The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. Leading the news this Tuesday, the Federal Reserve Board lowered a key interest rate to stimulate the economy. The White House retreated from a total ban on college scholarships based on race. President Bush said Americans would support military action against Iraq, but that support would erode if the war was drawn out. We'll have details in our News Summary in a moment. Judy Woodruff's in Washington tonight. Judy.

MS. WOODRUFF: On the NewsHour tonight our major focus is the latest dispute over affirmative action on campus, good politics or good policy. We get four views. Next, Kwame Holman reports on efforts to help the Manville asbestos victims before it's too late. Then Charlayne Hunter-Gault continues her conversations with University of Michigan students about a possible war in the Persian Gulf.NEWS SUMMARY

MS. WOODRUFF: The nation's central bank took action to ease credit today in the face of what it called the weakening economy. The Federal Reserve lowered the so-called "discount rate", which is the interest it charges banks to borrow money by, 1/2 point to 6 1/2 percent. Such a move usually leads to drops in other loan rates for mortgages, automobiles and businesses. It was the first reduction in the discount rate in more than four years. The stock market celebrated the news with a late afternoon rally. The Dow Jones Average of top Industrial Stocks rose more than 33 points. There was other economic news today. America's largest bank, Citicorp, said it would fire 8,000 employees and slash its dividends. The savings will be used to cover bad loans anticipated from the real estate slump. The government reported that retail prices rose only .3 percent last month, reflecting a slowing in energy price increases. Separately, the government reported a sharp rise in the trade deficit. The gap between imports and exports increased by more than 24 percent in October to nearly $12 billion, the largest in almost three years. Robin.

MR. MacNeil: The Bush administration today changed its policy on scholarships earmarked for minority students. In doing so, it retreated from last week's announced ban on such scholarships. Assistant Education Sec. Michael William said the new policy would allow financial aid based on race only if federal funds were not Iraqi soldiers have tortured and killed hundreds of civilians and left more than 300 premature babies to die after stealing their incubators. The report was based on interviews with about a hundred Kuwaitis who made it out of the country.

MS. WOODRUFF: The Pentagon today said that it may cancel a $4.8 billion contract to develop the Navy's Stealth attack plane because of financial and technical problems. Pentagon Spokesman Pete Williams said the plane's builders, McDonnell-Douglas and General Dynamics, had been given until January 2nd to develop a plan to solve the problem. The project is at least $1 billion over cost and at least a year behind schedule. The plane, which would be nearly invisible to radar, is known as the A-12 Avenger.

MR. MacNeil: The Interstate Commerce Commission voted unanimously today to ban smoking on all regular interstate buses. Charter buses will have the option of allowing smoking if all passengers agree to it. The new rule is expected to take effect within the next few weeks. In Utah today a Greyhound Bus collided with two tractor-trailer rigs on Interstate 80 near the Wyoming border. At least seven people were killed, sixteen others were injured, five in critical condition. The accident occurred in snow and wind gusts of almost 30 miles an hour. The bus was traveling from Salt Lake City to Chicago.

MS. WOODRUFF: Nineteen people were arrested today at a Mt. Vernon, Missouri, hospital when they tried to get into the room of a patient involved in a nationally known right-to-die case. They were protesting last week's court decision to remove the feeding tube that has kept Nancy Cruzan alive for seven years. Some of the protesters were lowered into police vans in wheelchairs. They tried to get into Cruzan's hospital room to reconnect the tube, but were stopped by police. Others kneeled and prayed in the halls. Cruzan suffered irreversible brain damage in a 1983 car accident. Last Friday, a Missouri judge ruled that the feeding tube could be removed, because there was clear evidence Cruzan would want to end her life.

MR. MacNeil: Mikhail Gorbachev today heard more opposition to his plan to prevent the Soviet Union from breaking up. At the parliament, most of the delegates from the Republican of Moldavia walked out and said they would not support his so-called "union treaty" between the 15 Soviet republics. When Gorbachev was asked about it, he said, "Those who don't want a union let the union go and secede." Four other republics have already said they will not sign the treaty. Gorbachev also responded to charges that he's trying to be a dictator.

MR. GORBACHEV: [Speaking through Interpreter] Talk about dictatorship is a lot of nonsense. You know I won't be a dictator. I want to convince you all of that. I could be a dictator, because the General Secretary has more power than anyone else in the world, but that's not my way.

MR. MacNeil: On the Soviet aid story, Japan today said it would lend that country more than $100 million to help it cope with food shortages. That follows a promise by the European community to send more than a billion dollars in aid and a $1 billion loan package from the United States.

MS. WOODRUFF: There was a breakthrough today in efforts to get food aid to Ethiopia where a civil war has prevented supplies from getting to the people. Today the government and rebel leaders agreed to reopen the key port of Masawa which has been closed for the past 10 months. Food would be shipped from nearby Djibouti beginning next month and would be equally divided between government and rebel held territory. Millions of Ethiopians are in danger of starving to death because of the drought. That's it for our News Summary. Just ahead, the White House and minority scholarships, the difficulty of righting a past wrong. And American college students speak out about Iraq. FOCUS - EDUCATION RIGHTS

MS. WOODRUFF: Should minority students receive scholarships unavailable to other students? That question set off a firestorm inside and outside the White House this week. In our main focus tonight, we'll hear a debate on the issue and the administration's affirmative action policies, but first, some background on how the controversy began in Arizona over plans for a holiday football game. The Fiesta Bowl traditionally has played host to some of the top college football teams in the country and twice in the last four years has decided a national champion. Schools participating in this New Year's Day game will receive $2 1/2 million each. But when Arizona voters recently said no to a state holiday honoring Martin Luther King, many of the nation's top colleges said no to the Fiesta Bowl. And when organizers sweetened the pot by adding a $100,000 minority scholarship to each school's award, the Department of Education also said no to the Fiesta Bowl.

MICHAEL WILLIAMS, Asst. Sec. of Education: [Dec. 12] The bottom line is the Constitution in Title VI is that generally speaking, without -- with the exception of some very limited areas, making considerations based upon race is improper.

MS. WOODRUFF: Michael Williams, Asst. Sec. for Civil Rights in the Department of Education, said that the Fiesta Bowl's $100,000 scholarship offer violated the Civil Rights Act of 1964, prohibiting discrimination on the basis of race, color, or national origin in any program or activity receive federal financial assistance, and that schools receiving federal funds could not receive or disperse race exclusive scholarships. Williams says his decision was based on conversations with low level staff.

MR. WILLIAMS: I do have some concern that we may be exaggerating what is perceived to be the potential fallout from our analysis and review of the law.

MS. WOODRUFF: But Williams' decision ignited a firestorm of protest among civil rights leaders and at the White House, where President Bush reportedly was very disturbed by Williams' decision and personally called Williams yesterday. Today Michael Williams returned to announce that the policy decision announced last week had been reversed.

MR. WILLIAMS: The Department of Education has decided that Title VI regulations will be enforced in such a way as to permit universities receiving federal funds to administer scholarships established and funded entirely by private persons or entities where the donor restricts eligibility for such scholarships to minority students.

REPORTER: Mr. Williams, you said that you were politically naive. Can you explain what you meant by that.

MR. WILLIAMS: What I meant by being politically naive, we did not attempt prior to making the decision as it related to the Fiesta Bowl to sort of weigh what was the feeling of people out in the community. We simply looked at the law very honestly and very straightforward. What I mean by politically naive is that we had no way and I had no way of knowing that what I did would cause the firestorm that it did in fact cause.

MS. WOODRUFF: Williams was asked if the White House had ordered him to reverse his original decision.

MR. WILLIAMS: I don't think that would be proper. That's not what happened. I was not ordered by anyone to overrule anything and neither was the Department.

MS. WOODRUFF: This afternoon, President Bush also faced questions about the change in policy concerning minority scholarships.

REPORTER: Mr. President, what prompted the administration's change of thinking, some might less kindly say flip flop, on the question of whether financial aid can be targeted to minorities? And I'd like a brief follow-up if I may.

PRES. BUSH: I don't think there was any flip flop on it. There was a ruling made by a man of great integrity in the Department of Education and when we heard about it here, I expressed a certain concern, asked that the policy be reviewed, and indeed today the Department issued a policy statement that is, that I think has Mr. Williams, who is the promulgator of the original regulation, ruling, happy, and yet it does do what I want to see, and that is to continue these minority scholarships as best we can. But it's -- I don't want to mislead people in the country by suggesting that this may not receive a challenge and then the courts are going to have to make that determination and then if somebody can legislatively correct it fairly, why I'd be open for that, but I don't want to buy into a court solution to a question that might happen way down the road, but I would recommend that everybody take a look at the policy statement that just came out a little bit earlier, and I think it will define where this stands now and what the likelihood is of its -- and for how long it will continue.

MR. MacNeil: We're joined now by four people with different reactions to today's decision. Virginia's Democratic Gov. Douglas Wilder last week wrote President Bush asking him to reverse the Education Department's ruling against minority scholarships. He's in Richmond, Virginia. Shirley Strum Kenny is the president of Queens College, part of the City University of New York. Terry Eastland, a former Justice Department official, is now a resident fellow at the Ethics and Public Policy Center, and co-author with William Bennett of the book "Counting By Race". Walter Williams is professor of economics at George Mason University. Mr. Eastland, whether there's a flip flop or not, was the administration right to change the policy today?

MR. EASTLAND: In my view, the administration was incorrect. I think that the administration was able to ignore clear sources of law, it also managed to shrink its own jurisdiction in ways that I think should make liberals uncomfortable incidentally. I think that this also calls into question the President's own opposition to racial quotas. I think if anything should be clear, it should be that there should not be benefits allocated on the basis of race, as we have in this instance.

MR. MacNeil: Gov. Wilder, you wrote the President, asking him to reverse the policy. Are you satisfied with the reversal?

GOV. WILDER: Well, I'm glad he's at least responded by showing that something needed to be done. On the other hand, to suggest that the matter has to go to courts for resolving somewhat negates the absence of or shows the absence of the moral authority in Washington. Look at what's been happening in the last several weeks. First of all, we have the civil rights bill that's been called a quota bill, which clearly is not. We have the President refusing to renounce the tactics employed in the North Carolina election when elderly voters were threatened by the Jesse Helms crowd, and then you have a sub-cabinet level person and even in that instance a sub-department person pronouncing something that profoundly affects, that sets in motion questions as to where the direction of this country is, all of that at a time when we're asking all of the people in America to get behind an effort to fight for the rights and freedoms of people abroad, it just doesn't wash, and it still has to have a positive message from Washington. Tell us not what we can't do but what we should be doing for people.

MR. MacNeil: Prof. Williams, how would you react to today's new position?

PROF. WILLIAMS: Well, I think the whole matter shows a great tragedy occurring in our country, that is if someone had said in 1940 or 1950 that there'll be no race based scholarships in colleges, the NAACP would have applauded him and you and I and every decent American would have applauded him. Now today it shows what has happened to the concept of equal opportunity over the years, that is, equal opportunity has come to mean that we're supposed to have a racial spoils system in the United States and I think that that is despicable and I think that's in violation of the Constitution and it is a betrayal to all those Americans who gave up sweat, blood and tears and made the sacrifices so that white people can be where they are today.

MR. MacNeil: Well, are you unhappy about the change today, or you think -- what's your opinion on today?l

PROF. WILLIAMS: I think that President Bush's comments, it demonstrates one very important thing you and I should recognize, that is in politics honesty and principles is something that you have to get rid of very very soon or you're going to fail in politics and George Bush demonstrated that today.

MR. MacNeil: What do you think he did today?

MS. KENNY: I think he did exactly the right thing today. Universities have many scholarships that are devoted to special purposes. We don't talk about them the way we're talking about this. This is one kind of scholarship for a special purpose and it's an important one.

MR. MacNeil: And important to have it sustained --

MS. KENNY: Absolutely.

MR. MacNeil: -- even with the limitations that were put on it that only public moneys could be used -- private moneys?

MS. KENNY: Private moneys. I'm very much concerned about that because, of course, we have had things like the Patricia Harris scholarships, et cetera. I think we really have to look at that issue but I think fast action over what had been said earlier was essential politically and in every other way.

MR. MacNeil: Gov. Wilder, to come back to the point you were making, the President said today he supports affirmative action. Is his position on affirmative action now clear to you?

GOV. WILDER: No, it is not, because the civil rights bill is something that says give people a chance. You know, when we speak about the history of this country, when I sat here and listened to some of the people defending what used to be, I couldn't go to schools in my state, I couldn't read in the libraries. I couldn't even take the book home. I couldn't go, because it was against the law. And so you had shackles put on people for years, saying they couldn't advance, they couldn't learn. Now they're called upon to be measured by the same yardstick of accountability in the American free enterprise system which never existed, so I don't think youngsters, and especially minority youngsters, who've been so affected thorough the years should be denied access to education solely because they are black or minority and poor. And the funds are available to help them and if this country can help others, why can't it help the deserving members of our own society? Accordingly, I think the President has to send a very clear message. If he is for affirmative action, what forms, how, when, and spell it out? If you are against the Civil Rights Act, what would you like to see in that Act? At one time he said he would put something in it.

MR. MacNeil: That's the one he vetoed recently.

GOV. WILDER: That's the one he vetoed recently. Send us down the Act, Mr. President, that you'd like to see us pass, and let's get the American people behind it.

MR. MacNeil: By vetoing that, Mr. Eastland, he said it was because he was against quotas and because the Act in his interpretation stood for quotas, if you say that's called into question by today's decision, what do you think about the clarity of the President's position now on affirmative action? Gov. Wilder says it isn't clear and needs clarifying.

MR. EASTLAND: Well, I would say that Gov. Wilder is consistent in his positions both today and earlier on civil rights legislation. I would simply say George Bush to me has been inconsistent. I think it's quite clear that for someone who opposes quotas that if they were to accept the kind of measures that George Bush has now accepted today that that position is clearly in conflict. I think the President's position is incoherent. It also it seems to me to indicate a larger problem with his own thinking about civil rights policy in general. What we do need in this country is a conversation about when, if ever, is it justified to take race into account, and that's the question that he has shied away from asking.

MR. MacNeil: Do you think the President's position is clear as of today?

MS. KENNY: No. But I also do not think the quotas are the issue in what is happening now. The scholarships that we're talking about are, you know, quotas are a sort of drop-in as a way to I think focus on other topics and people's attitudes toward quotas depend on which side of the line they're on obviously.

MR. MacNeil: How about you, Prof. Williams, is the President's position now clear?

PROF. WILLIAMS: It's clear that he flip flops on a lot of things but in our whole discussion whether black kids get into college today has very little to do with racial discrimination and it has very little to do with financial means. That is, what we're doing tonight, we're discussing rearranging the chairs on the deck of the Titanic while it's sinking, that is, the major problem that young blacks face is the fraudulent education that they receive in public school systems, that is the schools are destroying the career potential of many black kids. That is, they're giving them fraudulent diplomas, saying that they have a 12th grade education and very often, they cannot read at the 8th, 9th, or 10th grade levels. We need to do something about that. This worrying about the scholarship program that affects only a few blacks, and they tend to be higher income who benefit from such programs, allows us to ignore the day to day destruction of young black kids by the public school system in the United States.

MR. MacNeil: Is that right, it affects only a few blacks?

MS. KENNY: No, it is not right at all, and I would say I certainly agree with Prof. Williams that the problem is the Titanic and we are all passengers on that and it is important that we make it together. We have got to bring students, minority students, from preschool through graduate school, if we're going to make it, and it's all part of the same business. So I certainly agree we have to do something about what's happening in the schools. We can't stop there.

MR. MacNeil: But what about his point, that it isn't money, it's what you just described, the lack of preparation, it isn't money that is stopping minority young people from going to college?

MS. KENNY: It is always money and it is not true that it's the middle class alone, or predominantly that is taking advantage of the scholarship opportunities available. Colleges are doing a lot to make a difference for students who could not go to college without that help and we've got to get those kids into the professorate and into all the professions that are running that Titanic.

MR. MacNeil: Not true, Prof. Williams, money is behind it all she says?

PROF. WILLIAMS: What I'm saying, that if a minority kid wants to go to college, there are many financial assistance programs for him other than this particular race-based scholarship program. Now what the --

MR. MacNeil: Let me ask her about that. Is that true, Dr. Kenny? How many minority students do you have in your college?

MS. KENNY: We have about 40 percent minority students.

MR. MacNeil: And is what he just said true, that there are lots of other scholarships available to them, not race-based ones?

MS. KENNY: We really use race-based scholarships for national purposes. For example, there is a Mellon minority fellowship program in which we participate that helps bring minorities into the professorate. We need them. We need them as a nation. And we use those scholarships for many needs that are our needs, all of us, because we're going to survive together or we're not going to survive, so it's not giving them a particular -- I mean, you give scholarships to football players. You give college scholarships to music performers, because you need those kinds of people. You need these people.

MR. MacNeil: Terry Eastland, what's your view on this, on the controversy it's not money, it's preparation and what we just heard?

MR. EASTLAND: Well, recently the Department of Education did a study showing that a black graduate from high school of equal academic attainment with a white was more likely, in fact, to go on to college than the white student. The question is I think, as Prof. Williams indicated, there is a real need for enhancing the education of the lower grades, so as to get more minority students up through the ladder, if you will, and into the colleges. But let me return to this issue of whether we should have race-based minority scholarships. I think that these kinds of scholarships ask precisely the wrong question. They say, look I want to pick you out because of the color of your skin or your ethnic background. I think this is entirely a wrong approach. Michael Williams, and let us give him credit for this, in his earlier policy announcement indicated to the Fiesta Bowl that it would be more appropriate to bottom these scholarships on other issues, on social status, educational status, on demonstrated needs of one kind or another. That's the right kind of approach. It asks the right question, a moral question, not a racial question.

MR. MacNeil: Gov. Wilder, wrong to pick them out because of the color of their skin?

GOV. WILDER: What we have done -- and I asked the President when we were trying to get the governors to join with the President in the first education drug summit and the first program -- that youngsters should not be denied an education based on geographic location or economic status. I think it's been pointed out here today and I think it's absolutely correct that has to be the entire continuum of education and it starts at preschool. That's why we need, obviously, more funds for at risk youngsters, to avoid the drop-outs, to enhance the job market, and then to encourage youngsters to go to college, but more importantly, to pursue graduate degrees. When you look at the statistics to see the lack of minority people in graduate school, the lack of doctors, the lack of lawyers, the lack of the professionals, why, lack of encouragement in many instances, lack of achievement or self- fulfillment in many instances, but bottom line, also in many instances, lack of money, and I can tell you that in the absence of that, we will continue to lag behind globally and we'll also be a separate society.

MR. MacNeil: Dr. Kenny, suppose the policy announced last week had stuck and the President hadn't reversed it, what impact would it have? Is it mainly practical fewer blacks would have been able or other minorities afford to go to college or would the impact have been largely psychological, they don't want any in college?

MS. KENNY: I think that probably the worst impact would be psychological, symbolic. Think of the message that that is sending.

MR. MacNeil: But I mean would a lot of particularly black, but other minorities, young people, not be able to go to college because of the lack of money?

MS. KENNY: I think there would be ways to change the way wording for scholarships were made, but the answer is yes, it would have a strong impact. But let me point out something else where we're talking about statistics. There are far fewer black and Hispanic students going to college now, high school graduates, going to college than there were ten, twelve years ago.

MR. MacNeil: In absolute numbers, or in percentage of the population?

MS. KENNY: Percentages.

MR. MacNeil: Percentages?

MS. KENNY: Yes.

MR. MacNeil: Prof. Williams, what do you say about that, that the impact would be practical but also it would send a very severe psychological message to minority students, if the policy attaining last week had stuck?

PROF. WILLIAMS: I don't believe that. Again, I go back to the point is that what keeps black kids out of colleges is the poor preparation and it keeps them out of graduate school, because if you look at the graduate record exams, black performance on graduate record exams, it's about 100 points below the norm, even after they've gone through four years of college so that says that four years of college cannot repair twelve years of destruction.

MR. MacNeil: Suppose all racially-based scholarships were eliminated, made illegal, outlawed, would significantly fewer blacks for instance go to college?

PROF. WILLIAMS: I doubt that seriously, but even if it did have a minor impact, the question that we want to have, ask ourselves in our society do we want a racial spoils system in our society.

MR. MacNeil: Gov. Wilder.

GOV. WILDER: I don't know. I never wanted that. The only thing I've ever wanted to government to do for me was to get out of the way. And yet we've got to remember where our society came from. 1857, Dread Scott which said that there were no rights that blacks had that whites were bound to respect, and then it took years of people fighting to get the laws changed. The Dartmouth College case that says none of that money could go to any minority student, when you look at the kinds of things that have been inherited in the law, affirmative action means just that. You get rid of the negative action and you accentuate the positive action, which is affirmative, pick up those who have been most affected by the years of blight, not giving anybody a break, but giving and presenting them an opportunity.

MR. MacNeil: Terry Eastland, come back to where we started, is this a division in the country or is it a division in the administration and the Republican Party at the moment?

MR. EASTLAND: Well, I think it's fair to say that there is a division in both places. I think, however, that what we need in this country, what we've been lacking, at least at the Presidential level, is certainly moral leadership. I would agree with Gov. Wilder on that, although I would say that it has to be a different kind of leadership. We need to be asking the right question. We need to be asking what kind of disadvantage that an individual case might justify a scholarship. We should not be focusing on race and simply picking people out because they happen to be of this race or of this ethnic background. That again is the wrong approach in this area.

MR. MacNeil: But what is your answer to if you don't do that, will fewer minorities actually end up going to college?

MR. EASTLAND: I think that you will have only a very minor impact. Again, if you ask the question of disadvantage, if you look at social educational indices, I think you will end up probably disproportionately having more minorities than you would non- minorities, but I think that's a consequence of basically looking at the right question.

MR. MacNeil: Could I ask you a final question here. On the range of issues, of problems facing American education, where does this one come in importance?

MS. KENNY: It's absolutely at the top. We tend to focus a lot on money problems, on all sorts of problems, but if we do not provide education for the work force of the future, and that is a diverse and multi-cultural work force, we have failed. It is absolutely tops.

MR. MacNeil: Dr. Kenny, Terry Eastland, Gov. Wilder, and Prof. Williams, thank you all for joining us. Judy.

MS. WOODRUFF: For the record, the Fiesta Bowl officials who started this controversy say the Universities of Alabama and Louisville have accepted invitations to participate in the holiday contest. The two schools also accepted the Fiesta Bowl's $100,000 scholarship offer for minority students. Still ahead on the NewsHour, trying to make up for asbestos victims' lost time and two college students consider a war in the Gulf. FOCUS - ASBESTOS - RIGHTING A WRONG

MS. WOODRUFF: Next, we return to the long running story of the Johns-Manville asbestos trust fund. It was set up four years ago to pay the claims of former employees and others afflicted with diseases caused by asbestos, but many are still waiting for payment. Kwame Holman updates the latest attempt to compensate the victims.

WILLIE COLEMAN, Asbestos Victim: What kind of price, what kind of price can you pay, could you put on a man's life, especially when it's your own life, you know?

MR. HOLMAN: For more than 20 years, Willie Coleman unwittingly inhaled deadly asbestos fibers while handling Johns-Manville products. Coleman went to court and won a judgment against the Manville trust. But he died last January, before the first payment was made. Lester Schoenfeld spent 24 years at General Motors assembly plants doing welding and maintenance work that exposed him to Manville asbestos. Now an asbestos-caused tumor surrounds his lung and he may not live to see Christmas.

LESTER SCHOENFELD, Asbestos Victim: I have mezelfelioma and there's only one way that you cure mezelfelioma and that's you die.

MR. HOLMAN: Because Willie Coleman went to court, his widow is due to collect about $1/2 million for his mezelfelioma. Mezelfelioma claimants on average have settle for $145,000 from the trust. But Lester Schoenfeld or more likely his estate stands to receive $65,000 at best. That's because a new payment formula was announced in late November by federal district judge Jack Weinstein. Though both men suffered the same disease, the Schoenfelds will receive less than the Colemans. The inequity is part of Judge Weinstein's effort to preserve the Manville trust's shrinking funds to pay future victims. Kenneth Feinberg is the mediator appointed by Judge Weinstein for asbestos cases.

KENNETH FEINBERG: I think that the court was troubled by [a] the long delay, years of delay in getting a particular case to trial and secondly, the court was equally disturbed about the fact that similar plaintiffs with similar injuries would get, likely get vastly different amounts of compensation.

MR. HOLMAN: By stepping in, Judge Weinstein aimed to end the problems of the Manville trust once and for all. The trust is the legacy of the Johns-Manville Corporation's disastrous experience with asbestos, once the insulator of choice. In 1982, after a series of costly liability judgments revealed Manville withheld information about the deadly nature of asbestos, the company sought refuge in bankruptcy. But the bankruptcy judge believed the company couldn't pay outstanding or future claims of asbestos victims. so he agreed to a novel idea called the Manville Trust. The Trust was funded with roughly a billion dollars' worth of stocks, bonds, and cash from the company and its creditors. The Trust would pay victims' claims and to assure future income, the Trust would own 80 percent of the company's stock and eventually receive a share of its profits. To protect the Trust's investment, the company was shielded from any further asbestos liability. The company has prospered, but the Trust quickly was overwhelmed by the injury claims of asbestos victims. Ron Motley is one of the attorneys who represented victims in the negotiations creating the Manville Trust.

RON MOTLEY: We had contemplated two or three thousand cases a year and what we have is a fifteen to twenty thousand cases a year docket, and we have a hundred and forty-seven thousand cases already filed, and cases continue to be filed at a heavy rate.

MR. HOLMAN: With its funds rapidly dwindling, last April, the Manville Trust announced a plan to preserve its assets by paying claimants only 40 percent of their settlement up front, the rest over five years.

MR. MOTLEY: That plan was a disaster, because you had people who were sick and dying who the Manville Trust were only offering to pay in the year 20006. These people would have been dead long before their heirs would receive the first payment.

MR. HOLMAN: So over the summer, Federal District Judge Jack Weinstein intervened. Weinstein had been appointed to oversee some 600 asbestos cases already scheduled on the dockets of federal courts. He told attorneys for asbestos victims to come up with a fair way to distribute the Manville Trust's limited cash. Three weeks ago, nearly a hundred plaintiffs' lawyers from across the nation convened in Dallas. Their clients ranged from the gravely ill, such as Lester Schoenfeld, to the so-called plural plaque claimants who though not physically impaired have scarring of the lung that could eventually become cancerous. With the differing interests of these asbestos victims at hand, the lawyers argued over the dwindling spoils behind closed doors.

MR. MOTLEY: People in the Northeast tended to hold the view that all asbestos diseased people are, in fact, sick and deserving, as opposed to the West Coast who said, yes, that's true, but the sickest and the dead deserve the first and primary consideration.

MR. HOLMAN: Aaron Simon's Oakland law firm represents 500 hundred asbestos victims, including Lester Schoenfeld. Almost half the firm's clients are in the sickest and dead category.

AARON SIMON, Asbestos Victims' Lawyer: What we wanted originally, what our goal was, to get sick and injured people paid in full what compensation they were due to them by the Trust. Our initial back- up position was that they receive over a period of time at least 60 percent of the value of the claims, and now it appears that they'll get something less than half.

MR. HOLMAN: How does that make you feel?

MR. SIMON: Not good, but I've gotten used to this feeling because it's a feeling that I've had and that it's been chaired by my colleague since the Manville plan passed. We knew at the time, everyone knew at the time that this was a lousy deal, that there wouldn't be enough funding, and that eventually we would fight, as we have fought today, over what to do with the very small remaining assets of the Trust over the period of time that those become payable.

MR. HOLMAN: Simon and his colleagues maintained that the plural placque victims should not be compensated until their health was impaired, that the Trust's dwindling funds were needed most by the sickest and dying. In a compromise, the victims' lawyers agreed on a plan that favored the sickest. They would be paid an average of $35,000 over six years. The unimpaired asbestos victims could accept a token payment of as much as $5400 on average. And they could return to the Manville Trust for additional compensation when and if they became seriously ill from asbestos. The lawyers also agreed at Judge Weinstein's urging to reduce the fees they get for representing the asbestos victims from the customary 40 to 50 percent of the victim's settlement to 25 percent.

MR. MOTLEY: We give time priority to the sickest and disabled and the cancer victims, but we do not take, we do not rob those unimpaired brothers and sisters their rights, which they have under our Constitution and our civil justice system; that would be wrong.

MR. HOLMAN: Last month, Judge Weinstein essentially accepted the lawyers' payment plan for victims. He also ruled that the 100,000 Manville cases now before state courts will be handled instead by the Trust. And finally, Weinstein accepted an agreement by Manville Corporation to pay into the Trust an additional $520 million over seven years. Another chapter in the Manville story has ended and once again the latest victims of asbestos expect to receive less money than previous ones. But it could be worse for asbestos victims. Without the new plan, the Manville Trust would continue to battle each claim in the courtroom. Traditionally, such litigation is more costly and diverts the largest percentage of money to lawyers and other professionals.

MR. FEINBERG: I think on balance what Judge Weinstein is trying to do is fashion a settlement that's fair to everybody. The claimants get paid more promptly and with greater efficiency than if they go to trial, with more certainty than if they go to trial. The defendant companies do not have to file bankruptcy, but instead are permitted to generate income, much of which will be reserved in advance for the victims.

MR. HOLMAN: Yale University Law Prof. Peter Schuck has followed Judge Weinstein's action in the Manville case.

PETER SCHUCK, Yale University Law School: He wants to handle the claims on a more categorical basis, reducing the transaction's cost, increasing the amount of money available for distribution to the victims, but of course, in doing that, he is going to limit the ability of parties to use their full legal due process rights, and that's where the rub comes in.

MR. HOLMAN: So all in all a good idea, a bad idea, or the best society can do?

MR. SCHUCK: I think it may be the best that courts can do given the tools that have been made available to them. I think that legislatures could do a better job if they tried to reshape the system by which these claims are resolved and paid.

MR. HOLMAN: The next session of Congress is expected to consider granting new powers to the courts to deal with mass injury cases. If such legislation is adopted, it may well be the most lasting legacy of the eight year Manville legal saga. CONVERSATION - STUDENTS SPEAK OUT

MR. MacNeil: Next tonight we continue Charlayne Hunter-Gault's week of conversations with students about war and peace in the Gulf. Recently, she visited the campus of the University of Michigan in Ann Arbor, where there has been a teach-in and several anti-war rallies in the past two months. But as Charlayne found out, opinion on campus is divided.

MS. HUNTER-GAULT: Aaron Williams is a junior, an engineering student and former president of the Michigan Student Assembly. He's active in the Conservative Coalition, a political party on campus. Carey Brian Meadors is a senior in engineering. He's also a publisher of the Michigan Review, a conservative monthly on campus. Meadors has already enlisted in the Navy and expects to begin his tour of duty after graduation. Aaron, how do you assess the mood on this campus as it relates to the crisis in the Gulf right now?

MR. WILLIAMS: Overall, I don't think it's more different than any other university campus in the country except that a majority of students on this campus probably don't care about the Gulf. We don't care about a lot of things that a lot of people have been talking about. And they're mainly apathetic and until it really is going to start to affect them, meaning that maybe if a family or they, themselves, end up going, they may not pay very much attention to it.

MS. HUNTER-GAULT: What do you think?

MR. MEADORS: I agree. I don't think you're going to get a true consensus of students until you actually institute a draft. The main people who protest now are the same five or six hundred who protest everything anyway. Five or six hundred students on this campus is only one out of seventy. To say that that's a proper assessment of the mainstream University of Michigan student is ridiculous. It's not --

MS. HUNTER-GAULT: It's not --

MR. MEADORS: It's not --

MR. WILLIAMS: People who are going to be doing a lot of protesting are what you'd call the standard white liberal, meaning that their parents probably are well off and may tend to feel guilty about certain things or just in general want to go back to the '60s and relive the issues of protest, rebellion, questioning authority and sometimes I think all they need to look at is themselves because when they get into positions of authority, they are not much better than those people that question themselves.

MS. HUNTER-GAULT: What about your own attitudes toward the Gulf?

MR. MEADORS: I actually have mixed attitudes about the whole thing. I can certainly understand the necessity of being there because of the economy, because that is our oil supply, our oil flow, but then at the same time, I think that very poor energy policy, government intervention, has distorted the market to such a point that it's necessary that we import oil.

MR. WILLIAMS: We have to have some sort of source of cheap oil because our economy's just too dependent on it and if we had to revert to a system in which we pay higher prices, doesn't it mean instant recession, lots of joblessness, lots of things which are going to really affect Michigan students, meaning that because we are a state institution we're dependent on state funds and if the state economy is not good, that means flow of income from the state will go down. That means tuition's going to go up.

MS. HUNTER-GAULT: When you consider the possibility of military conflict, do you feel that that's enough of a reason to make the kinds of sacrifices that it's believed we're going to have to make?

MR. WILLIAMS: Yes and no. Potentially, it could be worked out with a peaceful solution, but it may not be a solution that people will like. I mean, if they go down and lose, and it's going to come down to an issue of pride between the leadership of both our countries or the leadership in the world just is general, with President Bush being pretty much the leadership of the free world. He has I'll say somewhat of an obligation to try to help with allies within that area, meaning Kuwait, and if he does not, I'll say help them out now, then people may look at this in a long-term role as being U.S. foreign policy in the future, meaning that if you ask for help, you may not get it from the United States.

MS. HUNTER-GAULT: What do you think about the recent build-up?

MR. MEADORS: On a strategic level I think it's excellent because it seems to me that they have a definite goal in mind, and that goal is either to protect Saudi Arabia or to launch an offensive against Iraq. If the United States is going to do something militarily, they should at least do it properly.

MS. HUNTER-GAULT: What are people saying and what are you feeling about the prospect or the possibility of a draft?

MR. MEADORS: I've heard really interesting arguments on both sides of this. I can certainly see problems with the draft, taking people out of their homes and forcing them to go to war. I have definite ethical problems with that, but at the same time, and perhaps that can even be overlooked in this respect, if you do have a draft, you're guaranteeing that America's not going to war unless they really want to be to war.

MS. HUNTER-GAULT: Why?

MR. MEADORS: Because as soon as a Congressman's child and the administration's relatives and every American, rich and poor, is over there fighting, people start to get a very new perspective on the war. If their sons and daughters are fighting in the sands, they'll be a lot more hesitant about writing letters in to the editor saying whether or not they want to be there. When every American is involved in the war, you're going to have a lot more thought on whether or not we should go over there, as opposed to the volunteer army being over there.

MS. HUNTER-GAULT: How about you, yourself, have you given much thought to whether or not you would serve if called?

MR. WILLIAMS: I think I would because of I'll say certain beliefs I do have and that I was taught to believe in trying to protect your country, trying to protect something that you somewhat sort of believe in, serving your country, and doing what you possibly could, but as with Brian, I do have some moral questions as about the use of force at this time.

MR. MEADORS: They can't draft me. I'm already in the Navy.

MS. HUNTER-GAULT: You're in the Navy.

MR. MEADORS: I'm in the Navy. I'm going to submarine school after I graduate.

MS. HUNTER-GAULT: How would you feel about serving in this conflict in the Gulf?

MR. MEADORS: I would serve, there is no question about that. I fully recognized that that was my job when I signed the papers.

MS. HUNTER-GAULT: The events of the last couple of weeks, have they encouraged you, discouraged you? What's been your reaction to them?

MR. MEADORS: As far as I'm concerned, it's all showmanship until the middle of January. That's what I'm waiting for. People inviting people back and forth, releasing hostages, I think it's just, it really doesn't mean anything until the deadline comes, and that's what I'm waiting for. I'm very curious to see what happens when that deadline rolls around.

MS. HUNTER-GAULT: All right. Let's say we arrive at January 15th; Saddam Hussein is not out of Kuwait; the President gives him an ultimatum, out or war, and Saddam said no, and the President said, all right, then it's war. How would you feel about that?

MR. MEADORS: I don't know, however, I would be pleased that he took a firm stand on an issue.

MS. HUNTER-GAULT: But it could mean thousands and thousands of casualties, U.S. casualties.

MR. MEADORS: It very well could. It's certainly a horrible prospect. To be honest, I have no conception of war. I really don't know what it's about, so I understand the point of the question, but I mean, to ask a person my age to conceive of thousands and thousands of deaths is really asking an awful lot. For everyone in the U.S., it's just playing with pieces on maps far away. I really, I recognize I can't grasp what that's really going to be about if that happens, but putting that emotion aside, I also realize there's a very strong point about the U.S. needing to exercise and properly follow through its interests in the world. So there are certainly two sides to be considered here and I think that's why I can't make an easy decision, because I just don't know if I have the experience necessary to easily make that.

MR. WILLIAMS: I have no concept of war, but as a person who is involved with higher technologies, if there is going to be a war, it'll be a war like none other. I say especially again in the sense that higher technology is going to come to be a large part of this war, as well as the threat of having biochemical/nuclear, and retaliations and the escalations which may proceed from that.

MS. HUNTER-GAULT: How would you like to see this crisis resolved?

MR. MEADORS: Like I said, for Saddam Hussein to die under mysterious circumstances and Iraq to pull out, but I don't know. That whole place is just such a mess. The whole Middle East is just chaos. I don't know how it's going to and I don't see an easy solution like most things in that region.

MS. HUNTER-GAULT: Do you feel there's been enough debate about this issue on this campus?

MR. MEADORS: Absolutely not, because I don't think there has been a real debate about this issue. I have not heard a loud and clear coherent argument for war on this campus, and I don't think we're going to hear one, and that's really sad, because debates should always have all sides on them. It has just been assumed by the people who are more vocal on this campus that war is not the solution, and the teach-in focuses on the idea that the war is bad, or the upcoming war is bad, and there hasn't been a real debate, because people aren't discussing both sides. You only hear discussion of one side.

MS. HUNTER-GAULT: Aaron, what do you think?

MR. WILLIAMS: I agree with him in the sense that if there ever was the attempt to try to give a pro war side of it, it would be not a very well structured argument or debate in the sense that you're going to find people who will be very much against war or anti-war, would be going there hissing speakers, booing speakers, trying to do everything they possibly could to disrupt, and as Brian has mentioned, being very emotional about it, instead of trying to be very clear thinking about the whole issue overall, and so that just precludes, they stop everybody from trying to find out both sides of the issue, and again with people on this campus, they don't seem to realize there are always two sides, and there may be a side that you may not figure, but there's always going to be another side to it.

MS. HUNTER-GAULT: Well, Aaron Williams and Brian Meadors, thank you for being with us.

MR. MacNeil: Tomorrow Charlayne continues her conversations with students from the University of Michigan. RECAP

MS. WOODRUFF: Again, the main stories of this Tuesday, the Federal Reserve Board lowered the discount rate to 6.5 percent. The move should lead to lower loan rates for mortgages, automobiles, and businesses. The White House retreated from a total ban on college scholarships based on race. President Bush said Americans would support military action against Iraq, but that support would erode if the war was drawn out, and the government banned smoking on interstate buses. Good night, Robin.

MR. MacNeil: Good night, Judy. I'm Robert MacNeil. We'll be back tomorrow night with a major focus on developments in Moscow. Can Gorbachev survive?