The MacNeil/Lehrer NewsHour

Intro JIM LEHRER: Good evening. Leading the news this Wednesday, 16 died in a midair collision in Utah. U. S. and Soviet arms negotiators met again in Geneva. And a suspect in the 1985 TWA hijacking was arrested in West Germany. We will have the details in our news summary in a moment. Robin? ROBERT MacNEIL: After the news summary, the Amtrak train crash. We talk to Joseph Nall, the man leading the federal investigation, and to two doctors who disagree about the reported marijuana factor in the crash. Then credit card interest rates. We have a documentary report and a debate over whether those rates are too high.News Summary LEHRER: Two small airplanes collided over the Salt Lake Valley in Utah this afternoon. At least 16 persons died in the crash, which scattered wreckage over a residential area. The collision occurred between a commuter plane operated by Skywest Airlines and a private aircraft. It happened 15 miles southwest of downtown Salt Lake City. The cause of the accident is not known, but authorities said there were 60 mile an hour winds in the area shortly after the crash. Robin? MacNEIL: The United States and Soviet Union opened a new round of arms talks today in Geneva. U. S. Negotiator Max Kampelman had lunch with his new Soviet counterpart, Yuli Vorontsov, at the Soviet mission. Although neither delegation had any comment on the opening talks, the atmospherics were cordial. The two men, meeting for the first time, shook hands warmly, smiled and slapped each other on the back, and joked about the weather as snow fell on the scene. Japanese Prime Minister Yusuhiro Nakasone today urged the U. S. and the Soviet Union to return to the summit bargaining table to achieve an arms control agreement. Speaking in Belgrade, Yugoslavia, at the end of a European tour, Nakasone said all the leaders he had met wanted President Reagan and General Secretary Gorbachev to meet again and reach an arms pact. LEHRER: The Senate select committee went about its Iran contra investigation today. The 11 member committee held its first official meeting. There was a photo opportunity at the beginning, then the senators went into closed session. Before the meeting, committee member Warren Rudman said his constituents are tired of the story.

Sen. WARREN RUDMAN (R) New Hampshire: They wish we would stop talking about this and just get it over with. They're concerned about keeping interest rates low, employment high and inflation down. That is really what the people in New Hampshire are mostly concerned about. As far as this matter is concerned, they think it was a terrible blunder to sell weapons to Iran. They don't get much beyond that. LEHRER: Senator Rudman's feelings about his constituents was reflected in a national poll released today. Only one out of five Americans are following the Iran contra funds story, according to a Gallup survey. Gallup President Andrew Kohut said people find the story disturbing but complicated. He said the recent polling also showed 53% felt the revelations had not hurt President Reagan's ability to govern, but 42% did think it had. MacNEIL: The Surgeon General C. Everett Koop told Congress today that education is the only present weapon against AIDS disease. Testifying before the Senate Labor and Human Resources Committee, Koop said, ''We have neither a drug, a cure nor a vaccine for prevention. Education is the only weapon we have. '' Senator Edward Kennedy and others, while praising the administration for increasing funds for AIDS research, complained that it was being taken from other projects, including cancer.

Sen. EDWARD KENNEDY (D) Massachusetts: I think you can demonstrate quite clearly from an examination of the NIH budget you're really robbing Peter to pay Paul. I think any fair examination of that budget would have to draw that conclusion, and that's wrong. That's wrong, and I want you to be very clear that we're going to do everything we possibly can to redress that kind of a situation. ROBERT WINDOM, MD, Department of Health and Human Services: Senator, each year there has been a continual increase in the awards and funding of the National Institutes of Health. And also, we are giving this next year -- will be the highest number of research award grants ever in the history. So we do not feel that we are sacrificing other research, but we're trying to bring some stability to that funding level. LEHRER: NASA agreed today to change the way it evaluates the risks of flying the space shuttle. The space agency said it would change some mathematical formulas for computing risks, among other things. The steps are in response to suggestions made yesterday by the National Research Council, a private, independent body. The five crew members of the next shuttle flight met the press this afternoon in Houston. They are due to go up in February, 1988, and they said they can hardly wait.

RICK HAUK, commander: We're looking forward to getting back to the business of flying in space. I have a very strong crew here. We can best be described as representing the NASA team. And that team is in good shape and headed in the right direction. We all went through a terrible trauma on the 28th of January last year, which we won't forget. But we will also look forward and be dedicated to the goal that that never happen again. MacNEIL: The Audi Company, a subsidiary of Volkswagen of America, today announced it was recalling a quarter of a million Audi 5000 models with automatic transmission. The cars have been under investigation by the National Highway Traffic Safety Administration, after hundreds of complaints of sudden acceleration. The NTSA said four people had been killed and 175 injured in accidents stemming from sudden acceleration. The recall is to repair an engine idling device. LEHRER: The West German police have arrested a suspect in the 1985 TWA hijacking. Authorities in Frankfurt said the suspect is Lebanese. He was carrying explosives when captured by officers at the Frankfurt airport Tuesday. A Justice Department spokesman in Washington said the United States will attempt to have the man brought here for trial on air piracy charges. A U. S. Navy man was shot and killed in the hijacking of the TWA jetliner on a flight from Athens to Rome. Thirty nine other Americans were held prisoner for 17 days before being released at the Beirut Airport. The hijackers walked away from the incident, and there had been no further word about them until today. MacNEIL: Much of Europe was still gripped by the worst run of winter weather in more than two decades. Rod Steven of Visnews has a report.

ROD STEVEN [voice over]: Paris, like the rest of Europe and Britain, is grinding to a halt as the worst weather in 25 years continues to ravage this part of the world. The River Seine is slowly freezing over, and now French President Francois Mitterand has been forced to mobilize the army to help deal with the massive problems caused by the arctic conditions. The capital's underground railway network, the Metro, has been kept open 24 hours a day, so that the city's 15,000 homeless can find somewhere to sleep. In Northern England, the main highway across the Pennine Mountains was closed for several days. In Humberside, further east, army snowcats had to be used to get food and supplies to isolated villages. MacNEIL: That's our news summary. Coming up, the Amtrak train wreck investigation and the related drug issue, and the fight over credit card interest rates. Train Crash Probe LEHRER: Our first order of business tonight is a newsmaker interview with the man in charge of the Amtrak train wreck investigation. He is National Transportation Safety Board member Joseph Nall. Sixteen people died, and 175 were injured in the January 4 tragedy outside Baltimore. [voice over] It's still not known what caused the crash between an Amtrak passenger train heading north from Washington to Boston and three Conrail freight engines. This much is known: a reenactment earlier this week showed the Conrail engineer should have been able to stop before his locomotives crossed the path of the Amtrak train. The engineer claims he never saw the distance signal more than two miles before the crash. But in the test, a similar Conrail train travelling at a similar speed was able to stop, even after the final home signal. Investigators say the Conrail freight was travelling at about 64 miles per hour, slightly above his authorized speed. They say the Amtrak train was going 128 miles per hour, far above its authorized speed of 105 miles per hour. Earlier in the week, the automobile driving record of the Conrail engineer was questioned, and yesterday it was disclosed that drug tests showed detectable levels of marijuana in the engineer and brakeman. [on camera] Mr. Nall, how important are these drug test results? JOSEPH NALL, National Transportation Safety Board: Well, the drug tests do enable us to determine whether or not the crew may have been impaired at the time of the operation. We have received the results. We have not analyzed them yet to determine just the extent of their impairment. LEHRER: Any indication thus far? Mr. NALL: Well, it is very preliminary, in that the test results were released only yesterday. We hope by our analysis and with some reflection of time we'll be able to determine what degree of impairment may have been involved. LEHRER: Is it possible that this wreck could have been caused by the use of marijuana by members of the crew? Is that a possibility at this point? Mr. NALL: Well, we're looking at all possibilities, and certainly that is an area that we are looking into. That's why we require the drug testing. That's why the drug testing is done. So this may be a possible -- one of the causes, one of the contributing causes to the accident. We don't know at this point. We haven't made that decision. LEHRER: When will you know? Mr. NALL: Well, our process takes a while, and our investigation will be continuing. And once we analyze the data, once we look at the medical information, once we get a better background of the two members of the crew themselves, then we'll be able to make that conclusion. LEHRER: Background of the crew. Now, why is that important? Mr. NALL: Well, we feel like it's important in any human performance issues to look at a background profile. We want to learn about their lifestyles, their family lives and anything that may have been important as they were operating the train on that Sunday. LEHRER: Is that pretty well where the investigation rests now -- that it's locked up on those members -- on the members in that crew? Mr. NALL: Well, we never limit ourselves to any one issue, but certainly that's a focal point of the investigation at this point -- the operation of the Conrail locomotives, yes. LEHRER: So you are pretty well convinced that the machinery worked? The signals and all that sort of thing were working properly? Mr. NALL: We have done a thorough test of the signals. Those inquiries will be continuing. And if we find anything hereafter that was wrong with the signals, certainly we would cite that as one of the contributing causes. But we have satisfied ourselves at this point as to the electrical integrity of the signal systems. LEHRER: So the question now before your -- the major question now is why was there human error. Is that essentially it? Mr. NALL: That is one of the major questions of our investigation, correct. LEHRER: What about the news of speeding violations, etc. -- motor vehicle driving violations by the members of the crew. Is that pertinent? Is that the kind of information that you want? Mr. NALL: Well, it helps us always to be able to reconstruct a mind set or an attitude or anything that will help us in the operational aspects of an accident. We want to find those things out. And certainly that's part of the lifestyle. It's certainly part of the history of this gentleman's past. LEHRER: All right. Today, you issued -- you made some recommendations to Amtrak, and they were mostly mechanical recommendations. One of them had to do with an automatic braking device. Explain that, please, sir. Mr. NALL: There are devices called and automatic train control that will actually slow the train and stop the train if the crew does not abide by the signal aspects that they are given. We feel that this device, if it had been in place, would undernormal operation slow the train to a stop, even if the crew had not abided by the signals. LEHRER: Which train are you talking about, or both? Mr. NALL: Speaking of the Conrail train. Actually, the Amtrak engines were equipped with an automatic train control device. And all of those Amtrak trains are so equipped on the northeast corridor. LEHRER: Now, why didn't it automatically stop the train in time to avoid the accident? Mr. NALL: Well, we are not -- we have not determined yet whether the automatic train controls may, in fact, have stopped it. As you recall, the Amtrak train was, in fact, put in an emergency braking condition either automatically or by the crew member who was there. However, the Conrail locomotives were not so equipped. LEHRER: So the -- if it had -- the Conrail -- make sure I understand this. If the Conrail engine had had a similar device, it would have stopped it from ever going past the signal point where there would have been the collision. Mr. NALL: That's -- LEHRER: It would have kept it off the track. Is that right? Mr. NALL: That's how the system is controlled, yes. LEHRER: Now, why don't these Conrail trains have them now? Mr. NALL: I suppose it's a matter of economics. We have made recommendations in the past regarding freight trains, and particularly freight trains that operate in the environment of passenger operations. But the commitment has not been made economically to so equip those trains. LEHRER: So what you want, you want every train to have this in the engine. And then no matter what human error there is, no matter what else goes wrong, this should avoid an accident like this from ever happening again. Mr. NALL: This is a redundancy. And assuming the system works properly -- and mechanically they do have a very good record -- then yes, this will greatly enhance traffic, particularly on the northeast corridor. Our recommendation is directed to the northeast corridor -- their high speed operations. LEHRER: All right. There were two other things you wanted done. What were they? Mr. NALL: Yes. In the interim, until those train devices are actually installed in the engines, what we are requesting is a change in procedure, so that, as freight trains moving onto the high speed passenger rails must come to a complete stop before entering and receive an express oral clearance by a tower operator or dispatcher before they're allowed out on the track. LEHRER: Now, obviously, if that had been operative on January 4, this accident would never have occurred. Mr. NALL: That's correct. In other words, this accident was being controlled -- or the train in this accident was being controlled only by the signal aspects. LEHRER: Does your board have the power to get this done, or are you just saying, ''Hey, this would be a good idea, Amtrak. '' Mr. NALL: Generally, NTSB is a non regulatory agency. We have the authority to issue recommendations, and it is Amtrak's responsibility to follow through, given the public pressure, Congressional pressure and the other pressures of the industry that can come to bear. LEHRER: Have you had any response yet from Amtrak? Mr. NALL: We have just issued the recommendations today. They were delivered to them today or will be delivered to them early in the morning. LEHRER: Now, anything else that you want done in the interim? Mr. NALL: The third item that we recommended today had to do with the use of two way radio communications, and we are recommending the installation of good quality two way radio communications, so that this interim device and so that in the future clearances can be issued, and even train to train communications can be made between the trains. LEHRER: What's the situation now? What was the situation on January 4 on these two trains? Mr. NALL: On the Conrail train, the panel installed two way radio was not operable. And consequently, the crew was carrying a small, four watt transceiver that was a hand held radio that did not have much of a range. LEHRER: Who could they talk to with that thing? Mr. NALL: There is radio contact, under normal circumstances, with a block operator who would be in the area -- the Edgewood block operator. LEHRER: Meaning some guy sitting in a tower somewhere. Mr. NALL: That's correct. He is actually having a board and is controlling trains within that particular area. LEHRER: I see. So what you want would have been the ability of this -- say, the Conrail train to talk to the Amtrak train or anybody else in the area. Mr. NALL: We are recommending that radios be installed of such quality that train to train communication can be possible, and secondly, good quality train communications with the station operators. For example, if this interim recommendation is approved and this procedure of the stopping and proceeding with authority is enacted, then we would have to have two way radio communications. LEHRER: Finally, Mr. Nall, if you determine that this was a result of human error of some kind -- recklessness, carelessness, drug use, whatever -- do you then follow that with prosecution of some kind? Mr. NALL: Again, the NTSB is not authorized to have any regulatory sanction or criminal sanction. That would be up to other entities. LEHRER: But you can make a recommendation, give it to the Justice Department or the local -- Mr. NALL: We have not made recommendations relating to criminal activity. Basically, our recommendations are remedial in nature and of safety issues -- to require safety devices that would prevent the same type of accident from occurring in the future. LEHRER: And you expect -- you're pretty close, are you not, to having some final conclusions? Mr. NALL: It would be, in all likelihood, six months to nine months before we issue a final report and issue an analysis and conclusion. LEHRER: Six to nine months? Mr. NALL: Yes. That's rather routine. That would be normal in the scope of this size of an accident. LEHRER: All right. Well, we'll have you back then, if not before. Mr. NALL: Thank you very much. LEHRER: Mr. Nall, thank you. Robin? Under the Influence?MacNEIL: Now we examine the question of whether the performance of the Conrail crew might have been impaired by the marijuana found in their blood. Medical opinion is divided on the subject, as we hear now from two leading experts. Dr. David Greenblatt is a psychiatrist and chief of the Division of Clinical Pharmacology at New England Medical Center Hospital. He joins us from public station WGBH in Boston. Dr. Robert DuPont is a former head of the National Institute on Drug Abuse, who is now in private practice treating people for drug and alcohol problems. Dr. DuPont, what did the urine and blood test results tell you in this case? Dr. ROBERT DuPONT, psychiatrist: They tell me that these two individuals used marijuana quite recently and that it was in their bodies and in their brains at the time the testing was done and presumably, therefore, at the time theaccident occurred. MacNEIL: How soon after the accident was the testing done? Dr. DuPONT: A few hours. I'm not sure exactly the number. I think the longest time was about eight hours after the accident. MacNEIL: I see. How soon -- I'm not sure what I'm asking you. How do the tests show to you that they had used marijuana recently? Dr. DuPONT: Well, two factors. I think the main factor is the blood levels, which were reported as five nanograms or less, or less than five nanograms, I think. Any detectable level in the blood suggests recent use. And then the urine results were also very supportive, because these are really quite high numbers for a single metabolyte. They would be the equivalent -- MacNEIL: What is a metabolyte? Dr. DuPONT: A metabolyte means a breakdown product of the marijuana constituent, the THC. And this problem -- the levels that we found here -- were equivalent on the standard testing procedure of about 150 or maybe even more. So when people say, ''Well, the military would have said this was negative, because they were under 100,'' they aren't using the same technology. If they had used the same technology, it would, I think, have been over 100, probably more like 150. MacNEIL: What does that amount of marijuana indicate, in terms of the degree of impairment it could have caused? Dr. DuPONT: It suggests a high probability that these individuals were impaired. It is not proof that they were impaired any more than an alcohol level or any other drug level would be absolute proof. What we have is a situation where any detectable level of marijuana in the system of a person operating a train, for example, or an airplane is incompatible with the public safety. And I think we need a clear standard of zero tolerance for that. So this is way beyond that and suggests that they had used it quite recently. I would say likely within 24 hours, and probably within 12 hours of the time of the accident. MacNEIL: Dr. Greenblatt, what do the data say to you, first on the question of how recently they might have used marijuana? Dr. DAVID GREENBLATT, New England Medical Center: Well, to me the test results are completely inconclusive. We know that when a human is exposed to marijuana that the excretion of marijuana metabolytes in urine persists long after the exposure -- sometimes days or weeks. The levels that actually were present in urine, assuming that the test results are accurate, were very low, contrary to what Dr. DuPont says. So my conclusion is that, first of all, we can't even be sure that the individuals smoked marijuana. The low levels such as were detected in these tests may, in fact, happen due to passive exposure to marijuana -- that is, walking through a room in which others have smoked marijuana. You don't smoke it yourself; you inhale others -- the breath from others who have smoked it and end up with trace levels in your urine. So I would suggest that we can't even be sure that these individuals smoked marijuana. Secondly, the levels are very low. There is no established correlation between levels in urine and intoxication. We can't be sure -- in fact, I would think it would be unlikely -- that these individuals were intoxicated. And finally, my conclusion from all of that is that it's very unlikely that marijuana had anything whatsoever to do with this accident. MacNEIL: But there were also blood tests; not just urine tests. What do you say to Dr. DuPont's finding or his interpretation of the blood tests? Dr. GREENBLATT: Yes. Well, we may have heard different results. My understanding that the levels of the intact drug -- that is, intact marijuana in blood -- were essentially undetectable would suggest to me that it's exceedingly unlikely that there was any recent exposure. In individuals with recent exposure to marijuana, and in particular with those who are intoxicated, have significant and measurable levels of the intact drug in blood. So to me it all fits together. These are individuals that may have smoked marijuana remotely in time, or they may have had some kind of passive exposure to marijuana. But the amounts present were exceedingly small and probably unrelated to intoxication or the event that we're discussing. MacNEIL: And not -- unrelated to the event we're discussing, in your view. Dr. GREENBLATT: Yes. MacNEIL: Dr. DuPont, first on the difference of opinion on the interpretation of the blood test. Dr. Greenblatt says insignificant. Undetectable, I think he said. Dr. DuPONT: Yeah. It was reported as present at a lower than five nanograms per milliliter level. And someone who smoked marijuana recently, a day or two ago, let alone -- is going to have none at all. So this is a significant -- it is impossible to have these numbers from passive inhalations, certainly of the kind Dr. Greenblatt is talking about -- being in a room. There has never been a study showing that people who were in a room where other people were smoking marijuana, unless you're talking about being in a phone booth wearing goggles with many people smoking, where anybody got even remotely close to these levels. These are the equivalent, as I mentioned, of over 100 nanograms on the emit or the RIA -- the standard immuno assays. And they are very high levels. I have no doubt whatsoever about that. MacNEIL: Very high levels, Dr. Greenblatt. Dr. GREENBLATT: Well, I disagree. When one says less than five nanograms per ml, that could be zero. And perhaps it was zero. We don't have enough information about the testing procedure. Dr. DuPONT: It was clearly not zero. Dr. GREENBLATT: Well, in any case, I would point to, with regard to passive inhalation, I would point to an article that was published within the last two months in the scientific literature that showed significant rates of urine positivity in individuals due to passive inhalation of marijuana. This can never be ruled out. It's always a possibility, particularly with low levels in the urine, as were found in these individuals. Dr. DuPONT: If they'd spent hours in a phone booth with many people smoking and they were tested within a few hours of that, it's possible. Dr. GREENBLATT: Well, the study I'm referring to had nothing to do with a phone booth. MacNEIL: If you two disagree on these actual tests, Dr. DuPont, what kind of impairment does marijuana cause that would be relevant to somebody driving a train? Dr. DuPONT: Well, there's a broad range of impairment. The most obvious is not paying attention. Marijuana is a drug that produces carelessness. It is what a call a care less drug. And people don't attend to things. So that that would be the most obvious and most likely impact. But beyond that are impacts of special relations, for example. The kind of thing where there was a misjudgement of the time and the distance is a very characteristic impairment from marijuana use. MacNEIL: Do you agree on that -- that if there was marijuana impairment, Dr. Greenblatt, that it would have been of that nature? Dr. GREENBLATT: It's possible. But those reported symptoms are byno means specific to marijuana. Intoxication with essentially any central depressant agent, such as even alcohol or valium type drug, will produce the same type of symptoms: lack of attention, slow reaction time, difficulty performing tasks requiring coordination, etc. So yes, they might happen with marijuana, but they're by no means specific or totally characteristic of marijuana. They're very nonspecific, general symptoms of intoxication from any central depressant drug. MacNEIL: You queried the -- you had a different interpretation of the tests. How reliable, in fact, are the tests themselves, in your view? Dr. GREENBLATT: Well, I have no information on what kinds of -- what the actual chemical procedures were in this case. In fact, the reliability of tests for substances of abuse in urine vary very widely. Some of the testing procedures are highly accurate and specific and essentially have a zero error rate -- for example, gas chromatography mass spectroscopy, which we sometimes read as abbreviated GCMS, is considered the gold standard of analytical chemistry. And if those were the testing procedures in this case, then we couldn't argue with that. On the other hand, there are some very nonspecific and highly inaccurate tests which are often used in screening procedures. In fact, the emit test or the enzyme immuno assay is a commonly used screening test. MacNEIL: Do you know -- Dr. DuPont, do you know what kind of test was done in this case? Dr. DuPONT: Yes. This is a high performance liquid chromatograph test confirmed by a GCMS for both the blood and the urine. MacNEIL: So, Dr. Greenblatt, you would have confidence in the test, then -- in the quality of the test. Dr. GREENBLATT: Yes. If positive results were confirmed by mass spectroscopy, then I would have confidence in the chemical accuracy of the tests, but by no means in the correlation between the chemical result and the effect on performance, because, in fact, we have no known relationship established between positivity in urine and impairment of performance or intoxication. MacNEIL: Dr. DuPont, you said earlier something about -- I think I understood you to say there should be a zero standard. You shouldn't be allowed to drive a train if you have had any marijuana. Is that right? There is no safe amount. Is that what you're saying? Dr. DuPONT: That's absolutely right. I think the public safety would require that, and I think the same thing would be true for flying an airplane or any other -- driving a bus -- or any other activity in which the individual and the public are at risk. I think any other standard is showing a reckless disregard for the public safety and the individual himself. MacNEIL: Do you agree with that, Dr. Greenblatt? Dr. GREENBLATT: I certainly by no means condone the use of illegal, mind altering chemicals. On the other hand, it's very important that we properly and appropriately interpret scientific information. And in this particular case, it's very possible to dangerously misinterpret science. I would not want individuals to come away from this program thinking that if you had a 50 or 100 nanogram per ml concentration of marijuana in your urine that you were necessarily stoned or that you were intoxicated by urine. We have to use scientific results properly. And I think from this particular incident, we can not conclude that the urine test implies intoxication, and we can not conclude that one must have a zero urine test to operate a train or an automobile or any other dangerous task safely. Wesimply don't have that information. Dr. DuPONT: But what would you think about allowing somebody with these levels to drive a train? Would you think that would be all right? Dr. GREENBLATT: I don't have information on that. I have no information. Dr. DuPONT: Would you want to be on a train with somebody like that? Dr. GREENBLATT: I don't know. Dr. DuPONT: I know I wouldn't. MacNEIL: I think we'll leave it there, gentlemen. Dr. DuPont and Dr. Greenblatt in Boston, thank you for joining us. House of Cards LEHRER: Finally tonight, a look at the piece of magic plastic called the credit card. There are growing complaints about those issued by banks -- complaints about too high interest rates, too easy credit and too hard a sell. We taped a discussion yesterday with a banker and a consumer advocate about those complaints. We talked right after they saw this set up report about some people in San Francisco and their credit cards. The reporter is Spencer Michaels of public station KQED.

GROUP MEMBER: Does anybody have anything they want to put in the pot tonight? SPENCER MICHAELS [voice over]: This group is called Spender Menders, and each new shop aholic or credit abuser who joins is encouraged, first off, to cut up his credit cards. GROUP MEMBER: I always used to carry around the ones that hadn't reached their limits yet, and then I'd shuffle them every month. GROUP MEMBER: A couple of weeks ago, I cut up about 15 of my cards. And all of the sudden, I'm having to say no to myself when I walk down the street and see things that I'd like to have. Now I know that I can't have them. MICHAELS [voice over]: In a society that says, ''Buy, buy, buy,'' and then says, ''Charge it,'' it's often difficult to say no. After joining a debtor's self help group, Marsha Von Moos finally did say no. Marsha is not an extravagant person, but she was seduced by aggressive marketing tactics into using more credit than she could handle. Today, she is trying to work herself out of MARSHA VON MOOS:debt. I work in a restaurant. I see credit and credit use all around me. I run the cards through for people paying for their purchases constantly. And I think it's really a national dilemma. It's an invitation to participate in a grandiose scheme that for some people becomes quite a fantasy life. MICHAELS [voice over]: Marsha's invitation came to her in the mail in the form of pre approved credit. Ms. MOOS: And all I had to do was sign my name. I didn't have to give credit references. And they mailed me a checkbook with a $5,000 unsecured credit limit. This one particular bank mailed me $15,000 worth of credit. Consequently, at least 40% of my income goes to make the payments. Last year alone, it was approximately $1,200 in interest I paid. And I feel like I'll never get ahead. It's this horrible feeling that the interest is eating you alive. For me, being $8,000 to $10,000 in debt is devastating. I wish I'd never touched any of it. PAT HEFFERNAN: I didn't know what to do. We owed $25,000, including the car and everything else. And I didn't know what I was going to do. MICHAELS [voice over]: When Pat Heffernan lost his job as a bank executive, he and his wife Gloria suddenly found they couldn't pay their debts. Even though Gloria works, they had become dependent on the two incomes and could no longer make ends meet. GLORIA HEFFERNAN: We had to pay the rent, and we had to pay the gas and lights. And you know, can't just call PG&E and tell them that, you know, you're unemployed. So we still had things we had to pay. It was the other things that we were finding difficult. MICHAELS: What other things? Ms. HEFFERNAN: Well, the -- Mr. HEFFERNAN: The retail stores, our MasterCard, Macy's, the Emporium. We had a credit card with Chase Manhattan Bank. And I called them to tell them and explain the situation. And the first question the fellow asked me, ''Are you going to declare bankruptcy?'' And I said, ''No. I'm trying desperately not to do that. '' Ms. HEFFERNAN: We just didn't like the idea of it. And these people and these companies had given us goods and whatever on good faith. And I know a lot of people do declare. And I've heard you can even get credit back again and everything. But I just -- something wrong about it. MICHAELS [voice over]: After several months had gone buy and Pat still hadn't found a job, one of the Heffernans' creditors told them about Consumer Credit Counselors, a nonprofit organization that works with consumers and their creditors to arrange a repayment plan. CATHY TIETRUSZEWSKI, Consumer Credit Counselors: Credit is easy to get for most of the people we are seeing. They qualify for too many credit cards and accept them and use them. MICHAELS [voice over]: Pat now has a temporary accounting job. And with the help of Consumer Credit Counselors, he and Gloria are paying off their debts. But they say they've learned their lesson and will never again become so dependent on credit. Mr. HEFFERNAN: Now, whether I get a job tomorrow making the kind of money I was making before, I wouldn't want to go back to the way that I was before -- so financially strapped with credit. 'Cause there's really no freedom. [clip from ad] ANNOUNCER: Spend the day out over the coral looking for fish or out on the flats just looking. But remember two things: bring some sandwiches and your Visa card.

MICHAELS [voice over]: But freedom and fantasy are exactly what the ads promise. And Michael Torisse figured that playing out his fantasies was all part of the game. Thanks to the bankruptcy laws, it turned out to be a game he couldn't lose. MICHAEL TORISSE: My theory is, if you've got them, use them. And I did. I've had cards for as little as $1,500 worth of a line of credit up to $5,000 for a line of credit. MICHAELS [voice over]: In the end, Michael had 20 credit cards, adding up to more than $30,000 in available credit. Mr. TORISSE: I had one bank send two applications for me for a gold card, which is a $5,000 line of credit. $10,000 from one bank to the same guy. That was great. That was probably a two month span that I had the most fun having $10,000 worth of credit. REPORTER: What did you do with it? Mr. TORISSE: Spent it. REPORTER: On what? Mr. TORISSE: Everything. I bought everything. I would have just flights of fancy with nothing to do on a weekend, and I would fly to Las Vegas and borrow $1,000 on my credit card, gamble. I would fly to Los Angeles, fly to Taho, just having fun. MICHAELS [voice over]: Michael makes between $25,000 and $35,000 a year selling seafood to stores and restaurants. But he lived the lifestyle of someone making a lot more. Eighty percent of everything he bought he paid for with plastic. Eventually, his overindulgence caught up with him. Mr. TORISSE: As the cards grew and the credit grew behind the cards, my salary didn't grow. All the sudden, I didn't have enough money to pay out the bills that I had incurred. MICHAELS [voice over]: Originally, Michael thought he would file a Chapter 13 bankruptcy, which would set up a schedule of repayment. But after going over the figures, he realized he could never pay it all back. Mr. TORISSE: After I had it all on paper, my God, I couldn't believe it that I had owed all these people this much money. He said, ''Okay, we're about $30,000. '' I said, ''What? How much?'' You know, I thought $14,000, $15,000 tops, but $30,000? And I said, ''You know, let's get out of here. Let's just -- let's go. '' MICHAELS [voice over]: He ended up filing for a Chapter 7 bankruptcy, often called a fresh start. He will have to give up a few things, like his BMW. But under current bankruptcy laws, he can keep up to $7,900 in cash and his paid for personal items. His credit card debts will be entirely wiped out. Mr. TORISSE: Can you imagine that? Just zero, like you never existed credit wise. God, it's like being a convict and having your entire history just wiped clean. The guy is a model citizen. MICHAELS [voice over]: Everyone who files for bankruptcy must go through a hearing like this one, which gives the court and the creditors a chance to question them about their assets and debts. COURT OFFICIAL: Do these schedules list all of the property that you own? FILER: Yes, sir. MICHAELS [voice over]: More often than not, the creditors don't even show up. COURT OFFICIAL: Are there any creditors here present in this matter? The record will show that there are none. Accordingly, sir, this hearing is now concluded, and you are excused. FILER: Thank you. MICHAELS [voice over]: A person can walk out of bankruptcy court free and clear of his debts. But to keep him from getting into the same mess again, there is a rule saying he can only file for bankruptcy once in seven years. He will also have the bankruptcy on his credit report for ten years, which may make it difficult for him to reestablish credit. This part of it doesn't discourage Michael, however. He says he will more than likely get right back into the game. Mr. TORISSE: As soon as I'm legal, I'll be back into the department stores. As a matter of fact, I'm going to call around and see who will be more than willing to take me back on again in the credit world. I don't think it will be that hard. LEHRER: As we saw, not everyone agrees about the problems of credit cards. We demonstrate that further now with Joan Claybrook, president of Public Citizen, a Washington based consumer group founded by Ralph Nader, and Bob Carlile, senior vice president of an Ohio banking group known as Trustcorp, Inc. , headquartered in Toledo. He speaks for the American Bankers Association on credit card issues. Ms. Claybrook, should we feel any sympathy at all for those people depicted n that piece from San Francisco?JOAN CLAYBROOKi, consumer advocate: Absolutely. The banking industry is overselling, saturating the market with credit cards. They send them to prisoners, they send them to 18 year olds, they send them to people who are not credit worthy, because this is a very important part of the profitability of banks today. In fact, without the excess profits they're making -- five times what they make on other loans -- that they're making off of credit cards, the banking industry wouldn't be as profitable as it is today. LEHRER: These people are victims, in other words? Ms. CLAYBROOK: I think they are in part. I think that there are problems with people who over spend. There's no question about it. But lots of times, people don't realize, as this section depicted, how much they're spending and how much they're getting in debt. There's no disclosure, really, of any value before you get a credit card. One of the major legislative proposals is to require disclosure of interest rates and fees and charges and grace periods that you have with credit cards, which today is not disclosed by banks. LEHRER: Mr. Carlile, guilty as charged? BOB CARLILE, American Bankers Association: No, I don't think so, Jim. In fact, I know not. First of all, I think you have to put your earlier piece in some perspective. Between 97% and 98% of the American public who use credit use it very wisely, pay their debts on time, pay it off on time, take the advantages of an interest deduction where that's appropriate, get the convenience of a credit card, don't have to carry cash, get a record keeping ability, all kinds of things that I think need to be set in a proper perspective. Credit is used -- LEHRER: These people, in other words, are very much the exception. Mr. CARLILE: Very much the exception. Credit is used wisely by the American public on the one hand, and secondly, it's not thrust on the American public by the lenders on the other. It is illegal for any lender to mail a card in the mail that is unsolicited. What you're seeing here are either what we call pre screened applications or pre approved applications. But in both cases, the customer has to agree to accept the card if, in fact, the credit is approved and sent to him or her. The last point I think I'd make on your original question is that no one is forcing them to use the credit. Whenever you go into a grocery store, you don't buy all the groceries. Whenever you go to a party, you probably don't eat all the food. And as a result, we as Americans, I think, have to make and do make conscious and usually very intelligent choices every day in our life -- where we work, whether we're married or not, where we go to church. And indeed, the use of credit is a privilege; it's not necessarily a right. And 98% of the time, it's used intelligently and wisely. LEHRER: Ms. Claybrook? Ms. CLAYBROOK: I think that's correct. I think that the real abuse here is in the interest rates. And that's the issue that the consumer groups have raised. In fact, even the Wall Street Journal has bowed its head in our direction. They published an article yesterday saying that, from now on, it's going to publish once a month the list of the banks that offer the lowest credit card interest rates. What we have today are credit card interest rates of 19%, about -- not all banks, but most of them. The large banks control this issue. Twenty five percent of the cards are controlled by six large banks. LEHRER: Twenty percent of all the credit cards? Ms. CLAYBROOK: Right. Twenty five percent. LEHRER: Are controlled by six major banks. Ms. CLAYBROOK: By six major banks. And that's why the interest rate hasn't come down -- because the banks need this for profitability, and the interest rate today -- the discount rate, for example -- is way down in the 5, 6, 7% range, whereas interest rates for credit cards are way up at 19%. LEHRER: But why -- what is the connection between that and these people using their credit cards too much? Wouldn't that cause them to use it less, rather than too much? Ms. CLAYBROOK: Well, no. I think that most people do not realize the enormous differential between the rate that banks are lending money at today and the rates that they're being charged on theircredit cards. LEHRER: I see. Ms. CLAYBROOK: So that's one reason why they abuse them. Another reason is, people have gotten -- there's no question they've gotten dependent on it. And what we have started is something called a fight and switch campaign, which says take a look at the credit card interest rate that the bank that holds your credit card offers. Because each bank offers something different, and most people don't realize that. Mr. CARLILE: I saw that Wall Street Journal article that they are going to start publishing, as Joan says, every month a listing -- representative listing -- of the credit card rates around the country, and I think that's fine. What she didn't go on to say was, though, that in that same list, those rates ranged from something around 10. 5%, in the case of a couple of banks in Arkansas where they're mandated by law to stay at around 11 or less, to something up in the low 20s -- a couple banks in Missouri that I saw. I think that the general public does not really know, does not have an understanding what goes in -- what has to go into credit card pricing, and so doesn't really understand why credit card rates have had to stay as relatively high as they have when other kinds of lending rates have come down. LEHRER: What are they? Mr. CARLILE: May I speak to that for just a minute? LEHRER: Sure. Mr. CARLILE: First of all, with a credit card loan, just as with any other loan, there is the so called cost of money that goes into funding that loan. And that's no different with a credit card loan than it is with a loan on your house or a loan on a boat or something like that. That is now roughly in the 6% or 6. 5% range. But what most people don't understand, what goes -- LEHRER: And it costs the bank to get the money in the first place. Mr. CARLILE: They're paying, say, a saver 6% incrementally to fund the loan that becomes a credit card loan. LEHRER: All right. Mr. CARLILE: But what most people don't understand is that the problem or the costing system really starts there; it doesn't end there, as it might, virtually, with a mortgage, which is a loan that doesn't take very much administrative cost. In the case of a credit card, several other things do happen. First of all, credit card lending is what I call lending at $40 a clip. That's the average amount of each credit card transaction: $40, $42, something like that. There are literally hundreds of millions of credit card transactions transacted in this country every single year. As a matter of fact, in the period between Christmas -- or between Thanksgiving and Christmas, credit cards were used in this country at the rate of about 5,300 transactions per minute. This is in many ways -- LEHRER: Fifty three hundred transactions. Mr. CARLILE: This is in many ways -- LEHRER: Who in the world counts those things up? Mr. CARLILE: -- how people shop in this country. But you know what's interesting, Jim. I might just pause for a minute there. Credit cards are not used nearly as rapidly or nearly as frequently as cash or checks. Of people who used transactions -- who made transactions greater than $10 a piece in a recent survey -- 1,000 of them were surveyed -- 15 of them spent for cash, 10 used checks and only 2 used credit cards. LEHRER: Does that surprise you? Ms. CLAYBROOK: No, it doesn't surprise me. But I think that the key issue here is that the rate charged for interest rate for credit cards by and large, the majority of the banks, they're charging between 17% and19%. Let me finish. And that is a very important issue, because back in 1980, when the interest rate was way up in the 15, 16, 17% range, credit card interest rate was 17%, 18%. And today, when the interest rate is way down in the 5, 6, 7% range, it's still up there. Why isn't a differential of 5% -- five percentage points above the cost of money to the banks -- enough? Mr. CARLILE: May I speak to that? First of all, back in the early '80s that Joan's referring to, there were a lot of state usury statutes that had credit card plans literally losing money. Visa lost $180 million in 1981, $138 million in 1982, because we were bumping up against those usury statutes, and the banks could not charge more. May I finish my model here as to why it costs so much? We talked about lending at $40 a pop. Literally, that's the average size of each transaction. That creates millions of transactions, as we've said, and they're of relatively small dollar value, each one. And so as a result, there's an awful lot of paper that flows through the network. It's a very expensive system to run is my point. Generally, the cost of operations in a credit card plan, because of these large number of transactions at relatively small dollar amounts, adds another 5% to the total cost of the plan. Third ingredient is the cost of float. Most people don't understand that when you pay off your credit card, as between a third and a half of all Americans do, at the end of the 30 day billing cycle, the bank has extended the money to you for that period of time, but is getting no interest in return. That float concept, which is perfectly legal within the confines of the plan, adds another 3%. And then the fourth dimension is the cost of fraud. The cost of fraud is growing enormously in credit card operations right now. Three out of two hundred applications are fraudulent. There are 100,000 fraudulent transactions -- LEHRER: The application -- Mr. CARLILE: The applications are fraudulent, and 100,000 fraudulent applications a day -- 100,000 fraudulent transactions a day across the country. Fraud charge offs last year were $200 million. That's up tenfold from the early '70s. And it's growing geometrically, not arithmetically. LEHRER: There are $200 million that somebody charged on credit cards that -- Mr. CARLILE: Were charged off. LEHRER: Charged off. Mr. CARLILE: Tremendous administrative costs to run a plan, just because of the fraud portion, to say nothing of the operations and the float and the cost of money portions. Fraud adds at least 1% or 2% to the total cost of the credit card plan. You add up those four dimensions, and you have a total cost to the lender something in the mid teens. That's why these rates in the 15%, 16% range are not the profit makers that many groups think they are. Ms. CLAYBROOK: Well, there are lots of issues that have been raised here. Let me see if I can answer some of them immediately. First of all, banks make five times as much money on credit card loans as they do on their other kinds of loans. That's number one. Number two, in terms of fraud or particularly default, there's -- LEHRER: Excuse me. What is your point there -- that that means if it was that bad a deal, they wouldn't lend it. Ms. CLAYBROOK: That's right. They wouldn't do it, number one. Number two is that there -- LEHRER: Nobody's forcing the banks to do this. Ms. CLAYBROOK: No. They're doing it on their own. LEHRER: All right. Ms. CLAYBROOK: And number two, they're over marketing it. For example, they're now stealing credit cards from each other. Right now, one of the latest gimmicks is that they're going to nonprofit organizations and membership organizations and saying, ''Listen, we'll give you a piece of the pie if you will ask all of your members to buy our credit card -- our bank credit card -- rather than somebody' else's bank credit card. '' The market is saturated, and if -- LEHRER: Explain that. Ms. CLAYBROOK: Well, for example, a bank will -- I don't know whether Mr. Carlile's bank has done this, but -- LEHRER: Do you do this? Mr. CARLILE: She's referring to an affinitive card, where you go to various trade associations, and you offer cards to all of their members for some sharing of the profits that are involved. The profits in the plan are nothing like what she relates. The Visa plan last year earned only 2. 7% on its revenues after tax, about 5% before tax. This is not the moneymaker in lending institutions that people think it is. LEHRER: Then why do they do it? What about her point? Mr. CARLILE: Because they do it as part of what we call a full service relationship. This is part of American banking. There are 160 odd Visa and Mastercharge cards across the country. They're accepted in 5 million merchants. There are $50 odd billion outstanding. This is, in many ways, the way Americans have chosen to shop. Ms. CLAYBROOK: Banks made $10 billion last year on credit cards. LEHRER: Net? Ms. CLAYBROOK: No, profit. Profit. That's right. Between the charges to the merchants -- they charge merchants for allowing the cards to be used. They charge all sorts of fees they didn't' charge five years ago. There's a fee if you exceed the limit on your card, when you don't even know you've done it. There's a fee for late charges, all sorts of fees that have been added on in addition to the interest rates. So they're making a lot of money on this. If there is a way of trying to limit the problem, it has to start with the banks. They can't go around complaining about it out of one side of their mouth and making billions of dollars on it on the other side of their mouth. Mr. CARLILE: Could I use the word perspective again? There are approximately 9. 6 cards, on average, in the American family. Only -- LEHRER: Nine point six cards? Mr. CARLILE: On average. LEHRER: Each family has nine credit cards. Mr. CARLILE: But only 8. 3 are carried. Only 7% are used. But only 1. 6 cards are interest bearing. The American public, if you put it in perspective and take it out of the context of your earlier piece here just a minute ago, the American public uses credit wisely. The accumulation of consumer credit recently has been at the high -- generally at the high end of the economic spectrum. What I mean by that is, the top 20% of American wager earners have accumulated about 45% of consumer debt recently. And on the bottom -- may I speak to the bottom, then, for just a minute? Many people think it's the lower economic end that is being maligned here. That isn't true. They're probably the smartest of all. Forty five percent of people who have $10,000 or less in income pay off their credit card loans every 30 days. Ms. CLAYBROOK: By the way, they're called deadbeats. I just want to point that out. In the banking industry now, they call people who pay off their debts deadbeats, because they don't earn the banks any money. I think that that's an interesting change in morality and point of view from the early -- LEHRER: All right, we need to wind this up. Your point, Mr. Carlile, is that there's no real serious problem in the credit card business today. It's a very small number of people who are abusing it. The banks have got things under control. It's a service that's provided; nothing to get excited about. But your position is that something needs to be done, which is what, in a nutshell? Ms. CLAYBROOK: I think there needs to be a limit on the interest rate. The interest rate is excessive. LEHRER: By law. Ms. CLAYBROOK: By law. To use -- LEHRER: Federal law. Ms. CLAYBROOK: Federal law. It should be a certain percentage point above the cost of money to the banks. They should not be charging consumers this. If -- LEHRER: And everybody should be treated the same. Ms. CLAYBROOK: That's right. If we had an interest rate that was like six points below what it is today, which is about what it should be -- about 12%, 10, 11, 12% -- consumers would save $4 billion a year. That's -- Mr. CARLILE: May I speak to that for just a minute? That's been tried in the Congress several times. It has always failed for various reasons. Ms. CLAYBROOK: And we have a new Congress. Mr. CARLILE: It just is not the way to deal in an open marketplace. A case in point is the state of Arkansas, that has this kind of a law on a local basis -- not a national basis, obviously. Of 260 banks in Arkansas that are chartered to do business down there, only three can offer credit cards or choose to offer credit cards. And one of those three has petitioned to go out of state, where there isn't this usury limit. If you did this, credit cards would dry up, and the convenience of them would be withdrawn from the American public. Ms. CLAYBROOK: If it was done for everybody, it would be okay -- by federal law. LEHRER: All right. Joan Claybrook, Mr. Carlile, thank you both very much. Phelps Dodge Plant Closing MacNEIL: Now we have an update on a story that we've covered in the past. The economic horizons of Douglas, Arizona, the kind of place that used to be called a company town, drastically narrowed this week. Peggy Giddins of KUAT TV, Tucson, has a report.

PEGGY GIDDINS [voice over]: The smokestacks of the Phelps Dodge smelter dominate the landscape of Douglas, Arizona, just as they have dominated the life and economy of the community on the U. S. --Mexico border since the turn of the century. But yesterday, the last molten copper was poured, in anticipation of the official closing of the smelter at midnight tonight. For Richard Morris, his final shift ended as his son's began. RICHARD MORRIS, copper worker: Well, I don't feel too good about it, you know. They've never shut down any tobacco companies, and they've killed more people with cigarettes or automobiles too -- air pollution from them. They've, you know, hurt a lot of people. They've never shut any of them down, so I don't know why they had to start with us, you know. GIDDINS: The outdated smelter, which has operated without pollution controls under waivers from federal and state clean air standards, was to be shut down in January of 1988, when the waivers expired. But that deadline was moved up one year after environmentalists won their battle to force the company to comply with clean air standards or close shop. [on camera] Officials of Phelps Dodge had always said they would close the plant before they would install emission controls. They said it would cost an estimated $600 million to update the facility. But Phelps Dodge authorities say they felt 1988 was early enough to close it down. DICK KAMP, environmentalist: We would have wanted Phelps Dodge to clean up and continue and to be a major part of the economy. They didn't want to. They didn't feel it was worth the investment. GIDDINS [voice over]: Phelps Dodge was the major employer in Douglas until recently, with an annual payroll of nearly $10 million. But the town and its people are determined to survive without the smelter. BEN WILLIAMS, mayor, Douglas, Arizona: We think certain industries and people would otherwise have been attracted here, had they not seen the smoke. That was offensive to them. By not seeing the smoke, I think that they will come to this area. GIDDINS [voice over]: Three hundred and fifty employees have lost their jobs. Some are being retrained in a project funded with federal, state and local money, with help from Phelps Dodge. The center is located in the old Phelps Dodge hospital. Others will seek early retirement or transfers to copper operations elsewhere. Douglas is too remote for workers to commute to other copper facilities, and many who have lived in the community of 13,000 people all their lives don't want to move. For them, the future is uncertain. Joe Robles is a third generation Phelps Dodge employee. JOE ROBLES, copper worker: My father worked here close to 45 years, my grandfather another 25. Then I've put in over 33 years. It's been part of my life. I've been here -- I was born and raised here. My kids were born and raised here. And seeing it go down really -- it was part of a town, part of our life, and it's kind of saddening in a way. LEHRER: Again, the major stories of the day. As many as 16 people may have died in a midair collision in Utah. A private plane collided with a commuter airliner 15 miles southwest of Salt Lake City. Officials said 60 mile an hour winds were recorded shortly after the accident. U. S. and Soviet arms control negotiators began a new round of talks in Geneva. And West German officials arrested a suspect in the 1985 TWA hijacking. Good night, Robin. MacNEIL: Good night, Jim. That's the News Hour tonight, and we'll be back tomorrow night. I'm Robert MacNeil. Good night.