The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, Tom Bearden and Margaret Warner look at making law and order in Kosovo. Paul Solman has a NewsHour encore report on the new bout of luxury fever. Terence Smith examines the reporting methods of super reporter Bob Woodward. And Poet Laureate Robert Pinsky offers some thoughts of the beach. It all follows our summary of the news this holiday.

NEWS SUMMARY

JIM LEHRER: The gunman in the Midwest who targeted racial and religious minorities is dead. Officials said 21-year-old Benjamin Smith shot himself as he struggled with sheriff's deputies after a high-speed chase in ruralIllinois. Smith advocated white supremacy. The shootings began Friday in suburban Chicago. Smith shot and wounded six orthodox Jews on their way to evening services. He later killed a black man, Ricky Byrdsong, the former head basketball coach of Northwestern University, and a Korean-American man who was shot Sunday in Bloomington, Indiana. A police spokesman in Skokie, Illinois, commented:

SPOKESMAN: We believe that he acted alone, but, as I say, you know, the investigation is ongoing. And, you know, it hasn't ended as a result of the death of M. Smith. You know, we are looking deeper into it. We want to find out why this occurred and how this occurred.

JIM LEHRER: This was a very hot day in much of the Northeast and Midwest. Temperatures were over 100 degrees in Philadelphia, Washington, and Newark, New Jersey. High humidity combined to make the heat index, or apparent temperature, go well above triple digits all along the Atlantic Seaboard. Excessive heat advisories were in effect from Boston to Washington, where forecasters urged people to stay inside. President Clinton began a tour today of some of America's poorest areas. The first stop was Eastern Kentucky. The four-day trip is designed to highlight the President's new markets initiative, a $15 billion plan involving tax credits and loan guarantees for businesses that invest in impoverished areas. Mr. Clinton spoke in Hazard, Kentucky.

PRESIDENT CLINTON: You know, these economists in Washington and New York used to tell me that if the unemployment ever dropped below 6 percent in America, we'd have inflation out of control. Well, it's been under 5 percent for two years now, and inflation is still low. And I'm telling you, it can go lower. We can hire more people. We can have more jobs. But we've got to go to the places where there have not been enough new jobs. And there has not been enough new investments. And we have to provide incentives for people to go there.

JIM LEHRER: Overseas today, India said it will keep fighting to evict Pakistani forces from territory in the disputed Kashmir region. President Clinton and Pakistani Prime Minister Nawaz Sharif met at the White House yesterday. They pledged to take concrete steps to restore the cease-fire line in the Himalayan territory. We have more from Gaby Rado of Independent Television News.

GABY RADO, ITN: The Indian army's fierce assault on Islamic fighters who've crossed the cease-fire line from Pakistani-controlled Kashmir is showing signs of destabilizing the old enemy across the mountains. For six weeks now, the South Asian neighbors, with nuclear power since last year, have waged a potentially dangerous conflict over Kashmir. The line of control, or old front line established after three wars since independence, has been breached by militants from Pakistan. Indian forces over the weekend took Tiger Hill from the insurgents, who had threatened to cut the main road from Srinagar, the Indian Kashmiri capital. When the Pakistani Prime Minister, Nawaz Sharif, promised President Clinton yesterday in Washington to honor the line of control, he was implicitly admitting his government had supported the Islamic fighters. But it's by no means certain the Mujahadeen in the mountains will deliver what the Pakistani leader has promised. There, political spokesmen have today been calling the deal a betrayal, and have demanded Nawaz Sharif's resignation. He's taking a big political risk.

JIM LEHRER: NATO's commander confirmed today there is a deal on allowing more Russian troops in Kosovo. Nearly 3,000 Russian soldiers willbe joining the 700 already there, but General Wesley Clark said they will not be allowed into the Italian-patrolled sector. Russian officials had wanted that. We'll have more on Kosovo right after the News Summary. Also coming, Luxury fever, Bob Woodward's shadow, and some beach poetry.

JIM LEHRER: Establishing law and order in Kosovo. Tom Bearden begins.

TOM BEARDEN: The war has been over for three weeks, but Kosovo is still a very dangerous place. Ethnic Albanians continue to seek revenge for months of ethnic cleansing by Serb troops. Last week, three Serb civilians were killed after they had left their convoy, which was being escorted out of Kosovo by British soldiers. There have been dozens of other attacks on Serbs, and at least seven have been killed. Homes belonging to Serbs have been looted and burned. These homes in Pristina belonged to gypsies who ethnic Albanians say took part in the Serbian repression during the bombing campaign. To date, more than 70,000 Serb civilians have fled Kosovo, illustrating the problem the United Nations is having maintaining security. According to the peace agreement, all Serb troops and police had to leave Kosovo, although on Friday, NATO soldiers arrested 11 men who appeared to have violated the accord. The United Nations says it is the ultimate civilian authority in Kosovo at the moment. Its job includes resettling refugees, policing the streets, restarting services, and setting up a political administration. For now, the 29,000 soldiers of KFOR, the Kosovo peacekeeping force, are performing most of those duties. They're disarming Kosovo Liberation Army guerrillas and preserving evidence of war crimes, including mass grave sites. They're also removing land mines and instructing returning refugees on how to spot and avoid the mines and booby traps which litter the countryside. But the U.N. Says KFOR isn't enough, and has asked for 3,100 police to keep order. The United States plans to send 450 officers by the end of the month. U.N. Special Representative Sergio de Mello has been serving as the acting administrator in Kosovo. Last week, he swore in a multi-ethnic nine-member panel of judges, who will hear the cases of the more than 150 people arrested by KFOR troops.

SERGIO VIEIRA DE MELLO: There is absolutely no doubt in my mind that justice is possible and necessary if we are to reconcile the different communities in this province and to establish the institutions that the Security Council demands we establish.

TOM BEARDEN: On Friday, France's Health Minister, Bernard Kouchner, was tapped to replace de Mello and run the civilian operation to rebuild Kosovo. Ethnic Albanians cheered his appointment, but violence erupted soon after. In Pristina, British troops killed two people who were firing guns in the air. And a Serb bank was attacked and Serb flags were burned.

JIM LEHRER: Margaret Warner takes the story from there with a discussion that was taped on Friday.

MARGARET WARNER: For perspective on what it will take to bring law and order to Kosovo, we turn to Shashi Tharoor, Director of Communications and Special Projects for U.N. Secretary- General Kofi Annan. He played a major role overseeing U.N. peacekeeping in the former Yugoslavia from 1991 to 1996, including the U.N. operation in Bosnia. Lieutenant John Gorman of the New York City Police Department was a police monitor in Bosnia in 1996 and '97. And Ivo Daalder was Director of European Affairs on President Clinton's National Security Council from 1995 to '96. Welcome, gentlemen.

Mr. Tharoor, why is it proving so difficultto stop the violence in Kosovo?

SHASHI THAROOR: It's an enormously complicated challenge, first of all, because we're speaking about law and order in a place where there really isn't any existing system of laws, and there is, therefore, a great deal of disorder. We're not talking about a situation where there is an existing functioning police. Most of the police were Serb, and they've left. We're not talking about a situation in which there is an existing functioning legal system. Most of the people of Kosovo have been uprooted and displaced in the tragic events of the last few months. We're talking about starting from scratch, but amidst destruction, amidst lawlessness, and in a situation in which the international community is scrambling to put in the people, the expertise, and the resources to deal with this.

MARGARET WARNER: And so for now, does the responsibility rest with NATO-- the NATO-led KFOR force, I should say?

SHASHI THAROOR: That's right. The KFOR force has, under the Security Council resolution, responsibility for public safety and order in general, and also for maintaining civil law and order for the immediate initial phase. We do hope, of course, that once the international civilian police are on the ground and deployed that we can take over, not the overall public safety and order, which will always have to be with the soldiers, but the civil law and order, the kind of regular policing that every society needs and has. We need to able to do that, but, of course, we can't deploy police we don't have. We've turned to member states of the U.N. - governments -- to give us police officers we can send out there as quickly as possible.

MARGARET WARNER: Mr. Daalder, in the meantime, do you think NATO is doing all it could?

IVO DAALDER: Well, given it has 23,000 the troops deployed in this much- dispersed environment as it can, it is trying through its presence, and actually a muscular presence, to try the best job that it's doing. It would be nice to have 50,000 troops in order to be in more villages and to be there with more people, but as we stand, NATO is doing more or less what it can do. In some sectors, it is acting slightly more robustly, particularly in the British, the German, and the American sectors. In the Italian and French sectors, where there are less troops so far, there is a standoffishness, primarily because there is a fear that if things go wrong, there may be nobody to back up. But in general, NATO is doing as much as it can, given the very, very difficult circumstances that it's facing.

MARGARET WARNER: Lieutenant Gorman, General Wesley Clark was on this show a few nights ago, and he said, as Mr. Daalder did, "We're doing the best we can, but we are not police." From your experience, what is it police can do that a military force can't do?

LT. JOHN GORMAN: Well, if you've seen the videos, you'll see how awkward the NATO troops are with the policing function. They're really not set up for that; they're not trained for it. And most importantly, they really don't want to get involved with it. It takes experienced police officers from around the world to do that kind of job-- things like domestic violence and displaced people and basically landlord-tenant type problems, which is what you are going to be faced with every single day. It's not a military function; it's a police function.

MARGARET WARNER: But landlord-tenant problems with a lot of underlying ethnic hatred and other -

LT. JOHN GORMAN: Absolutely. But it's not something you want to be mired down with -- with tanks and armored personnel carriers. You need people on the round who can handle these small day- to-day problems.

MARGARET WARNER: All right. Now, you heard Mr. Tharoor say they're trying to get an international police force in there. Take us through the steps, what it takes, then, to get from that to create a sort of functioning civilian law-and-order operation.

LT. JOHN GORMAN: Well, the first step is to identify the nations that will bring monitors over, and most countries send their best and their brightest. It's difficult for the United States in that we do not have a national police force, so it's up to the individual police chiefs to make the commitment to allow their people to go over for a year. Then you need to train them; make sure you have the right people. Carefully select them; make sure that they are going to operate under the U.N. command. They have to be willing to go with the U.N. mandate, not their own agenda, and operate as any other police force, naturally with the help of interpreters and with substantial backup from the NATO forces.

MARGARET WARNER: And then, Mr. Daalder, the next step is, what, to train local people to become a police force?

IVO DAALDER: Ultimately, the goal here is to have a functioning society that does not rely on the international community to function, so one of the main goals is to build up the society at a local level in two different ways: One, a police force that has people who can do the policing in a way that is according to democratic principles-- that is, you don't want to have Albanians policing Serbs in a manner that aggravates the situation; and then secondly, you need to build up the judicial system. You need to have a court structure, and that if the police arrest people, they can be tried and convicted and then go to prison. All of that has to be rebuilt basically from the ground up, and it's going to take quite some time before we're there.

MARGARET WARNER: It's true, is it not, Mr. Tharoor, that if you just have police and then you don't have prosecutors or courts or jails, you don't have too much?

SHASHI THAROOR: Right. We're very aware of that. In fact, we've already moved to appoint nine judges from all the communities-- Serbs, Albanians, and even a single Turk from Kosovo. The idea is indeed to try and get the judges functioning, get a system of justice, because after all, policing is all about trying to ensure justice. I do want to say that, of course, what Ivo Daalder said is absolutely right. The society has to be able to police itself. Initially the internationals will have do the policing for them, but the idea very much is to recruit and train policemen from the Kosovo community, people who reflect their communities, including the ethnic diversity of their communities, and people who can then go ahead and actually do the policing with our police monitors sort of supervising them. Policing the police will be our function at that point. And then eventually, we do hope that we would be able to have a Kosovo police reflecting the Kosovo people in charge of their own affairs, and that will of course be the way in which the international community would like to leave the problem at the end.

MARGARET WARNER: Lieutenant Gorman, there are reports from the U.N. that some U.N. members who are willing to send police don't want those police to be armed. From your experience, do you think the international police need to be armed, and what was the experience in Bosnia on that?

LT. JOHN GORMAN: Well, the U.N. makes a decision, a wise decision. Naturally there was a reluctance on all of our parts not to be armed in Bosnia. As it turned out, the wiser heads prevailed. We didn't need to be armed. It was not a chaotic situation; it was a tense situation. In Haiti, for instance, the U.N. police are armed, because the situation there is somewhat chaotic. To me, from what I've read, it certainly makes sense to be armed, and I think that will be the prevailing philosophy. And I think wiser heads will prevail again, and the proper police decision will be made, to have an armed police force.

SHASHI THAROOR: That's right. It is being made in precisely that sense. We are going to arm the police, and we are also going to have to have special units, sort of like formed constabularies, armed police with more than just side arms, which is what most of the police will carry, who can do things like crowd control and riot management, people who can function in formed units, almost in the paramilitary sense. So we'll have special police units like that. We'll have individual U.N. and international police wearing side arms. And, in effect, the unarmed police that some governments insist on providing will have to do desk work at police headquarters. The people out on the beat will all have to be armed.

MARGARET WARNER: Mr. Daalder, from the Bosnia experience, and I know it may be hard to extrapolate, but it's more of the police function -- or is it more of the crime problem? Is it political and sort of ethnically driven, or is it just good, old-fashioned crime, people taking advantage of a chaotic situation, as Mr. Tharoor called it?

IVO DAALDER: I think the problem in Kosovo is more of the crime problem that is aggravated by what has gone before in the last year. There are a lot of people coming back to homes that have been destroyed. There's a lot of people who are out for revenge, out to take back the property that was stolen from them, and it's that kind of aggravated crime problem. In Bosnia, it was much more of an ethnic problem, people who truly were turning against each other and needed to be separated in that way. Here we face an immediate problem of people returning, not having places to live, and it is, in that sense, a short-term problem. Once the housing reconstruction starts, once, in fact, the initial revenge wave has taken place, however bad that may be and however much we will try to minimize that, once that has happened, we are back to a policing situation that is more normal, still very complicated, but more normal than we had in Bosnia.

MARGARET WARNER: Mr. Tharoor, would you agree with that assessment? And also, given the rapidity with which Serbs are leaving Kosovo-- I think they're down to fewer than 100,000 now-- does the revenge killings or revenge crime necessarily sort of abate as more and more Serbs leave?

SHASHI THAROOR: Well, first of all, we'd like more and more Serbs not to leave. We'd like those who have left to come back, and we'd like Serbs from Kosovo to believe that they have rights in Kosovo and that the international police will uphold those rights, just as we are there to uphold the rights of Kosovo Albanians or gypsies or Turks or anybody else. The police are going to function without regard to nationality and ethnicity. Now, it is important, I think, as Mr. Daalder pointed out, that we accept there's a great deal of lawlessness and there's a lot of crime to worry about. We can't afford to be too complacent about the fact that we're not driven into different national groups as in Bosnia, because the problem is, at least in Bosnia, there were existing police forces whom we could superviseand monitor. Here we're going to be starting from scratch, and the U.N. police is going to be doing much more of the direct, on-the-beat policing than it needed to do in Bosnia, as well as eventually supervising the police force that we will have to create. So the challenge in some ways is actually greater than Bosnia, because we're doing more of the process from a lower base, starting with practically nothing.

MARGARET WARNER: Lieutenant Gorman, how would you compare the task ahead in Kosovo versus Bosnia?

LT. JOHN GORMAN: Well, certainly it's a more chaotic situation. It has been said that there was a operational police force in Bosnia. Basically, the Yugoslavian police force broke into their ethnic contingents and formed a police force. And they were an effective police force when they dealt with their own people. When they dealt with other people, of course, there were problems. Here that there is that vacuum, and that's why there's a need for a U.N. police enforcement unit. In Bosnia, we were police monitors. We were merely there to monitor the people. I just wanted to add, there was some concern about the Russians. And to me, the strength of the international police task force is the diversity of the people that are there. And there will be people from all around the world, and the Serbs can take some comfort in some people that they identify with more. And that's the strength of an international police force.

MARGARET WARNER: What do you think, Mr. Daalder, are the lessons from Bosnia, or what can be taken out of the Bosnia experience?

IVO DAALDER: Well, I think we're learning them as we go along. The first and most important lesson that we learned in Bosnia is that there is a gap between the international police force that was in Bosnia unable to have executive functions to do the arresting and the policing, and the military that was unwilling to take that place. Here we have made very clear from the beginning that NATO will in the first instance do civilian law and order until such time that there is an international U.N. police force capable of taking over. And then you have this seamless web between the NATO force and then the civilian force, and as the local forces get trained, a backup in that sense so that the gap, the security gap that was present in Bosnia is not going to be present in Kosovo, even though we still see lawlessness, as we do indeed in societies that have normal policing.

MARGARET WARNER: Mr. Tharoor, lessons of Bosnia?

SHASHI THAROOR: Well, I agree with the ones that have just been mentioned. In addition, I would say it's vital, as we learned in Bosnia, that the police force must reflect the community it serves. It's important we don't have a situation, as we sometimes had in Bosnia, where you had people of one ethnicity essentially policing, for which often you can read the word "oppressing," other ethnicities. Here we must have a police that's reflective of the ethnic variety in Kosovo, and if that means strongly Albanian composition, so be it. We'll have to find and recruit, train and deploy more Albanian police than Kosovo's ever had. A second point, frankly, is we have to ensure that the force is clean. We can't have people with dubious pasts, people who have indulged in actions which might, in fact, make them undesirable to be policemen. And there are some people with certain, shall we say, controversial backgrounds, who are trying to muscle into positions of authority. And we have to deal with that. That's turning out to be an important challenge, too. But I think as long as we go in with a clear head and no illusions, I'm fairly confident that we can actually create a police force worthy of the community and one which can bring peace and justice to Kosovo.

MARGARET WARNER: All right. Well, thank you all three, gentlemen, very much.

SHASHI THAROOR: Thank you.

JIM LEHRER: Still to come on the NewsHour tonight, luxury fever, Bob Woodard's methods, and some beach poetry.

ENCORE - LUXURY FEVER

JIM LEHRER: A NewsHour encore. The American economy in overdrive. Our business correspondent Paul Solman of WGBH Boston reports.

ROBIN LEACH: This is the world's number one restaurant. Only in this day and age would millions be spent on such fabulous carpets, such incredible chairs. And the service is supreme. This is living the high life.

PAUL SOLMAN: No, your TV did not spontaneously change channels. That is Robin Leach, whose "Lifestyles of the Rich and Famous" made him the video chronicler of conspicuous consumption these past two decades.

ROBIN LEACH: I'm Robin Leach, with those champagne wishes and caviar dreams.

PAUL SOLMAN: And indeed, the rich have been getting richer, their lifestyles heating up as almost never before. But for a serious news program, that raises some serious questions. Just how hot is it at the top? What are the consequences of the trend? And briefly, is there anything the rest of us can or should do to change things, besides of course sometimes crabbing about them? Let's begin with the wealth explosion itself, which is why we're at New York's elite eatery, Le Cirque 2000. The prices here range from lofty to, well, $15,000 for a rare Pinot Noir.

PAUL SOLMAN: What's the most expensive that you actually sell? $8,200.

SPOKESMAN: It's a Petrus 1961.

PAUL SOLMAN: And do you sell --

SPOKESMAN: Oh, yeah. Easy, easy.

PAUL SOLMAN: Wines the price of small airplanes have become so common during the Robin Leach decades that it's getting harder to really make a statement. Leach's idea of extravagance?

ROBIN LEACH: The all-gold house was probably the most obscene thing that one could ever wish to see. I mean, it was gold walls, gold floors, gold ceiling, gold cutlery, gold crockery, gold tables, gold furniture. The two people who owned it had even spray-painted their matching Rolls Royces in gold dust.

PAUL SOLMAN: Now, ever since Robin Leach began recording such images, Cornell Economist Bob Frank has been pondering them. He's now written a book, "Luxury Fever," in which he equates the 1990's with the 1890's.

ROBERT H. FRANK, Author, "Luxury Fever": There's no question but that we're in the midst of another Gilded Age. The last great one was at the turn of this century. The robber barons had accumulated great wealth, and they spent it in very visible ways. The cyber barons of today have accumulated great wealth, and they're spending it in visible ways.

PAUL SOLMAN: Some of them, in fact, spending on the remembrances of gilded things past.

SPOKESPERSON: This is the original Vanderbilt Fabbri mansion. Come on in.

PAUL SOLMAN: Realtor Barbara Corcoran said there was lots of interest in this robber baron fixer-upper on the upper east side.

BARBARA CORCORAN: This house is the largest beaux arts mansion in New York City. It was built at the turn of the century. It is $30 million, and of course for that, you get 30 most magnificent rooms.

PAUL SOLMAN: 30 rooms?

BARBARA CORCORAN: Yes.

PAUL SOLMAN: Magnificent, but in need of work. In the dining room, beneath the carved ceiling, cheek by jowl with the family coat of arms: A walk-in safe. But no one remembers the combination. The kitchen? Well, some of us might call it a handyman special. Luckily there's light at the top of the stairs: Electrified cupids cradling, appropriately enough, their horns of plenty. But in the music room next door: A really big organ in need of really big repairs.

BARBARA CORCORAN: And the estimates are about $250,000 to get it working.

PAUL SOLMAN: And will people actually pay $30 million for the mansion, and then another $1/4 million to --

BARBARA CORCORAN: Easily, for this reason only: This is not just an organ we're looking at, this is a status symbol, so people will spend the money to repair it and show it off to their friends.

PAUL SOLMAN: Now, since our tour, the mansion's been sold. But there's still plenty of plenty to be had at nearby Harry Winston's, and it's going fast.

CAROL BRODIE-GELLES, Harry Winston, Inc.: We have seen more clients buying the signature classic jewelry than we have had in the past. Now there's a need for jewelry that can be worn to luncheons, to dinner parties, to afternoon teas, for socializing; and that's what this jewelry is.

PAUL SOLMAN: And there are more people who can afford it now.

CAROL BRODIE-GELLES: There are more people buying it.

PAUL SOLMAN: They don't like to talk about prices here, but let's just say that the diamond garland around our saleswoman's neck goes for about the total lifetime salary of a NewsHour correspondent. Now, to some observers, upper-crust spending like this is a darn good thing. It creates jobs. Even if you buy a bauble here, you're helping support diamond miners, gem cutters, jewelry designers, displayers, sellers, and a bit of the champagne industry. Hey, when Bill Gates built his infamous $50-100 million house, who got the $50-100 million? The people who put this thing together for him. "But wait a minute," say the critics, "Should there be no limit to the concentration of capital?" The top 1 percent already owns, by some reckoning, almost half of America's collective wealth. Plus, they're moving further from the pack in income as well. 20 years ago, those in the top 5 percent earned ten times as much as those in the bottom 5 percent. Today, they earn 25 times as much. The problem, say Bob Frank and others, is that this concentration of wealth leads to competitive spending that does little for the spenders, and meanwhile misallocates natural resources and human labor, labor that could be put to far more socially productive use than making multimillion-dollar watches. Frank likens luxury fever to the wastefulness of the Cold War nuclear arms race.

ROBERT H. FRANK: The U.S. built more bombs, the soviet union built more bombs. We weren't any more secure than before, but it was very important nonetheless that you not have fewer bombs than your rival. Well, it's the same with much of this spending.

PAUL SOLMAN: In other words, we measure our success not in absolute terms, but relative to those we compete with. And if that sounds a tad primitive, well, it certainly is. Now, we humans may seem a far cry from the Vervet monkeys on whom so much of the relevant research has been done --

ROBERT H. FRANK: But evidence from all these studies points in the same direction, that concern about position is a very deep-seated part of the human brain chemistry.

PAUL SOLMAN: In research on these primates and their level of the hormone serotonin, the neurotransmitter associated with feelings of contentment, dominant monkeys had twice the serotonin levels of their underlings, who actually displayed symptoms of depression.

ROBERT H. FRANK: This is, by the way, the neurotransmitter whose production or retention is stimulated by the drug Prozac. When you acquire high status, your serotonin level goes up. So apparently that's part of the motivation to acquire high status. It feels good to have high status. It feels bad to have low status.

PAUL SOLMAN: And numerous studies show, says Frank, that as with monkeys, so with man. But so what, you may well be wondering at this point. If status competition is as old as our oldest ancestors, what's the news here? Well, arguably, we're now at the key point of this story. What's new is that luxury fever is raging not just among the dominant males and females driving Lamborghinis ahead of the pack, says Frank; luxury fever has become epidemic, and is infecting Americans at every income level. Take cars, for instance. The middle income luxury fever for sports utility vehicles has driven the price of an American automobile to $22,000, up 75 percent from just a decade ago. The average house is twice as big as in the 1950's. And then there are the appliances. Juliet Schor studies consumption among the not-so-rich, and the advertisements that target them.

JULIET SCHOR, Economist, Harvard University: The ultimate statement is now being designed and hand-crafted in Italy, in Fabrianno. It's a range hood unlike any other.

PAUL SOLMAN: A range hood? Just the thing --

JULIET SCHOR: The thing that goes over the stove, passionately designed, innovatively styled, inspiring, the focal point for all that surrounds it.

PAUL SOLMAN: Range hoods now sell, in a normal Boston store, for up to $2,000; refrigerators, up to $6,000; stoves, up to $10,000. Pricey, sure, but just part of an old American tradition: Keeping up with the Joneses, no? "No," says Schor. Times have changed.

JULIET SCHOR: The big difference is that in the past, people made proximate comparisons. That is, they compared themselves with people who were nearby them in terms of their financial situations or their economic situations. Today it is much more likely that people will aspire to be in the top few percent.

PAUL SOLMAN: In fact, says Schor, studies show that fully one-third of Americans earning more than $100,000 say they can't make ends meet. And the reason it's happening more and more, Juliet Schor thinks, is that well-heeled lifestyles have now become so visible, largely because of television, that they seem, to viewers, the norm. Even middle American Monday Night Football was brought to you last season by Lexus, a car relatively few football fans can presumably afford. So keeping up with the Gateses means most Americans work too hard, says Schor, save too little, borrow too much.

JULIET SCHOR: Consumer credit has been exploding throughout the 1990's. Two-thirds of households in the $50,00-$100,000 income category hold credit card debts. Personal bankruptcies are at record highs, and have quadrupled over the 1990's.

PAUL SOLMAN: After working on luxury fever for years, Bob Frank's decided there's only one good way to treat it, to discourage excesses from the $2,000 range hood to the $3 million bra. His radical proposal: A steeply progressive consumption tax that would penalize people the more they spend. As a result, you'd spend less, and -- here's the economic benefit -- you'd save more, which should be good for all of us in the long run.

ROBERT H. FRANK: If you want higher growth, you save more.

PAUL SOLMAN: Because you put the money aside to build stuff for the future.

ROBERT H. FRANK: The money goes into an account. It's loaned out to a business. The business buys new equipment. That makes it possible to build more things than we used to have.

PAUL SOLMAN: In other words, instead of Bill Gates putting so much into that new cyberspread, say, he'd have the incentive to invest more, in some newfangled technology perhaps, that could become the next Microsoft. It would be just a different way of spending the same amount of money on the future instead of the present. And if Gates and his fellow rich insisted on maintaining their present level of luxury consumption, the government would take in more taxes from them. The taxes, says Frank, could then be used to make long overdue public investments for all of us, in safety, education, bridges, potholed roads -- take your pick. Unfortunately for Bob Frank, to many Americans, a consumption tax like this may seem extreme, even unfair, and thus be politically impractical, because one can picture protests not just from the rich and famous themselves, but those who aspire to become them. After all, Robin Leach didn't become a celebrity for no good reason.

ROBIN LEACH: "Lifestyles of the Rich and Famous" was born to mirror or be part of a social chronicle of the age of glamour and wealth finally bursting back into the American landscape. And people in America started saying, "if they can have that wealth, we can achieve it, too."

PAUL SOLMAN: Well, this is one story we were sorry to finish. You should have tried those desserts at Le Cirque. Moreover, we weren't sure what conclusion to finish with. On the one hand, luxury fever, stoked by status, helps make capitalism go round, so it's arguably good for the economy. Desperately seeking serotonin, we compete with those above us and try harder. On the other hand, it's an exhausting race almost all of us are doomed to lose. Well, after all our arduous research, we, at any rate, weren't convinced that any changes are in the offing, because the longing for luxury is part and parcel of an economy these days whose increasing prosperity increasingly fuels the fever.

FOCUS - WOODWARD'S SHADOW

JIM LEHRER: Now a debate about how one of America's best-known journalists does his job and to media correspondent Terrance Smith.

TERENCE SMITH: Investigative reporter and author Bob Woodward has been a journalistic fixture in Washington for more than two decades. His stock-in-trade: Getting the big story from the inside. As a metro reporter for the "Washington Post" in 1972, Woodward and colleague Carl Bernstein broke the biggest political story of the century: Watergate. The criminal acts and cover-ups they unearthed led to the eventual downfall of President Richard Nixon.

PRESIDENT NIXON: Therefore I shall resign the presidency, effective at noon tomorrow.

TERENCE SMITH: During the ensuing years, Woodward has penned several controversial and wildly successful books, including "Veil," a chronicle of the CIA's covert operations during the 1980's, and "The Agenda," a behind-the-scenes look at the first year of the Clinton presidency. And now comes "Shadow: Five Presidents and the Legacy of Watergate." While the book covers every president since Nixon, nearly half of the attention is devoted to the current White House occupant. The Clinton White House is described as a dysfunctional family, with an isolated President, an emotional First Lady, and a staff prone to infighting. In his books, Woodward reconstructs conversations, frequently verbatim, involving the President, First Lady, and high officials. His technique has provoked critics to challenge whether he is writing journalism, history, or something else altogether. The publication of "Shadow" has revived questions about Woodward's sourcing. For example, how was Woodward able to recount a sensitive private conversation between President Clinton and his attorney, Robert Bennett, in the days leading up to the President's deposition in the Paula Jones case? Bennett has denied violating attorney-client confidentiality and said that he has no idea who Woodward's sources are. Another controversy: Former White House Special Counsel Jane Sherburne says she was alarmed to see her name attached to comments, especially about the First Lady, in the book, comments she thought were given to Woodward on deep background, or off the record. And former White House Press Secretary Mike McCurry said that Woodward may have been mistaken in taking his description of a conversation with Hillary Clinton literally.

MIKE McCURRY, Former White House Press Secretary: If I left Bob Woodward with that impression that I was giving him direct, verbatim quotes, then we must have had a serious misunderstanding. I mean, his portrait of this history is only based on the people who have talked to him. It doesn't bear resemblance, in my memory, to what actually happened, but it's close.

TERENCE SMITH: But significantly, no one has challenged the factual content of "Shadow," which is climbing rapidly up the best seller lists.

TERENCE SMITH: Joining us to talk about "Shadow" is its author, Bob Woodward; one of his sources, Leon Panetta, who was White House Chief of Staff from 1994 to 1997, and before that served as President Clinton's budget director; and media analyst Alex Jones, formerly of the "New York Times," he is now a Professor of Communications at Duke University and executive editor of "Media Matters" on PBS. Gentlemen, welcome to you all. Let me say for the record at the outset that we invited Mike McCurry and Jane Sherburne to come on, join you around this table, Bob, and they declined. But let me ask you to respond to their complaints about your technique. Jane Sherburne says you attributed quotes directly to her that were on background or off the record. And you heard Mike McCurry.

BOB WOODWARD, Washington Post: Well, it's clear that no ground rules were broken at all. The book was carefully and exhaustively reported. And particularly what you see with McCurry is what we call "discloser's remorse." As he said in that interview, he said, "I wish in retrospect I had not said those things." He is not challenging any of it. He is saying he doesn't believe or does not recall giving me the quotes. You know, it's a non-denial denial in the classic form.

TERENCE SMITH: Well, he does say that you attributed.-- took his description of a conversation with Hillary Clinton and made it verbatim, which he says it was not.

BOB WOODWARD: No, he is not saying that. He said, "I did not give the quotes to Bob Woodward, and if he thinks I did, there's a misunderstanding." But he doesn't say the quotes are wrong.

TERENCE SMITH: And Jane Sherburne?

BOB WOODWARD: Jane Sherburne is complaining. I have the 155 pages of single- spaced interviews with her. Obviously, I've done it very, very carefully. She disputes some things in a deposition, but she's given kind of inconsistent answers in that deposition.

TERENCE SMITH: All right. Well, I wish she were her to describe it herself. Leon Panetta, you have -- you are quoted directly and verbatim in the book. Are the quotes accurate? And did they come from you?

LEON PANETTA: Terence, yes, they did. I mean, I think in the conversation, obviously, you try to describe what took place to the best of your memory. And so a lot of this is obviously sometimes a few years away from the present, and you're trying to get the best recollection you can. You can't say that any of it is an accurate quote as if you were there at the time, but at the same time, it kind of conveys, I think, the general impression of what was taking place at that moment. And I think Bob Woodward tries to capture that. As to whether or not it's an accurate quote of exactly what was said at the moment, I think all of us know that a lot of that is simply -- tried to reconstruct it from memory.

TERENCE SMITH: All right. Alex Jones, I wonder what you think of this from a journalistic point of view, this sort of omniscient, fly-on-the- wall technique.

ALEX JONES: Well, I think all journalists require an element of trust from the r audience, but I think Bob Woodward requires a little too much trust, from my perspective. I think that that what Bob Woodward does, he does very, very well. And the "Shadow" is excellent Bob Woodward, but I think it's a bad model for other journalists. And I think that the fact that Bob Woodward is a man with the stature that he has in journalism today-- he's the most trusted, I think, journalist in America. But I think that by making a book like this that is so virtually entirely dependent on unnamed sources, he is basically giving a legitimacy to doing more of the same. And I think journalism needs a lot less.

TERENCE SMITH: Is it, Bob, a matter of trust, both in you and your sources?

BOB WOODWARD: Well, to a certain extent. I'm sorry that Alex hasn't read the book, because you would find that there are about 50 pages of source notes in the back.

ALEX JONES: Oh, I read them, Bob.

BOB WOODWARD: And the sections on the first four presidents are almost in every case the source is named, the interview or the document. And many of the sources, like Leon Panetta, is on the record, and it is so noted in the book. [Talking over each other]

ALEX JONES: I mean, you know, I think in fairness, you're got to acknowledge that when you look at your source notes -- and I did read the book, and I have looked at it carefully. We're talking, I think, in the context of this discussion about the Clinton coverage, and I think that it was, you know, unto itself. It was very interesting, but it was -- there's no question that Leon Panetta was an extraordinary exception. "Knowledgeable sources" was the source of virtually all of the most revealing information in the reconstruction about what happened. I'm not faulting the fact that you made the deal to get the access that you did. I understand it, and I think that you've given something valuable. But I think what you've given us is a kind of -- a kind of serial memoir that kind of gives what memoirs give. Memoirs offer access to very important moments, but they are always selective. They are always incomplete, and you can't necessarily think of them as history. They're valuable. They're very valuable.

TERENCE SMITH: Was this history?

BOB WOODWARD: What's interesting is -- I think some things are being mixed up here. A memoir, like Richard Nixon's memoir, he quotes from memos, or Henry Kissinger does, or lots of former presidents and so forth, and you're saying that's not history? That becomes part -- those become the pieces of history. And they often based what they've done on written documentation. I've done that to some extent. Now what happens here? I mean, let's go to an example, because I think it hangs or falls on examples. Leon Panetta told me that when he was there with Clinton and Clinton was signing the renewal of the Independent Counsel Act, the crucial moment - because this set the train going that led to Clinton's impeachment. Without it, you would not have had Ken Starr and Monica Lewinsky. And Leon Panetta told me in a way, he said, "I remember very vividly as President Clinton was signing this, he said, 'do I have to?'"

ALEX JONES: And that was one of the most vivid and powerful moments. And it was vivid and powerful because when you looked in the end notes, you found that Leon Panetta's name was attached to it.

TERENCE SMITH: All right, let's let Leon Panetta come in on this. Leon, from your perspective as a former White House official and somebody who has an interest in history as well, how does this hold up?

LEON PANETTA: Terence, I think that history, as we all know, is subjective. I don't know that there's anything like objective history. You can listen to the Lyndon Johnson tapes, and you know what Lyndon Johnson is saying. You can listen to the Richard Nixon tapes, and you know what Richard Nixon is saying, and you can put those in quotes. But generally when somebody like Bob Woodward goes back and tries to get into a situation, he's got to rely on the people that he interviews, and he then tries to paint a picture. It's really more like a painter trying to create a mood as to what was happening in history at that moment. And isn't -- it may not be accurate as to every specific.

TERENCE SMITH: But, Leon, let me ask you this -

LEON PANETTA: I think my greatest concern I that so many of the quotes are put into quotes. And I know that publishers usually want to have quotes because that's more interesting to the reader, but I'm not so sure that having all of those quotes is necessarily an accurate reflection of exactly what was said. I think it would have been better had he painted his picture without the necessity of trying to put everything in exact quotes.

TERENCE SMITH: Okay, Bob?

BOB WOODWARD: I don't put everything in quotes. And like -- the thing you told me, you remembered vividly Clinton saying, "Do I have to?," is that correct?

LEON PANETTA: Well, again, Bob, you know, you remember a certain moment. As to whether you remember the exact words that were used, you know, listen nobody -

BOB WOODWARD: But you told me you did, is that correct?

LEON PANETTA: -- can remember exactly each word that was used. It's just, you know, you remember a certain moment. You remember a certain reflection. That's the best your memory can do. I think you captured the right mood. As to whether or not you can put that in quotes or not, frankly, I think that's a bit of a stretch.

ALEX JONES: But let me give you the perspective of the consumer of is this book.

TERENCE SMITH: All right, exactly. Alex Jones.

ALEX JONES: As far as I'm concerned, I want to be able to want to decide whether it's credible or not. And because I was able to go to the back of the book and see that Leon Panetta said this, it meant one thing or another. Now, Leon Panetta's recollection may or may not convince me, but most of the book is based on knowledgeable sources who I do not know who they are. They are certainly -- I mean, I think Bob Woodward very much leads you to believe that he has sources that would suggest that the President was betrayed by every single one of his lawyers. But I mean, I don't know whether that's true or not. I inferred that from what I read of the book and then going back to see who said what. I put that together. And I think that in a way, you know, that's very interesting. I mean, I foundthe book to be a fascinating book, and I really -- I would recommend it to people. I just think that for journalism as a whole, it's a bad thing to think that what Bob Woodward has done, which is to trade access wholesale for anonymity, is a good thing. I don't think it is.

TERENCE SMITH: All right, when you say "betrayed"-- the President betrayed by his lawyers-- do you mean "betrayed" because they presumably talked to Bob Woodward?

ALEX JONES: Well, I mean betraying the lawyer-client privilege. All I'm saying is that's the inference that I drew from Bob's book. Now, I may be being unfair to this whole string of counselors in the White House, but that's certainly the impression that I got.

TERENCE SMITH: Okay, Bob Woodward, in the book, in fact, you quote this very personal, sensitive conversation between Bob Bennett and the President of the United States.

BOB WOODWARD: That's correct. In fact, as Alex points out, I quote all kinds of conversations and describe conversations involving the President and all of his lawyers going back to the beginning of the Whitewater scandal.

TERENCE SMITH: And are we to take that literally?

BOB WOODWARD: In detail, you are to take it literally that it is exhaustively reported. I mean, what people are suggesting here, where are the tapes? As best I know, and it's quite possible I missed something, there are no Clinton tapes of the Oval Office conversations. But history -- go back and look at history books. It's people's memories, it's notes, it's letters. In many cases, I was able to do this days or weeks after the events occurred. And it's done the way Alex Jones, when he worked for the "New York Times," would do it-- you go and you ask people, you quote people. Leon Panetta, on that very simple quote, "Do I have to?," that's what Leon said last year that the President said.

ALEX JONES: Bob, but all I'm saying is this: I don't mind trusting you, but I wonder if someone else wrote the same book with the same omniscience that you have given this -- there's no skepticism in this. This book is -- this is what happened. This is not, sort of, "this may have happened," or "this is what so and so said," and "this is what so and so said." You portrayed it as "this is what happened from an omniscient perspective." Now you wrote it, and you believe it obviously, but if someone else wrote it and handed it to you, wouldn't you be skeptical?

TERENCE SMITH: Bob, that's a good question. Would you believe the book if it was written by someone else?

BOB WOODWARD: If I checked it and established and had the kind of evidence I do in this book, absolutely.

TERENCE SMITH: Yes, but how could you do that? It's another author, how could you do that?

BOB WOODWARD: But everyone is named almost, and you can call them, and you can go see them, and you can listen to Mike McCurry do a dance but not dispute. Is this book perfect? No. Do I have 100 percent of what happened? Absolutely impossible. It's absolutely impossible in history, but this is the real thing.

TERENCE SMITH: All right, let me ask Leon Panetta to give us a final word from his perspective, that of a White House official, former White House official. You once were quoted as saying no White House official should ever want to talk to Bob Woodward. Is that so?

LEON PANETTA: Well, you know, the fact is I think that Bob Woodward writes books that do go back and try to portray a certain theme with regards to the presidency. I think his fundamental theme in this book is the right one, which is that these presidents since Watergate have not learned the lessons of Watergate itself. And I think that's a valid theme, and I think he portrays that. As to whether or not the specifics of every quote and every description that he includes is accurate, I think you have to understand that it's his viewpoint of what took place at that point. As long as people understand that, I don't have a big problem with this. But to the extent that they think these are actual quotes and that the President actually said this at that moment to Bob Bennett, that concerns me because I don't think that's an accurate perception of what really took place.

TERENCE SMITH: Okay. Leon Panetta, Bob Woodward, Alex Jones, thank you all three very much.

JIM LEHRER: Much of the country is suffering from a heat wave tonight. And, with that in mind, here now are some thoughts of the beach, courtesy of NewsHour Robert Pinsky, the Poet Laureate of the United States.

ROBERT PINSKY: At this time of year, when people go to the beach, I think of the resort towns of my childhood. Here's part of a poem I wrote about those days. "The Beach Women." "In the fierce peak of the day, it's quietly they wade with spread arms into the blue breakers, rushing white and swim seemingly with no tension, the arms curved the head's gestures circular and slow. They walk dripping back into the air of 1955, smiling downward from the glare as if modestly as they move daintily over the sand shaking their hair, tingling, taking it easy. The beach flushes and broils, shapes ripple in the waves of heat over it, and the cold seawater dries on their arms and legs and their suits, too, drying out stretched over their bottoms in the luxury of sun flowering everywhere -- the delicate salt glazing their skin - they dissolve in oil. Holiday colors throb on suits, towels, blankets, footwear, loose robes, bottles, carriers of straw, bright magazines and books, gear, feminine and abundant. The whole overwhelming with a sense less of sex than of gender. The great oval blanks of their sunglasses, hypnotic, flashing anonymous glamour over the cards, books, or gossip. The poem closes with a salute to the pathos and bravery of our pleasure-seeking devices, all the stuff they sell in the drugstore near the beach. On those days I admired their tans, white dresses, and pink oval fingernails on brown hands and sold them perfume and lipstick, aspirins, throat lozenges, and Tums, Tampax, newspapers, and paperback books. Brave stays against boredom, discomfort, death, and old age. I wish you a lively summer.

RECAP

JIM LEHRER: Again, the major stories of this holiday Monday: The suspect in a series of racially motivated weekend shootings killed himself after a high-speed chase in rural Illinois. And record high temperatures continued in much of the Northeast and Midwest. We'll see you online and again here tomorrow evening. I'm Jim Lehrer. Thank you, and good night.