The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight three views of the so-called loose nukes problem, the nuclear leftovers of the Cold War; a rundown on a new study of how to teach children to read; and a Tom Bearden report on the comeback of Continental Airlines. It all follows our summary of the news this Thursday. NEWS SUMMARY

JIM LEHRER: An independent counsel was named today to investigate Interior Secretary Bruce Babbitt. A three-judge panel selected Washington lawyer Carol Elder Bruce. Her investigation will center around the Interior Department's decision to deny a casino license to a Wisconsin Indian tribe. Its leader said an opposing group used political contributions and pressure to unfairly influence the decision. Babbitt disputed the charge in congressional testimony last year. The veracity of his testimony is at issue. Also in Washington today Alexander Lebed, former national security adviser to Russian President Yeltsin, appeared before a House committee. He said Russian nuclear scientists and military personnel needed to be paid better in order to prevent them from selling top secret information. We'll have more on this story right after the News Summary. Agriculture Secretary Dan Glickman today announced a new way to eliminate salmonella in chickens. It involves spraying baby chicks with a solution of so-called "good bacteria." Salmonella is one of the leading causes of food poisoning. Glickman spoke at a Washington news conference.

DAN GLICKMAN, Secretary of Agriculture: Today I have an exciting breakthrough to announce on the salmonella front, one we may hope--one we hope may prove just the tip of the iceberg in a new food safety revolution. Last Friday, USDA received Food & Drug Administration approval for a new anti- salmonella spray that has proven up to 99.9 percent effective in eliminating salmonella in poultry.

JIM LEHRER: The spray will be available to poultry producers in May. Violent crime occurred at one in ten American schools last year according to a report issued today by the White House. The National Center for Education Statistics conducted the first ever survey. President Clinton cited some of the findings.

PRESIDENT CLINTON: Too many of our children face a far more frightening reality every time they walk to the schoolhouse door. In 1996 alone, there were more than 10,000 physical attacks or fights with weapons in schools, 7,000 robberies, 4,000 rapes and sexual assaults. The threat of such violence hangs over children's heads and closes their minds to learning.

JIM LEHRER: Mr. Clinton spoke again of his plans to provide federal funds for school safety programs and to hire 100,000 new teachers. In economic news today the Commerce Department blamed Asia's financial crisis for the highest U.S. trade deficit to date. It rose 10.5 percent in January to $12 billion. Commerce Secretary Daley said it showed the Asian crisis had taken its toll on U.S. exports. The Labor Department reported a slight increase in the Consumer Price Index. It rose .1 percent last month. The CPI tracks inflation at the retail level. And the Dow Jones Industrial Average closed at its highest level yet, over 8800. It gained 27.65 points to finish at 8803.05, the fourth straight day of record- breaking sessions. In Kosovo today thousands of Albanians staged a sit-down protest in the capital city Pristina. They denounced what they called Serb terror and repression. Serbs held a counter protest against the rising Albanians separatist sentiment. At the United Nations in New York the American and Yugoslav delegates disagreed on how to end the conflict between Albanians and Serbs.

BILL RICHARDSON, U.S. Ambassador to the U.N.: We believe that continued pressure is useful, again, that we're going to press forward. I would hope that in the days ahead, in the week ahead the Security Council can go on record with an international arms embargo.

VLADISLAV JOVANOVIC, Acting Ambassador to the U.N., Yugoslavia: For us, Kosovo is internal matter. We oppose any attempt to internationalize it, and we don't give any consent to Security Council to debate that issue, or to adopt any decision in this respect.

JIM LEHRER: Kosovo is 90 percent Albanian. And that's it for the News Summary tonight. Now it's on to loose nukes, teaching children to read, and an airline's comeback. FOCUS - NUCLEAR NIGHTMARES

JIM LEHRER: Loose nukes: the nuclear weapons in the old Soviet Union. A House committee today considered the question of what happened to them. Kwame Holman begins our look.

KWAME HOLMAN: When the Soviet Union collapsed in 1991, a massive nuclear arsenal was broken into pieces. Suddenly, newly independent republics, such as Russia, Belarus, Ukraine, and Kazakhstan, were in possession of some 30,000 nuclear warheads and the scientific and industrial complexes to produce more. Other new nations, such as Georgia, Latvia, and Uzbekistan, found themselves operating full-scale civilian nuclear reactor programs. Through arms control agreements and other treaties the warheads have been removed from Ukraine, Belarus, and Kazakhstan, and are being reduced drastically in Russia. However, as economic disarray hits the former Soviet republic, the infrastructure that safeguards the weapons suffered. Scientific facilities and the scientists, engineers, and the military personnel who run them were left with little government support. In 1991, the U.S. adopted an initiative proposed by Senators Sam Nunn and Richard Lugar. It was designed to assist the former Soviet Republics in destroying nuclear and chemical weapons and to ensure weapons and material did not reach other countries. One of the more notable results of the program occurred in January 1996 when then Secretary of Defense William Perry was invited to the Ukraine to witness the destruction of a missile silo. In all, the Pentagon has spent more than $1 billion implementing the Nunn-Lugar anti-weapons program. Recently, however, there have been reports former Soviet scientists may be helping countries such as Libya, Iran, and Iraq build their own nuclear arsenals. And at many enriched uranium storage sites inside the former republics, security reportedly has grown lax. From inside the U.S. government and elsewhere there have been repeated warnings, though little hard proof, that some weapons material from the former Soviet Union may be unaccounted for. There also is concern that small nuclear devices known as suitcase bombs developed prior to the breakup of the Soviet Union also are missing.

ALEXANDER LEBED: [speaking through interpreter] But, frankly speaking, I'm not so much concerned with those nuclear devices, themselves. For purely technical reasons they are losing their capacity very fast.

KWAME HOLMAN: The potential danger posed by what insiders call "loose nukes" was taken up today by a House national security subcommittee. The key witness was Alexander Lebed, former national security adviser to Russian President Yeltsin.

ALEXANDER LEBED: [speaking through interpreter] Since '96, I've been trying to resolve another issue. And there are no guarantees against a possibility that say a rich dictator would buy somewhere, say in Africa, three square miles of land and disguised as a farm there will be a laboratory built who will gather together those, you know, often unique experts, would pay them handsomely, and gratefully they would do what they can do. And the world will face a problem of nuclear terrorism and nuclear blackmail. Then there would be a show--nuclear explosion of one device that would level to the ground a large village somewhere, and then they can call Moscow, New York, Tokyo, and demand any money. You know, there is a common principle, a general principle, that nuclear charges can be dismantled by those who assembled them. Well, these should be precisely the people who should service those charges. They should organize storage of the nuclear waste from those devices. These people must be gathered. Jobs must be given to these people. These people should be paid for loyalty--only then can we sleep calmly. Thank you, Mr. Chairman.

JIM LEHRER: Three views of all of this now: Indiana Republican Senator Richard Lugar did co-author the U.S. program for dealing with nuclear weapons and material in Russia in the newly independent states; Robert Bell is special assistant to the President for national security at the National Security Council; Jessica Stern formerly served on the National Security Council staff as director for Russian, Ukrainian, and Eurasian Affairs. Sen. Lugar, first, do you share Mr. Lebed's concern about finding work for former Soviet nuclear scientists?

SEN. RICHARD LUGAR, [R] Indiana: Yes, I do. And from the beginning of the Nunn-Lugar debate, the scientists were at the forefront of our consideration. There have been two programs developed in the State Department and the Department of Energy. One of these, an international program, employs as many as 21,000 Russian scientists. One of the problems here is we frankly do not know how many scientists in the former Soviet Union were involved in nuclear activity. People in the closed cities where a lot of this activity went on are well known, but 21,000 is an impressive figure. Well, in addition to that, we're trying to work with Russians to sort of marry their talents with the United States industries. This is a tougher sell. And, in fact, the Congress has frequently raised eyebrows as to how the source of commercial activities might proceed, but they're absolutely vital, and I thought Gen. Lebed's testimony today was compelling.

JIM LEHRER: You mean, the Congress objects to the idea of these Russian scientists coming over here and working for American companies?

SEN. RICHARD LUGAR: Well, people are more likely to work in Russia.

JIM LEHRER: For American companies.

SEN. RICHARD LUGAR: Exactly. All the Nunn-Lugar funds are controlled by American companies. I think we want to make that point because the congressional audit three or four times a year is very severe on this point.

JIM LEHRER: Mr. Bell, what is the evidence thus far that the kind of horror scenario that Mr. Lebed laid out today--in other words that these nuclear scientists could be hired by some rogue dictator and do what he said--is there any evidence of any of that going on right now?

ROBERT BELL, National Security Council: I don't think there's substantial, credible evidence, Jim, that scientists in large numbers are emigrating from Russia to go to work for dictators in rogue states. Of course, we have been working very closely with Russia to make sure that Russian enterprises, themselves, and in many cases are cash starved, don't contract with foreign companies to help in areas of proliferation concern, and we're going to continue to work with Russians to make sure that they observe their own non-proliferation export controls in that regard.

JIM LEHRER: Are you confident that the combination of the United States and Russia are on top of this thing, in other words, the recruitment problem that Mr. Lebed laid out today?

ROBERT BELL: I think we've worked very effectively with the Russians and particularly with the Congress, with Sen. Lugar and Sen. Nunn on this part of the Nunn-Lugar program. There are over 25,000 Russian scientists now engaged in almost a thousand different projects at a cost of about $500 million to keep them directly employed. Now, beyond that, we're planning new initiatives. In fact, at the recently completed conference between Vice President Gore and their prime minister, Mr. Chernomyrdin, we launched a new initiative to help their so-called nuclear cities do the same kinds of things we're doing in the cities where our nuclear laboratories are.

JIM LEHRER: What's a nuclear city?

ROBERT BELL: Well, R&I-16 is one example in Russia, which is similar in purpose to one of our nuclear labs like Los Alamos or Lawrence Livermore. And just as the Department of Energy's been very successful in helping those laboratories take on dual purposes and concentrate a good deal of their work on non-military research & development, so we will do this now, concentrating on nuclear cities in Russia to try to get more of their scientists engaged in this way. On other point, Jim, of course, and that's beyond that. If you can help Russia's economy improve generally and keep them on the course to free markets through our own assistance programs, the IMF, you're going to help keep scientists--

JIM LEHRER: More people.

ROBERT BELL: --engaged in Russia.

JIM LEHRER: Ms. Stern, how do you read the scientist problem?

JESSICA STERN, Former NSC Staff: Well, I think there's no question the programs that we have underway in Russia are doing a tremendous amount of good. And some of them are very, very exciting. For example, there are Russian scientists working at Harvard Medical School to develop the diphtheria vaccine. There's a program where U.S. and Russian scientists are working together to uneradiate milk from the Chernobyl disaster. But, in the end, there really isn't a whole lot we can do. Unfortunately, Min Adam has recently reported that workers are being paid on average 150 a month. Salaries are on average a month behind, and eventually someone may give in to temptation, and this is a very serious problem.

JIM LEHRER: So you think Lebed is on to something, right?

JESSICA STERN: Well, I am concerned. I am concerned.

JIM LEHRER: Senator, the other question--another issue that was raised to Mr. Lebed, and he had raised it earlier, in earlier comments, and that's the suitcase bombs. Give us some background. How many are there? How many are unaccounted for? Where do you think they are? And what should we worry about?

SEN. RICHARD LUGAR: General Lebed raised this question with Congressman Weldon last year, and it resulted in a flurry of activity trying to determine just that, but, Jim, there is no way of knowing exactly what these devices are, how many there are, and how many are unaccounted for. And I thought it was interesting that General Lebed today did not make allegations specifically about the accountability. Now, our programs--that is the Nunn-Lugar and the Department of Energy programs--really come down to trying to work with over 70 laboratories and facilities to get accountability. This is extremely important for the Russians and for us, that we know where it is and how much, and we're even working on computer systems to try and get a listing of where it all is, so that General Lebed, as well as ourselves, might have some idea how to answer your question.

JIM LEHRER: Ms. Stern, where do you think these--do you, first of all, believe that there are 100--what Mr. Lebed said a year ago was that there were 100 that were missing and then 48 were found, and there's been silence ever since. How do you-- what's your reading of that?

JESSICA STERN: Well, in fact, there hasn't been silence. Gen. Lebed has told a variety of stories; first, that 100 were perhaps missing. Later, he said that perhaps none were missing. Later, he seemed to be confused about the difference between atomic demolition munitions and artillery shells. And now he claims that perhaps, even if they're missing, they don't pose a threat. So it's really very, very hard to know what to think, but the very fact that we don't know what to think is the symptom of this problem. It is a very serious issue, the lack of security, both for warheads and materials.

JIM LEHRER: Suitcase bomb, is it literally the size of a suitcase?

JESSICA STERN: Yes, it could be.

JIM LEHRER: And it is--what were they developed for? Do we know? In other words, why did the Soviets develop these suitcase bombs?

JESSICA STERN: Well, at one point General Lebed said that they were sometimes used--there was an underwater version and a ground version; they could be used for blowing up a bridge, or possibly on the battlefield.

JIM LEHRER: But they were--were they used by--I read something that the KGB was even supposedly supposed to have some of these for what purposes?

JESSICA STERN: Well, I don't know the details, and the stories that have come out of Russia have changed over and over again, and unless the Russian government is forthcoming and tells us exactly what they were for, it's impossible for me to know.

JIM LEHRER: Mr. Bell, why won't they tell us?

ROBERT BELL: Well, their government has been quite clear in denying that any of these former devices are missing, but I think--

JIM LEHRER: Do you believe that?

ROBERT BELL: We do not have evidence that any of them are missing. And the fact that Mr. Lebed himself is now backing off that story I think tends to give some credence to what their government's been saying. But I sort of think the nuclear suitcase issue has been the functional equivalent of the asteroid story. I mean, it's something that captures public attention; it's a nightmare scenario.

JIM LEHRER: In other words, you mean people like me can understand a suitcase bomb.

ROBERT BELL: Well, Jim, I didn't say that. A larger issue has been not warheads per se, where we think they do have good accountability and certainly very strong controls. The concern, more broadly, has been with fissile material, highly enriched uranium, plutonium that was spread through many parts of the former Soviet Union. Now, there there's a good news story. There were 53 separate locations in the former Soviet Union where highly enriched uranium or plutonium was produced or stored. As of January, January this year, the Department of Energy now has programs of cooperation with all 53. These are programs for material protection, accountability, and control. And by the end of this year, we will have completed our protective upgrade programs at over half of those sites. We have about $800 million we're going to spend between now and the next five years to make sure that all fifty-three are upgraded to those levels of protection.

JIM LEHRER: Now, define protection in this context.

ROBERT BELL: Protection is a combination of things: better fences, sensors, locks, seals, ways to make sure that terrorists cannot get in and that people that are working in there cannot just walk off with the material and sell it.

JIM LEHRER: Ms. Stern, what do you think about the level of protection right now?

JESSICA STERN: The Department of Energy has made incredible strides in assisting, working together with the Russian government and Russian scientists at these facilities to upgrade security. It's astonishing. If you go and visit those facilities, it's very exciting to talk to the scientists to see how thrilled they are about the progress that they've made working together with Department of Energy Scientists. At the same time if a director of a facility decides that he wants to steal nuclear material, or if a corrupt government official decides that she wants to get in the business of selling nuclear material, no technology is going to prevent that. So there's really only so much that we can do. And we need to do more and expedite it. This, I think, is extremely important, but it is not enough.

JIM LEHRER: Senator, do you agree, not enough has yet been done on the protection issue?

SEN. RICHARD LUGAR: Of course, I agree. I wish that we had been able to accelerate the accounting process a lot more. It's one of these situations in which you have arguments as to whether ten or fifteen laboratories ought to be attacked almost on an annual basis when each one of them may have some dangers. But I see a lot of progress with the Department of Energy. I see a lot of possibilities for this year. The Russians are prepared to work with us on dismantling the warheads from SS-18's that have 10 warheads apiece.

JIM LEHRER: Those are missiles, right?

SEN. RICHARD LUGAR: That's right. And with the typhoon submarines, sort of very important breakthrough in terms of destruction of those weapons. In other words, it's up to the Congress how much we can do, but about $400 million has been appropriated regularly now for the last seven years, and I'm very hopeful that there will be strong support for the program this year.

JIM LEHRER: Well, Senator generally, on the question that most Americans care about as just an overview, are these what remains of the nuclear weapons systems and nuclear capabilities, et cetera, that still exist after the end of the Cold War on the Soviet side and the independent state side: are they--is the United States at risk in any way because of this, as we sit here now?

SEN. RICHARD LUGAR: Yes, of course, we are at risk. The arms control treaties have achieved a great deal, but we have not yet seen signature by the Russians on the START II Treaty that would bring us down roughly to 3500 warheads apiece. The 6000 level is where we're stuck, although the programs we've been talking about tonight may dip below that simply because the Russians, themselves, know it's every expensive to maintain these weapons. The dilemma is not that they are aimed at us, but that the security around the weapons, the maintenance of them, these are dangerous prospects with people as we've already described today who are often are underpaid or not paid at all in a country in which the central government may not have the control that we have become accustomed in our country. So all these dictate very prudent, timely, and I would hope accelerated action.

JIM LEHRER: Mr. Bell, how would you assess the risk to the United States from what's left over there?

ROBERT BELL: I agree with Senator Lugar in terms of a deliberate missile strike or an unauthorized or accidental missile strike tonight or tomorrow. It's inconceivable. In fact, while we sit here right now the commander in chief of the Russian strategic rocket forces is being shown around the United States by the commander-in-chief of our strategic forces. And tomorrow he's going to be in Cheyenne Mountain looking at all of our warning systems. So we're in an extraordinary degree of partnership with the Russians at that level. The danger and the risk is in the area of fissile material and the need to complete the task of getting that all under control and the know-how, the brains of the people that know how to do this, making sure they remain productively employed in Russia.

JIM LEHRER: And your risk assessment?

JESSICA STERN: I would agree with Senator Lugar. I think this is-- we're much more threatened right now by Russia's weakness ironically than by its strength, and the first order of business is to expedite that program to secure the nuclear materials and also to expedite the program to assist Russia in securing its warheads, particularly in transit.

JIM LEHRER: Okay. Ms. Stern, gentlemen, thank you.

JIM LEHRER: Still to come on the NewsHour tonight, teaching reading and the comeback of Continental Airlines. FOCUS - RETHINKING READING

JIM LEHRER: How should weteach children to read? Phil Ponce has the story.

TEACHER: We're going to write as many words in 10 minutes as you can come up with that have the "t" sound, the letter "t."

PHIL PONCE: A pane of reading experts weighed in yesterday on a decade-long debate over the best way to teach children to read. At issue were two different methods: first, the old-fashioned way, phonics. It teaches children to sound out letters to make words. For example, using the letters "p" and "h" together make the sound of the letter "f," as in the word "graph." The second newer method is called whole language. Children learn to recognize words based on their context. Take the word "spring" as in "I met Johnny at the spring," or "The flowers bloom in the spring." Two different meanings, depending on the context. The whole language method calls on teachers to read to their students, have the students read out loud, predict what will happen next in a story, and even make up spellings for their words as they start to write their own stories. The report presented yesterday by the National Research Council recommended that educators use elements of both methods to teach reading. All across America, state legislatures have entered the debate on how best to teach reading. In California, a 1986 law mandated the whole language method. But the state reversed its decision in the 90's and now calls for using the phonics method instead. Many other states, including Arizona, Washington, and Maryland, also have passed laws endorsing phonics to teach reading.

PHIL PONCE: For more on this we turn to Catherine Snow, chair of the panel of education experts that authored the new study. She's a professor at the Harvard School of Education. And welcome, Professor Snow. Before we get to your findings, could you just give us a brief argument as to--on the respective sides, both for phonics and whole language, as--what the supporters would say, why that method was the best.

CATHERINE SNOW, Harvard University: Well, you're asking me to speak for two different groups of people. I'll do the best I can, and I hope I don't misrepresent either of their positions. People who adopt a whole language approach would argue that reading is a developmental process, that it develops naturally in literate environments, and that if children are surrounded by books and surrounded by adults who engage in lots of reading with them and to them that they will discover the principles underlying the relationship between sounds and words. Defenders of the phonics approach, on the other hand, would argue that it speeds up the process of learning to read to point out to children explicitly what the nature of the letter/sound relationship is, how letters relate to sounds, and to give children opportunities to practice some of the complexities of English spelling.

PHIL PONCE: So, Professor, what were your findings?

CATHERINE SNOW: The findings of the committee were that, first of all, it doesn't make a lot of sense to characterize reading instruction in terms of this opposition between phonics and whole language. We hope that our report will be a step forward beyond the conflicts. We've seen this sort of pendulum swing back and forth that you talked about in the tape. The pendulum swing back and forth is not the direction we want to go. We really want to move forward. And in order to move forward we need a consensus on some basic principles for what constitutes good reading instruction.

PHIL PONCE: And what are those--

CATHERINE SNOW: Principles that everybody can sign on with.

PHIL PONCE: And those basic principles are--

CATHERINE SNOW: Those basic principles are that children need to understand that reading is about meaning, that reading is about getting message from text. They need to understand that those messages are conveyed through a fairly complex system of representing sounds through letters, and they need lots of practice because good reading, reading with comprehension, relies on fluency. And there's no way to achieve fluency in reading without having had lots and lots of opportunities to practice reading.

PHIL PONCE: So in plain language, are you saying that the approach now is to go back to the alphabet and to figure out what--how each letter sounds and use that as the basis?

CATHERINE SNOW: The alphabetic principle is the basis of the English writing system, and it's crucial that children understand the alphabetic principle if they're going to be readers of English. At the same time getting meaning out of text is crucial to any writing system, and clearly children have to understand that what they're reading makes sense, that they are meant to be comprehending it.

PHIL PONCE: So when you talk about the alphabet, that's from the phonics school, if you want to put it that way. If you talk about the meaning, that's more in the whole language school. How do you know which approach to use at what time?

CATHERINE SNOW: We argue that a good coherent reading instruction program will integrate an appropriate level of emphasis on the alphabetic principle, on comprehension, reading for meaning, and on providing opportunities for practice. These are--they're like three sides of a triangle, and if you can create this triangular column, then we've got a good basis for ensuring that children know how to read.

PHIL PONCE: So, Professor, in plain language, if you're explaining this to a parent, to a mom or a dad, as to how you're going to teach his or her daughter to read, if you're describing sort of like a basic lesson plan for the first few years, what would that lesson plan look like?

CATHERINE SNOW: Well, the lesson plan would be if it were advice I was giving, as to whether--whether your child is in a good first grade or second grade classroom, I'd say, well, talk to the teacher and find out whether there are lots of books around that the child is being encouraged to read for fun, for practice. Make sure that the teacher is pointing out ways of comprehending the meaning in text, strategies. Is the teacher stopping children who are reading and saying, what was that paragraph about, what was the point of this story, and is--does the child have the opportunity to learn what sounds represented by different letters and how English is spelled conventionally?

PHIL PONCE: And speaking of conventional spelling in the "whole language" approach, that was not a big deal in the early stages of teaching somebody to read, but now you're saying, what, that should get more emphasis?

CATHERINE SNOW: The report actually suggests that invented spelling, as it's called, letting children write using their own spellings, is a very good method, that it's a method that should be encouraged in kindergarten and first grade classrooms and beyond that as well to the extent that children haven't acquired a knowledge of conventional spellings. It's a very good method in part because it helps children discover the alphabetic principle by trying to listen carefully to words. They hear the facts that words can be broken down into smaller segments, and those are the segments that are represented by letters.

PHIL PONCE: And yet the report talks about theimportance of being able to spell "correctly."

CATHERINE SNOW: And invented spelling is not in any sense in conflict with conventional spelling. It's perfectly possible to let a child write his own messages or her own messages using invented spelling and at the same time to show the child what the conventional way of spelling some of those words would be.

PHIL PONCE: Professor, how severe was this so- called "reading war?" How much of a schism was there between the two camps?

CATHERINE SNOW: I think the reading war was quite severe. I think a lot of energy has been wasted in talking at the level of ideology and that that energy could better be focused now on recognizing that we need a consensual understanding of how to teach children to read, so that we can move forward. We need to acknowledge that there is a body of-- there's a body of science here. There is real research. We have the findings. We have findings that everybody from different perspectives can agree on are important and relevant to understanding reading development. So now the problem is to make sure that the most important people in this process, the primary teachers who have the heavy responsibility of teaching children to read, understand that work, that they are skilled enough in practice and sophisticated enough in their understanding that they can use it in their classrooms.

PHIL PONCE: Professor Snow, my understanding is that most recent graduates, speaking of teachers, have been taught in the whole language approach. How are they going to make the shift to teach this more sort of hybrid, integrated approach?

CATHERINE SNOW: The report makes a number of recommendations about the content of teacher education programs, how that should be enhanced, what we want to be sure that teachers are having a chance to learn in their pre-service certification programs, but also it makes a strong recommendation for ongoing support to teachers in the schools for continuing professional development. Going through a teacher certification program can at best produce really good novices. You really learn how to teach by teaching, and thus, teachers entering first and second and third grade classrooms need professional support from mentor teachers; they need reading specialists in their schools, people who are more advanced in their knowledge of this complex, complex topic. The thing about reading is it's really not--it's not that simple. For those of us who have been doing it for many years it seems simple, but for the child learning how to do it, it's a very complex process, and there are many different factors that have an impact on how it--how it happens.

PHIL PONCE: Professor Snow, thank you very much for joining us.

CATHERINE SNOW: Thank you. FOCUS - FLYING HIGH

JIM LEHRER: Finally tonight, Continental Airlines' big turnaround. Tom Bearden reports.

TOM BEARDEN: It's fun for Continental Airlines' CEO Gordon Bethune to make the rounds at Houston's George Bush Intercontinental Airport, which is something he does on a regular basis.

GORDON BETHUNE, Chief Executive Officer, Continental Airlines: How are you?

EMPLOYEE: This is my first day of being a supervisor out here.

GORDON BETHUNE: Are you? Cool, absolutely.

TOM BEARDEN: It's not just employees who clamor to shake his hand; so do customers.

WOMAN: I have truly seen this airline turn around, people's enthusiasm and pride in who they work for, and I really believe you're the cause, and I just--

GORDON BETHUNE: Well, with a good team effort, but thanks for sticking with us.

TOM BEARDEN: It's a radical turnaround for a company whose employees not long ago were ashamed to admit they worked there. Back in the 1980's Frank Lorenzo ran Continental. He'd taken over what had been known as a Tiffany airline with one of the best service reputations in the industry but was teetering on the brink of financial ruin. Continental had high labor costs and couldn't compete with the very low-cost discount airlines that sprang up after the industry was deregulated and ticket prices could be changed without government approval. Lorenzo's solution was to make every possible effort to reduce costs. He moved to cut wages. The unions went on strike. Lorenzo declared bankruptcy and abrogated all the union contracts. He explained the strategy in this 1988 NewsHour interview.

FRANK LORENZO, Former Chief Executive Officer: [1988] We were small, a small company. We did not have markets. We did not have any market share. We certainly didn't have any profitability, and we really were trying to give the consumer some real value. And that's what it was all about.

TOM BEARDEN: To some, Lorenzo was Continental's savior. To industry analysts he was a visionary, a man creating the model for airline operations in the post-deregulation era. To the unions he was a demon. Carla Winkler was a union flight attendant back then.

CARLA WINKLER, Flight Attendant: When you went to work for Frank Lorenzo, there was no compassion. The employees, they were a commodity like a file cabinet, like a desk, or a chair. They just moved the pieces around, and you weren't to have any feelings, or they didn't care if you liked the job.

FRANK LORENZO: [1988] Most people that know me would hardly think I'm cold, and my record has shown we look for a lot more than the bottom line.

TOM BEARDEN: Eventually, Lorenzo built what was briefly the largest airline company in the free world. He merged New York Air, People Express, Frontier, and Texas International into Continental and acquired bankrupt Eastern Airlines. But the relentless pursuit of ever lower labor costs proved disastrous. Continental plummeted to the bottom of everyone's list, the worst airline for lost baggage, late departures, and most customer complaints. The product was cheap, but so bad that nobody wanted to buy it. Lorenzo left Continental just months before the company declared a second bankruptcy in 1990. When Bethune was hired in 1994, a third bankruptcy was imminent.

GORDON BETHUNE: It was the most difficult place I've ever come in my life.

TOM BEARDEN: What made it difficult?

GORDON BETHUNE: Well, I think it's the value system that was in place, the over kind of focus on lowest cost is the way to win, when it certainly hadn't won in 10 years. Obviously, it had the makings of a good company, but it was what you'd have to characterize as dysfunctional.

TOM BEARDEN: Bethune hired 33-year-old Greg Brenneman as chief operating officer. Brenneman says it was pretty obvious to both men what had destroyed Continental.

GREG BRENNEMAN, Chief Operating Officer, Continental Airlines: People were focused on pitting the pilots against the mechanics and the gate agents against the flight attendants to see if you could beat down labor costs by getting them fighting with one another. And, of course, this is the biggest team sport in the world. You have to get everybody working together.

TOM BEARDEN: Bethune and Brenneman tried several strategies to try to get people to work together. For example, Continental was spending about $6 million a month rebooking passengers on other airlines because their flights had arrived too late to make connections. In January of 1995, Bethune decided he would pay each employee $65 every time Continental placed among the top five airlines in the Transportation Department's monthly on-time performance rating. A month later, Continental had moved from last place to fourth. The following month it ranked first. And the cost of the bonuses was more than offset by the reduction in payments to other airlines.

GORDON BETHUNE: 65 bucks was a nice way of saying thank you to a bunch of people who learned that the only way to get the 65 bucks is when they all work together. And it's been working for us ever since. It's not a lot, but it doesn't sometimes take a lot to show that this is like an appreciative change in the way we behave.

TOM BEARDEN: Continental also started holding drawings to give vehicles to people who had perfect attendance for the previous six months. And for the past two years employees have gotten a profit sharing check and a party to celebrate the company's reversal of fortune. Last year, Continental reported record profits of $640 million. The high paying business travelers have come back. The airline is winning awards for customer service, including two consecutive J.D. Power awards.

EMPLOYEE: [on phone] Okay. Again, thank you very much. Have a good day.

TOM BEARDEN: And Continental is now consistently among the top three airlines on the Department of Transportation's ranking for on-time performance and customer satisfaction. Judy Mensinger has worked for Continental for 11 years. She's now the director of customer relations.

JUDY MENSINGER, Customer Service Director: The realization is finally that you don't have a positive bottom line unless you have happy employees who do enjoy coming to work and who will take good care of our customers.

TOM BEARDEN: Now, Continental is embarking on a new business strategy that many analysts believe will be the model for airline operations in the 21st century. The airline is entering into a partnership with Minneapolis-based Northwest Airlines. The companies will code share, that is, a passenger would buy a ticket from Continental, but part of the route might actually be flown by Northwest. Code-sharing allows airlines to offer service to more destinations by connecting passengers to their partner airline, theoretically attracting more business for both. Bethune believes the alliance will avoid the serious problems that have arisen in the past when airlines have merged in order to create larger route structures. But some observers are skeptical. Airline analyst Paul Stephen Dempsey says the alliance with Northwest could bring about some of the same kinds of problems that arose when Lorenzo merged all those airlines back in the 80's.

PAUL STEPHEN DEMPSEY, Airline Analyst: And the difficulty that you have is two corporate cultures, one of which Continental is a very high service carrier. The other, Northwest, is deteriorated in terms of service levels in recent years. Trying to put those companies together and integrate their operations is very difficult without a command structure model. This is going to be a cooperative model. They're going to ask each company to come together and try to cooperate. It's very difficult to do.

TOM BEARDEN: But Brenneman argues the new alliance will do good for everyone.

GREG BRENNEMAN: I think it is a new paradigm in that we figured out a way to get the scale of putting a couple of big companies together in a way that's beneficial to consumers because you can use your frequent flier miles in more places and earn 'em more places, and you justhave more options as a customer.

TOM BEARDEN: Dempsey agrees code sharing probably is the wave of the future. But he says it won't be good for customers.

PAUL STEPHEN DEMPSEY: For the life of me I can't understand why the Department of Transportation is so enthused with this notion that airlines should not compete; that they should cooperate. I don't think that that's in the best long-term interest of the consumer. But, nonetheless, this is the track we're on; this is the way the game is being played. And, yes, we will have these massive alliances spread with its tentacles--with their tentacles reaching around the globe.

TOM BEARDEN: The pilots, again unionized, also have some doubts.

PILOT: I think that's what a lot of people don't understand, is that this is our careers.

TOM BEARDEN: Continental's pilots staged informational picketing at various airports to draw public attention to their concerns about the alliance. They're suspicious it would jeopardize their job security and that a true merger is really in the works. Bethune adamantly denies that. Union President Captain Len Nikolai says pilots are worried that Northwest would get most of the new routes, leaving Continental pilots with fewer job opportunities.

LEN NIKOLAI, President, Pilots' Union: If they really want this pilot group, this employee group, to buy off onto this transaction, they need to provide us with the information we need to make decisions about our careers. And if they won't share that information with us, that raises doubts. That raises suspicions. And they have nobody to blame but themselves.

TOM BEARDEN: But Bethune was apparently successful in allaying those suspicions. The pilots reached a tentative agreement on a new contract on February 24th. But a final agreement is expected until the end of April. For all of the good news, Bethune says the airline isn't entirely out of the woods yet. He acknowledges the company needs to lower its debt levels and reduce interest payments on loans and aircraft leases. Meanwhile, the entire airline industry is racking up record profits, thanks to the booming economy. Bethune says he isn't worried about an economic downturn pushing Continental to the edge of insolvency, as has happened many times over the past 20 years. This once nearly deadbeat airline now has a billion dollars in the bank. RECAP

JIM LEHRER: Again, the major stories of this Thursday, an independent counsel was named to investigate Interior Secretary Bruce Babbitt, Agriculture Secretary Dan Glickman announced a new way to eliminate salmonella in chickens, and a new report said violent crime occurred in one in ten American schools last year. We'll see you on-line and again here tomorrow evening with Shields & Gigot, among others. I'm Jim Lehrer. Thank you and good night.