The NewsHour with Jim Lehrer

ELIZABETH FARNSWORTH: Good evening. I'm Elizabeth Farnsworth. Jim Lehrer is on vacation. On the NewsHour tonight, the war in Russia's southern republics; the pros and cons of genetically modified crops; and the regional commentators on tax cuts. It all follows our summary of the news this Thursday.

NEWS SUMMARY

ELIZABETH FARNSWORTH: Prosecutors in Los Angeles filed state charges of first- degree murder and attempted murder today against Buford Furrow. The neo-Nazi sympathizer was accused of fatally shooting a mailman and injuring five people at a Jewish community center in suburban LAA. The district attorney said the charges would be treated as hate crimes based on race, nationality, or religion. Furrow was also charged yesterday with the federal crime of killing a government worker, a Filipino American postman. U.S. Attorney Alejandro Mayorkas said Furrow described that shooting to investigators.

ALEJANDRO MAYORKAS: He stated that the postal worker was a good "target of opportunity to kill" because he was "non-white and worked for the federal government." According to Furrow, the mail carrier appeared to be Hispanic or Asian. Furrow further stated that he exited his car and approached the mail carrier. He was carrying a loaded Glock, Model 26 in his back pocket. He asked if the mail carrier could mail a letter for him. When the mail carrier agreed, Furrow pulled out the Glock and shot the mail carrier two times. The mail carrier bent over and attempted to run away. Furrow stated that he then shot the mail carrier a few times in the back until he saw the mail carrier fall to the ground, face down.

ELIZABETH FARNSWORTH: At her weekly news conference, Attorney General Reno condemned the shootings, and deplored what she called "our culture of violence." She urged Congress to pass tougher gun legislation and to expand federal authority to prosecute hate crimes. The record drought in parts of the country will have a negligible impact on grocery prices, the Agriculture Department said today. Nor will it stop record harvests of soybeans and rice. Drought damage has been minimal in major farm states. The Department's fall forecast said the bumper crops will keep farm prices low because of a world glut of grain. President Clinton paid a visit to the Agriculture Department today. He issued an executive order to accelerate the use of trees, crops and agricultural wastes to make fuels, chemicals and energy. He spoke before a roundtable discussion between cabinet officials and experts got underway.

PRESIDENT CLINTON: I am setting a goal of tripling America's use of bioenergy and bio-base products by 20,000. That would generate as much as $20 billion a year in new income for farmers in rural communities, while reducing greenhouse gas emissions by as much as 100 million tons a year, the equivalent of taking more than 70 million cars off the road. And, believe me, if the technology develops fast enough, it would be easy to beat this goal. And this way, we plant the seeds of a new technology for a new century to sustain both our prosperity and our environment.

ELIZABETH FARNSWORTH: Energy Secretary Richardson was at the bio-energy event. Shortly afterwards, he said he was recommending disciplinary action against three employees of the Los Alamos Nuclear Laboratory. He cited their failures in carrying out the spying investigation involving scientist Wen Ho Lee. Lee was suspected of spying for China and fired. He denied it, and there was not enough evidence to charge him. Richardson said there had been a total breakdown in the lab's counterintelligence procedures. Salt Lake City's mayor gave an accounting today of the death and destruction from the tornado that struck suddenly there yesterday. She said 79 people were taken to hospitals; 15 remained there, some in critical condition. Dozens of others were treated for minor cuts from whirling glass and other debris. One person was killed, the first tornado-related death in the state's history. Mayor Deedee Corradini said the death toll could have been much greater. "We've been very, very lucky," she said. Overseas today, India said it was not on the brink of war with Pakistan, and Pakistan's foreign minister said his country wanted to avoid an escalation of tensions with India. Those comments came as Pakistan buried 16 servicemen killed when their aircraft was shot down Tuesday by an Indian fighter jet. Each nation claimed the unarmed naval patrol plane was over its territory when the attack occurred. Both countries have been on high alert after two days of air clashes, and weeks of conflict over Kashmir. Russian jets and helicopters attacked rebel positions in Dagestan today. It was the sixth day of fighting in the Caucasus Mountain region, where Muslim militants wanting to break away from Russia have seized several villages. The rebels remain dug in. Reports of casualties vary. U.S. officials have not been able to confirm them. We'll have more on this story right after the News Summary. Also ahead, genetically modified crops, and the regional commentators on tax cuts.

FOCUS - RUSSIA'S TROUBLES

ELIZABETH FARNSWORTH: The fighting in Russia's Southern republics. We start with some background from Spencer Michels.

SPENCER MICHELS: For nearly a week, there's been fighting between Russian soldiers and pro-independence guerrillas in the Russian Republic of Dagestan. And now the predominantly Muslim rebels have turned a political conflict into a religious cause, calling for a holy war

and for Dagestan's independence from the Russian Federation. For Russia's leaders in Moscow - eight hundred miles to the Northwest - this is yet another rebellion in the North Caucasus region. Dagestan lies next to the breakaway Republic of Chechnya, and its population is complex mix of nationalities. Western scholars regard it as lawless and wild. The rebellion in Dagestan is often compared to the fighting in Chechnyna, which lasted two years -- from 1994 to 1996. That insurrection cost Russia about 3,000 military casualties and much criticism from Muslim and other nations for the destruction of much of that province and tens of thousands of civilian deaths. Moscow eventually threw in the towel and withdrew its troops, giving Chechnya de facto independence -- although no nation including Russia has recognized it as a separate nation. Yesterday, the rebels in Dagestan announced that Shamil Basayev, one of the leaders of the Chechen rebellion, is the commander-in-chief of their armed forces.

SHAMIL BASAYEV: (in Russian) I want to say that time has come to liberate ourselves from the Russian tyranny. The Jihad must go on. We will accomplish our struggle only when will liberate whole of Dagestan.

SPENCER MICHELS: Last weekend, the rebels seized several villages in the mountainous region. They say they've downed at least three Russian helicopters. Russian authorities say there are about 1200 rebel troops whom they describe as "bandits" and "terrorists." Russian officials say ten of their troops have been killed in the conflict, but they allege that dozens of the Dagestani insurgents have lost their lives.

ELIZABETH FARNSWORTH: Margaret Warner takes it from there.

MARGARET WARNER: For more on this conflict, and its potential significance, we turn to Philip Kohl, Professor of Anthropology at Wellesley College. He has spent the past four summers researching in Dagestan. And Fiona Hill, associate director of a Harvard University project on strengthening democratic institutions. She's traveled extensively in Russia's Caucasus Region, including Dagestan. Miss Hill, explain to us, why has this conflict erupted now?

FIONA HILL: This is a direct result of the devastating war in Chechnya. Basically, the region has never recovered from the effects of the war. There's been little attempt at reconstruction. We have many political divisions in the region. As you've seen, weapons are free flowing freely there. There's mass employment and severe social dislocation. It's a recipe for disaster. This disaster has now come.

MARGARET WARNER: Professor Kohl, do you agree this is born of some homegrown discontent?

PHILIP KOHL: Yes. That is basic to the whole problem. The economic situation is chaotic and deteriorating. The unemployment is very, very high, as Ms. Hill said. You have a disproportionally young population, many of whom used to seek employment in Russia but that option is closed to them now for a variety of reasons -- largely closed to them. It's a situation waiting to explode, and it's beginning to explode.

MARGARET WARNER: Miss Hill, before we go on talking about Dagestan, why is Dagestan important to Russia? Why is Dagestan and this whole Caucasus region important to Russia, how important?

FIONA HILL: This is Russia's strategic borderland. And it's now its most sensitive geopolitical frontier. As you saw on the map at the beginning of the segment, this is the borderland with Iran and Turkey. It's the strategic coastline on the Caspian Sea, which has now become increasingly important because of the Caspian oil resources there is. This is also historically a very important region for Russia. Russia has fought long and hard over the last couple of centuries to conquer and then regain control of the Caucasus. And a lot of Russian blood has been spilt, not just during the Chechen war, but over the last two centuries there.

MARGARET WARNER: And, Professor Kohl, would you say this conflict has potential significance for the West as well?

PHILIP KOHL: Well, of course, it does, because the Caucasus is a very vital area for the reasons of the oil resources of the Caspian. This is an area bordering Iran and bordering Turkey. Political stability in the Caucasus I think is in the best interest of all the countries involved.

MARGARET WARNER: All right. Tell us, Professor Kohl, staying with you about this Shamil Basayev, the rebel leader. We just saw him in the videotape. Who is he, what's driving him?

PHILIP KOHL: Well, he's a renegade field commander. He has broken with the leadership in Chechnya with President Muskatov of Chechnya. He is trying to set up a united state that joins together Dagestan and Chechnya. I think he is deliberately evoking the image of the legendary Mann Shamil, the fighter of the first half of the 19th century that kept the Russians at bay for centuries. He is a seasoned guerrilla fighter who was a hero from the Chechen point of view in the Chechen war. He's a very tough character.

MARGARET WARNER: Would you agree, Miss Hill; a very tough character?

FIONA HILL: He certainly is. If you're looking to see whether he has the capability of carrying a liberation movement in Dagestan, he can't really command the kind of popularity in Dagestan that he could in Chechnya. Dagestan is a very complex mosaic of 40 different ethnic groups.

MARGARET WARNER: You mean, even though they're mostly all Muslim or Islam, they're still very, very different.

FIONA HILL: Yes. That is a very loose unifying factor. As I said, there are 40 different ethnic groups in Dagestan. They all have their own agendas. And the Chechens are not very popular. There is a lot of spillover from the fighting in Chechnya into Dagestan. And a lot of Dagestanis suffered very greatly from the activities of people like Basayev.

MARGARET WARNER: So, Professor Kohl, would you say that he has the potential for generating enough popular support in Dagestan, or do you think not?

PHILIP KOHL: Well, depending upon what happens, the potential, yes. Does he have it at the moment? No. I would agree completely with what Miss Hill has said. Islam in Dagestan is pervasive, it's a proud and traditionally Islamic area. But it is not monolithic. And, last summer, for example, the Grand Mufte, the head of Islam was shot dead on the streets in Mahajkulla, and most people -

MARGARET WARNER: That's the capital.

PHILIP KOHL: -- the capital of Dagestan. And most people immediately blamed it on these Islamic extremists. Besides -

MARGARET WARNER: I'm sorry. Let me make sure I get your point. So you're saying there's all kinds of conflict even among all these Islamic groups.

PHILIP KOHL: Absolutely. And there are many very devout Dagestanis who think Mr. Basayev is a terrorist.

MARGARET WARNER: Miss Hill, as one of you, I think, noted, the Chechen president has said they're not behind this, but do you believe that? I mean, how much do you think this is Chechen agitation, Chechnya next door?

FIONA HILL: There's a lot of opportunism here. As Professor Kohl said, you have a lot of groups in the area, all with their own agendas. In Chechnya -- there is not a master plan on the part of the Chechen government to take over this area. In fact, the Chechen government is not capable of any kind of master plan because it is equally divided. Musahadav himself has very limited authority even within his own republic. So you're basically seeing people trying to take control of a very chaotic, very uncertain situation. And they're using any slogans they can rally some support behind.

MARGARET WARNER: And so, staying with you, what will it take for Russia to hold on to Dagestan?

FIONA HILL: Well, it won't take bombs and troops. This is tragedy of the matter. Russia, unfortunately, has very little authority. We're talking about Moscow's authority here. As we've seen this week, Moscow has been very preoccupied with its own political struggles. And as a result of the financial crisis last year, there are very little resources to offer the region, to revive the economy. And that's the basic problem. This is a terrible situation, a terrible economic situation, total political destruction, social dislocation, and bombs and troops are not going to fix this. They may have a short-term fix in terms of stopping this fighting. But the problems that have made this such a fertile ground for this kind of activity will remain.

MARGARET WARNER: Professor Kohl, bombs and troops, though, on the Russian' part wasn't even capable of a short-term fix in Chechnya. Why should they be able to put this rebellion down?

PHILIP KOHL: Well, they may not be able to. It's a very delicate game that is being played now -- a cat-and-mouse game. Mr. Basayev has engaged in what could be called the politics of provocation. He's hoping for a heavy-handed response, precisely to elicit more sympathy on the part of the local population, I believe. And the Russians are capable of doing that. Hopefully, they will not do that. And, hopefully, they've learned something from the tragedy that took place in Chechnya.

MARGARET WARNER: So what did you make when the new or the acting prime minister in Russia, Mr. Putin said this week he was going to put this down in two weeks?

PHILIP KOHL: That made me very, very uneasy. It reminded me of the statements made in the outbreak of the Chechen conflict, that it was only going to last for 48 hours, 72 hours and went on for nearly two years. Possibly one could quell this current disturbance in a relatively short time. But the underlying problems, as Ms. Hill has emphasized, will remain. They're economic and deep-rooted. And until those are addressed, I'm afraid this area will remain quite unstable.

MARGARET WARNER: Miss Hill, are there any other powers outside of Russia playing in this region in terms of militarily?

FIONA HILL: Not militarily.

MARGARET WARNER: What I meant-- excuse me. For instance, I know there are lots and lots of guns there. There are lots and lots of weapons. Is there any kind of behind the scenes help that's been given to any of these groups?

FIONA HILL: That's not clear. I mean, there have always been rumors about that kind of activity, but I think you have more of a situation of mercenaries -- of guns for hire. And they may be from many different neighboring states or neighboring republics. But they're all joined by a similar common cause of who can pay the most for the hiring of these weapons.

MARGARET WARNER: But how do they -- if it's such a poor region, how do they have the money to hire these weapons, to buy these weapons?

FIONA HILL: Well, there's always flows of money into this region. Some people are making a very hefty profit off all kinds of things, from drug smuggling to weapons, money laundering. This has become an incredible zone of instability, of corruption. The borders are very porous, and a lot of activity is going on there that should be a real cause of concern, not just for Russia but for all of the neighboring states.

MARGARET WARNER: And so, Professor Kohl, would you say that in terms of all kinds of western investment that is going into this general region for oil development, is that a good bet? I mean, is the region stable enough? Can Russia keep a handle on it enough to make this work financially for these companies?

PHILIP KOHL: Well, I haven't been privy to any conversations that are being held in executive offices anywhere. But my guess is that people are very apprehensive about this. The Caucasus, when you look at a map, it's a very compressed area. It's just a peninsula stretching between the Black and Caspian Seas. And the situation -- what happens in Chechnya spills over into Dagestan. What happens in Dagestan will spill over further to the South. You can't contain these conflicts entirely. And the instability, I think, is great. The uncertainty, the volatility of the situation cannot be underestimated. So my guess is many people interested in those resources of the Caspian Sea are quite nervous at the moment.

MARGARET WARNER: All right. Well, thank you Professor Kohl and Ms. Hill. Thank you both very much.

FIONA HILL: Thank you.

PHILIP KOHL: Thank you.

FOCUS - SEEDING THE FUTURE

FOCUS - SEEDING THE FUTURE

ELIZABETH FARNSWORTH: Next tonight, the growing controversy over genetically modified crops. Tom Bearden reports.

TOM BEARDEN: Corn farmer Tim Hume is up to his ears in hope. After years of battling farm pests, Hume planted a new kind of corn this year, a genetically altered variety that actually kills invading insects. It's called BT corn. Scientists took a gene from a common soil bacteria called bacillus thuringiensis, and combined it with corn. The result is a sort of built-in pesticide. Hume says it's a godsend when it comes to fighting corn borers.

TIM HUME, Farmer: The corn-borer insects, the damage can be amazing. It can be up to 70 bushels per acre, which is 40 percent of our yield in this area.

TOM BEARDEN: The bioengineered seeds cost more but Hume hopes they will more than pay for themselves by resisting insects.

TIM HUME: They're simply less scouting for insects. And we have to spend less money on sprays that are costly.

TOM BEARDEN: A lot of farmers have jumped on the bioengineered corn bandwagon because corn borers cost them more than $1 billion a year in lost yields. Although BT corn has only been on the market for three years, it's now growing on 20 million acres, a quarter of the entire U.S. corn crop. But critics of bioengineered food products are worried the new seeds threaten human health and the environment. The biggest outcry is in Europe, where protesters who want to halt U.S. imports dumped genetically altered seeds on government officials' doorsteps. British tabloids refer to the products as "frankenfood," and the European Union has refused entry of any new genetically-modified crops. Fueling much of the current debate is a study published last may in the journal "Nature." Researchers from Cornell University reported that BT corn pollen can kill not just pets but also the larvae of Monarch butterflies. John Losey was the lead author for the study.

JOHN LOSEY, Cornell University: All of the caterpillars on the no-pollen treatment and all of the caterpillars on the regular-pollen treatment were still alive. 44 percent or almost half of the caterpillars feeding on the BT pollen treatment were dead. And those that weren't dead were significantly smaller.

TOM BEARDEN: Monarch caterpillars feed exclusively on milkweed.

JOHN LOSEY: This is milkweed with the pink flowers. And, if you notice, if you break off a leaf or a stem, it produces a latex sort of substance, and it looks like milk. And that's where it gets its name: milkweed. And what will happen -- when this corn grows up and sheds pollen -- is these milkweed right here on the edge, they are the ones that are going to get the highest dose of the pollen, and so the female monarchs will come in, and they will lay their eggs right on the bottom of leaves, and when the larvae hatch out, they'll start eating, and if it's been dusted with pollen, then they'll consume that and they'll get a dose.

TOM BEARDEN: Losey says the risk to the butterflies is significant, because they breed mostly in U.S. corn belt states. But the industry says Losey's laboratory study doesn't reflect real life. Val Giddings is a vice president of BIO, the Biotechnology Industry Organization.

VAL GIDDINGS: The crucial thing to look at is would Monarch larvae in the wild be exposed to corn pollen, and if so, how much effect would there be? The corn pollen is only around for an extremely short period of time during the growing season, so the potential for exposure is extremely low. Therefore, the probability for a negative impact is commensurately low.

TOM BEARDEN: Both the industry and Losey agree that more fieldwork is needed. Losey and his team are now measuring how pollen migrates from real cornfields, and what impact it has on Monarchs.

JOHN LOSEY: That's one of the behaviors that we're looking for, when it sort of does that head bob thing.

TOM BEARDEN: Because the Cornell study is the first evidence that pollen blowing from a genetically- modified plant can kill non-target insects, Losey says it should be seen as a heads-up for any bioengineering in the future.

JOHN LOSEY: It's not just Monarchs. If you look above them on the food chain, there's a lot of animals like birds, bats, other insects that eat either the caterpillars or the butterflies and moths. And so, if you start really having an impact on these populations, it's going to ripple both up and down the food chain. And it's really hard to predict what impact that's going to have on the total ecosystem. So I guess why you should be concerned about the Monarch is that the Monarch is sort of like the canary in the mine. And if the Monarch is going to be impacted, we know other butterflies and moths are going to be impacted, and that could be a real problem for the ecosystem as a whole.

TOM BEARDEN: Bioengineering critics also worry that genetically-modified crops could pose a threat to people, particularly those with uncommon allergies. Jane Rissler is with the Union of Concerned Scientists.

JANE RISSLER: If someone were allergic to bananas, she wouldn't buy foods with bananas. But if a banana gene were transferred to tomatoes, let's say, to give a yellow color, and that tomato were not labeled or processed-- tomatoes were not labeled-- then she could well get the protein from bananas, and she might be allergic to it.

TOM BEARDEN: The FDA already requires that foods which contain a gene from a common allergen, like peanuts, to be labeled. The biotech community says agriculture is being unfairly singled out, even as other bioengineered products are highly praised.

VAL GIDDINGS: Some critics of biotechnology have argued that this takes man into realms best left to God and God alone, that it is unnatural to meddle with nature. But then they say that it's okay to use biotechnology for pharmaceutical applications. Well, you know, this starts out as a fundamental statement of principle but all of a sudden mutates into one which is flexible. And, you know, we can ignore it when it suits us. I mean, if you're opposed to biotechnology in food, on a matter of principle, then why are you not opposed to biotechnology in terms of pharmaceuticals? Are you going to tell a patient suffering from breast cancer that she cannot have access to Herceptin, or the breast cancer cystability diagnoses that biotechnology makes possible? There is a fundamental inconsistency here philosophically in the minds of those who find biotech in pharmaceuticals okay but not in agriculture.

TOM BEARDEN: But Rissler says people with health problems are willing to take risks on bioengineered drugs.

JANE RISSLER: In Ag-biotech, let's look at who's benefiting and who's taking the risk. Biotech companies are benefiting; some farmers are benefiting. Consumers are eating the food -- are they benefiting? Should they be asked to take any risk, if they are not getting any benefits? Whereas if I take a drug that might prevent breast cancer, I'm benefiting directly.

TOM BEARDEN: But agriculture says consumer benefits are clear: Cheaper food crops that are much more friendly to the environment because they don't require pesticide to be sprayed. In fact, industry giants like Monsanto tout their DNA innovations as a green revolution. They've invested millions in gene splicing technologies for other crops like cotton and soybeans that also reduce the use of chemical pesticides. The huge expense of developing these new plants has started another argument, this time with farmers. Monsanto requires farmers who buy bioengineered seeds to sign a contract agreeing not to save seeds from their crops for replanting the following year. They say it's an intellectual property rights issue.

VAL GIDDINGS: It costs a good deal of money to develop these new products. Farmers can save seed every year, and what that means then is that for a company to invest a vast amount of research and development money into that, they would have to recoup all of their R&D costs from the first generation of seed sales. You know, and you just can't do that. You'd price yourself out of the market.

TOM BEARDEN: Ohio farmers Dan and Roger Peters resent Monsanto's claim of ownership. The father and son operate a seed cleaning business. Farmers bring plants to them to extract the seeds for use the next year. It's an age-old farming practice. The Peters go so far as to say it's a right.

DAN PETERS: Farmers have saved seed for years. And I mean, what the difference is, is -- I mean, a guy went out here and had a good field that yielded good - I can't save that for seed. I've got to haul it to town. I've got to go buy new. I mean golly, that's going to cost a lot of money.

TOM BEARDEN: Monsanto asked the Peters and other cleaners to post signs warning legal action against farmers planning to reuse genetically modified seeds, and the company has hired investigators to sample crops, looking for violators. It has a hot line; it encourages people to call to report others, and has taken some farmers to court. But a private company's ability to patent a gene-modified plant is now being challenged in an Iowa Federal Appeals Court. The issue is bound to get even more contentious when Monsanto introduces a seed now in development. Called the "terminator seed," it becomes sterile after one harvest.

JOHN LOSEY: So it definitely looks like they're eating less of the ones with pollen.

TOM BEARDEN: Since the Cornell Butterfly Study, members of Congress have proposed increased funding for further research on bioengineered food crops. The industry has also pledged more money for further investigations.

ELIZABETH FARNSWORTH: Still to come on the NewsHour tonight, our regional commentators debate tax cuts.

FOCUS - TAX DEBATE

ELIZABETH FARNSWORTH: Terence Smith has the tax cut story.

TERENCE SMITH: Tax cuts are the flavor of the month. House and Senate Republicans are using the congressional August recess to promote their tax legislation, while President Clinton is arguing against it. Kwame Holman has more.

KWAME HOLMAN: House Speaker Dennis Hastert kicked off his part in the tax cut campaign in his home district yesterday outside Chicago.

REP. DENNIS HASTERT: It's nice to be out of Washington and home to really the American heartland. (Applause)

KWAME HOLMAN: Hastert was the headliner before 250 workers at an auto parts plant in Elgin, Illinois, inaugurating a three-week push by congressional Republicans to raise public support for their $792 billion tax cut package. Hastert explained the essence of the tax bill Congress passed just before its summer recess using plain language, and dollar bills.

REP. DENNIS HASTERT: This is the surplus that the federal government is going to have in the next ten years. So every four dollars of surplus, we're going to take three dollars-- one, two, three-- and we're going to go down and we're going to pay down the debt for those three dollars. Then we're going to take this one dollar, and we're going to give it back to the American people, because they think what we think when they're overcharged on their taxes; that they'll do a better job with that money in spending it, or investing it, or saving it, than the federal government will do. And that's what this tax bill, ladies and gentlemen, is all about.

KWAME HOLMAN: Main features of the Republican tax cut plan include: A 1 percentage point reduction in each of the five income tax rates, a reduction in personal capital gains tax rates, a reduction in the so-called "marriage penalty" tax, and a phase-out of estate taxes. But President Clinton remains steadfast in his position that he will veto the tax bill as it now stands.

PRESIDENT CLINTON: And I would urge the American people to look at the fine print of this bill, because it also has big cuts in education, in research and development, in the environment. Because of the surplus, it means we can invest in the education of all of our children and meet our other fundamental responsibilities, and still afford a modest -- not a big, but a modest tax cut -- designed to help people deal with the biggest challenges they face.

TERENCE SMITH: Now, how the tax proposals look to our regional commentators: Patrick McGuigan of the "Daily Oklahoman;" Cynthia Tucker of the "Atlanta Constitution;" Lee Cullum of the "Dallas Morning News;" Bob Kittle of the "San Diego Union-Tribune." Joining them tonight are Rachelle Cohen of the "Boston Herald," and Jane Eisner of the "Philadelphia Inquirer." Welcome to you all.

Pat McGuigan, let me begin with you. If there is, in fact, a surplus, the argument comes down to spending versus tax cuts. Which is the right way to go?

PATRICK McGUIGAN: Well, I think as the Speaker indicated in the news segment, that prepared us for this discussion, that spending a portion of it on practical things that there's broad agreement on like Social Security, Medicare, fixing those things, having some for additional spending for education and other issues is a laudable purpose. But at least a portion of it, as he indicated in his simple but rather compelling way, ought to go back to the people who have made the surplus possible; that is, a tax cut of at least some percentage for taxpayers. There's absolutely nothing wrong with that. And, inevitably, we're going to get into some class warfare, which the President seems to be feeding. But part of the inevitability of that is that about half of the federal tax burden is paid by about 4 percent of all the taxpayers with the rest going to the remainder.

TERENCE SMITH: The wealthiest 4 percent.

PATRICK McGUIGAN: Yes. There is going to be some benefit for upper-income individuals. And there's nothing wrong with that.

TERENCE SMITH: Cynthia Tucker, what's your view?

CYNTHIA TUCKER: Well, I think everything is wrong with this tax cut proposal, Terence. First of all, there is not yet a surplus. This surplus is just predicted. If, in fact, we eventually have a surplus, then we have a debt amounting to more than a trillion dollars that we first have the responsibility of paying off. Secondly, the American public is not exactly clamoring for this tax cut. They understand that there would be much more benefit to them if Social Security is shored up, if Medicare is shored up. And so the American people have not said that they want this one dollar back. In fact, they would be much happier to see the debt paid off and then some fundamentals like Social Security taken care of if in fact, we turn out to have a surplus.

TERENCE SMITH: Lee Cullum, you've heard the case for it and against it. Where do you come down?

LEE CULLUM: Terry, first I'd like to take issue a little bit with Cynthia. I saw a Pew Center poll that said that if Social Security income is not touched, if Social Security revenues remain inviolate, 60 percent of Americans do favor a tax cut. 25 percent of them favor new federal programs. I feel that some tax cut is in order. It's got to be done obviously in concert with Medicare. The two have got to be considered in tandem. It's especially important to look towards tax cuts. It will stimulate savings and investments. And if that is done, it's bound to benefit the American economy.

TERENCE SMITH: Bob Kittle, one of the arguments, of course, is not just whether there should be a tax cut but how much. Is the Republican proposal of nearly $800 billion too much?

ROBERT KITTLE: I don't think so, Terry. The reality is, that in 1993, President Clinton pushed through the Democratic Congress the biggest tax increase in history. And he told us at the time that the reason we needed that tax increase was to end the deficit. We have now ended the deficit through strong economic growth and spending restraint. So I don't think the tax cut that the Republicans are proposing is too large. It merely gives back to taxpayers some of the tax increase that was adopted in 1993. But I would also say that there will be no surplus at all unless Republicans in Congress show some spending restraint and stick to the spending limits that they adopted in 1997. And, unfortunately, what we're seeing right now is that the Congress, the Republican Congress is blowing through those budget ceilings, those spending ceilings and passing appropriations bills that basically will spend the surplus before it materializes. So we need a tax cut, but we only need a tax cut if we also have spending restraint.

TERENCE SMITH: Jane Eisner, what's your view?

JANE EISNER: Well, I'd like to pick up on the point about spending. This is a Congress that seems to -- that can't even get its act together to fund a census which we know has to take place every ten years. So we are very concerned that this tax cut ignores the fact that Congress a couple of years ago agreed to reduce spending consistently every year and so far has not been able to do that.

TERENCE SMITH: Rachelle Cohen, I wonder what your view is and particularly about some of the components that have been proposed such as eliminating the marriage penalty and perhaps estate taxes, doing something about capital gains and doing something about retirement.

RACHELLE COHEN: Well, that's something that's getting lost in this debate a little bit because there are wonderful things that these particular targeted tax cuts can and will do for the economy. First of all, we also shouldn't lose sight of the fact that this is not the enormous tax cut the White House would have us believe. It comes down to $79 billion a year. It sounds like an enormous amount of money to most of us. But that's 4 percent of the federal budget. That's 4 percent that could certainly be returned to the pockets of American taxpayers. I think they truly believe in the equity of the argument of doing away with the marriage penalty at long last and the economic argument, the simple economics of reducing the capital gains tax, which only makes the economy grow more.

TERENCE SMITH: Jane Eisner, I wonder what you think of the politics of this. The President has made it clear that he intends to veto the proposal as outlined by the Republicans. How do you think the politics will play here?

JANE EISNER: Well, I don't really know. It's clear that the Republicans have scored a certain kind of victory in that it seems everybody is talking about tax cuts, not just the President, but Al Gore is as well in his own plan. So it seems that there is something that's going to happen in that regard. I think, though, that once the American people realize what this is going to mean, which is that it would have to be done with continued cuts in federal spending, which I'm not sure people are quite aware of yet, that may change the political landscape.

TERENCE SMITH: Bob Kittle, what do you think about that? Do you think public attitudes will change as the debate goes on? And I'm assuming and operating on the assumption that the presidential veto, if it comes, is not the end of the process, but really the beginning.

ROBERT KITTLE: No, I think the veto will not be the end of the process, Terry, and I think the President is going to have to stick to his guns, even though I believe the Republicans are going to have some success in persuading Americans that they do deserve a tax cut. And I think the tax cut is probably going to grow in popularity among voters. When the President veto it is bill, then there will be time for bargaining. And, as you said, the President does support a tax cut; he wants a $300 billion tax cut. The Republicans want a $900 billion tax cut. And there probably will be a compromise where everybody will get a little bit. Nobody will get an entire loaf. And we will have a tax cut. We're really arguing over what the size of it and the dimensions of it will be.

TERENCE SMITH: Right. Lee Cullum, is that the sort of compromise you'd support?

LEE CULLUM: Yes. I think that's a very reasonable compromise. I'd like to add, Terry, that I share Cynthia's concern about looking so far into the future. Ten years is a long time down the road. And I noticed that in the first five years of this plan, only $156 billion of that tax cut will have been in operation. So that's $650 billion left for the last five years. That needs to be rethought. I'm not sure we need to lock in these tax cuts for so long a period of time. Maybe a five-year period is more reasonable. Maybe that $156 billion should be increased perhaps to $250 billion. That would be a reasonable compromise, it seems to me.

TERENCE SMITH: Cynthia Tucker, your skepticism about the surplus and its certainty, does that go to how you think the economy will perform, or what's behind it?

CYNTHIA TUCKER: Well, Alan Greenspan has already discouraged this tax cut bill, certainly the nearly $800 billion tax cut proposal that the Republicans have offered up, because one of the reasons you offer tax cuts is to stimulate the economy. That would be one reason, for example, to cut the tax on capital gains. But as we all know, this economy doesn't need any stimulus at the moment. In fact, one of the things that has been best for this economy is that we have finally gotten on sounder financial footing by no longer running a deficit. It strikes me as enormously irresponsible then not to go ahead and pay off the debt. And certainly, one doesn't go out and build a big new house just because your boss said he might give you a raise. And that's the sort of thing we're talking about doing when we're giving a tax cut against a surplus that has not even materialized yet.

TERENCE SMITH: Pat McGuigan, you've heard some arguments against tax cut here from your colleagues. What do you think of them?

PATRICK McGUIGAN: This guy Alan Greenspan is just amazing - watching his career. I mean, he's on the verge of canonization by everybody across the political spectrum. And of course, he's being deployed a lot lately for some mildly critical remarks about aspects of the tax plan. However, he - in the same discussion with members of Congress -- did say that if the choice is a clear-cut choice between spending increases or tax cuts, then in that scenario, he would be for tax cuts. And you have a rough symmetry here. The President has proposed spending increases that over a decade or so total about $800 billion, and Republicans have proposed tax cuts that over a decade total about $800 billion. So you really have a pretty clear-cut choice between a modest set of spending increases or a modest set of tax cuts that are triggered by economic successes, as Lee pointed out. And, personally, I would agree with Lee Cullum's position, which is let's frontload some of these tax reductions and get the benefit for the people who have helped to create this economic boom that we're still in.

TERENCE SMITH: Rachelle Cohen, what do you think of that argument?

ROCHELLE COHEN: Well, I'm glad Patrick got the Greenspan quote correct this time. That was my understanding of where Alan Greenspan was coming from. Certainly, he would love to see all of this locked away to pay debt and shore up Social Security. But preference number two would be tax cuts over spending increases. And I think we all know what's going to happen to that money if the White House has its way, and it doesn't go into tax cuts. It's going to get spent, and that's not a good idea for the economy. And it's just going to disappear. So, I think our choices are clearly, again, tax cut versus spending, I would opt for the tax cut. And I think that three quarters of that surplus is safe and secure at whatever level it comes in.

TERENCE SMITH: Jane Eisner, I wonder, given some of the concerns you expressed earlier, whether you agree or what you think of economists who argue that the best thing for the economy is to pay down the national debt.

JANE EISNER: Well, I think there's a lot of value in that. It does put more money into the economy and less in the hands of the government. And it's also a way of doing it with cash on hand. Remember, we're talking about tax cuts here, and yet, for a surplus that may only be $5 billion next year. We really strongly feel that only a few years after slaying that budget deficit dragon, we ought not to create a new one.

TERENCE SMITH: Bob Kittle, we've been presuming a presidential veto here. What do you think are the politics of that? Is there a risk for Bill Clinton, or do you think it's a politically shrewd move?

ROBERT KITTLE: I think there are risks for the President in vetoing the tax bill, Terry, but I have to give him credit. In every confrontation with the Republicans on Capitol Hill over the budget, the President has come out on top. So I think he's in a strong position. I think he strengthens his position when he says, I want a tax cut, I just don't want one that's this big. So, you know, I think it can work both ways. But I do think that in the end, the American people are going to want a tax cut and that there will probably be one. And the key to all of it again, is it only works if the Congress and the President hold the line on spending. Otherwise, this surplus does not materialize, and there's no money to shore up Social Security or to return a portion of the surplus to the American taxpayers.

TERENCE SMITH: Lee Cullum, you'd save some of it for a rainy day.

LEE CULLUM: Yes, of course, Terry. And some of it should be used to pay down the debt. There's no question about it. I think when you look at the politics of the situation, you have to say that each side is sticking with its own old-time religion, Republicans with tax cuts, Democrats with spending. And the whole thing will ride on that 44 percent of Americans who are moderate and in the middle feel about that whole thing.

TERENCE SMITH: Okay. Cynthia Tucker, a final word from you. What do you think is going to happen?

CYNTHIA TUCKER: Well, Terry, of course that's the $64,000 question. I think that the veto from the President works out well for everybody's politics. Interestingly enough, there are some Republicans who are a little afraid of this $800 billion tax cut bill but they voted for it anyway because they knew that the President would veto it. So everybody gets something out of this; the GOP gets to go out there and criticize Bill Clinton. And the President gets to go out there and criticize the GOP as fiscally irresponsible.

TERENCE SMITH: All of which guarantees it won't be over for a while. Thank you all very much.

RECAP

ELIZABETH FARNSWORTH: Again, the major stories of this Thursday: Buford Furrow was charged with first-degree murder and attempted murder in Los Angeles. He was accused of fatally shooting a mailman and injuring five people at a Jewish community center. And the Agriculture Department said the record drought in parts of the country will have little impact on grocery prices, because of bumper crops in areas where rainfall was adequate. We'll be with you online and again here tomorrow evening, with Paul Gigot and Tom Oliphant, among others. I'm Elizabeth Farnsworth. Thank you. Good night.