The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Friday, the death toll from the New York airliner crash rose to 66, lawyers for Manuel Noriega asked that he be declared a prisoner of war, and U.S. economic growth was reported to be the slowest in three years. We'll have the details in our News Summary in a moment. Robin.

MR. MacNeil: After the News Summary, Tom Bearden reports on the [FOCUS - FATAL FLIGHT] Avianca plane crash last night, we discuss the flu epidemic [FOCUS - FLU EPIDEMIC] with Walter Gunn of the Centers For Disease Control, Business Correspondent Paul Solman examines how defense industries [FOCUS - PROFITING FOR PEACE] may adjust to the end of the cold war. We wrap up the week's politics with David Gergen [FOCUS - POLITICAL WRAP-UP] and Norman Ornstein, substituting for Mark Shields, and we close with a report from Alaska on harvesting icebergs [FINALLY - COLD CASH].NEWS SUMMARY

MR. MacNeil: The death toll from last night's Avianca plane crash in New York rose to at least 66. There were many severe injuries among the more than 90 survivors. The plane on a flight from Colombia crashed into a wooded suburb near Kennedy Airport after the pilot failed his first landing attempt and was coming in for his second try. The weather was foggy and rainy, but it's not clear whether that contributed to the crash. Investigators are looking into whether the plane ran out of fuel. Both black boxes, voice and other flight data, were recovered and have been sent to Washington where officials from the National Transportation Board are examining them. The Drug Enforcement Administration said one of the injured passengers was smuggling cocaine. He used a method called body carrying in which the cocaine is put in a balloonlike container and swallowed. We'll have more on the crash after the News Summary. Jim.

MR. LEHRER: Manuel Noriega's lawyers today claimed their client was a prisoner of war. They told a federal judge in Miami the former Panamanian military ruler deserved the designation under the Geneva Convention. They asked that he be moved to a neutral country. Noriega appeared at today's bond hearing in his military uniform. His lawyers first refused to participate on jurisdictional grounds, but Judge William Hoovler ordered the hearing to continue. He denied bond for Noriega, saying the defense had not rebutted prosecution claims Noriega might flee the country. Vice President Quayle begins his Latin American trip this evening. First off will be tomorrow's inauguration of the new president of Honduras. He will also visit Panama and Jamaica.

MR. MacNeil: Pres. Bush began selling Phase 2 of his drug plan today. He appealed to the nation's mayors for their help in recruiting volunteers for anti-drug programs. He said Americans were willing to denote more time and money, but they needed to be asked first. He also stressed the law enforcement aspects of his plan in a speech before the U.S. Conference of Mayors in Washington.

PRES. BUSH: I ask to support our strategy to take back the streets from crime and drugs and we need, we really do, I believe, need mandatory time for firearms offenses, no deals when criminals use a gun, and as Phase 2 proposes, an expansion of the death penalty for drug-related crimes. And in that context, I ask you to urge your state legislatures to approve the same penalty for the killing of local law enforcement officers. Let's work together to stop the hooligans and the thugs.

MR. MacNeil: Federal Savings & Loans regulators said today they would take action on conflict of interest charges against Pres. Bush's son, Neil. The U.S. Office of Thrift Supervision said the charges arose from decisions Neil Bush made as a director of the failed Silverado Savings & Loan in Denver. The younger Bush refused a proposed settlement yesterday and said he would fight the charges, adding, "I have nothing to hide and I have done nothing wrong."

MR. LEHRER: The U.S. economy grew .5 percent in the fourth quarter of 1989. That was the smallest gain in the Gross National Product in more than three years. Overall growth for 1989 was 2.9 percent. The Commerce Department reported lower personal spending was partly responsible for the last quarter's slowdown. The GNP measures the total output of both goods and services.

MR. MacNeil: Severe storms in Europe have left at least 93 people dead over the last two days. We have a report from London by Jeremy Thompson of Independent Television News.

MR. THOMPSON: The ferocious storms that ripped across Southern Britain yesterday left a trail of destruction. Today the aftermath as the nation assessed the damage running into billions of pounds and began the inevitable clear up. The landscape was strewn with wreckage. At White Warfon Air Field, their maiden head, vintage planes preparing for a rally to Australia were literally flipped on their backs. At this school in Cleveland near Bristol, a girl died when winds sent masonry tumbling through a roof. The storm has now whipped across the North Sea and smashed into the continent. In West Germany, winds of up to 90 miles an hour flooded Hamburg's harbor. Worst hit was Holland where 11 people died. Violent gusts caused massive structural damage, ripping the roof from this football stadium. At the height of the storm, driving became virtually impossible. In Belgium, at least six more people died and dozens were hurt. Thousands of people were left without electricity. The force of the wind sucked the windows off this house. Many animals were among the casualties. As the storm cut back out into the North Sea, it left millions of pounds worth of damage in its wake.

MR. MacNeil: That's our News Summary. Still ahead, the Avianca Air tragedy, the winter flu epidemic, a new business climate for the defense industry, a wrap-up of the political week and Alaska's hottest seller. FOCUS - FATAL FLIGHT

MR. LEHRER: Last night's airliner crash on Long Island, New York, is where we go first tonight. The plane was a Boeing 707 owned by Colombia's Avianca Airlines. It was on a flight from Bogota to New York's Kennedy Airport. Correspondent Tom Bearden takes the story from there in this update report.

MR. BEARDEN: Only one word describes the scene of the crash of Avianca Flight 52. Nightmare. Dozens of people were badly hurt needing immediate medical attention. It wasn't easy to give it to them. The plane crashed on a hillside. Workers had to carry stretchers a long way to reach ambulances that crowded down the single narrow access road. There were a lot of young children aboard, some of them just adopted on the way to meet their new family. Many spoke only Spanish, badly hurt, unable to communicate their pain and fear. There is already a great deal of speculation about what caused this carnage. Most of it centers on whether the plane ran out of fuel. WNYW-TV Anchorman John Cafferty spoke with Ham Radio Anthony Rosati who monitored the final radio transmissions.

ANTHONY ROSATI, Ham Radio Operator: I was sitting home, I have an aircraft scanner, and I had it tuned into LaGuardia. I live in the Bronx. Unfortunately, I can't pick up Kennedy, but I do get the bleed over and I heard exactly what the Avianca pilot told the tower.

MR. CAFFERTY: And what was that?

MR. ROSATI: He said, Avianca 052, we have just lost two engines, we are low on fuel, and request a priority emergency clearance.

MR. BEARDEN: There was more evidence to support the theory. The 23 year old jetliner broke apart when it struck the ground but did not catch fire. A National Transportation Safety Board official noted the absence of the odor of jet fuel, but Fireman Hewlett Jarvis had a different account.

HEWLETT JARVIS, Fire Department: We had our portable hamlets in there with us. Other than that, it was dark and there was a smell of jet fuel. I got a couple of drops on my head.

MR. BEARDEN: Some nearby residents said they didn't hear the engines before impact; others said they did.

JIM MONK, Resident: The plane came in, it hit through some trees and smacked against the side of a hill with the front piece, where the cockpit broke off and went down about another fifty to seventy- five feet. They had just brought out the pilot or co-pilot who was still alive, but everybody else in that front section died, and there was debris and bodies spread all down the hill.

REPORTER: What did you hear at the moment?

MR. MONK: I live in the area and didn't hear a thing.

JOHN SLATER, Resident: I was watching TV and we heard thunder and there was an immense smash and everything flickered and it was more than thunder. Something shook.

MR. BEARDEN: This is the kind of speculation that occurs after every airline crash. And it should be emphasized that it is usually wrong. Most air crashes are the result of more than one single factor.

ALLEN POLLOCK, NTSB Spokesman: And it's like a jigsaw puzzle. One of the things that we're here to do is separate the facts from fiction. You have all sorts of claims, you have all sorts of eye witness reports from somebody who speculates. All of that is very common in an investigation.

MR. BEARDEN: We do know the plane was trying to land at New York's Kennedy Airport in rain and heavy fog. The pilot made one approach to the runway but veered off, telling the tower the clouds were too low. He went around for another try and didn't make it. The flight data and voice recorders have been recovered intact from the wreckage and are now being examined in Washington. They will provide the first hard evidence of what really happened to Flight 52.

MR. LEHRER: Our special thanks to help on that report go to News 12 on Long Island and to Public Station WLIW in Garden City. FOCUS - FLU EPIDEMIC

MR. MacNeil: Next tonight the flu epidemic. The country is in the throes of what might be the worst flue epidemic in years. In making that announcement this week, the Centers for Disease Control said that flu deaths have been reported in 121 cities already this year. Eighteen states report widespread flue outbreaks. Another 17 states are experiencing some regional outbreaks and sporadic outbreaks are reported in the remaining 13 states. Here now to tell us more about this year's flu epidemic is Dr. Walter Gunn, an epidemiologist in the viral disease division of the Centers For Disease Control in Atlanta. Dr. Gunn, thanks for joining us. At what rate is this flu killing people?

WALTER GUNN, Centers For Disease Control: Well, at this point last week our reports from the 121 cities showed that 7 1/2 percent of all deaths were attributable to pneumonia and influenza.

MR. MacNeil: What would that mean in number

DR. GUNN: This was about 1143 people from those particular cities. It's important to put this all in perspective though, because what is important is not so much the fact that this year is unusual is the fact that any flu year is a very serious year, because 20,000 people die in an average flu year. We're a little concerned that this one might be a little worse than average, but we don't really know for sure how it's going to go.

MR. MacNeil: If 20,000 die in an average year, how many die in a really bad flu yea

DR. GUNN: Well, in 1984, there were 57,400 excess deaths, and in 1957, there were almost 70,000, so it can be very bad. But even in the lightest years, it's like 9,000.

MR. MacNeil: What kind of people die, Dr. Gunn, and what did they die of?

DR. GUNN: Primarily people who die are, 90 percent of them are 65 and older or in the high risk groups, people with serious chronic health problems.

MR. MacNeil: Like what?

DR. GUNN: Like cardiovascular problems and renal problems, diabetics and children with asthma, and people 65 and older, even though they are in otherwise good health.

MR. MacNeil: And what do they die of when they get the flu?

DR. GUNN: Primarily they die of pneumonia, although there are a number of other things that will take their toll as well.

MR. MacNeil: The CDC, Centers For Disease Control, recommends, I've seen you quoted, as recommending that people at risk take vaccines. Who should go and get vaccinated?

DR. GUNN: People over 65, 65 and older, even if they're good health, plus people of any age who have serious, chronic health problems, such as the ones I just mentioned.

MR. MacNeil: People with asthma, diabetes?

DR. GUNN: That's right. But also there are other people who should be immunized as well and these are people who could potentially expose those high risk people to influenza, like doctors and nurses from hospitals and especially people who work in nursing care homes.

MR. MacNeil: Where do you get the vaccine?

DR. GUNN: You start with your family doctor. If your family doctor doesn't have it, then you could try the health department to ask them where else to check.

MR. MacNeil: I mean, is it an easy thing to get, or is it a real difficult thing to go and get?

DR. GUNN: No, it's not difficult at all and it's not very expensive. It's available. We're not having any reports of shortages at this point, so the best thing is just to see your doctor.

MR. MacNeil: How expensive?

DR. GUNN: It's, I'm sure, on the order of less than $10 for a shot?

MR. MacNeil: Suppose you don't have a doctor of your own?

DR. GUNN: You could try local clinics, but I would say start with the health department and ask them for recommendations where you should ask.

MR. MacNeil: How effective is the vaccine?

DR. GUNN: In a healthy young adult, it's about 70 to 90 percent effective at preventing the flu. In the elderly, it's about 30 or 40 percent effective at preventing the flu, but it is 85 percent effective at preventing death in the elderly.

MR. MacNeil: With the epidemic sweeping the country, is it too late now to get it?

DR. GUNN: Absolutely not. People should go now if they're in the high risk groups to get the immunization. It takes about two weeks to build up full immunity.

MR. MacNeil: But there is more than one kind of flu. If you get one vaccine, does that make you immune to the various kinds of flu going around?

DR. GUNN: The three types of flu out there now are A-Taiwan, Influenza B, and A-Shanghai. I'm happy to say that all three of those are contained in the vaccine, so the vaccine should provide good protection.

MR. MacNeil: Why should healthy people be vaccinated and should they, healthy young people?

DR. GUNN: Well, it's especially important if they're going to come in contact with high risk people to not expose high risk people to unnecessary dangers.

MR. MacNeil: What are the symptoms of this winter's flu?

DR. GUNN: Well, typical of flu in general, it's sudden onset of fever, chills, headache, muscle aches and pains, malaise, dry cough.

MR. MacNeil: And you have all those things together?

DR. GUNN: Yes.

MR. MacNeil: And whatdo you recommend people do if they have those symptoms?

DR. GUNN: Well, No. 1, bed rest, stay warm, drink clear liquids and call your doctor, because there may be some special considerations for you.

MR. MacNeil: What about children?

DR. GUNN: Children -- well, I'd like to say one thing here -- parents should be reminded not to give aspirin or any product containing aspirin to children or teenagers for symptoms of the flu or of chicken pox because of the association with Reyes Syndrome. What they should do is they should call their doctor and ask what they should give, if anything?

MR. MacNeil: Some aspirin substitute?

DR. GUNN: Yeah. It, we avoid blanket recommendations because individual children may differ. There may be some contraindication. So the best thing to do is ask your doctor what's best for your child.

MR. MacNeil: Are we as a nation taking flu seriously enough as a disease?

DR. GUNN: Not enough. It's better than it used to be. At this point only 30 or 40 percent of the high risk group is immunized. This is considerably better than it was 10 years ago when it was on the order of 20 percent, but you have maybe as much as 70 percent of the high risk people who are still vulnerable to the flu?

MR. MacNeil: I mean, is flu now considered as serious a disease as some of the ones that society really tries to avoid like the measles and scarlet fever and rheumatic fever and things like that?

DR. GUNN: Of course, we consider it to be very serious, but there's a problem with public perception of flu. People think that every minor respiratory problem they get is the flu so they tend to feel complacent about it. But flu is a very very serious and deadly disease as you can see from the average 20,000 in a year.

MR. MacNeil: Well, Dr. Gunn, thank you very much for joining us.

DR. GUNN: Thank you.

MR. LEHRER: Still to come on the Newshour tonight, Paul Solman on the peace dividend, Gergen & Ornstein, and Alaska's plentiful iceberg harvest. FOCUS - PROFITING FOR PEACE

MR. MacNeil: Next tonight how easily can Americans beat their swords into plow shares? During the 1980s, defense contractors made a good living building hardware for the U.S. military, but in the course of the next decade, cuts are expected in military spending to reflect the end of cold war, how to make a shift to a peace economy. Our special business correspondent, Paul Solman, has this report.

MR. SOLMAN: FMC's Bradley tank, General Dynamics' Trident submarine, Grumman's F-14 jet. In the '80s, America was all fired up about defense spending and high powered military projects like these simply took off. For the Pentagon budget, the sky was the limit. Military expenditures were literally out of sight. Then come the '90s, the process is suddenly reversed. Defense projects now threatened with cancellation in mid-stream, parts of the defense industry now in danger of actually grinding to a halt unless they can convert to non-military production. For the American economy, this is no small matter as former Sec. of the Navy John Lehman explains.

JOHN LEHMAN, Former Sec. Of The Navy: There are 20,000 companies that do more than $10 million a year worth of business with the Pentagon, so suffice it to say that a company, any company that does 90 percent of its work for the government, simply doesn't have the kinds of management tools necessary to compete right away head up in the free market environment. They're just, they've been protected, coddled, sole source, non-competitive. Their cost structures are so high that they simply can't compete.

MR. SOLMAN: In other words, thousands of American companies, including some of the biggest, representing millions of American jobs are now at risk. Apparently they can't convert because they tied their fate to one customer, the military, that for decades has paid with a blank check. But not every military contractor lives or dies by defense spending. Just outside Hartford, Connecticut, is a successful example of military conversion, the Command Corp., No. 381 on the Fortune 500. Command sells everything from computer software to the specialty bearings they make here, but the firm began life back in 1945 making helicopters for the Navy. These were helicopters with a difference, a device that controlled vibrations in the rotor blades. The company was built on this technological breakthrough, but from the get go, founder Charlie Kaman felt that with just one product and just one customer, you don't have a company.

CHARLES KAMAN, Kaman Corp.: It was very clear from the very outset that we would have to have multiple customers, we would have to have multiple products for the company to grow and succeed.

MR. SOLMAN: Why?

MR. KAMAN: Because in defense there's always the potential of big cutbacks, there's always a potential of big growth as emergencies arise. It's a very cyclical business, it goes up and down, and anybody that relies just on defense is really looking for trouble.

MR. SOLMAN: But a lot of people rely just on defense.

MR. KAMAN: That's their problem.

MR. SOLMAN: Kaman still makes helicopters for the Navy. The brand new special Mission H-2 is being tested here. It's hot, it's high- tech, but another Kaman product is currently stealing its thunder. Believe it or not, this well tressed troubadour is like the Navy one of Charlie Kaman's key customers. As our audience of course will instantly recognize, its rock immortal John Bon Jovi, playing an Ovation Guitar, perhaps the hottest new product of the Kaman Corp. and actually an offshoot of its military expertise.

DAVE BERGSTROM, Kaman Corporation: This is one of our early guitars in which aerospace technology is applied. You see here three pieces of spruce. That's the same material that we were using at that time to build helicopter rotor blades. This material that's on the back of the guitar is called lyracord and was originally used in helicopter rotor blades to keep them from splitting when they were still made out of spruce.

MR. SOLMAN: So did you diversify because you had all this scrap spruce lying around?

MR. BERGSTROM: Actually, defense spending was down and Mr. Kaman was looking for an area in which he could diversify his company.

MR. SOLMAN: That was the early 1960s. Twenty-five years later, the popularity of Ovation Guitars has made Kaman into the largest acoustic guitar manufacturer and the largest distributor of musical instruments in the whole world. Throughout Kaman's strategy has been capitalize on what you already know. In helicopters, it was vibration. Kaman learned how to dampen the bad vibes of a rotor blade, to reverse the process in a guitar and come out with good vibrations. This spin off thinking has spawned somewhat more predictable lines of business as well, from computer software for America's missile defense system to industrial bearings to a multi- million dollar consulting division which advises factories on how to become more productive. Military work now accounts for only a fifth of Kaman's total sales. So why can't the nation's thousands of other defense contractors simply copy Kaman's performance, convert and diversify now that they can't count on the Pentagon?

SPOKESMAN: Kaman started this 44 years ago and we have been working this for all of these many years and getting this ability to diversify into the heads of our technocrats, our people, our engineers, our shop foremen, all of this. It takes years to build this.

MR. SOLMAN: We asked former Navy Sec. John Lehman what makes Kaman so unusual.

MR. LEHMAN: One of the reasons that the Kaman Company has been very much out of step with the rest of the defense industry for 40 years is Charlie Kaman who is a good example of the entrepreneurially innovative engineering talent who starts a company and owns it. When he takes it public, he still keeps a very important stake so he's an owner/manager which makes things a little different.

MR. SOLMAN: In fact, Kaman started his firm when his World War II employer, now United Technologies, turned down his design for a better helicopter because it was thriving under government control. In wartime, Washington called all the shots. It specified the products, paid for the plants, and guaranteed profits as a percentage added to the cost. The more they spent, the more defense contractors made. To John Lehman, when this system continued even after the war, it simply destroyed the competitiveness of the military industrial complex.

MR. LEHMAN: So it locked into place a system that in many ways is just as socialist as we find in the East Bloc today and suffers from exactly the same constipation and bureaucratic paralysis that the Eastern European economies. The difference is that these economies have finally been recognized as failures in the Warsaw Pact over the last year, but not here in the U.S.

MR. SOLMAN: Increasingly, critics would argue parts of the US defense industry have been recognized as something of a failure as well. The industry's pricing policy has been a subject of congressional controversy for years.

SEN. CHARLES PERCY, [R] Illinois: [1983] Now here is the three inch piece of steel wire that we got free. How could anyone quote $7,417 for a piece of steel that we picked up for nothing?

MR. SOLMAN: More familiar perhaps was the $620 airplane toilet seat. Inexplicable until you realize the incredibly particular specifications demanded by the Navy, the innumerable managers hired to serve all the bureaucrats who wrote and checked the specs.

MR. LEHMAN: The Reagan administration of which I was a part bragged about reducing bureaucracy. We added 100,000 bureaucrats to the Pentagon.

MR. SOLMAN: Is that true?

MR. LEHMAN: That's true.

MR. SOLMAN: So the situation seems almost desperate unless these companies are taken over by new management and maybe someone like John Lehman, now an investment banker, would be the man to make it happen, but says Lehman --

MR. LEHMAN: I don't want most of them.

MR. SOLMAN: You don't want most of them. Why not?

MR. LEHMAN: Well, they're just not very efficient industries, companies. Now there are many many fine exceptions in the business, but of the several hundred really big major ones, the majority of them are simply not well managed.

MR. SOLMAN: But couldn't you bring in a new management, the next Charlie Kaman?

MR. LEHMAN: No, because it requires in some of these cases much more than just a top manager at the top. It requires a depth of talent in a very large company that has a culture of managing to costs, not a culture of cost plus.

MR. SOLMAN: If Reagan's Sec. of the Navy thinks the defense industry as currently organized is a hopeless dinosaur, what can America do? Well, politicians in statesespecially vulnerable to defense cutbacks and at the national level are proposing legislation to retrain workers, retool factories in order to make military conversion a reality. The argument is that government, though it may have adversely affected the defense industry, has often engaged in successful economic planning. One time honored example of successful government planning is the work of this man, Economist Wassily Leontief. He won the Nobel Prize for this table which lists every industry in the economy, how much it consumes, what it produces. One of the table's first applications came during World War II when the newly immigrated Leontief was hired by the Pentagon.

WASSILY LEONTIEF, Economist: We were bombing Germany. We tried to disrupt industries and of course if you have such a table, you can determine what particular industries plant should be bombed so it can disrupt the economy the most.

MR. SOLMAN: In peacetime, Leontief points out this same analysis shows who's at risk when an industry just happens to go under. In Japan, for example, government is famous for steering the economy, here hoping to scuttle an obsolete sector of the fishing industry. Japan, unlike America, doesn't hesitate to take such action. It uses Leontief's system to address the economic problems of declining industries like this one and help the companies and workers address to the economic future.

MR. LEONTIEF: It's incredible how much more adventurous and systematic the Japanese industry and government are in doing that.

MR. SOLMAN: Taking old skills and transferring them to new products.

MR. LEONTIEF: In general, figuring out the whole thing, figuring it out, to analyze the situation in order to know what has to be done.

MR. SOLMAN: So should the U.S. Government use economic analysis to come up with an industrial policy to help the defense industry? It's what Japan, Leontief and much current legislation all seem to suggest.

MR. LEHMAN: I think the worst thing we could do would be to adopt an industrial policy like the Japanese. It is just simply another form of saying that bureaucrats in Washington know better how the free enterprise system works and they have no idea how it works, believe me. Nobody inside the beltway who's grown up in that environment has any idea what makes business tick.

MR. SOLMAN: To some extent, even Prof. Leontief agrees because politicians often use industrial policy as a means of protecting jobs and nothing else.

MR. LEONTIEF: If you simply try to provide some kind of employment, never mind what kind, under local, your whole economy will not be not very efficient, whereas you gain a compromise, the most efficient decision and most humanly acceptable decision. There is always that conflict which must be in a civilized way resolved.

MR. SOLMAN: The defense industry of course would love to just keep rolling along, but to the extent that Pres. Bush's new budget cuts defense spending, the industry will have to face the issue of military conversion, and the story of most defense contractors probably won't end as happily as that of the Kaman Corporation. FOCUS - POLITICAL WRAP-UP

MR. LEHRER: Next our Friday night analysis session with Gergen & Shields but without Shields. David Gergen, Editor at Large of U.S. News & World Report, is here, but Mark Shields is home with the flu. Coming off the analyst's bench in his place is our veteran Congress watcher, Norman Ornstein, resident scholar at the American Enterprise Institute. David, how impressed were you with the President's victory yesterday on the China students' override vote?

DAVID GERGEN, U.S. News & World Report: It was an impressive victory. I think the administration demonstrated once again when it has its back to the wall, it's pretty good at bouncing back and fighting back. You remember about a year ago, less than a year ago, it was under heavy criticism for having no policy with regard to the Soviet Union on arms control and the President came up with in a matter of a few days, came up with a proposal which really swept Europeans off their feet and they loved it. Then he was under heavy criticism not doing anything about Noriega. And he had his Panama invasion and here all of Washington thought that he was going to lose this fight. He did lose it in the House but I think they conceded that one right away. But they put together an impressive show. They brought a lot of resources in and they convinced a lot of Senators right at the last minute and surprised a whole lot of people here in this city?

MR. LEHRER: Surprise you, Norm?

NORMAN ORNSTEIN, American Enterprise Institute: Yeah, it certainly surprised me, as I think it did most people who have been looking at it who didn't see the votes there a day before it had happened. It's good for him for a couple of reasons. Not only does he have a victory here that people hadn't expected and it's all the sweeter for it not having come in an expected fashion, but this is the first big vote of the year and it sets the tone. Three years ago when Ronald Reagan entered the final stretch after the 1986 elections, Congress did two things right away. They passed bills on highways and clean water, Pres. Reagan vetoed them and they were overwhelmingly overridden by the Congress, and it established a tone for the two years. He was back on his heels. They were on the offensive. That's how the House and the Senate Democrats hope to start this year after a pretty lousy year for them last time. They anticipated it. Instead, they're back on their heels and it's a very good victory for him.

MR. LEHRER: Take me through what you all have picked up about what Bush did to win this thing.

MR. ORNSTEIN: Well, certainly we know that when he got within about 10 votes, he put on a full court press.

MR. LEHRER: Now what's that?

MR. ORNSTEIN: He had everybody, both inside the beltway, people like Lee Atwater, John Lehman, who spent most of their lives here but who know at least something about how things work here inside the beltway, from the party chairman Lee Atwater, through cabinet secretaries and other political figures, including congressional leaders Alan Simpson, Bob Dole who were with him, really begin to put pressure on members, making the political arguments. And what they tried to do was to change this from being an issue that had anything to do with China to being a question of presidential prerogatives and the parties. It was the Democrats who were trying to score a victory against the President, and then we had people outside, both those who are key constituents in individual states and others around, fund-raisers, for example, suggest the consequences that might be there if Senators didn't go along.

MR. LEHRER: David, why was this so important to the President? I mean, that's a lot of heat to put on on this thing.

MR. GERGEN: It was important for the very reason that Norm mentioned, and that is had he lost this, it would have been a substantial embarrassment at the beginning of the second year. It would have fed all sorts of Democratic ambitions to derail a number of his proposals in the year ahead, and I think the Presidenthonestly felt that it would be a setback to U.S.-Chinese relations, that it somehow, it would cost face for the Chinese, and having already invested all of this capital as he did, political capital in the two private trips by his aides to go to Beijing, I think he feels very very strongly and was deeply offended by the Congress, by Democrats he felt dictating American policy toward China.

MR. LEHRER: But what would you say to somebody who would say, okay, Gergen, I hear you, but it's strictly a technical inside the beltway victory because the simple fact of the matter is, an overwhelming majority of the Congress of the United States both in the House and then the Senate, I mean, it was the 2/3, and he barely won that, he barely won 1/3, that still an overwhelming majority of the Congress of the United States, both in the House and then the Senate, I mean it was the 2/3, and he barely won that. He barely won 1/3, that still an overwhelming majority of the Congress of the United States said we don't like your policy in China, so in one way, but he still didn't win.

MR. GERGEN: Well, there's no question that there are many in Congress, and I would say a majority, who do not like his China policy, and wish that Gen. Scowcroft had never gone to Beijing privately, however, it remains true that the President of the United States still sets foreign policy because he was able to win even on his executive order and it is his policy that now is in effect, it's not a congressional policy, and from the point of any President that's something that's very very important to maintain and from George Bush's perspective, a man who is preoccupied with foreign policy, of course, it's even more important to maintain control over foreign policy and with a country such as China.

MR. ORNSTEIN: You know, Jim, there is no more important formal power for a President than the veto power because he only needs to get 1/3 plus 1 of one of the two Houses. George Bush vetoed 10 bills in his first year, which is a lot for a new President. He sustained every one of them. The stakes weren't terribly high on most of them, although Congress didn't really go all out. This was a highly important one symbolically, but here we have a President with an 80 percent popularity and approval rating, but the word around town is well, he doesn't really scare the Congress, he can't close the deal when it really counts. So he wins a symbolic victory here, he's been able to close a deal. He's still undefeated when it comes to vetoes. He's not going to veto every bill, but now the threat of a veto continues to mean a little bit more for him in his second year.

MR. LEHRER: Bob Dole, the minority leader in his closing remarks yesterday said well, the people that are watching this vote are not the China watchers, this isn't foreign policy, this is domestic politics, and it's the political consultants who are watching this. Is he right about that?

MR. GERGEN: He's right in this sense. I don't think the country has paid a lot of attention to this issue. As Norm knows, the Los Angeles Times, with which Norm has a close association, had a survey of how many people were paying attention to various news stories recently, and while 38 percent or so were paying close attention to what was going on in Eastern Europe and that was considered low, only 6 percent, as I recall, were paying close attention to this story on --

MR. LEHRER: You mean the veto specifically?

MR. GERGEN: The veto story. So the question of the students was very much inside the beltway within a small Chinese community. It did have some impact. It did have some impact in a state like California, but nationwide this wasn't going to cut much either way.

MR. LEHRER: But the rhetoric on the Democratic side was awe, that it was in response to public outrage as to what had happened at Tiananmen Square and the President's reaction to that by sending the two missions over, et cetera.

MR. ORNSTEIN: We know that the American people on the whole do not agree with Bush's China policy at this moment, but as David said, it's not an issue that's really at the top of their minds. You wouldn't have gotten 37 Republican Senators to take the chance, most of them voting exactly the opposite of how they voted when this bill to keep the Chinese students in the country had originally gone through if they thought there would be a spontaneous outrage out there in the country. There are, however, some ramifications for China policy and for politics down the road. Now we're going to be looking to see if in fact we get the Chinese government making further concessions. Will Fong, the celebrated dissident we're holding in our embassy in Beijing, be released by the Chinese? Will we see something more than the token elimination of martial law? Now that Bush has won and they've saved face presumably will other things happen? If Pres. Bush cannot demonstrate that these trips to China made by Scowcroft and Eagleburger, his top officials, are bringing about very substantial changes in policy, then he's going to have more problems with this issue down the road. The Democrats in Congress can bring up many other votes that will be pretty embarrassing to him on his China policy, and now they're licking their wounds but undoubtedly we'll see this issue come back.

MR. LEHRER: All right. Another one that there's been a division and the Democrats have tried to make a division yesterday at least is this new, the second phase of the President's drug strategy that he announced yesterday. Sen. Biden immediately came out with his own policy and was critical of what the President has proposed. We did a debate on that last night. How do you read that, David?

MR. GERGEN: Well, of course, the proposal that the President's put forward increases spending by about a billion dollars, which is not a major increase. It goes from about 9 billion a year to about 10 billion a year, so there's nothing dramatically new about that. I think what is surprising to me is the President did not use this opportunity to send a much more forceful message to the country that he really was serious and used this as a crusade. As you recall when he announced the first phase, he went on national television to speak to a nationwide audience in prime time. His first major address of his Presidency was last fall, and here instead, in the second phase, instead of going nationwide at night or saving this as I thought he might for his state of the union address next week, when he'll have a huge national audience, he low keyed drugs, which surprised me. The other surprise was --

MR. LEHRER: You mean the way he handled it, it was kind of a low key approach.

MR. GERGEN: The way he handled it. Very low key. The other surprise I think is his drug czar yesterday began to claim some victories in the drug war which I think go beyond what most people sense in our daily lives. Yes, casual use has been coming down. It was going down before the drug war was declared. But what we're beginning to see, I'm afraid, is as with so many other social problems, we think they're beginning to be solved when they wind up only in the lower class. When they slip down through the middle class, the middle class sort of cleans up its act, and you've got all these people in the lower class who still have the problem and people then say we're winning.

MR. LEHRER: Norm, last night, my esteemed colleague, Robert MacNeil, asked the question that I thought was the crucial question, if the President said this is the most important issue this country has, the most important problem, as Robin asked the administration's spokesman official, well, if it's so important, why is it only $10 billion that we're putting into that?

MR. ORNSTEIN: Well, that is a question for which Joe Biden has an answer and the answer is it's not enough and we need to spend at least $4 billion more in this year, and clearly that's going to be a problem for the President. Every time he mentions an important social problem, the homeless or education, or the environment, we get something that involves not much additional spending. Now money can't solve these problems, we know that the American people do not believe that they can be solved with money, but unless you have more money, you're not going to have an adequate response and the Democrats are basically saying you're putting more money into law enforcement, that's great, you're putting more money into arresting criminals into interdicting drugs, that's great. What about dealing with those who have addiction problems now, about treatment and the like, and that's where we need some money. We're going to get a substantive debate here, but we're also going to see Democrats trying to one up him with more money.

MR. LEHRER: Well, David, what about that question? When does somebody start raising the question, hey, look, if this is the most serious problem in our country, then why is it that we don't put our most serious money into it?

MR. GERGEN: And if it's a war, why are we under funding it?

MR. LEHRER: Yes.

MR. GERGEN: The Democrats are and there was a Democrat yesterday who said --

MR. LEHRER: I wasn't thinking just in Democratic-Republican terms.

MR. GERGEN: Right, I understand that, but there are people who are saying, we're spending $50 billion to bail out the S&Ls, why are only spending $10 billion to bail out people who are in deep trouble personally around the country, and I think the Bennett answer is the extra $4 billion would not be usefully used, that there's only so much you can put into the system at one time and make it work. I would have to tell you, Jim, I think though that as we dilly dally around about how much we're going to spend, there is a growing sense around the country two things are happening, one it's getting worse in the inner cities and secondly, there is a growing feeling among the important people in this country that legalization may be the answer. A number of judges, federal judges, are privately reaching the conclusion that they won't talk about publicly. I've talked to some of them and there are a number of other people that are beginning to reach the conclusion that legalization is the answer, so I happen to disagree with that. I sharply disagree with that. What worries me is that Washington is not really conducting a crusade, that we're going to conduct almost business as usual for another year. In fact, we're not really going to come to grips with the problem, and I think it may get worse.

MR. LEHRER: Could that become the new debate of the '90s, do you think, Norm?

MR. ORNSTEIN: I think there's no question. Legalization has moved from something that was on the fringes -- when Kurt Schmoke, the mayor of Baltimore raised it, the first prominent public official, most others just jumped all over him, and he was way off on the fringes. Now we've had George Shultz, the former Secretary of State, and many others come out and suggest that perhaps it's not a bad idea. I have mixed feelings about it. I think it would do more to put a crimp in the Medillin and others than it would to solve the problem here, but it's going to be a significant debate, and the debate over whether we're doing anything to really solve this problem is going to start to come back in the next year or so, and it's going to create a problem for the Bush administration. I think that William Bennett has now changed his tune and said we're making progress because if you go along for more than a year where you're the administration in power and you can't show signs of progress or suggest that things are moving, before very long people are going to start to ask not only why aren't you putting more money into it to solve the problem, but you're in charge, why isn't it being done.

MR. GERGEN: People in Washington may think there's a lot of progress. I happened to be out on the road this week. I talked to one governor who was not even aware the drug bill had passed last fall, and the reason he's not aware, because no money has gone out from Washington. The money is not yet distributed. You know, this bill was passed back in the late fall, but it takes time for the wheels to churn in Washington and so forth and so on and that's the reason people aren't feeling out there, one of the reasons they're not feeling that Washington has really changed their lives.

MR. LEHRER: Yeah. Speaking of our lives, this is over, gentlemen. Thank you very much, David. Norman, thank you very much for filling in for Mark. FINALLY - COLD CASH

MR. MacNeil: Finally tonight, Correspondent Lee Hochberg of public station KCTS in Seattle has a report on a cool new product that Alaskans hope will soon be selling like hotcakes.

MR. HOCHBERG: Tracy R, a sparkling fiord 50 miles South of Juno Alaska, a land of cold water and ice. Today 10 men are plying these waters on a 200 foot barge. Like the pioneers who sought riches mining Alaska's gold, these men are harvesting their own pieces of Alaska, pieces of ice, 40 feet high, 50,000 pounds each, thousands of years old. Some Alaskans hope harvesting icebergs will become a bright new industry in Alaska. Nobody's sure how much money has been generated in its first three years, but estimates are up to $10 million.

MICHAEL CHAMP, Marine Scientist: It's a virtual gold mine, but it's an ice gold mine. And the thing about it is it's just like gold that Mother Nature placed in the earth to be mined and marketed and sold. It has a value.

MR. HOCHBERG: The icebergs are being chopped up and sold as ice cubes or melted to be sold as bottled glacial water, or melted and mixed with soap to make hair shampoos and conditioners. They're even being used to make Alaska's own brand of vodka. About a dozen Alaskan prospectors are using every type of craft imaginable to bring home some ice. Already harvesters estimate they've plucked some 5 million pounds of ice from the water. The ice originates at the state's 100,000 glaciers. Like prehistoric beasts giving birth, glaciers frequently calf huge icebergs into the water.

MR. CHAMP: Here is a resource that literally is floating away. A very interesting thing about it is that this is extremely pure water. This ice has been formed in some cases eight to ten thousand years ago where a lot of the industrial contaminants andpollutants that we know today are not there.

MR. HOCHBERG: The state of Alaska's Bob Poe uses these displays to promote the Alaskan ice to potential buyers. He says some day those buyers might be people looking for a source of pure bottled water. For now, he's concentrating on restauranteurs who want to offer novelty ice to their customers. He says the ice crackles when it's dropped in a beverage, it lasts longer than regular ice, and is a mysterious blue color.

MR. POE: It's very different. It's very dense. There's no air in this. That's why it's blue and that's why it lasts longer and it crackles.

MR. HOCHBERG: And the blue light along the side.

MR. POE: The blue light helps in this case but actually on a cloudy day, it's even better, but glaciers do look very blue and it's because there's no oxygen, there's no air in that ice.

MR. HOCHBERG: The new product and its mystique are selling especially well in Japanese department stores. Eager to get their piece of Pristine Alaska, Japanese have bought some 500,000 bags of ice retailing at $7 apiece. Now Alaskan leaders want to see if the ice crackles or just fizzles among American consumers. It's being test marketed at up scale restaurants on the East and West Coast and being sold in grocery stores at $2.75 a bag. At Seattle's Shucker's Restaurant, customers aren't sure Alaskan mystique is worth the cost.

MR. HOCHBERG: Would you pay more money to get this glacial ice in your drink?

CUSTOMER: Absolutely not.

MR. HOCHBERG: No. Can't tell the difference?

CUSTOMER: Not me, but I guess I'm not a connoisseur of ice.

CUSTOMER: If I'm paying this much for this drink anyway, another couple of cents for good ice isn't going to make a difference. You've got to be a purist about your scotch.

MR. HOCHBERG: The age old ice has become an ingredient in a new Alaska vodka as well. An Anchorage company is distilling a vodka made with glacial ice water. On this day, dignitaries are being shuttled by train to the Attakiska bottling plant to sample the new vodka. Mark Wilson developed the glacial vodka. He used to make chemical products used for oil exploration, but when the bottom fell out of the oil market, most of his customers left Alaska. He was looking for something else to sell when he discovered the possibility of marketing glacial vodka. He expects to sell $750,000 worth of it this year and $5 million by 1992.

MARK WILSON, Vodka Distiller: We can't make the same vodka without glacier water and it doesn't taste the same. The same experience is not there. We have the only aged vodka. I mean, one thing about it, our vodka has been a million years in the making using glacier ice, and nobody else's vodka is like that.

MR. HOCHBERG: Does that make it taste better?

MR. WILSON: Absolutely. There's absolutely no doubt about it.

MR. HOCHBERG: Environmentalists and tour guides say 300 foot barges and 200 foot cranes will be noisy intrusions on pristine Alaska settings, especially when the ice is collected just off shore Alaska's national parks.

MS. CASTELLLINA: A proliferation of this type of activity is the thing that I fear the most.

MR. HOCHBERG: The superintendent of Keen Eye Fiord's National Park in South Central Alaska is Anne Castellina. She has fought iceberg harvesting since it started. She says the operations shatter the tranquility enjoyed by the park's 75,000 annual visitors.

ANNE CASTELLINA, National Park Superintendent: I would hate to spend the money on one of these boat tours that these folks are spending, get all excited about going out to the fiords and seeing all of this and pull up in front of a glacier and find myself faced with a 300 foot barge with a 40 ton crane on it. Why does it have to be off of a national park?

MR. HOCHBERG: Castellina also fears the harvests will dry away the thousands of seals, sea lions and birds that live and propagate on the icebergs.

GARY PROKOSCH, Alaska Dept. of Natural Resources: I don't believe that the harvesting of glacier ice is going to impact the state if they go through the permitting process that we have set up.

MR. HOCHBERG: Gary Prokosh of the Alaska Dept. of Natural Resources says anyone who wants to take more than 20 tons of ice. Twelve companies have applications pending. Prokosh says if Alaska has been lenient in granting permits near parks, it's because the economic rewards to the state may be substantial.

MR. PROKOSCH: It needs to go on because people want it to go on. There's people out there that think they can add to the Alaska economy, they can create a business within Alaska and using Alaska resources to do it.

MR. HOCHBERG: The state's pledge to massage the industry has more entrepreneurs stepping forward every day to hustle the perceived purity of glacial ice. [BEAUTICIAN WORKING WITH CUSTOMER]

MR. HOCHBERG: Two cosmetics companies now make hair care products from glacial ice water. At an Anchorage hair salon Jackie Thornton checks sales figures for glacial fresh shampoo, a product she and her husband developed.

RICK THORNTON, Shampoo Developer: We have been out on the marketplace for four months now, again we are coast to coast. Our sales are rapidly approaching a million dollars gross sales.

MR. HOCHBERG: In three or four months?

MR. THORNTON: Yes.

MR. HOCHBERG: How high do you expect it to go?

MR. THORNTON: I hope to beyond rich and famous some day.

MR. HOCHBERG: The entrepreneurs say there's no limit to selling the aura of Alaska. The state too says ice cubes and vodka and shampoo is only the tip of the iceberg.

BOB POE, Alaska Dept. of International Trade: The marketing of the mystique or developing these new products at the moment is not going to replace the jobs that were lost to the downturn in oil. But it's the beginning.

MR. HOCHBERG: It will fall to the state to make sure iceberg harvesters don't damage the very environment that makes Alaskan ice products marketable in the first place. RECAP

MR. LEHRER: Again, the major stories of this Friday, the death toll in the Colombian airliner crash on Long Island rose to 66, Manuel Noriega's lawyers asked a judge in Florida to declare the former Panamanian dictator a prisoner of war and new figures showed the U.S. economy grew the last three months of '89 at its slowest rate in three years. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the Newshour tonight. We'll be back on Monday night. Have a nice weekend. I'm Robert MacNeil. Good night.