The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Tuesday, Paul Solman looks at what has happened to real wages of Americans, two House leaders debate what should happen to real taxes, Roger Mudd reports on the search for a leak in the Senate of the United States, and Charlayne Hunter-Gault profiles the newly independent republics of Central Asia. NEWS SUMMARY

MR. MacNeil: There was more grim news on the economy today. Consumer confidence was reported at a 17-year low in February. The report came from the Conference Board, a business research group. It said consumers were marketedly more pessimistic than a month ago. Spending by consumers accounts for 2/3 of the nation's economic activity. Despite the report, Federal Reserve Chairman Alan Greenspan today told the Senate Banking Committee he believed better times are ahead. That did not play well with some Senators who pressed him to do more to promote recovery.

SEN. DONALD RIEGLE, [D] Michigan: People of the country are trying to tell us something and they're trying to say something to you and to the Federal Reserve as they are to the President and to the Congress, and that is that there is a deep economic sickness in the country. Jobs are disappearing. These are not temporary layoffs. These are permanent layoffs. We don't have a strategy right now to do something about it and I think you have to do more. I think you're too passive, quite frankly. I don't say that just to you, but I think the response of the Federal Reserve Board has been very modest, very guarded, very slow, and I think not adequate to the problem.

ALAN GREENSPAN, Chairman, Federal Reserve Board: The general view of economists, and this is quite pervasive throughout the professional, although not unanimous by any means, is that the economy will start to quicken sometime in the second quarter. If that is, in fact, the case, we will be coming out of this particular period with perhaps the, with perhaps a degree of omentum which while scarcely adequate to bring the unemployment rate down this year, I don't think it's going to be very easy to do, at least puts us on a path where we will get some reasonably solid growth.

MR. MacNeil: The consumer confidence news helped send Wall Street stocks sharply lower. The Dow Jones Average closed down more than 24 points. Also today, House Speaker Tom Foley said Democrats have enough votes to pass their tax cut bill in the House. The White House said the President would veto the bill if it's passed in its current form. We'll have more on that story later in the program. Jim.

MR. LEHRER: This was Presidential primary day in South Dakota. The Democratic race has been seen as a crucial one for two Senators from neighboring states, Bob Kerrey of Nebraska and Tom Harkin of Iowa. Both fared poorly in last week's New Hampshire primary and badly need a victory in South Dakota. On the Republican side, President Bush has no opponent, though voters do have anuncommitted option.

MR. MacNeil: The Senate voted today to end China's Most Favored Nation trade status in June unless it makes substantial progress in human rights and in trade practices and weapons proliferation. The vote was 59 to 39, not large enough to override an expected veto by President Bush. The vote followed a secret session in which Senators heard the latest intelligence information about Chinese arm sales to the Middle East. Before the vote, the Democratic and Republican leaders spoke on opposite sides of the issue.

SEN. ROBERT DOLE, Minority Leader: I don't know whether you want to isolate a billion, one hundred million people or not. We want to slam the door and say we're not going to talk to you, we're not going to try to influence your policy. We're just going to close the door. That's the short-sighted view in the view of this Senator. And hade we taken that view with the Soviet Union when we had our difficulties with the Soviet Union on human rights and trade and proliferation, I'm not certain where we would be today.

SEN. GEORGE MITCHELL, Majority Leader: The administration's policy is not producing changes in Chinese behavior either with respect to human rights inside China or in Tibet or with respect to weapons proliferation outside China. Instead, what it has done has made the Chinese Communist leaders secure in the knowledge that. As long as they have a special friend in the White House, Chinese need not worry about American public opinion or American trade relations.

MR. MacNeil: In Beijing today, seven dissidents were convicted of counter-revolutionary activities. Among them were at least three student activists who participated in the 1989 pro-democracy movement. The government published the verdicts, but the trial and sentencing proceedings were conducted behind closed doors. CIA Director Robert Gates said today that North Korea may be near to developing a nuclear weapon. He told the House Foreign Affairs Committee that North Korea has nearly finished building a plutonium plant and weapons production could be achieved in as little as two months, or within two years. A North Korean official said today his government would probably allow inspections of its nuclear facilities in June. The plan must be ratified by North Korea's parliament.

MR. LEHRER: Mideast peace talks continued in Washington today. Israeli and Arab delegations met at the State Department. Palestinian negotiators dismissed an Israeli plan for limited self- rule in the occupied territories. They said the plan would perpetuate Israeli occupation and continued Jewish settlements.

MR. MacNeil: Latin American leaders began arriving today in San Antonio, Texas, where President Bush will join them tomorrow for a summit meeting on how to curtail drug production and use. The leaders first met on the issue in 1990 in Cartajena, Colombia. Democrats on the House Judiciary Committee have released a report which says there's been little success in the drug war since that meeting. Congressman Charles Schumer of New York spoke at a Capitol Hill news conference.

REP. CHARLES SCHUMER, [D] New York: Today I'm issuing a report that makes one thing crystal clear. The President's war on drugs, his Andean initiative, is a failure. And when he meets with the leaders of the Andean countries tomorrow, they all ought to admit one thing, that this strategy hasn't worked, we all ought to roll up our sleeves and try another. If you look at what is the ultimate goal of the Andean initiative, the reduction of crack cocaine on the streets of America, it is an abject failure. If you look at price, if you look at purity, if you look at preponderance, crack cocaine is more available than ever before.

MR. MacNeil: So far, the administration hasn't responded to that report. The Supreme Court today ruled that prison inmates can sue guards over the use of excessive force even if there's no significant injury. In a 7 to 2 vote, the court revived the suit of a Louisiana inmate who alleged he'd suffered a beating that represented cruel and unusual punishment. Justice Clarence Thomas wrote the dissenting opinion. He said, "Abusive behavior by prison guards is deplorable conduct but that does not mean it is invariably unconstitutional." Justice Sandra Day O'Connor disagreed with the Thomas dissent. She said, "Use of such force always violates contemporary standards of decency."

MR. LEHRER: And that's it for the News Summary tonight. Now, it's on to wages, taxes, leaks, and Central Asia. FOCUS - THOSE WERE THE DAYS

MR. MacNeil: We begin with a two part look at the topic that has dominated the political debate this election year, the plight of the middle class and what can be done about it. First, Business Correspondent Paul Solman of public station WGBH- Boston explains why so many American workers say they're pessimistic about the economy in spite of all the reports suggesting things are getting better. [SCENE FROM ALL IN THE FAMILY]

MR. SOLMAN: Well, for many Americans, including Archie Bunker and family, those were the days, or at least that's what people now seem to think. Even though the U.S. has experienced economic growth of 72 percent over the past 20 years, people feel they're worse off. Partly it's because we're worried about the decline of the American economy relative to competitors like Japan, but another reason many people feel worse off is that their income, adjusted for inflation, their real income that is, has been going nowhere for two decades. We're going to show you what's happened to real income in American these past 20 years using Archie, Edith, and the kids, all the folks in the family. We begin back in 1973, a couple of years after the show debuted. [SCENE FROM ALL IN THE FAMILY]

MR. SOLMAN: This was the good life. Archie brought home the bacon. Son-in-law "meathead" ate it. [SCENE FROM ALL IN THE FAMILY]

MR. SOLMAN: Now, Archie was no English major, but then he didn't have to be. He didn't need schooling to work on the loading dock at a tool and die plant. The money was good and only figured to get better. Here's Archie's income estimated by economist Kevin Murphy for an average 50 year old blue collar worker of 1973, high school degree tops, about $13,000 a year, adjust for inflation about $37,000 today. Wife Edith wasn't working, son-in-law Michael was in college. Daughter Gloria, if typical of her peers, was working half-time, making around $2,500 a year, adjusted for inflation, that's $7,000 today. Add to Archie's paycheck and family income in today's dollars would be around $44,000. [SCENE FROM ALL IN THE FAMILY]

ARCHIE: [All in the Family] I propose a toast to the good old US of A, where everybody gets a slice of the pie. All you got to do is do your work and in the end you get it.

MR. SOLMAN: The Bunkers have made it into the fast expanding middle class. The future looked especially rosy to the next generation, baby boomers like Michael.

HEIDI HARTMAN, Economist: Well, he had the experience of his parents to look at and he saw how well they did in the post World War II period and he probably thought it was going to be just as great for him, why not?

MR. SOLMAN: Economist Heidi Hartman has studied the income data.

HEIDI HARTMAN: It looked like a real economic engine. American capitalism looked really, really successful.

MR. SOLMAN: In the mid '70s, however, the little economic engine that could suddenly wouldn't. This isn't Archie's factory but the Ford Motor Company. Work like Archie's depended on firms like Ford, whose business had begun to sputter. Blue collar salaries were rising, but inflation was eating up all the gains. You could see the economic slowdown begin on "All in the Family," when Archie got a raise.

EDITH: ["All in the Family"] Archie, did you get a good raise?

ARCHIE BUNKER: ["All in the Family"] Edith, a three year contract for 15 percent.

MICHAEL: ["All in the Family"] Arch, Arch, what about the cost of living escalator clause?

ARCHIE BUNKER: ["All in the Family"] Oh, come on. The hell with the escalator! We're on firm ground with a 15 percent raise! Now, don't make me mad!

MR. SOLMAN: Archie doesn't get the basic economics. When your cost of living goes up faster than your paycheck, you take home more money, but because of inflation, it won't buy as much as it used to. Only "Meathead" understands that Archie's real income is going down.

MICHAEL: ["All in the Family"] Oh, boy.

GLORIA: ["All in the Family"] What's the matter, honey?

MICHAEL: ["All in the Family"] I didn't want to spoil his happy moment, but he's not any better off now than he was before.

GLORIA: ["All in the Family"] Well, of course he is. He got a 15 percent raise.

MICHAEL: ["All in the Family"] Gloria, remember reading in the paper the cost of living went up 12 percent last year?

GLORIA: ["All in the Family"] So?

MICHAEL: ["All in the Family"] So next year it's supposed to go up another 8 percent. That's 20 percent. Archie thinks he's 15 percent ahead, but he's already 5 percent behind. [laugh track]

MR. SOLMAN: After awhile, it wasn't all that funny. By the end of the '70s when Ronald Reagan ran for President, his best line was about real income and how it wasn't rising.

RONALD REAGAN: Are you better off than you were four years ago? Is it easier for you to go and buy things in the stores than it was four years ago?

MR. SOLMAN: Okay, we're about to check the 1979 numbers on the Bunkers. Keep in mind the point is not to see how Archie Bunker did as he got older, but what happened to his old job. Would a new worker filling Archie's shoes at the tool and die company be making more in 1979 than Archie made back in '73 after you adjust for inflation? Well, the Archie of '73 was making $37,000, the Archie of '79, an inflation-adjusted $36,000, down about 3 percent. But by 1979, more women had entered the work force, women like Edith, who would have been making about $9,000 annually, again adjusted for inflation. So family income was up because the family was working harder. And this kind of scene was becoming more and more common by 1979.

EDITH: ["All in the Family"] Look what I got, my first paycheck. Where's Archie? I want to show him. Archie!

MR. SOLMAN: Women like Edith were joining the one growing sector of the economy, the service sector.

EDITH: ["All in the Family"] Pay to the order of Edith Bunker $63.28.

MR. SOLMAN: Well, it may not sound like much, but to keep her family in the middle class, Edith really had no choice but to work.

HEIDI HARTMAN, Economist: And she's noticing Archie's real wage decline and she's thinking, well, what can I do for my family, I also want to help the kids out and there's nothing to help them out with because our family income's declining, so if I'm going to help them, you know, start their family growth in a little bit healthier position, maybe I'd better start going to work.

MR. SOLMAN: Meanwhile, young men like Michael were even more strapped. Let's say he'd left school for a job back in '73. Typical income for a meathead of that era with a few years of college was about $10,000. Now, the '79 meathead seemed to be doing much better, up around $15,000. But the point of our story is that when you adjust for inflation, his real income had actually dropped from $29,000 to $27,000 a year, again in today's dollars. According to Economist Larry Mishel, the only way for this kind of family to keep pace was for the woman to work more.

LARRY MISHEL, Economist: The thing to note about the young family is that we have the woman working far more hours and weeks in a year at slightly higher wages. And that extra amount of income has been enough to compensate for the fact that the man, "Meathead," is working the same amount each year, but at far lower wages. So what they're doing is working a lot more, maybe holding ground, probably doing somewhat worse.

MR. SOLMAN: And then along came the 1980s, Reaganomics, and the economic boom trumpeted by both the administration and the media. By 1988, the economy had grown nearly 30 percent in eight years. This so-called "boom" was symbolized by icons of the era like corporate raider Gordon Gecco, addressing the stockholders of the company he's targeted for takeover here in the movie "Wall Street."

ACTOR: ["Wall Street"] The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works.

MR. SOLMAN: For the well addressed and well heeled, the data are pretty clear. In general, the higher their income when the decade began, the greater their share of the economic gains of the 1980s. For a while, many of the bottom 60 percent or so believed that the wealth would trickle down to them. But as manufacturing jobs were lost or automated out of existence, replaced for the most part by lower paying service jobs, it became harder and harder for folks like the Bunkers to maintain their real income, or even their identity as members of the middle class. Here are the 1988 data: a blue collar worker like Archie continuing down to about 34,000 in today's dollars, meathead dropping to 25,000 or so. The go-go '80s, they were called, but the only direction the "All in the Family" guys were going was down.

HEIDI HARTMAN: I think this has been a very hard tide of economic growth in the '80s, because you could look at the other people who were doing really great. So not only are they working harder and all they get for their hard work is to keep their family the same, but they see all these other people who can afford the vacation homes, the yachts, hire a limousine to go out to dinner, and it's upsetting. It's upsetting to think that you're working so hard, you're middle class, aren't you? This is America. It's supposed to be good for the middle class. What's happening?

MR. SOLMAN: Queens, New York, 1992. To bring our story up to the present, we thought we'd visit the neighborhood where the Bunkers supposedly made their home. And since Archie worked on the loading dock, we visited one nearby to see how someone with his job is doing today. The nearest thing we could find to Archie Bunker was Frank Mondello. What was he making in 1973?

FRANK MONDELLO: $150 a week. Can I tell you something about that salary then? Okay. When I was making $150 a week, I had two children, I bought a house, and I had a car that was one year old. We were living very, very well.

MR. SOLMAN: Like "Meathead" and Archie, Frank Mondello has seen his paycheck rise, but his real income slip. He now drives a very old car, says he couldn't afford a house if he had to buy one today, thinks things are getting worse. Now, if we're here in 1973, and I ask you, do you think things are going to get better and better, what do you tell me?

FRANK MONDELLO: Oh, yes, I never thought it would end. I never thought in a million years I would see what I'm seeing today. The regular guy, the guy who wants to go out and make a living, you know, the guy that's willing to work hard, and he can't get a job for $500 a week or $450 a week. It's ridiculous.

MR. SOLMAN: We end this story right across the street at a once bustling tool and die company [Allmandinger Tool, Die & Metal Stamping]. Inside, $2 1/2 million worth of machinery sitting idle much of the time. This is the kind of place that once paid blue collar Americans a good living. But there's no one here. Twenty years ago, Americans here were in the right place at the right time, with skills all of us were willing to pay good money for. Back in those days there was no Japanese quality to compete with, no cheap foreign labor. But today firms like this, and what workers are left in them, just can't compete at the old high wages. Only with new investments and new skills can firms like this and their workers hope to provide again the kind of value we were once happy to pay for. Otherwise, the long-term trend seems likely to continue, a chunk of Americans doing better than ever and the top few percent really making out, the majority standing still or doing worse. FOCUS - 1040 - TAXING TIMES

MR. LEHRER: Now, from real wages to real taxes. The House of Representatives is preparing to vote later this week on three different tax proposals, one the Democrats call the Bush plan, one Republicans call the real Bush plan, and one Democrats call their very own. All three have been called election year fakery and trash, among other things, in lead editorials in the Washington Post and the New York Times the last two days. Here to talk for the Democrats now is the House Majority Whip, David Bonior of Michigan, for the Republicans, Bill Archer, Republican of Texas, ranking minority member of the tax writing Ways & Means Committee. They're both in a studio on Capitol Hill. Specifically, the New York Times said this morning, gentlemen, "This election year fakery on the part of both parties is worse than false. It is fraudulent, making a hodge podge of tax breaks for special interests. All three bills deserve to die." Those are strong words, Congressman Bonior?

REP. BONIOR: Well, they are, and I think they indicate who wrote those words, people who are doing very well in our economy today. The proposal that we are suggesting to the full House of Representatives this week will change the direction in which we have provided people in this country tax benefits and hopefully, and we believe, will create jobs for the American people. We believe in our party that the middle class that was well demonstrated in the piece that viewers just saw have been left out. We want to change the direction by providing middle income families like the Bunkers, people who today make between let's say thirty and fifty thousand dollars a year and have two people working, we want to give them in our plan somewhere between eight hundred and a thousand dollars over a two year period. These people are squeezed, they need support in this direction. In addition to that, Jim, let me just also say that we have some specific proposals in our overall tax proposal that relate to direct job creation. We extend the targeted job tax credit, extend the credit for housing development, low income housing development. We also do research and development, and we have a small venture capital provision for small business under a 50 percent exclusionary clause. So we do a number of things that directly relate to creating jobs. This isn't the total answer to getting our economy back in shape and getting people working, but it will start to say whose side are you on. We believe the middle class, as the Bunkers in your piece demonstrate, have been squeezed long enough.

MR. LEHRER: Congressman Archer, we'll talk about the Republican plans in a moment, but first, what do you think of the Democratic plan? We've heard what Congressman Bonior, how he described it. How would you describe it?

REP. ARCHER: Well, every economist that has testified before the Ways & Means Committee, including many liberal Democrat economists, have said that a middle income tax relief package paid for by taxes on others would not do anything to stimulate any jobs. I don't think 50 or 60 cents a day is the answer to the problems that you just presented for the middle income people. We need to cut spending. We need to cut down the size of the federal government and pass that along in a legitimate tax savings.

MR. LEHRER: Now, what would your Republican -- now there are three plans here I understand, and Congressman Bonior was talking about his. The Republican plan, the one that you support, how would you, how does it differ from what Congressman Bonior and the Democrats want?

REP. ARCHER: Oh, the President has proposed a two-part package, one that was of an immediate nature to create jobs and to get the economy moving in the right direction, and that first step is part of what we will offer this week to the Congress. It has a $5,000 tax credit for first-time home buyers. And that will stimulate according to the projections 700,000 new jobs for plumbers, carpenters, for people who make rugs and appliances, all the things that go into homes. So this is, it will be a major shot in the arm for the economy. In the long-term, the second package, and there are other things in the first package, but the second package does have middle income tax relief which the President proposed to begin on October the 1st. And that would be paid for by spending reductions.

MR. LEHRER: What do you think of that plan, Congressman Bonior, what the Republicans are supporting, what the President and Mr. Archer are supporting?

REP. BONIOR: Well, part of the Republican proposal, Jim, is a capital gains tax break, and it's the same "trickle down" theory that we've come to see throughout the 1980s and the early part of this decade. And I have to ask where are the jobs from that supply side theory that is in their proposal. We are losing 9400 jobs a month under this administration with that type of a program in place today. We believe that the middle class deserves the benefits and we believe that they ought to be paid through the sacrifices made by the very wealthy who made the gains during the 1980s. So our proposal, as opposed to what Bill is talking about, we would talk in a fourth rate, couples who make over $145,000 a year, we take that up to the 35 percent level, and we would also levy a surtax on millionaires and we would stop the deductions for corporate CEOs who are making over a million dollars a year in salaries. That money we would use to pay for the middle class and the eight hundred to a thousand dollar program for them over a two year period.

MR. LEHRER: Now, why do you oppose that, Congressman Archer, the taxing, the higher income tax proposal?

REP. ARCHER: Well, here we go again. We can go back in history and see where we're only going to jump up the rates a little bit, only on higher income people, and then it begins to filter back to the middle income class people. It'll happen again. The answer is not higher rates and higher taxes. The answer is smaller federal government with less spending. But on the capital gains end of things, I don't know why Dave and his people have made such an issue out of this. It didn't used to be an issue, because people understood that if you don't have domestic capital savings, you can't create good jobs. You mentioned this in your middle income class piece. We have to have the money to put into technology and new equipment. And if we don't have it occur domestically, then we've got to depend on foreigners. And most Americans don't like to depend on foreigners to own businesses in this country. Or you have to depend on the government to let the government build the factories. They tried that in Eastern Europe and the Soviet Union. It doesn't work. But when you have a high capital gains tax rate, you diminish the amount of domestic capital savings that are available to provide the tools, the seed corn, as it were, to have a bigger crop.

MR. LEHRER: Let me ask you this, Congressman Archer. The New York Times editorial, something that both your plans contained, which are help to people to the construction industry, new homes, new buildings, et cetera, and the New York Times says what the economy needs to grow is more equipment and better trained workers, not more buildings.

REP. ARCHER: Well, are you, you're certainly not saying we don't need more housing in this country, that everyone is in a house that is the size they need for their families, that first-time home buyers can get out and can buy a house to put shelter over their heads. The $5,000 credit for first-time home buyers is very, very important to provide a need for people, while creating jobs. Yes, we do need more tools and production. We do need more capital investment. But we've got to compete in a world marketplace now. And we have the highest capital gains tax rate of any of our developed country competitors.

MR. LEHRER: Congressman Bonior, the Times and others suggest that what even the Democrats are suggesting is a subsidy to the real estate interests in this country.

REP. BONIOR: There's a passive loss provision for the real estate industry in our provision, in our proposal, but I might also suggest that we also index capital gains and our proposal is not silent on that issue. We do index capital gains, but unlike the Republican proposal, Jim, our proposal would not give the great bulk of the benefits to the very wealthy. Under their proposals, those people who make over $100,000 a year will receive 80 percent of the capital gains benefits under the bill that they have and we think again that the focus ought to be on the people in your piece that you just saw who were squeezed, the middle income people. If they don't have the resources to by products, then we will not be producing products, then we won't be producing jobs. It all goes together. We want to do it bubbling up from the middle, as opposed to having it come down from the top, as we've had for the last 12 years.

MR. LEHRER: Congressman Archer, Robin reported in our News Summary, I'm sure you heard, already knew it, that Speaker Foley said that the Democrats have enough votes to pass their plan and then right after that a statement came from the White House, good luck because if it does pass, the President will veto it. So is that what's going to happen here, the Democrats pass their bill, the President vetoes it and all this has been an exercise in rhetoric?

REP. ARCHER: You know, unfortunately, it looks like it's another Presidential election year attempt at one upmanship instead of working together to try to pass something that's going to help the country. The President has been ready to negotiate and to work something out that would help the country. The Democrat leadership has made no contact, has made no effort. They're moving ahead with a package which we said early on will be vetoed. It's a plan for failure, and we're going to have to start all over again. This is the type of disillusioning activity on the part of the Congress o the American people don't like and we should try to get together and we should try to work out something that's going to help this country.

MR. LEHRER: But it isn't going to happen, is it, Congressman Bonior?

REP. BONIOR: Well, the President came before the Congress and he laid before it a plan and it included a 500 exemption on children for families, and then he withdrew it when he submitted his plan to the United States Congressmen, the Ways & Means Committee. And then he said during the campaign pass my plan the way it is. He wouldn't even consider any suggestions being made by the Democratic Party and so without a middle class proposal, we obviously were not going to take that. We believe the engine for growth in this country belongs in the hands of people who have been left out in the middle income areas and so we're going to pursue that. Now, the President will have a chance, hopefully, in this process, as it moves through the House and the Senate and the Congress, to join into the debate, and we hopefully can come up with a proposal that will be good for the country and will produce jobs and provide some equity.

MR. LEHRER: One more quote from a newspaper editorial. This is from yesterday's Washington Post. It says, "All of these bills are bad. They ought to be tossed in the trash as the very people pushing them the hardest know best. They ought to quit before someone notices." Congressman Archer, how do you respond to that?

REP. ARCHER: Well, we all know where the Washington Post comes from. It's an inside-the-beltway mentality. It does not represent what the minds of the American people are thinking. I don't give an awful lot of credence to that. I think there are things we can do that will create incentives for new jobs and for economic activity to build new homes for people and to provide the incentives for more capital to build new factories that are American-owned. And that's what the President's trying to do immediately. Dave said that he's a man in the middle income class relief and that's not true. He said initially in his State of the Union Address he wanted two packages. The middle income class relief was to be paid for by spending cuts. The Democrats always want to dodge spending cuts. They want to tax people more. They don't want to cut spending and needless to say, that's where the President is today, the same place he was in the State of the Union address. There's nothing in stone tablets that says we can't have two tax bills. I don't believe the American people believe that the Congress doesn't have the time to pass two tax bills in a full year.

MR. LEHRER: You mean a short-term and a long-term?

REP. ARCHER: That's correct.

MR. LEHRER: Well, gentlemen -- yeah.

REP. BONIOR: Well, the fact of the matter is, Jim, just for one second --

MR. LEHRER: Quick second.

REP. BONIOR: -- well, the President's own party, Pat Buchanan has renounced his pulling back on the middle income tax bill, and Jack Kemp is housing secretary. He called the proposal a gimmick so I think that speaks for the President's proposal.

MR. LEHRER: We have to go, gentlemen. Thank you both very much.

MR. MacNeil: Still ahead, the Senate looks for leaks and inside Central Asia today. FOCUS - SOURCE STORY

MR. MacNeil: Next, the search for a source in and around the United States Senate. It has to do with who leaked that memo about Anita Hill and Clarence Thomas. Roger Mudd reports.

MR. MUDD: Not often does the Congress deliberately set out on a collision course with the Constitution or with the Bill of Rights. But the Senate did so last October 24th when it voted 86 to 12 to investigate two separate leaks of confidential information to the press, the first involving an Ethics Committee report on California Senator Alan Cranston's dealings with savings & loaner Charles Keating, and the second involving Anita Hill's allegation that she had been sexually harassed by Clarence Thomas. Since then, the Senate has appointed a special independent counsel, Peter E. Fleming, Jr., who has already subpoenaed and taken testimony from at least two newspaper reporters. Yesterday, Nina Totenberg of National Public Radio answered her subpoena. The first time the Senate actually punished a reporter for refusing to divulge his confidential sources came in 1848 when John Nugent of the New York Harold was arrested by the Senate's sergeant at arms. Nugent was confined for about a month to one of the Senate's committee rooms during the day but he got to go home at night. In this century, 1971, the House Commerce Committee issued a contempt citation against Frank Stanton, President of CBS, for his refusal to release out takes from interviews in the documentary "The Selling of the Pentagon." The full House, however, voted down the citation. And in 1976, a House Committee tried but failed to get Daniel Schorr of CBS News to reveal his source for the leak of a secret report on the CIA.

DANIEL SCHORR, CBS News: [1976] To betray a confidential source would mean to try up many future sources for many future reporters. To betray a source would be for me to betray myself, my career, and my life,and to say that I refuse to do it isn't quite saying it right. I cannot do it.

MR. MUDD: The House Committee voted not to cite Schorr for contempt. Now, 15 years later, the Senate has taken aim at the First Amendment, but with no prospect it will be any more successful than before. The leak to the press of Anita Hill's allegation almost derailed Thomas's nomination to the Supreme Court.

CLARENCE THOMAS, Supreme Court Nominee: [October, 1991] Mr. Chairman, something has happened to me in the dark days that have followed since the FBI agents informed me about these allegations. And the days have grown darker as this very serious, very explosive, and very sensitive allegation, or these sensitive allegations were selectively leaked in a distorted way to the media over the past weekend.

MR. MUDD: Outraged Republicans accused the Democrats and/or their staffs of the leak. Orrin Hatch of Utah demanded an inquiry.

SEN. ORRIN HATCH, [R] Utah: I want an investigation by real appropriate, non-Senate staffers. I want some people who aren't affiliated with the Senate to look into this matter because I think that's the only way we even have the slightest chance any way of getting to the bottom of it, and then we probably won't.

MR. MUDD: Democrats were thrown on the defensive.

SENATOR: I want to make it clear today to you, Judge Thomas, and to the rest of the world that neither this Senator nor any of my staff have been the source of any leaks to the press on this subject.

SEN. EDWARD KENNEDY, [D] Massachusetts: I too want to indicate here before this committee and in this forum that neither I nor my staff were involved in any of these leaks.

SEN. ORRIN HATCH: I'd like to speak on behalf of all the Republicans. None of us did it. I guarantee you that.

CLARENCE THOMAS: Well, somebody did it, Senator.

MR. MUDD: Nonetheless, the investigation went forward. Peter Fleming, the Senate special independent counsel, began advising certain Senate staffers to hire themselves a lawyer and on February 13th, Timothy Phelps, a reporter for Newsday, which had published the original story on Anita Hill's allegations, was subpoenaed. His request for a public hearing was denied so Phelps later repeated for the cameras his prepared statement to Fleming.

TIMOTHY PHELPS, Newsday: I respectfully decline to answer the special independent counsel's questions here today because they are posed for the explicit purpose of seeking the identity of my sources. I do so not only as an assertion of my rights under the First Amendment, but also of those of my readers and of the American people. They had a need and a right to know that serious allegations have been made against a nominee to the Supreme Court. It was my job to tell them.

MR. MUDD: So you said no, but you were in there four hours. So what went on?

MR. PHELPS: Well, I don't blame you for asking that. We had agreed to authenticate the voracity of everything that I had written and said about this subject, so Fleming took me almost word by word through everything I had written. Is this true? Is that true? And we would answer that question, and I looked very carefully at each word to make sure that it was accurate. In addition, of course, then he would ask questions, well, now you talked about this Senate source and this Senate source. Are they the same sources?

MR. MUDD: Did you know he was going to do that?

MR. PHELPS: In a general sense, yes, but I thought, I guess naively, that we'd go in there and he'd say, well, is this story true, and I'd say yes, and he'd say, well, who's your source, and I'd say, well, I can't tell you, and then I'd leave. But I got a sense of what it's like to be at the other end of the system. It was a very exhausting, draining experience, and I hadn't even committed a crime.

MR. MUDD: Is that the chilling effect that journalists talk about? Was that chilling? Has it been chilling?

MR. PHELPS: Well, I would say that that is more exhausting than chilling. What's chilling most of all I think is for all my sources and my potential sources, here my name is in the newspaper as a target of this investigation and I'm trying to call people up in the U.S. Senate and get them to talk to me. I mean, it's really scary for these people.

MR. MUDD: Following Phelps' interrogation by Fleming, Sen. Patrick Moynihan told "Roll Call," the Capitol Hill newspaper, that he was "genuinely disturbed by Fleming's questioning of the press. And Orrin Hatch, one of the Republican supporters of the investigation, also seemed to be distancing himself from Fleming.

SEN. ORRIN HATCH: One of the problems with our special counsel laws is they're laws unto themselves with no supervision by anybody and frankly, in this particular case, he can do that. The question is whether he can get the rules committee to, or actually even the Senate to vote upon forcing those two reporters, or one of those two reporters to divulge their sources. My personal feelings are that most people worth their salt are going to report good stories and that certainly was an interesting and good story, and I would be very loath to compel them to divulge their sources. In the case of Nina Totenberg, who worked for National Public Radio, a radio system that's funded by the Congress, and in particular by the Senate in this case, that's another very interesting legal nuance or question. Personally, I would not require her to divulge her sources.

MR. MUDD: Nina would be shocked to hear that she is a Senate employee.

SEN. HATCH: Well, the fact is she's a government employee in the sense of a quasi-government employee, being paid for out of public funds. Now, I think you just have to consider that in the law that that might put a different twist on her obligation to divulge, compared to Timothy Phelps.

MR. MUDD: Whether there was a different twist on her obligation or not, Nina Totenberg also said no.

NINA TOTENBERG, National Public Radio: All I said was, yes, I said that on the air, and I believed it to be true. Other than that, I said nothing.

MR. MUDD: Special Counsel Fleming must now decide whether to take the first step in forcing the reporters to divulge or whether to shift his interrogation toward certain Senators and their staffs. In the long history of leaks on Capitol Hill, there has been only one journalist who has ever revealed his confidential sources. He was Jesse Dow and he was publisher of the original Washington Times. It happened in 1846. Within a month, the Washington Times had folded and Jesse Dow never ate lunch in this town again. CONVERSATION - LIFTING THE VEIL

MR. LEHRER: Finally tonight, we begin a series of conversations about the countries that used to belong to the Soviet Union. You remember the Soviet Union. It included republics like Russia, Georgia, all of those in the Baltics. Now each of those 15 republics is an independent nation. We start with the five Central Asian republics located on the borders of Iran, Afghanistan and China, thousands of miles and a world away from Moscow. Charlayne Hunter-Gault reports.

MS. HUNTER-GAULT: The mountains of Central Asia, a remote and exotic land, stretching from the Caspian Sea to the Gobi Desert. Alexander the Great and Genghis Khan conquered these hills. Marco Polo crossed them on his way to China. Its ancient cities were major stops on the silk route. Few know this history as well as Professor Edward Allworth, head of the Center for Study of Central Asia at Columbia University.

EDWARD ALLWORTH, Columbia University: The reason we call it Central Asia is because it's between those great powers, China, India, Russia, and the Middle East, but there's a lot more to it than geography. The people have a sense that they are central, that is, they see themselves as the center of the civilized world, and there's some reason for that.

MS. HUNTER-GAULT: For most of this century, the city of Samarkand was a dusty outpost of the Soviet empire. But long ago, it was a world capital. Many believe that Central Asian civilization peaked in the ninth and tenth century, during the Iranian's Samanid Dynasty. This tenth century mausoleum is typical ofSamanid architecture, one of the dynasty's great achievements, along with advances in astronomy, mathematics, and literature.

PROF. ALLWORTH: Those people had a marvelous civilization which believed in justice which created wonderful poetry and which affected all of their relations with the rest of the world. That was an Iranian dynasty and toward the end of the tenth century, this dynasty and the people became more and more overrun by nomads from the East.

MS. HUNTER-GAULT: The nomads' Turkic languish spread throughout Central Asia. Only the Tadik people in the South continued to speak an Iranian language, as they still do today, and Turkman nomads still wander Central Asia, about 2 1/2 million of them, herding sheep and raising horses. A glimpse of their lifestyle is shown in this exhibit at the Museum of Natural History in New York.

PROF. ALLWORTH: What we need to understand about the nomads in Central Asia is how closely they resemble in character, especially in character, the American Indians of our own list, so what they did produce in the way of art was objects like swords, saddles, and the like, the most fine, fine weaving. It's amazing how beautiful it is, and everything a nomadic person had had to go into these saddle bags.

MS. HUNTER-GAULT: After the Turks, came the Mongols, under Genghis Khan.

PROF. ALLWORTH: As a result of all these compacts of the Central Asians with the East, in particular, they learned many techniques which were not known in the West even, and certainly hadn't been on Central Asia, for example, the making of glass, the making of paper. Certainly the Central Asians learned silk culture from China.

MS. HUNTER-GAULT: The art of silk from lands to the East and carpet making from the South and West. This Muharan rug pattern is named for the city of Muhara, Southwest of Samarkand. Central Asia absorbed aspects of every culture that passed through. It assimilated all its invaders but one.

PROF. ALLWORTH: The Russian invasion has had the most lasting effect on Central Asian society precisely because the Central Asians have not been able to assimilate the Russians.

MS. HUNTER-GAULT: The Russian empire pushed southward in the 19th century. By 1886, the Russians had conquered the entire region and were trying to put their stamp on it.

PROF. ALLWORTH: For example, no slavery, no polygamy, kind of a damper on the use of drugs, all kinds of things which we relate to today. The Russian impact was profound but it didn't immediately take on the culture and try to alter it to the very bottom. But once the Soviet regime came in, then the story changes.

SPOKESMAN: [FILM] Now, let's turn to the Central Asiatic republics. In the Southernmost part of the Soviet Union, on the Caspian Shore, a mixed group is boarding a crowded ship. What a wide variety of racial types.

MS. HUNTER-GAULT: This film was shot shortly after the Bolshevik Revolution. At the time, Lenin voiced his fears for Soviet ethnic relations, saying, "It would be unforgivable opportunism if we should undermine our prestige with even the slightest rudeness or injustice to our own minorities." Stalin would turn that philosophy into a cruel joke. But ironically, he began his rule by making the Soviet Union the first country in the world to organize its government on the basic of ethnic territory.

RONALD GRIGOR SUNY, University of Michigan: And the idea was to nativize these republics, to allow the local people to govern themselves.

MS. HUNTER-GAULT: Ronald Suny, a professor at the University of Michigan, is a historian of the former Soviet Union's non-Russian republics.

RONALD GRIGOR SUNY, University of Michigan: Originally, there were tribes out there, there were regional affiliations, there were sort of sub-national loyalties, and then there was the suplar national loyalty to Islam, which went across any ethnic boundaries, or to the idea of a Turkic people, Turkistan, but in the Soviet period, Stalin very deliberately around 1924 created five different republics, somewhat artificially, Uzbekistan, Khirghizia, Kazakhstan, Turkistan, and Tajikistan.

PROF. ALLWORTH: And that's where those people had to live, and all of the border lines between them were new on the map. There had never been any such ethnic division before.

SPOKESMAN: [FILM] A group of Uzbek artists in an old Uzbek folk dance.

MS. HUNTER-GAULT: The Soviets glorified some aspects of Central Asian society, especially the folk culture, but they also made changes.

PROF. ALLWORTH: It had to be like ballet, for example, or it wasn't good, and the local people suddenly became learning to do steps that they had never done before, wearing costumes that looked very much like they might have come out of, oh, Eastern Europe somewhere. Well, folk culture is not made that way. This was an artificial graft on top of the Central Asian art.

MS. HUNTER-GAULT: The Soviets also launched a more direct assault. Mosques were closed and the native schools, all religious, shut down. The Arabic alphabet, the sacred language of the Koran, was replaced by the Russian cyrillic. Native language, like religion, was officially discouraged.

SPOKESMAN: [FILM] I am the Registan, the heart of Samarkand.

MS. HUNTER-GAULT: Even in the Gorbachev years, when some mosques were turned into museums, the sound and light shows were given in Russian, German, French, and English, but never in Uzbek, the native language of the 20 million people in the Soviet Union's third most populous republic.

SPOKESMAN: [FILM] Then history made its final choice. I heard the Russian people's voice. The call to march with banners red made every Uzbek raise his head.

MS. HUNTER-GAULT: As Stalin pursued his five year plans, the steplands of Northern Central Asia in the huge but sparsely populated republic of Kazakhstan were turned into labor camps, prisons for intellectuals, persecuted minorities, peasants resisting the collectivization of farms. Mines were opened, exploiting the region's rich deposits of iron, lead, zinc, and copper. In later years, the Kazakh Desert was made into the Soviet Union's nuclear weapons testing ground. Environmental damage in Northern Central Asia has been dwarfed by the devastation in the South. This is the Aral Sea, once the fourth largest inland sea in the world. Today "Arid" might be a more appropriate name for it. Since 1960, farm irrigation from rivers feeding the Aral Sea has reduced its volume by 2/3. At this rate, the Aral Sea will disappear by the year 2000, a victim of one of history's most misguided agricultural policies. Where farms once grew a variety of crops, the Soviets turned Uzbekistan into one huge cotton plantation on heavily irrigated land.

PROF. ALLWORTH: As a result of this, the local people became dependent on food production from the outside and food is a very, very strong lever. You can always withhold food and it affects people immediately. So it was a tactic, you might say.

MS. HUNTER-GAULT: Soviet planners boosted cotton production tenfold. White gold, they called it, grown with the massive use of fertilizers, pesticides, and herbicides, chemicals that poisoned the drinking water, the food supply, even breast milk. Central Asia has an infant mortality rate four times that of the former Soviet Union, the highest in the developing world.

DR. ASTITUL ABSCIUKIROVNA, Aralsk Obstetrician: [Speaking through Interpreter] Recently more babies are being born prematurely and there are more and more miscarriages, many caused by fetal abnormalities.

MS. HUNTER-GAULT: Central Asians also have the highest birth rate in the former Soviet Union. Families of ten or more children are common, especially in rural areas, where 80 percent of Central Asians live.

PROF. ALLWORTH: Women still have not made it all the way out of the 19th century and it's shameful, really. Within the last two or three years, we've seen evidence, and it's openly spoken about, of a lot of suicides among young women, that is, married women who are working and raising families and who are just finding it impossible to take. And the most horrible part of it is that the way they choose to take their own lives is by burning, self-emulation.

MS. HUNTER-GAULT: Still, many believe that conditions for women in the cities at least improved under the Communists. They banished the veil, sent women to school and put them to work. Literacy rates, down around 1 percent at the time of the revolution, are now reportedly very nearly 100 percent. While meeting these goals, however, Soviet central planners were unwittingly sowing the seeds of the Union's downfall.

PROF. SUNY: I think one of the great ironies of the Soviet period of history is that here was a regime that argued from its beginning that it would eradicate the evils of nationalism, that it would move beyond nationality into a classless, nationless society. But the irony is that, in fact, the Soviet Union was the incubator of new nations. So now, what we see is Uzbek nationalism, a sense of Kazakh statehood, Kirgizia as the important variable here, and indeed, Uzbeks and Kirgiz, Tajiks and Uzbeks fight and kill each other.

MS. HUNTER-GAULT: Bloody ethnic disputes and battles over land and water have erupted throughout the region since mid 1989, a year of several major changes. In 1989, Central Asians went to the polls in the Soviet Union's first open election. Also in that year, each Central Asian republic ousted Russian as the official state language and replaced it with the native language, and strictures against the practice of religion were lifted. Since then, the number of Central Asian mosques has grown from 160 to more than 5,000. This resurgence of Islam worries many who fear the rise of Moslem fundamentalism, but not Edward Allworth.

PROF. ALLWORTH: And I don't believe the majority of Central Asians, especially the city people, are going to want to go back and spend their time praying five times a day or making their pilgrimage to holy places. Some will. Certainly some will, but I don't think you'll see a mass change there.

MS. HUNTER-GAULT: After years of toiling in academic obscurity, Prof. Allworth now finds himself and his region at the center of attention. But it is of a center that may not hold.

PROF. ALLWORTH: These Central Asians are volatile. I would not dare predict that they won't go after each other, but the way I would rather predict it, if I had to do it, would be that they'll be so preoccupied with trying to make a go of independence, each one of the five republics by itself, that they'll have more problems at home than they can possibly handle. RECAP

MR. MacNeil: Again, the major stories of this Tuesday, consumer confidence in the economy was reported at a 17year low. Federal Reserve Chairman Alan Greenspan said recovery was just around the corner. The Senate voted to attach conditions to a renewal of normal trade relations with China, but failed to get the votes necessary to override an expected Presidential veto. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night with coverage of the South Dakota primary, among other things. I'm Jim Lehrer. Thank you and good night.