The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. I'm Jim Lehrer in Washington.

MR. MAC NEIL: And I'm Robert MacNeil in New York. After tonight's News Summary, we focus on the Mexican peso crisis with a report on how it affects American business, then a Newsmaker interview with the head of the International Monetary Fund. We discuss these issues and others with our panel of regional editors and columnists, and we close with a report on the controversy over cases of recovered memory. NEWS SUMMARY

MR. LEHRER: The House of Representatives began debate on the line item veto today. It would enable a President to kill specific budget items without having to veto an entire spending bill. Opponents say the measure gives too much power to the President. Here's some of today's debate.

REP. JOHN DUNCAN, JR., [R] Tennessee: I am pleased that today we are on the verge of approving a line item veto bill that will truly be effective in reducing pork barrel spending. Mr. Speaker, this is not a partisan issue. Forty-three of our nation's governors, bothDemocrat and Republican, already have the line item veto and are using it to cut spending in their states and balance their budgets. It is time for Congress to give this same tool to the President, so that he can eliminate the most outrageous examples of wasteful and unnecessary spending without vetoing entire appropriations bills.

REP. JAMES TRAFICANT, [D] Ohio: I am opposed to transferring any more of the people's power to the presidency. Nothing to do with Bill Clinton. You are not transferring our power, Congress. You are transferring the power of the people. In America, the people are supposed to govern. Where did we change that?

MR. LEHRER: Three days of debate are scheduled. The vote is expected Monday. Robin.

MR. MAC NEIL: In economic news, new home sales dropped in December for the second straight month but still finished 1994 at the highest level in six years. The Commerce Department reported sales increased mostly in the Northeast and West. The Boeing Company announced it will reduce its work force by 7,000 this year. The layoffs are said to be due to cutbacks on production of 737 and 767 jetliners. The International Monetary Fund approved a $17.8 billion line of credit for Mexico last night. The support package is a crucial part of President Clinton's nearly $50 billion rescue package for Mexico. We'll have more on the story after the News Summary.

MR. LEHRER: President Clinton today nominated a Tennessee doctor to be surgeon general of the United States. Henry Foster is an obstetrician-gynecologist who created a program to reduce teen pregnancy in two Nashville housing projects. He has served as dean and acting president of Meharry Medical College in Nashville. If confirmed by the Senate, he would replace Dr. Joycelyn Elders, who was fired in December. The President and Dr. Foster spoke in an Oval Office announcement ceremony.

PRESIDENT CLINTON: I want Dr. Foster to use what he's learned to help America attack the epidemic of teen pregnancies and unmarried pregnancies. We know government can only do so much. So large a part of Dr. Foster's job, obviously, will be to use his enormous skills of persuasion to reach out to people in the private sector, in the religious, education, entertainment, sports, and other communities in this country.

DR. HENRY FOSTER, JR., Surgeon General-Designate: We have the highest teen pregnancy rate in the western world. That is twice that of the next highest nation. Moreover, be assured this is a problem that cuts across all socioeconomic strata. There are, however, demonstrated ways that this problem can be mitigated. It takes commitment and lots of hard work, but it can be done.

MR. LEHRER: Dr. Foster said he would also focus on fighting AIDS and smoking among young people. Earlier in the day, President Clinton spoke about words at the annual National Prayer Breakfast at a Washington hotel.

PRESIDENT CLINTON: The communications revolution gives words not only the power to lift up and liberate but the power to divide and destroy as never before, just words. In Romans, St. Paul said, "Repay no one evil for evil but take thought for what is noble in the sight of all. Do not be overcome by evil but overcome evil by good." There's not a person in this room that hasn't failed in that admonition, including me. But I'm going to leave here today determined to live more by it. Let us leave this place renewed in the spirit of civility and humility and a determination not to use the power of our words to tear down.

MR. LEHRER: This year's prayer breakfast was attended by 3800 people,including federal, state, and foreign officials.

MR. LEHRER: The leaders of Israel, Jordan, Egypt, and the PLO met in Cairo today in an attempt to save the Mideast peace process. They issued a joint communique denouncing terrorism and reaffirming their commitment to a comprehensive peace. PLO Leader Yasser Arafat and Israeli Prime Minister Rabin will resume negotiations next week. Today marks the first time the four parties have met together. Russian tanks and armored personnel carriers continued to move into the breakaway republic of Chechnya today. Russian artillery also shelled the capital, Grozny. Russian commanders said they expect a protracted guerrilla war in the region.

MR. LEHRER: And that's it for the News Summary tonight. Now it's on to the peso crisis as seen by American business and the head of the IMF, our panel of regional editors and commentators, and the argument about recovered memories. FOCUS - MEXICAN CONNECTION

MR. MAC NEIL: Our main focus tonight is the Mexican financial crisis as seen by American businessmen and the head of an international lending agency. When he unveiled his emergency rescue plan two days ago, President Clinton said thousands of American jobs were at stake if the Mexican economy collapsed. In fact, many American businesses are already paying the price. Betty Ann Bowser reports from Colorado.

BETTY ANN BOWSER: Since early December, orders from Mexico have practically come to a standstill at the Monfort International Meat Company. Meat is Colorado's No. 1 agricultural export. Monfort, located in Greeley, 90 minutes North of Denver, is one of the country's largest meat producers. Charlie Monfort runs the company's international division.

CHARLIE MONFORT, Monfort International: Mexico was just really economy-wise coming around, and we were really picking up some steam sales-wise, so it affected it quite a bit. Our sales are down 60 to 80 percent, depending on where the currency is that weak, from where it was December 19th, before it was devalued at all. So it's had a big, big effect on us.

MS. BOWSER: Mexico's leading importers aren't buying Monfort's meat anymore, because they can't afford it. With devaluation, it's costing those businesses twice as many pesos to buy the same beef products that come from these animals. The peso is not just affecting big agricultural exporters like Monfort. At MTC International in Denver, orders from large retail outlets in Mexico have slowed to a trickle. Normally, MTC would be selling more than $50 million worth of socks, baseball caps, TV sets, T-shirts, briefcases, and hundreds of other items to Mexican retailers this year, but because of devaluation, $40 million worth of that business has dried up.

DAN DOERFLEIN, MTC International: These socks, for example, are made here in the U.S. by an American company but because we are so efficient and effective in the way that we produce --

MS. BOWSER: Dan Doerflein is the president of MTC. Not only has he lost money, he's had to lay off three of his eight employees.

DAN DOERFLEIN: Prior to December, we would probably have said 80 percent of our business was done in Mexico, however, today I would tell you that probably only about 20 percent of our business is done in Mexico. The devaluation of the peso has had a significant impact on our business and has had us rethink our strategies and our outlooks and where we need to go to develop our business.

MS. BOWSER: Businesses like MTC have had to develop alternative marketing strategies. For Doerflein, that means trying to sell his baseball caps and TV sets to other countries like Brazil and Argentina.

MS. BOWSER: Monfort also has been searching out new markets. He's diverted meat intended for Mexico to Korea, but he's not making the same profit, because the Koreans don't buy as much, and they want higher quality cuts of beef. Monfort also has come up with some new methods of doing business that will maintain sales and keep his Mexican contacts in business.

CHARLIE MONFORT: Our customers don't really want to turn their pesos into dollars at these crazy levels. They say, we owe you so much money for the boxed beef we bought in the last six weeks or so, why don't you come in, buy our cattle, we'll together figure out a level that they should be worth, and you take that off of my bill. So it really is bartering, and it's worked pretty well.

MS. BOWSER: But some companies are too small to develop global strategy. Richard Myron's company in Longmont, Colorado, is so small that he puts his two sons to work on the assembly line. Myron manufactures an automotive lubricant that reduces auto pollution, a product much sought after in Mexico City, which has one of the worst air pollution problems in the world. Myron was expecting a contract from Mexico with the potential for $2 million in business. He was about to hire five new employees. Then the peso fell.

RICHARD MYRON, Whitfields Automotive: Mexico was a new opening market for us. We had been in Mexico for two years doing the many meetings that we had to attend, go through the many various processes that are involved in doing business in Mexico, and we were on the verge of opening the Mexican business, but after the fall of the peso, it is not there anymore.

MS. BOWSER: But there are some companies which have benefited from the peso crisis. Jack Lundberg's company in Colorado Springs has been selling mineral purifying equipment to Mexico for 40 years. Even though the cost of the product is more expensive to Mexicans now, that increase has been offset by the decrease in labor costs, also caused by the drop in the peso. The Mexican companies can produce more purified minerals more cheaply and then make more of a profit in the world market. So Lundberg says it makes sense for his Mexican customers to continue buying.

JACK LUNDBERG, Denver Sala: You run the arithmetic, it's in his best economic interest to continue with the capital equipment, although it's at a higher cost in pesos because he'll have a substantially better opportunity to sell a large quantity of his commodity on the world market.

MS. BOWSER: The attraction of higher profits also brings more producers on line, more companies willing to buy Lundberg's equipment. But Lundberg is not totally optimistic about the longterm effects on his business.

JACK LUNDBERG: I think in the long haul it'll probably -- if the Mexican economy is substantially affected by this and their growth rate goes down and they turn out not to be the economy that we all envisioned up until a couple of months ago, that it'll, it'll catch us sooner or later.

MR. MAC NEIL: The question those businessmen want answered is: Will the new aid plan turn things around and when? A key player in all this is the International Monetary Fund. The IMF is in the business of lending money to countries in dire need, but the $17.8 billion it came up with for Mexico represents an unprecedented level of support. In Washington today, the IMF's managing director, Michel Camdessus, held a press conference to explain his agency's action. He then sat down with our business correspondent, Paul Solman.

PAUL SOLMAN: How serious a situation was this? In your press conference, you said one of the board members of the IMF called this the first crisis of the 21st century?

MICHEL CAMDESSUS, International Monetary Fund: Yes. This is the possible truth. We are in a very new context, with markets globalized, with instant communication, with huge amount of resources moving there in all directions at any time, and indeed, with countries no more protected, and this is good, by artificial exchange control regulation and so on. So the shock a country can suffer when confidence suddenly disappears can be tremendous, and when we acted expeditiously, it was precisely with the view of avoiding to see the Mexican obliged to come back to exchange controls with the risk of having this measure being spreading out in all the developing country world.

MR. SOLMAN: You've emphasized this before, that one of the dangers is the reimposition of exchange controls. Why is that a big deal?

MICHEL CAMDESSUS: Well, it's a big deal, because the more liberty you have in the movement of capital, the more saving can go to the places that have the best opportunities, the lower is the cost of financing for the investors and the producers in these countries, and then the better the chance is for these countries to grow and for the international community to benefit.

MR. SOLMAN: One of the criticisms of the Clinton plan, as it was proposed before this new plan was put together with you and the Bank of International Settlements and so forth, was that investors were being bailed out here, and that was unfair. But you're suggesting in this last answer that the flow of capital to Mexico is not only good but important?

MICHEL CAMDESSUS: It is essential. We are not bailing out anybody. Investors in Wall Street, many of them will have lost money in this episode, and many will have paid a high price for panicking. Okay. But those who pay a higher price for this crisis, and which are not by far entirely bent out, are the people of Mexico. The cost for Mexico of this crisis will be tremendous. Instead of going 4 percent, it will grow only 1.5 percent. Prices instead of being below 10 percent will be around 30 percent. You see the related suffering for people there. The only thing we can do in the aftermath is to shorten the time of the crisis and alleviate somewhat the cost of the adjustment for the poorest.

MR. SOLMAN: There is also the, the idea of systemic risk and contagion that you talked about. Partly, I gather, that's what you meant by exchange controls being reimposed around the world, and then you can't have free capital flows. Was there also, do you think, any chance at all that other markets would begin to collapse because of Mexico's collapse?

MICHEL CAMDESSUS: Well, markets are tremendously interrelated. You have seen, yourself, that the day the stock exchange in market, the Bursa, in Mexico went down, all the Bursas and stock markets around went down and not only in Latin America but also in Europe, also in Asia. So you had there major risk.

MR. SOLMAN: What chance did you give of there being, had there been no intervention, of there being a real financial meltdown worldwide, the kind of catastrophe that the Federal Reserve Bank and the U.S. was afraid of in 1987, when the stock market crashed, and, therefore, provided money to the system?

MICHEL CAMDESSUS: Well, it is not at all the same kind of crisis, but it's true when you see the reactions of the market that we were on the verge of something very serious and that we had to take very strong steps to convince the market that panic was the worst of all possible solutions.

MR. SOLMAN: If there were another Mexico out there, considering that this is an unprecedented amount of money that you are putting into this particular operation, bailout, call it what you will, critics would call it, do you have enough money for the next one?

MICHEL CAMDESSUS: Yes, we have.

MR. SOLMAN: Would you tell me if you didn't?

MICHEL CAMDESSUS: No. If I didn't, then I would go to see the secretary of the treasury and all the ministers of finance of the earth and I would tell, gentlemen, do your job, which is to strengthen the capital bases of the institution which has as a vocation to provide the world with this last resort financial sustenance.

MR. SOLMAN: Isn't it --

MICHEL CAMDESSUS: But, of course, you can be sure that soon I will ask them to replenish my capital basis, because they cannot ask me to act as a safety net and not to give me the resources for that.

MR. SOLMAN: One criticism that's been made is that a Russia, for example, or even the Ukraine is as deserving or even arguably more deserving in terms of world political stability in Mexico, and yet, there there's been this long, dragged out process of getting them less money than Mexico has now gotten, well, not quite overnight, but quite quickly.

MICHEL CAMDESSUS: The key principle of the action of the IFM is evenhandedness. We treat all our members equally. You remember, if we had met three months ago, you would have told me, aren't you forgetting Mexico and Latin American countries in putting so much of your forces in dealing with Mexico, Ukraine, and so on?

MR. SOLMAN: Russia, you mean, with Russia.

MICHEL CAMDESSUS: Yes. With Russia, Ukraine, and so on, successfully enough. If -- as far as Ukraine is concerned, we have put in place a very important program there, and now we are in Russia, we have a mission there, working intensely, and I hope decisively with the authorities to help them put together a credible program to allow us to credibly help them. But look what Mexico has done. Look at the financial situation we have in Mexico. Look to their surplus in their budget. Look to their wage policy. Look to their monetary policy. We have in Mexico the grounds for supporting a credible program. In Russia, we are working to this end.

MR. SOLMAN: So Mexico was meeting many of the conditions of the IMF? There's this famous word conditionality.

MICHEL CAMDESSUS: Yes.

MR. SOLMAN: And that's what you're talking about?

MICHEL CAMDESSUS: Exactly. The principle of this institution is that we help those who help themselves.

MR. SOLMAN: The -- what exactly is the IMF doing? I mean, you're going to Mexico, you're giving them money. You're sending it over the wire. What are you doing exactly?

MICHEL CAMDESSUS: Well, we, first of all, when the crisis -- and I will tell you something which has not been -- never said -- when the crisis started appearing to be a very serious one, I went there personally to spend a day with President Zedillo and his key associates to see how we would handle that. Then we had a team of IMF experts going there, reviewing what the Mexicans intended to do, see how this had to be reinforced, how that international support had to be structured, phased, and so on. And it is when my mission came back that I announced to the executive board that we intended to proceed in the way you know now.

MR. SOLMAN: Would you have preferred it if the United States had done its $40 billion intervention, and you would have never needed to be used?

MICHEL CAMDESSUS: Well, I would have spent a better day the day before yesterday, but democracies have parliaments and parliaments have their own thoughts, and on policies and at times difficulties in agreeing on something. I thought that President Clinton acted with determination and sense of responsibility in changing his strategy, and we had to react to that in our side accordingly.

MR. SOLMAN: In terms of the conditions, the new conditions that are imposed on Mexico, can you tell us something about them?

MICHEL CAMDESSUS: Yes. They have -- not in deficit but in surplus, and we had them agreeing in making the surplus even bigger at the very beginning of this year, at the time we need to reassure everybody and to maintain this surplus not only all this year, but all 1996, second monetary policy, interest rate, all instruments of saving, reassuring and paying better the savings, reducing the growth of military expansion, and importantly, and they had done that on their own, wage policy. You know that the people, the labor union in Mexico have agreed to reduce by about nine real GNP, real points their real wages.

MR. SOLMAN: 9 percent less.

MICHEL CAMDESSUS: Exactly, in real terms, and indeed, we have also agreed with the Mexican authorities to speed up the privatization program, to broaden it, and then to give a full credibility to their action.

MR. SOLMAN: Often, the IMF is accused of taking its actions at the expense of the poor. Poor protected here at all?

MICHEL CAMDESSUS: Yes. We try. Of course, it's more difficult to protect them at a time of crisis than the rest of the time. The progress of the economy of Mexico during the last several years has allowed distinct reduction of absolute poverty in Mexico, improvement in real wages, improving in education, health, and all that. What we are trying to do here is to protect these basic forms of investment for education and health in the budget, and we have given our agreement for this reduction in real wages to not to go too much downward and to allow those at twice the minimal wage to be compensated, to be spared a fate. The enterprise is being compensated by the government for that.

MR. SOLMAN: So there's a tax credit for enterprises, for workers up to twice the minimum wage?

MICHEL CAMDESSUS: Exactly.

MR. SOLMAN: Last question, and maybe the toughest: Can you or the world institutions at this point really counteract the power of the global marketplace? You talked time and again in your press conference about confidence, confidence, we're trying to restore confidence. But can, can you restore confidence when even yesterday the Mexican stock market went down and many fund managers, investment fund managers, say they don't want to go into Mexico now? If they keep taking their money out, what can you do?

MICHEL CAMDESSUS: Well, wait a minute. They are fund managers, and they are there to make money. There are circumstances where to continue panicking is the best -- the worst possible solution. I am certain, and I call their attention on that, that the conditions we have recreated of Mexico -- in Mexico are for them the best possible conditions to make money now in investing now in Mexico. If they are stupid, if they don't take opportunity, I hope that according to the market principles, somebody will do the job soon in their behalf.

MR. SOLMAN: Managing Director Camdessus, thank you very much.

MICHEL CAMDESSUS: Thank you very much. It was a pleasure to be with you.

MR. MAC NEIL: Still ahead on the NewsHour, our regional editors and the recovered memory controversy. FOCUS - EDITORS' VIEWS - ONE HUNDRED DAYS

MR. LEHRER: Now, how the Mexican aid situation and some other matters look to our regular group of regional editors and columnists - Clarence Page at the Chicago Tribune; Ed Baumeister of the Trenton Times; Lee Cullum of the Dallas Morning News; Cynthia Tucker of the Atlanta Constitution; and Gerald Warren of the San Diego Union Tribune. They are joined tonight by Patrick McGuigan of the Daily Oklahoman in Oklahoma City. Lee, is coming to the aid of Mexico a popular thing in Texas?

LEE CULLUM, Dallas Morning News: [Dallas] Yes, Jim, very popular indeed. Mexico is our very first export market here in Texas, terribly important to the Texas economy. People here feel the President did the right thing, the courageous thing, and I want to add that I was certainly pleased that Speaker Gingrich supported the move. I thought that was a courageous move on his part also.

MR. LEHRER: Gerry, how does look in California?

GERALD WARREN, San Diego Union Tribune: [San Diego] Well, oddly enough, the decision by the President's very important to California. Well over 100,000 jobs in our area alone are dependent on Mexico. Politically, it is not that favored here because of the appeal of the populace.

MR. LEHRER: What do you mean?

MR. WARREN: Well, this idea that somehow we shouldn't help Mexico until they deal with immigration, somehow we shouldn't help Mexico until they deal with, with drug use or drug smuggling, forgetting the fact that we have the market for drugs and forgetting the fact that we are the ones who hire the immigrants that come across.

MR. LEHRER: Yeah. How's it look from New Jersey, Ed?

ED BAUMEISTER, Trenton Times: Well, we lack a border, of course.

MR. LEHRER: Yes.

MR. BAUMEISTER: The details are very difficult for people to understand, but on last Sunday, we had the Republican leaders of Congress saying, gee, we should do it, but, you know, it's not very popular, and then a couple of days later, the President stood up, said, I know it's not popular, I'm going to do it, and come see me if you don't like it. And that, among my neighbors, made them sit up and take notice. Here was a man making a decision [a] and saying, blame me if you must, if you don't like it. I think --

MR. LEHRER: He got points for that?

MR. BAUMEISTER: Very big points.

MR. LEHRER: Yeah. Did he get points with you, Patrick, in Oklahoma City?

PATRICK McGUIGAN, Daily Oklahoman: [Oklahoma City] Well, I have a number of concerns. I absolutely agree that this is better than what was being discussed a few days ago. I think there was way too much risk for the American taxpayers in the original plan that the President had. Now, there's a multilateral risk, if you will. There's a number of players involved. We're just one of the players. I do have some concerns for the long haul, because as the world economy gets more and more integrated, you're going to have ups and downs, you're going to have corrections, and I guess my question is: Will the United States be expected to step up to the plate and help close gaps like this every time that natural, totally to be expected, economic problems occur?

MR. LEHRER: What would have been the alternative, in your opinion, to not doing anything -- I mean, to doing something?

MR. McGUIGAN: Again, I believe that what the President has done as a stop gap measure is preferable to what he was talking about a few days ago. The question I have is, for example, one of the little pieces of this is the President's dipping into the economic stabilization fund which is traditionally what Presidents have had the authority to use to prop up the dollar around the world.

MR. LEHRER: Yes.

MR. McGUIGAN: Not the peso. This in that respect is totally unprecedented, so I'm worried about the systemic implications of it. I'm not an economist. I'm just an American that's worried what this means for the future. I do salute the President in a limited sense of saying this is better than what he was talking about, and it was something he could do short of provoking a political battle on Capitol Hill.

MR. LEHRER: Do you salute the President, Clarence?

CLARENCE PAGE, Chicago Tribune: I do personally, Jim, but reaction from our readers has been mixed. In fact, we sent --

MR. LEHRER: Why is that?

MR. PAGE: Well, in our area, like with Ed's area, we don't share a border with Mexico, but we do have populace, middle American folks who are suspicious of foreign aid of any kind. We dispatched about four or five reporters out around our metropolitan area, and a substantial number of the people they talked to said this sounded like foreign aid to them. I think usually that term "bailout," as we heard earlier from the IMF director, is unfortunate, because it's given the impression that this is foreign aid. It's not in that classic sense of some kind of a handout. This -- and I think that President Clinton did explain himself well in his public appearance to say that, that hey, this is a loan or co-signing for a loan, and it's covered by Mexican oil. I thought maybe he was a little too folksy for my taste, but that was his choice, but you know, I think a part of his problem as President is a lack of that gravidas. Maybe he should have announced this from the Oval Office. Maybe that would have given too much attention to it, but let me say this. I think this was the most courageous move since the Haiti operation, because in the Haitian operation he had even less support than this --

MR. LEHRER: Yeah.

MR. PAGE: -- from his own party, let alone most Americans, and in this case was such a mixed reaction out there he did boldly go forth in a forthright manner, and he didn't waffle, which has been one of his image problems in the past.

MR. LEHRER: Cynthia, what's your view of it?

CYNTHIA TUCKER, Atlanta Constitution: [Atlanta] Well, like Clarence, I think it was absolutely the right thing for the President to do. I think it was a very courageous move. It looked suspiciously like leadership, and I have been waiting to see that for the President ever since the November takeover of Congress by the Republicans. I think it was absolutely the right thing for him to do.

MR. LEHRER: All right.

MS. TUCKER: It is very difficult to explain, however, and it has been confusing to a number of Georgians, and I don't think it has been especially popular here, even though Mexico is increasingly important to the Georgia economy.

MR. LEHRER: All right. To another thing involving the President, Cynthia, today the President said -- we ran it in the News Summary just now -- he criticized the way words are being used in Washington these days to tear down. What's your view of that? Do you agree with him?

MS. TUCKER: Well, the President is absolutely right about that, and I don't think what we're hearing from Congress these days is any great surprise. We heard this throughout the campaign. And unfortunately, I think that the Republicans believe their victory is due in some part to the mean-spirited campaign that they ran. House Speaker Newt Gingrich, after all, is a man who spoke of the enemies of normal Americans. So I don't think whatwe're hearing is any great surprise but it is disappointing. And I don't think that we can tackle the hard issues that are before us as long as this sort of incivility dominates public debate.

MR. LEHRER: Do you agree with that, Gerry Warren?

MR. WARREN: Well, I would wish for more civility in political debate. I think, though, the start of uncivil campaigns was not Newt Gingrich and his gang of 1994 Congress persons. I think the President, himself, felt it important to tear down President Bush and tear down Ronald Reagan and everything they had done in order for him to get elected in 1992. I think both sides in the House of Representatives particularly today need to look at their rhetoric. I think they're going a little bit too far. The Republicans now need to act like leaders, and that means to be above the fray. They must be candid, but they must be careful at the same time. The Democrats seem to want to do what they thought Newt Gingrich was doing to them prior to the election. I think that's a mistake.

MR. LEHRER: Lee, how's it look to you?

MS. CULLUM: Well, Jim, I agree with everything that I'm hearing. I try to show a little forbearance where this Congress is concerned. I remembered question and answer in the British Parliament and thought, well, parliaments are always raucous, they're never sedate, but I think they're going too far in Washington, and I think there's going to be a revulsion on the part of the American people if they're not careful.

MR. LEHRER: Going too far in what way? Give me an example of what you think they've done that's gone too far.

MS. CULLUM: Well, it seems to me the screaming fest that they have on the floor of the House talking about Newt Gingrich's book, for example, that's one, and it seems to go on and on. And it seems to be the order of the hour day after day, or that's the impression that I'm getting. And it seems to me it's time to lay that aside.

MR. LEHRER: Is it time to lay it aside, Ed?

MR. BAUMEISTER: I think so. The people voted for change, and they're not seeing much. The Republican -- it's become more partisan, I think, and I think that turns people off. I think they run a risk, the people now in charge, of, of putting distance between themselves and the people they said they would serve. They said they would be different, that they would return government to the people as if this government was something that was, you know, based in Luxembourg, and they were going to send it back, but this incredibly partisan and detailed partisan stuff is first of all hard to follow, if it's not your business to follow it, and second, begins to all, to all sound the same after a while.

MR. LEHRER: Are you talking about the Contract With America?

MR. BAUMEISTER: I'm talking about what I think Mr. Clinton was talking about this morning.

MR. LEHRER: Okay.

MR. BAUMEISTER: Remember in his inaugural address, he'd been in town not very long, he said, hey, listen, I've discovered this is a back-stabbing town. He's seeing it in spades now, and I think, you know, people I see every day shake their heads and say, what are they doing down there? The Republicans laid out this clear 10- point program, and now it, it looks like -- it sounds like chaos. It may not look like chaos, and I think this is turning a lot of people off. They're saying, why is this so messy, why is it not so orderly as they laid it out to be, and I think the Republicans are losing at least a bit of their grip on the people who sent him there.

MR. LEHRER: Do you agree with that, Patrick, that they're losing some of the grip just by their words and the way they're going about it?

MR. McGUIGAN: Well, I scarcely know where to begin to reply to some of this. I mean, you've got to go back to 1992. Gerry, I think, just referred to the kinds of attacks that were issued on George Bush. This was not invented in the last few weeks in Washington, D.C. Specifically, the Democratic National Committee, I presume with President Clinton's blessing, virtually accused George Bush of lying on the eve of the election in the infamous Halloween surprise. You can go back to the 1980s, things like the Bork fight. I don't remember many of my colleagues in the press - - at that time I was not in the press -- but I don't remember many of them bemoaning in 1987 when Ted Kennedy delivered an absolute diatribe attacking Robert Bork, totally distorting his --

MR. LEHRER: But what about --

MR. McGUIGAN: -- judicial views for the sake of defeating him.

MR. LEHRER: But what about Ed's point -- what about Ed's point?

MR. McGUIGAN: I'm all for -- I'm all for more civility. I'm all for bringing more civility to bear in Congress and in our public life.

MR. LEHRER: But his point was that, that the Republicans said they were going to not -- they weren't going to do that, they were going to change things, things were going to be different. Do you agree that they haven't really changed that much in terms of the rhetoric?

MR. McGUIGAN: Well, here's what I would say. I would say what's happening is that the Democrats are turning around and using some very effective personal attacks in order to, in essence, change the subject. The debate ought to be on the Contract With America and other proposals for change, but, instead, the debate is things like Newt Gingrich's book deal, when, in kind, in degree it might be different, but in kind it's no different than Al Gore's book deal.

MR. LEHRER: Clarence?

MR. PAGE: Well, Jim, as somebody who has occasionally been a guest on McLaughlin Group, I have no idea what these folks are talking about here. The fact is I think we in the media have played part of a role in that. It is popular to have more, more tabloidization, if you will, political discourse, not so much on this show but on other shows around. People watch it. They like that level of excitement. Now, the thing that concerns me is I think Newt Gingrich has brought some of that to Congress. He, himself, you know, I just take the example of his classroom discussion of women in combat. You know, he could have just said most women are less well suited to combat than most men are. Instead, he goes on talking about women having infections in trenches, and men being more suited to hunting giraffes and wallowing in the mud. He kind of likes that sort of provocative language. That is his won't. He kind of goes back and forth being good Newt and bad Newt on that. But I'll go back even farther than Patrick and Gerry and take it back to the '60s, back when I was a counterculture McGovernic, Jim, students of the left were not kind to Lyndon Johnson or to Richard Nixon, by any means, and I'm seeing that same level of rhetoric coming from the right now, coming from Rush Limbaugh and his fans, and so it's okay to be a radio talk show host but when it comes to the floor of Congress I'm a little bit concerned. This week, I've seen Republicans and Democrats do it, Bob Dornan, Republican from California, calling Clinton a traitor, and Jim Traficant from Ohio, a Democrat, calling the head of the Federal Reserve, saying he had just "stuck a finger up in the air to the American people." I mean, that kind of rhetoric on the floor of the Congress is disturbing to me.

MR. LEHRER: But is it worse now? Are you saying -- do you agree with President Clinton --

MR. PAGE: I think the pendulum has swung to the worst now, and it's being directed at Bill and Hillary Clinton. There's a level of nastiness now that I have not seen since the '60s.

MR. LEHRER: Patrick, you don't agree with that, right?

MR. McGUIGAN: Well, I think things have -- I would say they've intensified. Part of the reason they've intensified is that people who have been in power and have been used to largely having their way in Congress in hearings and otherwise are finding out that they're not going to get their way at least in policy, so you change the debate off of policy onto personalities. I think an awful lot of that is going on. I do have a helpful suggestion. I think that in this very question of the bailout of the Mexican peso it would be very helpful to have substantive hearings on the President's authority to do something like this. I have questions that this is a good idea, and entirely aside from that, whether the President really can do it, dip into something that's intended to protect our dollar and instead use it to protect a foreign currency. I think those could be positive hearings and wouldn't have to be better. They could just be substantive so we could get information about this.

MR. LEHRER: Speaking of substantive things, Cynthia, the talk aside that we've -- the words -- how does the -- the first one hundred days look so far to you, just in terms of what the Republican Congress has been able to accomplish thus far?

MS. TUCKER: Well, one of the more interesting things that has happened is we're now beginning to see some differences in the Republican Party, itself, as they disagree over things like term limits and whether, in fact, there should be a 3/5 majority required to raise taxes. I give the Republicans a lot of credit for a lot of the things they did to clean up the rules of running Congress and to cut staffs for Congress. I think those reforms were absolutely the right things to do. The Democrats should have done those things a long time ago. But I think that the party in power will now find it is more difficult to get some of the things passed than they thought it was going to be.

MR. LEHRER: Gerry Warren, how does it look to you, just what the Congress has done so far?

MR. WARREN: I think it looks great. I can't wait for more of it. I think the Republicans are being quite successful. Sure, they gave up the 3/5 vote on the taxes, and I think that was a wise thing to do. I think that was -- that was not called for in the first place. But in cases of balanced budget, unfunded mandates, bringing the law to the House of Representatives and the Senate of the United States, they've been very successful. I think they will continue to do that, regardless of what I see as an unconscionable attack upon their policies by the Democrats.

MR. LEHRER: All right. We leave it there. Thank you all very much. FOCUS - FACT OR FICTION?

MR. MAC NEIL: Finally tonight, the debate over so-called "recovered memories." They've become the controversial source of many court cases. Lee Hochberg of Oregon Public Broadcasting reports.

LEE HOCHBERG, Oregon Public Broadcasting: The sweet music of his childhood has turned sour for Ross Cheit. He's a professor at Brown University in Rhode Island, but when he performed for this recording in 1968, he as a 12-year-old member of the San Francisco Boys Chorus.

ROSS CHEIT: It's bittersweet to listen tothem now, and I guess I think a lot more now about the innocence.

MR. HOCHBERG: Cheit awoke one morning two years ago with horrible memories of losing his innocence. He says he remembered being sexually abused as a young member of the chorus by Bill Farmer, the chorus's summer camp administrator. The memories, hidden in Cheit's brain for more than two decades, abruptly returned to him while he was in therapy as a 37-year-old adult.

ROSS CHEIT: I woke up thinking about Bill Farmer. It was a kind of sinking feeling in my stomach of, oh, God, right, how he used to come into my cabin at night and do these things to me.

MR. HOCHBERG: Cheit's memories have thrust him into the heated debate in the psychotherapy profession over the validity of "recovered memories."

ROSS CHEIT: I could picture this all the first day. I could picture him sitting on my bed, talking to me about sort of how my day had gone, talking quietly, and he'd start, he'd put his hand on my chest and start kind of stroking my chest as he talked to me. He'd just be kind of, you know, rubbing my chest. And he'd talk, and eventually he'd start reaching his hands, and his hand would start moving down my chest. And I can still feel the feeling of having my stomach muscles tense up, and Bill saying, "Relax, relax."

ROSS CHEIT: [recording of telephone conversation] Hello, Bill?

BILL FARMER: [in recording] Yeah.

ROSS CHEIT: This is Ross Cheit.

BILL FARMER: Yes?

ROSS CHEIT: Do you remember me?

BILL FARMER: I remember the name.

ROSS CHEIT: San Francisco Boys Chorus?

BILL FARMER: Oh, yes! Ross, my God! Of course, I remember you.

MR. HOCHBERG: Legal experts consider the Cheit case important, because Cheit says he can provide corroborating evidence that his memories are true. A former lawyer, he says he located three other chorus members who said Farmer had molested them, and he recorded this telephone conversation with the man he accused.

BILL FARMER: [in recorded telephone conversation] Of course, I remember you. You know, your name came back, but you see, in my life you're about 12.

ROSS CHEIT: [in recorded telephone conversation] That's right. About 12. That's right. I'm the person that you abused. I'm one of many. I've located a number of others.

BILL FARMER: [in recorded telephone conversation] That was kind of a long ways down the road now.

ROSS CHEIT: Well, that's now I view it, but you molested people, right? Let's be clear about this.

BILL FARMER: [recorded phone conversation] Of course. That's what it is.

ROSS CHEIT: You molested me, correct?

BILL FARMER: Yup.

MR. HOCHBERG: Cheit sued Farmer and received a $450,000 judgment. The case is just one of an avalanche of recovered memory cases flooding American courts. In California, Eileen Franklin's memory of seeing her father kill an eight-year-old friend led to his murder conviction twenty-two years after the deed. Lawyers who specialize in memory cases say litigation costs could reach $250 million by the end of the decade. But even so, there's fierce debate over how accurate those long-hidden memories are when they emerge. Skeptics say using them to charge somebody with child abuse, without other evidence, is tantamount to a witch hunt.

ELIZABETH LOFTUS, Psychologist: The terrible damage and destruction that these lawsuits have done, you can use the word "outrageous," you can use the word "horrifying," just in terms of the numbers of people who are being harmed.

MR. HOCHBERG: University of Washington psychologist Elizabeth Loftus says thousands of innocent people are being charged with abuse. Her book, The Myth of Repressed Memory, alleges that memories of abuse often are planted by ill-trained therapists.

ELIZABETH LOFTUS: Even though the patient says no, the therapist sometimes presses this sex-abuse agenda, maybe interpreting dreams as evidence of memories breaking through, maybe doing hypnosis, and this climate of suggestion, I fear, is leading some patients to develop false beliefs and false memories.

JACKIE PICKERAL: I think that you may remember more and more as you go along. I'm interested in any details you can remember.

MR. HOCHBERG: Loftus cites as evidence an experiment she's conducting on volunteers at the University of Washington. Her research associate, Jackie Pickeral, has been able to plant false childhood memories in 25 percent of their subjects. She does so by first obtaining from a parent several real-life experiences from the subject's childhood. She mixes them with a couple of made-up experiences like getting lost in a shopping mall, and has the subject try to recall all of them.

JACKIE PICKERAL: This is the time that you actually were lost from your parents for a little while.

SUBJECT: I was lost from parents.

MR. HOCHBERG: This subject initially has no memory of being lost in the mall.

SUBJECT: Um mm.

MR. HOCHBERG: But in a highly suggestive environment not unlike some therapy sessions, Pickeral begins implanting one.

JACKIE PICKERAL: You were separated from mom and dad. How might you have reacted?

SUBJECT: I'm sure that I was like very frightened and stuff.

JACKIE PICKERAL: Do you ever remember hearing your name on the PA system?

SUBJECT: Yeah. I do remember that.

JACKIE PICKERAL: Could it have been this --

SUBJECT: It could have been.

JACKIE PICKERAL: -- time when you were five?

SUBJECT: It could have been.

MR. HOCHBERG: Only a week later, the false memory of being lost has taken root.

JACKIE PICKERAL: Do you remember being lost?

SUBJECT: Yeah. I feel like that initial like panic when you realize that your mom and dad aren't there anymore, and then the next memory I have after that is, umm, going to the security station and then hearing them call my mother and father's name over the loud speaker.

JACKIE PICKERAL: Well, in fact, being lost was false.

SUBJECT: Really?

JACKIE PICKERAL: Yeah.

SUBJECT: I never was lost? I had to have been lost! [laughing]

ELIZABETH LOFTUS: What these studies are showing is that it is possible to get people to believe that entire events happened to them in their childhood that didn't really happen.

DR. LENORE TERR, Psychiatrist: I'm not impressed with lost in a mall. I don't think that's traumatic.

MR. HOCHBERG: Top child psychiatrists, though, like San Francisco's Dr. Lenore Terr, point out that the university study failed in attempts to plant traumatic memories like having to go to a hospital. Terr says it's one thing to plant a memory of being lost, but another to plant memories of life-changing events, like child abuse.

DR. LENORE TERR: When these memories come back of being overtaken by somebody who ran your choir, who you trusted, you can't implant that.

MR. HOCHBERG: Terr says after 27 years in practice, she believes in recovered memories if they're accompanied by classic symptoms of trauma.

DR. LENORE TERR: If a patient shows returning perceptions or returning dreams, the same one again and again, if the person shows specific fears of something that goes along with the memory, that should be enough to show the court that the person went through this event.

WOMAN ON STAND: [testifying in courtroom] She started telling me of memories that she had. She was in her bed, she could see her father's back, he was on top of her, he was sliding over her.

MR. HOCHBERG: But in this recent landmark case in Napa, California, recovered memory suffered a severe setback. Napa Valley winery executive Gary Romona, whose daughter, Holly, had remembered him sexually abusing her as a child, successfully sued Holly's therapist for malpractice. He alleged they had implanted his daughter's memories.

GARY ROMONA: Repressed memory is a quack, quackery. It's absolutely, absolutely not true.

MR. HOCHBERG: His daughter, Holly, had entered therapy for bulimia. Then a 19-year-old student, she soon began having lurid flashbacks of childhood sexual contact with her father. He claims the therapist planted those memories by administering a hypnotic drug and telling Holly that many people with eating disorders have been sexually abused.

GARY ROMONA: Someone saying 80 percent of all eating-disorder people have been sexually abused, that certainly implants a major suggestion.

MR. HOCHBERG: Holly initially did not recall any abuse, so her therapist dropped the subject, but months later, Holly was jarred by a memory.

HOLLY ROMONA: I just remember his hand on my stomach. That was the first flashback. It was, you know, kind of like a black and white Polaroid picture. And I just re [remember] -- at that time feeling very frozen too.

MR. HOCHBERG: Her father maintained it was somebody else's hand in the memory.

GARY ROMONA: My daughter was at the children's hospital. They did a major procedure on my daughter for urinary tract infection, bladder infection.

MR. HOCHBERG: So that's the flashback that she remembered?

GARY ROMONA: You have a doctor there, performing his examination, hand, as we understand, definitely will be on the stomach.

HOLLY ROMONA: The hospital procedure doesn't explain the nightmares I have in the middle of the night or waking up, being afraid that he's there.

MR. HOCHBERG: The hand on the stomach memory was followed, before long, by others.

HOLLY ROMONA: Memories of, umm, my father coming into my room at night, umm, memories of him actually having intercourse with me. It just -- it kept progressing.

MR. HOCHBERG: Holly's health improved as the memories came out. Family members pulled away from Gary Romona. His wife sued him for divorce. Holly sued him for assault and battery, and he lost his $500,000 a year job. He sued the therapist for malpractice, portraying himself, as in this home video, as a loving father who had lost it all.

GARY ROMONA: I've lost everything. I've lost my marriage of 25 years, my daughters who I love dearly. I lost my career. I've lost my reputation.

MARCHE ISABELLA, Therapist: I've gone through it emotionally, clinically, and there is no part I had in planting a memory. These were Holly's memories. These were not my memories.

MR. HOCHBERG: The jury ruled the therapist had fostered memories of incest and ruled in Gary Romona's favor. He settled in October for $500,000 damages. Therapists and patients say the verdict may discourage future abuse victims from coming forward.

MARCHE ISABELLA: You're giving them the message, go back in the closet, don't talk about it, shut up and get on with your life. Well, that's what was going on for many, many years.

MR. HOCHBERG: The backlash against recovered memories is influencing policy makers. After Chicago cardinal, Joseph Bernadine, was falsely accused of sexually abusing a child, Illinois legislators debated a bill to prevent anybody over the age of 30 from filing child abuse charges. Sponsor Ed Petka.

ED PETKA, State Senator, Illinois: What is the societal interest that is being advanced with a child -- an adult who goes in twenty, thirty, or forty years later and files a lawsuit, as opposed to the risk of a person having his reputation damaged irreversibly?

MR. HOCHBERG: And though policy makers in California have passed a new law that allows criminal charges to be filed within three years of a memory, the author of the law required there be corroborating evidence beyond a psychiatrist's testimony that the memory is true.

PAULA BOLAND, Assemblywoman, California: I don't believe in my heart yet until we see how it works that just a psychiatrist's or psychologist's testimony in court should be enough evidence to convince somebody.

MR. HOCHBERG: The backlash is frightening to people like Holly Romona. Her own civil case against her father was recently dismissed on the grounds that he's already been vindicated by the Napa jury. She says, discrediting recovered memories, will further victimize people who've already been abused once. RECAP

MR. MAC NEIL: Again, the major stories of this Thursday, the House began debate on the line item veto, another part of the Republican Contract With America. A vote is expected Monday. And new home sales were down in December but still ended the year at the highest level in six years. Good night, Robin.

MR. MAC NEIL: Good night, Jim. That's the NewsHour for tonight. And we'll see you again tomorrow night. I'm Robert MacNeil. Good night.