The MacNeil/Lehrer NewsHour

MS. FARNSWORTH: Good evening. I'm Elizabeth Farnsworth in Washington.

MR. MAC NEIL: And I'm Robert MacNeil in New York. After tonight's News Summary, we look at the Senate's bitter divisions over welfare reform, then excerpts from today's double Whitewater hearings in Congress, and essayist Roger Rosenblatt looks at pictures of Nagasaki. NEWS SUMMARY

MR. MAC NEIL: More than 100,000 Serb civilians and soldiers continued looking for refuge today after the defeat of Croatian Serb forces in the Krajina region of Croatia over the weekend. Meanwhile, there were reports that the victorious Croatian army was preparing to take on forces from Serbia for control of an area of Eastern Croatia known as Eastern Slavonia. The area is now under Serb occupation. We have a report on the refugee flood and fears of a spreading war from Ian Glover James of Independent Television News.

IAN GLOVER JAMES, ITN: It's the biggest population movement of the four years' war in Yugoslavia, many roads to Serb cities now jammed with cars from Krajina, many with number plates from the fallen capital, Knin. Up to 1/4 million Serbs are on the move, fleeing in farm tractors with their household goods. These are farmers on country roads, frightened, their families exhausted and hungry, and all this in searing 100 degree heat that's taking its toll of young Krajina Serbs, uncertain where their next home will be. Some seem unworried by it all, but this baby was born on the move in a back seat of a car, entering life as a refugee. On the border, the local Red Cross can offer some help, loaves of bread to hungry families still shocked at losing nearly everything, but some didn't get this far. At Klenovac, Krajina Serbs fleeing Croat attack are shelled on the road to safety. Five died, more were injured. Thousands of Krajina Serbs are still trapped by pockets of fighting near here. The United Nations and aid agencies can do little to help. Meanwhile, Serbian tanks are on the move, this, the most powerful army in former Yugoslavia. President Milosevic's soldiers from Belgrade moving up to the Croatian border. Ahead is Eastern Slavonia, a Serb-held slice of Croatia that's rich in natural gas, oil, and fertile farmland. In Knin, triumphant Croat soldiers celebrate victory. Now the question is being asked will they bring Eastern Slavonia inside Croatian borders once more. Some Croat units are heading that way. The West and Russia are using restraint. A major Balkan war would be inevitable. In Osijek, in Eastern Slavonia, they're boarding up in case the war comes here. Their town was ruined in fighting two years ago. Now, they pray it won't happen again.

MR. MAC NEIL: Late today, the Croatian ambassador to the United Nations said his country would not attack Eastern Slavonia. He said future disposition of the occupied area would be negotiated as part of a whole peace package. Elizabeth.

MS. FARNSWORTH: Republicans and Democrats clashed today over Whitewater in both the Senate and the House. On the House side, an investigator from the Resolution Trust Corporation accused government officials of obstructing a probe into a failed Arkansas savings & loan. Jean Lewis testified that an investigation of Madison Guaranty turned up widespread fraud linked to Whitewater and President Clinton. She said those ties had made it difficult to pursue a criminal case.

L. JEAN LEWIS, RTC Investigator: I believe there is a concerted effort to obstruct, hamper, and manipulate the results of our investigation of Madison and subsequent counsel, excuse me, independent counsel investigation by individuals at the RTC, the Treasury Department, the Justice Department, and U.S. Attorney Paula Casey's office in Little Rock.

MS. FARNSWORTH: The Senate Special Whitewater Committee heard today from a close friend and advisor to the First Lady, New York attorney Susan Thomases. She testified she never tried to restrict the search of White House lawyer Vincent Foster's office after his suicide. We'll have extended excerpts from the two Whitewater hearings later in the program.

MR. MAC NEIL: The Senate today postponed until September its push to pass welfare reform. Senate Majority Leader Bob Dole said he'd have to negotiate with Republicans who say his bill isn't tough enough to discourage illegitimate births. Dole had delayed the Senate summer recess to take up the legislation. The split between Republicans and the number of opposing amendments from Democrats led him to conclude the measure couldn't pass this week. We'll have more on this story right after the News Summary.

MS. FARNSWORTH: President Clinton issued an executive order today aimed at strengthening environmental regulation. The order will force manufacturers with federal contracts to notify local communities about the release of 651 different toxic emissions. Last week, the House of Representatives voted to weaken the Environmental Protection Agency and cut its budget by 1/3. The President vowed to fight this legislation. He spoke to public health officials in Baltimore.

PRESIDENT CLINTON: Just before I left for Baltimore, I signed an executive order which says any manufacturer who wants to do business with the federal government must tell its neighbors what dangerous chemicals it puts into the air, the earth, and the water; no disclosure, no contract. [applause] The silent threat posed by pollution is as real and dangerous as the threat of a speeding car to a walking child. We've known for a long time that what we can't see can hurt us. Our health and safety laws, they're our line of defense against these dangers. We're not about to abandon them.

MS. FARNSWORTH: President Clinton said he would issue a second executive order if Congress blocks his attempts to toughen disclosure laws. The investigative arm of Congress, the General Accounting Office, reported today that nearly 5 million elderly Americans receive improper medication. The GAO said older people are prescribed drugs that are unsafe for their age group or duplicate medicines they are already taking. It also said such inappropriate drug use often results in hospitalization or death.

MR. MAC NEIL: In business news today, the Archer Daniels Midland Company has fired a senior executive who cooperated with the federal government in an anti-trust investigation against the company. A statement from ADM accused Mark Whitacre of stealing at least $2 1/2 million from the company. ADM has referred the charges to the Justice Department. Whitacre had been president of ADM's Bio Products Division, which is being investigated by the Justice Department for alleged price fixing. A Chicago grand jury is now hearing evidence in the case. Whitacre has had no comment on the ADM charges against him. IBM and Toshiba today announced plans to build a facility in Manassas, Virginia, to manufacture semiconductor chips. Production at the $1.2 billion plant is expected to begin in the fall of 1997.

MS. FARNSWORTH: That's it for the News Summary. Now it's on to welfare reform, the ongoing Whitewater probes, and a Roger Rosenblatt essay. FOCUS - WELFARE DEBATE

MR. MAC NEIL: First tonight, welfare reform. Sen. Bob Dole kept the Senate in session this week to pass welfare reform, but late this afternoon in a surprise move, he put off a vote until September. The Senate's been wrestling with competing proposals by Republicans and Democrats that would radically transform the welfare system. The proposals seek to eliminate or severely limit the federal entitlement to welfare, which establishes the right of poor people to receive government benefits. Currently, benefit levels are set by the states. The leading Republican proposals by Senators Bob Dole and Phil Gramm would both eliminate the main federal welfare program, Aid to Families with Dependent Children or AFDC, as well as federal child care and job training programs. The bills would, instead, send money for those services directly to states in the form of block grants. The Dole bill would give states the option of block grants for another large property program, food stamps. The Gramm bill, by contrast, would make block grants for food stamps and several other programs, including child welfare services and child nutrition programs, such as school lunches. Both bills would put a five-year, life-time limit on receiving benefits and impose strict work requirements on most recipients. They both threaten the eligibility of legal immigrants to receive aid. The Dole bill would give states the option to deny welfare benefits to legal immigrants. The Gramm bill cuts off welfare to legal immigrants, except emergency assistance. And in a controversial proposal, the Gramm bill would bar states from paying cash benefits to single teen parents. It would also impose a family cap which orders states to deny additional benefits to children born to mothers already on welfare.

SEN. PHIL GRAMM, [R] Texas: This is an issue where the future of America is on the line, that literally our house is afire, and I would argue--and I think the evidence is convincing in this argument--that what we have done in the last 30 years has not only not put the fire out but probably has made it burn brighter.

SEN. ROBERT DOLE, Majority Leader: And we've been criticized because we couldn't get a tougher bill in the Finance Committee. Well, you've got to have the votes to get tougher bills around here. I've learned from experience, the bottom line is how many votes do you have, not how many speeches do you make, or how many times you've criticized somebody else, it's how many votes do you have.

MR. MAC NEIL: The Democrats, including President Clinton, are backing a bill that is the toughest welfare proposal ever to emerge from their party. Like the Republican proposals, it would eliminate the AFDC program, impose new work requirements, and set a lifetime, five-year limit on receiving benefits. But during that five-year period, the Democrats' proposal would preserve the federal entitlement status of welfare. It would retain the food stamp program on the federal level, rather than funneling it to the states in block grants, and it would guarantee federally-funded child care to welfare recipients who work.

SEN. BARBARA MIKULKSI, [D] Maryland: But once you do go to work, we will not abandon you. We want to make sure that a dollar's worth of work is worth a dollar's worth of welfare. And while you're working at a minimum wage, trying to better yourself, we will provide a safety net for child care for your children, nutritional benefits will continue, and so will health care. We want to be sure that while you're trying to help yourself, we're helping your children grow into responsible adults.

MR. MAC NEIL: Now we talk to four Senators at the center of the debate on welfare. Oregon Republican Bob Packwood is a co-sponsor of the Dole bill. Missouri Republican John Ashcroft is backing the Gramm bill. Louisiana Democrat John Breaux is a sponsor of the Democratic Leadership Bill, and Illinois Democrat Carol Moseley Braun supports the Democratic bill but has also introduced her own legislation. Sen. Packwood, since you Republicans are divided on these bills, is it fair to say that welfare reform has become a casualty of presidential politics?

SEN. BOB PACKWOOD, [R] Oregon: [Capitol Hill] Oh, no, not at all. By the time, by the time we're done, we will have, I think, every Republican behind the Republican bill, and I'll make you this bet. We'll pick up ten to twelve Democrats at a minimum, and we'll have enough votes not only to pass the bill but to break a filibuster and possibly override a veto.

MR. MAC NEIL: Sen. Ashcroft, do you see this delay today--as a supporter of the Gramm bill--do you see this as a tactical victory?

SEN. JOHN ASHCROFT, [R] Missouri: [Capitol Hill] No. We are not interested in trying to delay or to obfuscate or to delay. We really want to try and move forward with a constructive bill, and I believe that we are making progress. A number of us met together this afternoon, and I believe progress is being made. So I don't see the delay as being anybody's victory. I think we're looking for a victory that would end the tragedy of welfare in America as it now exists, and we need to change it.

MR. MAC NEIL: Sen. Breaux, on the Democratic side, how do you see the delay? Is this--is this going to kill welfare reform this year?

SEN. JOHN BREAUX, [D] Louisiana: [Capitol Hill] Well, I don't know if it's going to kill it--I don't think so, Robin--but you correctly set up the debate. I mean, the debate right now and the fight right now is between the right and the far right, and they're both wrong. I mean, the fight is within the Republican Party. The Democrats had a bill. We've laid it down. It's on the table. We're ready to debate it, and all of a sudden, the whole thing gets pulled. And the reason it got pulled is because the Republicans cannot agree among themselves what type of bill they're going to support.

MR. MAC NEIL: Sen. Moseley-Braun, how do you see the delay?

SEN. CAROL MOSELEY-BRAUN, [D] Illinois: [Capitol Hill] I see the whole point as being the Republican bills are both tough on kids and soft on work, and there is the fatal flaw of that approach. The reality is coming home to roost. The fact is we're talking about 2/3 of the people who are presently on AFDC are children. You cannot address poverty--you cannot use welfare as a response to poverty without addressing the fact that America has 22 percent of our children live in poverty, 2/3 of the kids on welfare--of the people on welfare are kids. We can't just let kids suffer because of the behavior of their parents or the poverty of their parents.

MR. MAC NEIL: Sen. Packwood, on the Republican side, you've already toughened the leadership bill to please the more conservative Republican argument. How--can you and they reach some kind of compromise over the recess that is not going to drive the moderates away and some of those Democrats you said you hoped to get? How can you do that?

SEN. PACKWOOD: All I can say is I think what will happen is we're not at the start going to totally agree within the Republican Party on such a consensus bill that every single Republican is a co- sponsor. We'll have some differences, and those differences will be offered as amendments on the floor, but here's my bet: Win or lose, when it's all over, every Republican will support the bill, whether or not their amendments won or lost on the floor.

MR. MAC NEIL: Is that right, Sen. Ashcroft? I mean, that would involve you and Sen. Gramm and your--people who feel like you, feel as you do, dropping the teenage pregnancy issue and the family cap issues.

SEN. ASHCROFT: Well, you know, I think Sen. Packwood has indicated that there will be a discussion of those issues, perhaps amendments on the floor. Lots of us would like to see changes in the bill as it now exists in order to optimize the changes we want to make. We want to change the system that Sen. Braun has talked about. She talked about a system where 22 percent of the children are in poverty. This is a system that is tragically broken. It's a system that's entrapped people, not liberated them, and there will be differences about how we're going to change the system, but the truth of the matter is the core of agreement in the Republican Party is that this system is broken, the Washington one-size-fits- all, bureaucratic direction that has really put people under this heavy weight of dependency has got to be lifted.

MR. MAC NEIL: Well, do you see, Sen. Ashcroft, do you see--you and Sen. Gramm and those who agree with you--that the teenage pregnancy issue and the family cap are really vital to welfare reform, or are a kind of test of virility on the Republican right at the moment?

SEN. ASHCROFT: It is important that we recognize the fact in America that illegitimacy threatens the future of this country by stealing and robbing children of their families, and that illegitimacy has skyrocketed. It's a moral wrong. As chairman of the National Commission on America's Urban Families two years ago, I had the privilege of going around the country, and I had the tragic experience of talking to children who not only didn't have fathers, they didn't know any other children with fathers. That's morally wrong. It's indefensible. Now, how do we address the illegitimacy problem? Block grants in and of themselves provide incentives to curtailing this problem, because the resource is limited. But I think the bill should ultimately contain a statement that we've got to move away from illegitimacy and, and try and provide incentives for whole families. In the past, this system has been a set of incentives that's encouraged illegitimacy. That's why it's skyrocketed, and it's wrong.

MR. MAC NEIL: Sen. Packwood, do you hear the roots of a compromise there, that the bill only need to contain a statement discouraging illegitimacy?

SEN. PACKWOOD: The bill already contains a statement. I don't want to gloss this over. There's a significant difference of opinion as to whether or not the federal government ought to say to the states, here's the money, here are the work requirements that you've got to meet, beyond that, you figure how to get there. That's my view. I would prefer to let the states have as much discretion as possible. There are some in the Republican Party that say, no, we ought to add to the bill a prohibition on payments to teenage mothers, a prohibition if a woman on welfare has another child. I'm saying leave it to the states. They're saying put it in the bill. I'm saying, we'll have a vote on that issue, and whichever way the vote comes out, we will all agree to support the bill.

MR. MAC NEIL: Sen. Breaux, on the Democratic side, how do you see this illegitimacy issue and the family--

SEN. BREAUX: Let me make a comment, Robin, that I think there should be no disagreement on, on two points. No. 1, no one thinks that the current welfare system is working well. We all agree, Democrat, Republican, that it's broke, it needs major fixing, all of us abolish AFDC, and we start with a fresh slate. There's no disagreement on that. The second point I think is also, there should be no disagreement. We, as Democrats, can't pass a bill without their help, but they cannot pass a bill without our participation, one that's going to become law. So we are going to have to work together if welfare is going to pass this year, real reform is going to be achieved, otherwise, we are going to have a bunch of political speeches and a bunch of political statements and posturing and never change anything. Now, the question that we have about their bill is basically about two or three major points. No. 1 it says to states they don't have to put upanything if they don't want to. That's wrong. That's not a partnership. No. 2, it says that we're going to put people to work but we're not going to give the states any funding additionally to put those people to work, and that's wrong, and it doesn't work. It's cheap talk, but it's not going to get the job done. And the final thing is this child care. It is absolutely wrong, in my opinion, to say to a teenage mother that happens to have a child that we're going to deprive that child of the funding that they need to survive. That's wrong. That's why the Catholic Conference of Bishops has real problems with that approach, and I think that is going to be changed, and hopefully, that will lead to a good compromise.

MR. MAC NEIL: Sen. Moseley-Braun, do you think the President and the Democratic leadership should be seeking a deal with the Republicans, some compromise which will be obviously to the right of where you are, because you Democrats don't have the votes to pass a bill?

SEN. MOSELEY-BRAUN: Well, I don't know that there is a right here in terms of right or left, but there is a right and wrong.

MR. MAC NEIL: More conservative, more conservative.

SEN. MOSELEY-BRAUN: The point is that the Republican bills take a field of dreams approach, that is to say if you kick people off and send it to the states, it's going to magically fix itself, there are magically going to be jobs, the children will magically be taken care of, they won't be left home alone. Their bill does not work, and I agree with Sen. Breaux. We have an obligation, I think, to come together in a bipartisan spirit to address what is an important issue for our country. We all want to do the right thing here. We want to fix the system, but it cannot just take place just based on political posturing, and I would say in response to your first question about presidential politics, it's unfortunate that so much of the conversation is based on posturing, and, again, the field of dreams approach, if you kick 'em off welfare, they'll go to work, they'll stop having babies out of wedlock, they'll get themselves straightened out and behave in a way that's acceptable, I guess, to, to the political activists.

SEN. PACKWOOD: Let me say something.

MR. MAC NEIL: Sen. Packwood, yes.

SEN. PACKWOOD: If I can. When she says we're going to reduce welfare payments, we are not going to reduce welfare money. The states are actually going to get more money than they get now. We're not going to reduce the child care money. They're going to get more money--the states--than they get now. We're going to give the states more discretion as to how to spend it and to see if they can do it better than we can, but how we can sit here and say that the federal program is a success is beyond me. Fifty years ago, fifty years ago, the federal government was spending $106 million, million, on welfare. Today we're spending $18 billion--that's a 20- -17,000--pardon me--percent increase and the program has failed!

MR. MAC NEIL: Let me go back to the Democrats then on--Sen. Packwood says they're going to spend more Sen. Moseley-Braun.

SEN. MOSELEY-BRAUN: Well, that's just not true.

SEN. BREAUX: It is not true. I mean, No. 1, they freeze the funding at the 1994 levels.

SEN. MOSELEY-BRAUN: 1994 levels, that's right.

SEN. BREAUX: And they provide a very small increase, and they tell the states, you're going to have to put three times more people to work. This is the largest unfunded mandate in the history of the United States Senate.

SEN. PACKWOOD: Wait a minute. There he says--

MR. MAC NEIL: Let's have one at a time, Senator. Sen. Breaux had the floor.

SEN. BREAUX: I'd just conclude that their bill basically starts off by saying we're going to freeze welfare assistance to the states at the 1994 level, with a small, about a 4 percent increase over the next several years. That is going to be an absolute total unfunded mandate to the states. They can't handle it, and it's wrong.

SEN. ASHCROFT: Let me just comment on that.

MR. MAC NEIL: Sen. Ashcroft.

SEN. ASHCROFT: It's not an unfunded mandate. It's an opportunity for states to deploy resources effectively and efficiently, instead of in accordance with bureaucratic red tape. We've seen what happened with the Washington directed system. It's put people on [in] poverty. It's put children in poverty. It's trapped them in a web of dependency.

MR. MAC NEIL: Well, Sen. Ashcroft, what about the point Sen. Breaux made that your approach means that the states are not required to make any contribution themselves, and if a state chose to spend nothing, it could spend nothing, whereas now, a state contributes heavily?

SEN. ASHCROFT: Well, that's absurd! States--I just spent eight years as a governor of the state of Missouri, had the privilege of being chairman of the National Governors Association. Governors are not people who are malevolently motivated toward their state. They want to help. They want to do what's right. Let's look at where the successes are in welfare. They're at the state level. On the floor yesterday, Sen. Harkin, eloquent speech about a special program in Iowa; today, talk about special programs in Wisconsin, where they did reduce the AFDC benefit by about 6 percent, they took some of that money, and instead of doing like the Feds said, they put it into job training, they put some into education, and their caseload's gone down 27 percent.

MR. MAC NEIL: Sen. Moseley-Braun, how do you respond--

SEN. ASHCROFT: Are we trying to continue to build welfare or decrease it? They decreased it in Iowa and in Wisconsin.

MR. MAC NEIL: Sen. Moseley-Braun, how do you respond to the Republicans' counter-claim that how can you say that states and their governors and their legislatures are less interested in caring for poor people than bureaucrats in Washington, which is the way they put it?

SEN. MOSELEY-BRAUN: There is flexibility, and there is formlessness. The Republican bill is a formless one when it comes to our national commitment to address and deal with child poverty. If, for example, one--and I asked the question in the finance committee--if a state decided to cut benefits so dramatically that children were left hungry and homeless, could we as a national community do anything about that, and the answer came back loud and clear, no, we could not. And when I raised the question: What if we had children starving in the streets, the response came back to me, well, if that happens, we'll have to come back in two years and fix this. They know full well that, that the way this bill is presently patterned, the states have no obligation whatsoever to provide even a minimal safety net for children. And that is the problem. It's so much verbiage, but there is no safety net for children. There are no guarantees at all.

MR. MAC NEIL: Sen. Packwood.

SEN. PACKWOOD: You know, first I'll come back again--I get a kick out of my friend, John Breaux. I say we're not going to decrease money, and I hear from the left, yes, we are. And then he says, well, they're going to freeze it, but they're going to increase it about 4 percent. That is an increase! It is not a decrease. Sen. Ashcroft mentioned Wisconsin. Here is a classic example. After several years of trying, they got a waiver from the federal government to try an experiment. They have cut their welfare caseload 28 percent. They are saving $16 million a year, and half of it we get, half of it they get, and they're--

SEN. BREAUX: They're saving lives.

SEN. PACKWOOD: Oh, they're saving lives.

SEN. BREAUX: They're saving lives.

SEN. PACKWOOD: They're reducing welfare, and they're saving money. But here is the classic problem--and I'm going to use a different agency--here is a classic example of attempting to run things from Washington. I don't think your viewers can see this, but this is a picture of Harley, the drug-sniffing pig, in Portland, Oregon. Portland police discovered this pig can smell drugs better than dogs. They applied to the Drug Enforcement Administration for a grant for their pig, and the DEA, the Drug Enforcement Administration, says, no, we will only give money for dogs. The pig is cheaper.

SEN. MOSELEY-BRAUN: But that is stupid. Come on.

SEN. PACKWOOD: Wait a minute. The pig is cheaper.

SEN. MOSELEY-BRAUN: Now, come on.

SEN. PACKWOOD: The pig is better. Now, I've got to give Vice President Gore credit. He solved this problem by declaring the pig an honorary dog, but that's what you have to go through in dealing with the federal government.

SEN. BREAUX: Robin, let me comment on this--

MR. MAC NEIL: Sen. Breaux.

SEN. BREAUX: --pig example. The problem is under the Packwood bill, if you don't have any guidelines of what the state can do with the money, a lot of states are going to be buying a lot more pigs instead of spending the money on welfare work programs. That's why you have to have some type of a participation by the states to put up some of their own money. If they're going to get all free money from Washington, they will be less likely to spend it as a program we feel should be spent, and that is on putting people to work.

MR. MAC NEIL: Sen. Breaux, what is the irreducible minimum to you mainstream Democrats on this issue? I mean, what can you not stomach that you simply couldn't compromise on?

SEN. BREAUX: Let me tell you what I think we do need. No. 1, we need state participation. In a partnership, that means they're going to have to put up some of their money. We need adequate child care funding to make sure that the children, if the mothers are going to work, are going to have child care, and finally, we need some kind of job requirement that the work programs be adequately funded if we're going to have a successful welfare reform bill.

MR. MAC NEIL: Sen. Packwood, if you're looking for some Democratic votes, are those, are those beyond the pale?

SEN. PACKWOOD: Some of them are beyond the pale. When he mentions child care, I'm going to be very reluctant to do anything like Sen. Daschle and the Democratic majority want--they have added a brand new, what we call federal entitlement program in their bill. It's an expansion of child care. If they didn't put a cap on it, Sen. Moynihan has estimated it will cost $24 billion in new money. This is the Democratic answer to most problems, more federal money, and that--

SEN. BREAUX: Bob, what you're saying is the states are going to have to do it. You're saying the states are going to have to raise new taxes if they don't work with the federal government in partnership on it.

SEN. PACKWOOD: And I'm saying Wisconsin is a classic example of where they have reduced the welfare caseload, they have helped people, and they've saved money, not spent more money.

SEN. ASHCROFT: They did it by reallocating the benefit, not by spending greatly additional amounts of money. When they did reduce it, they did it by reducing first the benefit, diverting some of the fund, rearranging it, flexibly deploying the resource in a way that fit that state, not the way that will fit every state, and that's what we need is the right of states--

MR. MAC NEIL: Sen. Packwood--

SEN. ASHCROFT: --to tailor their own programs.

MR. MAC NEIL: Sen. Packwood, do you agree with Sen. Breaux that there is not going to be welfare reform unless you and some Democrats can provide a sufficient majority in the Senate to, to override a presidential veto? You need that many votes, you need 60 votes to pass welfare reform?

SEN. PACKWOOD: I'll make you this bet. If we pass a bill in the Senate to buy sixty-two to sixty-five votes, and that's what I expect we will do, that isn't quite enough to override a veto, but I'll make you a further bet, the President will not veto the bill.

MR. MAC NEIL: Sen. Breaux.

SEN. BREAUX: The fact is it cannot be passed without Democratic support. I want to provide Democratic support, and if they can be reasonable on some of these key features, I think we can get a real good compromise that the President would be able to sign. But they can't do it by themselves, and we can't do it by ourselves.

MR. MAC NEIL: Let me ask the two Senators who are more on the wings in this argument. Sen. Ashcroft, would you rather see no welfare reform than the kind that is in the mainstream bills at the moment?

SEN. ASHCROFT: Well, I believe there's a vast difference between the entitlement-laden bill on the Democratic side and the reform- laden bill on the Republican side, and I'd certainly prefer to see the kind of thing that I believe will emerge from the Dole-Packwood bill. I believe there's going to be real progress made there.

MR. MAC NEIL: How? How is there going to be progress? What would satisfy you and Sen. Gramm?

SEN. ASHCROFT: Well, in my belief--

MR. MAC NEIL: Sen. Gramm has denounced the Dole bill in very strong terms.

SEN. ASHCROFT: Well, if you watched him on the floor this afternoon, he commended the Dole bill because it strengthened the work provisions of the bill, and I think that's a major step forward, and we've been having meetings, some today, and I believe there's progress to be made on, on welfare as it relates to illegal immigrants and the like, and immigrants, non-citizens. So I believe that there's a real opportunity for us to come to agreement on the Republican side. I believe really what Bob has said, that when it comes down to it, they'll be uniform Republican support for a proposal here.

MR. MAC NEIL: Sen. Moseley-Braun, would you rather put off welfare reform for another year than see what is in the Republican majority's bill at the moment become law?

SEN. MOSELEY-BRAUN: I'd like to try to work toward compromise, and that's what John Breaux is talking about. The best response to reforming welfare is to provide people with a job and to take care to make certain that the children are cared for in a viable public partnership between state government, local governments, and the federal government. We all have--we're all in this together. We can't just throw brick bats and make slogans. We have to have a realistic response to the problem of child poverty in our midst, and I think we can do that.

MR. MAC NEIL: Well, Sen. Moseley-Braun and gentlemen, thank you all. Elizabeth.

MS. FARNSWORTH: Still ahead, the Whitewater probes and a Roger Rosenblatt essay. FOCUS - UNANSWERED QUESTIONS

MS. FARNSWORTH: Now, to Whitewater. House and Senate committees are holding separate hearings investigating various aspects of the Ozark Land Development Project, a failed savings & loan, and their connection to the Clintons. Both committees showcased star witnesses today. Kwame Holman reports.

KWAME HOLMAN: Democrats on the House Banking Committee began the day trying to block the appearance of the Republicans' star witnesses. Three federal bank regulators were about to testify that their investigation of the failed Arkansas thrift, Madison Guaranty Savings & Loan, was impeded by superiors, including some Clinton appointees.

REP. BARNEY FRANK, [D] Massachusetts: There are in this accusations--one person is accused, in effect, of obstructing justice. Mr. McKay, a prosecutor at the Justice Department, I think a career prosecutor, is accused of having written some anonymous note based on some anonymous source, Ms. Yonda, Ms. Bresler, they were all accused. All we're saying is let's have them all at the same time. The notion that you just have the accusers and not those who can respond is McCarthyite. I don't understand why this is considered even controversial.

MR. HOLMAN: The best that chairman Jim Leach would offer would be to allow other witnesses to appear before the committee in September, a decision that did not sit well with the Democrats. And after a 45-minute delay, the committee heard from lead witness Jean Lewis, a Resolution Trust Corporation investigator who in 1992 began to look at possible criminal activity at Madison Savings & Loan. Madison was owned by James McDougal, the Clintons' former business partner in the Whitewater Development Project.

L. JEAN LEWIS, RTC Investigator: This committee should know that I believe there was a concerted effort to obstruct, hamper, and manipulate the results of our investigation at Madison, and the subsequent counsel--excuse me--independent counsel investigation by individuals at the RTC, the Treasury Department, the Justice Department, and U.S. Attorney Paula Casey's office in Little Rock.

MR. HOLMAN: Lewis recounted in great detail what she found when she began looking through records of Madison bank accounts stored in a Little Rock warehouse since the S&L's 1989 failure.

L. JEAN LEWIS: The flow of funds among those accounts revealed an elaborate check kiting scheme, floating worthless checks among specific accounts intended to create the appearance of legitimate balances. This particular scheme of kiting transactions included the accounts of Flowerwood Farms, Tucker-Smith-McDougal, Smith- Tucker-McDougal, Madison Marketing, the McDougals' personal checking account, and Whitewater. Jim Guy Tucker was a business partner of Jim McDougal's and later became lieutenant governor and then governor of Arkansas. Stephen Smith was a business partner of both Mr. Tucker and Mr. McDougal and a former aid to then Governor Clinton. Many of the checks we traced had the word "loan" written on them, but the checking accounts did not generally maintain sufficient funds to cover the so-called loans. A substantial number of the checks written between these and other McDougal-controlled companies frequently created a series of false deposits that simply gave the appearance of available funds. The money paid from these accounts included various real estate and loan payments to, among others, the Bank of Cherry Valley and Madison Bank & Trust. The scheme also provided money to Jim McDougal, Chris Wade, Larry Kusa, and the Bill Clinton Political Committee Fund. The documents show contributions were made payable to Bill Clinton individually and the Bill Clinton Campaign Fund and then deposited to the Bill Clinton Political Committee Account at the Bank of Cherry Valley.

MR. HOLMAN: Lewis told the committee she referred the Madison case to the Justice Department for possible criminal prosecution in August 1992, five months after her investigation began.

L. JEAN LEWIS: Among other things, the referral provided specific check numbers, dates, account names, account balances, particular uses of funds, and the names of individuals and entities involved in various check kiting schemes. The referral also stated that among those who stood to benefit from this activity were Stephen Smith, Jim Guy Tucker, then Gov. Bill Clinton and Mrs. Clinton, inasmuch as "the overdrafts and loan transactions or alleged check swapping and kiting between the combined companies' accounts ensured that loan payments and other corporate obligations were met, thus, clearly benefiting the principals of each entity." Based on recent press accounts, it appears that for several years, covering the same time period, the Clintons made no mortgage payments on their Whitewater investment, which they owned jointly with the McDougals.

MR. HOLMAN: But Louis contends her criminal referral bounced around the Justice Department for more than a year before finally being sent back to Arkansas and to Paula Casey, who had just been appointed United States Attorney in Little Rock by President Clinton.

L. JEAN LEWIS: On October 27, 1993, more than a year after its submission, Ms. Casey declined RTC criminal referral No. C0004. In other words, Ms. Casey refused to further investigate the matters raised in the referral. In rejecting the referral, Ms. Casey stated there was "insufficient information to sustain many of the allegations." Ms. Casey stated she was concurring with the opinion of Justice Department attorneys in Washington who had concluded this matter prior to her coming to the U.S. Attorney's Office in Little Rock. However, Ms. Casey's rejection was in direct conflict with information I had received from the Justice Department in Washington and the U.S. Attorney's Office when the referral was returned to Little Rock four months earlier. Furthermore, the committee should be aware of press reports regarding a series of telephone calls from former Associate Attorney General Webster Hubbell to Paula Casey, which overlapped with the latter part of the same time period.

MR. HOLMAN: Lewis also charged that some of her superiors at the RTC impeded her investigation.

L. JEAN LEWIS: The Kansas City RTC criminal investigation unit had planned to submit the nine additional criminal referrals on October 1, 1993; however, RTC professional liability section chief Julie Yonda obstructed that effort with her unprecedented demand that her staff first conduct a "legal review" of the referrals. Going back to July 1993, shortly after Ms. Yonda was briefed on the criminal referrals, the criminal investigation unit observed the beginnings of a concerted effort by the Professional Liability Section, PLS, to monitor the Madison investigation and exert control over certain aspects of it. My recent experience at the RTC has shown me that despite the best efforts and intentions of our founding fathers, there are individuals, including public officials, who are capable and willing to skirt the law to unjustly enrich themselves at the expense of the rest of us.

MR. HOLMAN: When committee members got their turn to speak, Democrat Barney Frank of Massachusetts wanted to make clear that Bill Clinton was not President when criminal action against Madison Savings & Loan first was recommended to the Justice Department.

REP. BARNEY FRANK: You made the submissions, Mr. Iorio, on September 2nd, to the Bush Justice Department. Now, as I understand it, the Bush Justice Department sat on that for four and a half months and nothing happened, is that correct?

RICHARD IORIO, RTC Investigator: You're talking about the first referral.

REP. BARNEY FRANK: The first criminal referral that went to Mr. Banks and for four and a half months, from September 2nd to January 20th, under the administration of George Bush, nothing, nothing happened with those criminal referrals, is that correct?

RICHARD IORIO: We received no notification, that's correct.

REP. BARNEY FRANK: All right. Well, I think we ought to be clear about this, that, yeah, there were some problems, but the first four and a half months of delay, of absolutely nothing happening with a Bush referral--

MR. HOLMAN: Republican Peter King of New York used his time to explore further Jean Lewis's findings and their connection to the Clintons.

REP. PETER KING, [R] New York: Ms. Lewis, if I have a debt or mortgage and that's being paid by someone else, I think I would at least have some curiosity--unless I already knew the answer--who was paying my debt for me. Do you believe that Gov. and Mrs. Clinton knew or should have known how their liability was being paid and who was paying it for them?

L. JEAN LEWIS: Congressman, what I found certainly led me to that question, which is exactly why I put it in a referral and requested further investigation from the appropriate authorities.

REP. PETER KING: Especially considering the fact that both Mr. and Mrs. Clinton are graduates of Yale Law School, which I know does not impress my colleague, Mr. Hayworth, but they are graduates of Yale Law School, don't you think that they should have had knowledge or at least had the curiosity as to who was paying their bills for them?

L. JEAN LEWIS: Mr. King, my level of common sense would tell me that, yes, it would have made sense for them to have knowledge that someone was making mortgage payments to their benefit.

MR. HOLMAN: The entire matter involving Madison Savings & Loan, Whitewater, and any connection to the Clintons is now in the hands of Independent Counsel Kenneth Starr, and that's the point New York Democrat Charles Schumer wanted to stress.

REP. CHARLES SCHUMER, [D] New York: At least I, for one, have some confidence if something is there, that independent counsel has the tools, the ability to get to the bottom of it. Do you share that?

L. JEAN LEWIS: Yes, I do, Mr. Schumer.

REP. CHARLES SCHUMER: Okay. And so you used pretty strong words, words that give me a little trouble, that Ms. Yonda obstructed. Yo have confidence that if there was some criminal--did you mean to imply anything criminal there? It's a word that has criminal overtones, as you know.

L. JEAN LEWIS: On, I'm very familiar with criminal overtones, sir.

REP. CHARLES SCHUMER: Do you mean to imply criminal implication there?

L. JEAN LEWIS: My intent in utilizing the word "obstruct" there was Ms. Yonda knew of our intent to send those documents out and deliberately obstructed their leaving our office.

REP. CHARLES SCHUMER: Yeah. So you didn't answer my question, though. Do you mean to imply something criminal that she did?

L. JEAN LEWIS: I'm not prepared to answer that at this point, because I think that is an issue that may very well be under investigation by the independent counsel.

REP. CHARLES SCHUMER: Okay. You're saying possibly yes, possibly no, correct?

L. JEAN LEWIS: It could be under investigation by the IC's office.

MR. HOLMAN: The other congressional Whitewater committee also brought forth a major witness today. The special Senate panel heard from Susan Thomases. She is a close friend of the First Family's who Republicans suggest played a role in limiting police and FBI access to Vincent Foster's office two days after his suicide. Today Thomases categorically denied the charge, while recounting the White House mood during those July days of 1993.

SUSAN THOMASES, Clinton Family Friend: We had just had a death in what amounted to our family. From the Clintons on down, there was grief, a feeling of helplessness, and a question as to whether of any of us could have helped this. Like members of a family, we reached out to each other, and everyone asked everyone else to check on how people were holding up, how they were doing. Now I understand this committee is examining how the search or review of Vincent's office was carried out and how the files in that office were handled. Committee counsel have asked me and questioned me at length about my recollection of my actions with respect to those issues from July 20th through 22, 1993. I have tried my best to remember whatever I can about any phone calls and visits during that period. I will do so again today. While my memory is not perfect, I just don't remember every person that I spoke to during those days, but I do know that I never--I say never--received from anyone or gave to anyone any instruction about how the review of Vince Foster's office was to be conducted or how files in Vince Foster's office were to be handled.

MR. HOLMAN: Republican Committee Counsel Michael Chertoff questioned Thomases about a phone conversation she had with then White House Counsel Bernard Nussbaum, accused by Republicans of trying to conceal Whitewater documents.

MICHAEL CHERTOFF, Republican Committee Counsel: And tell us what the conversation was concerning the handling of a review of records in Mr. Foster's office.

SUSAN THOMASES: I was not looking for Bernie to talk--Bernie Nussbaum--to talk about the review of documents in Vince Foster's office. I was really trying to reach him to talk about how he was feeling and how he was doing.

MICHAEL CHERTOFF: And what did he say about the documents?

SUSAN THOMASES: He obviously was very focused on the documents at that time, where I was not, and he proceeded to tell me not to worry, that he had a plan, that he was going to take care of 'em, you know, he was kind of--as I said in my deposition--he was sort of venting. He seemed to have a very clear sense that he was on top of it, he was going to handle it, he was going to give Vince's documents to Lisa's lawyer, and that he was going to give the Clintons' documents to the Clinton's lawyers, and that he was going to protect all the presidential papers.

MICHAEL CHERTOFF: Well, what did you say?

SUSAN THOMASES: I said, "Sounds good to me."

MR. HOLMAN: Massachusetts Democrat John Kerry pointed out the fundamental difference between Thomases and Nussbaum's memories of their phone conversation.

SEN. JOHN KERRY, [D] Massachusetts: Then we go to Mr. Nussbaum's deposition, and I want to read to you from page 90 of his deposition. He was asked the question: "What was the conversation on the 22nd with Susan Thomases?" And his answer, "The conversation on the 22nd that she asked me what was going on with respect to, what was goingon with respect to the investigation or the examination, the examination of Mr. Foster's office," so his memory as to the question of, of your asking him what was going on with respect to it or your expression of concern about people using the correct procedure, his memory as to that is either incorrect or, or simply wrong?

SUSAN THOMASES: Let me tell you, I don't want to speculate about that, because it's not--I don't know for sure. I mean, you know, I could have said to Bernie, in addition to how are you doing, you know, when he seemed upset, is, are you concerned--I mean, I don't know that, but I did not have any concern when I talked to him, except how he was doing, how he was feeling.

MR. HOLMAN: But committee Republicans expressed disbelief that Thomases, a lawyer known for a tough, aggressive style when she was the Clinton campaign scheduler, would not have advised Nussbaum on the police search of the Foster office.

SEN. LAUCH FAIRCLOTH, [R] North Carolina: Knowing the perception, the reality of people that believe that you spoke for the First Lady, and then we go back to the calls to Bernie Nussbaum, and many, many, I mean, call, call, call, call, call-- and you were discussing the weather, his general feelings, did you discuss the impending review of documents in Foster's office?

SUSAN THOMASES: He discussed the impending review.

SEN. LAUCH FAIRCLOTH: And you just said politely, sounds good to me, Bernie, I don't really have many strong opinions, I never have had, and if you think it's good, I think it's wonderful?

SUSAN THOMASES: I have strong opinions, Senator.

SEN. LAUCH FAIRCLOTH: Well, why didn't you express 'em? You always have before.

SUSAN THOMASES: Senator, I have strong feelings, but I didn't have strong feelings about this subject.

MR. HOLMAN: Tomorrow, the committee hears from former counsel Bernard Nussbaum, himself. ESSAY - MOMENT OF TRUTH

MR. MAC NEIL: Finally tonight, essayist Roger Rosenblatt looks at a photographer's record of the day an atomic bomb was dropped on Nagasaki.

ROGER ROSENBLATT: For the record, certain things ought to preface any display of the horrors of the atomic bombings of Hiroshima and Nagasaki. For one thing, they did not erupt out of the blue. The Hiroshima Memorial Museum offers no mention of the Japanese bombing of Pearl Harbor. The Museum treats Hiroshima as America's terrible sudden whim. But Pearl Harbor got us into the war that Hiroshima and Nagasaki ended. Second, there is the fact that the bombings did end the war. Historians may argue whether after the Tokyo firebombings and the waning power of the Japanese military, Hiroshima and Nagasaki were really necessary. But a few days after Nagasaki, Emperor Hirohito did surrender. Third, as destructive as atomic weaponry proved itself to be, its use occurred in an ongoing context of the bombing of civilian populations. When the rules of warfare changed in this century and the citizens of London and all other non-military places were declared fair targets, then Hiroshima and Nagasaki could be seen merely as products of that same general change. Atom bombs were more deadly than conventional bombs, but the practice of aiming at civilians in order to terrorize them into submission was nothing new. Those things said, no one can look at the human beings who suffered from those atom bombs and comprehend why people do what they do to one another in wars, and why they never care to stop. On exhibit at New York's International Center for Photography these days, are the photographs of Yosuka Yamahata. On August 10, 1945, Yamahata was dispatched to take pictures of the destruction of Nagasaki. The bombing occurred on August 9th. On a single day, he walked the flattened, ruined city. Afterwards, he wrote, "Human memory has a tendency to slip and critical judgment to fade with the years, but the camera brings the stark facts before our eyes." The principal fact of this exhibit is that people engaged in war will blithely destroy the beauty of life that in peaceful times they claim to love above all things. Take the sweet full bloom of summer, for instance. The bombings of Hiroshima and Nagasaki occurred in mid- summer. Yamahata's pictures are summer pictures. See the shot of the wounded girl seated on the ground being attended by a woman. The summer lights and shadows play on the girl's face, the woman's arms, the bandage. See the dead boy lying in the lighted center between two dark spaces in another photograph. It could be a summer scene taken from inside a barn of a boy asleep. One large picture looks like a summer storm, the sky splotched with black and white, a scrawny tree keeled over by the wind. Summer lights and shadows in the sequence showing a soldier holding a stricken baby in his arms. The baby is held close to his chest in the first shot, then it falls away and farther away. Summer lights and shadows in the sequence of a mother with her suckling child. The baby's wounds make its head look like a map of the moon. Mother stares at child, and then at nothing. The baby appears to be taking life from its mother, but if the mother is poisoned by radiation, it is taking death instead. Summer comes into strongest focus in these pictures when one is reminded of life at its ripest. That mother's baby was born early that same summer of 1945. She was joyful at its birth. There is no joy in Yamahata's photos, but there are the remnants of joy. An older boy carries a younger one on his back. On a different day it could be play. Two boys lie side by side in the sunshine. Were it not for their slabs of burned skin, they could be napping. In the panoramas of rubble are toys and bicycles, wheelbarrows, pedestals, tools, the shards of people's rooms. In the most prominent of these pictures, a small boy, headdressed as if in costume with his coat of many colors, stands beside his mother who looks like the battered ghost of every war that has ever been. But he, holding his rice ball, could be a child anywhere. Only the scrapes on his face and his bandaged forehead make him a symbol. How bewildered he looks at the sudden disappearance of summer. Summer disappeared in Nagasaki, as it did in Hiroshima, some days before, as it did in Dresden and Nanking. It disappeared all over Europe and Asia in the 1940's. It disappears in Bosnia this summer. It comes and goes. People enjoy it and destroy it. Who can understand such things? Here are two moments of history that shout out the darkest riddle of the world. One is the picture of a woman frozen in helplessness standing near the charred skeleton of a human being. The other is more baffling. With the mist of the razed city in the background, a young woman emerges from an air raid shelter. She is all smiles. She believes that the shelter has saved her from death, which, of course, it could not do. But she believes it, nonetheless. She rises into the dead world like a flower. I'm Roger Rosenblatt. RECAP

MS. FARNSWORTH: Again, the major story of this Tuesday, more than 100,000 Croatian Serbs searched for refuge after Croatian troops conquered the Krajina region over the weekend. There were also reports that theCroatian army was preparing to reclaim a part of Eastern Croatia now controlled by the Serbs. But the Croatian ambassador to the United Nations said his country wanted a negotiated settlement to that dispute. Good night, Robin.

MR. MAC NEIL: Good night, Elizabeth. That's the NewsHour for tonight, and we'll see you again tomorrow night. I'm Robert MacNeil. Good night.