The NewsHour with Jim Lehrer

MARGARET WARNER: Good evening. I'm Margaret Warner. Jim Lehrer's on vacation. On the NewsHour tonight: A summary of today's news; baseball owners and players reach a deal; a Newsmaker interview with Deputy Secretary of State Richard Armitage about his recent trip to Asia; Kwame Holman reports on a Pennsylvania congressional race that could affect the balance of power in the House; and end of the week analysis by Tom Oliphant and Michelle Malkin, substituting for Shields and Brooks.

NEWS SUMMARY

MARGARET WARNER: A threatened baseball strike appears to have been averted. Negotiators for Major League players and team owners agreed on a tentative labor contract today, just hours before a player-imposed strike deadline. Details of the agreement were not released, officially pending ratification by both sides. We'll have more on this story in just a moment. The World Trade Organization ruled today that the European Union can impose $4 billion in sanctions against the United States. It was the largest penalty ever allowed by the WTO. At issue are special tax breaks granted to U.S. export firms, which the EU says amount to illegal subsidies. The U.S. admits the charge, but had argued the damages should be set at about $1 billion. EU officials suggested they'd delay imposing the sanctions, however, to give Washington a chance to change the tax law. Americans spent more freely than expected in July, spurred by no- interest car loans and big discounts on other items. The Commerce Department reported today consumer spending rose 1% last month, the largest increase in nine months. But personal income stalled, rising less than 0.1%. Consumer spending accounts for two-thirds of all U.S. economic activity. Federal Reserve Chairman Alan Greenspan said today he didn't believe the Fed could have safely deflated the stock market bubble of the late 1990s. At a annual Fed economic gathering in Jackson Hole, Wyoming, Greenspan said it's difficult to identify speculative surges as theory merging, and the only way to curb the 1990s bubble would have been to raise interest rates to recession-inducing levels. That's it for the News Summary tonight. Now it's on to averting a baseball strike, Richard Armitage, high stakes politics, and Oliphant and Malkin.

FOCUS PLAY BALL?

MARGARET WARNER: The boys of summer will apparently play into October. Ray Suarez has our baseball report.

RAY SUAREZ: After delaying their travel plans in anticipation of a baseball strike, players for the Boston Red Sox got good news at midday: There would be no baseball strike and they could get on their charter bus to go to their next game.

SPORTSCASTER: And the fans are getting a little restless here.

RAY SUAREZ: The news was a welcome relief compared to the scene last night at Anaheim. As the strike deadline approached, angry fans threw debris onto the field. The turnabout came today when owners and players announced a tentative deal to avert what would have been the game's ninth work stoppage in the past 30 years.

BUD SELIG, Commissioner, Baseball League Commissioner: I think there were a lot of people who never believed they'd live long enough to see these two parties come together, make a very meaningful deal, and do it without one game of work stoppage, and I mean that. I've been... I guess I'm the longest survivor in the game now since 1970. And when I think back to all the heartache of the years, and Don is right behind me, this was a day that many people never believed would happen, and it did. And so for a lot of reasons, I'm very grateful today.

DONALD FEHR, Executive Director, Major League Baseball Players Association: Any collective bargaining agreement requires substantial accommodations by everyone. Our prior agreements have done so. This agreement does so. But maybe this one gives us a chance to bring the game some stability that it hasn't had, and return the focus where it belongs.

RAY SUAREZ: The two sides would not divulge details of the deal, saying it still needed to be ratified by both sides. But there were agreements on several key issues, including a new, so-called "luxury tax." Any team with a payroll over a specific limit would have to pay a tax on that additional payroll to the league. The money would be shared among other teams. Revenue sharing-- wealthier, large market teams will have to share more of their locally earned funds with smaller teams in the league; a mandatory program to test for steroids among players beginning next year; and so-called contraction; owners agreed not to eliminate any teams until the end of the 2006 season. The owners had proposed eliminating both the Montreal Expos and Minnesota Twins before then. Owners said the agreement will help restore competition among teams at a time when salaries continue to grow-- the average player's salary is approximately $2.4 million, and only some teams can afford to pay.

BUD SELIG: I think, you know, we've made clear all along that the issue here was competitive balance, and I feel this deal clearly deals with that.

RAY SUAREZ: Both sides said today they realized there was too much at stake to strike.

TOM GLAVINE, National League Player Representative: I just felt like that both sides had enough common ground that we could talk about, and too much to lose to not get a deal done. And ultimately, that's the way it worked out.

RAY SUAREZ: This afternoon, fans returned to the ballparks, beginning with Wrigley Field, where the Chicago Cubs played the St. Louis Cardinals. Fans were glad to see their teams on the field. The last strike, in 1994, which wiped out the playoffs and the World Series that year, cost Major League baseball dearly. It took five years before attendance returned to pre- strike levels. For more, we're joined by Jim Bouton, a former pitcher with the New York Yankees, the Seattle Pilots, and the Houston Astros. He is author of "Ball Four," a diary of his experiences during one baseball season. Ron Rapoport, a sports columnist for the "Chicago Sun-times" and commentator on National Public Radio. And Allen Sanderson, a sports economist at the University of Chicago.

Well, Ron Rapoport, we ran through some of the basics of the agreement, but I'm guessing that steroids testing and arguments over contraction weren't at the heart of this thing. What were the do-or-die elements of this collective bargaining agreement?

RON RAPOPORT, Chicago Sun-Times: Well, the big issues, ray, were revenue-sharing and luxury tax. I think the owners made out extremely well on both of them. I think this is the first time in the free agency era that the owners can actually celebrate the end of a negotiation and say that they won, they won big. They will be sharing, over the next four years, in revenue sharing and luxury tax. A billion dollars will be moving from the richer teams to the poorer teams. I mean, that's the good news. The problem now down the line for the owners of some teams is that there's no place for them to hide anymore. We heard Bud Selig in the clip that you used say, "competitive balance." That's about the thousandth time I've heard it in the last month or so. The problem is competitive balance, the owners would like us to think it's from a revenue disparity. The problem is though that some of it is a brain disparity, or an intelligence disparity. If in four years the Yankees are still winning the World Series, and a lot of the low revenue teams are not making the playoffs, maybe the fans will wonder if it was revenue sharing at all that was the problem.

RAY SUAREZ: Professor Sanderson, the owners fought very hard on sharing the pot of 3.5 billion bucks that comes into baseball every year. How did these arch-capitalists, men who are successful in so many other fields, become so devoted to socialism when it came to running their game?

ALLEN SANDERSON, University of Chicago: Well, I agree with Ron in terms of we'll see if they're as good at baseball as they are in other things. Incompetence and mismanagement are not illegal. In part, even though the commissioner and others have focused on competitive balance, I don't think that's the issue. We are not going to see Milwaukee playing Kansas City in the World Series any time soon. I would probably rate it a tie overall. The owners were able to put some constraints on players' salaries, but players won as well because they were able to stop firm salary caps and payroll caps that are prevalent in the National Football League and National Basketball Association. And I think it's a tie for fans as well. The season will be completed, but we'll be back, as it were, in court three or four years from now to do it again because there hasn't been solid footing that fixes the problem in baseball for the next decade.

RAY SUAREZ: You say the players can take comfort in the fact that they avoided a salary cap. But doesn't a luxury tax, which forces owners to pay into a kitty if they go over a certain amount of player salary, in effect, act as a salary cap?

ALLEN SANDERSON: An implicit one, but I think a minor one, if one looks at the numbers. The amount of money that will be shared is relatively small compared to total revenues. Also, in the end, big city teams-- New York, Los Angeles-- are going to do better because there are just more off-the- field opportunities for players to earn revenues. They are just not going to be there in the smaller markets.

RAY SUAREZ: Jim Bouton, a player from the St. Louis Cardinals, Steve Kline, said, "Baseball would never have been the same if we walked out." He was talking about the pressure the players were under. Did they make a deal that maybe they wouldn't have made in other circumstances because they were feeling that kind of public pressure?

JIM BOUTON, Author/Former Player: I think so. I think the fans were against the players. I think there's a cumulative effect of about 25 years of owners trashing the players, calling them greedy and overpaid; also claiming, for the last 25 years, ever since free agency, that teams were about to go bankrupt. Now the newest argument, small market teams don't have a chance; and also falsely blaming the players for ticket prices which have nothing to do with players' salaries. But all of that put great pressure on the players who are concerned how the fans feel about them. These are guys who have been playing in front of fans since Little League, and they want their approval.

RAY SUAREZ: You heard Ron Rapoport call it a win for the owners, Professor Anderson calling it a tie. How do you score the result?

JIM BOUTON: Well, however it turns out, I guarantee you that four years from now, the owners will come back and say, "no, this isn't enough either. We need something else." It's going to be interesting to watch how it might work; for example, are the high-spending New York Mets and Texas Rangers- - both in last place this year-- are they going to be giving money next year to possibly the first place Minnesota Twins or the Oakland As? That will be interesting to watch.

RAY SUAREZ: Because they're in big markets as well, --

JIM BOUTON: Exactly.

RAY SUAREZ: -- and small market teams are doing fairly well in some parts of baseball.

JIM BOUTON: Extraordinarily well. For example, one of the lowest payrolls in baseball is the Minnesota Twins. They're in first place there. There are five other small market teams in pennant contention as late as August, and this is something baseball never had before free agency when the Yankees were winning-- I don't know, what was it-- 30 pennants in 35 years. The Washington Senators, the St. Louis Browns, the Kansas City as were always in last place, never got out of last place. Since free agency in 1976, more different teams have won league championships than ever before in history. So this is a fake problem along with the fake problem of teams about to go bankrupt that we have been hearing, but has never happened in baseball. So who knows?

RAY SUAREZ: Ron Rapoport, a fake problem? Most of the owners were declaring they were losing money in baseball.

RON RAPOPORT: It's so hard to understand where they're coming from. I absolutely agree with Jim that this is just the beginning. One of the most important provisions of this contract, Ray, is a rollover clause. If there is an impasse again in four years from now, the owners can say that the players have agreed that the levels of revenue sharing and luxury tax now in place will be where they start from. That's a floor. So the owners are going to come back in four years and say, "we need more. We need more." But it's so interesting that the Oakland A s are in baseball's pennant race and they have a very low payroll. The Minnesota Twins, as Jim pointed out, are leading their division. Here in Chicago, the Cubs have a very high payroll. Let's not go into exactly where they are in the standings today. It is really a question of where competitive balance comes from. Is it brains or is it money? And I think we are going to be finding out that the owners are going to have some problems when they start spending some of George Steinbrenner's money. And if you're Steinbrenner, you have to wonder, "here I am giving money to other teams. What hurts me most -- that they compete for the players I'd like to sign, or that they put it in the bank and declare a profit and money for the shareholders?" Poor George, I'm starting to feel sorry for him.

RAY SUAREZ: Well, the Yankees did pay $28 million this year into various revenue-sharing programs. There's estimates, based on the first word that's coming out from the contract settlement, that they're going to have the touch put on them for $50 million starting as early as next year. It's a big amount of money.

RON RAPOPORT: There's some talk that George Steinbrenner is hiring attorneys to look into this. The next great conflagration may not be between the players and the owners, but between the owners and the owners. That would really be a good one to watch.

RAY SUAREZ: Well, Professor, wasn't that underlying a lot of what was going on during this negotiation season anyway? It was depicted as the players versus owners, but weren't there really two classes of owners as well?

ALLEN SANDERSON: Well, there are two classes of owners, but there are also more than two classes of players. In some ways, it's amazing that Don Fehr was able to keep 750 people inside the same tent because you have journeymen players and superstars and then you have people at the margins who could be eliminated by somebody else. It has been emphasized about the diversity of ownership, but there is enormous diversity among the players as well. Bud Selig only has to keep 30 people in line. Bud Selig has to keep 750 -- that is a more difficult task. There is nothing in economic theory that says the owners deserve the money or the players deserve the money. There is a cartel. Baseball is an industry, as are other professional sports, that operates in a very protected industry. So it produces monopoly spoils. And after that, it's two groups at the same trough fighting over those spoils.

RAY SUAREZ: Jim Bouton, we've talked a lot about what the owners wanted out of this. What did the players want out of this? What does a player, a sort of middle-of-the-deck player who is looking at ten or so productive years want out of a collective bargaining agreement that may end up covering half his playing career?

JIM BOUTON: The players wanted to minimize the damage here. They knew they were going to have to compromise, and they have been compromising for 25 years because they've never really asked for anything except to continue with the current system, which itself was a compromise, negotiated in 1976 after the arbitrator ruled that the lifetime contracts were illegal and players could all be free agents in one year. That's when the owners were forced to sit down with the players and negotiate the current system of six years of service before they could become free agents. Ever since then, they have been asked to compromise on the previous compromise.

RAY SUAREZ: Well, they've done very well in the year of free agency, going from an average of $51,000 to an average of slightly over $2 million. Even the minimum wage, which is going to be raised in this contract, is going to be around $300,000. It doesn't sound like they've been compromising too hard.

JIM BOUTON: Well, they're compromising on the principleof negotiating what they would be worth in a completely free market. And who knows what they would be worth? You don't pay people according to whether they've got enough in this society, or whether they're worth it, or whether they need it. We pay people according to what somebody else is willing to pay them in an arm's length transaction. That's what the players would like to have. If it ends up they make a lot of money that way, then fine. If they don't make that much money, then that's okay, too. But it should be an arms-length transaction deal and they should be entitled to their share of whatever anybody is willing to pay them.

REENA AGGARWAL: Let me go back to Professor Sanderson.

ALLEN SANDERSON: I'm not sure which I find more disingenuous: Bud Selig's comments that 25 of the 35 teams are losing money, or Don Fehr's, or Jim Bouton's-- and I respect his writing-- that the players want their worth determined in a free market. This is not a free market. Sports industries operate off a zero-sum game. If the Cubs lose-- I'm a White Sox fan, and I hope they do-- somebody else wins. You can't get around that. You can't allocate resources in any way to get anything more than 2430 wins every year and 2430 losses. If there really were a free market for players, then Don Fehr wouldn't have a job. There wouldn't be salary arbitration. Players are not interested in that type of a free market. It is the cartel that provides the profits that pays the salaries. If we had a free market in baseball and had 48 teams instead of 30, the current 750 players would be making a lot less money than they're making now. That's a free market. So we need to be honest about what we're saying here.

RAY SUAREZ: Professor...

JIM BOUTON: If I could jump in for a second.

RAY SUAREZ: Quickly. Very quickly.

JIM BOUTON: If there were a competing major league, you wouldn't have a draft. You wouldn't have six years of service, and the players could play one league off against another. That would really be a free market. They would do very well in that situation.

RAY SUAREZ: Jim Bouton, Ron Rapoport, Allen Sanderson, thank you all.

MARGARET WARNER: Still to come on the NewsHour tonight, Richard Armitage on Asia, high stakes politics in Pennsylvania, and Oliphant and Malkin.

NEWSMAKER

MARGARET WARNER: Now to our interview with Deputy Secretary of State Richard Armitage. He's just back from a trip to Sri Lanka, India, Pakistan, China, and Japan. It was his second mission to dampen down tensions and the threat of war between India and Pakistan over the contested area of Kashmir. Also on the agenda for this trip was the prospect of U.S. military action against Iraq. I talked with him this afternoon from the State Department. Secretary Armitage, welcome.

RICHARD ARMITAGE: Good evening, Ms. Warner.

MARGARET WARNER: Your visit to India and Pakistan coincided with more violent incidents in Kashmir and a war of words over who is at fault. Is the situation between those two countries deteriorating?

RICHARD ARMITAGE: I think it is better now than it was in late May, early June. But it's clear that the incidents of violence are on the upswing.

MARGARET WARNER: As you know, India is saying that the Pakistani President Musharraf essentially broke his word, the word he gave to you in June, that he would bring a permanent end to these cross border incursions. Is India right?

RICHARD ARMITAGE: Well, President Musharraf, again, reiterated to me that his comment about stopping activities across the line of control was still valid. There d been nothing changed on that. I think both India and Pakistan recognize that there are certain infiltrations across the line of control that no Pakistani President could control.

MARGARET WARNER: Is India right that the incursions abated somewhat after your visit in June, but that now they are on the upsurge? I mean can you independently confirm that?

RICHARD ARMITAGE: Yes, that's correct, and I've said so publicly. The cross line of control incursions are up from the end of June, but they re still below the sort of seasonal annual highs.

MARGARET WARNER: Do you think General Musharraf is doing everything at least that is in within his power; that is, at least none of the incursions that are happening are supported by either Pakistani military or intelligence?

RICHARD ARMITAGE: Well, we do believe that President Musharraf is a man of his word and we're going to treat him as such and treat his word with all the care which it deserves. Only President Musharraf and his colleagues know for sure, but we think that he is exerting some efforts.

MARGARET WARNER: But are you saying the U.S. can't really be sure if there is still official Pakistani support or at least military intelligence support for some of these raids?

RICHARD ARMITAGE: Well, I don't know that I want to get into what we know and what we don't know. I'd say that we believe that President Musharraf is exerting efforts to cease Pakistan support for cross border Jihadists. I am saying that there are Jihadists that are outside the control of all Pakistani authority. There are also Jihadists that were already existent in Kashmir. They didn't need to cross the line of control to cause trouble.

MARGARET WARNER: Just one other question about General Musharraf. He gave an interview to Agents France Press I think just before you were there in which he said essentially look, if India won't take any steps toward Pakistan in opening a dialogue, which is of course what both Pakistan and the U.S. have been urging, I can't do anymore. I think he said something like I can't take ten steps when India takes none. Did he say something like that to you?

RICHARD ARMITAGE: No, but he didn t take that, but he made it very clear that he thought that Pakistan had lived up to their end of the bargain and he was very hopeful that India would begin dialogue. We see right now that India, for her part, is focused almost entirely on the upcoming Kashmir elections, focused like a laser on it. And perhaps if those elections can proceed relatively free of violence, then there can be some sort of dialogue.

MARGARET WARNER: Well, now what did Indian officials say to you about the possibility of dialogue and the possibility of some steps toward Pakistan? I mean, were they setting this timetable about the elections which I think are what, late September or early October?

RICHARD ARMITAGE: The elections are four-phase elections from the middle of September till middle October. They've said that if the elections could proceed free of violence from Pakistan, then they would entertain a dialogue. President Musharraf, for his part, told me that his government's position was to condemn violence during any electoral season.

MARGARET WARNER: You said, while you were in the region, that you have fears that there will be violence around the election. Explain why that might happen.

RICHARD ARMITAGE: Well, there are plenty of people who don't want elections to take place. There have been elections in the past that have been full of violence. And I'm fearful that history would repeat itself. I was happy to receive President Musharraf's assurances that his government condemned violence. And I hope that these elections will be carried out relatively free of violence.

MARGARET WARNER: And these are elections for, essentially, the local parliament and the Indian-controlled part of Kashmir?

RICHARD ARMITAGE: That's correct.

MARGARET WARNER: Which the militants want everyone to boycott.

RICHARD ARMITAGE: They re trying to -- militants are trying to bully people into not voting. And there are simultaneously in October elections in Pakistan for their parliament.

MARGARET WARNER: The Indian Indian officials talking to reporters, and I'm sure you've read a lot of these accounts, have been saying that they feel let down, essentially, by the U.S. Columnist Jim Hoagland put it that U.S. diplomacy had been devalued in India's eyes because the assurances that you gave to India in June, Musharraf has given us his word, this is going to end or close to end, haven't happened. Did you get that sense when you were in India?

RICHARD ARMITAGE: Both Indian officials and President Musharraf and his colleagues told me they valued U.S. efforts in this regard and hoped they would continue. Mr. Hoagland is welcome to his own opinion but that's what Indian officials told me.

MARGARET WARNER: And Indian officials are also saying they think the U.S. Is coddling Musharraf, not pushing him hard enough because the United States wants to maintain his support for the effort in Afghanistan. Did they say anything like that to you? And what is your response to that?

RICHARD ARMITAGE: Well, I've heard comments along those lines in the past and it is true that President Musharraf has been extraordinarily helpful in the war on terrorism. By the same token, however, we have obtained a pledge from President Musharraf about cross border activities and we are looking to him to live up to that pledge.

MARGARET WARNER: Did you speak to President Musharraf as well about the steps he took, I think just three or four days before your arrival in which he basically ran it himself, it has been widely interpreted by critics both here and in Pakistan and India as a power grab. Did you talk to him about that?

RICHARD ARMITAGE: Well, I spoke to the President about the transition back to civilian democracy. It is true that the people of Pakistan have been ill-served by both civilian democratic governments and military governments and pointed out that the U.S. view was very important that President Musharraf be able to show a return to civilian controlled democracy and a path to that democracy. And we had a good discussion on this.

MARGARET WARNER: What did he say?

RICHARD ARMITAGE: Well, he indicated that when he comes to Washington-- excuse me, when he comes to New York for the UN General Assembly in September, that he will be giving a series of interviews. And I fully expect him to talk about his plans and his hopes for democracy in Pakistan.

MARGARET WARNER: The other-- another topic on your trip from news accounts is that you are also talking in these various countries about the possibility of military action against Iraq. What kind of a response did you get in your private meetings?

RICHARD ARMITAGE: Well, you've prejudiced the question. I was talking about the situation of Iraq and I made it very clear that President Bush has all options open to him and that he has not decided which course to take, and when he did decide, then the President would consult with friends and allies. We just had exchanges of views on Iraq and on the Middle East in general.

MARGARET WARNER: But I think right after you left, both China and India warned against any action against Iraq. You said in Japan, I believe, at a press conference, that you thought when the President made his decision-- I don't have the exact words-- but that you believed-- we expect to have a fair amount of international support. I'm just wondering what is the scenario, do you think, for all of these leaders from France, to Germany to Saudi Arabia, to Japan, to China, to walk back from all the warnings they've issued about don't do this, don't do this. How do you think this might happen?

RICHARD ARMITAGE: Well, I would suspect that once the President has made a decision, then his administration would fan out and publicly begin making the case for regime change, and I suspect as we go forward, that nations would obviously decide or make the decision based on their own national interest. But I think once we make a public case on the question of the regime in Iraq, then we can expect a fair amount of support.

MARGARET WARNER: Is the administration ready to do anything to make it more palatable to other countries? I'm thinking, for example, the British foreign office said yesterday, it might press for setting, at the UN, a new deadline for Iraq to comply with weapon inspectors. Former Secretary of State Baker, as you know, has written that he thinks that the would be a good idea, the U.S. should support that as a precursor to any military action. Do you think the administration should take that route?

RICHARD ARMITAGE: I think the administration should take into consideration the views of all well-meaning friends and allies and former experts like Mr. Baker. And I know the President is looking and listening to all these voices. But he's the one nationally elected leader and he will make his own mind up after taking all these views into consideration.

MARGARET WARNER: Let me ask it another way. What would be the downside or the harm in first going to the UN and trying to put-- and that is what happened before the Gulf War, essentially put some sort of a deadline or obligation on Iraq and then if Iraq doesn't comply, you know, maybe you get more international support -- I'm just wondering what is the downside to doing that?

RICHARD ARMITAGE: There is an obvious downside spelled out by Vice President Cheney the other day, that Saddam Hussein is a master of bait and switch, and that he can obfuscate and delay and use any such discussions to just buy more time. But let me remind you, the President will make the decision whether to go to the UN or just what to do and we'll just have to await his decision.

MARGARET WARNER: Well, let me ask you about one other decision that I know he will also be making. It concerns what kind of approval, authorization or level of consultation with Congress. Yesterday Dick Lugar, pretty much the senior Republican on the Senate Foreign Relations Committee, said in Moscow that he thought the President should come for a formal Senate vote to authorize this. What do you think about that?

RICHARD ARMITAGE: Well, I think the President takes very seriously his relations with Congress and Congress's duties under the Constitution. And I know he has said he will consult with congress. And I'm sure Senator Lugar s views, as a very respected foreign policy expert, will be taken into consideration. It's not for me to say what the President ultimately will do.

MARGARET WARNER: All right. Secretary Armitage, thanks for being with us.

RICHARD ARMITAGE: Thank you, Ms. Warner.

FOCUS HIGH STAKES

MARGARET WARNER: With control of the House of Representatives at stake in the upcoming elections, Kwame Holman reports on one pivotal race. (Marching band playing)

KWAME HOLMAN: In small town America, nothing can draw the people out of their houses like a parade, and this time of year, there's always a distinct political flavor to the festivities.

SPOKESMAN: Hey, how are you?

KWAME HOLMAN: With the November elections just two months away, some candidates already are sprinting toward the finish line and they can't resist the chance to meet and greet potential voters who line up just waiting for something, or someone, to pass by.

SPOKESMAN: Howdy.

KWAME HOLMAN: And so last Saturday in Mahanoy City, Pennsylvania, there were plenty of politicians afoot at the 48th annual Schuylkill County volunteer firefighter's parade. Pennsylvania attorney general Mike Fisher, the Republican candidate for governor, was there. So was Bob Allen, seeking an eighth term in the state legislature. And amid the 20 marching bands, 1,500 firefighters, and more than 270 trucks and equipment, there were Tim Holden and George Gekas, two candidates locked in one of the tightest congressional races in the country.

SPOKESMAN: Thank you for waving.

KWAME HOLMAN: Aside from the fact that Republicans currently hold a narrow 13-seat advantage in the House of Representatives, making every seat won or lost crucial, what's drawing attention to this race is that the candidates, Gekas and Holden, both are incumbents.

SPOKESMAN: I'll take a hug.

WOMAN: Good luck to you.

KWAME HOLMAN: For ten years, democrat Tim Holden has represented the state's sixth congressional district. For 20 years, Republican George Gekas has represented the neighboring 17th. While it might not be evident by the crowds that lined the parade route on Saturday, Pennsylvania has been losing population for decades as its steel and coal mining industries shrank. As a result, the most recent census figures forced Pennsylvania to eliminate two congressional districts and redraw the others. Gekas still lives within the boundaries of the newly-redrawn 17th district, but now, so does Holden. Voters here are overwhelmingly conservative and identify with President Bush, but they're worried about jobs and the economy. They'll likely choose their Congressman with those concerns in mind.

REP. GEORGE GEKAS: I'm relying on their recognition that President Bush, in his efforts, would be better helped if I were elected than if Tim were elected.

REP. TIM HOLDEN: I look at the issues as they come at me and make a judgment, and my current Republican constituents understand that. They know that I'm not, you know, from the left wing of the Democratic Party.

KWAME HOLMAN: The decision to place congressmen Gekas and Holden in the same congressional district was made by the Republican-controlled legislature here in Harrisburg. It set up a contest between two incumbents who hadn't faced serious challenge before and who now must introduce themselves to new groups of voters.

REP. TIM HOLDEN: The Republicans controlled the... you know, the entire agenda here in Harrisburg. They have the state Senate, the state House, and, of course, the governor's mansion. And all along the reports were that they were going to, you know, take that to full political advantage and get rid of as many Democrats as possible. And they sent a message that, you know, this is drawn for George and, you know, Holden won't even run at this, and you start believing it. You get paranoia, you know, "Holden won't run," and this is a solid Republican district, and I'm used to running in Republican districts. My current congressional district is only 44% Democratic performing. This is a little worse. It's 41%, but I'm a conservative Democrat. I fit in with the values of Central Pennsylvania.

KWAME HOLMAN: Congressman Holden just told us that district was created to end Tim Holden's career?

REP. GEORGE GEKAS: Indeed, I think that was the thinking of the Republican leaders in Harrisburg in the General Assembly. I maintain that they did not fully analyze the returns of Schuylkill County when they made that decision. They went on pure registration numbers, which do favor me if you just go Republican-Democrat registration figures. But Tim has been able to overcome some of that deficit in years that he's been serving in Schuylkill County.

KWAME HOLMAN: Democrat Tim Holden retained only 40% of his constituents when the new 17th congressional district was drawn. Most of them live in Schuylkill County in towns such as Pottsville. That's where Holden, and hundreds who know him, ate crabs trucked up from Maryland last Friday night at a fundraiser for the local hospital.

SPOKESPERSON: Where are your crabs at?

SPOKESPERSON: Gwen has them. I was in charge of this.

KWAME HOLMAN: Holden served seven years as Schuylkill County sheriff before being elected to the House of Representatives in 1992. Even though the county is predominately Republican, Tim Holden is very popular here. State representative Bob Allen, a Republican himself, said George Gekas has work to do in Schuylkill County.

STATE REP. BOB ALLEN: Well, I think he has to address economic issues. Jobs are very important to this area. Our unemployment rate is 6.6%-- higher than the national average. He's going to have to show that he's going to have some interest in the leadership of creating jobs. He's also going to have to show that he has an interest in the agricultural industry. We have a lot of small dairy farms and potato farms in this area.

KWAME HOLMAN: George Gekas' strength lies in Harrisburg, his home, and the rest of predominately Republican Dauphin County. He retained 60% of his constituents. Gekas is a senior member of the House Judiciary Committee. But he's also portrayed as having one of the worst voting records on protecting the environment. And so last week he toured an abandoned coal mine site and urged federal action to clean up this acid-contaminated discharge that flows into a nearby stream.

REP. GEORGE GEKAS: This administration has been very tight with the dollars. We want to loosen up those at least are immediately required for situations like this.

KWAME HOLMAN: George Gekas and Tim Holden faced off on Monday in Harrisburg at a lunchtime forum sponsored by the Pennsylvania Press Club. Each made his best case for reelection.

REP. TIM HOLDEN: I'm a conservative democrat. The "national journal" has recorded me as being one of the 15 of the most conservative democrats in congress.

KWAME HOLMAN: Tim Holden also stressed his support for the president.

REP. TIM HOLDEN: I was one of a handful of Democrats President Bush brought down to the white house into the cabinet room as we prepared to vote on the homeland security bill, and I told him then that I would vote for it, and I did. And I'm proud that I did.

KWAME HOLMAN: But George Gekas questioned Holden's support for the president, citing the democrat's opposition to giving Mr. Bush trade promotion authority.

REP. GEORGE GEKAS: It's not enough to vote "yes" on the resources for the president and then deny him the power to negotiate agreements that are sure to bolster theeconomy and help him be the kind of commander-in-chief that we want him to be.

KWAME HOLMAN: Gekas took credit for introducing bankruptcy reform legislation, and for instituting instant background checks on handgun sales.

REP. GEORGE GEKAS: Those who hate it call it the Gekas amendment. Those who enjoy it call it the Gekas amendment. I say to you now it's the Gekas amendment. (Laughter )

KWAME HOLMAN: And he said he tried to prevent any more government shutdowns during budget battles.

REP. GEORGE GEKAS: My bill would have said at the end of the fiscal year if they haven't reached accord on a new budget, then you would have an instant replay of last year's budget until the appropriators can get together and do a final budget. That's common sense.

KWAME HOLMAN: Holden, in turn, stressed how he has been able to deliver for Pennsylvania through his work on the agriculture committee...

REP. TIM HOLDEN: And we were able to create, for the first time, a safety net. We were able to guarantee that there would be an income for our dairy farmers.

KWAME HOLMAN: ...And through his work on the Transportation Committee.

REP. TIM HOLDEN: And because I serve on that committee, I had $34 million at my discretion, and I worked closely with Penndot and other local elected officials not only to address safety hazards that needed to be looked after, but also to work on economic development.

KWAME HOLMAN: A new twist sure to impact the campaigns is the proposed sale of the Hershey Food Corporation. Hershey employs 6,000 workers in Central Pennsylvania, but the concerns extend far beyond simply the sale of the company. An entire community built up around Hershey over the last 108 years. It includes a popular amusement park, medical center, and a $5.5 billion charitable trust. During our visit to Hershey, the aroma of warm, sweet chocolate permeated the heavy air in neighborhoods blocks from the Hershey factory. The candidates were asked what they would do to protect the Hershey legacy in Central Pennsylvania.

REP. TIM HOLDEN: Milton and Catherine Hershey would have never in their mind envisioned selling that company and breaking that commitment to central Pennsylvania. So I have said to the workers at Hershey, I have said to the people of Hershey that if there is a sale that is proposed-- and we are hearing leaks now about Nestle and Kraft-- that I will ask the Justice Department to use every bit of power that they have and every bit of authority to look into any antitrust violations and hopefully we will be able to derail the sale.

KWAME HOLMAN: Republican George Gekas promised to use his influence as a member of the Judiciary Committee.

REP. GEORGE GEKAS: I was secretly hoping that if a sale is going to go through-- god forbid it should-- but if it does, I was hoping it would be Nestl s that would be successful bidder. Why? Because Nestl s being a large food conglomerate now, if they appended to its normal size the additional package of Hershey Foods, then I think our chances of stopping it antitrust-wise would be better.

REP. GEORGE GEKAS: The action youth group? From where?

SPOKESPERSON: Mahanoy City.

REP. GEORGE GEKAS: Is that right? I'm Congressman Gekas.

KWAME HOLMAN: George Gekas and Tim Holden will return to Washington next week as Congress embarks on a final month of work.

MAN: Rest assured we're in your corner.

SPOKESMAN: Thanks a lot. We have to win Schuylkill County big.

KWAME HOLMAN: But both candidates will make the short trip home frequently to shore up their bases of support and step up the task of introducing themselves to new voters in Pennsylvania's redrawn 17th district.

SPOKESMAN: We talked about that before

SPOKESMAN: We're trying. Thank you.

FOCUS OLIPHANT & MALKIN

MARGARET WARNER: Now, end of the week analysis, and to Terence Smith.

TERENCE SMITH: With me are "Boston globe" columnist Tom Oliphant and syndicated columnist Michelle Malkin. Mark Shields and David Brooks are on vacation. Welcome to you both.

Tom, the debate over whether this country should intervene militarily in Iraq really heated up this week. Vice President Cheney made two speeches outlining the administration's case for it. Why Cheney and why now?

TOM OLIPHANT: Well, Cheney's still the biggest gun, but I think the most important question is why now, since the end of August is not normally a time when an administration seeks to engage a vigorous national debate, and I think there are at least two things involved, Terry. First of all, as the discussion continues in the country, I think it's fair to say that people outside the administration, Republican and Democrat, have had more of the field in the last few weeks than administration officials have. And to a certain extent, the discussion was becoming almost monopolized by people outside the administration, so (a) this is an attempt to get back in the game. But secondly, the White House began noticing about ten days ago, in its own polling, that public anxiety is on the increase--.

TERENCE SMITH: Over Iraq.

TOM OLIPHANT: And automatic public support for military action has receded significantly. There is a public poll out today CNN-Gallup

TERENCE SMITH: CNN-Time.

TOM OLIPHANT: Time. Excuse me, indicating much the same thing. People in the White House argue, I think quite effectively, that a lot of this reflects a natural fall-off in the post-9/11 honeymoon for President Bush, more partisan Democrats, independents reverting more to form. Still, anxiety was what the White House noticed, and it was at about that time that we began to hear that Cheney would be making a couple of speeches.

TERENCE SMITH: Michelle, what is your read on the administration's strategy here?

MICHELLE MALKIN: I don't think we should be scratching our heads over why we're hearing from Cheney and the big guns now. You know, it's the Democrats, and if I recall correctly, a month or two ago, Joe Biden was beating the drum practically on every channel except for Nickelodeon talking about the need for a debate. Well, we're having it. That's what we're doing now. And, you know, it may be inconvenient that it's the end of August that we're having it but it needs to be done. I think that they're definitely hammering away at the theme that we have no time to waste.

TERENCE SMITH: Do you see it as Tom does, in response to other voices being in the debate, a need to step up lest public support erode?

MICHELLE MALKIN: Well, it's true there is dissent among advisors over this issue, but it's mostly Bush's father's advisors versus this Bush administration. Clearly Cheney and Rumsfeld and the Perle wing, the hawk wing of this administration is all on the same page. There is no doubt about that.

TERENCE SMITH: What about that? Disagreement within?

TOM OLIPHANT: No question about it, and I think Michelle says it perfectly. However, I do believe that timing is very important because to a certain extent, I think the administration has been caught without a policy to argue for. There are many specifics in this process that are yet to be decided. The case that has been made, being made right now is a rhetorical one, not a detailed evidentiary one. The President has a speech to make next month at the United Nations. That will be a detailed very serious speech. In addition, they're going to be further hearings on both sides of Capitol Hill and one of the things that Dick Cheney said is that the top echelon of the administration will be up there. Now when that happens, people are going to ask some very specific things. You know, tell us in detail about Iraqis, the Iraqi program on weapons of mass destruction. Tell us in some detail about your own plans. And I think at that point the administration will find itself on much more comfortable grounds because it will be able to talk about this in more detail.

MICHELLE MALKIN: Well, I do agree with Tom that the speech, if it is going to happen, September 12, is a very important date and he will need to, I think just as a matter of political reality, have to come up with some kind of proof or some more details as you say. But I totally disagree with you that the Bush administration hasn't articulated a policy. Of course it is. It's preemption and the Democrats have had nothing in response to that.

TOM OLIPHANT: Except support. There is no organized opposition to the President's policies as they are dimly generally understood. There are concerns that I think cross party and ideological lines at this point, and that what is happening is more of a national discussion than a partisan debate. In about six weeks, we're going to notice the 40th anniversary of the Cuban Missile crisis. President Kennedy put all the evidence on the table, photographs, detail, the most serious moment after War World II. It is that level, that kind of standard that I think the Bush administration will be held to on Capitol Hill by members of both parties.

TERENCE SMITH: All right. Now you know -- you mentioned the congressional hearings that are coming up. Is it politically necessary, in your opinion, for this administration to get the specific approval of Congress, or is it enough to "consult with Congress?"

MICHELLE MALKIN: I'm not really sure what form approval is going to take. Is it going to be a new resolution?

TERENCE SMITH: A resolution.

MICHELLE MALKIN: Yeah, I think even the Bush administration has recognized the need to do that. And conservatives have also, the "Wall Street Journal" weighed in with an editorial also recognizing that reality. Yes, we need a bipartisan Congress standing behind us and I think most people agree that when and if that request comes, it will be overwhelmingly approved.

TOM OLIPHANT: You know, it's interesting -- I agree with you completely. I think it's very interesting that even before the two Cheney speeches, there was a speech given by the House Majority Whip, Tom DeLay, that the administration played a significant role in helping draft. And one of the things that was hardly reported at all in that speech, DeLay said flatly before the moment of, he called it liberation of Iraq comes, the President will go to Capitol Hill. Of course that's an assumption that there will be a request for a resolution. I think it's an almost universal assumption at this point. All that happened this week, I think, like any administration defending the office of the presidency that made the case about what they can do. This is more about what they should do.

TERENCE SMITH: Now the Europeans, the allies such as France, have been urging this administration to get a specific approval for the United Nations Security Council before there's any military intervention. Michelle, is that something that should be done,can be done?

MICHELLE MALKIN: You know, there are perils there. It could be argued that we possibly set a bad precedent by having to get that imprimatur before the '91 Gulf War. And in fact, there's-- it's kind of a paradox because probably the best way to persuade our European allies of the, you know credibility and, you know, the ultimate you know, need or merit to go ahead, would be to not seek their approval. And in fact, you know, you look and you see there have been three roundtables Iraq and the United Nations over the past year and nothing has come of it. What good would one more chance do?

TOM OLIPHANT: It's interesting though that this is the point on which you begin to hear some of the dissent from inside the administration, and it's not just coming from outside; though I absolutely loved Secretary Armitage's reference to Margaret about former experts like Jim Baker. That was a little obvious -- too obvious for a diplomat, perhaps. But Jim Baker was making somewhat the same point. And I just go back to the analogy with the Cuban Missile Crisis for a second. Our case was so strong and we made it in such a public way, President Kennedy thought that international support was essential and a tremendous help to what we were trying to do. I think the point that's being argued now is not that it's some hoop that the administration should be forced to jump through but rather it's an exercise that will, in fact, broaden the base of support in the world.

MICHELLE MALKIN: Or is it just a charade that's going to buy Saddam Hussein even more time? I mean why bother?

TOM OLIPHANT: Perhaps, but if the case is strong and we make it publicly, the support will follow.

TERENCE SMITH: One other thing we ought to bring up just briefly at the end here, the Congressional Budget Office came out with a projection this week, three more years they say, minimum of deficit and deficit spending. How does this sit with Republicans, Michelle, who love reduced government spending and balanced budgets?

MICHELLE MALKIN: Well, that's not necessarily Republicans. It's limited government, conservatives and libertarians who have been distressed to see as high a level of domestic spending as we've had even before September 11 and, you know, President Bush--.

TERENCE SMITH: Higher now.

MICHELLE MALKIN: Yes, and even higher now and President Bush has been guilty a lot of the expansion that's led to, you know, the deficits that we will be seeing -- even outside and apart from the tax cut and, as I said military spending. I don't know how much resonance this is going to have the November 2002 elections though. I think there's probably clearly a sentiment that this is wartime and we have-- we are going to have a higher tolerance.

TERENCE SMITH: Tom, final word, quickly?

TOM OLIPHANT: I agree with you. It only has resonance when debt and deficit combine with a sluggish inadequate economy. That's when it gets trouble. Inside the beltway, the impact of the CBO's numbers is on the administration's credibility for the fights yet to come on Capitol Hill.

TERENCE SMITH: Thank you both very much.

RECAP

MARGARET WARNER: Again, the major developments of the day: Major League baseball players and team owners agreed on a tentative labor contract just hours before a player-imposed strike deadline. And the World Trade Organization ruled the European Union can impose $4 billion in sanctions against the United States over special tax breaks granted to U.S. export firms. A reminder that "Washington Week" can be seen on most PBS stations later this evening. We'll see you online, and again here Monday evening. Have a great Labor Day Weekend. I'm Margaret Warner. Good night.