The NewsHour with Jim Lehrer

ELIZABETH FARNSWORTH: Good evening. I'm Elizabeth Farnsworth. Jim Lehrer is on vacation. On the NewsHour tonight the president on taxes, Bosnia, and more; we have excerpts from his end-of-the-year news conference; former Senator Nancy Kassebaum Baker on why men and women in the military need some separation and a discussion of that; Paul Solman asks, is inflation a thing of the past; and a mysterious new flu in Hong Kong. It all follows our summary of the news this Tuesday. NEWS SUMMARY

ELIZABETH FARNSWORTH: President Clinton said today the United States may need to do more to help stem the financial crisis in Asia. He said so during a 90-minute end-of-the-year news conference. It was held at the State Department because the White House East Room was filled with Christmas decorations. Mr. Clinton said the International Monetary Fund's bailout packages for Southeast Asia may not be enough to turn those economies around.

PRESIDENT CLINTON: I think we may need to do more within the framework that has been established, but that needs to be a judgment made on a case-by-case basis. The most important thing is that we have a system in place. That system has to be followed. Strong domestic policies by these countries--the IMF framework with the other multinational institutions, then the U.S. and Japan and others there in a back-up role were necessary.

ELIZABETH FARNSWORTH: We'll have extended excerpts from the President's news conference right after the News Summary. South Korea's economy got a boost today. Its currency rose by more than 8 percent after the government announced new financial reforms. They were required by the International Monetary Fund's rescue package. In U.S. economic news today the Consumer Price Index was up .1 percent in November, bringing retail inflation so far this year to 1.8 percent, the lowest since 1986. And Federal Reserve policy makers declined to change interest rates at their regular meeting today in Washington. We'll have more on inflation and the Federal Reserve later in the program. A civilian panel recommended today that men and women recruits be segregated in some of their basic training. At the Pentagon Defense Secretary Cohen said the report would be reviewed by each branch of the service, but he would make any final decision. Cohen appointed the panel last summer after a series of military sex scandals. It was chaired by former Senator Nancy Kassebaum Baker. We'll have more on this story later in the program. Also at the Pentagon Secretary Cohen said it was essential all U.S. military personnel be vaccinated against anthrax. Iraq, Russia, and at least 10 other countries are believed capable of making weapons that carry the deadly biological agent. Secretary Cohen said all 1.5 million active duty personnel and a million reservists will be vaccinated next year.

WILLIAM COHEN, Secretary of Defense: The threat of chemical and biological weapons is going to proliferate in the future. We see this as a necessary precaution for all of our men and women in the service, wherever they may serve, and so we think it is necessary, and it's time that we start as soon as we can, and we will begin that process by April or May.

ELIZABETH FARNSWORTH: In Iraq today the official news agency quoting a government spokesman said the country did not possess even one gram of anthrax. In Brussels, Belgium, today Secretary of State Albright and NATO foreign ministers said military planners should create a smaller, more flexible peace force for Bosnia. The current 34,000-member force is scheduled to be withdrawn in June. It includes 8,500 Americans. Albright said a continuing military presence was needed because peace in Bosnia was not yet self- sustaining. NATO is expected to make a final troop decision in March. In South Africa today President Nelson Mandela stepped down as leader of the African National Congress political party. In a four-hour farewell speech he criticized apartheid era leaders and others for trying to undercut the democratic government he heads. Mandela has been the ANC president for six years. He will remain president of the country until 1999. In Hong Kong today medical authorities confirmed two deaths from seven known cases of a mysterious flu. It was previously found only in chickens and other birds. Three young children--all cousins-- have been hospitalized with the virus, raising questions about how it is spread. We have more in this report from Mark Austin of Independent Television News.

MARK AUSTIN, ITN: It's chickens from Southern China which are thought to be the source of the new deadly strain of flu. For months, scientists here have been frantically trying to determine whether the virus can be transmitted from human to human. Today at a news conference the government admitted for a first time that such transmission was likely.

DR. KEIJI FUKUDA, Centers of Disease Control: It's a very prominent possibility. I mean, you know, I think that like everybody else, when we hear about more cases, it just increases our concern and increases our worry about that.

MARK AUSTIN: As poultry markets here are closed for intensive clean-ups, scientists say they believe the low number of cases so far indicate a weak virus, but that could change. Tonight, the government announced a series of measures to improve monitoring and surveillance, including the setting up of special clinics designed to take thousands of swabs every day. Public anxiety is inevitably increasing here, but the message from the government is stay calm; we're one step ahead.

ELIZABETH FARNSWORTH: We'll have more on the flu story later in the program. And in Denver late today a jury began deliberating the fate of Terry Nichols. Closing arguments were wrapped up earlier. Nichols' defense lawyers argued there were gaps "as big as the Grand Canyon" in the government's case against him. He's accused of helping his friend, Timothy McVeigh, build the bomb that killed 168 people in Oklahoma City in 1995. McVeigh was convicted and sentenced to die for the crime. That's it for the News Summary tonight. Now it's on to a presidential press conference, gender and training in the military, is inflation a thing of the past, and a mysterious flu in Hong Kong. FOCUS - Q & A

ELIZABETH FARNSWORTH: President Clinton answered questions from White House and State Department reporters for almost an hour and a half this afternoon. Here are some excerpts.

SUSAN PAGE, USA Today: Mr. President, some lawmakers are talking about giving Americans a tax cut next year, but there's a separate issue of fundamental tax reform; that is, changing the tax code to a flat tax or national sales tax or a greatly simplified progressive tax. Do you believe that the time has come to seriously consider fundamental tax reform?

PRESIDENT CLINTON: First of all, on the whole tax cut front, there has been some talk about that by some lawmakers who say that now we have a surplus and, therefore, we should spend it in part at least with a tax cut. And by that they mean one of two things. They mean we have a projected surplus at the end of this budget period, or they mean that the deficit is lower now than it was projected to be last August when I signed the balanced budget bill. But it's important that the American people understand we don't have a surplus yet. We have a deficit that's over 90 percent smaller than it was when I took office. It was at $290 billion, and now it's at $23 billion. That is not a surplus. This economy is the strongest it's been in a generation because of the discipline that we've been able to bring to the task of bringing the deficit down and getting our house in order. We should not lightly abandon that discipline. Now, the second question: Should the tax code be simplified and should the--should the system work better for ordinary Americans? On an elemental level, of course, it should. I would not rule out a further substantial action to simplify the tax code. But I will evaluate any proposal, including any one that our people might be working on by the following criteria: First of all, is it fiscally responsible? Secondly, is it fair to all Americans? That is, we don't want to shift the burden to middle class taxpayers to lower income taxes on upper income people. We did that for 12 years, and it didn't work out very well. And we have reversed that, and we don't want to start that all over again. Thirdly, will it be good for the economy, and fourthly, will it actually lead to a simpler tax system? Now, within those parameters, any proposals that meet those criteria I think I am duty bound to consider supporting.

BILL NEIKIRK, Chicago Tribune: Mr. President, the polls show that people support affirmative action, but not when it's known as racial preference. How do you get around this clash of language? And what do you think about the term "racial preference?" Is it a proper one?

PRESIDENT CLINTON: Well, I think people support affirmative action when you describe it, and then if you call it racial preference, they don't support it, because it--the way--the words itself seem to inevitably mean that someone will get something because of his or her race for which he or she is not really qualified. Now, the problem, if you back off from it, is that we Americans believe in three things: We believe that the best qualified people ought to get what they're best qualified for; we believe everybody ought to have a chance; and we believe people that have had a hard time ought to have a hand up. If you took a survey, I believe over 80 percent of the people would say that. The problem is when you try to translate those three principles, if you have a label that can be affixed to your efforts that is consistent with those principles, people say, yes, do it. If the label seems to be contradictory to those, they say, no, don't do it. And what really matters is what are you doing, and is it working? I think people in both parties of good faith, what they want is a society where everybody who needs it gets a hand up, everybody's got a fair chance, but where unfair criteria don't deprive the deserving at the expense of the--to the benefit of the undeserving. We can get there if we'll move beyond the slogans to keep refining these programs and maybe even extending our efforts to help more people in their earlier years and help more people in these disadvantaged communities. That's what our whole empowerment concept is all about.

PETER MAER, NBC/Mutal Radio: Mr. President, I'd like to go to the question on Bosnia. You're obviously laying the groundwork for an extended stay for U.S. troops there. What kind of a mandate do you envision for that mission, and what type of military and financial responsibility do you hope the European allies will agree to in this follow-on effort?

PRESIDENT CLINTON: Well, of course, that is all part of our discussions now, both with our allies and with members of Congress, and I don't want to truncate the discussions. What I want to do is to see that the peace process continues. I think one of the things that all of our military people agree on is that we must do more to beef up the civilian police there, and that there must be a distinction between what we expect our military leaders to do, and what we expect the civilian police to do, and the mission must be--if there is to be a mission after the S-FOR mission expires, it also must have clear objective components with some way of knowing whether the mission has been achieved or not. In other words, I still don't believe that there should be anybody interested in some kind of permanent stationing of global military presence all over Bosnia, but I do think that these are all elements that have to be discussed, and, as I said, I hope to be able to tell you more about this before I leave on my trip in a few days. Mara.

MARA LIASSON, National Public Radio: You said this week you were looking forward to an honest dialogue with Iran. Could you tell us how and when that dialogue might begin?

PRESIDENT CLINTON: We are--all of us--discussing about how to proceed now. No decision has been made. But I have always said from the beginning that I thought it was tragic that the United States was separated from the people of Iran. It's a country with a great history that at various times has been quite close to the United States. We have had the privilege of educating a number of people from Iran over several decades. Indeed, some people in the present government were able to get some of their education in the United States, and Americans have been greatly enriched by Iranian, by Persian culture from the beginning of our country. We have three issues that we think have to be discussed in the context of any comprehensive discussion. The first relates to Iranian support of terrorist activities with which we strongly disagree. The second relates to Iranian opposition to the peace process in the Middle East with which we disagree. And the third relates to policies involving the development of weapons of mass destruction. I think we have to be able to discuss those things in order to have an honest dialogue, just like we have an honest dialogue with China now. We don't have to agree on everything, but you have--people have to be able to have an honest discussion even when they disagree.

DAVID BLOOM, NBC News: Mr. President, how long are you willing to tolerate Saddam Hussein's continued defiance of the United States and of the United Nations?

PRESIDENT CLINTON: Well, Saddam Hussein has been in defiance of the United Nations since the end of the Gulf War. That's why we have a system of sanctions on him. And I am willing to maintain the sanctions as long as he does not comply with the resolutions. If you're asking me, are there other options that I might consider taking under certain circumstances, I wouldn't rule out anything. I never have, and I won't. But I think it's important that you remember since the end of the Gulf, the world community has known that he was interested in not only rebuilding his conventional military authority but that he was interested in weapons of mass destruction and a set of sanctions that was imposed on him. There are those that would like to lift the sanctions. I am not among them. I am not in favor of lifting sanctions until he complies. Furthermore, if there is further obstruction from the mission, the United Nations mission in doing its job, we have to consider other options.

ELIZABETH FARNSWORTH: On a lighter note the President also announced the name of his new chocolate Labrador puppy. It's Buddy, in honor of a favorite uncle who died earlier this year. Still to come on the NewsHour tonight women in the military, what ever happened to inflation, and a new flu virus. FOCUS - NO MORE INFLATION

ELIZABETH FARNSWORTH: Inflation, as we reported earlier, is down, but it is out? Economics correspondent Paul Solman of WGBH-Boston reports.

PAUL SOLMAN: Headlines have proclaimed it. We're living in a new economy featuring low inflation. Is the great inflation over, they ask--inflation gone for good? Well, if it is, it's a big deal, because inflation has haunted the 20th century. The hyperinflation of Germany in 1923 is widely thought to have discredited government there and paved the way for Hitler. In 1948, hyperinflation raged in China.

SPOKESMAN: You needed a ricksha, instead of a purse or wallet, to go shopping.

PAUL SOLMAN: The U.S. has never experienced hyperinflation, but the fear of spiraling prices has long been a key concern, and the Federal Reserve, founded to control financial panics, has instead become, first and foremost, an inflation fighter, raising interest rates whenever it thought unemployment was getting too low; the economy, too high. But now some economists are standing this kind of thinking on its head. Ed Yardeni of Deutsche & Morgan Grenfell says we're in a new era, with a new economic paradigm; it's key feature that global competition has killed inflation.

ED YARDENI, Deutsche Morgan Grenfell: The old era risk was inflation. In the old era growth was bad. If you grew too rapidly in tight labor markets, labor costs went up; you had more price inflation; it got passed right into prices, right? Then the Fed would raise interest rates, and you would have a recession. So rapid growth was ultimately bad because it would lead to recession. In the new era competition keeps the lid on inflation.

PAUL SOLMAN: So, says Yardeni, inflation fighters like the Fed's Alan Greenspan should finally stop worrying about low unemployment and an overheated economy, because global competition has forced US "productivity"--the amount a guy like this can produce--to grow faster than his wages, thus helping keep inflation at bay in America. Well then, isn't this a new paradigm? Economist Nick Perna doesn't think so.

NICK PERNA, Fleet Bank: Isn't there an old song "Buddy, Can You Spare a Paradigm"? I'm not sure. I think the mistake that is being made by many people is to confuse things that are permanent with things that are transitory. We are decidedly on a lower inflation path than we've been in the last 20 or 25 years. To then say that we can go to lower inflation, or that we either can sustain the current rate of economic growth, or accelerate it, to me is not only being silly, but flirting with danger.

PAUL SOLMAN: Okay, how do you test the idea of a new paradigm? Well, we thought we'd take a look at a real company to get some on-the-ground answers to the lofty question: Is inflation dead?.

PAUL SOLMAN: This is Murray Gerber, CEO of Prototype and Plastic Mold, just outside Hartford, Connecticut. Gerber employs 80 people, from high-tech mold makers who design plastic gizmos, like the latest Piper airplane steering wheel, to low tech assembly workers who make them. At Gerber's firm, we found evidence in support of Yardeni's thesis: Competition has, he says, forced him to keep his prices down. In fact, in the early '90s--

MURRAY GERBER, CEO, Prototype and Plastic Mold: Our biggest customer came to us and said starting tomorrow, you will reduce your prices to us by 20 percent, or we will take the business away from you.

PAUL SOLMAN: Prototype was feeling the heat of ever keener competition--global competition, with lower prices due to efficient new manufacturing technology, for example, and new management methods in economies like Japan; lax government regulation of pollution and worker health and safety; cheaper labor, kept cheap by the suppression of unions. Global competition was forcing firms like this to lower their prices, but mainly by increasing productivity through labor-saving technology and techniques, instead of dropping wages orregulations.

MURRAY GERBER: We used to have a person who did nothing but schedule all of our molding machines. Now what we do is we put all the work for the molding machines up on the board for five weeks, and we have team leaders who come up and pick the jobs that are going to be run next. The scheduling is sent without anybody directing it.

PAUL SOLMAN: This so-called "Kanban" scheduling board was a Japanese productivity improvement. Another cost-saving innovation was simply putting casters on these once immovable objects: Bridgeport milling machines.

BOB COOK, Supervisor: Well, originally I'd make a plate that operators would read at the molding machine and not learn how to do the secondary operation. So what, we did here is we brought in the older machines and we put them on wheels, and we rolled them right up and we created mini cells.

PAUL SOLMAN: The "mini-cells" eliminated jobs in packing and inspection by having such tasks done at the molding machines themselves. The net result? Huge productivity gains. Murray Gerber worked especially hard for his biggest client, the one who demanded he cut costs by 20 percent.

MURRAY GERBER: And I am pleased to say that what we started with was a market basket of parts for one of their products that started at $24 is now under $9. And we are making more money on it than we did at $24.

PAUL SOLMAN: Okay, so far, so good. According to the new paradigmers, global competition has meant lower prices, which US firms have had to match with increased productivity. And in fact that's just what we found at Murray Gerber's place. But now here comes the key point regarding inflation. Significant productivity increases have usually led, in the history of American business, to significant increases in wages. That is, the workers wind up sharing much of the windfall that comes from producing more with less. But the workers we interviewed at Gerber's factory were unanimous.

RITA LEWANDOWSKI: We're doing a lot more stuff now at the machines; at least two to three extra procedures.

PAUL SOLMAN: And so you personally are getting a lot more accomplished?

RITA LEWANDOWSKI: Yes.

PAUL SOLMAN: Do you get paid accordingly? Or do you get paid more as a result?

RITA LEWANDOWSKI: No.

PAUL SOLMAN: But you're more productive.

RITA LEWANDOWSKI: Yes.

PAUL SOLMAN: Are you getting more done as a result?

RITA LEWANDOWSKI: No.

MIKE CONLEY: I'm sure. Yes.

PAUL SOLMAN: Have your wages gone up as much as your efficiency?

MIKE CONLEY: No, no. No, no, no, no, no. Not by any stretch of the imagination.

PAUL SOLMAN: And when you project ahead into the future do you think your wages will go up to reflect your efficiency or still lag?

MIKE CONLEY: I think, to be honest with you, I think it will still lag.

PAUL SOLMAN: Even Bob Cook hasn't seen his salary go up.

PAUL SOLMAN: You, I take it, are more productive, significantly so, than you were say five years ago?

BOB COOK: Most definitely

PAUL SOLMAN: Do you get paid as much more as you are more productive?

BOB COOK: No.

PAUL SOLMAN: Okay, what's happened here? Well, the workers, it seems, have been willing to settle for a secure job and steady paycheck, and they show no signs of pushing for wage increases that would in turn push up inflation.

SHEILA KROL: I wouldn't mind getting more money, but as long as he makes a profit and stays in the company and has a stable job and pretty secure, yes, I feel much better coming to work.

MURRAY GERBER: There is a great amount of angst among workers. And, you know, when you speak about drivers of inflation, I think that angst is keeping workers from coming and pounding on their bosses' desk, and saying, "If you don't give me a 10 percent raise, I'm going to leave."

PAUL SOLMAN: So Prototype, it would seem, is an example of the new, inflation-free paradigm. We confronted traditionalist Nick Perna with our case in point. And he had a pretty strong comeback.

NICK PERNA: But this is manufacturing. And manufacturing is what? Twenty percent of the U.S. economy. And since time immemorial, productivity growth in manufacturing has exceeded productivity growth in the economy as a whole. For any number of reasons it's a lot easier to mechanize manufacturing than it is to mechanize a retail store. I think what you need to look at is not simply manufacturing, but the overall economy.

PAUL SOLMAN: The overall economy, Perna points out, is dominated by service industries, featuring workers as diverse as croissant flippers, export shippers, microphone grippers. And as economist William Baumol famously observed, productivity gains in services can be hard to come by. "You can't play a piece of music any faster today," Baumol wrote, "than you could 150 years ago." But Ed Yardeni thinks global competition is putting downward pressure on costs throughout the service sector as well, causing productivity to rise through computers and the Internet, for example. But again, while productivity here is rising, wages are being held down, Yardeni says, by global competition.

ED YARDENI: Even I feel that I face global competition. And I had an E-mail from a fellow in Beijing, who said that he studied physics in China, had come to the U.S. and studied economics, with a Ph.D, went back to China, now he would love to come and work for me. And this guy is like my worst nightmare. If I hire him, he'll probably wind up taking my job. And if I don't hire him, he'd probably do it over the Internet. So one way or the other, I think we all face global competition.

PAUL SOLMAN: Okay, say you grant that there's been some increase in service sector productivity, in industries like financial services at least. Even so, a growing economy usually means less and less unemployment, upward pressure on wages, and thus, eventually, says Nick Perna, inflation.

NICK PERNA: And if the economy continues to grow at the same pace it's been growing for another year-- which seems unlikely now for a variety of reasons--but if it were to continue to grow, the unemployment rate would fall further. And I think the conversation that you would be having with me and with other people is not when the inflation rate is going to pick up, but how much is it going to pick up by.

PAUL SOLMAN: Perna points to headlines like these: the Army is having trouble finding recruits; companies are running job fairs to attract employees; Orlando, Florida is importing workers from Hungary, Poland and the Ukraine. It's only a matter of time before tight labor markets like these, he says, lead to higher wages. To Federal Reserve Board chairman Alan Greenspan, data like these that make the new paradigm talk worrisome, especially when it's extended to economic policy.

ALAN GREENSPAN: Regrettably, over the last year the argument for the so-called new paradigm has slowly shifted to a less than credible view, often implied rather than stated, that we need no longer be concerned about the risk that inflation can rise again.

PAUL SOLMAN: But to new paradigmist Ed Yardeni, our Connecticut case studies suggest inflation has been whipped, at least for the foreseeable future.

ED YARDENI: I think the notion that this is a new paradigm has been misinterpreted to mean that this is a new era, a golden era. Well, I do believe this is a new era of tremendous competition, keeping a lid on prices. All I'm saying is that competition is going to mean that inflation is dead. As long as inflation is dead, that, to me, proves that this is a new era.

PAUL SOLMAN: Well, today the Fed met and did not raise interest rates, despite the lowest unemployment in decades. This time it was probably fear of Asian instability that kept the Fed from acting, which only means the new paradigm debate has been left for another day. FOCUS - SEPARATE TRAINING

ELIZABETH FARNSWORTH: Next, the military training report. We start with background from Kwame Holman.

KWAME HOLMAN: Three of the four military services train men and women together. Only the Marine Corps separates its recruits in basic training. Nearly 200,000 of the nation's 1.4 million soldiers are female, but integrating the sexes in military training has proven difficult and problematic.

GEN. DENNIS REIMER, Army Chief of Staff: [1996] All of us in the army are deeply troubled by the allegations of sexual misconduct and rape.

KWAME HOLMAN: Last year, several young female soldiers based at the army's Aberdeen Proving Ground in Maryland accused their drills sergeants and other trainers of sexual harassment and rape. Six servicemen were convicted, including Staff Sgt. Delmar Simpson, who was sentenced to 25 years in prison for raping six female trainees. As the number of such scandals grew, Defense Sec. William Cohen named former Kansas Senator Nancy Kassebaum Baker to head a special panel to review mixed sex training. Their report, released today, includes these unanimous recommendations: Separate barracks for male and female recruits; organize basic units, the platoon or its equivalent, by single gender; expand sexual harassment training to include positive instruction on how to work together; eliminate strict rules against contact between the sexes known as "no talk, no touch;" use more female trainers and recruiters; and toughen physical training for both women and men. At the Pentagon this afternoon Defense Secretary William Cohen accepted the panel's report but declined to endorse it.

WILLIAM COHEN, Secretary of Defense: It is a good report. It does reflect the hard work that these distinguished panel members have put into this process. It is part of a process; however, and now that I have the report, I will again submit to the services for their comment.

REPORTER: May I ask you what your initial reaction is to separating--

REPORTER: You're neutral, decidedly neutral.

WILLIAM COHEN: I am neutral and open, as I've indicated before, to all constructive recommendations.

KWAME HOLMAN: Even before the secretary spoke critics lambasted the report.

DEL. ELEANOR HOLMES NORTON, [D] District of Columbia: If the Secretary turns tail and runs back to the bad old days of sex-segregated training, there will be lots of American women, not to mention women members of Congress, running him down. I mean, this takes us back many steps. We're trying to get women moved closer and closer to combat. These people are trying to keep the sexes from being trained together.

KWAME HOLMAN: But today the commissioners were adamant that their recommendations were not a step backward.

DEVAL PATRICK, Committee on Gender-Integrated Training: We are talking about housing teenagers in separate dormitories for the first six to ten weeks of their military career, six to ten weeks. And the training that runs at the dormitory level--I'm using civilian terms, if you will--would continue to run at the dormitory level. 70 percent of the time the training, even from day one, is gender integrated, preparing, we think, recruits for a gender-integrated military experience going forward.

KWAME HOLMAN: The four branches of the military will review the panel's recommendations and report back to Secretary Cohen in the next three months.

ELIZABETH FARNSWORTH: Margaret Warner takes the story from there.

MARGARET WARNER: The advisory committee visited 17 military bases and interviewed more than 2,000 active duty military personnel in preparing its recommendations. Here with more now is the committee's chairman, Former U.S. Senator Nancy Kassebaum Baker. Welcome, Senator.

NANCY KASSEBAUM BAKER, Committee on Gender-Integrated Training: Thank you, Margaret.

MARGARET WARNER: What was the overall problem you found in the area of the integrated--integration of women that led you to believe we need these changes?

NANCY KASSEBAUM BAKER: We felt not looking at a problem--we looked at both men and women in our basic training program and felt it could be improved. I would first like to just comment on the film clip we saw just to say--because I think many people commented on this report who haven't read it--that all the pictures we saw of the men and women training in the field will continue just that way. That's not changed. We strongly support gender-integrated training. We strongly support the opening of new areas in the services that women can serve and hope more will continue to open. But we felt that the overall basic training program needed to be strengthened; it could be improved; and that as--the way it was shaped today was not really providing the cohesion and unity and readiness that was necessary for a strong force.

MARGARET WARNER: But what is standing in the way of the cohesion and readiness?

NANCY KASSEBAUM BAKER: Well, we believed it was the way the living quarters were arranged, and in order to try and get at more unity, we believed it was getting to greater confusion, and as a result of this, their policies like no talk, no touch, don't even look at male/female for longer than a bit of time--

MARGARET WARNER: Three minutes.

NANCY KASSEBAUM BAKER: Well, whatever, you know. And sometimes that's enforced and vigorously enforced; sometimes it isn't. I mean, that's not law. That's just kind of grown up, and in many ways it's as if you're trying to deal with junior high school students. And I think it does a disservice to both the men and women not to be able to give them a little more structure, which, indeed, helps develop strong discipline and camaraderie and esprit de corps in a natural way.

MARGARET WARNER: And just to explain right now in a platoon--say if they're in the same barracks-- you'd have the men of this unit on one side and women on another, and they're not allowed to talk, is that right?

NANCY KASSEBAUM BAKER: Right. Or they can't--they have been sometimes on the same floor--one side female/one side male. We're just saying put them all in the same barrack--females with males--in a separate barrack, and that just helps foster, I think, a camaraderie and esprit de corps that is useful, and then as platoons fall out, they would march together, but as they come together as a company--and there are four platoons in a company--you have integration. That's in your classroom teachings; it's in your field exercises, many times your technical training at the rifle range and so forth; so that doesn't change. As former assistant attorney general for civil rights Deval Patrick pointed out, 70 percent of the army's training will be very--the same.

MARGARET WARNER: Give us an example of some kind of training that now is integrated that wouldn't be.

NANCY KASSEBAUM BAKER: That now is integrated that would not be.

MARGARET WARNER: That would not be. Just barracks specific. What do they do in the barracks?

NANCY KASSEBAUM BAKER: Let's say in the morning after reveille they get up and they march and they do some of their physical training exercises. This would be done by platoon, or division, or flight, as we talk about the Navy and the Air Force, rather than as they do now fall out and sort of march side by side. They would be marching separately, but we urge the toughening for physical standards and the same for men and women. We really heard this from the recruits; they expected tougher physical training, and that that would come.

MARGARET WARNER: Let me ask you one more thing about the women related. The Marines of course already do this, in fact, I think they keep them separate even farther up the chain.

NANCY KASSEBAUM BAKER: They go much further up.

MARGARET WARNER: Did you find empirical evidence or from what recruits and trainers told you that suggested that men and women in the Marines are more satisfied with their system?

NANCY KASSEBAUM BAKER: Well, yes, most of them said they were, but we must remember there are far fewer women in the Marines, and there are smaller numbers. The Marines do come together now in integrated-training for 17 days, in combat training between basic and advanced training. Our recommendations carry on into separate barracks for advanced training, which is Aberdeen. But, Margaret, let me just point out, this is a recommendation that includes a lot of things, that we think strengthens it for both men and women. And that's really what it's about. I believe, frankly, that women have been made a scapegoat for some of the things that have gone wrong and are being blamed for weakened physical training, being blamed for problems in the barracks. And that's just not the case.

MARGARET WARNER: Well, you did have a lot of recommendations over on the recruiting and training area.

NANCY KASSEBAUM BAKER: Right. Starts with recruit--we really believe recruits would be responsible for seeing their recruit get through the process.

MARGARET WARNER: You mean--

NANCY KASSEBAUM BAKER: The training process.

MARGARET WARNER: --who recruit them--the recruiters.

NANCY KASSEBAUM BAKER: The men and women. And we urge more female recruiters, and this is an important component of the whole process and a stronger enhancement of the delayed entry program, so that the young men and women who are going in and signing up have a better understanding of the physical and mental discipline that's required. We give strong support to the training cadre. We need to be utilizing them and exercising more selectivity and skill and career enhancement for your drill sergeants. We've not done, I think, a very good job making sure that we're getting the best instructors in and giving them an incentive both financial and career enhancement that's important.

MARGARET WARNER: Did you--did you find out why it is that some of these young people in the service think that the standards are tough enough? I mean, what has happened? The idea that basic training isn't tough enough seems sort of a counter--

NANCY KASSEBAUM BAKER: It does, and most of your officers would say that's what recruits say all the time. So I'm not sure, but I think that we just--we have tended to not believe we can ask for more. And I tend to think we can. I think we're seeing many young men and women come in that aren't physically as fit and we also stress nutrition and wellness programs. We stress value training, and let me say at the end of the day, Margaret, in many ways, it's leadership that counts. If you don't have strong leadership, that's willing to take positions, willing to accept responsibility, nothing will work. And we hope that we can begin to instill that even as recruits are coming through, so that they're going to be providing the leadership in the future.

MARGARET WARNER: Do you think that these recommendations--if they were accepted--would prevent another Aberdeen?

NANCY KASSEBAUM BAKER: How can you say? I--you know, we see those--it's a very--and that's a case where I think we've not done enough monitoring through the system, but I don't think you can say that anywhere, in the work place or the army, but in the army, in the Navy, the Air Force, the Marines, where you have authority and power and influence over those who don't have as much as you do, that's where you tend to get askew, and everybody has to be willing to accept some responsibilities in that process. We really believe this is as step forward, not a step backward. It really in many ways speaks to the importance of women's role in our armed services, and it's significant; it will continue to be significant. We feel we do a disservice--the committee did--to our young men and women by not giving them the very best.

MARGARET WARNER: All right. Well, thank you, Senator Kassebaum.

NANCY KASSEBAUM BAKER: Thank you.

ELIZABETH FARNSWORTH: We get two more views now. Susan Barnes is president of the organization Women Active in our Nation's Defense. Charles Moskos is a military sociologist at Northwestern University. Susan Barnes, you heard Sen. Kassebaum Baker say that the way training is shaped today isn't providing cohesion for the young recruits. What's your response to that?

SUSAN BARNES, Women Active in our Nation's Defense: Well, the response of the military women on our network would be that they just would simply disagree. Separate is never equal, and those of us who have been through--and I'm speaking now of the army women I was talking with just this morning on the telephone on these issues--who've been through the old system, where women were trained separately and have observed the more recent system with young men and young women trained together, would tell you very strongly and very forcefully that the new system is much better than the old. And, more importantly, there is some good data out there which supports that view, that is good sociological data. And one of the concerns we have is that these good citizens on the committee, they worked hard and certainly we have great respect for Sen. Kassebaum and the other members, but you didn't hear them talk about what the studies have shown about the effect of gender-integrated training on readiness. And readiness must always be the key.

ELIZABETH FARNSWORTH: So, Ms. Barnes, do you think that even cutting it down to 30 percent not integrated training, apparently about 70 percent will still be integrated, you think that could be bad for the recruits?

SUSAN BARNES: Oh, I think that our military women think so, especially since they would dispute the 70 percent factor. But let me make a point here. The Marines, who happen to have terrific public relations, are very proud of their separate training system. But there's no correlation between separate training and reduction of sexual harassment rates. The fact is it's the Marines have the very highest sexual harassment rate, and the Navy, for example, which has cut down its sexual harassment rate, did so and went to gender- integrated training after they discovered that one of the factors in influencing or keeping high sexual harassment rates was separate training. So what's being recommended here, according to a lot of the sociological data, is not consistent with the goal of reducing sexual harassment, if that's why we're here at all with respect to this particular task force.

ELIZABETH FARNSWORTH: Mr. Moskos, what does your sociological data tell you about this?

CHARLES MOSKOS, Northwestern University: Well, I think the report is really a step forward toward common sense and reality. In the long term if these recommendations are put into effect, it's going to enhance gender integration. What I think the report should be really recommended for is it avoids the true pitfalls of one--of blaming the macho culture or saying it's--with regards to sexual harassment, it's just a problem of a few bad apples. It makes concrete organizational changes, which are both I think readily to be implemented, and I'd add if you look at the big three, which is essentially separate dormitories or barracks by gender, same- gender platoons or divisions and consistent physical standards, all of these could be done very easily. The Air Force I might add too, to add to Sen. Kassebaum's remarks, has never had integrated dormitories in basic training, so there's another service which has essentially moved into this direction, with a very low sexual harassment rate, I might add. On the sociological data that Ms. Barnes reports, you know, it is--there are countervailing views. Other studies show there are approximately 70 percent of the men believe that gender- integrated basic training demeans the toughness and the physicalness, but I think whatever we're saying, we should always keep the basic purpose of basic training is not to reduce sexual harassment, is to make better soldiers, sailors, airmen, and marines. And this is what the report keeps its focus on.

ELIZABETH FARNSWORTH: Ms. Barnes, is the report a move to common sense?

SUSAN BARNES: No, I don't think so. The report doesn't focus on that at all. What Mr. Moskos is ignoring is the fact that the Army Research Institute has a very fine three-year study out which impaired test results from people in basic training who had trained in one unit sexually that is, separate sex basic training, and compared the test results with young recruits who had trained in gender-integrated troops. And guess what? In three of the four soldiering categories tested the people who had trained together, that is, men and women trained together, scored higher, both men and women scored higher than those who had trained separately, and that included such things as rifle marksmanship, so there's no empirical evidence out there that that training separately or training, that is training together, adversely impacts readiness, and we have to keep the eye on the ball here with respect to readiness. I couldn't agree more that this is probably not an appropriate way of approaching the problem of sexual harassment because, quite frankly, the fact is that the sexual harassment problem in services has never been a matter of peer sexual harassment. It has been a matter of superiors inappropriately pressuring junior people for sex. And that's not going to be solved by putting young men and young women in separate barracks and that sort of thing.

CHARLES MOSKOS: Well, there has been a problem, though, of same rank sexual behavior, which does undermine cohesion in the report, by advocating a separation by dormitory of the sexes, is certainly going to reduce that kind of same rank sexual activity, which does have an undermining effect in basic training, as well as later. And the report is very commonsensical on that.

ELIZABETH FARNSWORTH: And, Ms. Barnes, what about Sen. Kassebaum Baker's point that because of the no touch, no talk restrictions, there was just no cohesion in the units that were mixed at this basic platoon level and the equivalent units in the other services?

SUSAN BARNES: Well, I first of all in talking with military people today after watching the press conference, there was some disagreement as to whether there's no touch, no talk is really enforced, or whether it's really--has an adverse impact where it is enforced on cohesion. Cohesion is a much more--a much bigger issue, and it comes from people training together and learning to trust each other and from good leadership. And I think Mr. Moskos would agree, lots of elements go into unit cohesion. The problem that I have with what the committee has done here is that they seem to be relying on anecdotal evidence. And while that's fine, and they worked hard, you want to be very careful before drawing overall conclusions. Let me also--

CHARLES MOSKOS: Ms. Barnes, you know, better a good anecdote than a slippery statistic. You know, we can argue about what the data show, and I have a different interpretation of those findings too, but that's neither here nor there. What is here and there is what is the purpose of basic training, and it's to turn civilians into soldiers, sailors, airmen, and marines, and this is what the report directly addresses.

ELIZABETH FARNSWORTH: Ms. Barnes, excuse me one minute. Are you worried that a message is being sent here that women are somehow disruptive? What is your main concern about that?

SUSAN BARNES: Well, the main concern of the women that I work with is simply that the message is being sent that women are going to be--are less than equal soldiers. When your segregating out the sexes, what you're doing is you're saying someone can't be trusted to train together. And that's just contrary to what the army's own data shows. So I'm surprised at Mr. Moskos' comments.

ELIZABETH FARNSWORTH: Mr. Moskos, you don't--

SUSAN BARNES: I think we have to proceed really carefully here. And let me also point out that these task forces are a classic Pentagon way of dealing with difficult political issues, and there's a lot of stuff that goes into this, but hopefully Secretary Cohen will take into account what the secretaries have to say about the--excuse me--the service secretaries have to say about the report and it'll be part of what he'll consider, but it will not be the determinative.

ELIZABETH FARNSWORTH: And, Mr. Moskos, just quickly, what about that point that--

CHARLES MOSKOS: The point here is that it isn't women are disruptive, as Susan alleges the commission's report. It's that sex is disruptive. And this is done usually in a consensual way, and that's what the report tries to address. Let me make a final comment too here, which is we should always keep our eye on the fact that 90 percent of all women are enlisted women. They're not officers, and it's the concerns of enlisted women which should be the highest priority, and I think this is what the commission report addresses.

ELIZABETH FARNSWORTH: Okay. Well, thank you both very much.

SUSAN BARNES: Thank you. UPDATE - RARE VIRUS

ELIZABETH FARNSWORTH: Now a new mystery flu and to Phil Ponce.

PHIL PONCE: That new flu is a virus never before seen in humans and one which apparently was transmitted to humans by chickens. But scientists now worry the virus is being transmitted by humans. While the outbreak in Hong Kong is still in early stages, the fear of a possible epidemic is prompting the medical community to take action. For more were joined by Dr. David Heymann, director of emerging and other communicable diseases for the World Health Organization. Welcome, Dr. Heymann. Again, a small group of people in Hong Kong. Why is it that the world's health community is so interested, so concerned?

DR. DAVID HEYMANN, World Health Organization: Well, Phil, this is a new virus in humans. This is the first time, as far as we know, that this virus has entered the human population. And whenever a new virus enters a human population, we're worried. We need to find out what's going to happen now that humans are infected.

PHIL PONCE: It's a new virus, and yet, what does the world scientific community know about it so far?

DR. DAVID HEYMANN: Well, what we know is that this is a very lethal virus, not only a lethal virus in poultry but also in humans. Two of the first four cases have died from the disease, and now we have two people who are on ventilators with the disease in Hong Kong. So it's a disease which appears to be more lethal than the usual influenza.

PHIL PONCE: And as far as symptoms go, are they similar to what--the kind of flu that most people are familiar with?

DR. DAVID HEYMANN: Absolutely. These are the same symptoms--the high fever, muscle aches, just feeling very bad, and then developing influenza.

PHIL PONCE: And how did it come to people's attention? Where did it come from? When was it first noticed?

DR. DAVID HEYMANN: Well, throughout the world there's a series of laboratories which are constantly monitoring influenza, under 10 laboratories throughout the world. And these laboratories monitor cases of influenza. In Hong Kong back in May they isolated from a patient with influenza who died a new virus, the H-5 N-1 virus, which is the same virus that has infected poultry and was first identified in 1961 in Turns in South Africa.

PHIL PONCE: Turns being a form of bird.

DR. DAVID HEYMANN: That's correct, yes.

PHIL PONCE: Reports today indicate that two cousins of somebody who had been previously infected presumably by exposure to a chicken, that these two cousins now may have this virus. Do you believe now that it's being transmitted from human to human?

DR. DAVID HEYMANN: Certainly, this is more concern that there might be human to human transmission, but these two people, these two cousins could have also been exposed to the same source of the virus, and, therefore, been infected at the same time, because they've fallen ill within five days of each other.

PHIL PONCE: But is that the key concern, just how communicable this virus might be from person to person?

DR. DAVID HEYMANN: That's right. If this virus is very communicable from person to person, then we'll see it spread rapidly throughout Hong Kong, and with international travel, it will spread farther. What we know, though, is that hospital workers who have taken care of patients during this period have not themselves become ill with the disease. Some have become ill, and they've been put under observation, but they've not been ill with the virus, itself.

PHIL PONCE: Most of the people who've gotten the virus to date have been children. Why is that?

DR. DAVID HEYMANN: That's a good question and that we can't answer. That's some of the questions that must be answered in what's called an epidemiological investigation. We need to know who is at risk of this disease, why is it coming from animals to man? Will man pass it from man to man?

PHIL PONCE: What about this 11-year cycle that viruses sometimes seem to follow, could you tell us about that?

DR. DAVID HEYMANN: In recent years there have been influenza pandemics; that is, influenza epidemics that have covered the whole world every eleven to fifteen years. In 1958, for example, there was an epidemic of Asian flu. Then in 1968, there was an epidemic of Hong Kong flu. Then, as you know, in 1976 here in the U.S. there was fear that flu had crossed the barrier from pigs into man, and that there might be an epidemic of what was called swine flu, and measures were taken, vaccines were developed, and people were immunized in the hopes of preventing an epidemic, which never did occur. But at least the population was prepared.

PHIL PONCE: And in that case you talk about with the swine flu, there were--the epidemic did not happen, and yet, some people suffered some adverse consequences as a result of the vaccination.

DR. DAVID HEYMANN: That's right. People who were vaccinated, a certain number of those people developed a paralysis after vaccination, what's called Gionne Beret Syndrome, related to the vaccine.

PHIL PONCE: So what's being done with regards to this virus in terms of a vaccine?

DR. DAVID HEYMANN: Well, this virus is a very lethal virus, and, therefore, it can't be grown on eggs, which normally viruses grow on to produce vaccines. So we're doing--the scientific community is doing what now is called looking for a reassortment; that is, a virus which will grow on eggs, so that a vaccine can be prepared. The virus is being manipulated to see if we can make it grow on eggs. And if that's the case, then this will serve as a seed virus to develop a new vaccine.

PHIL PONCE: And how long might that take?

DR. DAVID HEYMANN: Well, we hope that by January, early January, this reassortment will have been found, and then it would fit into the actual normal cycle for preparation of influenza vaccines because each year in February there is a meeting which determines what strains of influenza should be put into the vaccine, and this is the time when this new reassortment will be available and can be put into vaccine.

PHIL PONCE: But typically, the lag period for the introduction of a new vaccine is what, about six months or so?

DR. DAVID HEYMANN: That's right. The lag period is six months, and right now we are working with industry to see what the minimum amount of time could be. This is called pandemic preparedness, trying to find out what the minimum time will be for development of a new vaccine.

PHIL PONCE: So for those people who've already had a flu vaccine this season, what do you say to them?

DR. DAVID HEYMANN: Those people are protected from what we know will be an epidemic this year, from the strains of virus which will cause an epidemic this year. What we don't know is if this new strain will also cause an epidemic.

PHIL PONCE: So if one has been--if one has already received a flu vaccine, that's for a strain that people were already familiar with in the past, not for this one.

DR. DAVID HEYMANN: That's correct. This is a new strain. We need to develop a new vaccine.

PHIL PONCE: What exactly constitutes a pandemic, or an epidemic?

DR. DAVID HEYMANN: A pandemic is a disease which starts localized and then spreads worldwide, a very simple definition.

PHIL PONCE: In this case how concerned should people in this country be about what's happening in Hong Kong?

DR. DAVID HEYMANN: People should be very concerned and make sure that the laboratories in the U.S., which are supporting the investigations in this outbreak, are supported. And those laboratories are the Centers for Disease Control in Atlanta and St. Jude's Hospital in Memphis.

PHIL PONCE: You're coordinating some of those, at least they're reporting to you. Are you satisfied those laboratories and sufficient resources are being committed to this?

DR. DAVID HEYMANN: Yes. Every day we're sending more teams out to look not only at the human disease but also disease in poultry in neighboring Canton, because we know that that's where they're having epidemics in poultry. And we know that poultry from that area are coming into Hong Kong for sale.

PHIL PONCE: Dr. Heymann, thank you very much.

DR. DAVID HEYMANN: Thank you. RECAP

ELIZABETH FARNSWORTH: Again, the major stories of this Tuesday, at an end-of-the year news conference President Clinton said the United States may need to do more to help stem the financial crisis in Asia. Inflation at the consumer level rose .1 percent in November, and a civilian panel recommended that men and women military recruits be segregated during some of their basic training. We'll be with you on-line and again here tomorrow evening. I'm Elizabeth Farnsworth. Thank you and good night.