The MacNeil/Lehrer NewsHour

INTRO

JIM LEHRER: Good evening. In today's major news President Reagan went in person to sell his deficit plan to Congress. Candidates and pundits examined Mondale's win in Illinois and saw a long struggle ahead. The Justice Department approved a new version of the LTV-Republic Steel merger.There were two incidents involving the United States and the Soviet Union in ships at sea. And the Reagan administration decided against selling antiaircraft weapons to King Hussein in Jordan.

Robin?

ROBERT MacNEIL: On the deficit story we ask a key House member, Leon Panetta, whether the Democrats will play ball. After Illinois? Political analysts John Sears and Alan Baron look at the new state of the Democratic presidential race. The merger wave: Paul McGrath, the Justice Department's man in charge of antitrust, explains the administration's new attitude. How does the public get a fair price for coal leases? Ww talk to David Linowes, head of the Coal Commission. And, in Paris, Charlayne Hunter-Gault interviews French President Mitterand, who visits Washington tomorrow.

LEHRER: President Reagan traveled the 13 blocks from the White House to the Capitol today to lobby his own, the Republicans in the House and Senate. He asked them to stand together in support of a $150-billion deficit reduction plan, the one he worked out last week with the Republicans Senate leadership. The meetings were segregated. First he met with the Republican senators in the Capitol building, and then he moved to the Rayburn House Office Building to address the House members. Here's part of what he said.

Pres. RONALD REAGAN: I believe, and this year particularly, it is absolutely essential that we appear as the group of us -- your leadership and ourselves -- that we appear united in our determination to get this package and stand together, and I think it will benefit all of us very much in every way. It will not only be good government, it will be good politics.

LEHRER: There were question-and-answer sessions after Mr. Reagan's prepared remarks before both groups, but they were closed to the press. Also absent from it all were Democrats, a White House spokesman explaining it was simply a case of first things first. Unified Republican support is a must if it is to go anywhere. Meanwhile the Democrats are offering their own deficit reducing plan. As announced yesterday by the House Democratic leadership, it would cut $185 billion over the next three years, $35 billion more than the President's would. Specifically, the Democrats would trim $95 billion from the planned increases in defense spending instead of the President's $40 billion, but only $40 billion in domestic spending instead of the $61 billion in the President's plan. On new tax revenues there's near agreement. Only a mere $1 billion separate the two; the Democrats, $49 billion to Mr. Reagan's $48 billion.

Robin? Democrats' Reductions

MacNEIL: The key question now is whether congressional Democrats will go along with the Republican plan or insist on their own or compromise. To discuss that we have Congressman Leon Panetta of California, a member of the House Budget Committee who helped draft the Democratic package.

Congressman, are the Democrats willing to buy the President's plan?

LEON PANETTA: Well, I don't think so. It's a step, certainly, in the right direction, but it's our view that it fails in three key areas. First of all, it is not a sufficient deficit reduction package. Our package includes $185 billion in reductions; it takes $35 billion off the deficit in the next three years, and we think that's what this whole process is all about -- reducing the deficit. Secondly, we think our approach is fairer in the sense that it limits growth across the board and protects those programs that we think deal with the poor and have been impacted over the past three years by the administration's approach. We try to protect those programs. And, thirdly, the increases that are provided for -- namely, a 3.5% increase in defense along with some increases in the programs that, again, serve the disadvantaged -- we think we ought to pay for those rather than simply borrow to support those programs. And paying for them basically means relying on the revenues that both the President and the Congress have agreed to.

MacNEIL: Now, the President was having to lobby for Republican support for the plan they worked out because not all Republicans approve it yet. Are Democrats firmly behind your plan?

Rep. PANETTA: Well, we spent the last two days presenting this program to Democrats on Capitol Hill. The leadership today endorsed it. The Steering and Policy Committee have endorsed our approach recommended by the Budget Committee. I think there is broad support among Democrats for this approach, mainly because it does reduce the deficit to a larger extent than what the President is recommending, and secondly because it's fairer.

MacNEIL: So you don't think it's going to have any trouble getting through the House, which you control, fairly easily.

Rep. PANETTA: My view right now is that the Democrats will consolidate behind this approach and that we will be able to pass that program on the House side.

MacNEIL: A member of the public hearing you all for weeks now talking about the need to get these deficits down and to make a down payment on that rapidly might well ask, "Well, if you're only $35 billion apart, why can't you meet each other halfway and compromise?"

Rep. PANETTA: Well, there may be a point at which that will happen. Obviously at this point we need to support the program that we think is more justifiable in terms of its deficit reduction capability and, secondly, the fact that it does deal with the programs that we think are important to protect. It deals with those in a fairer fashion. So we think we ought to pass that program on the House side. The Senate, of course, is going to have to deal with the issue of whether or not it can pass the President's package and then we will meet in conference. And at that point we will determine whether compromises can be made. One thing is clear. We need to adopt a firm and significant deficit reduction package in the Congress this year.

MacNEIL: Is there a part of it that's not compromisable in the view of you and your Democratic colleagues?

Rep. PANETTA: Oh, I think there are several key points that need to be made. One is that defense has to play a significant role here. We are talking about 3.5% real growth in our package. It compares to a 13% growth in the President's initial package, and I think roughly about a 7% growth figure in the compromise package that he's now recommending. But we think defense needs to play a key role here in terms of the overall priorities. Secondly, that we protect those programs that have been ravaged over the last three years and that served the poorest of the poor. And, thirdly, that whatever increases are provided for we pay for, and that we not simply borrow to support whatever increases Congress is willing to support in spending.

MacNEIL: Do you feel yourself that the need to do something about the deficit is so urgent and so immediate that it's more important to compromise than to stand by your proposal rigidly if that meant no agreement?

Rep. PANETTA: Well, I don't think there's any question that these tremendous deficits that are facing this country over the next three to five years -- $200-billion deficits that are projected throughout the rest of this decade -- have to be dealt with. We can't postpone the approach to next year. We have to deal with it now. So that ultimately it's my view that both the House and the Senate will have to develop a compromise apprach that will reduce this deficit substantially.

MacNEIL: And do you believe the President when he says he's done all the compromising he's going to do on defense?

Rep. PANETTA: Well, if you look at the last three weeks that hasn't been the case. Three weeks ago the President took a very firm position against any reductions in defense, against any additional revenues. And yet, when they introduced the Republican package the other day, he had compromised on defense and he had compromised on revenues. I think some additional compromises are going to be necessary if we get that package through the Congress.

MacNEIL: Congressman, what does your political nose tell you is going to come out of all this?

Rep. PANETTA: My sense is that there is that sense of urgency on Capitol Hill that something has to be done about this issue -- from a political point of view because it's an election year, but more importantly from the country's point of view.

MacNEIL: You would agree with what we just heard the President say, that it's good government and good politics this year?

Rep. PANETTA: I don't think there's any question about it. Both are involved here and, as a result, I'm confident that we will be able to produce a package in the Congress.

MacNEIL: Give us some idea of when.

Rep. PANETTA: Well, we have placed our approach on a fast time track. We're going to try to get the budget resolution to the floor within the next two weeks prior to the Easter recess and have it passed by the House side as well as the revenue package. The Senate then, obviously, has to operate on itsown time frame, but under our budget process a final budget resolution must be adopted by May 15th.

MacNEIL: You think you'll have the whole thing done by May 15th, and that it'll be a figure somewhere between your figure and the President's figure right now?

Rep. PANETTA: I think you're looking at a compromise budget resolution somewhere in that vicinity.

MacNEIL: Congressman Panetta, thank you.

Rep. PANETTA: Thank you.

MacNEIL: There were developments today in the story of Edwin Meese's finances, the subject of a Justice Department inquiry that has held up his confirmation as attorney general. Democratic Congresswoman Patricia Schroeder of Colorado announced that her House Civil Service subcommittee is looking at how the wife of a Meese benefactor got her job with the Merit System Protection Board in San Francisco. The woman is Mrs. Gretchen Thomas, wife of Edwin Thomas, whose $15,000 interest-free loan to Meese is the subject of the Justice Department investigation. Meanwhile, members of the Senate Judiciary Committee discussed whether to ask Justice to widen its investigation beyond the question of why Meese didn't report the loan. Senator Howard Metzenbaum, Meese's chief Democratic foe on the committee, said members were considering sending a letter to Attorney General William French Smith pressing for a comprehensive inquiry. President Reagan said in a newspaper interview made public today that he has not asked Meese to step aside and that he wouldn't listen if Meese offered to.

In Chicago another eight people, including a Cook County judge, have been indicted in Operation Gaylord, the FBI's sweeping undercover investigation into the nation's largest court system. In December nine people including three current or former judges were arrested. Last week the first defendant to go on trial, a deputy traffic court clerk, was found guilty of extortion and recketeering for accepting bribes.

In Washington the Justice Department dropped its objections to a big merger in the steel industry. Judy Woodruff has the details. Judy? LTV-Republic Merger

JUDY WOODRUFF: Robin, the Justice Department announced today that it would allow a merger between two of the nation's largest steel companies. In February the Justice Department had opposed the merger of LTV, a Dallas-based conglomerate and the country's third-largest steel producer, with Republic Steel, based in Cleveland and the fourth largest producer. Justice argued then that the deal was anticompetitive and could possibly lead to higher steel prices. As expected, that decision was sharply criticized by the steel industry. But less expected was the intense public criticism the decision prompted from top administration officials such as Secretary of Commerce Malcolm Baldrige, who called it "a world-class mistake." The criticism was specifically directed at Paul McGrath, who took over as the new head of the Justice Department antitrust division just last December. Today's reversal leaves unresolved many questions about the administration's antitrust policy and the conditions under which mergers will be allowed. Here to answer some of those questions is Assistant Attorney General Paul McGrath. Mr. McGrath, why did the Justice Department change its mind about this?

PAUL McGRATH: Well, we didn't change our mind, Judy. What happened was the facts changed. In particular, the companies came to us with a restructured merger that involves the divestiture of two substantial plants.

WOODRUFF: Well, now why should that make a difference, that they're willing tosell off two plants?

Mr. McGrath: That makes a big difference because they are going to sell those plants to independent competitors who will operate them separately, and that changes the competitive situation.

WOODRUFF: And what was the other factor?

Mr. McGRATH: The other factor is that at the time we announced our opposition to the LTV-Republic merger we also had before us a proposed merger by U.S. Steel and National Steel. That would have resulted in two companies having almost half of the flat-rolled sheet business, a situation that we found very troublesome under the antitrust laws. The U.S. Steel-National merger is no longer before us. Those two companies have announced that they have abandoned their plans to merge.

WOODRUFF: So now you're saying that this will now -- that these two companies, their merger will now take up what part of the flat-rolled steel?

Mr. McGRATH: These two companies would be a good deal less than 20% in flat-rolled sheet, and in addition there was a problem with stainless steel. The divestiture that is part of the restructured deal will involve a divestiture of all of Republic's stainless steel capacity, so there will be no addition to the concentration in that part of the business.

WOODRUFF: You know, at the time is was said, it was explained that the Justice Deparment had a mathematical formula for determining the concentration in an industry. Does that formula still exist? Are you still using that?

Mr. McGRATH: We do not have a mathematical formula for deciding these things. We have some mathematical formulae that sort of put a given merger in the ballpark, but we have a large number of other factors that really are more important -- what kind of product is involved, what kind of competition is there, what is the history of an industry, can other companies easily come into a business? All of those factors work into the equation and not just a mathematical formula. There are some mathematical steps we go through which are important to the decision, but it is a much broader decision than just putting something into a computer and cranking out a mathematical answer.

WOODRUFF: How do you know that this merger now will not be anticompetitive?

Mr. McGRATH: Well, the reason is that, given the structure of the industry, given the kind of increase and concentration that will result after the divestitures, we are confident that it will not, particularly given the fact that the two companies involved here have problems, particularly Republic Steel. There is a real concern that unless it merges with another company it may not be a strong competitive factor over time.

WOODRUFF: Well, now that was the case a month ago, though, wasn't it?

Mr. McGRATH: It was the case a month ago, but a month ago we also had a situation that would have resulted in almost half the business being taken over by two companies. And even though we had these other concerns, such as the future health of Republic, we had the overwhelming fact that there was just too much of an increase in competition. At that point to have approved the merger would have been a world-class mistake.

WOODRUFF: All right, you expressed also the concern a month ago that this -- that a merger then would have led to higher -- potentially led to higher prices. Are you convinced now that this won't lead to higher prices?

Mr. McGRATH: As convinced as we can be. Obviously you are always doing some future guessing in any merger decision. But the fact is that now we still have U.S. Steel and National as independent decision-makers. We will have the stainless steel capacity of Republic in an independent decision-maker. We will have the Gadsden plant of Republic in an independent decision-maker's hands. All of those factors will give us more pricing decisionmakers and therefore, hopefully, more price competition over time.

WOODRUFF: All right, you mentioned the U.S.-National Steel merger proposal. Could that be revived, and if it were, what would the Justice Department disposition be on it?

Mr. McGRATH: Anything can happen in the future. We do not now have anything before us. If a revised proposal were put before us we would consider it on its merits on the basis of the economics of the time. But I would not be willing to predict exactly what approach --

WOODRUFF: Even though you've gone ahead with this and the fact that that was off the table was a factor in going ahead with this merger?

Mr. McGRATH: Absolutely because it was a factor when it was on the table because it was a fact that both mergers were before us. Now it is not on the table and we would have to see what the situation was at the time.

WOODRUFF: All right, now what about all the comment that came from elsewhere in the Reagan administration, from Commerce Secretary Baldrige, whom we quoted earlier, to the Pesident himself, who said to reporters that he didn't think the merger would result in a monopoly? Didn't you feel some pressure from these other members of the administration?

Mr. McGRATH: No, I didn't, for this reason. The President made it very clear in that statement that the Justice Department was to make its decision independently, and as the attorney general indicated last week, I was to do that. And I work for the attorney general; I don't work for Mr. Baldrige. I never have, I don't now, and I probably never will. So I did not feel under any pressure.

WOODRUFF: But do you mean to tell me that the fact that President Reagan himself made a statement that indicated he felt that your decision was a mistake, that didn't have any bearing in your change of mind?

Mr. McGRATH: I don't think that's what he said, but I think that the critical thing is that he and the White House later made it clear that we were to judge this merger on the basis of the law and the facts as we saw them. And that is what we did. And I think that it would have been derelict in my obligations to the President to have done it any way other than the way he indicated it should have been done.

WOODRUFF: Do you think it's appropriate for the President to make comments, as he did, about a matter before the Justice Department as this was?

Mr. McGRATH: It absolutely is. Indeed, the president has the right to make a final decision on a merger if he chooses to do so. Presidents have not tended to do that for a variety of rather obvious political reasons and because it makes the process of deciding individual law enforcement cases more difficult. But he has the absolute constitutional right to make final decisions, and, obviously, to make whatever comments he wishes. But he did make it clear in this case that this matter was to be decided by the Justice Department, and that's what we did. And we were very careful to do it that way.

WOODRUFF: All right, as you know, there's an increasing trend now to encourage mergers in the oil industry as well.

Mr. McGRATH: Yes.

WOODRUFF: Why are those different from mergers in the steel industry?

Mr. McGRATH: The situation is really vastly different. Even though the oil companies that are merging are very large companies, they have very small percents of the market. Even though you may think of Gulf and Texaco and Mobil as giants -- and they are giants in terms of total sales, total assets -- they are very small in terms of the part of the industry that they have. And that industry is classically a total worldwide industry because there is virtually no barrier to the movement of petroleum products or at least crude petroleum between countries and at least into this country.

WOODRUFF: As you know, the Congress is looking into placing a moratorium on any mergers in the next six to 12 months. Do you have any objection to the Congress moving in that direction?

Mr. McGRATH: Yes, the administration is flatly opposed to that kind of a decision. Any kind of artificial constraint on the movement of assets through mergers is very troublesome. Our country works well when there is a relatively free flow of assets through mergers or other transactions. To put an artificial constraint on that can only have unpredictable troublesome results, and that's why we strongly oppose the legislation that has been advocated in the Senate, and we are quite confident it will be defeated. It was withdrawn today. It was on the floor, but it has been withdrawn, at least for the time being.

WOODRUFF: Well, thank you, Mr. McGrath, for being with us.

Mr. McGRATH: Thank you, Judy.

WOODRUFF: Jim? After Illinois?

LEHRER: Thank you, Judy. And now it's Gary Hart who must stage a comeback. Walter Mondale has completed his. That, for what it's worth, is the upshot of today's conventional wisdom on yesterday's Democratic primary results in Illinois, results which saw Mondale win 41% of the more than one million votes cast to 35% for Hart and 21% for Jesse Jackson. It was a victory that also increased Mondale's lead in delegates. He now has 619 to Hart's 327 and Jackson's 61. It will take 1,967 to win the Democratic nomination. Hart and Mondale looked at yesterday's results and, of coures, saw them differently.

Sen. GARY HART, Democratic presidential candidate: I suppose I put somewhere between 72 hours and 96 hours into the Illinois primary. For someone who was at 3% in the national polls four weeks ago to come in with 35 or 40 percent of the vote in that state in that period of time I think is extraordinary. It is not over yet, and I think suggestions that somehow it is over are premature, to say the least.

WALTER MONDALE, Democratic presidential candidate: This is a good night, but we got a long tough road to the nomination and to the election. And we must carry on from here. And one thing I feel best about is that I believe we've gotten the debate on the only question that counts, namely, who would make the best president of the United States. I think that question of who can handle the toughest of all assignments as president -- our security and our foreign policy -- I think I was gaining ground every day in that debate. This was a very important victory, but I've got a long way to go. I've got nothing to take for granted, and I am not taking anything for granted.

MacNEIL: With some variations the Illinois voting confirmed what other primaries have shown, that Walter Mondale has the advantage among older people, blue-collar workers and union members -- traditional Democratic voters, while Gary Hart is stronger with independents -- people who voted for Reagan or Anderson last time, and with young urban professionals. Hart carried the 30-to 44-year-old age group yesterday, and Mondale won the older vote. But Jesse Jackson, by pulling such a huge black vote -- about 75% -- actually won the total vote among young people 18 to 30. According to the ABC News-Washington post exit polling. Hart and Mondale split the white vote, some polls giving one or other the edge, but Mondale's black vote, 15 to 17 percent in those exit polls, may have given him the victory over Hart. The answers voters gave to ABC pollers' questions indicated a new sharpness in the campaign. Fewer than half of the nominee. ABC also said that Hart had a stronger appeal for women voters than Mondale by a ratio of four to three, while NBC said Mondale outpolled Hart among Jewish voters as well as Catholics, Polish and Irish.

Jim?

LEHRER: The Democrats of Minnesota also voted and chose yesterday. It was a caucus exercise instead of a primary, so the results are not yet complete and official, but Minnesota is Walter Mondale's home state and to no one's surprise initial results show him winning big with 62% of the vote to Hart's seven and Jackson's three, with 28% uncommitted.

Our ration of conventional wisdom on what yesterday all means comes first now from Alan Baron. Mr. Baron is a Democratic analyst who edits his own political newsletter. Mr. Baron, do you agree with the conventional wisdom that Mondale is now back and it's now Hart's turn?

ALAN BARON: Well, I think there's two ways to look at the race, and I think the two candidates look at it very differently. There's one way to look at a presidential race, as like a tennis tournament where you keep fighting your opponent and there's one survivor. And I think that's what Walter Mondale's campaign has been, and right now the basis of his campaign is to attack Gary Hart's credibility and hopefully defeat him and then to run an anti-Reagan campaign. And of course the choice is Hart or Mondale. Now, Hart's strategy is very different. Hart's presenting a message, as Ronald Reagan did in 1980, and he's presenting a thematic approach to the presidency in which he says that neither the New Deal liberalism of Walter Mondale and traditional Lyndon Johnson works, nor the new right Republicanism of Ronald Reagan, and he has a different sort of a vision of neoliberalism, whatever you want to say. So it's kind of a debate that's missing each other because, in one sense, Mondale is attacking Hart as an individual and saying, "I'm a better individual," and Hart is saying -- he's attacking Mondale's vision of a return to the basic policies of the Carter administration.

LEHRER: But is it fair to say, looking just at what happened yesterday in Illinois, that the Mondale strategy is working?

Mr. BARON: Well, it's fair to say that Mondale succeeded in Illinois --

LEHRER: Because he really beat up on Hart.

Mr. BARON: Yes, that's right, and he's shifted his strategy to saying, what kind of a person is Gary Hart, and you had a lot of people, I'm sure, that Mondale convinced that Gary Hart should't be President. You also, I'm sure, had a tremendous number of people who said, "Well, wait a minute.I only heard of this fellow a month ago, and I've got some doubts." And Walter Mondale has been around a long time, and I'll vote for him. But I think the test is still on Hart.I think Hart's message is a message that is closer to what people are looking for, frankly, but now they're going to test the messenger, and so it's how Hart handles himself from here on in. Right now I think Mondale's the stronger messenger, and Hart has a stronger message.

LEHRER: Speaking of the message, let's bring John Sears into this. John Sears is a Republican political operative, former campaign chairman -- campaign manager for Ronald Reagan, among other things, and he's with us tonight from Miami. John, do you agree with Alan Baron's reading of what it all means yesterday?

JOHN SEARS: Well, basically I do. I'd say this. I think this is a race Mr. Hart lost rather than that Mr. Mondale won. He had a lead in Illinois as little time ago as three or four days ago, and in the last going, why, he lost it. I think it's indicative of some of the staff problems he had. You know, in politics the organization has got to play music, and the candidate's got to sing, and there wasn't much music or singing coming out of the Hart campaign this year so the people went over and voted for Mondale.

LEHRER: You mean it's that simple?

Mr. SEARS: This week. Yeah, it's that simple, I think.

LEHRER: You think it's that simple?

Mr. BARON: Well, I think that Hart allowed -- I'd agree with John.Hart allowed the debate to get down to issues like the Chicago Democratic machine when Hart's goals should have been -- while there was a large negative vote to that and positive -- Hart won when he kept the goal on, what are we going to do in America for the next four years? Ronald Reagan didn't allow the debate to get to that in 1980. I don't remember the worst thing he said about George Bush. I don't remember him saying anything bad about Bush. You've got to keep your eye on the ball, and Hart's problem was that his whole campaign -- he didn't have a campaign until New Hampshire. You know, the entire staff was volunteer while Mondale had 40 people with printed business cards, and a large number of people earning $50,000 a year, and Hart just had a few young people here, no communications and organization. The issue is whether, now, Hart comes back. I'm certainly not going to say that he can't, and this is a test of him. And candidates are tested all the time like this.

LEHRER: Well, speaking of testing, John Sears, how would you read the way Walter Mondale has met the test, the test since New Hampshire?

Mr. SEARS: Well, I think very well. There was a lot of question back when he lost in New Hampshire as to whether this wasn't sign of a man who had never been through a close race before, whether it didn't unveil weaknesses in the man and so forth. I think over the last three weeks, in his ability to really come together again and to put on an effective performance yesterday he's passed that test. So I think you have to give him a lot of credit for that.

LEHRER: But Alan Baron says, and the facts pretty well bear it out, that it was a negative strategy. I mean, all he did was say bad things about Gary Hart.

Mr. SEARS: Well, I don't think that can continue, either. If all Walter Mondale does is say negative things about Gary Hart, that'll wear out here shortly. So, you know, he's going to have to show a little more than that. On Gary Hart's part, he's going to have to flush out his new ideas now and get the conversation away from many little things that may be wrong with him.

LEHRER: All right, let's look ahead. Next week the next episode in this is Connecticut.The word today is Hart's doing very well there. Would you agree with that, Alan Baron?

Mr. BARON: Well, that's the general consensus, but I think, you know, that this is very much of a national campaign being played on a lot of different battlefields, and you know, the results of various voter groups and all, it's such a personal individual choice that geography is less important than other factors and, if in the next week Mondale does brilliantly and Hart messes up, you can see Connecticut change overnight, or another state. And you can't predict them that far ahead.

LEHRER: Do you agree, John?

Mr. SEARS: Oh, I think Connecticut for Hart is in about the same category that Michigan was for Mondale. Hart's expected to do well in Connecticut, and so if he were to lose that would be a blow; if he wins, he's doing what he should. The next big contest is New York.

LEHRER: And does anything that happened in Illinois yesterday give you any wisdom about what might happen in New York, John?

Mr. SEARS: Well, not really any wisdom, but you know, I think that in Mr. Mondale's case he's coming into New York now with a great deal more confidence than would have been the case if he had lost yesterday. It puts him a good step ahead of where he was prior to yesterday.

LEHRER: Do you agree, Alan?

Mr. BARON: Well, I think so, and I think it's a --

LEHRER: You're hedging everything, aren't you?

Mr. BARON: No, I agree. He's individually very strong. There's a lot of confidence. His troops in New York are not dispirited.But, again, we're going to see a test. For example, today some of the Mondale people were putting out in New York that a major issue was going to be that Hart's campaign had borrowed money from a bank and it turned out that some of the stockholders in this bank -- one or more -- were Arabs, and therefore that proves that Hart's anti-Israel. If Mondale wages a gutter campaign on that level, then you know, one, it depends on Hart's response and, two, even if Mondale succeeds in doing that, even if he destroys Gary Hart, that doesn't come back to the basic question because if Americans are choosing -- I won't hedge on this at all. If Americans perceive the choice in November as between this administration and the last one -- Carter/Mondale -- then they will come up with the same verdict they came up with in 1980. And so therefore Mondale must, which he hasn't, define an alternative to Ronald Reagan for the future, not a choice between the present and the past. And Mondale has failed to do that yet.

LEHRER: Do I hear an amen from Miami, John Sears?

Mr. SEARS: Well, yes. I agree with that. I think one of the most disturbing things that probably hasn't been mentioned too much today is the fact that even though Gary Hart lost the Illinois primary and lost it fairly badly, given his lead of last week, the exit polling demonstrated that Hart would still run a better race against Ronald Reagan than Walter Mondale, the winner of the primary would, and that's the basic dilemma the Democrats are in.

LEHRER: All right. John Sears, in Miami, thank you for being with us; Alan Baron here, thank you very much.

Robin?

MacNEIL: The Pentagon reported today that an American aircraft carrier and a Soviet submarine collided in the Sea of Japan. The collision occurred in the darkness about 10 p.m., local time, about 150 miles off the coast of South Korea while the carrier Kitty Hawk was on maneuvers with the South Korean navy. Navy sources said the submarine, described as a 5,000-ton vessel of the Victor class, was sailing without lights. After the collision the submarine was seen heading north towards the Soviet base at Vladivostok. The 80,000 ton carrier shuddered when the two ships hit, the Navy said, but apparently there was no serious damage or injury.

In another maritime episode the Soviet Union formally accused the United States of piracy and terrorism in connection with damage to a Soviet tanker in Nicaraguan waters. A mine explosion in Puerto Sandino Harborblew a hole in the tanker's hull yesterday, and five crewmen were injured. The hole was patched and the 22,000-ton tanker reached port. The government of Nicaragua said the mine was planted by rebels who are supported by the United States. But Moscow said the United States was responsible.

Finally, a Soviet aircraft carrier has entered the Caribbean Sea for the first time in 15 years. The ship was identified as the helicopter carrier Leningrad. Accompanied by a destroyer and an oil tanker, she is headed towards Cuba.

Jim?

LEHRER: And on the Middle East there were several developments today. President Reagan officially canceled his request to sell anti-aircraft weapons called Stingers to Jordan. The decision followed congressional reaction to Jordan King Hussein's attack on U.S. Middle East policy last week, a policy Hussein said was too pro-Israel. Mr. Reagan also dispatched his Middle East negotiator Donald Rumsfeld back to the area. His itinerary includes stops in Egypt and Israel, specific mission unknown.

In Beirut today four people died and 22 were wounded as the ceasefire among the warring factions continued its precarious course. And Lebanese President Amin Gemayel stopped off in Paris on his way back home from that failed Switzerland reconciliation conference. He met with French President Mitterrand, as did another Lebanese leader, Shiite Muslim Nabih Berri. France still has 1,250 troops in Lebanon, the last of the multinational peacekeeping force.After his Gemayel and Berri meetings, President Mitterrand himself boarded an airplane for a trip here to the United States. The Middle East is sure to be one of the major subjects he will discuss with President Reagan at the White House tomorrow. It was also one of the things he discussed last Friday with our own Charlayne Hunter-Gault, who interviewed the French President at the Elysee Palace in Paris. Francois Mitterrand Interview

FRANCOIS MITTERRAND, President of France [through interpreter]: One thing is clear. The multinational force which, well, three parts of it, three elements, have already left Lebanese territory, and the multinational force, let's face it, has not fulfilled its role, perhaps, as much as would have been a good thing. But, well, I think, yes, the West as a whole, perhaps, has, to use the phrase that doesn't oversay what I'm trying to say, shall we say, the West hasn't increased its assets and its opportunities in the Near East.

CHARLAYNE HUNTER-GAULT: By the same token, do you feel that the Soviets have increased their assets? I mean, are they now -- do they have to be considered as a major player, if not the major player in the region through its surrogate Syria?

Pres. MITTERRAND [through interpreter]: No. No, I don't think Syria is completely subservient to the Soviet Union for one thing. Syria has agreements, privileged relations with the Soviet Union, yes, but, after all, Israel has privileged relations with the United States. Furthermore, I think in any case the Soviet Union -- and it's in the very nature of things -- it's part of the calling of the Soviet Union to exist in a certain fashion in that part of the world. Not directly, but through influences, through influence. I think it would be a mistake to try to establish a lasting equilibrium in the Near and Middle East, pretending that the Soviet Union doesn't exist. It would also, mind you, be a mistake to grant the Soviet Union a role which would be in excess of what it's role should be.

HUNTER-GAULT: Let me just ask you about your perception of U.S.-Soviet relations in the wake of Mr. Andropov's death and Mr. Chernenko's ascension to the head of the Soviet Union. Do you sense that there is any thaw in the relationship, and should some new initiative be taken at this time?

Pres. MITTERRAND [through interpreter]: I don't think one can really say that between Andropov and Chernenko there is all that much difference in the way they assess world affairs.There may be a different character, a different personality, yes, but both are really -- were really expressing a sort of collective will, if you like, the feeling, the position of the bodies that govern the USSR. And we must remember that they have time and they have patience and continuity. Now, in objective terms, of course, I don't know what Soviet intentions are naturally, but I think it would have been -- it was very difficult for the Soviet Union to start up the peace negotiations again so soon after having found that the deployment of the Pershings decided by the NATO countries had, in fact, become a fact and despite their warnings and, indeed, their threats on some occasions. And so it takes time to get over that kind of situation. But at the same time I think the Soviet Union wants peace, and that when the opportunity arises, when the time will appear to be just right in the coming months, then I think probably new efforts will be made by the Soviet Union in order to start up a new form of negotiations.

HUNTER-GAULT: Do you plan to raise with President Reagan the problems that some of America's economic policies have caused? I mean, what has the strong dollar, and what have high interest rates meant to the French economy.

Pres. MITTERRAND [through interpreter]: The French economy and the economy of a number of other countries too, because high interest rates in real terms, in relation to the degree of inflation, is something that is a burden on the economy and the economy of the development of countries such as ours. As the dollar is an international currency, the responsibility of people who govern the monetary policy of the country of the dollar, it is a responsibility that goes beyond the purely national interests of one single country. And in that respect, it's not for me obviously to pass judgment on the internal political affairs of the United States. That isn't obviously within my purview at all. But it is true that I do believe there are certain effects, certain phenomena that spring from a very large budget deficit in the United States. Well, such phenomena carry with it a number of consequences which have delayed or are delaying the return of growth in most industrialized countries in the world.

HUNTER-GAULT: Mr. President, let me just ask you about the internal situation here in France. In the United States we see in the media pictures of strikers blocking the roadways and we read stories about problems with workers. Are you -- what's your assessment of the situation? It looks pretty serious and pretty bleak from our side of the ocean. Is it that serious?

Pres. MITTERRAND [through interpreter]: I think that you're wrong. The strikes in France in the last two years have achieved the lowest level in the last 10 years. There are far fewer strikes at present than before 1981, and before 1981 it wouldn't have occurred to you to ask this question to the president of the republic. Why? No, no. So, in other words, your preface is wrong. What is true? What is true is that France, like many other countries, is up against a difficult problem -- adapting herself to the new industrial revolution, and that that implies bold measures, bold moves towards new technologies. And that means that you have to train people very quickly and very effectively, men and women, in order to master these new technologies. It also means that you have to give up a certain number of obsolete technologies. And what people mean when they talk about the crisis, it's in fact the time that elapses between the technological revolution and the time when the society becomes adapted to it. But this is true in all the countries that we're talking about, not only in France. And by all parameters, as the economists would say, the French position now is better than three years ago. But this people don't always seem to know and realize, and as too few people say these things -- well, I say these things. And I'd like someone to prove that I'm wrong, because I'm not.

LEHRER: And there's a development today on the crucifix struggle in Poland. Pope John Paul II voiced his support for those fighting to keep the crucifixes in the public schools. This morning at the Vatican he said he felt solidarity with the Polish Catholics on this issue.

[Video postcard -- Poteau, Oklahoma] Coal Leasing

LEHRER: A Senate committee today heard the findings of something called the Commission on Fair Market Value Policy for Federal Coal Leasing. Don't go away. That was the group former Secretary of the Interior James Watt described as consisting of "a black, a woman, two Jews and a cripple." And he is the former secretary for having done so. But after Watt's stormy departure the commission went on about its business and kicked up a storm of its own with its findings -- primarily that the government's coal leasing program has been seriously mismanaged. The commission's chairman, David Linowes, is here to tell us how and why, as he did the senators today. Mr. Linowes is a professor of political economy and public policy at the University of Illinois.

How bad was the mismanagement, sir?

DAVID LINOWES, Coal Leasing Commission: Well, we found the management very disruptive occasioned by considerable controversy and changes in direction -- quick changes in direction, unresponsive to the needs of consumers, to the needs of the coal-mining states, and the needs of the nation itself for stability so that it could engage in long-term economic and environmental planning.

LEHRER: Who's reponsible for this?

Mr. LINOWES: It's a combination of things, not the least of which is the outmoded laws that we have to work with. Some of those laws were passed during a different economic era, when we were an agrarian society, and therefore not energy-intensive. Some laws were passed out of a misunderstanding by Congress as to the nature of the coal market, and some actually out of the skepticism and even mistrust of Interior Department officials by the Congress. You have this combination plus the ongoing, never-ending conflict among the coal industry, the railroads, environmentalists, the administrations and the Congress, and you get this haphazard state of affairs.

LEHRER: And the result of this haphazard state of affairs was what? I mean, who's gotten hurt, if anybody? Why should we care?

Mr. LINOWES: Well, naturally the consumer got hurt.

LEHRER: How?

Mr. LINOWES: For example, when you have constant moratoriums, as we've had -- and this is not a new problem. President Theodore Roosevelt established a moratorium in 1906 that continued until 1920 because the public and the Congress were suspicious of the Department of the Interior in those days. When during the '70s when we had an energy crisis and there was only a trickle of coal leases placed on the market -- emergency leases because of a moratorium, all 240 Americans were hurt. On-again, off-again moratoriums just doesn't help anyone. You add that to the fact that the least expensive energy we have is coal.

LEHRER: Excuse me. Let me make sure I understand what you mean. There's a shortage of coal as a result of this mismanagement, or we paying too much for what we do have, or what?

Mr. LINOWES: There's a shortage of energy. In terms of capacity it takes four barrels of oil to produce as much energy as one ton of coal, and yet the price of that energy that comes from coal is one-third to a fourth the price of oil. We have the greatest resources in the world in terms of coal, and coal is very important for our society. Many people are not aware of it, especially those in the East. We export $6 billion worth of coal a year. We produce an equal amount of energy units -- British Thermal Units -- in coal as we do oil and gas. In terms of consumption, we consume about 22% of energy through coal. Ninety percent of our utilities, electric utilities in the West, produce that electricity by use of coal.

LEHRER: Now, you said that moratoriums don't help anything. That has been the reaction of the new secretary of the interior, Mr. Clark, to your commission's findings. You go along with that?

Mr. LINOWES: Well, of course we were very gratified that just the day before yesterday Secretary Clark did present his review. He had a task force reviewing our report, and it's a rather extensive one, 639 pages, and he accepted all of our recommendations but one and one that wasn't too important. We now are presenting our material to the Congress; the Senate Energy Committee met this morning, at which I testified, as you had indicated, and thus far is seems like it's being rather favorably received. So we're pleased because it will require at least seven changes in the laws, and we have 36 recommendations in all, but Secretary Clark has accepted just about all of our recommendations.

LEHRER: Is he going to do something about the mismanagement in the Interior Department?

Mr. LINOWES: Well, hopefully so.

LEHRER: Are you satisfied that he will?

Mr. LINOWES: I would be satisfied after it's accomplished. I'm satisfied that he is going in the right direction. He's indicated that he will. And I have no doubt in my mind that he will proceed on that basis, and I might add that I do feel our recommendations do present a blueprint for improving the effectiveness of our coal management program.

LEHRER: Is it in such bad shape that it's going to take years to overcome this negative influence?

Mr. LINOWES: Not at all because what we have -- because there were these moratoriums to a large extent. We had another moratorium from 1971 to 1981, which means personnel within the government were not able to develop a kind of expertise, nor could they develop and refine the procedures. And as a result there were tremendous numbers of mistakes, bad business judgment, in appraisals themselves we found extensive errors. Now, this is a type of thing that can only be corrected by pursuing dynamic management supervision and monitoring what's being done.

LEHRER: How much of the responsibility for the mismanagement and the other problems would you lay at the feet of former Secretary Watt?

Mr. LINOWES: Well, I try not to get involved in personalities. We were set up by act of Congress to examine the statutes, the procedures and the policies, but actually our criticisms, if you want to word it that way, fall into three areas. One deals with the laws themselves, which I commented on which need changes in our judgment and so recommended. Others have to do with traditional problems such as career people who were just making too many errors in their appraisal computations. They did not have enough people of different qualifications to deal with these issues, and then some of the matters in the recent years. They involve the leasing level, the amount that was leased.They involved some unwise errors, some errors in judgment by some of the administrators that made last-minute changes in procedures, that gave the wrong signals to the public and to the industry. It gave the people the impression that the government was cutting its price, which it was not.

LEHRER: Mr. Linowes, thank you very much. Robin?

MacNEIL: On Capitol Hill today the Senate Energy and Commerce Subcommittee heard arguments and counter-arguments on a bill that would forbid mergers among the top 50 oil companies for six months to a year while Congress reviews antitrust laws. Congress has become interested in oil company mergers because so far this year alone there have been four mergers or attempted mergers involving many billions of dollars. One of them is a $13-billion deal between Standard Oil of California and Gulf Oil, which T. Boone Pickens of Mesa Petroleum is also trying to take over.

The first witness today was Michael Pertschuk, a Democratic member of the Federal Trade Commission, which takes the lead in reviewing proposals to merge oil companies.

MICHAEL PERTSCHUK, Federal Trade Commission: The fact of the matter is that there are far more losers in our country from these mergers than winners. Far more Americans stand to pay higher gasoline and home-heating oil prices from reduced competition and exploration than will receive a stock windfall or handsome broker's fee. Mr. Chairman, a proposed moratorium on oil mega-mergers makes sense because the likely answers to the serious questions you have posed at these hearings mean these mergers make no sense.For more than a decade the taxpayers and consumers of this country have generously contributed to the amassing of huge oil industry hope chests to fund the battle for energy independence. Instead we now subsidize the cannibalization of the oil industry.Actions to halt these mergers would not be so pressing if the policies of past administrations were in effect. Most of these mergers would have been unthinkable then, and they should be unthinkable now.

T. BOONE PICKENS, chairman, Mesa Petroleum Company: I can only see winners in this group. Again, I come from the stockholders' direction -- profits on undervalued assets such as Gulf Oil. Gulf Oil's appraised value was $114. When we started buying the stock it was $36; $13.2 billion is what Socal has offered for Gulf. That goes directly into our economy. It goes into the hands of $300,000 people to be reinvested wherever, whatever, plus $2 billion in taxes. The consumer? The consumer gets a more efficient operation. You're combining two companies here. One has had a lackluster record; one has had a good record for a major oil company. You're combining two companies. The assets are flowing into the hands of stronger management, which is good, which'll be ultimately cheaper products to the consumer.

JACK BLUM, Independent Gasoline Marketers Council: You have to ask how you get a more efficient entity when you put together two exploration departments. The same personnel are there. The same rigs are there. The same prospects are there. I don't see that increasing efficiency at all, but I see a lot less money there and a lot more debt service and a lot more difficulty in finding the stuff.

WALTER ADAMS, economist: Now, with oil companies, Mr. Chairman, in America now replacing on the average only about 40% of the oil they produce, that is not good news. And as known reserves are depleted, it is questionable whether public policy should permit the petroleum giants to work harder at swallowing each other instead of redoubling their efforts to find new reserves. I respectfully submit that public policy, which tolerates and rewards such conduct, is calculated to achieve not innovation but stagnation.

G. M. KELLER, chairman, Standard Oil of California: It doesn't seem to me that mergers have to be in the national interest but rather that we should at least be able to show they are not to the disadvantage.

Rep. JIM SLATTERY, (D) Kansas: Is it safe to conclude that you made the decision that you could acquire the crude reserves owned by Gulf cheaper than you projected you could go out and find a similar quantity of reserves?

Mr. KELLER: Not necessarily, because these aren't alternatives. We view these as essentially unrelated items. There's a real fallacy here which Mr. Lichtblau pointed out, and I don't quite know where it comes from, but there isn't the remotest relationship between the reserves we have in hand and our exploration activity. We aren't trying to find crude oil to put in our refinery. We're trying to find crude oil because it's economically attractive to do so. Our tender offer becomes a binding contract for us to purchase the shares for cash as soon as we have FTC approval. We anticipate that, let's say, three or four weeks from now. At that point, having bought the shares, if there then is legislation that says that we may not merge, then we have an absolute shambles. We own an enormous company which we can't own and, obviously, for which there is no other market. So the alternative presumably is to dismember it in some fashion.

MacNEIL: As Attorney General McGrath said on this program earlier, that proposal for the moratorium has been temporarily withdrawn. As an alternative to the moratorium on oil company mergers there's also a proposal to make them less attractive by removing certain tax advantages.

LEHRER: And, from the medical beat, two stories from today's issue of The New England Journal of Medicine. For people who suffer from asthma, relief can be obtained from the caffeine of two cups of strong coffee instead of the commonly prescribed drug which is called theophiline. Researchers said coffee should not replace the medicine, but their studies show that it works in a pinch. Another research team reported that people who suffer from cancer of the colon do not live any longer if they receive chemotherapy along with surgical removal of the tumors. Colon cancer kills 50,000 people a year in the United States, second only to lung cancer. The study showed that the combination of surgery and and drugs is no more effective than surgery alone.

Robin?

MacNEIL: Once again, the main stories of the day. President Reagan went to Congress today trying to persuade Republican senators and representatives to support his plan for reducing the federal deficit.

The Justice Department withdrew its objections to a merger between LTV Corporation and Republic Steel.

An American aircraft carrier collided with a Soviet Submarine in the Sea of Japan. Moscow charged that the United States is responsible for a mine explosion that damaged a Soviet oil tanker in Nicaragua.

And the President decided to drop a proposal to sell Stinger anti-aircraft weapons to Jordan and Saudi Arabia.

Good night, Jim.

LEHRER: Good night, Robin. And we'll see you tomorrow tonight. I'm Jim Lehrer. Thank you and good night.