The MacNeil/Lehrer NewsHour

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

MR. MacNeil: And I'm Robert MacNeil in New York. After the News Summary this Tuesday night we continue our week long study of the Clinton economic plan. Tonight, economic stimulus and jobs. Laura Tyson, who chairs the President's Council of Economic Advisers, debates the plan with business, labor and an economist. Then Correspondent Jeff Kaye reports on the efforts to find a fair- minded jury in two Los Angeles racial beating trials, and finally essayist Jim Fisher looks at the end of an American institution. NEWS SUMMARY

MR. MacNeil: President Clinton confirmed today that the U.S. is developing a plan to air drop supplies into Eastern Bosnia. He said it would be a purely humanitarian mission. Fighting has isolated about a hundred thousand Muslims in the region who are said to be facing desperate conditions. The President discussed the issue with Sec. General Boutros Boutros-Ghali at the White House this afternoon. Afterwards, Boutros-Ghali said they agreed on the plan but details were still being worked out. Mr. Clinton was asked whether the relief operation might endanger U.S. military personnel.

PRESIDENT CLINTON: What we're discussing is very different, has no combat connotations whatever and is purely humanitarian and quite limited.

REPORTER: Isn't there a risk of people being shot at by anti- aircraft --

PRESIDENT CLINTON: Well, if we do it, we'll have an announcement that deals with that. We think the risks are quite small.

MR. MacNeil: BosnianSerb commanders criticized the air drop plan, saying it could escalate the fighting. A U.N. truck convoy carrying food and medicine arrived in an Eastern Bosnian town today. A second convoy was headed for another besieged town in the region. Serb militia have repeatedly blocked such shipments into the mostly Muslim area. The Serbs recently promised to cooperate with relief efforts. Jim.

MR. LEHRER: The Conference Board reported today that consumer confidence fell 8 points since January. The Board is a private business research group that surveys some five thousand households nationwide. This morning President Clinton pitched his economic plan to business leaders. He asked them not to focus solely on the tax increases, and he said he would make new efforts to cut government spending. He spoke to the U.S. Chamber of Commerce in Washington.

PRESIDENT CLINTON: I am sure after now almost five weeks in office that there are more cuts coming. I can tell you I will find more, and I think we have gotten everybody in the national government interested in finding more, and I encourage you to give us more. nothing is off the table, except those things that reflect the fundamental interests of the American people. The plan I have presented will reduce the deficit substantially and fairly. And if we do, it will mean lower interest rates.

MR. LEHRER: Republican leaders again criticized the President's plan. They spoke at a Capitol Hill news conference.

SEN. BOB DOLE, Minority Leader: I think the plan is a disappointment. We have known a lot of people out there talking about it, talking about patriotism, talking about investment, which is another word for spending. It seems to me that this package is not going to sell to the American people until we have some real spending reductions and eliminate a lot of the spending that he is now proposing.

SEN. BOB PACKWOOD, [R] Oregon: You either raise taxes to narrow the deficit or you restrain spending. All I'm saying is that in the past there is no history of ever reducing the deficit by increasing taxes.

MR. LEHRER: We will look at the jobs component of the President's Clinton plan right after the News Summary.

MR. MacNeil: About 10,000 pro-Communist veterans marched through Moscow today to denounce Boris Yeltsin and demand a military insurgency against him. It was one of the largest pro-Communist demonstrations in months. It took place on a holiday known until last year as Soviet Armed Forces Day. There was no immediate reaction from Yeltsin, who was at his country home outside Moscow. The Clinton administration has announced it's replacing the coordinator of U.S. humanitarian aid to Russia. The official, Richard Armitage, recently suggested that Boris Yeltsin's days in office were numbered. That brought a warning from a top Yeltsin aide that weak U.S. backing for the Russian president could lead to his ouster and a new reign of terror. The State Department spokesman said Armitage was being replaced because he was a Bush administration hold-over.

MR. LEHRER: U.S. military officials in Somalia today issued an ultimatum to one of the leading warlords. They told him to remove his forces from the port city of Kismayu or face allied military action. The warlord, known as Gen. Morgan, reclaimed parts of the city yesterday after fighting with rival clans. U.S. efforts to turn control of the area over to Belgian troops were delayed by the latest fighting. Sec. of State Christopher met in Jerusalem today with Israeli Prime Minister Rabin. Christopher made no comment after the two-hour meeting. Israeli officials called the meeting useful. Christopher also met with a Palestinian delegation.

MR. MacNeil: Five cross country skiers missing since Friday in Colorado turned up alive today. Two of them found their way to a trading post after disappearing in a dangerous avalanche area. They were suffering from dehydration and frostbite. The other three were spotted by a helicopter later in the day. Heavy snowfalls had hampered the search. Pulitzer Prize Winning humorist and columnist Russell Baker was named today to take over from Alistair Cooke as host of Masterpiece Theater. Cooke retired last fall after 22 years in the PBS series now familiar armchair. Baker, who assumes his new duties in October, explained his decision, saying, "All Americans want to be on television. If you're not on television, you're not an American." That's our summary of the news. Now it's on to economic stimulus and job creation, jury selection in LA, and a Jim Fisher essay. FOCUS - WORK WE MUST

MR. MacNeil: Tonight we continue our in-depth coverage this week of the Clinton economic plan with a focus on what matters most to those without them, jobs. Creating jobs in the short and long-term is a key ingredient in President Clinton's recipe for economic recovery. Today the President met with business leaders in Washington to make a case for his proposals. That followed a two- day campaign style swing on the West Coast. Correspondent Greg Hirakawa of public station KCTS-Seattle sampled the reaction to Mr. Clinton's speech at Boeing Aircraft, where major layoffs are in store.

MR. HIRAKAWA: More than 5,000 Boeing workers turned out in a 747 assembly hangar to hear President Clinton's message on creating jobs. The workers were interested in hearing anything about new jobs after last week's announcement that the company will be laying off 28,000 workers. Nineteen thousand of those layoffs will be here in Seattle.

SPOKESMAN: The President of the United States.

MR. HIRAKAWA: To jumpstart the economy, President Clinton has proposed a $30 billion stimulus package that will provide money for jobs in improving the nation's roads and bridges. The package will also fund a summer youth jobs program. In all, the President hopes to create 1/2 million new jobs in the next two years. That probably will not mean much to skilled Boeing workers. Part 2 of the President's plan may. By 1996, President Clinton plans to create 8 million jobs by spending $160 billion on technology development, environmental protection, health care, and job training.

PRESIDENT CLINTON: In a global economy in which the things that really pay off are high levels of education and skills, high levels of investment in appropriate technologies, a very close amount of cooperation within each work place among workers and between workers and management and in the national sense between government and business and labor. The countries which do that win. Those which don't are punished.

MR. HIRAKAWA: The message that resonated most strongly here was the President promised to help U.S. technological industries such as aerospace deal better with foreign competition. The President took a swipe at the subsidized European aircraft consortium that builds the Airbus, which has cut deeply into Boeing's share of the airline market.

PRESIDENT CLINTON: And I think you and I know deep in our heart that most of these layoffs, maybe not all, because the airline industry, itself, has problems, but a lot of these layoffs would not have been announced had it not been for the $26 billion that the United States sat by and let Europe plow into Airbus over the last several years. So we're going to try to change the rules of the game.

MR. HIRAKAWA: Later, Mr. Clinton spent more than an hour talking with airline executives about how to help this nation's ailing airline industry. U.S. carriers have lost an estimated $9 billion over the past three years, forcing them to delay or cancel hundreds of orders for new Boeing jets. Following the address, many Boeing workers gave the President's job creation programs high marks, although Troy Gibson, who most likely will lose his job soon is not so sure.

TROY GIBSON, Boeing Worker: It sounds good in the long-term, but I don't know if it's really going to help me out. I think I'm probably going to be looking for a job before the year is out, but it sounds good for the future, I guess.

MR. HIRAKAWA: Randy Belfield received his layoff notice last week. He supports President Clinton's proposal for deficit reduction and investment.

RANDY BELFIELD, Boeing Worker: I think if he helps out the national economy I'll be back sooner. It took me three years to get in here and going back in less than three years, I'll figure that's a win.

MR. HIRAKAWA: But some think President Clinton's plan to increase taxes will do more harm than good. Kenneth Young has been with Boeing for 13 years.

KENNETH YOUNG, Boeing Worker: I think the more income people have available the more they can spend on travel and airplane rides and I think that will help the airlines and that will help Boeing.

MR. HIRAKAWA: Three weeks ago, we talked with Boeing workers Dave Jensen, Bruce Spalding and Jeff Shirley. Back then, they knew the layoffs were coming, although they did not know how deep the cuts would be. They now feel 12 people in their 28-person unit will soon be without jobs. Jensen, who may be one of the twelve supports the President's call for retraining displaced workers.

DAVE JENSEN, Boeing Worker: I think as far as their re-education programs for the blue collar workers, that's, that's the right step because there is going to be less of those jobs available in the future. White collar jobs are going to be the way it is. I still think we're going to be losing industrialized companies to outside sources, Mexico or whatever, so white collar education is I think the ticket for the future.

MR. HIRAKAWA: Jeff Shirley likes what he hears, although he believes the President may be overestimating the impact of his programs.

JEFF SHIRLEY, Boeing Worker: What he proposes sounds real good, but actually enacting it, I don't know if it'll work or not. I think business is going to have to pick up, and we're going to have to re -- they're going to have to reinvest in the businesses, itself. I don't know if government subsidies is going to help that.

MR. HIRAKAWA: Cutbacks at Seattle's largest employer has prompted local government officials to try to reduce the city's economic dependence on the aerospace giant. Officials here hope to expand the region's computer software and biotech industries. They are also helping local small businesses market their products overseas. Officials trying to diversify Seattle's economy generally support the President's job proposals, although Seattle City Councilman Jim Street says the short-term stimulus package will do nothing for the city.

JIM STREET, Seattle City Council: Bill Clinton is not going to do something in the very short run that's necessarily going to have a profound impact on Seattle. On the other hand, I look to Mr. Clinton for the same kinds of things that I look to political leadership here, and that is an understanding that economic competitiveness is a very long-term process and that there's no quick fixes. Tax cuts, tax incentives, eliminating regulations are not the answer. The answer is investment, and that's what I like about Clinton's message.

DAVE JENSEN: I, I think that President Clinton truly believes it will work if everybody gets with him in the program. The optimism is there and he believes it. And he's exuding that confidence to, to us. And so that's, that's a good reason to try and support him and help him out.

PRESIDENT CLINTON: [speaking to Boeing workers] Thank you very much, and God bless you all.

MR. HIRAKAWA: Workers facing layoffs believe there is little government can do to help them anytime soon. They are, instead, hoping Mr. Clinton delivers on his promises for the long run and are hoping that will lead to better times ahead.

MR. LEHRER: Now some back and forth about the jobs and stimulus parts of the Clinton economic plan. It is among Laura Tyson, chair of President Clinton's Council of Economic Advisers, Alan Meltzer, an economic professor at Carnegie Mellon University, visiting scholar at the American Enterprise Institute, Michael Roush of the National Federation of Independent Business, a trade group of 600,000 small business owners, and Jack Sheinkman, president of the Amalgamated Clothing and Textile Workers Union, which has more than 230,000 members in the United States and Canada. He joins us tonight from Chicago. Ms. Tyson, as a practical matters those workers at Boeing are absolutely right, are they not? There's nothing in the short-term stimulus package, that's the $30 billion package, that's going to help them one bit.

MS. TYSON: Well, I think that that's actually not right. I think that the stimulus package, the rationale for the stimulus package is to get the recovery of the economy moving more quickly, to prevent a stallout, to make sure that we create more jobs. This has been so far a jobless recovery. If we inject spending into the economy through tax reductions for business investment and spending in the economy through various government spending programs, that increases demand in the economy and that has ripple effects throughout the economy. Now I can't predict that a particular Boeing worker --

MR. LEHRER: Sure.

MS. TYSON: -- will be affected, but I can predict that it will stimulate demand in the economy in spending and should lead to more job creation.

MR. LEHRER: What kinds of jobs will it create?

MS. TYSON: Well, I think that --

MR. LEHRER: Should it create.

MS. TYSON: I think that it creates jobs across a wide variety of activities because half of the package is really targeted to business investment incentives so that as businesses go out and invest in additional equipment you could have expenditures through a variety of industries, computer industries, machine tool industries, a variety of industries. On the other hand, on the spending side of the package, where we're doing construction spending, spending on Head Start programs, summer school programs, youth employment programs, we can affect a variety of economic activities, and again the induced effect, we create some initial demand that spills over throughout the economy.

MR. LEHRER: But the $30 billion, the infrastructure parts, those are jobs that, they're construction jobs, that kind of thing, are they not?

MS. TYSON: That's right, construction jobs, jobs corps, we have many jobs in there for summer youth employment programs around the country. We call it a summer of opportunity. We have jobs that would be created as a result of the immunization effort that we're going to start up as a down payment on our long-term investment of immunization in children. But those initial jobs will also create some additional jobs through additional spending in the economy.

MR. LEHRER: In other words, those workers --

MS. TYSON: Those workers will go out and spend some money.

MR. LEHRER: -- will then spend, get money, they will have a job, they will spend the money and that will help.

MS. TYSON: In addition, in addition to the confidence effect, you heard in the earlier news report that confidence was down, one of the things that we really want to do, consumer confidence is very sensitive to the issue of job prospects. We want to create some additional jobs in this economy, create some sense that job opportunities are out there. That should restore some consumer confidence and that, in turn, should lead to more spending.

MR. LEHRER: Mr. Roush, you heard what Ms. Tyson has said, the purpose -- now we're talking about the short-term now, the $30 billion -- we'll get to the long-term in a moment. Do you have the same kind of confidence that she and the President have that it will have the effect that she and the President want it to have?

MR. ROUSH: Unfortunately, no, I don't. In the short-term, it seems to me that first of all the stimulus, the spending programs won't hit immediately. These things have to be phased in and it takes time for them to hit. We're looking at maybe next year for a lot of these jobs at best.

MR. LEHRER: You're talking about the infrastructure --

MR. ROUSH: Infrastructure kinds of jobs.

MR. LEHRER: All right.

MR. ROUSH: And some of those jobs even more than a year because the money's already been authorized for that, that whole program, but at any rate, so there's a phase effect, a lag effect that I think is going to be in the short run that has to be dealt with. Furthermore, it seems to me that the whole question of whether a stimulus is needed in the economy is extremely dubious. There are going to be more jobs created but not because of a stimulus program. It seems to me there's sort of a self-fulfilling prophecy aspect of what's going on here.

MR. LEHRER: You mean, the economy on its own is improving at a rate that would create these jobs, whether there's a stimulus package or not?

MR. ROUSH: Absolutely, absolutely. The initial estimates of the fourth quarter growth of GDP was 3.8. Our estimates for the first quarter this year are at least --

MR. LEHRER: Gross Domestic Product.

MR. ROUSH: Gross Domestic Product is at least 3 percent. And small business confidence is up, and they are beginning to hire. In fact, as Dr. Tyson knows, the vast majority of jobs in this economy are created by firms between one and twenty employees.

MR. LEHRER: These are people that are -- a lot of them are members of your organization.

MR. ROUSH: That's right. A lot of them are members of ours. And the third point I'd make about the short-term is that in the short- term small business people want to see spending cuts and then they want to talk about tax increases. They are, they are extremely skeptical. We've been down this road in the last ten or fifteen years about taking tax increases and spending cuts and certain proportions and the spending cuts always, the spending increases always seem to come and the tax cuts never seem to arrive.

MR. LEHRER: Ms. Tyson, this argument has been the same one that the Republican leadership in the House and the Senate have made, that the economy is already, already improving, why go in there and spend more federal money, just let it take off on its own.

MS. TYSON: Well, I think there are three reasons: One is we've had a stall in this recovery before and we want to insure against that. Second, this is a recovery which is a relatively slow recovery in terms of creating jobs. We call it a jobless recovery. We are 3 million jobs short of what we would be if this was a normal economic recovery. And third, there are some danger signals out there in terms of some problem areas. We have to continue to contend with defend conversion. We have to continue to contend with industrial restructuring. We have to continue to contend with commercial real estate overbuilding and the results of that in some regions of the country, so we don't believe the foundations of this recovery are so strong that it could not be helped by a boost. We consider this to be an insurance policy against a stall and a down payment on some investment programs that are very important for the economy over the longer run.

MR. LEHRER: Mr. Sheinkman, when you look at the short-term, what do you see? I'm sorry, you heard what -- these are the two basic positions here about this argument. Where do you come down, you and labor?

MR. SHEINKMAN: Well, we generally support generally the program of the President. My personal concern is that this growth that we're seeing now in the economy is not sufficient to create the kind of number of jobs, whether for small business or large business. I feel that the amount of stimulus may not be enough. I do agree that we should have a tax increase that's progressive, as proposed by the President. But I would delay it, because I feel that with a 3 percent to 3 1/2 percent growth and the kind of recovery that we're experiencing now, which we have not experienced since the Second World War, with restructuring as Dr. Tyson has pointed out, real estate problems, and defense conversion, I would favor delaying the tax increase until we know that the economy is really moving along at a much higher speed than now.

MR. LEHRER: But you would go ahead with a stimulus package without --

MR. SHEINKMAN: Definitely. I think we should have a stimulus package. I think the stimulus package is very important. While infrastructure may be delayed, it's going to set the basis which we'll be discussing later for long-term growth.

MR. LEHRER: Yeah. Mr. Meltzer, you're an economist. You look at the, the big picture on this. What do you see?

MR. MELTZER: Well, I think this is a wrongheaded program, the short-term program, for two reasons: First, if we break it up into two parts, a lot of it has nothing to do, one part has very little to do with job creation. I mean, there's money for money unemployment compensation, there's money for measles, there's money for AIDS research. There's a lot of money. That money may be useful and good for social purposes, but has very little to do with job creation. The other part of the program -- and in that program I should say there's a little bit for infrastructure, but the big problem of jobs in this recovery is that last year we created --

MR. LEHRER: You agree that there's a problem, there's a jobs problem?

MR. MELTZER: But not the problem that they're hitting. The problem is that we created one and a half million jobs last year, and we have some concentration of high unemployment in about 10 states, mostly states with high defense. This program really spreads a lot of money around and doesn't really do very much for that particular program. Second, what could be done about that particular program? Well, they have an investment tax credit. Most of that is going to hit on their own numbers in 1994. It's mostly going to move investment from 1995 into 1994. Their own numbers say that the growth rate is going to go up in 1994 and down in 1995. That's smacks of being a political program to make the economy look better in 1994 at a time of congressional elections but has very little to do with long-term creation of jobs. Long-term creation of jobs is really something that the private sector does very well. During the 1980s, much-maligned 1980s, the economy created 19 million jobs.

MR. LEHRER: What about his basic argument that, okay, there need to be jobs, but the kinds of jobs that your package is designed to create are the wrong kinds of jobs?

MS. TYSON: Well, I think the argument is really first of all, the argument was we weren't going to create jobs. And we have actually estimated the effects of our program, and we believe that we are going to create jobs. And we did a conservative estimate, and we believe we are going to create 1/2 -- 500,000 jobs. The timing of the program, there is an issue of timing. We chose spending items that we believed we could get a fast spend out on so that we could get some additional spending in this economy this fiscal year. We anticipate that the tax incentives we are offering will be retroactive to the beginning, to December 3, 1992, so that actually the investment tax incentives we're offering --

MR. LEHRER: How would that work?

MS. TYSON: That has already been announced by the congressional leaders that if this package is passed, that the investment tax incentives we are offering would be retroactive, i.e., they would cover investment equipment and spending --

MR. LEHRER: But somebody spending right now, even though the law --

MS. TYSON: December 1992 to December 1994, so we tried to deal - - it is certainly true that you've come in after the inauguration, you're trying to move the package quickly because you want to get spending going as quickly as possible. On the issue of are we creating any jobs, I would just say the 1 million jobs that have been created still is way under what a normal recovery should do. So what we're trying to do is get the economy moving more quickly to get more on a normal paced recovery. We have had some recovery but it's been very weak. So I think we're trying to give it a boost.

MR. LEHRER: Mr. Meltzer.

MR. MELTZER: We have the best year for productivity growth in the last 20 years. We've seen an increase in service sector productivity growth in the last -- since 1990, which has made up all the shortfall in the measured numbers for productivity growth. The economy is now beginning to do nicely. The numbers for the last quarter of last year, the fourth quarter of last year, are going to be revised up. A common estimate is four and a half percent growth. That's well above the long-term average. The economy is doing very nicely. What we need to do, what the economy needs to do, both long- and short-term, is get more productivity into the economy, not just make work, jobs. What we need to do is get long- term productivity. We can't do that with an investment tax credit which gives business $15 billion and immediately takes back $12 billion through the corporate income tax. I mean, what kind of a program is that? That's a program that is going to move investment from 1995 into 1994 and do very little. And their own numbers suggest that they believe that also.

MR. LEHRER: Is that true?

MS. TYSON: I would say that our own numbers suggest and historical record suggests that an investment tax credit is the way to boost investment in the short run. One of our investment tax credits, moreover, the one for small businesses, while it declines in the out years, remains in place during our whole package. And the last thing I would want to say is that if you look at both the tax incentives and spending side of this program, and I admit that the immunization may not be viewed as a major jobs creation program, but if you look at the bulk of spending in this package, the stimulus part of the package, it is creating jobs. Moreover, it is investment that will enhance the productivity growth, exactly the productivity growth that Prof. Meltzer suggests is so important. And I agree, it's important. Our whole short-term package and long-term package is about more investment feeding into higher and higher productivity.

MR. LEHRER: Yes, Mr. Sheinkman.

MR. SHEINKMAN: I think you've got to also talk not only about investment in terms of investment tax credit, investment in research and development for high-technology, but as Sec. Weiss said, we have to invest in our front line workers. I think part of the problem we face, despite the growth rates that Mr. Meltzer has referred to of increased productivity, what we need to invest is in the workers who have knowledge on the front line and that too often is missing. We have learned from our experience that corporations that have had difficulty, that by giving workers a voice in how work is set up, the flow of work, getting their input has raised their productivity and will help create jobs. And I can give you one example, the Xerox Corporation. It was in great difficulty back in 1980, turned around as a result of the study action programs, teams we put to work, was able to retain jobs because ordinarily what happens is when a company is having difficulty, you look to out source, you look for new technology, but you don't look to the work force. And we, while we have to train our work force, we have to tap their knowledge, which is too often lacking. And we have to stop the command economy that we defeated in our external affairs that we have now in the workplace, and I think that's very fundamental.

MR. LEHRER: All right. Let's go to the longer-term here, longer meaning four years, $160 billion more or less. Mr. Roush, you criticized the short-term and the emphasis -- nobody disagrees with you or anybody else -- I don't think there's any disagreement that most of the new jobs that are being created in this economy are being created by small business. Is it your position that the administration's tax program -- I mean, investment program and its stimulus program will not, in fact, create new jobs in the long-term in small business?

MR. ROUSH: Well, we're not -- let me put it this way -- we're not convinced that it will, and we're highly skeptical, as a matter of fact. The one thing --

MR. LEHRER: Why?

MR. ROUSH: One thing that's continually missed, it seems to me, in the discussions of business generation, et cetera, is that most of the businesses in this country are not capital intensive. Almost all the incentives in this program are for capital intensive, high- tech kinds of businesses. The labor intensive, Main Street, mom and pop businesses, where the jobs truly are created, aren't of that nature. Furthermore, those businesses, eight out of ten businesses in this country pay taxes as individuals. They don't pay corporate income tax. They pay as individuals so the individual income tax rate increases in this proposal are going to hit the business job creators, the business owners and job creators of this economy harder than any of the incentives in the program can make up for, because the individual income taxes on top of the BTU tax or the energy tax is on top of reducing the deduction for meals that's currently allowed.

MR. LEHRER: Which is going to hit the small --

MR. ROUSH: Restaurants.

MR. LEHRER: -- restaurants. Yeah.

MR. ROUSH: In fact, if I could, I saw a study from the National Restaurant Association today done in Texas, and that reducing the deduction from 85 to 50 percent, which is what proposed, in Texas would cost 28,000 jobs. There are 500,000 people at work in the restaurant business just in Texas, and that reducing the, reducing the deduction, their study shows, will reduce in Texas alone 28,000 jobs. So that's indicative that we are looking at the program and the package as a whole, as the President asked us to, and it is found wanting.

MR. MacNeil: Dr. Tyson, what about that? Are you concerned that there might be some validity to this, the whole purpose of your plan being to create new jobs and the small businesses may have an opposite effect?

MS. TYSON: Well, we don't believe the small businesses that there will be an opposite effect. But let me say something about taxes though right up front. I think if you really are looking at the whole plan, you have to understand why those tax increases are built in. Our ultimate objective with tax increases is long on deficit reduction. Our ultimate objective with long on deficit reduction is to bring the cost of borrowing way down and to allow the private sector, small or large, to borrow in a variety of ways to fund its economic activity. I would suggest that the very dramatic decline in the bond rate -- we have already seen -- in long-term interest rates, we have already seen verifies the notion of the wisdom, the need to get the deficit down. We have tried to get the deficit down over a multiyear package which includes both spending cuts and tax increases. I think for the small business community they will see that the benefits that come from bringing the deficit down and getting borrowing rates down will more than offset the effects of any tax increases, in addition to which there are plenty of measures in there that are designed for the small business community. The small business investment tax credit, the reduced capital gains tax relief for the start-up of new businesses, in addition to which small businesses can benefit from training programs, they can benefit from technology programs, from a wide variety of programs in the investment package. I think, on balance, it is a jobs creating income enhancement program.

MR. LEHRER: And was that -- did you all run that through your minds and your computer specifically as to see what the effect would be on small business, I mean, was to help small business a purpose of this?

MS. TYSON: To help small business -- to help the American economy was the purpose. To help small business was obviously on our mind because the President fully understands, as do I, that the bulk of jobs created in the United States are in the small business community. That is why some of our tax incentives that last throughout the period that are for investment, that are for research and development, that are for start-ups, are for the small business community.

MR. LEHRER: Mr. Meltzer -- let me go to Mr. Meltzer on this. We had a small businessman in a report last night that Judy Woodruff did from Chillicothe, Ohio, who said just exactly what, what Dr. Tyson just said. He runs a little pizza parlor out there. He looked at this, said just the opposite of Mr. Roush said, that from his point of view that in the long run this was going to help him. And do you disagree with that?

MR. MELTZER: Yes. I --

MR. LEHRER: He's got it wrong?

MR. MELTZER: Well, he probably believes that that's going to happen.

MR. LEHRER: Right.

MR. MELTZER: And there will probably be some people who will create jobs, but we have to look at the whole program, right? And I think the first thing that I would say about the long-term program is, it's a disappointment because there was an opportunity here to make a major restructuring in the American economy by shifting, as they say they want to do, resources in the economy from consumption into investment. They don't do that. Basically what they do is they have a big tax increase now, they're going to have another tax increase when the Medicare program comes through, and on their own numbers, the structural deficit in 1997 is going to be $130 billion smaller than it is today, so there's no period in this whole experience on their numbers in which the structural deficit, which is what we want to look at, what the economy would do at full employment, is -- ever goes below $200 billion. So we're still going to be left with a big deficit, we're still going to be left with adding onto the public debt every year, and we're going to have two big tax increases and then where are we? So that's a very big disappointment. What the program should have done was to shift taxes from investment onto consumption, i.e., to get the economy to save more and to consume less, and they're not doing that. I mean, they have things in there, for example, in their program, $9 billion for example for AIDS and public health research. They call that investment. It has nothing to do with investment.

MS. TYSON: Well, first, I want to say that this is the biggest deficit reduction program over several years that we have ever tried. So it's one thing to say we could have done better, it's another -- but to say that really begs the issue. We have come up with the biggest, most precise effort to cut the deficit in a four to five year period that has been tried in this country. So I think you start with that. You look at the specifics of what we have proposed. We have proposed very specific spending cuts in very detailed ways going out to the whole period. So I think that we - - and we admit -- we show in our own numbers that that gets the deficit, the structural deficit, down as a percentage of GDP, i.e., compared to the size of our economy down by half in four years. That is a major accomplishment. It would reverse all of the trends of the 1980s. This is a major reversal.

MR. LEHRER: All right. And we have to leave it there. Dr. Tyson, gentlemen, thank you very much.

MR. MacNeil: Still ahead, jury selection problems in Los Angeles and a Jim Fisher essay. FOCUS - TRYING QUESTIONS

MR. MacNeil: We turn next to Los Angeles, where a jury was sworn in yesterday for the second trial of the four police officers accused of beating Rodney King last year. Today one of the defense attorneys stunned the court, saying he wouldn't accept the jury because one member had allegedly made disdainful remarks about the defense. His charge threatened to abort the painstaking process used to empanel the jury. Correspondent Jeffrey Kaye of public station KCET reports on how hard it was to get this far.

MR. KAYE: LA's Dodger Stadium is usually used as a battleground for baseball players, but in recent weeks, batons have replaced bats as Los Angeles police officers prepare for a different kind of battle. The riot control training is intended to send a loud message as LA braces for outcomes of two highly charged cases now getting underway, the federal civil rights trial of four officers charged in the beating of Rodney King

JUDGE JOHN OUDERKIRK: On the record, the matter of the People Versus --

MR. KAYE: -- and the case of three men accused of assaulting and robbing truck driver Reginald Denney and 11 others. Those attacks occurred at the outset of the riots that followed acquittals in last year's King beating trial.

[DEMONSTRATION]

MR. KAYE: Some see the cases as linked.

SAKINAH ABDULLAH: If you got to have justice for one, you got to have justice for all. You can't have justice for white men and a different justice for the black man, or the Hispanic man. It's got to be the same justice for everybody.

MR. KAYE: Because of the extraordinary attention these emotional cases have received, all sides in both trials have devoted special attention to the process of jury selection.

JAMES GILLEN, Defense Lawyer: We're concerned that it's going to be a difficult trial for people of lower socioeconomic backgrounds to participate --

MR. KAYE: In the Denney beating case prosecutors and defense attorneys differ as to whether the jury will be impartial. Damian Williams' lawyer, Edi Faal, believes his client has been so unjustly stigmatized that no jury would be fair.

EDI FAAL, Defense Lawyer: We believe that there's a strong perception out there that the riots were caused by the gangs, and if that is the case, we are very concerned about potential jurors blaming the riots on these defendants. Therefore, in the larger interest of protecting the integrity of the system it is our position that the charges should be dismissed.

MR. KAYE: Because there can't be an impartial jury?

EDI FAAL: Because there cannot be an impartial jury.

JANET MOORE, Deputy District Attorney: I think that from this community that we will be able to select citizens who want to do the right thing and who will listen to the evidence and who will follow the instructions and the law, and yes, I think we can get a fair jury in this trial.

MR. KAYE: In the King beating case, defendants say they are confident that the jury will be fair, as fair to them as they say the Simi Valley jurors were who handed down "not guilty" verdicts last April.

STACEY KOON, Defendant: I am extremely optimistic that we will get a fair and impartial jury. I've read every questionnaire, and the basis of that.

MR. KAYE: But attorney Paul Depasquale, who represents former police officer Timothy Wind, said jurors will have to set aside strong feelings.

PAUL DEPASQUALE, Defense Lawyer: To my knowledge, I don't think there's ever been a case where it was more difficult to select a fair jury, people who on the basis of little, if any, exposure to the evidence in the Simi Valley trial presume to judge my client without a trial, presume to judge the jury that sat in the first case. All of this flies in the face of the constitutional protections of the criminal accused, respect for a jury, and this just makes it tremendously difficult.

MR. KAYE: As jury selection got underway, defense lawyer Michael Stone explained the different expectations opposing sides had of jurors.

MICHAEL STONE, Defense Lawyer: What we're looking for is a, a jury that is the usual dream prosecution jury, people who support the government, who support law and order, who support the police, and the government will be looking for people that usually are the pro-defense jurors, the people who question authority, who may have gripes with the government and gripes with the police, and who may be less inclined to believe the police officers than they would someone off the street.

MR. KAYE: Government prosecutors refused to be interviewed about the trial.

PROSECUTOR: I have no comments today. Thank you.

MR. KAYE: But in court they urged the judge to excuse jurors who had expressed strong feelings about the case. Before oral questioning began, 290 prospective jurors filled out a 53-page questionnaire. Their completed responses were kept secret. The questions were not. Detailed jury questionnaires are not uncommon. They were used in the first King beating trial. In this case, they were designed by the judge and by the attorneys to probe a particularly wide range of beliefs and opinions. Prospective jurors were asked about their backgrounds, education, religion, and social activities. Among the specific questions: "Identify the last six movies you have seen;" "Do you ever watch TV programs like 'Cops' or 'America's Most Wanted?'"; "Have you ever called the police?"; "What are the major causes of crime?"; "Is it wrong to prosecute and punish police officers?"; "Do you own a firearm?"; "What do you feel caused the civil unrest and riots that occurred in Los Angeles in April and May of 1992?"; "Did you participate in the civil unrest?"; "How serious a problem do you think racial discrimination against Blacks is in Southern California?"; "Do you own a video camera?... If yes, does it have an automatic focus lens?"

MR. KAYE: Let me ask you about some of the questions that were asked the prospective jurors, and ask you why these specific questions were asked. "What was your personal initial reaction to the verdicts in the state court trial?" Why was that question asked?

PAUL DEPASQUALE: Well, that would be to find out, for example, if you have somebody whose response would be to either extreme, either hallelujah, it was over for those poor guys, or good heavens, they must have been crazy or a bunch of racists or a bunch of fools.

MR. KAYE: Another question: "Did you feel that justice had been served, or were you disappointed with the verdicts?"

PAUL DEPASQUALE: Well, the Constitution of the United States says that a criminal accused has a right to a trial by a fair and impartial jury. We had an impartial jury. They sat in judgment of the case. They acquitted my client. I think that was justice. That's how justice works in the civilized world.

MR. KAYE: Would you want to eliminate a prospective juror who answered that they were disappointed with the verdict?

PAUL DEPASQUALE: Well, not eliminate but ask further questions. Disappointment is the sort of expression that can then send you back to questions like: "Can you set that aside? Can you keep an open mind? Are you willing to give these guys a fair trial?"

MR. KAYE: It seemed it would be difficult for some prospective jurors to keep an open mind according to some of the answers mentioned in open court. One candidate for the jury wrote "The federal trial is unfair and a waste of taxpayer's money," and added of King, "If you get your ass beat, you probably deserved it." Another expressed fear because regardless of the verdict, "the press would persecute me." During our questioning, prospective jurors were asked to elaborate on their written responses. Attorneys focused on attitudes towards law enforcement and last year's riots. Several said they were sympathetic to police officers. Asked about possible fears in the event of acquittals, one man said, "I might be worried but it wouldn't change my decision." A woman said, "I'm not going to worry about what my friends or my family or anybody says." Defense attorney Ira Salzman asked one woman whether she would have found all officers guilty in the last trial. "Maybe not all four, but three," she answered. Yesterday a jury, which includes two blacks, one Asian American and a Latino, were seated. Jurors all said they could judge this case fairly. All that remained was the selection of three alternates. But today the jury selection process was thrown into turmoil after allegations were made concerning bias on the part of the already seated jurors. Defense attorney Salzman arrived in court and told the judge that one of the prospective jurors who had been dismissed had overheard one of the two black jurors speaking disdainfully of the defense.

IRA SALZMAN, Defense Lawyer: I spoke with this juror and he informed me that this witness complained about the fact that there was no blacks on the jury in Simi Valley, that the defense is going to try and get that happening in this case. We are concerned about jurors with potential secret agendas, for want of a better term. The only litmus test is whether a person can be fair and impartial. Individuals who have secret agendas raise an issue as to their fairness and impartiality.

MR. KAYE: Judge John Davies scheduled a hearing on the matter. In the Denney beating case, prospective jurors will also be asked to fill out questionnaires. The judge and the lawyers are discussing the wording.

JAMES GILLEN, Defense Lawyer: About the media coverage, I think that's the biggest problem we're having, is the inherent bias a juror is going to have.

MR. KAYE: The judge has not yet decided on final questions, but in court, defense attorneys and prosecutors had a disagreement over including the word "gang" in the questionnaire since original charges of gang associations have been dropped. Defense lawyers also objected to the use of police-supplied nicknames which may imply gang connections.

EARL BROADY, Defense Lawyer: -- and Lamar Brown, they have "Ant Dog" -- I think we should take those names out also --

MR. KAYE: Former federal prosecutor Laurie Levenson, now a law professor, says jury selection is more of an art than a science. She believes that good attorneys will be on the lookout for subtle signs.

LAURIE LEVENSON, Former U.S. Attorney: Look at the jurors' shoes. I remember that when you were picking a jury if you saw somebody in Berkenstocks, they might have one particular point of view, and if you somebody in wing tips, they might have another. Now this is just one example and a small detail, but you have to look at the whole person. I think as a prosecutor you want a jury that's working as a unit.

MR. KAYE: The jury in the King beating trial will be kept as a unit even when court is not in session. They'll be sequestered, meaning they'll live apart from their families in a hotel during the trial, and they'll be anonymous.

JUDGE: The court does not find sufficient basis at this time to order the jury sequestered.

MR. KAYE: In the Denney beating trial, the jury will not be sequestered but their identities will be secret. Juror anonymity is a contentious issue in this case. Deputy District Attorney Janet Moore, one of the prosecutors, says secrecy will protect the jurors.

JANET MOORE: I think that it sends the message that we want to be fair to the public, that we want jurors that can be fair to the people and to the defense, that we want them to feel protected. I think it's in everyone's best interest to keep the names anonymous.

MR. KAYE: But defense lawyers say an anonymous jury implies the defendants are dangerous.

PATRICK MAGINNIS, Defense Lawyer: When the jury is kept anonymous, basically what you're saying is these people are similar to gangsters, mobsters. They've got hit men; they're going to go out and do stuff to these people. These are poor defendants. They don't have access to hit men, killers, things like that.

MR. KAYE: Supporters of the defendants in the Denney beating case complain that the criminal justice system treats blacks and whites differently. They point out that no African-American sat on the jury in the first King beating trial. Participants and observers say that given the climate, the appearance of justice in these highly publicized cases is as important as justice, itself.

LAURIE LEVENSON: I think if the jury is more diverse that, in fact, the verdict, whichever way it goes, guilty or not guilty, will be better accepted in the community, because people will not be as frustrated. The problem after the Simi Valley verdict is people were very frustrated. They had no idea whether all the voices had been heard.

EDI FAAL: It is very important that the jury that is eventually selected in this case be one that represents a cross-section of the society, which means that it must be a racially mixed jury.

MR. KAYE: Attorney Depasquale has another point of view. He felt no obligation to seek racial diversity in the jury hearing the case against the police officers.

PAUL DEPASQUALE: It is not my job as an advocate for Tim Wind to establish a racially balanced jury.

MR. KAYE: I understand what your job is, but do you think society's interest, the larger interest would be served by having a racially mixed jury?

PAUL DEPASQUALE: Do I think it would be socially desirable, putting myself outside my position as an advocate?

MR. KAYE: Yeah.

PAUL DEPASQUALE: Yes, I do. I think it will be good if it can be done to have, it will be good for the appearance of justice if we can have a balanced jury. It will help people be more confident in the outcome of the case.

MR. MacNeil: Opening arguments in the King beating case were expected to be presented later this week, assuming today's developments do not lead to a mistrial. Jury selection in the trial of those accused of attacking Reginald Denney is scheduled to begin in late March. ESSAY - LOST GENERATIONS

MR. LEHRER: Finally tonight, some thoughts triggered by the recently announced changes at Sears Roebuck. They are the thoughts of essayist Jim Fisher of the Kansas City Star.

MS. FLEMING: As the baby boomers partied big time during Bill Clinton's inaugural, I couldn't help but have some sympathy for the poor generation coming behind us, the 20 somethings, the so-called "baby busters," having to live their lives in our shadows. The inaugural celebration, after all, was nothing short of an orgy of nostalgia for us '60s kids. Judy Collins and Chuck Barry were there. So were Carol King and Little Richard, along with Peter, Paul, and Mary, and peace symbols, and of course, Fleetwood Mac with Clinton's bland theme song, "Don't Stop Thinking About Tomorrow." [inaugural festivities] Bill Clinton, hip the mainstream all at the same time, is the quintessential '60s kid made good, the graying saxophone playing, first Lamaze daddy of the country. And then the Bushes were gone, along with our own fathers and mothers, rising in a helicopter, taking with them Frank Sinatra and World War II, and a whole other set of generational touchstones. It was a graceful exit, poignant and decisive. The first family and dog, Millie, flying back into private life, leaving the new kids on the block to run the country and play out their own nostalgia trips, as they were clearly intent on doing. But what of the poor generation coming behind us, the 20 somethings, what of them and all of this torch passing sentimentality? What a rough time they've been having. A non time, an anonymous cultural grope towards some cultural identity in our narcissistic way. It hasn't been easy for them, trying to find a voice, a place, not with us boomers acting out everywhere. In his witty and poignant parody, generation X, 20 something author Douglas Copeland evokes his peers with their boomer envy, their downwardly mobile, low paying "Mc" jobs, their disposable furniture and interchangeable lovers. Their is a lonely, disconnected, media dominated world, an Aron Spelling TV show come to life. They have no overriding passions even for sex, no overriding values, except to be cool, cynical and detached, the first generation in American history as their new President is the first to remind them that expects to do worse than its parents. Not a pretty picture. And as if that weren't enough, these 20 somethings are now coming in for media abuse, magazine pieces like this one deriding their "oddly soul-less counter culture, a sluggish mainstream that sold out even before it could drop out." This is tough stuff, hand grenades lobbed over the generational divide, and I don't like it. I feel bad for these baby busters, having to listen to our generation's endless moral self-celebration, not to mention our obsession with menopause and mid-life crises. It would be a lot nicer if we could find a way to bring them into the fold, and listen to them, let them be heard. This constant hounding on the generational theme is a bad idea, one of the down sides of American life, a way of keeping us separated, old from young, middle from young. That is the way we live here, each generation hunkered down with its own identity and memories. [Fleetwood Mac in background] And susceptible as I am to the old tunes and tugs, I think we baby boomers ought to lighten up a little in the nostalgia department and be a little more, to use one of Bill Clinton's own favorite words, "inclusive." I'm Anne Taylor Fleming.

MR. LEHRER: Obviously, that was not Jim Fisher talking about Sears and Roebuck. That was Anne Taylor Fleming talking about lost generations. Sorry about that. RECAP

MR. LEHRER: And again the major stories of this Tuesday, President Clinton confirmed the United States was developing a plan to air drop supplies to Eastern Bosnia. He said it would be a humanitarian mission. Bosnian Serb commanders said the plan would lead to an escalation of the fighting. And Mr. Clinton told business leaders he was making new efforts to find more cuts in government spending. Good night, Robin.

MR. MacNeil: Good night, Jim. And we'll be back tomorrow night with another in-depth look at an important part of President Clinton's economic plan, the spending cuts. I'm Robert MacNeil. Good night.