The NewsHour with Jim Lehrer

GWEN IFILL: Good evening. I'm Gwen Ifill. Jim Lehrer is off. On the NewsHour tonight, our summary of the news. Then, the continuing flap over Sen. John Kerry's Vietnam War record. Paul Solman with the second part of his look at retailing giant Wal-Mart, "The Price of Success." A look at a new Republican proposal to break up the CIA and a Roger Rosenblatt essay on detective stories as summer reading.

NEWS SUMMARY

GWEN IFILL: President Bush condemned campaign ads by outside groups today, including those attacking John Kerry's war record. A group of former swift boat veterans in Vietnam has claimed Kerry lied about his actions in combat. Today Mr. Bush said Kerry "served admirably" in Vietnam, "and ought to be proud of his record." He said the anti-Kerry ads should stop, along with other ads that attack him. We'll have more on this story right after this News Summary. In Iraq, the battle for Najaf raged on today. U.S. tanks and troops fought gunmen loyal to Muqtada al-Sadr, and moved closer to the holy site they've occupied. After dark, U.S. air strikes bombed targets near the shrine. Some of the militants were seen leaving the city today. Over the weekend, six U.S. servicemen were killed in separate incidents across Iraq. And American journalist Micah Garen was freed ten days after being kidnapped. He said today he hopes to stay in Iraq to complete a documentary. A new plan to overhaul U.S. Intelligence drew cautious reactions today and outright opposition. Republican Sen. Pat Roberts announced the plan yesterday. He chairs the Senate Intelligence Committee. He would split much of the CIA Into three organizations, and eliminate the Pentagon's control over three existing agencies. In response, former CIA Director George Tenet said breaking it up would be a "severe mistake." And in Crawford, Texas, President Bush was noncommittal.

PRESIDENT GEORGE W. BUSH: We've got, you know, we've got a lot of smart people looking at the best way to fashion intelligence so that the president and his cabinet secretaries have got the ability to make good judgment calls on behalf of the American people. So Sen. Roberts, a good, thoughtful guy, that came up with an idea. We'll look at it. We'll take a look at it and determine, you know, whether or not it works or not. But there's going to be a lot of other ideas but there's going to be a lot of other ideas too as this debate goes forward.

GWEN IFILL: Leading Senate Democrats complained they weren't even told about the Roberts plan while the John Kerry presidential campaign welcomed the plan, but said it needed bipartisan support. We'll have more on this story later in the program tonight. New rules on overtime pay for American workers took effect today. The Labor Department said the old rules were confusing and out of date. It said the new standards mean a net gain of more than one million workers who qualify for overtime pay, including anyone earning under about $24,000 a year. But labor unions and many Democrats insisted six million employees who earn more than that would actually lose overtime pay. On Wall Street today, the Dow Jones Industrial Average lost 37 points to close at 10,073. The NASDAQ rose a little over half a point to close at 1838. Investors took little comfort from falling oil prices because of bad news from Wal-Mart. The retailing giant lowered its August sales forecast. We'll have the second of our two reports on the Wal-Mart later in the program. The government of Sudan today rejected a plan for the African union to send 2,000 troops to the Darfur region. The rejection came as Sudan and rebel groups opened peace talks in Nigeria. They are seeking an end to an 18-month conflict in Darfur which has killed at least 30,000 civilians, and displaced more than a million others. Police in Norway searched today for a pair of famous paintings. Edvard Munch's masterpiece "The Scream" was stolen yesterday, along with his painting "Madonna." Masked thieves walked into an open museum in Oslo and snatched the paintings off the walls. Tips poured in today, but the paintings have not been recovered. At the Olympic Games in Athens today, the U.S. Women's softball team beat Australia 5-1 to win the gold medal. And in men's track and field, the U.S. Swept the medals in the 400-meter race. Also today, American women won medals in gymnastics and freestyle wrestling. And a Russian woman was stripped of the gold medal in shot put after she failed a drug test. South Korea formally appealed today over a disputed gold medal in gymnastics. American Paul Hamm was awarded the men's all-around title last week. But on Saturday, the governing body for gymnastics ruled a South Korean should have won. The group blamed a scoring mistake, but refused to switch the gold. It said South Korea waited too late to complain. Today the Koreans appealed to sport's supreme legal court, and the U.S. Olympics Committee suggested it would approve of a duplicate medal. But gymnastics officials said that solution would not work. That's it for the News Summary tonight. Now it's on to the political fallout from the debate over the Kerry war record; examining Wal-Mart's success; overhauling the intelligence agencies; and reading detective stories.

FOCUS INTEL OVERHAUL

GWEN IFILL: The latest proposal to reform the intelligence community. Margaret Warner has that.

MARGARET WARNER: Republican Sen. Pat Roberts, chairman of the Senate Intelligence Committee, issued his bold proposal to split up the CIA on CBS' Face the Nation yesterday.

SEN. PAT ROBERTS: We just sort of stepped back from the trees, and instead of worrying about boxes and agencies and turf, just said, what would you put together now that really represents an answer to what the 9/11 Commission has recommended and what our Senate report has indicated?

MARGARET WARNER: Roberts' proposal, the 9/11 National Security Protection Act, would give a new national intelligence director, or NID, control over all aspects of intelligence through four new function-based divisions headed by four assistant directors. Under this plan, the CIA's three major divisions-- for clandestine operations, for intelligence analysis, and for science and technology -- would be split up, and each placed under a different assistant director, depending on its function. Democratic Sen. Carl Levin, also on the Intelligence Committee, immediately objected to Roberts' failure to consult with the Democrats.

SEN. CARL LEVIN: The eightpeople who have signed onto this proposal-- and I don't know the details in here-- are the Republican members of the Intelligence Committee. I think it would be better to start on a bipartisan basis with a bipartisan bill.

MARGARET WARNER: John Kerry's foreign policy adviser called the proposal "welcome" and "similar to the reforms Kerry has offered," but said it was up to President Bush to "show leadership in this effort." President Bush was noncommittal, however, telling reporters at his Texas ranch today that Roberts' idea would be considered along with others in the current debate over how to reshape U.S. Intelligence. Weighing in forcefully was former CIA Director George Tenet. In a written statement today, he said:

This proposal reflects a dangerous misunderstanding of the business of intelligence Sen. Roberts proposal is yet another episode in the mad rush to rearrange wiring diagrams in an attempt to be seen as doing something.It is time for someone to slam the brakes on before the politics of the moment drives the security of the American people off a cliff.

MARGARET WARNER: For more on his proposal, we're joined by Senate Intelligence Committee Chairman Pat Roberts, Republican of Kansas, and Congresswoman Anna Eshoo, Democrat of California. She's a member of the House Intelligence Committee. Welcome to you both.

Sen. Roberts, most of the headlines this morning in most of the papers called your proposal a plan to split up the CIA. Is that the guts of your concept here?

SEN. PAT ROBERTS: In a word, no. What we plan to do is we said to our staff, step back from the trees, step back from the boxes, step back from the agencies, step back from the turf battles, really try to achieve real reform with a national intelligence director if, in fact, that's the direction that you want to go. Now, no agency is so sacrosanct that it comes before the national security of the United States. Every member of the CIA that is currently working for the CIA will continue to work in their function, whether they work at Langley behind a desk or whether they're out in the field laying their lives on the line in regards to our country and they've done a darned good job in many instances. In an Armed Services hearing we just had as of last week, I told that to the acting director, John McLaughlin. I said the snapshot of today is better than it was yesterday. But what we have done is we have put them under a different line authority.

We have realigned them so all that they've been asking for down through the years in terms of authority, more budgets, more priorities and to actually execute that authority would be accomplished under this bill. So I'm not trying to demolish the CIA by any means. I'm trying to improve their function by the people who work for the CIA today.

MARGARET WARNER: All right. I'm going to see if I can get you to explain it even further. As I read your proposal, it seemed to me what you were saying is, it doesn't matter where a particular agency or division got its start, whether it's CIA or at DOD, if it does a certain function, like collection, all those collection agencies should be in the same division and the same with analysis and so on. Give us an example of how it would work in the collection agencies. Which agencies-- and I keep using that word-- would be essentially robbed or mined to create this assistant intelligence director for collection?

SEN. PAT ROBERTS: I don't think anybody is being robbed. I think they're being enhanced. I have a chart here which I'm not going to show because it's too small and you just don't want to do that. But we have the National Security Agency, the NSA, and in that regard we already have the general in charge of that saying that he would not mind at all serving under a national intelligence director. We have the National Geospatial Intelligence Agency, and that general has said the same thing. We have the National Clandestine Service or the director of operations under collection. We have the Defense Intelligence Agency, and then we have the FBI counterintelligence and counterterrorism divisions. The FBI would still serve under the Department of Justice, but what I told the staff was, look, step back from the trees and take a look at the threat that we face today in our country, the real national security threat, and try to come up with something that if you have a national intelligence director that would give that director the line authority, the hire/fire authority, the transfer personnel authority and the budget authority to get the job done. Now what are the four components of intelligence? You have first collection and then analysis and then obviously you report that to the policy- maker. Then you have acquisition and research in regards to technology.

Then you have the final step which is the tactical intelligence that you provide the war fighter. I'm an old marine. I'm on the Armed Services Committee and I love John Warner, who is our chairman. And he does a great job. We're not going to do anything to the tactical intelligence that is provided to the Secretary of Defense with the exception we give him a four- star general that at least will be liaison between the Secretary of Defense and the National Intelligence Director.

So basically what we're doing is allowing all these people that you're talking about, about being robbed, we are enhancing their capability in terms of line-item authority so that they can do the job better.

MARGARET WARNER: Congresswoman Eshoo, I gather you couldn't hear the very beginning of his answer. Let me just paraphrase. What is wrong or do you think there is anything wrong or is there something to be said for the concept of taking, let's say, all the various divisions that are involved in the collection of intelligence-- in CIA and DOD and FBI -- and putting them under one assistant national director for intelligence?

REP. ANNA ESHOO: Well, first let me say that it is... it's welcome for Sen. Roberts to have come out with a proposal. I think that we need as many ideas as possible. Having said that, I think that this is a somewhat radical departure from the recommendations of the 9/11 Commission, which is the inspiration from which the Congress is working. Why? Because it really breaks up the entire central intelligence agency.

Secondly, as I understand it, this has not been put before the Democrats on the committee, and I think that what we do in the reform of the intelligence community, both in the Senate and in the House, should reflect the model of the 9/11 Commission. And that is that they were bipartisan. And so I think that those are some early considerations, certainly Sen. Roberts' ideas, he rolled out yesterday, most have not read the details of the proposal. I think that there is real support in the Congress for a national intelligence director, and there is a bipartisan effort going on in the Senate between Senators Collins and Lieberman. We have legislation in the House as well. But there isn't anyone that has come up with the proposal to break up the Central Intelligence Agency.

MARGARET WARNER: And why do you think that's a bad idea, just on its face?

REP. ANNA ESHOO: Well, I am very hesitant about it. I say this because I don't think that there is anything that points to that there should be a total break-up of the agency. What the failures that were documented by the investigation of the 9/11 Commission and then the recommendations they made relative to those failures were, that there was not a sharing of information a jointness that moves across the agencies. It didn't say that the CIA was totally broken down.

Now, my questions are the following: Where is the White House on this? The president said today in his own inimitable way, quote, there is a lot of ideas moving around. And so there is, I think, some confusion also. And I don't think at the end of this process that we went to end up with chaos. We're living under orange alerts now, and we need to, yes, examine all ideas and have constructive criticism which I'm attempting to offer, but I'm very hesitant about what Sen. Roberts has proposed. I have respect for him, but I don't know whether busting up the CIA is a real smart way to go.

MARGARET WARNER: Sen. Roberts, respond to that basic idea-- we've just heard it from George Tenet and others-- that it's just such a radical thing to do when we're in the midst of a war against terrorism and against al-Qaida that the CIA is to some great degree quarterbacking.

SEN. PAT ROBERTS: Every time that I have heard George Tenet-- and I hope he's still a friend of mine. He made very strong statements, and so did Anna, who is also a friend of mine and a very valued member of the House Intelligence Committee, and we served together on the House Senate investigation in regards to what happened with 9/11.

We're not breaking up the CIA We're not really breaking up that old gang of mine. Every time they've come to us before the Senate Intelligence Committee they've asked for more authority. They've had that authority since 1947. We have had, since 1949, 38 attempts to reform the intelligence community. This is number 39. We can't afford to wait any longer with all of the "oh, my God" hearings that we have in the Senate and the House-- "oh, my God, how did this happen?"-- and after 9/11.

This is truly real reform. What we take are the functions of the CIA personnel who still work in those functions, they simply are realigned to a different director who will give them more authority, more budget ale tension, the same kind of authority that George Tenet wanted every time he came before the committee and had since 1947-- not him but every central intelligence agency director. So we are not breaking up the CIA I can also respond to the partisanship in regards to lack of sharing this, in regards to a consensus with Democrats. But in the interest of time I'll let you ask me that again.

MARGARET WARNER: Well, I was going to ask you briefly on that because I want to get back to the congresswoman. Briefly, why didn't you bring in any of the Democrats on your committee, only the Republicans?

SEN. PAT ROBERTS: Well, Number one, I regret that that happened because of the time frame. We only have one more week before the Republican Convention. Then there's going to be eight or nine bills introduced at least on the Senate and the House side. We had eight members on the Republican side who said we ought to go with this bill, plant the intelligence flag at least as a marker. It is not written in stone. If anybody has concerns, they can certainly add or detract.

I talked to Sen. Rockefeller about it. We've been in close contact. He's been in contact with his members in regards to the 9/11 Commission. We're trying to work that out. Basically he had the bill on Friday. We had a disagreement. We had some meaningful dialogue. I thought we ought to introduce the bill as a marker. He did not. I think we can get back and have a consensus project.

MARGARET WARNER: All right. Congresswoman Eshoo, do you think this bill could serve at least as a "marker," a starting point?

REP. ANNA ESHOO: Well, I think that it is... I prefer, Margaret, the bills that are out there that do the following: That we have a national intelligence director. Why? Because there needs to be one person with very clear lines of authority and responsibility, and the budget and personnel authority must ride with that position. Otherwise, the person in that position would be essentially a toothless tiger. So I think that that's a very important starting point.

I also think that the White House should release the report that Brent Scowcroft put together I believe in 2002 for a full examination of the ideas that he had. He's respected on both sides of the aisle, and we need to see and examine that because this is once in a half century opportunity for us. I do think....

MARGARET WARNER: Congresswoman....

REP. ANNA ESHOO: I do think I still think that my friend Sen. Roberts' proposal is a real departure from those bills that are... that have been introduced so far. I also think that when Porter Goss comes before Sen. Roberts' committee for the nomination hearings that it will make for a very, very interesting conversation and debate as director of the CIA between his bill and the bill that Porter Goss introduced on June 16 which gave everything to the CIA director including all budget authority.

MARGARET WARNER: All right, and we are going...

REP. ANNA ESHOO: I'll look forward to that discussion.

MARGARET WARNER: We all will and thank you both very much.

FOCUS WAL-MART GLOBAL GIANT

GWEN IFILL: Now part two of our report on Wal-Mart. On Friday, our business correspondent Paul Solman of WGBH-Boston looked into the reason behind the huge success of Wal-Mart. Tonight he covers the debate over the costs of that success.

PAUL SOLMAN: Wal-Mart. From one northwest Arkansas store in the 1960s it's grown into the largest company in the history of the world. With annual sales larger than the economy of Saudi Arabia, profits greater than Exxon Mobil, productivity so high that Wal-Mart accounts for 10 percent of total U.S. productivity growth, prices so low that some hundred million U.S. customers shop at a Wal-Mart every week of the year. (Cheers and applause) But when you have a company this focused on profits and productivity, says Berkeley economist Harvey Shaiken:

HARLEY SHAIKEN, University of California, Berkeley: What you wind up with is a fierce competitor where suppliers, workers and even communities become the victims of that competitiveness versus its beneficiaries.

PAUL SOLMAN: Recently Wal-Mart supposed victims have gotten a lot of press. This summer, the world's largest company was slapped with the world's largest lawsuit: A class action alleging that Wal-Mart favors men over women-- part of an overall strategy, says lawyer Brad Seligman, to keep wages low.

BRAD SELIGMAN: They want to be the low-cost leader. If you can depress the wages of 70 percent of your work force, you've saved some serious money.

PAUL SOLMAN: Some serious money which Wal-Mart then passes on to its customers. Which is great, right? Or is it? This story looks at the key charge raised by critics: That the company's profits and productivity come at too higha cost -- a cost borne mainly by exploited workers.

HARLEY SHAIKEN: Wal-Mart has a ruthless focus on productivity and an even more ruthless focus on wages. The company's successful, but workers are entering the working poor versus the middle class.

PAUL SOLMAN: Labor economists Harvey Shaiken and others charge that Wal-Mart not only pays its workers poorly, less than $10 an hour, but provides health care to less than half its 1.3 million U.S. employees. Berkeley researchers Ken Jacobs and Arin Dube say that means Wal-Mart's been shifting the health care costs of its workers to taxpayers.

KEN JACOBS: When jobs don't provide a living wage or don't provide health benefits, someone has to make up the difference. That usually is the taxpayers. It means people are forced to rely on public services, public health care programs to make ends meet.

ARIN DUBE, University of California, Berkeley: We have found that Wal-Mart employees take up 40 percent more in public assistance like food stamps or public health programs than other retail workers in California.

PAUL SOLMAN: Dr. William Walker who runs the county health system in Contra Costa was puzzled at first by the volume of Wal-Mart workers he saw.

DR. WILLIAM WALKER: How could you be employed by a large employer and be coming to our clinic for the uninsured? What's the story here? And they basically said that either in their case they didn't qualify for health benefits or the health benefits were so high that they couldn't afford them, meaning that we take on the obligation of providing care to Wal-Mart employees and we are under our own financial crisis right now.

PAUL SOLMAN: Wal-Mart's response?

MONA WILLIAMS: More than two-thirds of our people are either college students, first jobs, learning to work, they're senior citizens who are supplementing an income that they already have or they are second-income earners for that family meaning that many of our folks are not trying to support a family on wages. They already have health care through another source, either through their family, through a working spouse, through a retirement program or through Medicare, for example. That's who our jobs are designed for. Those are the folks that we recruit.

PAUL SOLMAN: But such recruitment policies worry the likes of Maria Alegria, the former mayor of Pinole, California, which she says is about to be flanked by new Wal- Marts on either side of town.

ARIA ALEGRIA, City Council, Pinole, California: We spent 12 years and over $20 million of our public money to revitalize this town. What you'll end up seeing is shops closing, people leaving, and we're going to go back to where we started. For example, this bank building that we have rehabilitated, it's a flower shop. But, say, Wal-Mart comes in and they offer all these cheap flowers, what is that going to do to that business?

PAUL SOLMAN: The answer, to paraphrase John Donne, the gong will toll for the flower cart. In business for 40 years, five employees here earn $15 an hour plus benefits, more than half again the Wal-Mart wage. Owners Roseanne Stevenson and her brother say flanking Wal-Marts would kill their shop. Her brother, Mike Jadryev, says,

ROSANN STEVENSON: It would be gone very shortly.

MIKE JADRYEV: Right.

ROSANN STEVENSON: Very shortly.

MIKE JADRYEV: When they open up it takes the breath away from the small businesses.

REV. PHILIP LAWSON: I think Wal-Mart represents, from my perspective, perhaps the worst of capitalism.

PAUL SOLMAN: Rev. Philip Lawson helped lead a local referendum to help block Wal-Mart from coming to town.

REV. PHILIP LAWSON: Wal-Mart comes in, lowers the standard of living of the working people by the system of low wages and no benefits and pushing people to find outside sources of income in order to match up or take care of their health care. So Wal-Mart lowers everything.

PAUL SOLMAN: But the anti-Wal- Mart referendum failed, which wouldn't surprise Ronald Reagan's former chief economist. To free market enthusiasts like William Niskanen, Wal-Mart is the best of capitalism.

WILLIAM NISKANEN: Without asking for subsidies with no special favors, no tax preferences, no regulatory preferences, that should be regarded as a model of business and not a target for political and legal action. This is a company that has grown from nothing to being the largest private employer in the country. You don't do that by working conditions that are unattractive relative to other places to work.

MONA WILLIAMS: Any time we have a job opening, we open a new store, we have thousands of applicants for a few hundred jobs.

PAUL SOLMAN: And these applicants are the very people who shop at Wal-Mart because it offers goods they couldn't get elsewhere and because its prices are always lower, always being rolled back with such manic bounce by the little smiley icon in its TV ads.

AD: He's the rollback man. He's the rollback man.

PAUL SOLMAN: But to Wal-Mart detractors those low prices are actually working against the folks who supposedly benefit from them. Sociologist Kim Voss.

KIM VOSS: As they buy these cheap goods they are shopping against their own interest as a group.

PAUL SOLMAN: That's because?

KIM VOSS: That's because they are actually only able to buy cheap goods that other workers make for ever-cheaper prices. They then themselves are paid ever more cheaply. So workers are actually shopping against themselves. As they act as consumers, they are undoing their own wages.

PAUL SOLMAN: It's a race to the bottom, says Voss. The world's largest companies muscles suppliers to lower their prices so Wal-Mart can lower its to consumers but in so doing, Wal-Mart's critics charge, it drives its suppliers to the cheapest and most exploited labor on earth like the Honduran factory in which young girls made Kathie Lee Gifford brand clothing for Wal-Mart in the 1990s. The publicity created a furor and Gifford, a talk show host, broke down on national television.

KATHIE LEE GIFFORD: Millions of dollars have gone to help children, and I truly resent this man impugning my integrity.

PAUL SOLMAN: "This man" is Charlie Kernaghan, who has become one of Wal-Mart's most prominent critics.

CHARLES KERNAGHAN: We say to Wal-Mart, "are you proud of these factories?" They say, "of course we are proud of these factories."

PAUL SOLMAN: Kernaghans made a film featuring factories in Bangladesh of which few Americans would be proud. Women who work there say they're paid 17 cents an hour or less. Mahamuda Akter says she had to work 15 straight 19 1/2-hour days in the last month alone.

MAHAMUDA AKTER, Wal-Mart, Bangladesh (Translated): We can sleep on the ground in the factory but we have to start working again at 7:30 A.M. If there is any stop in the work, they start yelling. If we do anything, they start beating us a lot - - almost torture. They go too far. I guess that my fate, I have to work hard to eat.

PAUL SOLMAN: Akter, now 18, she had been sewing clothes for Wal-Mart for five years which prompted Kernaghan to make the point at the heart of the anti-Wal-Mart case.

CHARLES KERNAGHAN: Wal-Mart claims to have a commitment, an advertising commitment, even a rollback prices constantly. Well, what they're doing is they're rolling back human rights standards all around the world. They're rolling back wages and benefits all around the world.

PAUL SOLMAN: But, no, says Wal-Mart. It's trying to bring jobs and western standards to emerging economies.

MONA WILLIAMS: We have a group of over 100 people that do 15,000 inspections a year. We want to make sure that our suppliers comply with local country codes, with human rights standards, that people are not under age, that they're paid well, that they're living in good dormitories. I was in Shinjen just a couple of weeks ago during part of those tours, doing factory inspections unannounced.

PAUL SOLMAN: This is in China.

MONA WILLIAMS: Yes, in China, being committed to help those factories to make them better. We're raising the working standards for all of them.

PAUL SOLMAN: Mona Williams thinks Wal-Mart is a force for the better, but shareholder activist Conrad Mackeron warns that visitors can be hoodwinked by factory management, that workers often fear telling Wal-Mart inspectors the truth. Mackerron says rivals like the Gap and NIKE have agreed to use independent monitors.

CONRAD MACKERRON: They have gone out and actually issued public reports about, in detail, the extent to which their factories are in compliance with their codes of conduct. Yet Wal-Mart seems to be able to get away with outdoing those things.

PAUL SOLMAN: How come so little has changed? I mean, ten years ago Wal-Mart was the place where Kathie Lee Gifford had her clothing line.

CONRAD MACKERRON: The public is fickle. I mean, people will tell you in a public opinion polls that if they learn that these goods are made in sweat shops they'd be more likely not to shop there. In reality we don't see that being the case.

PAUL SOLMAN: That in the end sums up the ambivalence over Wal-Mart: Great prices, productivity and products but at what cost? It's an ambivalence one finds even at Wal-Mart itself.

PAUL SOLMAN: Are these your brand new Wal-Mart bikes?

MAN AND WOMAN: Yes.

PAUL SOLMAN: And you paid how much for it? Can we see here?

Sure.

PAUL SOLMAN: $266.61 with tax.

WOMAN: With tax, for helmets and two bikes and a lock.

PAUL SOLMAN: $266 for the whole deal.

WOMAN: Yes.

PAUL SOLMAN: Do you worry that this might have been made by people in china who weren't even making the minimum wage there? The minimum wage in china I found out yesterday, is 31 cents an hour. And there are suppliers, factories where people make 17 cents an hour.

WOMAN: We had that discussion. We said we could go... this is kind of supporting lower-wage, but on the other hand we wanted to save money too. So we've got to make a living.

PAUL SOLMAN: So it was a struggle?

WOMAN: It was a struggle. We did talk about that.

PAUL SOLMAN: You came down on the side of shopping here at Wal-Mart.

WOMAN: We ended up here. We got what we wanted.

PAUL SOLMAN: They got what they wanted. Or if you believe Wal-Mart's critics, maybe in the long run it won't have been what they wanted. But regardless of what you believe, such shoppers are facing a question more and more Americans confront in the age of high technology and globalization: What price productivity? Wal-Mart, because of its size and scope, has become a symbol for that question and so it's America's favorite store that's also America's favorite store to bash.

UPDATE WAR RECORD

GWEN IFILL: Now, to the debate consuming the presidential campaign, John Kerry's actions during and after the Vietnam War. Webegin with Kwame Holman.

MAN: I served with John Kerry.

MAN: I served with John Kerry.

KWAME HOLMAN: For the past three weeks, a 60-second TV ad, airing in only three states, has been the primary focus of the presidential campaign. The ad, critical of John Kerry's Vietnam combat record, was produced by a group called Swift Boat Veterans for Truth, and partly funded by a top Republican donor in Texas. A second ad begins airing this weekend. Kerry and running mate John Edwards repeatedly have called on President Bush to condemn the ads.

SEN. JOHN EDWARDS: These false attacks are tied directly to President Bush and his friends. The clock is running. The American people deserve to hear directly from the president of the United States that these ads should come off the air.

KWAME HOLMAN:: But the president only would say he was against all unregulated political ads. When asked at his ranch in Crawford, Texas, today, the president came as close as he has to rejecting the swift boat ads outright.

PRESIDENT GEORGE W. BUSH: I said this kind of unregulated soft money is wrong for the process. And I asked Sen. Kerry to join me in getting rid of all that kind of soft money, not only on TV, but used for other purposes, as well. I frankly thought we had gotten rid of that when I signed the McCain-Feingold Bill. I thought we were going to once and for all get rid of a system where people could just pour tons of money and not be held to account for the advertising. And so I'm disappointed with all those kinds of ads.

REPORTER: When you say that you want to stop all...

PRESIDENT GEORGE W. BUSH: All of them. That means that ad; every other ad.

KWAME HOLMAN: Meanwhile, John Kerry was set to begin a counter attack today, with ads accusing the Bush campaign of using smear tactics.

SPOKESMAN: American soldiers are fight fighting in Iraq. Families struggle to afford health care. Jobs heading overseas. Instead of solutions, George Bush's campaign supports a front group attacking John Kerry's military record.

KWAME HOLMAN: And over the weekend, there were more developments.

SPOKESMAN: Cutoff limbs, blown up bodies.

SPOKESMAN: That was part of the torture was to sign a statement that you had committed war crimes.

KWAME HOLMAN: Retired Air Force Gen. Ken Cordier, a Vietnam veteran who appears in the second swift boat veterans spot, resigned as a volunteer adviser to the Bush campaign. In yesterdays Chicago Tribune William Rood, the paper's editor, who served as commander of a swift boat alongside Kerry's, gave a 1,700-word personal account of what happened the day Kerry earned one of his five combat medals, the silver star. Rood said: Kerrys critics armed with stories I know to be untrue have charged that the accounts of what happened were overblown. The critics have taken pains to say theyre not trying to cast doubts on the merit of what others did, but their version of events has splashed doubt on all of us.

But last night on CNN, former Republican Sen. Bob Dole raised his own doubts about Kerry's commendations.

BOB DOLE: As far as I know, he's never spent one day in the hospital. I don't think he draws any disability pay. He doesn't have any disability and boasting about three purple hearts when you think of some of the people who really got shot up in Vietnam.

KWAME HOLMAN: Despite the limited TV run of the anti-Kerry ads, they've received heavy news coverage, and coincide with a CBS News poll that shows Kerry has lost some support among veterans nationwide.

GWEN IFILL: Joining us now to discuss the political impact of the swift boat controversy are David Gergen, advisor to four presidents and now professor of public service at Harvard's John F. Kennedy School of Government, and Kathleen Hall Jamieson, dean of the Annenberg School for Communication at the University of Pennsylvania.

Dave Gergen, why is this story still a story?

DAVID GERGEN: Well, I think, Gwen, in the beginning many of us were surprised it became such a hot story. The national mainstream media, and in particular the print press took a look at it and said this is not something we believe is true, and therefore they didn't cover it very much.

But it became a major story on cable television. It spread. Annenberg School picked up in their survey, as Kathleen will tell us, I'm sure, that it was widely seen after it became splashed all over cable television shows and became a center of dispute.

And of course there were some people who had an interest in stirring it up. Now that it's taken some toll on Sen. Kerry as that CBS poll shows that he's lost some support among veterans, the Kerry people have no choice but to fight back. They have to put a dagger into this so they can move on in their campaign.

GWEN IFILL: Kathleen Hall Jamieson, tell us more about the poll that the Annenberg School took that showed how many people were paying attention to this.

KATHLEEN HALL JAMIESON: The National Annenberg Election Survey showed that over half of the people in the country by the middle of last week had either seen or heard about the ad despite the fact that the ad aired only in three states and with a very small time buy. What this suggests is that the cable talk, the cable news as well as political talk radio, have managed to increase the likelihood that people have heard and seen an ad that didn't get much buying power behind it.

One of the things that we found was high cable viewers, more likely to have seen and heard about, high political talk radio listeners and political talk radio is largely conservative, much more likely to report seeing or hearing.

We also found what you would predict: That is that political partisans drew the reasonable inference from their own ideology that either the ad was definitely true, the Bush supporters, or definitely false, the Kerry supporters.

But importantly among those reported seeing or hearing the ad there was higher belief in the statement that Kerry hadn't deserved all of his medals than among those who didn't report seeing or hearing about the ad.

GWEN IFILL: So the practical political... let's continue on that for a moment. Obviously dust is swirling and doubt has been raised about John Kerry's war record. What is the practical political effect? Dave Gergen just alluded to the CBS Poll and Kwame did as well in which he lost ground with veterans. Is there a direct connection?

KATHLEEN HALL JAMIESON: We don't know if there's a direct connection because the CBS Poll didn't tie that finding back to seeing or viewing the ad but what we do know from analysis of how communication functions with audiences is that if you have extended discussion about whether or not someone earned something, you're creating doubt.

So, for example, if we say let's have a discussion about whether Kathleen Jamieson is a murderer and David goes on television and says she's definitely not. We have absolutely no proof. The fact that we've had that discussion, let's say repeatedly over cable for a week-and-a-half and political talk radio, might make you more wary the next time you see me with a paring knife.

GWEN IFILL: Well, David Gergen, lets talk about --not so much about Kathleen Hall Jamieson's character but John Kerry's character. Is that what this debate is really about? Is it about his record or is it about that old character question coming back in a different guise?

DAVID GERGEN: I think it's more about George Bush's character than John Kerry's. Clearly what they're trying to do here is that Kerry's war record was the bright, shining asset in his campaign. And the Republicans are trying to, you know, sow or build a large cloud, a dark cloud over that so it doesn't shine quite so brightly. I think in the short term they have succeeded.

As Kathleen knows, these negative ads often do work. The public says "we hate negative ads. We don't like to see these things," but they then they watch them. Just like the public said we don't want to see anymore O.J. Simpson, we're sick of this on television, and then everybody turned the television sets on to watch it.

There is the tendency with these negative ads for people to see and to hear and to register in the short term, I think in the short term I think the president has gained. But I will tell you, Gwen, in the long term, this may backfire on him. There are some real dangers here for the Republicans in this story.

GWEN IFILL: So when the president says, as he did today, listen, I just think all these ads are bad, that's not arm's length enough?

DAVID GERGEN: No. No. I think that there is a very strong danger here for the White House that a lot of voters will conclude-- because, of course, the evidence is coming out in the print press is there's very little... there isn't anything to support these allegations in this first ad. And that the ad looks more like a smear.

Now the danger for the president is if people conclude this was a below-the-belt tactic that was intended to smear John Kerry and that it plays into a pattern of going after John McCain in 2000 and going after Max Cleland in 2002, that may well backfire on the White House, and that's the danger that they face. Short term they've got a gain. Long term they could pay a price.

GWEN IFILL: Now, Kathleen Hall Jamieson, that word smear is the one that the Kerry folks have been using in Internet advertising and other places. Does that work? Does that punch through with viewers who have been paying attention to these ads? Is there any way to know in the same way that the original accusations do?

KATHLEEN HALL JAMIESON: The interesting thing about this is that during the time that the ad was being aired sometimes full screen on cable talk shows without a rebuttal ad from the other side, the Kerry representatives were coming in to try to rebut the charges, the news paired the two together. But ultimately that's a losing proposition for the Kerry campaign because the ad has repetition behind it, repeatedly aired in cable. It's visual. It's evocative; its got evocative music.

But now the tables are starting to turn. When the Washington Post did the first investigative piece, found evidence that some of those claims aren't true, the New York Times then came into play, journalism, largely print, has been moving forward fairly aggressively to check these claims against the documentary evidence, and Kerry's case has been built substantially as a result. That helps turn the news agenda to benefit Kerry.

The night that the Washington Post piece aired the Kerry people pulled their spokespersons off the air and as a result cable was left with swift boat statement from one person representing a swift boat veterans and on the other side a Washington Post reporter. That suggests a danger for the Bush campaign -- credible news information suggesting that there are problems with that ad in an environment which the Kerry counterattack says this is part of a pattern, linked to previous attacks on McCain and distraction from issues we should be talking about.

The question then becomes: does the public say, "yes, we should be talking about those issues, this is a distraction and yes we grant the pattern?" If so, net damage potentially to President Bush.

GWEN IFILL: Well, David Gergen, so say that they decide that maybe this first round of ads questioning what his behavior was in these particular situations in which medals were won, they set that aside and they turn as they have in the latest ads to questioning whether John Kerry should have been campaigning against the war. His activity was Vietnam Veterans Against the War when he came home. Does that pose the same danger for John Kerry, especially if he takes what it was -- two weeks to respond?

DAVID GERGEN: Well, I do think it does pose some danger for John Kerry. It strikes me that his actions once he came home are subject for legitimate debate about whether it was appropriate or not to go after the war. And he's going to have to take that on too. He's going to make a speech tomorrow apparently that's going to go after this group and make his arguments and he should take on both sides of this.

But let me go back to something which Kathleen also said. The other danger here for the Bush team and for everyone and John Kerry included is that the public is going to very rapidly get fed up with a campaign which is debating something that happened 35 years ago. Nobody wants to debate a war in Vietnam when we should be debating Iraq. If either side is seen as trying to create a long-term diversion in this campaign people are really going to get angry very fast.

GWEN IFILL: You anticipated my very next question, David, which is: are there examples in the past that you can cite in which debating the past backfired?

DAVID GERGEN: Well, you can't find many, I guess, that are... nothing comes to mind in that.

GWEN IFILL: Didn't it work for Michael Dukakis, for instance, when Willie Horton which was part of his past was raised, it hurt him. Hasn't it worked with other candidates before?

DAVID GERGEN: Oh, there's no question that going after someone's past can hurt that candidate if you do it effectively. Michael Dukakis did not answer quickly or effectively at that time.

I think that John Kerry has an opportunity to dig into the past here for some of the people involved in the swift boat thing. For example, John O'Neill who is involved for the Swift Boat Veterans for Truth -- as they call themselves -- was first recruited by Chuck Coalson of the Nixon White House to go after John Kerry way back in the 1970s. We all remember what kind of dirty tricks came out of that office then. There are opportunities both ways.

My sense of where this is going right now is that it's going to play through the end of this week and then the subject is going to change because the Republican Convention is going to switch subjects on to, you know, the president and the Republicans in New York. And this will have become an episode in the past but it will have taken a pint of blood out of John Kerry. The real issue now is can he even the score? Can he get back in there by convincing people that this was essentially a smear? I think that's the challenge he has tomorrow and for the rest of this week.

GWEN IFILL: So, Kathleen Hall Jamieson, you're an average voter trying to decide what to make of this. How do you decide what to believe based on all this conflicting information?

KATHLEEN HALL JAMIESON: Well, the first thing to ask is what matters to me in making a voting decision? What are the issues I care about and how relevant do I consider the biographical detail and the war records or the military service records of these two candidates? If one answers the question by saying "that's the past, they both served honorably end of discussion." I'm interested in the future, one makes a very different kind of decision. Kerry is inviting that move right now.

The problem is, as David notes, he is vulnerable to the move that's being made in the second swift boat ad. If I could go back for a moment to the Willie Horton ad from 1988 produced by National Security Political Action Committee, that worked for two reasons. One, Dukakis didn't rebut. But two, the press didn't investigate to find out what the facts actually were.

In this case, the press appears to be more aggressive in determining what is fact in these circumstances -- as it was when charges were raised about President Bush's military service.

GWEN IFILL: Kathleen Hall Jamieson and David Gergen, thank you both very much.

KATHLEEN HALL JAMIESON: You're welcome.

DAVID GERGEN: Thank you.

ESSAY WHO DUNNIT?

GWEN IFILL: Finally tonight, essayist Roger Rosenblatt speaks of the summertime pleasure of reading detective stories.

ROGER ROSENBLATT: With summer comes the reading of detective stories because there's more free time to give to what is probably our favorite kind of fiction. Yet the oddity of heroic, honorable detectives is that one never sees the real-life models for them. This is not true of noble fictional doctors for whom life offers prototypes or noble soldiers or miraculous to say noble lawyers and journalists. But the real-life detectives are keyhole peepers in divorce messes, not heroic, not honorable and certainly not the protagonists of beloved books. Why then have we created a hero without models solely out of our wishful imaginations? Because, my guess is, the detective is a person assigned to pursue justice. Justice is that damned elusive pimpernel. We glom on to it in fiction because we get so little of it in life.

SPOKESPERSON: We the jury in the above entitled action....

ROGER ROSENBLATT: In life one more often sees justice avoided or justice delayed or compromised so drastically that injustice takes its place. The O.J. Simpson trial left most observers feeling that justice had been cheated. The feeling returned recently when O.J. gave TV interviews on the 10th anniversary of his trial. The Kobe Bryant case. The Scott Peterson case. The case of the domestic diva. How close does one come to satisfactory answers to the question basic to all detective stories: Who done it? Who done what? In the wider view, what sort of justice awaits Saddam Hussein? Was Iraq a just war? Will there be justice for those lost in the Sept. 11 attack? Whatever else it does, the 9/11 Commission eventually is about justice. Helpless as we are in the presence of justice denied in real life, a satisfying power is granted whenever we bury our noses in a good detective story. Moral satisfaction accounts for the success of the genre. Sherlock Holmes, Filo Vance, Lord Peter Whimsey and Nero Wolfe labor at the high end of elegance. Miss Marple, Poirot, Mr. Moto in the middle and at street level or below, Philip Marlowe, Lou Archer and Sam Spade. However different their locales or their accents, all have in common this wonderful and fanciful idea that the bad guy gets caught and the good guy triumphs. What's more, this idea is treated touchingly as rational. Equally satisfying is the chase itself, the hunt for the criminal through a maze constructed to confuse and discourage. How much fun there is in the pursuit at every level of sophistication. On TV no policeman sleuth is more lovable than the disheveled Columbo who asks in our behalf.

COLUMBO: I just have one more question here.

ACTOR: I said no u-turn here.

ACTOR: That's what you said no u- turn here.

ROGER ROSENBLATT: In movies Charlie Chan was ripe for parity but he was immensely popular in spite of the caricatured black chauffeur and his various numbered children assistants because he represented a decent and orderly conclusion to a crummy and untidy problem. This summer detective stories may be more in demand than usual. If one is looking for a time when one feels out of control of one's world or of one's fate, there's no time like our present. Prospects for rational and equitable solutions seem kind of dim but not in these stories, these scary tales we can hold in our hand when the wind kicks up and the moon slips behind clouds and the windows rattle. Then Sam or Sherlock or Miss Marple will look a culprit straight in his guilty eyes and say, "got you." And we will sigh with rare relief. I'm Roger Rosenblatt.

RECAP

GWEN IFILL: Again, the major developments of the day: President Bush condemned campaign ads by outside groups, including those attacking John Kerry's Vietnam War record. U.S. troops in Iraq moved closer to a holy shrine occupied by gunmen in Najaf. And new rules on overtime pay for American workers took effect. A small correction before we go, Kathleen Hall Jamieson is the director not the dean of the Annenberg School of Communication at the University of Pennsylvania. We'll see you online, and again here tomorrow evening. I'm Gwen Ifill. Thank you, and good night.