward in putting forward the conclusion that we have to have growth in order to make the world trading system and the world economic system work. And there was before in previous summits, there was a lot of "yes, but." Yes, they'd like growth, but you had to do this, you had to do that. This time there was none of that. For anybody that wants to take the time to read this communique, I don't suggest it, but anybody that wants to do it, you'll see a big difference if you compare it with other communiques in the past.

MR. MacNeil: But, for instance, the Germans haven't agreed, have they, significantly to lower their interest rates, which would stimulate growth, because they have such extraordinary expenses in rebuilding the former East Germany?

SEC. BRADY: That's correct, but we have now the three most important industrial countries headed in the same direction. The United States is in recovery, not as strong as people would want, but a 2.7 percent growth in the first quarter of this year. Lowering interest rates, the Fed chopped the discount rate last week as well. Japan all but committed to a budget increase in the second half of this year to fuel their own domestic economy, and Germany recognizing that you can't lower interest rates until you make sufficient progress on their own budget have limited public expenditures, governmental expenditures, 2 1/2 percent over the next five years. It's thought that that will bring their deficit into a more needy balance, and that will provide the basis for a lowering of rates by the Bundes bank. The Bundes bank won't say that, but the whole, the growth in Europe is now being stopped by high German interest rates and with this move by the German, by Chancellor Kohl and Finance Minister Vigel to attack their own budget, I think you'll see interest rates coming down when inflation subsides in the next year.

MR. MacNeil: You mentioned the 2.7 percent growth in the U.S. economy in the first quarter. Were you able to tell your G-7 colleagues that growth will be comparable or greater or less in the second quarter?

SEC. BRADY: I told them that it was idle to speculate what the second quarter would be. There is no recovery -- I think I'm accurate -- since the Second World War that has gone straight up. We're getting a little revisionism in economic history by those who say you've got to have one quarter following on the other. That's not the way it does happen, nor is it the way it did happen in previous recoveries. What I've said, I don't expect the second quarter to be greater than the first quarter. It is going to be growth somewhere in the 2 percent area, I would say. It could be more, could be a little less, but growth, indeed. And I expect growth through the year. And the real, the real important point here, Robin, is that '93 and '94, in my view, and I've been looking at economic statistics for a long time, are going to be banner years for America, the United States.

MR. MacNeil: The President expressed some frustration today that a majority of Americans believe the economy is getting worse when he sees it, and I guess you see it, getting better. Don't you think -- or I wonder whether he doesn't think that American voters are smart enough to know just what they see around them when the economy's getting better?

SEC. BRADY: Well, I think it's that plus it's also we have gone through in the United States a restructuring. Some of our major industries that are heavily advertised, like General Motors, AT&T, Ford, IBM, have all had cutbacks. And that makes people think what's going on here. Will school keep? How will I make out? Will I have a job? Will my neighbor have a job? And what we're seeing here is a -- inside the United States -- a rationalizing of our cost structure, cutting out overhead and unnecessary expenses to put our industry on a similar par with world costs. We've done that. And now, because we are winning the battle in the export markets, our exports have increased three and four times as much as Japan and Germany, people have to get it in their head that that's where the growth in jobs are going to come from. That's a hard concept. It's an overseas concept. It's something that's hard to focus in on. But that's what's going to make the difference. This one thing -- one thing, Robin. Let me just say something really unbelievably significant happened here. I talked to the people at BMW who are building a plant in South Carolina. It's a fine company, a foreign car company. From that plant in South Carolina, they are going to supply not only Germany, but they're going to supply the Far East. Think of it -- a foreign company putting a plant inside the United States, because our cost structure is very, very competitive so that they can ship cars to the Far East. That's the world of '93 and '94.

MR. MacNeil: Okay.

SEC. BRADY: We're right at the center of it.

MR. MacNeil: Well, Mr. Brady, thank you very much for joining us. We have to end it there.

SEC. BRADY: Thank you, Robin.

MS. WOODRUFF: Still ahead, selling arms to Saudi Arabia, California promises, and a "getting along" conversation. FOCUS - HARD SELL?

MS. WOODRUFF: Now, we get a different perspective on the connection between jobs and politics at home and abroad. Thousands of jobs and several billion dollars are at stake in the proposed sell of F-15 fighter bombers to Saudi Arabia. Israel usually objects to such arms sales, although its opposition may soften under the new Labor government of Yitzhak Rabin. But one of Israel's supporters in Congress, California Democratic Howard Burman, today denounced McDonnell Douglas, the U.S. aircraft manufacturer, for pushing the deal. He said it violates the Bush administration's policy against arms proliferation in the Middle East. Time Magazine's National Security Correspondent Bruce Van Voorst reports on the F-15 controversy.

MR. VAN VOORST: The McDonnell Douglas F-15 Eagle is the best fighter bomber jet aircraft in the world. During the Gulf War, the F-15 accounted for 36 of the 38 Iraqi aircraft shot down. The F-15 played a critical role in attacking ground targets around Baghdad and in destroying Scud missile launchers. Now, the F-15 has become the focus of a bitter domestic and international dispute. Saudi Arabia, whose 90 F-15's played an important role in the Gulf War, wants to purchase another 72 in a cash deal estimated to be worth $13 billion. Opponents argue that the sale contradicts the administration's policy of limiting arms to the volatile Middle East, and that it threatens Israel's security. Supporters respond that a close U.S.-Saudi relationship contributes to stability in the area and that if the U.S. refuses to sell the F-15's the Saudis will buy the British-made Tornado aircraft as they did once before. But here at McDonnell Douglas in St. Louis, the argument boils down to one thing, jobs. If the Saudi sale falls through, 40,000 workers here and across the nation will be fired. What the workers know in this production line is that time is running out.

CHRISTOPHER SMITH, McDonnell Douglas Employee: For me, it's job or no job. It could very well mean job or no job for my whole family. If Mac has to shut down this line, it's going to be company-wide. My wife is a software engineer here. How far the cutsMNEIL are going to go, who knows?

CONNIE BRANSON, McDonnell Douglas Employee: I don't have any proper schooling for a better job. I would, more or less, have to go back to being a gas station attendant or checker at one of the grocery food stores or a waitress somewhere.

MR. VAN VOORST: How would that salary compare to what you're earning?

CONNIE BRANSON: A third.

TERRY ZIRKELBAUM, McDonnell Douglas Employee: It affects everyone in the whole area. There's all the car dealers and all the people that build the cars and clothes and everything will go down if you take out that many people out of the income when, you know, middle to moderate income, you know, range, you can't go buy nothing, they start losing their jobs also.

MR. VAN VOORST: These are the voices and the concerns of McDonnell Douglas workers. The aircraft manufacturer is Missouri's biggest single employer. Robert Trice, vice president for business development at McDonnell Douglas, lays out what the sale means to the company. foreign debt. Before leaving, he made a last minute pitch to the summit leaders offering to trade Russian property, energy resources, and land for elimination of the debt. He said he was optimistic that negotiations on the issue later this year would be successful. Judy.

MS. WOODRUFF: The Conference on Security & Cooperation in Europe today suspended Yugoslavia from the 52-nation group over the fighting in the former Yugoslav republic of Bosnia. The suspension will be permanent if Yugoslavia fails to help stop Bosnia's civil war within 100 days. President Bush and other heads of state have begun arriving in Helsinki, Finland, for the two-day summit portion of the conference meeting. Bosnia and other conflicts in Europe and the former Soviet Union will be at the top of their agenda. In Bosnia, heavy fighting continued today. Artillery battles raged across the capital of Sarajevo. A Bosnian news agency said two people were killed and twenty-nine wounded by Serbian shells fired on a suburb near the city's airport. Canadian leaders have reached a breakthrough agreement in the country's constitutional crisis. The heads of the nine English speaking provinces struck a deal last night which accommodates Quebec's demands for more autonomy. The French speaking province had threatened to secede if it was not recognized as a distinct society in the Constitution. Among other things, the new draft constitution transforms the Canadian Senate from an appointed body to a more powerful elected one, with equal representation for each province. Canada's parliament will consider ratification of the draft at a special session later this month.

MR. MacNeil: Paul Tsongas today formally endorsed his formal rival, Bill Clinton, to be the Democratic Presidential nominee. He said Clinton was the best choice to improve education, protect the environment, and safeguard a woman's right to abortion. He was asked at a news conference in Boston how he could reconcile his differences with Clinton over economic policy.

PAUL TSONGAS, Former Democratic Presidential Candidate: What I did was I sat down to look. Here is George Bush. He cannot be re- elected. I spent the last year and a half trying to alert this country to the threat to it. And four more years of George Bush is not acceptable, to my mind. And when you look at the areas of common agreement, choice, the environment, education, et cetera, those count. Now, yeah, are we going to squabble over economics? We sure are. And I will take my case around the country for the next several years. But that doesn't mean that that alone says these things don't count.

MR. MacNeil: Tsongas said he will not have his name placed in nomination at the Democratic National Convention next week and he has released the delegates pledged to him. Also today, Bill Clinton picked up the endorsement of the National Education Association, the largest -- the nation's largest teachers' union. He received 88 percent of the vote, the highest percentage ever given to a candidate by NEA members.

MS. WOODRUFF: Astronauts aboard the space shuttle Columbia will spend an extra day in space, extending their record setting mission to 14 days. NASA officials postponed today's scheduled landing because of rain at Edwards Air Force Base in California. Columbia will try again tomorrow morning. It has enough food and fuel on board to last until Saturday.

MR. MacNeil: More than half the nation's cities expect a budget shortfall this year, despite having raised taxes and cut services. The National League of Cities released its annual survey of urban fiscal conditions today. It showed 72 percent of the cities responding had either raised taxes and fees, or imposed new ones. The organization's executive director told a Washington news conference that federally mandated programs were as much of a burden on city budgets as the economic recession.

MS. WOODRUFF: The House of Representatives today passed a new trade bill. The vote was 280 to 145. The bill would force the administration to retaliate against countries imposing major barriers to U.S. exports. It would make the now voluntary quotas on car imports from Japan. And it would require Japanese cars assembled in the U.S. to contain at least 70 percent U.S.-made parts. Republican leaders oppose the bill, calling it "Japan bashing." The Senate has yet to take up its version of the legislation. That's our News Summary. Now it's on to a Newsmaker interview with the Treasury Secretary, fighter sales to Saudi Arabia, California's I.O.U.'s and a conversation about getting along. NEWSMAKER

MR. MacNeil: As we reported in Munich today, the leaders of the world's seven richest democracies wrapped up their annual economic summit. The world leaders grappled with a global economic slump and a trade deadlock. Their three-day meeting produced agreement on several broad principles, but little else. The leaders pledged to work for policies to create jobs and economic growth without spurring inflation; to cut government budget deficits in order to encourage lower interest rates. On the critical issue of breaking the deadlock on the so-called "Uruguay Round" of GATT trade talks, the leaders said they were convinced a balanced agreement is within rich. At a press conference today, President Bush talked about the six-year-old negotiations designed to revise the rules which govern international trade.

PRES. BUSH: We had a frank exchange on views, of views on trade. We all recognize that completing the Uruguay Round will give a major boost to world growth by expanding trade for all countries, developed as well as developing. And I've worked hard over the past year to identify constructive solutions to tough issues. It's natural that as we get close to the end, the going gets tougher. But I will persevere because the benefits of success are tremendous. And all summit leaders expect that an agreement can be reached by the end of the year. Now, one thing stands out clearly from our discussion. The triumph of the ideals of democracy and free markets throughout the world means that distinctions between domestic and international economic policies are increasingly meaningless. This is particularly true for the U.S., where over 70 percent of our growth in the last five years has come from exports. Over 7 million American jobs are related to exports and clearly, America's well-being is tied closely to the health of the world economy.

MR. MacNeil: Treasury Secretary Nicholas Brady was with President Bush at the Munich summit and I talked with him late this afternoon. Sec. Brady, thank you for joining us.

NICHOLAS BRADY, Treasury Secretary: You bet, Robin.

MR. MacNeil: Is President Bush in his comments suggesting that after the French referendum on Europe in September and the American election that a deal on GATT can be struck?

SEC. BRADY: Well, what he said was he came here to Munich ready to deal. And that would include tomorrow, a week from now, or after the French referendum, or any time that the negotiations could proceed. He's ready to go.

MR. MacNeil: Do you believe that it will be easier for the French to make any further concessions after the European referendum in September?

SEC. BRADY: Well, I would certainly think that that would have a positive bearing on the matter, Robin. It obviously has slowed it down now. Their minds aren't on it. They're probably cautious on the matter. So I assume if they got a positive vote, which they expect they will get, that that will make a difference, and we can move forward. Now we've got one part, as you know. We've got the common agriculture policy settled, but we're not making enough progress on tariffs and export subsidies.

MR. MacNeil: The EC say they're awaiting some American move to meet the concessions that they've made in reducing some of the, some of the tariffs. Is the U.S. going to make no move to make a compromise?

SEC. BRADY: I think if the President saw real light in the eyes on the EC side, then he'd make a move. But certainly that wasn't the case here. As I said, he came ready to make a move, if you can make a move at a two-day conference. So it -- I think that the truth of the matter is it'll move forward when we get the idea that it's possible for the French to join the conversations in full force.

MR. MacNeil: Yeah. So you didn't see the light in their eyes this time you're saying?

SEC. BRADY: I don't think it was there. I think everybody agrees on that.

MR. MacNeil: What is the specific issue now, if you can put it in simple terms, that is holding up a GATT agreement?

SEC. BRADY: Well, obviously, the first part of it is trying to finalize the negotiation on agricultural policies because that's the most difficult thing to do. If you get that done, then you start to hammer out the details. Right now, we've got an egg and we need an omelet. We have one part of it and we need to get the other two parts flushed in. The ball's in the EC's court. I think they know it, although the press may not come out that way. And the President has a genuine desire to move. In fact, he was the guy that really pressed the matter at this conference.

MR. MacNeil: If the GATT agreement is so crucial -- and the President said today again it was because so many benefits are supposed to flow from it and exports are so important to the U.S. economy now -- is it smart to make agriculture such a -- the kind of Holy Grail of this thing if it actually prevents agreement?

SEC. BRADY: Well, I mean, you really -- it's such an important part of the total financial benefit that would derive out of an agreement, you've got to crack that problem first. It just simply - - I mean, the rest of it will fall into place, not overnight, but those things will become the other matters, intellectual property and the like, will become easier to do if we get the concessions on agriculture.

MR. MacNeil: Crack that to the point of making the Europeans actually back down and do what the U.S. actually wants, or crack it by meeting them somewhere in the middle?

SEC. BRADY: I would say the latter. The President is willing to compromise. He said so. He said he came to Munich ready to deal and he made that very clear in the beginning. As you say, the Uruguay Round is enormously important because it's the -- it replicates the way the world is going to go round. It's going to be the order of business in the '90s, trade between nations, exports fueling jobs, and providing investment. Everybody knows that. It's kind of sad that more progress wasn't made. I know he felt that it was a disappointment to him.

MR. MacNeil: Turning more generally to the G-7 summit, Mr. Bush said today the U.S. is the sole super power, but can't dictate. In fact, doesn't the $400 billion budget deficit greatly reduce American influence today in these gatherings?

SEC. BRADY: No. I don't think so at a all. Really, people look to the United States. I mean, the idea that the United States is some kind of an economic back water just is totally off course. Discussions take place, but there isn't any question when it comes right down to getting the job done that the United States is the country that can do it. The President, because of his style, doesn't choose to flaunt that. But it's a fact of life.

MR. MacNeil: Well, how did that fact of life show itself at the summit? I mean, where did American power or whatever have -- clout have particular influence? Where did it move things?

SEC. BRADY: Well, I would say, first of all, on the matter of world growth, which the President has been extraordinarily strong on, because we have to have growing nations with whom we can join in export trade, this summit, kind of an arcane point, made a big stride forward in putting forward the conclusion that we have to have growth in order to make the world trading system and the world economic system work. And there was before in previous summits, there was a lot of "yes, but." Yes, they'd like growth, but you had to do this, you had to do that. This time there was none of that. For anybody that wants to take the time to read this communique, I don't suggest it, but anybody that wants to do it, you'll see a big difference if you compare it with other communiques in the past.

MR. MacNeil: But, for instance, the Germans haven't agreed, have they, significantly to lower their interest rates, which would stimulate growth, because they have such extraordinary expenses in rebuilding the former East Germany?

SEC. BRADY: That's correct, but we have now the three most important industrial countries headed in the same direction. The United States is in recovery, not as strong as people would want, but a 2.7 percent growth in the first quarter of this year. Lowering interest rates, the Fed chopped the discount rate last week as well. Japan all but committed to a budget increase in the second half of this year to fuel their own domestic economy, and Germany recognizing that you can't lower interest rates until you make sufficient progress on their own budget have limited public expenditures, governmental expenditures, 2 1/2 percent over the next five years. It's thought that that will bring their deficit into a more needy balance, and that will provide the basis for a lowering of rates by the Bundes bank. The Bundes bank won't say that, but the whole, the growth in Europe is now being stopped by high German interest rates and with this move by the German, by Chancellor Kohl and Finance Minister Vigel to attack their own budget, I think you'll see interest rates coming down when inflation subsides in the next year.

MR. MacNeil: You mentioned the 2.7 percent growth in the U.S. economy in the first quarter. Were you able to tell your G-7 colleagues that growth will be comparable or greater or less in the second quarter?

SEC. BRADY: I told them that it was idle to speculate what the second quarter would be. There is no recovery -- I think I'm accurate -- since the Second World War that has gone straight up. We're getting a little revisionism in economic history by those who say you've got to have one quarter following on the other. That's not the way it does happen, nor is it the way it did happen in previous recoveries. What I've said, I don't expect the second quarter to be greater than the first quarter. It is going to be growth somewhere in the 2 percent area, I would say. It could be more, could be a little less, but growth, indeed. And I expect growth through the year. And the real, the real important point here, Robin, is that '93 and '94, in my view, and I've been looking at economic statistics for a long time, are going to be banner years for America, the United States.

MR. MacNeil: The President expressed some frustration today that a majority of Americans believe the economy is getting worse when he sees it, and I guess you see it, getting better. Don't you think -- or I wonder whether he doesn't think that American voters are smart enough to know just what they see around them when the economy's getting better?

SEC. BRADY: Well, I think it's that plus it's also we have gone through in the United States a restructuring. Some of our major industries that are heavily advertised, like General Motors, AT&T, Ford, IBM, have all had cutbacks. And that makes people think what's going on here. Will school keep? How will I make out? Will I have a job? Will my neighbor have a job? And what we're seeing here is a -- inside the United States -- a rationalizing of our cost structure, cutting out overhead and unnecessary expenses to put our industry on a similar par with world costs. We've done that. And now, because we are winning the battle in the export markets, our exports have increased three and four times as much as Japan and Germany, people have to get it in their head that that's where the growth in jobs are going to come from. That's a hard concept. It's an overseas concept. It's something that's hard to focus in on. But that's what's going to make the difference. This one thing -- one thing, Robin. Let me just say something really unbelievably significant happened here. I talked to the people at BMW who are building a plant in South Carolina. It's a fine company, a foreign car company. From that plant in South Carolina, they are going to supply not only Germany, but they're going to supply the Far East. Think of it -- a foreign company putting a plant inside the United States, because our cost structure is very, very competitive so that they can ship cars to the Far East. That's the world of '93 and '94.

MR. MacNeil: Okay.

SEC. BRADY: We're right at the center of it.

MR. MacNeil: Well, Mr. Brady, thank you very much for joining us. We have to end it there.

SEC. BRADY: Thank you, Robin.

MS. WOODRUFF: Still ahead, selling arms to Saudi Arabia, California promises, and a "getting along" conversation. FOCUS - HARD SELL?

MS. WOODRUFF: Now, we get a different perspective on the connection between jobs and politics at home and abroad. Thousands of jobs and several billion dollars are at stake in the proposed sell of F-15 fighter bombers to Saudi Arabia. Israel usually objects to such arms sales, although its opposition may soften under the new Labor government of Yitzhak Rabin. But one of Israel's supporters in Congress, California Democratic Howard Burman, today denounced McDonnell Douglas, the U.S. aircraft manufacturer, for pushing the deal. He said it violates the Bush administration's policy against arms proliferation in the Middle East. Time Magazine's National Security Correspondent Bruce Van Voorst reports on the F-15 controversy.

MR. VAN VOORST: The McDonnell Douglas F-15 Eagle is the best fighter bomber jet aircraft in the world. During the Gulf War, the F-15 accounted for 36 of the 38 Iraqi aircraft shot down. The F-15 played a critical role in attacking ground targets around Baghdad and in destroying Scud missile launchers. Now, the F-15 has become the focus of a bitter domestic and international dispute. Saudi Arabia, whose 90 F-15's played an important role in the Gulf War, wants to purchase another 72 in a cash deal estimated to be worth $13 billion. Opponents argue that the sale contradicts the administration's policy of limiting arms to the volatile Middle East, and that it threatens Israel's security. Supporters respond that a close U.S.-Saudi relationship contributes to stability in the area and that if the U.S. refuses to sell the F-15's the Saudis will buy the British-made Tornado aircraft as they did once before. But here at McDonnell Douglas in St. Louis, the argument boils down to one thing, jobs. If the Saudi sale falls through, 40,000 workers here and across the nation will be fired. What the workers know in this production line is that time is running out.

CHRISTOPHER SMITH, McDonnell Douglas Employee: For me, it's job or no job. It could very well mean job or no job for my whole family. If Mac has to shut down this line, it's going to be company-wide. My wife is a software engineer here. How far the cuts are going to go, who knows?

CONNIE BRANSON, McDonnell Douglas Employee: I don't have any proper schooling for a better job. I would, more or less, have to go back to being a gas station attendant or checker at one of the grocery food stores or a waitress somewhere.

MR. VAN VOORST: How would that salary compare to what you're earning?

CONNIE BRANSON: A third.

TERRY ZIRKELBAUM, McDonnell Douglas Employee: It affects everyone in the whole area. There's all the car dealers and all the people that build the cars and clothes and everything will go down if you take out that many people out of the income when, you know, middle to moderate income, you know, range, you can't go buy nothing, they start losing their jobs also.

MR. VAN VOORST: These are the voices and the concerns of McDonnell Douglas workers. The aircraft manufacturer is Missouri's biggest single employer. Robert Trice, vice president for business development at McDonnell Douglas, lays out what the sale means to the company.

ROBERT TRICE, Vice President, McDonnell Douglas: Here in St. Louis, we've laid off 10,000 people in the last 18 months. We need to understand that, in fact, today without further orders, that F- 15 line is going to die in the first quarter of 1994. It's withering today. We laid off 200 people in Tulsa, where they build the aft end of the fuselage. We laid off 134 people today here in St. Louis. And for all our macroeconomic friends inside the beltway, we're telling them watch the F-15 line if you want a case study in how to destroy the defense industrial base of the United States.

MR. VAN VOORST: John Steinbruner, director of policy studies at the Brookings Institution, argues that preventing arms sales ultimately outweighs the question of jobs in America.

JOHN STEINBRUNER, Brookings Institution: It's good economics for the weapons producer, but not good security for the country. I don't see the logic for doing it now. There's no imminent threat to Saudi Arabia, certainly no increase in the threat to Saudi Arabia. It will complicate the peace process. It will complicate the ability to attempt to work out some arms control arrangement for the region.

MR. VAN VOORST: Traditionally, most U.S. arms sales to Arab nations have been opposed by Israel. The American-Israel Public Affairs Committee has been vigorously fighting the sale behind the scenes. Morris Amitay, a former executive director of AIPAC, describes Israel's perspective.

MORRIS AMITAY, Pro Israeli Lobbyist: The Saudis are still in the state of war with Israel. They have participated in previous conflicts against Israel and could be expected if there's another general conflict out of Israeli conflict in the region for them to join in, whether they wanted to particularly or not. The sale really complicates Israel's defense planning. They have to now plan for another 72 top-of-the-line U.S. aircraft sitting to the East of their borders.

MR. VAN VOORST: Bob Trice of McDonnell Douglas argues that the Saudi threat to Israel is exaggerated.

BOB TRICE: We, in fact, think that since Desert Storm and Desert Shield, many of those arguments concerning potential Saudi threat to the Israelis have dissipated. And I don't think any serious observer today believes that the Saudi regime would, in fact, be a threat to the government of Israel under any circumstances.

MORRIS AMITAY: Saudi Arabia is basically an inherently unstable regime. It's a feudal monarchy. It has no institutions for continuity. There could be a palace coup. There could be a radical takeover. You could have a change in government virtually overnight and there the Saudis would be with a huge U.S. arson.

MR. VAN VOORST: Rep. Mel Levine of California is perhaps the most vocal congressional critic of the proposed sale. A majority of the House members signed a letter to President Bush drafted by Congressman Levine challenging the deal.

REP. MEL LEVINE, [D] California: It's fundamentally inconsistent with all of the lessons that we learned from the Gulf War. The administration going into the Gulf War, during the Gulf War, and after the Gulf War, indicated that arms control would be the cornerstone of post Gulf War American foreign policy in the Persian Gulf. As important as jobs are to every one of us -- and they're extremely important to me -- they cannot be used as an argument to undermine vital American foreign policy objectives.

MR. VAN VOORST: At McDonnell Douglas, we heard the suggestion that opponents of the sale are placing the interests of Israel before those of America.

CHRISTOPHER SMITH: There's somebody in Washington who is associated with a foreign country that has more say than we do. And that's not the way it's supposed to be; it's just not.

REP. MEL LEVINE: Well, I think that that is a canard that is outrageous and entirely inaccurate. These decisions are made by every single one of us, however you come out on this issue, based upon our perception of the best interest of the United States of America.

MR. VAN VOORST: Amb. Nicholas Veliotes, a veteran of three decades in the region, describes why it has been in America's best interest to sell high technology weapons to the Saudis.

NICHOLAS VELIOTES, Former State Department Official: Saudi Arabia is a friend who happens to be the custodian of a major resource, oil. The protection of that resource is an American major foreign policy, national security interest. One of the ways that we can help protect this interest is to make sure that the Saudis have modern American equipment in place in the Eastern province where the oil is.

MR. VAN VOORST: Veliotes notes that the earlier sales of U.S. F- 15s and airborne warning aircraft, AWAC's, established the basis for a much broader defense relationship.

NICHOLAS VELIOTES: What did these two sales actually result in? You had the equivalent of a major American base established in Saudi Arabia, unacknowledged by anyone. And in my view, that was one of the major reasons, if not the major reason, and the confidence that we have established with the Saudis, which enabled Desert Storm to be organized so well and effectively and quickly.

MR. VAN VOORST: Another unavoidable consideration is that once before the U.S. refused to sell F-15s to Saudi Arabia and the Saudis turned elsewhere. Sen. John Danforth of Missouri, the home of McDonnell Douglas, makes the point.

SEN. JOHN DANFORTH, [R] Missouri: Consider what happened in 1985. In 1985, the Saudis wanted to buy 40 F-15s. There was a big hue and cry in Congress in opposition to it. The Saudis took their business elsewhere. And instead of buying 40 F-15s from the U.S., they bought 72 Tornados from the British. Whereas, F-15s that the Saudis own have been conditioned as to where they're based, there are no conditions that have been placed by the British on the Tornado. So the Tornados that they already have, 72 of them, some of them are stationed very close to Israel, which is not permitted for the F-15.

MR. VAN VOORST: The F-15 sale to Saudi Arabia which was rejected by the U.S. in 1985 ultimately amounted to commercial sales of $30 billion for the British, the biggest ever United Kingdom export order. Supporters of the current sale fear this could happen again.

SEN. JOHN DANFORTH: The Europeans have been very aggressive in trying to muscle us out of that market. They have in commercial aircraft, with respect to the Airbus, and now they have a program to go forward with their European fighter aircraft. The Saudis have indicated that if they do not buy the F-15 from the United States, they will do two things: First, they will buy the Tornado from the British, and secondly, they will invest in the European fighter aircraft program.

MR. VAN VOORST: The eagerness of weapons builders in Europe and elsewhere to sell arms, particularly for cash, to anybody casts doubt on any short-term prospects of success for President Bush's non-proliferation efforts. Dov Zackheim, an aerospace consultant with, among others, McDonnell Douglas as a client, points out the obstacles to Bush's program.

DOV ZACKHEIM, Aerospace Consultant: There are five countries in the Security Council that have pushed for arms control. All five are leading vendors to the Middle East, namely China, Russia, the United States, Britain and France. Then there are other countries that aren't involved in this process you mentioned, the Koreans, who've created a stir by selling missiles to Syria, the Brazilians, the Argentineans, many, many others. How do you get your arms around all this? The answer is piece by piece and over a long time frame.

MR. VAN VOORST: The Saudi sale comes as America's defense spending is declining. Employment in the aerospace industry declined by 12 percent in 1991 alone. Even the F-15 sale would not rescue major sectors of the defense business from the need to convert to civilian production.

JOHN STEINBRUNER: It will be a short-term help, but in the long- term, quite clearly, we are going to have to cut back in major weapons procurement. That is an inevitable thing. I think better to start now and be systematic about it.

MR. VAN VOORST: To Christopher Smith on the final assembly line at McDonnell Douglas, that all sounds a little Pollyanish.

CHRISTOPHER SMITH: Okay. I believe in a conversion, but I don't believe in a stop. They want to stop this line. They want to shut it down. If they want us to build something else, that's fine. Whatever it is, move it in. Move it in now. Move it in a year from now. But don't take my job away from me in the meantime, because you don't believe in what I'm doing.

MR. VAN VOORST: For the moment, the ball is in the administration's court. The question's not formally posed until the White House officially advises Congress of its intent to sell. FOCUS - RUNNING ON EMPTY

MR. MacNeil: Weapons and jobs are a big issue in California too, where defense cuts have pushed the state's unemployment rate to the highest in the country. Californians are now facing a financial crisis many haven't seen since the '30s. Correspondent Spencer Michels of public station KQED-San Francisco reports.

MR. MICHELS: So far, these San Francisco senior citizens are receiving the meals and other services the state government of California pays for. But senior programs are among those most in jeopardy as the state endures its second week without a budget and without a bank balance. To save money, the administration of Gov. Pete Wilson has proposed numerous cutbacks, including the elimination of the Department of Aging. Without a budget, programs like this will run out of money and people like 62-year-old Maria Lewiczka will be among the first to feel the effects.

MARIA LEWICZKA: It's about the most important thing I can think about because I only eat two meals a day as it is and if I haven't got this, then I wouldn't have nothing to eat at all.

DOROTHY CARBERRY: If they take places away, where are the people going to go, it seems, you know. It's important to me, you know.

MR. MICHELS: Sixty-nine-year-old Dorothy Carberry is angry at the politicians.

DOROTHY CARBERRY: It's always a sudden thing that they have some trouble with -- that they got to cut out something, you know -- I think if you put a working man in there, they're going to -- I think they can figure it out better.

MR. MICHELS: At the state capital in Sacramento, politicians failed to meet the June 30th deadline for a budget for the fourth time in five years. They even tried to stop the clock, but the situation required more than a quick fix. In past years, legislators knew the state had reserved funds to pay the bills, but this year the state coffers are empty. State Controller Gray Davis has stopped issuing checks. Instead, he has begun printing I.O.U.'s called "Registered Warrants." It's the first time California has done that since the Depression.

GRAY DAVIS, California Controller: Nobody wants these warrants that are out, least of all me, because there will be no winners if Registered Warrants are issued, only losers. All of us in Sacramento will have our reputation tarnished because we weren't able to pay our bills in the customary fashion.

MR. MICHELS: But warrants are not real money. They are I.O.U.'s that bear 5 percent a year interest. Banks don't have to accept them or redeem them for cash. Still, they are all the state has to offer as pay to 160,000 state workers and others to whom the state owes money. Their use has prompted Moody's Investor Services to downgrade the state's credit rating. So far, the banks have honored the warrants, but not with great enthusiasm. Greg Wilhelm is a lobbyist for the California Bankers Association.

GREG WILHELM, California Bankers Association: If the state of California were a private enterprise and came to us with its current financial situation and asked for a $1.6 billion loan collectively from the banks, I don't think they would get it, a loan to be paid back at some uncertain date, when they get the money, when they can get their act together. The state has the right to stop payment on these things the whole time they're being held by the banks. I'm worried that it becomes a precedent for California on an annual basis, let alone what it may do for other states watching this process. And I think, quite frankly, the experience with warrants this year is going to make them much less attractive for all parties concerned next time around.

MR. MICHELS: While the banks play ball for now, the Democratic legislature and the Republican governor play their own game, wrangling over proposed cuts, certain that new taxes are a political impossibility. On the agenda at this special budget committee meeting were schemes to slash money from the University of California and other already beleaguered state colleges, measures unpopular with practically everyone. Politicians must eventually agree on a budget so the state can legally spend what it takes in. But the root of the problem goes much deeper. The economy is failing to produce enough tax revenue to support state services, while the demand for those services is increasing. California's tax base is crumbling. Defense spending is down across the nation, but California is suffering most because more than a fifth of the U.S. defense budget has traditionally been spent at California companies like Lockheed and Aerojet. In addition, natural disasters, savings & loan problems, corporate downsizings and construction slowdowns have meant more unemployment to be paid out, which means fewer profits and wages that can be taxed for revenue. As of July, the state leads the nation with a 9.5 percent unemployment figure.

GREG WILHELM: The recession has helped bring to the surface some problems, structural problems, in the economy here in a way that the politicians have never had to face before, because this has been a bullet proof economy in the past and now the recession has really made them realize that it's not bullet proof and, indeed, there are some underlying problems that are very, very severe.

MR. MICHELS: Despite the revenue shortfall, Gov. Pete Wilson thought he had come up with an acceptable balanced budget. He proposed a $2.3 billion cut in public education, which the legislature claimed would ruin the schools. So they turned the budget down. Wilson was furious.

GOV. PETE WILSON, California: This morning California is running on empty. By failing to act last night, the assembly Democrats have left us with a road map that means even more painful spending cuts ahead. Obviously, California does not want, because it cannot afford, a tax hike. California's people understand, as the assembly Democrats do not, that they are not, people are not taxed too little, rather, government is spending too much.

MR. MICHELS: The fate of the budget may turn on the issue of state support for education. Delaine Eastin is chair of the assembly education committee. She deplores the proposals made by Gov. Wilson.

DELAINE EASTIN, California Legislator: He delays 110,000 kids entering kindergarten. He doesn't acknowledge that any new and additional kids are entering school every year and yet, California is adding kids at a record rate, we're adding 200,000 kids a year. We'll add a million additional children in five years. And we don't have enough classrooms for the kids we have.

KEN MADDY, California State Senator: One proposal that he had is that there is a category of children that were allowed to come into school that were less than five years old, and he said at this point in time drop that program for one year; it's a considerable amount of money that he would save. That was one proposal to how to save money, but it wasn't -- his feet are not in concrete. We're just saying we have to spend less money this year than we did last year.

MR. MICHELS: Ken Maddy is minority leader of the State Senate.

KEN MADDY: But they're getting the lion's share of the money. It's just a question that they're not getting as much as they had hoped for, which is always true with everyone.

MR. MICHELS: The budget crisis has brought home to agencies like the North of Market Senior Services in San Francisco the fact that their funding is precarious and subject to political manipulation. Executive Director Vera Haile resents that.

VERA HAILE, Senior Services Director: What I don't have sympathy with is their solutions that hit low income people hardest first. That's not where I would look for the first solutions. I would look elsewhere and would look to increasing taxes on those who can afford to pay more taxes.

MARIA LEWICZKA: If the money isn't spent on seniors and health care, what's the money being spent on? What are they using it for?

MR. MICHELS: What do you think?

MARIA LEWICZKA: I haven't got no idea what they use it for.

MR. MICHELS: California's legislature needs a 2/3 vote to pass the budget. That is tough to achieve. Even when a new budget is passed and the governor signs it, that won't solve the perplexing problems of a stagnant economy and a growing population in need of services. CONVERSATION - CAN WE ALL GET ALONG?

MS. WOODRUFF: It was in the wake of the Los Angeles riots that Rodney King asked his now memorable question: "Can we all get along?" That question has become the focus of a series of conversations that Charlayne Hunter-Gault has conducted around the country. Tonight she revisits a Savannah, Georgia, lawyer she first met while working on a profile of then Supreme Court nominee Clarence Thomas. His name is Lester Johnson.

MS. HUNTER-GAULT: Lester Johnson, how wide do you think the racial divide is in America today?

LESTER JOHNSON: It's, I think it's very wide. As a matter of fact, I think that it is the worst problem that we've got in the country right now. We can talk about the deficit all we want; we can talk about all the other problems we've got. In my opinion, the worst problem we've got is the racial problem.

MS. HUNTER-GAULT: Do you think things have fundamentally changed since the sixties when it was "we shall overcome," "black and white together," great optimism about race relations for the future?

LESTER JOHNSON: Well, I think a lot of things have happened. I think that, unfortunately, the country did not progress economically as fast as we would have liked it to. And hence, you had a tremendousnumber of blacks and women, in particular, who are now getting a piece of the economic pie, but I think it's because of the fact that people say well, the reason why I'm not doing better is because all these black folks are now in these positions and these women are in these positions, and other minorities are in these positions, and that's why I can't do well, whereas, it's not that at all. It's just that the economic pie didn't get, you know, built up, you know; instead of having a three-tier cake now, we still got a one-tier cake. And we should have had a three-tier cake by now if the economic situation would have progressed.

MS. HUNTER-GAULT: What about the South, do you think it's better or worse here than the rest of the nation?

LESTER JOHNSON: In my opinion, I think it's much better in the South. And I don't think that's just a recent event. I think it's always been better in the South simply because down here we always knew where everybody came from. I mean, we knew, I knew that when I walked into a room with whites that a significant number of those whites hated me simply because I was black. When I went up North to school, I walked into the classroom and the assumption on my part was because I was in the North, that everyone in that classroom, and for the most part the class was a predominantly white class, that they loved me, that they had no problems with me being a black individual. But then we would find out later that that was just a facade and that, in fact, the same type of racism that existed down here existed up there; it just wasn't expressed as it was down here. And it wasn't understood. And we went up on a theory that, hey, this is the North; this is the land of milk and honey; everything's going to be better up here and there is no racism.

MS. HUNTER-GAULT: So what happened in the South?

LESTER JOHNSON: In the South --

MS. HUNTER-GAULT: Over time.

LESTER JOHNSON: Over time, I think, you know, we came to grips with that fact. I mean, I was telling a young person about two weeks ago that if you go to the smaller towns in the South -- and I think the example I gave was Mayhunta, Georgia, which is outside of Brunswick, small town, probably 5,000 people -- when I went to that town and people found out that not only did I have a high school diploma but had a college degree and a juris doctor degree, even though I was black, to them, you know, I was a special person. You know, they made me feel superior to them simply because the average person in Mayhunta, Georgia, whether they're white or black, barely has a high school diploma, and never leaves Mayhunta, has never experienced the North or anyplace else, and so my experiences going to a Northern college, going to law school, was a big deal for them. And so the racism that they may have had is automatically withdrawn and dissolved because of the fact that even though you're black, you've done so much better than them that they can't feel superior to you now.

MS. HUNTER-GAULT: What about your social life here? What is it like being black in Savannah, Georgia.

LESTER JOHNSON: Well, it's, I think it's a good time to be black in Savannah. I think things are changing here. But it still, it's still that aura of folks trying to hold onto the old days. You see it when you go into a room and people walk up to you and begin to congratulate you because you have gotten this job or that job or they're talking about, well, that's going to be our next judge or making little comments like that that people normally make, and you can see some of the resentment on whites' faces when they see that because they know deep down that, yes, at some point in time just from the sheer numbers, you know, a town that's almost 60 percent black, that at some point in time the black community is going to surpass them, is going to be economically sound, and that's a resentment, and I think is just from human nature.

MS. HUNTER-GAULT: Is there a lot of social interaction between blacks and whites here?

LESTER JOHNSON: Not as much as it should be. But there is. And that's simply because the people in Savannah have made an effort to try to make sure that, for example, in the Leadership Savannah group that I was in, that there was a good mix of blacks and women and whites.

MS. HUNTER-GAULT: What was that?

LESTER JOHNSON: Leadership Savannah program.

MS. HUNTER-GAULT: What is it?

LESTER JOHNSON: It's a program that is sponsored by the Chamber of Commerce and its emphasis is to take people and hopefully mold them into being leaders or if they're already leaders, help them to understand some of the problems that leaders have specifically in Savannah.

MS. HUNTER-GAULT: And what did they do, I mean, on the race issue? Was it a conscious thing -- tell me a little bit --

LESTER JOHNSON: Yeah. They would try to make sure that we, when we went on a trip, that we always roomed with a white participant so that we wouldn't automatically say, well, I want to room with the black person who I know. They would always make sure that you roomed with a white person, that you sat with a white person when we had lunch and dinner, so that you could get to know whites. And that's the main problem. If you don't get to know someone, you know, you'll never break down those barriers.

MS. HUNTER-GAULT: So do you think that the South has lessons to teach the rest of the nation about race?

LESTER JOHNSON: No question about it. I think not only for the nation, but I think we have lessons to teach the Middle East. We have lessons to teach, you know, any era that's had a conflict because of regional differences and because of impoverishment and slavery, you know, we had a lot of lessons to show them, and to prove to them that it can work, and we can come together, and we can move on. And those lessons, I think, come about from the fact that, you know, most whites in this town, Savannah and in the South, and I don't think that -- I think we can use Savannah and say that most of the South would be indicative of this, but most whites in the town generally respected blacks. They may not have respected us in the sense that they felt we were equal, but you've got to understand that, you know, just as we were being taught that we were not better, they were being taught for years that they were better. And when you tell somebody they're better over and over again, it becomes a psychological implant. And to get them to change that is very difficult, but there was a common respect for blacks in the South I think. They didn't like us because of what they'd been taught, but there was a common bond of respect there. And I saw it on all levels when I was growing up. The perfect example is my father. My father was a school teacher, but he worked at the Morning News and worked in several other places just to send us to school. And there's a gentleman right now who is, I guess his title is editor emeritus for the local paper, named Tom Coffee, and Tom build a relationship with daddy back in the fifties. And even though daddy worked in the mail room, which was a room that just delivered the papers, and Tom was an editor, there was a mutual bond of respect with Tom and my father. And when my grandmother died, Tom did an editorial on my grandmother in the morning news. Now, here's a black woman who probably was not known in the white community, and one would say, well why would the Savannah Morning News write an editorial on this woman? And the answer was that Tom respected my parents and my grandmother dearly. Then later on, every time something happened to any one of us, you know, we got top coverage in the newspaper. If my brother did something, if I did something, if any of us did something, just out of common respect for my father, he would give us top billing for it. And, you know, people always said, well, I wonder why they're always in the paper. Well, you know, Tom was a dear friend and respected us tremendously. Growing up and seeing that, you know, taught me some lessons right off the bat. And the lesson that it taught me was, you know, I have gotten a lot of animosity from whites, but Tom, who is white, I've got nothing but good things from him and he's always been there. He's always praised our family, praised my father, and always been there for us. When we went up to Clarence's swearing in, Tom was up there.

MS. HUNTER-GAULT: Clarence Thomas.

LESTER JOHNSON: Clarence Thomas's swearing in. Tom was up there. And I walked over to Tom and we talked briefly. And when we got back to Savannah, I picked up the paper and there in the paper was an article that said, "While I was in Washington, D.C., I ran into Lester Johnson. And I said to Lester this is the second time an L.B.J. was in the White House," because my initials are L.B.J. And, you know, everybody, of course, reads his articles and, of course, just really went wild when they read that. But that's the kind of person Tom was. That's the kind of respect that I'm talking about. And that's just one example. And you can multiply that many times over.

MS. HUNTER-GAULT: Tell me a little bit about your feeling about stereotypes.

LESTER JOHNSON: We had a meeting recently in a group called Leadership Georgia, and they brought down this lady who goes to different corporations and teaches these executives how to deal with different cultures. And what she said over and over again and what everybody could walk away with was that everybody has tendencies, but nobody, no one race does the same thing, but we all have tendencies. You know, black people have a tendency to be very emotional, to use our hands when we talk. Whites have a tendency to not be very emotional, to be more businesslike and to not be very loose and do all the little dances. But now when you watch TV, you can see whites doing all those kind of dances that at one time blacks said, oh, whites can't dance at all. And you turn on the TV now and you see them doing all the dances. So that's a myth. So we've got to pass that on and say, look, tendencies are what races have, but not everybody in that race does it the same way, thinks the same way, eats the same kind of food, et cetera, and, therefore, we all don't think alike, we all don't hate whites. Some of us still got a problem with whites, but we all don't have problems with whites. We all can look at people -- some of us can look at people and say I'm going to deal with you on the content of your character and the way you interact with me, and if you're white, if you're black, Chinese, or whatever, that's not going to matter to me. But if we can't get to that point, we'll never be able to progress in this country.

MS. HUNTER-GAULT: To get to the Rodney King question, "Can we all get along," can we all get along?

LESTER JOHNSON: We can get along. It's going to take a lot of effort on everybody's part and it's going to take some real extreme measures to do it.

MS. HUNTER-GAULT: Well, Lester Johnson, thank you.

LESTER JOHNSON: You're welcome. RECAP

MR. MacNeil: Again, the main stories of this Wednesday, Western leaders wrapped up their three-day summit without an agreement on world trade. They did agree to push ahead with economic aid for Russia. AMOCO Oil Company said it would cut 8500 jobs by the end of next year. The Los Angeles-based Unocal Oil Company and Mobil have also announced major work force cuts because of poor economic conditions. On the NewsHour tonight, Treasury Sec. Brady said he expected the nation's sluggish economic growth might slow further in the second quarter of the year, but he said the economy would pick up by 1993. Good night, Judy.

MS. WOODRUFF: Good night, Robin. That's our NewsHour for tonight. We'll be back tomorrow night with a NewsMaker interview with the new man at the helm of the United Nations. I'm Judy Woodruff. Thank you and good night.