The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight a debate about the proposed changes in Medicare, highlights from today's political money hearings in the Senate, four views of the political sea change in Mexico, and an Anne Taylor Fleming essay on the moms of summer. It all follows our summary of the news this Tuesday. NEWS SUMMARY

JIM LEHRER: The Mars Pathfinder was back in business today. NASA scientists said the lander was transmitting data to Earth after an unexpected interruption early Monday. Photos released to the NASA news briefing showed the Mars rover maneuvering around the planet's rocky surface and getting ready to use its X-ray spectrometer to analyze a rock nicknamed "Yogi." NASA officials said they will release that information within the next few days. The Pathfinder shut down three times in the last six days. Repairs to the disabled Russian space station Mir were put on "hold" today. Yesterday, its commander complained of heart problems. We have more in this report from Lawrence McDonnell of Independent Television News.

LAWRENCE McDONNELL, ITN: --carried out in the last 24 hours confirmed that commander Basili Tsibilyev on the right has developed a minor heart condition, forcing the postponement of the rescue mission for at least 10 days. Mission Control Doctor Igor Gacherov put the condition down to stress. He said tension on board was naturally high. Tsibilyev was feeling the pressure. It's now been confirmed that the Russians have asked that English-born American Michael Foale be prepared to carry out the rescue mission instead of Tsibilyev. Doctor Foale will be required to carry out a space walk, or EVA. Today NASA said that shouldn't be a problem.

PHILIP ENGELAUF, NASA Spokesman: Mike is fully trained in the Orland suit, the Russian EVA suit, as a backup for Jerry Leninger, and he has performed an EVA in the US space program and in the American equivalent.

LAWRENCE McDONNELL: In the last few days Mission Control in Moscow has released pictures of the cargo ship crashing into Mir three weeks ago. Tsibilyev has been accused of causing the crash for failing to control the supply rocket as it approached the space station. Today the crew due to take over from the cosmonauts now on board Mir were familiarizing themselves with the situation. They're supposed to take off on August 5th. But now the launch will only go ahead when current repairs are completed.

JIM LEHRER: Tonight, Russian doctors announced they were putting the Mir commander on medication to try to correct his irregular heartbeat. NASA officials said they are still weighing the Russian request to let Michael Foale take his place for the repair mission. Vincent Foster committed suicide in 1993. That was the official conclusion issued today by the Office of Whitewater Independent Counsel Kenneth Starr. The statement said Foster, then a deputy White House Counsel, died from a self-inflicted gun shot. His body was found in a wooded recreation area in a Washington suburb. Several earlier investigations also concluded that Foster's death was a suicide, but wild conspiracy theories continued to circulate. Starr said he based his conclusion on a lengthy investigation conducted by experienced prosecutors and law enforcement officers. At the White House today federal health officials pushed for changes in the proposed tobacco settlement. Industry lawyers said they may be willing to pay even stiffer fines if the president will endorse the settlement. President Clinton has already rejected limits on the Food & Drug Administration's power to regulate nicotine. Also at the White House today congressional leaders talked with the president about various tax cut, Medicare, and budget proposals. Senate Majority Leader Trent Lott told Mr. Clinton he was confident compromises could be reached in the next two weeks.

SEN. TRENT LOTT, Majority Leader: We are working together in a bipartisan way that will get some budget spending to the front and will get the reforms that we need to have in Medicare, will preserve and protect that program, and also will give tax relief to working Americans and tax relief that will help the economy keep going, but we have made real good progress in the last month toward those goals, and we're committed to getting it completed and worked out, and passed through the Congress, so that you can sign it, as we've all agreed to in our budget agreement, by the 1st of August. It's a big order, but I think we can do it.

JIM LEHRER: At that same event President Clinton issued a sharp warning to Bosnian Serbs. He said they should not retaliate with the arrests of suspected war criminals by NATO-led forces.

PRESIDENT CLINTON: The Dayton agreement says that if someone is charged with a war crime, they should be turned over and subject to trial. Now, very plainly it also says that if the S-FOR troops come in regular contact with those people, that they can be arrested. Now, they have clearly not complied with that provision of the Dayton agreement. They've made no effort to help us get any of these people. And so--but they have no cause to take any retaliatory action, and it would be a grave mistake to do so.

JIM LEHRER: Mr. Clinton was referring to bomb attacks over the past two days in the Bosnian Serb territory. International peace monitors were targeted. Both explosions caused property damage but no injuries. Back in this country today the Senate hearings on political money focused on campaign contributions made four years ago. Documents were released in which fund-raiser John Huang asked his Indonesian employer to send money for 1992 political donations. He wanted the Lippo Group conglomerate in Jakarta to reimburse him for a $50,000 check he sent to the DNC victory fund. The Democratic National Committee immediately announced it would send back that donation. The party returned $1.6 million raised by Huang in the 1996 presidential campaign. We'll have excerpts from today's hearings later in the program. Italian fashion designer Gianni Versace was shot to death this morning outside his Miami Beach home. Police said he was shot twice in the head at point blank range by a white man about 25 years old. Versace began designing ready-to-wear clothes in 1972. He launched his own label six years later. He was 50 years old. And that's it for the News Summary tonight. Now it's on to the Medicare debate; the Senate campaign finance hearings; a new democracy in Mexico; and an Anne Taylor Fleming essay. FOCUS - CURING MEDICARE?

JIM LEHRER: Margaret Warner has the Medicare story.

MARGARET WARNER: The $200 billion-a-year Medicare program provides health care benefits to 38 million elderly and disabled Americans. It is financed through a complicated mix of taxes paid by today's workers and premiums and other charges paid by the elderly. The financing is further complicated by differences between the two different types of Medicare programs--part A, which covers hospital and home care bills; and part B, which covers doctors' bills. Taken altogether, the cost of the Medicare program is growing at more than 8 percent a year, a rate many analysts say will balloon further as the ranks of America's elderly grow. But efforts to rein in Medicare costs have proved politically explosive. In 1988, the powerful House Ways and Means Committee Chairman, Democrat Dan Rostenkowski, was set upon by seniors--literally--after Congress hiked Medicare premiums to fund catastrophic care. Six years later, in 1994, a newly Republican congress proposed $270 billion in Medicare savings. That too ran into vociferous opposition from the elderly and from many Democrats.

NUSSLE: I've got two grandmothers who want Medicare reformed, and we want to know why you're delaying it on the floor.

REP. CHARLES RANGEL: You ought to be ashamed of yourself for what you're doing, not to-- Don't do that to your grandmother. NUSSLE: You ought to be ashamed.

REP. CHARLES RANGEL: You ought to be ashamed what you're doing to the American people.

MARGARET WARNER: In the end, some savings were made--but nothing like what the Republicans had proposed. In the 1996 presidential and congressional campaigns, the Democrats made political hay out of the issue.

AD SPOKESMAN: The Republicans are wrong to want to cut Medicare benefits. And President Clinton is right to protect Medicare.

MARGARET WARNER: But this year, with the election over, the President and Republican leaders in Congress agreed to a budget deal that would save $115 billion over five years, with unspecified Medicare changes.

SEN. BREAUX: I think that we have a situation with a divided government that neither side can afford to say never or no way.

MARGARET WARNER: It was left to Congress to pass legislation with specific Medicare changes. But the President will have to sign any bill before it's final. To date, the House and Senate have adopted separate plans that, while different, do share some features. Both would force health care providers to accept smaller payments and would encourage seniors to move into more cost-effective managed care. But there are controversial differences too--particularly over the following three changes in the Senate bill that weren't included in the House version. The Medicare eligibility age would gradually rise from 65 to 67 for future recipients; more affluent seniors would be required to pay higher premiums; and recipients would be required to pay a home- healthcare fee of $5 a visit. Last Thursday, House and Senate negotiators began meeting in conference to iron out differences between the two bills. The conferees also have to take the President's views into account, or risk a veto. Last Wednesday, in Madrid, Mr. Clinton indicated he might accept charging wealthy seniors higher premiums, a position known in shorthand as "means testing."

PRESIDENT CLINTON: I've never been opposed to means testing Medicare.

MARGARET WARNER: The President and his aides have made clear he opposes raising the eligibility age, at least in this current package. Last Thursday, the House voted--by a resounding 414 to 14- -to go on record against hiking the eligibility age. But advocates fought back. On Friday, a bipartisan group of 12 senators released a letter to the President, saying the eligibility age hike would make the Medicare system "more fair and sound in the future."

MARGARET WARNER: And joining us now are Democratic Senator John Breaux of Louisiana, one of the signers of the letters to the President supporting the Senate's Medicare changes, and Martin Corry, director of federal affairs for the American Association of Retired Persons, better known as AARP. Senator, for the whole history of Medicare, every recipient's been charged the exact same premium. Why change that now?

SEN. JOHN BREAUX, [D] Louisiana: Well, because we have a real serious problem. Medicare is going broke. By the year 2001--at the end of that year--unless we make some fundamental changes in the program, the system is not going to be there for the seniors who are now on the program or those who are getting ready to come on the program. Everybody wants us to fix it. The problem is nobody wants us to do the things that are necessary to fix it. They say fix it but don't increase my premiums; fix it but don't reduce my benefits; fix it but don't increase the retirement age. We've got to lower the rhetoric. We've got to work with people like Martin to try and come up with some suggestions on how to fix it so it'll be there in the future.

MARGARET WARNER: And give us briefly--because I know it's complicated--the scope of this means testing--the progressivity kicks in for individuals making $50,000 and up. What percentage of seniors would be covered by that, would have to pay higher premiums, and how high could the premiums go?

SEN. JOHN BREAUX: Margaret, in Louisiana, less than 5 percent of the people who are retired and on Medicare would be hit by it when it's fully phased in. We're talking about a couple that has $125,000 in income while they are retired. The average salary in Louisiana is probably about $22,000 for people that are working. And I think it's fundamentally unfair to ask a truck driver trying to support two children who may not even have, for instance, health insurance, who's making $25,000 a year, to subsidize somebody like say a Warren Buffett, who may be getting Medicare. We should make- -we should make sure that those who are going to be asked to pay a little more can afford it, and I think that a limit of $125,000 a year is a fair limit, and for an individual it would only come into play after they're making $100,000 a year. That's when they're retired and on Medicare. We're just asking them to pay a little bit more of their Medicare insurance. It's still a very good deal, much better than they could get in the private sector.

MARGARET WARNER: The private market. AARP opposes this. Why?

MARTIN CORRY, American Association of Retired Persons: Well, the issue isn't about progressivity or fairness. In fact, it's rather ironic. Medicare beneficiaries at $50,000 for singles, $75,000 per couple, are not wealthy, and yet, we see members of Congress, as well as corporate executives, Fortune 500 executives, who get very generous subsidies from the federal taxpayers for their health insurance.

MARGARET WARNER: Because their employer--

MARTIN CORRY: Because their employer's deductible, and it's excludable in their income, and if you look at the federal tax code, you'll see that these health benefits are among the most expensive. And they drive the deficit just as much as Medicare or any other programs. So there's a fairness issue, but there's also an issue of will it work. The Senate provision--as the administration has noted--and I think probably some Senators, maybe even privately, have noted--doesn't work. It requires Medicare's computers to talk to IRS computers to talk to Social Security's computers. It's a real Rube Goldberg that just simply won't work on the face of it.

MARGARET WARNER: Senator, what about that point, that it makes it very complicated?

SEN. JOHN BREAUX: That's an argument without any validity. If we can agree on the policy that it's appropriate to means test Medicare, don't tell me we cannot come up with a system where the people who collect taxes cannot figure out how much someone makes and then report that to the Health & Human Services Department and have them figure it out with regard to a person's premiums that they have to pay. Every month right now when someone gets their Social Security check, a portion of it is deducted from their Part B premium costs. Now, it's very easy, I think, and it can be worked out between the Internal Revenue Service and HHS to figure out how we determine whether someone is making $125,000 when they're retired. We're talking about fairness. We're also talking about helping to save Medicare. We can't continue to not do anything to fix this system. These are difficult problems, and they're going to call for difficult solutions.

MARGARET WARNER: All right. Let me ask you about another provision that you oppose; that AARP opposes, and this has to do with raising the eligibility age. Why? What's wrong with raising it to age 67 by the year whatever it is--2026?

MARTIN CORRY: Well, this is, again, another irony. For the last three or four years Senators--including Senator Breaux, who's been a real leader in this area--have talked about reducing the number of Americans without health insurance, increasing health insurance coverage in this country. This proposal will increase the ranks of the uninsured. Medicare is the health insurance program for those beginning at age 65. There are millions of people out there now who just live to try to make it to 65 so they have health insurance coverage. This will increase the ranks of the uninsured, and what's more, the analogy that's been made to Social Security by the proponents is, frankly, a false one. Social Security's age of eligibility really begins at age 62. Most Social Security beneficiaries do not wait until 65. So the whole premise of this; that we're tracking Social Security is false.

MARGARET WARNER: You mean, because Social Security--the optional retirement age is going to increase.

MARTIN CORRY: Right. In fact, the average age of retirement today in this country is about 61 1/2. And this will mean that people will be without health insurance coverage.

MARGARET WARNER: All right. Well, let me let the proponent speak in favor of it. Why raise the eligibility age? Address those criticisms, if you would.

SEN. JOHN BREAUX: Well, Margaret, he makes an argument without any evidence to support it. No. 1, when we passed Medicare back in 1965, the average life expectancy for a male was about 66 years old. Today the average life expectancy for a woman, in comparison, is almost 80 years old. So I think it's totally appropriate that we just really try and have some relation that is current between the age that someone becomes eligible for Medicare and their life expectancy. That's how it was started off in 1965, No. 1. The second point is that already about 78 percent of the people in this country retire before they're eligible for Medicare. There's already a gap. And our phase-in takes 24 years to reach what it would kick in totally. And it would not even start for another seven years. So we have time with working with the Social Security Commission to make recommendations on how peoplecan buy into the Medicare program before they become eligible at the age of 65 or 67 years of age. So we have the time to try and figure out how we can help those people. But I tell you what. The big problem is if we do nothing, it's not going to be around for anybody. We have to have some help from people in solving these difficult problems. The worst thing we could do would be to break the commitment we made to have this program around for senior citizens.

MARTIN CORRY: The Senator makes the point that if we do nothing. And that's just really not the case. The House bill achieves just as much, if not more, savings as the Senate bill. It extends Medicare solvency until 2007 to give us time to take on some of the legitimate issues the Senator raises. But he does it without these controversial issues.

SEN. JOHN BREAUX: That's the old argument of fix it but don't fix it now; fix it later. Don't you fix it. Let somebody else fix it. Don't fix it with this plan. Fix it with some other plan. I would suggest that the time is now for us to act and make the tough decisions now.

MARGARET WARNER: Senator, the President has also argued that-- the House Bill--he hasn't applauded the House bill--but those changes that you all have pretty much agreed on would keep it solvent to 2007, and that these bigger ones could be put off to take care of the baby boomers. What is wrong with that argument?

SEN. JOHN BREAUX: That argument is delay it. That argument is saying, don't do it now; do it later, because we don't want to take the political heat to fix the problem now. We need the lead time to start doing these things now so we can figure out how we can allow people to buy into the program when they retire early. We cannot continue to postpone the decisions on these problems. What Martin is suggesting, that we can save $115 billion by just doing what we've done every year, cut doctors, cut hospitals, payments until the points that they're not going to want to take senior citizens anymore. We can't continue to do it the same old, the same old way.

MARTIN CORRY: No. 1, the House does accomplish it, and No. 2, this is not about delay. This is about doing it right. We need to have a debate that includes a baby boom generation. Many of the changes the Senator's talked about deserve to be debated, but we'd better hear from the generation that is going to be most affected by them. And they haven't yet been heard from in this debate. We need to reach out--

SEN. JOHN BREAUX: That is simply not correct. In last year's centrist budget they got 46 votes in the Senate in the last Congress. Both of these provisions were in our bill, fully debated, and people talked about them and made suggestions. It's already been--

MARGARET WARNER: Before we run out of time, I do want to hit the last issue, the third issue, which is charging $5 per visit for elderly who get home health care. Briefly, Senator, what's the argument for that?

SEN. JOHN BREAUX: No. 1, we have co-payments on other programs. It's the fastest increasing program. It's increasing at about 49 percent a year, the home health care is, and most of the people, 90 percent would not be affected by it, because they're either covered by Medicaid or by Medigap insurance policies. It is not $5. I want it to be at least maybe a dollar to have some relation between getting health care and the fact that it costs something for it to allow people to take that into consideration. The first 100 visits would be totally exempt from any co-payment whatsoever.

MARGARET WARNER: Is that unreasonable?

MARTIN CORRY: It is unreasonable because it will increase the cost to widows, people with ten, twelve thousand dollars in income, who can't barely afford their bills now. And it's not $5 a visit. It's $760 maximum in the first year. At that age, if you're using home health that much, it is a very large burden. And what's more, the whole premise of home health is to get people out of more expensive care, keep them out of nursing homes. If they can't get home health care because they can't afford it, they're going to end up as a more expensive burden for us in the Medicaid program, which will affect not only the federal government but also the states.

MARGARET WARNER: Brief response on that point; that it could just put people into more expensive care?

SEN. JOHN BREAUX: Martin wants us to fix it all, but he doesn't want us to do anything necessary to fix it, other than cutting doctors and hospitals, which has the real potential of destroying the program. Like I said, if you are poor, you'd be covered by Medicaid. Other people would be covered by their Medigap policies, which would cover the co-payment. The first 100 visits would be totally exempt from any co-payment whatsoever.

MARGARET WARNER: And, Senator, briefly, your prediction of what's going to happen out of this conference.

SEN. JOHN BREAUX: I would think that we will come together and hopefully make some of these difficult decisions. It may not be just like the Senate bill that we passed, but I think it will look somewhat like it.

MARTIN CORRY: We know people will look at the effect on the beneficiaries, not just today but in the future, and look at how all of these proposals interact, so that it is not burdensome.

MARGARET WARNER: All right, gentlemen, thank you both very much.

JIM LEHRER: Still to come on the NewsHour tonight, political money, Mexico's new political world, and an Anne Taylor Fleming essay. SERIES - THE MONEY CHASE

JIM LEHRER: Week two of the Senate campaign finance hearings and to Kwame Holman.

SPOKESMAN: [pounding gavel] The committee will come to order, please.

KWAME HOLMAN: Chairman Fred Thompson promised the Senate Governmental Affairs Committee would sharpen its focus this week on alleged foreign funding of the 1996 Democratic presidential campaign and on the central figure in those allegations, John Huang.

SEN. FRED THOMPSON, Chairman, Governmental Affairs Committee: It turned out Mr. Huang facilitated the raising of hundreds of thousands of dollars in illegal contributions that have been shown by the committee's investigation to be of foreign origin.

KWAME HOLMAN: John Huang was a top executive of the Indonesia- based Lippo Group, whose owners reportedly have close ties to the Democratic Party. Huang later joined the Commerce Department, then moved over to the Democratic National Committee and raised $3.4 million for the 1996 campaign. Almost half that money was returned by the DNC because of questions about its source.

SEN. FRED THOMPSON: We'll look at Mr. John Huang's activities when he worked at Lippo, including whether he engaged in illegal money laundering there. I think the significance there is that apparently both Mr. Huang and Lippo were perfectly willing and adept at putting illegal money into the United States. Would you please stand and raise your right hand, please.

KWAME HOLMAN: The committee called Juliana Utomo, who worked as a bookkeeper for Huang in the late 1980's, when he ran several Lippo subsidiaries in Los Angeles. Republican Counsel Michael Madigan questioned her about political contributions the cash-strapped Lippo subsidiaries made, including one for $50,000 to the Democratic National Committee in 1992.

MICHAEL MADIGAN, Chief Counsel: Each of those companies for each of those years lost money, right?

JULIANA UTOMO, Lippo Employee: It appears so, yes.

MICHAEL MADIGAN: And 102 is a document that is from John Huang and Mr. Settiwan, which according to the document seeks reimbursement for the $50,000 given to the DNC from Jakarta, correct? Isn't that what the document says?

JULIANA UTOMO: It appears.

KWAME HOLMAN: The Jakarta, Indonesia-based Lippo Group specializes in real estate and construction and reportedly has assets of $3 + billion, much of it in joint ventures with companies run by the government of China. In the 1980's, Lippo established three subsidiaries in Los Angeles under the control of John Huang. Committee Democrat Joseph Lieberman acknowledged Lippo apparently reimbursed its Los Angeles subsidiary for that 1992 contribution.

SEN. JOSEPH LIEBERMAN, [D] Connecticut: There's a pretty clear document here requesting a reimbursement for a $50,000 donation to the DNC Victory Fund, which certainly looks like the movement of foreign money into an American campaign in 1992.

JULIANA UTOMO: If I may add, actually the DNC exactly meant--I didn't know until recently.

SEN. JOSEPH LIEBERMAN: Could you say that again? The DNC--I didn't hear the second word.

SPOKESMAN: She didn't know what the DNC stood for until recently.

SEN. JOSEPH LIEBERMAN: Oh, didn't know what it was. This was literally a blank check that you signed. I mean, who asked you to sign the check?

JULIANA UTOMO: I cannot remember.

SEN. JOSEPH LIEBERMAN: You don't know--well, who might have-- JULIANA UTOMO: But usually Mr. Agustian or Mr. Huang.

SEN. JOSEPH LIEBERMAN: Or Mr. Huang, one or the other would have asked you to sign. Okay. Thank you.

KWAME HOLMAN: The committee then called on an international business specialist to describe the Lippo Group conglomerate and its growing ties to state-run companies in the People's Republic of China.

THOMAS HAMPSON, International Business Consultant: Over the past few years the record is very clear that the Lippo Group has shifted its strategic center from Indonesia to the People's Republic of China. Lippo currently is involved in dozens of large scale joint ventures on the mainland, including construction and development of apartment complexes, office buildings, highways, ports, and other infrastructure.

SEN. ROBERT BENNETT, [R] Utah: Tell us a little more about China Resources and what they can bring to the table as a joint venture partner.

THOMAS HAMPSON: Well, China Resources is a huge trading company. It's 100 percent owned by the government of the People's Republic of China. It's involved in everything from peanuts to property development and from minerals to machinery. It has hundreds of subsidiaries. Its sheer size dwarfs even the Lippo Group. Its purpose is to foster trade and to promote development of the mainland's economy. Through business ties it has established the group seeks out technology that the country needs and buys it. China Resources also has a more geopolitical purpose. It is well established in the public record that the government of the People's Republic of China uses China Resources as an agent of espionage, economic, military, and political. If its agents can't buy the technology, they obtain it by other means. They acquire interest in companies in order to use them as surrogates, as well as to provide cover for covert operatives. A company is kind of like a smilingtiger. It might look friendly, but it's very dangerous.

KWAME HOLMAN: But Democratic counsel Alan Baron drew out the point that Lippo does business with countries around the world.

ALAN BARON, Minority Counsel: Countries like Taiwan?

THOMAS HAMPSON: Yes.

ALAN BARON: Japan?

THOMAS HAMPSON: Yes.

ALAN BARON: France?

THOMAS HAMPSON: Yes.

ALAN BARON: England?

THOMAS HAMPSON: Yes.

KWAME HOLMAN: And that many companies in the American mainstream have business relationships with the Chinese government similar to Lippo's.

ALAN BARON: General Motors has the same kind of relationship with Chinese companies in which the Chinese government has a stake.

THOMAS HAMPSON: Yes.

ALAN BARON: Eastman-Kodak has business ventures of that type, do they not?

THOMAS HAMPSON: I don't know.

ALAN BARON: It wouldn't shock you to find out that they did?

THOMAS HAMPSON: No.

ALAN BARON: A great place to sell film, would it not--over a billion in population.

THOMAS HAMPSON: I would think so.

ALAN BARON: Are you aware that Microsoft has business ventures involving companies in which the Chinese government has a stake? Are you aware of that?

THOMAS HAMPSON: No.

ALAN BARON: It wouldn't shock you to find out that that was the case, though, would it?

THOMAS HAMPSON: No.

KWAME HOLMAN: This afternoon the committee heard from Harold Arthur, who shared office space with John Huang at the Lippo Bank, one of the Lippo subsidiaries in Los Angeles. Arthur said he knew nothing about the 1992 $50,000 donation to the DNC but did have a view of the strongest allegations against John Huang.

SEN. JOSEPH LIEBERMAN: Some have charged, as you know, that John Huang was a spy for either the Lippo Group or the Chinese government. And you knew him. You've told us what you thought about him. You worked right next door to him. I'm interested in hearing your reaction to those charges, and I suppose, more specifically, in your experience with Mr. Huang, did you see anything that would support those claims?

HAROLD ARTHUR, Former Lippo Executive: I think the answer--if I may--

SEN. JOSEPH LIEBERMAN: Please.

HAROLD ARTHUR: --to the claims is hogwash, and the answer to your other specific question is no, I never saw anything that would indicate that.

KWAME HOLMAN: The committee reconvenes tomorrow morning. Some of John Huang's former co-workers at the Commerce Department are expected to testify. FOCUS - CHANGING TIMES

JIM LEHRER: What last week's elections may say about the future of Mexico. We begin with a background report by Charles Krause.

CHARLES KRAUSE: There's general agreement in Mexico and in the United States that Mexico's July 6th election was a watershed in the country's political development. After nearly 70 years in power, the country's autocratic ruling party, the Institutional Revolutionary Party, also known as the PRI, was soundly defeated. For the first time, the PRI lost its majority tn the chamber of deputies, the lower house of congress, which means that for the first time Mexico's president--currently Ernesto Zedillo- -will be forced to negotiate with the opposition, as in other democratic countries, if he hopes to govern. At the state level, the PRI also lost two more governorships--bringing opposition politicians to power in six of Mexico's thirty-one states. That's six more states than the opposition controlled just a decade ago. And, perhaps most significantly, the PRI has now lost control of Mexico City--the sprawling metropolis that's Mexico's economic and political capital. For the first time in 50 years, the capital has an elected mayor: he's Cuauhtemoc Cardenas, a center leftist whose victory reflects Mexico's new commitment to free, fair, and honest elections. But it also signals a significant challenge to the PRI and, possibly, to the current government's free market economic policies. Cardenas is the son of one of Mexico's most beloved presidents, Lazaro Cardenas, a founder of the PRI who nationalized Mexico's oil industry in 1938. At the time, Cuauhtemoc Cardenas was just a child in Los Pinos, the presidential palace. But as an adult in 1987, Cardenas broke with the party his father had founded, in part because he objected to the government's economic program, which called for dismantling the highly centralized, state- controlled economic system his father had helped create. In 1988 and again in 1994, Cardenas ran for president. On the campaign trail he accused the PRI of corruption, of being undemocratic, and of having lost touch with the poor, who make up the vast majority of Mexico's 90 million people. Three years ago, we interviewed him as he campaigned through Michoacan, his home state in central Mexico.

CUAUHTEMOC CARDENAS: I've been going all around the country, talking with many people, and people are very angry with the government, because the government has been stealing elections, because living standards have been dropping, because wages are lower and lower, because there's more unemployment, so people find that there is no real action from the government to improve living standards or create jobs, etc.

CHARLES KRAUSE: In 1994, Cardenas campaigned against a background of violence: A guerrilla uprising in the Southern Mexican state of Chiappas, and two political assassinations, including the murder of his principal opponent, PRI candidate Luis Donaldo Colosio. Fearful of instability, Mexico's voters voted for what they knew: the PRI and its substitute candidate, Ernesto Zedillo. This year, Cardenas made a strong comeback, propelled by three years of severe economic crisis, allegations of widespread government corruption, and growing concern even among average Mexicans of the evident growing power of Mexico's drug cartels. So far, the fact that the PRI allowed Cardenas and other opposition parties and candidates to win has been hailed as a positive turning point for Mexico. Mexico city's left-of-center daily newspaper La Jornada said of the July 6th election: "At last we are arriving at democracy." The centrist paper "Excelsior" credited President Zedillo, the titular head of the PRI, with election reforms that resulted in this year's "exemplary election" And the government-controlled "El Nacional" called for 'tolerance and civilized coexistence-- a new era," the paper said. Meanwhile, politicians from all parties have their eyes cast to Mexico's next presidential election in the year 2000. That's when Cardenas is once again expected to try to take the country's most powerful office from the PRI.

JIM LEHRER: Four views now; those of Former Secretary of State James Baker; Mexican writer Enrique Krauze--his latest book is "Mexico: Biography of Power;" James Jones, the U.S. ambassador to Mexico in the first Clinton term; and Jorge Dominguez, director of the Center for International Affairs at Harvard--he was born in Cuba, came to the United States in 1960. Secretary Baker, how would you characterize the importance of what's happening in Mexico right now?

JAMES BAKER, Former Secretary of State: I think, Jim, it is very, very important, and I don't think it's an overstatement to say it represents a real sea change in Mexican politics. I think it is fundamental and it now means that Mexico is not only on the path of economic reform but I think is well on the path of political reform. I think it's very, very meaningful, very important.

JIM LEHRER: A change from what to what, Sec. Baker?

JAMES BAKER: Well, a change from one-party autocratic rule for 68 years to a multi-party democracy. I don't think there's any putting this genie back in the bottle. I think that you're going to see now a true multi-party democracy take root in Mexico. What we have to hope, in my view at least, is that we don't have a reversal of some economic reform as a consequence of the fact that we now have more factions in the legislative bodies that could conceivably band together to try and reverse some of the economic reforms that Mexico has experienced.

JIM LEHRER: Mr. Krauze, would you agree with the Mexican newspaper that said, "At last, we are arriving at democracy"?

ENRIQUE KRAUZE, Author: Absolutely. I think it is really a historical change we have been living this year--these days. Mexico has not only been an autocracy for 68 years. In fact, it has been an autocracy for almost all its history. We were a theocracy during the times of the Aztecs, an absolute monarchy during the three centuries of Spanish rule. Then came a century and a half of the rule or domination of the culdios in Mexican history, and then of the almighty Mexican presidents. During all those centuries we had only 11 years of true democracy, in the half of the 19th century a few months, in the beginning of the 20th century, and now at last, we have true democracy. That is civil liberties, real elections, clean elections, and balance of power. I think really this is a historic moment.

JIM LEHRER: Do you agree that it's irreversible? Do you agree with the secretary; that it can't be put back in the bottle?

ENRIQUE KRAUZE: Yes. And for one reason. Because those two experiments--the one of the 19th century and one in the beginning of the 20th century--that ended up in military takeovers--had one problem; we did not--we didn't have the citizen, which is the true protagonist of democracy. Now we have immense--enthusiastic participants majority in Mexico. We just understood finally that Mexico has to end--finish the 20th century as a normal democracy.

JIM LEHRER: Mr. Dominguez, what is your reading of what the Mexican people were voting for or against in this election last week?

JORGE DOMINGUEZ, Harvard University: They were voting no to the continued uninterrupted and unchallenged rule of the Institutional Revolutionary Party, the PRI. It really was striking to watch how many people in answer to public opinion polls would agree with the proposition that they would vote for anyone but the PRI. The other noteworthy feature of this campaign is that the share of voter preferences for the PRI remained almost stable for the entire campaign. What you had was the Mexican voters in the opposition deciding they no longer wanted the PRI to govern alone and to control all the national institutions, looking out to see which of the two opposition parties had a better chance at defeating the PRI. So the election campaign was fought mainly between the two opposition parties and there the party left--the Party of the Democratic Revolution--the PRD--really won the lion's share of the vote and improved its participation dramatically. So it was no to the PRI, not quite clear, yes to what.

JIM LEHRER: And so it wasn't ideological per se, is that what you're saying?

JORGE DOMINGUEZ: Quite right. It was really non-ideological. It was really no to the PRI and then I'm going to choose the party that has the best chance of defeating the PRI even if I'm not sure I agree with its policies. The opposition fought mainly for democracy, for corruption, against abuse. It was not a very detailed program of a set of economic policies. That is really quite unclear. Nor do I think Mexican voters voted for anything more precise than the word "change."

JIM LEHRER: Ambassador Jones, you were there. You were observing this. As an outsider looking on, and observing this campaign, what is your analysis of what caused this to happen? How did that information get to the people, and how did they make this decision?

JAMES JONES, Former U.S. Ambassador to Mexico: Well, I think the first step was the economic reform. And that opened up the whole system and that following from that were the demand for political reforms. Following from this will be demand for legal reforms. And those are the three prongs or foundations of first world status which most Mexicans are really wanting to achieve.

JIM LEHRER: And who's telling them that this is possible? In other words, where is all of this coming from? Is it coming from- -is it coming from the bottom up, or is it coming from politicians down?

JAMES JONES: I think it's coming from two sources, from top down, starting with President Zedillo. I think he has not been given all the credit that he deserves for demanding these political reforms. Three years ago the elections were conducted honestly. And when Zedillo came in, what he demanded is that the process be fair, not just honestly conducted. And that's what happened with the reforms that were put through. That's one part of it. The other is bottoms up. For the first time in my thirty-one years of dealing with Mexico, average Mexicans feel they really have power. They have the power of the electorate very similar to what American citizens feel.

JIM LEHRER: As Mr. Krauze said, that's the basis of a democracy.

JAMES JONES: That is the basis, and what you find--and the reason I--I am not worried--as Sec. Baker brought up--rightly so--I'm not worried that the clock is going to be turned back on economic reforms because the political parties, the opposition as well as the PRI, are listening to the electorate, and the electorate wants to move forward with these economic reforms.

JIM LEHRER: Sec. Baker, why are you concerned about the economic- -what causes you to be concerned about the economic thing?

JAMES BAKER: Well, I think we have to--the only concern I have, Jim, is that there--you have a lot of factions now. And, as one of your guests has just--has just stated--this vote was a vote against the PRI more than it was a vote for anything else. We've got-- you've got the PRD here that is not--

JIM LEHRER: That's Cardenas's party from the left, right?

JAMES BAKER: That's Cardenas's party that's not really--has not in the past at least been exuberant about--about economic reform. And you have a number of old dinosaurs of the PRI left, and is conceivable, I think, that those two factions could get together to stall some privatization efforts, or to subvert some of the--some of the economic reforms that are planned, or that have actually taken place. We don't know what's going to happen yet, and the jury is still out on that. And that's the source of my concern. I have to say, though, I think that if you have a more prosperous Mexico, as we've had with the economic reforms, and a more democratic Mexico, as we now have with the political reforms, you're going to have a more stable Mexico, and that can't be anything but good for this hemisphere and for the world.

JIM LEHRER: Mr. Krauze, what about--how do you feel about this economic concern?

ENRIQUE KRAUZE: I'm not that afraid about what has been the-- there are some businessmen here and bankers, for instance, who have thought that perhaps we are going to have great changes. I don't think the economic model is going to change, first of all, because we are living--to be in the left after '89 is different from being in the left before '89. The people in the PRD and Cardenas, in particular, are moderate people. They have sensibility towards social issues, but they acknowledge the fundamental changes that the world has been going through in the last decade, and I don't think they are going to reverse. They are not now in a position to reverse because they are--Cardenas is not a president of Mexico. But even if in the year 2000 he becomes president, I am positive that he is going to be president according to the times. He might introduce some nuances, some changes, some--changes of degree, not of substance. I think the economic model is here to stay.

JIM LEHRER: Mr. Dominguez, Cardenas and Zedillo, what kind of relationship, what kind of power sharing, what kind of whatever is- -can we expect from those two men over the next several months and few years until 2000, when there's another election?

JORGE DOMINGUEZ: I think it would be difficult, frankly. It will be Cardenas's city as governor of the federal district. It is also the president's city because that is the city from which he governs Mexico. Cardenas is positioning himself to run for president in the year 2000, and thinks that he finally has a chance at winning. Zedillo is a lame duck, cannot run for re-election. The intertwining of the national government and the city government is also a new ball game. This is the first time there is an elected independent government in Mexico City. It may well--may well work out but it has never been done before. Zedillo and Cardenas would have to demonstrate a great deal of statesmanship and goodwill to create a new relationship between this gigantic city and the national government. Can they do it? Yes, of course, they can. They are both very bright; they are both very talented. But they are really inventing a relationship that has never existed before.

JIM LEHRER: Does Cardenas have any motivation to get along with Zedillo?

JORGE DOMINGUEZ: Well, in order to run credibly for the presidency in the year 2000 Cardenas really needs to demonstrate that he is a reasonably competent executive. He cannot be a competent, effective mayor of Mexico City, governor of a federal district, if he is undercut, undermined, and opposed by the president and the national government. The new city government is fragile. It is not very well defined. Cardenas has been in the opposition for all of these years. He doesn't have a governing team. If he really fights the president head on, he will probably have a poor record running the city on which to run for president in the year 2000. So Cardenas does have an incentive to reach out and in order to govern the city more effectively.

JIM LEHRER: Amb. Jones, how do you read Cardenas versus Zedillo?

JAMES JONES: Well, I think they're going to learn to get along.

JIM LEHRER: Do they have any choice?

JAMES JONES: They don't have any choice. All the political parties are aiming toward the year 2000 now. None of them want to be perceived as an obstructionist or to move the clock back. So I think there's going to be a lot of ad hoc coalitions in order for the country to be governed well. I think over the next few years you're going to see two other reforms. One is a lot of restructuring of the political parties, themselves, as Jim Baker pointed out, or one of the speakers, Enrique Krauze, that there are a lot of PRI members who are more in tune with the PRD. There are many pawn members who are more in tune with some of the reformers of the PRI. You have wildcards like the former mayor of Mexico City organizing a new reform political party. So you have a lot of forces going, and I think over the next three years there will be a lot of restructuring, and on top of that, I think you're going to see a lot of reform in the legal system--in the law enforcement system.

JIM LEHRER: Mr. Krauze, just--just spiritually, what has this done for the average Mexican?

ENRIQUE KRAUZE: I am amazed the--of the enthusiasm that you find when you go into streets and to taxi drivers, and everywhere you go, you simply feel that after so many years of bad news, bad news of Mexico to the world, bad news of Mexico to one's self, we have been the country of drug trafficking and corruption and political assassinations, and suddenly the horizon opens, the skies are blue again in a way. We are not naive about that. We know that we have to build our democracy, but here we are. We have opened a new era, and we have done it ourselves. So I think we will--we will keep up this momentum.

JIM LEHRER: And you see it the same way, Sec. Baker, looking--

JAMES BAKER: Yes, I really do, Jim, and following up on that, I want to repeat something that Amb. Jones said--and that is I think President Zedillo deserves an awful lot of credit for what's happened here. If you remember last year, he was trying to implement some electoral reforms and some privatization measures, and he was beaten by some of the dinosaurs in his own party, and yet, it was the electoral reforms that he was able to get through that has enabled this to happen.

JIM LEHRER: All right. And you agree with that, Ambassador.

JAMES JONES: Absolutely.

JIM LEHRER: All right. And we have to leave it there. Gentlemen, thank you, all four, very much for being with us. ESSAY - SUMMER DAZE

JIM LEHRER: Here now is essayist Anne Taylor Fleming with some thoughts about mothers and summertime.

ANNE TAYLOR FLEMING: In the summer, I don't live in the present. Part of me always lives in the past, in those aimless Coppertone- coated summer days of my childhood. Mostly in my memory I live here on this beach in Santa Monica. This is where my family and I spent endless summer hours, swimming, chatting, eating squishy sandwiches dusted with sand, and drinking warm bottled Coca-Cola. Some days we toted along a friend or two, but you could hardly dignify that by calling it a play date--an arrangement that has to be planned these days by two working mothers with the precision of drill sergeants. I watch today's mothers now with empathy and distress- -America's hard working, middle class moms, never more so than in the summer. That's their worst time of year because the kids are out of school. What to do with them? Can't just let them pedal their bikes down to the beach, or the local park and hang out like we used to do. Oh, no. The very idea sends shivers of concern up the parental spine--predators, usually more imagined than real, lurking behind every umbrella. Leave them at home alone? No way. You've got to get those kids scheduled. The working world does not shut down in the summer. Companies run. The stock market buzzes. Construction goes on. Cops work their beats. Doctors operate. Welcome to late 20th century America, a beehive of workaholics. With the movement of women into the workplace, you have a very different world than the one where Dad brought home the bacon and Mom cooked it and raised the children, all those sitcom families. Now, women are working an average of 41.7 hours a week and men 48.8 hours. And most families require two breadwinners to make ends meet, to keep kids in Nikes, and pay the mortgage or the rent, not to mention having enough to take a summer vacation. Beyond the economic realities, there is something else behind the country's workaholism, something sociologist Arlie Hochschild talks about in her provocative new book, "The Time Bind." What happened, she says, is that there's been a total flip in our national life. Despite the uneasiness caused by downsizing corporations in the past decade, for many, workplaces have become the havens, retreats where they hang out with buddies, joke and complain, but where the expectations are clear and the rewards are tangible. It's the home front that's the problem. That's where the real stress is--all the roiling, defeating needs of loved ones, all the varied demands of children, not to mention the piles of dirty dishes and dirty laundry. Raising children is a messy, emotional, and difficult business, as is marriage often. So it's easy to understand perhaps why so many of us would seek the escape that work offers. So here we are in deepest summer, and a fair number of America's kids are scheduled to the max, given the work schedules of their parents--day camps, summer schools, sleep-away camps. They have camps now for everything: camps for computer whizzes and soccer stars, for budding musicians and would-be actors. And the theme parks will no doubt be packed, kids being shuttled from a Disney World here to a water park there. This one is not far from my house. Watching the kids swim and surf on these manmade waves, I want to ask, hey, what's wrong with the real ones? A half hour drive and you could be riding real waves. But there's no planned amusement here on Santa Monica's beach, where I used to wile away my summers--just sand and sea and sun, and the pervasive sense of idleness, of endless summer days stretching towards the horizon. I guess for today's working moms and overscheduled kids, that's just too much to handle. I'm Anne Taylor Fleming. RECAP

JIM LEHRER: Again, the major stories of this Tuesday, the Pathfinder resumed transmitting signals from Mars after a brief interruption. The Mir space station repairs were put on hold because its commander developed a heart ailment. President Clinton warned Bosnian Serbs not to retaliate for the arrests of war crimes suspects, and former White House Counsel Vincent Foster committed suicide in 1993. That was the official conclusion issued today by the Office of Whitewater Independent Counsel Kenneth Starr. We'll see you online and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.