The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight an Asia crisis overview from Walter Mondale, Winston Lord, Michael Armacost, and Paul Krugman; a government weatherman and the governor of Maine consider the storms in the Northeast and elsewhere; Stuart Taylor recounts today's Supreme Court argument over who owns Ellis Island; and Elizabeth Brackett tells the story of a new substitute for estrogen. It all follows our summary of the news this Monday.NEWS SUMMARY

JIM LEHRER: Wall Street rebounded today from Friday's 222 point drop. The Dow Jones Industrial Average closed up nearly 67 points at 7647.18. Trading was heavy, with 696 million shares traded. It followed another bad day in Asia's financial markets. Troubles there last week contributed to four straight losses for the Dow. The Hong Kong market lost another 9 percent today, following last week's 16 percent. Today's was blamed mostly on the collapse of the large Hong Kong financial institution with heavy holdings in Indonesia. U.S. Deputy Treasury Secretary Lawrence Summers arrived in Indonesia today to meet with President Suharto. They'll discuss measures to restore confidence in that economy. We'll have more on the Asian story right after this News Summary. There was another flare-up with Iraq today. Iraq announced it would again block weapons inspectors because the UN team was led by American Scott Ritter, a Marine captain during the Persian Gulf War. Iraq has repeatedly claimed he's a spy. There are nine Americans, five Britains, a Russian, and an Australian on the team. At the White House today President Clinton defended that make-up.

PRESIDENT CLINTON: There are a substantial number of Americans on this team that were picked by the person who's in charge of the inspection process because of their technical expertise. Everyone who goes there should be technically qualified, and the United States has not attempted to influence the composition of the people on the teams, but certainly Saddam Hussein shouldn't be able to pick and choose who does this work. That's for the United Nations to decide.

JIM LEHRER: The U.N. teams were created to help enforce the '91 Gulf War cease-fire which banned weapons of mass destruction. On the domestic front today Mr. Clinton announced a plan to crack down on drugs in U.S. prisons. It includes $200 million for prevention and treatment programs. A recent study said up to 80 percent of all prisoners are in jail for drug and alcohol-related crimes. And many continued to abuse them in prison. National Drug Control Policy Chief General Barry McCaffrey spoke to reporters at the White House.

GEN. BARRY McCAFFREY (Ret.), National Drug Policy Director: I think the big solution won't be the 197 million we've got on the table. You know, we've got this 1.6 million people behind bars. It's projected to go up by 25 percent in the next five years. Somehow we've got to take the billions that are available for prison construction and make sure that the states have the legal option to take that money and include drug treatment and testing as part of that block grant.

JIM LEHRER: A federal judge ordered Tyson Foods today to pay $6 million in fines and legal costs. The poultry company pleaded "guilty" last month to giving illegal gifts to then Agriculture Secretary Mike Espy. The Agriculture Department regulates food processors, including Tyson Foods. The Arkansas-based company was also sentenced to four years' probation. This was a bad weather day in the two northern corners of the United States. Winter storms still paralyzed much of the Northeast and Canada, and an ice storm moved into the Pacific Northwest. It knocked down power and closed roads. In Portland, Oregon, most schools and businesses were closed. In New England, thousands of homes and businesses remained without power after nearly a week of icy weather. Fifteen deaths in the United States have been blamed on the storm. In Canada, two million people were without electricity. Officials said there have been 15 weather-related deaths there. We'll have more on this story later in the program. There was an argument about Ellis Island at the Supreme Court today. Both New York and New Jersey claim ownership of the immigration landmark. Twelve million immigrants came to America through Ellis Island between 1892 and 1954. The Supreme Court is expected to rule by late June. We'll have more on this story later in the program. There were more reports of violence today in the North African country of Algeria. They said more than 100 people were killed last night near the capital, Algiers. There were two attacks, each one starting with a bomb. No one has claimed responsibility. Algeria has been troubled by unrest since 1992, after the military-backed government canceled elections. An Islamic group was expected to win. And that's it for the News Summary tonight. Now it's on to some perspective on the Asia crisis; a bad weather report; Ellis Island before the Supreme Court; and a new estrogen substitute. FOCUS - VIEW OF ASIA

JIM LEHRER: The turmoil in Asia. We begin with a report on today's developments by Steve Levinson of Independent Television News.

STEVE LEVINSON, ITN: The financial brain power of the West was deployed throughout Asia today. Michel Camdessus, head of the IMF, was on the stump in South Korea. His deputy, Stanley Fischer, was dispatched to reassure President Suharto of Indonesia. Larry Summers, America's deputy treasury secretary, was sent by Bill Clinton to Singapore, and Defense Secretary William Cohen's mission was to give the Malaysians a hug. Also on hand, crisis management veteran Henry Kissinger. It was damage limitation on a vast scale. The aim: to reassure the markets that Asia's problems of too much debt and fragile financial systems can be contained. To some extent, it worked. Wall Street was steady tonight, and London recouped half of its early losses. But deep-seated problems remain.

TREVOR GREETHAN, Merrill Lynch: People are taking this very, very seriously. And they do think it can impact places outside of Asia. Everybody's really worried that the crisis in Asia is worsening.

STEVE LEVINSON: As global trading grows increasingly difficult to isolate regional economic crises, in the last few days the collapse of a debt-ridden Indonesian taxi company, inappropriately named "Steady Safe," has had catastrophic international effects. Much of his borrowing came from Peregrine, a major Hong Kong investment bank. Peregrine had somehow lent a quarter of its capital to Steady Safe and today went into liquidation. Staff were left to pack up creep out of their building, unsuccessfully trying to avoid the cameras. The result: meltdown in Hong Kong's stock exchange, which dropped 9 percent amid fears of further financial failures. The long-term issue for Wall Street and other western markets is the extent to which American and European economies will slow in response to the problems in Asia. But that question cannot be answered until the Asian crisis is brought under control.

JIM LEHRER: Now, an overview. It comes from former Vice President Walter Mondale, who was U.S. Ambassador to Japan during President Clinton's first term; Winston Lord, who served in five administrations, most recently as Assistant Secretary of State for East Asian and Pacific Affairs; Michael Armacost, former ambassador to Japan and the Philippines, and former undersecretary of state, now president of the Brookings Institution; and Paul Krugman, an economist at MIT whose most recent book is entitled "Pop Internationalism." Vice President Mondale, President Clinton said today economic stability can be returned to these Asian nations if they are willing to take the steps to do it. Do you agree with that?

WALTER MONDALE: Yes. That's a big part of it. The collapse in Asia occurred because of some very deep systemic failures, particularly in their banking system, the failure to disclose clearly in times, so that these problems were contained. And in order to help Asia, the Asians must help themselves to reform, and basically restore confidence in those markets. That's basically what the IMF is doing. That's what these officers are doing during their trip throughout Asia. The United States has a deep stake in all of this. We have to be heavily involved, but fundamentally, it depends upon those nations and what they do.

JIM LEHRER: Mr. Krugman, do you agree, they have the power to fix it themselves?

PAUL KRUGMAN, MIT: Probably. That's if they have the political will. And, unfortunately, that doesn't depend only on the current leadership. What we're finding now is in places like Indonesia there's a certain crisis of legitimacy of the people who are currently in charge. After all, it was their mistakes, their responsibility, and in some cases their corruption.

JIM LEHRER: This was President Suharto and his family?

PAUL KRUGMAN: That's right. For example, that taxi company that had trouble had a family connection. Suharto's daughter was involved in the business. So it's not just a question of getting the leaders to do the right thing. It's also getting the people of the countries to do the right thing, getting them behind the leaders. And that's going to be a lot trickier.

JIM LEHRER: Now, Mr. Lord, on that issue alone, former Secretary of State Kissinger said the other day, and I think he repeated it today, and others have said the same thing, that you've got to be careful--if you push these countries too hard on reform, it could cause social and political unrest that could even be worse than the economic problem.What's your read on that?

WINSTON LORD, Former State Department Official: Well, I frankly think in their own self interest they have to be encouraged to take the kind of reforms that our two previous speakers have already mentioned. So there's--obviously, we have a huge stake out there, as Amb. Mondale has said, and I think our basic strategy is sound; namely, first looking to the countries themselves to reform their banking system, to have greater transparency, and to be more responsible, so as to restore confidence, then behind that, working with the IMF and other countries, to give them some temporary relief. We have a stake in this; we should be helping, but the countries have to take the first step and the international community, along with ourselves. So I think if they don't take these kind of steps, you're going to get instability. And I think there has to be a certain degree of encouragement and even pressure.

JIM LEHRER: Do you agree that pressure may work on--Mr. Armacost--do you think pressure form us and the IMF and the rest of the world, it's got to get these countries to do it themselves?

MICHAEL ARMACOST, Former State Department Official: A lot of the pressure's coming from the marketplace, and that's helpful. Certainly, if you've got external pressure, it's better to do it through an international organization, but in one way the biggest problem is in Japan, because they're the second biggest economy in the world, and in many ways it's their slow growth that makes it difficult for them to absorb exports from other countries in the region. And it also makes them more reliant on exports themselves to get out of the seven-year slump. So without the IMF involved, the question is whether or not the Japanese can step up to their own institution on other problems. And I think there's a constituency for that in Japan because, obviously, people want to grow faster. And Japanese growth would serve their own interests and serve the interests of the region and clearly our interest as well.

JIM LEHRER: But, meanwhile, you say they're not in a position to help Indonesia, Thailand, Malaysia, Hong Kong, and the others who are in trouble?

MICHAEL ARMACOST: They are contributing to the support for IMF programs, but in terms of their role in the region, the biggest contribution they could make would be by absorbing a larger portion of the exports of those countries. They've encouraged export-led growth and in the process incurred, I think, a certain obligation to help absorb those exports that other countries in Asia can now contribute.

JIM LEHRER: Amb. Mondale, do you think the Japanese are willing to do that, to play that hard--that strong--large a role?

WALTER MONDALE: Let me say I'm praying that they do. Japan is now in a recession, or a near recession. Her financial institutions are very fragile with all kinds of bad debts. Japan is not providing the markets for the region or for us, for that matter, as Mike Armacost just mentioned, and Japan's economy is larger than all the other Asian economies put together. One of the reasons that Mexico was able to get out of the deep crisis she was in was that she was able to export her products to a very prosperous and growing America. Japan has to provide that role now in Asia. And I know that we've been pressing her hard to put in place a much stronger stimulation package, to take steps to reassure the safety of their sound financial institutions, and to deregulate to provide more openness, so that we can get into her market more easily. I think this is also in Japan's distinct best interest, but this is a big question, and I hope that Japan will move and move quickly.

JIM LEHRER: Mr. Krugman, how do you see Japan's role and whether or not they--even if they have the will, do they have the ability to solve this and play that large a role?

PAUL KRUGMAN: Japan is a huge economy, very wealthy, doesn't have foreign debt. It's got a domestic economic problem, which they had been mysteriously unwilling to come to grips with, but they certainly have the resources to play this role. The question is whether they have the moral leadership to--the moral capital, if you like, to play the role. Since they haven't reformed themselves, they're not a very credible player in telling other countries to reform. In a way they've been through the Asian crisis, the stock market crash, the land market crash, you know, a number of years ago, and they've been sitting with the luxury of being a much wealthier, stronger economy. They've been sitting and really not responding to it for a long time. They are, I think, a supplier of money, but unfortunately other countries are going to have to be suppliers of leadership during this crisis.

JIM LEHRER: Now, why have they escaped the domino effect from these other countries thus far?

PAUL KRUGMAN: Mostly, they are very big. Again, you really have to think about just how huge their economy is--I think in dollar values about seven times as big as China. And they are also--well, everybody knows that they have the resources to bail out their own banks. Unlike South Korea or Indonesia, if the Japanese find themselves with a banking crisis, they actually do have the money, they do have the resources to deal with their own problems. And that means that people don't launch a run on Japanese banks the same way they will in Hong Kong, because you know that in the end the banks will be saved. As I say, they have the resources, but we've been waiting about six years for them to do something about themselves.

JIM LEHRER: Mr. Lord, speaking of political will, how do you read the political will in Thailand, in Indonesia, in South Korea to step up and do what they must do?

WINSTON LORD: Well, I think it's evolving. Thailand hesitated at first. They got a new government, and now they seem to be acting much more responsibly. The same with South Korea, where the new president, the coming president, flirted with rejecting IMF conditions and then retreated, or now is making all the right moves and all the right comments. And so I think in Thailand and South Korea they're clearly on a more positive path. Indonesia will have to see. President Suharto's budget of a few days ago sent the market reeling, but I gather the IMF deputy today said his talks were very constructive. Larry Summers and my successor, Stan Roth, will be meeting with Suharto tomorrow. And I think you're going to see announcements later this week by Indonesia that will be reassuring. So the market, as Mike Armacost has said, is the great discipline here. In addition, in terms of any risk of reaction to U.S. pressures we talked about before, the combination of the market, the fact that it's the IMF and other countries will spread that around, but we can't totally avoid that. We are the largest country; we have to show leadership; and I believe the risk of inaction is much greater than the risk of action.

JIM LEHRER: Mr. Armacost, starting with you, explain the U.S. stake in this, the chain reactions, and why this is so important to the United States, why Larry Summers was over there, why the President was on the phone to Suharto, why the United States is so much involved in this.

MICHAEL ARMACOST: Well, from a security standpoint, all the great powers' interests intersect there. It's the region in which we have our largest and most rapidly growing trade, or at least that was true until very recently. Our multinational companies have huge stakes that they've established through their direct investment in the region recently.

JIM LEHRER: Not only as customers, but they also have manufacturing plants and everything else over there.

MICHAEL ARMACOST: Absolutely. And of course, we are still involved in a residual way in a couple of Cold War problems that remain dangerous in Korea and Taiwan Straits. So we've got big national stakes riding on this, and of course, the implications in a global economy can't be stopped. Slow growth there--I mean, slower growth here--it means some pressure of a deflationary sort in some sectors of our economy certainly. It raises potential problems in the Treasury's market, though I think those have been exaggerated. Most importantly, it foreshadows a huge dramatic increase in our current account deficit. That means merchandise trade imbalance grows even more.

JIM LEHRER: Explain why.

MICHAEL ARMACOST: Because our economy's growing; they're reliant on the export sector.

JIM LEHRER: So--

MICHAEL ARMACOST: The wealth effects have meant that they've got weaker currencies; they've got stock markets in the doldrums; credit's tight; government budgets are austere. So they don't have demand at home, and so they'll export their way out of this crisis.

JIM LEHRER: And they sell their products at a cheaper price.

MICHAEL ARMACOST: We're the only country providing an engine for the world's economy, and Europe's picking up a little bit, but we're the primary target, and that's good for us, because we can use those products; they're cheaper; they check inflation; they lower our costs; but we know from the inability of the administration last fall to get fast track that it will bring some political challenges for us too. That's the--

WINSTON LORD: Jim, if I might intercede in that--

JIM LEHRER: Sure.

WINSTON LORD: --in terms of our stake here, as Mike has said, it's huge. Our exports have grown 50 percent since 1993, and 1/3 of that growth has been in Asia. Eleven million jobs depend on exports, one fifth of all manufacturing jobs. One third of our exports last year were to Asia. This is crucial in economic terms, plus the security dimensions that Mike mentioned, so we're not just doing a favor to our Asian friends. This hits Main Street as well as Wall Street, and it is very important to the average American interest, whether it's pension funds or investment in the stock market, or the overall economy and jobs and exports.

WALTER MONDALE: Could I make one point here?

JIM LEHRER: Sure.

WALTER MONDALE: As long as we're toting up this list of America's distinct stake in solving this problem. And that is if these problems get bad enough, it could trigger political and social collapse and revolution. We hope none of that will happen, but it's this sort of thing that can produce that. And that can produce political and security challenges that history has taught us in Asia can be very dangerous to the United States.

JIM LEHRER: Where are the most vulnerable spots?

WALTER MONDALE: I think you'd start right now in Indonesia, where there's always been a deep fissure in that society between the Chinese ethnics and the others.

JIM LEHRER: Because the Chinese are 3 percent of the population.

WALTER MONDALE: Right.

JIM LEHRER: But they own about 60/70 percent of the goods and--

WALTER MONDALE: Right. And there's been reports today of tensions of that kind beginning to arise, reports out of Singapore that they're afraid that there could be a spillover into Singapore. We hope that the Korean thing will go all right. Temporarily, it's encouraging, but you could--you know, they have a democracy now--but it has--it's not all that stable--established. I think they're going to be all right, but we shouldn't be testing these things. To the extent that we can solve these economic problems we're also contributing to the kind of basic political stability that is so important to us as well.

PAUL KRUGMAN: If I could say something here--

JIM LEHRER: Yes.

PAUL KRUGMAN: Only seven months ago, everyone was telling these countries how great they were. Only seven months ago they were on top of the world. Now we're suddenly saying to them, you're a mess, you have to change everything you do, you have to change all your way of doing business, everything that you were doing is wrong. They wouldn't be human if they weren't suffering a pretty bad psychological backlash. We've got to do something to try and get them through this.

JIM LEHRER: Mr. Krugman, that's the question I was going to ask you. Why is it that nobody saw this coming? This is being treated like a--you know, like a storm in the Pacific Northwest or in the Northeast today, rather than as something that people, economists as well as political people, saw coming.

PAUL KRUGMAN: Part of it was the Asians did invent a new kind of crisis, I think. This is really something--we didn't know--there are usual things that you look at for a crisis. You look at government budgets; you look at things that are basically on the books. And this turns out to be an off-the-books crisis. It's all the hidden liabilities of institutions that weren't exactly publicly guaranteed, that weren't exactly not publicly guaranteed.

JIM LEHRER: You're talking about like banks, brokerage firms--

PAUL KRUGMAN: Right. Finance companies, and all of them somehow or other run by the president's nephew. It's a lot of--it's a lot of--a culture in which the line between what is private and what is public was not well drawn, and we're not used to that. We weren't used to it. We didn't know how to read the statistics. We didn't have statistics. We weren't looking at the right things. The other thing is, look, a lot of people were--it's very hard to argue with success. These economies were doing so well for so long that someone who said, gosh, you know, I see some risks out there tended to be argued down, you know, just take a look at the place; take a look at all the construction. And so people were lulled into a false sense of security.

JIM LEHRER: Mr. Armacost, when this thing is--let's say that this thing is solved, that it doesn't get any worse than it is as we sit here tonight, is it ever going to be back to where it was? Are the tiger economies ever going to return?

MICHAEL ARMACOST: Well, I think one of the transitions that take place is away from reliance on the main banks to finance growths toward the equity markets. And the main bank system was one in which the decisive influences over the allocation of credit were made kind of behind the curtain. The bankers would talk with businessmen, politicians, bureaucrats, and sometimes less reputable elements of society, but those were confidential relationships. The equity markets come in and they in order to inspire confidence require disclosure, require transparent regulatory arrangements, and that's a different system. And I think part of getting out of this crisis requires movement on those fronts. These kind of structural reforms are part of the IMF packages, I believe, so they went to take place overnight. But if getting out of the crisis means solving some of the institutional weaknesses, then we'll be in a better position to do business there, because we're accustomed to doing business that's transparent.

JIM LEHRER: But you agree with Mr. Krugman that we told 'em it was great there as long as it was--everything was fine, but now in order for them to save themselves, they're going to have to change more than just a few minor items?

MICHAEL ARMACOST: Well, we've been involved for some year with the Japanese and trying to promote some structural adjustments. Both Fritz Mondale and I bear some scars for that. So this isn't quite a new thing, but it is true that they did the fundamentals well; we tend to assume growth was both self-sustaining and like could it be sustained for a long time. They've run into some problems. I think these are these financial instability problems that the company-- robust growth, rather than the harbinger that Asia's going to fall apart--but only time will tell.

JIM LEHRER: All right. And speaking of time, we have to go. Gentlemen, all four, thank you very much. FOCUS - WEATHERING THE STORM

JIM LEHRER: Still to come on the NewsHour tonight, bad weather, Ellis Island before the Supreme Court, and a substitute for estrogen. Kwame Holman begins the weather story.

KWAME HOLMAN: Hundreds of thousands of homes and businesses still are without power after the five-day ice storm that hit the Northeastern United States and Eastern Canada last week. The ice and snow blanketed Northern New York State, parts of Vermont, New Hampshire, and Maine, and the entire Eastern third of Canada.

SPOKESMAN: We have a major power outage. Most people don't have any means of heat, supplies, water.

KWAME HOLMAN: As many as twenty people died as a result of the weather, including two who were poisoned by carbon monoxide fumes from generators used for heating. That toll is in addition to the 10 deaths reported in southern states after massive flooding there caused by rain from this same storm system. Last night temperatures in the Northeast dipped below zero, hardening up to two inches of ice that covered virtually everything. On Saturday, President Clinton declared a state of emergency in a five-county area in Northern New York. National Guard troops went door to door delivering food, water, and fuel. And electric company crews are working 18-hour shifts.

SPOKESMAN: We're pretty tired, you know, so you've got to just set a good pace, be constant, you know. Ain't gonna do it in a day. A lot of damage.

KWAME HOLMAN: New York Governor George Pataki warned the effects of the crisis will be lasting.

GOV. GEORGE PATAKI, New York: It's going to be difficult, not just for a day or two or a week. It's going to be difficult for a period of weeks for the entire state, the entire country, putting our resources under it.

KWAME HOLMAN: In Maine, Governor Angus King, whose own home is without power, toured some of the shelters in his hard-hit state.

GOV. ANGUS KING, Maine: It's just great to see the neighbors reaching out to each other. That's what it's all about, and that's how we're going to get through this thing.

KWAME HOLMAN: Conditions are even worse north of the border in Canada, where the ice storm was the worst in recorded history. A week-long power outage has affected 3 million Canadians. More than 11,000 Canadian troops are working with utility crews and emergency workers to clear roads and restore power. Nearly a million people can expect to be without power for another week. Schools and most businesses in Montreal are closed today. And more potential bad news: Forecasters say another significant snowstorm in Central New York and Southern New England is a strong possibility toward the end of the week.

JIM LEHRER: And to Elizabeth Farnsworth in San Francisco.

ELIZABETH FARNSWORTH: And to tell us more, we turn to Gov. Angus King of Maine and to Louis Uccellini, director of the Office of Meteorology at the National Weather Service. Governor King, bring us up to date. What's the situation in Maine as of this evening?

GOV. ANGUS KING, Maine: Well, we're finally starting to make some real progress. The problem last week was that every time we'd fix a line it would go down again because the ice storm continued; it just wouldn't quit. Right now tonight I think we've got between three and three hundred and fifty thousand people still without power. But that's half of what it was on Saturday. We've had a couple of sunny days. That's the good news. If we catch a break from the weather the next few days, I think we're going to be out of the woods. But right now tonight I'm in a shelter here in Augusta. We've still got, as I say, about 350,000 people without electricity, and in most cases, that means without heat.

ELIZABETH FARNSWORTH: Governor, how are people coping, beginning with you? How have you coped, since your home hasn't had electricity?

GOV. ANGUS KING: Well, the good part of this thing, if there's any good to come out of this, they say people are at their best in bad circumstances, and the good news is that people in Maine are being fantastic reaching out to one another. My house lost power starting Friday morning. We just got it back this morning at about 5 in the morning. We've been bunking in with some neighbors, who had electricity. We've had eleven people, grandparents, five kids, and the trooper on the living room sofa. So, you know, that's what people are doing. It's Yankee ingenuity, and we're getting through it. But I've got to tell you that this is--we're now going into the fifth or sixth day where people are either with neighbors or in shelters. And the novelty is wearing off, and people's patience is wearing thin. But the good humor has been terrific. We had a crew of linemen from out of state go to dinner last night in Portland. They got a standing ovation from the people in the restaurant. So there's a lot of good things happening as well.

ELIZABETH FARNSWORTH: Besides that crew, what's being done to restore power to people quickly? GOV. ANGUS KING: Well, we've got an army up here. Both of our major utilities have people from as far away as Baltimore. I'm sure those guys from Baltimore are wondering what they've gotten in to tonight, but we've got people from Pennsylvania, Baltimore, New Jersey, Massachusetts. We've got roughly five times the normal crews of people with tree-trimming operations, bucket trucks, diggers. And the problem that we're now having is that we've done most of the--the utilities have done the big stuff, the major lines. And now it's sort of hand-to-hand combat, street by street, putting people back on line. I was in a place here in Augusta. It looked like a war zone, with the trees down, the wires down, and people were--there were three and four breaks in a mile. And that's where the time takes.

ELIZABETH FARNSWORTH: Mr. Uccellini, what caused this ice storm?

LOUIS UCCELLINI, National Weather Service: Well, this is an ice storm brought on by almost very unusual warm weather that was able to get up and over a very shallow layer of cold air as far North as Southeast Canada. When you have those conditions where the cold air is only several hundred feet deep, or a thousand feet deep, and you bring air from the tropics, literally from the tropics, up and over that, you bring the potential for very heavy rains that fall into this cold layer and freeze almost instantly upon hitting the wires and roads and trees.

ELIZABETH FARNSWORTH: There seem to be a lot of extremes right now of weather in the United States. It's been raining like crazy here in California, and there are ice storms in Oregon, as Kwame reported, and there's flooding in the Southeast. Does anything connect all of this together?

LOUIS UCCELLINI: Well, the type of weather patterns we're experiencing in the Southeast U.S.., up along the East coast of the U.S., and along the West Coast, itself, is certainly consistent with the El Nino pattern that was forecast by the climate predictions center of the National Weather Service months ago.

ELIZABETH FARNSWORTH: And remind us about El Nino.

LOUIS UCCELLINI: Well, El Nino represents the warm pool, which develops in the Pacific Ocean along the equator and shifts eastward in such a way that it can fuel the air streams which create the weather for the United States. When this pattern gets locked in as long as it has, the weather systems can be significantly--produce a significant amount of rainfall in the Southeast, for example, can produce very heavy storms along the West Coast of the United States, and under certain circumstances can produce significant ice and snowstorms along the East Coast, up into the New England states, as we saw last weekend.

ELIZABETH FARNSWORTH: Can you just explain that more specifically. How can warm currents in the Pacific cause ice in the Northeast?

LOUIS UCCELLINI: Well, the warm ocean in the Pacific actually influences the air currents over the Pacific Ocean. Specifically, it influences the jet streams. It amplifies them, creates instabilities within the jet streams. And these flow patterns then translate over the United States in such a way to create severe storms over the Southeast and up along the East Coast. We also can get series of storms developing that are fueled by the warm waters in the Pacific that impact directly along the West Coast. And we, in fact, are starting to see some of these storms line up tonight.

ELIZABETH FARNSWORTH: Governor King, what are you telling people who have no power to do? Are you telling them to go to shelters?

GOV. ANGUS KING: Well, the basic message that I've been giving for the last four days is that this has to be a neighbor-to-neighbor operation. We've got the shelters. As I think I mentioned, we have 135 of them statewide. But the issue has to be to check on your neighbors, particularly people who are disabled, who are elderly, to make sure they're okay, to make sure they're taken care of, and bring them to your house, or get them to a shelter. That's the message because it's getting cold. The good news is the last couple of days we've had sunshine, and that's helped. The bad news is the temperature has dropped, and it can be dangerous when it's down in the single digits, which it is--it's going to be tonight--if people are without--without heat. That's really the issue, and that's the message that we've been giving to people all weekend. So far, we've been lucky. I think it's a miracle that we've had more than 1/2 million people without heat in a Maine winter, and we've had two deaths from asphyxiation from people running a generator in their basement. I'm keeping my fingers crossed and knocking on wood that that pattern continues.

ELIZABETH FARNSWORTH: But that is the danger, right, that if you use some kind of heaters inside, you could have carbon monoxide poisoning?

GOV. ANGUS KING: Yes. And there's been a tremendous outpouring of information. A lot of our radio and TV stations have essentially gone on 24-hour information, people calling in, helping each other, people--I was on a help line the other day--people calling in, saying, can I bring my gas grill inside--absolutely not--that kind of thing. If you're going to use a kerosene heater, be sure it's vented. People are learning where the cutoff is for their water in their basement, so when they do leave their house, they turn off the main valve and save some of the pipes. So all of those kinds of things are happening, and I've got to emphasize that what has really been positive about this is the way people have reached out to each other. I was at a shelter yesterday. Kids were bringing in blankets for the elderly. And it's just been a great experience. Along with what the meteorologist said, we have an event in New England that's never occurred in my experience. It was warmer at the top of Mount Washington on Saturday than at the bottom. And that's never happened. I mean, Mount Washington for New Englanders is the definition of cold. And for it to be warmer at the top than at the bottom you know strange things are happening.

ELIZABETH FARNSWORTH: And, Mr. Uccellini, back to you, just very briefly, you said that more is expected. Tell us about that.

LOUIS UCCELLINI: Well, we have a weather pattern developing such that even tonight there might be some light precipitation across the New England area that could produce some light freezing rain or some snow. It wouldn't be as heavy as last week's, but what we're really worried about for the New England area is what could be happening by the end of this week. The National Weather Service's Hydro Dynamic Prediction Center is predicting the development of a major coastal storm by Wednesday and Thursday that could be moving up into the New England area. So they certainly have to be concerned with the weather patterns for this weekend. And in the West we also have a series of storms that are impinging upon the West Coast from California up towards Oregon and Washington State that could produce very heavy rains in Northern California, and there's a potential for some more snow in Oregon and Southern Washington State tonight, into tomorrow morning. So both coasts are under the gun with this weather pattern, and even in the Southeast, as that East Coast storm develops. We could be seeing more heavy rains in the Southeast.

ELIZABETH FARNSWORTH: Okay. Governor King and Louis Uccellini, thank you very much for being with us. FOCUS - COURT WATCH

JIM LEHRER: Now the Ellis Island argument and to Margaret Warner.

MARGARET WARNER: Seventeen million immigrants passed through Ellis Island between 1892 and 1954. But was it New York or New Jersey beneath their feet? The argument over who has sovereignty over Ellis Island appeared to have been settled more than 160 years ago by an 1834 compact between the two states. Though Ellis Island was clearly on new Jersey's side of New York Harbor, the compact gave New York the three-acre island and gave New Jersey the waters around it. Then during the major waves of immigration in the late 1800's and early 1900's, the island was enlarged by successive landfills from its original 3.3 acres to 11--16--20--and by 1936--27 1/2 acres. New Jersey says it should have sovereignty over the new 24 acres created by landfill. New York disagrees. In 1994, the Supreme Court appointed a "special master" to take evidence in the case and recommend a solution. In the end, the special master, former Columbia University Law Professor Paul Verkuil sided mostly with New Jersey. He recommended New York keep five acres--the original three acres plus two more. The island's main tourist attraction, the original processing center, which is now a museum, sits on that land. Verkuil recommended that New Jersey get the remaining 22 1/2 acres, which now hold abandoned dormitories, hospitals, and administration buildings. Neither state was happy with his proposal. New Jersey wants a bigger share. New York wants it all.

SPOKESPERSON: Based on the history of this island and everybody, after here, they went into New York-- it should be New York.

SPOKESPERSON: Obviously it belongs to Jersey. New York is always trying to take everything away from us.

MARGARET WARNER: Today, lawyers for New York and New Jersey took their arguments to the Supreme Court. The states's attorneys general spoke to reporters afterwards.

PETER VERNIERO, Attorney General, New Jersey: New Jersey is only looking to share custody of the island. And we don't think sharing is such an ugly concept.

DENNIS VACCO, Attorney General, New York: But we think that sharing is contrary to the original spirit and intent of the agreement to begin with. It wasn't--the agreement in 1834 wasn't designed for sharing.

MARGARET WARNER: The attorneys were reminded that the two states do seem to share a football team: The New York Giants, whose home stadium is now in New Jersey.

REPORTER: Is it the New Jersey Giants or the New York Giants?

PETER VERNIERO: That's an easy one.

DENNIS VACCO: New York.

PETER VERNIER: New Jersey.

MARGARET WARNER: Now, for more on what happened today, we're joined by NewsHour regular Stuart Taylor, senior writer with National Journal and contributing editor of Newsweek. Stuart, why are these two states arguing over this? I mean, doesn't the federal government actually own and operate the museum on the land there?

STUART TAYLOR, National Journal: Yes, it exerts total control. New York does collect about $500,000 a year in tax revenues from concession stands that are in the historic part, but this dispute, as the deputy assistant solicitor general suggested for the United States and the argument today has little to do with practical consequences and a lot to do with perhaps symbolism, bragging rights over this historic immigration gateway. It has a lot to do with the territorial imperative. In fact, the New York Times gave an interesting example--an editorial which we were reminded of courtesy of the Washington Post this morning--in which the New York Times said, "New Jersey's attempt to snatch Ellis Island is unfriendly, unbecoming, un-American, untoward, unhelpful, unprincipled, unseemly, unwarranted, and underhanded," to which a New Jerseyian might add "and right."

MARGARET WARNER: So taxpayers might ask, why is the Supreme Court taking its time with this?

STUART TAYLOR: In fact, the Clinton administration, the Justice Department said don't waste your time on this; it's a theoretical abstract controversy; it's not at all clear that any of the tax revenues would go to New Jersey even if it owns the land it says it owns. And there are some future development possibilities that are very speculative. But the court took it anyway. And I suppose it's because the United States Constitution prescribes as the original jurisdiction of the Supreme Court a very few types of controversy which the framers considered very important. And a suit by one state against another is one of those. It doesn't go to a lower court; it goes straight to the Supreme Court. And I think the Supreme Court out of respect for the sovereignty of the states bends over to hear these cases unless it thinks they're really silly and frivolous.

MARGARET WARNER: So what did the lawyers or lawyer for New Jersey say today, argue today?

STUART TAYLOR: Joseph Jianati, an assistant attorney general from New Jersey who went first, basically said the special master professor Verkuil was right in holding an 1834 compact--an agreement between New York and New Jersey with many clauses--which was approved by Congress--gives New York Ellis Island, itself, as a matter of sovereign jurisdiction. Remember, the United States has owned it, the federal government, all along, so this is a matter of governing authority, which may not mean much when it's the United States that own it, but also gives the surrounding waters and the land under them New Jersey. This was the fundamental finding of the special master that was ruling that all of the filled area, which is most of Ellis Island now, and is--is--used to be submerged in Jersey, and, therefore, it still belongs to New Jersey in its sovereign sense; however, there's a problem with that argument, which is another clause of the provision slices it very fine. It says New Jersey owns the surrounding waters and land, but New York has jurisdiction over them. And Mr. Jianati, the New Jersey lawyer, argued that all that means is jurisdiction over navigation and ships and boats and the like, and if you fill the land in, then there's no navigation, no ships, no boats, it reverts-- it's all New Jersey, except for it's really the United States's.

MARGARET WARNER: And then what was the New York lawyer's main argument?

STUART TAYLOR: Daniel Smerlock, arguing for the state of New York, said the plain language of the 1834 compact says New York has jurisdiction over Ellis Island. This is Ellis Island, and that does it. Now, he had--in order to account for the fact that Ellis Island is much bigger now than it is then, it said the bigger it got the more New York owned. And Chief Justice Rehnquist said that doesn't found like a very good deal for New Jersey, and the lawyer for New York said, well, there are checks and balances. We wouldn't fill land all the way over to the Jersey shore because once you touch the Jersey shore, suddenly it would belong to New Jersey, not to us anymore, again, belong in the sense of sovereignty jurisdiction, because it wouldn't be an island anymore. And this provision only applies to islands. And Rehnquist thought that that wasn't a very good deal for New Jersey either, but part of the argument New York is making and a bunch of historians join in its side, is New Jersey was--didn't make a very good deal for itself because for political reasons at the time New Jersey was feeling a lot of pressure to agree to what New York wanted.

MARGARET WARNER: All right. So how did the justices respond to all this?

STUART TAYLOR: I mentioned Chief Justice Rehnquist, who hammered away at the New York argument a fair amount. And I'd say there were--there was tough questioning on both sides, but I think the court generally tends to defer to special masters, as Prof. Verkuil was, in cases like that, who have heard lots of evidence. And on a particular point, they seem likely to defer to this one, and it could be important. The special master found unpersuasive New York's contention that as a historical matter everybody in 1834 knew that they were landfilling all over the New York area, knew that Ellis Island was going to grow, and, therefore, new and assumed that New York's jurisdiction would grow with it. The special master said he didn't think that evidence was convincing. A number of historians, including Arthur Schlessinger, have come into the court with friend of the court's briefs on the side of New York, saying, the special master blew it. In essence, the court, several of the justices on that front said you're going to have a hard time getting us to secondguess the special master. On the other hand, New Jersey lost one little thing in the special master's recommendations after saying that as a matter of historic right, New York only had three acres, he said, well, I'm going to give 'em five acres because we ought to keep the building in one piece because little pieces of it shouldn't break off and go into New Jersey, the historic building, and we shouldn't have any--you know, we should make sure that New York's ferry landing is connected by a strip of land New York owns to the building. There was a substantial argument by New Jersey there, which the court seemed sympathetic to, or at least some of the justices, that the court's power is limited to declaring what the boundary is. And they can't adjust it for practical and convenient reasons thereafter.

MARGARET WARNER: So it's either that you accept that the boundary was as they said in 1834, or you don't, is what the court said?

STUART TAYLOR: Yes. There's lots of room for arguing about what it was in 1834, but once that argument's over, that's it, except--there's always an "except"- -there's a doctrine called "prescription and acquiescence."

MARGARET WARNER: I hate to say it, but that's it for us. Thanks, Stuart.

STUART TAYLOR: Thank you. UPDATE - REPLACING ESTROGEN

JIM LEHRER: Finally tonight, an update on estrogen replacements for women. Elizabeth Brackett of WTTW-Chicago reports.

ELIZABETH BRACKETT: Pills containing the hormone estrogen are the number one selling prescription in America. An estimated 6 million women use the pills or patches to replace the estrogen their bodies stop producing when they reach menopause. Some studies show that estrogen protects not only against hot flashes but against heart disease and maybe even Alzheimer's. But there are side effects.

JOY DORDCIK: And I got scared, so I called my doctor--

ELIZABETH BRACKETT: When a group of women who have reached menopause get together, questions about estrogen replacement are a hot topic.

JOY DORDCIK: The frightening thing for me is heart. There's a lot of heart disease in my family. And I'm scared of giving myself cancer from taking all of this stuff for so long.

BOBBIE ROTHENBAUM: My background is pretty similar to yours in that I've been taking it for--taking estrogen since, well, I guess for the last 23 years. So--and I'm not thrilled about the symptoms that I've gotten because I've gotten periodic headaches, and my breasts have enlarged tremendously since then. I'm not happy about those side effects. I'm open to a new product, but I don't want to be a guinea pig.

ELIZABETH BRACKETT: There is a new product just hitting pharmacy shelves this week. The FDA approved Raloxifene for the prevention of osteoporosis. Osteoporosis affects more than 28 million Americans, most of them women. Raloxifene, manufactured by Eli Lilly under the trade name Evista, and labeled a designer estrogen by some, provides some of the same benefits as estrogen. But unlike estrogen, it will not increase the risk of breast cancer. Dr. Douglas Muchmore oversaw the research material Eli Lilly submitted to the FDA.

DR. DOUGLAS MUCHMORE, Eli Lilly & Company: Evista will be--is marketed, and it is appropriate for women who have concerns about the health risks associated with the menopause, specifically osteoporosis, because it's approved for the prevention of osteoporosis. It has a broad profile of pharmacological activity, including beneficial effects on the lipids or cholesterol profile, and that is a consideration that can be brought into play in the decision to take Evista.

DR. LAUREN STREICHER, Obstetrician/Gynecologist: How have you been feeling?

LINDA SORKIN-EISENBERG: I've been feeling pretty good. I'm really concerned about not taking estrogen, so--

DR. LAUREN STREICHER: Well, I know osteoporosis has been an issue for you for a long time.

ELIZABETH BRACKETT: Fifty-six-year-old Linda Sorkin-Eisenberg was anxious to hear what her gynecologist had to say about Raloxifene. Fibroid tumors in her uterus have made her reluctant to take estrogen. But she has already experienced bone loss from osteoporosis.

DR. LAUREN STREICHER: The studies do show that it prevents bone loss probably as well as estrogen and will also decrease your cholesterol and may give you some cardiovascular benefit as well.

LINDA SORKIN-EISENBERG: It sounds like something that's very exciting.

ELIZABETH BRACKETT: Dr. Lauren Streicher sees a lot of menopausal women in her Chicago practice. She does stress that Raloxifene is not for everyone.

DR. LAUREN STREICHER: The confusion with Raloxifene, of course, is that everyone thinks this is it, this is an estrogen substitute. It is not meant to be an estrogen substitute, and it's not being marketed as such. It is being marketed as an alternative to women who cannot take estrogen, who would like to prevent osteoporosis. It's not going to help hot flashes, in fact, may increase hot flashes, and it may not--no one has really looked to see other tissues, in terms of is this going to benefit the bladder, is this going to help with Alzheimer's, which we know that estrogen can.

ELIZABETH BRACKETT: But Dr. Samuel Epstein, author of the "Breast Cancer Prevention Program," has major concerns about Raloxifene. His concern is not about breast cancer with Raloxifene but ovarian cancer. He points to the research submitted by Eli Lilly to the FDA, which shows an increase in ovarian tumors in mice and rats.

DR. SAMUEL EPSTEIN, University of Illinois, Chicago: The alarming information is that in studies on mice and rats Raloxifene produces a high incidence of ovarian cancers. The end of the section dealing with these studies says the clinical relevance of this is not known. However, when you turn to the warning section on Raloxifene in which women are told about their dangers, there's not a single mention about ovarian cancer.

ELIZABETH BRACKETT: Do you think Raloxifene to be allowed on the market?

DR. SAMUEL EPSTEIN: Under no circumstances.

ELIZABETH BRACKETT: But Eli Lilly says the mice and rats in the study were pre-menopausal when ovarian cancer is common. The company says ovarian cancer was not found in humans.

DR. SAMUEL EPSTEIN: Our extensive testing of these thousands of women over the years, has shown no evidence whatsoever of ovarian tumors in women at a rate that's any different from that seen in the placebo-treated control groups.

ELIZABETH BRACKETT: But since one in eight American women get breast cancer, it is the fear of that form of cancer that has many women shying away from estrogen replacement. And a study published last June in the New England Journal of Medicine did little to calm those fears. The study found that women who take hormone replacement therapy for 10 years reduce their risk of dying from all causes by 37 percent. The risk of dying from heart disease is cut by 57 percent, from breast cancer by 24 percent. But if a woman continues with hormone replacement therapy more than 10 years, the risk of death from breast cancer jumps to 43 percent. Still, most gynecologists, including Streicher, think the benefits outweigh the risks with estrogen replacement.

DR. LAUREN STREICHER: Most women die of heart disease. Estrogen protects against heart disease. And if, in fact, we find that estrogen does somewhat increase the risk of breast cancer in a small population of women, I think that the studies really have shown that the protection against heart disease outweighs that.

DR. SAMUEL EPSTEIN: My view is very clearly that it's not worth the risk of breast cancer, and my particular reason for saying that is there are many safe alternatives for preventing heart disease and osteoporosis. What you have--there are no other effective methods of preventing breast cancer, so if you increase your risks of breast cancer, this is something which is preventable.

ELIZABETH BRACKETT: Since there are questions about estrogen, why not just take a lower dose? There are products on the market, sometimes referred to as estrogen-light, that contain half as much estrogen as the standard dose. Estrotab, an estrogen synthesized from soy and yam sources, has been prescribed in doses of .3 milligrams, as opposed to the usual dose of .625 milligrams. A recent study published in the archives of Internal Medicine found that the low dose of Estrotab protected against bone loss as well as the higher dose. That sounded good to the woman's group.

WOMAN: The idea of going on something light was very, very appealing to me because I'm scared, like all of us are scared.

ELIZABETH BRACKETT: But Streicher says half as much estrogen does not necessarily mean half as much risk for breast cancer.

DR. LAUREN STREICHER: Because we don't know, first of all, absolutely that estrogen increases the risk of breast cancer, it appears that in certain populations it might, and we certainly don't know whether it's dose-related or not. Many people say, well, it stands to reason if one dose causes it, then a lower dose won't cause it. But that's really not evidence-based. You really have to look and see if something is dose-related or substance-related.

ELIZABETH BRACKETT: But Epstein doesn't like anything that adds to the estrogen levels in women's bodies.

DR. SAMUEL EPSTEIN: We have the clear evidence from the fact that women are being exposed to more estrogens than ever before from sources including hormone replacement therapy, the pill, from some pesticides that have weak estrogenic effects, and also, very, very importantly but unrecognized by the American public at large from meat, because meat contains very significant levels of sex hormones, particularly estrogens. So from birth till death women are exposed to estrogens in a wide range of different forms.

ELIZABETH BRACKETT: So despite new studies and new drugs, women still have no clear-cut answers. Instead, they are advised to look at their own health history, weigh the risks and benefits, then decide for themselves. RECAP

JIM LEHRER: Again, the major stories of this Monday, Wall Street rebounded from Friday's 222 point drop. The Dow Jones Industrial Average closed up nearly 67 points at 7647.18. Hong Kong's stock market lost another 9 percent, following last week's 16 percent. And President Clinton announced a $200 million plan to crack down on drug abuse in U.S. prisons. We'll see you on-line and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.