The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. I'm Jim Lehrer in Washington.

MR. MacNeil: And I'm Robert MacNeil in New York. After tonight's News Summary, what role for the CIA in the new world order. We have a NewsMaker interview with Director Robert Gates. Then Bruce Van Voorst of Time Magazine reports on new doubts about the vaunted Patriot Missile. Next, the pressure on American jobs from foreign competition is a factor in the Caterpillar strike in Illinois. We have a report by Tom Bearden. NEWS SUMMARY

MR. LEHRER: Macy's filed for Chapter 11 bankruptcy protection today. The giant department store company blamed slumping sales and its massive debt. Macy's is based in New York City and operates more than 250 stores nationwide, including I. Magnin and Bullock's. Today's filing will allow it to remain in business while it reorganizes its finances. Robin.

MR. MacNeil: President Bush went over details of his State of the Union message with Republican leaders at the White House this afternoon. Afterward they said Mr. Bush would present a comprehensive program to jumpstart the economy. Mr. Bush refused to comment on the details of the speech which he'll deliver tomorrow night at 9 PM Eastern Time. He did preview two more elements of his budget package. He said he would ask Congress to increase both anti-drug and anti-crime spending. Mr. Bush said he was initiating a new program he called "Weed and Seed." He explained it in a speech to religious broadcasters.

PRES. BUSH: First, we join federal, state and local forces to weed out the gang leaders, the violent criminals, the drug dealers who plague our neighborhoods. And when we break their deadly grip, we follow up with Part 2, we seed those neighborhoods with expanded educational opportunities, job training, health care, and other social services. But key to the seed concept will be jobs generating initiatives, such as enterprise zones to give people who call these neighborhoods home something to hope for.

MR. MacNeil: Democratic Sen. Joseph Biden, chairman of the Judiciary Committee, said he cannot accept the President's drug plan. He said it ignores the fact that there are more hard core cocaine addicts in the U.S. today than four years ago and there's been a dramatic rise in heroin and hallucinogenic drug use. The Supreme Court today upheld a 1989 federal law which attempts to protect children from so-called "dial-a-porn" phone messages. The law requires telephone companies to block excess to such service unless a customer asks for them in writing. Several companies said the law was a curtailment of free speech, but the Justices let stand a lower court decision which said the law put on restraint on adults who wanted access to the services.

MR. LEHRER: Russian President Boris Yeltsin has decided to stop targeting U.S. cities with nuclear missiles. He said it in a weekend interview with ABC. White House Spokesman Marlin Fitzwater said today it was an important and positive step. Sec. of State Baker said today good progress had been made in eliminating Soviet nuclear missiles. He also said the United States would be willing to send technicians to help destroy even more. He spoke in Moscow during a meeting with Russia's foreign minister. Baker was there for the next phase of Mideast peace talks scheduled to begin tomorrow. We have more in this report narrated by Louise Bates of Worldwide Television News.

MS. BATES: Arriving in Moscow, James Baker was immediately closeted in talks with Russian Foreign Minister Andrei Kasarov. Here there was intense interest in the latest developments on the nuclear weapons issue. Elsewhere the rhetoric had started. The Israeli delegation was quick off the mark in the war of words. Foreign Ministry Spokesman Moshe Aviv was immediately on the offensive.

MOSHE AVIV, Israeli Spokesman: It took our partners, our Arab partners, 43 years to reach the conclusion that only direct face- to-face negotiations can produce progress and can lead to peace.

MS. BATES: But the key sticking point in the buildup to these talks has been the make-up of the Palestinian delegation. Israel refuses to budge.

MOSHE AVIV, Israeli Spokesman: It will be a joint Jordanian- Palestinian delegation in terms of the same criteria as Madrid.

MS. BATES: Some important countries are boycotting Moscow, but more than 20 parties, including Saudi Arabia, will be represented at the talks. One of the key players, Jordan, was skirting the delegates questioned and attempting to take a broad view of the problem.

KAMEL ABU JABER, Foreign Minister, Jordan: He wants the whole region to settle in peace, peace that will give the Palestinian people the right of self-determination, peace that will see Israeli withdrawal from the occupied territories, including Jerusalem.

MR. LEHRER: Boris Yeltsin will miss those Moscow talks. He abruptly cancelled his appointments for Monday and Tuesday and left the capital. A spokesman dismissed rumors that illness or a drinking problem were to blame. He said Yeltsin simply needed more time to prepare for a trip Thursday to the United Nations in New York. Yeltsin was last seen in public on Friday. UN weapons inspectors in Iraq said today they were roughed up by a crowd of about 40 men. A U.N. spokesman said three members of the team were jostled and shouted at outside their Baghdad hotel, while police were watched and did nothing to stop it. He called the incident a clear breach of the U.N. weapons inspection agreements with Iraq.

MR. MacNeil: An Arkansas woman held a news conference in New York to claim she had a 12 year affair with the Arkansas Governor and Democratic Presidential candidate Bill Clinton. Jennifer Flowers repeated allegations she had made in a tabloid newspaper. She acknowledged that she'd been paid for the story but she charged that Clinton was lying yesterday when he appeared on CBS "60 Minutes" program and denied such a relationship. Gov. Clinton and his wife, Hillary, admitted there had been problems in their marriage, but said they had worked things out.

MR. LEHRER: Two major criminal trials began today. In Milwaukee, jury selection started in the sanity trial of Jeffrey Dahmer. He has confessed to killing and dismembering 15 young men but claims he was insane at the time. In Indianapolis, lawyers began questioning potential jurors for the trial of former heavyweight boxing champion Mike Tyson. He is accused of raping an 18 year old beauty pageant contestant. He has denied the charge, saying the woman consented to sex.

MR. MacNeil: Astronauts aboard the space shuttle Discovery will spend an extra day in space. NASA officials today extended the mission so the crew can conduct more scientific experiments. The seven astronauts are testing the effects of zero gravity on themselves as well as on plants, insects and animals. The shuttle is now expected to return to earth Thursday.

MR. LEHRER: Jose Ferrer is dead. The prominent actor died yesterday of an unspecified illness in Miami. Ferrer won an Oscar for his 1950 portrayal of Cerano DeBergerac. The same role on Broadway won him a Tony Award several years earlier. He had been scheduled to appear in a new play on broadway next month. He was 80 years old. And that's it for the News Summary tonight. Now it's on to CIA Director Gates, how good were the Patriot Missiles, and how the recession is playing in Peoria. NEWSMAKER

MR. LEHRER: Robert Gates, the Director of Central Intelligence, is first tonight. Mr. Gates assumed that position two months ago after serving 25 years in the Central Intelligence Agency. His CIA duties included two special assignments at the National Security Council. His latest is the No. 1 deputy under National Security Advisor Brent Scowcroft. Mr. Gates, welcome.

MR. GATES: Thank you very much.

MR. LEHRER: First, just on the news of the day, can you add anything to this report I just gave about Boris Yeltsin dropping out of sight? Is he sick?

MR. GATES: I don't have anything to refute what the spokesman in Moscow said.

MR. LEHRER: Okay. What about the interview that ABC ran yesterday, where Yeltsin said that they were no longer going to target U.S. cities, is that an important new piece of information?

MR. GATES: Well, it would certainly be a welcome step. Obviously, the Soviets for a long time have maintained what we regarded as a war fighting capability, which meant that many of their missiles were targeted on military targets within the United States and our allies. Nevertheless, the decision not to target urban areas would be an important one, and I'm sure that our policy makers are looking forward to hearing more about it at the end of this week.

MR. LEHRER: But he didn't say anything about not still targeting military targets here in the United States. There's a big difference, is there not?

MR. GATES: Yes, there is.

MR. LEHRER: Yeah. Yeah. And what is -- when you say more detail, what kind of things would we want to know beyond that?

MR. GATES: I think he may have at the end of the week more information on just exactly what kind of targeting changes they're having, that they have in mind. We'll just have to wait and see. He may have said all he intends to at this point.

MR. LEHRER: Sure. But as a practical matter, and you said it, in fact, in testimony last week, the threat of war, intentional war, from Russia and the other former Soviet Union republics is almost nil, is it not, at this point?

MR. GATES: We think that the chances of global thermonuclear war, deliberate war, or conventional war in Europe clearly have receded almost to the vanishing point at this stage.

MR. LEHRER: So what remains as far as a worry or a concern from that old world, that old Soviet Union?

MR. GATES: I thinkthat the primary concern in a moment of great hope, actually, is the difficulty that they face in making the transition to democracy and in rebuilding an economy based on workable principles of market economics. They have 30,000 nuclear warheads. While we're confident of the command and control system at this point, there clearly is the worry that if the commonwealth should fail or if other negative things should happen that something might happen to that system. We're also worried, as I testified, about the danger of proliferation, of materials, perhaps weapons, but most likely individuals who have been involved in these nuclear, chemical and biological weapons programs finding their way to other countries that are interested in developing their own programs.

MR. LEHRER: And there's nothing the United States can do about that, is there?

MR. GATES: Well, actually there is, and the heads of the various republics of the commonwealth are interested in doing something about it as well. We've been very heartened by the harmony of the heads of the republics as they dealt with the nuclear issue and command and control, and their interest in keeping control of these weapons and their interest also in doing something about the scientists who ensure that they don't go places that they might get, where they might get involved in the proliferation problem. The United States' policy makers are clearly interested in encouraging that. The Congress, as you may recall, voted some money, a substantial amount of money, to help in this process, so there are some things we can do to encourage it, but I guess the point I'm making is that there's a great interest in Russia and the other republics in cooperating and exercising that control, themselves.

MR. LEHRER: We had a report on this program a few weeks ago about a particular nuclear scientist over there. He said, fine, I don't want to go anywhere else, but I can't find work, my family is starving. So it is, it's a dilemma, is not, just in human terms for those people?

MR. GATES: Oh, very much so. Many of these people are at the end, are located in remote areas where these test facilities were placed by the Soviets, they're at the end of a long supply chain. They are, they, along with the military and hospitals and other places, are dependent on the central distribution system, so that as that distribution system is broken down, they are among the first to feel it. Those who were the most privileged under the old system in some respects are the first to feel the pain of the new.

MR. LEHRER: This whole thing, of course, has presented you and the Central Intelligence Agency and the entire intelligence community with a new world. What are you doing to accommodate this kind of thing that we've just been talking about?

MR. GATES: I think the one point worth making at the outset is that for 15 years or so the American intelligence community has been evolving away from a preoccupation with the Soviet Union. Even at the height of the cold war in the early 1980s and as recently as the last two or three years, no more than 50 percent of our resources generally have been devoted to the Soviet Union, including arms control monitoring and all aspects of the Soviet problem. We have become involved in issues like proliferation and economic intelligence, counter narcotics work, counterterrorism, and a variety of others. I think what you will see is an intensification of this effort, of the effort in these areas. But I would add that we have taken great heart from the President's directive last November in which he directed the heads of some 20 departments and agencies in the government to assess their intelligence needs and requirements for the next -- about the year 2005 to determine what they think they will need from us during that period. So we have, in essence, the first zero-based review of requirements on the intelligence community since CIA was formed in 1947. When that effort is completed, in the next month or so, I think we will have a fresh view of the missions and roles of American intelligence. I think it will begin with looking at the problems of the commonwealth of independent republics, independent states, the former Soviet Union, but it's going to include these problems that I've discussed.

MR. LEHRER: We'll go through these in a moment. But what would you say to somebody like Sen. Moynihan, who says there, it should be a real zero-based beginning, that you should do away with the CA, the Intelligence function should go back into the State Department. The rest of it can go to the Defense Department. There's no need for this massive intelligence gathering organization that we have now in this new world.

MR. GATES: I think 's probably what a lot of statesmen thought in the late 1930s. The fact is that CIA was created out of the experience of World War II and Pearl Harbor, and the need to have some centralized organization that receives all of the information available to the United States government, can integrate it and present it to policy makers in a way that they pay attention to it. I think they also felt that it was important to have an organization that did not have a stake in policy, an organization of civilians that would assess the threat that faced the United States, and thereby could inform the formulation of the defense budget and also assess the diplomatic and political situation around the world as well.

MR. LEHRER: But you're not arguing, are you, that it all can be done, or it needs to be done with the same size CIA, are you? The Defense Department, for instance, has acknowledged and is in the business already of cutting back and trimming back as a result of the new world. Isn't the CIA obligated to do similar things?

MR. GATES: I think it is, and, in fact, we already have implemented in CIA a program to reduce the number of people in CIA by 15 percent over the next several years. The intelligence community as a whole has cut a number of billions of dollars out of its budget over the next several years, and some of the agencies associated with the Defense Department have taken cuts beyond that, so we're not only immune, we are very much involved in this process, sometimes painfully.

MR. LEHRER: Well, let's go through some of the new -- for instance, there was a story a couple of days ago that you have directed the -- or I'm not sure it came from you -- but anyhow that the CIA is now going to pay more attention to criminal wrongdoing, and it grew out of the BCCI scandal where you all had some information, went to the Federal Reserve, the Federal Reserve didn't act on it in the way you thought, but you're going to change the way you operate because of that in this area, is that true?

MR. GATES: Yes, it is. And what it really boils down to is that as we get into areas such as proliferation and technology transfer and counter narcotics and economic intelligence, increasingly information is collected abroad that may suggest possible criminal wrongdoing by Americans or by others. And what we wanted to put in place are procedures that will enable us to recognize that information and get it to proper authorities in the United States government. Our case officers and our analysts are usually not lawyers and they are not in a position to recognize the three axial widget as a violation of U.S. export law. And so we are putting in place procedures so that we can get that kind of information to people who can recognize it and put it in the proper hands.

MR. LEHRER: I would think the average American would ask you, Mr. Director, why in the world hasn't the CIA been doing that every day of its life since the time it went into being?

MR. GATES: Well, we have to a certain extent, but I think they would need to appreciate the change in the focus of our intelligence over the years. We really didn't encounter very many problems of this kind when we were dealing with the Soviet threat and Warsaw Pact, and these kinds of problems. There weren't very many questions of illegality involved, or uncertainties. If somebody shipped a high technology piece of equipment to the Soviet Union, you could rest assured it was a violation of somebody's law. So the problem has become more complicated as we have moved into more complicated and current issues.

MR. LEHRER: You mentioned economic intelligence. Some nations use their intelligence service to actually commit acts of what would be called, I guess, economic espionage, to find secrets and that sort of thing to help their country and businesses in their country. Is the CIA going to do that for American business?

MR. GATES: Jim, I would be very much against that. I think that CIA and the American intelligence community has three proper roles to play in the economic arena. The first is to identify those countries that are not playing on a level playing field, those that are violating bilateral agreements or multilateral agreements, those where companies and governments are colluding to disadvantage the United States unfairly. That's one area I think we have to be aware of. The second is in the area of high technology developments abroad. We obviously need to be aware of developments in the telecommunications, computer, composites, and other high tech areas that impact on our national security. We need to know about those and report those to our government. And finally, I think we need to be very aggressive in working against those foreign services that you referred to, those foreign intelligence services, that, in fact, are trying to plant moles in American high tech companies that search the brief cases of American businessmen traveling overseas and engage in activities of that kind.

MR. LEHRER: How can you do that without going into the same business? I mean, isn't that just another form of counter intelligence in the old school?

MR. GATES: I think that if we are -- well, yes, as a matter of fact it is. It is very much counter intelligence, acting against the services of other countries.

MR. LEHRER: But you would not engage in that, yourself? In other words, if some country was -- a business in another country was developing a new form of microchip that would revolutionize the computer business, CIA would not dispatch one of your agents to get the secret and bring it back here so that it could be used by an American company?

MR. GATES: No, I don't think that would be appropriate. As I've - - I've used the example before -- some years ago one of our case officers overseas told me that, you know, Mr. Gates, I'm prepared to give my life for my country but not for a company.

MR. LEHRER: Yeah.

MR. GATES: And I think that's not an appropriate activity for us. Also, I think it's important to realize that in this country that kind of activity could quickly embroil us in an enormous legal hassle in terms of advantaging one company over another or one industry over another. After all, if tax dollars are supporting this activity, why are you helping this industry and not that industry? So in even practical terms, it becomes a very difficult problem.

MR. LEHRER: So when the politicians of all stripes say the new, the next war for the United States of America is going to be an economic war, it's going to be a war that the CIA is not going to be involved in.

MR. GATES: No, that's not correct at all. I think we will be involved in at least two areas that I mentioned, first, to make sure they're playing according to the rules and that they're not cheating on agreements with the United States or with other countries, or that they're not colluding businesses and governments against our companies in a way that's unfair, and also in acting against their intelligence services when they come after our companies.

MR. LEHRER: On the CIA, itself, the task force that you appointed recently came out with a recommendation that the CIA operate more in the open, be less secretive, so the American people will better understand what you all are doing. Have you accepted that recommendation? Are you going to implement it?

MR. GATES: Yes, I have, Jim. I think that with the passage of the cold war and the end of the Soviet Union, it's important for us to show that we're prepared to change with the times and as a result, I think we ought to be more open about the way we do our business, about what we do, how we do it. I think there's a great deal about intelligence process that we can talk about so people understand where their tax dollars are going without getting involved in revealing sources and methods, or sensitive information.

MR. LEHRER: William Safire, a columnist for the New York Times, among others, has suggested that you all have to do something or you're going to lose, you're going to have to find new things to do, or you're going to lose your budget, you're going to lose your constituency, et cetera, now that the "enemy" is gone. Are they right?

MR. GATES: No, I don't think so. I think we have to change, but I think we have a very strong constituent in the President and I think also we have a strong constituency in the Congress. I think that they are interested in making sure that we are working on subjects that are relevant to today's world and we are in the process of making sure of that ourselves.

MR. LEHRER: But aren't you confronted with a very serious problem as far as public perception is concerned that why do we need secret agents, for instance, gathering information clandestinely about the new commonwealth of states, for instance, and the old Soviet Union when all that information now is suddenly available? I mean, Yeltsin is talking, everybody is talking, anybody can walk the streets. It's like going to Kansas City or somewhere else.

MR. GATES: Well, it's clear that with the change in the environment, we can devote fewer resources to collecting information on certain aspects of the commonwealth of independent states. We clearly don't need to pay as much attention to indications and warning in Europe, don't have to worry about a surprise attack in Europe, we don't need to devote as many resources to Soviet conventional forces that now are not poised on the front lines in Europe. But by the same token, the very problems that I was talking about earlier, proliferation, counter narcotics, counter terrorism, some of these economic issues, the role of the human intelligence agent is absolutely critical in finding out what is involved there. We have very great difficulty finding out about these chemical and biological programs, especially in some of these countries without very valuable agents. That kind of information on proliferation problems, on terrorism and so on, is absolutely critical. And I think the Congress and certainly the President understand that.

MR. LEHRER: The change -- you mentioned a while ago that even up till recently at least 50 percent of the resources of the CIA were targeted to the Soviet Union and the Soviet Bloc. It must be a wrenching exercise to take those same people -- are they even qualified now to do all these other things? In other words, if they're Soviet experts, Eastern Bloc experts, suddenly you say, okay, now you're a narco terrorist expert, or now you're an economic expert. How are you handling that?

MR. GATES: Well, they don't transfer quite like that, but on the other hand, those who worked in areas on Soviet research and development and Soviet biological and chemical programs clearly can be transferred to the broader proliferation problem and work on Libya and Iran and some of these other countries and use almost exactly the same skills that they developed while they were working on the Soviet Union. The same way with experts on conventional forces. Iran is interested in building up its conventional force capabilities. An analyst who has worked on that in the Soviet Union or on the Soviet problem clearly can transfer those skills. So there's a much greater degree of transferability there than one might think at first blush.

MR. LEHRER: And the -- internally within the agency, has everybody accepted this new world?

MR. GATES: I think one of the most pleasant surprises I encountered when I went out to the agency last November was the readiness of people both within CIA and in the intelligence community to embrace change. The end of the cold war and the collapse of the Soviet Union coming in such a short period of time last year really created a dramatic break that I think made everybody aware that they had to change and adjust to this new world. And I've gotten a lot of cooperation out of everybody.

MR. LEHRER: Is there some kind of -- you were asked about this at your confirmation hearings, but you were specifically involved for years in Soviet Bloc analysis and all of that. Here again, to quote Sen. Moynihan, that he said that you and others for 35 years told the American Presidents everything they wanted to know about the Soviet Union, except the fact that it was collapsing. Is that a bad rap on you all, or did you just miss it?

MR. GATES: I think it is a bad rap. I think that CIA and the intelligence community, from the late 1950s on, documented in enormous detail the decline of the Soviet economy and the failures of that society. I think if there was a short coming in the analysis that was done, it was in the attempt, in an effort to try and help policy makers understand that collapse better or that decline better, to impose a Western economic model on the Soviet economy in order to try and express it in numbers. And the truth is it isn't a Western economy, wasn't, and it still isn't now. And the result was that the numbers did not -- which were really intended to reflect trends and were relative, were taken as absolute, perhaps sometimes presented that way by CIA and others. But the use of those numbers was a mistake because they tended not to reflect, were used not to reflect trends, but tosuggest that this is actually the way it is. But I would still argue that for 30 years the intelligence community painted a very realistic picture of a country in serious decline. And I think that the work that was done particularly after 1985 illustrated very clearly that this was a country in crisis. I might add that the intelligence community also provided a remarkably good warning about the August 19th coup. Now, they didn't pick the date, but as early as the beginning of 1991, they were saying the reactionaries in the Soviet Union are going to come back at this problem. They are going to come back at Gorbachev. They are going to attempt to reverse these reforms. And I remember sitting up in Kennebunkport with the President the day before the coup reading an intelligence report with him that warned that in the next few days there could be a coup attempt. So I think the entire intelligence on the Soviet Union and on the big issues was much better than has been portrayed.

MR. LEHRER: Now, somebody who has spent so much of your life professionally combating the Soviet Union and the Soviet Bloc, are you the least bit uncomfortable in this new role, actually having to cooperate with them and all of that? Are you having any problems adjusting just in personal terms?

MR. GATES: No, you know, I spent a good deal of my academic career studying Russian history. And in a way, it's enormously satisfying and gratifying to see this people that have been put through such a wringer over a thousand years finally have an opportunity to have a real future. And I think that there is a sense on the part of people in this government and Western Europe and elsewhere that we ought to do what we can to try and help them make that future work.

MR. LEHRER: Your -- I mentioned it a moment ago -- your confirmation process before the Senate was a difficult one, to put the best, good word on it. Are those scars beginning to heal? Have they healed?

MR. GATES: I think there may have been fewer scars than people might think. I was gratified during the process to have a lot of friends who were very supportive and very helpful. Also, I was kept pretty busy in the job that I had at the time. It was not as scarring a process as people might think.

MR. LEHRER: All right. I take it that's a yes then?

MR. GATES: That's a yes.

MR. LEHRER: All right. Mr. Director, thank you very much for being with us.

MR. GATES: My pleasure.

MR. MacNeil: Still ahead on the NewsHour, second thoughts about the Patriot Missile and the wider meaning of a strike in Illinois. FOCUS - SCUD-BUSTER?

MR. MacNeil: Next, reevaluating one of the most highly touted weapons of the Persian Gulf War, the SCUD-busting Patriot Missile. Patriot enthusiasts said the missile proved that the Strategic Defense Initiative could be successful. But now analysts are saying that the Patriot might not have been as effective as the military thought. Time Magazine's national security correspondent, Bruce Van Voorst, has our report.

MR. VAN VOORST: During the height of the Gulf War, Americans were glued to their television sets, watching a modern version of a Roman Gladiator battle. Over Dhahran and Riyadh in Saudi Arabia and Tel Aviv and Haifa in Israel, Iraqi SCUD missiles hurdled from space. American-built Patriot missiles rose in graceful arcs to intercept the SCUDs. American military spokesmen repeatedly described these Patriot intercepts as virtually 100 percent successful. President Bush traveled to Andover, Massachusetts to visit Raytheon Corporation, the Patriot's manufacturer. The President told workers, "Thank God for the Patriot missile. Thank God for that." [cheers] "All told, Patriot is 41 for 42, 42 SCUDs engaged, 41 intercepted. [cheers by crowd]

MR. VAN VOORST: The Patriot became overnight a symbol of American technical genius -- or so everybody thought. But was it really? Even before the end of the war, questions were being asked, doubts raised, about Patriot, especially in Israel, where there was considerable destruction of apartments and houses. Gen. Colin Powell, Chairman of the Joint Chiefs of Staff, conceded before a congressional committee --

GEN. COLIN POWELL, Chairman, Joint Chiefs of Staff: [February 19, 1991] The Patriot functions, but whether it destroys a SCUD in midair, it's not always the case, sometimes breaks up, breaks in different pieces, and so you have had cases where the warhead has landed and gone off.

MR. VAN VOORST: Several months after the war, the administration began backing away from its initial figures on Patriot success. The army now claims 90 percent success in Saudi Arabia and only a rather startling 50 percent against SCUDs in Israel. Theodore Postal, professor of technology at Massachusetts Institute of Technology, says, however, that Patriot's performance was far worse.

THEODORE POSTAL, Massachusetts Institute of Technology: I would say the overwhelming body of public evidence, circumstantial evidence, and technical evidence indicates that Patriot missed almost all of the warheads it shot at. At the moment, there is no data to indicate otherwise.

MR. VAN VOORST: The MacNeil-Lehrer NewsHour asked the army and Raytheon to respond to this charge. They recommended Charles Zraket, former CEO of Mitre Corporation, a Washington technology firm.

CHARLES ZRAKET, Former CEO, Mitre Corp.: These criticisms are not a scientific analysis to prove it didn't work. What they are is a statement that they don't believe the data and the process that went on within the government. It's not just me. The defense science board has done a review of all of this and published a report. Sec. Cheney's office has reviewed this information and published a report. So this has gone through a very exhaustive assessment process throughout the Department of Defense and the Congress. This is not just myself. It's not just Raytheon.

MR. VAN VOORST: Do you know any scientists inside government who do have access to the classified information who share Mr. Postal's doubts?

MR. ZRAKET: I don't know of any.

MR. VAN VOORST: A major problem in judging Patriot's performance is the extreme complexity of the Patriot SCUD engagement. The Soviet-made SCUD, some 35 feet long, flies 25 miles up into space before reentering the atmosphere at a speed of about 4,000 miles per hour. The SCUD missile was originally designed as an air defense weapon against airplanes and was adapted to work against the short range ballistic SCUDs far more difficult targets. At night, observers on the ground can see the Patriot exhaust fumes until the engine cuts out. The darkened rocket continues coasting unseen at 3,500 miles per hour toward its target. The Patriot, costing just over $1 million each, is guided to the target by radar waves transmitted from the ground and reflected off the SCUD. The task of intercepting the SCUDs became even more difficult because Iraqi modifications caused the SCUDs to break into pieces as they reentered the atmosphere. This created clouds of metal debris which confused the Patriot's efforts to find the warhead. The Patriot is not designed to strike the SCUD. Instead, a proximity fuse detects the SCUD's presence and detonates the Patriot warhead, sending small fragments to kill the SCUD. With a SCUD and a Patriot approaching each other at a closing speed of 8,000 miles an hour, 1/1000 of a second makes the difference between a hit or a miss. The Pentagon considers an encounter successful if it destroys, incapacitates or deflects the SCUD warhead. In the heat of battle, neither the U.S. nor Israel utilized standard data recording techniques to evaluate the Patriot's success. Most of the claims depend upon an analysis of damage on the ground. Pentagon officials consider this data secret. Ted Postal, however, says the evidence supporting his critique of the Patriot is publicly available, right there in videos made during the SCUD attacks.

MR. VAN VOORST: What are we seeing here?

THEODORE POSTAL: Well, here we see the launch of a Patriot interceptor. We're in very close. You can even see the launcher unit.

MR. VAN VOORST: With four --

THEODORE POSTAL: With the four boxes from which one missile could fly. There's another unit back here from which a Patriot was launched, and we should shortly see the plume of the missile as the camera goes skyward, trying to find the Patriot. Here's the plume of the Patriot.

MR. VAN VOORST: Of the Patriot engine, right, the motor's burning?

THEODORE POSTAL: That's right, and it's moving around because the person operating the camera is trying to acquire it. It's not because the missile, itself, is wobbling erratically. And we'll see it climb and it's beginning to burn out now. And so it's again moving under the influence of aerodynamics. And here comes the SCUD coming in. It's pretty bright and here's the detonation of one of the Patriot interceptors missing. You see, the SCUD almost maneuvers. The SCUD is now breaking up. This is not an interception. This is the disintegration of the body of the SCUD. And we can see the warhead has separated from the SCUD. And we'll shortly see the detonation of another Patriot, missing again by a very large distance. And this --

MR. VAN VOORST: How far are you talking about?

THEODORE POSTAL: Well, it's hard to know when you see something without a perspective, but it's certainly many hundreds of feet, and could well be thousands of feet.

MR. VAN VOORST: And clearly, the warheads cannot damage the SCUD?

THEODORE POSTAL: The fragments from the warhead, even if they were to go backward, and they wouldn't, they would go forward, would not be able to overtake the SCUD. The SCUD is moving too fast.

MR. VAN VOORST: So we've still got a lethal SCUD warhead headed towards earth.

THEODORE POSTAL: That's right. And this thing should continue to fall under the influence of gravity and unless it happens to be a dud because of an imperfection in its design.

MR. VAN VOORST: This is 600 pounds of, five or six hundred pounds of high explosives?

THEODORE POSTAL: Right. And you can see that this thing is tumbling. You can see that sometimes it's turned side ways and sometimes it's oriented along its axis of symmetry and because it's tumbling, it varies in brightness partly because it's heating at different rates and partly because you're seeing different illuminated area.

MR. VAN VOORST: And you know that's the warhead?

THEODORE POSTAL: Yes. It's certainly the warhead and you can see, of course, the trail of debris coming off the warhead. And we should see an impact, and if it's not a dud, of that nation.

MR. VAN VOORST: There it is.

THEODORE POSTAL: It looks like it wasn't a dud.

MR. VAN VOORST: It certainly was no dud, but Patriot supporters say this sequence, and there are others like it, prove nothing. Peter Zimmerman is a physicist and senior analyst at the Center for Strategic & International Studies in Washington.

PETER ZIMMERMAN, Defense Analyst: Your trying to do this with video and news camera in particular is a gimmick.

MR. VAN VOORST: Why a gimmick?

PETER ZIMMERMAN: Because you can't prove anything with it unless you have every single video. And then you track the carcass of the rocket, the incoming rocket to the ground, and you say was that fireball that I saw when it hit really an explosion, or was it just the kinetic energy in that rocket being converted into heat? I can assure that when a rocket hits inert, no warhead, there is a flash and a fireball that looks on a monitor, on a video screen, just about like a high order detonation.

MR. VAN VOORST: Charles Zraket agrees that standard video images are misleading.

CHARLES ZRAKET: You said the explosion took place behind the warhead. It looked that way certainly in the 2-D picture. But depending on what angle the camera was taking that picture and what the timing was in terms of the interceptor going up and the SCUD coming down, it's possible that optically that it really wasn't, the explosion didn't take place behind the warhead.

MR. VAN VOORST: More than optical illusion is involved here and more than just America's pride in its technology. Raytheon hopes to sell hundreds of millions of dollars' worth of Patriots around the world. Most of all, there's the battle for dollars among various weapons systems in a time of declining defense budgets. What's really behind the Patriot controversy, however, is the Strategic Defense Initiative, SDI, President Reagan's multi-billion dollar vision of a Star Wars defense against missiles. President Bush in his last State of the Union message argued that Patriot's success in the Gulf proved that defense against ballistic missiles is possible. Patriot's critics, however, point out that the missile's at best marginal performance in the Gulf certainly does not justify SDI. SDI Director Henry Cooper, echoing the President, has said that the Patriot's success has proven beyond a shadow of a doubt that it is possible to intercept ballistic missiles in flight. In an interview, Amb. Cooper insisted that the Gulf War proves the need for missile defense.

HENRY COOPER, Director, SDI Program. The experience of the Gulf War shows us that there is a need and that defenses work on, at least on the Patriot scale, and the, the future conflicts that we might envision, no one wants to be in a conflict, but one could be faced with weapons that might include chemical, biological weapons. And it would be far more important even than it was in the Gulf War to destroy the missiles far away from the city.

MR. VAN VOORST: But many experts who praise the Patriot find it dangerous to extrapolate from Patriot's short range missile success or even failure any clear conclusions about the case for a much more difficult SDI, anti-ballistic missile defense.

MR. ZRAKET: Well, I don't think that one can jump from the success of anti-tactical ballistic missiles like Patriot to essentially feasibility and desirability of ABM systems against long range ICBMs with nuclear warheads. I'm sure that at least rhetorically speaking that such a connection will be made, but I think there are two different problems, and I think they have to be looked at separately.

MR. VAN VOORST: The SCUDs also carried conventional high explosives and SDI defense will have to contend with nuclear warheads. Peter Zimmerman explains why even a 90 percent success rate is unacceptable for an SDI defense.

PETER ZIMMERMAN: If a 200 kilogram, 440 pound load of high explosive hits, it will destroy a reasonable fraction of a city block. It'll take down this building that we're in and the building next to it. If the same weight of nuclear explosive, a hydrogen bomb or a fission weapon, were to explode at its proper altitude, the area would not be measured in square blocks, but rather in square miles, tens of square miles, at some level the whole of Washington inside the beltway; it'll be measured in cities.

MR. VAN VOORST: Uncertainties over the performance of Patriot have now attracted attention of a congressional oversight committee. Rep. John Conyers, chairman of the House Government Operations Subcommittee, has announced an investigation of Patriot's performance.

REP. JOHN CONYERS, [D] Michigan: I believe that the Patriot missile was great and was the super weapons system of the war.

MR. VAN VOORST: And now?

REP. CONYERS: Well, now, I'm not so sure. What we're trying to determine now is: Did the Patriot missile perform as it was touted?

MR. VAN VOORST: There may not be sufficient technical data ever to determine just how well the Patriot performed in the Gulf War. But if the government hopes to preserve the Patriot's image as a wonder weapon, the Defense Department will have to share with the public all the data it does have. The Conyers Committee is determined to have a look. FOCUS - BLUE COLLAR BLUES

MR. LEHRER: We go now to another "made in America" story. This one involves the Caterpillar Company of Peoria, Illinois. Workers there are involved a grim battle for a dwindling number of jobs. Tom Bearden reports.

MR. BEARDEN: On a bitterly cold day in Peoria, Jimmy Toothman was trying to do two things: stay warm and stay employed. Toothman is manning a picket line in front of the factory where he has assembled tractors for the past 22 years. Toothman and the United Auto Workers are on strike against the Caterpillar Company, the largest manufacturer in Illinois.

JIMMY TOOTHMAN: It's almost being in between a rock and a hard spot. You know, no one wins in a strike. The union people don't win; the company doesn't win; the economy in the area doesn't win.

MR. BEARDEN: The strike began last fall when Caterpillar and the union couldn't agree on a new three year contract. Instead of calling for an all out strike, the union decided that only 2400 key assembly line workers would walk off their jobs. It was an acknowledgement that times already were tough for blue collar workers. In Illinois, the unemployment rate is up to 9.3 percent, the worst among the nation's largest states, and the strikers would have found it tough to find supplemental work. But Caterpillar responded by locking out another 5,650 workers. At the heart of the dispute is the value of American labor in overseas markets. Caterpillar says the union's wage demands would make the company's earth moving equipment too expensive to sell in foreign markets. Caterpillar's vice president for labor relations, Wayne Zimmermann.

WAYNE ZIMMERMANN, Vice President, Caterpillar Co.: The world is changing so rapidly, at least the world in which we compete, the bulk of the competitors that we compete with do not manufacture in the USA; on an ongoing, almost a daily, weekly, yearly basis, the competition from outside the United States is becoming better. They do not face some of the same contractual obligations and agreements that we face as a company. We need an agreementthat keeps this company competitive.

MR. BEARDEN: But labor leaders say Caterpillar management actually wants to destroy the union seniority system. They say the company proposal would allow Caterpillar to lay off a worker with 20 years' experience before someone with less time on the job. Union Spokesman Jerry Brown.

JERRY BROWN, President, UAW Local 974: You shouldn't compete in the world market on the basis of a worker's wages, pit worker against worker. That's not the way to compete. Compete on whether or not you build a good quality product.

MR. BEARDEN: Caterpillar does pay some of the highest wages for manufacturing jobs in the country. Jimmy Toothman earns over $16 an hour for his work on the assembly line. His annual salary is $34,000 but Toothman said it was difficult paying the bills for a family of six even before the strike started. This county clinic will provide some relief by supplying three months of food for their youngest children, ages three and eleven months. Like all the 8,000 idled Caterpillar workers, the Toothmans don't qualify for unemployment, and the $100 a week strike benefit from the union isn't nearly enough to cover expenses.

NUTRITIONIST: [talking to Joyce Toothman] What was the reason that you switched from formula to milk?

JOYCE TOOTHMAN: Well, it was right after they went on strike and that formula was just, you know, too expensive for us since he went through quite a bit of it.

JOYCE TOOTHMAN: You hate to ask for help, you know, but you do anything so your kids can eat, you know, and keep them. I mean, they need things, you know, we just can't afford right now.

MR. BEARDEN: Jim Hayden has also worked for Caterpillar for more than 20 years. But he's still working. The union didn't pick him to strike and Caterpillar didn't lock him out. He's one of 9,000 UAW members who continued to bring home their regular pay. Hayden tries to help his fellow union members by donating part of his paycheck to a fund called "Adopt A Striker."

JIM HAYDEN: It brings about a lot of mixed emotions from union brothers and sisters. We feel bad that our people are standing out there and sacrificing their, their livelihoods and their paychecks and the rest of us are still working.

MR. BEARDEN: One of the reason's Hayden supports the strike is the fact that the buying power of his $30,000 salary has been falling steadily. Over the years, Hayden's paycheck has not kept pace with inflation. That's made it tougher for Judy Hayden to balance the family budget. A recent study shows that for eight of every ten American two-parent families earnings have not kept up with inflation in the past decade. Data from the Census Bureau shows the median household income today is actually a thousand dollars less than it was in 1973, after inflation is figured in.

JIM HAYDEN: I believe the country is heading towards two classes of people and I believe they're squeezing out the middle man, which I consider the middle class person, and there are going to be two classes of people. And there's going to be the rich and the poor. And I believe the tax burden is on the middle class right now and they're just going to continually squeeze us out or drive our wages down so the higher class can get higher and the lower class can get lower and we'll all end up either at the bottom or the top.

MR. BEARDEN: The Haydens' 11-year-old son, Ryan, plans to go to college. Another son, Kevin, joined the Navy shortly after his 20th birthday. The Haydens told their sons that they shouldn't try to follow in their father's footsteps.

JIM HAYDEN: We've seen so many jobs leave this country that there was no future, no prospective future for my children to even think about going into industry and doing a job like I'm doing today with a high school education. The jobs that I came out of high school and fell into and got hired into that would put a roof over my head and give me enough money to raise a family and live comfortably as a mid to lower middle class just aren't available anymore.

JUDY HAYDEN: They know. My oldest especially is in the Navy and he knows those jobs aren't available anymore. He knows he has to have some training or school to do something else, you know.

MR. BEARDEN: Robert Vanderheiden is one of those in Peoria who found out firsthand about the grim future of manufacturing jobs in this country. He was one of over 18,000 workers who lost high paying jobs at Caterpillar in the eighties. Since that time, he has uprooted his family and followed blue collar jobs to Ohio, Connecticut, and Texas. But at each state it was the same story. Shortly after starting work as a machine operator or quality control inspector, the job was eliminated.

ROBERT VANDERHEIDEN: You go from rags to riches, rags to riches. It hasn't been easy on the family, moving. It's always scary to move from one town or one state to another state because you don't know what it's going to hold. There are no guarantees.

MR. BEARDEN: After he was laid off by a Texas company in August, Vanderheiden moved his family back to Peoria, where his parents gave them a place to live. But as Vanderheiden found out here at the job service center, finding a job is tough, even in a city like Peoria, where most jobs have always been in manufacturing.

MR. VANDERHEIDEN: They're all out of state. They've got Alabama, Arkansas, Colorado.

MR. BEARDEN: Nationally, blue collar factory jobs continued to vanish, falling by 32,000 positions last month alone. In the past year, 443,000 manufacturing jobs have been lost. Vanderheiden decided to apply for a manufacturing job in Yankton, South Dakota.

MR. VANDERHEIDEN: It's an employer's market now, instead of an employee's market. It's just -- jobs are limited. They are high skill, high tech. A person with a high school education is -- his employment is limited.

MR. BEARDEN: But Vanderheiden can't wait for the job to come through. His next stop was Walmart. He'd seen an opening for a night clerk. The pay is only $4.75 an hour. And Vanderheiden was interested. He has to be. Right now, the Vanderheidens have no income and are living on food stamps.

MR. VANDERHEIDEN: I want to fill out an employment application.

CLERK: We don't have any right now.

MR. VANDERHEIDEN: You don't have any right now?

CLERK: No.

MR. BEARDEN: Vanderheiden was astonished to find that over 600 people had already applied for the job.

MR. VANDERHEIDEN: That's all that's available is the $4.25/4.50 an hour jobs and if things get bad enough, you will take a job there and you'll be a working poor. I mean, you can't live on $4.50/4.25 an hour.

MR. BEARDEN: For much of the American work force low paying service industry jobs have replaced high paying manufacturing jobs. Since 1970, 10 percent of the American work force has moved from manufacturing to the service industry. The high rate of unemployment and the financial squeeze on the middle class are already shaping up to be important campaign issues in this Presidential election year.

SPOKESMAN: Until the politicians in Washington, D.C. realize it's a blue collar force out here is the that supports the economy instead of putting us out on the street, then we have no, we have no backing behind the U.S. -- the labor force. So we're going to have to send out a message to the politicians in Washington, D.C. that we are the total force behind the economy.

MAN ON STREET: There are two things generally that we need to learn out of this, this struggle right now, is one is to register and two, get out and vote.

MAN: Because if you don't vote, you might as well give 'em a yes vote.

MR. BEARDEN: No one knows how long the Caterpillar labor dispute will last. But projections are grim. Since the work stoppage, Caterpillar has laid off 1800 workers. Communication between the union and the company has virtually ceased, and last week, Caterpillar posted its quarterly report citing huge losses for 1991. RECAP

MR. MacNeil: Again, the main stories of this Monday, Macy's filed for Chapter 11 bankruptcy protection. President Bush conferred with Republican leaders about his State of the Union message. Sec. of State Baker said Russia and other republics had made good progress in dismantling former Soviet nuclear weapons. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night with previews and coverage of President Bush's State of the Union address. I'm Jim Lehrer. Thank you and good night.