The NewsHour with Jim Lehrer

GWEN IFILL: Good evening. I'm Gwen Ifill. Jim Lehrer is away this week on a book and PBS station tour. On the NewsHour tonight: Our summary of the news; then, an update on the situation in Iraq, events today, and what lies ahead; in Oregon, no new taxes, but the state budget comes up short; a conversation with Nicolas Vaca about his new book, "Presumed Alliance"; and we visit an award-winning children's theater in Minneapolis.

NEWS SUMMARY

GWEN IFILL: President Bush plans a major address tonight, in which he has promised to detail plans for Iraq's political transition. It's the first in a series of speeches between now and the June 30 deadline. In them, the president hopes to rebuild support for his policy. White House Spokesman Scott McClellan said today the president will outline five steps to make the transition work.

SCOTT McCLELLAN: He will talk about the political front. He will talk about the election front. The president will talk about how we are working to eliminate the security threats in Iraq, and he will talk about our efforts to reconstruct Iraq's infrastructure. We are making great progress on that front but there is still more to do. And I expect he will talk about our diplomatic efforts.

GWEN IFILL: Tonight's speech takes place at the Army War College in Carlisle, Pennsylvania, at 8:00 PM Eastern Time. We'll have more on this story later in the program. The U.S. and Britain offered a draft resolution on Iraq at the United Nations today. The Security Council discussed it behind closed doors. The proposal endorses the transfer of power to an interim government. And it gives the new regime control of oil revenues, under international monitors. It does not say if the Iraqis would have the authority to ask coalition troops to leave. The British ambassador to the United Nations addressed that point outside the council chambers.

EMYR JONES-PARRY: We should have sufficient certainty militarily that that force would stay and do the job through the election and the whole electoral process. Until then we have a different circumstance, a transitional government, democratically elected, and then it can exercise its will, no question.

GWEN IFILL: And France said today it wants a timetable for giving Iraq control over its own police and security forces. The German ambassador called the draft a good basis for discussion.

GUNTER PLEUGER: I think it is important that the resolution make clear that we have a new start in Iraq, a political process, the restoration of sovereignty to Iraq, and we will have to make sure this process provides Iraqi ownership for the political process, as well as for the process of economic reconstruction.

GWEN IFILL: The draft resolution urges more nations to send troops to Iraq, but it was unclear today if any would. The resolution is expected to be voted on next month. In Iraq overnight, militiamen loyal to radical Shiite leader Muqtada al-Sadr clashed with U.S. forces again. The fighting in Najaf killed at least one Iraqi and wounded 20. In nearby Kufa, U.S. and Iraqi security forces killed more than 30 gunmen on Sunday. But al-Sadr's militia abandoned positions in Karbala over the weekend. A roadside bomb in Baghdad destroyed an armor-plated vehicle today, killing two British civilians. It happened near a checkpoint outside coalition headquarters in the so-called "green zone." Two other people were injured. On Saturday, a suicide bomber killed four people in the capital and slightly wounded Iraq's deputy interior minister. U.S. officials today denied that a new video obtained by the associated press proves that a military strike targeted at foreign fighters in western Iraq actually killed dozens of guests at a wedding. The video shows guests arriving and dancing, followed by scenes of destroyed buildings and tents. Today, in Baghdad, the U.S. Military showed slides of guns, drugs and passports also seized at the site.

BRIG. GEN. MARK KIMMITT: I notice that in the APTN video, those activities that we saw were all happening during the daylight. Granted, these pictures were taken in the daylight in the post forensic analysis as well. There are inconsistencies. We will do an investigation, but at this point we have seen really nothing that causes us to be... to change our minds. That's why we need to get as much evidence as possible, hand it to the investigators. Let's see where the investigation takes us.

GWEN IFILL: The attack survivors have insisted there were no foreign fighters in their group. We'll have more on this story, right after this News Summary. The Midwest struggled to get back to normal today, after a weekend of tornadoes and severe thunderstorms. One tornado destroyed most of the village of Hallam in southern Nebraska. Another severely damaged the town of Bradgate in Iowa. Flooding caused widespread damage, and thousands of people still had no electricity today. The storms killed at least five people. Outside Paris today, four people were killed when a 98-foot section of a new terminal roof at the Charles de Gaulle International Airport collapsed. We have a report from Katie Razzle of Independent Television News.

KATIE RAZZLE: New video from the French fire brigade shows the extent of the collapse. The terminal is supposed to be a signal of France's readiness to be the air hub of Europe, now closed, possibly permanently. This morning, recovery work was suspended when new cracks were heard in the departure hall roof. The building was evacuated immediately. A criminal investigation is under way. The French now saying four, not five people, died, crushed as tons of concrete caved in, and maybe more buried in the rubble. The French prime minister had a message for their families when he visited the airport today.

JEAN-PIERRE RAFFARIN (Translated): We are all very moved by the cruelty of this collapse. Our thoughts are with the families of the victims. We're focused on the inquiries, which will help to us find out the truth about this accident.

KATIE RAZZLE: The share prices of the construction firms involved in building terminal 2-E fell today with potential threats of lawsuits. French unions had long complained that safety had been compromised, a claim denied by all involved.

GWEN IFILL: The terminal cost nearly $900 million to build and opened just 11 months ago. But the French Airport Authority said today it will tear down the entire building, if need be. U.S. oil prices shot back up today, despite a pledge from Saudi Arabia to increase output. In New York, crude oil futures gained nearly $1.80 to finish near the all-time high. Traders blamed skepticism that higher Saudi production alone could meet increased demand. New York State sued the former head of the New York Stock Exchange today over his pay package. Richard Grasso was ousted last year after reports he was paid $187 million. Today, New York Attorney General Eliot Spitzer called that figure "wholly inappropriate and illegal." He demanded Grasso return more than half the money. Grasso defended his record and said he would fight the suit. Former WorldCom boss Bernard Ebbers will face new charges. A fresh indictment in New York today accused Ebbers of making falls filings with the U.S. Securities and Exchange Commission. He was already charged with fraud and conspiracy for allegedly hiding $11 billion in company debt. WorldCom's bankruptcy two years ago was the largest in U.S. History. On Wall Street today, the Dow Jones Industrial Average lost eight points to close at 9958. The NASDAQ rose more than ten points to close at nearly 1923. That's it for the News Summary tonight. Now it's on to: A Baghdad update; what next in Iraq; tax issues in Oregon; a new book conversation; and children's theater in Minneapolis.

UPDATE - STRUGGLE FOR CONTROL

GWEN IFILL: Now to our report from Baghdad. I talked a little earlier this evening with Dexter Filkins of the "New York Times."

GWEN IFILL: Dexter Filkins, welcome again. Could you bring us up to date on what events happened today, especially the attacks just outside the green zone in Baghdad?

DEXTER FILKINS: Yeah, there was A... there was an attack today on a civilian convoy that killed two British civilians just outside the green zone, like 100 yards. There was a couple of armored cars that were going towards the green zone, and... and it looks like... it looks like a couple of guys on a roof with a rocket- propelled grenade, you know, hit the car, killed two of them. I think two people survived. I went to the site. You know, it's the same sad scene that I've seen so much of, you know, particularly recently, and... and I can't say... I can't say the Iraqis who were there were terribly upset about it. I mean, it was... you know, you go to these things and it's just a real eye opener how much hostility there is towards the United States. But that... that was the main... that was the main event here today.

GWEN IFILL: And over the weekend there was a suicide bombing as well.

DEXTER FILKINS: There was. There was a suicide bombing on Saturday outside the house of the... one of the deputy interior ministers. Didn't kill him, but killed a number of other people.

GWEN IFILL: As you know, there has been quite a back-and-forth between U.S. officials and people on the ground about what happened in this so-called wedding tragedy, which is to say American officials are saying that they attacked a suspicious target, and there is now today video which has surfaced appearing to show a wedding. What can you do to bring us up to date on what... where that stands?

DEXTER FILKINS: Well, there was... this was the wedding... well, the wedding or not, or a gathering of insurgents, as the U.S. claims, about 300 miles west of here at the Syrian border, and I should just start by saying, you know, three months ago the whole press corps in Baghdad would have just driven out to this place, but... and tried to find out what happened. But we can't do that now because it's just so dangerous, and so it's just made trying to figure out, you know, what happened in a place like this that much more difficult. But basically the dispute has been about 40 people were killed 40 Iraqis were killed; nobody disputes that. The Americans say that they were insurgents. There have been a couple of videos now of weddings, and people say that it was a wedding party. I... a video came out today. I've seen that video. It does show a wedding; it shows a wedding in the desert. It's really hard to say if that is the same wedding that, you know, took place, or allegedly took place the other night. There is a guy, there's a singer in the video who looks a lot like the body of a dead person in one of the... that's shown in one of the videos of the funeral-- very similar. And we know that a singer was killed, so... it's tough. It's really murky. It's really murky stuff, and it, you know, ultimately comes down to the details, but it's just really hard to figure out what happened out there unless you can go out there yourself.

GWEN IFILL: And among the details apparently is that there were foreign passports and weapons found on that site as well.

DEXTER FILKINS: There was. I mean, it's... you know, it's... this was a little village on a border... on the border in the middle of the desert, and it's pretty clear that whatever else they were, these guys were smugglers, you know. There were lots of big trucks. There were guns; most smugglers around here carry guns. It was kind of a camp where they lived. I guess it looks like maybe they were carrying some drugs. You know, there were some visa machines and that sort of thing. But I guess the question is whether, you know, these were like serious... I don't think the U.S. bombed this place to take out smugglers. You know, the question is whether these guys were serious insurgents, and they did show... the U.S. says that they found a few Sudanese passports. I think... the other day they said they found one, and I think today they said that they had found more than one, but it wasn't clear to me how many they had found there.

GWEN IFILL: As you know, the president is beginning his effort to try to lead up to the hand-over June 30 in Iraq, to basically sell it with a series of speeches. I wonder if in Iraq, especially among those who are in line to take over in the interim government, there is... they're listening very carefully to what the president will have to say.

DEXTER FILKINS: Well, they definitely will. I mean, I think, you know, Lakhdar Brahimi from the United Nations is here, and he's trying to assemble this caretaker government, and you can be sure that those people will be listening. I think the question that... the question that sort of troubles me or would trouble anybody here is who else is listening to it, and whether the ordinary Iraqis are going to listen to what President Bush has to say. And the way things are going here, and the way they have been going here, it's... he's not... President Bush is not a very popular guy here these days, and so I think the answer is, at the top, yeah, they'll be listening, but I think everywhere else they'll probably turn it off.

GWEN IFILL: And speaking of not a popular guy in leadership, Ahmad Chalabi, who used to be, as he used to describe himself, as America's best friend in Iraq, obviously has fallen out of favor. Does his fall, the raid that the U.S. conducted on his home, does that have an effect on his power base in Iraq?

DEXTER FILKINS: Well, Ahmad Chalabi, who's... he comes from an Iraqi family, and it's a very prominent family and they've been in Iraq for a long time. But he was out of Iraq for... you know, for most of his life, and he doesn't have much of a power base in Iraq. He's not a very popular guy here. People associate him with the United States. They associate him with scandals that he was allegedly involved in, a big banking scandal in Jordan. He's not a very popular guy here. In fact, what's... what's been interesting about to watch this raid-- I was at the raid when... or right after the raid-- is that Chalabi has tried to use the raid and to say "look, you know, the U.S., these big bad U.S. guys are kicking my door down. You know, I'm with you, the Iraqis, and I don't like the U.S. now." And so he's trying to sort of use that to, pretty clearly, to gain in popularity among ordinary Iraqis. And I don't... it's anybody's guess as to whether it's going to work.

GWEN IFILL: Okay. Dexter Filkins, thanks a lot again.

DEXTER FILKINS: Thank you.

FOCUS - TROUBLED TRANSITION

GWEN IFILL: President Bush addresses the coming transition of sovereignty in Iraq. Margaret Warner has that story.

MARGARET WARNER: As President Bush prepared for his televised speech tonight, U.S. diplomats offered a preview of sorts at the U.N. Their draft resolution, endorsing the handover on June 30, says: "The new interim government will have "authority for governing a sovereign Iraq - that elections for a transitional national assembly will be held by next Jan. 31. And other nations are urged to contribute to the effort with troops and reconstruction aid." Three views now on the president's approach in his speech tonight. Peter Galbraith is a former ambassador who has written widely on Iraq and the Kurds. He's just back from Iraq. Laith Kubba is a senior program officer for the Middle East at the National Endowment for Democracy. Born in Iraq, he's now an American citizen. And Reuel Gerecht was in the CIA's clandestine service focusing on the Middle East from 1985 to 1994. He's now a resident fellow at the American Enterprise Institute. Welcome, gentlemen. What does the president... what is the main message, Reuel Gerecht, that the president has to get through to the American people tonight?

REUEL GERECHT: Well, I think first and foremost, that he has a plan. And then I suspect that he will give a rough outline on it and he will suggest probably it's a two track plan, there's one track developing in Baghdad and that there is another one developing in New York through the United Nations and that the two are going to harmoniously work together, and we will be able to see where we are going, conceivably, the end of the road.

MARGARET WARNER: Is that how you see it? That's what the president has to do?

PETER GALBRAITH: I don't think this speech is going to have any credibility unless he admits that the strategy that he has been following has not worked. I think he has to admit that there were huge mistakes, that he was overly ambitious in trying to establish Iraq as a democracy that would transform the Middle East, that he didn't put the resources to that task and he sent people who weren't qualified to do the job. I think he now needs to be realistic and he needs to be focused on civil war, which I think is a much more likely outcome now than democracy.

MARGARET WARNER: And, Laith Kubba, what do you think is the most important message he has to send to the Iraqi people?

LAITH KUBBA: I think the most important message is that America is not going to be an occupying power, that there has been illusions or expectations that it is going to be expansionist adventure in the region; this is not going to happen, that America is sticking to the timeline of handing over power to the Iraqis. It is going to be a sovereign government with full authority. Iraqis are in charge of their own money and their own future and they're sticking to a timeline. Most importantly, the U.N. will assume the legal and political responsibility to lead that effort of the transition and the U.S. is no longer in charge of it.

MARGARET WARNER: Now the draft resolution that we saw in the U.N. this afternoon includes many of these elements. Does it strike you, Reuel Gerecht, to use Peter Galbraith's comments, to move Iraq from its present occupied status to astable, unified democratic government?

REUEL GERECHT: I don't think we know yet. One, Grand Ayatollah Sistani, who's the Shiite cleric that leads the Shiite community in Iraq, he has been reviewing the program as it has developed in a rush. But he has not given his approval as far as I know to it. I really don't think they've fully worked this out. And until Grand Ayatollah Sistani approves of the program, the program functionally doesn't really exist.

MARGARET WARNER: But are you saying that the whole idea of an interim government is even questionable in your view? Is it's just a concept?

REUEL GERECHT: Well, no, I think there is going to be an interim government, but the details of it, I think, are still far from certain. And I think it's important to remember that Grand Ayatollah Sistani wanted the U.N. to participate because he wanted to use it as a leverage against the Americans to accelerate the democratic process. Unless he is certain that in fact that democratic process is moving forward, and there is no doubt about that, it is not unlikely that he will veto it.

MARGARET WARNER: How realistic a plan do you think this is, Laith Kubba for moving from here to there?

LAITH KUBBA: I think if you were to ask, is it going to be perfect, the answer is no. Is it going to please everybody, the answer is no. Is it going to be a continuation of the policy, answer is no. Is it likely to work? I think it stands a good chance. It is going to be tough, but I cannot see an alternative to it.

PETER GALBRAITH: I think this plan doesn't address many of the fundamental issues. First, it's really stunning that here we are five weeks before the handover of power, we do not know who is going to take over. We don't know what the authority of the new government is going to be. We don't know what the status of the interim constitution, which was adopted in March after a lot of discussion and a great deal of back slapping by the administration, whether that will even apply. And if it doesn't, some of those carefully constructed compromises, for example, that would give the Kurds a veto on the permanent constitution, if that's taken away, then you're setting the stable for conflict and potentially civil war.

MARGARET WARNER: A lot of the political news, Laith Kubba coming out of Iraq in the last couple of weeks has been one of conflict. I mean, everything from everybody from the different ethnic faxes factions jockeying for the jobs, from killing of the member of the governing council and the raid on the offices of another, Ahmed Chalabi. Will the interim government... what does that tell you about challenges that will face the interim government?

LAITH KUBBA: Tremendous. But I still say it can work if more effort has been put into rebuilding state institutions. The army, security and the bureaucracy, they can be built. By and large, Iraqis are accustomed to a strong state and I think very quickly they will help rebuild it. The politics of it, it's difficult unless there is an end from Iraq's main communities as I think has mentioned Ayatollah Sistani, then it can succeed.

MARGARET WARNER: Do you think Iraqis will regard this appointed interim government as the governing authority and will see that, will come together to get to the next stage, these elections in January, just because it's Iraqi-led?

REUEL GERECHT: Perhaps. I mean I think they may view it as an improvement on the Iraqi governing council but I wouldn't get my hopes up very high. I think the only thing that is really going to bestow legitimacy in the eyes of the Shiite community are elections. Until we get to elections, I think the possibility for this coming off the rails remains fairly substantial.

MARGARET WARNER: Do you think Iraqi people will regard this government as a legitimate government?

PETER GALBRAITH: I think it depends on what you mean by the Iraqi people. It really is no such thing. There are different communities within Iraq which have very different views. I think Shiites will wait until there are elections. The Kurds are not going to agree to anything that changes their status, which is, in fact, functionally an independent state. They're not going to accept the restoration there of central government institutions. They'll never accept the return of an Iraqi army however reformed because they associate that with genocide. So the question is who is going to accept what. And in the Sunni Triangle, there aren't really leaders in place who have authority or support among the pop lace. So we don't know what is going to happen there.

MARGARET WARNER: Let's look at the security situation. Will the fact, Laith Kubba, that the government is at least run by Iraqis, will that in and of itself reduce any of the violence? Or might it, as Gen. Abizaid suggested last week, even increase it?

LAITH KUBBA: I think nobody has an illusion that there is no quick fix to security. Things will get worse before they get better. It is a little bit too late in the game to fix it now because there has been a vacuum for a long time. But I think once there is a sound political process, once there are institutions, when people see light at the end of this tunnel, I think Iraqis by and large will line up behind the process and ultimately we will see dramatic, I think, rapid increase in security.

MARGARET WARNER: You're saying Reuel Gerecht, or at least you said earlier, that you think we should have had earlier elections in Iraq. Why?

REUEL GERECHT: Because I think there is an enormous and increasingly frustrated desire in the country for elections. There was an interesting group put together by the Iraqi governing council which included the very well known Iraqi writer, Makia, who traveled all over the country from the Sunni regions and Shia regions and the Kurdish region. What they found that they didn't anticipate was the enormous desire for elections.

MARGARET WARNER: What do you think of that idea?

PETER GALBRAITH: I think actually it is a good idea to hold elections.

MARGARET WARNER: You mean as soon as maybe this fall?

PETER GALBRAITH: As soon as this fall. But then we're going to have to be prepared to live with the consequences. And I think what elections are going to produce different outcomes in the different regions. I think you are going to see strong support for the Shiite religious parties in the South. What you are going to see in Kurdistan is support to continue the more pluralistic western-style democracy that they've had. Unless you can have a system that reconciles those very different visions of the future of Iraq, a system which I think has to be a very loose federation, that unless you can reconcile those different visions, you are going to have conflict, and that issue has to be addressed as a top priority and so far it hasn't been.

MARGARET WARNER: One other point the president is going to make tonight and is in the U.N. resolution is further internationalizing this effort both with troops and assistance. What do you think the prospects of that are?

PETER GALBRAITH: Well, there is an obvious advantage for the United States for internationalizing because we get other people to help share their share of the burden, pay the price. The problem is that the Germans and the French are not going to want to put up the $10 billion each to support the effort which they didn't support in the first place and they feel they have been badly treated by the administration in the process.

MARGARET WARNER: Bottom line question, Reuel Gerecht, does this plan of the president, this approach, strike you as the beginning of a successful exit strategy and one that leads leaves a successful stable Iraq?

REUEL GERECHT: Again I think at this time it's impossible to say that. If I had to bet on it, I would probably bet in the other direction because I think they are being a little bit too loose on the issue of elections. I think they need to come quickly because we don't know what is going to happen. And also it's good to remember -- I mean Colin Powell made a very important statement last week where he said that an interim government might have the authority to ask the Americans to leave --deduced from that means that an interim government may be able to check mate insurgency operations. We could get ourselves into an enormous mess if that's true.

MARGARET WARNER: What is your thought on that?

LAITH KUBBA: I can see this process has huge potential. It is multi phased, there is a lot of flexibility built into it. And I think if we make mistakes we will fine tune it as we go along. I think ultimately it will deliver. Nobody think it is going to be easy but I think ultimately it will deliver.

MARGARET WARNER: So you don't see the real potential for disaster that the other guests do?

LAITH KUBBA: On the contrary, I'm aware of all the challenges but I-- but I do not see an alternative. I think once this process is set in place with the phase envisioned, I think Iraq can have a better future to it.

MARGARET WARNER: Do you, Peter Galbraith see the outlines of the beginning of an exit strategy that will persuade the American public that we have a game plan to ultimately get out with success?

PETER GALBRAITH: The president is basically going to be proposing more of what has already failed. So unless there is a radical change of strategy, which requires recognition of the multiple failures to date, I don't think the American people are going to have any confidence in it, and frankly, I don't think the people in Iraq are going to have any confidence in it.

MARGARET WARNER: So when you raise the prospect of civil war, are you saying this could just as easily lead to that?

PETER GALBRAITH: The whole strategy has been, in addition to the many mistakes that have been made, has been based on assumptions about Iraq as a homogenous nation, which is it is not. There aren't any Kurds that I've met in 20 years in Iraq who want to be part of Iraq. We have to deal with that reality.

MARGARET WARNER: Peter Galbraith, Laith Kubba, and Reuel Gerecht, thank you all three.

GWEN IFILL: Still to come on the NewsHour tonight: A tax battle in Oregon; "The Presumed Alliance"; and children's theater in Minneapolis.

FOCUS - TAXING ISSUES

GWEN IFILL: Next, voting down taxes in Oregon. Lee Hochberg of Oregon Public Broadcasting has the story.

LEE HOCHBERG: Log trucks rumble through the small town of Rainier, Oregon, all afternoon. Though there aren't as many as there used to be, the wood products industry is still the historical heart of the town, which makes it especially galling to local school administrators that the high school's wood shop may soon be eliminated for budget reasons. Superintendent Michael Carter:

MICHAEL CARTER: Inthis community, this is vital. This project has been here since the school's inception. Woodworking, the entire community was built around woods, the wood industry. This is one of the few areas some kids actually really shine in, and they can make a career out of, and we're going to cut that.

LEE HOCHBERG: The district may lay off the wood shop teacher to save money for English, math and science programs. It faces a $600,000 budget shortfall mainly because the state government has lopped $285 million from statewide school funding. Oregon schools get some money from local property taxes, but 71 percent of it comes from the state.

SINGING: Tomorrow, tomorrow -- I love ya tomorrow...

SPOKESPERSON: Good.

LEE HOCHBERG: Also on the block at Rainier High is the drama program; and ironic for this town that sits aside the Columbia River, the swimming program. 90 districts statewide have sliced as many as 17 days off the school calendar to save money.

SPOKESMAN: I understand when you say "no new taxes," but you've got to understand that we're to a point you can't run schools at the funding levels that we're expected to do it. It's impossible.

LEE HOCHBERG: And it's not just schools under Oregon's budget ax. The state is also slashing $200 million from its health care program for the low-income and $60 million from public safety.

SPOKESPERSON: If you are waiting for a ballot, if you'll move on down to the end of the counter, we'd appreciate it.

LEE HOCHBERG: The cuts were needed because Oregon voters have rejected two statewide ballot measures to boost the state income tax in just over a year-- the most recent, measure 30, this past February. Oregon faces an $800 million deficit. It has one of the highest unemployment rates in the country, and with people not working and not paying as much income tax, state revenues have plummeted. But voters have rejected tax increases to plug the deficit. Oregonians haven't voted to raise the state income tax in 75 years, so the rejection of the proposed tax increase in February really wasn't a surprise. But many observers say the tax hike would have gone through had it not been for the efforts of national anti-tax activists. The state legislature had already passed the tax increase with bipartisan support. It would have raised the average Oregonian's tax $81 per year.

SPOKESMAN: And it is not about the money. It's about the character of the nation. We believe in individual liberty and personal responsibility. (Applause)

LEE HOCHBERG: But former U.S. House Republican Leader Dick Armey and his Washington, D.C.- based anti-tax group came to Oregon to overturn the legislature's measure. The group, known as Citizens for a Sound Economy, had already helped defeat a tax increase in Alabama.

SPOKESMAN: Excuse me, ma'am...

LEE HOCHBERG: In Oregon, it spent $100,000 on signature gatherers, who got enough petitions signed to send the issue to a voter referendum. Political analysts like Oregon State University's Bill Lunch say it's highly unlikely the tax would have been put up for a vote and rejected without Armey's efforts.

BILL LUNCH: The money to finance the referendum signatures clearly mainly came from outside, so that's the critical component here. And the thrust to get this going was probably external; the money for it was probably external.

LEE HOCHBERG: And Peter Courtney, the president of the state senate, accuses outsiders of misusing Oregon's referendum process. He says they're taking major decisions like budget making away from legislatures.

PETER COURTNEY: If we are going tomove away from a representative democracy and simply have a direct democracy, that is a major change and the greatest change this country will experience in its 200-plus years of existence. It was never intended to be that way.

LEE HOCHBERG: The director of Armey's group in Oregon, Russ Walker, answers that while his organization did organize the petition, it was Oregonians who signed them.

RUSS WALKER: 175,000 real people signed that petition and said, "you guys made the wrong decision." And then come election day, almost 60 percent of Oregonians said, "you made the wrong decision."

LEE HOCHBERG: He says the tax increase failed because Oregon voters are struggling through hard economic times and they believe the state government is wasting their money.

SPOKESMAN: We have had unemployment between 7 percent and 8.5 percent for the last three years in the state of Oregon. We have the highest unemployment in the nation. We were dead last in jobs creation, and they're being told, "we want more of your money." Wrong message. Wrong message.

LEE HOCHBERG: Indeed, the tax hike was trounced in towns like Rainier, where the county unemployment rate is over 11 percent.

TOM RAMEY: I know the kids, they got to have a... a good education, but at the same time I see that they got to open up the country and get jobs going, and I don't know. And I haven't seen that too much, and it's scary. Yeah.

WOMAN: We can only give so much. We can only give so much, and I know the schools are in jeopardy. We're all in jeopardy.

MAN: Hello? They want to talk to you.

LEE HOCHBERG: As Oregon schools struggle, so are thousands of low-income Oregonians, who rely on the state for health coverage. Phillip Bounds returned from military service in Iraq in October and has been unable to find work. His wife, Jennifer, a diabetic, has been getting her health coverage through the state health plan. With the failure of Measure 30, her benefits, as well as those of 50,000 other low-income Oregonians who don't qualify for Medicaid, will end August 1.

PHILLIP BOUNDS: This is the rose petal off of the rose bush in front of Saddam's presidential palace.

LEE HOCHBERG: With Phillip Bounds still recovering from mortar and missile attacks in Iraq, the family sees an irony.

JENNIFER BOUNDS: It's quite frustrating that we can help everyone else out, but in the end, there isn't anything to help us out.

PHILLIP BOUNDS: For Afghanistan, Iraq, Bosnia. Yeah, we'll go anywhere and everywhere, but we've got a lot at home we still need to take care of.

LEE HOCHBERG: And the state cut off prescription drug coverage for 7,000 other Oregonians. Channah Pastorius needs $2,100 a month for medications to treat her multiple sclerosis. She now depends on drug companies to send her free medicine, but she fears that charity will end.

CHANNAH PASTORIUS: They're not in the business to give out medications. It's nice they do that and I'm so grateful, but I'm so afraid they're going to say, "we don't have to do this."

LEE HOCHBERG: The governor's health advisory panel reports, of those the state has cut off, 92 percent now have no prescription drug coverage; 45 percent rely on drug companies for charity care, and most of those only get some of the medications they need. A 37-year-old epileptic suffered a massive seizure two weeks after the state cut off his anti-seizure medications. His death received widespread attention and became a rallying cry for those opposed to the cutbacks. The Citizens for a Sound Economy's Russ Walker says nobody's medicine would need to be cut off if the state spent the money it does have more wisely.

RUSS WALKER: The solution ultimately to Oregon's economic woes and fiscal crisis is not more taxes. That will actually create more difficulty for business in the state of Oregon. It will make it more difficult for businesses to locate here. What we need to do is find a way to track businesses. You can do that by reducing regulations, by removing the barriers that make it difficult for businesses to come to Oregon.

LEE HOCHBERG: State leaders are accessing emergency funds, but so far have found only $15 million to try to soften the blows to schools and the uninsured. Armey's group, meanwhile, is currently working against proposed tax increases in Washington State, Nevada, New Hampshire, and Michigan. ( Applause )

CONVERSATION

GWEN IFILL: Now, a conversation with an author of a new book, and to Ray Suarez.

RAY SUAREZ: The book is "The Presumed Alliance: The Unspoken Conflict Between Latinos and Blacks and what it means for America." The author is Nicholas Vaca, an attorney in the San Francisco Bay area and a visiting scholar at the University of California at Berkeley. The book examines the economic, social and political realities that sometimes unite and often divide the country's two largest minority groups. Nicholas Vaca, I think a lot of people from outside these two groups might say, "look, they've got a lot of the same battles, whether it's housing, education, employment, access to elective office." How did it end up being an unspoken conflict?

NICHOLAS VACA: Well, I think actually you had this conflict going on even in the '60s and the 70s, though in a subdued basis. What has happened, I think, is largely the Latino population explosion. I was really piqued to do the research and write this book because of the 2000 census, which predicted that Latinos would outnumber African Americans by the year 2005. In fact, in 2003 that came to be the fact. So I was intrigued by that. I think what has happened now is Latinos are growing and trying to assert their own political empowerment, you're having this conflict, even though you're absolutely right: Suffer from the same kind of racial profiling, discrimination, prejudice. Those similar kinds of problems affect both groups, but in fact you still have a conflict because it is to some extent a zero-sum game, and each group wants to have its own for its own.

RAY SUAREZ: In a lot of the places where these two groups live in large numbers, they're large metropolitan areas, and the ones that you cover in the book, they are also much... much the goal... city hall is much the goal of both groups. How come it ended up not being an alliance but a battle?

NICHOLAS VACA: I think because there is a perception by both groups that if one group gets into power, the other group is shut out. Let me give you the example of Los Angeles. In Los Angeles, Antonio Villaraigosa thought that he could be able to sway the African American voters to vote for him. Now, it didn't turn out to be the case. When the election came about, 80 percent of the African Americans voted for James Hahn, a white candidate. Now, one of the reasons why they did that is because the African American community in Los Angeles had a long history with the Hahn family, beginning with Kenny Hahn, James's father, who represented south central, delivered for south central year in and year out. But the other reason why the African Americans were afraid of the Latino and didn't vote for him was they thought that if they got him into power, that he would throw them out. This is something that I quote in the book. There was an unfounded fear, as far as can I make out, because Antonio Villaraigosa has a history and had a history of working with African Americans from high school through college. So I think it was a misperception but it was a perception that really affected the way the African Americans voted in that mayoral election.

RAY SUAREZ: You tell the story of Houston, where in the way you tell it, it looks like ethnicity trumped ideology, that Latinos voted in large numbers against a black candidate who might have shared a lot of their views on the issues.

NICHOLAS VACA: Yeah, I thought in fact what Lee Brown did in Houston as the incumbent mayor was what every African American thought he should do in terms of relating to the Latino community. He had a Mexican American political adviser. He created a Latino advisory committee that he met with on a weekly basis. He had done everything that he should have done to extend a helping hand, to build relations for the Latino community. But I think what happened in Houston was that you had a growing frustration with the Latino population, who saw their numbers in rather significant portions of the population, but not reflected in the big issue or the big office, which was the mayoral office. And it's a frustration that grows from the fact that even though you have large Latino population in many areas, you have a lot of immigrants-- whether they're legal or illegal-- and if they're illegal, they certainly can't vote; if they're legal, they don't always become U.S. citizens; if they become U.S. citizens, they're not always registered to vote; and if they're registered to vote, they don't always vote. So you have this large number of disenfranchised Latinos who think that somehow they should be enfranchised because of the numbers, but in reality don't have the voting power to put their own into office. In Houston I think they saw the opportunity for doing that even though the candidate was a Cuban American, not a Mexican American.

RAY SUAREZ: In Miami you tell stories of how a Latino majority seems not to be politically open to the entreaties, the efforts to make inroads by a black population that is of longer duration.

NICHOLAS VACA: That's correct. That is a really good example of what is going on in the United States. I'd like to compare Miami with what is going on in Compton. In Compton you have an entrenched African American power structure that is not willing to open up and include Latinos. In Miami, you have the reverse: You have Latinos who are not willing to allow blacks to come in and share the power. The difference is in time the Latino population will become large enough in Compton to put their own into power. That is not going to happen in Miami. And I think for the African American community, this book represents a real challenge because it really addresses what is going to continue to go on and grow in the coming years, and that is the Latino population is going to increase dramatically and continue to affect the African American population.

RAY SUAREZ: You purposely shy away from making prescriptions for these two groups of aspiring people. But when you look at the demography, when you look at where populations are going and changing, and the power structures and balances are changing in the country, are we just set for more of the same in urban America, or will there be coalitions based around issues instead of ethnicity, around winning political power instead of figuring out who's going to divvy it up?

NICHOLAS VACA: Yeah, I think that's true. I think eventually you are going to have a situation where the groups may come around and rally around certain issues. You are going to have, unfortunately, a painful process of readjustment as the Latino population grows and dominates. By the year 2050, it is predicted by the U.S. Census that Latinos will represent 25 percent of the population. I happen to think that's a conservative estimate. We've seen demonstrations already that that number will increase based on changing policies on immigration; the most recent example is Bush's proposal. It is going to be a painful process because there is going to be a realignment. And there's going to have to be a reassessment of each group towards each other. You know, in the '60s and 70s, even in the '80s, these two groups kind of understood their histories and their backgrounds and the fact that there was a mutual struggle at one point to work for better housing, affirmative action, et cetera, et cetera. That's... that is not always a common history anymore, particularly with the new immigrants, who have no sense or no concept of the history of the African American in the United States. I see it is going to be very difficult, particularly as the Latinos come into areas that they traditionally have not occupied, such as Atlanta, North Carolina, South Carolina, which have been traditionally African American.

RAY SUAREZ: Nicolas Vaca, the author of "The Presumed Alliance," thanks for being with us.

NICHOLAS VACA: Thank you for having me.

FINALLY - CHILD'S PLAY

GWEN IFILL: And finally tonight, an award-winning theater for young people. Arts correspondent Jeffrey Brown reports.

JEFFREY BROWN: A young mouse-child gets a first whiff of her new baby brother, Julius. ( Laughter ) On a recent Friday in Minneapolis, youngsters put on their finest to attend "Lilly's Purple Plastic Purse," a play based on three books by Kevin Henckes. It's a fun-filled romp, but it also takes seriously the issues that children face.

ACTRESS: After Julius goes away, do I get my own room back?

ACTRESS: Not so loud, Lilly.

ACTRESS: After Julius goes away can I talk like a normal person again?

ACTOR: Julius isn't going anywhere, Lilly. This is where he'll stay... and stay and stay and stay.

JEFFREY BROWN: That same day, in a nearby rehearsal hall, another play for young people.

ACTRESS: Ha! You're about as African American as George Bush.

JEFFREY BROWN: Called "Snapshot Silhouette," this brand-new work tackled tough problems within the local community.

ACTRESS: Where's your mother?

ACTRESS: Not here. The Congress sure ain't going to let her kind cross the border.

JEFFREY BROWN: Together, the two plays show the range and ambitions of an institution that last year became the first theater company for children to win the prestigious Tony Award for best regional theater.

JEFFREY BROWN: National recognition for the children's theatre company here in Minneapolis has come for its efforts to find new and creative ways to reach young people. Sometimes that's through a fantasy world like this one, where creatures scurry about in the corner of a room. Other times it's through stories from the very real world, in which children themselves experience conflict and strife.

ACTRESS: Change your facial expressions as slowly as you can.

JEFFREY BROWN: Even as many theater companies struggle, CTC, as its known, seems to be thriving. With an annual budget of $9 million, it offers acting classes to children of all ages and presents six major productions a year, including some that tour through the Midwest. They're seen by more than 300,000 people. Artistic Director Peter Brosius says the key is doing work that honors children.

PETER BROSIUS: Honoring them, taking them seriously, realizing that they're not some future being, some future audience, a future artist, but that they're creatures living immensely in the present, who have stories to tell, have perceptions, have wisdom, have insights that we can learn from. You have this incredible opportunity when you're making theater for young people that you may be the first theater they see, and so you have both an opportunity and a responsibility.

JEFFREY BROWN: Brosius is obsessed with presenting new work, often by contemporary playwrights who've never written for children before. He commissioned Kia Corthron, a New Yorker known for her tough and often politically oriented work, to write a play taken straight from local headlines.

KIA CORTHRON: I was really interested, because I've never written a children's play before, what children will be interested in, and particularly children in Minneapolis. So Peter was happy to throw out a bunch of ideas, and one of them was the relationship between African American kids and Somali kids.

JEFFREY BROWN: Some 35,000 Somali refugees have flocked to Minnesota in recent years, impacting local schools and jobs. Tensions, including fights among teens, have risen with the African American community, which numbers 170,000.

ACTRESS: Hey!

JEFFREY BROWN: Corthron created a drama around two 12-year-old girls, one Somali, the other African American, who are thrown together in the same house. Each with their own painful past, they warily circle one another, their arguments hitting very raw nerves.

ACTRESS: I was trying to be nice, stupid. I was trying to get along.

ACTRESS: I thought Somalis didn't know how to get along. "Oh, your great-great- grandfather killed my great- great..." "oh, you stole a chicken from my 14th cousin on my mother's side. Got to kill you now." Wah, wah, wah.

ACTRESS: Why are Americans so lazy? Free education. You don't even appreciate free school. You waste it away skipping or not studying -- lazy, lazy African American.

ACTRESS: The most important thing was for me to present the truth. I mean, I certainly... I wanted the message ultimately to be reconciliation and peace. But getting through that there is a lot of strife.

SPOKESMAN: Start with "everyone got religion in light of the wars."

JEFFREY BROWN: Corthron and director Michael John Garces went to great lengths to make the play realistic. Nadifa Osman, a Somali immigrant who works with young people, acted as an advisor, coaching the cast on everything from tying a head scarf to getting the accent right. For Osman, the theater is a new way to reach her community.

NADIFA OSMAN: This is the beginning of the accomplishment of some of my dreams, that I can stand in front of other people and be able to educate them what it's like being in a different culture. We have our differences. But the message that the play is saying is "let's put our differences aside."

ACTOR: She is Zenab and she is from Somalia.

JEFFREY BROWN: For the young actors, certainly, the play hit home.

ROKIA MOALLIM, Actor: My mother is African American and my father is Somalia, so at first there was tension between my family, so this script related to my family a lot actually.

DANIEL CURRY, Actor: I've learned you have to be more open-mined and just try to see people eye-to-eye, because people may be different, but there's a lot of things you can learn from other cultures and different people.

JEFFREY BROWN: Peter Brosius says "Snapshot Silhouette" does exactly what good children's theater should do.

PETER BROSIUS: You're making art for a group of people who are living in a world that is complex, you know? They know we're at war. They know this country is an immigrant nation with challenges and opportunities. They're living in this world and so, yes, you can ignore that, or you can see the daily reality is filled endlessly with teachable moments-- moments where they can be engaged and have an opportunity to wrestle with what's concerning them. ( Applause )

JEFFREY BROWN: The children's theatre company shows no sign of resting on its laurels. It's raised $24 million from private sources and state government and has begun an expansion project that will add an education wing, more rehearsal space and a 300-seat theater.

RECAP

GWEN IFILL: Again, the major developments of the day: President Bush planned a major address this evening to detail plans for Iraq's political transition. He was expected to say the U.S. would persevere and in his words, "hold this hard-won ground for the realm of liberty." The U.S. and Britain offered a draft U.N. resolution on the transition. And U.S. oil prices shot back up despite a pledge from Saudi Arabia to increase output. We'll see you online and again here tomorrow evening with full analysis of the president's speech. I'm Gwen Ifill. Thank you, and good night.

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The NewsHour with Jim Lehrer Monday, May 24, 2004