The NewsHour with Jim Lehrer

RAY SUAREZ: Good evening. I'm Ray Suarez. Jim Lehrer is on vacation. On the NewsHour tonight, the troubled legacy of outgoing FBI Director Louis Freeh, the week's political wrap from Shields and Gigot, charging for energy by time of day, and remembering two men in the arts. It all follows our summary of the news this Friday.

NEWS SUMMARY

RAY SUAREZ: Iran and Saudi Arabia today criticized the U.S. indictments in the Khobar Towers bombing case. 14 Arab suspects were charged yesterday in the 1996 attack that killed 19 American airmen in Saudi Arabia. U.S. officials claimed unnamed members of the Iranian government supported and supervised the bombing. Today, Iran's foreign minister denied any involvement, and the Saudi defense minister accused the U.S. of meddling in his country's affairs. He demanded all the evidence be given to Saudi authorities. U.S. Attorney General John Ashcroft and FBI Director Louis Freeh had praised the Saudis' cooperation. This was Director Freeh's last official day on the job. He retired after leading the agency for eight years, with two years left in his term. His deputy, Tom Pickard, will serve as acting director. We'll have more on Freeh's tenure after this News Summary. U.S. forces in the Persian Gulf were said to be on high alert today. The Associated Press and Reuters reported a threat against Americans had been issued possibly by Osama bin Laden's terrorist group. The report said the threat might be connected to the Khobar Towers bombing indictment. Marines in Jordan stopped training exercises. And Navy ships in the port of Bahrain were ordered to sea. The Defense Department will ask Congress for an extra $18.4 billion for next year. That word came today from the Office of Management and Budget. The extra money would bring defense-related spending for next year to $343 billion. The new request includes military pay, health care and spare parts, and provides $1 billion for preliminary work on a missile defense system. The truce in Macedonia ended today. Government troops attacked ethnic Albanian rebels near the capital, Skopje. We have a report from Mark Austin of Independent Television News.

MARK AUSTIN: Once again, the Balkans are on the brink. This is a Macedonian government attack helicopter unleashing missiles on a village held by Albanian rebels-- the assault signaling a shattering end to a fragile 11-day cease-fire. The Macedonian military says the aim is to crush and destroy those it describes as "terrorists." And as houses are set ablaze, the Albanians vow to fight back. "If they want a war," said a rebel leader, "they will get one." The onslaught is perhaps an attempt to pressure ethnic Albanians into accepting a government peace plan. Despite continuing negotiations, talks appear to have reached stalemate and alarmingly to the authorities, the Albanians are now occupying villages just a few miles from the capital, Skopje. As they responded today with machine-gun fire, hundreds of refugees were fleeing, mainly Albanian civilians looking for sanctuary in neighboring Kosovo. Only two years ago, of course, the flood was in the other direction.

RAY SUAREZ: NATO's Secretary-General, Lord Robertson, denounced the new fighting as "complete folly." The alliance has offered to send troops to supervise disarming the rebels if there's a political settlement. Britain today ordered 1,600 new troops to head to Northern Ireland after two nights of rioting. Catholic-Protestant violence in Belfast lasted until nearly dawn today. Rival crowds again threw rocks and firebombs at each other and at police and British troops. At least 20 officers were hurt as the trouble spread to more neighborhoods. The violence came amid growing tensions over getting guerrillas to decommission their weapons. Two British boys who kidnapped, tortured and killed a toddler when they were just ten years old, will be freed. The government made the announcement today. The parents of the victim, two- year-old James Bulger, had campaigned against their release. Jon Venables and Robert Thompson, now 18, have been given new identities and homes for their safety. They had been in custody since 1993. Officials said they could be arrested again at any time if they prove a threat. There will be no special counsel to investigate the finances of Senator Robert Torricelli. The Justice Department announced that today and said an existing federal investigation will continue. It said the Senator's concerns about media leaks didn't warrant the appointment. The New Jersey Democrat has said the leaks are politically motivated. The investigation began with his 1996 campaign fund-raising, but now includes his personal finances. The United States and Mexico will try to reduce migrant deaths along the border. The two governments agreed today to do more to combat human trafficking and discourage migrants from crossing illegally. And U.S. Border Patrol agents outside San Diego will experiment with non-lethal weapons. Mexico says more than 150 Mexicans have died trying to cross the border this year. Two deaths to note today: Carroll O'Connor, the actor who played Archie Bunker on TV's "All in Family," suffered a heart attack yesterday at his Malibu, California, home. He was 76. And John Lee Hooker, the great blues guitarist, died in his sleep of natural causes yesterday at his home near San Francisco. He was 80. We'll have more on both men at the end of the program tonight. Between now and then, assessing the tenure of FBI Director Louis Freeh, political analysis from Shields and Gigot, and charging for energy by time of day.

FOCUS - TROUBLED LEGACY

RAY SUAREZ: Kwame Holman beings our coverage of the Freeh story.

KWAME HOLMAN: On his next to last day in office, Louis Freeh joined in announcing that a two- year investigation into the terrorist bombing deaths of U.S. Service members in Saudi Arabia finally resulted in indictments. It was a major achievement for the FBI and for Freeh, who had substantial personal involvement in the diplomatically difficult case.

LOUIS FREEH: It certainly will be my last press conference, and I am leaving very satisfied and pleased.

KWAME HOLMAN: But such successes have been overshadowed by problems since Freeh took over the nation's top law enforcement agency in 1993. At the time, the FBI still was reeling from criticism after the deadly outcome of the stand- off with the Branch Davidian cult at Waco, Texas, and events at Ruby Ridge, Idaho, in which an agent killed the wife of a suspect. And there was turmoil internally from the abrupt departure of Freeh's predecessor, William Sessions, who resigned after admitting to a number of ethical lapses.

SPOKESMAN: Ladies and gentlemen, the President of the United States.

KWAME HOLMAN: Chosen by President Clinton, Louis Freeh arrived in Washington with sterling credentials. He once was an FBI Agent and later served as a federal prosecutor and a federal judge in New York.

PRESIDENT CLINTON: Today I am pleased to nominate a law enforcement legend to be the director of the FBI, Judge Louis Freeh.

KWAME HOLMAN: But his tenure included a new set of problems and controversies, some of which remain under investigation today. Last year, a Presidentially appointed commission investigating the 1993 standoff and catastrophic fire at Waco found that the FBI repeatedly withheld from then-Attorney General Janet Reno important details about the siege. The FBI's case against scientist Wen Ho Lee, suspected of passing nuclear secrets to China, largely fell apart amid evidence of bungling and misleading testimony by the FBI. Ultimately, 58 of the 59 charges against lee were dropped. The FBI's crime lab was found to have mishandled evidence in dozens of major cases, including the World Trade Center and Oklahoma City bombings. The lab was revamped after a review by the Justice Department's Inspector-General. Last month, the execution of Timothy McVeigh had to be delayed after disclosure that the FBI failed to turn over thousands of pages of case- related documents to McVeigh's lawyers. And the investigation continues into the activities of Robert Hanssen, a senior FBI Counter intelligence agent, accused of selling classified information to the Soviet Union and Russia for 15 years. When the problems landed Freeh before Congress, he often shouldered the blame.

LOUIS FREEH: For problems that have occurred during my watch and to problems, which have developed prior to my watch, I take full responsibility.

KWAME HOLMAN: On the plus side, Freeh often got the benefit of the doubt from sympathetic members of Congress. During his tenure, Congress has increased the FBI's budget by some 65%. The Bureau hired 5,000 new agents, including many minorities and women for an agency long criticized as dominated by white men, improved relations with the CIA and law enforcement agencies, and doubled its presence overseas. But critics say Freeh has been less successful in breaking down what they call a "cowboy culture" within the FBI.

REP. DAVID OBEY: When you have the kind of examples, continuous, ongoing, repetitive which have plagued your agency under virtually every administration as long as I've been here, it says to me that there is a fundamental problem of management, as well as a fundamental problem with the culture over there.

KWAME HOLMAN: Freeh acknowledged some failures in management, but says the culture in the bureau has changed for the better.

LOUIS FREEH: I think we have to be extremely diligent and conscious about a culture which I do think existed at one point, maybe when I was a young agent in 1975, where FBI agents and perhaps the institution tended to think of themselves as the best, which is not necessarily a bad thing. But if it's the best that "we can never make a mistake" and "everybody needs us" and "we're the only game in town," then that's a significant culture problem. I think we were caught up in that for maybe a long period of time, for all the wrong reasons. I think that's changed. I think that's changed very substantially.

KWAME HOLMAN: On Wednesday, a Senate committee brought together some of the many experts who have been called on to examine the FBI. Former Senator John Danforth, who headed the Waco investigation, noted the agency took six years to disclose that it used an incendiary device at the compound even though that did not cause the fire.

FORMER SENATOR JOHN DANFORTH: I didn't think there was a cover-up of a bad act. I think it was basically trying to cover embarrassment. Somebody made a mistake in a statement and mistakes aren't permitted. And let's not admit to mistakes so let's not say anything to set the record straight.

KWAME HOLMAN: Danforth said he found it difficult to investigate the FBI.

FORMER SENATOR JOHN DANFORTH: There were people within the FBI who just plain didn't want to cooperate with us. I think it was a small fraction, but I think they were some pretty well-placed people. I think that there is a culture in the FBI-- somewhere in the FBI-- to keep this... to keep this from coming out in the public.

KWAME HOLMAN: This week, Attorney General John Ashcroft announced the Justice Department will undertake it's own full-scale review of FBI Performance. President Bush is expected to nominate a new FBI Director shortly.

RAY SUAREZ: With me now to discuss Louis Freeh and the highs and lows of his career as FBI Director are Kris Kolesnik, former investigator for the Judiciary Committee; he is now executive director of the National Whistleblowers Center. Michael Bromwich, former inspector general for the Justice Department, now in private law practice. Elsa Walsh, staff writer for the "New Yorker." She recently wrote a piece on Director Freeh for the magazine. And Clinton Van Zandt, a 25-year veteran of the FBI; he is now a private consultant.

Clinton Van Zandt, let's start with you. If we look at the ledger with the undeniable successes and the problems, what should we make of the Freeh era at the FBI?

CLINTON VAN ZANDT: Well I think Louis Freeh really came in and tried to do the job. He was what agents wanted to see. He came in, he had been a street agent; he had worked his way up through the ranks. He had been a prosecutor. He had been a judge. He was a shining star. He brought everything that we needed but one thing, and that was someone who had run a corporation with 27,000 people. We need that in the FBI then; we need it today.

RAY SUAREZ: So given his experience and his strength in the investigative work, can we at least lay the successes of the Bureau at his door while he has publicly taken responsibility for some of the snafus?

CLINTON VAN ZANDT: Well, you know, the FBI has made some mistakes. But, Ray, as you know, they work 180,000 cases a year. They don't bungle 187,000 cases a year. They do a very good job. Director Freeh, if there is anything I think that Louis Freeh did wrong as director, number one, he trusted people implicitly and sometimes they let him down. And I think his investigative experience let him get too close to individual cases where perhaps a manager or something of that big of an organization needs to be able to back up a little bit, have other people come in. I don't think anyone could have tried any harder. The times I sat down with Louis Freeh one on one it was just amazing. The man was interested. He cared. He wanted to find out what was best for the American people. And he was politics be darned, we're going to do the job the best way he can. I think that's what he tried to convey to the agents who worked for him.

RAY SUAREZ: Michael Bromwich, how do you see that same thing?

MICHAEL BROMWICH: I think it's a mixed legacy. I think he did some very good thing. I think he expanded the FBI's presence abroad. I think he focused the Bureau on international organized crime, on fighting terrorism and so forth. But I think that the head of an organization has to take responsibility for the failures that occur on his or her watch. You've gone through the litany of what those failures are. And I think Director Freeh, to his credit, didn't run away from those failures, but he presided over them. It's fair to call him to account for those.

RAY SUAREZ: Those failures that he took responsibility for, often, Kris Kolesnik, rebounded to the benefit of the FBI and to the director himself?

KRIS KOLESNIK: Well, if there's one thing he was definitely good at, it was translating some of these failures into more money, more agents, more authority. And the way he would do that is he would take the full responsibility. And that was very impressive to members up in the Senate because they don't usually hear that from the head of an agency. And so what he would do is he would go up and he would say, it's my fault. And they would say, okay, how much more money do you need to fix the problem? How many more agents do you need and so on? And they thought they were holding him accountable but he was basically playing them like a fiddle.

RAY SUAREZ: Well, some of his supporters on Capitol Hill and in Washington have gone down that same litany and says, well, the director wasn't responsible for this and this and this and this. This was subordinates making mistakes; this was people way down the food chain making errors. What does land at his doorstep finally?

KRIS KOLESNIK: Well, the cause of the problems are essentially the culture. That's the culture coming out. Usually it's not high-profile cases, because that's where you make a name for yourself if you prosecute a case successfully. And when you have a high-profile case, there's a lot of pressure sometimes to cut corners. And it's usually the people down further in the chain of command, not him. But he would always take responsibility. Ultimately he's the leader. He's the manager. It does fall at his feet.

RAY SUAREZ: Elsa Walsh, you spent a lot of time with Louis Freeh.

ELSA WALSH: I did.

RAY SUAREZ: And the time that included going overseas and seeing the expanded work of the bureau. Tell us about what we should know about the man.

ELSA WALSH: Well, I spent about a year traveling around with him and talking to him. I think that, you know, there were a lot of problems on Louis Freeh's watch, but they weren't mistakes of bad faith or of malice. And he was a person, as Kris said, who was determined to fix things when a problem arose. I think that yesterday when you saw the indictments in the Khobar Towers case, which is what I wrote about, that was probably the most important case to Louis Freeh. As George Tenet, who was the CIA director, said, you can see all of lose it Freeh's values on his sleeve in the Khobar case, the tenacity, the determination, the empathy for the families, the sort of unwillingness to give up. And I think that when you spend time with Freeh, he has a very disarming presence. He comes across as quite humble, and most people of his stature in Washington suck a lot of air out of the room, but he isn't that way at all, but you really can seriously under estimate the feeling that's underneath that demeanor, because Freeh is a gentle bulldog.

RAY SUAREZ: Do you also see his - the strength of his personal diplomacy in getting the Saudis to come around and cooperate?

ELSA WALSH: Freeh said to me once - he said -- you can do fabulous investigative work but unless you have good personal relationships you're never going to get a case done. I think that when he came into the FBI, he saw that the relationship with the CIA and the DEA, the Drug Enforcement Agency, were completely dysfunctional and he made a big effort to try to improve those relation... that relationship to the point that when George Tenet, who is the CIA director, became the CIA director, he asked Director Freeh to swear him in because they both wanted to make a statement that we were now two agencies that were working together. In the Khobar Tower case, Louis Freeh felt that the Clinton administration was dragging its feet on it... On this case. Sandy Berger, who was the National Security Advisor at that time, said that was not the case. Regardless of what that interpretation was, Louis Freeh really worked on the Saudi ambassador to the United States, Prince Vandar, and also established relationships with people in Saudi. He went there over and over again. It was oftentimes in the FBI they joked that Louis Freeh is the only sort of presidentially appointed street agent. In the Khobar case he did that and he did that with the crown prince. It got to the point where Freeh thought that the Clinton administration was dragging its feet so much that he went to the senior President Bush, George Bush's father, and said, "help me out because the Saudis say that they believe the Clinton administration is no longer interested in this case." So Freeh did something that - you know -- some people might consider quite insubordinate. And he asked Bush to make an appeal. And it worked.

RAY SUAREZ: There's some disagreement over his status, his skill as a political player. Some people, in their appreciations of him over the last couple of weeks since he announced his retirement have said, no, he was total apolitical. And some people have had somewhat less of a generous assessment. Michael Bromwich, where do you come down?

MICHAEL BROMWICH: I think he was extraordinarily skilled politically. I think that the best evidence of that is the budgetary success he had on Capitol Hill over the years. He swelled the Bureau's budgets by billions of dollars. I think it's 65% since he came in in 1993. So I think he was very politically adept in that way. I do worry though about a director who starts to take a larger role than perhaps is appropriate. I think what Elsa has talked about suggests that Director Freeh and the Khobar Towers case thought that he was authorized or that it was appropriate for him to be setting United States foreign policy and balancing law enforcement interests versus other foreign policy concerns. That's the President's job. The President is elected to balance those values. I would be worried about Director Freeh or any other FBI Director making those kinds of decisions.

RAY SUAREZ: Clinton Van Zandt, a lot of talk about the Freeh resignation is focused on how he grew the Bureau, especially overseas.

CLINTON VAN ZANDT: Absolutely.

RAY SUAREZ: And also how he came into a place that already was quite troubled after the Sessions' years.

CLINTON VAN ZANDT: Sure.

RAY SUAREZ: How do those two things mesh? Did the Bureau need to grow in the ways it did and did he address some of those problems he found when he got there.

CLINTON VAN ZANDT: Well, let's talk about the overseas issue. During his tenure, the FBI increased its legal attaches, FBI agents overseas. We've doubled the number. You have to realize today that 40% of the investigations that the FBI conducts has some type of international aspect to it. Now the State Department fought the FBI kicking and screaming for FBI agents to go overseas. They considered that their exclusive turf. But it was the FBI agents who would have to go over and investigate. Just like we're saying now, you have to have those personal contacts. You have to go out and have dinner with people before they're going to trust you, especially when you're dealing in an international arena. I think Louis Freeh was very good at that. I think he was a visionary in that he saw that was the direction that international crime was going to be driven in, and he put the FBI in position to start moving. Unfortunately, our computer system and other things haven't kept up with us. But I think Louis Freeh's legacy is going to be he saw where the FBI needed to go. He tried to position us. I think now the Bureau needs to get away from bank robberies and they need to get on with what are the crimes of the 21st century going to be. We need to arm the FBI -- not with guns necessarily -- but with the training and with the equipment that's going to help them address cyber crimes in the future.

ELSA WALSH: May I ask --

RAY SUAREZ: Kris --

EDWARD WARNER: I'm sorry.

RAY SUAREZ: To your thoughts on that same question. The overseas expansion and the changing the culture question that's often asked about the FBI.

KRIS KOLESNIK: Well, I think they're two different issues. I agree with Clint that he had to, if he was going to open up these offices overseas, he was going to have to spend a lot of time socializing, hobnobbing. In fact, he spent a lot of time on Embassy Row here in Washington doing the cocktail circuit. He would talk to the ambassadors about the need for opening up an FBI office in their country and he would talk about the benefits of it for both countries and he would go overseas and he would dine with heads of state and do the same sort of thing.

RAY SUAREZ: In your view, was that in conflict with the domestic brief and the mission of the FBI?

KRIS KOLESNIK: Well, I believe what happened was he wasn't spending enough time here having control over some of these cultural problems we're talking about. And I think that's where the basic failure of his tenure has been.

RAY SUAREZ: Elsa Walsh?

ELSA WALSH: I think that one of the sort of the primary legacies that he will leave and something that a lot of people don't realize is that, in fact, the FBI now is as essential to national security as the Pentagon is, as somebody of the National Security Council said to me, because with the Cold War having diminished what are the big threats to the United States? There is terrorism and there is cyber crime. And these are crimes that have no borders. I think what Freeh saw that that was going to be the future. In fact when he first came into the FBI he said to a number of people who were right around him, he said that I don't want to have happen with terrorism what happened to the FBI with the mob. I think if you remember students of the FBI will remember that Hoover thought that the mob wasn't a big deal. So therefore ignored it. Freeh was a young agent at that time and saw that. So, what he really focused his attention on was trying to sort of change the FBI'S role in terrorist investigations. I think he did that. You saw with the East African bombings and with Khobar. These were crimes that essentially in another era really probably would have gone unpunished and uninvestigated. They're too hard, they're too tough and the jurisdictional issues are just impossible. But he has essentially made real a policy, which says that if an American is murdered abroad, the FBI is going to go after you. And that didn't happen before.

VOICE OF GUEST: That's changed.

RAY SUAREZ: What does he hand on to the next director?

MICHAEL BROMWICH: I think he hands on an agency, a large agency, 27,000 people that has a record of great accomplishment in law enforcement but now is a very troubled agency. The FBI personnel are very much affected by the bad publicity that the bureau gets. I think that morale of the FBI right now is probably at a very low ebb. So I think what needs to happen is a new director needs to be nominated. He needs to be somebody who is non-partisan and who is welcomed as a professional, who has law enforcement experience, who is a good manager, as Mr. Van Zandt suggested. Then the Bureau can get on with its business of restoring its reputation and doing some of the very fine work that it does.

RAY SUAREZ: Guests, thank you all.

FOCUS - POLITICAL WRAP

RAY SUAREZ: Still to come on the NewsHour tonight, Shields and Gigot, time of day energy, and remembering two men in the arts.

RAY SUAREZ: Now Terence Smith is joined by Shields and Gigot.

TERENCE SMITH: That's syndicated columnist Mark Shields, and "Wall Street Journal" columnist Paul Gigot. Gentlemen, welcome.

Paul, this week the president threatened to veto on the Kennedy-McCain version of a patients' bill of rights -- a bold move. Is it smart politics?

PAUL GIGOT: I think it's smart politics. I think you can blame three people for it -- outside the White House. One is the Speaker of the House Dennis Hastert, a Republican and two Senators, both Democrats. John Breaux of Louisiana, Ben Nelson of Nebraska, both against that version of the bill, and both think that there's enough Democrats potentially who now support the Kennedy-McCain bill. But if they think that bill can't pass, will never become law and of course with a presidential veto it will not if he follows through on that, they might move over to the compromise legislation that John Breaux is sponsoring with Bill Frist of Tennessee, a Republican and Jim Jeffords, the Independent who has left the Republican Party, of Vermont. So I think it's tactical politics. It's designed to move the bill in a direction that Bush thinks his constituencies can more better live with. There are a lot of Republicans in the Senate - maybe as many as 40 -- who don't even like the Breaux version of the bill. Bush had to issue this veto or he would have been faced with a more difficult choice.

TERENCE SMITH: And he saw compromise from Speaker Hastert.

PAUL GIGOT: Well, Speaker Hastert wants a bill. He's wanted it for a couple years now. He wants it off the table. He wants to move on. He would like to get an achievement for the Republican Party dealing with health care going into the 2002 election.

TERENCE SMITH: Mark, what about the politics of it?

MARK SHIELDS: I dissent on the politics of it. I think the president was trying to buck up support among Republicans this week. This is an impossible position for the Republicans. He's facing overwhelming majorities both in the Congress and in the country that want patients' bill of rights that want it as written, that 70 Republicans in the House voted for this bill two years ago -- basically this same bill. With all those noxious, pernicious provisions the President warns us about. I think what the President... His life is complicated, Terry, by the fact that compromise is going to be inevitable. He's going to have to make it. What Democrats are truly terrified of is that George Bush will be a shrewd politically as Richard Nixon was when the Democrats set the legislative agenda and he ex-appropriated the Environmental Protection Agency and tied Social Security payments to cost of living increases and advocated national health insurance, took away basically their legislative agenda as Bill Clinton did in 1995 when the Republicans took over the Congress, Bill Clinton signed the Welfare Reform Act. Bill Clinton cut capital gains tax. Bill Clinton balanced the budget. What it ends up doing is isolating that wing of your own party that's been most loyal to you, liberal Democrats in the case of Clinton, conservative Republicans in the case of Nixon but it helps the President. And I think that's what Democrats are terrified of that. And I think the veto indicates that George Bush is not going to practice the kind of middle politics.

PAUL GIGOT: I disagree with that. It's shaping the bill. He's already signaled he's going to... they're going to compromise. I mean there's no question that philosophically Republicans are on the defense on this. I mean, they're really talking about two different versions of a big new regulatory regime for the private health care market. There's no question about that. But he's got a perfect foil -- in the health care, in the trial lawyers. Bush has a perfect foil in the trial lawyers on this bill. That's what he's making the lynchpin of his veto threat. Trial lawyers are only people who are less popular than journalists in this country and maybe politicians. So there's no question that he can... He's going to try to shape this legislation. There's one other thing he's got to do. This is the first real test of Bush with a Democratic Senate. If he rolled over on this, Tom Daschle was going to be beginning to see that he was an easy mark. This is also about Bush versus Daschle.

TERENCE SMITH: Is it shaping up that way?

MARK SHIELDS: Well, I'll say this: George Bush does not to be seen as the champion in the tribune of American insurance companies. I dissent with Paul. I think the Republicans have put themselves in a terrible position. They're saying the only place you can sue is in federal court. I mean this is the states' rights party. These are the people who believe in local control - local access. You can't go to your state courts. You have to go to federal dockets where the dockets reach from here to Omaha. I really think that Bush is in a tough, tough position here politically. The idea of compromising with Tom Daschle probably would help George Bush who got very bad news in polls this week.

TERENCE SMITH: Another subject. The President's political advisor, Karl Rove, is back in the headlines this week for meeting with Intel executives while he still held more than $100,000 worth of Intel stock. Political trouble?

PAUL GIGOT: Well I think he wished he didn't have that meeting. Tom Daschle, the Senate Democratic leader, is not known for practicing the politics of charity. He's pretty hardball player. He said we're not going to investigate this. I think he decided that because there's really not a scandal here. At most there's just the appearance of some kind of impropriety -- even less than an appearance because there really isn't a big fact base behind this. He met with him, he says, plausibly because he hadn't received... the White House counsel told him don't sell your shares until you get a letter of divestiture that allows you to get a tax break on your capital gains stock. There's no suggestion that he actually was decisive in this meeting. The other members who were in the meeting said no, in fact, he said other people in this administration have something to do with that. Karl Rove is an influential person in this administration. There's no question about that. But I don't think on this one there's anything there. That's why Daschle decided it wasn't worth pursuing.

TERENCE SMITH: Mark, what do you think?

MARK SHIELDS: Fact: Intel has a lobbying staff of ten here in Washington. It's a big company. It wanted to divest to a Dutch company. It needed administration approval in the Department of Justice. That had not been forthcoming. Fact: The chief lobbyist of Intel says we know what we're doing in Washington. We knew what we were doing when we met with Karl Rove. Karl Rove then sent the chief executive officer of Intel over to meet with the Vice President of the United States and the National Economic Council. Paul is right. He's involved in every decision. He's probably as close to the President politically as anybody. When Karl Rove calls and asks you to meet with somebody and you're a part of this administration you do it. You think you pay some attention to it. You don't just give the guy a pass. Fact: After the meetings within a matter of weeks the Intel's merger was approved. This is an administration that said we are going to be different, we're not going to give even the perception, the remote perception. This is a man who could have put his money, according to my ethics lawyers, the people I've talked to, into a blind trust right at the outset. He chose not to do that and instead opened himself up to these questions. They're legitimate questions. Henry Waxman the Democratic member of the ranking member of Dan Burton's committee where we want to put things behind us who has already issued 100 subpoenas in the past four months of Clinton's administration folks has not. He's just written some questions about this and wants to know exactly what went on in the meeting. Legitimate. It's not a witch hunt but I think it's a legitimate inquiry.

TERENCE SMITH: Does it have legs? That's the real question?

PAUL GIGOT: It has no legs. It has no legs. The reason he didn't set it up in a blind trust is because he wanted to sell it. You can sell your holdings or you can put it in a blind trust. Rove said I want to sell it. The White House counsel said wait a minute we've got to through these bureaucratic hoops and give you a letter of divestiture. You won't pay as much tax. Hold off.

TERENCE SMITH: At that point wouldn't somebody concerned about appearances say no I better not meet with the executives that company?

PAUL GIGOT: The White House Counsel's Office in my reporting did say that. The White House argument is that the letter that asked for the meeting from Intel made no mention of this story of the... Of the merger. Therefore he had no idea it was going to come up.

MARK SHIELDS: This is a guy who had a quarter of a million between $100,000 and a quarter of a million dollars of Intel stock. You're told when you go to work for the federal government in the Executive Branch any time there's a perception you have to ask for a waiver of a meeting involved in a company in which you have a substantial share. That's a substantial share.

TERENCE SMITH: No such waiver in this case.

MARK SHIELDS: No. No evidence of waiver. That's one of the questions that Waxman asked. It's a legitimate inquiry. Was there a request for a waiver?

PAUL GIGOT: Why aren't the Senate Democrats looking into it? They don't usually lay off these things as an act of....

TERENCE SMITH: What about that, Mark?

MARK SHIELDS: What about it? Is there an investigation? Henry Waxman has not asked for an investigation. Henry Waxman wrote a letter. It's not unlike the whole matter of Dick Cheney. Certain newspapers-- I'm an avid reader of-- seven years ago were castigating and crucifying Hillary Rodham Clinton for having secret meetings of the health task force. Yet Dick Cheney had every oil mogul in the world in on his energy thing and I haven't heard the same hue and cry demanding...

PAUL GIGOT: What does that have to do with Karl Rove?

MARK SHIELDS: If the inquiry with Henry Waxman....

TERENCE SMITH: Meetings in the White House.

MARK SHIELDS: That's right. Meeting in the White House.

TERENCE SMITH: One other, Paul, on Tuesday the New York Times and CBS News came out with a poll showing that the president's support is slipping. Should he be worried?

PAUL GIGOT: I think the poll was hyped -- to be honest -- by the Times.

TERENCE SMITH: Hyped?

PAUL GIGOT: They played it up. It's their poll. By hyped I mean the significance of it. It fell... His poll rating fell four points in terms of approval. In that Poll Gallup had him at 55. The Times at 53. He's been mostly in the 50s throughout this with the exception....

TERENCE SMITH: Should it be slipping at this stage?

PAUL GIGOT: If there's any concern-- and there is some, there should be some concern at the White House-- I think it's explained by two things: Energy and the economy. 40% of the public....

TERENCE SMITH: And the economy, not the environment? The economy?

PAUL GIGOT: Well, is linked to the economy. But... Is linked to the environment. I'm confusing myself. In that poll, 40% of the public said the economy is getting worse. Only 9% said it's getting better. The wrong track number, which is, I think, if you look at the poll seems to be rooted in economic anxiety, gas prices and so on is 53-42. So the country, I think, is sayings, look, we're a little anxious here and we're not certain and that is redounds to the detriment of a President.

TERENCE SMITH: Mark?

MARK SHIELDS: Anxiety is rampant in the ranks for a very simple reason. The worst thing a pollster can say to any candidate when a poll comes back, "don't worry, boss, you have time to turn this around."

TERENCE SMITH: That's not good news because George W. Bush is up until 2004. These are the same numbers that Bill Clinton had in 1993 at the same stage basically. Now Bill Clinton, as we all know, came back and won a thunderous re-election. The problem is this: The problem is that Bill Clinton's numbers in 1993 came after three attorneys general, after the haircut on the tarmac at Los Angeles Airport, after the firing of the Travelgate, and after, you know, you name it, the energy tax back-off -- all sorts of problems. George Bush's bad numbers come after what a favorable positive reviews mostly of his trip to Europe, of his two biggest legislative initiatives having been passed, education and taxes.

TERENCE SMITH: So you interpret.

MARK SHIELDS: So my interpretation is this is the best we've had. This is good news. He's at the top of his game. And the thing he has to be most concerned about is this: Just as it happened to Clinton in 1993 and 1994, is that the members of your own party-- and I think we may get nervous and skittish in the ranks. Yesterday we saw70 House Republicans break from the President on off shore drilling in Florida. That may have been a reflection of the poll.

TERENCE SMITH: We'll have to leave it there. Thank you both.

FOCUS - TIME IS MONEY

RAY SUAREZ: Charging for electricity by time of day. Lee Hochberg of Oregon Public Broadcasting has the story.

LEE HOCHBERG: At 5 o'clock in the afternoon, Karen Stillwell powered up the computer to check her e-mail. Elsewhere in the suburban Seattle home, 14-year-old Jake was plugged into Sports Radio while doing his homework. 12-year-old Justine had her stereo going, and nine-year-old Jeffrey was perched at the TV playing video games. Everybody was using electricity. Pretty typical in an American home at 5:00 PM, but under a controversial time-of-day price plan just implemented by Puget Sound Energy, a private utility serving 900,000 Washington customers, the cost to the Stillwells of using that electricity has soared. A sophisticated new electric meter on their garage wall spun minute-by-minute consumption data back to computers at utility headquarters. And the Stillwells were charged 15% more than if they had used that same electricity before 5:00 PM.

GARY SWOFFORD, Puget Sound Energy: Customers have to see the consequences of the purchase decisions they're making.

LEE HOCHBERG: Utility Vice President Gary Swafford says the time-of-day plan will reduce the chance of brownouts by inducing customers to shift their power demand to off-peak hours.

GARY SWOFFORD: This stuff has to be priced in a manner that people can see what it is that they're paying for and to be able to respond for it. For the most part, customers pay an average price and they don't have any reason to modulate their usage based upon what the actual price of the product costs.

LEE HOCHBERG: A few other utilities use time-of-day pricing. But this five-month pilot program is the nation's largest such experiment. It's voluntary to more than 300,000 Seattle area households, which have the new meters. Electricity is priced about the same as the old rate during the middle of the day, but it jumps 15% at the peak periods of 6:00 to 10:00 in the morning and 5:00 to 9:00 in the evening. Power use after 9:00 PM or on Sunday is discounted 15%. The Stillwells already are shifting their dish washing.

KAREN STILLWELL, Homeowner: I load it and then start it at 9:00 before I go up to bed. That is when it's the cheapest to use. They'll bill me at a cheaper rate if I wait and do it after 9:00, and my laundry, too. I don't do my laundry until after 9:00.

LEE HOCHBERG: But there is a debate over what this kind of load shifting will really accomplish.

SPOKESMAN: There is a critical need for us and the region to be doing whatever we can.

LEE HOCHBERG: In regulatory hearings before the plan was implemented, the utility insisted the pricing plan was essential to promote conservation. But the state attorney general's office, which represents rate payers, argued it won't help conserve at all.

SPOKESMAN: It's not a conservation mechanism. And we think their needs to be far more emphasis on really aggressive conservation mechanisms, and that this is a distraction, a misdirection of energy and resources for everyone involved.

LEE HOCHBERG: Assistant Attorney General Simon Ffitch says time- of-day pricing shifts electrical load, but doesn't reduce it.

SIMON FFITCH, Washington State Asst. Attorney General: If you want to reduce the level of demand, you get people to unplug hot tubs. You don't get them to just use it at nighttime. The real emphasis right now should be on energy efficiency and conservation. And time-of-day plans just simply don't do that.

SPOKESMAN: The response to Puget Sound energy's personal energy management program has been overwhelmingly positive.

LEE HOCHBERG: In promotional material, Puget Sound energy counters that its program does include a rebate for customers who use 10% less electricity this year than last year. But it says just shifting power use in itself benefits customers. It reduces peak demand on the system so the utility doesn't need to build expensive new power plants, a cost customers would have to absorb.

GARY SWOFFORD: If we don't get customers who actually use the energy to be able to vary their demand with what the price is, we will in fact have to build more resources than are necessary-- not just generation, but transmission and distribution resources because the whole system has to be able to support higher usage. If we can get usage down, we won't have to build as many resources.

LEE HOCHBERG: The program has build-in limits. It doesn't apply to businesses like restaurants who successfully lobbied that their energy demand is driven by customers and can't be shifted to off-peak hours. Diane Symms is with the Washington Restaurant Association.

DIANE SYMMS, Restaurant Owner: You know, you build your business on when the customers are coming, not when the power companies are going to choosing to be choosing to charge you for their power at different rates.

LEE HOCHBERG: And it can't really apply to many apartment dwellers, who aren't allowed to run washers and dryers late at night. Consumer advocates say time-of- day plans for them need to be coupled with provisions to cut consumption.

SIMON FFITCH: You need to give them ways to respond that doesn't involve, you know, shivering in the dark. You can send them timers. You can send them energy- efficient light bulbs, so that... Particularly for those people who can't shift their usage, they can still have a way to respond and not be really punished by this kind of a program.

LEE HOCHBERG: But what bothers critics even more than the specifics of time-of-day pricing is the possibility that utilities could exploit it during the current energy crisis. They say it's true that load shifting could help utilities that are short of supply, but it also could be abused by utilities that have plenty of supply and want to save some of it to sell to the highest bidder. Ffitch says Puget Energy falls into that category.

SIMON FFITCH: They have enough energy from their core resources, their hydro and their long-term resources, other resources to serve their basic load.

LEE HOCHBERG: He says Puget could take the power Seattle customers don't use and turn around and sell it to needy utilities elsewhere for three to four times the price.

SIMON FFITCH: There are significant revenue opportunities here for the company. There is going to be some company benefit from selling freed-up power into that expensive wholesale market.

GARY SWOFFORD: They're just plain wrong on that. They're just wrong. That isn't the motivation behind this. The idea that somehow we came up with this program just so we could make some more money is just wrong.

LEE HOCHBERG: Puget energy reported profits of $185 million last year. It won't say how much more it expects to earn with the time- of-day plan. The company says drought conditions in the Pacific Northwest have hydropower supplies 53% below average, and utilities' real goal is to avert electricity shortages.

GARY SWOFFORD: We think we're going to have enough resources tomake it through that, but we're talking about the difference between if we lose a resource, we won't have enough and we'll be in the market buying energy. So it's not like we have some great surplus that we can call upon or resources we can call upon. They all have to run and they all have to run well.

LEE HOCHBERG: Critics, though, are unconvinced. But the real winner here is whom?

SIMON FFITCH: Potentially the utility companies are going to see the biggest benefits from this.

LEE HOCHBERG: The Stillwells' electric bill for the day NewsHour visited was pennies higher than it would have been before time-of-day pricing. The utility predicts 6% of customers will see a change of up to 3%, either higher or lower. Puget Sound Energy says real change will soon be occurring nationally.

GARY SWOFFORD: Ten years from now, customers in this country will be purchasing their energy on time- of-use basis. I think this will go all over this country. I think this will go all over the world, quite honestly.

LEE HOCHBERG: The utility hopes to implement a permanent time-of-day plan for residential, commercial, and industrial customers as soon as next year. But state regulators say they'll evaluate the experiment first, determining how much energy it saved, how much money it saved or cost consumers, and what it earned or cost the utility itself.

FINALLY - IN MEMORIAM

RAY SUAREZ: Finally tonight, we remember two American artists: First, an actor who left an indelible mark on television.

EDITH: Songs that made the hit parade...

ARCHIE BUNKER: Guys like us we had it made...

EDITH AND ARCHIE SINGING: Those were the days...

RAY SUAREZ: Carroll O'Connor will be remembered most as Archie bunker, the ingeniously comic but bigoted Queens workingman of the 1970s television show "All in the Family." The show ran for eight years, won a slew of awards, and became one of the most influential programs in TV history.

ARCHIE AND EDITH SINGING: Those were the days... ( Applause )

RAY SUAREZ: Archie had a bad word for everyone, from blacks, Jews and commies, to name a few of his targets, to his wife Edith, who Archie not so fondly called the dingbat.

EDITH: I'm sorry! I thought I was doing a good thing.

ARCHIE: Oh sure, good thing. That's you all over, always doing good. Edith, you're so good you never get mad at nobody, you never holler at nobody, you never swear, no nothing. You're like a saint, Edith. You think it's fun living with a saint? It ain't! It ain't at all! Look at this. You don't even cheat to win. You cheat to lose! (Laughter ) I mean, Edith, you ain't human!

EDITH: That's a terrible thing to say. I'm just as human as you are.

ARCHIE: Prove you're just as human as me. Do something rotten. (Laughter)

RAY SUAREZ: O'Connor built a television, Broadway, and movie career that spanned more than five decades. In the 1960s, he played a series of supporting roles in Hollywood films, including the 1963 movie "Cleopatra."

CARROLL O'CONNOR: Your happiness is understandable enough. Now that Caesar has publicly recognized his son, one need no long wonder.

RAY SUAREZ: After "All in the Family," he had a solid Emmy-winning run as the police chief on the television show "In the Heat of the Night," and most recently played Minnie Driver's father in the movie "Return to Me."

CARROLL O'CONNOR: Save it, save it, save it for the Italians. I know you love me.

RAY SUAREZ: But it was Archie bunker who defined O'Connor. He and "all in the family" made its mark by testing limits, provoking controversy for blunt treatment of such thorny issues as the Vietnam War, religion, race and social justice. A frequent foil was his next door neighbor, George Jefferson.

GEORGE JEFFERSON: I see you are interested in the space program.

ARCHIE BUNKER: Yeah, that's a genuine facsimile of the Apollo 14 insignia. That's the thing that separates the U.S. of A., the red chinks and all them other losers. ( Laughter )

GEORGE JEFFERSON: You don't think we got anything more important to do with $20 billion than to send a guy up on the moon to hit a few golf balls?

ARCHIE BUNKER: What's more important than that?

GEORGE JEFFERSON: How about spending the money here on earth to fight poverty, create a few jobs?

ARCHIE BUNKER: Oh, you sound just like my son-in-law now.

GEORGE JEFFERSON: Your son-in-law's black?

ARCHIE BUNKER: No! ( Laughter ) He's only a Polack. (Laughter )

RAY SUAREZ: The Polack was Archie's liberal son-in-law Michael Stivak, was played on the show by actor/director Rob Reiner.

ROB REINER, Actor/Director: Carroll O'Connor clearly created, I believe, the most indelible character in the history of American television.

RAY SUAREZ: O'Connor died of a heart attack Thursday. He was 76.

RAY SUAREZ: And now blues man John Lee Hooker. He was born to a sharecropper family in Mississippi and became a leading figure in the Mississippi Delta blues tradition. With his electric guitar and often growling voice, Hooker influenced several generations of rock and pop musicians, including the Rolling Stones, Carlos Santana, and Bonnie Raitt, many of whom ended up recording with him. Hooker received numerous lifetime awards in his later years. He estimated he'd made more than 100 albums. Here he is, solo, from a 1993 interview session. (Blues guitar playing )

JOHN LEE HOOKER: (playing guitar) This is about the flood. A long time ago -- Tupelo, Mississippi --

happened one Friday evening - (playing) -- a dark cloud rose the people of Mississippi was out on their farms during their harvest -- it began to rain -- the poor people of Mississippi began to worry. It rained and it rained -- both night and day - it rained and it rained. The people said, lord who can we turn to now?

The women and there were children screaming and crying saying, Lord, have mercy.

What can we do now? Who can we turn to? (Humming and playing guitar)

RAY SUAREZ: John Lee Hooker died yesterday in his sleep. He was 80.

RECAP

RAY SUAREZ: Again, the other major stories of this Friday. Iran and Saudi Arabia criticized the U.S. indictments in the Khobar Towers bombing case. And an 11-day truce ended in Macedonia when government troops attacked ethnic Albanian rebels near the capital. We'll see you online, and again here Monday evening. Have a nice weekend. I'm Ray Suarez. Thanks and good night.