The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Friday, Pres. Bush said he won't tip his taxes hand before the budget summit, there were new signs the economy is slowing down, and an explosion on a Philippine airliner killed seven people and injured eighty. We'll have the details in our News Summary in a moment. Robin.

MR. MacNeil: After the News Summary, we have a News Maker interview with William Seidman, head of the savings & loan bailout effort [NEWS MAKER - SAVINGS & LOAN], then editorial [FOCUS - TAXING WEEK] views from around the country on the skirmish in Washington on the budget and taxes. We have an update from Alaska on the Exxon-Valdez cleanup effort [UPDATE - EXXON - BACK TO ALASKA] and essayist Anne Taylor Fleming [ESSAY - MOTHER KNOWS BEST?] talks about motherhood in the '90s. NEWS SUMMARY

MR. LEHRER: Pres. Bush said today he would have no more to say about next week's budget summit with Congress. He said he is willing to discuss all options. White House Chief of Staff John Sununu said earlier this week those options did not include a tax increase. The President spoke to reporters today aboard Air Force One on his way to Texas.

PRES. BUSH: I've made this proposal that we meet with no conditions and that's exactly the way it's going to be and we're hearing comments from you people, by that I mean astute journalists wanting to probe beyond where I'm ready to speak, we're hearing comments from the political left, middle, center, right, and my position is I've made this offer to sit down in good faith and talk with no conditions and that's exactly the way it's going to be.

MR. LEHRER: Mr. Bush went to Texas to deliver a graduation speech at Texas ANI University in Kingsville. He told the graduates the nation's space program was a critical investment in America's future.

PRES. BUSH: Each time we go to the frontier and beyond, we bring back more than we hoped for, and this time we have the chance to bring back more than we can possibly imagine. Thirty years ago, NASA was founded and the space race began. And 30 years from now I believe man will stand on another planet, and so I am pleased to return to Texas today to announce a new age of exploration with not only a goal but also a timetable. I believe that before Apollo celebrates the 50th anniversary of its landing on the moon, the American flag should be planted on Mars.

MR. LEHRER: A congressional study released today criticized the U.S. space program. The Office of Technology Assessment said it lacked a clear future course, despite the President's call for missions to Mars and the moon. It said Congress must make tough decisions about paying for those missions, plus a $30 billion space station. Robin.

MR. MacNeil: There was more evidence today that the economy is slowing down. The government reported that in April, retail sales fell .6 percent and wholesale prices dropped .3 percent. Lower food and energy costs accounted for much of the price decline. The prospects of slower growth and lower inflation sparked a rally on Wall Street. The Dow Jones Industrial Average closed up more than 63 points.

MR. LEHRER: An explosion and fire ripped through a Philippine airliner today. Seven people were killed. The mid section of the Boeing 737 exploded as the plane was being towed to the runway for takeoff at the Manila airport. Most of the 113 passengers escaped by sliding down emergency chutes before flames engulfed the plane. Eighty-two passengers were treated for injuries. Officials said a bomb may have caused the explosion. There was also an air tragedy in West Germany today. A German army transport plane loaded with kerosene crashed in a remote area near Frankfurt. Ten people were killed.

MR. MacNeil: Throughout France today there were expressions of outrage and condemnation for the desecration of the nation's oldest Jewish cemetery. The desecration of 34 tombs was discovered yesterday in the Southern town of Capultra. The corpse of an 81 year old man was dug up and impaled on a pole. Officials blamed the National Front, a right wing extremist group, but today the group denied any responsibility. This afternoon services were held at the cemetery. Holocaust survivor Elie Wiesel who attended the ceremony said France must now examine its conscience.

MR. LEHRER: Novelist Walker Percy is dead. He died of cancer at his home outside New Orleans late night. The 73 year old Percy was a practicing physician before turning to fiction writing. His first book was "The Movie Goer", which won the national book award in 1962, when he was 44 years old.

MR. MacNeil: That's the News Summary. Ahead on the Newshour, the man in charge of the savings & loan bailout, editorial writers and talk of new taxes, spring cleaning in Alaska, and thoughts about mothers. NEWS MAKER - SAVINGS & LOAN

MR. LEHRER: We go first tonight to William Seidman the man in charge of cleaning up in a way the nations savings and loan mess. he Heads both the Federal Deposit Insurance Corporation and the Resolution Trust Corporation. He made news this week by joining other financial regulators urging banks to make more loans, suggesting a new system of selling off real estate from failed S&Ls and by being the subject of continuing stories alleging President Bush and the Treasury Department are trying to push him out of office. He is with us now for a Newsmaker interview. Mr. Seidman first the message to the bankers. You went with Federal Reserve Chairman Greenspan and Comptroller of the Currency Clark to deliver it. How would you summarize that message.

MR. SEIDMAN: Well our message was two fold. One all the regulators together in the way we are looking at these real estate loans and there have been allegations that we were not all acting on the same standards and we said we were. And secondly we wanted to make sure that those standards did not prevent banks from making good real estate loans. We were only setting out standards that helped them avoid bad loans.

MR. LEHRER: What caused you to take this action. Why did you feel that you had to deliver this message?

MR. SEIDMAN: Well first we wanted to join ranks with our beleaguered colleague Mr. Clark who was taking most of the heat for being too tough in his supervision of banks and we wanted to tell everybody we were in fact we were altogether in the project. And secondly we have been getting all kinds of stories in the press that said there was a credit crunch on and it was caused by the regulators. We wanted to say that we didn't see it but we also wanted to know whether the bankers saw it.

MR. LEHRER: Had you all noticed, had you, the Federal Reserve and the Comptroller of the Currencies Office noticed a freezing of loans now?

MR. SEIDMAN: We really hadn't and we had talked to a lot of people but we read that a lot of people were saying that and we wanted to see if bankers themselves saw if there was a real crunch on a real stop of all loaning on real estate ventures.

MR. LEHRER: What was their reaction?

MR. SEIDMAN: Well their reaction was if you ask us around the table here there were about 30 bankers their answers were no. We are making real estate loans. We don't believe there is such a change that we've stopped loaning but we keep hearing from our colleagues in the countryside that there are those who are not making loans any more. So in a way they were saying we don't see it but we hear it too.

MR. LEHRER: What was the allegation that you regulators that was causing bankers not to make loans?

MR. SEIDMAN: The allegation was that we were to tough in supervising the loans that they made. That we were making loans that were really okay in the old days. We were now treating them as bad loans and requiring reserves against them and that we were simply making it so that banks did not want to make real estate loans.

MR. LEHRER: That is true isn't it. haven't you scared a lot of them?

MR. SEIDMAN: Well to some extent we have because a lot of bad loans were made. Many of the standards with respect to construction loans were eased and we got a tremendous amount of over building. The vacancy rates in commercial buildings are at their all time high in history. So we clearly did see some loaning that shouldn't have been done.

MR. LEHRER: So if there is over building, and I am going to ask you about this in a minute. Your Resolution Trust Corporation is holding these buildings that you have foreclosed over, not foreclosed on, but taken possession of because of the closing of some S&Ls. So may be there is no need for a lot of new building now in some areas at least?

MR. SEIDMAN: Well it is certainly true in some areas and what happens is when you have an excess and when people get over optimistic because they can get financing but there is nobody there to use them and in order to get back to normal you have to go below normal in your building cycle until the demand develops. So it is not going back to normal. You have to go back to below normal.

MR. LEHRER: So if you have a city in America where you have a 30 percent vacancy rate or a 70 percent occupancy rate in downtown office buildings no bank in their right mind should loan money to somebody who wants to build another office building downtown. Is that it?

MR. SEIDMAN: Well that would be true unless they have a tenant for that building. If they have a tenant for that building so they know that it will be rented out they can build the building.

MR. LEHRER: What was the crisis that you thought, you and Mr. Greenspan and Mr. Clark thought might happen if you did not get this message over and these banks did not react favorably?

MR. SEIDMAN: Well there is always the possibility of people over reacting, of people believing what they read in the paper that there is a crunch and it becomes a self fulfilling prophecy. We wanted to make clear that we did not want to stop loans to builders. We were out to insure that those loans were the type that would be repaid.

MR. LEHRER: If in fact there was a credit crunch this would have caused a recession would it not. Was that not the bottom line.

MR. SEIDMAN: The bottom line is that it would be something that would drag the economy down. may be not by itself but with other factors it could certainly make things very difficult.

MR. LEHRER: When the meeting was over did you and Mr. Clark and Mr. Greespan walk out thinking we did God's work today and every thing is going to be alright now?

MR. SEIDMAN: I thought it was a successful meeting. The question is whether word will go out and did we get all the facts that we needed. We are not going to stop. We are going to continue to pursue letting everyone know that we are not out to stop the construction industry and we are not out to cause a credit crunch.

MR. LEHRER: Alright let's talk about what you are out to do and that is clean up the savings and loan thing. Now you all made a decision this week to lower your price if you had to, is that right, explain that. You went down 20 percent, in other words you could go down 20 percent below assessed value to get rid of this stuff. Explain why you did that?

MR. SEIDMAN: Well what we said was that we now get appraisals to set prices. Now what we said after a period of time generally six months if a building hasn't sold we will give people the flexibility to lower the price 15 percent because obviously our price is too high we are not getting any bidders. After another three months we could lower it another 5 percent. So what we were really doing was feeling for the market if we hadn't found it through an appraisal.

MR. LEHRER: And this was based on what. Why did you feel that you needed a 20 percent flexibility?

MR. SEIDMAN: It was based on going out and talking with customers. talking with brokers, talking with appraisers who said appraisals are often behind the curve and things have changed. The real market is where you can make a sale. We still have yet to find the first citizen who wants to buy from us out of the sense of patriotism. They want to buy because they can get a good price and we have to give it to them if we are going to sell these things.

MR. LEHRER: But if you set a 15 percent and then you say 5 more percent doesn't that encourage people to go to that last 5 percent before they buy?

MR. SEIDMAN: Well it does if no body else buys but they may lose it. We are not going to reduce it by 15 percent on all properties. If there have been some good bids and they are five percent below well we will reduce it 5 percent. It is not automatic. We are looking for the real market.

MR. LEHRER: What is the real tally as of today as to how much property, how much real estate in value at least that you have to unload?

MR. SEIDMAN: Well we have now about 16 billion that is in real estate form. We have many many billions more that is collateral for loans and those loans will have to be foreclosed on and we will have to clean the titles to get it ready to sell.

MR. LEHRER: But you have 16 billion ready to sell?

MR. SEIDMAN: Yes.

MR. LEHRER: And how much have you sold off already?

MR. SEIDMAN: About 2 and 1/2 billion.

MR. LEHRER: Alright you have 16 billion in the store ready to go and you have how many billions out there still to get?

MR. SEIDMAN: Well at least a 100 billion.

MR. LEHRER: At least what?

MR. SEIDMAN: A 100 billion.

MR. LEHRER: Could it be as high as 200 or 300 billion?

MR. SEIDMAN: Well I doubt it would be 2 or 3 but it could be between a 100 and a 150 and then of course on the other side in the FDIC we have another 75 billion that came from the transactions that were previously done by the old Bank Board. So when you add them altogether it will be over 200 billion.

MR. LEHRER: Alright let's go to the third element in all of this and that is the going of William Seidman story. Are you leaving?

MR. SEIDMAN: Well basically I told the Administration that I did not expect to stay my whole term. I still have over a year to go on it and I thought it would be better if some one came in who wanted to go for a longer period than I did. I have been there almost 5 years.

MR. LEHRER: It's a six year term?

MR. SEIDMAN: Yes. So I told them they should start looking for somebody else.

MR. LEHRER: And when did you tell them that?

MR. SEIDMAN: Oh maybe a couple of months ago.

MR. LEHRER: And how did you feel when the President said at a news conference the other day about your successor by name or possible successor Mr. Taylor?

MR. SEIDMAN: Well I had talked to him about it and if they were ready to do that it would be good for the overall organization not to have a couple of months or three months of speculation considering all the rumors that were out about when I was leaving. So I tried to do that for the benefit of the overall operation.

MR. LEHRER: Now where do things rest right now?

MR. SEIDMAN: Well where they rest right now is the President said I am not urging you to leave and when you are ready we will have a successor in place and I would like you to go forward with this very ambitious program that you have to sell a 140 S&Ls by June 30. I am busily trying to do that now.

MR. LEHRER: Marlin Fitzwater, the President's spokesman said, we are interested in getting new leadership when this whole thing came up. What does that mean.

MR. SEIDMAN: What he really said new and aggressive leadership at time, at the time that I leave. And the next question was does this imply that Mr. Seidman is not an aggressive leader and the answer was no he will be very hard to replace. So sometimes you don't get the whole story.

MR. LEHRER: The New York Times said quote for months senior Administration Officials have said privately that their battles with Mr. Seidman and his practice of publically speaking out when he disagrees with the Administration have soured the relationship". Is that an accurate statement?

MR. SEIDMAN: Well there are a lot of people in the Administration some of them I get along pretty well with and some of them apparently were really upset by my testimony before Congress when asked my opinions I tend to give them.

MR. LEHRER: So had there been territorial fights between you and the Treasury Department trying to get this thing worked out?

MR. SEIDMAN: Not really. We have had some disagreements because they in effect run the oversight board and we run the operations and it is a huge operation to get started. Actually that is pretty much behind us. I would say the last two or three months things have been working very smoothly. Mr. Taylor has been running the oversight operation.

MR. LEHRER: He is the guy that has been mentioned as your successor?

MR. SEIDMAN: Right he and I get along very well and I think that most of the people would say things have been working very smoothly the last few months.

MR. LEHRER: Secretary Brady, Treasury Secretary Brady has taken some cuts at you as you are aware of. Is that unsettling to you?

MR. SEIDMAN: Well it is always unsettling particularly since we've known each other a long time and I always hear these things second hand.

MR. LEHRER: Well, he said on this program, you know, under the lights, with the microphones on just like we are right now, when I was doing the interview, he said that possibly you were overstating the problem, in other words, the question was how much money this thing was going to cost and how big the S&L thing, and he suggested that you may be overstating the problem in order to make your job seem bigger than it was. Did you happen to hear about his saying that here?

MR. SEIDMAN: I didn't. I guess the facts will show that the problem is bigger than any of us though.

MR. LEHRER: Well, members of Congress have rushed to defend you in all of this in these last couple of weeks since these stories have come out, and they charge that the administration is out to get you because you told the truth about how serious the savings & loan problem is. Is there any truth to that? Do you feel that?

MR. SEIDMAN: Well, it's hard to talk about the administration. I've talked with the President and he hasn't said any of those things, but there are people who work for him who are apparently saying those things, and I think that there's always a tendency to shoot the messenger with the bad news and there's a tendency to like to have the party line carried out and if the party line is let's not talk about it, then no one's to talk about it. But I work for an independent agency and I go before the Congress, and under the law that I operate, I'm supposed to tell them what I know.

MR. LEHRER: Did anybody, has anybody from the administration, from the President on down, anybody, at any level, ever said to you will you please cool it Bill, we're trying to get this thing, quit telling people, quit telling Congress, quit going on television saying this is a big --

MR. SEIDMAN: Oh, I've had innumerable talks with them about what we should say and what I could say and still give the Congress an honest answer, so this hasn't just appeared out of the blue. We have talked about it at great length and occasionally we've differed.

MR. LEHRER: Yeah. I mean, do you feel that you're being pushed out?

MR. SEIDMAN: No, I'm not going to be pushed out. I mean, I have a term and unless the law changes I can stay as long as my term. I intend to leave before my term and I intend to leave when I get the RTC up and running and I hope that the sooner that is the better.

MR. LEHRER: Do you feel that you're a victim of honesty, in other words, that that's not the thing to be in this town right now, is to --

MR. SEIDMAN: I don't feel a victim at all. I may have been the butt of a few leaks from the White House with the intention of making me uncomfortable but, in fact, I don't know, I find more people recognize me on the street, so, you know, it's not all bad.

MR. LEHRER: So if somebody, whoever, is trying to get you out of there, you're going to go when you're ready, rather than when they're ready?

MR. SEIDMAN: I'm going to go when I've gotten a job that I think I was put in there to do in a place where I think I can leave and that's what the President has said to me.

MR. LEHRER: All right, Mr. Seidman, thanks a lot.

MR. MacNeil: Still ahead on the Newshour, editorial views from around the nation on the new Washington tax talk, Exxon Valdez cleanup a year later, and Anne Taylor Fleming on motherhood in the '90s. FOCUS - TAXING WEEK

MR. MacNeil: Now to some Friday night political analysis of the upcoming budget summit. David Gergen of our regular Friday night team is out of the country, but Mark Shields is in the country. He's a syndicated columnist with the Washington Post. Joining him tonight are four newspaper editors. Ed Baumeister is managing editor of the Trenton, New Jersey Times, Lee Cullum is the editorial page editor of the Dallas Times-Herald and joins us from public station KERA in Dallas, Clarence Page is an editorial board member of the Chicago Tribune, and Thomas Holt is the assistant editorial page editor of the Richmond Times-Dispatch. Mark Shields, the President, as we've noted on this show, has signaled that the budget deficit has become serious enough that tax increases can be discussed and a noisy scrambling for position followed after that. How does it look to you? Is this statesmanship and good politics?

MARK SHIELDS, Washington Post: Well, statesmanship and good politics I'm not sure. Certainly for the first time in a long time we've seen the Republicans occupying that turf where the Democrats have most recently been found. That's in disarray. There's been dissent, disorganization, contradictory statements being issued from one Republican after another, John Sununu contradicting the President, then Marlin Fitzwater contradicting John Sununu, restlessness in the Republican ranks, dissent, George Bush's most loyal supporter on the, steady supporter on the whole proposed budget resolution or resolution of the budget problem is Bob Dole, who of course ironically lost the Republican nomination in New Hampshire in 1988 because he refused to take a "no new taxes" pledge and George Bush did and made a television commercial of it which was decisive in that primary.

MR. MacNeil: Yeah. Let's ask our regional editors what you think of the President abandoning his "no new taxes" pledge. Lee Cullum, how did you react to that?

LEE CULLUM, Dallas Times-Herald: Robin, I reacted with dismay. I was delighted to hear that the President was finally going to acknowledge the problem of the budget deficit, delighted that he might be willing to consider some revenue measures, and really quite put off by his retreating from his position. It was a sound position. He should have taken it and held it.

MR. MacNeil: Ed Baumeister, how did you react to this?

ED BAUMEISTER, Trenton [N.J.] Times: Well, we thought it was probably about time that he acknowledge something. We have in our state a governor who is having to levy the biggest tax increase the state's history. He's raising 11 taxes if he gets it through the legislature. And we thought he acknowledged it, he dealt with it. We thought now this was signs of Mr. Bush doing the same.

MR. MacNeil: Thomas Holt, how did it hit you?

THOMAS HOLT, Richmond Times-Dispatch: Well, I think this budget summit has liberals and conservatives alike, something like teen- agers on a blind date with Miss America. Liberals are real happy because they think they're going to get to raise taxes and not have to make tough choices on spending. Conservatives are very nervous because if taxes go up, that means abandoning any hope on the deficit and just enormous political problems for Bush and for candidates in 1990 and '92.

MR. MacNeil: What was your reaction, Clarence Page?

CLARENCE PAGE, Chicago Tribune: Well, my reaction was very much like that of our newspaper editorial. We felt Bush's softening in his "no new taxes" pledge was both a good move and long overdue. It's very important that we do something to reduce the deficit with interest rates creeping up, with economic development in sore need, and with the peace dividend seeming to evaporate before we even see it, it's important that Congress and the White House stop this dance around the need to raise revenue, and perhaps now we're going to get down to really seeing the kind of economic stability we need.

MR. MacNeil: Mark Shields, what do you see as the political fallout? Now there were 19 Republicans in the Senate who said to the President, please, don't do this. Some of the people arranging the Republicans' campaign for the congressional seats, Ed Rollins called it a disaster, and yet a lot of the Democrats suspect that they're being set up for some kind of a trap and that they're going to be blamed if there are tax increases. What do you see as the political fallout from this?

MR. SHIELDS: Well, I think the political fallout first of all is that the Republicans are in jeopardy because of Pres. Bush's move here of losing what has been the last of the three issues which have enabled the Republicans to become the majority party at the Presidential level in the country. Those three were, Robin, a national strength credential which the Republicans had as the party in favor of a larger defense budget and a more assertive American foreign policy. End of the cold war diminishes the saliency of that issue for Republicans. Second was traditional values with the Republicans in support of school prayer and opposition to abortion, a constitutional amendment to outlaw it, and that all of a sudden faded for the Republicans and left them in an embarrassing and awkward position with the Supreme Court decision opening up that debate last summer. Now the last card they've had, which for 15 years has worked for Republicans, has been they've been the anti- tax party and the Democrats have been the tax and spend party and all of a sudden they're back to a parity with the Democrats, and if the debate is going to be about not whether taxes should be raised, which it has been in the past, but what taxes and whose taxes ought to be raised, then I think it gives the Democrats a stronger footing, especially when the richest taxpayers in the country are now being taxed at a marginal rate of 28 percent which rate of 28 percent, which is higher than the 33 percent that upper middle income taxpayers are at. So I think the political fallout is very very real, and I think Tom was right when he said 1990 could be a tough year for Republicans for that reason. It may help George Bush in 1992 though.

MR. MacNeil: A tough year for Republicans, Lee Cullum, or that they will benefit from facing the reality that you described a moment ago?

MS. CULLUM: I think they will benefit from facing the reality. Now maybe that's unrealistic but I hear responsible people in my part of the country thinking that Bush was doing the right thing before he backed off his position. I don't think people are terribly happy with our own Gov. Clements here in Texas who has vetoed a bill to fund equalization of schools. He's tied up the legislature now in a third special session. I don't think he's going to gain from that. He can't run for re-election so it doesn't make any difference. He can't run for re-election. But I think Republicans could gain from an even-handed, statesmanlike position.

MR. MacNeil: You were saying, Ed Baumeister, in New Jersey, the feeling that the period of no new taxes had been used up at the state level.

MR. BAUMEISTER: Well, there have been new taxes since 1980. They've been pushed on to the local level. The mayor of my town, Princeton, says that Mr. Bush is finally doing something that is necessary for the good order of the Republic. She's had to raise taxes and as she points out, the state taxes tend to be the more regressive ones. So it has been an era of taxes, and this acknowledgement on Mr. Bush's level that maybe some others need to be raised is something we welcome.

MR. MacNeil: John Holt, do you agree with Mark Shields that there's going to be serious negative fallout for Republicans if he goes ahead with it?

MR. HOLT: I think there's going to be tremendous fallout because George Bush didn't say I'll raise taxes as a last resort. He didn't say, I'll resist taxes. He said no new taxes. If he abandons that, he abandons the last defining, really clearly common sense defining issue that differentiates Democrats from Republicans. If there's no difference, there's no reason for people to vote Republican in 1990, and it could even be the sort of the thing that could bring a challenge to George Bush in 1992, or help the Democrats in '92 by just running a fairly moderate candidate. I don't see how it's somehow responsible or statesmanlike to automatically have everybody jerk their knees in favor of raising taxes without talking at all about spending cuts. We can get $25 billion out of defense. We could get a similar amount of money out of farm programs. There are a whole number of areas where we could look to cut spending, and that's the real problem with spending, because spending has far out paced growth and revenues in the last 10 years, and revenues have really been far out pacing inflation thanks to the tax cuts of the early '80s.

MR. MacNeil: Clarence Page, come in the point that this removes the last credible difference between Republicans and Democrats.

MR. PAGE: Well, I find that to be kind of laughable. I don't think the Republicans are going to suffer that much political damage in the general elections from the softening of the no new taxes pledge. Here in Illinois, the Republicans did suffer in the primary, the conservative Republicans did, when the hard core, no tax crowd went out and voted in great numbers for some rebel renegade candidates who unseated some established Republican office holders. And it sent shivers through both parties of tax fears. But look, November you're talking about Republicans versus Democrats. The hard core no tax crowd has got to stick with the Republicans because they're the ones who have been strongest on this issue. I personally think opinion polls show that the majority of the American public feels responsible on the issue and polls certainly show support for new taxes that will go to reduce the deficit. If the Republicans play their cards right, they're not going to suffer from this.

MR. HOLT: If I might break in --

MR. MacNeil: Who's that, Tom Holt?

MR. HOLT: Yes. Mr. Page is absolutely right the polling data shows people will support a tax increase if it goes to the deficit, but we've been led down this primrose path before. In 1982 and again in 1984, we were promised deficit reduction in exchange for tax increases. Well, they got the tax increases, we didn't get the deficit reduction. There were no real spending cuts to speak of, so the polling data doesn't really help here. I think there is strong resistance to substantial increases. I don't think anybody is going to be stupid enough to raise income tax rates, but if a whole series of other kinds of taxes come out of this, this could be very very costly to the Republicans.

MR. MacNeil: Mark Shields, do you think the case has been made to the country that the deficit situation is really so serious? I mean, Marlin Fitzwater said this week that severe action has to be taken. Do you think that case has been made yet?

MR. SHIELDS: It hasn't. It hasn't. We've heard from everybody so far, Robin. We've heard from Marlin Fitzwater. We've heard from John Sununu. We've even heard from the Vice President who's recently returned from overseas who says the President has a budget, a no taxes budget up on the Hill, a budget which the Republicans in the House refused to bring up for a vote on the House floor, but we haven't heard from the President, because the mantra of both the Reagan and Bush years were in the longest uninterrupted peacetime expansion in the history of the country, and all of a sudden, overnight, we've gone from that to this severe, desperate straits that Mr. Fitzwater alludes to, and I think the President has to do that. Only the President can make the case that there really is a need and that there is a sense of urgency abroad in the land. I think the overlooked asset the Republicans still have, and I have to concede this, is they have, they do have one card to play, and that is, we are not the Democrats. That might be their last card to play, but I think it's one that has, still has a certain saliency with the voters.

MR. MacNeil: How do you feel about that, Ed, that the case hasn't been made that suddenly the deficit situation is so serious, that it's really drastic? I mean, they were talking, Richard Darman was on this program talking about $76 billion, because of the added effect of slower growth, therefore, less tax revenue, the impact of the S&L loans, the interest rates going up and so on?

MR. BAUMEISTER: I think these are numbers that are almost too large to wrap the average mind around. I mean, it's such a staggering amount of money?

MR. MacNeil: Seen from New Jersey, suddenly this sort of message wafting out of Washington, that, hey, the situation is so serious that it might even endanger the President's re-election chances in 1992, has that come out and really been absorbed?

MR. BAUMEISTER: Not as an alarm. It hasn't been sounded as an alarm. There's an understanding that there's something wrong there. There's a lot of talk. It looks to some of my neighbors like a lot of people trying to back away from a fire that started in a room, but there's nothing been crystal clear that says now, now is the time to change the meaning of the lip reading, now is the time to change the way we've been behaving.

MR. MacNeil: Lee Cullum, has the case been made, as you hear it from Dallas, do you think that it really has become something of an emergency situation?

MS. CULLUM: I think the case has been made, Robin, not so much as an emergency, but I think there has been a subliminal suggestion that all is not going well. It's been going on since Black Monday, which was almost three years ago. I think there's been real concern about the federal deficit, certainly in the business community. I think in the community at large there's an understanding that we're living beyond our means, even though they haven't talked much about it in the Republican Party in Washington.

MR. MacNeil: Tom Holt.

MR. HOLT: Well, I don't think there's any question that the deficit is a problem, but to an extent, it's blown out of proportion. When you look at it as a percent of GNP, the deficit has been cut in half in the last seven years. So there's some progress being made. But we'll make no more progress at all if there isn't something done on the spending side. What this budget summit really indicates is that Congress has totally lost any sense of discipline about the budget. The process is broken. It needs to be fixed. What we need now is leadership from the White House to fix the budget process, get things on track again, start talking about real issues, not all taking the easy choice, and the easy choice is raising taxes, no matter how politically costly it might be to the Republicans.

MR. MacNeil: Do I gather from you earlier, Clarence Page, that you think that, sitting where you are in Chicago, that the case has been made, whether the President's made it or not, that the case is made that the situation is serious and needs drastic action, as Fitzwater put it?

MR. PAGE: Well, certainly no one wants to have the kind of economic recession that so many people have been fearing might happen. One way to avoid that would be to stabilize the deficit situation. I've heard so many estimates as to how big the deficit is, it begins to sound like smoke and mirrors I think to me and to a lot of other folks, but there's question that you can't live beyond your means forever, and certainly with the S&L bailout looking more and more costly, we are seeing some very dire clouds in the future, and I think right now certainly is the time for the White House to make some kind of a move if they want to avoid the kind of political damage that could pop up in '92.

MR. MacNeil: I'm going to come back to each of you around the country in a moment. I'm going to start with Mark. Describe how you see the role of John Sununu in this situation.

MR. SHIELDS: I had a couple of Republicans say quite candidly this week that if Lee Atwater were well --

MR. MacNeil: Let's just define for those who don't follow these things every day that John Sununu is the White House Chief of Staff.

MR. SHIELDS: John Sununu is the White House Chief of Staff who was, of course, George Bush's campaign chairman in New Hampshire, when the pledge became the issue, the "no new taxes" pledge, and became very important in winning the nomination for George Bush. John Sununu has taken over in the absence of Lee Atwater, the Republican National Chairman, and the Bush National Campaign Manager of 1988 who is ill and being treated for that illness, he's taken over the political role as well, and I don't think there's any question -- I can't recall the last time I've heard the President's chief of staff 48 hours after a meeting with the congressional leadership being contradicted by the President's press secretary on a statement which he did, which John Sununu did make, that George Bush did not intend to put taxes up for consideration or deliberation in these meetings.

MR. MacNeil: Clarence Page, how far does curiosity about that sort of thing stretch beyond Washington, about whether Sununu's taking over Atwater's position and Sununu's role in appearing to contradict what the President had said earlier.

MR. PAGE: Well, a lot of that tends to be inside the beltway sort of gossip, but what is important here is that we're dealing with personalities who are Bush's political brain trust and the GOP's political brain trust. When the GOP speaks with one voice, it is most effective. When we see contradictions in the same day between key people and the administration and in the party, the Republicans don't look so strong. So I think in that sense there could be a ripple effect if this continues where people will start making unfavorable comparisons between George Bush and Ronald Reagan who certainly was a very strong GOP leader.

MR. MacNeil: Lee Cullum, does the curiosity about the Sununu role stretch to Dallas?

MS. CULLUM: Oh, I wouldn't say there's great curiosity about John Sununu, but I will say it's all looked like theater of the absurd. All of a sudden, things looked as if they were going to get on track, and all of a sudden they were badly off track, and I don't think Mr. Sununu has reflected well on the President or helped the President's cause down here.

MR. MacNeil: Tom Holt.

MR. HOLT: Well, I think the analysis that it's inside baseball is correct, but it's very important inside baseball, because the fact that Marlin Fitzwater came out and said that's crazy when Sununu suggested that tax increases would be vetoed, that really spells trouble about the whole budget process. Until a few days ago, the White House had the initiative, they had the sequester, they had the no new taxes putting pressure on the spending side. That pressure is not there anymore.

MR. MacNeil: Ed Baumeister, how did that strike you briefly?

MR. BAUMEISTER: Off the New Jersey Turnpike, it looks like whether an argument over whether Alfonse should proceed Gaston, it looks like a side show as "read my lips" did, not on the issue.

MR. MacNeil: Okay. Well, gentlemen, and Lee Cullum, thank you all. UPDATE - EXXON - BACK TO ALASKA

MR. LEHRER: Now a look at post oil spill Alaska. The state is emerging from its first long, cold winter, since the Exxon Valdez spilled 11 million gallons of oil into Prince William Harbor. This week, the state legislature considered and rejected attempts to pass new laws designed to protect Alaska's shoreline. Our report is by Lee Hochberg of KCTS-Seattle.

MR. HOCHBERG: It's the beginning of an anxious spring for thousands of Alaskan fishermen. Last year, halibut, herring, shrimp, crab and salmon fishing seasons were cancelled in Alaska for fear of contamination from the Exxon Valdez oil spill. Thousands of fishermen went to work cleaning beaches. But this year, they need to get back to the business of catching healthy fish and nobody knows how healthy they'll be. State inspectors like Clark Pearson are on the docks in the fishing village of Cordova sniffing halibut for the odor of oil.

REPORTER: Have you found any oil so far?

CLARK PEARSON, Fish Inspector: No. The fish look very good. They are good quality fish. We haven't seen any oil contamination.

MR. HOCHBERG: The halibut dwell on the floor of Prince William Sound and seem unlikely to be tainted by floating oil. But state scientists are alarmed by findings in a more sophisticated analysis late last month that bottom dwelling pollack from the Sound are contaminated. The National Marine Fishery Service found significant levels of hydrocarbons in their gall bladders.

USHA VERANASI, Researcher: We were a little bit surprised when we saw the exposure in such deep, at such deeper level and in offshore species, because these fish were sampled from anywhere from four hundred to twelve hundred feet below the sea levels.

MR. HOCHBERG: Usha Veranasi says the oil hasn't been found in the flesh of the fish, the part that's made into fish sticks and fillets, but the pollack studies confuse an already murky picture about the health of other Prince William Sound fish. Both the state of Alaska and Exxon have conducted their own extensive studies. But with the state embroiled in major litigation against Exxon, both have kept the results of their studies private. The head of the state's oil spill impact assessment team, Gregg Erickson, says he has proof some fish have been harmed, but he won't release it.

MR. HOCHBERG: Do you have information like that?

GREGG ERICKSON, Department of Fish and Game: We've got lots of that data and I can't tell that information to you today. And we're real concerned about that, so I have to answer your question, yes, there is information out there that the public should have, the public should have it all of it.

GOV. STEVE COWPER, Alaska: Well, the reason that we're withholding is because the other parties are withholding. The unfortunate fact is that if you were in litigation and you give people your information and they don't give you yours, you lose the case.

MR. HOCHBERG: Alaska Gov. Steve Cowper has taken to the air waves with an offer to release the state's data to a federal repository if Exxon will do the same. Exxon has refused. Exxon's Otto Harrison.

OTTO HARRISON, Exxon: We think we ought to all be on a level playing field, okay. And if we're putting data on the table and you're involved in this case in litigation, okay, and the other party is not, that's not a level playing field.

MR. HOCHBERG: What has leaked out are frustrating pieces of studies. The Newshour has learned of a state study suggesting brain lesions are forming in possibly thousands of seals exposed to the oil. There's also a report suggesting the highest mortality of killer whales ever seen. State scientists have found genetic abnormalities in herring eggs and high mortality of salmon eggs exposed to oil, foreboding prospects to Prince William Sound fishermen.

WENDELL JONES, Commercial Fisherman: We're ponds. You know, it's just a, it's a chessboard within the legal system and we're expendable ponds is what it seems to be.

MR. HOCHBERG: 53 year old Wendell Jones made thousands of dollars last year helping to fight the oil spill. Like many fishermen he invested his windfall in a down payment on a new boat. Jones wonders now if salmon and herring runs will shrink in Prince William Sound and prevent him for paying for his boat.

MR. JONES: We have to make our living off these resources. We need to know this information. The spill has taken place. The scientific data has been accumulated. Why can't we know it?

MR. HOCHBERG: Exxon is filling the information vacuum with a controversial public relations campaign in Alaska. Newspaper ads give results of selected studies commissioned by Exxon. The state calls the ads misleading and irresponsible.

SPOKESMAN: The wildlife ad suggests that oil remaining in the shorelines is not going to be, "is not likely to be a threat to wildlife," is their exact words. Well, we just don't think they have any basis for saying that.

MR. HARRISON: You know, we have to go back and look at the specific words in the end.

MR. HOCHBERG: I think I've got a copy of it if you'd like to see.

MR. HARRISON: Okay. But, you know, and I've given a number of talks using that and we've used an organization called Alaska Biological Research to go out and do actual counts on birds and mammals and see what they're doing, and they're telling us the same thing for birds and mammals, said they are not seeing stressed wildlife due to oil.

MR. HOCHBERG: No matter what's being muddied on paper, what's very clear is that animals are still dying in the waters a year after the spill. The heart warming $18 million effort to save 360 sea otters oiled in Prince William Sound has turned out to be far less successful than hoped for. Two hundred of the animals survived the summer and were released were to the Sound and forty-five were fitted with radio transmitters to monitor their progress. But the Fish and Wildlife Services Bruce Batten says as many as half of them may have already died.

BRUCE BATTEN, U.S. Fish and Wildlife: We were looking for a far better survival rate, particularly after the rehabilitation process. We can't give the impression that if there's a big oil spill and it's going to affect a lot of otters that we can go out there with rehabilitation and save all those otters. That just isn't the case. [WORKERS DIGGING UP SPILLED OIL OFF OF BEACH]

MR. HOCHBERG: Even after a winter of storms, a lot of oil still coats the Prince William Sound beaches. Exxon says wave action removed about half of the surface oil and nearly three-quarters of the sub-surface saturation. Much of what's left though has congealed to form so-called "tar mats". Some workers are calling the tar beaches the new Alaska Marine Highway.

WORKER: It's like asphalt. You could pave a parking lot with it.

WORKER: It's nasty, real nasty.

MR. HOCHBERG: Community cleanup squads funded by the state have been out for weeks trying to remove the oil before animals come back and are poisoned by it. Cleanup Coordinator Linda Hyce says her team's light tools won't be enough.

LINDA HYCE, Local Cleanup Coordinator: It's going to take some equipment in here to clean this and most of the time we wouldn't favor that kind of intrusion, but this is a high human use area and it's dead. We're not going to disturb any life on this beach; there isn't any.

MR. HOCHBERG: But there will be no heavy equipment this year. The Coast Guard approved the final cleanup plan today that's very similar to Exxon's own proposal. It calls for a low tech beach assault, relying largely on garden tools. Also, bio-remediation will be used, application of a fertilizer that promotes the growth of an oil eating bacteria. Exxon credits the fertilizer for dramatic recovery on exposed beaches like Point Helen.

OTTO HARRISON, Exxon: This beach, I'm immensely gratified about this beach. All of the oil is not gone. You can see oil stains here, but I don't think there's any question that this rock which I just turned over has light green algae regrowing. We have heavy algae regrowing on the rock here that we're standing on, and the material that we're seeing up here is not going to harm or be a detriment to birds or other wildlife.

MR. HOCHBERG: The state insists there's no evidence that bio- remediation will work on the 16 miles of beach left with sub- surface oil. Dennis Kelso of the Department of Oil Conservation says some beaches are soaked more than two feet deep.

DENNIS KELSO, Department of Conservation: A squirt and a promise is not good enough. We need more than just to have this stuff sprayed on and then see what happens. We need to be using a variety of different tools.

MR. HOCHBERG: The state says oily cobble could be scooped from the beach, washed in a rock washing machine like this, and returned to the beach. The Anchorage manufacturer of this unit says it removes 99 percent of the hydrocarbons in rocks. Exxon though says the technology threatens the environment.

MR. HARRIS: That's a fairly intrusive process, and our concern is whether there is a real net environmental benefit to that process.

MR. HOCHBERG: With rock washing not in the cleanup plan, state leaders are becoming resigned to the fact that many Prince William Sound beaches will never be the same.

GOV. COWPER: We're not going to get the whole thing cleanedup. I wish we could, but we just can't. Some of the oil has reduced itself to a consistency that is not toxic. If it's black and people don't like it when they see it, we're, it's one of those things that I guess we'll have to live with.

MR. HOCHBERG: Living with it is going to mean more than just ugliness for some people on the Sound. Villagers in the native community of Chanega are finding almost no seals that make up a part of their diet, and those they do find, they're afraid to eat.

PHIL KOMPKOFF, JR.: You used to see seal all along here, ducks, birds. Now I don't see any. It's just, to me it looked like a big graveyard out here, big, empty, lonely, and having to look at this day after day, hoping that you'll wake up and it's all a bad dream.

MR. HOCHBERG: Lawmakers killed two key bills that the state oil spill commission had recommended to prevent a repeat of the Valdez accident. One would have strengthened the state's authority to inspect oil terminals. It was rejected. Another bill would have increased civil penalties for oil discharges from a tanker. It was also rejected. Representative Ramona Barnes reminded colleagues in the House that the oil industry provides 85 percent of state revenues.

RAMONA BARNES, State Representative: If you continue to lay all these regulations layer on top of layer, what I foresee happening is driving the companies out of the state. And that's not good for the people of the state of Alaska, it's not good for the people in the rest of the country.

MR. HOCHBERG: One important law did pass requiring the industry to have contingency plans to contain an Exxon Valdez size oil spill within 72 hours of the spill. Alaskans will be watching to see if that law keeps their waters from being oiled again in the next spill. In the meantime, the cleanup plan the Coast Guard announced today gives Exxon until August 15th to do its best job cleaning up the black remains from the last one. ESSAY - MOTHER KNOWS BEST?

MR. MacNeil: Finally tonight essayist Anne Taylor Fleming takes a look at motherhood in the '90s.

ANNE TAYLOR FLEMING: Eighteen years ago the Aalas had a daughter named Anissa. That daughter now has leukemia, and when a proper bone marrow donor could not be found to give her a curative transplant, the Aalas decided literally to have one of their own. In short, they conceived a second daughter to try to save the life of the first. There was only a 25 percent chance that the baby's marrow would be compatible with her older sisters, but the Aalas beat the odds and now Anissa has a 70 to 80 percent chance of being cured. That's a Hallmark card come to life, isn't it? A daring story of maternal love at its most determined and most optimistic. It's easily the nominee for Mother Day's Story of the Year. Is there a dry eye in the house? Indeed there is, not only a dry eye, but a tight jaw as well, that of the medical ethicists who object to the idea of a mother having a child in order to try to save the life of another child, a sibling sacrifice, as they see it, another step on the slippery slope of mother love run amuck. Motherhood is highly contested terrain these days and the womb is the hottest spot of contention. All the hearts, flowers and sentiments aside, all the well heeled baby boomers with their cherubic toddlers aside, the truth is mothers are under siege at the moment, their judgments and behavior being questioned at many a turn. After all, that's what the abortion fight is about, whether a mother to be has the right not to be a mother. That's the flip of the Aala story, to haveor have not, and who makes that decision, if not the mother. Increasingly, there is talk of fetal rights. That's the code phrase, the argument that fetuses that have rights that are equal to and even transcend those of their mothers. Fetuses come first. That's the gist of some tough new court rulings. In California, for example, a young pregnant woman by the name of Pamela Ray Stewart was told by her doctors to rest and stay away from drugs and sex. She did not heed him and delivered a brain damaged child who later died. She in turn was charged with failing to give support to her child. In Florida, Jennifer Johnson, a 23 year old cocaine addict gave birth, and was charged with being, in effect, an umbilical drug peddler to her very own baby. Weird stuff, ugly stuff, sad stuff, babies whose first breath on earth is one of discomfort and withdrawal, who can minimize that? But is the answer locking up the moms, the estimated 375,000 of them in this country who deliver drug addicted babies every year? Clearly, there are those who say yes. But what then shall we do with the others, with the mothers who drink wine or smoke cigarettes, or stay with abusive men during pregnancy, risks all? Where are the lines? Who's going to draw them? Who's going to decide whether punishment is preferable to treatment? Who's going to mother the mothers? That, after all, is what a lot of them need. These are dark thoughts perhaps for Mother's Day. I didn't quite mean it that way. I started with the Aalas, rather with the criticism of them, and one thing seemed to lead to the other, which is, of course, the problem. So let's go back to the happy picture of them, of Anissa and her little baby sister, Marissa Eve, and the mother who gave birth to both, hoping that by giving life to one, she could prevent the death of the other, mother love, 1990. I'm Anne Taylor Fleming. RECAP

MR. LEHRER: Again, the major stories of this Friday, Pres. Bush declined to rule in or out anything going into his budget summit with Congress next week. There were new signs the U.S. economy is slowing down, and an explosion possibly caused by a bomb killed seven people aboard a Philippine airliner. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the Newshour tonight. Have a nice weekend. We'll see you on Monday night. I'm Robert MacNeil. Good night.