The MacNeil/Lehrer NewsHour

MR. MUDD: Good evening. I'm Roger Mudd in Washington.

MR. MacNeil: And I'm Robert MacNeil in New York. After the News Summary with a Supreme Court nomination imminent, we debate whether it should be politician or jurist. From Congress, Kwame Holman updates the emerging tax bill. Mark Shields and Doug Bailey analyze the week's politics, and Bruce Van Voorst with Time Magazine reports on the politics behind the gays in the military issue.NEWS SUMMARY

MR. MUDD: President Clinton discussed a possible Supreme Court appointment with Federal Appellate Court Judge Stephen Breyer face to face today. But the White House said this afternoon the President had not yet made a final decision on replacing retiring Justice Byron White. Breyer, who is the chief judge of the First Circuit Court of Appeals in New England, arrived at the White House this afternoon for an hour and forty-five minute lunch with the President. White House officials indicated the list of candidates had been narrowed to the 54-year-old Breyer and Interior Sec. Bruce Babbitt. Babbitt has said he would accept the nomination offered but would be happy to stay in the cabinet. The Supreme Court today upheldthe right of states to hand out longer prison sentences to people who commit hate crimes. The court said such sentencing was not a violation of free speech. It was a unanimous decision written by Chief Justice Rehnquist. About 20 states now have laws allowing harsher punishment for crimes motivated by racial hatred. In another unanimous decision, this one written by Justice Kennedy, the court upheld the right of religious groups to conduct animal sacrifices. The practice is conducted by followers of a religion known as Santeria. The court ruled that a Hileah, Florida, ordinance banning animal sacrifices violated constitutional guarantees of religious freedom. Robin.

MR. MacNeil: President Clinton today named Walter Mondale the new ambassador to Japan. Mondale's a former Senator from Minnesota, a vice president under Jimmy Carter, and unsuccessful Democratic candidate for President in 1984. The announcement was made in the White House Rose Garden. Mr. Clinton called Mondale a statesman, negotiator, and counselor who could strengthen the bonds between the U.S. and Japan. Mondale had this to say.

WALTER MONDALE, U.S. Ambassador-Designate, Japan: There are worse economic tensions with which we must deal. And President Clinton and Prime Minister Miyazawa have agreed to develop a new frame work to address our economic agenda. And success in this area is necessary for both of our nations. Above all, we share a common commitment to freedom, to democracy, to human rights, to a market-oriented economy, and to international cooperation. The truth of it is that we are essential partners. The well being of one depends on the well being of the other.

MR. MacNeil: North Korea today reversed a position and agreed not to withdraw from the nuclear nonproliferation treaty at least for now. The announcement came during talks in New York between State Department officials and North Korean representatives. The statement did not make clear whether the decision was final. The director of the CIA said recently that North Korea had enough nuclear material for at least one bomb. The North Korean government raised fears of an Asian arms race three months ago when it announced it would withdraw from the treaty. That withdrawal would have been effective tomorrow.

MR. MUDD: The White House Travel Office was back in the news today. The Washington Post reported that White House Associate Counsel William Kennedy had told the FBI officials that he might have to ask the Internal Revenue Service to investigate the travel office if the FBI did not do so immediately. That telephone conversation reportedly occurred about a week before the seven- member travel office was fired amid allegations of possible wrongdoing and replaced by a cousin of President Clinton. Today's story brought more sharp criticism from Senate Republican Leader Robert Dole.

SEN. ROBERT DOLE, Minority Leader: When the American people hear that these two powerful independent, and I underscore independent, agencies may be getting political marching orders from the White House, the American people have the right to be alarmed. And judging from some of the tantalizing evidence the media's uncovered, it's no wonder people are now asking is there a Travelgate coverup going on? There might be and there might not be. But how do we know? The only people looking into this are ones who got the White House into the mess in the first place. And the Democratic-controlled Congress continues to refuse our demand for accountability from a Democratic-controlled White House.

MR. MUDD: White House Press Sec. Dee Dee Myers said Chief of Staff Thomas McLarty and Budget Director Leon Panetta were reviewing the entire matter. During a White House briefing, she had this comment on the Washington Post story.

DEE DEE MYERS, White House Spokesperson: The White House did not contact the IRS. And the IRS I think confirms that in the Washington Post story this morning, that no one from the White House ever contacted the IRS.

REPORTER: Was there an implied threat that they would contact the IRS?

DEE DEE MYERS: No, there was no implied threat, but I would just leave the final analysis of this to, to the management review currently being conducted by McLarty and Panetta.

MR. MUDD: In economic news, there was no inflation in prices at the wholesale level last month. The government report said declines in energy and food prices offset other price increases. A separate government report said retail sales were up .1 of 1 percent in May, after a much stronger performance in April. The New York Times has agreed to buy the Boston Globe for $1.1 billion in cash and stock, the highest price ever paid for an American newspaper. The Times, with a daily circulation of 1.2 million, and the Globe, a daily circulation of 517,000, are among the few large newspapers still under family control. The deal gives the Globe full managerial and editorial independence for five years. Shareholders of the two companies must give final approval to the merger.

MR. MacNeil: United Nations troops guarding an aid convoy in Bosnia killed two Croat attackers today. They were the first confirmed deaths caused by U.N. peacekeepers since the beginning of the war in Bosnia. Terry Lloyd of Independent Television News reports.

MR. LLOYD: Much of the convoy had been trapped overnight, its drivers, though still alive, terrified as to what would happen next. It was surrounded by angry Croat gunmen who prevented the lorries from driving on to the mainly Muslim town of Tuzla, which is where the aid was destined. Many drivers bore the wounds from vicious beatings. They'd been dragged from their cabs and attacked. But their ordeal at the hands of local gunmen wasn't over. They headed for the shelter of British armored warriors, one of which was shot at by three Croat fighters. It was then the British army returned fire, killing one of the locals and wounding another. The dead man's family blamed the army for what happened, and other grieving Croats claimed the U.N. was protecting and even arming the Muslims. It placed more pressure on the army and its already precarious role. Meanwhile, the convoy had made some progress, believing it had been granted safe passage out, but as it made its made through Navi Bela, just a short distance away, the gunmen reappeared and shot one more driver dead. His vehicle slid into a telegraph pole with his engine still running. The local militia left the scene waving and cheering, indicating how much law and order had broken down here. The rest of the convoy slowly filed past the sight of the murder, the other drivers too frightened to stop. They were then ordered to drive along dirt tracks where they were halted again and their lorries were looted. The scenes of Croat families helping themselves to the contents made a mockery of the guarantees by local leaders that the convoy was free to go on.

MR. MacNeil: There were more signs today that U.N. forces in Somalia were preparing to attack a group responsible for a deadly ambush against its peacekeepers. The Pentagon ordered the aircraft carrier Wasp and three other ships to break away from exercises off Kuwait for possible diversion to Somalia. United Nations forces also ordered the Mogadishu airport closed to all non-U.N. traffic. Somali gunmen killed 23 Pakistani peacekeepers in a Mogadishu ambush last Saturday. A retaliatory strike has been widely anticipated. Eighteen thousand U.N. troops are in Somalia to maintain order, including 4200 from the United States. U.N. officials in the West African nation of Liberia today raised the death toll from a weekend massacre there to over 500. Almost all the victims were women and children. The attack took place Sunday in a refugee camp 40 miles from the country's capital. The rebels have been blamed, but U.N. has opened an investigation which is also focusing on reports that government soldiers were involved.

MR. MUDD: That ends our summary of the day's top stories. Ahead on the NewsHour, we look at President Clinton's Supreme Court options, our Friday political analysis, an update on the tax fight on Capitol Hill, and gays in the military. FOCUS - JUDICIAL QUESTION

MR. MacNeil: We look first tonight at President Clinton's imminent decision on a Supreme Court Justice to succeed retiring Justice Byron White. Headlines earlier this week indicated Sec. of the Interior Bruce Babbitt, a longtime Democratic politician with no judicial experience, was the front runner. Attention then shifted to Federal Appeals Court Judge Stephen Breyer, who was at the White House today for lunch. These two choices have revived an old debate over the merits of politicians versus jurists for the highest court. We join it tonight with Kathleen Sullivan, a professor of law at Harvard University, and Charles Cooper, a former assistant attorney general during the Reagan administration. Kathleen Sullivan, some people seem shocked that the President would consider a politician, not a jurist. Why would a politician, in your view, serve him well in these times?

MS. SULLIVAN: Well, let me start by saying that I think both Breyer and Babbitt are terrific nominees, Breyer in part because he, like Babbitt, has political experience, in Breyer's case working on the Hill when he was Sen. Kennedy's aide. But going back to the question of whether it's shocking to have a politician as a nominee to the court, in fact, it's not. The great tradition of the Supreme Court from Justice John Marshall in the 19th century to Justice Warren in the 20th century includes many people who served either in the federal or in state governments as politicians before they rose to the court. In fact, the great Brown vs. Board of 1954, the court that decided that public schools should be desegregated did not contain a single sitting judge. It contained Earl Warren, the former governor of California, three Senators, two ex-attorneys general, one ex-solicitor general, one ex-speaker of the house, and two new dealers, who later became law professors, who helped FDR build the New Deal. So, in fact, if Clinton were to appoint someone whose first name was Governor as in Cuomo or Reilly or Babbitt, he would be in keeping with tradition of most of American life that we're hearing from the conservative side, the myth of the sitting job as Supreme Court nominee. In fact, that's a very recent innovation of Presidents Nixon and Reagan and Bush. Most of their nominees were sitting judges, it's true, but that's not true of the bulk of Supreme Court history.

MR. MacNeil: Mr. Cooper, I know you think that nominating a politician now would be a bad idea. A bad idea because of who the individual is who's being named or generally?

MR. COOPER: Well, Mr. MacNeil, I don't think that appointing a politician is a shocking proposition, but I do think that being a politician is not a singular virtue for appointment to the Supreme Court. In fact, in my opinion, it raises the question whether or not the individual who is to be nominated and confirmed presumably to the Supreme Court understands the critical distinction between a politician and being a jurist, or rather whether the individual spent his whole career as a politician, thinks he's simply being appointed to another legislature, essentially a super legislature composed of nine legislators who are designed to sit in judgment of the wisdom of the policies, results that have been enacted by state legislatures of the federal congress. I think that's the real question. I have no brief against politicians generally and certainly no brief against individuals with big hearts which, which is the criterion that President Clinton laid down. But I think that in light of that criterion and in view of the fact that Mr. Babbitt's status as a life long politician has been viewed as a, a virtue of his appointment one must has whether he will look inside his big heart for the answers to the critical questions that come before the Supreme Court, or rather he will look to the law and try to apply it as best he can.

MR. MacNeil: Ms. Sullivan, how do you -- what's your comment on that?

MS. SULLIVAN: Well, the question is: What is the law? We've heard from some conservatives in recent weeks that Justice Holmes, one of the great Justices of the 20th century, once said when he goes to work, he doesn't go to do justice, he goes to do law. But that same Justice Holmes also said the life of the law is not logic, it is experience. And that reflects the truth, that interpreting the law sometimes takes wisdom from real life experience, and real life experience and politics, in bringing together coalitions in politics can be as important on the court as off it. And I just don't think it's true that whether someone was a politician or a judge can predict what they're going to do on the court.

MR. MacNeil: Well, what about, what about his point, Ms. Sullivan, that, that what he's concerned about is that a politician now would be deciding with his heart, rather than based on the law?

MS. SULLIVAN: Oh, I don't think there's any evidence for that. I think politicians can be very legally-minded once on the court, because they get life tenure. And life tenure insulates you from politics and gives you a chance to change your mind. And that can happen to someone who was a sitting judge before he went on the court as well. After all, Justice Blackmun, author of what many would call the most activist, liberal decision of modern times, Roe V. Wade, was a sitting judge before he came on the court. So whether you were a politician or a judge doesn't predict whether you're going to have a big heart or a judicial temperament on the court. What you have to look for is someone of good judgment, and I think real life experience can contribute to that, rather than detract.

MR. MacNeil: Mr. Cooper, let me ask you, when Republican Presidents have chosen jurists in their recent appointments, have they chosen them apolitically?

MR. COOPER: Apolitically in the same of their political --

MR. MacNeil: Not being concerned about what their politics were.

MR. COOPER: Yes, in fact, they have, at least the President with which I was affiliated, the Reagan administration, the politics of the candidate were secondary and actually irrelevant to the question of what kind of judicial philosophy the individual would have. And those are two very different things. An individual can, can have political views that, that he recognizes don't and should not govern the judicial decision as to what a law means and what rule of law that the people, themselves, have consented to abide by and to live by means in a particular case or not. And I think that I certainly agree with Prof. Sullivan's statement that being a politician doesn't disqualify one from also ultimately being a jurist and viewing his or her role on the court along the lines that I am, I am suggesting here. But the closest analogy I think we have for Gov. Babbitt is former Gov. Warren who became chief justice and who really I think personifies judicial activism at least in the modern area.

MR. MacNeil: So it's an argument more, from your point of view, against activism on the court than it is politician/non-politician?

MR. COOPER: Yes, it is. And I think the question really has to be: How will the individual view his or her role in the context of a judicial body as opposed to a political body or a legislative body? And, and a politician isn't disqualified, but one should ask some very searching questions, it seems to me, about, about one's individual judicial philosophy.

MR. MacNeil: Ms. Sullivan, do you have a comment on that? And then I want to ask you something else.

MS. SULLIVAN: Yes, just briefly. I think Mr. Cooper's example helps show what a red herring the politician/non-politician distinction is. Justice Warren was considered a great activist member of the Warren court but so was Justice Brennan. Justice Warren was a governor. Justice Brennan was a state court judge for New Jersey. Both of them were architects of the Warren court, and you cannot tell from their background how they're going to turn out.

MR. MacNeil: Let me ask you this, Mr. Cooper. And I'll ask each of you. Start with Bruce Babbitt. Evaluate him from your point of view as a potential justice.

MR. COOPER: Well, I think that Gov. Babbitt has some relevant experience in his background to be sure. He was attorney general in the state of Arizona. He has been a partner in a substantial law firm, presumably practicing law. But the bulk of his experience has been politics. It has been elected government. It has been campaigning and all of the things that go with politics. I think the New York Times editorial page put it right. There's nothing that conspicuously qualifies him for the position. But I certainly wouldn't suggest that he's unqualified, and I wouldn't suggest that his political, his background as a politician in and of itself disqualifies him as a jurist. I think Prof. Sullivan is certainly correct that an activist can come out of judicial tradition as well.

MR. MacNeil: Ms. Sullivan, evaluate Bruce Babbitt.

MS. SULLIVAN: Well, in a way, both Babbitt and Breyer are mirror images of President Clinton. In Babbitt's case, he's a former attorney general and governor from a very conservative state in which he had to be a pragmatic moderate to win as a Democrat. So his biographical -- he resembles Clinton closely. Breyer resembles Clinton closely intellectually. In a sense, he is consistent with the idea of the new Democrat, a person who is for government when it works but for dismantling government regulation of the economy when it doesn't. He was very active in bringing about bipartisan airline deregulation when he worked in the Senate. Both of them are pragmatic moderate, centrist coalition builders in spirit, and in that sense, the difference between them has maybe been overstated. True, Judge Breyer has the advantage of 12 years of judicial experience on the First Circuit where again he has been moderate. He's been someone who's characterized by great lucidity in his opinions. He writes in English. He doesn't have many footnotes. He's cares about being understood by the litigants, and those are great virtues which, again, I think he helped, that he gained from his political experience on the Hill. So both of these men are very qualified and would make very good candidates for the court. What Babbitt might bring that's different from Breyer is more recent experience in hand to hand electoral combat, rubbing sharp elbows just on the Hill but with the people.

MR. MacNeil: And, Mr. Cooper, how do you evaluate Stephen Breyer?

MR. COOPER: Well, I think Prof. Sullivan's evaluation is pretty fair of Steve Breyer. That certainly is my own view of him. I don't know him particularly well, but I've appeared before him a couple of times, and that's how I would assess him as a judge. But it does seem to him that this is an exquisitely simple decision, however, for President Clinton to make. I haven't heard a single voice raised in opposition to Stephen Breyer's nomination should it happen. His potential nomination's been embraced by both sides of the political spectrum, Republican and Democrats, whereas, with respect to Mr. Babbitt, while there hasn't been serious controversy raised about his potential nomination, at the same time his greatest allies are actually his largest opponents for nomination to the court. The conservationists, environmentalists, don't want to see him leave the Interior Department. So it seems to me like this is a pretty easy call for President Clinton.

MR. MacNeil: Well, Charles Cooper, Kathleen Sullivan, thank you both. Roger.

MR. MUDD: Still ahead on the NewsHour, Friday political analysis, tax fight on Capitol Hill, and the gays in the military issue. FOCUS - POLITICAL WRAP

MR. MUDD: Next, some political analysis of President Clinton's deliberations over the Supreme Court nomination and other issues in the past week, and we get it from syndicated columnist Mark Shields. Joining Mark tonight is Doug Bailey. He's the publisher of the daily political newsletter "The Hotline," and a former Republican campaign strategist. Welcome, Doug. Is there a serious problem at the White House about the appointments process. I mean, the vacancy in the Supreme Court occurred in March when Byron White said I'm going to leave. It's now what, three months, four months?

MR. SHIELDS: It is. And I don't think there was a timetable, Roger. I don't think you'd probably go back and say, well, you know, how long did it take for Earl Warren to be chosen or Hugo Black to be chosen, another politician, Senator, who served with distinction on the bench. But the way they do it, I mean, have they had problems in the past? You'd better believe it. They had two attorneys general shot up, shot down, assistant attorney general withdrawn, and this, this week has been beyond understanding to some of us who think that Bill Clinton actually likes Bruce Babbitt. Bruce Babbitt, former governor of Arizona, was mentioned for United States Trade Representative for attorney general, and finally settled on interior, and this week he was kind of dangled out there, took some shots, took some hits, had some innuendos directed his way, and was left undefended. And so he's, he's now withdrawn, or it appears, I don't know for sure, who does, but I mean as a somewhat diminished figure. This was the pick of the litter of his cabinet. I mean, if there's anybody in this cabinet who's had really unrelentingly positive reviews, it's been Bruce Babbitt. I don't know why they've done it.

MR. MUDD: Can you account for it, Doug?

MR. BAILEY: Absolutely not. I think there is a tiny problem in their appointments. After all, Vice President Mondale was appointed ambassador to Japan today. The President was sworn in the 20th of January, I believe. And, and it is really sort of mind boggling for the President to seriously consider taking the strongest member of his cabinet, the one administration official who is running a department and getting a job done and gotten his appointments made --

MR. SHIELDS: That's right.

MR. BAILEY: Gotten them largely approved, taken command of the department and getting some policy decisions made, to take him out of the administration and send him to court strikes me as a sign of weakness, rather than strength, although I believe that Bruce Babbitt would be a superb justice. But why would the administration take their strength and send it to the court at this point in their history I can't imagine.

MR. MUDD: So here is Judge Breyer with three or four broken ribs from an accident the other day. He's in the hospital last night. The White House staff goes up to Boston to talk to him, to vet him as they say. They drive him to New York, put him on a train, bring him to the White House. They have an hour and a half of lunch with the President, and there's still no decision.

MR. SHIELDS: That's right.

MR. MUDD: How could -- I mean, are we being unfair to the President?

MR. SHIELDS: I don't know if we're -- I don't know if we're being unfair. I mean, I think that the unfairness, if it was unfair this week, it definitely does go to Bruce Babbitt, and Judge Breyer, if he is chosen, I mean, he does -- you heard Chuck Cooper speak of him, Orrin Hatch, ranking Republican on the committee, or at least the most formidable Republican on the Senate Judiciary Committee, Bob Dole, a Republican Senate leader, a man not known for an excess of bipartisanship, he's already said good things about him, and his confirmability appears to be, appears to be a real asset in his behalf, whereas, Bruce Babbitt, because there's a couple of lousy, unsubstantiated rumors, all of which have been checked out, all of which have been disproved, none of which have in any way inhibited his confirmation as Secretary of the Interior, is, is somehow becomes less appealing for that reason. I don't, I don't think he can say that the process is, brings anything but - - I don't want to say dishonor -- but certainly disfavor on the President and the White House.

MR. BAILEY: I don't, I don't think it's fair to, to criticize the President for not making an appointment right after having lunch with the man and meeting him for the first time. It is sort of bewildering to think that we've gone this long and hadn't met him up to this point. My own sense is, by the way, that Breyer probably has a hundred Senate votes.

MR. SHIELDS: Yeah.

MR. MUDD: Really?

MR. BAILEY: But Babbitt has 95. The notion that Babbitt would not be confirmed is ludicrous.

MR. SHIELDS: Yeah.

MR. BAILEY: My own sense is Babbitt is so strong, however, in the administration that rather than sending him to the court, they might bring him into the White House.

MR. MUDD: You remember last week Congressman Craig Washington from Texas was on the broadcast.

MR. SHIELDS: Yes.

MR. MUDD: And he said the, taking down to the Lani Guinier nomination meant that he could be, the President could be rolled. Do you think he was rolled by the environmentalists on Babbitt?

MR. SHIELDS: I don't know if he was rolled. I think there's a strong case that Doug touched on that Bruce Babbitt is key to this administration. Bill Clinton is the first Democratic Presidential nominee to even score in the central let alone the pacific time zones on election day. All right, he did -- the coalition he put together began in the Pacific Northwest, Washington, Oregon, California, and came right down. He did, carried Colorado, and he did, he did well in the West. The key central divisive issues, important issues in the West, environment versus the economy, somebody who understands that issue, who's dealt with it, who brings to it enormous credentials, great believability to all parties involved is Bruce Babbitt. So I think you could make a strong persuasive political case that you need Bruce Babbitt, and probably it may be easier to find a Supreme Court Justice than it is to find a Secretary of the Interior.

MR. MUDD: You both remember back in March when Justice White announced his retirement the President's reaction was, I'm going to find somebody whose name will evoke from the nation "Wow!" Is Babbitt a wow and is Breyer a wow? Are they wows?

MR. BAILEY: Well, Breyer certainly isn't a wow, because nobody's heard of him, other than an inside Washington crowd, although he is as qualified for the court as Bruce Babbitt than he is superbly qualified with the court. Babbitt is more of a wow and certainly to those people who know him, the appointment is an absolute wow, because in terms of temperament, he would be spectacular on the court. But he is spectacular within the administration. That to me is the point, it's more a wow that they would take Babbitt away from their administration than they would appoint him to the court.

MR. MUDD: President Clinton also spent much of this week trying to save this deficit reduction package, and it appears that in order to save it, he has dropped or is dropping his controversial BTU energy tax which was designed to cut the deficit by $72 billion. Let's talk about the politics of that, but first we want to get this report from Congressional Correspondent Kwame Holman.

MR. HOLMAN: The fate of the BTU tax actually was sealed three weeks ago when four Senators, two from each party, jointly announced their opposition to the tax. The most influential among them was Democrat David Boren of Oklahoma who held the deciding vote on the Senate Finance Committee.

SEN. DAVID BOREN: I am saying that would vote for a deficit reduction plan that does not include the BTU tax and that includes more spending cuts than it has tax increases. That's real deficit reduction, and I think --

SENATOR: What Sen. Boren just said is that the BTU tax is dead.

MR. HOLMAN: Realizing that the BTU tax wouldn't survive in the Senate without the support of Boren and other key Democrats, President Clinton bowed to the political realities this week and backed away from the most important and most controversial element of his deficit reduction package.

PRESIDENT CLINTON: An energy tax ought to encourage conservation and the use of cleaner fuel. Those are the things that I think ought to be done. We'll just see what happens.

REPORTER: Does it have to be a BTU tax?

PRESIDENT CLINTON: I have delegated to -- I don't want to get into the name game here. I'm interested in the principles of the program.

MR. HOLMAN: The President's problem was that few members of Congress ever supported the BTU tax, even though they responded politely when the President unveiled the tax in February.

PRESIDENT CLINTON: [February 17] Unlike a carbon tax, it's not too hard on the coal states. Unlike the gas tax, it's not too tough on people who drive a long way to work. Unlike an ad valorem tax, it doesn't increase just when the price of an energy source goes up, and it is environmentally responsible. It will help us in the future as well as in the present with the deficit. [applause]

MR. HOLMAN: Though President Clinton hadn't even left the halls of Congress when interest groups began lobbying for exemptions, and they got them. Ethanol was exempted from the gas. Aluminum producers and fuel used in farming received partial exemptions. Commercially used heating oil was exempted and complaints by energy producers resulted in moving the tax's collection point away from them and closer to the consumer. Republicans who saw no benefit in supporting a Democratic plan to raise taxes offered their criticism instead.

SEN. PHIL GRAMM, [R] Texas: But I can tell you right now that if the aluminum exemption stays in, you're going to have an exemption for the petrochemical industry, you're going to have an exemption for agriculture.

SEN. ROBERT DOLE, Minority Leader: So it's beginning to look a little like swiss cheese.

MR. HOLMAN: However, President Clinton stood by the BTU tax and fought off charges that it was too complicated to collect, too complicated even to understand.

PRESIDENT CLINTON: I think we ought to stay there with it. I think it's a good part of the program, and I think we can pass it.

MR. HOLMAN: And the President's perseverance paid off. The BTU tax survived its real test in the House of Representatives.

SPEAKER TOM FOLEY: By recorded vote the yeahs are 219, the nays are 213, and the bill is passed without rejection -- [cheering]

MR. HOLMAN: With all 174 Republicans as well as 38 Democrats voting no, President Clinton managed to convince just enough Democrats to stick with him even if they didn't like his plan.

REP. BILL BREWSTER, [D] Oklahoma: This bill is not everything I want, not everything you want, but if you vote no and go out of here and tell your constituents you're for deficit reduction, you're not being truthful to them.

REP. BARBARA KENNELLY, [D] Connecticut: Do any of us like taxes? No. But we're here today to break gridlock, to go forward, to show that we in the Congress can govern with the President. Thank you, Mr. Speaker.

MR. HOLMAN: It's been widely reported that President Clinton had to do a fair amount of hand holding, arm twisting, and cajoling to get the BTU tax passed. Some of the more moderate and conservative members of the House say the White House told them to go ahead and vote for the tax and assured them that it would be scaled back once it got to the Senate.

REP. CHARLIE WILSON, [D] Texas: Nobody's saying that they don't think the BTU tax is going to be significantly changed in the Senate, if not simply dropped.

MR. HOLMAN: But this week, when the President seemed to abandon the tax outright, some members of Congress said they felt abandoned as well.

REP. CHARLES RANGEL, [D] New York: One of the things that we got assurances from the President is that he would not leave us out on the limb with the BTU tax if those who had major problems with it supported it.

REP. PATRICIA SCHROEDER, [D] Colorado: The return apparently was signalled without anybody really being aware of the retreat, and there we are, doing a tap dance out on the end of the plank as it's being sawed off from underneath us.

MR. HOLMAN: But on the Senate side, David Boren of Oklahoma wasn't complaining.

SEN. DAVID BOREN: And so we have a real problem here in terms of making that work. It won't work, and I'm elated that there has been now an acknowledgement of that and that it does appear, although I suppose it's not yet officially done, that we will be looking at other forms of revenue that would be fairer, that would hurt the American people less, that would reduce the number of jobs in this country less than the BTU tax.

MR. HOLMAN: And Democrat John Breaux of Louisiana, also a member of the Senate Finance Committee, immediately introduced a tax on fuels used in transportation as an alternative to the BTU tax.

SEN. JOHN BREAUX, [D] Louisiana: An energy transportation tax would be easy to collect. The mechanism is already enforced. It is not just a gas tax as some have labeled it with legitimate concern, because it is a tax on all of energy that transports both products and transports people, thereby making it, I think, more acceptable and more balanced, because it affects every state and every product that is transported and people that are transported.

MR. HOLMAN: But as the Senate Finance Committee began discussions on the tax bill this week, there was dissension among Democrats. Max Baucus of Montana said he would vote against the transportation tax, while Jay Rockefeller and Donald Riegle said they're against making up any tax short falls within deeper cuts in Medicare, an idea proposed by Committee Chairman Daniel Patrick Moynihan. And any changes the Senate makes risks scuttling the fragile coalition of liberals and conservatives the President put together to get his tax bill through the House.

SEN. CHARLES RANGEL: If the Senate really thinks that it's going to reduce or eliminate the BTU tax and cut deeper into health care and Medicare, thereby crippling an already lame delivery system in the inner cities, then all I can tell you is that those of us that represent these communities would have to just reject that compromise outright.

MR. HOLMAN: New York's Charles Rangel also was echoing the feelings of the growing and increasingly influential Black Caucus, whose 38 House members have threatened to withhold their support from the President.

REP. KWEISI MFUME, Chairman, Congressional Black Caucus: We believe that further reductions in those programs, those entitlements that mean so much to people who need and benefit from them is something that becomes a point of non-negotiation and something that imperils the passage of this legislation.

MR. HOLMAN: Yesterday, President Clinton tried to reassure those angry House members that they are still players in the process.

PRESIDENT CLINTON: They didn't, they didn't walk the plank on the budget for nothing. Their budget is going to be part of the conference, and they are being consulted now, and no decision has been made yet by the Senate.

MR. HOLMAN: But this week here on the NewsHour, Treasury Sec. Lloyd Bentsen certainly gave the impression that the Clinton administration had given up on a major part of their budget, the BTU tax.

LLOYD BENTSEN, Treasury Secretary: [Wednesday] It's just preliminary at this point, but I think we made the progress of deciding that the BTU tax based on British Thermal Units, that that would be put aside.

MR. HOLMAN: The unraveling of the President's tax bill could take down his entire economic plan, the focus of his presidency. He now must decide whether his strategy will be to resume the role of active lobbyist and try to influence lawmakers or assume the role of interested observer and let the increasingly contentious legislative process play on without him.

MR. MUDD: Still with us are Mark Shields and Doug Bailey. If President Clinton has actually withdrawn from the process of shepherding this through the Senate, it appears that, that negotiations are out of control on Capitol Hill, Doug.

MR. BAILEY: This is --

MR. MUDD: I mean, everybody has kept their own, own bill working at cross purposes.

MR. BAILEY: This is the -- by his own insistence, this is the major point of the administration, this is the major program of the administration, and the President has turned the negotiations over to the Senate on what the content will be. That strikes me as highly unusual, but, frankly, his problem isn't in the Senate. His problem is back in the House. He's got to go back to the House which passed a bill by, by six votes, all Democrats voting for it, and now sell a totally different bill and a totally different tax. The question is: Why should a member of the House stick with the President when the President didn't stick with the President? He's violated what I call the lima beans rule. The lima beans rule is something every parent knows. If you want real trouble, you don't force, make some of your children eat some of the lima beans without making all of your children eat the lima beans. He made the House eat the lima beans, and now the Senate gets to write its own bill, send it back to the House, and impose on the House more vegetables to eat, and I mean, i just think that this is, this is a fiasco at the moment.

MR. MUDD: Do you think that the House members really have to walk the plank on that vote, Mark?

MR. SHIELDS: The House members did have to walk the plank on the vote.

MR. MUDD: Did they know that it was going to come back from the Senate, a different bill?

MR. SHIELDS: No.

MR. MUDD: Wasn't that one of the reasons it got through, wasn't it?

MR. SHIELDS: No. The reasons it got through, you remember, Roger, on the floor of the House, the day of that vote a petition was circulated, and the first names on that petition were Dan Rostenkowski, the chairman of the Ways & Means Committee, John Dingell, the real bull of the House, a tough, bare knuckles guy, chairman of the Interstate & Foreign Commerce Committee, and leadership of the House. And the petition was a very simple one. Any subcommittee chairman who did not support the President and the leadership's position, that is to vote for the BTU bill in the House, risked his subcommittee or her subcommittee chairmanship. And they were put on notice. I mean, it was a serious thing. Now what you've got is they didn't vote for the BTU tax. There is no more BTU tax. So how are you going to hold anybody accountable? This week Tom Foley, the Speaker of the House, tried to put a good gloss on it by saying no, we don't deal that way. We -- we acknowledge people's conscience. They could vote any way. We do it by persuasion and the strength of our argument. But I mean Bill Clinton went, the President went to the House Democratic Caucus, and said I know you're walking the plank on this one, on the BTU, on the vote, on the 27th of May. He said, I'm walking the plank with you, I'll be there to the end, and then the end just came.

MR. MUDD: I read in today's Washington Times a quote from Jay Rockefeller, the likes of which I've never read before. He said, "I'm sick and tired of people putting this on Bill Clinton. The problem is David Boren, and John Breaux, David Boren, and Kerr McGee have been running this Congress for a month."

MR. SHIELDS: That was tough.

MR. MUDD: I mean, does that reveal a cataclysmic split in the Democratic Party in the Senate?

MR. BAILEY: There's a terrible split in the Senate. There's a terrible split in the House among Democrats. While the Republicans in the House voted to a person against --

MR. SHIELDS: Against.

MR. BAILEY: -- as did Republicans in the Senate opposed the stimulus bill earlier unanimously, I'm not sure the Republicans should be crowing so much. I'll come back to that, but the fact of the matter is that the Democratic split is very, is very serious in both bodies. The President loses three votes in the House that he had three weeks ago, and he loses, he can't carry the bill, three votes. Now I know a lot of reasons why some Democrats ought to be angry over Lani Guinier, over a gas tax, instead of a BTU tax, over the President backing away from his own package. I can see why a no vote would change to a yes vote -- I mean a yes vote can change to a no vote. I don't see any reason why a no vote -- I mean, a yes vote would change to --

MR. SHIELDS: Come the other way.

MR. BAILEY: Yeah, come the other way. Why would the President get more support in the House where if he loses three votes, are there three votes to gain? There won't be any Republican votes.

MR. MUDD: But talk about the problem in the Senate, he, he's now lost one Democratic vote, because of the Texas election, with the white out in Texas with Bob, Bob Krueger going down, and now we have a Republican, Ms. Hutchison. What does that portend up ahead, Mark?

MR. SHIELDS: Well, a couple of things. First of all, there'll be no recount in Texas. It was better than two to one. It was a wipe out. Now Texas has Kay Bailey Hutchison in the Senate, the state treasurer wamped Bob Krueger for the first time since reconstruction, which I covered. Texas now has two Republican Senators. The first consequence is the Democrats have lost a seat. The second consequence is this: There will be an added return, the super collider, the adam smasher, which has been debated long and hard and fiercely and which Lloyd Bentsen kept alive in the last Congress, because it was defeated in the House and kept alive in the Senate, will go down. It will go down in the Senate, and Democrats will take glee in sending it down, because Phil Gramm, the Republican Senator from Texas who fights all fiercely against excessive federal spending any place else except Texas will be identified as this champion and Texas will pay a price for it, but sure, it sends a signal, Roger. Any time a special election is held, the losing side says, we lose because of local factors, that was the only reason, or we ran a bad campaign, or it was just local factors. The other side, the winning side always says, it's a universal applicability, this shows a major national trend. That's what the Republicans are saying. Any time a President appears to be weak outside of Washington it doesn't help him inside of Washington. Ronald Reagan's great strengths is that even though inside of Washington there was skepticism about him, there was always that fear and that suspicion that my God, he's got something going outside in the country.

MR. MUDD: Well, thank you. We've got to stop now, Doug. We'll have you back another time if you come, please. Thank you, Doug Bailey and Mark Shields. FOCUS - CLOSING RANKS

MR. MacNeil: Finally tonight, a report on a political and social controversy that has dogged the Clinton administration from the start, the issue of gays in the military. The issue may be close to resolution. Yesterday at Harvard, Gen. Colin Powell suggested a compromise was in the works that the Joint Chiefs of Staff could live with. An executive order could come within days. New polls also indicate public support for compromise. The latest NBC News/Wall Street Journal Poll published today showed only 21 percent still favor a complete ban on homosexuals serving in the armed forces. Bruce Van Voorst, a national security correspondent for Time Magazine, prepared our report.

BRUCE VAN VOORST: April 1993, it was the biggest gays and lesbians march ever in Washington, by some estimates 300,000 people, by others up to a million. Most of all, it was a reminder to President Bill Clinton of his campaign commitment to lift the ban on homosexuals serving openly in the military. President Clinton moved quickly on that issue in the early days following his inauguration. The President was about to sign an executive order lifting the ban on gays and lesbians when he ran into major opposition. Joint Chiefs of Staff Chairman Gen. Colin Powell signalled the President that he had not dropped his opposition to lifting the ban when he spoke to midshipmen at Annapolis.

GEN. COLIN POWELL, Chairman, Joint Chiefs of Staff: [January 11] My position is that I still think the presence of homosexuals in the force would be detrimental to good order and discipline for a variety of reasons. I think it'll be very, very difficult to accommodate that into the armed forces.

MR. VOORST: And Sen. Sam Nunn, the powerful chairman of the Senate Armed Services Committee warned that Congress by a massive majority, perhaps 70 to 30 in the Senate, would reverse the President and put the ban into law. On the Senate floor, Sen. Nunn supported Gen. Powell.

SEN. SAM NUNN, Chairman, Armed Services Committee: [January 27] Gen. Colin Powell, chairman of the Joint Chiefs, has stated that in view of the unique conditions of military service, active and open homosexuality by members of the armed forces would have a very negative effect on military morale and discipline. Mr. President, I agree with Gen. Powell's assessment.

MR. VOORST: David Mixner is a longtime personal friend of President Clinton and an adviser to the President on gay issues during the campaign. He says the President was surprised by the intensity of the opposition from the Pentagon.

DAVID MIXNER, Gay Political Activist: I think the intense institutional homophobia of the military leadership caught him by surprise. Colin Powell's opposition, General Powell's opposition caught me by surprise. I think everybody was caught off guard at the vehemence of Gen. Powell and which gave legitimacy to people like Sen. Nunn to pursue more aggressively his agenda on this issue.

MR. VOORST: In the face of this overwhelming opposition, President Clinton agreed to hold off his decision during a six- month cooling off period. In the meantime, the military would abide by a provisional compromise formula called "Don't Ask, Don't Tell." Under "Don't Ask, Don't Tell," civilians entering the military are no longer asked if they are gay or lesbian. So long as they don't tell of their sexual orientations once on duty, they are allowed to serve. But gays and lesbians exposed by denunciation or investigation continue to be expelled. "Don't Ask, Don't Tell" as currently defined remains a prohibition on gays and lesbians serving openly in the U.S. military. In the military as well as in the public, the formula "Don't Ask, Don't Tell" became the rallying call of the debates. In these months, partisans for and against lifting the ban have attempted to narrow or broaden the meaning. Sen. Dan Coats, who opposes lifting the ban, offers the narrowest interpretation.

SEN. DAN COATS, [R] Indiana: I think the political forces are clearly lining up in favor of essentially retaining the policy before President Clinton announced that he wanted to change it. There is a slight modification that's a serious proposal on the table which basically says we won't ask the question of recruits coming in, but essentially everything from that point forward will be pretty much the same as it was before. You cannot declare your homosexuality. You basically have to keep it in the closet. That's the "don't tell."

MR. VOORST: Tom Stoddard is coordinator for the Campaign for Military Service, the central coalition favoring lifting of the ban.

TOM STODDARD, Campaign for Military Service: "Don't Ask, Don't Tell" is not really a lifting of the ban, because it only permits people to be gay if they pretend not to be gay. That's not acceptable. It's not a lifting of the ban. It's only a reformulation of the existing policy of discrimination.

MR. VOORST: It was evident by Memorial Day that the months of congressional hearings and public debate had turned the political tide against the President on this issue. One major factor in coalescing the opposition has been the hearings held in the Senate by Sen. Nunn, especially the testimony of Desert Storm Gen. Norman Schwarzkopf.

GEN. NORMAN SCHWARZKOPF, U.S. Army [Ret.]: [May 11] In every case that I'm familiar with, and there are many, when it became known in the unit that someone was openly homosexual, polarization occurred, violence sometimes followed, morale broke down, and unit effectiveness suffered. Plain and simply, that has been my experience.

MR. VOORST: The President is clearly at a political dead end. Aware of this, Congressman Barney Frank, one of the two openly gay men in Congress, went public with a proposed compromise. Frank offered a broadened variation on "Don't Tell, Don't Ask."

REP. BARNEY FRANK, [D] Massachusetts: [May 18] It seems to me the distinction ought to be on duty and off duty, that on duty, in the military facility, I believe reality says for an indefinite period gay men and lesbians are going to have to not discuss their sexuality. On the other hand, gay men and lesbians who are willing to make that decision, who are willing to restrain and restrict themselves on base, on duty, and in uniform, should be allowed off duty, off base, to live their lives in a reasonable fashion as gay men and lesbians without that being held against them.

MR. VOORST: Frank then explained the political realities of the fight.

REP. BARNEY FRANK: If Congress now chooses between a complete and total removal of the ban and a statutory enforcement to the ban, I am not optimistic that the side I would like to see would win, and that I think is reality.

MR. VOORST: Whether coordinated with the White House or not, as some believe, such an initiative coming from a leading figure in the gay and lesbians movement gave the President the cover he needed to get off this extremely sticky political wicket.

PRESIDENT CLINTON: [CBS "This Morning" May 27] We almost have a compromise here. We are trying to work this out so that our country does not -- I understand what you're saying -- so that our country does not appear to be endorsing a gay lifestyle, but we accept people as people and give them a chance to serve if they play by the rules.

MR. VOORST: Sen. Nunn went to the Senate floor to emphasize a measure of agreement with the President.

SEN. SAM NUNN: [May 27] I want to commend President Clinton for the tone of his remarks on this issue today on the CBS television show. In those remarks, President Clinton indicated that he understands that for a great many people in this country this issue touches on deeply held moral or philosophical beliefs. President Clinton made it clear that any resolution of this debate should not appear to be endorsing any particular lifestyle.

MR. VOORST: But the Senator left no doubts about the differences between himself and Congressman Frank.

SEN. SAM NUNN: I believe that his on base, off base distinction would establish a very undesirable precedent in military law. One of the most fundamental distinctions between military life and civilian life is that the military's code of conduct, the uniform code of military justice and related regulations, is not simply a code of employee behavior. It completely regulates a service member's life 24 hours a day, from the day a person enlists until the day the person is discharged.

MR. VOORST: Some major figures of the gay and lesbian community liked neither the Clinton nor the Nunn formula. Tory Osborn is executive director of the National Gay and Lesbian Task Force.

TORY OSBORN, National Gay and Lesbian Task Force: President Clinton, this is not about lifestyle. This is about our lives. Sen. Nunn, you're a plain, old-fashioned bigot on this issue. Your position, your lack of leadership is immoral, and we are angry.

MR. VOORST: There were some in Congress as well who spoke out for lifting the ban on the grounds that it is discrimination. Congressman Ron Dellums, chairs the House Armed Services Committee, and though he by no means controls his committee in the fashion of Sam Nunn, as a former Marine and a black American, he has considerable influence in the House. Dellums sees a parallel between integrating blacks into the military and accepting gays and lesbians.

REP. RON DELLUMS, Chairman, Armed Services Committee: So at one point it was a matter of race, at one point it was a matter of sex. Now it's a matter of sexual orientation. I think we've got to get past that. And the faster our society gets beyond that fear and that ignorance and that oppression, the better off it seems to me we all are.

MR. VOORST: Nonetheless, with Sen. Nunn threatening to reject any proposal which lifts the ban and Congress likely to back him up unless there's a satisfactory compromise, the ball is in the Pentagon's court. The President has directed Defense Sec. Les Aspin to recommend suitable compromise language. Aspin has commissioned two studies, one from a military working group inside the Department and the other from a Rand Corporation team. Reportedly, the Pentagon group has embraced Sen. Nunn's narrow interpretation of "Don't tell," while the Rand team supports something closer to Congressman Barney Frank's "Don't shout." As Sec. Aspin strives to combine all these conflicting views, he must keep in mind most of all that any compromise formula must be acceptable to two parties, Sen. Nunn and chairman of the Joint Chiefs of Staff Gen. Colin Powell. With luck, this compromise will enable the President and the Pentagon leadership to move on to more pressing military issues. RECAP

MR. MUDD: Again, the major stories of this Friday, President Clinton discussed a possible Supreme Court appointment with Federal Appellate Court Judge Stephen Breyer. At the court, the Justices today upheld the right of states to give longer prison sentences to people who commit hate crimes and the right of religious groups to conduct animal sacrifices. And North Korea reversed its decision to withdraw from the nuclear non-proliferation treaty. Good night, Robin.

MR. MacNeil: Good night, Roger. That's the NewsHour for tonight. Have a nice weekend. We'll you see you again on Monday night. I'm Robert MacNeil. Good night.