The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Friday, Pres. Bush said he was hopeful House cuts in his defense budget could be restored, there was no contradictory word on the alleged spying of U.S. diplomat Felix Bloch, and Israeli commandos kidnapped the major pro-Iranian religious leader in Lebanon. We'll have the details in our News Summary in a moment. Charlayne Hunter- Gault is in New York tonight. Charlayne.

MS. HUNTER-GAULT: After the News Summary, we go first to Pres. Bush's wide ranging news conference. We'll have extended excerpts, next, our regular David Gergen/Mark Shields team reflects on the political week. After that, we'll have extended excerpts of today's hearings on the HUD scandal, then we have a News Maker interview with the man called the father of the pro-democracy movement, Chinese dissident leader Yan Jiaqi. And finally we have a report on rap music as political theater. NEWS SUMMARY

MR. LEHRER: Pres. Bush said today he had not given up on his defense budget. He said he expected the Senate and the House Armed Services Committee Chairman Les Aspin to help him restore what the House cut last night. Those cuts included some in the Strategic Defense Initiative, the B-2 Stealth bomber and the Midgetman Missile. Mr. Bush spoke at an afternoon White House conference.

PRESIDENT BUSH: I want to get support across-the-board in the Congress for our defense program and yesterday was not the House's most memorable moment, but we're going to keep fighting on for what we believe in.

MS. HUNTER-GAULT: The President also predicted that he would prevail over Congress on the savings & loan bailout. Last night, House and Senate conferees prevented Mr. Bush's financing package which would have prevented the bailout money from being counted as part of the nation's deficit. On Capitol Hill today, the Chairman of the Senate Banking Committee defended the revised plan. He said it wasn't all that different from the President's.

SEN. DONALD RIEGLE, [D] Michigan: We have a major legislative package here and it needs to be enacted and it needs to be enacted as soon as possible. We estimate the losses are running to as much as $20 million a day every day that continues without this legislation being signed into law. We've given Pres. Bush's plan in every essential detail in terms of the structure recovery arrangements and we've strengthened them where they needed to be strengthened and we've given him a package that is the best and strongest package that's possible under the circumstances.

MS. HUNTER-GAULT: There was more evidence today that the economy is slowing down. The government reported that the level of spending by American consumers in June was the weakest it's been in nine months. Hardest hit were car sales and other big ticket items.

MR. LEHRER: There were two major developments today in the Felix Bloch spy case and they do not add up. In Paris, Soviet Foreign Minister Eduard Shevardnadze denied the U.S. Foreign Service Officer had a relationship with the Soviet Union. He said, Bloch "never had any relations with us, no relations which could arouse any suspicions whatever.". But the New York Times and the Associated Press reported today Bloch admitted to investigators that he had worked for the Soviets for many years and he had been paid a lot of money by them. The Times said Bloch did not give enough details to support his being arrested and charged, however.

MS. HUNTER-GAULT: Israeli commandos carried out a kidnapping in Lebanon today. The man they abducted is a Shiite Moslem cleric, Sheikh Abdul Kareem Obeid. He's believed to be a leader of the pro Iranian militia called Hezbollah, which is holding several Western hostages. A team of about 12 Israeli commandos landed their helicopter near Obeid's home town after midnight and abducted him from his apartment with two of his associates. The Israelis killed one man on their way out. Obeid has been linked to the kidnapping of American Lt. Col. William Higgins last year. An Israeli officer listed these charges against Obeid. Iran today called the Israeli commando raid --

RAANAN GISSIN, Israeli Army Spokesman: -- against Israel and authorized most of the attacks against Israel in the recent months. He was responsible for the transfer of weapons to Hezbollah groups in the South and also provided shelter and sanctuary to terrorists who conducted terrorist activity into the security zone and against the Israel Northern border.

MS. HUNTER-GAULT: Iran today called the Israeli commando raid state terrorism and said it would not go unanswered. In his news conference this afternoon, Pres. Bush said kidnapping and violence would not help the cause of peace in the Mid East. Meanwhile, in Beirut, there was a second straight day of factional fighting between warring Moslems and Christian militias. Louise Bates of Worldwide Television News narrates this report.

LOUISE BATES: This latest battering of Beirut went on for nearly 8 hours. In that time, thousands of shells and rockets fell on the city and its outlying areas. The police spokesman said hardly a neighborhood escaped damage in what was the heaviest shelling in four months of conflict between Christian and Syrian forces. Among the many buildings hit was a plastics factory. It burnt fiercely for hours as volunteers struggled to control fires across the city. Even when they managed to reach the blazes they were hampered by an acute lack of water. At least 13 people died and more than 60 were injured in what was the second straight night of heavy bombardment. One report said Beirut was being massacred and the outside world didn't seem to care. One appeal was made by the International Red Cross who called for a halt to the shelling of civilian areas, but with no diplomatic solution in sight, it's likely to have little impact on Beirut's reign of terror.

MR. LEHRER: The people of Iran are electing a new President today. All expectations and indications are he will be the present speaker of the parliament, Hafshi Rafsanjani. Rafsanjani is 55 years old. He has emerged as Iran's strongest leader following the death last month of the Ayatollah Khomeini. The Associated Press said voting was extremely heavy. Polling places were ordered to stay open after some ran out of ballots.

MS. HUNTER-GAULT: The Soviet Union's chief military officer paid a visit to the White House today Marshall Sergei Akhromeyev met with Pres. Bush for one hour in the Oval Office. They discussed the status of arms control negotiations. Afterwards, a White House spokesman reiterated his desire for an early agreement. Back in the Soviet Union, the labor unrest in the Republic of Estonia may be coming to an end. Thousands of ethnic Russians have agreed to return to work today after a week long strike. The workers claimed they were denied voting rights by the Estonian majority. The decision followed a meeting in which strike leaders extracted a promise that the government would form a commission to look into their grievances.

MR. LEHRER: And that's it for the News Summary tonight. Now it's on to President Bush's news conference, Gergen and Shields, the HUD hearings, a Chinese dissident leader and rap music. FOCUS - TAKING QUESTIONS

MS. HUNTER-GAULT: We go tonight to President Bush's news conference. The President went to the White House Briefing Room to announce that Arkansas Congressman Tommy Robinson was switching Party Affiliation from Democrat the Republican. The President was then questioned by the Press Corp on a wide range of issue from the Defense Budget to espionage to the savings and loan bailout. Here are some extended excerpts.

PRESIDENT BUSH: It is a great privilege for me to welcome to the Republican Party a man who stands by the faith of his principles and has helped keep America free. Arkansas Representative Tommy Robinson, a man of exceptional caliber. Tommy Robinson is a man of the people, a man who believes in straight talk, hard work, and getting the job done rebuilding our defenses, standing up for veterans, for small business and for fighting the war on drugs.

RITA BEAMISH, Associated Press: Mr. President the House has just turned your Pentagon spending priorities inside out and it is leaving a shambles that Congressman Aspen says is a Michael Dukakis Defense Bill. What movement are you willing to make to turn it back to a George Bush Defense Bill.

PRESIDENT BUSH: I think that we will prevail for most of what we want. We have a strategic concept and what I need is a strong SDI program, a strong B2 program. We are doing reasonably well on many of our conventional allocations there but I do not want to negotiate with the Soviet Union without as many cards in my hand as possible so there is an arms control dimension to what we are talking about too but we've set up a solid strategic program. I am disappointed that the House did what they did. We have a Defense Secretary who has made some tough cuts and set some priorities and done that which many had failed to do and that is to cut out some systems but then the House is regrettably is looking at more narrowly than I am and they have restored some of the very things that the Secretary of Defense and the Joint Chiefs felt that we could get along without. In fact I see that are even talking about trying to keep open some of the bases that we have suggested that be closed and it is not easy to close a base so I want to get support across the board in the Congress for our defense program and yesterday was not the House's most memorable moment but we are keep fighting on for what we believe in.

BERNARD WEINRAUB, New York Times: Mr. President how concerned are you that the Bloch Case will actually endanger national security and can you give us any indication how long this has been going on.

PRESIDENT BUSH: I can't give you the facts on it. I don't want to go in to it while it is under investigation. I am very disturbed about the premature discussion and discloser, that means leaks, on this matter because I think that you can jeopardize the case itself and perhaps the man's ability to get a fair hearing. So I am troubled by it but I can't really help in the facts on the matter.

FRANK SESNO, Cable News Network: I would like to continue with this kinder gentler theme for a moment. You tried with Congress the entire 6 months that you have been in office yet your Crime Bill has failed, your Defense Bill appears to have been savaged, your Nominee for Civil Rights post who you say is qualified is being given the rough ride to say the least, the S&L Bill you have great concerns about. How would rate your own legislative success in your first 6 months.

PRESIDENT BUSH: I'd be rating the Congress wouldn't I if I rated the legislative success and I wouldn't give it very high marks. I sent a savings and loan bill up there and it has been there for how many day, since February 23 and I challenge the Congress to get something done is 60 days and it wasn't done. So in not going after people and in a very personal way attacking some Congressman Senator with whom I differ that does not mean I am happy or relaxed about the legislative calendar and the legislative performance. I am concerned about it and every day the savings and loan sits there unsolved it is costing the American Taxpayer, some estimates go from 10 to 30 million dollars a day and I'll take the fault responsibility when we are slow getting legislation up. We've been criticized and I think properly so with not getting legislation there on time but on this one I think the Congress has been taking too long to resolved the matter and there are others. The Defense Budget is not a question of timing so much as it is the mix on our strategic system. So I would not give Congress very high marks on doing what I want done on legislation.

GERALD SEIB, Wall Street Journal: On related matter there is some fairly intense negotiations going on with capital gains tax proposals going on right now. Are you willing to accept some kind of indexing of capital gains rather the cut you have asked for as an alternate that might be more acceptable to Democrats.

PRESIDENT BUSH: Look what I want to do is seek capital income at different rates. I want what is known as the differential and so let's see what can be worked out if there is some compromise that can spur investment, spur jobs, increase employment because of new jobs starting up I would be interested in it but I have a good sound proposal and it was tested. It was one of the things that was clearly in focus in the campaign.

JIM MIKLASZEWSKI, NBC News: Mr. President during the John Tower Controversy you spoke out strongly and often in his defense. Right now your nominee for Assistant Attorney General for Civil Rights, William Lucas, is under fire on the Hill yet we haven't heard from you.

PRESIDENT BUSH: You just haven't just haven't been listen or reading and let me use this occasion and I am glad that you raised. I strongly support Bill Lucas. I am convinced that much, not all, but much of the criticism of him is pure gut American politics and it started long before day one of the hearings and there is a man who has served as a Democrat, was widely respected, switched to the Republican Party and then people piled on to a fare thee well. He has my confidence and I am glad that you gave me this opportunity to express that confidence more publicly. I feel strongly about him and I told Bill last night. He was over at the House for dinner here and I told him that I am staying with you a 100 percent and it is going to be right there and solid.

SAUL FRIEDMAN, Newsday: There is testimony in the Judiciary Committee that however you word it such a Constitutional Amendment would make an exception for the first time in 200 years on the First Amendment. I wonder if you have any misgivings about the possibility that you may be weakening the First Amendment?

PRESIDENT BUSH: I thought about it Saul because i don't want to weaken anything but I feel so strongly that a very carefully drawn Amendment can solve this problem that I don't worry about because I also fall back on the fact that the founding fathers did provide for the Amendment process. I mean. I don't have disrespect for those who want to find a different answer. The thing that I think is heartening is that there is a wide array of support for doing something about this question. FOCUS - GERGEN & SHIELDS

MR. LEHRER: Now our regular Friday political analysis by Gergen and Shields. That is David Gergen Editor at Large of U.S. News and World Report. He is in the studios of Public Station KQED in San Francisco tonight and here in Washington Mark Shields Political Columnist for the Washington Post. Mark how do read what the House did on the Defense Budget.

MR. SHIELDS: I think that it reflects more than anything else a change in the geo political reality in which we live, I mean, the President came back week last from a triumphant tour of Eastern Europe and with the cheers of the workers in Gdansk echoing in his ears and a piece of barbed wire from Hungry. The cold war is over. That is tough to come back and then say that what we really need is this defense budget and I just don't think that the rational has been made I don't the case has been made and what you are seeing now is that the defense fairly or unfairly is being treated in the House like a public works bill. I mean the New York Delegation is for defense projects that are built in New York and there really isn't a coherent hold.

MR. LEHRER: David how is the President handled it. You saw how he handled it at the News conference. His reaction was well we'll work this thing out. What do you think about that?

MR. GERGEN: Well I think that is the right approach. What he is going to need to do now is he has got a window in the next few months to make a very strong case for the Stealth Bomber. That is the one that is in the most difficulty as you know, the B2. What happened was that the Pentagon in effect over the last couple of years told everyone what the price of that bomber was going to be without selling its mission. Now they have to come back it seems to me that they have to make the argument that this is an important component of the so called triad of our defense forces. It will be penetrating bomber that would be even more important after an arms control agreement. I think that one of the arguments, Jim, that will have some persuasive effect is that Dick Cheney and other have began to advance rather quietly in the last few days namely that the Joint Chiefs went along with the Arms Control Proposals of the past because they believed that they would have a B2. It was an important part of their consideration and one of the assumptions they had. Now I think that hasn't been fully brought out and I think that as it is the arguments and the support for the B2 will grow.

MR. SHIELDS: I think there is one thing that I want to add Jim and that is that we are struggling in this country toward a new definition of national security. National Security has been traditionally defined in terms which has politically been mostly helpful to the Republicans, commitment to strong military presence, willingness to use Military Strength and the Democrats have been seen on the weak side of that question. I think that right now a lot more Americans see the economic threat posed by Japan as being more immediate to them then the military threat posed by the Soviets. So they are kind of struggling toward what is national security going to be in the 1990s and it may not necessarily be defined in terms of military hardware any more.

MR. LEHRER: Okay let's go to savings and loans and capital gains. The President here again, David, I don't know if you agree, but it seemed to me that yes we can make a deal here. I am a little concerned they didn't give me this or they are a little slow on that but there is no heat there.

MR. GERGEN: There is no heat at this point and I think that reflects that we are seeing, Jim, and Mark may have a different view on this but I think this past week we have seen that neither the President nor Tom Foley can command the troops nor put the fear of God in to people on the other side when they want to. Traditionally as some our past Presidents, Lyndon Johnson was a good example during his hey day Reagan in his early years could bring along a lot of Democrats and traditionally the Speaker of the House could count on the support of his folks on the Democratic side on key votes that are really important and now what we've seen this past week was that Tom Foley lost control of the some of the Democrats on the House Ways and Means Committee on Capital gains and President Bush has not been able to bring along some of the conservative Democrats that he wanted on the B2.

MR. LEHRER: Mark how do you explain these House and Ways thing some as David said several conservative Democrats said okay I am going to go with the President on this and the whole Democratic line has been no no capital gains?

MR. SHIELDS: Well I think Chairman Dan Rostenkowski gave them at the very least if not a green light then a yellow signal he was reconsidering last month his opposition to capital gains which gave Ed Jenkins a very able conservative Democrat moderate Democrat from Georgia a chance to put together this group who really believe in capital gains and want to have a more Democratic approach to the business community. The irony is Tom Foley did go into the whips meeting, the Democratic House Whips Meeting and did give a fiery speech, a fiery speech that really charged up the troops against any cut in capital gains and made it very much a Bush Foley issue which it has become much to the consternation, as understand, of the White House, and I think that Democrats are starting to realize that the only time that Michael Dukakis, I mean, a name that is not mentioned very frequently in democratic circles today the only time that he really closed the gap in the last October of 1988 when he gave some flesh to his skeletal slogan of I am on your side came out strongly against the capital gains tax cut and tagged George Bush and the Republicans as the party of the rich and that is how this issue has to be phrased from the Democrats point of view. It has to be a windfall for the wealthy while the Republicans want to do it as a tax cut and it is going to be interesting to see who dominates dialogue.

MR. GERGEN: Jim could I add to something to that?

MR. LEHRER: Go ahead.

MR. GERGEN: The return that Mark made earlier which is I think a good one and that is that National Security is increasingly being redefined by the country in economic terms as opposed to military terms. One of the attractions of the capital gains is that business and others, economists argue, it would make us more competitive in other words it would make us stronger in the area of this new arena of economic competition with the Japanese and Europeans and I think that is one of the reasons that some moderate Democrats who now want to cut the defense budget at the same time are willing to cut the capital gains rate because they see that as the new area of competition.

MR. LEHRER: Alright the case of William Lucas the President came out today reaffirming his support for William Lucas. Is he going to make it as Attorney General for Civil Rights.

MR. GERGEN: You know we talked about this last week and it seems to me that he is still down less than 50 to 50. Perhaps the President can rescue it and he is obviously making the effort.

MR. SHIELDS: I think the nomination has not been helped by the weeks events and today the Washington Post which is influential in such matters editorially opposed the Nomination.

MR. LEHRER: I said Attorney General for Civil Rights. I meant to say Assistant Attorney General. The other thing the reason that the President had this news conference today was to announce the defection of another Democratic Congressman to the Republicans, Tommy Robinson of Arkansas. Is that an important thing Mark?

MR. SHIELDS: Well I think that it is significant not by itself, I mean Tommy Robinson has always been a maverick, a loose canon, he has been all sorts of things. As many people in Arkansas know sort of a populist flamboyant type but any time the pattern is consistently moving from one party to the other. We had the Secretary of State of Louisiana do that as well. We had the police chief of the District of Columbia do it yesterday, MOrris Turner, become a Republican.

MR. LEHRER: So he could run for Mayor of DC.

MR. SHIELDS: And Tommy Robinson all the bets are that he is going to run for Governor of Arkansas. he probably couldn't run a primarily against incumbent Bill Clinton and Attorney General Steve Clark but he could have the nomination as the Republican his for the asking and I think it shows when the Democratic Party is not competitive at the Presidential level for election,, after election, election after election it is awfully tough to continue to hold on to your parties apparatus and loyalty at the local level.

MR. LEHRER: David a thought on this.

MR. GERGEN: Yes I think the Robinson move today reflects the change that is really occurring in the South. As you know the South was solidly Democratic in the days of Franklin Roosevelt they used to vote 70 percent for a Democratic candidate for President. It now votes about 70 percent for Republican Candidate for president and what we are gradually seeing is that below the Presidential level at the Congressional and gubernatorial level more and more candidates are beginning to run and act like Republicans and I think that reflects the growing solidly of the Republican Party in the South. It is still very competitive outside the South but there are some states now that have moved very strongly into the Republican column.

MR. LEHRER: What about the Felix Bloch case, Mark, the spy.

MR. SHIELDS: You know, it is a bizarre case, I mean, every where he goes he has 6 FBI agents with him. I was going to ask David, I mean all this rash of espionage cases epidemic Jim,, you know it makes me year for the Nixon years when all the spies seemed to work for the Committee to Reelect the President.

MR. LEHRER: He had his line David.

MR. GERGEN: Yes he did I knew you wanted to get Bloch on this show for some reason Mark. A bizarre case and you've even added a more bizarre twist to it.

MR. LEHRER: Okay and on that note I think we will leave it. David Gergen in San Francisco thank you very much.

MR. GERGEN: Thank you.

MR. LEHRER: Mark Shields here in Washington thank you very much.

MR. GERGEN: Thank you.

MS. HUNTER-GAULT: Still to ahead the HUD scandal, a leading member of the Chinese dissident movement and rap music's missions. UPDATE - BUILDING SCANDAL

MS. HUNTER-GAULT: We go next to the ongoing investigation of influence peddling, contract steering and theft at HUD the Department of Housing and Urban Development. Another high ranking aid to former reagan Secretary Samuel Pierce was to have testified before the main Congressional Committee investigating the scandals. That man Lance Wilson has postponed his testimony several times. Today he said he couldn't appear because his attorney was ill. The Committee will vote next week on whether to subpoena Wilson. The Committee did here from HUD's former New York Regional Director. Kwame Holman has this report.

REP. LANTOS: Do you solemnly swear to tell the truth the whole truth nothing but the truth so help you God.

MR. HOLMAN: Joseph Monticciolo served as Administrator for the Housing Department's Northeastern region for all the Reagan years. This morning he told the House Government operations sub committee is was well known in HUD that funding decisions in the now infamous moderate rehabilitation program were political.

REP. LANTOS: Typically units were allocated on a political basis. Is that your testimony.

MR. MONTICCIOLO: It appears that way sir my judgement is that there were some that were and some that were not.

REP. LANTOS: What proportion would you say were politically allocated? Ball park figure?

MR. MONTICCIOLO: At least a half.

REP. LANTOS: Possibly more.

MR. MONTICCIOLO: Possibly sir.

REP. LANTOS: Possibly three quarters.

MR. MONTICCIOLO: It is hard for me to judge on that.

REP. LANTOS: Okay.

MR. HOLMAN: Under questioning from Committee Chairman Tom Lantos Monticciolo said his own activities were free of favoritism.

MR. MONTICCIOLO: From a regional Administrators point of view I think we carried out our responsibility as fairly and as equitably.

REP. LANTOS: Well leaving that self serving statement aside I am asking you now to comment as an observer. For eight years you were the HUD Regional Administrator for this region. You working days revolved around HUD. Is it your testimony that you carried out your responsibility and you were unaware of the scandal and mismanagement and incompetence and theft and embezzlement and everything else that was brewing.

MR. MONTICCIOLO: During the six plus years that I was Regional Administrator I would have to say in general its my impression that the operations of our offices were---

REP. LANTOS: I am not asking about your offices I am asking about HUD as an entity. The Central Offices relationship to your regional office.

MR. MONTICCIOLO: Certainly there were instances of concern on our part about the qualifications and the decisions being made in Washington on certain projects. That is really and always has been say conflict between region and Washington on issues. Decisions being made by Washington generally if it filtered down to the field offices would be done within the regulations.

MR. HOLMAN: But this afternoon Connecticut Republican Christopher Shays began a detailed cross examination with a warning that Monticciolo should be careful not to perjure himself.

REP. SHAYS: I think that you are close to perjuring yourself right now. You have said that you do not promote projects, you don not recommend projects and now you are telling us that you sent a memorandum and recommended these allocations of projects.

MR. MONTICCIOLO: Allocations of units.

REP. SHAYS: Okay let me be very clear then. Have you ever promoted any units for any particular areas?

MR. MONTICCIOLO: Promoted in the sense of?

REP. SHAYS: Recommended.

MR. MONTICCIOLO: Recommending yes.

MR. HOLMAN: Congressman Shays said those projects Monticciolo recommended for funding while at HUD benefitted people who later became his private business partners.

REP. SHAYS: Your statement to us that in no way did you make any recommendations in 1981 or 1982 or 1983 that benefited any of your business associates who you are now involved with.

MR. MONTICCIOLO: I made recommendations to Washington that ultimately benefited people who are partners of mine now.

REP. SHAYS: Thank you.

MR. MONTICCIOLO: The final decisions were made and negotiated by the Central Office.

REP. SHAYS: You make a $125,000 a year, you pointed out that you have an equity interest of 15 percent without putting anything down. So where I come from is to say when people ask you know any quid pro quo I am going to have people look at what you have done because it has been a quid pro quo and I am also hopeful and would expect that the Attorney General's Office would look at what you have done because you cashed in it seems to me.

MR. MONTICCIOLO: In the final analysis I believe the figures that were referred to in terms of this phenomenal profit are overblown and not accurate.

REP. MORRISON: We can't rely on a thing that you said because as has been dramatically pointed out in this last testimony you say one thing when you don't have the document and then when the document is in front of you you say something diametrically opposed. Now I wonder what would happen if instead of providing you the document Mr. Shays had just stopped when he asked the question on whether you had ever provided a recommendation that benefitted individuals with whom you now have a business relationship with and you said no you never did. And had he just taken the transcript of the hearing the Chairman take the transcript of the hearing and taken down those documents and sent them down to the US Attorney and suggested to you be indicted for perjury. You were just given an opportunity to take your head out of that particular noose by that but I wonder how many other documents there are kicking around that would negate things that you have already said.

MR. HOLMAN: Finally the long time HUD official was about the role in the scandals of politically connected consultants who allegedly earned large fees for helping developers get HUD Contracts.

REP. LANTOS: What will be the impact on consultants like Mr. Watt and Mr. Bush?

MR. MONTICCIOLO: I think the people who do not have the expertise and the knowledge people like that who have profited from a telephone call certainly will find that they will not be able to do business in the future.

REP. LANTOS: Would it be more accurate to refer to them as parasites rather than consultants?

MR. MONTICCIOLO: I'll leave that to you Mr. Chairman.

REP. LANTOS: I am asking you.

MR. MONTICCIOLO: I will say that they certainly abused their privileges and they were taking advantage of opportunities where they really had nothing to offer.

MS. HUNTER-GAULT: The Committee's investigation into the HUD scandal continues Monday. Among the witnesses will be former U.S. Senator William Proxmire. Samuel Pierce the HUD Secretary during the Reagan Administration will make his second appearance before the Committee in mid September. NEWS MAKER - STILL DEFIANT

MR. LEHRER: We return now to the China story and to the young Chinese who have not given up on their push for democracy and reform. Several hundred Chinese students are meeting in Chicago this weekend to discuss what has happened and what should happen next. Among the participants is one of the major figures of the democracy movement, Jan Jiaqi. He was an aide to ousted party chief Zhao Ziyang. He escaped from China after the Tiananmen Square massacre. Elizabeth Brackett reports from Chicago.

MS. BRACKETT: Chinese students who had spent the month before the massacre manning telephones and fax machines in support of their fellow students in China were thrilled today to see the leaders they had worked so hard to support.

CHINESE STUDENT: I feel like overwhelmed. Actually I should say that, because now they are here speaking to us and they are just like one of us.

MS. BRACKETT: The message the dissident leaders brought to the students was harsh. Jan Jiaqi, the leading intellectual in the pro- democracy movement and former top adviser to deposed Communist Party Chief Zaho Ziyang told students they should not plan to return to China anytime soon.

YAN JIAQI, Democracy Movement: [Speaking through Interpreter] This country is not a republic, not in any real sense a republic, and the soldiers there are protecting the people, they are protecting the dictatorship.

MS. BRACKETT: But charismatic student leader Wu'er Kaixi, who had rallied the students on Tiananmen Square, also rallied the students here.

WU'ER KAIXI, Democracy Movement: [Speaking through Interpreter] Some say China is hopeless at this moment. I want to say the hope is just beginning, the hope is great. This congress represents the future, the hope, the progress, and the success of the democratic movement in China.

MS. BRACKETT: The strain of the hazardous escape the two men had made from China was evident as Wu'er Kaixi neared collapse after speaking. Despite his fatigue, Jan Jiaqi did speak with us last night in his first interview with a Western reporter since leaving China. I asked him how he had made his escape.

YAN JIAQI, China Democracy Movement: [Speaking through Interpreter] During the same time when I left Beijing, I went through a lot of trouble and I was in many dangerous situations and I think I had a blessing of Goddess Democracy so I can safely arrive here in this country.

MS. BRACKETT: Was the most difficult time for you when you were still within the Chinese borders, or was it when you finally had left the country and were making your way to the United States?

YAN JIAQI: I would rather say the period when I was at the border and tried to leave China. There was a great amount of danger and a possibility that I could be arrested there.

MS. BRACKETT: Can you tell us something about the route that you took, your way out of China?

YAN JIAQI: I would rather not answer this question because for the safety of the people who helped me.

MS. BRACKETT: You were a top adviser to Communist Party Chief Zhao. Do you know where he is now and what has happened to him?

YAN JIAQI: As I understand, he is now deprived of freedom.

MS. BRACKETT: When Chairman Zhao came and said good-bye to the students, he has not been seen in public since, did you advise him to do that? Did you think he should come and advise him to do that? Did you think he should come and make some statement to the students?

YAN JIAQI: It was a hope of the many people like us should have our top ranking officials such as Deng Xiaoping, himself, to come out and have open dialogue with the students, Chinese students, and we hope that they could come out and speak to the students. By the time of May 17th and 18th, there were thousands of students who were having real troubles because of hunger strike, and the government people were so indifferent in meeting with the students and we were so worried about that. The time when Zhao just spoke out, it was already too late.

MS. BRACKETT: With your contacts in the government, was there a time when you knew that the government would bring force, that they would bring troops in on the students?

YAN JIAQI, China Democracy Movement: [Speaking through Interpreter] At the time when this happening, actually nobody ever imagined what was going to happen and we still cannot believe that the so-called people's army and people's government having their guns against people.

MS. BRACKETT: What future is there for the reform movement, for the pro-democracy movement?

YAN JIAQI: The massacre we've witnessed will eventually speed up the reform process in China.

MS. BRACKETT: When do you think some change might occur? How long do you think the people in China will have to wait?

YAN JIAQI: I think we should divide this up into several stages. I think -- let's say the first period, the Li Peng government is going to be unstabilized. Then we will see a kind of a moderate person to be in the government and to be control. And during that period when this person is in control, I think we are going to turn everything upsidedown on the account of what happened in 1989. Then we'll move in with those requests of press freedom and other agendas we have.

MS. BRACKETT: Do you think this will take months or years?

YAN JIAQI: I think it takes years. I think even after the Li Peng government is gone, we still have to take a few years to have everything taken care of.

MS. BRACKETT: You don't think you can return until you're ready with your movement to try and overthrow the government?

YAN JIAQI: I don't want to use the word overthrow the government. I believe that whatever we're doing here is to speed up the process of Li Peng's government.

MS. BRACKETT: Do you fear for your life while you're outside of China? Do you fear for your life while you are in the United States?

YAN JIAQI: I do not have fear and I am only concerned about how I can contribute to this movement, pro-democracy movement. If there's anything that happens to me, I think I am willing to sacrifice myself. There are so many people who have already had their blood shed and I don't think we have any choice but to fight for them. And also I believe it will be not for too long we will see a democratic China emerging.

MS. BRACKETT: Mr. Yan, thank you very much. FINALLY - FIGHT THE POWER

MS. HUNTER-GAULT: Finally tonight we look at rap music, a style that has confounded the music industry for more than a decade. At one time rap music was dismissed as an odd offshoot of rhythm and blues catering to a strictly black inner-city audience, but today rap has transcended not only racial but national and international boundaries. Rap groups still range from dance oriented fluff to hard core depictions of sex and violence, but the direction of many of the most popular rap groups today is political. They see themselves as the opening wedge in a new political awakening led by the young. This is the controversial rap group, Public Enemy. Their video "Fight the Power" begins with an irrelevant tape on the 1960s civil rights marches by the group's leader, Chuck D.

CHUCK D: Check this out, man. We're rolling this way. That march in 1963 was a bit a nonsense. We ain't rollin' like that no more. As a matter of fact, the young black America, we're rollin' up with seminar press conferences and straight up rallies, am I right?

MS. HUNTER-GAULT: The video then shows what rappers might call some attitude about their style of civil rights march today. Rap was born out of the black neighborhoods when stories were rhymed to a beat. Most often they were about bragging. Now set to music, many have become sophisticated political commentaries. Chuck D and other top rap performers from around the world gathered in New York recently for the annual New Music seminar.

CHUCK D: Our whole point is opening up the channels for communication and information to our people, No. 1 priority, and everybody else, No. 2. Now the media on paper, TV, radio has been poison to our people, historically poison.

MS. HUNTER-GAULT: With power and empowerment as recurring themes, rappers and their supporters hammered home the message that there is a new underground political movement being born and that more than anything else the rappers see themselves as its profits.

CHUCK D: Rap music gets directly to the point, is a dictation and it's a definition on how we are living. It's the underground informational CNN network that black people have never had. It has only one result, within five to six years the establishment of black intellectualism.

MS. HUNTER-GAULT: Village Voice Critic Greg Tate agrees that black rap has offered black youth a new form of communication.

GREG TATE, Village Voice: Most rappers in New York really love, have concern for the communities out of which they come. They don't want drugs, violence, you know, police brutality in their communities, you know, and to the extent that they can speak out about those things, they do. To the extent that they try to redirect the consciences of young black people away from negative influences, they do. [RAP MUSIC]

MS. HUNTER-GAULT: The rap messages are sometimes brutal and blunt because the rappers say that's how their lives are. Los Angeles rapper Ice-T depicts himself as the gang member in his song Colors. He uses his experiences as a real life gang member to explore the mentality of gangs like Crips and Bloods.

ICE-T, Rapper: His rationale is he ain't got nothin' left and he's stuck down in here and his mother doesn't care about him and his brothers are dyin' and his friends are dyin' and it's just an eye for eye.

MS. HUNTER-GAULT: What's that verse that goes, "Nightmare walking"?

ICE-T: "I am a nightmare walkin', psychopath talkin' king of my jungle, just a gangster stalking."

RAP SEGMENT: I am a nightmare walking, psychopath talking, king of my jungle, just a gangster stalking, living life like a firecracker, quick is my fuse. The debt is a debt back the colors I choose. Red or blue, crips or blood, it just don't matter. Suckers dive for your life when my shotgun scatter. The gangs of LA will never die, just multiply.

ICE-T: The heaviest line in the record is: "Our color is death, though we all want peace, but this war won't end till all wars cease." And what I'm trying to say is that for people that have the attitudes that you could snap your fingers and end gangs, it's joke. You can't snap your fingers down in South America; you can't snap your fingers in Northern Ireland. It's a war. Thousands of people have died in that gang situation, but the media hasn't shown it as a war. They show it as kids. And people have the idea that gangs can hit choreographed steps behind Michael Jackson and all other kinds of junk which aren't true. Gangs kill each other. It's a war. And now there's drugs involved and it's real serious. It's real sad. But they have soldier mentality. They're willing to go in there and die and they're very deep into it.

MS. HUNTER-GAULT: So rather than glorifying violence, what I hear you saying is that you're trying to reflect a certain kind of reality.

ICE-T: That's all there is to reflect, you know. I'm a realist. There's no angle. It's just real.

MS. HUNTER-GAULT: Tom Silverman is the Chairman of Tommy Boy Music, a New York company which first started recording rap nearly a decade ago. Silverman says the words energy and images also serve a social purpose.

TOM SILVERMAN, Tommy Boy Music: I have a personal feeling that if rap hadn't been around for the last 10 years, there would be race riots in most major cities in the summers. I think it's a major venting force. It channels a lot of energy frompeople and that energy needs to be channeled. [RAP SONG]

MS. HUNTER-GAULT: Perhaps one of the most political raps was one designed to encourage an end to black on black violence. Self Destruction was a joint effort by some of New York's top rap artists brought together under the stop the violence movement. The video warned blacks to stop robbing and killing each other, to drop their weapons, stop dealing and using drugs and to go to school. The video began with a message to the media from rapper Kris Parker, also known as KRS-One.

KRS-ONE, Rapper: My line is as follows: Well, today's topic, self destruction, it really ain't the rap audience that's buggin', it's one or two suckers, innocent brothers, trying to rob and steal from one another.

RAP SEGMENT: Today's topic -- self destruction: It really ain't the rap audience that's buggin'. It's one or two suckers -- ignorant brothers -- trying to rob and steal from one another. You get caught in the mid so to crush that stereotype here's what we did. We got ourselves together so that you could unite and fight for what's right, not negative, 'cause the way we live is positive. We don't kill our relatives.

MS. HUNTER-GAULT: For Kris Parker, rap is a media that can and should teach.

KRS-ONE: We're reconditioning the mind, the human mind, that's been conditioned for so long, hundreds and hundreds of years to think, well, I'm here, this is as far as I go. I said, I won't even think beyond my project, I won't even think beyond my block. [RAP SEGMENT]

MS. HUNTER-GAULT: Violence has also been associated with rap concerts like this one in Public Enemy's video, but there's been no more violence at rap concerts than at rock'n roll concerts around the country. Critic Tate says rappers use violent images and themes but should only draw concern or alarm when they glorify brutality.

GREG TATE, Village Voice: There's a new group out now, NWA. There are a few things on their records that to me just condone all kinds of blood sport, killing that's goin' on among the gangs. If you listen to their records, it's clear that this is the way they've chosen to package themselves, to promote themselves, to sell records, to come on like the hardest of the hard and the baddest of the bad and to really create no moral distance between the kind of violence that they dramatize in their records and the violence that's going on in the streets.

MS. HUNTER-GAULT: The possibility of confused messages is what worries George Butler, a vice president at CBS Records specializing in jazz artists.

GEORGE BUTLER, CBS Records: Because of the vicious circle of poor education, indigent neighborhoods, drugs, unemployment, under employment, kids just saw no way out of that to enjoy some kind of or to enjoy some of the luxuries of life, and this rap afforded them a vehicle to make statements about some of the ills of society, some of the things that they were totally against and wanted to be heard and of course thought the best way to do that was by way of shock treatments. And that can be misleading to a young person who's impressionable.

MS. HUNTER-GAULT: Ice-T for one pleads guilty to shock lyrics, prime example his record, I'm Your Pusher, in which Ice-T casts himself as a dope dealer.

RAP SEGMENT: We're selling dope till we succeeded. Dope beats and lyrics ain't no beepers needed for this drug deal. I'm the big wheel. The dope we're selling you don't smoke -- you feel.

MS. HUNTER-GAULT: What does that mean and what is that saying to young people?

ICE-T: Well, the dope they're talking about is dope lyrics, because right now dope is a slang in hit pop is something so good it'll get you high, so I made a record called I'm Your Pusher, where I said I'm not selling drugs, I'm selling dope music. Get a high off the music; you don't need drugs.

MS. HUNTER-GAULT: Is that the message that goes to the kids?

ICE-T: Definitely. You couldn't find a kid in the United States that thinks Ice-T pushes drugs or sells anything other than that, but see, this music is misunderstood by other people, you know, and they don't understand it, and I think rap kids love the fact that momma don't understand everything that's goin' on. That's what makes the music theirs. Because as soon as moms and pops can sit down and understand everything, it's not cool any longer.

MS. HUNTER-GAULT: Rap artists have long complained that radio stations have been slow to play their songs or even program rap at all. One of New York's biggest black music stations, WBLS, only plays rap on Friday and Saturday evenings. Program Director Ray Boyd says he limits the play of rap music because his more mainstream general audience isn't into rap.

RAY BOYD, WBLS-FM; Adults do not care for rap to the same degree that young people do. Radio stations now have become more targeted in their demographics and some of the songs have the concept that even if you love rap music, you couldn't play it.

MS. HUNTER-GAULT: What's the basic problem?

MR. BOYD: Primarily profanity. There's still a lot of groups that are providing product that is playable and product that you don't have a problem sending the audience to buy.

MS. HUNTER-GAULT: But even without the backing of mainstream radio, rap music is rapidly growing far beyond its original constituency, transcending neighborhood, national and international boundaries.

RADAR: What I like about rap is the rap that is positive, the rap that is conscious of a revolution concept.

YOUNG GIRL: It's happening; it moves; it's great.

YOUNG MAN: I just like the beat really. Sometimes the lyrics have a lot to say.

MS. HUNTER-GAULT: Is it big in Japan?

JAPANESE GIRL: Bigger. We're trying to make it bigger.

QUEEN LATIFAH, Rapper: They can relate to it. I mean, we talk about something they've seen or been to. You know, we direct our music to youth and I don't think anybody else really directs their music to youth like we do.

RAP SEGMENT: Latifah is a name meaning delicate and sensitive, but I have no problem formulating sentences -- to break it down to the ground. I won't use violence. The color of this is brown and I am down but never never never down and out. So don't try to turn me inside out.

MS. HUNTER-GAULT: It's still too early to tell whether rock's provocative messages will have a social or political impact but the messages are relentless and so are the messengers. RECAP

MR. LEHRER: Again, the major stories of this Friday, Pres. Bush said he would work to restore the cuts made by the House in his defense budget. Soviet Foreign Minister Shevardnadze denied U.S. diplomat Felix Bloch had a relationship with the Soviet Union, but news reports claim Bloch had admitted being a spy and Israeli commandos kidnapped a pro-Iran Lebanese religious leader believed to be responsible for the kidnapping of a U.S. Marine colonel last February. Good night, Charlayne.

MS. HUNTER-GAULT: Good night, Jim. That's our Newshour for tonight. We'll be back on Monday. I'm Charlayne Hunter-Gault. Have a good weekend. Good night.