The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight a summary of the news, the latest on the growing eruption over Senate Republican Leader Trent Lott's Strom Thurmond comments, some perspective on what the new Bush economic team means for policy, and a debate about a new approach to fighting fires in national forests.

NEWS SUMMARY

JIM LEHRER: President Bush rebuked Senate Republican leader Trent Lott today. It was the latest development in a storm that started last week. That's when Lott said the country would have been better off supporting Strom Thurmond for President in 1948. Thurmond ran as a segregationist. Today in Philadelphia, Mr. Bush told a multiracial audience any such talk was offensive.

PRESIDENT GEORGE W. BUSH: Recent comments by Senator Lott do not reflect the spirit of our country. (Applause) He has apologized, and rightly so. Every day our nation was segregated was a day that America was unfaithful to our founding ideals.

JIM LEHRER: Lott had already apologized twice for his comments. Today, his office issued a statement saying he agrees with the President, went on to say he repudiates segregation because it is immoral. We'll have more onthis story in a moment. The President advanced key pieces of his faith-based initiative today. He signed executive orders to give religious groups a role in government programs for the needy. Religious charities will be allowed to compete for federal grant money, and they can be awarded government contracts even if they refuse to hire people of other faiths. The measures had bogged down in Congress over questions about the separation of church and state. As executive orders, the new rules are subject to being rescinded by future Presidents. Wall Street investment banker Steven Friedman will head the National Economic Council. The President announced that today. Friedman is a former co-chair of the investment firm Goldman Sachs. He'll replace Larry Lindsey who was ousted in a shake-up of the Bush economic team last week. We'll have more on the President's team and his economic policy later in the program. On Wall Street today, the Dow Jones Industrial Average lost more than 50 points to close at 8538. The NASDAQ was up about three points, closing at more than 1399. Militants linked to al-Qaida may have gotten nerve gas from Iraq. The "Washington Post" reported that today. It said U.S. officials had credible information that the transaction took place in late October or in November. Today, in the Persian Gulf region, U.S. Defense Secretary Rumsfeld would not directly confirm the account, but on ABC, he said, "it's clear terrorist states have such weapons and might be willing to share them."

DONALD RUMSFELD: We also know for sure that al-Qaida and other terrorist networks have had an appetite to get their hands on chemical and biological weapons. So it certainly comes as... should come as no surprise to anybody that that possibility is being reported on.

JIM LEHRER: In Baghdad, the Iraqi general who deals with UN weapons inspectors dismissed the report.

SPOKESMAN: This is really an assumption from the American administration. And because they know us very well, that we have no prohibited material or no prohibited activities.

JIM LEHRER: Across Iraq today, UN inspectors visited seven more sites. One was a plant that once made Scud-type missiles. North Korea announced today it will reactivate an old nuclear plant. The United States has said the site was used for nuclear weapons research in the past. The North said it needed the plant to generate power because the U.S. has cut off fuel oil shipments. That happened after the Communist state acknowledged it was again working on nuclear arms. A White House spokesman called today's announcement "regrettable." New smallpox vaccinations will be available to Americans, starting next month. It was widely reported today that President Bush plans to make the announcement tomorrow. The shots will be mandatory for some military personnel, and recommended for hospital and emergency workers. The general public will be offered the vaccine on a voluntary basis, probably in 2004. A federal regulatory judge found today that California was overcharged by $1.8 billion during a power crisis in 2000 and 2001. That was far less than the state wanted. The judge also ruled California still owes $3 billion in unpaid power bills. The findings now go to the Federal Energy Regulatory Commission. Its decision is due next year. And that's it for the News Summary tonight. Now it's on to the Lott firestorm, the new Bush economic team, and preventing fires in national forests.

FOCUS UNDER FIRE

JIM LEHRER: Kwame Holman begins our Lott coverage.

KWAME HOLMAN: Mississippi's Trent Lott was all smiles last Thursday as he told stories and delivered jokes at a celebration honoring 100-year-old Strom Thurmond, the retiring Republican Senator from South Carolina. However, one remark Senator Lott made has exploded into questions and concerns over his racial sensitivities, and whether he is fit to serve as the new Senate Majority Leader.

SEN. TRENT LOTT: I want to say this about my state. When Strom Thurmond ran for President, we voted for him. We're proud of it. (Applause) And if the rest of the country had followed our lead, we wouldn't have had all these problems over all these years, either.

KWAME HOLMAN: Strom Thurmond made his run for President in 1948 as a strict segregationist. A handful of media organizations picked up on Lott's remark, prompting a series of written explanations from the Senator. On Sunday, Lott said: "This was a light-hearted celebration of the 100th birthday of legendary Senator Strom Thurmond. My comments were not an endorsement of his positions of over 50 years ago but of the man and his life."

By Monday, a second statement: "A poor choice of words conveyed to some the impression that I embrace the discarded policies of the past. Nothing could be further from the truth .And I apologize to anyone who was offended by my statement."

However, Lott's written statements didn't satisfy his critics. Members of the Congressional Black Caucus, together on Tuesday to elect new leadership, were incensed by Lott's remarks at Senator Thurmond's birthday party. Elijah Cummings of Maryland is the incoming chairman of the Black Caucus.

REP. ELIJAH CUMMINGS (D) Maryland: It sends a chilling message to all people, and I would... you know, if you think about post-9/11, we talked about bringing this nation together. And those are the kinds of words that tear this nation apart.

KWAME HOLMAN: At least one member of the Black Caucus suggested Lott should resign. Nancy Pelosi, the new House Minority Leader, was asked if she agreed.

REP. NANCY PELOSI: I'm not going to speak to the resignation. I understand that Senator Lott has made an apology. And he can apologize all he wants; it doesn't remove the sentiment that escaped his mouth that day at that party. And I find it something that is unacceptable. I don't know what the remedy is to it, but I do know what Senator Lott said -- I know that it was completely inappropriate. I don't know if any apology is adequate.

KWAME HOLMAN: Senate Democratic Leader Tom Daschle on Monday said he believed Lott's comments had been misinterpreted, but yesterday asked if Lott "did not mean to endorse segregation, what did he mean?" Trent Lott apologized again yesterday, this time by telephone, on a Fox News Channel program.

SEN. TRENT LOTT: I apologize for the words, and I'm sorry that I used words that were insensitive, and it conveyed, you know, an impression that is not an accurate one. So, I think I... once again, I'm saying now that it was not intended just to say, "I'm sorry if you didn't like it." I... you know, I regret it.

KWAME HOLMAN: However, Lott's troubles have been compounded by the discovery of a statement he made in 1980. As a young Congressman, Lott appeared at a campaign rally in Mississippi, again with Strom Thurmond, and said: "You know, if we had elected this man 30 years ago, we wouldn't be in the mess we are today." During a speech before a largely black audience in Philadelphia today, President Bush finally weighed in with his thoughts on the controversy.

PRESIDENT GEORGE W. BUSH: Any suggestion that the segregated past was acceptable or positive is offensive, and it iswrong. (Applause) Recent comments... recent comments by Senator Lott do not reflect the spirit of our country. (Applause) He has apologized, and rightly so. Every day our nation was segregated was a day that America was unfaithful to our founding ideals. (Applause) And the founding ideals of our nation, and, in fact, the founding ideals of the political party I represent was -- and remains today -- the equal dignity and equal rights of every American. (Applause) And this is the principle that guides my administration. We will not and we must not rest until every person of every race believes in the promise of America.

KWAME HOLMAN: The President has not asked Trent Lott to resign; neither have any Republican Senators. However, very few of them have been outspoken in their support, and a number of newspaper editorials now question Lott's ability to lead the Senate and have urged him to step down. It's not clear when Trent Lott will speak publicly again. His office says he's on vacation.

JIM LEHRER: Now to two political reporters who have been covering the story: Thomas Edsall of the "Washington Post," and Adam Nagourney of the "New York Times." For the record, Senator Lott declined our invitation to appear tonight.

Tom Edsall, what does your reporting say about the how the Republican Senators are backing Senator Lott at this point in time?

THOMAS EDSALL: Well, the Republican Senators are in the whole are just holding their own fire. They're somewhat loyal to Lott. Where Lott's real problems are is that the Senate staff-- and that's not an insignificant group-- many of them, Senate Republican staff, are beginning to turn against him and see him as a real liability. And secondly, another group that's very important to him is the whole conservative opinion leader, commentator, editorial writing community from the "Wall Street Journal" to his own home town newspaper, to many from Thomas Soul. There are a lot of people who are being very critical and very sharply critical of him. And these are people right out of his own base. That's a serious problem.

JIM LEHRER: Charles Krauthammer was one today. Weighed in on the op/ed page of your own newspaper.

THOMAS EDSALL: He did.

JIM LEHRER: A conservative paper. But back to the Senators, we couldn't get any of them to come on this program tonight, in fact, to defend Trent Lott. Are they saying some things privately that they're not saying publicly? What is the state of play?

THOMAS EDSALL: They are saying it publicly by not coming on. They do not want to get into this mess at this point. It's a signal, if Lott is not getting strong support, verbal, public commitments going on TV from his own people, he has a problem that he has to seriously address, and this thing may be more difficult than he has anticipated, or we in the media assessed.

JIM LEHRER: You mentioned the Senate staff, the Senate Republican staff. Why are they important in this? How are they... how is their view being reflected and being taken at this point?

THOMAS EDSALL: I missed the beginning of

JIM LEHRER: I'm sorry. Just why is it that important? Give us a feel for why that's important.

THOMAS EDSALL: Senator Lott is just coming in as returning to the position of Senate Majority Leader after having been out during the time when Senator Daschle and the Democrats controlled. He never was really a very popular figure. His leadership was supported, but it was not very enthusiastically supported. The White House likes him, but they don't love him. He does not have that kind of core backing from either people who aren't totally politically tied to him or who he has done favors that have won their hearts. So he's a fragile situation. Secondly, the Republican Party is on the verge-- they want to build on this last election and really go forward. And the last thing in the world they want is to have to deal with issues where the Republican Party is once again being accused of being the party of racism, the segregated South. This is not just harmful in the black community; this has already proven handful in the Hispanic community, it hurts among suburban voters, professional voters. It just is a... it's awful for a Republican Party that now senses a majority this far away.

JIM LEHRER: Adam Nagourney, what can you tell us about what led to President Bush's strong statement today?

ADAM NAGOURNEY: There was a sense over the past couple of days that this was not going away. If you watched the White House over the first two days, they were restrained in their condemnation of Mr. Lott. They basically said they accepted his remarks at face value and the contrast with what the President said today was pretty startling. I think one result, just adding to go what Tom was saying, I think that one result of what the President said today is that it's going to give some cover to Republican Senators, should they want it, to come out and be more critical of Senator McCain...

JIM LEHRER: Senator Lott.

ADAM NAGOURNEY: Excuse me. Senator Lott. In fact Senator McCain being an example of what I am talking about he was called this afternoon Senator Lott to go out and do a news conference. So I think that could have an effect on it. I think that in a strange way, Mr. Bush's remarks could undercut Mr. Lott's position even more, to tell you the truth.

JIM LEHRER: Even though the President stopped short of saying that... in fact and then Ari Fleischer said, no, the President wasn't calling for his resignation or not calling for him not to be Majority Leader, but just the fact that of his condemnation, you think, could unsettle everybody?

ADAM NAGOURNEY: Yeah, I mean it makes it like... if you're a member... they're coming to the point, these guys aren't coming on your show or other shows, as far as I know to defend him. But at the same time they have not been going out to criticize him because most sane human beings don't go out and trash their boss in public; you just don't do that. But if you have the President of the United States doing, that it's easy to do. So I think what happens over the next couple of days, or the next day really is going to be really interesting here.

JIM LEHRER: Do you agree with what Tom said, though, that there is not that kind of general support for Senator Lott within the Bush administration, never has been?

ADAM NAGOURNEY: Well, that's why I'm raising this... I mean, I don't want to overanalyze or suggest maybe more intelligence there. Who knows? But if you take the premise that the President, President Bush and the people around him have never loved Trent Lott and would not be particularly upset at getting him out of there, and you take the premise that Democrats I think would ultimately like to keep Trent Lott in there, no matter what they're saying now because he's a good target, then maybe what the President's doing here, which you know, puts him out in front of the issue that he wants to be out front of, re-enforces his attempt to sort of present the party as a different Republican Party than maybe we remember growing up, and then criticizes him, making it easier for other Republicans to criticize him, might have the net result of sort of making it easier for Trent Lott to go. I just suggest it out there. I'm not sure they are that smart but...

JIM LEHRER: Okay, I hear you. I take it... to take it the next step, if in fact the end result of this is Trent Lott stepping aside as Majority Leader of the United States Senate, then President Bush could correctly take credit for that having happened? Is that what you're saying?

ADAM NAGOURNEY: Yeah. And plus, he's positioned himself on the side of the angels here. I mean to me, civil rights is one of the few issues in this country where, like, there is a clear right and there's a clear wrong. I mean we debate about all kinds of stuff, but I think generally that's one thing where there's... most people don't think there's two sides. It's hard to find people now who will argue that it's, you know, appropriate to have Jim Crowe laws or laws that discriminate against people, against blacks.

JIM LEHRER: I want to ask both of you, starting with you, Tom Edsall, as Kwame pointed out in the piece, this story had kind of a slow start. It was several days ago that Trent Lott said this. There was very little reaction from Democrats, Tom Daschle said it was okay and then the press, we didn't cover the story very extensively at all. What happened? What caused the slowness? And then what caused it to build?

THOMAS EDSALL: I hate to claim credit for my paper, but we...

JIM LEHRER: That's quite all right, Tom.

THOMAS EDSALL: ...We ran a story a day late, but we did run a substantial story, and I... that really is what got it rolling. And it was a slow roll.

JIM LEHRER: Why? Why was it so slow? Why didn't it catch on?

THOMAS EDSALL: I think people, including editors and reporters, are reluctant to get into these issues in an aggressive fashion. But once they do it, turns out to have a lot of consequence and result. And the echo effect having -- now receiving it, is pretty profound and significant. Let me add one other thing I thought one thing that, in addition to the damage that Bush inflicted on Lott by his basically condemnation of Lott's statement, Bush's own forthright statement in support of equality -- civil rights, really was sort of a backhanded slap. That is just what Trent Lott and his... in his two appearances so far, has not done. He has not done that on "Larry King" and he did not do it on Fox News, making a really positive affirmative statement in the way that Bush did and that the way Bush did and it resonated with the audience there, so that there is a lot to go here. But in terms of the media, I don't know.

JIM LEHRER: Adam Nagourney, how do you feel about how the... how do you analyze the pace of this story?

ADAM NAGOURNEY: I would say, a couple of things: First of all, I'm not going to get too much into this for obvious reasons, but I think there's a great media story to be here, actually, a specific story. I think that newspapers in general are reluctant to sort of carry the banner on stories when you're sort of driving it. We can argue about whether that's right or not, and reporters are I think wary or I would argue should be, of gaffe or gotcha stories. I do not think this is a gaffe or gotcha story, but at first until you saw the video, you couldn't be sure. And I think that often these stories are driven-- and I think Tom's right I think it's because the Post-did this on Saturday -- helped drive this along-- often these stories are driven by Democrats, or the opposition. Democrats are reaching and they're making an argument Al Gore has for one and I think President Clinton did up in New York the other day, that Republicans are very good at sort of driving these negative stories involving Democrats. I would argue Democrats are not anywhere near as good as Republicans at this. And I think that one of the prime examples was Tom Daschle. You know, Senator Daschle's initial response to this and you go back and look at his initial response to this compared to what he's saying now and compared to what most people are saying now is pretty startling.

JIM LEHRER: Yeah, Daschle said, "Well, I've talked to Senator Lott and I understand why he said it and let's move on" essentially --

ADAM NAGOURNEY: Absolutely. He's more apologizing, more apologizing for him than people in his own conference are today. I mean that says a lot, I think.

JIM LEHRER: What's your gut tell you? This story still has some life to it.

ADAM NAGOURNEY: My gut says absolutely yes. My gut says the story is going to keep going for a little while at least because... the reason is it feels real. I mean you know, I do think a lot of times we in Washington, reporters, get hooked up on you know, silly ridiculous stories, just you know, that's the way the world is these days. But I think one is about real events and it's coming when the Senate is about to, you know, choose its new Majority Leader and as Republicans are about to take control in Washington and I think it's a legitimate story.

JIM LEHRER: Tom, do you feel it's still got some life to it?

THOMAS EDSALL: I think it's got more than life. I think what you've got here is not just these two comments that Senator Lott had to say, but there is a whole history of his actions and votes and dealings on racial issues, some of which have come to light already in the past, more of which are already coming out. "Time" Magazine has a scoop on this thing coming later that's already out on their web site.

JIM LEHRER: That has to do with Senator Lott's leadership in the '60s to keep a particular fraternity segregated, right?

THOMAS EDSALL: Yeah, his own fraternity.

JIM LEHRER: But a lot of stuff still to come?

THOMAS EDSALL: Yes.

JIM LEHRER: Well, gentlemen, thank you both very much.

ADAM NAGOURNEY: Thank you.

FOCUS ECONOMIC PICKS

JIM LEHRER: Still to come on the NewsHour tonight, the new Bush economic team, and preventing fires in national forests. Ray Suarez has the economic story.

RAY SUAREZ: President Bush filled the last vacancy on his economic team late this afternoon, naming Wall Street investment banker Stephen Friedman as his top economic adviser. Friedman replaces ousted National Economic Council Chief Lawrence Lindsey, who was pressured to resign last week, along with Treasury Secretary Paul O'Neill. 64-year-old Stephen Friedman is currently a senior principal at Marsh McLennan Capital. He's also a limited partner at banking giant Goldman Sachs, where he served as chairman for much of the '90s early on with former Treasury Secretary Robert Rubin. Friedman serves on several orate boards, including Wal-mart and Fannie Mae.

PRESIDENT GEORGE W. BUSH: I selected Steve for his wide experience and steady and sound judgment. He understands the free enterprise system. He knows how the economy works, and he shares my objective for stronger economic growth, high standards of corporate integrity, more small businesses across our nation, and greater trade across the world. I will work with Steve and others on a growth and jobs package that we will present to the new Congress. In order to continue our economic recovery, we will propose further steps to add new jobs, reduce the burden on our taxpayers, and to strengthen investor confidence.

RAY SUAREZ: Friedman said he was looking forward to working with the other members of the Bush economic team.

STEPHEN FRIEDMAN: I look forward to working with them to achieve the goals of greater growth in the American economy and more jobs for the American people. As you've said, growth has returned to the American economy. We must increase the momentum of the recovery. Your administration entered office facing a recession. Your economic policies helped make it one of the shortest on record. Still, we must address pressure on family budgets and savings, the need to create more jobs, slow growth in our overseas export markets, and disappointing business investment. Faced with these challenges, I strongly share your conviction, sir, that now is the time for a robust growth and jobs policy. I also share your great confidence in the energy, the resilience and the creativity of American workers and businesses. Now is the time to help them achieve their full potential.

RAY SUAREZ: Earlier this week, the President tapped railroad executive John Snow as Treasury Secretary to replace Paul O'Neill; and William Donaldson, founder of a major investment firm, was chosen to succeed Harvey Pitt as chairman of the Securities and Exchange Commission, that resigned under fire on election day. Unlike those of Snow and Donaldson, Friedman's appointment does not require Senate approval.

RAY SUAREZ: Now, an assessment of the new economic team. We're joined by John Castellani, President of the Business Roundtable, an association of chief executive officers of leading U.S. companies; Nell Minow, editor of the Corporate Library, a web site devoted to corporate governance issues; and Ken Kies, managing director of the federal policy group of Clark/Bardes Consulting, where he provides tax policy advice to companies and trade associations. And Jeff Madrick, a contributing economics columnist for the "New York Times" and author of a new book, "Why Economies Grow."

Ken Kies, last week when Paul O'Neil and Larry Lindsey left, it was said that the Bush administration wanted people who would be better -- better representatives, for their economic policies. Is this new team of Friedman, Donaldson and Snow what they need?

KEN KIES: I think it's a great set of people. John Snow has got great relationships with the Congress. I think one of the weaknesses of Paul O'Neil was his ability to deal with the Congress wasn't that strong. The President has some really significant initiatives that the Congress is going to have to consider, stimulus bill, maybe tax reform after that. So Snow is a great choice for that. Friedman, obviously has great connections on Wall Street, and I think that is something that's critical in terms of getting the economy and confidence. And the choice for SEC couldn't be better in terms of somebody that really has a great reputation and great experience, knows the markets. So I think the President has put together a really all-star team.

RAY SUAREZ: Jeff Madrick, what does the administration need from this new trio, and are they likely to get it?

JEFF MADRICK: Well, I think they're probably not likely to get it because they perceive this as public relations issue. Indeed it's an economic policy issue. Treasury Secretary O'Neil and Larry Lindsey were inept publicly. I think they did a bad job representing this administration. But the issue is not merely public relations; the issue is policy, and I think it's an attitude on the part of this administration. They resisted talking about the economy. They resisted talking about a stimulus package. They deflected attention from the economy. Now they've come out into the open. They're conceding, hey, there is an economic problem. And Steve Friedman's argument that the recession is over is not shared as yet by the National bureau of Economic Research. By this time in an economy, we are creating new jobs... in an economic recession and recovery, we're creating new jobs. We're not creating any. The 6% unemployment rate understates the real unemployment in the economy because people are leaving the workforce. If they stayed in the workforce the way they used to, we'd have a 7% or a 7.5% unemployment rate. So we've got an economic policy issue. Tax cuts are not... tax cuts and only tax cuts are not the right response for this kind of economic recession and the probability of slow growth, or maybe a reduction in GDP again. We need some direct stimulus there, we need temporary tax cuts that will be spent now. And what we're getting is almost exactly the opposite policy to what we need, long-term tax cuts mostly for the well off who will not spend at creating long-term deficits. These two gentleman... these three gentlemen face a serious problem. It's not clear to me, though they are more competent, that they'll be able to deal with it.

RAY SUAREZ: John Castellani, maybe you can respond to Jeff Madrick and also give us your overview of this economic team.

JOHN CASTELLANI: Well, I agree with Ken; it's a very solid team; it's an experienced team. And I think there is something else that is particularly important. It's a team that both knows how to communicate and I think communication is important and a team that understands the political dynamic. I mean John Snow has a tremendous political acumen. All three of them have worked in the political circles, so they understand the dynamic that's going to bear on these issues. The CEO's of the Business Roundtable are concerned about the economic outlook. We have our own survey of our 150 members, which doesn't point to a very good economy for 2003: Stagnant investment, declining employment, and growth that is very much below what we think this economy can achieve without any danger of inflation. We called for a large package, something that would have a significant impact on the economy early on next year, and this is what the President is working on. Now, our idea is to address exactly what's been said, and that is to get a large amount of money to the most number of people, the fastest means possible, people who will spend it. And that's why we've called for a withholding tax holiday on the first $10,000 of income. The second part of it, though, is important, and that is that we accelerate the tax cuts that have been already enacted, bring them forward to 2003, so there's some permanence. And the third element that we're advocating is to provide relief for investors who own shares on the taxation of the dividends that are paid on those shares on individual investors because part of what's depressing this economy has been the depression in equity prices, and everyone looking at their 401K's, their IRA's and their savings and saying, "I can't go out and spend because I've lost a lot of value. So I think it's a challenge for this team, but I think it is a team that is very capable of dealing with it. And as we know, the administration is considering right now coming forward with a package that will speed up the economic recovery.

RAY SUAREZ: Mel Minow, how will investors and the people who visit your web site, regard this new team?

NELL MINOW: Well, I represent the other side. I represent the supply side of the capital markets, and I don't think that they're as excited about these appointments as the people on Wall Street are. If you're looking to restore investor confidence, you have got to have an economic team in place that has a record of promoting accountability to investors, and we don't see that here. We have people coming straight out of the business community, and spouting the same kind of rhetoric. I'm not too worried about the taxation of dividends of people in their 401K's and their IRA's because you don't tax the dividends that are in tax-protected accounts like those. I'm a little bit more worried about how we're going to pursue some of the corporate scandals of 2002 and how we're going to prevent further corporate scandals and I want to see people in place who are really committed to some real reform.

RAY SUAREZ: Well, the appointment of William Donaldson was hailed like here's a guy who really knows this word. Is that the kind of signal that you were looking for from the Bush administration?

NELL MINOW: I'm feeling somewhere between cautious optimism and outright skepticism right now. I comfort myself that the first chairman of the SEC Joe Kennedy was accused of being the fox guarding the hens and the person who appointed him, FDR, said it takes a chief to... thief to catch a thief. I don't think Donaldson is that kind of guy. I think he is very much in the business community, of the business community and on behalf of the business community.

RAY SUAREZ: Now, John Castellani, do CEO's feel that they have a friend where they didn't before? Paul O'Neil was the head of ALCOA, and at the front end, when he first began with the administration, this was talked about as someone who would be very friendly to that world and understand the problems of people like your members.

JOHN CASTELLANI: Well, I think in John Snow clearly and in the other appointees, Donaldson and Friedman, you've got experienced business leaders. And so I think there's a level of comfort with that. But there are a couple of other things that Nell touched on that I think are very important in addition to that. And that is part of this, part of what needs to be done is to restore confidence not only in the capital markets but also in the corporate governance system. In John Snow you have somebody who has been very active in advocating governance reform. He was the co-chair of the Conference Board's blue ribbon commission that came out with very, very cutting-edge and aggressive reform proposals. He was very active in developing the Business Roundtable's principles of corporate governance and he's been a leading spokesman for it. That is part of it. And what Nell was talking about on the dividends, let me be very clear, that is not to provide stimulus for the people who receive those dividends into their 401K's. That's not taxable. But we think by not taxing dividends, you'll put upward pressure on equities markets because it'll more highly value those equities that do pay dividends and that in turn will relieve some of the distress that people are feeling because of the contraction that they've seen in their 401K's and their IRA's. So good businesspeople I think will have strong leadership from them and are they a friend? Well, they're somebody who understands business, all three of them understand business and that's vital to this.

RAY SUAREZ: Jeff Madrick, both today and during the past week when these new people were coming onboard, a lot has been said about stimulus. You mentioned it in your opening remarks. But are you all talking about the same thing? Pump-priming, money going into the economy?

JEFF MADRICK: No, I don't think we are, Ray. And the nature of even this conversation disturbs me a little bit because it's been so... the agenda has been so well established. We only talk about tax cuts. We talk about strong leadership. There's a lot of cheer-leading here. What we want to see is some action. What will make people invest again, indeed what will make business invest again is more business, more customers. Tax cuts I think in this kind of economic recession and very slow recovery, if a recovery at all, are not going to work in large part because it's an investment recession. There was too much investment in the late 1990s, too much exuberance and a lot of false hopes for a lot of reasons we're talking about. What we need and what has worked in the past... what we need is also some spending. We should immediately extend unemployment benefits. Two million are running out of unemployment benefits by the end of this month. We should... a million people... I'm sorry. We should be getting money to the state and local governments who are going to start cutting back significantly on education and health care. And then maybe we can start talking about tax cuts. But the idea-- and I think it's almost breathtaking to me that we're only talking about tax cuts when we had a boom in the late 1990s that occurred after we had two major increases, tax increases under the first President Bush and under President Clinton. It's almost as if we're in a public relations vacuum. Public relations is not what we need right now. We need some serious action. We need business again.

RAY SUAREZ: Ken Kies?

KEN KIES: Well, I think public relations actually is part of this story. Giving people confidence is what makes them go out and spend on Christmas presents, it's what makes them feel good about making new investments and hiring new people. So I think part of the job here is to send a message that the administration believes that the economy needs attention, that they're going to give it serious attention. Tax cuts are part of it. I don't think that's the only part of it for the administration. The Justice Department has been aggressive in indicting corporate wrongdoers. And I think that's a part of the effort to show that they're serious about getting corporate governance back to where it belongs. So the PR is part of this story because it's what makes people feel good about where they're going, what they're doing, how they're spending. So we can't downplay the importance of send ago strong message out there that the economy should get going. We had 4% growth in the third quarter. If we get a good retail season in the fourth quarter, we may see some decent growth. So I wouldn't say it's all doom and gloom here. And I think this team is a great team to do the job for the President.

RAY SUAREZ: Well, to the extent that PR is, as you suggest, a part of this, what does it tell us that there was some backchannel stuff going on around Steven Friedman's appointment, a lot of Republicans expressing their own displeasure with it?

KEN KIES: Republicans are always good at kind of having their fights that should be in the back room in the front room. There was some disagreement about whether he was aggressive or not. I think he clearly has communicated with the President. He's a good choice. He's going to defend the President's policies. The notion that they're going to hire somebody into the White House who's going to immediately start undercutting President's position I think is foolish. So these little skirmishes occur from time to time. It's healthy. It shows that people have different views. But I don't think there's any doubt but that this team is on the right track with the President.

RAY SUAREZ: Well, Jeff Madrick, Nell, suggested that there was too much investment at the end of the '90s, as a representative of the people who buy stock and not necessarily urban issue it, what's that... what's the right relationship between too much, not enough? How do you know when enough is enough?

NELL MINOW: Well, there was too much investment in the wrong companies for sure. I mean we went through sort of a bubble period where people would buy stock because their hairdresser's second husband suggested it. People were not doing any kind of fundamental research anymore. There was a lot of talk about a new paradigm. There's only one paradigm, which is that you look at cash flows and you decide what the expected future returns are going to be and you invest on that basis. I'm glad that people are more cautious now. I think that investor caution is probably a better promoter of a stronger economy than any of these other things that we're talking about. And I hope they will continue to be cautious.

RAY SUAREZ: So what has to happen short term, and what will these new appointees be involved with that will create that balance?

NELL MINOW: Well, I'm hoping for some very rigorous confirmation hearings so that we can ask Donaldson and Snow directly exactly what their commitment is going to be to improving corporate governance. The SEC has not moved yet on the New York Stock Exchange's excellent proposals for reform. We want to find out what Mr. Donaldson thinks about, that what he thinks about the proposal that's currently being considered to require disclosure of proxy policies by institutional investors. So I think there are a number of bellwether issues that we will be able to ask them about that will tell us right away whether these are the right guys for the job or not.

RAY SUAREZ: What do you want to see in those confirmation hearings?

JOHN CASTELLANI: Well, the three things that we're talking about and that's first a good discussion of where these men stand in terms of how they view the priorities, both for the economy. I think it's very important, as Nell said, that we continue to implement the things that were enacted in Sarbanes-Oxley. The new listings for the New York Stock Exchange and for the NASDAQ and the other initiatives that the SEC has undertaken; it's absolutely important that we follow through and follow through smartly and quickly to restore investor confidence. That part of it I'm confident the SEC will, with this kind of leadership. On the economic side, the issue is what to do, how do we get consumer demand up so that we can create an economy that's growing fast enough to create jobs? Right now, we're not creating jobs, and that's the real tragedy here. Yes, we have overcapacity. We've got sufficient capacity in manufacturing and financial services, certainly in telecommunications to meet a lot more demand. And what is the administration going to do to help stimulate the demand for that capacity is something that's going to be on everybody's mind.

RAY SUAREZ: Guests, we'll stop it there. Thanks a lot for being with us.

FOCUS FORESTS & FIRES

JIM LEHRER: Now, a new approach to fire prevention in national forests, and to Terence Smith.

TERENCE SMITH: This year's fire season has been one of the worst on record: Seven million acres charred, tens of thousands of residents evacuated or displaced, 23,000 homes and buildings destroyed, 21 firefighters killed.

SPOKESPERSON: The first thing I'd like to tell you today is that we're dealing with an emergency situation.

TERENCE SMITH: Yesterday the Bush administration announced plans to streamline paperwork and procedures they say slow down steps to reduce fires in overgrown forests. The new rules curtail impact studies that have been required under the National Environmental Policy Act before logging can take place; they apply to ten national forests, most of them in mountain and western states. The administration proposal also would allow logging and thinning to begin even while judicial appeals of such activities are being heard. Agricultural Secretary Ann Veneman, whose department runs the U.S. Forest Service, said the objections of environmentalists would still be heard, but...

ANN VENEMAN: We have a situation now which our chief of the forest services likes to call "analysis paralysis," where you make a decision and it continues to get appealed into the courts, and that's one of the problems is we then never get anything done. And so the buildup continues in these forests, and the result is the kind of fires that we had last year.

TERENCE SMITH: President Bush first offered his healthy forest initiative last summer in Oregon after touring the site of a major forest fire, but Congress rejected his proposals. Yesterday, the President used his executive powers to enact the same proposals. He can do that on projects that don't have an immediate impact on human environment, such as in remote forested areas. Conservationists were quick to criticize. The National Resources Defense Council called easing the rules, "a payback to the timber industry" that would generate more logging revenues. Democratic Senator Jeff Bingaman from new Mexico, outgoing chairman of the Senate Natural Resources Committee, said Mr. Bush was, "pursuing too much exemption from existing law" by skirting Congress. Environmentalists have also been upset by other recent moves by the Bush administration, including permitting snowmobiling in Yellowstone Park, and easing incentives for emission cleanup by power plants and factories.

TERENCE SMITH: With me now are Michelle Ackermann, vice president of the Wilderness Society, an conservation group; and Terry Anderson, executive director of the political economy research center in Bozeman, Montana. Due to video problems, Mr. Anderson joins us by phone and we apologize for that. Welcome to you both.

Michelle Ackermann, the administration argues that these new rules and these changes will streamline bureaucracy and actually safeguard forests. Do you see it that way?

MICHELLE ACKERMANN: Well, the primary priority in any work that we do on wildfire needs to be protection of western communities from wildfire. Right now, there are more than 9,400 communities across this country that have been identified as at risk from wildfire. 9,400, that's a lot of communities, that's a lot of work we need to do. The President had a real opportunity to put a real push behind directing resources towards projects that would protect those communities. Unfortunately, his proposal does nothing of the sore. He's chosen, instead, to essentially open our national forests not, not just ten of them, but the entire forest system, to logging without laws. His proposal would make it so that projects on the national forests would not have to have any meaningful documentation, but what sort of environmental effects they would have. It would essentially also cut the public out of the process. America... our national forests are American treasures. We go to there to hunt and fish, to hike and be with our families and we have a right to have a say in how they're managed. Unfortunately, what the President would propose would take the public out of that process and not do anything to protect communities from wildfire.

TERENCE SMITH: Terry Anderson, take the public out of the process, is that the way you see it?

TERRY ANDERSON: Hardly. I think it's important to start with understanding what the problem actually is. The problem is a build-up of wood in the forests, or fuel as it's called, that has resulted from fire suppression and reduced logging over the last 100 years and certainly the last 20 in the logging case. Climate certainly contributes partially to this, but the fuel reduction is the only thing we can do anything about. What the President's proposal does is allow the administrative branches to reduce some of the bureaucratic red tape that has crept into the process. 100% of all the projects in the northern region that have been proposed in the past ten years have been appealed by environmental groups. And as one forester friend of mine put it, "with a 37-cent stamp, you can stop a logging operation." What the President's trying to do with his administrative actions is to reduce some of this red tape. And I find it hard to believe that the environmental community is so upset over what he's done. For example, categorical exclusions are one of the main points of the President's approach, and those were allowed under the National and always have been allowed under the National Environmental Protection Act. And as a result, what he's doing is going back to the way the forests have been run for many, many years. All that really does is allow the President and the agencies to establish broad categories where they know there won't be environmental impacts and move forward. This does not apply to wilderness lands; it does not apply to wetlands, it does not apply to inventoried roadless lands, and the list goes on. One of the other things the President does in this-- and I think this is important-- is that this requires assessing the long-term risk of not taking actions, especially as it relates to endangered species. And I should think that Michelle and her colleagues would love this. The biscuit fire in Oregon burned 150,000 acres of spotted owl habitat.

TERENCE SMITH: All right. Michelle, you've been shaking your head at some of these points, particularly when Terry Anderson talked about 100% of the projects in that area being appealed and slowed down.

MICHELLE ACKERMANN: You know, there have been recent studies by the government itself that have shown that that's simply not the case, that the whole idea that the environmental community is appealing all these projects is simply false. But I would also say that no one -- no one disagrees with the fact that we need to target our resources towards projects that are actually going to protect communities. No one is out there saying, we don't want this to happen. Science has told us what needs to happen to protect these communities; we know what it is. We need to roll up our sleeves and get to work. I mean there are 9,400 communities that need this work done.

TERENCE SMITH: You're talking about people who live near these forested areas and whose homes are in danger?

MICHELLE ACKERMANN: Absolutely. I mean and these are communities that have been identified by the government. The other thing that I would say is that I think that Mr. Anderson is grossly oversimplifying the condition of the forests. We have 192 million acres of forest land, and to say that it's all overstocked and it all needs to be logged and that it's all the same is a gross oversimplification. Different forests types are different. There is a little bit more fuel as a result of some of our policies in some forests, absolutely. Should we do something about it? Yes, we should. But should we be targeting our resources, our scarce resources and our priorities to all the work that has to be done around communities first? Absolutely. Does the President's proposal do that? Absolutely not.

TERENCE SMITH: All right, Terry Anderson, what's the practical consequence here? What will be different with these rule changes, in terms of the way we approach the forests?

TERRY ANDERSON: The main difference will be that the agencies, in particular the Forest Service and the Department of Interior, will be able to move forward with the thinning and replanting operations without a three-to five-year delays, which have been the average for these projects in the past. And that can make a big difference in how quickly we can move to apply the scarce resources, as Michelle described them, to the places they need to be applied.

TERENCE SMITH: And do you agree that those places include the communities that are at risk?

TERRY ANDERSON: Well, they certainly include those. But it's naive to think that simply going out and clearing some brush on the edge of a forest is going to solve this problem. I have a mountain cabin. I have no doubt that clearing brush around my cabin will help some, but if we don't do something to simply prevent some of the massive forest fires from starting, it won't do any good for me to clear that brush. And this is not just... this is not a clear-cutting operation by any means, but it is an effort aimed at trying to do some sensible logging and fuel reduction in those areas that aren't just on the wild land urban interface, but those will clearly be included. So the notion that this is a Trojan horse for clear-cutting is just nonsense.

TERENCE SMITH: Michelle?

MICHELLE ACKERMANN: There's absolutely no guarantee of how this will turn out. There's no guarantee that this is not a clear-cutting operation. And furthermore, the Forest Service's own scientists have told thaws what we need to do to protect communities is focus on clearing the areas right around those communities. Second, I have to say that only 20% of the acres that have burned as a result of wildfires in the last decade have been on national forest land. Only 17% of the fires that started this last year, in 2002, were on federal land. I mean this is simply not primary a national forest service problem. Most of the area that burns is on state land, it's on tribal land and frankly, it's on private land. So throwing open the entire forest system to what is essentially logging without laws when the problem is based around communities and we've got more work than we can possibly do there and not enough money to do it, is just simply wrong and inaccurate.

TERENCE SMITH: Logging without laws, Terry Anderson?

TERRY ANDERSON: This is logging underneath it. This is logging under laws that have been in place for decades. So it's not logging without laws and it's not throwing open all the forest to this process. The one place I would agree with Michelle on is that we need something other than just these kinds of changes that will streamline the appeals process. And that has to be done, I think. But more importantly, we need to do some things to really change the incentives. And I fault the administration for not taking more action along these lines. They have proposed the long-term stewardship program and made little progress on that. They may blame about the Congress for that. But they need to do more to really increase long-term stewardship by people who are willing to get out, roll their sleeves up and actually manage these forests. And secondly, and there are many groups, not just on the right, but on the left, who are saying, "we need to experiment with more decentralization of management." And what we see, I think, going on here is that the national environmental groups don't want anything to do with decentralization because it takes them out of that process. But that's what's going to have to happen ultimately if we really want to have sensible management of our national forests and our public lands.

TERENCE SMITH: Okay. And a final word, Michelle?

MICHELLE ACKERMANN: Yeah, you know, for the last two years, a broad-based group of stakeholders, including the Western Governors Association, the Timber Association, conservation groups, including the Wilderness Society, the Cattlemen's Association, basically everyone who has an interest in wildfire work has come together and put forward a plan called the Western Governors Association Plan. It's a big collaborative effort, and that plan specifically says that there is no need to change existing environmental laws to accomplish what we need to accomplish to protect communities. The President's proposal would undermine the basic bedrock of environmental protection that this country has had for more than 30 years and would not protect western communities from wildfire, and that's the bottom line.

TERENCE SMITH: All right, we're going to have to leave it there. Michelle Ackerman and Terry Anderson, we apologize again for the failure of the video. Thank you both.

MICHELLE ACKERMANN: Thank you.

TERRY ANDERSON: Thank you.

RECAP

JIM LEHRER: Again, the major developments of this day, President Bush rebuked Senate Republican Leader Trent Lott. The President said it was offensive for Lott to claim the country would have been better off electing better off electing Strom Thurmond President in 1948. Thurmond ran as a segregationist. And Wall Street investment banker Stephen Friedman was named to head the National Economic Council. We'll see you online, and again here tomorrow evening with Shields and Brooks, among others. I'm Jim Lehrer. Thank you and good night.