The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight: A summary of today's news; a look at the Supreme Court's term- ending decisions today; including one approving school vouchers; a debate over an appeals court hit at two words in the Pledge of Allegiance; and a discussion of money and ethics with a group of business journalists.

NEWS SUMMARY

JIM LEHRER: The U.S. Supreme Court ruled today school voucher programs are constitutional. The 5-4 decision came on the final day of the current term. The court found vouchers are permissible if they apply to both religious and secular schools. The programs allow the use of taxpayer money to help parents pay tuition for those schools. In another 5-4 ruling, the court upheld random drug tests for many high school students. Also, the Justices rejected limits on what judicial candidates may tell voters, and they allowed an Alabama prisoner to sue over being tied to a post on a hot day. They ruled the practice was cruel and unusual punishment. We'll have more on all of this in a moment. A federal appeals judge in San Francisco put a ruling against the Pledge of Allegiance on hold today. Just yesterday, circuit Judge Alfred T. Goodwin wrote the decision declaring the pledge unconstitutional because it includes the phrase "under God." His action today gives the full ninth circuit court of appeals time to consider the matter. The U.S. Justice Department now plans to ask for a hearing before that court. Earlier today, the House of Representatives voted to condemn the decision against the pledge. The Senate did so last night. And in Canada, at a meeting of industrial powers, President Bush said the decision was out of step with American traditions and history.

PRESIDENT GEORGE W. BUSH: America is a nation that is a nation that values our relationship with an Almighty. The declaration of God in the Pledge of Allegiance doesn't violate rights. As a matter of fact, it's a confirmation of the fact that we received our rights from God, as proclaimed in our Declaration of Independence.

JIM LEHRER: The President also said the ruling pointed out the need for what he called common- sense judges. We'll have more on this story later in the program tonight. At that summit in Canada, President Bush and the other leaders committed up to $20 billion for Russia over the next decade. It's to help dispose of weapons of mass destruction and keep them away from terrorists. In addition, African governments could receive billions in new aid if they make political and economic reforms. British Prime Minister Tony Blair said the plan offers hope for those willing to take it.

TONY BLAIR: I think the past has been based on a very passive relationship between us giving money and them receiving it. And what we're saying is, from now on, that's not the deal anymore. The deal is we're equal partners in this process. We will give the additional money, we'll give the extra help, we'll help you with things like resolving the conflicts of Africa, but you in Africa have also got obligations against corruption in favor of democracy and human rights and proper adherence to the rule of law.

JIM LEHRER: The industrial nations also said they would develop a plan for an African peacekeeping force. It's part of an effort to end long-running conflicts in Congo, Sudan, and Angola. On the WorldCom story today, a House committee subpoenaed current and former executives of the giant communications firm. WorldCom revealed Tuesday it failed to count nearly $4 billion in expenses against earnings. Also today, President Bush said he's concerned about the economic impact of corporate accounting scandals, and Treasury Secretary O'Neill said executives who approve false financial information should go to jail. The College Board Organization approved major changes today in its college entrance exam, the SAT. The new, longer test will add a writing section, including a 25-minute essay, eliminate questions on analogies and phase in questions on higher level math. The changes will take effect in Spring of 2005. Amtrak now has a tentative funding deal to keep it running a little longer. It was announced last night. The Bush Administration will lend the passenger rail service $100 million right away. Congress will be asked for another $170 million to last through the end of the fiscal year. In return, Amtrak has to improve its financial discipline and accountability. The U.S. economy had its best showing in more than two years, from January through March. The Commerce Department reported today the gross domestic product increased at an annual rate of 6.1% in the first quarter of the year. Other recent reports indicate growth may have slowed some since then. That's it for the News Summary tonight. Now it's on to school vouchers and other Supreme Court rulings; the Pledge of Allegiance debate; and a business ethics discussion.

FOCUS - VICTORY FOR VOUCHERS

JIM LEHRER: The Supreme Court's decisions. First, school vouchers, and to Ray Suarez.

RAY SUAREZ: Here to walk us through today's ruling is NewsHour regular Jan Crawford Greenburg, of the "Chicago Tribune."

So on school vouchers, did we get a sharply split court?

JAN CRAWFORD GREENBURG: Yes, we did. This issue divided the Justices just really as it's divided the lower courts, the state legislatures and society. It was a very stark series of dissents today. The court ruled 5-4 in a decision written by the Chief Justice William Rehnquist. The court held today in the majority opinion that an Ohio program that allowed parents to use government money to send their children to religious schools did not violate the First Amendment, that that was part of a true private choice on the part of the parents, that the parents acted as a circuit that separated government and religion and that, therefore, the establishment clause of the First Amendment was not implicated. In his decision today, Rehnquist emphasized a long line of cases, he said, "an unbroken line" in which the court has consistently allowed this kind of indirect aid to religious schools.

RAY SUAREZ: And the dissenters weren't all of one mind either, were they?

JAN CRAWFORD GREENBURG: No. And the dissenters took very sharp issue with today's ruling; in a dramatic announcement from the bench Justice David Souter said he feared the court had made a fundamental and possibly tragic mistake. Justice John Paul Stevens wrote separately, as well, in dissent, discussing the mistrust that we see in the Balkans, in the Middle East and in Northern Ireland, and saying he fears today's ruling removing a brick from the wall of separation of church and state could lead to similar strife and mistrust here. Justice Breyer also wrote a separate dissent, talking about that strife and his concerns that today's ruling would lead to further divisiveness.

RAY SUAREZ: Now, what does that tell us, when you get so many opinions written in a 5-4 decision?

JAN CRAWFORD GREENBURG: That tells us that the court feels very strongly about this issue. For example, we had five Justices joining this majority opinion today, but two of them wrote separately to further express their views. Justice Sandra Day O'Connor, who many people who oppose vouchers had desperately hoped would provide the key swing vote to shoot down all these programs, she was with the majority today. She wrote separately to dismiss what she said were alarmist claims by the dissenters and to emphasize that today's ruling was no dramatic departure, that the court in previous years dating back two decades, had allowed people to take tax deductions for educational expenses, sending their children to religious schools. We've allowed the Pell Grants to be used at Catholic colleges. We allow senior citizens to use Medicare to go to Catholic hospitals. She saw it as no major departure. Justice Clarence Thomas also wrote a separate concurring opinion in which he spoke movingly of poor urban families and their plight of seeking better educational opportunities for their children. It was quite a dramatic day, very dramatic opinions on both sides of the issue.

RAY SUAREZ: Jan Crawford Greenburg, thanks a lot.

JAN CRAWFORD GREENBURG: Thank you.

JIM LEHRER: Gwen Ifill takes it from there.

GWEN IFILL: For more on the ramifications of today's decision, we're joined by: Howard Fuller, chairman of the Black Alliance for Educational Options-- he was the superintendent of Milwaukee Schools in the early 1990s; and Sandra Feldman, president of the American Federation of Teachers.

GWEN IFILL: Mr. Fuller, was today a brick in the wall falling out of the wall between church and state, as the Justice wrote in the dissent?

HOWARD FULLER: No, I don't think so. I think that what we have is a continuance, as Justice O'Connor said, of policies that have been around for a long time. I've never understood why it is that people feel comfortable and think it's okay for people to use a Pell Grant, but they don't want low-income parents in Cleveland or Milwaukee to have the same options. I think what we have here is an opportunity that has been given to low-income parents to have some of the choices that those of us with money in America have had for a long time.

GWEN IFILL: Sandra Feldman, same question to you: Church and State intact?

SANDRA FELDMAN: Well, I think that the decision was not unexpected coming from the court, but it does, I think, take us to a very different place, and one in which we do have to worry about whether or not we're going to be able to continue the improvement effort in our public schools, in which we've had rising achievement now over several years, because of standards-based reform. And one of the things that we're concerned about - Mr. Fuller talks about the Pell Grants - well, when Pell Grants were being used for proprietary schools that were basically ripping students off, the government had to step in and put in accreditation standards, and so what we'll be looking for in the instance of potential increases in voucher programs will be whether or not these programs are accountable to the public and whether or not they adhere to the standards in the states just as public schools have to. But I also feel that we're not going to have a great proliferation of voucher programs, that the American people believe in their public schools; they want them to be improved, and every time they've had an opportunity to vote, they have voted against vouchers and for public schools.

GWEN IFILL: Let's just talk for a moment about this Cleveland program that the court ruled on today. The court said this was a religion neutral program because it gives people - it gives parents the opportunities to go to a non-religion school if they choose.

SANDRA FELDMAN: Well, I think the court was confused about these other schools. 96 percent - over 96 percent of the children who are using vouchers in Cleveland are going to religious schools. The schools that the court was talking about is providing choice are indeed schools of choice; they are public schools. And you know we do have a lot of choice in the public school systems. They are basically charter schools, other public schools, and so we did not have a situation, for example, where suburban school districts were opting into the program, where children could take that voucher and go to a suburban school. They were very limited in their choice; they were limited basically to the religious schools, so I think the court is mistaken.

GWEN IFILL: Howard Fuller, I want to give you a chance to respond. Justice Rehnquist said today that this was about true private choice, this Cleveland program. Do you agree with that?

HOWARD FULLER: That's correct. I don't think the Justices were confused. I think they clearly understood that there was a range of options that were available to the children in Cleveland, and there are a range of options available in Milwaukee, but I want to say to Sandra Feldman that I wish she would come to Milwaukee and see the improvements that have occurred in Milwaukee public schools and listen to the people who have said - including the superintendent of Milwaukee schools and board members, who attributed those improvements to the Milwaukee pro choice program. And I would also ask her to come with us, join with us and talk to her brethren in the NEA and tell them not to oppose the longitudinal study that we have called for so that we can, in fact, give the information to people in the city of Milwaukee who are interested in knowing what is happening in these schools. We are prepared to voluntarily take the same tests that people take in the Milwaukee public schools. We just want to do it in a way that does not bring about excessive government entanglement, because she knows that there's an issue of excessive government entanglement when you put too many rules and regulations, including mandatory testing, on programs, so we're prepared to do this on a voluntary basis.

GWEN IFILL: Are you suggesting that voucher programs or school choice programs are good for public schools?

HOWARD FULLER: I'm suggesting that we have two things: public education in America and a system that delivers public education. We should not equate the system with the concept of public education. And the fact that we have now an opportunity to allow a financial mechanism to allow students to go to schools and they work for them is in the public interest. And I think what we have here really is redefining the nature of public education and public education cannot be confined merely to the system that currently delivers it.

GWEN IFILL: Well, Ms. Feldman, that raises an interesting question. Are we talking about what's good for the students here or what's good for the school system here?

SANDRA FELDMAN: Well, I think we're always going to be talking about what's good for the students. And the fact of the matter is that it is true that the Milwaukee public school system has gotten quite a bit better, as has the school system in Hartford, Connecticut, and in Chicago, in Baltimore. We are - in the states now we have standard states reform. We have an accountability system in most states, which does include testing, publishing the test results, looking at the performance of schools. And it is that standards-based reform, which has helped improve the Milwaukee public schools, including some additional investment. But the children in the voucher system in Milwaukee or in the voucher schools in Milwaukee, we don't know how well they're doing because they have not been part of the standards, the testing, the accountability system in that state. And so while I'm glad to hear Mr. Fuller say that they're prepared to be scrutinized in that way, we think it ought to be on a regular basis. They have not taken the test that the children in the Milwaukee public schools have taken and they have not been in any way brought under the accountability system and hopefully now they will be so that we can provide parents with real information.

GWEN IFILL: Let me let Mr. Fuller respond.

HOWARD FULLER: First of all, Sandra Feldman knows very clearly that we have a Wisconsin court that says that parent choice, plus the current requirements, meet the public interest. She also knows that her own union was very clear that the way to kill the program is to bring excessive regulation, because what that will do is cause private schools to get out and then they could take us back to court on excessive government entanglement. What we're saying very clearly is we are prepared to do the testing, the same ones at MPS because most of the schools are already doing the same testing in any event. We're prepared to make that public as part of a ten-year longitudinal program. We would do more than testing. We would look at completion rates, we look at parent satisfaction, we look at attendance rates, we look at value added. We would look at all the things you ought to use to judge a school; we will make that public. What we're saying is we presented that idea three years ago. The people who have opposed it in Wisconsin are the Senate Democrats and the Wisconsin Educational Association, which is an affiliation of the NEA..

GWEN IFILL: Okay, Mr. Fuller, let me -

HOWARD FULLER: ...so what Ms. Feldman should do is ask them to join with us in doing so and we're prepared to do it.

GWEN IFILL: Mr. Fuller, let me attempt to broaden this beyond Wisconsin for a moment. What do you think today's ruling is going to mean for other states, other school jurisdictions?

HOWARD FULLER: Well, I agree with Sandra Feldman in the sense that I don't think that this is going to mean that there's going to be a tremendous proliferation of voucher programs, nor should there be. I think what it says is it takes a away an argument that she and others have used that programs like this are unconstitutional. At least we no longer have that cloud hanging over the programs, but it's still dependant upon communities to determine whether or not this is something that will work in their particular communities. Some communities may decide, that a lot will say no. I don't think that there's going to be any significant push in this country to do that.

GWEN IFILL: I have to allow Sandra Feldman a very quick response.

SANDRA FELDMAN: Well, I'm glad we're in agreement. I also don't think that this is going to create a significant push. I disagree that it's not unconstitutional. I know that the American public does not want taxpayer dollars going to religious education, and if they do go to private and parochial schools and those schools have to be subject to the same kinds of accountability and scrutiny as public schools are.

GWEN IFILL: Sandra Feldman and Howard Fuller, thank you both very much. I'm so sorry. We're out of time. Thank you.

JIM LEHRER: Now, today's other Supreme Court rulings, and again to Ray Suarez.

RAY SUAREZ: Still with me is Jan Crawford Greenburg.

Jan, let's look at the school drug test case first. What was at stake there?

JAN CRAWFORD GREENBURG: At stake is whether or not schools across the country could test all students, all junior high and high school students who were involved in any kind of extracurricular activity, be it band or choir or the chess club if they could test those students randomly for using drugs.

RAY SUAREZ: And this was without any previous suspicion of drug use?

JAN CRAWFORD GREENBURG: That's right. Now, in 1995 -- we have to look at this case against the backdrop of a 1995 ruling in which the court, for the first time ever, ruled that none of that suspicion was required in the public school context when a school wanted to test athletes. After the court handed down this ruling, school districts across the country started pushing the envelope a little bit. They started saying, "Look, if we're going to test athletes, let's see if we can test other students involved in these other extracurricular activities." Schools said they had a very significant interest in deterring students from using drugs and protecting them from the harms of drug use. A student in Tecumseh, Oklahoma, a very bright, promising student involved in the band and choir and a number of other extracurricular activities, challenged that school district's drug testing policy, the expanded policy. Sued. She argued that it violated her right to be free from unreasonable searches and seizures that are guaranteed by the Constitution's Fourth Amendment. That was the case that was heard toy in the Supreme Court, and that's the court that the court used today to announce this broad holding that schools across the country can, in fact, test a wide range of students randomly for drugs.

RAY SUAREZ: How big with the majority, and what did the opinion say?

JAN CRAWFORD GREENBURG: This was a narrowly divided opinion 5-4. It's an interesting question because, in 1995, the decision was 6-3. They lost today, Justice Ginsburg. In 1995, Ginsburg emphasized that the ruling should apply only to athletes because of the special needs that athletes may have. She was persuaded that athletes could be harmed on the playing field if they were under the influence of drugs, and that sometimes they're the leaders in the schools. Furthermore, athletes have what we call a "lesser expectation of privacy" because they're used to being in the locker room and those kind of settings. None of that applied today in Justice Ginsburg's mind to students who are just in the choir or in the band and she wrote the dissent for one of the dissents for the court today, explaining all of those concerns and suggesting that the ruling was in fact perverse because these are the very students who typically don't have problems with illicit drug use, the ones who are heavily involved in school activities. She suggested these aren't the students that we need to be worried about. The schools are off trying to do these new drug testing programs, in which they really are not tuned in to what their interests in protecting students should be about.

RAY SUAREZ: And the majority's defense of their decision was based on...

JAN CRAWFORD GREENBURG: Justice Thomas, Clarence Thomas wrote the opinion for the majority, and he emphasized that schools do in fact have a very strong and compelling interest in protecting students from drug use. And he stressed that central to the previous holding, as is true today, was that schools act as guardians, as stand-in parents for the school children. So they have different privacy interests then, say, you and I would if we were just walking down the street. Schools protect the children, they act as guardians, and so therefore, students lesser privacy interests and the schools have these heightened concerns. Based on those two things, Justice Thomas, writing for the majority today found that this program did not run afoul of the Fourth Amendment.

RAY SUAREZ: Now, are there a lot of school districts that have been using tests of this kind that now have a green light to move ahead in a much broader way?

JAN CRAWFORD GREENBURG: You know, that's a good question. And I think it's hard to define. After the court handed down this first ruling testing athletes, as I said, other schools started pushing the envelope. And some lower court opinions started coming up evaluating whether or not schools could continue this broader drug testing. I did a story a couple of years ago, in which I interviewed students from all over the country and school districts across the country, and many school districts said, "you know, this may be a good idea, and yes, we're very interested in deterring drug use, but these are pretty expensive tests. Some of them cost, you know, $35 a pop, and you know, we're going to spend our money on other things." Of course other school districts have used it as an opportunity to expand, so it's really now up to the individual school district and whether they believe that this is somewhere they need to be spending their money.

RAY SUAREZ: The other big decision from today involved the election of judges. It was a Minnesota case. What was being argued?

JAN CRAWFORD GREENBURG: This involved a judicial campaign speech and whether or not judges, like candidates for city council or, you know, the State Senate or any other political office should be able to express their views on issues of the day. Minnesota, like eight other states, has a code that prohibits judicial candidates from announcing their views on disputed legal or political issues. As the court found today, that strictly and severely restricts what they can say on a wide variety of topics. A judicial candidate in Minnesota challenged that as a violation of his free speech rights under the First Amendment. And the Supreme Court, in a 5-4 ruling today written by Justice Scalia, said that he in fact did have a First Amendment right to be able to make these statements; that this code was unconstitutional because it targeted a core speech, core political speech, that's at the heart of our freedoms, and that violated the First Amendment.

RAY SUAREZ: And what did the dissenters have to say?

JAN CRAWFORD GREENBURG: This came down to a matter of free speech. We need to be able to allow judges to be able to say this, the majority said, and the dissenters led by Justice Ginsburg who summarized her dissent from the bench today quite passionately that this is about impartiality and the public's trust in the judicial system, that we cannot have and the states have an interest in limiting some of the things that judicial candidates can speak about because the public needs to know that the judiciary is impartial and unbiased. When they get a case, they're not going to already have their mind made up, they're not going to be biased. Justice Ginsburg in her dissent said, "I do not believe an election is an election, is an election." Judicial elections are different and the majority she said today ignored all of that. Justice Stevens also wrote a separate dissent, articulating further on how he found the majority's reasoning so troublesome and suggesting it was just naive to think that the public confidence would not be undermined by today's ruling. Now, Justice O'Connor, who was with the majority, had a very interesting concurring opinion that she wrote. This wasn't an issue in the case, this opinion doesn't really have any sway in the lower courts, but she said, "look, if the states are so concerned about an impartial judiciary, they've brought all of this on themselves." She questioned the very wisdom of electing judges in the first place. It wasn't around at the time of the founders, in fact, the founders of the Constitution had serious concerns of electing judges. So they traced the origin of how we've come to elect judges; 38 states now elect their own judges to the state Supreme Courts, and she suggested that that's really... not really the way to go, that of course a judge who's up for re-election would be influenced by how the public, who might later have to vote on them at the ballot box, how they might view one of his rulings.

RAY SUAREZ: Well, how did the majority deal with just that issue, that idea that if someone's opinions on different laws in the state are well-known, you might choose them because you want that law overturned?

JAN CRAWFORD GREENBURG: Well, the court looked at that when it said, "we hear you in Minnesota, we know you're concerned about bias. We know you're concerned about open-mindedness, but this doesn't narrowly get at the bias problem. We're not talking about a bias in specific case." And judges may be talking about issues, and it's impossible for us to believe that courts can limit the speech of somebody who's campaigning, can limit their... the campaign speech on a core political issue. This is not about open- mindedness. We know that judges who are on the bench talk about their own views. This is only a campaign political core free speech issue.

RAY SUAREZ: Jan, thanks.

JAN CRAWFORD GREENBURG: Thank you, Ray.

JIM LEHRER: Still to come on the NewsHour tonight: The Pledge of the Allegiance ruling; and money and ethics.

FOCUS - FIGHT FOR THE PLEDGE

JIM LEHRER: Banning "under God" from the Pledge of Allegiance; Spencer Michels begins.

SPOKESMAN: No one should be made to feel like an outsider because of his or her religious beliefs.

SPENCER MICHELS: The man who ignited the controversy is Michael Newdow, of Sacramento. He's a doctor with a law degree, and a self-proclaimed atheist.

CHILDREN: "One nation under God..."

SPENCER MICHELS: Objecting to the phrase "under God," Newdow sued his local school district on behalf of his second-grade daughter.

MICHAEL NEWDOW: I think the government is not suppose to be imposing its religious beliefs on any of our citizens, and it's clearly doing that with "under God" in the pledge, and so I thought it should be out.

SPENCER MICHELS: A trial judge dismissed his suit, but yesterday in San Francisco, a three-judge panel of the ninth circuit court of appeals agreed with him, saying the words "under God" violate a section of the first amendment known as the establishment clause. It says: "Congress shall make no law respecting an establishment of religion." Judge Alfred Goodwin, a Nixon appointee, wrote the majority opinion in the 2-1 ruling. It said, "to an atheist or a believer in certain non-Judeo- Christian religions or philosophies, "One nation under God" may reasonably appear to be an attempt to enforce a religious orthodoxy of monotheism, and is therefore impermissible." The lone dissent came from Judge Ferdinand Fernandez, appointed by the first President Bush. He wrote: "We will soon find ourselves prohibited from using our album of patriotic songs in many public settings. 'God Bless America' and 'America the Beautiful' will be gone for sure, and currency beware."

SPOKESMAN: We ought to be outraged by this judicial decision.

SPENCER MICHELS: The decision provoked bipartisan outrage in Congress.

SEN. JOSEPH LIEBERMAN: This one is so far out, so offensive.

SEN. TRENT LOTT: This outrageous decision by the ninth circuit court of appeals.

SEN. ROBERT BYRD: What are we coming to when we can't speak God's name?

SPENCER MICHELS: This morning, the House of Representatives packed the chamber to recite the daily pledge, a ritual that's usually attended sparsely.

GROUP: "And to the republic, for which it stands."

SPENCER MICHELS: There was a similar scene across the Capitol in the Senate.

GROUP: "One nation, under God, indivisible, with liberty and justice for all."

SPENCER MICHELS: But in on the streets of San Francisco, the reaction was less one-sided.

GINNY FANG: I understand the need for patriotism and being positive about your country, but that was a reason... one of the major founding points of how our country was founded, and I do believe that's very important to keep separate.

SPENCER MICHELS: Others found the ruling offensive.

RHONDA RYDSTROM: The Pledge of Allegiance is just a small way of kind of saying we respect our country. I think it's awful. It's ridiculous.

SPENCER MICHELS: But children in the nine western states that make up the Ninth Circuit probably won't be affected soon after the judge who wrote the decision blocked his own ruling from being enforced, and the Justice Department announced it would seek a hearing by the full appellate court.

JIM LEHRER: Two views of this controversy now. Barry Lynn is president of Americans United for the Separation of Church and State. He's an ordained minister in the United Church of Christ. Jay Sekulow is chief counsel of the American Center for Law and Justice, which is affiliated with the Christian Coalition. Barry Lynn, did the appeals court ruling get it right, in your opinion?

REV. BARRY LYNN: I think it did because it made it clear that, in 1954, when the Congress of the United States changed the original pledge, one written by a minister, but which did not contain the word "God," turned it in 1954 into not just a political statement, an affirmation of patriotism, but also now turned it into a religious affirmation. Congress, at a minimum, shouldn't be making decisions about what God Americans should believe in or which number of Gods we should believe in. They should strictly keep their hands out of the religion-deciding business.

JIM LEHRER: Why?

REV. BARRY LYNN: Because I think the central core of the establishment clause is this: That government, can government agencies, branches of government should not make decisions about one topic and one topic alone: Religion. That should be left entirely to the religious institutions and the conscience of individual Americans. So I think the court, although it's taken a long time to get here, yesterday those two judges looked hard at the issue and said if we really don't want Congress making laws about religion, they should not, in 1954, have turned a political affirmation into a religious creedal statement.

JIM LEHRER: Mr. Sekulow, I mispronounced your name a moments ago. My apologies.

JAY SEKULOW: No problem.

JIM LEHRER: Mr. Sekulow, you disagree what the court did.

JAY SEKULOW: I do.

JIM LEHRER: Explain your position.

JAY SEKULOW: That's quite all right. I think the ninth circuit really got it wrong here and I think ultimately they're going to be overturned and sooner rather than later. I think that what the Pledge of Allegiance did in 1954 is what our founders did when they wrote the Declaration of Independence and said we are endowed by our Creator with certain inalienable rights. There was a recognition of God. It wasn't a statement of denominationalism. It was just a recognition of God's providence in the foundation of the country. I think in that sense, the Pledge of Allegiance, like when the Supreme Court starts its session, God save the United States and this honorable court is part of this ceremonial deism that has been around since the very founding of our country. Where I disagree with the court and where I disagree with my good friend Barry Lynn is that the fact is if you take this argument to its natural conclusion, then our national motto "in God we trust" is removed next, which may be okay for some the ninth circuit, but I think for the rest of the country, there's going to be pretty serious opposition.

JIM LEHRER: How would you respond to Mr. Lynn's point, how would you respond to Mr. Lynn's point that this is something that Congress is prohibited from even getting into, in other words, anything religious, Congress must stay away from, because of the Constitution?

JAY SEKULOW: But Congress isn't allowed to make statements like this. I take a very different view of the way the establishment clause is supposed to operate. I think this kind of accommodation, if you will, no one's forced to say the Pledge of Allegiance. It's part of our constitutional history. I mean there's a series of Supreme Court cases, in fact the U.S. Supreme Court eight times has made reference to the Pledge of Allegiance and "the one nation under God" statement and has never found it to be a constitutional infirmity or difficulty. This ninth circuit opinion, I think, is wrong constitutionally, flawed legally and either it's going to be decided by the entire ninth circuit court of appeals or the end result may be the U.S. Supreme Court. And either way, I think the case is reversed.

JIM LEHRER: Mr. Lynn, first of all, do you agree that it's probably going to be reversed, that this is a one-night stand on this story?

REV. BARRY LYNN: Well, I'm not really sure about that, although I would not bet the ranch that the current Supreme Court would in fact uphold this ruling. But I think the ninth circuit may well, when all of its 11 members go, will maintain the same position because of the terribly well-reasoned opinion. In fact, it goes through settled law on issues like prayer in school. In prayer in school cases from the 1960s, the court said, and I think many Americans agree with this, that if you are in the same classroom as a group of other people who are praying to a specific God, that if you did not believe in that God or you have a different set of religious ideas, you should not be forced to either stay in the room and essentially participate in that exercise, or leave the classroom every day and be subject to the ridicule or, or worse, of your peers. This is a natural extension. If the Pledge of Allegiance has been turned effectively into a religious statement of faith, as it was in 1954, then a person who doesn't believe it, religious or otherwise-- this is not just about atheism versus good Christianity. It's about whether people believe that this is a public pronouncement that ought to be made-- it's just as much making you feel like an outsider, if it's the Pledge of Allegiance than if it's a prayer selected by the majority.

JIM LEHRER: You disagree with that, Mr. Sekulow?

JAY SEKULOW: I do. A couple of points. Number one, I think it's important to note at the outset, no one is compelled to participate in the Pledge of Allegiance. If someone objects to it, they cannot be participating and they have a perfect right to do that. The Supreme Court has recognized that.

JIM LEHRER: What about Mr. Lynn's point that if you're just standing there, you're put in a position of being kind of ostracized?

JAY SEKULOW: Yeah, but isn't the price of freedom, the fact that in public life, whether it's at the school or in the Supreme Court or in the halls of Congress, you're going to hear things you may disagree with -- and the fact of the matter is to take what Mr. Lynn is saying, what Barry is saying to its logical conclusion, then our national motto, "in God we trust" needs to go as well because you would perceive there to be an establishment clause. I think that what you have here is a situation where this court, out of sync with every other court in the country, and particularly these two judges -- we shouldn't blame the whole ninth circuit yet until we see what the final decision from the ninth circuit is when it's served by the full 11 judges - but I think these two judges are clearly wrong; they got it wrong constitutionally. The Constitution does allow for a religious acknowledgment. After all, it was Justice Douglas who said that our very institutions presuppose the existence of a Supreme Being.

JIM LEHRER: Barry Lynn, let me ask you about the point now that Mr. Sekulow's made more than once now, that is... and also the dissenter, the one judge, Judge Fernandes, dissented down this road, God we Trust goes -- it goes off the money, it goes off all these other things. Do you think that's where it should go?

REV. BARRY LYNN: I don't think it takes it out of in "America the beautiful," which I don't think mentions God. It certainly doesn't mean we change the declaration of independence, maybe God on the money, maybe you could make the argument. But I think here we're talking about something of central importance. The Pledge of Allegiance is the one and only national affirmation that is supposed to unify all of us here in the United States as patriotic Americans. I think it's far more significant than a couple of words, even important words, etched into the coins. I do disagree with Jay fundamentally about one thing. What is the price of freedom? I think sometimes the price of freedom is that we recognize that we in the majority have to use our own agencies and organizations and institutions to promote our religious faith because if we force or allow government to help religion, in fact, it will violate the conscience of the minority. And sometimes freedom means the church has to do it on its own. Religion has to thrive on its own, not with the help of government, not by its specific inclusion in our national Pledge of Allegiance.

JIM LEHRER: Mr. Sekulow?

JAY SEKULOW: Well, I'll tell you this, I... what Barry said at the end really in answer to your question, is "in God we trust" there's a national motto under his theory of the Constitution would go. I think, again, you look at the history of the country, to the history of the Declaration of Independence, we shouldn't start exercising our documents. Under Barry's theory of the case, the Declaration of Independence shouldn't be posted in the classroom either, certainly not our national motto "in God we trust." I think it's a recognition of who we are as the American people. You don't have to participate, you don't even have to agree, but I think that kind of acknowledgment is appropriate. I think it's legal.

JIM LEHRER: Mr. Lynn, how do you interpret this overwhelming negative response to this? Liberals, conservatives, Democrats, Republicans, big votes to zip, the President, everybody has come down against this ruling.

REV. BARRY LYNN: Well, I think there's two ways to look at this. First of all, I think in the public opinion polls, they're now starting to go run between 25% and 35% of Americans who actually believe the court was right. Congress uniformly seems to think they were wrong. I think the one-word difference may be "elections." The American people can take a sober look at this, look at the principles of our country. A lot of members of Congress happened to show up today to pledge allegiance and be on national television. They were the same people who yesterday could have gone voluntarily and pledged allegiance, but they didn't go. I'm afraid we're seeing a little bit of-- a lot frankly-- of political grandstanding as we so frequently and sadly do when politicians mix religion and politics very close to a national election.

JIM LEHRER: Is that what this is about, Mr. Sekulow?

JAY SEKULOW: I don't think so. I think the reason is politicizing the fact that the ninth circuit court of appeals made the decision yesterday, and I think they were in once sense an equal opportunity offender. They offended conservatives, liberals, Republicans, Democrats and independents. They offended the American people. I think the American people, even under Barry Lynn's theory, 70 percent of the people think the 9th Circuit's wrong, but ultimately, at the end of the day, I think the Supreme Court is going to make that same conclusion.

JIM LEHRER: This an important issue, or is it? Is it important?

JAY SEKULOW: I think it is important. It's important to let the court stand and also understand what the courts failed to understand, the idea that you start removing mention of "God" or faith from public life or government would be a tragic mistake in light of our constitutional history. No one's mandating the denomination here. No one's mandating belief. It's simply a tacit acknowledge of what they call, the court has called ceremonial deism, and I think to remove that would be tragic.

JIM LEHRER: Is this important?

REV. BARRY LYNN: It's very important legally and religiously. Whenever you mention the name of God, I think they... it is an important statement. It's not a ceremonial act. It's an important religious affirmation. This is an important case, and I'm terribly sorry that one of the clearest images out of this case that we've seen all day on national television are death threats brought against the man who brought this case in California. In America, we ought to settle our differences in the court, maybe Jay will win as he did with vouchers today. I lost. But the point is that that's the way we settle our differences. We don't threaten our neighbors. That's the kind of rules, non- rule of law that we've seen in so many countries that have now been identified as our greatest enemies.

JIM LEHRER: We have to leave it there.

JAY SEKULOW: On that we can agree.

JIM LEHRER: Thank you both very much.

SERIES - MONEY & ETHICS

JIM LEHRER: Finally tonight, business ethics. Enron, Andersen, Global Crossing, Tyco and now WorldCom. Our Business Correspondent Paul Solman of WGBH-Boston has been looking into these recent scandals of cooked books and other corporate misdoings. Here is part two of his series, a talk with five veteran business journalists. It was conducted before the most recent WorldCom news.

PAUL SOLMAN: Thank you all for coming.

PAUL SOLMAN: First question: Has American business hit some kind of ethical ebb?

ADAM SMITH: Where are the sound of the tumbrels rolling through the cobblestone streets to the guillotines? Of course it has! ...

PAUL SOLMAN: Loyal PBS viewers will recognize the first journalist as the eponymous host of Adam Smith's Money World.

ADAM SMITH: Now we've seen famous firms eager to sell themselves out just to make this year's numbers.

ALLAN SLOAN: There's an old line that the four most dangerous words on Wall Street are, "This time it's different."

PAUL SOLMAN: Next, Allan Sloan, financial writer for Newsweek.

ALLAN SLOAN: We're not at an ethical ebb. What you're seeing now is what's been going on for years. Now it's only surfaced. It's not that things are worse now than they were, it's that you're seeing how bad they were.

JAMES GRANT: Yeah, but the question is: What is the quality of our miscreants versus the miscreants of yesteryear, and I submit to you that ours are ever so much worse.

PAUL SOLMAN: Jim Grant was with Barron's in the 1970s and now writes and edits Grant's Interest Rate Observer.

JAMES GRANT: I'm not sure that people were nobler or more honest in the past. I daresay they were not. But

I think the standards of behavior were - were better on Wall Street and in finance.

ANDREW TOBIAS: One of my readers has suggested the wheel of misfortune ...

PAUL SOLMAN: ANDREW Tobias, personal finance writer since 1970.

ANDREW TOBIAS: ...white collar criminals would get the trials that they now get and every so often someone is convicted. But then they go to the wheel of misfortune, and if you're unlucky and you're the 10th or the 22nd or whatever number is it - you get the death penalty. Now I - or let's say to make it actually - a little bit less silly - you get some serious prison where you don't get to play tennis and you don't have a phone in your room and you don't have a double bed.

CAROL LOOMIS: I want to take it more back to executive compensation and stock options and that kind of thing ...

PAUL SOLMAN: Carol Loomis started covering business for Fortune Magazine in 1954.

CAROL LOOMIS: But I believe much of this bad behavior is tied to the- what I have called in the past "the madness of executive compensation" and to the arrogance that sort of comes out of that where the guys think they can do anything! And I say "guys" advisedly because there aren't many of my sex in this.

PAUL SOLMAN: The sense I get is that many people are outraged but the tenor of the public is, "everybody was doing it." Am I wrong?

ADAM SMITH: What I'm wondering is how -- why aren't the American people angrier?! Will we see some of this anger in the months to come? Where-

CAROL LOOMIS: How do they exhibit the anger -- if they are angry? They can withdraw from the market, and I think we are indeed seeing some of that, but I don't think we have seen the kind of withdrawal from the market that yet says that the -- that we're going to burn everybody who's involved here at the guillotine or...

ADAM SMITH: No, right. I think the anger is going to come from people who thought they had paid for their retirement! After all we had a big move to the 401Ks, we - and we had-- in order to get the pension obligations off the companies' expense sheet! So we moved the people in, and if you're in your own company's stock and the company is Enron, you've lost your pension. And even in those companies that are not Enron, many of them have very desiccated-looking 401Ks.

ANDREW TOBIAS: Well, but I mean people - on the up side - no one was complaining when things got so un--unrealistic and people thought they could retire young because the market was going to go up 15 percent a year. Maybe one of the reasons the outrage isn't quite what it will be if things keep going is that to a certain extent people somehow know that some of this wasn't real; that they knew some of this wasn't real. But I think, I think people will go to jail. I think people should go to jail. And I think a certain number of people-- are outraged enough that they would - they'd like to see that.

CAROL LOOMIS: I'm not quite as convinced that sending a few of these people to jail will-- will kill the wrongdoing out there. We saw Michael Milken go to jail, and that doesn't seem to have done much of-- at all.

ALLAN SLOAN: The question is -- well you don't have to shoot them -you have to scare the others! It takes a long time for people to go to jail. It takes a long time to get indictments. Look at this fellow Koslowski from Tyco. The company goes offshore a few years ago - ducks out on probably by now a billion dollars of federal income tax and nobody cares. New York State gets him for a million dollars of sales tax personally and he's criminally indicted!

JAMES GRANT: The likes of Koslowski are reminders that there, in any capital society there is, there is an implicit social contract between the rich and the others, and the idea is that the rich can get as rich as they like as long as the poor can also try to get rich. But when there is a breach of the contract, when the rich take what is not theirs-- there is-- there is a sense that something is wrong, and, and the result is that, that envy and avarice meet head on -- and that is what I think we're looking at socially with the current -with the contemporary crop of bad guys, it's, it's -- one wishes one had lived in the Coolidge boom. (laughter)

ALLAN SLOAN: Yeah, well it's, it's a lot easier to cheat now than it used to be I think. It used to be if you wanted to make up phony numbers, you had to sit - the numbers had to add up across and down. You needed imagination. Now with the spreadsheet you just push in your conclusions; you work backwards to your assumptions; you get the accountants to sign anything; and then it all gets disseminated in about three seconds, and what we're seeing now is not what's happening now -- we're seeing now what happened three and five and seven years ago-

GUEST: A surface economy.

ALLAN SLOAN: A surface economy. Right! It's a new economy of fraud!

ADAM SMITH: And another factor is the multiplier in this - in the bubble economy was so much greater - that is everything went up so much more you could have a company - there are always little companies coming out that weren't worth very much - but you couldn't have them be worth 5 billion, 10 billion dollars the day they came out when they still had no earnings and no earning power. That didn't happen-

GUEST: Or revenues.

ADAM SMITH: Or revenues! Or anything! You know. In other words there was - this was the biggest boom in fiction since-- Dickens and Thackeray in the mid 19th Century.

JAMES GRANT: The legacy of a boom is excess in all forms. During the Great Bubble Years - in the late 90s - capital was virtually free to takers-- you signed up - investment bank and, and basically you funded your enterprise. People availed themselves of it. They built stuff. They built to excess. And the excess weighs on an economy. It, it -when there's too much investment-- people produce too much. They produce too much at, at uneconomic margins. They drive out competitors who haven't got free capital behind them. The result is a kind of a chronic low-level virus in the economy and people talk about -- you know stagnation. Japan has been sitting in the soup for about a decade. It too had a bubble. It refused to clear the debris. It wouldn't let markets work. It wouldn't mark things down. And lo and behold it's still struggling.

PAUL SOLMAN: But do you explain it the same way Jim does -- as a function of unprecedented euphoria - an unprecedented bubble that simply and inevitably brings with it weird, aberrant behavior?

ADAM SMITH: You don't see the bones on the beach till the tide goes out. And what you're seeing now is the bones on the beach. There's more, more to come.

CAROL LOOMIS: I've always heard that you never know who's swimming naked till the tide goes out which I like much better than the bones. (laughter) Ever since the SEC came into being, we've had an expectation that the markets supposedly are working well under a strong regulatory scheme. And so you don't expect the kind of thing that is happening today. And also, I think it's very broad. To borrow a line from Warren Buffett, the people who are engaging in bad behavior today are the, the people - are people that you would be willing to have marry your daughter. Or be a trustee of your trust. But there is a - these people are accepting that it's okay to do this managing the books and doing anything to produce the kind of earnings that- is desired.

ADAM SMITH: My question is: here are great firms like Morgan Stanley and Merrill Lynch, and they are paying people 15 million dollars a year for a product that they know is not really first class, and if they have any sense of history, is going to lose a lot of people a lot of money. But it will make money this quarter and so that's why they do it. It's a kind of myopia that is terrifying.

ANDREW TOBIAS: I don't know what the repercussions to some-- should be for someone like that, but--a lifelong of happy repercussion free retirement - I don't think so!

ALLAN SLOAN: Would, would, would you feel the same if they were making 200,000 dollars a year instead of 15 million?

ANDREW TOBIAS: Well, no. But if they're not being paid much you figure they're - maybe they're doing it to preserve their job or to try to somehow pay for their child's bad leg, you know, but, but, but for 15 million dollars you figure that they're doing it because they want to be rich beyond imagining.

PAUL SOLMAN: So it was just a question of a screwed up set of incentives?

ALLAN SLOAN: Well it - Wall Street has never been a holy place. Wall Street is always greedy. It's the nature of the beast. What happened was there was far more money around than ever; the boom was greater than ever, andlargely because of the Internet and partly because certain members of my profession fell for this nonsense and promoted some of these people who shouldn't have been allowed out without keepers -- you, you had this irrational boom -this idea that everybody could get rich -- all of us here - all of us panelists knew this wasn't true. You'd raise your voice. It didn't make any difference. The -- it was like madness, and it burned out about 2,000 and now the hunt is on for villains!

ADAM SMITH: I don't want to, I don't want to step on your toes as the interrogator, but I wonder if there is the Calvinist notion that there has to be a certain amount of suffering before good times can come back.

JAMES GRANT: Yeah, there has to be a period, but not so much of chastisement or affliction but there has to be a period of, of marking to market -of, of, of recognizing values. And I submit to you that we are not there by any means; you know the, the, the stock market is, is, is this rarest bird of plumage. What we have is an overvalued bear market! You don't see those much.

PAUL SOLMAN: Do you think that we have an over-valued bear market?

ANDREW TOBIAS: Yes.

PAUL SOLMAN: Do you think we have an over-valued--

CAROL LOOMIS: Absolutely! I just can't find what they are out there to buy!

PAUL SOLMAN: I didn't pick you guys - I mean cause - for any bias -

ALLAN SLOAN: Except that we're old.

ADAM SMITH: Allan has a point -- that is, this particular panel has seen several cycles. Bubbles always float higher than you think they will and they always last longer than you think they will--and they always take longer to recover from than you think they do, and that makes us sound very old.

PAUL SOLMAN: Well, thank you all very much.

RECAP

JIM LEHRER: Again, the major developments of this day: The U.S. Supreme Court ruled school voucher programs are constitutional. And a federal appeals judge in San Francisco put his ruling against the Pledge of Allegiance on hold. That gave the full 9th circuit court of appeals time to consider it. There's a "Frontline" documentary tonight on most PBS stations. "Shattered Dreams" examines the collapse of the Middle East peace process. Please check your local listings for the time. And tomorrow morning, the cable network C-Span will feature the NewsHour. The senior correspondents and I will appear on the "Washington Journal" program. It runs from 7:00 to 10:00 eastern time. We'll see you then, on-line, and again here tomorrow evening with Shields and Brooks, among others. I'm Jim Lehrer. Thank you and good night.