The MacNeil/Lehrer NewsHour

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

MR. MAC NEIL: And I'm Robert MacNeil in New York. After tonight's News Summary, we have a report on today's Israeli-PLO agreement and a discussion on the economics of Palestinian autonomy, then health care reform, which plan will cost less, Clinton or Cooper-Breaux? We have a debate. Finally, essayist Phyllis Theroux talks about Justice Harry Blackmun and the ability to change your mind. NEWS SUMMARY

MR. LEHRER: Israeli Prime Minister Rabin and PLO Chairman Arafat signed off on Palestinian self-rule in the Gaza Strip and the West Bank Town of Jericho today. Both areas have been occupied by Israel for 27 years. The ceremony in Cairo hit a snag when Arafat balked at signing maps accompanying the agreement. Rabin then also refused to sign. After a five-minute delay and some words from Sec. of State Christopher, the signing proceeded. We'll have more on this story right after the News Summary. Robin.

MR. MAC NEIL: Artillery battles continued to rage today in the Rwandan capital of Kigali. Shells fell outside UN headquarters in the city and near a UN post at the airport, wounding the peacekeeper. Ethnic fighting broke out a month ago, and estimates of the dead run into hundreds of thousands. At least a quarter of a million people have fled from neighboring countries to escape the fighting. In Washington today, a group of aid agencies pleaded for international help for the Rwandan victims.

C. PAYNE LUCAS, Africare: After working 30 years in Africa, I've never seen this kind of response by the world before, because in addition you talk about holocaust -- this may be as bad as what's happened in Nazi Germany. And I don't want to blame the Americans, because I think part of the problem here is that all the countries, the G-7, the Russians, the Japanese, and everybody needs to respond to this crisis now.

MR. MAC NEIL: The Red Cross said today it had managed to evacuate 250 Rwandan orphans to Zaire. Yesterday, the aid agency said 21 orphans as young as three and more than a dozen of its workers had been killed on Sunday in a southern Rwandan town.

MR. LEHRER: There was more reaction today to the possibility of sending U.S. troops to Haiti. House Republican Whip Newt Gingrich said a U.S. invasion would be a very serious mistake. The chairman of the Congressional Black Caucus, Kweise Mfume of Maryland, had this view.

REP. KWEISI MFUME, [D] Maryland: I think that it's almost time to send in the military, and I would hope that it is not a unilateral action, that we try at least to work out a regional arrangement either with the Organization of American States or the UN. But there are not many things left to do. People are being hacked to death. Their body parts are being fed to animals. We had an agreement, the Governors Island Accord. We didn't violate that agreement, and certainly President Aristide didn't. It was the military leaders in Haiti. They've laughed at it, and they've laughed at this nation because we've not had as an option use of military force.

MR. LEHRER: Randall Robinson, the head of a lobbying group on African and Caribbean issues, was admitted to a Washington hospital today. This was the 23rd day of his hunger strike to protest US policy on returning refugees to Haiti. The government of Singapore today reduced the caning punishment of an American teenager from six to four strokes. The decision followed pleas of clemency from President Clinton and others. Eighteen year old Michael Fay was convicted of vandalism for spray painting cars.

MR. MAC NEIL: In economic news, the Commerce Department reported orders to U.S. factories rebounded 1.1 percent in March. Orders had declined the month before due in part to bad winter weather. The Federal Reserve reported thateconomic growth continued at a strong pace in March and April, despite the harsh weather. The Feds' so- called "beige book" regional survey found growth signs even in California, where the recession has lingered. The survey also found little evidence of inflation in the economy. The U.S. enlisted the support of other countries today to help prop up the dollar, which has been falling on foreign exchange markets. The Federal Reserve and central banks from 16 nations bought dollars on world currency markets. Administration officials have expressed concern that the dollar's weakness could spark inflation and force up interest rates.

MR. LEHRER: President Clinton signed a school to work program into existence today. It is designed to prepare high school students for the job market even if they do not go to college. Mr. Clinton signed the enacting bill at a desk designed by high school students in Flint, Michigan. Before that, he spoke about the benefits of the program.

PRESIDENT CLINTON: For too long, we were the only country that did not have a system to provide this sort of education and training and opportunity for young people who don't go on to four year colleges. The legislation that I will sign is both innovative in structure and ambitious in scope. It doesn't simply throw a lot of new money or create a lot of new bureaucracy. Instead, it enables us in the national government to be a catalyst, to bring together workers and businesses, parents and students, the experts and the doers, the designers and the implementers, to create programs that work for every American and every community in this country.

MR. MAC NEIL: A Congressional Budget Office report says the main alternative proposal to the Clinton health plan would insure fewer Americans and require more government subsidies. The proposal is called "Managed Competition." It's favored by many business groups because it does not mandate that employers insure their workers. We'll have more on the pros and cons of the plan later in the program. First Lady Hillary Rodham Clinton was on Capitol Hill today to discuss children's health care with a group of sick children and their parents. The parents told her about huge medical bills and cancelled insurance policies. Mrs. Clinton had this reaction.

HILLARY RODHAM CLINTON: This is a very important legislative battle. There are many people who are talking about what we need to do. There are many analysts who are analyzing all the different approaches. But there isn't anything as important as taking care of our children. And that means every child. And as you can tell for me, this is an issue that goes way beyond politics. And it's an issue that I think we should not rest as a country until we deal with.

MR. MAC NEIL: That's our summary of the top stories. Now it's on to Palestinian autonomy, pricing health care reform, and essayist Phyllis Theroux. FOCUS - CAN IT WORK?

MR. LEHRER: Today's giant step toward Palestinian autonomy in the occupied territories is our lead story tonight. The agreement laying out the details of self-government for the Palestinians and the Gaza Strip and West Bank Town of Jericho was signed in Cairo. We'll examine economic viability of the new creation right after this report from Jericho. The reporter is Liz Donnelly of Independent Television News.

LIZ DONNELLY, ITN: Waving their flag high above the police station, the last vestige of Israeli power in Jericho, Palestinians greeted this new era of autonomy. But the spirit of reconciliation hasn't yet reached the Israeli army, and despite the presence of the world's press, the flag on an army vehicle was more than they would tolerate. This isn't the peace the Palestinians wanted. It isn't even the peace they hoped they'd get last September when they took to the streets in their tens of thousands. But in the end, it was all they could get, and for some, at least, there was a feeling of relief.

MAN: I feel very, very happy, because we have something. We did something after we were patient. We've been long time waiting, and we have something now.

OTHER MAN: We hope it's a start. It was a very good start.

LIZ DONNELLY: Many watched the signing ceremony television. But the long delays and months of wrangling created an air of unpleasantry. Israel's committed to completing its withdrawal within 21 days, though in reality it could be much sooner. Palestinians will take over their own policing in the running of their domestic affairs, but exactly how this will work has still not been spelled out. And even those who represented the PLO in the original negotiations see this as a temporary settlement, not a final peace deal.

HANAN ASHRAWI, Palestinian Human Rights Authority: I think we shouldn't overload it with expectations, and we shouldn't look at it as the miraculous solution. It is a step that is fraught with difficulty, that has tremendous drawbacks, and I'm afraid it has placed the PLO on a recurrent test pattern, rather than on a pattern of incremental build-up towards the real devolution of the occupation and the evolution of a Palestinian state.

LIZ DONNELLY: Everywhere there are signs of Israel's withdrawal. Until very recently, this building housed the Israeli civil and military headquarters just outside Jericho. Today it was almost deserted, but just half a mile down the road right alongside the new Jericho border, Israel's building a large new military center. The government's aware that a serious increase in violence in Jericho and Gaza could prove disastrous, and if that were to happen, they haven't ruled out sending their army back in.

YOSSI BEILIN, Israeli Deputy Foreign Minister: If this is the case, we will have to deal with it very seriously. It may happen with any other agreement. There is a potential for breaching the agreement with the Egyptians too. No agreement is 100 percent waterproof. I hope that this development will not take place. But if, God forbid, it happens, we will have to deal with it.

LIZ DONNELLY: On the far side of the ancient wall of Jericho, the Aynal-Sultan Refugee Camp will now come under PLO control. This camp was established in 1948 after the foundation of the State of Israel. What people here say they want is a real change to their lives, where refugees come back from Jordan, and where all their relatives are released from prison.

WOMAN: [speaking through interpreter] We hope we get peace, a peace that is right for us, a peace that will release all prisoners and all our young men. This is all we need.

UNIDENTIFIED MAN: [speaking through interpreter] The people are not celebrating as they were in September because the Israelis have dragged out the negotiations. It's now reached the point where both sides don't tell their people what's going on.

LIZ DONNELLY: As they prepare to take control in Jericho and Gaza, the PLO leadership knows the next weeks and months will provide a major test. Their years as a guerrilla movement and government in exile have given them no experience of running an administration. And to win support, they'll need to convince people the agreement was worth making.

HANAN ASHRAWI: It's not thetest of Israel placing it on good behavior, on probation. The test is whether the PLO can really regain its credibility and its legitimacy or its own people.

LIZ DONNELLY: Tonight, despite the signs of change on the ground, the borders of Jericho are still at the heart of controversy. The Israeli-Palestinian deal could have had a far more auspicious beginning. The hope now is that the PLO will be able to make the deal bear fruit.

MR. LEHRER: Now, three perspectives on the economic prospects for Jericho and Gaza. Leonard Hausman is an economist, director of the Institute for Social and Economic Policy in the Mid East at the Kennedy School at Harvard University. Peter Gubser is president of American Near East Refugee Aid, which does economic development projects throughout the Middle East. And Spiros Voyadzis is head of the Middle East Division of the World Bank which has just proposed a $1.2 billion program to help the Palestinian transition to autonomy. First, beginning with you, Mr. Hausman, how would you describe what the economic situation is there right now on the ground in Jericho and Gaza?

MR. HAUSMAN: Well, I guess that over the years of the Intifada, the situation undoubtedly has deteriorated. Prior to that, things had been improving steadily. And now I think that there is every reason to be hopeful because of the agreement that just has been reached.

MR. LEHRER: But what's the situation? Hopeful -- what has to be improved, or what -- how would you characterize what it's like to live economically in the Gaza Strip and, and Jericho as we speak?

MR. HAUSMAN: Well, of course, right now there's great Palestinian dependence upon employment in Israel, and every time that there is a terrorist incident, that employment is disrupted. So about 1/3 of Palestinian GNP is derived from the employment of Palestinians in the Israeli labor market. That has been a problem, but it also has been an opportunity. That really needs to be stabilized, and if the situation on the ground in terms of order can be controlled, then I think that there will be stable employment opportunities at rising wages for Palestinians in Israel.

MR. LEHRER: Mr. Gubser, how would you characterize the situation now?

MR. GUBSER: I just returned from a trip to Israel, the West Bank and Gaza, as well as Jordan, and I found the situation in the West Bank and Gaza rather sad economically. The place had been cut off from Israel for the previous three weeks, therefore, the 80,000 or so workers who usually go to Israel were not going, therefore, those 80,000 workers were not bringing paychecks home to their families. It was very difficult. Equally, it was difficult for the West Bank and Gaza internal economy, because they could not communicate with each other very well. Gaza is separated from the West Bank and because the way the land lies, the Northern part of the West Bank and the Southern part could not communicate with each other readily, therefore, the economic business was minimal. Also, social type services, education, health services, especially based in Jerusalem, were not accessible to the Palestinians in the West Bank and Gaza.

MR. LEHRER: Mr. Voyadzis, your organization, as I said in introducing you, has just earmarked $1.2 billion as the first part of aid that would go to help the transition to autonomy. What needs is that figure based on, based on what you all see on the ground there?

MR. VOYADZIS: Let me first correct the impression that the World Bank has earmarked 1.2 billion. This is basically resources that are provided from many donors. We have estimated together with the Palestinians that the first three years of the emergency assistance program needs $1.2 billion of resources. Half of that is for infrastructure, and in that we're talking about transportation, housing, telecommunications, assistance within the municipalities, health, education. And one thing which is critical, I think, is to mention is that about 300 million is allocated for private sector activities.

MR. LEHRER: Like what?

MR. VOYADZIS: For example, the promotion of telecommunication, promotion of housing by private sector agriculture industry. These are the types of activities.

MR. LEHRER: Was, was it your opinion or the opinion of the folks in the World Bank that unless this kind of emergency money is forthcoming that autonomy has a very slim chance of making it economically? In other words, is this an emergency, a real emergency economically?

MR. VOYADZIS: This is a real emergency, and I frankly believe that without the infrastructure that is absolutely needed in the territories, both in Jericho and Gaza, as well as later on in the West Bank overall, that the economic activity cannot take off. Now why I'm saying that because the grounds are there. 80, 85 percent of GDP is produced by the private sector, so if that infrastructure is not in place to provide the impetus for that, it might create much more serious problems.

MR. LEHRER: Mr. Hausman, do you agree that it's that critical, the emergency is that real?

MR. HAUSMAN: I think that the situation has not been good, and the aid is necessary to jumpstart the economy. There are two aspects of aid that are more important. One, as has been stated, they need infrastructure, roads, sewage, and the like. And two, the PLO has to demonstrate success quickly in order to gather the confidence of the Palestinian people. But I think that the most important thing is that in the agreement that the PLO and Israel have reached, there is the opportunity for the development of the Palestinian private sector because of their opportunities to trade. No country in the region is going to have access to the Israeli market, the best in the region, like the emerging Palestinian entity will. Palestinian people will be able to import goods from Europe and from the United States at the best possible prices. They will also be able to import from the Arab and Islamic world to satisfy the needs of the Palestinian market. So I think that the trade opportunities which will keep Palestinians competitive and the goods coming in is very, very -- are very, very important.

MR. LEHRER: Do you agree, Mr. Gubser, that that is key to it, the ability to trade?

MR. GUBSER: I agree that the ability to trade is very important, but that's not the essence. Let me go back to what the gentleman from the World Bank was saying about infrastructure. Infrastructure and sort of the rebuilding of infrastructure is of the essence, is exceptionally important, and I think the aim of the World Bank in this is very, very important. That being said, I think it's very - - equally important that there be political stability in the West Bank and Gaza in order to attract private investment, private investment whether it originates locally, regionally, or internationally. It tends to be that private investment only follows stability, and without that stability, we're not going to see very much economic development.

MR. LEHRER: Is there much there now? Is there much private investment in those areas now?

MR. GUBSER: In comparison to its neighbors, no, there is not very much. Industry is rudimentary. Farming is --

MR. LEHRER: What kind of industry is there?

MR. GUBSER: There's some cloth manufacturing, clothing manufacturing. There's stone cutting, some food processing, shoe manufacturing, tobacco, pharmaceuticals, and not very much more. We're not talking about sophisticated industry such as Israel has, nor are we talking about on a much lower level but still a decent level industry that Jordan has. West Bank, Gaza just does not have very much industry at this moment.

MR. LEHRER: Does, Mr. Voyadzis, is your assessment that there is potential for growth in all these areas that he just mentioned?

MR. VOYADZIS: Without doubt, without doubt. I think that if the infrastructure is taking place, and if the political stability, as the previous gentleman mentioned, is there, I think things on the private sector, that will attract the necessary capital, and, therefore, we can face a very sustained growth that will begin, together with trade, and I fully agree with what Prof. Hausman mentioned before. What is important to say is that all these things cannot be done overnight. I don't think that all around infrastructure, that what is needed can be implemented from one day to the other. It will take time. It will take the institutional capacity on the Palestinian side. It will take a very long commitment from the donor community to continue to assist the Palestinians in this effort, and certainly from all those international organizations it can help.

MR. LEHRER: What kind of commitments do you have now from the donor countries, or do you feel that long-term commitment is there?

MR. VOYADZIS: At this stage, as you know, for five years after the October 1 conference for peace in the Middle East and then some additional funds that have been committed, we have about 2.4 billion for the next five years. For that, as you mentioned previously, 1.2 is for the first three years. Now certainly much more is needed. This is only the beginning, but it's a very important beginning I think. These are resources that are 85 percent of them are on grants or high concessional terms which is exactly what is needed.

MR. LEHRER: In other words, you mean they're not going to have to be paid back?

MR. VOYADZIS: Well, part of it will not have to be paid back.

MR. LEHRER: Right, right.

MR. VOYADZIS: As it is a grant or highly concessional terms will be paid back. But I think what is important is that the donors have decided to support this effort.

MR. LEHRER: Do you agree with Mr. Gubser that there are countries and private interests out there in the world that are first going to wait at least for a while to see if this thing is going to work politically before they start investing in these areas?

MR. VOYADZIS: I think on the private sector, yes, I would agree certainly with the gentleman that there is need. Any private sector in any country needs to know that there is No. 1, the necessary infrastructure, No. 2, the stability that is necessary to invest. And I think whether these are Palestinians abroad or others, we need to see that happening.

MR. LEHRER: Mr. Hausman, as a practical matter in this agreement that has just been signed, how much economic autonomy will the Palestinian governing body have, in other words, in terms of taxation, the normal things that a government has, how many of those will the -- will this new entity have?

MR. HAUSMAN: In general, the answer, Jim, is that the new entity which soon I think will cover the entire West Bank as well as Gaza will have a substantial degree of what one might call economic sovereignty or control. For example, I don't know that the Palestinian people will enjoy it, but the Palestinian authority will have the opportunity to levy income taxes, both personal and corporate. Value added taxes will be somewhat circumscribed by the agreement with Israel. The Palestinians will have their own financial authority.

MR. LEHRER: Now, why is that important? Financial authority meaning like our Federal Reserve you mean, or --

MR. HAUSMAN: Almost like the Federal Reserve, Jim. They're going to be able to establish new commercial banks and regulate them. They won't be able to print money and regulate money.

MR. LEHRER: Whose money will they use?

MR. HAUSMAN: They'll be using initially and probably for five years both Jordanian money, the dinars, and Israeli money, the sheckel. The Palestinian authority also will be able to conduct foreign economic relations and establish --

MR. LEHRER: You mean sign treaties and this sort of thing?

MR. HAUSMAN: Sign trade treaties and arrange for goods to come in from all over the world, and I think taxes, trade, financial authority, they'll be able to set up their own social security system. There are a lot of important elements of independence, and I think that maybe not everybody has caught it, but Arafat and Rabin have really agreed that this Palestinian entity is on the road to statehood.

MR. LEHRER: Do you agree, Mr. Gubser, that those powers are there for self-rule, for economic autonomy?

MR. GUBSER: Reading through the economic agreement that was signed between the PLO and Israel last Friday, yes, I would agree. They are mostly there. Could I take up a point that --

MR. LEHRER: Sure.

MR. GUBSER: -- Leonard Hausman mentioned earlier about trade? I think it would be very beneficial for Israel, Palestine, and Jordan, if one were to see a Bino-Lux type of arrangement.

MR. LEHRER: A what? Explain that.

MR. GUBSER: There would be an arrangement economically among the three powers, the three countries, Jordan, Palestine, and Israel, whereby there would be a free market for labor, for capital, and for goods that could be freely interchanged among them.

MR. LEHRER: Almost like a common market.

MR. GUBSER: Sort of like a common market. And I mentioned this specifically, because while Israel has a fairly strong -- quite a strong economy and Jordan has a growing economy, the Palestinian one is the weakest. If it could truly have access not only to the Israeli economy but to the Arab economy and hopefully a little bit further on into the Middle East through Jordan, it would have more economic opportunities for its labor, for its capital, for its trade. Specifically, you will find that Foreign Minister Peres, also Crown Prince Hasan of Jordan have talked about this Bino-Lux concept, and I would hope negotiators on all three sides would look into this seriously for the economic benefit and ultimately political benefit to all three parties.

MR. LEHRER: Mr. Voyadzis, finally, you said, don't expect miracles, this isn't going to happen overnight. As we go through these next several months and these next several years, but particularly the next several months, what should we be looking for? What are the kind of markers that should be put on judging whether or not this thing is working economically, and thus, overall?

MR. VOYADZIS: I think for me the first thing is employment creation as quickly as possible, and that part of infrastructure investments that will take place, some of them will go very fast. That will create employment. Second, we should use existing channels all over, so the donors such the non-governmental organizations that are in place, the United Nations agencies that have been working in the territories for a very long time. We should not innovate. We should use what exists and move as fast as possible to create employment.

MR. LEHRER: Because if you create a bunch of new organizations, you slow things down.

MR. VOYADZIS: Of course, of course. And this is why we need to use existing channels as much as possible, then strengthen the situation and the capacity on the Palestinian side, including this agency which is called PECDR, which is the Palestinian Economic Council for Development and Reconstruction, and equally, as I mentioned before, use the UN agencies to do so and the non- governmental organizations that are crucial?

MR. LEHRER: Do you hope?

MR. VOYADZIS: Absolutely, yes.

MR. LEHRER: Do you, Mr. Gubser?

MR. GUBSER: I'm hopeful but guarded.

MR. LEHRER: Mr. Hausman.

MR. HAUSMAN: I think that if as we said at Harvard in June they create the right policy environment, along the lines that Peter just described And if we let private business people in the region, the Palestinian entrepreneur, the Israeli business person, the Jordanian get to work with each other, I think there's going to be success and rather quickly.

MR. LEHRER: Gentlemen, thank you very much.

MR. MAC NEIL: Still ahead on the NewsHour, pricing health care reform, and a Phyllis Theroux essay. FOCUS - NUMBERS CRUNCHING

MR. MAC NEIL: The new report on health care reform is our next story tonight. There are five major health reform plans before Congress. The Cooper-Breaux plan is considered the main conservative alternative to the Clinton plan. It has considerable backing among business groups because it doesn't have the Clinton requirement that businesses pay for health coverage. Today the CBO, the Congressional Budget Office, gave its analysis of the Cooper- Breaux plan. Kwame Holman reports.

MR. HOLMAN: The non-partisan Congressional Budget Office was asked to assess how much the various health care reform plans would cost. CBO Director Robert Reischauer came before the Senate Finance Committee this morning to report on the plan offered by Congressman Jim Cooper of Tennessee and Sen. John Breaux of Louisiana, a member of the Finance Committee.

ROBERT REISCHAUER, Director, CBO: Let me begin by providing you with a thumbnail sketch of the Managed Competition Act. The proposal would make health insurance available to all but would not establish universal coverage. In other words, there would be no individual or employer mandate. All employers, however, would have to offer but not pay for coverage for their workers. Insurance markets would be restructured. Employees of firms with a hundred or fewer workers and individuals with no attachment to the labor force would purchase coverage through regional health plan purchasing cooperatives. These hypics would offer consumers a choice of accountable health plans at modified, community-rated premiums. These plans would provide a standard benefit package that would be specified by a national commission but supplementary insurance could be purchased separately. Firms with more than a hundred employees would have to offer their employees the opportunity to purchase coverage either by setting up their own accountable health plans -- and by that I mean by self-insuring - - or by purchasing coverage from a plan offered in the non-hypic marketplace. The proposal would provide people with strong incentives to purchase health insurance prudently by limiting the tax deductibility of premiums, the amount charged by the lowest cost plan offered through the hypic that enrolled a significant percentage of the eligible population.

MR. HOLMAN: Reischauer spent much of the hearing comparing the Cooper plan to the plan proposed by the President. He said the Clinton plan gets better marks on the goal of universal coverage. It would cover all Americans, whereas the Cooper-Breaux plan would leave about 24 million uninsured. As to the level of benefits contained in each package, the Clinton plan would offer a comprehensive package of medical coverage. Cooper-Breaux calls for a national health commission to determine the basic coverage at some later date.

ROBERT REISCHAUER: This commission would be responsible for determining the eligibility for premiums, for premium cost sharing and wrap-around subsidies, as well as insuring that the hypics and accountable health plans were paid their proper subsidy amounts. The commission could receive well over 40 million applications and renewals each year and an equally large number of reconciliation or year-end income verification forms. The commission would have additional daunting day-to-day functions, including registering and overseeing thousands of accountable health plans, including those established by self-insured firms. It would also have to design and implement a system to ensure an equitable distribution of premium and cost sharing subsidy shortfalls to the plans and to the hypics. Whether such a system is feasible is an open question.

MR. HOLMAN: On the federal deficit, the CBO says the Clinton plan would add $74 billion to the deficit over the first six years. Assumptions in the Cooper-Breaux plan say it would save $86 billion over nine years, but the CBO says that doesn't account for subsidies for low income people. Senate Majority Leader George Mitchell, a Clinton plan supporter, questioned Reischauer on the savings in the Cooper-Breaux proposal.

SEN. GEORGE MITCHELL, Majority Leader: Dr. Reischauer, then, I just want to be sure I understand this. The Managed Competition Act as introduced does not specify the benefit package for the health insurance to be provided under the Act that is to be set, it is to be determined at a later time, is that correct?

ROBERT REISCHAUER: Yes.

SEN. GEORGE MITCHELL: So in order for you to estimate the cost of the subsidies proposed under the plan, you had to assume a certain level of benefits, is that correct?

ROBERT REISCHAUER: That is correct.

SEN. GEORGE MITCHELL: And you made two different sets of assumptions. On the --

ROBERT REISCHAUER: Right.

SEN. GEORGE MITCHELL: -- one hand, you assumed a level of benefits comparable to that contained in the Health Security Act introduced at the request of the President, is that correct?

ROBERT REISCHAUER: That's correct.

SEN. GEORGE MITCHELL: And on the other, you assumed a lower level of benefits, you referred to it by various terms, but an alternative and lower level of benefits, is that correct?

ROBERT REISCHAUER: Less comprehensive.

SEN. GEORGE MITCHELL: Less comprehensive. And if the benefit package comparable to the President's plan were included under this Act, then the deficit would be increased by $300 billion over the next 10 years, absent other offsetting provisions. Am I correct in that understanding?

ROBERT REISCHAUER: It would if the automatic reductions in subsidies --

SEN. GEORGE MITCHELL: Right.

ROBERT REISCHAUER: -- were not implemented.

SEN. GEORGE MITCHELL: That's right.

MR. HOLMAN: But Reischauer also said both plans might eventually cut the deficit. Both plans would trim the nation's overall spending on health care. Under the Clinton plan, savings would reach $150 billion by the year 2004. Cooper-Beaux would save 30 to 50 billion dollars over the same period. The Clinton plan achieved its savings through caps on insurance premiums. The Cooper-Breaux plan places no controls on insurance premiums, relying instead on market forces to hold down insurance costs. CBO Director Reischauer admitted that it was difficult to compare the two plans because Cooper-Breaux is less detailed.

ROBERT REISCHAUER: The Congressional Budget Office usually bases its judgment on empirical evidence and analysis of scholars and our own researchers, and what I've tried to point out is no available evidence of this sort upon which to base an assumption like this, and so we --

SEN. DANIEL PATRICK MOYNIHAN: You just had to choose.

ROBERT REISCHAUER: We had to choose what we thought was a reasonable assumption. There's a lot of disagreement in the academic community about this issue, and I think it's fair to say that the incentives and restructured markets created by this proposal would have some effect. It's clearly greater than zero. How much of an effect though is really a very uncertain matter, one that will in large measure be determined by possibly the changed expectations that the American public might develop over time, and we really don't know how far these changes will go. They could go almost no distance at all. They could be considerable.

MR. MAC NEIL: How to debate the cost and benefits of the Cooper- Breaux and Clinton plans, we have Sen. John Breaux, Democrat from Louisiana, the Senate sponsor of the Cooper Managed Competition Bill, and Sen. Jay Rockefeller, the West Virginia Democrat, a key supporter of the Clinton plan. Sen. Breaux, you and Congressman Cooper have been finding good news today in the CBO report, whereas, certainly a lot of the media see bad news for your plan. Where is the good news?

SEN. BREAUX: Well, the good news for the first time, Robin, is that CBO has recognized that managed competition without employer mandates, without any kind of federal mandates coming out of Washington, would accomplish about 91 percent of the people having insurance under that plan. I think that's significant because previously the administration and others have said the only way you're going to insure most of Americans is by mandates coming out of Washington and force out of Washington to require employers to pay for insurance before we reform the system. So the good news, No. 1, is that they said today that we would achieve about 91 percent coverage using the marketplace as opposed to mandates.

MR. MAC NEIL: Sen. Rockefeller, do you see the CBO figures as a break for the Clinton plan?

SEN. ROCKEFELLER: I just see the CBO figures as condemning basically for the Breaux-Cooper plan. I mean, first of all, the benefit package that would have to flow from the money which is available in the Breaux-Cooper plan is so meager that it would only allow 15 days of hospitalization, no preventive care, no prescription drugs, no long-term care, you know, all kinds of things which we consider basis in the Clinton plan are just absent from that plan. Beyond that, 25 million people don't get any coverage, and then even with not giving any coverage to 25 million people, they still come up with 189 million dollar shortfall. And that's, I think, compares rather poorly to the Clinton plan.

SEN. BREAUX: Robin, I think that's totally incorrect. My good friend, Jay, isdescribing a hypothetical plan that the CBO said, well, there may be a plan -- they call it a spartan plan -- that would have to be so small under their estimates that it would not do what is necessary. That is totally unrealistic. It is not politically accessible. I would not support it, and I think that's not the type of plan that we're looking at. We're looking at a comprehensive plan that can get the job done, and I think one, that it's going to be very close to the Clinton plan as far as coverage is concerned.

SEN. ROCKEFELLER: And, Robin, I would just disagree with that in every sense of the word. What the CBO had to do because John Breaux and his colleagues simply didn't say what's going to be in the benefit package, I mean, they just said -- they punted basically. Clinton says exactly what's going to be in the package.

MR. MAC NEIL: We just heard Sen. Mitchell questioning Dr. Reischauer about that and saying that they'd taken a comparable one to Clinton and then a smaller one, which you just referred to as spartan, Sen. Breaux.

SEN. BREAUX: Well, the difference is, it's the question of whether we should have a group of politicians running for office, all trying to sit on the floor of the House and the Senate and write a very complicated health insurance plan. I would suggest a better way is to have the President appoint his commissioners, medical experts, to sit down and write the best plan that they can come up with as medical professionals. I want medical professionals writing it, not politicians.

MR. MAC NEIL: Okay. Let's, let's discuss a couple of things that I think we can that are clear to understand. Sen. Breaux, the CBO finds that your plan is short on one thing. It does leave, Sen. Rockefeller just said, 25 million Americans uncovered. You said it covers 91 percent. That's satisfactory to you, is it, to cover only 91 percent of the population?

SEN. BREAUX: Absolutely not, Robin, but it's a very good start. What CBO said this morning I thought was very significant. It said that in the first year 40 percent of the people who do not have insurance, poor people who don't have insurance, sick people who don't have insurance would immediately in the first year be brought into the program. That's 18 million people in the first year. So our argument is not that we shouldn't have universal coverage. I'm supportive of that. I'm just saying we have to be careful. Let's take it one step at a time and make sure we do it right, as opposed to trying to do it all at once and just hope that it's right.

SEN. ROCKEFELLER: And there is another substantial disagreement between my friend, John Breaux, and myself, and I credit John, because he feels something other than what his bill says. He believes and has been saying so much more recently in universal coverage, which is what the President and I believe in, but his bill says what we have now is 85 percent of Americans have health insurance, so we go from 85 percent in the status quo to 91 percent. And John Breaux says, well, that's fine, but that's all we need to do, let's come back in a few years and, and see if we want to do some more. To that, I say it doesn't work that way with Congress.

MR. MAC NEIL: Sen. Breaux, Sen. Breaux, as I understood these accounts of Reischauer's testimony today, he said in answer to questions, you can't get universal coverage without an employer mandate. Do you agree with that?

SEN. BREAUX: I definitely do not. I think what we ought to do is try and reform the marketplace before we start trying to create a new bureaucracy with mandates, and mandates a program that has not yet been reformed. I'm for universal coverage. I would suggest that we ought to phase it in like we've done with everything else, whether it's Medicare or whether it's Social Security, or any other major health program. I don't think the American people think that Congress is going to be able to change this system overnight and make it work. Let's take it one step at a time to make sure it's going to work.

SEN. ROCKEFELLER: That again --

MR. MAC NEIL: So you add up -- can I just clarify that, Sen. Rockefeller, for a moment? If your plan does not have -- and one of its selling points to business and others is that it does not have an employer mandate and it covers only 91 percent of the population -- isn't that an equation that, therefore, you can't have 100 percent without the employer mandate?

SEN. BREAUX: No, it's not true, Robin.

MR. MAC NEIL: It's not true?

SEN. BREAUX: What it does is it gets 91 percent in the very first year that the plan is in effect, and as those reforms start working, they'll make insurance more attractive, it will make it more competitive. It will lower the prices through all of the things that we have in our plan, many of which are very similar to Jay's plan. Let's those market reforms begin to work and the 91 percent will very quickly move up to the goal that we all can agree on.

MR. MAC NEIL: What's your observation, Sen. Rockefeller?

SEN. ROCKEFELLER: Robin, there's something that we in the Congress are going to have to fully understand, and we're going to -- we're just going to have to bite the bullet on this one. There is no way to get universal health coverage in America without a mandate. Now, you can have it, as John Chafee says, individual mandate, or you can have it as President Clinton says a corporate mandate, but a mandate there must be. There will not be universal coverage in this country without a mandate.

SEN. BREAUX: The problem is mandating it before we reform this system. Why don't we concentrate on reforming health care in this country and making the product a more viable product, one that is workable, and then we'll talk about whether it should be mandated. The problem of the administration's bill is they start off with mandates before we reform this system. I think that's wrong.

MR. MAC NEIL: Senator -- Dr. Reischauer also said today --

SEN. ROCKEFELLER: Can I -- I'm sorry, but you've cut me off several times, and I want to make my point. The -- what John has just said basically is that, that we'll just do a few people, 40 percent more, then we'll come back to the others later. Congressional behavior says that this doesn't work. We will not come back to this next year or the year after, the year after that. That's why you have to do the mandate. What John's words cover over is the fact that you don't do the mandate all at once. You don't make it effective the first year. You phase it in over a period of years. While the mandate is being phased in, the American health care system with the rest of the Clinton bill, and would mix with very good ideas that John and Jim Cooper put into it, the health care system is being reformed. But you don't get there without the mandate.

MR. MAC NEIL: Sen. Breaux, Dr. Reischauer also said today that under your plan that healthy people, if there is no mandate, healthy people might just desert the insurance pool and that that threatened to destroy -- unravel the whole system, to use his words.

SEN. BREAUX: To require, Robin, the employers of a hundred employees or less to join health alliances, to purchase their health insurance through purchasing cooperatives, if we can get the price of health insurance down and bring about more competition, improve the system, if you will, reform the system, people will want to buy health insurance. They will be able to afford it. Our plan covers four people. It will make the package much more attractive to individuals because we give them a hundred percent deductible, and if they are self-employed and we -- I think -- make a much more attractive package they will be willing to buy.

SEN. ROCKEFELLER: The definition needed here, what John has just said is that employers of only plants that are a hundred or fewer people must offer their employees a health care plan. It doesn't mean they have to pay for it. There's an enormous difference, Robin. In other words, it's saying if you want to pay for it, go ahead, but if you don't want to, don't worry about it. Now, because subsidies are there for people that have lower income or low wage jobs, the effect of that is going to be there's an enormous incentive for employers who are now currently offering health insurance to stop offering health insurance to their employees. And, in fact, the CBO says that a substantial percentage of Americans who currently have health insurance will be substantially worse off than they are today under the Breaux bill.

MR. MAC NEIL: Senator, let's just talk politics for the last couple of minutes here, Senator Rockefeller, the chairman of the Finance Committee, Sen. Moynihan, said -- obviously very influential in what kind of bill ultimately emerges -- said today he was optimistic because this fairly minimal plan, to quote him, referring to Sen. Breaux's plan, takes us to within 90 percent of the population within 18 months. Are you worried that he's now leaning towards -- this very influential Democrat is leaning towards that Breaux-Cooper plan?

SEN. ROCKEFELLER: I don't know. I mean, Pat Moynihan will have to make decisions on his own, but he's made it very clear that he is for universal health care coverage. Universal means that it has to be 100 percent in the law. Now, that -- as both John and I would recognize -- as in Social Security, there are a number of people even though they're required to have Social Security who don't end up having it, but Moynihan has said 100 percent, you've got to have total coverage in America. That implies, therefore, a mandate and it certainly means that everybody has to have it. That's a long way from John Breaux's 91 percent.

MR. MAC NEIL: How did you interpret Sen. Moynihan's remark today, Sen. Breaux?

SEN. BREAUX: I think what is happening, Robin, is that more and more of us are realizing that employer mandates are good news and bad news. The good news is everybody will have health insurance. The bad news is a lot of people won't have jobs, because we are trying to mandate something before we reform it. Let's get the controls working. Let's get the reforms working. We'll make a better product, and then we can see what else is needed to be done to make sure 100 percent of the people have insurance. I support that, but let's do it one step at a time.

MR. MAC NEIL: Your colleague in the House, Sen. Cooper -- sorry, Congressman Cooper said today he was discussing a compromise with Chairman Dingell there. Is there a compromise possible between your bill now and the Clinton bill?

SEN. BREAUX: The only way the health care will pass in this Congress is through a compromise. No plan right now, mine included, has enough votes to pass, therefore, we ought to start talking about taking the best features of all of the plans, packaging them up and getting something that achieves what we all agree, and that is quality health care for all Americans at an affordable price.

MR. MAC NEIL: Sen. Rockefeller, can -- is a compromise possible on this question of employer mandates? I mean, either there are mandates, or there are not? Is that not the case?

SEN. ROCKEFELLER: That's right. You have the corporate mandate, which is what the President prefers and what I refer. And you have the individual mandate. Now understand the individual mandate, mandate, in my judgment, is absolutely ludicrous. That means that every individual is required to have health insurance by law. I mean, imagine IRS agents chasing these people around saying, do you have your health insurance? It has no relationship to corporate shared responsibility. But, nevertheless, you know, a mandate is a mandate, and John Chafee has said that he's for an individual mandate, and President Clinton said I'm for a corporate mandate. And I think we can find a compromise. And I want to also compliment John Breaux and Jim Cooper for their managed competition advocacy of this, because it's basic to Clinton. And Jim Cooper was for managed competition long before any of the rest of us were.

MR. MAC NEIL: How can you have a compromise, Sen. Breaux? Either there is a mandate or there is not a mandate.

SEN. BREAUX: No, it's not. It's not true. We could have a trigger mechanism. In other words, you could have the reforms. Let them have a chance to work. We all agree on the type of reforms that we need. And then if those reforms do not achieve the goal of universal coverage like we like, we could have a trigger mechanism that would bring about some other way of doing it like an employer mandate. So there is a way to compromise this particular issue that I think is probably workable.

MR. MAC NEIL: Well, thank you gentlemen both. We have to leave it there. ESSAY - CHANGING YOUR MIND

MR. LEHRER: Finally tonight, Essayist Phyllis Theroux considers a mind that can change.

PHYLLIS THEROUX: One of the reasons we like to watch athletes perform, particularly at the Olympic level, is to remind ourselves of what the human body is capable of doing. But while the Winter Olympics in Norway were still in progress, a different but equally impressive performance of the human mind was turned in at another Olympian site, the Supreme Court. In a dissent from the court's decision not to review a prisoner's case in Texas, Justice Harry Blackmun declared that he no longer believed the administration of the death penalty was constitutional. There are those who agree and those who disagree with Blackmun's decision, but that does not diminish the impressiveness of his act. At 85, Justice Blackmun continues to do something with his mind what most of us find extremely difficult to do at any age. He changed it. On the surface we change our mind as frequently as we change TV channels or lanes upon a highway, but this is only on the most superficial of levels. Deeper down where we store our most cherished ideas and understandings about life we're far less flexible. Most of the time we don't really change our mind so much as we rearrange what's already there and make ourselves more comfortable. But the greatest minds, the ones which wind up shedding the most light upon our own, our less interested in making themselves comfortable than in getting closer to the truth. "All my advances," declared inventor Buckminster Fuller, "are made possible by my mistakes." You uncover what is when you get rid of what isn't. "The dogmas of the past," said Abraham Lincoln, when he changed his mind about slavery, "are inadequate to the stormy present. We must think anew." And the Mahatma Gandhi, the little man who ousted England from India without lifting a hand, except to himself, was so dedicated to changing on every level that it amounted to the life long experiment, his clothes, his diet, his work habits, his attitudes. Gandhi cheerfully changed whatever got in the way of what he most wanted to do, which was to return India to its people. But where Gandhi differs radically from other leaders is that he steadfastly refused to take advantage of his adversaries. In South Africa, just after Gandhi announced he and a group of Indian miners were going to march against the government to regain their rights, white employees of the South African railroads went on strike. Gandhi canceled his march, not wanting to take advantage of the government's other difficulties. It was the government's mind and heart he was determined to win by the sheer example of his moral rightness. And Gandhi got it time and time again by refusing to deny his adversaries' capacity for goodness. What an interesting idea. It takes an imaginative mind to hold on to one's enemies' unproven capacities for virtue, or as Reagan did with Gorbachev, let go of an enemy's proven capacity for harm. But that was the major part of the foundation upon which F.W. DeKlerk and Nelson Mandela finally stood and won the Nobel Prize for doing so when they reached agreement on South Africa. Yitzhak Rabin and Arafat are in a similar position. And in this country so deeply divided by racial strife, black and white Americans have a critical need to change their minds about each other's capacity for harm and virtue too.

SPOKESMAN: The white man is against brotherhood, and the white man is against peace. The history on this earth has proved that.

PHYLLIS THEROUX: When Malcolm X went to Mecca, he was amazed to see white Muslims behaving as genuine brothers. In his autobiography, he wrote, "Even I was, myself, astounded. If there was a precedent, my whole life has been a chronology of changes." And when he returned home, he writes of hearing a white man call out his name. He stuck his hand out of his car grinning, "Do you mind shaking hands with a white man?" Imagine that. Just as the traffic light turned green, I told him, "I don't shaking hands with human beings. Are you one?" Not every change of mind is a change up. But the ones that remind us of what human beings are capable of at the highest level usually state larger circles around more of us and have been skated around before. I'm Phyllis Theroux. RECAP

MR. MAC NEIL: Again, the major story of this Wednesday, Israeli Prime Minister Rabin and PLO Chairman Arafat signed an historic peace agreement after months of haggling that carried on right to the last minute. The accord begins an era of Palestinian self-rule in the Gaza Strip and Jericho and ends 27 years of Israeli occupation. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer. Thank you, and good night.