The NewsHour with Jim Lehrer

ELIZABETH FARNSWORTH: Good evening. I'm Elizabeth Farnsworth. Jim Lehrer is on vacation. On the NewsHour tonight the Dow drops 247 points, an analyst explains why, who's shipping the packages instead of UPS, the week's politics with Paul Gigot, joined tonight by E. J. Dionne and Andrew Kohut, and a discussion about Elvis on the 20th anniversary of his death. It all follows our summary of the news this Friday. NEWS SUMMARY

ELIZABETH FARNSWORTH: The Dow Jones Industrial Average today dropped 247 points to close at 7694.66. It was the largest decline in points since a 508 point loss in October of 1987, but not the largest drop in percentage, 3.1 percent, because of the high levels the market has achieved over the last decade. The index has lost 565 points since its record highs in the middle of last week. We'll have more on the stock market right after the News Summary. UPS and the Teamsters Union held the second consecutive round of talks in Washington today but without reaching a contract agreement. The two sides in the 12-day strike have met informally for more than 20 hours since Thursday morning. Teamsters President Ron Carey spoke to reporters about the status of the talks.

RON CAREY, President, Teamsters: It's obvious that there have been agreements reached; however, I will continue to negotiate as long as there is hope. But we will also continue to build the public support that it will take to reach a reasonable settlement.

ELIZABETH FARNSWORTH: There was no official comment today from UPS. A USA Today/CNN Gallup Poll published today said the Teamsters have the backing of 55 percent of those surveyed versus 27 percent saying they supported UPS. Some 185,000 UPS workers have been on strike since August 4th. Two key issues are the status of part-time workers and control of pension funds. We'll have more on the strike later in the program. The Agriculture Department today expanded a recall of Hudson Foods frozen hamburger patties. USDA officials said the patties may be tainted with E-coli bacteria, which can be potentially fatal for the elderly and young people. The recall was increased from 40,000 pounds to 1.2 million pounds of meat. The contaminated beef came from a Hudson Foods plant in Columbus, Nebraska. The company is based in Rogers, Arkansas. USDA officials advised returning frozen hamburger patties produced by the Hudson company since June. On the Mir story today the three crew members boarded a capsuled, pulled away from the space station, and circled it for 45 minutes. They looked at a module that was punctured by a runaway cargo ship in June. American astronaut Michael Foale videotaped the hull to help plan repairs. Foale radioed Moscow Mission Control that he did not see anything significant. The repair work is scheduled to start Wednesday. The Justice Department said today former top officials of the FBI will not face prosecution over the 1992 siege at Ruby Ridge. Officials cited lack of evidence in explaining the decision not to bring charges against former deputy director Larry Potts or his deputy, Danny Colson. They have been investigated for allegedly trying to obstruct an inquiry into the nine-day standoff at Randy Weaver's remote Idaho cabin. Weaver's wife was killed by an FBI sniper after a federal marshal and Weaver's son were killed in a shootout. Both Potts and Colson have been on paid administrative leave during the two-year investigation. At the National Archives today President Clinton held his last public event before leaving Sunday for a three-week vacation. The President unveiled plans for the nation's celebration of the millennium and said First Lady Hillary Rodham Clinton will play a leading role. The Millennium project will include lectures and 29 programs around the country sponsored by the National Endowment for the Arts. The Clintons will spend most of their vacation on the resort island of Martha's Vineyard, Massachusetts. They will return to Washington the weekend after Labor Day. More U.S. troops are on their way to Bosnia, officials said today. A new rotation of soldiers from the second armored calvary regiment based in Louisiana will temporarily raise the total number of U.S. servicemen in Bosnia to as many as 12,000, some 4,000 above current levels. The soldiers are part of the 31,000 member international stabilization force known as SFOR, deployed to implement the Dayton Peace Accords. State Department Spokesman James Rubin said the build-up will last through local elections in Bosnia, which are scheduled for next month.

JAMES RUBIN, State Department Spokesman: My understanding from the Pentagon is this is a normal planned troop rotation designed to ensure that troops will be sufficient in the area during the election period. We wanted to keep a strong presence there during this election period because we saw it as a significant moment.

ELIZABETH FARNSWORTH: The U.S. troops will go to Bosnia from a staging area in Hungary. Updating a story we reported Wednesday, a Texas grand jury last night declined to indict a Marine who shot and killed an American teenager herding goats on the U.S.-Mexican border. Corporal Clemente Banuelos was on a drug surveillance mission in May when he shot Ezekiel Hernandez, an 18-year-old from the border town of Redford, Texas. The military contended the shooting was in self-defense after Hernandez fired his 22-caliber rifle twice and was aiming at one of the three other Marines on patrol. Since the shooting the Defense Department has suspended the participation of active dutymilitary and anti-drug operations on the border. The program is under review. That's it for the News Summary tonight. Now it's on to the falling Dow, UPS's competitors, the week's politics, and an Elvis anniversary. FOCUS - UPS - MANSHIP

ELIZABETH FARNSWORTH: Since the UPS strike began the company has only been able to handle about 10 percent of the 12 million packages it usually moves every day. That means business is booming for UPS competitors. Tom Bearden reports.

TOM BEARDEN: At 11 o'clock every night after the last passenger plane has landed at Memphis International Airport, the purple and orange planes of Federal Express begin descending. Every 90 seconds they touch down and taxi to a gate not at the passenger terminal but to one at the much larger Fed Ex sorting center. A team of about 20 workers then quickly and methodically empties the plane, hauling out large containers of boxes for transfer inside. Workers here are accustomed to dealing with a large number of boxes, but over the last 11 days the volume has increased sharply. Under normal conditions Federal Express handles 2.8 million packages a night. But since the UPS strike began, that shot up to nearly 4 million. Fed Ex is working hard to keep up. Behind the scenes the global operations control center employees track weather conditions and other variables that could affect operations. At the start of each shift there's a briefing in the war room. On this night all systems seem to be operating smoothly, but Fed Ex has been forced to abandon its overnight guarantee. By 2:07 AM the package sorting is completed, and the boxes headed back to the planes are onto trucks. Laurie Tucker is vice president of logistics for Fed Ex. She says coping with the increased volume is the biggest challenge the company has had to deal with in its 25-year history. She says they've been able to manage the flow because of their sophisticated system of moving goods.

LAURIE TUCKER, Federal Express: We can see the volume builds in the field. We can understand where certain airplanes are going to be needed before the sort actually begins. We can begin to prepare for the inbound. We certainly have visibility into the weather, airport curfews, and such. So the information technology has helped us manage through this, but it all comes down to the people. And the people are working their hearts out right now.

TOM BEARDEN: So far, Fed Ex has hired only a small number of temporary workers. Instead, officer workers have volunteered their time after hours and on weekends to help sort the boxes. But Fed Ex is not an option for some companies who normally ship via UPS because Fed Ex charges dramatically higher prices. Many are turning, instead, to the U.S. Postal Service. In fact, so many customers have flocked to the Postal Service that over 2700 temporary employees have been brought on board. David Medina is the operations manager at the bulk mail facility in Denver. He says more people is just one of many adjustments.

DAVID MEDINA, U.S. Postal Service: We're re-aligning our forces. We have the equipment that we use to transport mail that we bring out of storage in order to help all the mail, and we'd normally put on extra trips, going to the different locations in order to haul the additional volumes of mail.

TOM BEARDEN: Any danger of being overwhelmed?

DAVID MEDINA: At this point, no. We've been handling the capacity very well.

TOM BEARDEN: Like Fed Ex, the Postal Service has a highly mechanized system for sorting and delivering packages. Since the strike, the number of Express Mail parcels has increased 70 percent. And, unlike Fed Ex, the post office is still guaranteeing delivery. The number of priority parcels--those slated for second or third day delivery--has increased 50 percent. Although Fed Ex and the U.S. Postal Service are two of the largest alternative to shipping by UPS, many other companies are taking advantage of the strike to make their presence in the delivery business known. United Airlines took out newspaper ads reminding the public they ship packages for same-day delivery. United says their package delivery business is up 30 percent. Private trucking companies are also getting a lot more business, as are bus companies. In Greyhound's western region parcel shipments have tripled. Regional director Mike Timlin says the strike has made the public aware of the service they've offered for over 80 years, rapid delivery service to small cities and towns.

MIKE TIMLIN, Greyhound Lines: I think it's an absolute great opportunity for us because that, quite frankly, is our niche. You know, we don't have a fleet of airplanes that can go across country but our niche is that we can deliver a package faster, cheaper, better than anybody else within a 500-mile radius of a distribution center.

TOM BEARDEN: The existence of so many different kinds of on-time delivery companies reflects just how dependent the nation has become on fast, guaranteed service over the last 15 years. Steven Medema chairs the economics department at the University of Colorado at Denver.

STEVEN MEDEMA, Economist: The on-time delivery thing is an offshoot of the general training business for just-in-time delivery of inputs to production, things that used to be stored in inventories and so on. It has a lot to do with the increasing globalization of the marketplace, the competitiveness that's involved, and the costliness of storing up inventories just doesn't make sense in this business world.

TOM BEARDEN: Medema says that although shipping companies have been able to keep up with demand so far, they won't be able to do it for long. Both Fed Ex and the Postal Service have put restrictions on how many packages they'll accept from individual shippers. And Medema thinks bottlenecks will emerge within the next week or so.

STEVEN MEDEMA: There's some windfall element there. There's also substantial cost there because their capacity is being strained as well. And they probably are doing some things to buy the capability to move some more packages. And doing that short-term is a very costly process. You don't have time to shop around for the best deal. You rent another plane from somebody and pay whatever price they want.

TOM BEARDEN: Nevertheless, most shippers say they don't mind because they think they'll keep some of the new business after the strike is over.

DAVID MEDINA: We're in a competitive business, and we want all the business we can get.

TOM BEARDEN: What's the reaction of your work force to this increased volume and the extra hours they're having work?

DAVID MEDINA: For the most part they see it as an opportunity to convince the public that, hey, we can deliver and to continue our tradition of excellent service to the public. The additional volume just represents additional opportunities.

LAURIE TUCKER: I think there's no question that the strike is going to cause some of those people to immediately see the value. And I think, yes, there will be some customers who will stay with Federal Express now as a result of the strike.

TOM BEARDEN: If the UPS strike continues, the acid test for the other shippers is expected to come after Labor Day when catalogue companies gear up for the traditional Christmas rush. UPS normally handles 80 percent of the parcel delivery business, but experts say there isn't enough excess capacity in the whole system to meet the demand. FOCUS - GOING DOWN

ELIZABETH FARNSWORTH: Next, the stock market and what's behind today's 247 point drop in the Dow Jones Industrial Average. Charles Krause has that story.

CHARLES KRAUSE: There were a variety of explanations for today's 3.1 percent drop in the Dow Jones Average. To help explain what happened we're joined by two chief economists from Wall Street: Mickey Levy, chief economist of NationsBanc Capital Markets, and David Blitzer of Standard & Poor's. Gentlemen, welcome. Mr. Blitzer, put this in perspective for us. With the market at these levels, how serious is a 250 point drop?

DAVID BLITZER, Standard and Poor's: [New York] I don't think it's that serious. I think first of all because it's gone up so much in the last couple of years we have to speak in percentage terms, not really in points on anybody's index. We dropped a bit more than 3 percent today. Last week between Thursday and Friday put together we dropped actually a tiny bit more than that. And I think in the grand sweep of time, as we look back at the end of this year and certainly next year, we're going to see this as the moment of nervousness but not a moment of panic, not a moment of lasting concern. I think in the coming weeks we will recover as we look at the economy. As we look at what the Fed is likely to do at its policy meeting next week, and we not raise interest rates, I think we'll see that we are in fundamentally good shape, and we can resume the kind of gain we've seen recently.

CHARLES KRAUSE: Mr. Levy, not a moment of lasting concern?

MICKEY LEVY, NationsBanc, Capital Markets: [New York] No, that's right. I think what we have to do is look at the fundamentals that brought the stock market up so high; that is, we have sustained economic expansion, with no signs of recession on the horizon. We have very strong earnings growth, and we have very low inflation. And with those fundamentals, the stock market's on sound grounds. Today it was a host of technical and psychological negative impacts from the falling dollar to just plain profit- taking to the fact that it was two options were expiring today. I think I believe the fundamentals will stay very, very sound, so if the fundamentals stay sound, there's no reason to be concerned. And the stock market's on sound footing.

CHARLES KRAUSE: Mr. Blitzer, do you agree that this is more of a technical problem than a fundamental problem?

DAVID BLITZER: I think it is in part technical and part psychological. We had a drop in the German mark and in the last week increasing concerns about European monetary union, Germany monetary policy, and a whole raft of issues that we know have helped the inflation picture stay good in this country, but we really haven't worried about it for the last several months. We had options expire. We've had a very volatile rough several days. Since Thursday of last week it's been more down than up. It's been very volatile. I think it's given some people some pause. And with options expiring and a couple of slow weeks in August coming up, I think a lot of people have said, I don't know if I want to carry all this stuff over the weekend, I'd rather square my books right now, sell, go home, and not worry about it. And I think that's what a lot of them have done. For the individual investor I think the thing to do is look at a little bit in the longer term. We've been telling you that if you're in stock, there are volatile moments. This is one of them, but we've also been telling you--and I think rightly so--that if you're in stocks over the long haul you'll profit. The last 15 years were exceptionally good, but I think they certainly proved that in the long haul they're a profit.

CHARLES KRAUSE: All right. Let me ask Mr. Levy--both of you have cited the dollar--concerns about the dollar--and also this exploration of options. I wonder--without getting too technical-- could you explain why--what options are, first of all, and why their exploration today might have affected the markets?

SEN. CARL LEVIN: Well, I think the simplest point to make about options--today we had the monthly expiration of index options and stocks. And when that tends to occur, various large institutions use options for different purposes, but in order just to square their books when you have options expirations that double up or triple up on the same day, it tends to accentuate the short-term trend, has nothing to do in the long-term. Vis-a-vis the dollar there is a lot going on in Europe, and just the uncertainty has led to a pick-up in the D-mark relative to the dollar. I think that is also just a short-term technical decline in the dollar. My feeling is if you look at the underlying fundamentals supporting the U.S. economy and where it's heading relative to the uncertainty in Europe and the fundamentals in Europe, which are ify at best, there will be continued demand for dollar-denominated assets, and the dollar will trend up. So by and--

CHARLES KRAUSE: Let me--one thing some of our viewers may not quite understand is why--if the Deutsche mark gets a little bit stronger in Europe--does that mean there's going to be a 250 point drop on Wall Street.

MICKEY LEVY: Great question. I don't know. I mean, quite simply, people said, oh, if the dollar is going to continue to fall, people are selling dollar-denominated assets, so they're selling stocks. But my feeling is the stock market fell due to short-term psychological and technical reasons and then as it falls, people scramble to make up reasons for it. Forget about all the short-term psychological impact. You look at the fundamentals, and they're still unambiguously positive.

CHARLES KRAUSE: Good enough. Sorry. Let me go to Mr. Blitzer for a second. Do you agree that this is--there's a kind of psychology here now that's kind of feeding on itself?

DAVID BLITZER: I think there is definitely psychology and I think it is feeding on itself, and it has for the past week. If one looks at--and I sort of hesitate to mention as a comparison--but 1987, when the market crumbled, the week before the crash we saw much, much more volatility than there is. But what we clearly saw was nervousness that rose and rose and rose. And all the studies done at that time and very much at that time showed that people got themselves into really a panic. I think since then what we've learned out of '87, out of a dip in '1989 that was about one and three times bigger than this one on a Friday afternoon, and some other dips since then, is that panic is a mistake. What is reasonable is to look, as both of us have said, at what the economy is doing. And the economy in 1987 was much, much worse than it is now. And in that I don't think there's any comparison or any parallel.

CHARLES KRAUSE: Do you agree then with Mr. Levy that really nobody really knows why this happened today or this week?

DAVID BLITZER: In a sense nobody does really know why this happened. There is an element of mob psychology in any market. And starting at about 3 o'clock this afternoon, and between 3 and 4 was almost half the drop, I think that just got the ball rolling. And everybody sees somebody selling. Nobody wants to be the last fellow who didn't sell on this afternoon. So they all rush in. On Monday morning, by then I think they will have had a chance to look around, and most of them have decided it's not so bad and they should sit tight. And I think a few of them will decide it's gotten so low they should be back in there buying. And hopefully, that should get us off to a better start next week.

CHARLES KRAUSE: So you're expecting the market to rise next week?

DAVID BLITZER: I'm expecting the market to rise a little bit. I think it's going to be another volatile week. It takes a little time to digest 3 percent in a day or about 1 percent in an hour.

CHARLES KRAUSE: Quickly, Mr. Levy, do you agree that probably the market may end up going up next week?

MICKEY LEVY: Well, it's always hard to say, and it's a guessing game. One point I would like to get back to, and that is this is nothing like October 1987. Then you had the Federal Reserve raising rates. You had fears of inflation. You had a fragile economy. Now you have--the Fed's all but licked inflation. The Fed is not raising rates. The economy is unambiguously on sound foundations, and with that, it's not--it's only--it's silly to draw comparisons.

CHARLES KRAUSE: And I'm afraid on that note we will have to leave it for now. Thank you, Mr. Levy and Mr. Blitzer for joining us. Thank you.

ELIZABETH FARNSWORTH: And still to come on the NewsHour tonight the week's politics and why Elvis is still the king. FOCUS - POLITICAL WRAP

ELIZABETH FARNSWORTH: Now, political analysis of the week. Mark Shields is on vacation, but Wall Street Journal columnist Paul Gigot is here. Joining him tonight is Washington Post columnist E. J. Dionne, plus Andrew Kohut, executive director of the Pew Research Center for the People and the Press, which released a new poll today. It shows more Americans are satisfied with the country's course than they have been in a long time. Andy, explain what you found, please.

ANDY KOHUT, Pew Research Center: Well, apparently, Americans have turned a psychological corner for much of the 1990's and even a good part of the late 1980's when we asked samples of the American public: Are you satisfied or dissatisfied with the conditions in the country? Fort the most part they said dissatisfied. Maybe 25 percent or 26 percent would be the average if we put all of those numbers together. Only in the days just after the Gulf War and for a very short time did a majority of Americans think the country was on the right course. But in our current survey we find 49 percent saying I'm satisfied with conditions in the larger world, not only with my world but the way things are going in the country.

ELIZABETH FARNSWORTH: Did they say why?

ANDY KOHUT: Well, I think it reflects a couple of things: the conditions that people acknowledge. They see the stock market is up, at least up relative to where it was a few years ago, and they see unemployment down, but in this poll we found people also saying for the first time crime is not on the increase. The budget deficit is not on the increase. And in other surveys we found an easing of economic anxiety, personal economic anxiety. People were scared for a very long period of time through the 1990's, and that fear has gone down as news coverage of that economic news has gone down, kind of a strange thing to say coming out of that last report, but that's been the reality of the past year or two.

ELIZABETH FARNSWORTH: Do political opinions reflect these feelings?

ANDY KOHUT: Well, what's happened in this poll is we see confidence in the course of the nation is up. There's a big vote of confidence in the political establishment. We see--

ELIZABETH FARNSWORTH: How about the President, for example?

ANDY KOHUT: The President, for example gets ratings that are nearly as high at 59 percent as Ronald Reagan's at a comparable point in time, which would have been in the summer or fall of 1985, when Reagan was getting 62 and Clinton is polling 59 now. We see when we ask people about members--the congressional representatives, we see the highest reelection figures that we've ever seen--66 percent volunteering that members deserve reelection. And then one of the more surprising results in the poll is that for the first time in a decade the percentage of people saying that we need a third party has fallen into the 40's, rather than in the 50's. A year ago, I believe, it was 58 percent. It's 47 percent currently. And all of these things are sort of coming together as people feel better about the country, and, therefore, feel more satisfied with the status quo.

ELIZABETH FARNSWORTH: Back on President Clinton just for a second, what do people say about what they think of him? Are they mentioning his policies?

ANDY KOHUT: Well, when we asked an open-ended question, what have you heard about President Clinton, we found a very different answer than six months ago. As many people in August mentioned scandal, Whitewater, Paula Jones, but unlike in our February survey, August we find as many people mentioning Bill Clinton in association with a policy initiative, mostly the budget legislation, but other things as well. So the public--the President's image as able to get things done has improved by 21 points. To a certain extent many people still mistrust the President; 47 percent regard him trustworthy compared to 64 percent able to get things done.

ELIZABETH FARNSWORTH: And what did polls show about what Congress and the President should focus on next?

ANDY KOHUT: The public says when confronted with a laundry list of issues the top two issues that come up are education, fix education and fix Social Security. And an interesting thing, Elizabeth, there's a big generational difference here. Older people, people over 50 years of age, put their emphasis on fixing Social Security, younger people, people under 50, say fix education. Poverty is mentioned. Medicare, obviously, is mentioned, and race to a lesser extent than these two big issues of education the President has promised, and Social Security, which the country is very worried about.

ELIZABETH FARNSWORTH: Did the polls show that people appreciated recent congressional initiatives, like the budget?

ANDY KOHUT: Well, if we look at when we asked people to rate how important the budget has been, the passage of this has been, relative to other initiatives, it gets higher ratings than just about anything, with the exception of Kennedy-Kassebaum, which was higher than the tobacco deal, higher than the Family Leave Act, and certainly higher than the minimum wage. This--especially the tax cuts and the tax credits are things that people feel will help them. They still remain skeptical.

ELIZABETH FARNSWORTH: 16 percent said they thought the budget would be balanced, is that right?

ANDY KOHUT: But that's better than a month ago. 85 percent a month ago said the budget won't be balanced in the year 2002. It's down to 77 percent or 75 percent. So we have some measure of--still a long way to go. It's a show-me attitude actually.

ELIZABETH FARNSWORTH: Was the public interested in say the campaign finance hearings and other news out of Washington? Is it still important to them?

ANDY KOHUT: Well, what we've been finding not only with regard to campaign finance hearings but most Washington policy stories, much less interest in 1997 than in 1996 and 1993 and '94 and '95. In fact, we've seen a steady erosion over time in the percentage of people who say they paid some or a fair amount of attention to the Washington policy stories that we poll on, on a monthly basis.

ELIZABETH FARNSWORTH: Well, let's talk about that, all of us, for a minute. Are you going to get another job, Paul?

PAUL GIGOT, Wall Street Journal: My mother always told me I should have got a real job.

ELIZABETH FARNSWORTH: Why do you think this is happening? What's your analysis of this phenomenon, or less interest in what happens in Washington?

PAUL GIGOT: Well, it is a little bit stressing, if you're a political journalist, but if you're a conservative, it may be reassuring. It reflects a country, I think, that's reasonably content, as Andy said. 4.8 percent unemployment can cover an awful lot of Charlie Tries and John Huangs and Webster Hubbells and whatever goes wrong in the city.

ELIZABETH FARNSWORTH: Names in the campaign finance--

PAUL GIGOT: In the campaign finance--whatever goes wrong. But also other things have been happening. Look at welfare, which was a great controversy for a long time. It's been a great success over the last year. As the President said this week, the debate over that bill's over. The welfare rolls have declined enormously. Crime has been falling. I think the country seems to be happy with that, and also has a certain--still retains a certain skepticism about what the city can do about the remaining problems--education as a priority is fundamentally a state and local problem.

ELIZABETH FARNSWORTH:

E. J., what do you think about that, the role of Washington?

E. J. DIONNE, Washington Post: Well, I'll go cover the Red Sox or the Orioles happily. I think that the--you know--I think the public has a perfectly rational response in that there's a kind of exhaustion both in Washington and in the country after the last four years. In the Clinton--first two Clinton years--you had this horrible fight over health care that didn't reach the goal that Clinton set. Under the Republicans after they took over Congress, you had another horrible fight over their budget. They didn't reach the goal they set. Both of them--the voters essentially reduced both parties to little piles of rubble--the Democrats in '94, the Republicans in '96--they got a wake-up call. So now everybody's cautious. The country says, okay, in Washington they're not fighting a lot. This budget gives us some tax cuts which we like. It'll cover more kids--give health insurance to kids. They like that, and they're inclined to say, let's think about something else. And I think that's a reasonable response.

ELIZABETH FARNSWORTH: And,

E. J., what about the polls showing that education and Social Security are high up on people's agendas? Are they likely to be higher up on the congressional agenda, when the members return in September?

E. J. DIONNE: The real problem, I think is each party figuring out what to do about those. I mean, I think education could be a great debate. I think the Republicans have something to say about vouchers and alternative ways of approaching education. The Democrats could talk a lot about inequalities between what's spent on kids in wealthy areas and what's not spent on kids in inner cities. And you could try to bring--I think there's an opportunity to bring together those two sides and say, yes, we do need to spend more but we need to spend it in different ways. But there are huge obstacles to both of those things happening. The budget agreement doesn't leave a lot of money to be spent on education, and obviously there are a lot of people opposed to vouchers.

ELIZABETH FARNSWORTH: And what about Social Security?

PAUL GIGOT: I think Andy's results are striking and they're striking because it suggests that what was and has been the third rail of American politics untouchable is beginning to be touchable. Enough people are worried about the status of Social Security so that they may beginning to entertain thoughts and politicians who have thoughts about fixing it.

ELIZABETH FARNSWORTH: Let me interrupt just one minute. Are they willing to entertain it? Is that what the poll shows, do you think?

ANDY KOHUT: Well, the poll didn't pursue--this poll didn't pursue what they're willing to do.

ELIZABETH FARNSWORTH: It just said that was way up there.

ANDY KOHUT: But we did find much more willingness on the Medicare debate to do--to, for example, means-testing than actually occurred. The public was very reluctant to see the age of eligibility required, but we were surprised by how much give there was to public reaction to sort of means testing.

ELIZABETH FARNSWORTH: Go ahead. I'm sorry to interrupt you.

PAUL GIGOT: Well, it may be that the country here is a head of the politicians on the subject, who I don't think are going to do anything about Social Security anytime in the next year or two, probably. It may be that this is a sort of thing that gets debated in the 2,000 presidential campaign.

E. J. DIONNE: And I think the problem on Social Security, as Andy said, a lot of the people who name that issue are elderly people. They are less interested in reform to say privatize it or do something radical to it. They want to make sure their benefit is there. And if that is their main concern, which is a reasonable concern, then they're not going to look kindly to a Congress that might reduce what they're going to take out of it in the long run.

ELIZABETH FARNSWORTH: And

E. J., what about the UPS strike, do you think the President will continue to stay out of it?

E. J. DIONNE: I think he will. I think that the--what he's done is he's had his secretary of labor do something to bring them back to the table. But the President got a lot of support from the unions in 1996, the Democratic Party did. He's about to start a fight with unions over free trade. He wants fast track authority to negotiate more free trade agreements. He is not, I think, going to step in and slap the unions in the face, as they would see it. And the other thing is this is a very popular strike. This is--I mean, this is, I think, one of the most important strikes we've seen in ten or twenty years. It involves a new--

ELIZABETH FARNSWORTH: It is one of those issues you think is not being hyped, is that right, it's a big deal?

E. J. DIONNE: This is--yes, when people say it's a big deal, they're not hyping it because, you know, first of all, you're dealing with a new part of the economy. Unions are seen as dealing with manufacturing, with the trades, the building trades. This is one of the growing parts of our economy, so it affects a lot of people. The central issue in the strike, which is, should companies take on more part-time workers, or should they give more people full-time jobs, most Americans are very concerned with the spread of part-time work. And most Americans have seen UPS workers out there working hard, so they're sympathetic figures on--you know, on their face from what they do. So that I think from the Democrats' point of view and the President's point of view they don't want to intervene against labor in a situation where labor- -at least in public opinion terms--is strong.

ELIZABETH FARNSWORTH: What about the Republicans point of view?

PAUL GIGOT: Well, the Republicans generally would be--say hands off because we don't want the government to intervene in what is a private collective bargaining effort. But you have the Republicans constituency being small business, for example, which is--sends an awful lot of packages through UPS. And they're being hurt by this and so you're beginning to see some Republicans say let's intervene. I agree with

E. J. on the political clout of labor. It's kind of a paradox. Labor's never been weaker in terms of its clout of the private economy. I mean, there's only 10 percent of the workers that are really organized now; 35 percent 20 years ago. But they're probably as strong as they've been in 20 years in terms of political clout, and that's in part I think a reaction to the Republican takeover of Congress, unions deciding we're going to suddenly channel an awful lot of money into individual races, affect that, try to get Congress back, and then you have what I this is one of the most under-reported stories in Washington, which is the dance between Al Gore and the AFL-CIO, because he's trying to get that presidential nomination in the year 2000, and they're going back and forth on what

E. J. talked about, the free trade issue, and he gives 'em one; he takes one. He gives them one; he takes one. And I think this strike is one he's going to give 'em because this is an issue--this is a strike in which the labor unions are trying to increase their power over the private economy that's been dwindling away.

E. J. DIONNE: I think just to back up actually, something Paul said, a reason why labor--despite the fact that it's only 10 percent is gaining strength, is because the issues are laid out there, the issues that people care about are now much more the issues that organized labor is talking about. This question of part-time work, people are worried about pension benefits being reduced in the long run. There are a whole bunch of things that labor has started talking about where people are taking a second look at unions. And you can't say I'm afraid of big labor, which was the standard thing that was said, when labor isn't big anymore. So labor is now not threatening in the way it was to some people and seems to be allied where most people are on a lot of important issues.

PAUL GIGOT: There's a risk for labor here, though, if they go too far because if they're--if it is seen as damaging two different parts of the economy, I think that the pressure will grow for some kind of settlement, for presidential intervention.

ELIZABETH FARNSWORTH: Well, thank you all very much. FINALLY - ELVIS LIVES

ELIZABETH FARNSWORTH: Finally tonight, the King. Tomorrow is the 20th anniversary of the death of Elvis Presley. Paul Solman looks at his enduring appeal.

ELVIS PRESLEY SINGING: Well, get out of that kitchen and rattle those pots and pans.

PAUL SOLMAN: It was 1956, when an unknown twenty-one year old from Tupelo, Mississippi, changed the face of American music and cultural history, seemingly forever.

ELVIS PRESLEY SINGING: I believe you were doing me wrong and now I know. I believe you were doing me wrong and now I know.

PAUL SOLMAN: His name. - Elvis Aaron Presley, his trademark--lips that quivered and hips that quaked.

ELVIS PRESLEY SINGING: Shake, rattle, 'n roll. I said shake, rattle, 'n roll. I said shake, rattle, 'n roll. I said, shake, rattle, 'n roll.

PAUL SOLMAN: In his first live TV performance on the Dorsey Brother's Stage Show, the man moved with such vigor, an aerial camera was needed to keep him tn view. Starting out in the early 50's as part of the "Blue Moon Boys," Elvis mixed a brand of rhythm and blues with country music-- a sound that would become a hallmark of rock and roll.

ELVIS PRESLEY SINGING: We're going to rock--

PAUL SOLMAN: Enter "Colonel" Tom Parker, who looked at Elvis and saw money signs. The fast talking manager orchestrated a deal with RCA, which paid off immediately when "Heartbreak Hotel" topped the charts.

ELVIS PRESLEY SINGING: so lonely they could die--

PAUL SOLMAN: But this was the 1950's, the America of Eisenhower, conformity, complacency, and racial segregation. Elvis's black sound, his emphatic hair, his even more emphatic pelvis--aroused pre-pubescent, pre-rebellious baby boomers. Their parents were often outraged. But thanks to TV, the kids won out. One of the first to introduce the hot new attraction--Milton Berle.

MILTON BERLE: Elvis, if I did that thing the way you did that thing [wiggles], do you think I could get all the girls the way you do?

ELVIS PRESLEY: Well, it might not help you get girls but at your age it would get your blood circulating.

PAUL SOLMAN: Elvis's unbridled performance of "Hound Dog" on "Uncle Miltie's" show was right on the edge. Mid song, he put his guitar aside, and emphasized the beat with more flexible equipment.

ELVIS PRESLEY SINGING: You ain't nothing but a hound dog--

PAUL SOLMAN: Elvis was due to perform on the Steve Allen Show within a few weeks. NBC was pressured to cancel, but after reassuring viewers that Elvis would be gyration-free, the show went on.

STEVE ALLEN: We want to do a show the whole family can watch and enjoy. And we always do. And tonight we are presenting Elvis Presley in what you might call his first comeback. And at this time it gives me extreme pleasure to introduce the new Elvis Presley. Here he is.

PAUL SOLMAN: It would be an embarrassing, even surreal performance. Dressed in white tie and tails, the singer serenaded a "Hound Dog" in top hat. The Ed Sullivan Show chose a different way around the censors. In 1957, for his third and final Sullivan appearance, Elvis was allowed to perform in any manner he chose. The camera, however, never hit below the belt. A seven-year movie contract with Paramount followed--from a farm boy in "Love Me Tender," to roles as an island tour guide, a prize fighter, a sheik--

ELVIS PRESLEY SINGING: Come hear my serenade--

PAUL SOLMAN: --even a rodeo rider, and the musical ex-con in "Jailhouse Rock."

ELVIS PRESLEY SINGING: Let's rock. Everybody, let's rock--

PAUL SOLMAN: But the Hollywood Elvis in swimsuits and Hawaiian shirts as a critical failure and a far cry from the bad boy of rock'n roll. In 1968, Col. Parker dressed Elvis in black leather and returned him to the stage to again strut the stuff that had made him a superstar.

ELVIS PRESLEY SINGING: You got me doing what you want. Baby, what do you want me to do? Now, wait a minute. Wait a minute. There's something wrong with my lip you remember that, don't you? [laughter among audience]

PAUL SOLMAN: The lip shivering, hip shaking King was back, with a note of triumphant irony. He was older, so were his adoring, aging baby boom fans. Elvis went on to Vegas to perform two nights a week, but the life, the stardom, it was all getting to him. He became exhausted, sick, and began to rely on prescription drugs. Elvis's last TV appearance came six weeks before his death.

ELVIS PRESLEY: Thank you very much. If you think I'm nervous, you're right.

ELVIS PRESLEY SINGING: My friend, I'll say it clear, I'll state my case of which I'm certain. I've lived. Life is full--

PAUL SOLMAN: Elvis died of a heart attack in Memphis August 16, 1977. He was 42.

ELVIS PRESLEY SINGING: I did it my way.

PAUL SOLMAN: The amazing thing is that despite his physical death, the cry continues louder than ever: Long live the King.

SPOKESMAN: What we are about to unveil here is staggering--a certification for sales totaling more than 400 million records outside of North America.

PAUL SOLMAN: RCA says Elvis record sales rose 61 percent in the past 12 months, and he remains the label's top-selling artist worldwide. This week, RCA announced the release of a new four-CD set: Elvis Presley Platinum: A Life in Music. There are some 500 Elvis fan clubs in the U.S. and hundreds more across the globe, from Germany to Singapore, to Macedonia. And then there's Graceland, where tourists can choose from more than 2500 mementos to take back home. Among private homes, Graceland says, it's second only to the White House in tourists, 700,000 annually. Another site on the Presley pilgrimage, Elvis Presley Memphis, which serves up the King's favorite southern meals, including his beloved fried peanut butter and banana sandwich. Meanwhile, on the interpersonal front, sorry Ken, but Barbie's moving out. Mattel has debuted a Barbie Loves Elvis gift set. For the sophisticated Elvis fan the Cleveland San Jose Ballet's tribute to Elvis, Blue Suede Shoes, which has toured to sold-out performances nationwide. [music in background] And for those students returning to campus this fall Elvis awaits. More than 300 college courses on the King are offered in the U.S., with no shortage of reading. More than 200 books have been published about Elvis in English alone, plus, you can access one of the hundreds of web sites on Elvis history, Elvis sightings, even a fictional page which pretends to show the star's life as seen through the eyes of his stillborn twin brother, Jesse Garron Presley. And Elvis thrives on the silver screen in movies like "Forrest Gump."

WOMAN: Forrest, I told you not to bother this nice, young man.

ACTOR PORTRAYING ELVIS: Oh, no, that's all right, ma'am. I was just showin' him a thing or two on the guitar here.

PAUL SOLMAN: He also provides a key moment in "Honeymoon in Vegas." And there are thousands of performing Elvis impersonators, including at least one Las Vegas headliner, Ram Patrick by day, Elvis Presley by night. Add it all up and you've got a cultural figure who's an even larger presence 20 years after his death than he was in life.

PAUL SOLMAN: Now for more we talk to Sam Phillips, who discovered Elvis, and as the founder of Sun Records was his first producer. He joins us from Graceland, along with Peter Guralnick, who published volume 1 of his massive biography "Fast Train to Memphis: The Rise of Elvis Presley," in 1994, the second volume is due next year, and Charles Wolfe is a professor at Middle Tennessee State University, who studies cultural history and of course Elvis. Welcome to you all. Mr. Phillips, let's start with you if we might. What was it about Elvis that made him so popular?

SAM PHILLIPS, Sun Records: Well, you know, I think if I could answer that question, it probably--we wouldn't be talking about it here right now, but at the same time you--what I think is so valuable in this whole situation is it's not necessarily the entertainment portion that we know the man had, but his ability to affect that type of entertainment that was not exposed to the people, the younger people at that time, back in the 50's, that made him become to them someone that was freer for their purposes and their actual ability to say hey, you know, this man came up the way I did, and he is doing some things that I would like to--not necessarily musically--but he's wearin' his hair a little bit different, and he just did so many things, so many things so differently that I think that that had an immediate display of acceptance and then of course later on we know the story.

PAUL SOLMAN: Was that the essence of his appeal, do you think, Mr. Guralnick, his rebelliousness?

PETER GURALNICK, Biographer: I wouldn't say it was rebelliousness. I think that Sam Phillips and Elvis Presley were looking for a fresh row to hoe, as Sam has said many times. There was an element of originality; there was a sound that nobody had ever heard before, and this took a degree of daring, it took a degree of cutting itself free from commercial restraints. It took the courage to go out there and to introduce to the world a sound that they weren't ready for really. When Sam went around to the different radio stations, the country stations said Elvis sounded too black; the black stations said he sounded too country; and the challenge was to sell it to the extent that people would be able to hear it, and I think the reason the people could hear it was the same reason that people today will respond to something fresh, something original, because they had never heard it before.

PAUL SOLMAN: You've also written about his vulnerability. You've talked about his exposure of his feelings. What did you mean that?

PETER GURALNICK: I think that one of the things that Sam has pointed out is that Elvis came in; he was perhaps the most insecure person that Sam had--one of the most insecure people he'd ever recorded, including blue singers who had never interacted with white people before, including country boys who came in and simply hadn't had the expose to that degree of celebrity or aspiration to fame. What Elvis--what was astonishing about Elvis is from the very first tape--that he made--the one that he came in the summer of '53 to make--and it's been said he made it for his mother--but I think he made it more as a tryout for himself--from that very first time he was able to expose his vulnerability; he was able to express himself in music in a way that he was not able to express himself in words, and what I think was astonishing about the union of Sam Phillips, Elvis Presley, and Sun Records was that Sam Phillips was able to recognize what lay behind this exterior and that there was something just crying out to be expressed.

PAUL SOLMAN: Mr. Wolfe, you're in Nashville and you're a cultural historian or student of cultural history, sorry. The sexual revolution, integration, these were all happening at--beginning to happen at that time. Does Elvis Presley's popularity fit in with that, or am I just--is that a stretch?

CHARLES WOLFE, Middle Tennessee State University: No, very much. He fits in with that. One of the things that we tend to overlook sometimes arethe momentous events that were going on in 1956 and '57. When Elvis signed his contract with RCA, for example, in 1956, there was not a single integrated school in the state of Tennessee. And that was all just about ready to break loose, and many of the people who resented the attempts to do civil rights looked upon Elvis as one of the examples of why civil rights should not take place.

PAUL SOLMAN: But how come he's so popular, if people are afraid of him in that way?

CHARLES WOLFE: Well, not all people were. We're talking about a generation here that really preceded Elvis's generation, younger people, who were Elvis's fans, who were flocking to his concerts didn't feel that way at all. We're talking here about some of the old south that saw many of their cherished values being threatened and challenged by this.

PAUL SOLMAN: And, Mr. Phillips, did you feel that, that part of what you were doing with him was a breakthrough at a time when America was ready for integration?

SAM PHILLIPS: Well, we didn't set out to revolutionize the world. I just always thought and have from childhood, being raised up on a farm with black and white, during the Depression--I'm 74 years old now--I did see some of the things that brought blacks and whites in the South especially closer together than anybody could anticipate. We were forced one way or the other to kind of keep it separated, segregated schools and all that, but we weren't that segregated in spirit, and what we learned from each other, and the feel and the actual "gospel" that we had, and the things that we did and tried to do one with another was something that was just automatic when it came to music. Music was some way of saying in the South look man, if there is some fervor that you feel in our soul and you're not a preacher, you're not a politician, maybe you're not a speaker, but if you can sing and you can feel, you're going to convince the people that what you're feeling is something that is worthwhile.

PAUL SOLMAN: Mr. Wolfe, is he more popular today and if so is that part of the reason why, I mean, the kind of spiritual feeling that Mr. Phillips was just talking about, something that transcends race, for example?

CHARLES WOLFE: Well, absolutely. It transcends race, it transcends the immediate social context; it transcends the whole business of Elvis as a southerner. He today has gotten beyond all of those original contexts, and he has in the process I guess could be described as universalizing Elvis. And the reason that works is because of the passion and the sincerity that Sam talked about, I think, the fact that people recognize today that nobody put as much into a song as Elvis did, regardless of whether you like his rock'n roll, his ballads, even his movie songs, you know, he does them extremely well, and people recognize that he's extremely vulnerable, and he's dealing with it through his music. So people respond to him that way I think in many ways, and it makes him a universal figure because what we're talking about here are archetypal elements that people in Japan and South Africa, in Germany, in Iceland, can understand, as well as people in the American South.

PAUL SOLMAN: Mr. Guralnick, I'm astonished by his current popularity. Are you not surprised? I mean, how could he be this big a deal this long after his death?

PETER GURALNICK: Well, I think one aspect of it, as--we've seen a proliferation of media in the last 10 or 20 years that would have been unforeseeable in the past, and to the extent that you have something like the trial of the century--you havethe girl in the red velvet swing trial at the beginning of the century, you have the O. J. Simpson trial towards the end of the century-- look at the difference in the coverage. It's simply--there is no basis for comparison. But the thing is that I would agree with Charles. I think the basis for Elvis's continuing popularity is his music and what continues to appeal to people is the same thing that continued to appeal till the end of his life. Whether you like the music that he made at the end, for example, or not, what he showed on stage, he revealed himself. What he showed on records, he was nakedly revealing himself, and I think people appreciated the honesty of that presentation even whether that was their favorite music or not, and I think that's what continues to come through. This is not something you can bottle or define, but it's something that came through from the very first record he made, and I think it comes through even at the end.

PAUL SOLMAN: Okay. Well, thank you all three of you very much. I appreciate it. RECAP

ELIZABETH FARNSWORTH: Again, the major stories of this Friday, the Dow Jones Industrial Average dropped nearly 250 points, and UPS and the Teamsters Union held a second consecutive round of talks in Washington without reaching a contract agreement. We'll be with you online and again here Monday evening. I'm Elizabeth Farnsworth. Thank you. Have a good weekend.