The MacNeil/Lehrer NewsHour

Intro ROBERT MacNEIL: Good evening. Leading the news today, the U. S. dollar fell to a new low, and stock prices tumbled in Tokyo and New York. All 28 Marine guards at the U. S. Embassy in Moscow are being replaced, following the arrest of two on spy charges. Van Gogh's SUNFLOWERS was sold for almost $40 million, the most ever paid for a painting at auction. We'll have details in our News Summary in a moment. Jim? JIM LEHRER: After the News Summary, U. S. trade representative, Clayton Yeutter, analyst, Hugh Patrick, and economist, David Jones, take us through the latest on the chip and yen war with Japan. Correspondent, June Massel looks at the issues raised by the legal and emotional fight over Baby M. Congressman Thomas Foley and Senator Phil Gramm argue the highway bill veto, and essayist, Penny Stallings has some words about the Oscars.News Summary MacNEIL: Currency and stock markets in Tokyo and New York reacted violently to fears of a trade war between the U. S. and Japan. Responding to President Reagan's Friday decision to slap 100% tariffs on Japanese products using cheap computer chips, the markets produced these results today. The U. S. dollar fell to a new low against the Japanese yen, down to l45. 20 yen to the dollar. The Tokyo stock market suffered its second biggest one day fall ever. On Wall Street, share prices feel sharply. At one pointin early trading, the Dow Jones average of 30 industrial stocks was down some 80 points. Although prices recovered somewhat, the index suffered its third worst point loss ever, dropping 57 points, to close at 2278. 4l. Both short and long term interest rates rose, as did gold prices. President Reagan's budget director, James Miller, said the administration had not meant to drive the dollar or stock prices down, but he told ABC the threat of heavy U. S. tariffs on electronic parts had gotten their attention for sure. Jim? LEHRER: The Supreme Court spoke about air bags today. The court refused to order them or automatic seat belts installed in automobiles. The case was brought by the State of New York against the U. S. Department of Transportation. It alleged the department was sacrificing life and limb on the roads by not requiring bags or automatic belts. President Reagan also made the case again today for his veto of the $88 billion highway bill. The House votes tomorrow on whether to override that veto. Mr. Reagan spoke to a special forum of federal executives in Washington about it and the last two years of his administration.

President RONALD REAGAN: Friends, we are not about to fall on the ball and wait for the clock to run out. Instead, we're going to have the greatest fourth quarter in presidential history. To begin with, you might have noticed that lately there's been a little trouble with the way that big spenders in Congress have been handling the budget. I have to admit that legislation like the $88 billion boondoggle of a highway bill sort of gives me a case of heartburn. How do I spell relief? V E T O. LEHRER: Mr. Reagan also said it was now time to move forward from one of the more frustrating times of this or any other administration, from four months of what he calls 'ceaseless attack' over the Iran contra affair. MacNEIL: The second blizzard in less than a week has left sections of the plain states in snow drifts of up to l4' deep. In Colorado and Kansas, snow plows were unclogging 250 miles of interstate highway from Salina to the Colorado border. While National Guard helicopters also airlifted feed to livestock marooned in 18 Kansas counties, the problem further south wasn't snowfall, but falling temperatures. Low records were set today in cities all the way to Corpus Christi and Galveston, which broke a century old record, with a temperature of 37 degrees. LEHRER: It was not pressure from the United States or Israel that caused a central figure in the Pollard spy case to resign. The Israaeli ambassador to the United States said today that Colonel Aviem Sella stepped aside on his own. Sellah is under indictment in the U. S. for recruiting U. S. intelligence agent, Jonathan Pollard, to spy for Israel. Yesterday, Sella quit his job as commander of Israel's largest air base. Here's what the Israeli ambassador said.

MEIR ROSENNE, Israeli It was made very clear by Colonel Sella himself -- that this is his decision to step in order to avoid any additional problems in the relationship between Israel and the United States.Ambassador: LEHRER: Also on the spy front today, the U. S. government ordered home all 28 of the Marine guards at the U. S. Embassy in Moscow. A spokesman said it will help facilitate the investigation of two former guards, a Marine sergeant and corporal, on charges of letting Soviet agents into the Embassy at night, and handing over sensitive information. The current guard contingent will be replaced by Marines from other posts and stations. A State Departmentspokesman said none of the 28 ordered home today is implicated in the spy scandal. MacNEIL: British Prime Minister, Margaret Thatcher, and Soviet leader, Mikhail Gorbachev had four hours of talks today, described as vigorous and forthright. On the third day of her Soviet visit, Mrs. Thatcher pressed the importance of human rights actions as a test of Soviet promises on other matters, like arms control. Speaking at a Kremlin banquet tonight, she welcomed the new openness introduced by Gorbachev, but added, ''We will reach our judgements not on intentions or on promises, but on deeds, and on results. '' Pakistan said today that its jet fighters have shot down an Afghan war plane that penetrated 10 miles inside Pakistan. The incident followed Afghani air raids last week, in which 152 people were killed along the border. Pakistan flies American supplied F16 jets, and the Afghans use Soviet aircraft. LEHRER: Back in this country, two key congressmen came down hard today on the Air Force and its B 1B bomber. Democrats Les Aspin, Chairman of the House Arms Services Committee, and Samuel Stratton, Chairman of the Subcommittee on Procurement, said the Air Force had mismanaged the plane's development and production.

Rep. LES ASPIN (D) Wisconsin: We have a plane right now that does not do all that it was designed or advertised to do. But it does some things. We know that with time and money, it can be improved. The question that we have to find out is is that worth it. What Congress did was to accept exactly what the Pentagon wanted on this one. Which was a multi year procurement, a cost cap and no fiddling with it at all. We did not fiddle with it. We just left them alone. And frankly, the Air Force screwed it up. LEHRER: The congressman said it would take about $3 billion over four years to fix what's wrong with the B1B. The U. S. Air Force had no comment on that report. MacNEIL: Finally, in the news, Vincent Van Gogh's still life painting, SUNFLOWERS, sold for nearly $40 million today in London. The amount was more than three times the previous record price for a single painting sold at auction. The impressionist masterpiece was sold to an anonymous collector at Christie's Auction House, and bidding went up by increments of half a million pounds, or $800,000 at a time.

AUCTIONEER: 22,500,000 pounds, for the last time. MacNEIL: The final price, including commission, was $39. 85 million. The Dutch painter, who never sold a painting in his lifetime, painted SUNFLOWERS in 1889, a year before he killed himself at the age of 37. And that's our News Summary. Coming up, trade wars and nervous markets, conflicts for feminists, the highway bill veto, and the Academy Awards. Chipping Away LEHRER: The war with Japan over chips and yen is first tonight. It's become a rough one. Friday, the Reagan administration announced stiff tariffs on certain Japanese electronic products that would double the price of imported television sets, lap top computers, stereo equipment, and other consumer items. The action sent the price of the U. S. dollar to a 40 year low against the Japanese yen, raised Japanese tempers and spun some international financial markets into a tailspin. The Japanese stock market fell sharply today, and so did U. S. stock and bond markets. We hear an exchange of reports from the front now. The U. S. view is from Clayton Yeutter, President Reagan's Special U. S. Trade Representative, and the Japanese is from Hugh Patrick, a professor at Columbia University Business School, and Director of his School Center on the Japanese Economy and Business. Mr. Yeutter, first, what was the message the United States intended to send to the Japanese Friday with this chips decision. CLAYTON YEUTTER, Special Trade Representative: Well the basic message, Jim, is that when you sign an agreement, we expect you to fulfill the terms of that agreement. We negotiated this particular agreement with the government of Japan last summer, after many, many hours of hard work. The agreement went into effect in September, and some provisions of that agreement simply have not yet been fulfilled. LEHRER: This is an agreement on microchips, correct? Mr. YEUTTER: Yes. This is on semiconductor chips, which are a very important part of our high technology base in this country, and the agreement really had three parts, two of which are at issue here. The first one was in essence, ''Thou shall not dump in the U. S. market. '' LEHRER: When you use the word, ''dump,'' that means bringing them in here at a cheaper price than what they cost? Mr. YEUTTER: Exactly. And that part of the agreement has been fulfilled at least in reasonably effective fashion. It's the other two parts that have been of concern, Jim. One is ''Thou shalt not dump in third country markets. '' Our concern was that if Japanese firms would no longer be able to dump in the U. S. , that they would simply move into third country markets, with very aggressive and predatory pricing practices. And that's exactly what happened. And the third part of the agreement -- LEHRER: And by that, they would come in here, eventually. Is that right -- ?

Mr. YEUTTER: -- eventually come in here, but also, of course, undercut our semiconductor firms in their export to third country markets. And the third part of the agreement, Jim, was opening of the Japanese markets. ''Thou shalt truly open thy market in Japan. '' And that just did not happen. LEHRER: And the U. S. position is that the last two have not been honored. Mr. YEUTTER: That's correct. LEHRER: Professor Patrick, how do the Japanese read the message of Friday's decision? HUGH PATRICK, Professor, Columbia: I think there's been a great deal of shock on the part of the Japanese that this agreement has come to this perilous state. Essentially, the problem was that everyone signed what was a bad agreement last summer, and we're having a playing out of something that is not only bad economics, but is very difficult, indeed, virtually impossible to administer and implement effectively. The Japanese claim that they're making a real effort to administer the thing effectively, but they can't require Japanese companies to buy American products, and they're having a hard time managing the problem of a gray market developing when there's excess capacity -- LEHRER: Define a gray market in this case. Prof. PATRICK: Well, they tried to keep the major producers in line, but there are a lot of small traders of semiconductors, not only in Japan, but in Hong Kong and Singapore. They will buy from a small producer at a low price, and perhaps reship to the United States, or see to it that they are put into products that are shipped to the United States. LEHRER: So, the Japanese view then of what Ambassador Yeutter just outlined is an unfair action against Japan? Prof. PATRICK: Certainly that's the Japanese perspective -- that this is an uncalled for, and unfair action, because they've been doing the best they could with what was a very difficult agreement, in practice, to implement. LEHRER: You don't agree that they were doing everything they could? Mr. YEUTTER: No, I certainly do not, Jim. And I must preface that by saying that it doesn't give us any joy to take this kind of action. Japan is a great friend, and we hope that they wil folow through now in implementing the agreement as they should. We don't want to take a retaliatory action here if we don't have to. That's not really what's involved here at all. LEHRER: Professor Patrick, is Japan in a position to retaliate against the retaliation. What do you expect to happen next? Prof. PATRICK: I don't think the Japanese want to retaliate. Indeed, the official government line has been rather quite muted and conciliatory. They too want to compromise. The problem lies with general public opinion. In some sense, this action, following a number of previous actions, has sort of made the Japanese feel that they've had it stuck right up to their throats. With a series of hostile actions. They worry very much about the use of phrases like ''predatory, hostile, adversarial trade. '' And they regard that as not the sort of terminology that's appropriate for what is supposed to be an alliance relationship. LEHRER: They're also hot -- are they not, Professor Patrick -- about what's happened to the price of the yen and the dollar. True? Prof. PATRICK: Oh, this has disturbed them a great deal. The appreciation of the yen is finally beginning to take hold in the economy, and asserting a great deal. And Japanese industry is complaining that even at 150, they're losing money. And to have the agreement that they thought existed between Baker and Miyazawa fall apart in the last day or two, further incenses them, and makes them start to express this anger more overtly than they have before. LEHRER: Mr. Ambassador, do they have any right to complain? Mr. YEUTTER: No. In my judgement, Jim, they brought this problem on themselves. I wish it hadn't happened, because all we were asking them to do is do what they've agreed to do. I don't agree with Professor Patrick that this was an unsound agreement. The agreement simply says that the Japanese firms should not dump semiconductor chips. That happens to be an international agreement under the general agreement of tariffs and trade these days. In other words, the spirit of international trade says that nations and firms shouldn't dump. And so I don't see anything wrong with that. LEHRER: Do you think they could stop it if they wanted to? Mr. YEUTTER: They most certainly can. I do not agree with the position that it is impossible for the Japanese government to effect the conduct of those firms. In my judgement, the government of Japan can effect the conduct of those firms, and can take corrective action, if it simply wishes to do so. And in fact, the government apparently is beginning to do that just now. I just wish they had started six months ago, instead of six days ago. LEHRER: What about the yen question? Mr. YEUTTER: Well, certainly, the movement of the yen is causing some economic turmoil in Japan, and that's understandable. My only response to that is that although I can be emphathetic with that, we've gone through about five years of struggle here in the United States, going just the other direction with a very strong dollar, affecting our imports -- our exports -- into Japan and other places around the world. So, although I can sympathize with the economic turmoil that exists there, it's occurred for only a few weeks or a few months in Japan. We've gone through it for a number of years. And this kind of adjustment was just just inevitable. LEHRER: How will that argument go down in Japan, Professor Patrick? Prof. PATRICK: I don't think it will go down very well. They will claim that the yen has appreciated in dollar terms more than 40% in the last two year period. In fact, most of it last year. And they say that's more than enough. The general feeling is that somehow Japan has done a great deal to open its market, to appreciaate the yen, and that the United States is scapegoating Japan and is not solving what are essentially Americana domestic problems. LEHRER: What about -- Prime Minister Nakasone is due to come to the United States and see the President -- I think it's on the 17th or 18th. Is he going to have a special burden to bear politically back home when he comes over here? Prof. PATRICK: I think he's coming later in the month. The 17th is when there's supposed to be some sort of compromise reached on this particular issue. However, the dilemma has been that this issue has indeed broadened out, and has raised Japanese anxieties over the whole range of issues that are dealing with the U. S. /Japan trade frictions. This comes at a time when Prime Minister Nakasone is already vulnerable domestically. And it certainly further weakens his position at home. Therefore, I'm not quite sure how that trip is going to be played out. LEHRER: From the U. S. perspective, Mr. Ambassador, is this coming trip seen as a peace trip, or are they going to yell at each other? What's going to happen? Mr. YEUTTER: Well, obviously, there are going to be some difficult issues on the agenda, but clearly Prime Minister Nakasone will be greeted in a friendly, amicable way. That will not change the overall relationship. The President has a very high regard for the Prime Minister. So do all the rest of us. So, it will be a friendly visit. But at the same time, we can't ignore these difficult issues that are confronting us, and we shouldn't ignore them. LEHRER: Is the administration prepared for a long fight over this? Or is this just a one shot deal? ''Let's get their attention and see if we can't work out something''? Or have you got a plan -- that ought they do this, we'll do that? This could go on for a while. Mr. YEUTTER: Well, Jim, we've indicated that if they'll begin to implement the agreement as we believe they are required to do, if they wish to honor it, we're prepared to lift the retaliatory action. But clearly there has to be a demonstration that the agreement is really being followed -- and not just rhetoric that indicates that at some point and time we'll do what we're supposed to do under this agreement? LEHRER: Peace at hand, Professor Patrick? Prof. PATRICK: I think that peace will come about, but I think in the same time we're going to hear in the course of the next few weeks more and more Japanese media opinion, and business opinion, which expresses more openly what I think is a great deal of anger and frustration with the United States. LEHRER: Gentlemen, thank you. Robin? MacNEIL: For a view of how the trade sanctions and the falling of the dollar are affecting the U. S. economy and Wall Street, we talk with David Jones, Senior Vice President and Chief Economist with Aubrey G. Lanston, a New York Security Firm. What are the markets saying today to the Reagan administration? DAVID JONES, economist: The pieces have come together, Robin, and the markets are saying without any doubt that this shot across the bow in a trade war was wrong by the administration. The dollar has fallen. There's a fear of inflation, interest rates have risen, and the stock market has fallen. I have never seen a judgement as clear by a set of markets to suggest the trade war declaration was wrong.

MacNEIL: What is the fear of inflation based on? Mr. JONES: Well, the concern is really twofold. First of all, when we have a situation like this, with the dollar falling, in terms of a foreign currency, that means that the price of everything that we buy -- particularly from Japan, from autos to cameras -- will go up. And that adds to consumer prices. We've already seen in January and February, Robin, acceleration in consumer prices. It looks like we will have maybe three times the inflation in 1987 that we had in 1986. The second concern, and really a major concern, is that each of these protectionist measures, each of these additional duties tacked onto products from abroad, reinforces the increase in inflation. So, in effect, we get a double whammy here on the inflation side, and the markets weren't prepared for that. MacNEIL: But mightn't that discourage American consumers from buying some of these products, which would help the trade deficit -- which presumably is part of the purpose. Mr. JONES: It could, but it would be painful. And it will be painful, particularly for the financial market, because as inflation goes up and as the consumer pocketbook gets hurt, we see a potential for rising interest rates, and a very weak stock market in the financial side of things. MacNEIL: What about the falling dollar's impact on all of this? Mr. JONES: Well, it's going to be very difficult. One of the problems here is that we had a meeting in February among the group of six international financial wizards, and they essentially tried to hold the dollar in terms of the yen at about 150. It looked as though that was working for a while -- particularly until just last week. And then suddenly the dollar began to -- MacNEIL: Because they agreed -- the Japanese particularly -- and the United States agreed to intervene. Go in and buy dollars to keep the price up. And that happened today. Mr. JONES: What happened is that the intervention -- or at least the threat of intervention -- in the period immediately following that important international meeting, held the dollar and the yen relationship at about 150. The danger now is that the dollar is falling sharply in terms of the yen, even with central bank intervention. Meaning that you have kind of a sinking feeling in the pit of your stomach if you're trading dollars, because suddenly, not even the central banks can stand in the way of a bent in the markets that the protectionist sentiment, the large trade deficit, will continue to drive the dollar sharply lower. MacNEIL: And if the dollar is driven lower, what impact does that have on interest rates? Mr. JONES: A very dangerous impact. In effect, a lower dollar, as we have said earlier, means inflation. Bond markets and stock markets do not like renewed inflation, and that's going to be extremely difficult. And most importantly, Robin, it will drive away foreign investors or foreign savers that we need desperately to help finance a huge budget deficit. There's a great fear in the bond market right now that essentially foreign money is already being pushed away from dollar investments in favor of British pounds or Canadian dollars, or other currencies. And that's going to be a very difficult situation, particularly when we have big budget deficits.

MacNEIL: Let's come back to the purpose of the administration's doing this in the first place -- or one of the purposes that has been reported. Are the markets really a good judge of these things, or do they just get a bit hysterical on the day to day performance. For instance, one of the administration motives appears to have been to head off in Congress even wider or wilder protectionist measures which appear to have been building up. Mr. JONES: In a sense, Robin, we have a judgment right now in the market. All the pieces have come together. There had been some uncertainty. For a while the administration appeared to be fighting for Democratic congress. The first thing on the agenda of the Democratic congress was protectionism -- as I would call it -- and the administration had been fighting it. It seems to have given in to that argument, and the markets in a clear judgement. And in this case I think the collective judgement of the markets is correct -- have said it's a wrong action, it's very dangerous -- higher interest rates, weaker markets, and potentially, perhaps next year, a recession.

MacNEIL: How do you react to all of that, Mr. Yeutter? Mr. YEUTTER: Well, in my judgement, the markets have overreacted in a most inexplicable way. To suggest that an action that involves $300 million should move a multi billion economic relationship is simply incomprehensible to me. Now, there may well be other factors in the market, and I suspect that is the case. But it's also incomprehensible to me that anybody would consider this to be a protectionist action, when it's exactly the opposite of that. What we're attempting to do with this and a lot of other aggressive actions on the trade front, is to get nations around the world to respect their international commitments, and to do what they say they're gonna do. And why the market should react negatively to that is just beyond me. I would hope that it would correct itself relatively soon, because I don't happen to think this short run kind of activity should have that long run impact at all. MacNEIL: Do you think the markets are overreacting, Mr. Patrick? Prof. PATRICK: I think that probably the markets were ripe for some kind of adverse signal, so in part this was a catalyst. However, I think that the basic point is that the market is interpreting this much more broadly than just a $300 million action. And the markets are telling us that they are very nervous about the possibility of the United States taking a number of substantial steps, which would be in effect protectionist. And that's the issue that is bothering the market, and that's a real issue. MacNEIL: Mr. Yeutter says they're wrong. Why is he wrong to think that they're wrong? Prof. PATRICK: Well, we're only telling you what the market has told us. And the market has said that ''this is something that we're very nervous about. '' This signal that the United States government has sent to Japan and to the world, because it's not just the yen that has gone up, but also the deutchmark, conveys a greater sense of anxiety about the future. MacNEIL: Well, let me ask you this -- even if -- Mr. Jones, even if the markets are wrong in guessing that the administration has joined the protectionist ranks in Congress, if the world reads it that way, is that what you're saying? The dollar can continue to go down, interest rates might be forced up, and that is the danger? Mr. JONES: Perceptions are the key here. And the collective judgement of the market is what to watch. One of the mistakes the administration makes is that it jumps from one brush fire to the other, and doesn't think about the broader implications. If ever there were a case of that, it's now. And if ever the markets were giving a message to the administration, it's now. MacNEIL: Mr. Yeutter? Mr. YEUTTER: Well, I don't agree with any of that. First of all, this President is not a protectionist, and this U. S. trade representative is not a protectionist. So I hope we can lay those concerns to rest right off the bat. With respect to dealing with issue by issue, we're jumping around, as the gentleman just said. We're obviously going to confront issues as they come on our plate. We have no choice but to do that, unless we simply want to capitulate and let other nations in the world do anything they wish on the trade front. And we're not going to operate on that basis. Maybe this country has done that in the past, but we don't intend to do that now or in the future. I really believe that most Americans want us to defend the interests of this nation. We had a situation here wherein agreement involving a great deal of high technology trade has been placed in jeopardy, because Japanese firms are selling semiconductors in third country markets at about 60% of cost. That's not just dumping, that's flagrant dumping. And it doesn't seem to me that this government oughta tolerate that kind of activity, particularly when it's totally uncalled for in terms of the agreement that was executed. MacNEIL: To just ask you very briefly in a few seconds, how many days need to go by before one sees whether your pessimism is correct? Mr. JONES: I think we'll see it within the next few weeks. I think generally speaking, the dollar will continue lower, interest rates will move higher, and I think the markets will be in a very uneasy set of circumstances. I think the verdict will be continuing and coming down. MacNEIL: We have to leave it there. David Jones and Hugh Patrick in New York, Clayton Yeutter in Washington, thank you. Struggle With Surrogacy LEHRER: Her mother calls her Sarah, her father calls her Melissa. The world knows her as Baby M, the object of one of the most widely publicized custody battles in history. Tomorrow, a New Jersey judge is expected to rule on her fate, deciding whether she belongs with her natural father, or with a woman he hired to bear the child. The case has sparked sharp debate, and has forced many feminist women to re examine long held ideals. Correspondent June Massell recently talked with some of them about Baby M and surrogate motherhood.

JUNE MASSELL [voice over]: During the trial, feminists picketed the courthouse in New Jersey, where the bitter battle for custody of one year old Baby M took place. Protestors felt that the baby belonged with her natural mother, hired by this woman, Elizabeth Stern, a pediatrician, and her husband, William, a biochemist, to bear a child for them. PICKETER: Baby stealer. Have your own baby. Don't take another woman's baby.

MASSELL [voice over]: But when the baby was born, the surrogate mother, Mary Beth Whitehead, changed her mind, and said she wanted to keep the child. Many feminists flocked to the side of Whitehead, denouncing the practice of surrogate motherhood. MARY BETH WHITEHEAD, Surrogate Mother: Thanks for coming.

PICKETER: Good luck. MASSELL [voice over]: Other feminists supported the Sterns, arguing that Whitehead should be held to the contract she had made with them. Still others were left in the middle, emotionally torn by the complexity. The case throws into question the very definition of motherhood, and challenges some feminist ideals. To discuss these issues, we brought together a group of women representing different sides. Rose Gould, novelist and mother, in favor of awarding custody to the Whiteheads and visitation to the Sterns. Dr. Wendy Chafkin, obstetrician/gynecologist and mother, would prefer the child to go to the Whiteheads, but be ''attached'' to both families. Phyllis Chessler, psychologist, author, and mother, set up a support committee for Mary Beth Whitehead. Liddy Polderman, Editor of Ms. Magazine, and a mother, undecided, and glad she's not the judge. Janet Gallagher, an attorney with a specialty in reproductive rights, active in Catholics for Free Choice, with no children of her own, in favor of the Sterns getting custody. Betsy Agin, psychologist and director of a surrogate mother program. Infertile herself, she became the mother of a child born to a surrogate. Nancy, who asked that her last name not be used, is currently pregnant as a surrogate mother. She has four children of her own, is a writer and owns a small construction company. In court, much of the testimony dealt with whether Mary Beth Whitehead was a fit mother. While Mr. Stern was not criticized for being an unfit father, his claim to Baby M raised the question of whether the biological father has equal rights to the biological mother, a position that many feminists have long advocated.

LOIS GOULD, Novelist: All things being equal, I would say the child belongs with the mother, and the mother's right to nurture that child if she can do so, is probably inherent in her, and we should acknowledge it socially and in every other way, and support her, as we have in the past. MASSELL: Didn't the women's movement advocate that women, just because they were women, were not necessarily better or the more proper nurturer than the man. Ms. GOULD: I think the ideal expressed in that period was -- it was to be hoped that the male nurturing instinct, which had been always ignored, could be brought to the point where he could share in the nurturing. It hasn't happened. LETTY POGREBIN, Ms. Magazine: And the real danger, since we are attempting to enrich the notion of full fatherhood -- there's a real danger of undercutting what little progress we've made -- by failing to recognize that a man may indeed be as concerned about having and taking care of children as a woman. It just bothers me when biological, or the maternal instinct, is reaffirmed because the next step is all women should be mothers. The next step is women who aren't mothers aren't women, and down we go.

BETSY AGIN, Psychologist: I think that he should not have the same rights. I feel that he has more of a right. Because the agreement was arranged because of this couple's desire and need to raise a family. The surrogate did not intend to be a mother, to be a mother in the parenting sense. WENDY CHAVKIN, Obstetrician/Gynecologist: They're talking about this baby as his baby, and they're talking about her as the surrogate carrier. I think that's really a fascinating contradiction. That his genetic contribution is being elevated, and her both genetic and gestational one is being denigrated. MASSELL: Nancy, you're a surrogate mother. Do you think that the natural father has more of a right to this child than you do? NANCY, Surrogate mother: I think that his right actually is a little bit over mine, because I have agreed that the child is his and his wife's, and it's not my child. PHYLLIS CHESLER, Psychologist: Why is it so difficult to admit that children need mothers? I don't think that my saying this makes me any less a feminist. And I think we have to begin wondering about the Sterns, and wondering about the kinds of people who would try to buy a baby. MASSELL [voice over]: While feminists have argued for a woman's right to choose and her right to control her own body, many now attack surrogacy as baby selling and a form of enslavement. [on camera] Why shouldn't a woman be allowed to become a surrogate and receive a payment for it? Why is that? Ms. CHAVKIN: Because I don't want to live in a society where we see relationships as commodities, where people can be sold. In terms of this question about whether we should be allowed to, or not allowed to, I see a way out of that dilemma. We choose simply to look to adoption laws, and the laws governing adoption, to apply to these surrogacy situations. In that case, a woman is not allowed to be paid, other than medical expenses, and -- in other words, she is not allowed to be paid for the sale of her child. MASSELL: Betsy Agin, what is your feeling about that? Is surrogacy baby selling? Ms. AGIN: Absolutely not. The woman signs the contract so that the couple, out of their relationship, can create a child. And she agrees to carry that child for the couple. She doesn't plan to be the mother, in terms of being a parent to that child for the next, you know, 20, 30 years. She plans to carry the child for the couple. MASSELL: You're making a distinction between selling a baby and carrying a child. Ms. Agin: Yes, she sells her service.

Ms. POGREBIN: I want to say that I'm opposed to servicing, because it smacks of enslavement, because of the class question -- that clearly the people whose bodies are going to be used are poor people, not rich people. NANCY: I am not poor. I am not enslaved. I don't feel oppressed by men in any way. I feel that I have been given an opportunity to give a very special gift to some people who really deserve a child, and should have one. Ms. GOULD: I'd just like to respond to that and a couple of other things. Do you accept a fee for your services in producing someone else's child for adoption? NANCY: Right now, no, because I'm being [can't understand] for the income I would lose by being pregnant for these people only. Ms. GOULD: How much? NANCY: That's a private matter, and I wouldn't disclose that to anyone. That's between myself and the Ms. GOULD:couple. Let's take the $10,000 surrogacy being paid in the Stern case, which seems to be -- I don't know if it's true in Nancy's case, but it seems to be fairly common on the record for surrogacy cases -- $10,000 is an ordinary fee. Hourly rate is $1.57. That's below minimum wage. So if you're talking about slavercouple. PARTICIPANT: Nancy's not a poor woman. NANCY: I have my own business. I have four children. We live very well. I don't need the money.

Ms. GOULD: That's unusual. Most surrogate -- NANCY: It is not unusual. I'm sorry. MASSELL: Does it gives anyone pause that all of the people in this room who are against surrogacy have had children on their own, and haven't experienced the torment of being infertile. Does anyone feel that that shows a lack of sensitivity towards women with this problem? NANCY: Yes, I feel that. I feel that very strongly. Number one, because sitting here, and looking at you very fine and intelligent people, I ask you, could you do what I am doing. Could you do that? Ms. GOULD: I know many women who have considered -- I know many women who have considered it -- yes, I'm saying something. I could conceive of -- pardon the pun -- having a child for a dear friend or a sister who was having a fertility problem. I also know that if I did that, there wouldn't be a middle man or woman in the business of matchmaking between me and my friend or my sister. MASSELL: Surrogacy is frequently compared to adoption. And the question is asked, ''Why didn't the Sterns adopt instead of trying to have a child who is half theirs?'' Ms. POGREBIN: Having had children, I don't think about the fact that they are mine, mine, mine. They are them. And I think that women have been trained and propagandized to look at pregnancy a certain way, to look at the genetic imprinting of children as a way of connecting to children that somehow or other is so superior to other ways of connecting to children. I mean, why is it more important to adopt his child than have both of them adopt a child.

Ms. AGIN: We tried very hard to adopt a child, and there was no adoptive child available. We went -- Ms. POGREBIN: White, black, Asian? Ms. AGIN: No, we wanted a child -- most people wanted a newborn that is like themselves. And we were not -- we were told that they -- in fact, we were willing to take an interracial child. They wouldn't give us a newborn, and we were on a waiting list. They insisted on giving us a child only of the religion that we were from, and the waiting list was 6 to 7 years long, and then they told us that we would be too old to adopt, and we couldn't adopt through them. Ms. POGREBIN: Maybe that was one agency's response.

Ms. AGIN: Three agencies' response. Please. And then we looked at private adoption. JANET GALLAGHER, Reproductive Rights Lawyer: I have some problems about the kind of glib reference to ''They should adopt'' that gets laid on people with infertility problems or considering surrogacy. I think talk is cheap in this area -- Ms. GOULD: -- and certainly in infertility cases who should be adoptive parents, and there are millions of children in the world who are -- Ms. AGIN: There are couples who have tried for 11 years, who have gone through five, seven, surgical operations in order to try to become pregnant. Ms. GOULD: I understand that, and I sympathize with them. And I am saying that the guilt and terror and anxiety that they feel is in large measure enhanced by a huge campaign to make those people feel so desperate to have a child, as if it is the answer to their lives. That may not be appropriate.

Ms. AGIN: I was desperate for my baby. Ms. GOULD: I understand. Ms. AGIN: I needed to have a baby in my arms. Ms. GOULD: There are babies that you could have hugged.

Ms. AGIN: I'd like to see you try the adoption route, or try the infertility group -- MASSELL [voice over]: Some say that surrogacy should only be allowed if the surrogate has a grace period, time in which to change her mind. Ms. GALLAGHER: I think that to forbid surrogacy by law, to set it aside as something we would criminalize, that women not be committed by law to make that decision, really attacks and undercuts our sense of women as adults, capable of making moral and legal decisions. But in those cases like this, it seems to me that there should be a period of time during which people -- as in the adoption setting -- can change their mind. Ms. AGIN: If you place a woman being able to change her mind into law, youare asking for a proliferation of Baby M cases throughout the country. Because that will make it legal for a woman to be ambivalent. Now, in our screening -- [overlapping of talk] Ms. GOULD: -- written law -- women are permitted to change their minds. Ms. AGIN: No, no. Ms. CHESLER: People change their minds in business every minute, every second, football, baseball heroes, change, renegotiate, walk out on contracts -- why are we being so restrictive and so punitive about something that is -- in my opinion -- even much more important? Ms. AGIN: I respect a woman's right to make a choice, to be willing to deal with the separation anxiety of having to give that child. And if she's not willing to deal with that choice, there is nobody coercing her into becoming a surrogate. She should not apply. NANCY: I would say introspectively, that anybody who decides to engage themself in such a venture as I have would have to do a tremendous amount of self examination before they even considered doing this, because it's a momumental thing you're doing. It's phenomenal, and the idea that you have to know something about yourself, and really dig deep to find out if you are a selfless person, and that you can just take this baby and say, ''This is yours, be happy, enjoy. '' And that's it. Vehicle for a Veto MacNEIL: Next tonight, we take a look at President Reagan's veto of the highway bill, and the politics behind it. Judy Woodruff has the story. JUDY WOODRUFF: When President Reagan vetoed the $88 billion highway and mass transit bill last week, there were two forces at work. What he said was his desire to avoid spending $10 billion more than his original request, but just as -- and perhaps more -- important was the test of Mr. Reagan's political strength, especially in the wake of the Iran contra affair. Tomorrow, the House is expected to vote on overriding the President's veto, with the Senate expected to vote later this week. Joining us now to size up the prospects for an override, and the White House strategy in all of this, are two members of Congress on opposite sides of the issue. House Majority Leader, Thomas Foley, and Senator Phil Gramm, Republican from Texas. Congressman Foley, I'm going to begin with you. The President says it's a boondoggle and called those of you who are supporting the bill ''big spenders. '' How do you respond to that? Rep. THOMAS FOLEY, (D) Washington: It's a political veto. This is a bill with the support of the overwhelming number of members of Congress of both parties and both houses. Only 17 members in the House and 17 in the Senate voted against it. Eighty percent of Republicans on the Budget Committee, almost all the Republicans on the Budget Committee in the House, the overwhelming number of public works members in both parties supported the bill. The President didn't even indicate he was going to veto it until after the bill was passed, and then suddenly the bill has all these problems. The reality is that this is a political veto. It is a designed effort to make the President appear tough, and to give him some kind of macho image. It's not a substantive -- if this bill were voted on on substance, on the issues, it would be overwhelmingly overridden in both houses. I believe it will be overridden, but there wouldn't be any question about it. It's only the rallying around the President call that's even making it a question. WOODRUFF: Is that true, Senator Gramm, it's purely political and if it were the vote on substance it would be overriden? Sen. PHIL GRAMM (R) Texas: Now, Judy, you're not going to be surprised that Tom and I disagree -- which is why you invited us here. Basically, I think if the President looked at the bill in another budget era, he might have let it pass. But in a era when so many in Congress are saying there is more fat in the family budget than there is in the federal budget and therefore we ought to raise taxes so that government can spend more -- looking at a $1. 1 billion add on for Boston, Massaachusetts, which was sort of the going away gift to Tip O'Neill, who held the bill up last year, looking at a mandate that the federal government sign a contract with Los Angeles, California, that gives them 14% of the mass transit money, which they don't know where they want to bill mass transit, and they haven't even finished the environmental impact statement -- I think those projects, together with the overall budgetary impact -- I think it induced the President to act. But let me tell you, if you're trying to be macho, this is not the bill, because this is a tough bill. Politicans love to build roads. They love to bring home the bacon, and I think this was a courageous veto, and I want it sustained, because the President's right. WOODRUFF: Isn't that true, Congressman? Rep. FOLEY: No, it's not true. Bob Dole said last week -- the Republican Leader in the Senate -- said it's a high risk, but it's necessary. He said it's necessary for the President to demonstrate that he's effective. And one way to do that is to show he can be tough. Now, that's Senator Dole's comment. Senator Stafford said, ''I hope the President gets the votes to override, because it's necessary to show that he can be an effective President. '' Everyone knows that the rallying cry among Republicans in the House and the Senate is not on the merits of this bill. I'll give Senator Gramm the fact that he voted against the bill to begin with -- but many -- most -- of the Republicans in the House and Senate voted for it. The rallying cry now is not because the bill was bad, but to come around and help the President assert himself. WOODRUFF: But, Senator Gramm's point was that if you're going to veto a bill just to prove that you're strong, to challenge Congress to override you, you pick a bill where you had a better chance than the President does on this one. Rep. FOLEY: I think it's a matter of timing. This is a bill that's coming along, where the President decided at the last minute, against better counsel in the White House, to veto it. But I think the counsel he's following is more disturbing than maybe the veto. The counsel is clearly the counsel of Pat Buchanan, who wrote this week an article in NEWSWEEK Magazine, in which he argues for confrontation with the 100th Congress. For 22 months of acrimonious confrontation. And I think this is the beginning of what we may be seeing in the Buchanan strategy. He argues, in fact, for veto strategy, specifically.

WOODRUFF: Senator Gramm? Sen. GRAMM: Well, let me first say that I think if you look at the bill with its over 150 demonstration projects, when we've only had 30 in the whole history of the highway program, where we're singling out priorities at the federal level, rather than at the state level, which we traditionally have done. If you can look at the two big political projects, and then you look at the fact that under Graham Rudman, we have committed to the American people that we are going to meet a target of $108 billion, there's no doubt about the fact that Tom is right -- a lot of politicians,Democrats and Republicans, voted for this bill. It has a speed limit increase that I am very much for, that the people of my state want, and that I've gotten a lot of notoriety for helping get passed. But the bottom line is on today's budget, this is bad -- Rep. FOLEY: I'd like to comment on that, if I may. In the first place, the demonstration projects take up less than 1. 6% of the bill. There's another 6% of the bill that's discretionary with the administration to see to it that the programs work effectively. This bill spends less money than Graham Rudman's first sequestered level of spending -- that the Senator and I both supported. It spends less than that. It spends less money than is in the trust. The trust will accumulate money -- WOODRUFF: In the highway trust fund. Rep. FOLEY: -- the highway trust fund. And talking about taxing, the American people have already been taxed for a highway bridge improvement, and the mass transit program. That happened in 1982, when the five cent gasoline tax was added for just this reason. And the President supported that, and signed it, and now he's not willing to have those needed improvements made. On the subject of Los Angeles, and of Massachusetts, the Federal Highway Administrator agreed to this program in Massachusetts -- WOODRUFF: Senator, isn't the President putting members of his own party on the spot. I mean, he's got the leadership in the House of Representatives on the Republican side against -- Sen. GRAMM: There's no question. This is a tough vote. It puts people on the spot politically, because everybody's got projects in their state, or in their district, in this bill. But the President's not saying, ''Kill this bill and have no highway bill. '' He's saying, ''Go back to the traditional method by which we allocate funds, where we don't take a couple of big political projects and preempt the overall system. And then let's come forward with a new bill. ' WOODRUFF: Come back with a bill that's how much less? Not $88 billion, but what? $80 billion? Sen. GRAMM: It represents a compromise. It comes up -- WOODRUFF: Why can't Congress live with that? Rep. FOLEY: The highway program -- the President's budget recommended 65. 5% -- $55 billion, roughly. This bill is about $300 million out of $65 billion over the President's own recommendations. It's well within the Congressional budget limits that were enacted by both the House and the Senate last year. It is a bum rap, and a false argument to say that this is a budget buster. The monies in the trust fund can't be spent for anything else.

WOODRUFF: When the White House says the President is weaker if he can't get this veto sustained, is that right? Is he weaker? Rep. FOLEY: I think it's a self imposed weakness. It's not going to last very long. The President was ill advised to veto this bill. If he's taking the action, not for substance, as I believe he's not taking it for -- but for politics, he will be weakened for a short term by a political maneuver that backfired, but it's not going to affect his longterm Presidential role, if he agrees to try to be substantive about the work, and not be political. WOODRUFF: Senator, that's the White House argument, though, isn't it? The President --

Sen. GRAMM: Well, I think the White House argument is that this is bad law. I mean, you can -- WOODRUFF: But they're also arguing -- Sen. GRAMM: -- all you want to, concerning what the bill does and doesn't do, but it has clear projects that are there only because of politics, in an era when we face tight budget constraints. Now, is Reagan going to be hurt if this veto is overridden. I think clearly he will. But I think he's going to be hurt, not because it's a political veto, because it's not. He's going to be hurt, because when you got down to the bottom line on an important issue that's set out a principle for the rest of the Congress, Congress ran off and left him. I don't think they're going to. I think he's going to pull it out in the end.

WOODRUFF: And you don't agree? Rep. FOLEY: A political veto -- badly advised by the kind of a confrontational policy -- what Democrats and Republicans -- the President -- need to do is address the problems of the country. This is a good bill -- the veto shall be and should be overridden. WOODRUFF: We'll be watching it this week. Thank you both, Senator Gramm and Congressman Foley. Ode to Oscar LEHRER: Finally tonight, an essay about the Oscars. Millions of us wil be watching tonight, as they are bestowed. One of them is our essayist, writer, Penny Stallings.

PENNY STALLINGS [voice over]: Its that time of year again, folks. Time for what some say is the tackiest of American traditions. And others, like me, would like to see made a national holiday: the annual presentation of the Academy Awards. It's time for critics to malign the nominating system. Time for actors and directors to bemoan the idea of competition between artists, while agonizing over what to wear. The hokey production numbers, the sanctimonious tributes, the interminable acceptance speeches, the new stars, the legends, the get up, the hair -- not to mention trying to guess who'll win. Sure, there's often more to winning an Oscar than talent or excellence of achievement. So what else is new? Is that any reason to dismiss the awards as an overblown popularity contest? The fact is that up until the 1950s, with the exception of a few unforgivable oversights, like Chaplin and Garbo and Cary Grant, most of the great films and talent of Hollywood's golden era were given their due. But with the decline of the studio system and the rise of TV, Oscar's reputation began to tarnish a bit. Movies became bigger and more gimmicky, to lure Americans away from their small screens, and it was spectacle, not quality, that turned Oscar's head. Naturally, the public became dubious. Some even said that Oscar's affections could be bought. But who says that all the profiteering and preening that go on today are in any way at odds with the spirit with which the Academy was founded -- back in 1927. Plagued by scandal and the threat of boycotts and government censure, the youthful film industry came up with the idea of the awards as part of an ingenious propaganda campaign to clean up Hollywood's then unsavory image. To convince Mr. and Mrs. America that film making was an art, not a hustle. A cunning a mix of a get up movie premiere and a company picnic, the annual ceremony blossomed into the most brilliant PR stunt ever. One which honored both the finest in cinematic achievement: CLIP: And the winner is AN AMERICAN IN PARIS.

STOLLING: -- as well as any number of clinkers. Take the big one, the year's best picture. Now, everyone knows that just because a particular film wins best picture, that doesn't necessarily mean it IS the best picture. All sorts of issues can come into play. [voice over]: Like the film's box office performance, or how many actors and technicians it employs. Or how highminded the Academy members are feeling that year -- that's highminded, as in Gandhi vs. E. T. When it comes to acting kudos, Oscar is a sucker for flashy, thespian conceits. Like the kind that takes an actor from youth to dotage in the time it takes to polish off a giant Hershey and a Coke. And you can't beat the showy tour de force wherein an actor sacrifices a glamourous image to play, say, a drunk, a nut case, an idiot, or an aging southern belle. [film clip from Street Named Desire] VIVIEN LEIGH: Don't you love these long, rainy afternoons in New Orleans, where an hour isn't just an hour, but a little piece of eternity, dropped in our hands. STOLLING: Oscar loves it when stars play against type. When a good girl goes bad, or a fashion plate plays a plain Jane, or better yet, a saint. Oh, and another thing -- Oscar never forgets. Say, it's 1959, and you're Elizabeth Taylor, and you've turned in a solid performance in Suddenly Last Summer, but you blow filmdom's highest honor because your private life is in a state of -- well -- disarray. But not to worry. Oscar will make it up to you next year for Butterfield 8, even though it's unquestionably one of your worse. Your recent near scrape with death will have nothing to do with it -- not much. And, finally, there's Oscar's well known weakness for the star who's been around for a while, who's not afraid to show his age. [on camera] So, down to the business of handicapping tonight's race. Well, let's see. Children of a Lesser God has a good shot for best picture. That is, if the Academy is feeling noble. On the other hand, Platoon is not only noble, it's boffo box office. And Bob Hoskins is looking very strong for best actor. But who is Bob Hoskins anyway? And besides, this is Paul ewman's seventh nomination. Jane Fonda would be --N

MacNEIL: Again, the main story of the day. The U. S. dollar and stock prices fell sharply today, in reaction to the administration's decision to punish Japan for selling cheap computer chips. The U. S. dollar hit a new record low against the Japanese yen. The Tokyo stock exchange had its second biggest drop in its history. And Wall Street prices fell sharply. And on the News Hour tonight, Clayton Yeutter, the President's special trade representative said the markets had overreacted, and he discounted any longterm ill effect. Good night, Jim. LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer. Thank you, and good night.