The MacNeil/Lehrer NewsHour

Intro

JIM LEHRER: Good evening. In the news this Thursday, CIA Director Casey confirmed reports it was a businessman who told him about the contra aid with the Soviets. And South Africa announced new press restrictions. We will have the details in the summary in a moment. Robin?

ROBERT MacNEIL: After the news summary, we profile the extraordinary man at the center of the Iran-contra storm, Marine Lieutenant Colonel Oliver North. Then Budget Director James Miller discloses the administration's economic priorities for 1987. From Seattle, we have a documentary report on white supremacists active in the Northwest. And we close with a Rosenblatt essay on 40 years of Fullbright scholarships. News Summary

LEHRER: CIA Director William Casey said today, he learned of the diversion of Iran arms funds to the Nicaraguan contras from a non-CIA, nonofficial source. He identified that source as New York businessman Roy M. Furmark, a former legal client of his. Casey talked briefly with reporters after giving three hours of closed door testimony to the House Intelligence Committee. He said the conversation with Furmark was in early October and gave him only an indication of what was going on. He says it wasn't until Attorney General Meese told him and everyone else six weeks later that he found out the full story.

Furmark was the closed door witness today of the Senate Intelligence Committee. Committee member Senator William Cohen, Republican of Maine, offered this summation of how that investigation was going.

Sen. WILLIAM COHEN (R) Maine: I think each day that passes, each witness that comes before the committee, the picture, as I said, becomes clearer, the story more confounding.

LEHRER: The Republican chairman of that Senate Intelligence Committee said today government officials involved in the Iran arms affair should take off their uniforms or take off their Fifth Amendments. Senator David Durenberger of Minnesota was referring to the taking of the Fifth by former National Security Adviser Navy Vice Admiral John Poindexter and his aide, Marine Lieutenant Colonel Oliver North. North wore his Marine uniform in his appearance before Congressional committees, where he refused to answer questions. Robin?

MacNEIL: The South African government clamped even tighter restrictions on journalists today in all stories about black unrest and opposition to apartheid. We have a report from Michal Buerk of the BBC.

MICHAEL BUERK [voice over]: The regulations were issued this morning, while women from the Black Sash movement were releasing balloons at Dipkloof Prison, where black children are held in detention. Before the women left, it was a crime to report about the treatment or even the release of the 20,000 people believed to be in detention here. It's now forbidden to describe or comment on the actions of the security forces. We can no longer report the most common form of passive black resistance: the boycotts of schools, shops, buses or paying rents. It's illegal now to report on the campaign against compulsory conscription here for whites or any other form of civil disobedience. That's now considered incitement and subversion. Even leaving blank spaces in newspapers to show where there's been censorship is now a crime punishable by up to ten years jail. A special center is being set up in Pretoria where we must submit records on sensitive subjects for ministerial approval. Many countries don't allow journalists to function at all. Amongst those that do, South Africa possibly now has the strictest censorship in the world.

HELEN SUZMAN, member of parliament: It is a disaster for South Africa, because really and truly, the one bit of evidence that one could use to prove that South Africa was not a totalitarian state is the fact that the press was relatively free.

BUERK [voice over]: The new restrictions come as the United Democratic Front is launching a black Christmas campaign against the state of emergency. Tonight, they said they'd fight the new laws in the court. The Johannesburg Star rolled off its presses tonight, unable now to report about anything of that kind. An editorial on its front page said this was possibly the last issue of any relatively free newspaper that will be read in South Africa. And in the hours before the new censorship, people here held a candle-lit vigil to draw attention to an alleged injustice we can not now mention. A peaceful protest tonight effectively snuffed out.

MacNEIL: In Washington, White House spokesman Larry Speaks said the administration regrets the restrictions and has raised the matter with the South African government. At the State Department, spokeswoman Phyllis Oakley made this statement.

PHYLLIS OAKLEY, State Department spokeswoman: We reject the claim that these actions and any other curbs on the media are necessary. As an American columnist noted, it is not the press reporting of the problems in South Africa, but the problems themselves that the South African government must come to terms with.

LEHRER: NATO decided today to proceed with troop reduction talks with the Soviet Union. The foreign ministers of the 16 nations, including Secretary of State Shultz, adopted a resolution in Brussels saying they were ready to talk about reducing manpower and conventional weapon strength throughout Europe.

And there were two spy stories today from top officers of the West German government. A former secretary in the president's office in Bonn was charged with spying for the Soviet Union since 1971. And an employee of the defense ministry was arrested on charges of spying for East Germany.

MacNEIL: At least 15 people were killed and 22 others wounded when Israeli planes attacked guerrilla positions both of Tripoli, Lebanon, today. It was Israeli's second raid into Northern Lebanon in the past two months. Israel said it was aimed at the Abu Nidal Palestinian faction. Lebanese authorities said four Lebanese civilians were killed when a delayed action rocket exploded a half hour after the raid.

LEHRER: Back in this country, there were two AIDS related stories today. In Atlanta, the Centers for Disease Control said 600 previously unexplained cases of the deadly disease were contracted through heterosexual contact. The CDC said heterosexual transmission now accounts for 4% of AIDS cases.

And in San Francisco, a team of researchers have identified a group of white blood cells which appear to prevent the AIDS virus from reproducing. Dr. Jay Levy, who led the group of scientists from the University of California, was asked if this discovery was a major breakthrough.

Dr. JAY LEVY, researcher: We're pretty reluctant to use that word. But I must say the excitement in the lab with the finding that we had identified a cell that within the body naturally protected you from the spread of the virus was a tremendous feeling of achievement.

REPORTER: This has got to be second only to discovering the virus itself.

Dr. LEVY: Well, I think it's certainly a first step in approaches to therapy which may not need drugs and which offers people the knowledge that their own immune system may be able to ward off the virus.

MacNEIL: OPEC countries met in Geneva today to dicuss efforts to raise world oil prices by about $3 a barrel. The efforts is led by Iran, which advocates cutting the cartel's daily production by about 10% to force prices up from the present $14 or $15 a barrel to about $10.

In economic news at home, the Commerce Department reported that retail sales which slumped 5% in October rose by a modest half a percent in November. The White House greeted the news enthusiastically as a sign that the economy is building up steam. Private economists were more cautious.

LEHRER: President Reagan lit the national Christmas tree tonight. He pushed the button in an early evening economy that Presidents have performed since Calvin Coolidge did it in 1923. The tree is on the ellipse south of the White House.

Pres. RONALD REAGAN: Let's see if we can't turn this cold, dark evening into one of light and warmth.

MacNEIL: That's the news summary. Coming up, a profile of Lieutenant Colonel Oliver North, Budget Director James Miller, and white supremacists in the Northwest. Lt. Col. Oliver North

MacNEIL: First tonight, we have a closer look at the man at the center of the Iran-contra spotlight. He is Marine Lieutenant Colonel Oliver North, who was dismissed from the National Security Council after it came out that profits from arms sales to Iran were being diverted to the contras in Nicaragua. But the day after he fired North, President Reagan praised him as a hero. Correspondent Charles Krause has been looking more closely at the lean, tightlipped, much decorated soldier and found a storybook character.

CHARLES KRAUSE [voice over]: His defenders claim he's been made a scapegoat. His critics say he's a cowboy, a rogue elephant who betrayed the President. Today, he's barred from his old office at the National Security Council. But from all appearances, Oliver North seems to be unphased by the firestorm around him. According to friends, he's in good humor, playing cat and mouse with reporters, meeting his lawyers in downtown Washington. But for the colonel, it's a far cry from his glory days at the White House. there, he ran covert operations with daring and success until his luck ran out.

Lt. Col. OLIVER NORTH: I have great trust in the Lord and a good attorney. Have a good day.

KRAUSE [voice over]: His admirers, especially those on the far right, have come to think of North as a real life James Bond. Andy Messing, who has himself visited war zones in 17 third world countries, is director of the Conservative National Defense Council. He credits his friend Ollie North with most of what's gone right for U.S. foreign policy over the past several years.

F. ANDY MESSING, National Defense Council: He has brought five of the major foreign policy successes to the Reagan administration, out of about six. He did Granada, he shut down the death squads, he insured the democratization of El Salvador, he did the intercept of the killers of Leon Klinghoffer, the intercept of the Egyptian jet. And he helped on the American side in getting out the dictator Babydock Duvalier. And he shunned power, sex and money, I know, on all three levels, for a fact, because he is interested in serving his country, bringing peace to the world, and all these kind of corny but ethereal concepts. This man is a decent person. That's why I'm not going to stand by and allow people operating on half the facts to denigrate a man that's bigger than life.

COMMITTEE MEMBER: -- so help you, God?

Lt. Col. NORTH: I do.

COMMITTEE MEMBER: Thank you very much, Colonel.

KRAUSE [voice over]: So far, North has appeared twice before Congressional committees. Both times, on advice of counsel, he's taken the Fifth and refused to testify. Nonetheless, he's impressed many observers, including many congressmen, with his courage and his sincerity.

Lt. Col. NORTH: I don't think there is another person in America that wants to tell this story as much as I do, sir.

COMMITTEE MEMBER: Thank you, sir.

KRAUSE [voice over]: Even many Democrats, outraged at the Colonel's alleged role in diverting money from the Iranian arms sales to the contras, have expressed admiration for Oliver North, the man, Congressman Michael Barnes first met North in 1983, when the Colonel served as White House liaison to the Kissinger commission on Central America.

Rep. MICHAEL BARNES (D) Maryland: He was gung ho, bright, aggressive. What was unusual about his demeanor and the way he dealt with the commissioners was that you would normally expect a Marine Corps officer to be incredibly deferential -- to sort of jump whenever anybody said anything, and "Yes sir" this and "Yes sir" that. He was more on an equal level with the members of the commission. Not quite -- a little touch of deference, but not much. He first-named the commissioners, which would be extraordinary.

KRAUSE [voice over]: Barnes says North may have been good at running covert operations, but he was alos a zealot who didn't fully understand the context in which he was operating.

Rep. BARNES: Ollie North is clearly one who sees Central American issues in a very black and white kind of context. He doesn't really see much gray there. I remember him doing a briefing for the commission at the White House in which he said, and I quote, "Fidel Castro is responsible for 90% of the problems in Central America." Well, anybody who knows anything about Central America knows that's laughable.

KRAUSE [voice over]: William Grove, is a Methodist bishop opposed to administration policy in Central America. He too remembers one of Colonel North's briefings on the so-called Reagan Doctrine.

Bishop WILLIAM GROVE, United Methodist Church: His basic argument was that of the position of the administration on Central America -- that we must do everything we can do to support the forces of freedom as he and the administration would define them over against communist infiltration and Soviet intervention to avoid having a Soviet colony on our doorstep.

KRAUSE [voice over]: But Messing says the colonel had a better grasp of how to deal with the problems of Central America that liberals in Congress and, for that matter, many top officials at the Pentagon.

Mr. MESSING: Oliver North was a man who understood how to counteract Soviet power projection, using the minimum of force. He was one of the few people in Washington who understood how to deal with low intensity conflict on a multidimensional level.

KRAUSE [voice over]: Oliver North's rise to power was slow but steady. After graduating from Annapolis in 1968, he fought in Vietnam, where he won medals for bravery. He was promoted through the ranks, attending the Naval War College at Quantico, Virginia. Then in 1981, at the age of 38, he was detailed to the National Security Council at Marine Corps Liaison Officer. William Corson held a similar job under Presidents Eisenhower and Kennedy. Corson later taught at Annapolis, where Oliver North was one of his students.

WILLIAM CORSON, former White House aide: He's got a facile pen. He's quick. He knows how to make a phone call. He know how to follow up. It's called completed staff work. He's a very competent officer.

KRAUSE [voice over]: Now retired, Corson watched his young protege rise at the White House, especially after William Clark and Robert Bud McFarlane came to run the NSC in 1982.

Mr. CORSON: Bud comes in, and he's running the -- the paper in the NSC, it's like something out of Fantasia. It's generated at a rate -- you can't believe it. So McFarlane is controlling the paper, because Clark's going bananas over this. And some things come up. "Oliver?" "Yes sir?" Oliver's a major. Bud's a retired -- or he's a lieutenant colonel retired. "See to it." "Yes sir." Does it. And that's how, you know -- and one might say, and that's how it happened.

KRAUSE [voice over]: What happened was, according to Corson, Oliver North filled a bureaucratic vacuum, taking on risky national security matters nobody else wanted to touch: Granada, terrorism, Iran, the contras. North was a can-do officer willing to work 18 hours a day, 7 days a week. He became invaluable, because he pushed the President, the State Department, the CIA, to do what President Reagan wanted them to do.

Mr. CORSON: They may give thousands of excuses. "Well, we're working on it." But nothing happens. It's all intellectual masturbation. It's lovemaking without any babies. Oliver says, "I'll try, sir." Because you don't like to see your boss be put upon because of the incompetence of its institutional hierarchies that are supposed to serve him, but are out there serving themselves.

KRAUSE [voice over]: But North did far more than just push the bureaucracy around. He was a man of action who became the President's eyes and ears on the ground.

Mr. MESSING: I know in 1983 and '84, there were many occasions where I heard about how Ollie North had gone into some of the hottest areas of El Salvador to access for himself, so he could give a firsthand report to the President what the situation was. And as you remember, those were the critical times for El Salvador.

KRAUSE [voice over ]: To some, North became a legend. To others, he was a cowboy who forgot he was working at the White House, not leading a Marine Corps platoon. Even Corson says North should never have gone with McFarlane to Tehran to try to get the hostages released.

Mr. CORSON: THAT WAS A CALCULATED RISK FOR HIM TO GO THERE, BY VIRTUE OF THE DAMN CLEARANCES HE HAS. I WOULD HAVE TO THINK OF WHAT THE DEVIL DO I DO OR WHAT I TELL THE PRESIDENT IF BUD AND OLIVER WERE TAKEN BY THE AYATOLLAH AND THROWN IN THE CAN THERE. AND HE'D SAY: "HEY, WAIT A MINUTE. WE GOT TWO MORE HOSTAGES. WELL, THE IRANIANS ARE TERRORIST ORIENTED." BUT THE POINT WAS, HE SHOULDN'T HAVE BEEN THERE.

KRAUSE [voice over]: The question now is whether Colonel North and the President had a close relationship.

Mr. MESSING: Absolutely. The President admired Oliver North.

Bishop GROVE: We asked him if he saw the President often, and he said he met with the President personally on the average of twice a week. And that the agenda for their meetings together involved about 50% of the time on terrorism and counter-terrorism, about 50% of the time on Central America and Nicaragua.

KRAUSE [voice over]: Congress and the Justice Department are trying to find out whether North arranged to transfer money to the contras and whether others in the government knew about it.

Rep. BARNES: Well, I don't know what the President knew. All we know about that is what the President says. What I do feel confident of is that Ollie North thought that he was doing what the President would want him to do. The President made very clear on numerous occasions that he wanted aid to get to the contras; he didn't care what the Congress said. I mean, he said, "I'm a contra too. And I want to help them." And he made that very evident.

Mr. CORSON: The approval would be more than a wink and a nod and a tacit nod or a tacit understanding. The approval would be for McFarlane, who he would consider to be competent legal authority, from Poindexter and/or Don Regan as the Chief of Staff.

Mr. MESSER: I mean, this is a man who reflects through his actions Judeo-Christian ethics and Constitutional processes. So I can't believe, until I'm shown the actual proof, that this man would be doing something that contravened the law or contravened ethics. He's not built that way.

NORTH SUPPORTER: Colonel Oliver North has a heroic record.

KRAUSE [voice over]: Few people who know Oliver North dislike him personally. Conservatives are raising money for his defense fund, blaming those opposed to Reagan administration policy in Central America for his downfall.

NORTH SUPPORTER: If you can help stop the liberals from surrendering Nicaragua to the communists with a contribution of $30 --

KRAUSE [voice over]: Meanwhile, even Democrats in Congress are praising North's patriotism and his integrity. But no one, apparently not even President Reagan, knows the full story of Oliver North, his many intrigues and adventures. And quite a story it will probably be.

Rep. BARNES: Well, I think Ollie North's going to be a very rich man. His book will be an extraordinary book, even if he doesn't tell all -- if he just talks about his activities in Cambodia during the Vietman War and his activities in Iran under Carter and the Achille Lauro and Granada and a little bit about all of this, it will make one heck of a great movie.

KRAUSE [voice over]: Maybe Oliver North will play himself. Through all of his current troubles, America's most famous Marine Corps Lieutenant Colonel hasn't lost his timing or his dramatic flair.

Lt. Col. NORTH: I do not wish to comment on what Mr. McFarlane said.

REPORTER: Okay.

Lt. Col. NORTH: But I do want to make one statement. You ready?

REPORTER: Yes.

Lt. Col. NORTH: Beat Army. Have a good day, guys. Budget Forecast

LEHRER: We go now to a newsmaker interview with President Reagan's chief budget man, the head of the Office of Management and Budget, James Miller. Mr. Miller is putting the final touches on the first trillion dollar federal budget ever proposed by a President of the United States. It goes to Congress January 5, but we're going to get a preview tonight.

Mr. Miller, welcome.

JAMES MILLER III, Budget Director: Thank you.

LEHRER: A trillion dollars. How much is a trillion dollars?

Mr. MILLER: That's a lot of money. It's enough to scare anybody. But we came close to it last year, and we'll go over that figure this year. I don't think there's any question of that. But the outlays will not increase a lot. And that's the reason that we'll be able to get -- that's one of the reasons that we'll be able to get into the $108 billion target that the President set for us and that we're going to achieve under Gramm-Rudman-Hollings.

LEHRER: You are going to achieve the Gramm-Rudman-Hollings. What's that? That's $108 billion?

Mr. MILLER: A hundred and eight billion dollars. And we'll do it without raising taxes.

LEHRER: That's what the deficit this year is going to be.

Mr. MILLER: The deficit for fiscal year 1986 was $221 billion, and it was a record. And it happened on my watch; I'm not proud of it. But any kind of -- in the first year of Gramm-Rudman-Hollings, 1987, the deficit will come down to about $70 billion. Now, that's a $50 billion reduction in one year. And that is outstanding success. I think. It's a record: $51 billion in one year. And we should be able to get that number down to 108 this year.

LEHRER: All right, I want to come back to some of the specifics in a minute, buy why didn't you and the President submit or propose a budget that was balanced?

Mr. MILLER: As I testified in my confirmation hearings, I think it would be a mistake to precipitously bring the deficit down to zero. We need to do it over a period of years. And that's what the Gramm-Rudman-Hollings half has for us. If we tried to end it immediately, we could do it by raising taxes, by slashing $200 billion in spending. Either way, I think it would create too much disruption. So a glide path that gets us down is the right way to go.

LEHRER: All right. Let's take your glide path. Who gets the heaviest hit? There is -- as you say, there is a reduction of $50 billion in here in terms of outlays, right?

Mr. MILLER: Well, let me just talk about that. There are $50 billion in reduction and outlays from what people estimate might be current services that would -- if there were no change in law. But in terms of total spending --

LEHRER: But the total money goes up.

Mr. MILLER: The total spending goes up.

LEHRER: Right.

Mr. MILLER: The total spending is going to go up. For example, we're going to have total outlays -- excuse me. Total spending will go up. We have -- defense will realize a 3% real growth. Social Security, of course, will go up. The President said, "Do not touch that." International affairs will go up.

LEHRER: International affairs. That's running the State Department --Mr. MILLER: Foreign aid.

LEHRER: Foreign aid.

Mr. MILLER: And those sorts of accounts

LEHRER: Okay.

Mr. MILLER: But you know, I read the other day in the newspaper that there were going to be major slashes in medical programs. The medical areas are going to go up by 4.3%. So that's simply not true. We're going to have some things are going to go up, other things are going to go down. We've got to realize some savings.

LEHRER: All right. Now, which are the major ones going down? Education?

Mr. MILLER: Education will have some cuts, transportation will have some cuts, HUD -- Housing and Urban Development -- will have some cuts. But let me just talk, if I could, just a minute of where we're going to get those savings. As you said, it's about $50 billion we have to save to hit that 108 billion figure. It's compared to what the expenditures would be if Congress didn't change the law in any way. And that, of course, would be higher than last year. Of that, we're going to have increased revenue. Part of that would be Internal Revenue Service. We'll give them more money, so that they can cut down on people who cheat on their income tax. And we'll get about $6 billion -- not just from IRS, but from other areas.

LEHRER: That's like user fees and other things?

Mr. MILLER: No, that would be other revenue items that I shouldn't go into right now. The President hasn't --

LEHRER: Oh, he hasn't approved all this?

Mr. MILLER: He hasn't approved everything. We're still in the final stages. Privatization -- selling power marketing administrations and that sort of thing -- should raise some --

LEHRER: Power marketing administrations?

Mr. MILLER: Marketing administrations. We in the federal government own these great wholesale producers and distributors of electricity. Most Americans get their electricity from privately owned utility companies, and they pay rates. There are a few of these organizations that are not run as efficiently as we think that they might be run in the private sector. Moreover, they have a draw on the federal treasury and are getting rates -- are getting loans at very low rates of interest. And we think that's unfair. We think that those ought to be put in the private sector, so that those customers would buy electricity on the same basis as everyone else. We're going to sell some loan assets -- probably generate about $8 billion there.

LEHRER: When you sell a loan asset, in simple terms, these are loans that the federal government has made, and you just take the loan and sell it to somebody else, who then collects it. It's no longer a federal loan; it's a Sam or Sue Smith Company loan, right?

Mr. MILLER: That's exactly right. You know, one of the things in government is that the Congress, and maybe people in the administration, believe that a federal loan is for free. You know, you make the loan, but of course it's going to be paid back. Let me -- I've got news for you. It's not paid back. A lot of them aren't. In fact, I doubt if congressmen and senators and many people in the administration really know what kinds of loans are -- tend to be paid back, and which kinds are not. My proposal is to sell the loan asset when the loan is made -- when the loan is made. And the revenue generated by the sale of that asset would come in as a receipt. And the difference between the amount of the loan -- the money that you loaned to someone -- and the receipt from the sale of the loan asset would be a direct measure of the amount of subsidy involved. And I think that's a far better system, and it results in a lot better credit management in giving the people loans who really most deserve it. And we'll get about $3 billion in user fees. But then the point that I want to make is about -- of that $50 billion in deficit reduction, about two fifths, maybe more, of that will come in the form of revenues in some way. The rest, about three fifths -- over half -- will come in the form of programmatic reductions, yes. So it's not the whole $50 billion in cuts. And again, many of those cuts are simply slowing down the increase of the programs. I mean, if a program increases a lot and you slow it down, I don't know whether you should call that a cut or not.

LEHRER: All right. The process from here on. The President has -- it's going to go to the cabinet officers, right? Have the cabinet officers signed off on all these things?

Mr. MILLER Yes. On almost everything. We're very close to --

LEHRER: And then the President signs off on it, and it goes to Congress in January, right?

Mr. MILLER: That's right.

LEHRER: Mr. Miller, are you haunted at all by the fact that of all the budgets that President Reagan has submitted to the Congress of the United States in the six years of his Presidency, none of them have even come to a vote, much less been adopted?

Mr. MILLER: Well, you know, every President submits budgets that doesn't get all they want. I mean, Andrew Jackson didn't get what he wanted. Thomas Jefferson didn't get what he wanted. Theodore Roosevelt and FDR, neither one of those Roosevelts got what they wanted. So it's a process. The President's budget embodies the President's priorities. And it goes to Congress, and we engage in a dialogue with them over what that ultimate outcome should be. And it will be the same this year as it was last year. We are very hopeful of getting priorities more consistent with the President's views this year than even last year. But we'll be up there battling.

LEHRER: What about -- what kind of problem has it been worrying about the budget in this atmosphere of the Iran arms affair at the White House?

Mr. MILLER: You know, it really hasn't been a problem. All of the budget details and the budget steps have gone forward just as last year. It's gone on a regular basis. We've had just about the same number of problems, the same number of appeals going up. In fact, just a few less this year than last year. I've had no problem getting time of the President to focus on the budget issues. Some people are obviously very concerned. But you know, there's sort of a feeling, I guess, that when the times get tough it's time to really go on and do your job. And so those at the White House that are more directly involved in that are doing their jobs.

LEHRER: How much time has the President devoted to this?

Mr. MILLER: In terms of hours, in terms of days?

LEHRER: Any way you want to do it.

Mr. MILLER: We went through a process over the last several weeks of exchanging notes and information. Presentation -- direct presentation to the President -- of the overall budget concepts, the overall situation with respect to the deficit and the economy and the growth rates and the assumptions, etc., and got his feedback on what he thought of that. And then we went into a process of going through account by account, major agency by major agency, major initiative by major initiative, and get his feedback on that. Then we sat down with the cabinet, with the President, and the President told the cabinet members about the need to meet the budget targets and has insisted that we hit the 108 target without raising taxes, without cutting back on defense. And then we've had some -- I just left a meeting this afternoon where a cabinet officer went before the President and appealed his budget.

LEHRER: No paralysis, then.

Mr. MILLER: No paralysis.

LEHRER: All right. Mr. Miller, thank you very much.

Mr. MILLER: Thank you.

MacNEIL: Still to come on the News Hour, a documentary report from Seattle on white supremacists in the Northwest. But first, this is pledge week on public television, and we're taking a short break now, so that your local public television station can ask for your support. That support helps keep programs like this on the air.

[pledge break] Right of Right

LEHRER: Next, a story from Couer D'Alene, Idaho. It's about the coming of white supremacists to this town of tranquility and tourists and what that coming has wrought. The reporter is Victoria Fung of public station KCTS, Seattle.

KKK MEMBER: Inner circle torchbearers, right turn. Outer circle kinsmen, left turn. Let the circles move, as does life. Forward march. Slowly, inexorably, without stop, life goes on.

VICTORIA FUNG [voice over]: The Couer D'Alene area is headquarters for the Church of Aryan Nations, a neo-Nazi group dedicated to establishing a white separatist state in the Northwest. The group is headed by the Reverend Richard Butler from a 20 acre compound just north of Couer D'Alene. More than 100 white separatists met there this summer to plan the establishment of their new, all white state.

Rev. RICHARD BUTLER, Aryan Nations: Kind unto kind. This is exactly what the 56 men were seeking who signed a document called the Declaration of Independence. It is a sanctuary wherein our kind can live their culture, reproduce their own kind and build their civilization.

FUNG [voice over]: A small press at the Aryan Nations compound churns out neo-Nazi and racist literature for distribution worldwide.

Rev. BUTLER: We've put out 100 million copies of Aryan Nations literature all over the world. It's every place white men live and walk, from the tip of South Africa, it's in Norway and Sweden, Denmark, in France and in Germany. It's in the Soviet Union. Aryan Nations literature is everywhere.

FUNG [voice over]: Each Sunday, Butler conducts church services for a dozen or so followers. The numbers have dwindled since 19 of them, members of an extremist offshoot called The Order, were convicted on murder and racketeering charges. While the actual number of known Aryan Nations members living in Northern Idaho is relatively small, leaders of the movement claim that many in the area are sympathetic to their cause and that many others are moving to the region to establish their all white sanctuary.

DAVID DORR, Aryan Nations: If somebody considers that I'm a racist because I want to live separate, then I guess I am.

FUNGX[voice over]: David Dorr is chief of security at the compound. His wife Deborah acts as publicist for Reverend Butler.

Mr. DORR: We're getting quite a few people to move out this way. There's been 150 people move out here from Michigan. And in the next three months, there's going to be about seven to ten families from Chicago.

DEBORAH DORR, Aryan Nations: And they know that we are determined to keep the Northwest white.

Mr. DORR: And that's what's drawing them here. Because it is a basically white area.

Mr. DORR: I guarantee you that the movement will grow. It's already growing.

FUNG [voice over]: The area around Couer D'Alene is picturesque, dotted with lakes and rimmed by mountains. The area has about 70,000 year round residents, almost all of them white, and many of them dependent on tourism for their livelihoods. Couer D'Alene boasts a new $40 million resort complex, and co-owner Duane Hagadone says he understands why neo-Nazis might be drawn here.

DUANE HAGADONE, resort owner: U.S. News & World Report has named it one of the ten most livable cities in the United States. If you want to get away in the north woods, why do you ever have to go any further north than Couer D'Alene?

FUNG [voice over]: Some residents of Couer D'Alene are worried the publicity surrounding Aryan Nations could hurt the local tourist trade.

RESIDENT: All we have is tourism now. And that's going away with this kind of publicity. This isn't good for us.

RESIDENT: I've been here two years. And since I've been here, I'm beginning to wonder whether this is a safer place to be or back in New York.

SANDY EMERSON, chamber of commerce: There was a black salesman that was traveling through the area, and it was getting late at night, and tired. And he slept on the road, because he didn't want to come to town, because he was afraid he'd run into a Nazi-owned motel. You know, that's a pretty tough image to live down.

Fr. BILL WASSMUTH, Catholic priest: It is through your goodness that we have this bread to offer today, which earth has given and human hands have made. It will become for us the bread of life.

FUNG [voice over]: One vocal opponent of the Aryan Nations is Bill Wassmuth, a Roman Catholic Priest.

Fr. WASSMUTH: I think it casts a tone on the people of the community and the people of Northern Idaho that's entirely false -- that somehow it implies that we are supporters of racism or that we are at least complacent in the face of it. The fact is, we will be actively opposing it.

FUNG [voice over]: Father Wassmuth heads the Kootenai County Task Force of Human Relations. The task force works to heighten community awareness of racial and religious prejudice by, among other things, holding rallies. This one was orchestrated to counter the Aryan Nations congress in July.

TASK FORCE MEMBER: Prejudice and violence have no place in a democratic and pluralistic America.

Fr. WASSMUTH: The numbers around here aren't all that terribly large and never have been. At maximum, there were some 60-some people associated with Butler's compound out there, as far as anybody knows. On the other hand, a small number of people can do a great deal of harm and a great deal of damage.

FUNG [voice over]: On September 15, Father Wassmuth's home was bombed.

Fr. WASSMUTH: I was in my livingroom there on the telephone when the bomb went off, and it was placed right in this area. Parts of the garbage can ended up on the roof over there. It's a pipe bomb. But they got the pieces all over.

FUNG: Are you scared?

Fr. WASSMUTH: Yeah. Yeah, I'm threatened.

FUNG [voice over]: Two weeks later, three more bombs were set off in Couer D'Alene, including one set outside the building that houses the FBI. No one ws injured by the blasts, and members of the Aryan Nations have denied involvement.

ARYAN NATIONS MEMBER: Guilt by association. What do you call it?

ARYAN NATIONS MEMBER: Guilt by existence.

Rev. BUTLER: We think we can drop a pretty good libel suit on them.

ARYAN NATIONS MEMBER: It's possible.

FUNG [voice over]: During the course of the bombing investigation, law enforcement officials allegedly found three machine guns, explosives and over $1,000 in counterfeit bills at the home of David and Deborah Dorr.

[on camera] Do you think that you are a dangerous couple of people?

Mr. DORR: If provoked.

Ms. DORR: If provoked, you bet.

FUNG [voice over]: David Dorr and two other members of the Aryan Nations Church were arrested for the Couer D'Alene bombings.

Fr. WASSMUTH: It's not just an attack on me; it's an attack on the whole task force. And since we represent the community, it's indeed an attack on the whole community. And that's what the community is feeling right now.

FUNG [voice over]: The bombings intensified local opposition to the Aryan Nations. Members of the Kootenai County Task Force on Human Relations met to plan a response to the violence and the fears it aroused.

TASK FORCE MEMBER: I've been asked to -- if I was going to move out of town now, because there was one person of color that said, you know, "It's time for me to leave. I'm scared." And I'm hearing this from people of color.

TASK FORCE MEMBER: Knowing my family was here, essentially unprotected and vulnerable, I felt tremendously vulnerable. And I felt like a victim.

FUNG [voice over]: In Couer D'Alene, opposition to prejudice includes educating tomorrow's leaders. Here at Couer D'Alene High, junior members of the task force lead a civics discussion with fellow seniors.

STUDENT: America is for everybody. And it doesn't matter if it's in North Idaho or Louisiana or wherever it is.

STUDENT: Yeah, if they're putting their putting this thought in people's mind that white supremacy is right when it's not.

STUDENT: We got people from all over the world, and we have little bits of everything in our country. And that's what our country is made of. And that's ripping our country apart if we're saying this area's only for whites.

LEHRER: Since that report was prepared, it's been quiet in Couer D'Alene. The Aryan Nation members charged in the bombing incident remain in jail awaiting trial. Mind Power

MacNEIL: Finally tonight, we have an essay by Roger Rosenblatt looking back at 40 years of Fullbright scholarships.

ROGER ROSENBLATT: When it occurred to Senator J. William Fullbright to create a foreign exchange program for scholars 40 years ago, his ambition was to protect the world from self-destruction. The senator had holocausts in mind. In his eyes were the European death camps and Hiroshima and Nagasaki. Fullbright countered those images of extermination with the Fullbrights -- an odd corrective, don't you think? Students from all over the world coming to America, American students travelling all over the world and doing what? Intensively examining noun declensions in Burma or flute manufacture in Senegal. How were such esoteric pursuits going to keep the world from blowing apart?

Then picture the selection of former Fullbright scholars and say, if you can, how such a varied crowd would go about preserving the planet. Harvard's President Derek Bok, the University of Chicago's President Hanna Gray, a group of Nobel Prize winning economists, including Wassily Leontief and Milton Friedman; a group of Nobel Prize winning scientists, Hans Bethe, Joshua Lederberg, Emilio Segre; historians Oscar Handlin, C. Vann Woodward, Henry Steele Commanger; writers Alfred Kazin, Joseph Heller, John Updike, Eudora Welty; composers Aaron Copeland, Philip Glass, Roger Sessions; actors John Lithgow and Stacy Keach; a librarian of Congress, Daniel Boorstin; a senator, Daniel Patrick Moynihan; a voice, Anna Moffo.

Fullbrights all, and a remarkable lot. But would you say that they kept theworld intact? Of course, one must concede that the world has stayed intact these 40 years, so no one can prove exactly that the Fullbright program did not do the trick. Only its method has been circuitous. Senator Fullbright shuddered at the power of the bomb. But he evidently believed wholeheartedly in the power of the mind. And he theorized that the more the mind takes in, the more generous it may grow.

Sen. J. WILLIAM FULLBRIGHT: And that's what it's all about. It's to change the way people think about each other -- people who have different cultures, different religions, different customs.

ROSENBLATT: At the end of World War II, Americans needed to get out into the world, where they were to hold so prominent place thereafter. Not just to go and stare at France, Brazil and Spain, but to recognize the France, Brazil and Spain in them. Ostensibly, the purpose of a Fullbright might be to spend a year on Irish folklore. In fact, its purpose is to spend a year on you -- a journey taken inward in a strange place where nothing and everything is familiar. The mind reaching out reaches in.

"Dear Mom and Dad, after four months in Berlin, my categorical wariness has evaporated almost totally. I begin to understand the German people after Hitler. What they must go through for redemption. But mainly, I see them as people."

"Dear Mom and Dad, I cracked a joke in Urdu today, and someone laughed."

"Dear Mom and Dad, tonight I'll walk where Shakespeare walked and chatted with the people in the village. For the first time in my life, I feel that anywhere I live is past, present and future -- the whole world precious to me now."

People know the whole world a lot more intimately today than they did 40 years ago, thanks more to TV than to the Fullbright program. But the Fullbright idea advocated a special, deeper sort of knowledge that embraced the world as both mysterious and kind. Beyond the doors is where you often find yourself, a citizen of everywhere with everywhere waiting for you, depending on you to stay alive. An exhilarating prospect for anyone who packs his books and bags, looks back with trepidation, and goes away toward home.

LEHRER: Again, the major story of this Thursday. CIA Director William Casey confirmed to reporters that a private businessman was the first to tell him about the diversion of Iran arms funds to the Nicaraguan contras. That was in October. He said he did not get the full story until six weeks later, when Attorney General Edwin Meese made the contra story public. Casey testified for three hours today before a closed session of the House Intelligence Committee. Good night, Robin.

MacNEIL: Good night, Jim. That's the News Hour tonight, and we will be back tomorrow night. I'm Robert MacNeil. Good night.