The MacNeil/Lehrer NewsHour

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

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Tuesday, we update the damage from the oil tanker spill in the North Sea, run excerpts from the confirmation hearings of the Clinton choices for Secretaries of the Treasury, Housing and Education, and find out from the Comptroller General of the United States how badly the federal government is managed. NEWS SUMMARY

MR. MacNeil: Iraq continued to provoke the United States and its allies today by defying U.N. cease-fire resolutions. For a third day in a row, Iraqis crossed into disputed border territory to remove military equipment. Also, a top U.S. general said Iraq had put anti-aircraft missiles into the northern no-fly zone. Last week, it moved missiles into the southern zone. White House Spokesman Marlin Fitzwater said the continued violations were a matter of extreme concern and hinted at retaliation. He told reporters, "There is a clear pattern of violation. It's clear that Saddam Hussein has intensified his efforts, and it remains to be seen exactly what may come of that. But there will be no warnings." Tonight Iraq's ambassador to the United Nations offered to discuss all issues related to the crisis. He did so in a meeting with the U.N. Security Council president. Jim.

MR. LEHRER: The leader of Bosnia's Serbs today accepted an international peace plan for Bosnia. Radovan Karadzic did so at talks in Geneva. Those talks appeared near collapse earlier today when he first rejected the plan. His turnabout came after pressure from his allies. Michael Nicholson of Independent Television News reports from Geneva.

MR. NICHOLSON: All day, Karadzic had insisted he would not move from his position of demanding a Serbian state within Bosnia, whatever the cost.

REPORTER: This could escalate the war now, couldn't it?

RADOVAN KARADZIC, Bosnian Serb Leader: Well, any disagreement can escalate the war, any imposed solution can escalate the war.

MR. NICHOLSON: According to the other delegates, there was no point in any federal negotiations, say it was tired and disappointed co-chairman Cyrus Vance and Lord Owen who announced the conference's failure.

LORD OWEN, European Community Mediator: We will go on discussing ways of finding a peace settlement but we will obviously have to report back to the U.N. Secretary General and to the president of the European Community, and it will then be for them to decide further action, and whether or not the Security Council will decide to meet and to decide their view on this question.

MR. NICHOLSON: It was a last ditch attempt, but Messrs. Owen and Vance asked the parties here, including Karadzic, to stay overnight in Geneva, hoping that even at this 11th hour they could get a "yes" from the odd man out. And it appears to have worked. A short while ago, Karadzic returned here, accepted the plan and is flying back to Bosnia tonight to get it endorsed by his assembly.

MR. LEHRER: Political talks on Somalia went nowhere today. The country's 14 factions remain deadlocked over plans for a reconciliation conference. Their dispute centers over who should be allowed to take part in that conference. The disagreement is threatening a cease-fire and disarmament plan announced just yesterday.

MR. MacNeil: The oil tanker aground on the Shetland Islands broke apart today. The Liberian-registered ship ran aground nearly a week ago and began leaking its cargo into the North Sea. Relentless pounding from huge waves split the tanker into at least four pieces early today. It was carrying 25 million gallons of oil. Salvage officials said nearly all of it had now spilled. The accident has killed hundreds of birds and marine animals along the Shetland Coast. We'll have more on the spill later in the program. A Berlin court today agreed to abandon the manslaughter trial of former East German leader Eric Honecker. He was on trial for ordering the shootings of East Germans trying to escape to the West. A higher court ruled that keeping Honecker in jail was a human rights violation because he is terminally ill with cancer. Honecker's lawyers said they expect the second prosecution for embezzlement to be dropped tomorrow. They said Honecker could then leave for Chile, where his wife and daughter now live.

MR. LEHRER: Three more Clinton cabinet nominees testified before Congress today. Members of the Senate Finance Committee gave their chairman, Sen. Lloyd Bentsen, a standing ovation after they voted to confirm him for Treasury Secretary. Bentsen said the government must consider tax increases and benefit cuts to control the deficit. Sec. of Education-Designate Richard Riley said it was vital to improve the nation's education system, but he said the budget deficit would limit how much the Clinton administration could do. Former San Antonio Mayor Henry Cisneros is Mr. Clinton's nominee to head the Department of Housing & Urban Development. He said he will work to erase divisions of race and improve economic opportunity. We'll have excerpts from those hearings later in the program, along with some bad news about the way the federal government is managed and the latest on the North Sea oil spill. UPDATE - LOST BATTLE

MR. MacNeil: The North Sea oil spill is our lead story tonight. The Liberian-registered super tanker Braer smashed into the Southern tip of the Shetland Islands January 5th, and its cargo of 25 million gallons of Norwegian light crude started spewing into rough seas. The tanker's engines failed while it was passing between the Shetlands and Fair Isle, a shortcut between Norway and Canada the tankers take in winter to avoid arctic ice. The spill is the 13th worst ever recorded. Our coverage begins with reports on the disaster by Independent Television News.

CORRESPONDENT: A week ago, it ran aground here. Today it's in pieces on the rocks, officially a wreck. In seafaring language, the Braer is now a total loss. The storms and towering waves have at last broken up the Braer into three, perhaps four parts. The bows jut out of the sea at an awkward angle, severed from the hull. The bridge swings free from the deck, forced looser by every wave. Salvage experts can only watch from the cliff as the last gallons of the Braer's cargo of oil gush from the tanks. They say they may yet pump some oil from the wreckage, but for the salvage team today's breakup is a bitter disappointment.

SPOKESMAN: The very high winds we've had for the last few days and the spill was extraordinary. No ship can stand those circumstances.

SPOKESMAN: Clearly, nobody could feel other than sadly dismayed by what's out there, but on the local scene, clearly this is a considerable disappointment.

CORRESPONDENT: Disappointment locally, but perhaps a sense of relief too as fish was landed for the first time this year at Lerwick, the main port in Shetland, trawlermen anxious to demonstrate that their catches were untainted by the oil.

CORRESPONDENT TWO: Checks on beaches continue. The oil tanker's breakup is the worst news for Dave Hammond, who's been compiling regular pollution reports for the authorities on Shetland.

DAVID HAMMOND, Shetland Smokehouse: The environment is of ultimate importance to us. The environment has always been clean here, and we want to keep it that way, if we can.

CORRESPONDENT TWO: Mr. Hammond also runs a salmon smokehouse. The turnover is 1/2 million pounds a year. And while only eleven out of fifty-eight salmon farms are affected, in Shetland, the whole industry is worth 35 million pounds a year. And they're worried about the use of chemical dispersants by the cleanup teams.

DAVID HAMMOND: We don't want them anywhere near our salmon farms, because the salmon are very sensitive creatures and they are very responsive to, to that kind of thing. I mean, the dispersants actually cause small crustations and things like that, and they're worse than oil.

CORRESPONDENT TWO: The spraying operation is being carried out by specially equipped Dakotas, flying continuous sorties and dumping detergents. But sea conditions have been too rough to deploy booms to contain the slick. Experts are still gauging the size of the spill, but there is growing anger in Shetland over why the tanker was abandoned so soon by her Greek and Filipino crew. At Dunn Rossness School, six miles from the wreck, children arrive for class with anxiety growing in the community over health fears.

WOMAN: I'm worried about the kids.

CORRESPONDENT TWO: Why?

WOMAN: There are a lot of rumors going about. I mean, I have a little girl, she's six, and she's being told she's going to have to go away from home. The bigger kids are telling them that the spraying is going to kill them. They don't know what's happening.

CORRESPONDENT TWO: Beside the wreck, the Braer was thick with fumes, the sealike treacle after thousands of more gallons of crude had spilled.

POLICEMAN: Please clear the site immediately.

CORRESPONDENT TWO: Health fears increased when police cleared the area close to the wreck, though the authorities later played down the risks and said complaints of sore throats and eyes would be expected.

SPOKESMAN: With any substance where it can be smelled, these symptoms can occur, but it doesn't mean to say that they will be long-term symptoms or continue for a considerable period of time.

CORRESPONDENT TWO: But the impact on nature can't be played down. Farmers like Jackie McLaughlin can no longer allow their sheep to graze on grass coated in an oily film. They may have to send flocks to the mainland.

JACKIE McLAUGHLIN: The Shetland sheep has probably the best health status in the UK, and if we send them down there, we could probably bring back disease and just absolute disaster.

CORRESPONDENT TWO: Along the blackened coastline, volunteers continued to recover scores of sea birds from the oily waves. Some they hoped to save, but hundreds have already perished and so surely will hundreds more.

MR. MacNeil: We turn now to the inevitable how and why questions that will be explored in an investigation ordered by the British government. ITN Correspondent Andrew Veech outlined some of them shortly after the wreck occurred.

MR. VEECH: According to existing rules, the Braers should have been inspected before it sailed from Norway, so the inquiry will want to know why the engine failed so soon after leaving port. At 5:20, the captain sent out a mayday and gave his position as 10 miles off Sumburgh Head, on the edge of the 10-mile exclusion zone protecting wildlife areas. It was not until 6:30 that the tug Star Sirius in Lerwick was alerted. The captain is thought to have asked permission from his owners in New York before calling out the tug. By the time the Star Sirius arrived at 10:15, the captain and his crew had been airlifted to safety. There was no one to take a line on board, and the ship was about to hit the rocks. So the inquiry will want to know why there was a delay in calling out the salvage tug.

DAVID THEOBALD, Captain, Star Sirius: All I can say that if the personnel were still on the tanker when we arrived on scene, we would have got a line on board and pulled the tanker clear, and this would have never happened.

MR. VEECH: But the tanker's owner insisted the crew had acted properly.

MIKE HUDNER, Braer's Owner: [January 6] Everything that was done by the crew was competent and prudent and normal practice.

MR. VEECH: Questions over the morale of the crew of the stricken tanker and the state of its aging pipework emerged today. The Filipino crew is reported to have complained to unions about undermanning and overwork, and two previous captains were alleged to be in dispute with the ship's owners.

AKE SELANDER, International Transport Workers Federation: There were still outstanding claims from two previous ship masters for breach of contract and also complaint by the crew that they were working too much overtime, up to 200 hours per month, when, in fact, it is only safe to work somewhere between 70 and 80 hours per month.

MR. VEECH: A maintenance crew stayed on the ship after it sailed from Norway to conduct running repairs. Records of the ship's inspection in August have been obtained by the Norwegian environmental group, Belana. They specify faults to be corrected before the ship arrived in Norway for what turned out to be its last journey; supports and covers for piping corroded and damaged, piping for air heavily corroded and leaking, numerous valve handles for operating and draining of cargo heating system broken or missing, dresser couplings on main steam line leaking, a defect on the fire monitor on the main deck, leakages in the hydraulic steering gear, and oil spill trays. In October, the company told the inspectors in this Telex from Stamford, Connecticut, that some but not all of the faults have been repaired. Finally, a pipe developed a leak during loading in Norway four days ago. Loading was delayed while the pipe was repaired. Analysts say the faults give a picture of an aging ship continually in need of repair, but they also show that the ship was relatively well-maintained.

DAVID MELVILLE, MRC Business Information: The company itself was not operating under any specific pressure that would cause it to cut corners and, indeed, B&H on the whole has been seen as one of the best around, as it's Americans and Norwegians behind that company, and they tend to take their responsibility seriously.

MR. VEECH: But the question is: What blocked the ship's fuel lines? Engine fuel oil is first stored in bunker tanks under the engine room. It often contains water and sediment, so it's pumped up to settling tanks, usually one port and one starboard. Every four hour watch, the crew drains off water and sediment. The fuel then passes through centrifuges before entering the service tanks in the engine room. Every tank is vented up to the deck, but there are non-return valves to prevent any possibility of water getting in and contaminating the fuel. One explanation may be that the ship was burning a mixture of incompatible American and European fuel oil. The Braer's sister ship, Saltec, is in Quebec. The condition of the tanker was criticized by pilots who've guided her along the St. Lawrence Seaway. They said the engines lost power, the anchors were not working, and her crew had never before sailed in ice. The pilots say tankers like these are a potential disaster.

MICHAEL POULIOT, Canadian Pilots' Union: These are aging tankers manned by crews who are not as competent as we would hope, and you have the results now on the beeches of the Shetland Islands.

MR. VEECH: The official inquiry will cover the ship's seaworthiness, the crew's competence, and navigational safety. Conducted by the Department of Transport's Marine Accident Investigation Branch, it's expected to take 18 months.

MR. MacNeil: Now for more on the Shetlands' oil spill and the damage it's causing, we're joined by Faith Yando, editor of Oil Spill Intelligence Report, a weekly industry trade publication that tracks oil spills around the world. She joins us tonight from public station WGBH in Boston. Ms. Yando, thank you for joining us. Now that the tanker has broken up and pretty well all of that oil has gone into the sea, on the scale of oil spill disasters, where does that put the Braer?

MS. YANDO: Well, it puts it on the 13th on the list of all time oil spills, and that's based on figures that we've been keeping since 1978, 13th on the list, however, as far as environmental damage, there were some statements made today by the Department of Transport officials that the damage, the actual oil on the shoreline, may not be as severe as you might think and compared to the Valdez oil spill, which was less oil, it's definitely not going to be as severe as that spill.

MR. MacNeil: This is about twice as much oil, but the difference, I gather, is this is light crude, and the Valdez oil was, was heavy, and we saw all the pictures of the Valdez. Is that going to make this less serious, just because of the nature of the oil?

MS. YANDO: Yes. I mean, it means that more will evaporate, and it also means that the other big difference is the weather here was so severe that actually it was a good thing and breaking up the oil, the severe weather meant that the wave action actually dispersed the oil naturally, which is a difference. In the Valdez, a lot of the oil went into really calm bays, and just sat there and had to be cleaned up.

MR. MacNeil: We -- there was a report in the London Economist that even noble efforts to clean up wildlife, birds and things, are not really very affected. It said few of the cleaned up birds survive and that ultimately nature does a better job of cleaning up than man can. Do you, who follow so many oil spills, agree with that?

MS. YANDO: Not really. I think that depending on the type of oil and depending on the amount of wildlife affected, you know, sometimes they have as much as a 70 percent survival rate when they get birds to a facility and clean them. They're almost certainly going to die if they're not cleaned because they lose their waterproofing on their feathers and they get hypothermia. So I would disagree. I think it's, you know, the cost is another issue, but as far as just straight is it effective, I would agree that it is effective.

MR. MacNeil: Does this mean that this kind of oil, if it's dispersed, does that mean that it's going to form into hard globules like we saw from the Exon Valdez, and go down and be permanently on the, on the ocean bottom around those shores?

MS. YANDO: Not so much huge droplets. It would -- what it means is it gets mixed with the water and there would be some oil there for, in the entire water column, you know, from the bottom up to the top, but it's less likely to be the heavy droplets that you saw in the Valdez spill.

MR. MacNeil: If they can't contain this now with booms and they can't pump it off, what can they still do to protect the wildlife from the oil that is in the sea?

MS. YANDO: Well, some people would argue, and environmental groups would disagree with this, but industry people would argue that the use of dispersants actually has a benefit to wildlife because it makes the oil less sticky and, therefore, less likely to stick on birds. However, environmentalists will say all it does is make the oil disappear and it gets dispersed in the water column, and, therefore, some creatures, you know, wildlife that wasn't affected before would be affected now, so it's kind of an area of dispute.

MR. MacNeil: Yeah. That salmon farmer we heard in the, in the report just now said that it would be very bad, it would be toxic for the salmon, these chemical dispersants.

MS. YANDO: That's also an area of debate. In 1967, there was a big oil spill in Britain called the Torrey Canyon Spill, a lot of dispersants used that were very toxic. Dispersant manufacturers would say since that time they've developed non-toxic dispersants, however, you know, environmental groups would, again, disagree with that, and so it's still a matter of controversy whether or not they would, indeed, you know, would there be any negative effect. What's interesting about this spill is there's going to be a lot of studies done, and I think it's actually going to really help the body of knowledge on the effect of dispersants on wildlife and on, also on people, because a lot of people are ingesting sprays and also dispersants, and to see if there's any long-term effects on the population.

MR. MacNeil: The Shetland Islands being so remote there were regarded as one of the pristine and valuable wildlife areas in Europe. Does the Exon Valdez cleanup experienced in Alaska, which was also a pristine area, show that such pure conditions can be restored, or is there always, is it always tainted afterwards, after a spill like this?

MS. YANDO: No. We've seen -- and actually there's a big symposium in February on the results of the studies from the Valdez oil spill, and what a lot of these studies have shown is that nature does a good job of cleaning up, and in a lot of instances, the best thing to do is not to do anything at all. In fact, some of the really intrusive cleaning methods they used in the Valdez, they used this -- hot water hoses that they sprayed, and it basically did more harm than good. It killed a lot of the organisms, where areas where they didn't clean up or didn't do an intrusive cleanup, there's actually been a better recovery rate.

MR. MacNeil: Who is responsible for paying for the cleanup in a situation like this where the oil is owned by one company, is being transported by a tanker owned by another country, registered in another country, basically who has to pay?

MS. YANDO: The tanker owner has to pay. They're responsible and under all international and U.S. law is basically a polluter pays principle, and the polluter is identified as the tanker owner.

MR. MacNeil: Since the Exon Valdez, the oil shipping industry has made some new rules, for instance, after nextsummer, I gather, all new-built tankers are going to have to have double hulls. Would that have made any difference in a situation like this with a ship forced onto a jagged rocky coastline?

MS. YANDO: Actually, I think the date is a little longer than that. There's a phase-in and I think it's the year 2015 in the U.S., but to answer your question, as far as double hulls, the people I talked to say that it really wouldn't have made any difference in this situation because it really had to do with the weather, and that no tanker design could have undergone that kind of heavy weather condition. The one caveat would have been maybe because of the double hull the oil would have leaked out slower and would have allowed people to respond quicker, but having said that, there's really no response they could have done in this type of weather, so, you know, probably that's a moot point.

MR. MacNeil: What other safeguards did the -- came in the wake of the Exon Valdez experience that are going to lessen the, the danger of these kinds of spills?

MS. YANDO: One of the biggest ones has to do with contingency planning. And there's regulations both in the U.S. that are more stringent than international regulations, and proposed regulations internationally, and this was such things as if, for example, if a tanker is traveling to a certain port in the U.S., they would have had to arranged for how they're going to respond when a tanker loses all of their cargo in adverse weather, which is defined as the worst weather for the area, which actually is the situation that happened off the Shetlands, and so that tanker owner would have to prepare and decide, have all the resources in place to be able to respond to a spill.

MR. MacNeil: The lane that this tanker took, the lane between Fair Isle and the Shetlands, is used by, we're told today by approximately three tankers a day, and some of them have gone through there since the Braer went aground. In oil shipping circles, is that route regarded as controversial?

MS. YANDO: To be honest, I hadn't heard much about it before this. It's probably because I track spills, and there haven't been a lot of -- there hasn't been another spill in that area. But -- so I haven't heard a lot about it. One of the things to remember is there is some talks -- talk about legislation for areas of avoidance, where tankers wouldn't be allowed. The problem is there are so many sensitive areas the question becomes how do you designate those areas, but there are such areas, for example, the Great Barrier Reef in Australia is an area where there's special regulations because of the sensitive nature.

MR. MacNeil: We talked to someone from the Greenpeace organization today and they are calling for more exclusionary zones. Where does that move stand? What kind of support does it have in the international community?

MS. YANDO: Quite a bit of support, especially in the European Community. The EC is talking about setting up specific zones in Europe. The EC countries, France, the UK, in particular, are very concerned about tankers passing by their coast that spill oil, such as the situation here, and the fact that they really don't -- how do you regulate that -- you know, it's easy for the U.S. to regulate someone that's coming to Alaska when they get into U.S. waters and in that port, they can say they have to follow certain provisions. But how do you do that for pass-by tanker traffic? And that's going to be, I think, the big issue you're going to see in the EC and also international in the International Maritime Organization.

MR. MacNeil: And up till now, is it just up to each country to declare, like Australia did, its own exclusion zones?

MS. YANDO: Yes. What happens is that they can under a, an international treaty called "MARPOL" there are provisions to declare something an exclusive zone and that goes through -- there's -- the IMO is a branch of the UN and they have an amendment process. But usually if a country feels strongly about that, other countries don't object.

MR. MacNeil: Would you expect this accident to give impetus to that movement, to create more exclusion zones and force tankers to go on clearly safer routes?

MS. YANDO: I would think so, and you're already hearing that discussion. You know, I've heard transport ministers in France and Germany discussing it. The EC is supposed to meet January 18th. The European parliament is supposed to meet at that date and it's supposed to pass a resolution saying that, and also maybe international regulations to the International Maritime Organization.

MR. MacNeil: Well, Ms. Yando, thank you very much for joining us.

MS. YANDO: Thank you.

MR. LEHRER: Still to come on the NewsHour tonight, three cabinet confirmation hearings and some bad news about the government they are about to start running. FOCUS - ADVISE & CON

SENT

MR. LEHRER: Now today's confirmation hearings for three more of President Clinton's cabinet nominees. Treasury Secretary-Designate Lloyd Bentsen appeared before the Senate Finance Committee, a committee the three-term Texas Senator has chaired since 1987. During a morning of friendly questioning, he was asked about the Clinton campaign promise of a middle class tax cut.

SEN. LLOYD BENT

SEN, Treasury Secretary-Designate: There's no question of what middle income families have taken a hit more than any other group, particularly those with children. And I've certainly supported in two tax bills before that kind of tax cut to try to assist them. I would also state that since we did those bills we have seen a very substantial revision in the estimates as to what the deficit will be, and we see it up by all the way from forty to sixty billion, depending on whose estimates you want to take in that regard. And that's going to make it fare more difficult to achieve that kind of a tax cut. I think that's one of the options that's still being weighed. There's no question of what this President-elect has a strong commitment to cut that deficit and do it in a major way. So the options are going to be tougher than they were before we receive those new numbers.

SEN. BOB PACKWOOD, [R] Oregon: How do we guarantee if we have a tax increase for the purpose of reducing the deficit that, indeed, that is what it goes for, and I don't just mean when we pass it. It's easy enough the first time you passed it, say it's for the deficit, then the budget problems get hard, and you want to spend money the next year and you change it. How can we -- we have not succeeded at it in the past 40 years -- how can we guarantee it would go for deficit reduction?

SEN. LLOYD BENT

SEN: Senator, that's up to this administration and to you and your colleagues to guarantee that, to put those things in being and keep them in being, and as you go along, if you see that you're not accomplishing your objective to make the adjustments, then to try to see that that's done. It's going to call for some tough votes, and it's going to call for courageous and tough stands by the President. I believe you're going to get those. Let me say, Senator, I don't know of a time in my adult lifetime when the responsibilities of the Department of the Treasury have been more important to achieving those objectives. And, in all candor, that's one of the reasons I accepted the invitation of the President-elect to be a candidate for that job, where I thought perhaps I could make a difference. And that's the reason that you fellows are up there, because you think you can, and this is a difference that has to be achieved. We have not done it, neither the administrations nor the Congress, and the time is running out. You don't have a lot of wiggle room left, so these things are going to have to be faced up to.

SEN. JOHN BREAUX, [D] Louisiana: I'm wondering if you see anything that has changed now from the campaign period with regard to the economy that would say it is not now necessary to take actions to jumpstart the economy and still be looking for a program that would, in effect, jumpstarting the economy.

SEN. LLOYD BENT

SEN: Well, the decision hasn't been made insofar as the stimulant and to what degree that stimulant should be. One of the major tools for that purpose that has been discussed by the President-elect, and that's the investment tax credit on a marginal basis, to give you the leverage that you can get in that regard and not be rewarded, companies that would have made that investment anyway, that's not an easy one to design, but it does give you more bang for the buck, and obviously, that's one of the serious options that is being considered. But the overall amount of stimulant, the degree of stimulant or even that there is a stimulant, that has not been decided.

SEN. JOHN BREAUX: Many liberals would argue that deficit spending and low interest rates is really key to an economic recovery, while many conservatives would argue that the marketplace is the best way to spur economic growth and that the government should pretty much stay out of the way and try and make more capital available for growth. I guess that just a general philosophical question -- where do we see your administration and the administration of Gov. Clinton coming forth with programs? Are there going to be more emphasis on deficit reduction, more emphasis on deficit spending? What type of plan are we looking for?

SEN. LLOYD BENT

SEN: Let me say this. There will continue to be a very major emphasis on deficit reduction, without a question. And what you will also see particularly is long-term investment encouraged, and it will be trying to encourage the private sector to do most of it. But I would also believe that there would be some government spending in the public sector as a part of it, and that dedicated much to the infrastructure.

MR. LEHRER: Next, the hearings of Richard Riley, the nominee for Secretary of Education. Riley is the former governor of South Carolina. He appeared before the Senate Labor and Human Resources Committee. As with the Treasury confirmation, the growing federal deficit was a major topic.

RICHARD RILEY, Secretary of Education-Designate: I think all of us realize that as this new administration comes into office we are coming in at a time of very significant deficit debt problems. That affects all departments. It affects not just the Treasury and OMB and those who are directly related, but it affects every department. President-elect Clinton is very much interested in, in paying attention to that in every decision he makes, and I will attempt, Senator, to work with him to try to make the careful choices in terms of the Department of Education that would be very sensitive to this deficit problem but would also be sensitive to the fact that education of the young people of this country is the only way for us to come out of this economic hole that we're in.

SEN. DAVID DURENBERGER, [R] Minnesota: What should we be doing at both the federal and the state levels to affirm the role of parents in choosing the school or the education forum that their children will attend?

RICHARD RILEY: The choice aspect of reform is a very important part of a comprehensive package, in my judgment, of education reform. It is not a silver bullet that is going to solve all problems in every direction. I feel that choice in the public schools is a proper aspect of this comprehensive package. I oppose the voucher system, the using public funds to go to the private schools. I think that that pulls the rug out from under the public school system.

SEN. JUDD GREGG, [R] New Hampshire: What your basically saying if you're only going to support choice for public school systems is that you're only going to support choice for those people who live in urban areas, and that you're not going to allow rural areas and in many cases suburban areas to have choice. And that's just a fact, as you'd say, it's a mathematical fact, and it seems to me that's something you might want to consider.

RICHARD RILEY: Well, Senator, you would, of course, have the opportunity to have choice of the private school, and that is a choice and a very legitimate choice. It would not be a choice for poor families, perhaps, but it is a choice for some.

SEN. JUDD GREGG: For the parent, for the middle income, low income and in many instances even for the middle income parent in many instances, choice is not an option under your philosophy of choice in rural or suburban areas.

RICHARD RILEY: And if they had a voucher system, choice would not be an option either. They would just have a poorer public high school to attend, in my judgment.

SEN. JUDD GREGG: Well, if we followed Mr. Cose's suggestion of maybe doing a few demonstrations and seeing if that actually occurs, we could find, we could actually get an answer to that, rather than having it be just anecdotal.

RICHARD RILEY: Well, again, I would say that I have -- this is not a new issue for my consideration, and I have thought and thought about it, and I really don't think that it would be good for the public schools, and so I really would not favor spending money on trying to see that something is worthwhile when I am a hundred percent convinced that it is not.

MR. MacNeil: The third nominee to be heard from is Henry Cisneros, President-elect Clinton's choice for Secretary of Housing & Urban Development. He's the former mayor of San Antonio, Texas. His appearance today was before the Senate Banking, Housing & Urban Affairs Committee.

HENRY CISNEROS, HUD Secretary-Designate: What occurred in Los Angeles can happen in any number of American cities. It happened in Los Angeles on that occasion, particular events stimulated it there, but we've come very close in Miami, and we came close in Atlanta during the course of the Los Angeles events, and there have been incidents in Chicago, and many other places across this country can, this can occur. It can also occur in a different way. It always doesn't take the white hot intensity of the Los Angeles instance, but there's a slow, nightly drive-by shootings, youth being lost to drugs and gangs, and so it's a, it's a withering away process that maybe doesn't ever reach the newspapers in the same way Los Angeles did, but it's equally unacceptable. What should we do with respect to these questions? Well -- and what I can do at HUD -- the first thing we must do -- and it sounds simplistic, overly simplistic perhaps -- is to try to reclaim for the Department a voice as a voice for America's communities and cities, and that means to articulate, along with the mayors and public officials across the country, a sense of urgency about this. It means being an advocate.

SEN. CONNIE MACK, [R] Florida: I would like to pose at least one question which is related to enterprise zones and get a sense from you as to how enthusiastic you believe that the new administration is going to pursue enterprise zones.

HENRY CISNEROS: The highest priority in the Clinton administration will include those items to which the President- elect has spoken over the years and in his campaign and enterprise zones is certainly one of those. Secondly, I do think that the concept of adding enhanced or what has been called by the President-elect comprehensive federal services to the tax strategies is critically important. I think that if we were just to designate some physical real estate in a big city and provide some tax incentives and then hope that companies would come and then hope that if they did come they would provide jobs for people nearby and hope that if those jobs were provided, somehow that was all going to make everything else all right, I think we'd be disappointed.

SEN. PATTY MURRAY, [D] Washington: A U.S. Conference of Mayors Survey of 27 large cities found that over 1/3 of the homeless are families with children.

HENRY CISNEROS: That's right.

SEN. PATTY MURRAY: And we know that one out of five American children live in poverty today. And, in fact, children under the age of 18 are the fastest growing group among the homeless population. You and I both know that this affects our education system, our job market and certainly our country's future. As HUD Secretary, what actions can you take or will you take to respond to this particular population?

HENRY CISNEROS: I realize that people are not homeless because of choice and when a family, often single head of household, a mother with children, finds herself seeking shelter, that it's because other elements of the system have not worked for that family, so it is critically important to link homeless initiatives, housing, with other social services, and I will look at the range of social services programs that exist and housing programs that exist to make the match so that we can provide jobs, where necessary, provide training, where necessary, provide health care, where necessary, but try to recreate the setting in which a person can have a physical place and become self-sufficient once again.

SEN. DONALD RIEGLE, Committee Chairman: Expectations have been raised in this campaign in the hearts and in the emotions of people who have had really no hope for some time. I am very much concerned that if we don't meet and fulfill these expectations that we're going to have not only a continuation of the same problems, I think the problems will get worse. I think they'll get far worse. I don't think you can raise expectations and then fail to meet them.

HENRY CISNEROS: I have watched over the years the difficulties in the Department managerially, and I know the problems in America's cities, so I had no illusions going in. I don't know how successful I will be able to be, because in some sense it's a mine field rigged to blow off your legs, but I will get up every morning and do the very, very best job I can because I think our country is in trouble. I've said that before today. I don't want to over stress the point. But I, I just will assure you that I will bring the maximum energy and focus that I can, having severed relationships with non-profit organizations, business relationships and so forth, I have only two commitments in my life. One of them is this the Department. The other one is my family. And that gives me the focus to just get up and just do this job as best I can every single day. And I promise you I will do that.

MR. MacNeil: There will be more confirmation hearings tomorrow, including one for Warren Christopher, nominee for Secretary of State. FOCUS - RED INK

MR. LEHRER: Finally tonight, some startling reminders about how badly the government of the United States is actually managed. They come from the nation's top auditor, Comptroller General Charles Bowsher, who heads the federal government's General Accounting Office. As part of the transition, he issued a series of 45 reports on the efficiency of government agencies. I talked to him about them this afternoon. Mr. Bowsher, welcome. Let's begin with a quote from your reports "Widespread financial management weaknesses are crippling the ability of our leaders to effectively run the federal government." Those are very serious words.

MR. BOWSHER: Yes, they are, but they're the facts of life. In other words, we have large government agencies today where we can't do audits. In other words, the records are so bad, and if you think back to the HUD scandal where we had a $4 billion loss four years ago, that was one of the problems. In other words, you couldn't get in, find out, and that's where we are today on student loans and quite a few other areas, so it's a real problem.

MR. LEHRER: But I mean the fact that -- in other words, you can't even, the records are so bad you can't even tell how bad the problems are in some of these agencies?

MR. BOWSHER: In some of these agencies, that's exactly right, and so when a new cabinet officer comes in to take over, he's hoping - - or she's hoping to work on policy. And all of a sudden they realize that they don't even have the basic information to really know what's happening in their programs.

MR. LEHRER: You mentioned student loans. What are some of the others where the records are so bad you don't even know what the problems are?

MR. BOWSHER: Well, we did audits in the past four years of the Air Force and the Army. We're going to do the Navy. So those are two areas. In other words, one of the reasons you have excess inventories is you have such bad systems and you can't get those records in shape at this point in time, so --

MR. LEHRER: You mean an agency does not know how many wrenches it has or how many --

MR. BOWSHER: That's right. See, the safe thing is to order more. And so that's what's costing, and it's the same like at the IRS. How much are the receivables that we can really collect? We have over $100 billion of receivables on the books, but the truth of the matter, we think it's closer down to maybe 30 billion that you can go out and actually collect.

MR. LEHRER: Why is that? You mean $100 billion is owed the federal government in tax money --

MR. BOWSHER: That's right.

MR. LEHRER: -- through IRS?

MR. BOWSHER: Yes.

MR. LEHRER: And only, we can only get 30 billion?

MR. BOWSHER: Yes, because, see, the truth of the matter is there's so many people there that just don't have any money. There's some errors that were made in your system in past years, and everything like that, and it's such a problem that for the new IRS Commissioner now coming in they're going to be saddled with this problem, and I must say the last three commissioners have started to work on this. We're very pleased, you might say, that the IRS was one of the agencies that's starting to go after the problems here in the financial management area. But a lot of these agencies are in very bad shape.

MR. LEHRER: Yeah. Well, what, how did this happen? How in the world could a federal government with, with all of this money being spent and all of that, be turned over in such -- I mean, end up being so poorly managed?

MR. BOWSHER: It goes back, I think, to the factors that you created this government in 1930's, the modern U.S. Federal Government really started in the '30s and World War II. And then you came along in the '50s and the '60s and you computerized. And the Executive Branch really took over the responsibility for financial management in 1950 when the Hoover Commission made the requirement. Prior to that, the General Accounting Office was the General Accounting Office. We did the accounting. So they never really got the accounting in good shape in the federal government, and it's something that I've been arguing for quite a bit here in the last 10 years. We've got to make that investment. You've got to find out where your problems are, and, and then you've got to do something about it.

MR. LEHRER: So there are solutions?

MR. BOWSHER: Well, there are solutions, absolutely.

MR. LEHRER: What are the solutions?

MR. BOWSHER: It's like New York City. In the 1970s you had the great crisis in New York City. They couldn't tell you where they stood financially but when we wrote it into the loan agreement that to get the federal money they had to get modern accounting and have an annual audit, they did. Now Sen. Glenn and Sen. Roth in their committee, they have passed what's known as a Chief Financial Officer's Act, and that's mandating it for a certain number of agencies. I am hoping that this Congress and with the Clinton administration supporting it, I hope that we can get that mandate in all of the major agencies and then have a program, and it'll take a number of years to get on top of this issue.

MR. LEHRER: But is it a failure of cabinet officers to get on top of it, a failure of the professional Civil Service, the failure of Congress to oversight, where's the failure?

MR. BOWSHER: It's the failure of all of those. You just named the three major responsibilities. In other words, the Civil Service, the career Civil Service people should have systems that work well, and they --

MR. LEHRER: No matter who's running it?

MR. BOWSHER: No matter who's running it, because then political people could come over and do, come in and do what they want to do and that is work on policy, work on programs, things like that. But the truth of the matter is they come in, they find out they've got all these problems, and the congressional oversight, and I was testifying last Friday. I said, you've got to have better congressional oversight on these major cabinet departments.

MR. LEHRER: Did they hear you?

MR. BOWSHER: Yes, I think they did, and I'm hoping that with a new team, the Clinton people are a young group coming to town here, I hope that they will really get behind this.

MR. LEHRER: Any evidence thus far that they've heard you?

MR. BOWSHER: Well, yes, I think that I -- I've talked with Congressman Panetta and some of the people.

MR. LEHRER: He's going to be the new --

MR. BOWSHER: He's the new OMB Director. He's coming over to meet with me tomorrow morning again, and I'm hoping that they'll put a program in place to really start the, get on top of this issue.

MR. LEHRER: Can you put a price tag on what this mismanagement is costing the taxpayers?

MR. BOWSHER: It's costing the taxpayer we think tens of billions of dollars. In other words, if you look at the excess inventories and the --

MR. LEHRER: It's just like having too many things. You don't know how many you have.

MR. BOWSHER: Yeah, too many things, in the military. We're running about $3 billion a year now in losses on the student loan programs. We have billions of dollars of loans not being repaid to the Department --

MR. LEHRER: Is that an accounting problem or is that a policy problem?

MR. BOWSHER: It's a policy problem, but to fix it and to know where you stand, you have to have good information, and so the accounting, the problems with the accounting and the financial reporting leads to the fact that it's hard then to get on top of these problems.

MR. LEHRER: So student loans is a good example to use. Let's say that as a matter of policy, political policy of a given administration, they want to be lenient.

MR. BOWSHER: Yes.

MR. LEHRER: On student loan --

MR. BOWSHER: That's right.

MR. LEHRER: Considered good for America.

MR. BOWSHER: Good for America to be lenient and let's make sure more people go to school than --

MR. LEHRER: Exactly. Your point is they don't even know how to be lenient?

MR. BOWSHER: That's right. In other words, they don't even know how much leniency can they afford, you might say.

MR. LEHRER: Yeah. Because they don't know how many loans are outstanding, and they don't --

MR. BOWSHER: They don't have it aged. Every company in the country would have their balance aged as to what the receivables are, how old, 30 days, 60 days, 90 days -- don't have that.

MR. LEHRER: Yeah, I see. Well, your reports also have some even, even more fundamental problems in there. One agency in particular, the Department of Agriculture, you say "It's a 20th century dinosaur."

MR. BOWSHER: Yes.

MR. LEHRER: In what way is it that?

MR. BOWSHER: Well, it's like some of our big corporations. In other words, it was created years ago. It was created when you had a lot of small farms prior to World War II. You had a county office in every county, and you serviced the people with manual systems and things like that. Today you have a much different farm agriculture program, and we just did a big management review there, and I think if you really went in there and did one of these TQM studies, you know, that Total Quality Management that's become very fashionable and that, you could, I think, streamline the laws, the regulations, the organizations, modern systems, make it simpler so that the customer, namely the farmer, can understand his programs better because today they have a terrible time understanding the programs. It's like looking at the Internal Revenue Code. So there's an area where I think you could get big savings, deliver better service to the customer, namely the farmers, and save the taxpayer a lot of money. Now you can't do that --

MR. LEHRER: And not step on policy?

MR. BOWSHER: You would have to take on policy, that's right. And there's vested interests in the policy issues, needless to say. Now I think like Adm. Watkins, you had him on your program recently.

MR. LEHRER: That's right.

MR. BOWSHER: He said --

MR. LEHRER: He's the outgoing head of energy.

MR. BOWSHER: Of Energy. And I think Adm. Watkins has made a real effort over there in the Department of Energy and he gave himself a C+ on the program the other night.

MR. LEHRER: For management.

MR. BOWSHER: And I asked my people who specialize in energy, is that reasonable, and they said, yes. He's really started to tackle some of the problems. That was an agency in really big trouble.

MR. LEHRER: Well, he said in that interview with Judy that he didn't realize what big management problems he was going to have before -- the same thing you said -- that he had to solve the management problems or get on the management problems --

MR. BOWSHER: That's right.

MR. LEHRER: -- before he could even worry about --

MR. BOWSHER: Before he could even start on some of the policy and some of the technical problems, and so I'm hoping now that the new team that's coming in in energy will take what he has accomplished and move it forward, but it really has to be worked at hard, and you've got to have the tone set at the top. So I'm hoping that President Clinton understands that these management problems are there and that the new administration and the Congress working with him will do something about them.

MR. LEHRER: There's also, you say, make the point in your reports that if you don't get on top of these things, you're also inviting more abuse and fraud.

MR. BOWSHER: Absolutely. Like, take the situation in HUD four years ago. Jack Kemp inherited something that just practically washed him over because he inherited an agency that had these scandals, had losses they didn't know. They thought they had losses maybe around 800 million, and when we finally got to be able to do the audit it was $4 billion. So as he said to me one day, if you people hadn't been in there doing this work, I never would have known where we stand. So that consumes a new cabinet officer like Jack Kemp. And that's what we've got to get behind us.

MR. LEHRER: And it's fair to say that a lot of these new cabinet members in the Clinton administration are going to be consumed?

MR. BOWSHER: They're going to be faced with these kinds of problems, I'm afraid, because it's not only in financial managements and systems, they don't have the talent there to really evaluate the programs, program performance, and you know, what outcomes are you trying to get. That's important to have here too in the government just as much as in the private sector and in our state and local governments. So these are some of the areas that they've got to work on.

MR. LEHRER: Mr. Bowsher, somebody listening to you tonight, taxpayers sitting out there, could get very angry if he or she wanted to. Should he or she get angry? Is this the kind of thing that should really annoy people?

MR. BOWSHER: Yes, I think it should, I really do. In other words, it's been allowed to go on for too long and I think it's time that they get fixed, and I think if an administration doesn't get it fixed, I think the taxpayer could get angry.

MR. LEHRER: Well, Mr. Bowsher, we just had 12 years of Republican administrations who said they wanted to come in and run the federal government like a private business, bring business principles to this terrible bureaucracy and clean up all these things you're talking about. You're saying they didn't really, in fact, do it, did they?

MR. BOWSHER: They really didn't in most cases, and that's a big disappointment. As you know, I'm a Reagan appointee, and I have four more years to go in my term here.

MR. LEHRER: You have a 15-year term?

MR. BOWSHER: A 15-year term, that's right. But I would have hoped when I came in -- because I know President Reagan when he gave me my charge, and I know gave some of the others, he was hoping that some of these problems would get solved,but by and large they didn't get solved in the past 12 years.

MR. LEHRER: Is there any simple reason as to why they didn't?

MR. BOWSHER: I think it's -- what you've got to do is you've got to get somebody at the core of OMB, if you're a member of the OMB directors that they've had here and not normally -- Darman's done more but David Stockman -- and they weren't really interested in the management --

MR. LEHRER: They were policy people.

MR. BOWSHER: They were policy people, and they were going to --

MR. LEHRER: Put a budget together.

MR. BOWSHER: Put a budget together, and cut here and cut there, and you know, you can't do it. Like they cut 17,000 people at Social Security, but there was no new systems, there was no new plans, so now it's hard to get a telephone call through to the Social Security Administration.

MR. LEHRER: Well, Mr. Bowsher, thank you very much.

MR. BOWSHER: Thank you. RECAP

MR. MacNeil: Again the main stories of this Tuesday, Iraq continued to provoke the U.S. and its allies, sending workers into disputed border territory with Kuwait for a third straight day and putting anti-aircraft missiles in the Northern no- fly zone. The leader of Bosnia's Serbs dropped his opposition to an international peace plan aimed at ending Bosnia's civil war, and this evening the Pentagon said a U.S. Marine was killed in Somalia. The Defense Department said he died in a fire fight with Somali gunmen in Mogadishu, but no further details were immediately available. It was the first casualty of a U.S. serviceman in Operation Restore Hope. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.