The NewsHour with Jim Lehrer

RAY SUAREZ: Good evening. I'm Ray Suarez, Jim Lehrer is off today. On the NewsHour tonight: As China's Vice Premier meets with President Bush, Margaret Warner explores the latest thorn in the U.S./China relationship, Terence Smith examines the push for profits in the newspaper business,

an appreciation of James Madison on the 250th anniversary of his birth, and a Roger Rosenblatt essay on the surviving the game of life. It all follows our summary of the news this Thursday.

NEWS SUMMARY

RAY SUAREZ: Gunfire erupted at another high school today. It happened at El Cahone in San Diego County, California. That's four miles from Santee, where two students were shot to death earlier this month. Police said four people were wounded, including the suspect. He was shot in the face and buttocks by a deputy who worked on the campus. A witness said the gunman got out of a car and started shooting.

WITNESS: He got down just like in a sniper position, and just started opening fire. It seemed to be a shotgun, and it was at least eight shots. One of them came two inches away from my head. If I wouldn't have ducked down, I would have been shot. And it's just kind of a blur from there. He reloaded a second time, and the second time I got out of there.

RAY SUAREZ: Police said the gunman was a former student. There was no word on a possible motive. President Bush today defended the U.S. decision to expel a large number of Russian diplomats. Reports said 50 or more Russians were affected. They were suspected of undercover intelligence activities in the wake of the Robert Hanssen case. He was the FBI agent charged last month with spying for Russia. Mr. Bush was asked about it after a Washington speech.

PRESIDENT GEORGE W. BUSH: The actions we took yesterday speak for themselves. It was the right decision to make, and having said that, I believe we can have a working relationship with the Russians. I intend to have a working relationship with the Russians. I suspect the first time I'll have a chance to sit down with Mr. Putin is when I head overseas to the G-7, plus one. But our government made the right decision yesterday.

RAY SUAREZ: Later in the day, Secretary of State Powell said the U.S. had a long-standing concern about the level of Russian spying in this country. He said he made that case to his Russian counterpart.

COLIN POWELL: I had a long conversation this morning with my Russian colleague, Foreign Minister Ivanov, and we discussed this in some detail. And I said to him that, with this action that we took yesterday, that I took with the Russian ambassador, we consider this matter closed. We have important interests in maintaining cooperative and productive relations with Russian, and we intend to continue working to advance those interests.

RAY SUAREZ: Russia's foreign minister called the expulsions a groundless political act reminiscent of the Cold War. He said he expected the same number of U.S. diplomats would be asked to leave Russia. This was a wild day on Wall Street. The Dow Jones Industrial Average was down more than 350 points at one point. That was deep in bear market territory, or 20% off its all- time high. But in the final hour of trading, the Dow clawed its way back to close down 97 points, at 9389. The NASDAQ Index was up 67 points at 1897. More layoffs were announced today. Procter & Gamble said it will cut about 9,600 jobs worldwide, about 9% of its work force. The cuts include nearly 4,000 jobs in the United States. The maker of Tide, Crest and other products said it needed to increase long-term profits. And the brokerage firm Charles Schwab will cut as many as 3,400 positions, or about 13% of its work force. Schwab blamed tough conditions in the financial markets. The House Ways and Means Committee passed another part of President Bush's tax plan today. It would cut taxes on married couples, and double the $ 500 tax credit for each child. The cost would be $ 400 billion over ten years, more than the President requested. And in the Senate Budget Committee, Chairman Pete Domenici called for giving taxpayers a quick rebate, on top of a long- term tax cut. Chairman Domenici said the economic situation demanded it. On the campaign finance story today, backers of the McCain/Feingold bill to ban soft money won another victory. They defeated an amendment to make labor unions disclose political activities to members. Corporations would have had to do the same for shareholders. It was similar to an amendment defeated late Wednesday. China's Vice Premier Qian Qichen met with President Bush today, to argue against U.S. arms sales to Taiwan. The two men sat down at the White House this afternoon. China's communist government opposes the possible sale of American destroyers to Taiwan. Mr. Bush said he'd listen to the concern, and also raise the issues of human rights and religious freedom. We'll have more on this story after the News Summary. In Macedonia today, government forces renewed shelling ethnic Albanian rebels. They fired into the hills outside the city of Tetovo, after rejecting the rebels' offer of a cease-fire. But the violence also moved into the streets of the city. We have a report from Bill Neely of Independent Television News.

BILL NEELY: At a military checkpoint, two Albanian men are asked for documents. Across the road, troops watch and wait behind sandbags. The old man gets out. The young man follows. Suddenly, there's a scuffle. The young man reaches into his jacket for a grenade. (Gunfire) The troops fire over and over. The men are still alive. At the old man's feet, a second grenade; but as the troop's commander runs to stop his men firing, further volleys kill the two Albanians. There's panic as the experienced troops try to reload. Another car approaches, the troops take aim. (Gunfire) The car drives off. Again the commander orders his men to stop shooting and moves in to pull away the body of the old man. The checkpoint had only just been set up. The silver car was the fourth they'd stopped. Seen from another angle, the young man clearly aimed his grenade at the bunker. (Gunfire) The grenade failed to explode. Macedonia's government says the two men were terrorists. Before attacking thecar, these troops were part of a bombardment of Albanian rebel positions in the hills -- the rebels ignoring the government's demand to withdraw.

RAY SUAREZ: A rebel commander warned that if the government starts a total offensive, his fighters will answer with what he called total guerrilla warfare. President Bush today ended the practice of having the American Bar Association review nominees for federal judgeships. The ABA has been conducting the reviews for half a century. But in a letter, White House counsel Al Consalas told the association that it was not fair for one organization to have such a preferential role. Many conservatives have argued the group has a liberal by as. Leading democrats condemn the decision. That's it for the news summary tonight, now it's on to U.S./China relations, profits in the newspaper business, honoring James Madison, and a Roger Rosenblatt essay.

FOCUS - STRAIT TALK

RAY SUAREZ: A new President steps up to the U.S./China relationship; Margaret Warner has the story.

MARGARET WARNER: George W. Bush ran for President promising to take a new approach to China.

GEORGE W. BUSH: The current President has called the relationship with China strategic partnership. I believe our relationship needs to be redefined as one as competitor. Competitors can find areas of agreement, but we must plaque it clear to the Chinese that we don't appreciate any attempt to spread weapons of mass destruction around the world, that we don't appreciate any threats to our friends and allies in the Far East.

MARGARET WARNER: Since taking office, Bush officials have elaborated only slightly and without much in the way of specifics.

COLIN POWELL: We don't view them as an enemy. We don't wish to make them an enemy. But at the same time we have to be realistic about the relationship. They're not a strategic partner. They are a trading partner, they're regional competitors. We sometimes have very different interests in the region.

MARGARET WARNER: This talk is about to be put to the test next month when President Bush faces a decision on whether to sell advanced weaponry to China's island neighbor Taiwan. The U.S. recognizes Beijing's claim to Taiwan as part of China, but Washington is committed under the 1979 Taiwan Relations Act to sell Taiwan the arms it needs to defend itself. These annual arms sales are a source of friction with Beijing, which regards Taiwan as a renegade province. Controversy this year centers on Taiwan's request for four state-of-the-art Navy destroyers, outfitted with so-called aegis radar technology, capable of tracking 100 targets simultaneously. China fears the Aegis radar could ultimately link Taiwan to a U.S. Missile defense shield. Hoping to head off the sale, China's top diplomat, Vice Premier Qian Qichen came to the U.S. this week, meeting with Secretary Powell yesterday and President Bush today. In New York Tuesday, Qian warned that an Aegis sale would increase the chances of a China-Taiwan military confrontation and cause a serious rift in the China -U.S. relationship.

QIAN QICHEN: But the Taiwan question is such a major one, that it is actually the most important and sensitive issue in China-U.S. relations. It must be taken seriously and handled properly.

MARGARET WARNER: But leaders in Taipei say that's exactly why Taiwan needs the destroyers with their Aegis technology. Pointing to China's missile build-up, a government editorial this week said: "The time to arrange these arms sales is now, before it is too late." China has installed some 300 missiles along its coastline aimed at Taiwan, and U.S. Intelligence says it is adding 50 additional missiles each year. At the beginning of today's meeting with Qian, President Bush was asked about the weapons sales issue.

REPORTER: Is there anything that China could say or do that would influence your decision about which weapons to sell Taiwan?

PRESIDENT GEORGE W. BUSH: This meeting will give me a clans to confirm the fact that I will honor our obligations under the Taiwan Relations Law. I look forward to explaining that as clearly as I can to our distinguished guest. If he cares to bring up the subject and wishes to make a case, I will be glad to listen. But no decision has been made yet.

MARGARET WARNER: For more on the choice facing President Bush, we turn to Michael Pillsbury, a former Pentagon officials in the Reagan and first Bush administrations. He's now at National Defense University. He was in Taiwan last month visiting military and political leaders. Susan Shirk, deputy assistant Secretary of State for East Asia and Pacific Affairs during the Clinton administration. She's now a professor at the University of California, San Diego; and Bates Gill, director of the Center for Northeast Asian Policy Studies at the Brookings Institution.

Welcome to you all. Michael Pillsbury, starting with you. Before we get to the choices that President Bush has to make, explain to us briefly, why does Taiwan want these Aegis-equipped destroyers so badly -- and why is China so vehemently opposed?

MICHAEL PILLSBURY: Well, to start with Taiwan first, they feel quite vulnerable to the missile build-up of the last several years. It probably became more dramatic in 95-96 when Beijing fired missiles quite close to Taiwan. So it's a public issue that's debated by the Taiwan parliament. Even taxi cab drivers will tell you, "you know, you must sell us the Aegis ship to help us against these missiles." So I think it's a public issue there. In Beijing, it's considered much more a matter of nationalism. They doesn't want America to split Taiwan away from the Chinese people. And China tends to believe any sale at all of any weapon, no matter how... even a rifle to Taiwan, somehow will bring about independence for Taiwan, and this really inflames the nationalistic feelings of taxi cab drivers in Beijing, as well as in Taiwan.

MARGARET WARNER: But Susan Shirk, Taiwan has a long list of weapons they want in this arms sale. Why is the Aegis-equipped destroyer issue front and center, so controversial for both countries?

SUSAN SHIRK: Well, because people in all three capitals view the Aegis destroyer as a building block of the upper tier TMD system.

MARGARET WARNER: You're talking now about a theater missile defense?

SUSAN SHIRK: That's right. So it's acquired this great symbolic and political value to all sides.

MARGARET WARNER: And do you think that Beijing means it when they say... when they threaten, as Qian did in his speech Tuesday, one, that it really would cause a rift in the U.S.-China relationship and; two, he said-- let me see five got this-- if I've got this-- he said that if the sale went through, that the whole relationship between China and Taiwan would change from a peaceful approach to reunification to a military approach. Do you take those threats seriously?

SUSAN SHIRK: Well, I'm not sure what they will do, but there could be a strong nationalistic reaction, and they could act out. There are hot heads on both sides of the strait. And if we decide to sell Aegis now, instead of selling a lot of other equipment they need instead, it's acquired this symbolic value, and so there could be a strong nationalist backlash in China, not just among the military, but I think this would be supported among the population, as well -- because the Taiwan issue has gotten all wrapped up in domestic politics in China. You've got a very insecure leadership that is stoking nationalism, and Taiwan is the hot-button issue of nationalism.

MARGARET WARNER: Bates Gill, what would you add to that?

BATES GILL: I would only add that, at this point, the President has a very difficult situation to have to face within his own party. There's a division there amongst conservatives and more internationalists leaning persons in the party. So there's going to be this domestic issue that he to deal with at home but also deal with the broader geo strategic issue of also maintaining a stable relationship with China. I think that what we probably ought to think about, is instead of zeroing in so narrowly on the transfer of four ships, we ought to embed this in a broader geo strategic context and make a more prudent decision.

MARGARET WARNER: All right. I want to get to that but, Michael Pillsbury, I want to point out here or see if I'm correct in this, even though Taiwan is very concerned about this missile build-up, these missiles, isn't it the case that these destroyers actually right now don't have the capability to protect against missiles? I mean they might be able to track them, but they don't have the ability to knock them out?

MICHAEL PILLSBURY: That's right. There's no real urgency to the sale of the Aegis because, first of all, it couldn't be delivered for eight or nine years. Secondly, Susan Shirk's quite right. China fears they could be the basis for an upgrade later -- once our own Navy can do it, to become a theater missile defense system. But that's really several years into the future. Why this has become an issue now, I don't really know. I think somebody may have deliberately misled our Chinese friends in Beijing that they should oppose this now, publicly and very strongly for reasons that are a mystery to me because, as I say, it's eight years off. We can't do it. It can't be a missile defense system for quite some time. So it's somewhat of a puzzle why they're so excited about this issue.

MARGARET WARNER: So, Susan Shirk, how do you think the President should balance these competing interests? And what can he do?

SUSAN SHIRK: Well, I'd say not this year. I'd say there are a lot of items on Taiwan's wish list that it really does need this year. It definitely needs to improve its backward Navy, not necessarily with the aegis destroyers, but with some other new ships. It needs help with training, it needs help with logistics, it needs help with air defense. It needs help with civil defense, with hardening airfields and other military targets. We have a legal and a moral obligation to help Taiwan defend itself, and there are many ways we can do that. I agree completely with baits. We shouldn't fix eight on these four ships.

MARGARET WARNER: So what, Bates Gill, should the President do?

BATES GILL: I think, first of all, the right message is being sent today, that is a very clear message that the ball is really in China's court. They're the ones who are destabilizing the situation; they're the ones who are engaged in the missile build-up, which we really can't tolerate for our own national interests, as well as our legal obligation under the Taiwan Relations Act. Once that signal is sent, I think it ought to be very clear that they're going to have to take some steps to show restraint, that we are favorably disposed to helping Taiwan in the area of defense against missile attack, and that if this build-up continues, we are going to have to go forward with the types of transfers that they've drawn red lines up, up to and even including the Aegis destroyers. But I would say for now, we probably ought to wait but let Beijing know clearly that we're predisposed in this direction.

MARGARET WARNER: So do you think when the President - and he did a couple of times said in his discussions, "I want to remind my distinguished visitor that we are committed to the Taiwan Relations Act," which is the act that requires the U.S. to help Taiwan defend itself, that he's sending that signal that essentially the degree of defense that Taiwan needs depends on the degree of offensive threat from you, China?

BATES GILL: Exactly - because China's always reminding us of the so-called three communiqu s: One of which the last one under the Reagan administration wrote in the text that we would decrease in quantity and quality our arms sales to Taiwan. But the context of that agreement was that there would be stability in the Strait, that China wouldn't take steps to destabilize the situation, which they have done with this missile build-up. So it's important to remind China of that.

MARGARET WARNER: Michael Pillsbury, what do you think he should do?

MICHAEL PILLSBURY: Well, there's a lot of pressure from Congress that the President has to take into account, as well. There are a series of letters already on their way advocating the sale of the Aegis -- quite a few other systems, the ones that Susan Shirk alluded to. There's a history of a major problem last year when the House of Representatives passed by more than two-thirds something called the Taiwan security Enhancement Act. There's always a threat to bring that up again this year in both Houses. So the President has to take into account not just China and Taiwan's request and with the military authorities of the DOD have to say about the balance, which Bates mentioned under the act he has to do, but also Congressional pressure -- and as your piece pointed out, his own campaign promise that he's going to redefine the relationship to something different than President Clinton did. How to do all those... take all those four vectors into account is no easy task.

MARGARET WARNER: But do you think there's some way to set up something that is sort of conditional, such as Bates Gill was suggesting, maybe not go ahead with the sale but essentially say, "we're going to, unless?"

MICHAEL PILLSBURY: Yes, I think there is room for several kinds of creative compromises on the Aegis system. Bates' concept is one good one, to link the build-up to the sale of different systems, including the Aegis. I think we have to give some credit to Susan Shirk and the Clinton administration for already raising this with the Chinese, making this linkage clear to them and hoping that they will at least cap their missile build-up, if not possibly reduce it. But as you know, the Chinese will not start arms-control talks with the United States yet. This is something we all look forward to. So Bates' concept is give them an incentive. We will sell this... now, one could go a step further and say why not sell it now, why not sign the piece of paper and announce it but then say, "we'll stop the sale," because we have eight years to make the transfer." And if during those eight years there's a reduction, well, then sales can be undone, perhaps by Taiwan's own request. They could save $ 4 billion-- actually, $ 5 billion-- by canceling the sale a little bit down the line and just paying for the small amount they've put in in the first year.

SUSAN SHIRK: I don't think that's realistic or practical. There's no precedent for that, never has it happened that we approved a system that we in fact later didn't transfer or Taiwan didn't want. I mean basically, Taiwan never met a major weapons system that they didn't want, which is part of the problem, because they've been so focused on these major systems. They haven't done the less dramatic steps that are really necessary to strengthen their defense.

MICHAEL PILLSBURY: Actually, Taiwan turned down a very similar system to the Aegis about seven or eight years ago. They're coming back at it.

SUSAN SHIRK: That's true.

MARGARET WARNER: Let me have a brief final word actually from Bates Gill. Do you think we are all right to read so much into this decision? In other words, do you think that when the President makes this decision, it will be an important indication of how he plans to approach the Chinese?

BATES GILL: It will, but it's not the be all and end all. This is a much bigger problem. Our future relationship with China certainly depends on far more than whether or not we sell four ships, but it has the potential of being highly politicized and causing a at deal of difficulty. I think the real focus has to be what this means in the geo strategic context for our allies and for the longer term stable relationship with China.

MARGARET WARNER: All right. Bates Gill, Susan Shirk, Michael Pillsbury; thank you all three.

RAY SUAREZ: Still to come on the NewsHour tonight, profits in the newspaper business, honoring James Madison, and a Roger Rosenblatt essay.

FOCUS - PROFITS AND THE PRESS

RAY SUAREZ: Journalism and the bottom line in the newspaper industry: Media correspondent Terence Smith has that.

TERENCE SMITH: In a move that stunned the newspaper industry earlier this week, Jay Harris, the publisher of the "San Jose Mercury News," resigned. Harris had been ordered to cut costs at the "Knight Ridder" paper, in an effort to boost its profitability. Profit margins across the newspaper business, which can range from 22% to 29%, have been sagging this year due to depressed advertising sales. This has increased the pressure on papers across the nation to produce quality journalism on significantly tighter budgets. In his resignation letter to Tony Ridder, the CEO of Knight-Ridder Corporation, Harris said that the planned cost-cutting would necessitate and in a memo to the staff, Harris said that attempts to meet profit targets could not be made "without risking significant and lasting harm to the Mercury News as a journalistic enterprise." In the wake of Harris's resignation, Tony Ridder advised the "Mercury News" staff that there would be "No layoffs of full-time newsroom employees" and said that management "hoped to avoid layoffs of full-time employees elsewhere" at the paper.

TERENCE SMITH: Joining us to discuss the newspaper industry story are David Yarnold, executive editor of the "San Jose Mercury News," who on Tuesday reassured the newsroom staff by ripping up a list of proposed layoffs; Lauren Rich Fine, a Merrill Lynch managing director who analyzes the publishing and advertising industries; and James Naughton, a former executive editor of the "Philadelphia Inquirer," a Knight Ridder paper, he is now President of the Poynter Institute for Media Studies in Florida.

Welcome to all three of you.

Jim Naughton, you know the Knight Ridder organization.

JAMES NAUGHTON: Yes, do I.

TERENCE SMITH: You know Jay Harris, and you know something about the pressures that can be brought on editors to reduce costs and improve profits. What is Jay Harris' resignation say to you?

JAMES NAUGHTON: Well, I think it's hugely important to journalists everywhere and to people who care about journalism because there are a lots of people in newsrooms who have been saying for some time that they were increasingly alarmed about the stress that was being put on profitability and, in their judgment, often at the expense or potentially at the expense of content. And for Jay Harris, who is, by reputation and I would agree by in fact one of the most entrepreneurial, most capable publishers in America, to say that he was concerned about these very same threats to the journalism I think is just hugely important.

TERENCE SMITH: David Yarnold, in his resignation letter, Jay Harris wrote, "much greater priority is given today to the business aspects of our enterprise than is given to fulfilling our public trust." Is he right?

DAVID YARNOLD: Well, I think Jay was fearful that the balance had shifted, and I think... I hope that we're still a company that believes that good journalism is good business, and I-- and I believe that goes the case. But the pressure's brought about by an economic downturn are, without question, severe.

TERENCE SMITH: Did his action, his resignation surprise you?

DAVID YARNOLD: Not really. I think I had seen signs of it coming. I think Jay had a number of long-held, deeply felt concerns, and I think this was a trigger more than anything else.

TERENCE SMITH: Lauren Rich Fine, newspaper profit margins are higher than many other industries. Why the pressure, the continuous pressure to keep them up or even increase them?

LAUREN RICH FINE: Well, I think that comes with being a public company. I think it's the same with every industry. Shareholders invest in companies for growth, and so even though we're in an economic downturn and there's a lot of pressure on ad revenues, shareholders expect companies to contain their costs and do what they can to maintain their profitability, if they can't improve it at the time like this. And so I think the real issue here comes from trying to serve the public in a high-quality fashion, but at the same time being beholden to shareholders.

TERENCE SMITH: Well, Lauren Fine, what profit margin does Wall Street expect from a newspaper, a publicly held newspaper company? If they average in the 20s, is that enough? What does it have to be?

LAUREN RICH FINE: Well, it's never enough, of course. This is Wall Street we're talking about. I think the expectation is that you can improve your margins over time. And what happens is each company is compared to its peer group. And so you indicated there's a range of 22% to 29%. If somebody's at 22%, you want to see a clear path of how they're going to move their profits to 29% margins. And certainly adjustments are made for the type of properties that you own; when you're in larger metropolitan areas, but there is an expectation that over time you can improve them.

TERENCE SMITH: Jim Naughton, what is being lost? Explain to us what is being lost in a situation like this where the market, the advertising market certainly seems to be turning down and yet the pressures continue to increase? What is at least potentially being lost in terms of the reader and the paper?

JAMES NAUGHTON: Well, there are judgments being made right now about whether to eliminate content and to respond to the continuing pressure on profitability in the midst of a down economy by eliminating, as one Knight Ridder newspaper is considering, four pages of content in its Monday edition. And in San Jose, they have taken steps to avoid layoffs, but there will be doubtless be consequences, such as combining zoned editions or eliminating some content that is already in print. So if you take a look-- and I agree that Wall Street is not asking anything different of newspaper companies than it's asking of other companies, but the level to which newspaper companies have climbed in profitability is just quite unusual, I think. In the last decade, the average profit margin of newspaper companies has gone from 13.5% in 1991 to 21.5% last year. In Knight Ridder, which is clearly trying to improve its margin and impress Wall Street, the average in Knight Ridder in 1995 was 12.5%. Last year, it was 20.8%.

TERENCE SMITH: So they're doing quite well, given that comparison?

JAMES NAUGHTON: They're doing quite well.

TERENCE SMITH: David Yarnold, are you under pressure to make economies of the sort that Jim Naughton was talking about -- reductions in content or collapsing editions?

DAVID YARNOLD: Certainly we are being asked to cut costs and that is the way newspapers work in any downturn. I think the bigger point is that profits have a constituency and the constituency for profits is Wall Street. And the constituency for quality would be readers, and they're represented by editors and publishers and newspaper company executives. And I think what Jay was trying to do was to issue a wake-up call to the pillars of journalism, the tribune companies and the knight riders and the New York Timeses and the Washington Posts to draw a line around high standards and to stick to core values and not to let an economic downdraft blow you over that line.

TERENCE SMITH: David, was it taken as a wake-up call? In other words, was there discussion, is there a discussion at the newspaper about the line where such cuts begin to affect the product?

DAVID YARNOLD: Those discussions happen whenever we make any change to the product. I think the larger point is, is that I think it's going to put the issue squarely on the front burner for editors and publishers across America.

TERENCE SMITH: Lauren Fine, I would assume from these numbers that are being tossed around here that the newspaper business is a pretty good investment.

LAUREN RICH FINE: Well, numbers can be somewhat misleading. I think the problem is choosing 1991 as a starting point for margins. That was in the ad recession of 1991 when the industry's profits were down 20% or more. And so that was choosing a very low point from which to compare. The industry has been very healthy. They, too, have enjoyed a good economy over the last six to eight years. And they've done a very good job of managing their costs, making the appropriate investments to improve the quality, to improve their production efficiencies, and they have been good investments. But typically this is not viewed as a high-growth group. It's viewed as an early cyclical group. And so investors today are looking at this group and saying wait, classified is starting to turn down. That's typically my signal that we're getting close to an economic bottom and I can buy the group fairly soon in hopes that I get the operating leverage on the way back up in the cycle. But I think a couple of things that haven't come up here is that newspapers do have two revenue streams. They don't just have advertising; they have circulation revenues, as well. And what we've seen a number of companies do is try to raise their circulation prices in hopes of finding alternative revenue sources to cover the cost right now and to cover the shortfall in advertising. I think, again, one of the issues you face and thinking of what David just said about a different constituency, which are readers, readers have been unwilling to pay higher prices for newspapers, and therein lies the big issue. Readers do want quality, but they're unwilling to pay for it. But Wall Street isn't really that evil. Companies don't have to be public, and the newspaper industry in particular is an industry that generates a lot of free cash flow. And most of these companies don't need to be public, unless they plan on making acquisitions. And so I think companies need to reassess, if they're not prepared to do what it takes from a weak economy, they should reconsider whether they want to be public or not.

TERENCE SMITH: Jim Naughton, listening to this, it's obvious newspapers live in a different world today. They have to be attended to shareholder concerns.

JAMES NAUGHTON: There's no question about that, Terry. They have always, I think, been attendant to the realities of the marketplace. And what's different today is that those realities are more insistent and unrelenting. And what I think Jay was reflecting in part was a frustration on the part not just of people in the newsrooms in these companies, but also in the business offices in these companies, that being public, as I believe is absolutely correct, puts pressures on them that 20 or 30 years ago when these companies began going public, they had not fully understood or anticipated. And now that they're in this position, they don't seem to know quite how to get out of it.

TERENCE SMITH: Okay, a final word, David Yarnold, can you tell us what the impact of this was on the morale, on the staff, on the atmosphere in the "San Jose Mercury News" this week?

DAVID YARNOLD: Well, Jay is much revered and respected at the "Mercury News," not just in the newsroom but across the entire company. Everybody was shocked, and saddened and took heart with his words, that we should be able to use this to our advantage and to learn from it.

TERENCE SMITH: So perhaps he got his message across.

DAVID YARNOLD: I'm sure he did.

TERENCE SMITH: David Yarnold, Jim Naughton, Lauren Fine, thank you very much.

FOCUS - FOUNDING FATHER

RAY SUAREZ: Honoring James Madison, 250 years after his birth.

RAY SUAREZ: Large monuments on Washington's mall honor George Washington, Thomas Jefferson, Abraham Lincoln. But there's no remembrance of the nation's fourth President, James Madison, though his contributions to American democracy may be equally important. At celebrations marking Madison's 250th birthday this year at his home in Montpelier, Virginia, and at the Library of Congress in Washington, he was remembered for his role in the founding of the republic. U.S. Supreme Court Chief Justice William Rehnquist called him "the Father of U.S. Constitutional Government."

CHIEF JUSTICE WILLIAM REHNQUIST: Madison, Jefferson, Hamilton and Washington, then, made contributions which none of the others could have. Madison was the most thoughtful and deliberate of the four and perhaps the least charismatic. But it was the very thoughtfulness and deliberateness which enabled him to lead the way to the adoption of the United States Constitution at the convention in Philadelphia in 1787. This remarkable document has endured for more than two centuries, is the envy of many, many countries outside of ours, and it is, in a very real sense, Madison's memorial. It is a fitting and proper one.

RAY SUAREZ: Born in 1751, Madison was part of Virginia's landed gentry. As a Virginia legislator, he supported American independence. He served as a delegate from Virginia at the Constitutional Convention in Philadelphia in 1787. There he introduced his plan for America's national government. Michael Quinn is President of the Montpelier Foundation.

MICHAEL QUINN: Madison literally wore himself out at the Constitutional Convention. He was not only one of its most active members, speaking more than almost any other delegate, but he took detailed notes of every speech. He actually developed his own form of shorthand so he could write down verbatim what each delegate said. And then as soon as the day's meeting was over, he'd return to his room and copy it all out in longhand. His notes from the convention fill more than 1,000 pages, and they're held at one of the nation's treasure, at the Library of Congress.

RAY SUAREZ: Madison was the Constitution's leading defender for 50 years. He guided it through the ratification process and wrote many of the Federalist Papers to explain the document to his fellow citizens. While serving in the first federal Congress' House of Representatives, Madison sponsored the first ten amendments to the Constitution, what we call the Bill of Rights. And after eight years as Thomas Jefferson's Secretary of State, Madison was elected President in 1808. His presidency was fraught with political rift at home and disputes with France, Great Britain and Spain. During Madison's second term, the War of 1812 led to the British invasion, the burning of Washington and the White House. Madison eventually retired to Montpelier and died there at 85. In his final days, his last advice to the country was that the union of the states be cherished and perpetuated.

RAY SUAREZ: Joining me now to discuss James Madison and his legacy are Hunter Rawlings, President of Cornell University; Jan Lewis, professor of history at Rutgers University and author of "The Pursuit of Happiness: Family Values in Jefferson's Virginia"; and Jack Rakove, professor of history and political science at Stanford, and author of "James Madison and the Creation of the American Republic." Jack Rakove, if there's a sense that James Madison hasn't gotten his due, why don't you start us on a path toward giving it to him? What should we say to place him in his proper historical context?

JACK RAKOVE: Well, the first thing to say about him of course, as your little snippet suggested, is that he really was the principal framer of the Constitution, the principal statesman who helped to arrange for the calling of the convention, the one who argued most vigorously for its ratification, after... in 1777 and 1778, and then of course, Madison goes off to the first Congress and presides over the adoption of the Bill of Rights. So we always think of him first and foremost as the Constitutional founder, the one man who seemed to have been involved at every key point in the movement to create a stronger national government and to get the thing up and running, and then of course, to preserve the Constitution upon which it rested.

RAY SUAREZ: Jan Lewis, what would you like to add to place James Madison among the pantheon?

JAN LEWIS: I think that what we should remember Madison for, also, is his extraordinary skill as a politician. It was an extraordinary achievement, not simply being able to think up the ideas in the Constitution, but to be able to share them with others at the Constitutional Convention and to know when to compromise, to know just what was necessary to get the Constitution not only written, but then ratified. Throughout his long life, Madison was an exemplary politician, the man who knew how to get things done.

RAY SUAREZ: Well, Hunter Rawlings, this was a time in American history when giants walked the earth. How did it happen that James Madison doesn't come rolling off the toning when we discuss Washington, Franklin, Hamilton, Adams?

HUNTER RAWLINGS: Well, they were big personalities, very flamboyant in some cases, extremely visible and well-known to the American public. Madison was a scholar, he was quiet, he was quite shy, in fact, and it took him quite a bit of time to develop the confidence to appear in the vigorous debates that were to lead to the Constitution. So Madison was a more scholarly type, and it took long way for while for him to have a significant influence. But when he did, everyone knew it.

RAY SUAREZ: So though we may not talk about him as much today, he was respected by his contemporaries?

HUNTER RAWLINGS: Let me give you an example. When Washington was preparing the first speech to the new Congress for the new American government, he had a 73-page speech prepared by a speechwriter. He asked Madison to look at it. Madison said it wasn't very good. George said, "James, would you write me one?" James said he would be happy to. Washington gave it. The Congress was so pleased with the speech that it decided it needed a response. So they looked around for the best person to respond, and they asked James Madison, a member of the House of Representatives, to write the response and to give it, which he did. And then Washington was so pleased with the response, that he felt yet another response would be necessary and he asked James Madison to write one for the Senate and one for the House. James Madison, in other words, conducted the opening dialogue of the American government by himself.

RAY SUAREZ: Well, Jack Rakove, here we are 200-plus years later still arguing about what the framers intended, what different parts of the Constitution really mean. In playing such a large role in the drafting of this document, did Madison anticipate that many years on we would be engaged in just that act?

JACK RAKOVE: I think he did not quite anticipate just how difficult the task of Constitutional interpretation would be. Madison's original hope coming out of the convention was that after a few years of getting the government up and running, a number of useful precedents would be set, things would settle down, and one would know more and more with each passing year exactly how the thing was to operate. What he learned very quickly, and certainly no later than 1793, 1795, '96 and continued to think about on through his Secretary of State and presidency and the 20 years of his retirement, was that there would never be any final resolution of what the Constitution meant. And as a result, Madison had to struggle with the question of what kinds of sources... or what kinds of resources could you bring to bear to resolve constitutional disputes. You know, everybody knew that he had kept those, the famous notes of debate, the most comprehensive record of the deliberations at Philadelphia. Everyone knew they were in Madison's possession, that he was tinkering with them and probably one day hoped to see them published. But he was adamant down until his death in 1836 that the notes be published only posthumously. And so he started to develop a theory of Constitutional interpretation, which we now call originalism, but which had the somewhat perverse quality of saying that, in fact, what the framers had actually said and thought and done at Philadelphia was not proper matter to bring to bear on solving Constitutional disputes. Instead, one had to look at what the people who ratified the Constitution thought that they were doing. And Madison's really the first politician to develop that theory of interpretation that we're still kicking around 200 and... well, 21 decades later in our ongoing debates about Constitutional interpretation.

RAY SUAREZ: Well, Jan Lewis, I know it's a mistake to try to look at the past through the likes of our own day, but I was struck, in getting ready to talk to you all today, when looking at the arguments over nullification, the arguments over what a state can do versus what a federal government can do, that Madison was really wrestling with some of the same sort of splits and tears that would lead to events long after his death, like the civil war and arguments over states' rights and states' sovereignty.

JAN LEWIS: That's true, but I don't think that we can or should look to Madison for the answers. One of the ironies-- and it comes out precisely in the debates over nullification-- was that Madison thought he had a pretty good idea of what the Constitution should suggest, and there were people in the Congress at the time, Madison's now in retirement, who were debating nullification.

RAY SUAREZ: Let's explain what nullification is, first.

JAN LEWIS: Oh, nullification is when South Carolina wants to nullify an act of Congress, in particular the Tara, and John Calhoun comes up with a whole theory to justify nullification. Madison is opposed, as this... It would be harmful to the union, the union more than anything else. No state should interpose itself in this way.

RAY SUAREZ: So he was saying that the writ of the federal government should run inside states, that state governments can't contradict an act of Congress?

JAN LEWIS: At this point, he was, as through his whole life, a committed unionist. But other than the Congress, said, "well, this old man doesn't know what he's talking about and we don't have to pay any attention to him."

RAY SUAREZ: By living such a long life, another remarkable thing is that he was friends with Benjamin Franklin, and also knew such 19th century figures as Andrew Jackson and Henry Clay and John C. Calhoun. He sort of bridged an amazing span of eras there.

JAN LEWIS: Well, he did. He even lived long enough to engage in correspondence with Princess Victoria, later Queen Victoria. So he bridged an amazing... He lived a very long life and saw the world change phenomenally. And he himself helped bring about the changes.

RAY SUAREZ: Well, Hunter Rawlings, you're an educator. How can we reclaim James Madison?

HUNTER RAWLINGS: Well, the best thing to do to reclaim James Madison is to do exactly what he did; namely, to study. Madison himself was a careful scholar. He studied Greek and Roman antiquity very carefully and drew a lot of lessons from that study, and analysis that led to many of his thoughts at the Federal Convention. In the same way, I hope that we'll begin to study Madison more carefully in order to understand what went into those very thoughtful and thought-provoking aspects of the Constitution that he helped to develop. The best way to study is to read some of the short pieces, for example, from the "Federalist Papers," which he wrote, along with Hamilton and Jay, and the Tenth Federalist Paper is perhaps a great place to start. It's a short document, but it gives you a very good window into Madison's thoughts.

RAY SUAREZ: And just so we don't do violence to his own wishes, was this a man who was content not to be named among the brave, content to be in the shadow of some of his better-known contemporaries?

HUNTER RAWLINGS: I think to an extent he was content in that way. He didn't mind writing Washington's speech, as long as it was a good speech that the President gave. And the fact that no one knew Madison wrote it was fine with him. And the only real monument to him in our nation's capital now is the Library of Congress. That strikes me as especially fitting for James Madison, a scholar, to have a library named after him.

RAY SUAREZ: Well, Jack Rakove, just so it's not all sweetness and light, we should also remember that he was a war-time President and the country was under attack. Briefly remind people what they should remember about the War of 1812.

JACK RAKOVE: Well, Madison carried us into the War of 1812 through his diplomacy with in a Napoleonic France and Britain, and most scholars have felt he may not have done the nation the best service through his diplomacy. But if the historians have not graded Madison very highly, he was not a vigorous wartime leader and didn't really have a moderate conception of executive power. But what he did have, and what I think Madison was consciously trying to do, was to react against the example of vigorous executive powers that had been set back in the 1790s by George Washington and by John Adams. Madison had really reacted very sharply against what he saw as the abuse of the prerogatives of the presidency back in the 1790s. And so I think the one thing that might be said in his defense for his conduct of the war against Great Britain is that he wanted to set the right kind of Constitutional precedence. He wanted to lead the government without becoming a wartime dictator. He didn't have a very able group of men around him to help him in that respect, in any case. And the curious thing is that even though the war was not well fought and in many ways very close to disaster on several occasions, and of course, the capital itself was burnt in 1814, that Madison actually comes out of the war with his reputation not only intact but in some ways enhanced. And I think in a certain sense, the result was what he would have wanted, that the country had survived-- in some ways Andrew Jackson had done his bid at the very end in New Orleans-- but that he had set an example of how you would go could go through a second war of independence, perhaps not have the kind of vigorous executive leadership that we associate let's say with Woodrow Wilson or Theodore Roosevelt or Franklin Roosevelt, but you could also keep the Constitution and with it, the union intact.

RAY SUAREZ: Born 250 years ago this month, James Madison. Guests, thank you all.

ESSAY - SURVIVING

RAY SUAREZ: Finally tonight, essayist Roger Rosenblatt looks at a book about surviving the game of life.

ROGER ROSENBLATT: The book begins with the word "warning," then adds: "Do not attempt to undertake any of the activities described in this book by yourself." The hell I won't. Why would one acquire this remarkable little guide unless one lived in a world where it was indispensable? "The Worst Case Scenario Survival Handbook." That's its name and that's its game. Joshua Piven and David Borgenicht are the authors names, and here is merely some of the information they provide: How to escape from quicksand. How to win a sword fight. How to perform a tracheotomy. How to leap from a bridge or cliff into a river; how to fend off a shark. See what I mean? One might criticize this book as a tad defensive. But so are the Bible, the Koran, and the Bhagavad-Gita. And this one leaves those others in the dust. Example: "How to Escape From a Bear." The authors advise: "Lie still and quiet; an attack often ends after the person has stopped fighting" -- which has been my problem from the get-go. I see a bear, I give him a shot to the snout, in no time there's a donnybrook. Example: "How to Land a Plane." Unfortunately, the advice here does not apply to commercial airliners, which are the kind I usually travel in. But the first three steps seem easy enough. 1) Drag the pilot out of the pilot's seat; 2) Take your place at the controls; 3) Put on the radio headset and yell "Mayday! Mayday!" The intermediate steps seem to require more skill. But the last one, after I've landed the plane, is both doable and courteous: The book says, "Get out as soon as possible and take the pilot with you." Example: "How to leap from a motorcycle to a car." I can't count the times I've tried that one, and landed square on my you-know-what. On and on this wonderful guide goes. How to jump from a building into a dumpster; advice for those who can no longer afford the rent, I suppose. How to deal with a charging bull; it says, "Do not antagonize the bull" -- always my error. How to deliver a baby in a taxicab. Could I try that motorcycle trick again? How to take a punch; easy, don't read the reviews. In fact, the measure of any truly great book is the wider applications of its thesis. The guide tells us how to escape from a sinking car-- it might also include a sinking credit card and more socially useful situations: How to escape from one more movie about aliens or dead people. How to sit through a performance of +Nsync without putting a pistol in your mouth. How to endure a German opera. How to survive a conversation with a happy person. How to survive more news about Madonna. How to escape from anyone who says, "you're toast, I'm there for you, I'm here for you." The U.S. Senate is a club. No problem, I just want to get on with my life. Behind this book lies the premise that one must always to prepared for calamity, that life is relentlessly imperiling. And anyone who has tried life must concede that this is true, even in my sedentary profession. Example: How to identify a bomb. The book goes into careful detail about bomb identification, but I need no instruction on this one. How to identify a bomb-an essay by Roger Rosenblatt -- nobody claps. The audience yawns expansively. The TV sets turn off at the announcement. I'm Anne Taylor Fleming.

RECAP

RAY SUAREZ: Again, the major stories of this Thursday: Gunfire erupted at another high school in San Diego County. Police said four people were wounded including the suspect; he was shot by a deputy working at the school. And President Bush today defended the U.S. decision to expel a large number of Russian diplomats. We'll see you online, and again here tomorrow evening with Shields and Gigot, among others. I'm Ray Suarez, thanks and good night.