The NewsHour with Jim Lehrer

MR. LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, the President's news conference. We have excerpts plus some context from two White House reporters, Sec. of Defense William Perry, Elizabeth Farnsworth has a Newsmaker interview. Funding drug abuse programs, Jeffrey Kaye reports from California, and what's happening to the American dream, David Gergen talks to author Robert Samuelson. It all follows our summary of the news this Thursday. NEWS SUMMARY

MR. LEHRER: President Clinton held a televised news conference this afternoon. He announced federal assistance to East Coast areas battered by winter storms and then for 45 minutes answered questions about the budget talks and his wife's role in the Whitewater affair, among other things. On the budget, he said a balanced budget agreement was in reach.

PRESIDENT CLINTON: I'm telling you, we're not that far apart. If the objective is balancing the budget and giving an appropriate tax cut, we are not that far apart, and we ought to resolve the policy issues we can resolve, put the ones we can't decide. There will be plenty of things to argue about in the election season, but this is something we ought to give the American people, and I think we will. I'm quite confident. I think we will.

MR. LEHRER: House Speaker Gingrich listened to the President's news conference in Seattle. He said Mr. Clinton repeatedly misled the American public about Republican positions.

REP. NEWT GINGRICH, Speaker of the House: I will just say that I don't think the President moved the negotiations a step closer to a balanced budget today. I thought it was a very, very disappointing press conference, and it does not give me much encouragement. We're still prepared to meet next Wednesday. I hope that the President and his staff will decide that it is time to get serious about balancing the budget and not just play political games, and I regarded, frankly, today's press conference as a zeal game.

MR. LEHRER: We'll have more of and about the President's news conference right after this News Summary. The Senate Whitewater Committee had a hearing today on First Lady Hillary Clinton's work as a private practice attorney. The committee is examining ties between Mrs. Clinton's law firm and a bankrupt Arkansas savings & loan. The S&L was run by James MacDougal, president--the President and Mrs. Clinton's partner in the failed Whitewater Land Development Company. Charlayne Hunter-Gault has more.

MS. HUNTER-GAULT: The committee today tried and failed to get a clear answer as to who at the Rose Law Firm in Little Rock brought in MadisonGuaranty Savings & Loan as a client in the mid 1980's. First Lady Hillary Clinton, a partner at the firm at the time, is on the record saying associate Richard Massey did it. But under questioning today, Massey, still a partner at the firm, couldn't recall the details.

MICHAEL CHERTOFF, Republican Counsel: Did you ask Mrs. Clinton to go to Mr. MacDougal in order to arrange for him to pay money on a retainer basis, up front so to speak, so that the firm could do work for the Madison Bank?

RICHARD MASSEY, Rose Law Firm: Sir, I don't believe I was involved in any negotiations with respect to how the client would be billed, or it would not have been my place as a first-year associate to be involved in that. It's possible that I could have had a casual conversation with her in a hallway and said, gee, we'd really like to try to get these folks' business, and, and maybe you could have a word with Mr. MacDougal. It's very possible.

MS. HUNTER-GAULT: However, Richard Massey did support Mrs. Clinton's assertions that he, not she, handled almost all of Madison's work at the firm. Records released to the committee last week showed Mrs. Clinton billed Madison for 60 hours of work over 15 months.

RICHARD MASSEY: These were primarily one-man jobs, and I did primarily all of the research, writing, drafting, and so forth. Mrs. Clinton had a role in the--obviously, she had a role in those matters. I view it as a supervisory role. But in terms of who was in the trenches and doing the work, Senator, it was me.

MS. HUNTER-GAULT: Committee Chairman Alfonse D'Amato says he still intends to call witnesses and find out why it took the White House two years to find and release Mrs. Clinton's billing records.

MR. LEHRER: On the hostage story in Southern Russia today, Russian government troops surrounded the village where Chechen rebels are holding more than 200 hostages. We have more in this report from Julian Manyon of Independent Television News.

JULIAN MANYON, ITN: Russian special forces troops are getting ready for action as their army throws a ring of steel around the village where the Chechen rebels are still holding more than 100 hostages. At the scene, a Russian general has said that the gunmen must be eliminated. Every type of heavy equipment is now being moved towards the village of Pervomayskaya. Negotiations are still taking place, but it all looks ominously like the preparations for an assault. ITN was the only television company to slip through the Russian army cordon. In the village our cameraman found Chechen rebels digging trenches as they prepared to fight to the death. The Chechens have faced more groups of fighters in different parts of the village, each group holding some of the hostages. Many of the hostages are women and children, now clearly in some distress cooped up in houses abandoned by local residents.

COL. ISRABILOV, Chechen Rebel Army: [speaking through interpreter] We are not afraid. We will identify ourselves, and the Russians can destroy this place if they want to.

MR. MANYON: The Chechens have told the Russians that they will release many of the women and children in exchange for a written guarantee of safe conduct, but the Russians say that all hostages must be released now.

MR. LEHRER: In Japan today, former Trade Minister Hashimoto was formally named Prime Minister. He was elected by a vote of the parliament. He succeeds Tomiichi Murayama, who resigned last week. Hashimoto is Japan's eighth prime minister in seven years. France said farewell today to former President Francois Mitterrand. Thousands ofmourners joined world leaders at a memorial service at Notre Dame Cathedral in Paris. Mitterrand died Monday at the age of 79 from prostate cancer. Later in the day, he was buried in a private ceremony in Southern France. Family and friends attended the funeral in the small town where Mitterrand was born. He had asked that he not be given a state funeral. Back in this country today, the space shuttle Endeavour was launched into space at dawn. NASA officials said the temperature at Cape Canaveral, Florida, was only 44 degrees, the lowest temperature at launch since the Challenger exploded in 1986. Japanese and American astronauts aboard the Endeavour will retrieve a Japanese satellite. Two spacewalks are also planned during the nine-day mission. And in Washington today, federal workers returned to their jobs for the first time in three weeks. They faced long delays on roads still clogged by a paralyzing snowfall earlier in the week. Subway officials said 5,000 more passengers than normal used the system during the morning rush hour. The federal government had been closed for nearly three weeks by the budget impasse, then for the last three days by the weather. More snow is expected on the East Coast tonight and tomorrow. And that's it for the News Summary tonight. Now it's on to the President's news conference, Sec. Perry, funding drug abuse programs, and a Gergen dialogue. FOCUS - TAKING QUESTIONS

MR. LEHRER: We begin tonight with the President's news conference this afternoon in the White House East Room. It was the first formal one he has held in five months. Here are some extended excerpts.

PRESIDENT CLINTON: Congress's own economists confirmed what we have said all along. We can balance the budget without excessive cuts in Medicare and Medicaid, without cutting education or the environment or raising taxes on our hardest pressed working families. Now, as all of you know also, the Republicans in Congress are insisting on cuts in Medicare, Medicaid, education, and the environment that I believe are well beyond what is necessary to balance the budget, well beyond what is necessary to secure the solvencies of those programs, well beyond what is necessary for the Congressional Budget Office to say we have to do to balance the budget. We all know too that there are two strains at work in the Republican effort. There is the genuine desire to balance the budget, which I share, but there are those who want to use the balanced budget and the huge tax cut crammed within the balanced budget to strip our national government and our country of our ability to do our part here in Washington to help people out in our communities with the challenges they face. We shouldn't let our fundamental agreement on a balanced budget be held hostage to a narrower agenda that seeks to prevent America from giving Medicare to senior citizens or quality nursing home care or educational opportunity for young people or environmental protection to all of us. We could quickly find common ground on balancing the budget and providing appropriate modest tax relief, we could do this in 15 minutes after the tens of hours we have already spent together.

RITA BRAVER, CBS News: Mr. President, when you campaigned in 1992, you and the First Lady both said that the American people would get two for the price of one. I wondered if that's still going to be a slogan in 1996, and if the First Lady has really taken the role that you envisioned for her as First Lady, or if she's just simply become too controversial.

PRESIDENT CLINTON: Well, first of all, I think she's done a fine job. I may have asked her to do more than anybody should ever have been asked to do when I asked her to undertake the, the health care effort. But there are worse things than wanting every American child to have health care coverage just the way every child in every other advanced country in the world has. I believe that, you know, in the last six months or eight months, she wanted to take a lot of time off to write her book, which she did do, and I think the book is a very important contribution to America which reflects 25 years of work, learning, and exposure on her part, and I expect that she will continue to be an enormous positive force in this country. And in terms of controversy, very often in this town, you know, you don't make yourself controversial; someone else makes you controversial. Yes, Brian.

BRIAN WILLIAMS, NBC News: Mr. President, do you worry about the cumulative effect of this, this drum beat, which is getting louder. As of close of business today, there will be more people under subpoena in the Travel Office matter than were fired in the Travel Office matter, and second, you must have discussed why it is, even if cleared in the end of all charges, why it is your wife, the First Lady, appears to be the most--arguably the most controversial First Lady, at least in modern politics.

PRESIDENT CLINTON: Since Eleanor Roosevelt for many of the same reasons, from many of the same sources. And that's just part of what we're living through. The American people can make up their own mind about the facts of it. Yes.

LAWRENCE McQUILLAN, Reuters: To kind of stay on this theme of controversy, the end result seems to be that it's taken a toll financially on your obligations and there's a magazine report out that, that's assessed your situation, and basically decides that you're pretty close to bankruptcy. Could you give us a little bit of the financial toll, or--

PRESIDENT CLINTON: You know, I feel worse--I suppose it probably is right. I have never added it all up, but that's probably right.

ANN COMPTON, ABC News: Mr. President, as I recall, you once told the Republicans that if they wanted to pass these ideological changes, they'd have to have someone else behind the Oval Office desk to sign them into law. Is that what this boils down to, you putting your presidency on the line for the budgetary items and the government programs you believe in, and isn't that what the Speaker is saying that, that these--isn't he saying that these have to be resolved before they'll do any budget, other than continuing resolutions?

PRESIDENT CLINTON: But the point I'm trying to make, that is what I said, and if you look at the context in which I said it, at the proposals they then had on the table, already they have moved on that. And I have made a good faith effort to come toward them. But that's what you have elections about. The what--the way democracies work and particularly ours has worked for 200 years, is that people of good faith and honest differences attempt to reconcile their differences, and then when they can't, they attempt to do what they can, and then let the voters resolve their differences that they can't resolve at election time. The important thing now is that all the American people know that one of the differences we do not have to resolve is whether we should pass a credible balanced budget plan. That can be done. That can be done in no time. We have already--both sides have agreed to well over, well over $600 billion in spending reductions. We have agreed to more than enough to balance the budget in seven years, and still give a modest tax cut, so that is no longer at issue. My view is we should do both those things. We should pass the balanced budget, we should give a modest tax cut, we should put the other differences off for the election. That's what elections are for, but that's not an excuse for us to lay down on the job now. The people hired us to show up for work every day. Yes, sir.

ROBERT RANKEN, Knight Ridder: Mr. President, what are the issues you think should be deferred to the election? You mentioned Medicare and Medicaid several times as things you just can't tolerate that degree of cuts.

PRESIDENT CLINTON: Let me--I think--and the structure of Medicare. You know, we can try some experiments, but to fundamentally change the structure of Medicare so that it would no longer be a recognizable guarantee for our seniors, I think that is going too far in the direction of just turning it over to insurance companies and other private providers. Whether Medicaid should be a block grant instead of a guarantee from the nation to our poor and disabled children and to seniors in nursing homes, that's something, I think, that could be deferred to the election, but we can make an 80 percent agreement, because I am in favor of letting the states have much more flexibility in the way they run the program, or some of the environmental aspects of the, of their plan that I do not believe properly belong in that, I don't see why we should cloud this budget agreement with controversial items like whether we should drill in the Arctic National Wildlife Refuge. Those things are not necessary to balance the budget.

MR. LEHRER: Now, this news conference and what it may say about the atmosphere at 1600 Pennsylvania Avenue these days. We talk to two White House correspondents, Susan Page of "USA Today," and James Carney of "Time" Magazine. Susan Page, this was seen as a major event by the President and his aides, was it not?

SUSAN PAGE, USA Today: It was. You know, it's been five months since he asked questions in such an extended way, a very important news conference, and at a time of, I think, some peril for the White House, peril on the budget, peril on the scandal front, peril also with the deployment of all these troops to Bosnia.

MR. LEHRER: Yeah. Well, there's a purpose behind all of these things. What was the purpose going in, as you understood it?

MS. PAGE: I think the President wanted to make it clear to Republicans that he does want a budget deal. If there was any doubt about that or any question in his mind, I think it was settled yesterday when the stock market took a plunge of almost 100 points in the wake of the recess of the budget talks. And I think he also wanted to show that he can answer questions about Whitewater and Travelgate and not look defensive. I think he, while he didn't break new ground on either of those fronts, I think he was trying hard to look like he was being open and cooperative and willing to answer any questions that are going to be posed, and I think the White House is now discussing what Mrs. Clinton might do to settle some of these questions. Jay Carney, would you agree, first of all, that there was no new ground broken by the President on any matter today, was there?

JAMES CARNEY, Time Magazine: No, there wasn't at all. In fact, I was somewhat surprised. I sort of expected a little more, that he would shed a little more light on what he was proposing to the Republicans to advance the budget negotiations. I mean, it really seems as though Bill Clinton has become the last optimist in Washington about--as to the question of whether or not these negotiations will produce an agreement. Newt Gingrich's comments today I think threw a lot of cold water on what the President said. It was very surprising. What the problem may be is that Bill Clinton doesn't want to walk away from the table because once he does, that issue is then left to the election and what he's got left is Travelgate and Whitewater. The budget negotiations haven't been all bad for Clinton at all. On, on the scandal issues, I think that that is--what Susan said is correct, that they're going to--the campaign now is sort of to kill them with kindness and openness to portray themselves as always willing to come forward with documents, always willing to answer questions. The First Lady's going to hit the networks beginning tomorrow night and interviews next week, and perform her book tour, and take a lot of these questions and try to defuse the, the almost feeding frenzy right now in Washington.

MR. LEHRER: But at the same time, Susan, that will also keep the story alive, will it not, because she will be going from place to place and being asked these questions place to place?

MS. PAGE: Well, to the White House's dismay, this story is alive no matter what Mrs. Clinton does. We saw new Whitewater hearings today, a full week of Whitewater hearings expected next week. Next week, the House Government Operations Committee also resumes its hearings into Travelgate, and Travelgate is a scandal or a controversy that is easier to understand than Whitewater and in that may maybe more damaging, so the White House does not have the choice of whether these controversies are going to be in the news are not; they are. The question is how are they going to respond to them.

MR. LEHRER: Yeah. Jay Carney, do you--this is always a hard question to answer but I'm going to ask it anyhow. I mean, was this news conference planned today, or in some kind of atmosphere that could be described as crisis atmosphere, or how would you describe it?

MR. CARNEY: Well, it is an odd situation. I think that normally we know exactly why a press conference is planned. You know, there's some speculation. The press secretary and the White House have been under pressure to have a press conference. It's been five months, as Susan said. I know that the press office has wanted the President to come out in this forum to discuss where he was on the budget. But as to the crisis atmosphere, there is some of that, and I think that there's tension right now in the White House between those people who have been working on the budget and working on issues that have generally been very good for the President in the last four to six months as the numbers are up. The public is giving him a second look and giving him a lot of credit, and those other portions of the White House staff, primarily in the First Lady's office, who are now taking a large portion of the blame for these suddenly emerging documents and, and, you know, the--

MR. LEHRER: Sure.

MR. CARNEY: --scandal that is now, this dark cloud that now rests over the White House just as the President seemed to have been doing so well.

MR. LEHRER: Do you read it the same way, Susan?

MS. PAGE: Yes. I think that's right. You know, it's--in a way, it's ironic, because the President's public approval numbers have been getting somewhat better. In most polls, he's been beating Senate Majority Leader Bob Dole, his likely opponent in the election, but there are a lot of problems percolating, and they're percolating at a critical time. For instance, justtake the budget talks and the effect they may have on the economy. We're now into the first quarter of the election year. The most important or reliable indicator of whether a President is going to be reelected is economic performance in the first three quarters of the election year. We're into that period; the economy looks a little shaky; the failure to reach a budget deal could have a real effect on that. You saw the President express some nervousness about that, I think, at the news conference.

MR. LEHRER: Jay Carney, back to your point about Newt Gingrich's reaction. I watched that as well, and the end of--the news conference ended, and then they went immediately to this news conference of Gingrich's out in Seattle, Washington, and you would have thought they were talking about two entirely different budget talks. Gingrich essentially said the President--didn't essentially say it--he said the President misled the American public. He used the name--the word "cuts" eight times in reference to Medicare and Medicaid in ways that were incorrect, and he said this was not constructive, and he said just the opposite of what the President said.

MR. CARNEY: It was striking because Speaker Gingrich actually took several steps backwards in the rhetorical arguments. I mean, we've sort of been through that. Is it a cut? Is it a cut in the growth of spending, all those sorts of things, and it was striking also because the President made the point that he spoke with Bob Dole today and he characterized that conversation as relatively positive, and certainly there has been in these negotiations tension between Dole, whom I think we all know to want a deal and to want to get it over with, and Speaker Gingrich, who is really hamstrung by the House that he created, you know, the majority of Congress is Republicans and those who are most conservative and most opposed to splitting the difference with the President on the budget deal are the very people whom Gingrich can personally claim to have helped usher into the Congress and to, and to have helped create the majority. So I think Gingrich's maneuverability is limited and maybe he's decided to wash his hands of this and to begin the positioning for 1996 elections, and, and that's what this is about, because I was--I was struck by the difference in tone.

MR. LEHRER: And Susan, meanwhile, the President puts the most positive spin of anybody on this.

MS. PAGE: As I say, it's pretty clear the President wants to deal, but it's hard to imagine, given the tone that Speaker Gingrich took, that there's a deal to be had, and that raises some serious questions just in the next few weeks. The continuing resolution that's now funding the government expires on January 26th. Do we face another shutdown? And in about a month, the Treasury is going to hit up against that debt ceiling again. It's not clear what the Congress is going to be willing to do about that.

MR. LEHRER: Both of you all, I assume, were at the White House when this news conference was over. What was the--what were the atmospherics afterward, ride on, Chief, you did a great job, or what--what kind of spin were the folks around the President putting on this, Jay?

MR. CARNEY: Well, they were reasonably positive about it, but I think you have to assess the performance as a good one for the President because he didn't make any mistakes. He didn't say anything that anyone in the White House will regret. But he didn't make a lot of headlines either. It'll get coverage because he is the President and he's addressing issues that are in the news right now, but I don't think he advanced his cause very far along the road here, and I think once the budget, you know, the reality sets in that these budget talks don't seem to be going anywhere, the President is going to have to come right back to the podium and explain why.

MR. LEHRER: Susan, in a word, what do you--how would you read the atmosphere afterward?

MS. PAGE: Well, I think the bad news for the White House is the topics that they're talking about. They're talking about a budget negotiation breakdown. They're talking about scandal. And if you're President, you want to be on the offensive on both those fronts. The President is, at the moment, on the defensive.

MR. LEHRER: All right. Thank you both very much. NEWSMAKER

MR. LEHRER: Now a Newsmaker interview with the Secretary of Defense, William Perry, to be conducted by Elizabeth Farnsworth.

MS. FARNSWORTH: Sec. Perry is back from a week-long trip that began at NATO and U.S. bases in Italy, and then took him to the staging area for U.S. troops in Southern Hungary and then to Bosnia. From there, he went to Ukraine for nuclear disarmament talks, and he wrapped up his travels in the Middle East. He went to Oman and Saudi Arabia and then to Jordan and Israel. Thank you for being with us after such a long trip.

WILLIAM PERRY, Secretary of Defense: Thank you, Elizabeth. It's good to be home.

MS. FARNSWORTH: Let's start with Bosnia. There are about--as I understand it--about 6,600 troops there now. From what you saw, is the deployment going as planned?

SEC. PERRY: The deployment is going as planned. I came away very, very proud of the American troops. In the face of snow and ice and mud and floods, they're overcoming those adversities and they're meeting their schedules. They are displaying--I told them when I met with them not only I was proud of them but they were displaying true grit.

MS. FARNSWORTH: I want to ask you about some of the things that are happening in Bosnia now. Today, according to news reports, a two-mile-long stretch of vehicles was, was passing through or across the airport in Sarajevo, and these were Bosnian Serbs who were trying to get some of their, I guess, home furnishings and things out of their homes before their parts of the city passes under--pass under Bosnian--under Bosnian government control. Does this present a real problem for the implementation force? Should they do anything about this?

SEC. PERRY: I don't believe so, Elizabeth. That's my answer to both of your questions. What--our best understanding of what's happening is that there were many Bosnian Serb refugees that were in the Sarajevo area, and those refugees are now leaving and going to Pale and the Pale area. We do not believe that the Bosnian Serbs who live in that area are leaving their homes.

MS. FARNSWORTH: So you're not expecting a mass exodus?

SEC. PERRY: Well, we--there are a lot of refugees there. There are thousands of them, and so there will be a large number of refugees leave. We do not expect the local Bosnian Serb residents, though, to be leaving their homes.

MS. FARNSWORTH: So they've been reassured enough, you think, that they will stay there, because there have been all these reports that they would torch their homes and it would present such a problem for the NATO forces.

SEC. PERRY: Just yesterday, President Izetbegovic announced amnesty for the Bosnian Serb soldiers. I think that will be a very positive step towards reassuring, towards comforting the people who are concerned, which it's--there are still problems in the Sarajevo area. We're a long way from having that situation stabilized, but the developments to date I believe are not cause for particular concern.

MS. FARNSWORTH: Recently, the U.S. had to or was called out of its sector. I know that the U.S. is in one sector. The French are in another sector. The British are in another sector, and U.S. troops were called out to help with some Apache gunships when there was some idea that there were--there was, I guess, danger at the Sarajevo Airport and some of the advance troops for the President were coming in. Is that likely to happen, that the, the NATO commander will call on U.S. troops to help out in Sarajevo sometimes?

SEC. PERRY: Yes. The IFOR, the name of the NATO forces, is an integrated force, and the commander, Admiral Smith, who's an American admiral but is commanding that force, has the authority to call troops from any one of those regions to assist in any of the other. It's a convenience to organize them, to have them located that way, but we're not really organized as different national entities. We're organized as NATO, and we're there as an integrated force.

MS. FARNSWORTH: Um-hmm. And finally, on the news reports today about the mine, I guess there's an open pit mine which is-- apparently has thousands of bodies that were dumped there allegedly by the Bosnian Serbs, and a British NATO force is just a mile away but is saying that it's not its job, it's not this group's job to open up the road so that the investigators can get in to look at that mine. What do you think about that?

SEC. PERRY: Two comments to make on that, Elizabeth. The first is that part of the IFOR responsibility is to assure freedom of travel throughout the region, and certainly a high priority in that is facilitating the investigation of the war crimes tribunal, so a very positive answer to that question, yes, we do have that responsibility. IFOR does have that responsibility. Secondly is that we've been in place now for less than three weeks, and it's going to be another couple of weeks until we're there in force. And before we are in a position to confidently establish freedom of movement throughout the country, we need to have the place in force. We'll be in that position in about another three weeks.

MS. FARNSWORTH: Okay. Moving on to Ukraine, would you describe what you did just South of Kiev, you and the defense minister of Russia and the defense minister of Ukraine.

SEC. PERRY: This was, I believe, an historic occasion. Having those three defense ministers come together at all, that's the first time that has ever happened, but what we came together for was to blow up, to destroy a missile silo, and ICBM silo. And all of my adult life I've been living with the nuclear cloud hanging over my head, threatening the extinction of all mankind.

MS. FARNSWORTH: We're the generation that hid--had to go under our desks for--

SEC. PERRY: Exactly. And now with the ending of the Cold War, that cloud is drifting away, but there are thousands of weapons still remaining. And we have as a high priority in the United States to take actions to get those weapons destroyed as quickly as possible, as efficiently as possible, so we went there for the purpose--one aspect of that program was blowing up those silos. That site, Pervomayskaya, just a year ago there were 700 nuclear warheads all aimed at targets in the United States. We're in the process of dismantling that, removing that threat to the United States. By this June, that missile field will have become a wheat field again. That's the process we're going through right now. And to have those three defense ministers come together to participate in that activity gave me a real sense of, of accomplishment, a real sense of pride.

MS. FARNSWORTH: And you each had a switch that you moved.

SEC. PERRY: We each had a key which was the launch control key for the missile. The wiring had been changed so that when all three of us turned our keys, it caused the silo to detonate and to blow up.

MS. FARNSWORTH: The U.S. has been helping fund the efforts to get rid of these missiles in Ukraine, Belarus, and Kazakhstan. How's it going elsewhere?

SEC. PERRY: This is, by the way, called the Comprehensive Threat Reduction program for reasons that are obvious. And it's also known as the Nunn-Lugar program, because the program was initiated by Sen. Nunn and Sen. Lugar. That involves about $400 million out of the defense budget funds, and we're doing that in all four of the countries in the former Soviet Union that have nuclear weapons, and Kazakhstan, Kazakhstan is already nuclear-free. By this June, we expect Ukraine to be nuclear-free. Ukraine was the third largest nuclear power in the world, and they're going to be a non-nuclear nation by this Summer. And Belarus is also reducing its weapons. It will be nuclear-free by the end of the year. Russia, in the meantime, is reducing the size of their nuclear forces under START I, as is the United States.

MS. FARNSWORTH: And just before the meetings, the defense minister of Russia, Mr. Grachev, said that if NATO is enlarged to include the ex-Warsaw Pact nations, I think he said Russia might re-think its policy on tactical nuclear arms and its commitment to arms pacts. It's not a direct quote. Did he talk to you about that? Did he say that to you?

SEC. PERRY: Yes. I've talked with him many times on this whole question of the expansion of NATO, and I understand that Minister Grachev and most Russians are very much concerned about NATO. NATO to them has been the threat for decades. NATO is a four-letter word in Russia, and, therefore, they're very nervous about the prospect of NATO expanding right up to its borders. I believe, and I've explained to him many times, that as he works more--as Russia works more closely with NATO, they're already members of the Partnership for Peace, which is in NATO, that they will find that NATO does not pose a threat to them and, indeed, is there to enhance the security of Europe, which enhances their security too. The most significant development in that regard is Russia participating in NATO, with NATO in Bosnia. And they're going to see then that we can--they and NATO can work together for the benefit of the security of all of Europe. That's going to, I think, ease their concern in time.

MS. FARNSWORTH: Okay. Moving on to your visit to Saudi Arabia, this was your first visit, I believe, since the car bombing last November--

SEC. PERRY: Yes.

MS. FARNSWORTH: --that killed five Americans. What did you find there? Do you think that was a sign of rising anti-West sentiment?

SEC. PERRY: No, I don't, Elizabeth. This was one act of terrorism in many, many years in that country. Anywhere our troops are deployed we have to be concerned with the prospect of terrorism. Even in Oklahoma, we had--some of our soldiers were killed by an act of terrorism. I found generally stability in the country; nevertheless, we have enough concern about this that we have taken additional security measures to make our troops less vulnerable to that sort of an attack, but I--I see no reason for singling out Saudi Arabia as a country where troops might have particular problems. It's a general problem we face with our deployments anywhere in the world, and we are taking special measures in Saudi Arabia. I talked, by the way, with all of our troops that are there and the families I met with two of the widows of the, of soldiers who were killed. Our mission there is very important, and we are not going to be pushed out of the country by an act of terrorism.

MS. FARNSWORTH: Jordan and Israel, Israel at this point, the big question now seems to be, or the big--Israel is really moving forward on this Syria peace and peace with Syria, and one of the main things they're trying to work out is a way to monitor the Golan Heights, and you said that the United States would help with that. What would U.S. troops do there?

SEC. PERRY: I made a fairly carefully phrased statement of what we would do there. I said first of all, our willingness to participate hinges first of all on there being a peace agreement which calls for a peacekeeping force in the Golan Heights, and secondly, very importantly, our willingness to do that hinges on both Syria and Israel requesting us. If both--if all of those conditions happen, then we are certainly willing to, to participate in a peacekeeping operation. It would be a multinational peacekeeping operation. The Japanese have also indicated a willingness to participate in that.

MS. FARNSWORTH: Are you committing the U.S. to something prematurely though? There's a lot of opposition to this in Congress, isn't there?

SEC. PERRY: Uh, I also told them that any proposed--any response of the United States, we would have to consult with Congress about. My own belief is that Congress will support a reasonable move, a reasonable deployment of that sort. But it's premature yet because we don't have a peace treaty yet. We don't have a request yet. But given that, then we would certainly go to the Congress and consult with them and propose a course of action.

MS. FARNSWORTH: Things have changed so much in the Middle East. The Israelis actually lobbied, as I understand it, for the aid that you promised to Jordan, which is something very new, military aid, military sales.

SEC. PERRY: When I was in Jordan, I proposed to King Hussein the program which would provide a squadron of F-16's to Jordan, and he was--and he accepted that proposal. We will be going ahead with that program. I followed that with a visit to Israel. I briefed the Israelis on this program, and in the press conference I held with Prime Minister Peres, he--I mentioned nothing about this but he took the occasion, saying he thought this was a very good move, and he and the government of Israel strongly supported this enhancement of Jordan's security, and I think that certainly is an indication of progress in the Middle East.

MS. FARNSWORTH: Well, thank you for being with us, Mr. Secretary.

SEC. PERRY: Thank you, Elizabeth. Nice to talk to you again.

MR. LEHRER: Still to come on the NewsHour tonight, funding drug abuse programs and a Gergen dialogue. FOCUS - DRUG ABUSE

MR. LEHRER: Now, drug treatment programs. One of the appropriations bills tied up in Congress now calls for sharp cuts in funding. Jeffrey Kaye of public station KCET-Los Angeles reports.

SPOKESPERSON: You look pretty good this morning, huh.

MR. KAYE: Vivian Brown is worried about the future of the women and children in her drug treatment program.

VIVIAN BROWN, Prototypes: If next year our demonstration project is cut off, this will mean some women will be out on the streets with their children, not receiving the treatment they need.

MR. KAYE: Brown is executive director of Prototypes, one of many treatment centers founded in the 80's as part of the war on drugs.

WOMAN: There ain't no doubt in my mind if I use again I'm gonna die.

MR. KAYE: In addition to therapy, Prototypes offers an array of programs for the 80 women and 50 children who live in the facility in Pomona, California, East of Los Angeles. There are lessons on parenting and job training. Prototypes receives $960,000 a year, but its future is in question since the federal agency that funds it, the Substance Abuse and Mental Health Services Administration, or SAMHSA, is facing deep cuts. Last year, SAMHSA received about $2.2 billion, but in August, the House of Representatives passed an appropriations bill that would cut SAMHSA's budget by 18 percent. In September, a delegation representing federally funded treatment and prevention programs went to Washington to lobby against the cuts.

SPOKESMAN: I want you all to sit down and make yourselves at home.

MR. KAYE: The object of the delegations attention was Republican Congressman John Porter. Porter offered the appropriations bill passed by the House, but since the measure still had to be considered by the Senate, it was not a done deal.

MARY ANN ANDERSON, Alcohol & Drug Treatment & Prevention Association: We wanted this opportunity to talk with you today about the magnitude of the reductions in funding for substance abuse.

ELLEN WEBBER, legal Action Center: Unless you have a very forceful and singular message that's coming from all levels, the federal government, the state government, and the local government, which is matched by funds to fund these programs, you're going to have an increase of drug and alcohol use.

MR. KAYE: Congressman Porter listened closely but appeared unpersuaded.

REP. JOHN PORTER, [R] Illinois: We have a huge budget deficit in Washington. My assignment at Labor, Health & Human Services, and Education was to find $9 billion in reductions out of $70 billion of discretionary spending. It is a contribution to get the deficit under control and not pass our bills onto our children.

MR. KAYE: But SAMHSA director Nelba Chavez says the proposed cuts will cost taxpayers more in the long run.

NELBA CHAVEZ, SAMHSA: We will see an increase in health care costs. We will see an increase in crime. We will see an increase in, in violence. We will see an increase in homelessness, and we will see an increase in the abuse of children.

MR. KAYE: But Congressman Porter says under his plan SAMHSA and the states which receive block grants would continue the best programs. Most cuts would come from demonstration projects, programs like Prototypes funded to test methods of treatment or prevention. Porter says his goal is not only to save money but to require greater accountability.

REP. JOHN PORTER: Most of the demonstrations are not evaluated for their effectiveness. Some are, but most are not. Unfortunately, many of them continue on year after year as if they were existing programs, funded directly by the federal government, instead of a demonstration grant to see what works best and then shared among providers.

MR. KAYE: Porter did not provide any examples of what he considers problem programs after repeated requests to his congressional staff, but he's supported in his belief by William Bennett, who was drug czar during the Bush administration. Bennett says too much money has been spent on drug treatment that doesn't work.

WILLIAM BENNETT, Former Drug Czar: I'm all for spending more money on effective drug treatment,and we spent a lot, increased a lot when I was there, but not for pouring money into programs where there's no accountability, which is the current situation.

MR. KAYE: Chavez says her agency has tightened up evaluation procedures and does require most demonstration programs to evaluate their results.

NELBA CHAVEZ: We have very, very stringent evaluations for many of our--for the majority of our programs, and we have been able to demonstration that treatment does work.

MR. KAYE: Prototypes, for example, has received what its director calls an extensive evaluation. Vivian Brown says most women in her program six months or more are drug-free six months after leaving Prototypes.

VIVIAN BROWN: If a woman stays in this program and graduates, we have incredible success. We're talking 75/80 percent success. But unless I follow up those women and children, I cannot tell you if a woman six months from now is still clean.

MR. KAYE: Brown says the proposed cutbacks are a sign that the political will to fight the drug problem has diminished.

VIVIAN BROWN: Sometimes people don't like people who cost this country more, and that--by that, I mean people who may be on welfare, people who are homeless, people who use drugs, particularly women. I think women have been targeted by many people in this country as bad mothers, bad people, and they should be punished. And if you believe these women should be punished, then you don't believe they should be given treatment; you believe they belong in prison, not in treatment.

MR. KAYE: While treatment advocates have pleaded their case in Washington, the alcohol industry has lobbied for the cutbacks. The industry argues federal funds have been misspent on programs like the Community Coalition for Substance Abuse Prevention and Treatment.

SPOKESPERSON: [on phone] Community Coalition.

MR. KAYE: The coalition tries to limit the number of liquor stores in Los Angeles. 80 percent of the coalition's $1.3 million annual budget comes from the federal government. The group organizes residents to oppose liquor permits at city hall hearings.

WOMAN: By adding another permit to this particular community then, indeed, there would be an adverse impact on the neighborhood.

MR. KAYE: The coalition maintains that with fewer liquor stores, there'd been less alcoholism and less crime. That claim is a controversial one with which the alcohol industry disagrees. Representatives of the industry also say federal funds should not be used to lobby against legitimate businesses. David Rehr represents the National Beer Wholesalers Association.

DAVID REHR, National Beer Wholesalers Association: It would be just like their reaction if I went to the federal government and said, give the beer wholesalers $10 million so we can go and lobby the city of Los Angeles to eliminate beer taxes, or to allow all sorts of increased outlets for the sale and consumption of beer. They'd be outraged! Our feeling is you just shouldn't use taxpayers' dollars for advocacy, period. If they have people who feel strongly about limiting liquor licenses, they should just go ahead and raise that private money from those people and pursue that neo-prohibitionist agenda.

KAREN BASS, Community Coalition: I just have to disagree with that.

MR. KAYE: Karen Bass, the coalition's executive director, says she's using her federal grant to try to reduce alcohol-related problems, not to outlaw liquor.

KAREN BASS: What we are doing in the long run is reducing use of other public money because if we can eliminate crime clusters like that, we are reducing the expenditures of other public dollars for police, for criminal justice, for hospitals. So it depends on how you choose to look at it.

MR. KAYE: Legislation to fund alcohol and drug abuse programs remains stalled in Congress. Although the appropriations bill was passed by the House of Representatives, it has yet to get to the floor of the Senate. DIALOGUE

MR. LEHRER: Finally tonight, a Gergen dialogue. David Gergen, editor-at-large of "U.S. News & World Report," engages syndicated columnist Robert Samuelson, author of The Good Life and Its Discontents: The American Dream in the Age of Entitlement, 1945- 1995.

DAVID GERGEN, U.S. News & World Report: The theme of your book seems to be contained in the first sentence, which says, "The paradox of our time is that Americans are feeling bad about doing well." What do you mean by that?

ROBERT SAMUELSON, Author: If you go back and look at the United States, how it's changed over the last 50 years, I think most Americans would just be astonished about not only the material changes but the psychological changes, the changes in the way we live and the assumptions that we have in our social customs. At the end of World War II, just to take one example, less than half the population had a telephone in their house. There obviously were no televisions in people's houses. At the beginning of the 1940's, the most common fuels for household heating and cooking were wood and coal. We take things for granted today that simply did not exist and people really didn't imagine could exist in the 1930's, in the 1940's, and even to some extent in the 1950's. For example, retirement is a normal part of life. That was made possible by Social Security in the 1930's and the spread of private pensions after the war. Health insurance as a kind of--and health care as a kind of right--almost no one had health insurance before World War II. There was a little bit here and there. It really began during the war, and it spread substantially after the war, and now most Americans think that everybody ought to somehow be covered by health insurance. But that was an idea that was completely foreign to us. College education--5 percent of the people in 1940 had a college education. So that's the material side of life and sort of the kind of expectations we had about--enormous changes in the expectations we've had about how we go about living. Let me just- -one other area which is so important, and that is the decline in discrimination over the last 50 years. It's not just that there was legal discrimination against blacks in the South up until the 1960's. It is that there were attitudes that were widespread in the United States that were racist attitudes. At the end of World War II, for example, they had a survey that said, "Should blacks be allowed to get any kind of job that a white can get, or should they just get the jobs that whites don't want?".

MR. GERGEN: Right.

ROBERT SAMUELSON: More than half of white Americans said they should just get the jobs that whites don't want.

MR. GERGEN: That's changed enormously.

ROBERT SAMUELSON: Enormously. The last time they asked that question, which was the early 1970's, 97 percent of the people said they should get any job they want. And, and so that even though we have these problems, people don't recognize the enormous transformation of social attitudes and material well-being that we really had over the last half century.

MR. GERGEN: But your point is, though, that coming out of that post-war boom, during that 25 years after the Second World War, we created not only a better society, a much better society, but a set of expectations, what you call the age of entitlement. The people began to feel they were entitled to the good life and an ever-rising standard of living and to, and to a government that, in fact, provided more and more benefits, more bounty, in effect, with society, and then that, inevitably, there was going to be disillusionment which set in with that, that we couldn't achieve that perfection.

ROBERT SAMUELSON: I think that that is basically the theme of the book, and that we began to feel that we were entitled to so many things from so many places. We not only expected that the government would do a lot for us, but we expected corporations, for example, who were going to be able to provide absolute job security for Americans, constantly rising incomes, constantly improving fringe benefits like health insurance and pensions, and we ignored that there was a fundamental contradiction in our expectation. We, we expected the benefits of a competitive economy, which is naturally kind of disruptive and dynamic, where a Microsoft and Intel begin to challenge the dominance of IBM. We expected all the benefits of such an economy without any of the drawbacks, in other words, the fact that IBM has to lay off people, the fact that they can't meet all their commitments, and so, it seems to me, we set ourselves up for this kind of disappointment.

MR. GERGEN: And that we've gone from a period of excessive optimism about what society could achieve, what government could achieve, what business could achieve, to a period of what you now consider excessive pessimism about where we are.

ROBERT SAMUELSON: I think we're excessively pessimistic in the sense that people compare what we have with what we expected. And since what we expected was quite unrealistic, they can draw up a long laundry list of places and events in our society and trends that don't meet our expectations.

MR. GERGEN: Let me press you now on your theme a little bit, because, essentially, you're arguing that we had an illusion that we could have rising prosperity. But isn't it possible, as Paul Krugman has argued in reviewing the book, and economist Paul Krugman, that it will look back and say that the last 50 years are really divided into two periods, one was the post-war boom when we did have high growth rates and growth rates of 3-3 1/2 percent a year, and then if you look at the years since the 1970's, the period of growing disillusionment, what we've had is substantial slowing of the economy. And, in fact, many people are facing not just stagnant incomes; many people are facing lower incomes, so that there's a real reason for people feeling disillusioned after all. It's not just an illusion; many people feel like life is not getting better and that things really are slowing down. And, in fact, they are.

ROBERT SAMUELSON: Well, I don't believe that we won't have rising prosperity in the future. I don't believe that we haven't had rising income gains over the last 25 years. And I think if you look at the things that people actually own and buy, their houses have air conditioning to a greater extent than they had in 1970, we have VCR's, cable television, personal computers, more people have knee replacements and bypass surgery, you can go down a long, longer list of things that we have that we didn't really have even 25 years ago. What has changed in the last quarter century, it seems to me, is that these income gains have been much slower than people expected and, and imperceptible.

MR. GERGEN: I want,again, to challenge the notion that this is an illusion. Isn't there something different today when an employee feels he has a social contract with a company for a big company, he works hard 25 years, very loyal to the company, he's then laid off by that company, the company's stock goes up, and the people at the top of the company get increases in their pay, and the employees--they just say good-bye, and from the employee's point of view, his boss just doesn't give a damn, isn't that different, and don't people have a legitimate grievance about that?

ROBERT SAMUELSON: I think people in a situation like that have a right to feel angry.

MR. GERGEN: Right.

ROBERT SAMUELSON: If I were in a situation like that, I would feel angry. I'm not sure that you're being quite fair. You've created a situation in which every CEO who fires every employee is completely callous, completely insensitive, and really doesn't care about the people he had to let go, and I doubt that that is the case. But if you're let go, it doesn't make any difference whether the CEO is devastated about it, or whether he doesn't really care at all, but the point I'm trying to make here is in the first place, there is still an awful lot of job security, and we tend to miss that.

MR. GERGEN: Yeah, but--that you're going to be laid off.

ROBERT SAMUELSON: Yeah, that's right. That is exactly--

MR. GERGEN: No matter what you do.

ROBERT SAMUELSON: That is exactly right. We had this idea and it was unrealistic that every large corporation would always be immortal, that it would never lay off anybody, except for cause, and that was unrealistic. It doesn't mean that every corporation fires everybody every year, but it does mean we're going to have to learn to live with a greater anxiety, more insecurity, but you have to come to terms with the way the world is, and not the way we want it to be if that was an unrealistic expectation. And I don't think Americans want the kind of rigid economy that stagnates that the vision of the completely stable environment implies. I mean, you can have stability, but ultimately, that means stagnation. And we have to learn to, to understand, it seems to me, that all good things are not always compatible, and in--there are ups and downs in life.

MR. GERGEN: But doesn't that also mean, though, that the working- -working people in this country haven't been living through an illusion, that they have some real issues, real reasons for anxiety?

ROBERT SAMUELSON: They do have real reasons for anxieties, but I don't think we ought to exaggerate how bad off we are. And I would say that the anxiety that we have to some extent here is not working class anxiety. The working class always had anxieties. The idea that there was complete utter job security for people at the bottom end of the economic spectrum is an illusion. There was always insecurity for those people. The reason you hear so much about it today is that people in the top half of the spectrum who thought they would never have job insecurity, now they experience the same sort of thing, and they're more articulate and their anxieties are new to them, and they're completely unexpected. Well, you take construction workers. Construction workers have always had job insecurity, and so to some extent here, the popular dialogue projects on a group of people who have always faced these problems, the problems of a group that really never expected to face them.

MR. GERGEN: As much as I'd like to talk on, thank you very much.

ROBERT SAMUELSON: Thank you very much, David. RECAP

MR. LEHRER: Again, the major stories of this Thursday, President Clinton said at a news conference that a balanced budget deal with congressional Republicans was in reach. Speaker Gingrich disagreed. The President also said First Lady Hillary Clinton should and would answer all new questions raised about her involvement in the so- called Travelgate affair and the Whitewater matter. We'll see you tomorrow night with Shields & Gigot, among other things. I'm Jim Lehrer. Thank you and good night.