The NewsHour with Jim Lehrer

MR. LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, the emphasis is on economics in politics. We get four perspectives on today's unemployment and other economic numbers. Tom Bearden reports from Kansas on the ups and downs of farm prices. Kwame Holman chronicles the opening move in the Senate to lower the gas tax, and Mark Shields & Paul Gigot put it all in a political perspective. We close with a David Gergen dialogue with author David Popenoe about life without father. It all follows our summary of the news this Friday. NEWS SUMMARY

MR. LEHRER: There was more big news on the U.S. economy today. The Labor Department reported the unemployment rate was 5.4 percent in April, the lowest level in more than a year. That good news was tempered by the fact that only 2,000 new jobs were created. In other reports, the Commerce Department said personal income rose .5 percent in March. Consumer spending was up .6 percent. At the White House, Labor Secretary Robert Reich discussed the unemployment report.

ROBERT REICH, Secretary of Labor: April's unemployment figure of 5.4 percent marked the 20th consecutive month that we had unemployment below 6 percent. The unemployment rate is now two full percentage points below what it was exactly four years ago. In April of 1992, we had an unemployment rate of 7.4 percent. It is now 5.4 percent.

MR. LEHRER: We'll have more on the economic news right after the News Summary. In Liberia today, faction leader Roosevelt Johnson was airlifted out of the West African country by U.S. Marines. He was taken to neighboring Ghana, where he's expected to participate in peace talks next week. Rival warlord Charles Taylor insisted on Johnson's surrender before agreeing to a cease-fire. In Washington, State Department Spokesman Nicholas Burns said the Liberian faction leaders are impeding the peace process. He said they would not be allowed to enter the United States.

NICHOLAS BURNS, State Department Spokesman: This action results from the refusal of the faction leaders to heed the pleas of the Liberian people and the international community to stop the wanton fighting and the killing and the corruption and the looting in Monrovia. They've refused to return to the peace process, and with Liberia on the verge of total chaos, it is critical that the faction leaders agree now to reinstate the April 19th cease-fire, to agree now to re-establish Monrovia as a safe haven for its 1 million civilian inhabitants, and to agree that they will attend on May 7th and 8th the emergency Echowa summit in Ekraw, which has been--Ghana, which has been called by the Ghanian president, Jerry Rawlings.

MR. LEHRER: Burns said participation at those peace talks sponsored by the economic community of Western--of West African states was mandatory if the faction leaders want diplomatic relations with the United States. Also, today, 60 more U.S. Marines joined the protection force at the U.S. Embassy in Monrovia, Liberia's capital. That brings the number to 290. three U.S. Navy ships with 2,000 more troops are offshore. In the U.S. Senate today, the Finance Committee started the move to lower the federal gasoline tax. Senate Majority Leader Dole wants the repeal of a 4 cent increase in the tax imposed in 1993. Some Democrats argue against repeal on grounds the revenue is needed and there was no guarantee the 4 cents would be passed on to consumers anyway. At today's hearing, transportation industry officials supported the repeal, saying the tax hurts their businesses. We'll have more on this story later in the program. Republican Senator Alfonse D'Amato took a hit at House Speaker Gingrich today. D'Amato said Gingrich will hurt the Republican Party if he does not moderate his message. In a "New York Daily News" interview, D'Amato said Gingrich misread the message of the 1994 elections which put Republicans in control of Congress. D'Amato said the voters wanted evolution, not revolution. The New York Senator is co-chair of Bob Dole's presidential campaign steering committee. A spokesman for Gingrich said D'Amato was trying to appease the liberals. We'll ask shields and Gigot about this later in the program. A leading Chinese dissident has been admitted to the United States. A White House spokesman confirmed today that 34 year old Leo Gong is in this country. He reportedly escaped Chinese police surveillance earlier this week and fled China. Leo served a six-year prison sentence for helping lead the 1989 Tiananmen Square protest. In Washington State, a moderate earthquake shook Seattle last night. It measured 5.4 on the Richter Scale. No one was injured, and there was no major damage. And that's it for the News Summary tonight. Now it's on to the news on the economy, a report on farm prices, the move against gas taxes, Shields & Gigot, and a David Gergen dialogue. FOCUS - READING THE NUMBERS

MR. LEHRER: We do go first tonight to the economy and to Margaret Warner.

MS. WARNER: The news today, another drop in the unemployment rate and a robust increase in personal income. The news yesterday, higher than expected first quarter growth. What are these and other indicators telling us about the state of the American economy? We get four perspectives. Allen Sinai is chief global economist with the investment firm Lehman Brothers. Sandra Shaber is an economist with the WEFA Group, an economic forecasting and consulting firm in Philadelphia. Barbara Grogan is president of Western Industrial Contractors, a construction and consulting firm based in Denver, and Barbara Rackes is president of Rackes Direct, a custom apparel company that sells by catalogue and over the Internet. She's based in Columbia, South Carolina. Welcome, all of you. Allen Sinai, let's start with you with the new numbers that came out today on unemployment and the wage picture, that is unemployment is down again. Yet, personal income has risen comfortably. What do those two figures tell us about the state of the economy right now?

ALLEN SINAI, Lehman Brothers: [Boston] Well, the economy is improving this year. It's picking up in momentum. It's a renewed expansion. It's being led by the consumer. There are enough jobs, enough income to generate spending. It looks sustained. It's really a pretty good picture. And the small, non-perm payroll jobs number today, the 2,000, was that way because of some special technical factors, we call them seasonal factors, they depress the numbers, and it should be dismissed pretty much as an apparition.

MS. WARNER: So you're saying that job creation really is proceeding at a, at a healthy clip?

MR. SINAI: It's 160,000 per month so far this year. That's above trend. It's very good for the sixth year of a business expansion, and on the other basis, the one on which the unemployment rate is calculated, 5.4 percent unemployment rate, and about a million one people having found work so far this year is really quite an outstanding picture.

MS. WARNER: Now, what about the wage picture? We've heard a lot of talk this year about wage stagnation, yet, wages or personal income is up. What's driving that?

MR. SINAI: Well, that's changing. The labor market is tighter. A 5.4 percent unemployment rate tells us this. And wages in all of the ways that they're measured do show some tilting up, some improvement. I think American workers aren't going to feel so badly as the months go by this year and more jobs are available, and they have a little bargaining power. It's generating income and, you know, we're consumers. We like to spend the income we get. We spend 80 cents of any dollar we get in a given year, and that is what is propelling the economy higher.

MS. WARNER: Mmm-hmm. Sandra Shaber, turning to you and to the companies that your firm advises, what is the employment and the wage structure picture in the companies you're advising?

SANDRA SHABER, WEFA Group: [Philadelphia] Well, I think everybody is breathing a sigh of relief. It wasn't too long ago where we thought we really were in a recession, but how that news is perceived by many different kind of businesses is quite varied. Retailing, for example, is such a mixed picture. Consumers are spending more. In total, they're spending a fair amount of money, certainly whatever their paychecks generate, yet there are so many stores and so many malls that when you pick up the paper it's almost a bankruptcy a day.

MS. WARNER: But, let me--I want to get to the growth in a minute, but let me just ask first of all about employment and wages. Are the companies you're advising, some of these big retail chains, are they having to pay people more?

MS. SHABER: There are some wage pressures. It really depends on where they are. Certainly retailing is stronger in some parts of the country and in some segments. And so there is some employment growth. But there is a lot of competition in that job market. Wages are growing, but on a per-worker basis, wages in general are just barely ahead of inflation.

MS. WARNER: Barbara Grogan, in the contracting and construction business, what are you seeing in terms of the labor market, the labor situation?

BARBARA GROGAN. Western Industrial Contractors, Inc.: [Denver] Well, Margaret, we work all over the country, so it really depends on which market we're in. There are some markets that are much tighter. We're seeing a real strengthening in the California market, for example. It was pretty weak for a long time. In Denver, in Colorado, the market is much softer because of the anomalous situation with Denver International, pouring $4 billion into a pretty small construction market, so in Colorado, you're seeing--

MS. WARNER: Explain that. You mean now that that construction is over?

MS. GROGAN: Exactly. Construction ended. It was more than $4 billion in a, in a pretty small state, in a pretty small construction market, so in Colorado, it's sort of soft, but in the other regions of the South, Southwest, the Northwest, we're seeing a real strengthening, and competition for good employees is getting tougher.

MS. WARNER: And, Barbara Rackes, now you just changed your business so that you've actually reduced the number of people that you employ. Tell us about that.

BARBARA RACKES, Rackes Direct: [Columbia, SC] Well, over the past five years there's been major changes in consumer spending patterns. And like a traditional retailer, we served geographically delineated marketplaces. We started to see that as the consumer became--

MS. WARNER: You had stores, is that right? You had regular--

MS. RACKES: Stores, traditional stores, what I call brick and mortar. And we found that as consumers were, uh, going into a more casual marketplace, as they were spending more money on how they lived rather than what they wore, uh, that we were having to reach out further to reach our target market. We also found that people wanted to have the everyday low prices of a Walmart but they wanted to have the high level of service that they got in a specialty operation. The customer came in and she said, I want that blue dress but I want it with a V-neck and a long sleeve and so on, et cetera, et cetera. And we decided that what we wanted to do was to go into the custom business where we could accommodate all of the needs of that very specialized customer. See, as I see it over the next couple of years, we're going to see really two segments of the marketplace. There's going to be the very large superstore retailer that meets the average needs of every consumer, and then there's going to be the specialty retailer that provides the unique things that are not otherwise available.

MS. WARNER: And so you--

MS. RACKES: We made a choice to go into that market.

MS. WARNER: I see. And you're able to do this really just, people just order by fax and modem and phone.

MS. RACKES: Absolutely.

MS. WARNER: Is that right?

MS. RACKES: We now serve a slice of the world, rather than a geographically-delineated marketplace. In fact, our first order came from Japan.

MS. WARNER: I see. Sandra Shaber, is this the kind of--are we seeing this all over the country in different markets, change in the employment picture?

MS. SHABER: There are certainly--first of all, I want to agree that there are great differences from one region to another. But there are also great differences from one segment of retailing to another. The part that's growing, the two parts actually that are growing and adding people and selling more are the big discounters and some of the department, many of the department stores and also some very specialized kinds of retailers who really can find a way to bring customers in the door in a very, very crowded market, but major differences from one segment to another.

MS. WARNER: Allen Sinai, let's turn now to the new growth figures from yesterday, the 2.8 percent growth. What was--what are the major factors fueling that? We've talked about consumer spending. Was that one of them? Were there others?

MR. SINAI: Consumer spending was the largest and it was across- the-board in all categories. Also, we had a big increase in equipment spending and some in plant. That's business investment, business still investing heavily, and housing and construction went up. But later on, as we moved through the year, because many of our trading partners are starting to do a lot better this year, we, we think exports will be very strong, and that will carry our economy.

MS. WARNER: And what were the businesses investing in predominantly?

MR. SINAI: Well, it's mainly computer and software and information processing and communications equipment, kind of the same old thing, pretty big spending on that. That was a surprise, because we've had such a boom in those areas of capital spending for the last two or three years, it seemed to continue in the first quarter.

MS. WARNER: And, Sandra Shaber, are the businesses that you're advising and consulting with, are they investing in computers?

MS. SHABER: Absolutely. Information technology is such an important part of retailing and such a success factor in retailing, much of the pressure now is to cut costs. As we've heard consumers aren't willing to pay more, and so the retailers must cut costs to offer attractive prices. And much of that cost-cutting has to do with new uses of information and the use of computers to distribute information, to control inventories, to order, and to get through to the customer also.

MS. WARNER: Barbara Grogan, what's the business investment picture in the construction and contracting business?

MS. GROGAN: Well, I've always felt like my company was sort of a funny little economic bellwether because for us to be working, businesses have to be making capital investments, and, therefore, they have to be bullish about the future. Umm, so--

MS. WARNER: You mean otherwise they wouldn't build?

MS. GROGAN: Exactly. That's why they wouldn't expand, they wouldn't change their product line, they wouldn't be making the enormous capital investments that are involved that we're involved with, so what we're seeing is a pretty strong around the nation investment, and in terms of employment, I was with an architectural and engineering firm yesterday in Chicago, a very large one, who is doing more work this year with two thirds of the personnel because of an investment in technology that they made over the last two years. I thought that was a pretty staggering number.

MS. WARNER: Allen Sinai, is this--this anecdote we just heard and also Barbara Rackes' example, is this why you think people still feel some economic insecurity, even though new jobs are being created all the time?

MR. SINAI: Well, yes, it's a very different kind of labor market, and businesses are run quite differently, and we do have technology to displace us, and a lot of competition, a lot of new people come into the labor force who are highly skilled, and often will start at lower salaries, so we have a lot of job insecurity, and I think it's that, as well as the fact that we're all working so hard to earn the money we earn to buy what we want to buy. I've never seen anything quite like it. Now, that's the flip side of the productivity, the fact that we're working hard and as a nation, we're more competitive than we've ever been, but it's hard work, and people wonder why they're spending that much time doing that and what they're getting for it, but, you know, on the economics, in the income growth and what we're spending and what the consumption statistics show and even the job generation, it's hard to find anything really wrong economically. I think it's how we feel, not necessarily how much we're earning and how much we're spending.

MS. WARNER: Barbara Rackes, what are you seeing in terms of consumer spending patterns, willingness of consumers to spend a lot, and a related question, in terms of the growth, did you invest a lot in computers in order to change your business?

MS. RACKES: Uh, dealing with the first, uh, issue first, uh, it sounds a little boring but I think that the consumer is cautiously optimistic, and I feel like I've been saying that for at least the last 12 months, but I do feel that the consumer now sees the economy as being much more stable than it has been, and is willing to, umm, spend on the things that they really want. We're in an economy these days where once we felt like we needed a lot of things, and today we've learned that we can live without a lot of things. So we, we wait until we find exactly what it is that we want at the price that we want, and then once we've found all of those things, we're very willing to make the investment in, in doing so. Uh, in terms of South Carolina, in terms of the kind of investment that, that we've made in our, our particular field, probably 60 percent of the total capitalization of our company has gone into technology of one kind or another, whether it's technology training, the development of our Internet site, the computers that we use in order to work 24 hours a day in spite of the fact that we, as human beings, are not working 24 hours a day.

MS. WARNER: But people can call you 24 hours a day.

MS. RACKES: People can call us 24 hours a day. They can E-mail us 24 hours a day. They can, umm, make a very personalized order at 3 o'clock in the morning, and I can be sound asleep in my bed. I think that is one of the greatest advantages of making the investment in technology because humans can then invest in their own personal lifestyles a little, a little more qualitatively.

MS. WARNER: Mr. Sinai, to put all of this together that we've just talked about tonight, how much, if any, of a risk of inflation does this pose, does this good news pose, do you think?

MR. SINAI: Well, you know, the economy is doing better. We are close to full employment in the labor market. There are some increasing wages. There is risk that inflation will be higher, probably will be higher this year than last year and perhaps a little higher next year, and that is what's been bothering our financial markets because when that happens, interest rates rise, and higher interest rates hurt stocks. Then you have the rate picture against the earnings picture and the tug of war in the stock market. I think though, by and large, it's the cost of more jobs and a better feeling for most Americans in terms of their job outlook and how they live, how they work, that is brighter. A little bit of extra inflation I think we could live with.

MS. WARNER: Sandra Shaber, how do you see the inflation prospects?

MS. SHABER: There are some underlying forces now which are keeping a lid on prices. The things that we're seeing right now, a spurt in gasoline prices, and some potential increases in grain prices, those are very temporary factors. They're not part of a long run. Over the long run, I think the global economy and all of this competition that we have are, indeed, keeping a lid on prices, and that's very good for all of us consumers and workers alike.

MS. WARNER: Well, thank you very much. Thank you all four of you. FOCUS - UP & DOWN ON THE FARM

MR. LEHRER: Now another kind of economics, the ups and downs of farm prices. Tom Bearden reports from Kansas.

TOM BEARDEN: It's been a frantic couple of weeks at the Kansas City Board of Trade. This is where hard red winter wheat--the kind used to make bread--changes hands--where wheat prices soared to all time record highs last week--then plummeted--then rose again. Wheat is now trading at nearly double what it was last year. Mike Braude is president of the board.

MIKE BRAUDE, Kansas City Board of Trade: Last week we had the biggest day in our 140-year history, that's the good news. The bad news, of course, is what's causing it, and it certainly isn't good for the producer.

MR. BEARDEN: This is why the market is so volatile--dead and dying wheat plants in fields throughout the nation's breadbasket- -because of one of the worst droughts on record. Brian Turney farms in Sumner County, Kansas, just South of Wichita.

BRIAN TURNEY, Farmer: And you've got wheat here that, uh, you know that top leaf there is only an inch and a half off of the ground on this plant. And a lot of this wheat died before it ever got a little bit of rain to keep it going. And now the green bugs have attacked it. And they actually just suck the life right out of the wheat. See down here on the ground, there's actually green bugs all over the ground, there's just hundreds of them down here.

MR. BEARDEN: Turney's family has been farming here for generations, but they've never seen it this bad.

BRIAN TURNEY: My grandmother's 85 years old, and she farmed with my grandfather through the drought of the 1930's in what they called the dustbowls. And she says that as far as she could tell, it was not even as dry in the 30's during the dustbowl as it has been this winter.

MR. BEARDEN: A few weather forecasters are even predicting a return of dustbowl conditions that forced thousands of farmers off the land. Turney says he saw similar conditions a few months ago when it got so dry on a neighbor's fields the soil turned to powder and started to blow away.

BRIAN TURNEY: This field here has been mostly destroyed from wind erosion, and it just didn't come up good in the fall. They have already worked most of it up.

MR. BEARDEN: Prospects are that Sumner County, normally the biggest wheat producing county in America, will only harvest about a quarter of its usual crop. Norbert Gurstenkorn says losses like that are bound to have a substantial impact on small-town America. He runs the co-op elevator in Conway, Springs.

NORBERT GURSTENKORN, Grain Elevator Manager: Some of our suppliers of farm supplies, ourselves for example, it's going to cut back the money that the farmer's going to use to spend, and he's going to cut here and there in order to make it, have enough to put the next crop year in. So it's hard to say dollars and cents. Well, maybe I'd say at least 25 to 30 percent cutback in farm supplies and things like that.

MR. BEARDEN: All this bad news from the farms has made for historically high wheat prices.

MIKE BRAUDE: For the first time in the 13 years that I've been President of the Exchange we had $5 wheat at harvest last year. A couple of weeks ago I saw $6 wheat for the first time. Last week, I saw $7 wheat for the first time. So we're in, at least in my tenure in the business, in new high ground.

MR. BEARDEN: But then it rained in the Midwest over the weekend, a storm which caused flooding a couple of hundred miles to the East. Some futures traders thought it might save some of the crop, and the market dropped. Prices shot back up when it became apparent that the rain had come too late for a lot of fields. Although the weather played a major role in the price changes, the drought isn't the only factor. Supply is another reason. The once enormous stocks of wheat stored in America's grain elevators are at their lowest level since 1947. A few years ago, Norbert Gurstenkorn's elevator would have been bulging with grain. Today, it's empty. That's partly because the federal government used to store surpluses of grain as part of the farm support program. Policymakers decided to get out of that business. But it's also because the rest of the world has been buying more and more American grain. The higher the demand, the higher the price on the grain markets. Wade Collins, a broker in Kansas City, says foreign demand has dramatically changed the marketplace.

WADE COLLINS, Commodities Broker: They have more money to spend, they have more people to feed, they have more animals, their economies, particularly the Asians are booming, and they're growing, and that's where the demands come from.

MR. BEARDEN: Other countries aren't just buying wheat. They're also snapping up corn. Cattle ranchers have found the price of feed corn skyrocketing. At the same time, the drought has rendered some pasturelands ungrazeable. All this comes when herds are at the biggest they've ever been and a surplus of beef means lower prices. Couple low beef prices with much higher feed prices, and a lot of cattlemen can no longer afford to feed their animals. So they're sending them to the slaughterhouse, depressing beef prices even more.

WADE COLLINS: Our domestic industry largely waited to buy, and the prices kept getting higher and higher. So now it's extremely unprofitable in some sectors for them to continue to feed their animals, so they are liquidating them.

MR. BEARDEN: Collins says telephone conversations with his customers indicate they're very worried.

WADE COLLINS: I saw and felt a range of feeling in their voices. We have never seen wheat and corn prices as high as we saw last week. We have not seen cattle prices this low in ten years. Here they were buying, trying to buy grain for their livestock; they were trying to market their livestock with prices that at their point seemed like would never go up. And I've never felt that range of emotion in my career.

MR. BEARDEN: While the people who raise the food struggle to survive, the people who eat it may not even notice the drought of 1996. Scott Merrill trades in wheat futures.

SCOTT MERRILL: Consumers probably won't be affected that much. It's kind of a misstatement to think that the price of wheat plays a significant part in the price of bread. It probably will only affect the price of bread or those kinds of goods a couple of cents a loaf.

MR. BEARDEN: And the price of beef may actually decline substantially because so much product is likely to be dumped on the market. But even as consumers get a meat windfall this year, traders think foreign demand will continue to push prices upward for all American agricultural commodities-- permanently. Meanwhile, the farmers are trying to move on. They're turning under their dead wheat plants and preparing to plant new crops. Under previous federal farm legislation, they wouldn't have been permitted to do that. The 1996 Freedom to Farm Bill removed those restrictions. It also took away the chance for federal financial assistance for this year's failed crop. While other farmers may not agree, that tradeoff is just fine with Brian Turney.

BRIAN TURNEY: The best thing the government has done for us in this 1996 Farm Bill is to give us the freedom to rotate to any crop that we want to rotate to and let them work and pay us.

MR. BEARDEN: But the replacement crop will still be subject to the vagaries of the weather and the whims of the marketplace. And that's something that never really changes in farm country.

MR. LEHRER: Still to come on the NewsHour tonight, the gas tax debate, Shields & Gigot, and a David Gergen dialogue. FOCUS - POLITICS AT THE PUMP

MR. LEHRER: Now, the Washington response to another price increase. Kwame Holman reports.

MR. HOLMAN: Gasoline prices nationwide are the highest they've been since the Persian Gulf War. They've risen an average 20 cents a gallon just since February. In an effort to increase supplies and hopefully drive down prices, President Clinton ordered the sale this week of 12 million barrels of oil from the nation's strategic oil reserve. But it's an idea proposed by Senate Majority Leader Bob Dole, the Republican challenger for President, that's getting the most attention. Dole wants to repeal the 4.3 cents a gallon tax on gasoline that was levied in 1993 to help reduce the federal deficit.

SEN. ROBERT DOLE, Majority Leader: I think there's always been sort of a gnashing of teeth by people who want to build highways and bridges and others and people who have to pay the tax. They can maybe justify it if it's for construction of highways, bridges, whatever, but it's hard to justify--at least it has been in the past--to increase gas taxes for deficit reduction. And I think therein lies the major problem.

MR. HOLMAN: Dole spoke this morning at a meeting of the Senate Finance Committee. It's unusual for a Senate leader to participate in committee action, but Dole once was Senate Finance Chairman. The gas tax repeal is his idea and there is a presidential campaign underway.

SEN. ROBERT DOLE: Some can say it's partisan. Some can say something else about it, but I think we don't need it. I think we can do without it. I think we can offset it, and we ought to get rid of it, and we ought to do it before the summer driving season starts in earnest.

MR. HOLMAN: The Republican-controlled committee called as witnesses representatives of the trucking, bus, train, and air transport industries, all of whom support repealing that portion of the federal gas tax set aside for deficit reduction. THOMAS DONOHOE, American Trucking Association: Consumers would save 6.5 billion dollars per year in fuel taxes. Trucking companies would save $600 a truck.

SUSAN PERRY, American Bus Association: A Greyhound's demographic showed that 44 percent of their passengers have annual incomes of $15,000 or under, so it is a major consideration for our constituency and for our companies who are not healthy, to say the least, and in rather precarious financial positions.

EDWIN HARPER, Association of American Railroads: There is no justification for expanding fuel taxes beyond their traditional and appropriate application as a user fee. In addition, it is fundamentally unfair to single out the transportation industry to pay for deficit reduction.

MR. HOLMAN: Melvin Sherbert lobbies Congress on behalf of service station dealers and owns two AMOCO stations himself.

SEN. WILLIAM ROTH, Chair, Finance Committee: You say that you would pass on the tax benefits to your customers if the 4.3 cents per gallon motor fuel tax was repealed.

MELVIN SHERBERT, Service Station Dealers of America: The moment we received it, we would put that on the street, and I think every other dealer would do that. We challenge each other to try to be the most competitive, and every opportunity that we have to reduce the price, we do it.

MR. HOLMAN: It was the Democrats on the Finance Committee who helped push through the 4.3 cents a gallon tax aimed at deficit reduction, and now they don't want it repealed because, they say, it works.

SEN. DANIEL PATRICK MOYNIHAN: We did cut the deficit. We cut it in half. We now have a primary surplus for the first time since the 1960's, which is to say outlays are lower than revenues save for debt service.

SEN. JOHN BREAUX, [D] Louisiana: I am absolutely convinced that American families and people that we represent are going to be far better off if we can reach a balanced budget in a reasonable time frame. Your industries, your constituents, the American family, everybody will be much better off. Progress is being made now with four years in a row of deficit reduction because people have had the courage to do some things that aren't very pleasant, and this was one of them. But it's working.

MR. HOLMAN: And Senator John Breaux from the oil-producing state of Louisiana says repealing the tax doesn't necessarily mean the savings will show up at the pump.

SEN. JOHN BREAUX: Now, Mr. Sherbert, I respect you saying you're going to pass this on but you don't pay the tax. The people at the pipeline, the end of the barge end, when the fuel comes out collect the tax and pay it. They have no obligation to pass it on to you, just as they did not increase their prices when we passed a 4.3 cent tax.

MR. HOLMAN: But Dole insists repealing the gas tax would save consumers nearly $5 billion a year, and he says he's sure Congress will be able to find spending cuts to offset the loss of tax revenue.

SEN. BOB DOLE: My view is when it finally comes to a vote, it'll probably be unanimous or almost unanimous.

MR. HOLMAN: And Dole says Congress will get it done by Memorial Day. FOCUS - POLITICAL WRAP

MR. LEHRER: Now how the gas tax, the economy and some other matters appear to Shields & Gigot, syndicated columnist Mark Shields, "Wall Street Journal" columnist Paul Gigot. Mark, on the gas tax, is that a winner for the Republicans?

MARK SHIELDS, Syndicated Columnist: It's better certainly than the minimum wage, Jim. They want to switch that debate. They were losing the minimum wage. Sure, any time you talk about cutting taxes, it's probably good for Republicans, but this is not what the election of 1996 is going to be decided upon.

MR. LEHRER: What do you think, Paul?

PAUL GIGOT, Wall Street Journal: Well, it's not going to be decided over a 5 cent--or 4 cent a gallon gas tax, but it maybe heavily influenced by the issue of taxes, and that's what this is really all about. This gives the Republicans a chance to remind people about the President's tax increase, the middle class tax increase that a gasoline tax represents. Any time historically and ever since the tax revolt in California reared its head in 1979, with Proposition 13, any election in which taxes are a dominant theme, Republicans tend to do well. If they're not, or if Republicans muddle that message, they don't do as well.

MR. SHIELDS: This is quite a step back though, I'd just say. Republicans came in calling a Clinton tax increase in 1993 the biggest in history, and they're going after a 4.3 cent a gallon gasoline tax repeal. That doesn't sound like the elimination of the capital gains tax and all the other things that were on that list of goodies.

MR. LEHRER: Mark, the Democrats were not inactive on this issue this week either.

MR. SHIELDS: No.

MR. LEHRER: I mean, the President did the $12 million worth of selling--

MR. SHIELDS: Petroleum barrels.

MR. LEHRER: Petroleum--yeah, right--was it 12 million--

MR. SHIELDS: Barrels.

MR. LEHRER: --barrels, not $12 million?

MR. SHIELDS: That's right.

MR. LEHRER: 12 million barrels. Okay. And there was the Justice Department investigation.

MR. SHIELDS: Right.

MR. LEHRER: What is it about a rise in the gas price that scares politicians so?

MR. SHIELDS: First of all, it's rife with all sorts of possibilities and perils. It is--the possibilities are, Jim, first of all, you've got big oil, and I don't have a villain in American politics. Your villain must be big, whether it's big business, big banks, big media, big labor. Nobody runs against little labor or small banks, and big oil has been a familiar villain throughout much of modern American political history. Sen. Henry Jackson in 1974 had the oil company presidents up there demanding answers that they couldn't give at the time as to why their prices were going up, even though the Arab embargo was on. Second thing is that it's a universal experience You, I don't care who you are, you know what the price of a gallon of gas is. You drive by, you bombard it with it everyday. You go by a station whether you're filling up or not. It's something that you can't substitute. The price of beef goes up, Jim, you can eat tuna fish or vegetable soup. You can't substitute gas, so--I mean, there's a universal experience, and I think that, that has an enormous political saliency, as all the pollsters and political scientists say.

MR. LEHRER: Particularly in an election year, right?

MR. SHIELDS: Yes.

MR. LEHRER: Paul.

MR. GIGOT: Well, sure, I mean, there's also for some--the politicians and some of us who can remember it, there's some echoes of the 70's here--

MR. LEHRER: Sure.

MR. GIGOT: --where when you had the great run-up in gas prices, you had such devastating effects.

MR. LEHRER: And President Carter waited a while to do something about that--

MR. GIGOT: That's right.

MR. LEHRER: --and paid a price for it, right, Paul?

MR. GIGOT: Well, he sure did. And remember the gasoline lines, which was really the ultimate nightmare for President Carter, and I think contributed to his defeat.

MR. LEHRER: Yeah. All right, Paul, let's move on to the economic numbers. Today's on unemployment, yesterday's on growth, parse that politically for us.

MR. GIGOT: Well, there's a lot of sleeping easier right now at the White House. There had been a lot of sweaty palms earlier this year because the President had come out of the State of the Union Address and said that we have the best economy in 30 years and then a few days later it turned out that the fourth quarter numbers were under 1 percent.

MR. LEHRER: Growth, you mean growth?

MR. GIGOT: The growth of the economy was under 1 percent in the fourth quarter, and they were fearing, oh-oh, we're going into a recession. It looks like that's not going to happen. We're popping out of it, out of the trough, and 2.8 percent is right on that line between where you can say if it gets above 3, 3 1/2, you can start saying morning in America, a little below that, and you start--you have some ambivalence about whether you want a run on the economy. I mean, this is right on the line. I think what still gives some Democrats pause is that in 1994, the economy was growing by 4 1/2 percent, and that really didn't seem to help Democrats much in that election, so I think a lot of this depends upon how the average person perceives these abstract numbers. How they really feel in their own security will depend, I think, how this cuts in the election.

MR. LEHRER: Mark.

MR. SHIELDS: The Republican pollster Bob Teeter, who was President Bush's pollster and continues to do work, said once that it takes a full quarter, three months, for people's perception of the economy to change. In other words, there has to be an improvement, particularly because in 1982 in the middle of the recession, and if they hadn't turned around by that third quarter, that whatever--on the second quarter--that whatever happened after that wasn't going to help the Republicans and Ronald Reagan and the White House. And I think--I think, Jim, this is more bad news for the Republicans than it is necessarily good news for the Democrats. Good economic news in the spring do not guarantee good November political results, as Paul just cited.

MR. LEHRER: Why not?

MR. SHIELDS: Well, I mean, we had the experience in 1994, and other factors can intrude or there can be a change. What it hurts is the Republicans' message. The Republicans started the year by running against the Clinton crunch, and, and the Democrats' message at the time seemed to be quite mixed. It was things have never been better, and Bill Clinton is the only guy that can get us out of the mess we're in. I mean, it was sort of a mixed message that we were sending.

MR. LEHRER: Yeah.

MR. SHIELDS: Now, they can stand there, as they did today, and point out that unemployment is, is down two full points, since four years ago in April of 1992, that the deficit's cut in half, as Sen. Moynihan said in Kwame's piece, and so there is real economic news, and probably the most important thing was that the biggest increase in wages in five years was reported this week, and that of course has been a continuing problem.

MR. LEHRER: Do you agree with that, Paul, that politically this hurts the Republicans more really than it helps the Democrats, because it's hard to run against this sort of thing?

MR. GIGOT: Well, if I, if I were advising the Republicans, I would say still run on it. We don't know what--

MR. LEHRER: What do you say? What do you say?

MR. GIGOT: Well, I think you say we can do better. You say--you look over the whole course of the Clinton years, and you say, we're in the--we've had one of the slowest recoveries by historical standards that we've had. I mean, this is not the recovery of the 80's, this is not the recovery, for example, the Kennedy years in the 60's, and you say we could do a lot better and we could have done a lot better if we had pursued better policies. Now, maybe if, if this, if this economy runs out through the end of the year and is terrific, that argument is not going to work, but you have to at least make that argument, because if Republicans give up the economic argument, you know, they're giving up one of the centerpieces of, of any election campaign. They've got to at least begin to make that case. And if it works out, you know, it'll help 'em. If not, well, then it'll help the President.

MR. LEHRER: What is--what is the political up and down about unemployment figures? How--has anybody ever traced that as to whether or not it really affects the way people vote?l

MR. SHIELDS: I think it's direction, from what I have seen. In other words, if it is improving or of it is getting worse, I mean, we've had this sort of low level fever in the body politic called anxiety.

MR. LEHRER: Anxiety.

MR. SHIELDS: About the future.

MR. LEHRER: And, again, a figure like this today, Paul, then this would say, hey, well, wait a minute, maybe there's no reality to my anxiety, and it in that way would help the Democrats, right?

MR. GIGOT: Yeah. I think that if you get, you know, three, four, five months of good economic reports, it would tend to have people say, well, maybe the anxiety that I feel in my circumstance is not shared generally. I mean, you know, even if you don't lose your job, if your neighbor does, you feel anxious, and if that kind of thing isn't happening, then it's going to make people a lot more, a lot more sure. I mean, in some parts of the country, there's no question about it, you can't find somebody to work in McDonald's at the minimum wage. You know, it's 7 bucks an hour. So, you know, in a 5.4 percent unemployment situation, there are going to be some places where they don't need to increase the minimum wage, they've already done it in the private market.

MR. LEHRER: Yeah.

MR. SHIELDS: Jim, one thing that this does, though, it robs the Republicans of an awful lot of their argument, and their argument going in was that Bill Clinton's economic policies, his tax increase in 1993, his regulations, his administration's regulations, strangled economic growth. And to see the country and to hear the piece--the voices in Margaret's piece and to hear the further news today, the sense that there is economic growth really puts the lie to that argument, or weakens that argument enormously. So it becomes tougher for them to say, gee, what he did in 1993 really killed you.

MR. LEHRER: Yeah. Do you agree, Paul?

MR. GIGOT: Well, it's tougher to say it really killed you, but I mean, the question is, how well could it have done? I don't know too many economists who say the economy has, has been--has prospered because the President raised taxes. Umm, I, you know, taxes are not a stimulus, so it does hurt the Republican argument, but I don't think--I don't think it eliminates it.

MR. LEHRER: All right. Speaking of the Republican argument, what do you think about today's D'Amato news, Sen. D'Amato saying that Newt Gingrich misread the 1994 election results, no revolution, only evolution, and he must moderate or he will hurt Dole's campaign, what do you think about that, Paul? What's going on?

MR. GIGOT: I think maybe Republicans should form a circular firing squad to save the Democrats ammunition. I don't think this helps Republicans. I don't think it helps Bob Dole, frankly, because that played right into the Democratic strategy, which is to link Sen. Dole with Newt Gingrich, who knows himself he's unpopular right now. But I, I also think D'Amato's wrong on the merits when he says that Gingrich didn't change the agenda in this country or misread the--

MR. LEHRER: Misread the results.

MR. GIGOT: Yes. I mean, Bill Clinton's revival strategy, his reelection strategy, has been to run a kind of kinder and gentler Contract With America. It's been to sound like a Republican but not be one in an awful lot of areas. If Gingrich hadn't set the terms of debate that the President has so skillfully coopted with sort of, except for certain things, Al D'Amato wouldn't be chairman of that committee today.

MR. LEHRER: What do you think, Mark? What's going on?

MR. SHIELDS: Even Sen. Al D'Amato's severest critics acknowledge that he is constantly taking the temperature and the pulse of the voters of New York. And I think that's what he's reflecting here.

MR. LEHRER: Yeah.

MR. SHIELDS: I mean, the areas he cited where he criticized Speaker Gingrich and the House Republicans were anti-environment and anti-education, and I think he's absolutely right. I mean, there's no question that the Democrats have exploited those openings. He didn't run against a balanced budget or tax cuts or, or that--or welfare reform, but he said that the Republican--House Republicans' emphasis on those had given Democrats an enormous opportunity and opening, which it did. I think you can't argue with that, but as far as his being helpful, I think Paul is right. It isn't. I mean, I don't know, the Republicans have learned the worst habits of the Democrats and are repeating them on a daily basis.

MR. LEHRER: D'Amato--go ahead.

MR. GIGOT: That's the nicest thing Mark has ever said about Al D'Amato.

MR. SHIELDS: He gave me a ride one day.

MR. LEHRER: D'Amato is one of Dole's campaign's co-chairmen so he isn't talking as--

MR. SHIELDS: I agree.

MR. LEHRER: --just as an independent Senator from New York.

MR. SHIELDS: I agree. I mean, it is not helpful, it really isn't. And he is--he is doing the Democrats service because every time Newt Gingrich is linked to Bob Dole, it is unhelpful to the Dole candidacy.

MR. LEHRER: Yeah.

MR. GIGOT: Jim, I think this reflects how unpopular D'Amato is in New York, himself, and, and he's--if he's going to run for reelection in 1998, his numbers are terrible up there, and I think he's--he understands Newt Gingrich's are too, and he maybe can separate himself a little bit from Gingrich. He can help himself.

MR. LEHRER: So we shouldn't put too much on this, that this is a Dole strategy. This may be D'Amato trying to protect himself.

MR. SHIELDS: I think it's very much Al D'Amato. All politics is local, and with Al D'Amato, it is acutely local.

MR. LEHRER: Okay. Mark, Paul, thank you both. DIALOGUE

MR. LEHRER: Finally tonight, a Gergen dialogue. David Gergen, editor-at-large of "U.S. News & World Report" engages David Popenoe, a professor of sociology at Rutgers University, author of Life Without Father.

DAVID GERGEN, U.S. News & World Report: Dr. Popenoe, in your new book, you make the case that since the 1960's America has experienced a dramatic social revolution. In 1960, 17 percent of the children in America went to bed at night without their natural father at home. Today, we're up to 36 percent who are fatherless, and you say that by the turn of the century, if current trends continue, we'll be up to 50 percent. Now, your book says these are the result of two trends, the continuing high divorce rate, 50 percent, as well as the increase in the illegitimacy rate which is now up to one out of three babies are born out of wedlock. But you go on to say that this has significant consequences for children, very damaging consequences. Let's start there. What are those consequences?

DAVID POPENOE, Author, Life Without Father: The best evidence is that children coming from non-intact families have a risk factor of two to three times various problems befalling them as they become teenagers and young adults, compared to children from intact families. And that means juvenile delinquency. It means dropping out of school. It means having a bad marriage when they become adults. It means for girls having teenage pregnancy. That means if you have, let's say 10 percent of the kids from intact families becoming delinquents, to pick a percentage--this may not be quite accurate--you have from non-intact families, single-parent families and fatherless families 20 or 30 percent, so that's really a staggering difference.

MR. GERGEN: Yeah. It doesn't happen in all families, as you say, but it was interesting, you used the idea it's comparable to taking the risk of smoking two to three packs of cigarettes a day.

DAVID POPENOE: Exactly. I mean, I've heard that if a man, for example, has two choices, to stop smoking or to stay married, by far the best thing is to stay married if he wants to live a healthy, rich life.

MR. GERGEN: Right. Right. Well, that was the other interesting point. You came to the conclusion this was not only damaging for the children but for the men, themselves, who do not have a spouse, do not stay around with their kids, that they too suffer consequences.

DAVID POPENOE: Indeed. I mean, that's one of the overlooked dimensions of this whole thing. I mean, in general, I think you can say that a society that has a lot of single men running around without family responsibility. You got to worry about that society, and that's more or less what we're becoming.

MR. GERGEN: That marriage, in effect, has a civilizing impact--

DAVID POPENOE: Absolutely--

MR. GERGEN: --on the man.

DAVID POPENOE: --civilizing, yeah. I just read the other day adults--it's not that adults produce children, it's that children produce adults.

MR. GERGEN: It's a nice idea, but men who are single tend to live a shorter life, tend to be less happy, and they tend to have less- -less satisfying sexual lives.

DAVID POPENOE: You know, the data are just overwhelming now about that, and, and surprising. Most people don't know that.

MR. GERGEN: Right. Now, as you well know, from the academic community where a lot of your work, of course, is controversial, there are a good many feminists who disagree. They think that this case is overstated, that a woman can do as good a job, a single woman can do as good a job raising a child as she can with a man around. You know, it goes back--it starts with a Gloria Steinem argument--

DAVID POPENOE: Right.

MR. GERGEN: About men are not necessary these days.

DAVID POPENOE: Right.

MR. GERGEN: Steinem said, you know, men--a woman without a man is like a fish without a bicycle.

DAVID POPENOE: That's right.

MR. GERGEN: You know, they're just not very necessary.

DAVID POPENOE: Right.

MR. GERGEN: But it goes on to make the argument that women can play the same roles that men can play.

DAVID POPENOE: Right.

MR. GERGEN: This is all social construction. You disagree.

DAVID POPENOE: Absolutely, I do, and there's a whole chapter in the book that goes into just what fathers do for children that are often overlooked, and that's sort of a long story, but basically, you know, men and women are different, and the differences don't show up much in the workplace, and a lot of the differences have been exaggerated, so what's happened in the last 30 years has been useful, certainly for women, but when you get in the family scene and you have the man and the woman working hard there day to day, with kids, these differences show up, and the differences that men bring to children are, are similar to the kinds of characteristics that men have as men. Namely, they're more aggressive, they're more competitive, they take more risks, they're arguably more oriented to the outside world, whereas women tend to be, of course, more nurturing, more emotional, more talkative, and these kinds of traits are passed on to the child. And certainly no one person can- -you know, it's very difficult to combine those two things in one person.

MR. GERGEN: I loved your metaphor that the woman provides the roots and the man provides the wings.

DAVID POPENOE: That's a standard one. The roots and wings, and I think it's an apt one, maybe a little bit corny, but--

MR. GERGEN: But come back to the argument, though, that many women experience these difficult marriages. You have daughters. Now, let's say one of your daughters was married in their late 20's, as you suggest is a good time to marry. She marries someone who seems very respectable and responsible. She then has a couple of children. And four or five years, she comes to you and says, dad, you know, my husband drinks too much, he's got a drug problem, he becomes verbally abusive, my children would be a lot better off if they--instead of being in this marriage--they were being raised by me alone, because I'm very caring and can look after them.

DAVID POPENOE: And that may be the case if that's the fact. We are never going to get the divorce rate down to zero. We're never even going to get it down to 25 percent. How about getting it down to 33 percent? It's now 50 to 60 percent. And the fact is that a lot of these divorces do not today involve these very serious problems when the women really should take the kids and run. There, you know, minor, relatively minor things--

MR. GERGEN: Too casual, in effect.

DAVID POPENOE: Too casual, and the level of stress at which marriages break up by all accounts are much, you know, lower today than they have been in the past.

MR. GERGEN: So there's not the commitment to marriage that was once there.

DAVID POPENOE: Commitment is so important. If people just go into a marriage committed, and especially if they're going to have children, that this is for life, that can carry you an awful long way. And, of course, that's partly where religion comes in. I mean, it's also where the marriage ceremony comes in. I mean, everybody says these things when they marry, but it's just that they don't carry them out as much as they used to.

MR. GERGEN: Well, it was interesting to me how much of an emphasis you placed upon this high divorce rate and the high illegitimacy rate as being the product of a changing culture, as you say a radical individualism that's taken hold, and that--so that the answers, in your judgment, come in changing the culture first, rather than changing our laws.

DAVID POPENOE: Well, I think you probably have to change both. It's, you know, one sort of follows the other, but there has to be a cultural shift, and then we have to back away from the kind of expressive individualisms, one term, or me generation. There's no doubt in my mind, looking at the data, that we've gone too far in that direction. And, by the way, we've pulled away--we're pulling away from all institutions now. We don't like government. We don't like, you know, labor unions. We don't like the banks. We don't like religion. You know, everything, marriage is one of these, and you can't have a society in which people are just going to go off and do their own thing.

MR. GERGEN: Now let's talk about what can be done legally. There's a lot of controversy in this country today about divorce laws. You would advocate having a two-tier divorce law system.

DAVID POPENOE: Well, of course, some states have that now. Many foreign countries do, at least to the point that you have longer- -at least--have longer waiting periods for people who have children. I mean, it's a big difference if it's two people with no kids and people with kids, and for the people with kids, you ought to have a longer waiting period, you may want to have counseling available for them. Counseling has come a very long way in this country, and there's so much that can be done. I'm not sure everybody realizes that.

MR. GERGEN: Yeah.

DAVID POPENOE: And up to now, you know, we've sort of been counseling for a good divorce, as if that's the way to go, but how about counseling for the marriage?

MR. GERGEN: My wife happens to be a family counselor and therapist, and she argues now, after looking at a lot of these cases, that people ought to have marriage check-ups, that every year they, in effect--

DAVID POPENOE: A great idea.

MR. GERGEN: --as they have health check-ups, they ought to go in with counseling, either from a religious organization--

DAVID POPENOE: Exactly.

MR. GERGEN: --mothers--and then they ought to have check-ups every year.

DAVID POPENOE: I mean, marriages take a lot of work, and, you know, in a sort of me generation society, you don't think about that. It's just sort of love, you fall in and out of love, but this is an institution you really have to put the time in, and, and the kids, of course, are the ones to a certain extent, one of the reasons you're doing it.

MR. GERGEN: Anecdotally, I'm wondering if you see some of the same evidence I do, and that is that there is now--I see a reaction starting to set in to all the single motherhood, that many younger people want to marry earlier, they want to have more commitment to the marriage, they want to have children, that they've rethought some of the ideas of the 60's.

DAVID POPENOE: I think there is a sort of mini shift in two senses. One is that the baby boomers now are all aging and have kids and they're not like they used to be. They've become more family-oriented, and they're taking out against TV and so on, but, but also the younger generation, you know, you have the sense that they don't want to go through what the last generation has just put them through. And the only trouble is that, that's scary, is that the children of divorced and broken homes statistically have a much worse chance of success in their own marriages, so you have this kind of very worrisome snowballing effect that could be happening.

MR. GERGEN: But you do think we can turn it around?

DAVID POPENOE: Well, I hope so. I mean, I'm optimistic, personally so certainly.

MR. GERGEN: Thank you very much.

DAVID POPENOE: Thank you. RECAP

MR. LEHRER: Again, the major stories of this Friday, the Labor Department reported the unemployment rate was 5.4 percent in April, the lowest level in more than a year. Faction leader Roosevelt Johnson was airlifted out of Liberia by U.S. Marines. He was taken to neighboring Ghana to participate in peace talks. We'll see you on Monday night. Have a nice weekend. I'm Jim Lehrer. Thank you and good night.