The MacNeil/Lehrer NewsHour

Intro

ROBERT MacNEIL: Good evening. These are the top news headlines today. The United Nations Security Council voted for voluntary sanctions against South Africa. Secretary of State Shultz formally rejected new U.S. talks with Nicaragua. Congressional negotiators agreed on defense spending but stalled on the main budget package. Teamsters' union car haulers went on strike. Jim?

JIM LEHRER: There are two focus sections and a newsmaker interview on the NewsHour tonight. Judy Woodruff reports on a defense budget item called the Bradley fighting vehicle. We interview Li Peng, the youngest of the new leaders of the new China, and we take a second look at a report from Tennessee, which seems to be on its way to replacing Michigan as the automobile capital of the nation. News Summary

MacNEIL: The United Nations Security Council approved a resolution today calling on member nations to impose sanctions against South Africa because of the declaration of an emergency there. The vote was 13-0 with the United States and Britain abstaining. The U.S. and Britain vetoed another resolution which would have called for mandatory sanctions. The resolution that was approved suggests five actions: suspending new investment in South Africa, halting imports of South African gold coins, ending guarantees on export loans and ending sales of any computer equipment that might be used by the South African police and army.

In Washington the Reagan administration toughened its rhetoric against South Africa. White House spokesman Larry Speakes called on South Africa to lift the state of emergency, restore civil liberties and dismantle the system of apartheid. In the strongest words used this week, Speakes said, "We want the state of emergency removed." In South Africa there were scattered incidents of violence as arrests under the state of emergency mounted to more than 1,300. Near Cape Town 300 people stoned a school. In the same area police used tear gas to scatter a crowd burning private vehicles. President P.W. Botha said today he was willing to negotiate with blacks who oppose violence, but he did not urge any specific talks with Bishop Desmond Tutu, who said earlier this week he would be willing to talk to Botha.

LEHRER: Secretary of State Shultz today rejected direct talks between the United States and Nicaragua. He told reporters in Mexico City, "Appropriate circumstances for such talks are not present." Shultz was urged to resume conversations by Mexico on behalf of the so-called Contadora countries, which are trying to negotiate a peaceful settlement in Central America. Shultz issued his statement as he left Mexico City this morning. A House-Senate conference committee also today reached agreement on aid to the anti-Sandinista guerrillas in Nicaragua. The amount is $27 million, but it has to be used for nonlethal aid which cannot be administered by the CIA. The agreement clears the way for final passage of a $12.7 billion foreign aid bill, the first Congress has been able to agree on in four years. Another conference committee has also agreed on a $302.5 billion Pentagon budget which House Armed Services Committee Chairman Les Aspin said today meant the days of the big defense increases are over.

Rep. LES ASPIN, (D) Wisconsin, House Armed Services Committee: Basically what the administration requested originally was a 5.9 increase this year in defense spending. This is a no increase. That was a 5.9 real increase that the administration asked for. We are now down to a no real increase. We've given the rate of inflation over last year, and that's all. And I think the message here quite clearly is, the time of big defense increases is over. The kind of increases that we saw in '80, '81, '82 and '83 -- no more.

LEHRER: We'll have more on the defense budget and the overall budget as well later.

MacNEIL: The mayor of New York City said this evening that increased amounts of plutonium were found in the city's water supply after a threat was made to poison it. The threat was made as part of a demand to drop all charges against Bernhard Goetz, the so-called subway vigilante who shot four black teenagers he said menaced him on a subway train. The threat was made in an unsigned letter received by Mayor Ed Koch in April. The traces of plutonium, a radioactive material, were found in May. Dr. David Senser, the city health commissioner, said the traces of plutonium were so minute they were harmless.

LEHRER: All signs today point to the small Tennessee town of Spring Hill as the place where General Motors will put its new Saturn automobile plant. The United Auto Workers executive board voted this afternoon in Chicago to approve a special contract to cover workers in the plant. Copyrighted stories in the Detroit Free Press and the Nashville Tennessean said earlier UAW approval was all that remained to be done. Spring Hill has a population of 1,100 and is 30 miles south of Nashville. A formal announcement from GM is now expected early next week. There's been a ferocious competition among more than a dozen states for the Saturn plant, which will employ some 6,000 workers.

The other major auto story of the day has to do with workers not working. Twenty thousand Teamsters' Union members who haul new cars to dealer showrooms went on strike. We have a report from Trudy Gallant of public station WTVS-Detroit.

TRUDY GALLANT, WTVS [voice-over]: As car haulers of Teamster Local 299 pulled in from cross-country trips this afternoon they were told to park their rigs and join picket lines. The National Automobile Transporters Association says car haulers are some of the highest paid truckers in the nation. They were offered a substantial wage increase. But teamsters say it was minimal because of concessions made three years ago.

JIM CAROTHERS, trucker: We get paid on a mileage scale. We're not interested in a mileage scale increase. This is a concession contract that they're asking for at a time that doesn't warrant a concession contract. All of these companies have made huge, huge profits in the time since the last serious recession in '81. We gave them a serious concession contract then. There's absolutely no reason for them to come back and ask more.

LOU LARICHE, president, Detroit Automobile Dealers Association: If the strike lasts for any longer than a week, a week and a half, I think it would be devastating to most of the dealers across the United States. But right now we're getting toward the tail end of the 1985 season and we're looking at the 1986s. And there's a great deal of interest there and a great deal of momentum going. I would hate to see the momentum end as far as the sales of cars.

GALLANT: Cars only remain on these lots for about 48 hours before moving on to dealer showrooms, and already in this, the first day of the strike, more than half of the trucks are empty. If the strike is lengthy, not only will dealers be affected. Because few cars are moving out of these lots, the middle ground, auto production could slow down as well.

MacNEIL: In India the main body of the principal Sikh political party approved an agreement with the government that is intended to resolve their differences over the Punjab state, which is mostly inhabited by Sikhs. The Akali Lal party made its decision at a meeting of party leaders in the town of Anandpur Sahib, about 180 miles north of New Delhi. Mark Tully of the BBC has a report.

MARK TULLY, BBC [voice-over]: The meeting was held in a historic temple at the foot of the Himalayas. Here the last guru founded the Sikh army, and here the Sikhs met today to accept peace terms offered by Rajiv Gandhi. The party leader, Singh Longowal, told young men he'd signed a historic accord with Prime Minister Rajiv Gandhi. He said it was like an agreement between two countries. He told the young men they must now stand against the Sikh extremists who have rejected the accord. The powerful president of the Sikh Temple Management Committee was not happy. He had been excluded from the talks with Rajiv Gandhi. Nor was the former chief minister of Punjab. The two dissident party leaders were clearly unhappy as they walked towards the crucial delegates' meeting. The former chief minister of Punjab told delegates the agreement was not commensurate with the sacrifices of the Sikhs. The Temple Committee president said the party could not expect his support. But Singh Longowal, who commands the most support with the local party bosses, carried the day. He declared the struggle with the government over.

MacNEIL: Radicals in the party and militant Sikh students have denounced the agreement and declared that they will continue what they call their holy war against the government.

In Lebanon, four members of Yasir Arafat's faction of the Palestine Liberation Organization were found murdered with notes pinned to their chest saying they'd suffered the fate of Israeli agents. The notes did not say who killed them.

LEHRER: And finally in the news of this day, an update to the AIDS story we did last night. The Department of Health and Human Services said the drug HPA-23 will soon be available in the United States. A drug manufacturer is expected to apply within a month to test the drug here and government approval will be expedited. HPA-23 is the first drug shown to suppress the AIDS virus, at least temporarily. Actor Rock Hudson reportedly has been treated with the drug in Paris, as has John Coffee, the subject of our report last night. Li Peng: Man of the Future

MacNEIL: First tonight we have a newsmaker interview with the deputy premier of China, Li Peng, one of the group of Chinese leaders now visiting this country.

[voice-over] Li Peng's presence with Chinese President Li Xiannian on this trip to the United States marks the 56-year-old Li as a rising star in the Chinese Communist Party leadership. He was born in 1928 in Chengdo in Sichuan Province, an origin he shares with Chinese Deng Xiaoping. These ties to the Communist Party and leadership began at his birth. The son of a revolutionary hero, Li was orphaned when he was three years old. He was later adopted and raised by Zhou Enlai, who was one of Mao Zedong's closest associates and a premier of China.

Li was trained as an engineer and educated in the Soviet Union, where he became president of the Association of Chinese Students. His career centered on China's developing electrical industry. He held a succession of posts at various plants and districts, culminating in his 1979 appointment as minister of the power industry and secretary of its party members' group. Four years later he was appointed vice premier of the People's Republic. Li's authority is clearly on the upswing. This year he added the chairmanship of the State Education Commission to his current responsibilities as head of China's energy, transportation and electronics industries. He represented China at Konstantin Chernenko's funeral in Moscow. While in Washington this week, Li signed the agreement on nuclear cooperation with the United States, and he's been meeting with government and business leaders. Li Peng has been described as a very sharp, very articulate guy who has the tendency to go to the heart of the issue. Many China watchers think he will be the next premier of China.

[on camera] The Chinese delegation was in Chicago today opening a new consulate there and visiting sites like the Sears Tower. In his Chicago hotel room this morning the deputy premier gave the NewsHour this exclusive interview.

LI PENG: Thank you very much for giving me this chance to talk to American people.

MacNEIL: Do you consider the visit a success?

Vice Premier LI [through interpreter]: Yes. I think the visit by President Li Xiannian is very successful so far.

MacNEIL: Has any progress been made towards resolving differences between China and the United States?

Vice Premier LI [through interpreter]: I think there are a lot of common grounds between China and United States, and also we have differences with each other. Yet I think this visit has promoted our mutual understanding. It does not mean that all the differences have disappeared. Yet through this visit we have ironed out some differences. But there are still differences in existence. I think we have reached some mutual understanding. That'd be a more appropriate way to say it.

MacNEIL: One of the areas of your responsibility is economic affairs in China, economic policy. Can we talk about the reforms, economic reforms in China?

Vice Premier LI: Go ahead.

MacNEIL: Since you began these reforms there is a popular conception in the United States that you are becoming a capitalist nation. To what extent is that true?

Vice Premier LI [through interpreter]: China wants to imbue socialism with Chinese characteristics instead of capitalism. I think the essence of a reform in China is to make use of the scientific methods as well as managerial methods, advanced managerial methods, to further raise China's economic efficiency and speed up our economic development. Therefore we will adopt some useful methods practiced in capitalist society. If they are good we will also adopt and continue our own good methods. I think here there are two points which are very important. I think first, in view of the economic structure of China, socialist economy is always the predominant portion of economy. It's true that there are some elements of capitalism -- for example, in running joint ventures with other countries there are some capitalist elements. Yet the total proportion of this is quite limited in the whole economic structure. And also in view of the development of China's economy I think the socialist elements will develop more quickly than those of capitalism. Another aspect is also very important -- that is, the distribution of wealth. Now we are advocating that some people or some places should get better off first. Yet the ultimate goal of us is to make all the Chinese people have common prosperity.

MacNEIL: Can't there be quite a tense period while some people in China are doing very well in the new consumer society and others are not doing well?

Vice Premier LI [through interpreter]: Perhaps I can put it this way. Because of the difference in the possession of wealth, some people might be discontent or dissatisfied. Yet I think that will encourage him to increase production, therefore increase the income. This way will further speed up our economic development. In the past when China was practicing egalitarianism, China suffered a lot because people did not have enthusiasm for work. Now we practice a principle of to each according to his work. Therefore we can give play to the incentive and enthusiasm of the people. Those people who have got better off first through their own hard work can set good examples for other people. Key result: the whole social productivity will be further enhanced.

MacNEIL: How can you encourage some aspects of capitalism -- for instance, introducing the consumer society as it is known in the West -- without importing other Western values which would be alien to China's traditions -- acquisitiveness, individualism?

Vice Premier LI [through interpreter]: We stand for the improvement of people's living standard on the basis of improved productivity. I don't think this is capitalistic. We think all people love a good life. Aside from material civilization, which we're trying very hard to [unintelligible], we're also trying hard to develop our socialist ethics, or in our term, spiritual civilization.

MacNEIL: Are the economic reforms that are being instituted, are they going to survive the present leadership? Deng Xiaoping is an elderly man.

Vice Premier LI [through interpreter]: You're right that Chairman Deng Xiaoping is the chief architect of China's current economic reform. He's now in very good health. We all wish him a long life. Aside from this, now in China there have emerged large numbers of young cadres with modernization knowledge, both in the central government and in different localities. I think this is also an important guarantee for the continuation of China's current policy.

MacNEIL: Do you still have people with dogmatic views from the past whom you have to persuade and convince? Does a lot of argument still go on about whether this is the right course for China?

Vice Premier LI [through interpreter]: China, as you know, is so big with so large a population, therefore it's very natural to have different ways of thinking. Yet the party central committee of China, as well as the majority of the Chinese people, are supportive of the current reform. This is the main trend.

MacNEIL: But you still have to do some persuading, do you?

Vice Premier LI [through interpreter]: Naturally.

MacNEIL: You have instituted a policy of strict birth control in order to control your population for growth, for very important economic reasons. That has been criticized, recently by the U.S. Congress -- some aspects of your birth control policy. What did it make you feel when you were accused in the U.S. Congress of violating human rights because of -- through abortion and sterilization policies?

Vice Premier LI [through interpreter]: China feeds one quarter of the world population with 7 of the world land. In order to feed, house, clothe and educate each newborn citizen of China, that's one way. Another aspect is to let them suffer from cold, from starvation. Which is more humanitarian? We have different concept about humanitarianism.

MacNEIL: Some students of your country who are very sympathetic to your aim of restricting the growth of population, for the reasons you've mentioned, feel that the one-child-per-couple policy is so draconian and so alien to old Chinese values -- people who love children, who are used to large families -- that you will have to modify that policy. Are they right in thinking that?

Vice Premier LI [through interpreter]: The scholars can retain their own views. But Chinese people will take care of their own affairs.

MacNEIL: The Chinese relations with the Soviet Union. Now, you may say that is not economic policy, but on the other hand you have just signed a new trade agreement which is part of economic policy with the Soviet Union, which as you know gave rise to some anxiety in the United States -- was China now going to become an ally of the Soviet Union again, move much closer to the Soviet Union? What have you been saying, you and President Li, to President Reagan and American officials to reassure them on that point?

Vice Premier LI [through interpreter]: China shares a border with the Soviet Union as long as 7,000 kilometers. Therefore, the normalization of relations between China and the Soviet Union are in the interests of our two peoples. I think the normalization of Sino-Soviet relations will contribute to world peace. China pursues an independent foreign policy of peace. China will not ally itself with any country. Therefore, the normalization of Sino-Soviet relations will not restore our relations to the level of the '50s. That is, we were allies. I think some improvement of Sino-Soviet relations will not affect the progress of Sino-U.S. relations.

MacNEIL: Many observers and students of China in the West have marked you as one of the emerging leaders. Some of them have virtually already elected you prime minister. How do you feel about that?

Vice Premier LI [through interpreter]: If the Chinese government and the Chinese people want me to continue to work in my present post, I will certainly do that. You may know that I am engineer and also I can say to you I'm a quite good engineer. I would also feel very happy if I can return to my old profession. The new generation of Chinese leadership will not practice the sort of permanent position. That is to say, we can both be officials and be ordinary people.

MacNEIL: Well, Mr. Vice Premier, thank you very much for joining us.

Vice Premier LI: My best wishes to the American people.

MacNEIL: Well, thank you.

MacNEIL: Still to come on the NewsHour, Cokie Roberts analyzes the impasse on the federal budget. Judy Woodruff has a documentary report on one controversial weapon system that has survived the budget axe. And we take a second look at the way the state of Tennessee succeeds in attracting new industry. A Fighting Vehicle

MacNEIL: Last night a conference committee of senators and congressmen approved a bill authorizing $302 billion for the Pentagon to spend on weapons. Tonight Judy Woodruff reports on one of those weapon systems, one that Congress and the Army and at least two presidents have been grappling with for more than a decade. Judy?

JUDY WOODRUFF: The Defense Authorization Bill as it emerged from a joint conference committee restores funding for some 22 weapon systems that either the House or the Senate had voted to kill. That prompted one congressional aide to tell The New York Times the bill proved once again that Congress can't kill weapon systems any more than the Pentagon can. One weapon system that survived both House and Senate scrutiny, despite a controversy that has raged in recent years about its value, is a program with a $13 billion price tag. Because it raises fundamental questions about how well the Pentagon spends its money, we decided to take a closer look.

[voice-over] U.S. Army planners say it's the only way to travel on the modern battlefield. To the uninitiated it looks like a tank, but the Bradley fighting vehicle is something else: a 20-ton troop carrier that also happens to be loaded with deadly firepower. "With the Bradley we can win. Without it we lose." So says the head of the Army Infantry School at Fort Benning, Georgia, where new soldiers learn how to fight on foot and with the mechanized mobility that strategists say is a necessity on the battlefield of the 1980s and beyond. The company that makes the Bradley boasts that it takes a back seat to nobody in this era of sophisticated ground warfare.

ANNOUNCER [Bradley promotional film]: Today the Bradley fighting vehicle system takes mobility and firepower a leap forward, giving the United States Army a combined arms team second to none.

WOODRUFF [voice-over]: Not everybody is convinced, however. For the past several years, in fact, a collection of skeptics have leveled serious charges at the Bradley.

Rep. DENNY SMITH, (R) Oregon: I think you're going to find you've got an ammo dump that's going to blow up.

Sen. DAVID PRYOR, (D) Arkansas: In that particular vehicle our sons and maybe our daughters, our military personnel, it is absolutely a firetrap for them.

PAUL HOVEN, Project on Military Procurement: I think if we were in a war we'd probably be talking treason. You know, because in the ultimate end we're going to have 7,000 of these with nine to 10 men apiece in them, and a lot of them are going to die, needlessly.

WOODRUFF [voice-over]: The Bradley fighting vehicle and its predecessors have been controversial since they first showed up on a Pentagon drawing board. The Army was never completely happy with the personnel carriers that it's used over the past few decades. So vulnerable were they that American soldiers in Vietnam frequently rode on top rather than inside. In the 1960s the U.S. began to look for a replacement, a vehicle with more weapons to fend off hostile fire. But the Soviets beat us to it. In 1967 they unveiled something called the BMP, their version of an infantry fighting vehicle.

Mr. HOVEN: So there was -- I think a very large element was just keeping up with the Joneses essentially. They have one, we're going to have one.

WOODRUFF [voice-over]: In 1972 the Pentagon approved the American version of a replacement for the personnel carrier, which had cost $80,000 apiece. The name changed to the mechanized infantry combat vehicle, and so did the price tag, to $270,000. But design problems cropped up and it was never produced. By 1977 the Army came up with a still newer version. The price was up to almost $400,000 each, and the name had changed again, to the infantry fighting vehicle. Critics and supporters alike say by this time, the requirements added by the Army had gotten out of control.

Mr. HOVEN: To start off with, they came up with the idea that the infantry, the passengers, as you would say, would also be able to fight from the vehicle. So we find the little gun ports on the side. We see the turret, the commander station increasing from a one-man to a two-man turret. Now it has the additional weapon capability of having the Tull missile on it.

EDWARD LUTTWAK, military analyst: Now, the next thing that was realized is that you cannot actually use the Tull missiles from a vehicle unless you stabilize the turret, because if you're sitting there and the whole thing is shaking, you're simply not going to be able to get the target down. So then they said, "Well, if we have a stabilized turret, why don't we put the gun in it, the cannon?" So then they said, "Well, we can do that because the turret has to get a little bit bigger, a little bit heavier and so on." And in the end your basic armored truck that would cost, let's say, $100,000, which is just a people mover with a bit of armor to prevent the artillery splinters, you know, from entering the vehicle, to come down, becomes a combat weapon.

WILLIAM H. TAFT IV, Deputy Secretary of Defense: The Bradley was a very bad example of what happens to a system when you redesign it, change the specs, and the costs grew very rapidly during the 1970s.

WOODRUFF [voice-over]: Late in 1977 President Carter recommended the whole project be killed, but Congress kept it alive. Inflation and further modifications drove costs higher, to almost $500,000 apiece in 1979. The next year this doubled to over a million dollars each, and the Army decided on still another name, the Bradley fighting vehicle, after General Omar Bradley, known for his concern for the welfare of his troops. Even that didn't stop budget director David Stockman from trying to kill the project again in 1982. But he was overruled by the White House, and the first Bradleys rolled into service in March 1983. Since then the criticism has only grown louder.

Sen. PRYOR: One, it was an inferior weapon. It was built with aluminum.

Mr. LUTTWAK: It's essentially as large as a tank, but weighs 30 tons less, and that 30 tons difference is 30 tons less protection. It means practically, for practical purposes, that if you put your tank and the Bradley side by side into the modern battlefield, your tank will survive. The Bradley, on the other hand, will just get blown away.

WOODRUFF [voice-over]: California Republican Congressman Robert Badham, a member of the House Armed Services Committee and a Bradley defender, says the Bradley has to be considered along with the other vehicles and weapons in the U.S. arsenal.

Rep. ROBERT BADHAM, (R) California: It, along in coordinated conventional warfare with the M-1 tank and its own gun system and armored personnel carriers used in proper formation, using the best traits of each system, is the best mobile conventional force anywhere in the world, we believe.

WOODRUFF [voice-over]: The soldiers who use the Bradley, who train recruits how to fight with it, make the same point. Sergeant Steven Collier has trained with the Bradley for the past two years at Fort Benning, Georgia.

Sgt. STEVEN COLLIER, U.S. Army: Mechanized is today's Army. You and I, we'll talk mechanized, that's the way we're going to go. If you've got to go mechanized you might as well go with the best. Take the Bradley with you with all that firepower and get you some combined arms to go with it. Get that M-1 tank to go with you and some attack helicopters, and you know, you're going to be number one then.

WOODRUFF [voice-over]: But Republican Congressman Denny Smith of Oregon, co-chairman of the Military Reform Caucus, still has doubts about the Bradley, also known as the M-2.

Rep. SMITH: They're supposed to be able to meet 90 of the incoming rounds that it's being possible receiving. But the RPG-7, which is the rocket bazooka that the Russians would utilize at the present technology stage, is very destructive of our tanks, it was very destructive of the Israeli tanks -- it's a very, very powerful weapon. And shoulder fired and so forth, it would make mincemeat out of the M-2, we think -- but we don't really know.

WOODRUFF [voice-over]: Sergeant Collier at Fort Benning has an answer for that as well.

Sgt. COLLIER: Sure, he's got an RPG. But if I got a decent crew with a 25 and a tow, and my dismounted troops deployed properly, there's no reason why an RPG should come close to me. Because with all this additional firepower I guarantee you, if I shoot the 25 at you at 2,500 meters, you can shoot all the RPGs and Sager missiles you want, but with 200 rounds of 25-millimeter chain guns shooting at you, if you're going to hit me with an RPG, you know, you're fooling somebody, only Superman's going to do that.

WOODRUFF [voice-over]: But if the Bradley does get hit -- and some surely would -- critics say the troops inside are not as safe as they should be, that the mostly aluminum exterior is not adequate protection.

Mr. HOVEN: From someone who has been in combat and dealt with weapons that were, you know, less than perfect, it's treason. You know, people ought to be court-martialed and punished severely for it. You see, the thing is, the people involved in this are never going to be in the M-2 when it goes into combat. You know, it's going to be someone else's kids, and so who cares.

Sec. TAFT: These combinations of things are taken together and distorted in high rhetoric, put together to show that the person who is saying them perhaps doesn't want the vehicle.

WOODRUFF [voice-over]: Deputy Defense Secretary William Howard Taft IV.

Sec. TAFT: The fact of the matter is that we need the vehicle. We need to be able to transport our troops in some degree of safety as much as we can, with firepower, as much as we can get for them, with the mobility that the Bradley provides. It's a military requirement.

WOODRUFF [voice-over]: Congressman Badham candidly acknowledges the decision was made not to put heavier armor on the Bradley.

Rep. BADHAM: Well, yes, you can do that, but you can't get it there, you can't get it to the grossed battlefield because you can't airlift it if you make it bigger. And if you can't airlift it to get it there it's absolutely worthless. So these are the kinds of tradeoffs that I was talking about earlier.

WOODRUFF [voice-over]: Those tradeoffs are not acceptable to some in Congress. But their efforts to improve the Bradley, to have it at least more thoroughly tested, have until recently failed.

Rep. SMITH: They've driven it around the test track. It's a good track vehicle. But whether it -- you know, we're not going to use it in the back 40 as a tractor on a farm; it's going to be shot at, and if it's shot at, is it going to survive?

WOODRUFF [voice-over]: Congressman Smith and others before him have urged the Army to test the Bradley under simulated warfare conditions ever since the vehicle was first designed. But it's only been in the past few weeks and months that such tests have been done. The results won't be available until later this year. Meanwhile Congress has approved funding for some 6,000 Bradleys; 4,000 are already in service. Smith says the same sort of thing has happened with numerous other Pentagon weapon systems.

Rep SMITH: First off, they'd like to have some new equipment. So they're anxious to rush it to production. It takes time to test. But the military's attitude is, we go ahead and build them, and then if we discover something that we have to change we'll go back through and retrofit. So the taxpayer pays up front a very expensive price. Then if we have to retrofit them, we go back through, take them all out of service.

WOODRUFF [voice-over]: Smith has a theory about why the Pentagon operates that way.

Rep. SMITH: I think it's just the way the world runs over there. I don't think that we've had an emphasis on making the weaponry work, and we've been too interested in the upper end of the scale. For probably 50 less cost in a lot of these pieces of machinery, we could get a five or 10 percent reduction on the upper limits of their capabilities. But for that we could buy probably twice as many in numbers.

WOODRUFF [voice-over]: Still, how does a weapon system as controversial as the Bradley manage to stay alive? Budget Committee member and conservative Senator Charles Grassley of Iowa says it's careful; Pentagon planning.

Sen. CHARLES GRASSLEY, (R) Iowa: Get the weapon system started, get Congress hooked on a certain weapon system, and it creates a life of itself, and once you get it started the theory is, well, you've invested so much money you can't throw that away now so you might as well just put in a little bit more and a little bit more, and that goes on year after year after year.

Mr. LUTTWAK: It's so difficult to get a program going, to translate the requirement into a program. Just buy a rifle -- there's so many controversies, lawsuits, hearings, impediments and obstacles, that once a program is going nobody wants to reopen the program and stop it.

WOODRUFF [voice-over]: As for the costs of a program like the Bradley, which is running about a million and a half dollars apiece now to transport just seven infantrymen to the battlefield, critics say the lack of competition is to blame.

Sen. CARL LEVIN, (D) Michigan: If you rely on one manufacturer who's got you by the throat, if they're the only supplier they've got you. They've got you where they want you, and you can't rely on them to drive down price because there is no incentive to drive down price. The market, the competitive market is what keeps prices down. In the absence of that you're not going to get it.

WOODRUFF [voice-over]: Secretary Taft defends the decision to have only one prime contractor for the Bradley, as well as for one out of every three other defense projects.

Sec. TAFT: After a certain stage it becomes uneconomical to open up a second line which maybe would have made sense if you had done it at the beginning, and I think that's in that case. But the way to remedy it to the extent you can is to get as much subcontracting competition as is possible, and that's one of the things that we've been doing.

WOODRUFF [voice-over]: That argument may not satisfy the growing number of members of Congress concerned about spiraling military costs. But it's good enough for Sergeant Collier at Fort Benning, who says despite the criticism leveled at it, whatever the Bradley costs, it's worth it to him.

Sgt. COLLIER: What I'm saying is, you can't put a value on a soldier's life. If you put a value on a soldier's life, then you know, what difference -- if you're going to sacrifice him. We're looking for that soldier in the back, people like me and those folks out here. And cost to me, if it's going to save somebody's life and help us win a battle, cost should be not a problem. Because we're looking at defending our nation, and if people want to save $1.9 million, you know, if that's what it is, and we're not communists, by God it's worth it. And I definitely believe in this thing right here.

WOODRUFF: The full order of Bradleys will be produced by one major contractor. But the defense bill which emerged last night from the congressional conference committee did contain a provision requiring the Pentagon in the future to use more than one manufacturer for a major weapon system. That's a move designed to increase competition and save money. However, in a compromise the conferees said unlimited exceptions can be made when the secretary of defense says they are necessary in the interest of national security. Jim? Budget Battles

LEHRER: And there is still no deal on the overall budget. All week long there have been reports of pressure and talk and new offers and potential breakthroughs. But as we speak, nothing. House conferees are currently sifting through a proposal from Senate Budget Committee Chairman Pete Domenici, but there are reports neither President Reagan nor House Speaker O'Neill like it, so maybe nothing's happening after all, but then on the other hand maybe there is. We will now find out from Cokie Roberts of National Public Radio, who has been covering the budget story all week, if not all her life, if that appeals to you.

COKIE ROBERTS: Well, I think most of my life, certainly.

LEHRER: Where is the Senate Budget Committee proposal now? Is it alive and well?

Ms. ROBERTS: Well, it's more alive than one might expect it to be, and part of the reason for that is because we are getting very close to that August recess. It's a week from today; the members of Congress want to go home for the summer. And they really would prefer to go home with a budget than without one. Here's what's in that Senate budget, and the reason why I say it's a little bit surprising that it is even breathing. It has an oil import fee, so that if you buy imported oil you have to pay a tax on it. The people in the Northeast don't like that very much because they use a lot of oil in home fuel heating. It has across the board more cuts in domestic spending. And then it has this very interesting combination of delayed indexing on taxes. Now, that's the plan by which your tax rates are tied to inflation, and it's supposed to hold down your taxes. Well, it will delay that indexation of taxes, and at the same time delay the cost-of-living adjustments for people who get Social Security and other federal benefit programs. The way it works, not surprisingly, is everybody gets everything in election years. In 1986 you get all your tax breaks and all your benefits. And in 1987 you get no tax breaks and no benefits. Then in 1988 you double your benefits and your breaks. Now, that is called by the Senate "double-up COLA." House Majority Leader Jim Wright yesterday in the conference said it sounded like the new COLA to him and he wanted to go with the classic COLA. It was the way of the Democrats saying they weren't pleased with that part of the proposal.

LEHRER: And of course, what has been the reaction of the House leadership to this? Let's explain that the House, of course, the House version does away with any cap on Social Security COLA and they're not going to -- I assume they're opposed to this, right?

Ms. ROBERTS: The House, both parties in the House have been opposed to touching Social Security in any budget. The Republicans in some ways have been even more adamant than the Democrats -- they're the ones who lost 26 seats in 1982 on the Social Security issue and they're not eager to go messing around with this. The House Democratic leadership yesterday morning, when this plan was getting floated around, before it was presented, Speaker O'Neill said, "Well, Bill Gray, the chairman of the Budget Committee, asked me not to talk, but I'm going to talk anyway. I'm stubbornly opposed to any gimmickry with the COLAs." But late this afternoon the Speaker issued a statement where he said that he's determined to go the extra mile to achieve an agreement. And I'm reading from the statement here; he says, "If President Reagan agrees to all or even part of the budget proposal made by the Senate Republicans yesterday, then the House will sit down and negotiate on the basis of that budget." The Speaker is feeling some pressure from his own members, who are feeling a lot of pressure from their own voters that they need to get a budget. Now, you noticed, the Speaker does say "if President Reagan agrees."

LEHRER: What's the latest on that?

Ms. ROBERTS: Well, the President has said that he does not like taxes. He's been pretty clear on that, and of course he points to the results of the 1984 election where the tax issue wasn't exactly a hidden issue.

LEHRER: So the objection would be to the oil tax you talked about.

Ms. ROBERTS: The oil tax and the delay of indexing.

LEHRER: The delay of indexing, yeah.

Ms. ROBERTS: And the President of course has never been thrilled with doing anything to Social Security either; it was only under pressure from the Senate Republicans. So really where we're sitting is that everybody is waiting for the other guy to blink first. And Bennett Johnston, a Democrat on the Budget Committee from Louisiana, suggested yesterday that they take a lesson from Huey Long, who when he was about to be impeached said that everybody should give in at the same time with their eyes closed -- and it worked; he wasn't impeached -- he was assassinated.

LEHRER: I don't know what the lesson from that is. But what's your own feel for what is going to happen? Are they going to make the deadline by next Friday and get out of here?

Ms. ROBERTS: I have continued to believe, probably because I believe in Santa Claus and the tooth fairy, that there is going to be a budget before we get out of here in August. I just think the dynamic is so much to get a budget and that it's so embarrassing for members to go home with no budget. And you know, it's reached the point, Jim, and this is important, because until now everybody's been trying to shift the blame to somebody else. But at least what the House members are saying is that voters are no longer distinguishing between Democrats and Republicans, between the House and the Senate. What they're saying is Congress can't get its act together, and if you guys in Congress can't do it, there's something wrong with you and the way you're handling it. Now, so far the Senate has not felt that way, and they're still operating under the real fear of the 1986 election, those 22 Republican senators who are up next time -- many of them voted for the Senate budget with its freezes on Social Security. So they're still sort of moving around trying to figure out if no budget is better than any budget at all.

LEHRER: And the Social Security thing is still the main thing.

Ms. ROBERTS: Is still the key.

LEHRER: And until they choke that one up or down or out, there's not going to be a deal, though, right?

Ms. ROBERTS: That's right, except for that -- it doesn't have to be benefits. That's the other thing to keep in mind. Speaker O'Neill continues to say there must be some other way to deal with Social Security other than the benefits. The fact is, this thing is on the table and it's alive.

LEHRER: Thank you very much, Cokie Roberts. Japan in Tennessee

MacNEIL: Finally tonight, a second look at a report from Tennessee, which seems on its way to replacing Michigan as the automobile capital of this nation. Today there are reports the new General Motors Saturn plant is headed for Spring Hill, a small town 30 miles south of Nashville. Tennessee's campaign to get General Motors is part of a bigger one to get everybody, as we saw in this April report by Kwame Holman.

KWAME HOLMAN [voice-over]: It's a time for celebration at this Nissan plant outside Nashville, Tennessee. The Japanese manufacturer is undertaking a major expansion of its American assembly line. Nissan is not the only Japanese manufacturer in the state of Tennessee. In fact, every week seems to bring news that another Japanese company is setting down Tennessee roots. The week before Nissan's announcement, it was Komatsu, a manufacturer of earth-moving equipment that was receiving Tennessee Governor Lamar Alexander's welcome.

LAMAR ALEXANDER, Governor of Tennessee: Mr. Nogawa. Let's give him a good Tennessee welcome.

HOLMAN [voice-over]: Companies that make radios, television sets, printing supplies, tires, all in all 30 Japanese companies, have made their home in Tennessee. Tennessee now has 12 of all the Japanese capital investment in America. Why have all these firms settled in Tennessee? Why is the image of Tennessee changing from this [country & western Nashville] to this [Japanese tea ceremony]?

Gov. ALEXANDER: The Japanese business leaders tell me that they come to Tennessee because of its central location to the American market, because of its good business climate.

HOLMAN [voice-over]: But if it was only a business climate the Japanese sought, they could have chosen a dozen other states that offered them greater financial incentives. So what attracted them?

Dr. ESTHER SEEMAN, director, Japan Center: Tennesseeans and Japanese feel comfortable with each other. And when Tennesseeans go to Japan, they feel comfortable there and the Japanese feel comfortable here.

HOLMAN [voice-over]: Both Dr. Seeman and the governor have endless explanations for that feeling of cultural compatibility. They have lists of characteristics that Tennesseeans and Japanese share.

Dr. SEEMAN: We're talking about the cultural factors, the strong element of traditionalism.

Gov. ALEXANDER: The environment here is a lot like it is there.

Dr. SEEMAN: There's that whole feeling of civility and politeness.

Gov. ALEXANDER: The state flower here is the iris and the iris is important there.

Dr. SEEMAN: This very late modernization and late industrialization is common to both countries.

Gov. ALEXANDER: It's like being picked up on one side of the world and just placed on the other side of the world, but almost in exactly the same place.

Dr. SEEMAN: If Somebody said to me, what would you pick as the most important thing that decides whether or not the Japanese will settle in a certain place, I would say that it would be an atmosphere of trust.

HOLMAN [voice-over]: The Japanese who have come to Tennessee agree with that analysis. Sadao Takeda is a senior vice president of Toshiba's microwave oven division. He prefers Tennessee to any other place he's lived in the United States.

SADAO TAKEDA, senior vice president, Toshiba America: In Tennessee this area is not so modernized and still everybody have traditional habit and traditional way.

EIKO TAKEDA: Tennessee personally is more open, everything open. So very easy to understand.

HOLMAN [voice-over]: In the end, it may not be all these shared qualities that matter as much as the fact that the state's chief executive spends his time thinking of ways that will make the Japanese feel at home.

Gov. ALEXANDER: We spend a little bit of time every week thinking of a way to make a gesture, to make a call, to market what we have, to develop new friendships in Japan, because it's a close network of people there; they listen to one another, they develop a consensus about a place, and I think they've developed one about us.

HOLMAN [voice-over]: One of these gestures is the state support for a Japan school, where once a week the children of Japanese executives can learn more about their native culture. For Mr. Takeda it's important that his daughters and his workers learn the best of both worlds.

Mr. TAKEDA: In Japan we have some good point and bad point. And also in the United States, American people have a good point and bad point. I want to try to have good point of each other. [singing "Toshiba" company song]

HOLMAN [voice-over]: But all is not hands across the assembly line. There are some Tennesseeans who resent the intrusion of so much industry into their rural landscape. Homer Gannon is a farmer who lives less than 10 miles from the Nissan plant.

HOMER GANNON, farmer: I just don't like to see all of the best farmland in this country to go under concrete. I see middle Tennessee becoming another Chicago, Detroit or Toledo, Ohio.

HOLMAN [voice-over]: Governor Alexander argues that change doesn't have to be bad.

Gov. ALEXANDER: In the town where I grew up in Tennessee, Alcoa came with a big aluminum plant in about 1913 and the mayor who got it there was run out of town and tarred and feathered. But for three generations it's provided people in Appalachia with good jobs.

HOLMAN [voice-over]: Homer Gannon may not like all the concrete, all the new people, but when Japanese companies are paying farmers $5,000 to $10,000 per acre, even he can't resist.

Mr. GANNON: I'm dickering right now to sell this place. I might as well. If you can't whip ' em, why, join ' em.

HOLMAN [voice-over]: Farmers in Tennessee aren't the only ones bothered by foreign investment. In the last 10 years foreign investment in America has increased by 400 . It's not only happening in Tennessee, and it's not just the Japanese who are doing it. The British, the Dutch, the Saudi Arabians, the Mexicans are all buying American businesses or moving their own here. All this upsets June Collier, who runs an electronics firm that makes wiring for American cars. She thinks America is being colonized.

JUNE COLLIER, president, National Industries: All of our industries is on the verge of destruction. They're going to buy them for a song and sing it themselves. Then they will own this country. Do we want that? I don't want them to own this country. I want Americans. I don't want my children saluting a different flag. I don't want my children owing their loyalty to someone that doesn't even speak their own language.

Gov. ALEXANDER: We've always looked west, and the west now includes Japan and a billion people in China and Malaysia, and that's where our interests lie and we better start getting comfortable with it.

HOLMAN [voice-over]: June Collier is not comfortable with that. She has sent letters to 50,000 people urging them to join her Citizens Against Foreign Control of America Foundation.

Ms. COLLIER: I don't want those countries influencing our political process, and right now we have got them telling us what we're going to do with our economics, with our trade life.

Gov. ALEXANDER: It's a two-way street. We invest everywhere in the world. We've done it for years. We've made a lot of money on it, and our standard of living is high because of it. We've got the biggest market in the world, and we need to let other people in it.

HOLMAN [voice-over]: Despite the opposition of people like June Collier, despite the fears of farmers like Homer Gannon, Governor Alexand