The NewsHour with Jim Lehrer

MR. LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, the Senate debate over the gas tax, we have our own with Senators Lott and Dorgan; the FCC completes another part of an important auction, Paul Solman has an update; the Bosnia War Crimes Trial opens, we have a report from the Hague; and the move toward a Chinese Hong Kong as seen by the current British governor of Hong Kong. It all follows our summary of the news this Tuesday. NEWS SUMMARY

MR. LEHRER: Senate Democrats blocked a vote on repealing the 4.3 cent gasoline tax today. Kwame Holman reports.

KWAME HOLMAN: Late this afternoon, Senate Majority Leader Bob Dole proposed what he considered a compromise amendment aimed at pleasing everybody.

SEN. BOB DOLE, Majority Leader: It would be the win-win that I read about over the weekend. You'd have a repeal of the gas tax and you'd also have the adoption of the minimum wage, which would take you to $5.15.

MR. HOLMAN: To Democrats, it sounded promising, one bill encompassing their wishes to increase the minimum wage while Republicans get the gas tax repeal they've been pushing for. But then Dole dropped yet another shoe.

SEN. BOB DOLE: We would add to that the so-called Team Act.

MR. HOLMAN: The introduction of the Team Act was unexpected. Dole explained.

SEN. BOB DOLE: And the Team Act amends federal labor laws to make clear that employers, employees may meet together in committee or other employee involvement programs to address issues of mutual interest. Who can be opposed to that?

MR. HOLMAN: The answer is Democrats in general, the President in particular.

SEN. TOM DASCHLE, Minority Leader: We all know that the President for good reason opposes the Team Act, especially in its current form. Why? Because it gives license to companies to set up rump organizations to negotiate with themselves. To add this amendment to a bill that the distinguished leader knows is going nowhere is not a deal at all.

MR. HOLMAN: Democrats refused Dole's offer.

SEN. BOB DOLE: Mr. President, as I understand it, everything has been objected to.

SPOKESMAN: That's correct.

SEN. BOB DOLE: And so where are we? We're--

MR. HOLMAN: Right now in limbo. The Senate finds itself stuck on a Republican bill to help fired employees of the White House Travel Office. Without a vote on the minimum wage, Democrats won't let that bill proceed either.

MR. LEHRER: We'll have more on this story right after the News Summary. In a Senate Whitewater Committee today, there was a dispute concerning First Lady Hillary Clinton. The issue was some Little Rock law firm records found at the White House several months ago. The Senators worked on shortening a list of people who might have mishandled the records and might be called as witnesses. The dispute was over whether Mrs. Clinton's name should remain on that list.

SEN. CHRISTOPHER DODD, [D] Connecticut: This is what she said. She said, "I don't know how the billing records came to be found where they were found." And she's also in response to two interviews on NBC and CBS asked directly, "Did you place them there?". She said, "No." Now, we've accepted the statements from other people and taken their names off here. I mean, they're not even her billing records. They're the law firm's billing records. And that's just showing--I mean, this committee has got to try and, and, you know, maintain some veneer of objectivity here. When we throw a chart up calling them her records, despite the fact she's denied putting them there, we keep her name up.

SEN. PETE DOMENICI, [R] New Mexico: The reason I would not strike the First Lady's name from who stored the records and who placed them is because it defies common sense that these records are open in a room she has access to all the time and, and she doesn't know how they got there, she doesn't know who brought them there, kind of like she doesn't know anything about that, they sort of showed up.

MR. LEHRER: In Arkansas today, President Clinton's former Whitewater partner, James McDougal, took the stand in his own trial. McDougal denied he committed any crimes. He said he never met with then Governor Clinton in the mid 1980's to arrange a fraudulent loan. McDougal is accused of fraud and conspiracy in connection with $3 million in federally-backed loans. On the Liberia story today, West African leaders and Liberian officials met in Ghana to establish a framework for peace talks. The United Nations envoy to those talks said humanitarian aid may be cut off unless guns stop shooting and return stolen UN property. He said continued assistance will depend on the commitment of the Liberian leaders to the peace process. Faction leader Charles Taylor has refused to attend the talks. In the Hague, Netherlands today, the first trial of the Bosnian War Crimes Tribunal began. Bosnian Serb Dusko Tadic is charged with the torture and murder of Muslims and Croats in 1992. He has denied any involvement in the concentration camps where the atrocities allegedly occurred. A trial is expected to last several months. Judges will hear testimony from more than 100 witnesses. The Tribunal has indicted 57 suspects. Three are in custody. In Washington, a State Department spokesman said the U.S. hoped Tadic's trial would be the first of many.

NICHOLAS BURNS, State Department Spokesman: This marks the beginning of a historic process to bring justice for serious violations of international law, including genocide, to the attention of the international community. These are the first war crimes trials in Europe since Nuremberg after the Second World War. The United States strongly supports the work of the War Crimes Tribunal. It has led the international effort in providing and coordinating diplomatic, financial, and technical assistance for the War Crimes Tribunal.

MR. LEHRER: We'll have more on this story later in the program. In Russia today, nine British diplomats were accused of being career spies but a spokesman for the Russian foreign ministry said a final decision on whether to expel the nine had not been made. British Foreign Secretary Malcolm Rifkind said the allegations were not justified. President Clinton talked by phone this morning with President Yeltsin about the upcoming Russian elections. White House Spokesman Mike McCurry said Yeltsin told Mr. Clinton the vote would take place next month as scheduled. A close Yeltsin aide had said over the weekend the elections should be postponed. He said a win by the Communist Party candidate could divide the country. Back in this country, the wild fires in New Mexico continued to burn. More than 7500 acres of dry pine and brush in the Northern part of the state have already been destroyed. Because of the rugged conditions, much of the firefighting has been done by crews and planes and helicopters. New Mexico Governor Gary Johnson declared a state of emergency yesterday. More than one million acres of national forest in Northern Arizona will be closed today. A U.S. Forest Service spokesman said there was a danger of fire. In Mexico City today, two people died after a soap factory exploded. The Red Cross said at least 34 more have been injured. A Mexican safety official said more victims are feared buried under the rubble, no word yet as to the cause of the explosion. And that's it for the News Summary tonight. Now it's on to lowering the gas tax, an auction update, the Bosnia War Crimes Trial, and the governor of Hong Kong. FOCUS - POLITICS AT THE PUMP

MR. LEHRER: We go first tonight to the gas tax debate. The 4.3 cent tax was part of the 1993 budget bill which a then Democratic Congress passed without any Republican votes. Now with gas prices lurching up in recent weeks, the gas tax is back on the political agenda, and here to debate the issue are two Senators, Republican Trent Lott of Mississippi, the Senate Majority Whip, and Democrat Byron Dorgan of North Dakota. Senators, welcome. Senator Lott, where do things stand tonight? Is there going to be a vote on the gas tax, and, if so, when?

SEN. TRENT LOTT, Majority Whip: Well, we certainly hope so, and we will try it again tomorrow to bring it up as a part of a bill that would provide some additional relief for taxpayers called the taxpayers relief bill No. 2. You know, it's interesting that this is the tax freedom day. This is the first day of the year that people are able to work and get to keep their money. Up until now they've been having to pay taxes, so we're trying very hard to repeal this gasoline tax that we don't think was fair, and it's not just gasoline. It also applies to diesel and jet fuel. The Majority Leader will make another proposal on the next day on Wednesday that will allow us to get it up, and I believe that we will reach a point where we do get a vote to repeal the gas tax, and it will pass the Senate.

MR. LEHRER: Now, Senator Dorgan, are the Democrats going to go along with it tomorrow?

SEN. BYRON DORGAN, [D] North Dakota: Well, I mean, this is another campaign stop on the floor of the Senate. That's what this is all about. I mean, you know, we have the attention span of a house fly around here. I thought the subject was to reduce the federal deficit, and we've taken some tough steps to try to do that, and now the price of gas spikes up twenty or thirty cents a gallon, and having nothing to do with the 4.3 cent gas tax that was imposed several years ago, all of a sudden the subject is a 4.3 cent gas tax. Why not the dime gas tax that was supported by Sen. Dole in the 1980s and early 1990s? This is all politics, and, you know, we probably won't have a vote on repealing the gas tax. I assume at some point they can force that. 'We're suggesting that we also ought to have a vote on some other things that are important to us, adjusting the minimum wage, which has been frozen for five years.

MR. LEHRER: Sen. Lott, why not have just simple up or down votes on these things? Democrats want to vote on the minimum wage, you all want to vote on the gas tax, but everybody keeps adding other things to it. Why not just have one on each and go home?

SEN. LOTT: Well, first of all, I want to go back to the gas tax a second.

MR. LEHRER: All right.

SEN. LOTT: I'll answer your question directly. But, you know, the thing that offended me the most about the gas tax when it was passed in 1993 was that that money all went into general treasury. It didn't go into the highway trust fund to build highways and bridge which we do, in fact, need. That 4.3 cents a gallon gas tax, it may not be big, but it is a little relief that people can enjoy from the spike in gasoline taxes. I mean, they have gone up 20 to 30 cents a gallon in the last couple of months. This is a tax we should never have put on gasoline. We have over 14 cents a gallon federal gas tax in addition to this. And we should give the people this relief. That's all we're saying, but it may be politics, but it's also I think good judgment. It's good for the people, the working people, and let me answer your other question--

MR. LEHRER: I'll tell you what. We'll come back to my political question in a minute.

SEN. LOTT: All right.

MR. LEHRER: Let's stay on the gas tax.

SEN. LOTT: All right.

MR. LEHRER: Sen. Dorgan, what about that? Why not give people the relief?

SEN. DORGAN: Well first of all, it was done to reduce the federal deficit. The federal deficit has been cut in half in the last three years, but the point is the price spiked up 20 or 30 cents a gallon, and, you know, that had nothing to do with the gas tax. We ought to investigate the oil industry, find out what has caused the price increase. It's a little like driving a car down the road and it starts to overheat, and you've got steam coming out of the hood, and so you pull the car over and decide to fix your tire. I mean, there's no relationship here, and I guess I would hope that all of us in the Senate would decide that the first agenda here is to reduce the federal budget deficit. Now, when they talk about the gas tax, it's interesting, Dick Armey over in the House of Representatives, the Majority Leader, said, well, let's cut the gas tax and we'll pay for it by cutting education. I can't think of a worse idea. I can't think of a single worse idea than doing that. So I hope we'll get back to basics here. We ought to have an up or down vote on a range of these things. I don't want to retreat on dealing with the federal deficit. This federal deficit's coming d down because we've taken some hard choices, made some tough decisions.

MR. LEHRER: And your point, Sen. Dorgan, is that if you remove the 4.3--the 4.3 cent gas tax, that money has to be made up somewhere else--

SEN. DORGAN: Absolutely.

MR. LEHRER: And it'll increase--well, Senator Lott, what about that?

SEN. LOTT: We will have offsets where it won't add to the deficit. We do have a couple of provisions in our bill that would do just that. I don't, again, the Democrats always say the way to deal with the deficit is by raising taxes. I maintain the best way to deal with the deficit is by controlling spending and by giving some incentives for growth in the economy. That's the way to deal with the problem.

MR. LEHRER: Do you--Sen. Lott, do you support Congressman Armey's proposal that, that the offset be in education spending?

SEN. LOTT: No, I don't support that, and I don't think he made any specific proposal in that regard but regardless of that, I don't support that.

SEN. DORGAN: Well, the point is, Congressman Armey this weekend, who's an enthusiast for cutting the gas tax at this moment, apparently because the price of gas is spiked up by the oil industry, he says, well, we could make this up by cutting education. And my point is I think that's a fundamentally dumb idea. Education is an investment in our country's future. So I mean--I--

SEN. LOTT: I would like to say that the gas tax increase going in the general treasury was a fundamentally dumb idea too, but, you know, we talked about--

MR. LEHRER: Sen. Lott, what will happen if this 4.3 tax is, is repealed? Will that automatically go out and reduce the price of gasoline by that at the pump?

SEN. LOTT: I don't think it's necessarily automatic, but there's no question that retailers are not going to, you know, refuse to take action when they see the Congress actually bolts to reduce a repeal that 4.3 cent gasoline tax, it will come down, and it does provide some relief to people. They may say in Washington, oh, it won't provide much help, but a person that has to drive long distances in North Dakota or Mississippi to get to work, you know, fifty or seventy-five dollars a year does make a difference.

SEN. DORGAN: But I think that's a key point. The point is they can reduce the gas tax tomorrow morning at 9 o'clock in the morning and there's no guarantee at all that the large oil companies are going to pass that through to the consumer. In fact, the--you know, the folks that drive up to the gas pumps and pump gas, I'd like to say to them if you're going to reduce the gas tax, let's guarantee it goes in the right pocket. We've got small pockets and big pockets in this country. Let's make sure this benefits the drivers.

MR. LEHRER: How would you do that? How would you do that?

SEN. DORGAN: Well, they've done it in their piece of legislation. They've put a sense of the Congress resolution. Why did they do that? Because they can't provide the guarantee that this is going to go anywhere other than the pockets of the big oil industry.

MR. LEHRER: Sen. Lott.

SEN. DORGAN: So I'm going to offer an amendment on it, by the way--

SEN. LOTT: Well, one thing will be for sure, that we will have instead of 18.6 cents a gallon or whatever it is federal taxes, we'll only have 14 cents. I do think we should have an investigation by the Justice Department and by Congress why we had this big jump up in prices. But while we're finding out why we had the big jump, we can at least provide relief to working Americans by giving them this 4.3 cent federal tax back. It will get to the people, and the price will come down as a result of it.

MR. LEHRER: What about Sen. Dorgan's point, Sen. Lott, that there's no connection between this 20 cent hike and the 4.3 cent tax?

SEN. LOTT: Well, there's no immediate connection, but there's no question that that tax is on there and we can provide some immediate relief to the workers of America that are having to drive to work by rolling back a 4.3 cent gasoline tax which we should never have passed in the first place.

MR. LEHRER: All right. Let's go to the politics. Sen. Dorgan said, Sen. Lott, that all this is, is the Presidential campaign being played out on the Senate floor. Is that--is he right?

SEN. LOTT: [laughing] Politics in the Senate? I mean, look at what's going on. We made an offer this afternoon to have a straight vote on the gasoline tax and a straight vote on the minimum wage tax and a vote on what is known as the Team Act. It allows for employer/employee communications and working together in the work place, and they rejected that. They've been saying they're worried about the working Americans when we gave them a chance to get a vote on repealing the gasoline tax and a minimum wage vote. They rejected it because the labor bosses don't want employees and employers to be able to work together.

MR. LEHRER: Sen. Dorgan.

SEN. DORGAN: Well, with all due respect, they control the floor of the Senate these days, and they couldn't organize a two-float parade. The fact is, uh, we can easily deal with these issues one by one as you implied with the previous question, bring it up for a vote and see what happens.

SEN. LOTT: Let me tell you--

SEN. DORGAN: But, instead, we're involved in this convoluted procedure to try to prevent things from coming to the--

MR. LEHRER: Sen. Dorgan--

SEN. DORGAN: --Senate floor.

MR. LEHRER: But Sen. Dorgan, aren't you Democrats playing the same game by, by adding minimum wage to everything in order to force that vote?

SEN. DORGAN: Yes, but we wouldn't do that at all if they'd simply give us an opportunity to offer them at any other time. We're simply saying to them, give us an opportunity to offer the things we think are important, and we'll back off any amendments to anything.

MR. LEHRER: All right. Sen. Lott, why won't you all do that?

SEN. LOTT: They want to run the Senate. They are in the minority. We are in the majority. Let me tell you what would happen. We would get a straight vote on the minimum wage, which would more than likely pass, a straight vote on repealing the gasoline tax, which will probably pass, and then when we got to the one allowing employer-employee relations to, to exist, they would filibuster it. They would filibuster it and block a direct vote on the issue so- -and tell me that's not politics.

MR. LEHRER: Sen. Dorgan, is that politics? Would you do that, first of all, and if you would do it, is it politics?

SEN. DORGAN: Well, he knows a lot about filibusters because his party spent the better part of a decade filibustering in the Senate, so it's not--it's not exactly a new device, but our point is this. Our point, we don't want the Senate to, to collapse in bickering. We want to advance public policies that we think are good for this country. It's not good public policy to say let's cut the gas tax and pay for it by cutting our kids' education. That's not good policy, so let's take that to the floor and have a vote on it--

SEN. LOTT: That's not in our proposal.

SEN. DORGAN: --if that's what's being offered.

SEN. LOTT: That's not in our proposal.

SEN. DORGAN: Well, it's what the Majority Leader of the House proposed, and it doesn't make any sense.

MR. LEHRER: Well, starting with you, Sen. Dorgan, are you too concerned about what this looks like to the average voter out there? You've got a situation where you just said, both of you agree, that when minimum wage comes to a vote, it's going to pass, when repealing the gas tax comes to a vote, it's going to pass, and each in your own way are forbidding that from happening.

SEN. DORGAN: Well, look, I don't want to prevent either from happening. The dilemma we have, as you know, for the first time in history the Majority Leader of the Senate is running for President against an incumbent President, and the floor of the Senate looks like a political convention these days, and you know, I'm not suggesting that the political system shouldn't have some politics in it, but the American people expect a lot better of us. They want us to solve problems for this country.

MR. LEHRER: Are you saying, Sen. Dorgan, that if Sen. Dole were not the Republican nominee for President you'd already had your up or down vote on minimum wage?

SEN. DORGAN: Absolutely.

MR. LEHRER: And you would--and the Democrats--

SEN. LOTT: No, they wouldn't have.

MR. LEHRER: Sen. Lott.

SEN. LOTT: No, they wouldn't have. Absolutely not.

SEN. DORGAN: We wouldn't have the gas tax proposal on the floor.

SEN. LOTT: There would be others of us that would block the way they're doing this. What they're doing--you talk about politics-- this whole thing, both in opposing the employer-employee relationship and also pushing for minimum wage is a payoff for 35 million dollars by labor unions into Democratic campaigns. That's what that's all about. Now, having said that, I do think the best thing for us to do in the Senate is try to work together as we have earlier this year on telecommunications reform, the Farm Bill, on immigration reform. When we come together, we don't get everything we want, but we get results to the American people.

MR. LEHRER: Sen. Lott, what about--what is your answer to the question I just answered--just asked Sen. Dorgan about what this looks like to voters? Here are two clean issues, yes or no, and for some reason you all won't, won't do it.

SEN. LOTT: We offered the Democrats the opportunity to have clear votes on those issues today, and they objected to it. We're going to try again on Wednesday.

MR. LEHRER: What I mean is one at a time, not altogether, in two or three--

SEN. LOTT: We offered for a clean, straight vote on minimum wage, and a vote on the repeal of the gas tax, coupled with a Team Act, but no reason why we have to couple the Team Act because the Democrats will filibuster it, drag out the debate. We won't be able to get a vote--

SEN. DORGAN: And I think you just heard the answer. The fact is they didn't offer clean votes on two things--

SEN. LOTT: We offered a vote, a clean vote on what you said you wanted, minimum wage.

SEN. DORGAN: What we should have in the Senate is a set of public issues that come to the Senate, we debate them, and then we cast a vote, and the winning side wins. The American people are treated to a spectacle of bickering about a whole lot of things that are not at the top of their list for what we need to do in this country for its future.

MR. LEHRER: Sen. Lott, you said at the very beginning that Sen. Dole was going to come up with a new proposal tomorrow and break this. What is that going to be, sir?

SEN. LOTT: Well, basically that we would have as a base bill the gas tax bill and we would have a clean vote on the minimum wage, a clean vote on the employer-employee--

MR. LEHRER: One at a time? One at a time?

SEN. LOTT: One at a time. One at a time. And then if they both pass or one passes and the other one doesn't, that would be added to the base bill. The gas tax repeal would go to final passage, and that would be it.

MR. LEHRER: You'll buy that, Sen. Dorgan?

SEN. DORGAN: Well, this is kind of make up your own rules as you go game. I'm not sure they know what they're going to bring to the floor tomorrow.

SEN. LOTT: I'm telling you--

SEN. DORGAN: They didn't know what they were going to bring today but we'll see. We're willing to be reasonable. Anything they want to do that gives us an opportunity to advance good public policy we're for that.

SEN. LOTT: I've got the proposal right here, I have put it in the hand of Sen. Kennedy, that would give straight, clean votes on those three issues, and all they have to do is say yes, just say yes, we can deal with these issues, and move on to other issues.

MR. LEHRER: Are you going to say yes, Sen. Dorgan?

SEN. LOTT: Well, you know, we've seen what they've written before that doesn't turn out quite the way we've written it--

MR. LEHRER: Okay.

SEN. LOTT: But I hope this gets resolved tomorrow. If they give clean votes on all these issues, I think that we'll resolve them and we'll have the votes.

MR. LEHRER: Well, we've got to say goodbye. Thank you both very much. We'll see what happens tomorrow. UPDATE - AIRWAVES FOR SALE

MR. LEHRER: Now an auction update from the world of telecommunications. It begins with an explanation of that auction being held by the Federal Communications Commission. The explanation was done last year by our economics correspondent Paul Solman of WGBH-Boston.

PAUL SOLMAN: For most of us, a big-time auction is basically a spectator sport--not much chance we're buying this Claude Monet painting, for instance, or, for that matter, selling it. But in Washington on December 5th, they began auctioning off something of ours, something you might not have known we had, something with enormous value, as it happens.

SPOKESMAN: Is everybody ready?

MR. SOLMAN: The right to use our airwaves.

SPOKESMAN: Let the auctions begin.

MR. SOLMAN: Now the government used to give these rights away on an exclusive basis to the radio and TV frequencies in different areas of the country, for example. And even as much lower frequencies began to be used, the so-called cellular telephone, the government was still giving away our airwaves by lottery. MIT economist Jerry Hausman thought that was sort of foolish.

JERRY HAUSMAN, Economist: They did the cellular lottery for Cape Cod, a dentist won sold it a week later for $40 million. Now, I've never really thought the dentists are the truly needy in this country, and so it's much better for taxpayers to get the money than the truly needy dentist who won the Cape Cod cellular franchise.

MR. SOLMAN: This is actually going to make a difference to the two of us as taxpayers?

JERRY HAUSMAN: Yes. In fact, it's going to lower the deficit. The government's going to get the money, and let's say it's twenty to forty billion dollars, that's real money even in Washington nowadays.

MR. SOLMAN: And, remember, it's your real money and mine. Even Hausman's low estimate, $20 billion, would work out to about $200 per American household for the PCS licenses. Okay. Time out for a brief moment of science here on the NewsHour. This some of you may recall from physics class is the electromagnetic spectrum, cosmic rays up here at the highest frequencies and shortest wave lengths down through X-rays, visible light, that's those colors you see, radar, TV, that's about there, radio, and down here at the lowest frequencies and longest wave lengths, cellular telephone rightabout there maybe, and now personal communications services, or PCS, down even lower. Now, let's cut through the actual science part of this because the business person simply needs to know that way down in the PCS band you need to put up more transmitters to give the phones a reasonable range. And that costs money. But the payoff could be tremendous, according to Reed Hundt, chairman of the Federal Communications Commission, which is running the PCS auction.

REED HUNDT, Chairman, FCC: We will see about 1 percent added to the Gross National Product of this country through the development of a mobile communications industry, about 300,000 new jobs in mobile communications alone, and another 700,000 jobs that are jump-started into being because of the global communications business.

MR. SOLMAN: In short, this could be a boom industry, and at a pre-auction press conference featuring, by the way, not one but two FCC officials who bore a startling resemblance to the Vice President, we were given a sampling of the world beyond cellular, so-called personal communications services, or PCS, featuring Dick Tracy wrist phones, wireless computers, and the latest in mobile phones made by Motorola.

UNIDENTIFIED WOMAN: It's a handset that you can use to walk through the streets of Washington, D.C., and communicate.

MR. SOLMAN: So I can just make my little calls here -- this is just like a cellular phone?

UNIDENTIFIED WOMAN: Sure, but it has total quality which is comparable to your wire line service that we're accustomed to using in our offices, except for you'll have that capability walking through the streets.

MR. SOLMAN: Because this is digital?

UNIDENTIFIED WOMAN: Yes, completely digital.

MR. SOLMAN: So bottom line, how much is a license for PCS worth, considering there will be two licenses per region? Well, consider the current value of the more powerful cellular band, where there are also two licenses per region.

JERRY HAUSMAN: The way that the world has typically done it, it's all -- it's called a "per pop" basis.

MR. SOLMAN: Per pop?

JERRY HAUSMAN: It's per population. So the prices vary anywhere between 95 dollars if you go into the South and Alabama per pop, and if you look at New York or San Francisco or Los Angeles, the value is probably about $300 or even more per pop.

MR. SOLMAN: That's per head, per person.

JERRY HAUSMAN: Per person.

MR. SOLMAN: In other words, say a billion dollars for a cellular license in San Francisco to a half billion for LA, maybe three billion for New York. Moreover, this business has been growing at a mouthwatering 35 to 40 percent a year. Add in the greater clarity and privacy of a digital signal, and you begin to see why PCS is going like gangbusters wherever it's already available, like England. If they'd had PCS sooner, those sizzling cellular calls of the chatty royals wouldn't have been picked up by nosey scanners. Barely a year old in England, PCS is already getting major use and has been signing up 25 percent of all new mobile phone customers. Hong Kong has four competing PCS companies, and they're all growing, and Australia has decided to ditch cellular altogether in favor of PCS. But PCS also has certain disadvantages. It requires more transmitters, more money, to buy out everyone from police and fire departments to ambulance and oil companies who currently have rights to this part of the spectrum. And, remember, cellular has a big head start. So what are the new PCS licenses going to go for per member of the population?

MR. SOLMAN: What's the range you can get in LA, for example?

JERRY HAUSMAN: You could get a range of between let's say $25 and $125.

MR. SOLMAN: That's a heck of a range for an auction.

JERRY HAUSMAN: Yes.

MR. SOLMAN: A heck of a range and for the companies involved a heck of a high-stakes game.

MR. LEHRER: And in the end, hundreds of large and small companies got involved in the FCC auction. Paul is with us now for a further update.

PAUL SOLMAN: Well, to tell us what's happened to the FCC auction we're joined by David Roddy. He's the chief telecommunications economist with the Deloitte and Touche Consulting Group in Atlanta, Georgia. Mr. Roddy, thanks for joining us.

DAVID RODDY, Deloitte & Touche Consulting Group: [Atlanta] Good evening.

MR. SOLMAN: Latest phase of the FCC auction concluded yesterday. What happened?

MR. RODDY: Basically, the FCC has finished auctioning off the third PCS license. Now PCS means Personal Communications Services. It's basically an enhanced cellular telephone system.

MR. SOLMAN: Now, that's that little thing that I was using there back in December--that that woman was showing me, right? Looks like a cellular phone but it's even smaller and supposedly clearer.

MR. RODDY: That's exactly correct. And your signal will be dropped less. It'll be better clarity, and you'll be able to eventually have a lot more fancy services on the network. But the FCC has finished up the third auction which was designed for small entrepreneurs, so that makes five telephone companies in each major city who are offering wireless service to the public. Over the next six to twelve months they should be on-line.

MR. SOLMAN: What was different about this auction, or this phase of the auction from the auction that we covered originally back whatever year and a half ago, whenever it was?

MR. RODDY: Yeah. A year ago in March there, they finished the A and B block, which was basically for large companies, AT&T and Sprint, and some of the cable companies and the regional Bell companies bought the licenses there.

MR. SOLMAN: Same kind of licenses, though? I mean--

MR. RODDY: Exactly the same.

MR. SOLMAN: So what's the difference this time?

MR. RODDY: In this case, the FCC, umm, following Congress's mandate tried to get small companies, women-owned companies and minority-owned companies involved.

MR. SOLMAN: And that was the whole point of this. That's right. I remember that.

MR. RODDY: That's right. And the Supreme Court changed the affirmative action rules, so the FCC had then changed the rules to limit it just to small companies. Unfortunately--

MR. SOLMAN: Wait. You mean, you couldn't do minorities or women, you couldn't give them the special 25 percent break or something like that?

MR. RODDY: That was what the FCC's interpretation of the Supreme Court ruling, that's correct.

MR. SOLMAN: Okay. So then, so then the idea was okay, let's just do it for small companies, because at least they'll have a shot to go against the big companies?

MR. RODDY: That's right, but the difficulty is in order for them to compete against AT&T and Sprint and Bell Atlantic, NYNEX, and Air Touch, they had to have a lot of capital expenditures, a lot of advertising, a lot of customer care, so they needed financing, and so the FCC allowed a lot of big financial backers to help out these small owners. Some of those financial backers are from East Asia and some are from the United States.

MR. SOLMAN: So I read Sony and big Korean firms--

MR. RODDY: Yeah. All of the top--the top four winners of licenses accounted for seven of the ten billion dollars that was closed off on Monday, and you do have Korean backers who hope to sell equipment in the U.S.. And in my theory, you also have a link where the U.S. company eventually wants to practice wireless telephone service here but then go into East Asia where there's huge economic growth, there's no telephones, and there's a lot of people, great opportunity for a wireless telephone company.

MR. SOLMAN: How are the prices this time compared to the time we did it a year ago? I mean, we did that story a year ago.

MR. RODDY: True. The prices are double or triple what they paid a year ago.

MR. SOLMAN: Double or triple?

MR. RODDY: Yeah. What you have to keep in mind is they do have an easy payment plan in terms of paying only interest for the first six years and then they have to start paying back the principle. But they also got the 25 percent discount.

MR. SOLMAN: So is that the reason that the prices are so much higher?

MR. RODDY: Well, I think the reason is that over the last year or two years, people have discovered that one of the best industries to be in in the world is wireless telecommunications, particularly if you're going to do it on a global scale. The U.S. is growing at 40 percent per year, but the rest of the world in terms of wireless subscribers is growing at 70 to 80 percent per year.

MR. SOLMAN: But you're buying in the U.S. Why are foreigners buying in the U.S. if the rest of the world is growing so fast and we're not?

MR. RODDY: Well, basically, the idea is that they're going to get their feet wet here and then treat it as a small first step in a larger investment project, and almost consider it a lost leader, if you will, because I think the profit margins in the U.S. are eventually going to be pretty slim.

MR. SOLMAN: So this is--we're like a test market for the Europeans and the Japanese?

MR. RODDY: I think that's right. You run a couple of marathons first before you enter the Boston marathon and go for the real thing.

MR. SOLMAN: How is PCS technology, by the way, doing in terms-- compared to cellular? Because we've seen them--it was hard to distinguish quite what the difference was between them.

MR. RODDY: Well, basically, PCS technology is entirely digital and the sound quality in systems that I've tested is really quite good, and it's going to offer better clarity, better coverage, better, umm, capability to carry you through a tunnel or under a bridge and so forth.

MR. SOLMAN: So you don't get those cut-offs like when you get somebody calling you from a car phone and suddenly you can't hear 'em anymore?

MR. RODDY: That's exactly right. It's so frustrating because you feel you're paying by the minute and then you have to call 'em back or they have to call you back and so forth.

MR. SOLMAN: It's particularly frustrating if they call you up and then you can't hear them.

MR. RODDY: That's exactly right. I think that brings up another point though that consumers are going to be the big beneficiaries of this not only in terms of saving money on their taxes because the FCC has brought in the $20 billion but also with the five companies in every city, the two cellular and the three PCS, prices are going to drop pretty rapidly, and you're going to see a scheme where I have a flat rate plan so I don't have to pay by the minute in many areas.

MR. SOLMAN: But that brings up a question that I have. Who needs five wireless options in addition to the line that comes into your house? I mean, I, I frankly am already overwhelmed by the number of long distance companies that are constantly seeking my business and trying to take it from each other, and that's like three or so.

MR. RODDY: That, that's right. Well, that's the key to the FCC's program because their key word is competition, which says let everybody in and how many ever shoe stores will survive in a city let it be. And some people will definitely lose money, and some people will make a lot of money. But you definitely will see a lot more advertising. If you think you've seen a lot of television advertising of telephone services so far, you just wait until all these PCS guys get on line. That will be a big factor.

MR. SOLMAN: So what's life going to be like for the typical MacNeil-Lehrer--or the NewsHour viewer--sorry--five years from now say?

MR. RODDY: Well, I think you basically--if you choose to live that kind of a lifestyle, you'll always be able to make a phone call or receive a phone call. And you'll always--you'll never have to stay at home or stay at the office to wait for an important phone call. You won't be able to use that excuse anymore.

MR. SOLMAN: All right. Well, thank you very much for joining us, Mr. Roddy.

MR. RODDY: My pleasure.

MR. LEHRER: Still to come on the NewsHour with Jim Lehrer tonight the Bosnia War Crimes Trial and the governor of Hong Kong. FOCUS - RIGHTING WRONGS

MR. LEHRER: Now the opening day of the Bosnia War Crimes Trial in the Hague, Netherlands. Lindsay Hilsum of Independent Television News reports.

LINDSAY HILSUM, ITN: Dusko Tadic arrived to face an indictment cataloguing some of the worst horrors of the war in former Yugoslavia, allegedly committed in the early months of 1992. He's accused of mass murder, torture, and sexual assault. Tadic, a Serb, wasn't a soldier, but a cafe owner and traffic policeman. There's no jury at this tribunal but a panel of three judges. The most severe sentence they can hand down is life imprisonment.

SPOKESMAN: Please be seated.

MS. HILSUM: The intense media interest is not because Tadic is a unique figure but because he's alleged to have been part of a cruel plan, and he's a symbol of why this international tribunal was created.

GRANT NIEMANN, Prosecutor, War Crimes Tribunal: When an individual commits a crime, the state stands as the bastion of justice, but when the state commands the crime, only the community of nations can protect the individual. Otherwise, evil has no boundary.

MS. HILSUM: These images focused the world's attention on the camps at Omarska and Trinjapolje in Northern Bosnia. Here Muslims who were once friends of Dusko Tadic were among those imprisoned, tortured, and killed. The prosecution detailed the names of victims and the role Tadic, a karate black belt, allegedly played in one of the incidents.

GRANT NIEMANN: The man who appeared to be in charge was Tadic. Tadic didn't use any weapons, only his feet in a karate fashion. Salim Milosevic and Siyad Sevic and other prisoners were found dead in the same spot later that day.

MS. HILSUM: Tadic's lawyer cast down on the entire proceedings. He said the prosecution witnesses would be unreliable and they'd named the wrong man. Defense witnesses, who may run the risk of imprisonment themselves if they come to the Hague, will testify by video link from the Serb-controlled part of Bosnia. There was, said the lawyer, the danger of an unfair trial.

MICHAEL WLADIMIROFF, Defense Lawyer: If, as we maintain, it cannot be sufficiently proved and Dusko Tadic is innocent of these offenses, then the temptation to use the lack of clarity in the law to satisfy an international community hunger for a verdict or guilty must be resisted at all costs.

MS. HILSUM: But the prosecutors here in the Hague have a greater concern. The two most prominent Bosnian Serb leaders, Radovan Karadzic and General Ratko Mladic, have been indicted but remain free. The chief prosecutor, Justice Richard Goldstone, has repeatedly called for their arrest but no one, not even NATO's troops in Bosnia, has apprehended them. At Dayton, President Tudjman of Croatia and President Milosevic of Serbia pledged to cooperate with the tribunal, but they haven't, and the tribunal, itself, has stopped short of investigating these two leaders who may be implicated in war crimes. What's most striking about today's trial in the Hague is that the most infamous of those indicted or implicated are not here and may never be brought to justice. CONVERSATION - HONG KONG BLUES

MR. LEHRER: Finally tonight, a conversation with the governor of Hong Kong, the man in charge of moving Hong Kong from British to Chinese control. Elizabeth Farnsworth has the story.

ELIZABETH FARNSWORTH: Hong Kong is the last great jewel in England's imperial crown, a reminder of the days when the sun never set on the British empire. But on July 1, 1997, Hong Kong will be returned to China after 150 years as a British colony. That arrangement was sealed in 1984, when Britain and China signed an agreement which stipulated that Hong Kong would retain its capitalism, its rights, and its freedoms. China's promise was one country, two systems. British influence and way of life have pervaded Hong Kong since it became a colony in 1842. The most fashionable neighborhood was called Victoria's Peak and streets were named Percible, Landale, Keswick. The Royal Hong Kong Jockey Club was organized in 1844. The Chinese quickly joined in the excitement of betting on race horses, but they couldn't belong that the club until 1926. Since World War II, and especially in the last two decades, Hong Kong has changed dramatically as it evolved into an economic power house. It has the world's eighth largest trading economy with until a recent slump a 6 percent annual growth rate and an unemployment rate that until recently hovered at around 1 1/2 percent. Its Gross Domestic Product is one fifth that of all China. When Christopher Patten, a prominent British politician, became the last British governor of Hong Kong in 1992, he turned what could have been just a ceremonial post into a bully pulpit. From the beginning, Patten has pushed Hong Kong towards more democratic government, and he was repeatedly vilified by Beijing as a result. Shortly after taking office, he introduced a reform bill which gave the people of Hong Kong voting rights for the first time in a hundred and fifty years. Last September, voters chose Hong Kong's first fully elected legislative council. Pro democracy candidates won overwhelmingly, defeating the pro China party. Martin Lee is chairman of Hong Kong's Democratic Party.

MARTIN LEE, Chairman, Hong Kong Democratic Party: [September 1995] The people of Hong Kong are telling the whole world that they don't want a spineless government. They want legislators who will stand up for Hong Kong.

MS. FARNSWORTH: Then in March, China's hand-picked preparatory committee, an advisory group on the transition from British to Chinese rule, announced that the newly-elected council would be dismantled in 1997. It would be replaced with a provisional legislature appointed by the pro Chinese preparatory committee itself. Governor Patten, among others, sharply criticized that decision.

CHRISTOPHER PATTEN, Governor, Hong Kong: A legislature which people have just elected in such record numbers, to start talking about dismantling them frankly isn't a very good way of winning hearts and minds in Hong Kong, and I should have thought one very clear message yesterday was that people have to be concerned about hearts and minds in Hong Kong.

MS. FARNSWORTH: A few days later, a Chinese official turned up the heat. He said that civil servants in the future would have to pledge their allegiance to the appointed legislature or lose their jobs. Though he later softened his stance, the damage was done. People in Hong Kong have reacted to the Chinese government's actions with anger and fear. A week after the announcement that the legislative council would be removed, tens of thousands of people lined up to apply for a British overseas passport which allows residents of former British territories to travel without a visa to Britain and 18 other countries. A January opinion poll found that 43 percent of Hong Kong's citizens aged fifteen to twenty-four would rather emigrate than stay past 1997, and more than half of all residents oppose reunification with China. Faced with mounting criticism, the Beijing-appointed preparatory committee held what it billed as an airing of public views on Hong Kong's future government. Critics complained that no pro democracy politicians were invited to speak and the press was kept out. More than a thousand demonstrators took to the streets with signs calling China a rapist of democracy.

WOMAN ON STREET: They have to deal with people with different ideas. If they're not prepared to argue with people on contentious points like the setting up of provisional legislature, they must ask themselves why they avoid these questions.

MS. FARNSWORTH: In the midst of these tensions, Britain and the United States continue to deal with China as a dynamic new economic power, and Hong Kong, a crucial economic and trade link to China, has a direct stake in the current American debate over renewing Most Favored Nation status to the mainland. The United States is Hong Kong's largest overseas partner. Trade between the two now totals some $24 billion. If China is denied Most Favored Nation status or MFN, Hong Kong, soon to part of China, would be hurt. Without MFN, imports would be subject to punitive tariffs that could price them out of the U.S. market. Two issues are on the top of Governor Patten's agenda as he visits the United States this week. One will be to convince Congress not to deny or put conditions on China's MFN status. Today Patten met with Sen. Tom Daschle and tomorrow he'll talk to Majority Leader Bob Dole. The governor met with Vice President Gore at the White House this morning to discuss the MFN issue, as well as the future of Hong Kong once the British lion retreats.

MS. FARNSWORTH: Now, 420 days before Hong Kong reverts to Chinese sovereignty. We are joined by the territory's governor, Christopher Patten. Thank you for being with us.

CHRISTOPHER PATTEN, Governor, Hong Kong: I'm delighted to be here.

MS. FARNSWORTH: One of the reasons that you're here, as we've just mentioned, is to argue for Most Favored Nation status for Hong Kong and by extension China. Why?

GOVERNOR PATTEN: Well, because the next year is going to be a very sensitive and difficult one for Hong Kong, and I want to make it easier rather than more difficult. I'm not here arguing the case for China. I'm not arguing for China's human rights record or China's record on intellectual property. China will have to make the case for those things, if it can. What I'm saying is that it would be hugely damaging to us in Hong Kong if we were to lose--if China was to lose Most Favored Nation status. It would mean about a hundred thousand increase in our jobless figure. It would halve our growth rate, and that would make it much more difficult, I think, for us to sustain a free society and a successful society at this important moment in our history.

MS. FARNSWORTH: Some might see your quest as contradictory, to be arguing for Most Favored Nation status, which really is for China, since if you're arguing for Hong Kong, you're arguing for China at the same time as China is threatening to close the legislature that your policies made possible.

GOVERNOR PATTEN: Well, it's interesting that Martin Lee, who's the most successful and popular democratic leader in Hong Kong and a very brave man too was here making the same case in Washington a few weeks ago. Both os us feel passionately strongly that it's important to protect Hong Kong's human rights and the promises that were made by China among others for the development of democracy in Hong Kong, but we don't think that the best way of standing up for those and for those values is by hurting Hong Kong's living standards, by throwing people out of work, by depressing the amount of money that they've got in their pockets. I don't think that's the best way of proceeding. I don't like mixing up trade and human rights issues.

MS. FARNSWORTH: This committee that's overseeing the, the transition, they call it the preparatory committee, not only has spoken out about the provisional or about the legislative council, but also about other things that are happening right now. Could you tell us about that. They've made certain demands, have they not?

GOVERNOR PATTEN: It's an interesting example of Chinese behavior. They've made demands for cooperation. Now normally with people you actually request cooperation. It's a two-way street. Anyway, put that on one unfortunate side, and they've made a number of demands; some of them we're perfectly happy to accommodate. They do have to prepare for the government of the special administrative region, it'll be known after 1997, and there are things that we can do in good faith, providing with information, making it easier for them to hold their meetings and so on, but there are some things which are just not on. And they want us to actually assist in the establishment of this puppet legislature that they're talking about. We won't have anything to do with that. We're not going to do anything at all which undermines the credibility of the work of our freely elected legislative council, and I very much hope that they'll have second thoughts about winding that body up or trying to because if they do try to wind it up they're not going to snuff out democracy in Hong Kong. They're not going to do that for a moment but they will provoke some of the sort of political disturbance and turbulence which they say they dislike.

MS. FARNSWORTH: Do you think they're trying to consolidate their control now in these coming months before they take power, that's what's happening?

GOVERNOR PATTEN: I think there is an element of that. I think, to be honest, that they're nervous about taking responsibility for Hong Kong, despite all the promises that are being made to Hong Kong. If they were a bit more relaxed about Hong Kong, they'd learn that there's nothing to worry about. Hong Kong's an extremely moderate, reasonable, sensible place. We've got the beginnings of a political debate, political dialogue in Hong Kong, which is conducted in a very responsible way. Hong Kong is hugely successful partly because it's a free society. And I think Chinese officials have got to try to understand the relationship between Hong Kong's freedom and its prosperity and success.

MS. FARNSWORTH: Do you fear that they're reneging on the one country--one country-two systems promise?

GOVERNOR PATTEN: Well, it would be an appalling blow for Hong Kong and for the region were they to do so, and I think they understand the extent to which delivering on that promise is going to be regarded by the United States and by others as a sort of litmus test for the way they behave on the international stage. It's also, of course, the case that one country-two system was meant for Taiwan, as well as Hong Kong, so there's some sort of reed across. It has to be said there's a reed across from how they treat Taiwan to Hong Kong as well. But I hope they won't resile from those promises and any suggestion that they were doing so or any actual retreat from those promises would, I think, produce in due course a considerable response from the United Kingdom and from other countries as well, but let's hope that they learn over the next year to be a little less nervous about Hong Kong, to trust Hong Kong and to recognize that Hong Kong represents the future in Asia.

MS. FARNSWORTH: What can you do, what can the United Kingdom do if they do back off of this promise?

GOVERNOR PATTEN: Well, it's obviously unreasonable of me to make assumptions about their bad behavior in the future. I hope that they will behave as they've promised they will. What Britain can do would depend on how they broke their word and how substantial the breaches were, but Hong Kong's future is guaranteed in an international treaty lodged at the United Nations signed by Britain and China. It guarantees Hong Kong's well-being for 50 years after 1997. That means that Britain has to stay interested, has to hang in there, and will hang in there. We're not on the 30th of June next year going to wash our hands Pontius Pilate-like of Hong Kong and say, now let's try to get on with, with normal life. It's terribly important to us that we're seen to have wound up this last chapter in our empire story honorably and decently and competently, unlike almost every other colony. We haven't been in the position of being able to bring this one to independence. History dictated otherwise, but it's still an important job to make sure that it stays a free city.

MS. FARNSWORTH: Some Hong Kong business leaders--I believe including one who's been on your cabinet and who pushed for the legislative council and the elections have now begun to work with China more closely on the preparatory committee and are not standing up for the legislative council. Can you explain that? What's happening there?

GOVERNOR PATTEN: Well, I think there are some businessmen who've taken the view that the best way of getting on with China is to avoid a row at all costs. And first of all, that's extremely short- sighted because the rule of law and the freedoms of Hong Kong are one of the reasons for Hong Kong's success and one of the reasons why they're so fabulously rich, and they haven't become rich in a Leninist society. They've become rich in a free society. Secondly, there's hardly one of these people who doesn't have a foreign passport in his back pocket, so they want the insurance of a free society for themselves but seem to think that it doesn't matter too much for the 5 1/2 million plus people in Hong Kong who don't have a foreign passport. Now I've got to think about everybody in Hong Kong, not just those with a lot of money in their bank accounts.

MS. FARNSWORTH: You will be hauling down the union jack, if not actually, then figuratively. You've had a very interesting political career. You've had many, many posts. Did you think this would be your rule as a historic?

GOVERNOR PATTEN: Well, when I was offered the job and offered some other jobs in domestic politics as well, I took the view that this was important, that it was interesting, that it was in some people's view impossible and that it would put me in a position where I could, if I could do the job competently, make a difference and help to secure a better future and a better life for 6 million people. I hope that we can end the story that we've written with some distinction with the people of Hong Kong. I hope that we can finish that story well. Hong Kong is a fantastic city, and I'm sure it'll continue successfully in the future.

MS. FARNSWORTH: Has it been more difficult than you anticipated?

GOVERNOR PATTEN: It hasn't been a push over, and it's not going to be a push over for the next year. What I know that we can count on is the increasing interest of the rest of the world because this is going to be one hell of a story next year, and I hope that it's a successful one.

MS. FARNSWORTH: What do you foresee, if you look ahead, what do you foresee for Hong Kong, first in five years and then in ten?

GOVERNOR PATTEN: Right. I'm pretty confident about Hong Kong, not mindlessly bullish about it, but I'm reasonably confident because I think that the things that Hong Kong represents, the values it represents, are what Asia and what the world are going to be like. I also think there's a tremendous resilience of-- in the people of Hong Kong. It's a refugee community. It has all the gumptions-- gumption and bravery and commitment that you'd expect, and I think that they'll go on making a very successful hag of things.

MS. FARNSWORTH: Well, thank you very much, Governor Patten, for being with us.

GOVERNOR PATTEN: Thank you very much. RECAP

MR. LEHRER: Again, the major stories of this Tuesday, Senate Democrats blocked a vote to repeal a 4.3 cent gasoline tax. They wanted to link the vote to raising the minimum wage, and in the Hague, the first trial of a Bosnian War Crimes Tribunal began. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.