The MacNeil/Lehrer NewsHour

Intro

JIM LEHRER: Good evening. In the headlines this Wednesday, President Reagan offered to compromise as the House began debate over contra aid. The U.S. and Canada reached a deal on acid rain. The Justice Department announced a solution to the liability insurance crisis, and the Senate Budget Committee passed a very non-Reagan budget. The details are in our news summary coming up. Charlayne Hunter-Gault is in New York tonight. Charlayne?

CHARLAYNE HUNTER-GAULT: After the news summary, here's how the NewsHour unfolds. On the eve of the contra aid vote we sample the final heat of House floor debate. We get Canada's response to U.S. acid rain plans. We look at the Justice Department's sweeping new proposals to cope with the nation's insurance liability crisis with critics and supporters, and Roger Rosenblatt remembers a novelist called "The Natural," Bernard Malamud.News Summary

LEHRER: The House debate on contra aid is under way amidst White House talk of compromise. After 10 official hours of debate, there will be a vote which is now set to come around midday tomorrow. House Speaker Thomas O'Neill said when it does come it will be a defeat for President Reagan's $100-million aid request. Late today White House officials said Mr. Reagan was willing to limit assistance to the antigovernment guerrillas to defensive weapons, training and logistics for the first 90 days while negotiations were pursued. There was no immediate word on the impact of that compromise offer on the vote. The House floor debate itself was billed as one of heat, and it lived up to its billing.

Rep. THOMAS HARTNETT, (R) South Carolina: The time now is to vote. If you are not with the anticommunist forces, then I and all of America have to assume you are with the communist forces. And if you are unwilling to say we are going to have an apocalypse for communism in Nicaragua, if you are unwilling to say that, then where will you say that? Honduras? Guatemala? Mexico? Brownsville, Texas? Cheyenne, Wyoming?

Rep. ROBERT WISE, (D) West Virginia: If the national security of this country is threatened, if indeed there is a Soviet menace to Nicaragua, then this country will have to take its own steps to deal with that. It cannot depend upon rent-a-guerrillas.

LEHRER: Also on the contra aid issue today, the foreign minister of Venezuela said there should be a peaceful end to the tensions in Central America. The Venezuelan diplomat said he was speaking for the eight Latin American nations that are part of the Contadora peace process. Charlayne?

HUNTER-GAULT: The Senate Budget Committee passed the first trillion-dollar spending budget in American history today. Approved by a vote of 13 to nine, the budget calls for slowing defense spending and increasing taxes by more than $18 billion. The extra revenue and defense trims would spare some domestic cuts proposed by the President. At a news conference, the Republican chairman of the Budget Committee explained why the administration's proposals could not pass.

Sen. PETE DOMENICI, (R) New Mexico, Chairman, Budget Committee: They know that their budget was not acceptable to Democrats or Republicans. I have had no alternatives suggested by the White House officially or unofficially. I mean, obviously the drum beat has been defense must be extremely high and there can be no new revenues. That's impossible to have both of those wishes and still get the Gramm-Rudman-Hollings totals. At least it's impossible with the live men and women who are senators voting.

HUNTER-GAULT: The budget proposal will be sent to the full Senate for action next week. Meanwhile, the U.S. economy grew at a sluggish rate in the final three months of last year, a performance that could possibly cause the government's balancing budget targets for next year to be scrapped. The Commerce Department reported that the gross national product rose an anemic 0.7% in the fourth quarter, and just 2.2% for all of 1985, the smallest rise since the 1982 recession.

LEHRER: There is a deal between the United States and Canada over acid rain. President Reagan and Canadian Prime Minister Brian Mulroney acknowledged it today at the White House. It involves a five-year, $5-billion effort to reduce acid rain from coal-burning industries in the United States. Mr. Reagan endorsed a joint commission's recommendation to that effect, but he did not mention a money figure. Here is what he said, along with Prime Minister Mulroney's response.

Pres. RONALD REAGAN: I wish I could say that our action today takes the acid rain issue off our bilateral agenda. Unfortunately, this cannot be. Serious scientific and economic problems remain to be solved. But in the spirit of cooperation and good will which has come to characterize the way Canadians and Americans approach their common problems, I am confident that we have begun a process which will benefit future generations in both our great countries.

BRIAN MULRONEY, Prime Minister, Canada: Mr. President, I'm very encouraged by your statement and appreciate your personal commitment to resolve our common problem on acid rain. I am confident that we can move to early and substantial reductions of damage to our environment. This remains our urgent goal, and I'm very grateful to you, Mr. President, for your personal support in meeting this challenge.

LEHRER: The acid rain issue has long been a tough one between U.S. and Canadian administrations and was known to be number one on Mulroney's Washington visit agenda.

HUNTER-GAULT: One of the FBI's 10 most-wanted fugitives was arrested in San Antonio, Texas, today. He is Richard Joseph Scutari, an alleged neo-Nazi, on the list for an armored car holdup in California.

The National Football League Players' Association today came up with its own get-tough drug-testing program. The proposal came in response to NFL Commissioner Pete Rozelle's challenge to the union to accept his drug-testing plan or counter with one of its own. At a news conference today in Washington, Players' Association executive director Gene Upshaw outlined the program.

GENE UPSHAW, NFL Players' Association: This is the first time that the players have voted on a get-tough policy for repeated drug use in the NFL. The program calls for testing, calls for penalties and also calls for banishment from the NFL for life. The players are willing to take stiffer penalties, and they understand their responsibility, and that's why we are at this position today to discuss this, because the players feel very, very firm about this. We need to know what the penalties are. The penalties need to be tough, and that's the way we control the problem that we have in the NFL.

HUNTER-GAULT: The Justice Department today proposed what it called quite modest reforms to deal with the nation's insurance liability crisis. Among the features of the proposal, reducing attorneys' fees and limiting such non-economic damage awards as pain and suffering. The report called liability insurance a lynchpin in the operation of the United States economy and went on to say that the proposals should not dramatically alter the basic principles of tort law that have existed for centuries.

LEHRER: A House subcommittee went after the subject of going after the Marcos money today. The big development was the discovery of documents which showed contributions were earmarked for the American political campaigns of Ronald Reagan, Jimmy Carter and Senator Alan Cranston. Spokesmen for all three denied receiving the money. The Philippine official in charge of the money search said the records are incomplete and there is no way to know if the money was actually given to the campaigns. He also told the committee why the search for the Marcos millions was so important.

JOVITO SALONGA, Philippines Good Government Commission: We hope to be able to accomplish several things. One, ascertain the extent of this incredible plunder. Number two, with the assistance of your government as well as other foreign governments, we hope to be able to recover as much as we can, so we can pay even in part the onerous foreign debt incurred by Mr. Marcos, some $30 billion, and thereby enable our government to do something about the grinding massive poverty of our people. And, thirdly, more important of all, we hope to be able to regain our sense of moral values and win back the confidence of our people in a democratic government they can truly call their own.

LEHRER: Overseas today there was violence against four Israelis in Cairo, Egypt. Gunmen in a speeding car opened fire on the four outside an international trade fair. All four, two men and two women, were hit; one of the women died. A radical group called Egypt's Revolution claimed credit for the attack in a note to a news agency in Cairo.

And in Sweden police freed a suspect in the murder of Prime Minister Olof Palme. The release came after officials said an important link in a chain of circumstantial evidence had been broken.

HUNTER-GAULT: And of course there's the newest royal engagement. Buckingham Palace announced that Prince Andrew, the queen's second son, will marry Sarah Ferguson, the daughter of Prince Charles' polo manager. For more on that, here's Patrick Brown of the CBC.

PATRICK BROWN, CBC [voice-over]: The match was made not in heaven but over chocolate pastries at the high point of Britain's horse-racing calendar, Royal Ascot. Although Sarah Ferguson is a commoner, the couple have moved in the same circles since childhood. Her father is Prince Charles' polo manager, and she's a close friend of the Princess of Wales. They skiied together in Switzerland earlier this year. The announcement today ended weeks of speculation. The couple showed off the engagement ring, a ruby set with 10 diamonds, and gave giggly interviews. What, they were asked, did they see in each other?

SARAH FERGUSON, Fiancee: Wit, charm.

Prince ANDREW, British royalty: Yes, probably. And the red hair.

Ms. FERGUSON: And the good looks.

BROWN [voice-over]: Prince Andrew will continue his career as a military man. He's a helicopter pilot in the Royal Navy and saw action during the Falklands War. He won't be continuing his career as a playboy prince whose girlfriends have included Koo Stark, an actress who once starred in soft porn movies. Unusually for a royal bride, Sarah Ferguson too has had what are politely known as "relationships." But she's definitely what Britain's bluebloods call "people like us," with a royal ancestor or two thrown in for good measure. And everyone has admired her cool handling of the journalistic siege she's been under for the past few weeks, at home and at the printing firm where she works as a sales executive.

LEHRER: And that's it for the news of this day. Now we look at excerpts from the House floor debate on the contras, hear some official Canadian reaction to the acid rain deal, debate the Justice Department's answers to the liability insurance crisis, and remember the literary achievements of the late Bernard Malamud. Contra Countdown

HUNTER-GAULT: Today was the beginning of the end in the long contra aid debate in the House of Representatives. Tomorrow the debating stops and the votes are cast on the administration's $100-million contra aid package. Today's debate marks the culmination of an extended contest for public support. We turn now toan extended look at what went on in the House, where the debate sometimes centered on the debaters.

Rep. ROBERT MICHEL, (R) Illinois, Minority Leader: We're now told we must try negotiations without military aid. Let's cut out the rhetoric and get to the truth about negotiations. The communists in Nicaragua have consistently refused to enter into talks with the contras as we and the Catholic bishops of Nicaragua have asked them to do. And if the communists don't want to talk with the contras, no negotiation is worth the paper it's written on. You can send diplomats to Central America until you're blue in the face and if the communists feel no pressure to negotiate with their own fellow countrymen, you can forget diplomacy as a means of containing the communist threat.

Rep. DAVID OBEY, (D) Wisconsin: The United States of America, with our great tradition, should not be in the business of funding a grinding, low-level, dirty little war under conditions which at best we can play to a tie.

Rep. BARBARA BOXER, (D) California: If you vote for this package you vote to throw $100 million down a bottomless hole. Instead, we could spend it on our farmers, our homeless, our kids. Let's vote this down.

Rep. DUNCAN HUNTER, (R) California: I think it's interesting that the number of people on the other side are saying that the contras can't possibly win. And I simply wonder what would have happened if we hadn't believed that Cory Aquino could win, and I think there are very few members in this house who think that Cory Aquino could have won in the Philippines had the military not ultimately backed her. Negotiations, good wishes, good will could not have helped her win.

Rep. BOXER: The gentleman made a point about Cory Aquino. If we learned anything from the Philippines, it's that all the guns in the world cannot win over a people who are ready for democracy. So I think that we can fight for democracy in Nicaragua, and we should fight for democracy in Nicaragua, but we shouldn't vote for bloodshed and killing. That's not what brought democracy to the Philippines, my friend. What brought it is a people yearning for democracy, and all the guns in the world can't stop that.

Rep. RONALD DELLUMS, (D) California: No one, not even the Foreign Affairs Committee, has raised the question of the legal status of the contras. There's only three things the contras can be. They can be internal dissidents. They don't qualify as internal dissidents under Geneva Accords. If that's not what they are, there are only two other things. They can be members of another country's armed forces. Are they our armed forces? If they don't qualify as that, you know the only other, third alternative -- mercenaries and terrorists.

Rep. ROBERT LIVINGSTON, (R) Louisiana: Witness the evolution of the communist movement in Nicaragua from the moment the Sandinistas rose to power, despite their assurance that they were going to abide by all of the promises that they made to the Organization of American States when they took over; despite the fact that we gave them $120 million to get them on their way; because we were glad to get rid of Somoza; despite the fact that we appealed to the World Bank to get them about $200 million in extra credits so that they could get along on their way. See how they've constricted and strangled the essence of liberty and independence in systematic fashion so that their people are deprived of liberty, the liberty which we enjoy and which enables people like my predecessor, the speaker before me, to get up here and rant and rave about how wrong we in the United States are. From 1979 to 1981 --

Rep. DELLUMS: Point of order. I move that the gentleman's words be taken down on the grounds that the gentleman has no right to characterize this gentleman's statement. I will be characterized by history, not by the gentleman in the well --

Rep. LIVINGSTON: I will change only one word.

Rep. DELLUMS: -- and I move to take the gentleman's words down.

Rep. LIVINGSTON: I would withdraw the words "rant and rave." I would withdraw the words "rant and rave" and say "discuss" how wrong we are.

Rep. DELLUMS: Then I thank the gentleman for realizing that he made a serious error. Thank you very much.

SPEAKER: Proceed in order.

Rep. LIVINGSTON: I would certainly not want to overcharacterize the gentleman's statements for whatever they may be.

Rep. GERRY STUDDS, (D) Massachusetts: Mr. Chairman, it is a tribute to the American political system that the U.S. can adopt and carry out a policy that is brutal, illegal and ineffective, and then devote 10 full hours to debating whether to do more of it. By ignoring the pleas of Latin American democrats and submitting this proposal now, by including military aid, by emphasizing the role of the CIA, by using harsh and exaggerated rhetoric, and by mischaracterizing both the supporters and the opponents of Nicaragua's government, the administration has missed an opportunity to unite this country and our regional allies in effective support of democratic change. While seeking to isolate an undemocratic Nicaragua, the administration has, in a hemisphere of democracies, isolated only itself.

Rep. HENRY HYDE, (R) Illinois: The truth is that our friends on the left have a Will Rogers-in-reverse complex. They never met an anticommunist they liked, whether it's Syngman Rhee, Chiang Kai-shek, Savimbi, Diem. That's called red-baiting. Red-baiting. Don't think Mr. Nixon's troubles didn't start with his going after Mr. Hiss. Believe me, they did. And that extends down to Calero, Cruz and Robelo. The army and the government in El Salvador are the bad guys; the guerrillas are the good guys. Then you'll reverse that when you go into Nicaragua. I want to say something. As the refugees stream north, and as we are forced to avert our eyes from Europe and the Middle East because that's the Soviet grand strategy, history, not Pat Buchanan, is going to assign to you folks the role of pallbearers at the funeral of democracy in Central America. That's not McCarthyism. That's called accountability.

HUNTER -- GAULT: One of the top Democrats in the House, Majority Whip Tom Foley of Washington state, says the anti-contra aid forces will win tomorrow's vote. Foley predicted a victory which he said will be conclusive but not overwhelming. Cleansing Rain

LEHRER: Next, the one thing the Canadian prime minister wanted more than any other, a promise from President Reagan to do something about acid rain. Judy Woodruff has that story. Judy?

JUDY WOODRUFF: Acid rain has been a thorn in U.S.-Canadian relations for years, with Canada complaining that pollution from the U.S., particularly coal-burning utility plants in the Midwest, was creating acid rain across the border and wreaking havoc with lakes and forests in both countries. Up until now, President Reagan has opposed taking costly steps to curb the pollution, saying that more study was needed. But now for the first time he has agreed to join Canada in a $5-billion effort to reduce acid rain. The agreement announced today is of special importance to Canadian Prime Minister Brian Mulroney, who has pushed for improved relations between Washington and Ottawa. Mulroney talked about the agreement at a news conference.

Prime Min. MULRONEY: This represents real movement and real commitment by the United States administration on an issue which has bedeviled our relationship for far too long. This endorsement won't provide a total answer, but it is an essential first step. This is not a Canadian problem. This is a Canadian and an American problem. It is killing the environment in the United States just as surely as it is in Canada, and many people in the United States, led by the President, accept this view. And we view that, we consider that as a major and a helpful departure. And we've received substantial assurances from leadership in the House and leadership in the Senate that there will be full cooperation to provide the appropriate funding. This is a front burner issue. This is not going to go away until it's solved. I indicated to some of your colleagues at breakfast yesterday that long after it's no longer fashionable to discuss Nicaragua in Washington you're going to be discussing the environment. You can be certain of that. And so we're keeping it right on the front burner, and we're going to insist that it remain there. And we're going to deal with it and we're going to solve it. This thing has been kicked around, debated to death, in Canada and elsewhere. And we think that we have a reasonable plan now in place to solve it. Not perfect, but well on the way to effective resolution, and that's what we're going to do.

WOODRUFF: We hear more about the issue now from Canada's minister of the environment, Thomas McMillan. He joins us tonight from Ottawa. What exactly has the United States agreed to do, in a nutshell, briefly?

THOMAS McMILLAN: In a nutshell, it agreed through the President of the United States to endorse fully the report, the joint report of two envoys appointed a year ago by the President of the United States and the prime minister of Canada to look into all aspects of acid rain. That was a big achievement for Canada at the summit in Washington yesterday and today.

WOODRUFF: And what does that report call for precisely?

Min. McMILLAN: It recognizes that acid rain is a serious problem, that it's serious both in Canada and the United States, that it's a trans-boundary problem in the sense that each country is discharging emissions onto one another's front lawn. It establishes mechanisms to ensure that the acid rain question is not just a one-summit wonder, and it outlines a program for a substantial commitment of dollars by the American government to acid rain abatement through the application of technology.

WOODRUFF: Now, as I understand it, it's $5 billion over five years but that it's primarily a demonstration project, a research project. Is that correct?

Min. McMILLAN: It isn't just research nor development. It's the application of known research and development on a demonstration basis through existing companies. The purpose is to demonstrate the possibilities for a more broadly based program down the line, but it will have short- to near-term benefits in terms of controlling acid-rain, causing emissions in the United States which drop on Canadian soil in great quantities.

WOODRUFF: The White House said today that it's not yet found most of the money, that it's trying to come up with the $2.5 billion it's going to come up with, supposedly, from the government, and that corporations in the United States are only going to be doing this on a voluntary basis. Now, what's the incentive for corporations to get involved when they haven't been involved before?

Min. McMILLAN: It is a cost-shared program between industry and the government of the United States. I understand that $700 million has already been committed by the American government for this purpose, that a further $800 million was committed today and the President of the United States has committed himself to finding the balance of the $5 billion. It will depend, to an extent, on the good will and cooperation of American industry, but American industry has a vested interest in taking advantage of the program, because for every dollar they spend the American government will match it. And of course American industry --

WOODRUFF: So you think that'll be different from the attitude that has been prevalent until now, which was they didn't really want to get involved.

Min. McMILLAN: A lot of the thermal power plants in the United States are increasingly antequated and will have to resort more and more to the application of acid rain abatement technology whether they like it or not, and since down the road they're going to have to be spending this money, it's in their interest to be able to dip into the federal treasury on a dollar-for-dollar match basis with the American government. So it's vested interest.

WOODRUFF: You said back in January when that joint report, the U.S.-Canadian report, was issued that it was not an ideal report because it didn't call for specific reductions of sulfur dioxide emissions. Is that still a problem with this agreement as far as you're concerned?

Min. McMILLAN: Yes. We do not see today's agreement between the prime minister and the President as the end of the road, but rather as the beginning of the road. Here in Canada we've adopted a program which involves identifying specific targets for emission controls, specific schedules for the achievement of the targets and specific commitments of cash for both purposes. And we think that the bilateral mechanisms that the two countries have agreed to setting up to pursue the issue further should be employed to see whether it isn't possible to have in the United States the kind of program that we ourselves have adopted in Canada.

WOODRUFF: Do you see the same level of commitment from the U.S. that you have there in Canada?

Min. McMILLAN: I think there is a growing awareness in the United States of the devastation caused by acid rain on agriculture, on forestry, on buildings, on cars, on human health, as reflected in the Lou Harris polls which indicate that the awareness and the concern are very much on the rise in the United States, following suit with Canadian public opinion.

WOODRUFF: Growing awareness. That sounds almost like a polite way of saying you wish they would move faster.

Min. McMILLAN: Obviously, we environmentalists want movement because the acid rain issue is so important to both our countries, and I think there is a growing concern around the United States, across American public opinion at large, and in the House and in the Senate in Washington, as reflected, for example, in commitments given by individual legislators to the prime minister in his meetings with them in Washington over the last two days.

WOODRUFF: And as the prime minister just indicated, I gather this is not the last that we are going to hear on this issue in discussions between the two countries.

Min. McMILLAN: No. Acid rain was on the agenda in Quebec City of the two government heads last year, as it was in Washington yesterday and today, and both the government heads have now committed themselves to placing it on the agenda for next year and for subsequent summits until the issue is resolved.

WOODRUFF: I read that the prime minister was going to be in a lot of political trouble in Canada if he didn't come home with some kind of an agreement. Does this mean the coast is clear now for him to come back to Ottawa?

Min. McMILLAN: I think we'll welcome him with open arms. He's done a good job for Canada and for the United States both.

WOODRUFF: Well, spoken like a loyal minister. Mr. McMillan, thank you for being with us.

Min. McMILLAN: I've enjoyed chatting with you.

WOODRUFF: Charlayne?

HUNTER-GAULT: Still to come on the NewsHour, critics and supporters reacted to the Justice Department's new plan to cope with liability insurance crises and Roger Rosenblatt remembers a man they called "the natural" when it came to writing, novelist Bernard Malamud. Damage Control

LEHRER: The Justice Department today offered a way out of the ever-growing liability insurance crisis. They would cap attorneys' fees and damage awards in some liability cases, among other things, all in the belief they are the cause of the skyrocketing insurance rates. There are those who disagree and disagree strongly about that belief and the Justice Department's solutions. We're going to get to that disagreement in a moment, but first here's a reminder look at the part about which there is no disagreement, the part about the devastating effects of high insurance rates. Correspondent Tom Bearden is the reporter.

TOM BEARDEN [voice-over]: The Great Smoky Mountains of North Carolina. The rugged beauty of the region attracts tens of thousands of visitors each year, and the money they spend supports thousands of small businesses. This tourist season is over. Most of the shops are shuttered for the winter. Some of them may never reopen, because they won't be able to afford liability insurance to protect themselves from lawsuits.

[on camera] Tourism can be a very precarious industry. Most businessmen must earn their entire annual income within the space of a few short summer months if they're to survive. This has not been a good year for this area. That's why it was such a shock when the annual liability insurance bills began arriving.

[voice-over] Gus McMahon is an ex-policeman from Florida. He and his wife Michele bought the Mountainbrook Cottages nearly seven years ago. They worked seven days a week renovating the 1930 vintage units and were just beginning to to reap the financial rewards of their labor, until it came time to renew their liability insurance last summer. They'd been paying $1,800 a year for a million dollars' worth of coverage. The policy was canceled. The company had decided to stop writing liability insurance. Apparently the risk of huge jury awards was too high, even though such awards are rare in this part of the country. Their agent told them he'd found another company to insure them, for $11,000 a year. The McMahons simply couldn't stay in business at that price.

ROGER McMAHON, resort owner: At that point I was frantic. I was frantic because not only could I lose my entire business if somebody would get hurt and we are uncovered, but there are other ramifications on it. This is part of one of the requirements for our mortgage.

MICHELE McMAHON: You're -- just all of a sudden, what can you do? And you don't have the knowledge. You're just small. And, you know, you're up against the wall.

Mr. McMAHON: Yes, ma'am. My name is Gus McMahon and I'm with Mountainbrook Cottages in Silva, North Carolina.

BEARDEN [voice-over]: Faced with foreclosure and the loss of everything he had ever worked for, McMahon got on the phone. He called the state insurance commissioner and dozens of insurance companies. He finally found cheaper coverage, at $4,500 a year, still a 250 increase. He thinks he should have been warned by the insurance industry and the state agency that regulates it.

Mr. McMAHON: How am I, somebody that is not trained in insurance matters -- where do I go? I'm not asking for the government to subsidize me. All I'm asking was for guidance.

BEARDEN [voice-over]: Mrs. McMahon is worried that this is just the beginning of a series of increases.

Mrs. McMAHON: I still get the feeling like maybe we're all right at the moment, but how long will that -- you know, how long will that last? Something may come in the mail tomorrow that changes all of that and then we'll be back to square one and going through the files and that kind of thing, too.

BEARDEN [voice-over]: Roger Battle runs a riding stable in the Great Smoky Mountains National Park. His insurance bill went from $2,300 to $15,000 last year. He says the increase wiped out his profits.

ROGER BATTLE, stable owner: I've got four months left and my insurance comes due again the first of April. And, if I cannot make it in the first of April and the premium is still this high, why, there's no use me just staying there and try to break even, spinning my wheels. We'd try to make another living, maybe somewhere else.

BEARDEN [voice-over]: Battle says the insurance underwriters and the state insurance commission were polite, told him they were sorry but that there was nothing they could do. He says that won't pay the heating bill this winter.

Mr. BATTLE: If the insurance companies don't come up with some kind of solution, get some more underwriters here and get more people to working on this thing, I say there's going to be more people going down the drain than just me.

BEARDEN [voice-over]: And so a lot of people who make their living in tourism have something else to worry about besides the weather and the economy -- the fear that the cost of insurance may eventually prevent them from doing business at all.

LEHRER: Now to the Justice Department's solutions to the insurance problem and to Assistant Attorney General Richard Willard. First, Mr. Willard, is there no question in your mind that the reason for the skyrocketing insurance rates for those folks in North Carolina and elsewhere is the rise in jury awards in liability cases?

RICHARD WILLARD: There's no doubt that's a very important factor in the problem. Now, we analyzed a lot of contributing factors to the problem and one of them, quite frankly, is the decline in interest rates. Since the Reagan administration came into office, interest rates have declined and the ability of insurance companies to make investment income has gone down. But the underlying problem --

LEHRER: So as a consequence, to finish the point, because this is a point that many consumer groups make, that the real problem here is the insurance industry, their not being able to make money on their investments, so now they're raising their rates.

Att. Gen. WILLARD: Right. Well, that is a contributing factor to the problem, and it's a result of the fact that interest rates are not nearly as high as they used to be. But we don't see much you can do about that. I don't think anyone would suggest we should return to high interest rates and high inflation in order to bring insurance premiums down. But we found that there was another, more fundamental cause for the problem, and that was the increase in civil judgments in our justice system that has really been very dramatic in the last 10 years.

LEHRER: And there is no question that there is a connection? Is that what you're suggesting? Your study documents that?

Att. Gen. WILLARD: That's correct. There certainly is a connection. The study shows that the cost of the civil justice system has dramatically increased, and since that's what the insurance companies have to pay by way of claims, that affects the cost of insurance.

LEHRER: All right, now to your solutions. There are two major areas. fFirst, tell me what you want to do to attorneys' fees.

Att. Gen. WILLARD: Well, we suggest that the attorney's contingency fee, in which a plaintiff's attorney takes a third or even a half of the judgment in a case as his fee should be controlled and there should be some limits set on that, starting at 25% and scaling down as the size of the award goes up to a maximum of 10%.

LEHRER: What would be the good effect of that?

Att. Gen. WILLARD: The effect of that would be to insure that more of the amount that's awarded goes to the injured victim and less to lining the attorneys' pockets. We found that in some areas of the litigation as much as two-thirds of the money that was paid out went to pay lawyers, both plaintiffs' lawyers and defense lawyers, and only about a third of the award trickled down to the victim.

LEHRER: Now, you want to make some changes in the awards themselves, as to what the courts can do. Tell me about those.

Att. Gen. WILLARD: That's correct. We found that tort law, that is, the rules of the civil justice system, in the last 10 to 20 years had really taken quite a turn towards increasing the amount of liability. And so we propose to return those legal doctrines to basically what they were before this huge escalation began.

LEHRER: Now, how would you do that?

Att. Gen. WILLARD: Well, we would insist that liability be based on fault instead of the growing trend towards no-fault liability. That is, someone should be paying a judgment if they've done something wrong, but not if they just happen to have a deep pocket.

LEHRER: Give me an example of that.

Att. Gen. WILLARD: A good example is a case in the California supreme court only a couple of years ago where an allegedly intoxicated driver lost control of her car, went off the road and into a parking lot and hit a phone booth. And the man inside who was injured sued, among others, the phone company. And the California supreme court said, well, the phone company could be held liable in this kind of a situation.

LEHRER: And the result of that, the phone company had to pay damages as well as the driver of the car?

Att. Gen. WILLARD: Well, the case was settled after it was remanded, so we don't know exactly how much they had to pay, but the important thing was the principle of it. And that is, the phone company, even though it hadn't done anything wrong, just was in the wrong place at the wrong time and had the financial resources to pay a judgment, and they could be held liable.

LEHRER: What would be the effect of your changes, do you think?

Att. Gen. WILLARD: Well, the effect we think would be to return the civil justice system to the way it operated for many years in this country quite successfully and limit some of the more outrageous decisions that we've been seeing in the last 10 or 20 years.

LEHRER: And lower insurance rates?

Att. Gen. WILLARD: Well, the result would be to lower the amount awarded and ultimately to lower insurance rates.

LEHRER: Is what you want -- do you wantsome new federal laws enacted, or do you want the states to do what you're suggesting? What's your scenario for bringing this off?

Att. Gen. WILLARD: Well, we think that reform has to come at both levels and, quite frankly, most of the problem is at the state level and so we'd like to encourage the states to consider these kinds of reforms. But we'll also be looking at federal legislation.

LEHRER: How are you going to go about encouraging states to do this?

Att. Gen. WILLARD: Well, one thing is the report we issued today. We hope that people will read it and study it and we'll stimulate a debate on these issues.

LEHRER: No, but is this a big deal with the Justice Department, with the Reagan administration? Are you going to go out on the road? Are you going to just kind of issue the report and sit back and hope the folks do it, or what?

Att. Gen. WILLARD: Well, we are certainly going to discuss the issues and try to inform people of our views about what should be done. And there's been a great deal of interest in the topic.

LEHRER: And then you're going to propose specific changes in federal laws?

Att. Gen. WILLARD: That's something we're looking at now, but a final decision on that hasn't been made yet.

LEHRER: Okay. Thank you. Charlayne?

HUNTER-GAULT: Reaction to what we've just heard now from two key figures on this issue. Joan Claybrook heads Public Citizen, a Washington-based consumer group. She's leading a national effort to prevent federal restrictions on liability awards. She joins us tonight from public station KCTS in Seattle. And on the other side, Dennis Connolly, a senior vice president with the American Insurance Association, a Washington-based trade group. He's been spearheading his organization's effort to reform the liability laws. Starting with you, Joan Claybrook, is what you've just heard good news?

JOAN CLAYBROOK: Well, no. It doesn't surprise me, though. The Reagan administration has been cutting back on the rights of victims and the public ever since it came into office, and this is just one more step in that direction. I must say I'm amused to find that the Justice Department and the Reagan administration are recommending a limit on the free market in terms of the fees for plaintiffs' attorneys, when they want the free market to operate and no regulation for everybody else in America. And in addition, most of the reforms that they -- so-called reforms that they're proposing, which I think are cutbacks in the rights of the citizens in a terrible way, most of these things would put limits on individual citizens, their rights to get awards decided by the jury in a court where the jury hears all of the information, all of the evidence in the most neutral form available, and yet they have no similar cutbacks in the cost of medical care and the amount of premiums that are paid, in the executive salaries and the expenses that insurance companies have. It's a very, very biased and one-sided proposal. I might comment, for example, that in the state of Georgia, where they considered this issue, they put a limit in the legislature on premiums to be paid as well as on the recoveries to be paid, and when the insurance company heard that they went crazy and said they absolutely wouldn't accept such a bill at all, that they couldn't show any relationship between the amount of awards in the cases and the amount of the insurance premiums. So there's really no relationship, there's no shown relationship. Most of the statistics being bandied around are not solid information, and I must say that here in the state of Washington, where I've taken a hard look at the situation, what we find is that the amount of premiums taken in by the insurance industry as a whole in the state of Washington, the property-liability-casualty industry, has been twice the payments that they've made out in the last 10 years. So here at a state level we have very, very hard data on that issue.

HUNTER-GAULT: All right, Ms. Claybrook, let me just get Mr. Connolly in on this. Is this good news or bad news for you?

DENNIS CONNOLLY: Oh, I think this is good news. I think that you ought to understand that among the major proposals offered by the Justice Department are ones which would allow a jury to know about double payments that a plaintiff may have received which would allow people who are being charged with fault to demonstrate what they've done, to demonstrate that their fault may be even non existent or to show that they should be held liable for less than all of the fault. These are things that they are not allowed to do now, so that among the major proposals are ones which allow a degree of predictability by insurors and which allow jurors to have information so they can make decisions based on fault, which is what we need to have.

HUNTER-GAULT: All right, and what's your reaction to the cap on attorneys' fees? Is that good news as well?

Mr. CONNOLLY: I think the cap on attorneys' fees is good news for the consumer and for the people who are injured and receive compensation. The cap itself is not going to be a fundamental change in the way our liability system works, and in fact many states already have caps and they seem to work fairly well. It's a regulation of the scale of fees so that exorbitant fees are prevented.

HUNTER-GAULT: And you believe that what the Justice Department is tryingto put into effect here really will lower the suits?

Mr. CONNOLLY: I don't know if it would necessarily lower the suits. It will probably do that. What it will do for insurers, it will make the risk that we take on, the amount of money that we're going to have to pay out more predictable because it will be based upon fault characteristics -- did you do something wrong? -- as opposed to the system now where a person may be entirely correct in their conduct and still liable.

HUNTER-GAULT: What about that, Ms. Claybrook? This was the point that Mr. Willard was making earlier, that they're restricting the damage awards really to the people who were actually involved and at fault.

Ms. CLAYBROOK: Well, first of all, that's just an absolutely incorrect statement. Under the liability laws today you can't recover unless somebody manufactured, say, a defective product or committed malpractice. The difference in the law as it used to be and to some extent has emerged into a hybrid fashion today is that you don't have to show the mindset of the individual. One of the major problems is that in pure negligence you have to show that the mindset of the individual involved, the manufacturer, was such that this went on intentionally or that it was something that they knew about and that they didn't attempt to correct it. What the key issue is here is that victims are victimized by defective products and there's no change in that issue under this. I must say that it's interesting that the American Insurance Association is saying that they can't show any relationship between changing and taking away the rights of the consumer and the change in these liability laws. This is the most massive change in the liability laws that's ever been proposed in America. It's cutting back on the rights of victims who are brain-damaged and paraplegic and hurt for life. And what they want to do is to cut back on their rights and the possibility that juries can offer them recovery.

HUNTER-GAULT: Is that what you see happening, Mr. Connolly?

Mr. CONNOLLY: That's exactly incorrect. That's not what I said. What I said was that if the liability system is made more predictable then the insurance industry, in the difficult areas to provide liability insurance, can reenter the market, the kinds of people that you even showed today where their liabilities may well be unascertainable because basically what they're doing is right. What we want is a system which returns to one where the jury can look at the conduct of the parties and say, did you do the right thing, and if you did then you're not liable. Essentially that's what insurers can do, and then we can provide insurance. What happens now is we provide insurance and then the rules of the law change. That's exactly what's happened here. We can't predict, we can't enter the market. So what I do say is --

Ms. CLAYBROOK: But at times that --

Mr. CONNOLLY: -- is we can -- excuse me. Can I nish? We can reenter the market. I did not say we would not reenter the market.

HUNTER-GAULT: Ms. Claybrook?

Ms. CLAYBROOK: Well, but in fact, in Canada, in Ontario, Canada, they've had very restrictive product liability laws, and in fact you can't buy insurance there. In Pennsylvania, in the malpractice area, they cut back -- in the municipalities area they cut back drastically and you still have tremendous problems and costs of insurance there.

HUNTER-GAULT: So basically --

Ms. CLAYBROOK: The fact is that the insurance industry has not been willing to put any kind of controls on premiums or on the availability of insurance. At the same time, they want to cut back on the victims' rights, and these are victims who are damaged and they're injured for life, who are innocent and injured by defective products or incompetence or malpractice by doctors. There's no lack of fault. This is a fault system that we have in place today. That's a total misstatement.

Mr. CONNOLLY: Well, in fact, she just pointed out before that we have shifted from a system of negligence to a system which is essentially one of fault. In addition, the system of law that exists in Ontario and in Canada has changed dramatically. The biggest single liability in the United States has had a superfund. Last year Canada enacted a similar bill. By the way, they do have some of these recommendations. Not the major ones, but some of them, and their bill is about a third of ours for liability insurance.

HUNTER-GAULT: All right, Mr. Connolly and Ms. Claybrook, we're going to continue this discussion from Washington. Jim?

LEHRER: Yes, right. We want to bring Mr. Willard back into this. You heard what Ms. Claybrook said, Mr. Willard, that you're cutting back on the rights of citizens, it's biased and one-sided.

Att. Gen. WILLARD: Well, we're not cutting back at all on the right of a citizen who is injured by a defective product that's dangerous, to sue, or who is injured by malpractice. What we are saying, though, is the idea that someone who has a deep pocket can be held liable --

LEHRER: Just because they have a deep pocket?

Att. Gen. WILLARD: Just because they have a deep pocket is something we have to get away from. A good example is this case in Pennsylvania where a man had a heart attack after trying to start a lawnmower which wouldn't start. And he sued Sears and the jury awarded him over $1 million. And that's not a product that was unreasonably dangerous.

LEHRER: Ms. Claybrook?

Ms. CLAYBROOK: The reason that he sued was because, and the reason he won the suit was because -- what the jury found out, and what apparently Mr. Willard doesn't know or isn't willing to tell us, is that the product was not properly designed for starting. It was a young doctor who was 32 years old. He had a very long history and earning potential in front of him. He tried to start it 15 times and then died of a heart attack. And so that was the real reason, because they didn't design it properly to be started with ease.

LEHRER: So, in a nutshell --

Ms. CLAYBROOK: I don't think --

LEHRER: Wait a minute. In a nutshell, then, Ms. Claybrook, you're saying that that was a proper award. He should have gotten $1 million?

Ms. CLAYBROOK: I think that when a product is misdesigned in that award and in many others I think that they should get recovery. There is no question about it.

Att. Gen. WILLARD: Well, I'd like to respond to that example, though, because I think that is a good example of the kind of case we shouldn't have. The product has -- all of us have lawnmowers that won't start. That's not an unreasonably dangerous product. To say that if you have a lawnmower that doesn't start, someone has a heart attack while trying to start it, is really an absurd kind of decision for our --

Ms. CLAYBROOK: No, this was made very difficult to start.

Mr. CONNOLLY: As I understand, this was a doctor who attempted 15 times to pull a starter which wasn't either working at that time or was difficult to start. It's not unreasonable --

Ms. CLAYBROOK: No, it was improperly designed. It was improperly designed is the problem.

Mr. CONNOLLY: Was it negligently designed?

Att. Gen. WILLARD: I don't think it was improperly designed.

Ms. CLAYBROOK: No, it was improperly designed --

Att. Gen. WILLARD: Was it unreasonable to sell it?

Ms. CLAYBROOK: Yes, it was.

Att. Gen. WILLARD: If the lawnmower had been easier to start and children, for example, had started it and gotten into trouble, Sears could have been sued by the children or their parents on the grounds --

Ms. CLAYBROOK: No, it didn't have to be easy to start. It had it --

Att. Gen. WILLARD: -- on the grounds it was too easy to start.

Ms. CLAYBROOK: -- the key issue here is not whether one lawnmower is proper to start. The key issue is whether or not the jury is going to have the right under our system of laws they've had for 300 years. And this is not going back 20 years; this is going back 300 years. Whether the juries are going to have the right to make these decisions, whether there's going to be a cap. The Justice Department is recommending a maximum cap on the amount of awards that can be made, both for punitive damages, which are designed for deterrence of manufacturers who knowingly and willfully, as in the Ford Pinto case, or the Dalkon shield, manufacture products that are harmful to the citizen, and maximum penalties on the pain and suffering. Pain and suffering is designed to at least allow a small amount of joy for someone who is permanently damaged, with brain damage, or quadriplegia --

Att. Gen. WILLARD: But we don't propose --

Ms. CLAYBROOK: There's no amount of money that you can pay someone that really makes a difference in that. I don't know anybody --

Att. Gen. WILLARD: Well, that's a good point.

Mr. CLAYBROOK: -- who could accept a certain amount of money.

LEHRER: Mr. Willard?

Att. Gen. WILLARD: That's an excellent point, and that's why we've proposed a limit, because who can say how much pain and suffering is worth?

Ms. CLAYBROOK: The jury should say; you shouldn't.

Att. Gen. WILLARD: Well, well, that's exactly what we disagree with. We think that it's unfair --

Ms. CLAYBROOK: Okay, but you just --

LEHRER: Hold on, Miss Claybrook.

Att. Gen. WILLARD: -- that we have this lottery system where one jury says pain and suffering is worth $10,000; another jury can say $10 million. Juries should not have a blank check to fill in whatever number they feel like for pain and suffering. Now, where it's real damages, like medical care, lost income, we propose no limit on real, provable damages. We do propose a limit for these subjective elements of damage, like emotional trauma or pain and suffering.

Ms. CLAYBROOK: But surely the proper people to make the decision of what is the right amount for any particular case should be the jury. If you're talking about an adjudication of a case in the federal government, I'm sure that every industry in America would go berserk if there was a minimum fee that was going to be imposed by legislation. You're talking about people who are lobbyists deciding in state legislatures or in the federal legislature through their political action contributions what that amount's going to be.

Att. Gen. WILLARD: That's right.

Ms. CLAYBROOK: That's not the fair way to treat the individual. Individuals should have it based on the pain and suffering that's deemed by the jury.

Att. Gen. WILLARD: That is the democratic way to solve it, through the legislative process. Juries are supposed to find facts, not be legislative, law-making bodies.

Ms. CLAYBROOK: Excuse me. Juries --

LEHRER: Hold on just a minute. Mr. Willard, why did you not recommend also some restrictions on insurance premiums that she suggested?

Att. Gen. WILLARD: Well, we found in our study, and it's a difficult subject, the insurance industry in this component is basically competitive. In fact, a lot of the critics said they're too competitive because in the late '70s they were cutting their fees too much. We don't see any evidence that putting additional regulation on the insurance industry would solve the problem.

LEHRER: Would the industry be willing to go along with that? Would it go along with some restriction on insurance premiums in exchange for some restriction on the liability insurance --

Mr. CONNOLLY: No, I think that insurance premiums should and can reflect the cost of the system. In fact, that's exactly what's happening now, and that's why there are problems. We have a system where people who are essentially innocent or partically at fault are now paying large awards for other people's fault or, in instances where they weren't at fault, and we, contrary to Miss Clay -- this is very important to me. I think that Miss Claybrook --

LEHRER: Well, more important is that we have to go. We have to go. I'm sorry. I'm sorry. Mr. Connolly, Mr. Willard and Miss Claybrook, in Seattle, Washington, thank you. Natural Writer

LEHRER: Finally tonight, some words about Bernard Malamud who died yesterday in New York at the age of 71. He was the man they called "the natural," the natural writer who wrote The Natural and other great works of American fiction. Our words about him are from our regular essayist, Roger Rosenblatt, of Time magazine.

ROGER ROSENBLATT, Time magazine: "Write your heart out," Bernard Malamud advised his students of writing. He was not telling them to be expansive but to be generous, which was Malamud's way of doing his work. In novels like The Fixer and The Assistant and the short stories of The Magic Barrel, Malamud wrote his heart out without showing it off. Always formal, usually direct and straightforward, he believed in the strange continuity of things and in the responsibility of art to that continuity. Art was an instrument of civilization. The heart, too, was an instrument of civilization. Relish life and you see all that it contains -- kindness mixed in with the foulest brutality. Called a Jewish writer, he called himself both Jewish and American, perhaps because he saw both conditions as equally painful and exuberant. He deplored what the moviemakers did to his great baseball novel The Natural, but characteristically he took the mishandling well. The movie gave the novel a happy, nonsensical homerun ending, whereas Malamud the novelist knew better how the corrupted heart must truly wind up. Redemption for Malamud was not a fireworks finish but reality itself, dark and inconsistent. Life was life and miraculous for that. The mystery made the fireworks. Thus, in the real games an Italian tough guy can learn to assume the identity of the suffering Jew, as in the novel The Assistant. Or an empty-headed Russian peasant can teach himself to be a great humane philosopher, as in The Fixer. It's all a sort of magic without tricks, a natural magic, the way the natural ballplayer Roy Hobbes even as he was being shot in the stomach could reach instinctively to get the bullet.

Malamud was not that kind of natural. No first-rank writer is. It takes a lot of misstepping to make it sound as if it all came in a rush, because by writing one learns exactly who one is, and that takes time and trouble. A year ago Malamud said as much in Lincoln Center. When someone in the audience asked what writing had taught Malamud about Malamud, he answered, "I shall treasure that information." He said something else about writing, that art tends towards morality. The tending is the trick. If art proclaimed morality, who would believe or trust it? But in the books, obliquely, the moral voice comes through. Morality begins with an awareness of the sanctity of one's life, he said. Hence, the lives of others, even Hitler's, to begin with. The sheer privilege of being in this miraculous cosmos and trying to figure out why. Art, in essence, celebrates life and gives us our measure.

HUNTER-GAULT: Again the major stories of this Wednesday. The House of Representatives prepared for tomorrow's vote on the administration's $100-million contra aid request. This evening the White House proposed a compromise that would delay the aid for up to three months to permit time for negotiations with Nicaragua. White House spokesman Larry Speakes said the compromise should help convince the House to side with the President.

LARRY SPEAKES, White House spokesman: We believe that this is a fair and equitable agreement that meets the concerns of Democrats and Republicans alike. It also meets the national security needs of the United States. And it demonstrates once again our commitment to begin working on a negotiated settlement immediately. To delay beginning this process, we believe, would serve as an impediment to reaching a peaceful settlement. We're urging the House of Representatives to act favorably on this legislation and to do so now. We are very, very close to achieving passage on this tomorrow, and we're particularly interested in having a vote tomorrow on this matter and a vote on the President's approval. We're sending this forward to show the President's good faith effort to meet the concerns of those on the Hill.

HUNTER-GAULT: In other news, the U.S. and Canada reached an agreement on combatting the acid rain problem, and the Senate Budget Committee passed a new federal budget that cuts military spending and raises taxes more than President Reagan wants. Good night, Jim.

LEHRER: Good night, Charlayne. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.