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 sample the ongoing emotional debate [Focus - Welfare Reform] in Congress on welfare reform, and we have our own debate with Health & Human Services Secretary Donna Shalala and Republican Congressman Clay Shaw. Next, two Republicans ventilate the dispute within their party over limiting proposed tax cuts [Focus - Contract Breaker?], and finally Paul Solman reports on the ad war against drugs [Focus - Targeted Ads]. NEWS SUMMARY

MR. LEHRER: The House voted changed in the Republican welfare plan today. Much of the debate focused on children. The changes increase the funding level for child care and cut food stamp eligibility for parents who fail to pay child support, among other things. The debate was again spirited.

REP. CARRIE MEEK, [D] Florida: There's no mistake about it, our welfare system needs to be improved. We all know that. But do we have to improve it by taking food out of children's mouths? Do we have to improve it by taking away the welfare help we're giving states now? If you want states to be able to do something with welfare reform, then give them the same amount of money you gave them before.

REP. JOE SCARBOROUGH, [R] Florida: The argument all week has been you've got to vote more money, throw money at a problem that we haven't been able to solve for the past 30 years by making bureaucracies larger. And if you're not for huge bureaucracies, then you're against children. That's garbage, and everybody here knows it's garbage.

MR. LEHRER: We'll have more on this story right after the News Summary. President Clinton said today he would veto cuts in student loans if Congress passed them. He spoke to a group of college newspaper reporters at the White House.

JEFF GLASSER, Yale University: How do you plan to stop Congress from capping direct loans or cutting Pell grants, or paying the interest on loans taken out during college? Are you willing to veto legislation if it comes across your desk?

PRESIDENT CLINTON: Well, of course I am in the areas of education which are so important to me. I don't think there's as much enthusiasm in the Senate among Republicans, and I know the Democrats will oppose eliminating the subsidies, cutting the Pell grants, limiting the direct loan program. So I hope that we can prevail in the Congress. But the veto pen is always there.

MR. LEHRER: Mr. Clinton also said he thought Speaker Gingrich's idea of giving poor children tax credits for lap top computers was a good idea. Gingrich backed away from that proposal after suggesting it earlier this year. Robin.

MR. MAC NEIL: Japanese police continued their series of raids on a religious cult today. They turned up more drums of chemicals linked to a deadly nerve gas attack on the Tokyo subways earlier this week. Police also arrested one member of the cult after they found a gas mask in his car. Ten people were killed in Monday's incident. More than 5,000 were injured.

MR. LEHRER: President Clinton was asked today to investigate two murders in Guatemala. Congressman Robert Torricelli, a New Jersey Democrat, charged they were ordered by a Guatemalan military officer on the CIA payroll. The victims were an American hotel operator, who was killed in 1990, and a Guatemalan guerrilla leader killed in 1992. Torricelli is a member of the House Intelligence Committee. He held a Capitol Hill news conference today with the guerrilla leader's widow, Jennifer Harbury.

REP. ROBERT TORRICELLI, [D] New Jersey: It appears to me the agency kept this to themselves for several years. Only at sometime within the last two months did apparently this reach the National Security Council and senior officials, in which case they did take action in going to the Guatemalan government. I am not going to defend the fact that they did not come forward to the Devine family or to Jennifer about these murders and tell them honestly what had happened.

MR. LEHRER: Acting CIA Director William Studeman issued a statement in response. He said the CIA did not have credible information about the killings until well after they occurred. He said the information was shared with the appropriate U.S. government authorities. White House Press Secretary Mike McCurry said this.

MICHAEL McCURRY, White House Press Secretary: Throughout the process, we've done everything we can [1] to get the facts from the Guatemalan authorities, [2] to make sure Jennifer Harbury had access to those facts in a timely way when they were available to us consistent with our own obligations to protect our own national security, and [3] we, as soon as we could make that information publicly available, we did so. I am not aware of any information available to the White House nor to the CIA that indicated with certainty that anyone in the government knew that he was dead shortly after being taken captive in March of 1992. I do that we shared with her our own view that that was likely the case. And that has consistently been our view.

MR. LEHRER: McCurry said the United States had recently suspended a military training program for Guatemalan officers.

MR. MAC NEIL: California Gov. Pete Wilson took a first step today toward running for President in 1996. He announced he's forming a committee to raise funds for a possible bid for the Republican nomination. Wilson, who's 61, is currently serving his second term as governor. He was also mayor of San Diego and served in the U.S. Senate.

MR. LEHRER: And that's it for the News Summary tonight. Now it's on to welfare reform, the Republican tax cut debate, and anti-drug ads. FOCUS - WELFARE REFORM

MR. MAC NEIL: Welfare reform is once again our lead story. The House debate has been rancorous, even nasty, and it's all expected to lead to a final vote tomorrow. Kwame Holman begins our report.

KWAME HOLMAN: This second day of debate on welfare reform legislation did not reach the fevered emotional pitch achieved during yesterday's opening round, but it appeared it might when Republican Robert Walker of Pennsylvania came to the floor.

REP. ROBERT WALKER, [R] Pennsylvania: It is immoral to take money from decent middle class Americans who work for everything they have and give it to people who think they are owed the money for doing nothing. It is immoral to run up our debt, leaving our children and our grandchildren to pay the cost of federally apportioned compassion. It is immoral to consign poor people to lives of living hell as government dependents so that politicians and bureaucrats can maintain power. What the Democrats speak on this floor is the language of fear, fear of the future, fear of change, fear of the loss of their political power. The system, no matter how corrupt, is their system, and they want to keep it.

REP. CHARLES RANGEL, [D] New York: Isn't it a fact that the Republicans are not driven to reform the system which Democrats want to reform too, but you're driven in order to save the money in order to pay for this horrendous tax bill that you've introduced on the Contract on America?

REP. ROBERT WALKER: The gentleman is absolutely wrong. What we are attempting to do --

REP. CHARLES RANGEL: Isn't that true?

REP. ROBERT WALKER: -- is have economic growth and at the same time make certain that we bring down the debt and deficit. It is corrupt and immoral what you're out here on the floor defending, Mr. Rangel. Defending this welfare system is absolutely corrupt, and it is immoral!

REP. CHARLES RANGEL: Will the gentleman yield further?

REP. ROBERT WALKER: This system is absolutely one of the most corrupt --

SPOKESMAN: Time for the gentleman from Pennsylvania has expired. The time has expired.

REP. CHARLES RANGEL: It's not welfare reform. It's tax reduction, not welfare reform, and you know it!

SPOKESMAN: The time has expired, and the gentleman from New York is out of order.

MR. HOLMAN: Despite Walker's attack, several Republicans and Democrats offered amendments they said would soften the impact of the Republicans' welfare reform plan. That plan scraps some 40 federal welfare programs in favor of block grants to the states and cuts $66 billion in various kinds of assistance over five years. Nancy Johnson of Connecticut teamed with fellow Republicans Pryce, Dunn, and Waldholtz in an effort to add $160 million a year to state block grants to fund child care for welfare recipients.

REP. NANCY JOHNSON, [R] Connecticut: In an ideal world, extended family would be able to provide some amount of this care, but in today's world, day care and the need for day care is a reality for those on welfare and those gaining independence.

MR. HOLMAN: Some Democrats immediately attacked the Republican proposal.

REP. JIM McDERMOTT, [D] Washington: So they've come out here with an amendment today. It's a fig leaf. It puts 100,000 back on. There's still 300,000 kids who will not get welfare child care under this bill.

MR. HOLMAN: Other Democrats were more conciliatory.

REP. NANCY PELOSI, [D] California: The amendment offered by our colleague from Connecticut, Mrs. Pryce, Rep. Johnson, Pryce, Dunn, and Waldholtz, is a step in the right direction, and I commend the sponsors for offering it, but I recall a story by the former governor of Texas who said you can put lipstick on a sow and call it Monique but it's still a pig. And this, I contend, is a cosmetic change to this terrible bill, HR-4.

MR. HOLMAN: In the end, however, few members objected to appropriating the additional money.

SPOKESMAN: The ayes have it.

MR. HOLMAN: Last night, Republican Chris Smith of New Jersey was able to ease another restriction in the Republican welfare bill, a provision that would cut off assistance for children born to women already on welfare.

REP. CHRISTOPHER SMITH, [R] New Jersey: Mr. Chairman, there is much about the welfare system that needs changing, much that does serve to trap people in the cycle of poverty and despair. But allowing the states to pay modest per-child benefits is not one of those terrible things.

REP. BARBARA VUCANOVICH, [R] Nevada: That's why I support the Smith amendment. This amendment would retain the essence of the family cap provisions by restricting direct cash benefits but would allow states the option of providing vouchers to pay for particular goods and services specified by the state as suitable for the child involved.

MR. HOLMAN: Again, Democrats complained the Republicans' changes didn't go far enough.

REP. CHARLES RANGEL: I guess this is part of an overall scheme to say that those people on the local level, those in the cities and those in the states, that theyknow better than we in Washington. And if that is so, why don't we give them full discretion to do everything. Why is that we see fit to say that we don't want any strings attached to the governors when it comes to doing mean-spirited things, but we're just saying that they may provide vouchers? Why can't we say if they want to provide cash assistance, let them do that too?

MR. HOLMAN: Despite the complaints, the amendment passed overwhelmingly. Still to be considered, however, is a complete but less restrictive alternative to the Republican welfare reform plan sponsored by Democrat Nathan Deal of Georgia. It could pass by attracting the support of a handful of moderate Republicans not completely pleased with the Republican bill in its current form.

MR. MAC NEIL: Earlier today, Margaret Warner conducted our discussion on welfare reform.

MARGARET WARNER: I'm joined by two key participants in the welfare debate: Clay Shaw, Republican of Florida, sits on the Ways & Means Committee and led the House Republican effort on welfare reform. Donna Shalala is Secretary of Health & Human Services in the Clinton administration. Welcome to you both. Congressman Shaw, judging from the debate on the floor of the House today, where you've got a couple of dozen amendments from Republicans, a lot of them seeking to soften the bill, how do you explain that? Do you have a mini revolt on your hands from members of your own party on this bill?

REP. E. CLAY SHAW, JR., [R] Florida: Oh, not at all. As a matter of fact, I've supported many of the amendments that have been out there, and I might just say that we're improving the bill. One amendment that I was very proud to support was increasing the child care which is going to be very necessary for a successful welfare reform bill. That brings the Republican bill up, increases the funding by about $750 million over the next five years. And that's very important, because we've got to put that money out there, and now the Republican bill has much more money in the child care provision than the Democrat substitute has.

MS. WARNER: Madam Secretary, how do you interpret what's going on on the House floor right now?

DONNA SHALALA, Secretary of Health & Human Services: Well, what we're seeing is budget cutting, not welfare reform. This is not welfare reform. There are now work requirements that are as strong as current work requirements. We're cutting child care. With all due respect to Congressman Shaw, the fact is they restored half of the cuts that would have existed with existing law, so asking a mother to go to work without having proper child care, without having health care, without having education and training, if you don't have those things, you're not doing welfare reform.

REP. SHAW: Well, I'd have to differ with the Secretary on this, very respectfully I might say, because the Democrat substitute over the next five years only has a little over $8 billion in child, child care dollars, where the Republican bill has over $10 billion. That's a big increase. I don't understand where the math is coming from. All I have is the comparative figures, and it shows that we're way ahead.

MS. WARNER: Ms. Shalala, let me ask you this. Overall, the broad outlines of this bill basically take these forty federal social welfare programs, collapse them into five programs, send them back to the states, and take away their entitlement status. What is the administration's basic objection to that overall approach?

SEC. SHALALA: It takes a whole group of existing programs and cuts $60 billion from them and sends the money back to the states with no strong work requirement. They started out with 4 percent. They went to 2 percent. They went to 4 percent. Now they're at 10 percent. That's below the --

MS. WARNER: What do mean percent?

SEC. SHALALA: That means the percentage of people that have to be the first year in work. That's below the current percentage. Currently, we have 11 people -- 11 percent of the population of welfare in work requirements. We need stronger work requirements. Without strong work requirements, without holding both parents responsible, without getting child support enforcement with teeth, you don't have welfare reform. And cutting $60 billion from women and kids is not welfare reform. It's cutting the budget to pay for tax cuts.

REP. SHAW: Well, let me cut in here, I mean, because the figures, again, just don't match up. We, we increase the spending in welfare across the board by over $70 billion over the next five years. That's a 42 percent increase. So when you start talking about cuts, I don't know where they are. It's important to realize one area we are cutting and cutting severely, and that is the bureaucracy. Right now, I think it's somewhere around 65 cents of every dollar that is paid in actually gets to the beneficiary. We're cutting the bureaucracy, and that's what the people want; that's what they're calling for.

MS. WARNER: Let me ask you about this point because you -- Republicans and Democrats have been arguing about it. Republicans make -- don't they -- with some validity the point that they aren't really cutting spending; they're just not going to let it increase as much as it would have under existing law, and they argue further, as Congressman Shaw just did, that, that they think they can realize these savings just from federal bureaucracy. Now do they have a point at all?

SEC. SHALALA: Well, they really don't have a point. You know what the federal bureaucracy is? I have 180 people that run the AFDC program. Their requirements alone, the things that they are locking in, will require more people than that to administer the programs at the state level, and so I would suggest to you let's look at the child care program, let's --

MS. WARNER: Let me ask the Congressman, respond just on that point, Congressman. What about that?

REP. SHAW: Well, the Secretary certainly knows AFDC, but let me point out here that there's some 60 programs that we're folding into the block grant. Right now there are six -- there are three hundred and sixty-three means-tested federal programs, each having their bureaucracy, each having their own regulation, those are the federal programs. That's nuts. We've got to not only to take care of the ones that are before the Congress as we speak, but we also have to cut and combine many of the other programs. The amount of programs that has mushroomed and built up over the years is absolutely out of sight. It makes no sense in dollars and cents. The only sense it makes is political sense, and that's what we're going to go after, those programs that are in here for political purposes only, and that could much better be combined, sent down to the states, and that's where they should be administered, and that's what we plan to do.

MS. WARNER: Congressman, of the $66 billion in savings that this bill would realize over five years then, is it the Republican contention that none of this money will come out of the hides of the deserving poor, that this is all either waste, fraud, abuse, or just overlapping bureaucracy or programs?

REP. SHAW: Well, it's all of that, but I think also it's just a question of greater efficiency. As I just pointed out, only 60 some cents of the federal dollars are getting down to the people that we're trying to help. I mean, that's the worst kind of trickle down that you could possibly have. And now we're going to send it down to the states. The states would get out to about 98, 95, 98 percent, to where it belongs. That's where your true savings are, and I think that's the direction that the American people want us to go.

MS. WARNER: How do you see it?

SEC. SHALALA: We want welfare reform and to get welfare reform, you have to change the state bureaucracies. It's the states that determine eligibility. It's the states that have this large number of people that are focused on making people eligible as opposed to helping them get into jobs, and so we need child care to help people get into jobs, we need child support enforcement with teeth, and the spectacle of a Republican -- of Republican women having to put teeth into the child support enforcement plan is, it's what's being played out now in the, in the Congress. But to get work requirements, to get child support enforcement, to make sure that the state bureaucracies change their tune and help support people to get into work is exactly what needs to take place. And our argument is that's not in the Republican bill. What they're trying to do is to finance their tax cut. They're using the money to finance their tax cut, and they're not putting in work requirements. We've had to work very hard to get them to take child support enforcement seriously. Their own party has made changes to make the bill so it's not as hard on children, but it still is very tough on kids and very easy on work.

REP. SHAW: Let me say this.

MS. WARNER: Yes.

REP. SHAW: Let me say here very quickly to the Secretary that the child support is one of the areas where we've agreed from the very beginning, and Madam Secretary, you know that. We talked about it, and we've -- I think we've worked well together. The bill that's on the floor is going to, I'm sure, by amendment, is going to revoke the driver's licenses, it's going to go after professional licenses, and something else that was introduced just today which I don't think the administration ever thought of, we're going to take food stamps away from the fathers that don't take care of their kids. So I think, I think that when you talk about what's stronger, right now, when we finish this process, our child support provision is going to be a lot stronger. And I want to say one thing about the work requirement. The Congressional Budget Office, as reported in the Washington Post this morning, just said that the GOP work requirements are so strong they're not even obtainable. So I've been waiting for some of the members to talk about that on the floor today but none of them have chosen to even bring it up. We've got strict work requirements. They're good work requirements, they're realistic, and in meeting with many of the Republican governors who are in town today, they said they can obtain those standards.

MS. WARNER: Congressman, let me ask about another point that Ms. Shalala just raised, which had to do with whether all the states are ready to do this. The Brookings Institution did a recent study pointing out that certain states have been very creative and innovative and are clearly ready for this but saying other states are a long way from that kind of competence, and then went on to say, for instance, there was positively no way that Texas or Mississippi, and other states with limited experience could meet the administrative requirements that the Republicans in Congress want to send back to them. How confident are you that all these states are really ready to take on these responsibilities?

REP. SHAW: Well, the states right now are where all the good ideas are, and I must say, to much of the credit of this administration, that they've granted a large number of waivers that's really demonstrated the talent that's out there in the states. Some of the states might have a little bit of trouble, but I think one of the basic differences that I have with the administration is that I've got a lot more faith in the states to be able to administer these programs. They're administering them now, but they're administering them with Uncle Sam looking over their shoulder. They're administering them with, with all of the hundreds of programs that are out there, that they are confused by. Even my own state of Florida has had some problems with that, and all the tons of regulations, libraries of regulations that they've got to deal with. The states can handle this in a very common sense way. It's not that complicated, and I just simply have more faith in the states than the secretary does.

MS. WARNER: How much faith do you have in the states?

SEC. SHALALA: Well, I have a lot of faith in the states. As a matter of fact, I'm sure that Gov. Clinton had a lot of faith in the states, because of his own background.

MS. WARNER: Would you agree that the federal requirements have tended to limit the ability of states to do creative and innovative things?

SEC. SHALALA: The President was the first one that started to move on that. In the 1988 welfare reform, he was one of the leaders with Congress that affected that. His own bill last year had extensive state flexibility. We have the states in welfare waivers. We believe in state flexibility, but we do not believe that states can meet work requirements unless they have child care money, unless they have some health care built in, unless they have some national standards and some expectations of what they're going to do with taxpayers' money. And we believe those requirements ought to be in the bill, and you can't do that if you're trying to finance a tax cut for the rich.

MS. WARNER: Congressman, I'd like to get back to the politics of this now before we go.

REP. SHAW: There's a lot of politics here.

MS. WARNER: A lot of politics today. Recent polls are finding that the majority of Americans are now afraid that Republicans are going too far in cutting programs for the poor, in good part to help the wealthy through tax cuts. Are you losing the public relations battle on this one?

REP. SHAW: I, I hope not, but I think that the Democrats have been very persistent in their arguments, even though they aren't true. They've said we're cutting the nutrition programs, when we're increasing them, and the dollar figures are right there to prove it. In fact, in some of the programs we're way ahead of where the President's own budget is for the next two years. So, I mean, the big, the big question is: If you say it enough times, will people believe it, even though it's not true? And the answer is, obviously, the way the polls are going, the way you suggest they're going, that that may be true.

MS. WARNER: What can you do to get it back?

REP. SHAW: Well, I think that -- I think the thing is swinging back. We're going to pass a good welfare bill, and all we ask to be is judged not on the amount of money that we give to poor people but the amount of poor people that we drag out of poverty. And that's what's necessary, and that's what we've got to do. And I must say that I believe that Gov. Clinton, who obviously was a leader on this when he was a governor, was a leader on this in the '92 presidential campaign, that Gov. Clinton would have supported what the Republicans are trying to do today. But now -- and I must also say here, and I think this is very important for all of us to realize -- that we're closer together than a lot of people might realize. There are some areas that we're wide apart, such as the question of whether you pay welfare benefits to aliens. We've got a big difference there. Given the SSI checks, the so-called crazy checks to kids who have some type of attention disorder, we disagree on that. We disagree on whether you should pay alcoholics or drug, drug users, users of illegal drugs SSI benefits because of their drug dependency or alcoholism. Those are some of the places we do disagree. But the basic program, the program that's really going to make this work, is a question of time limiting AFDC. We agree on that, the question of requiring that, we agree on this. We disagree on the details, but the basic proposition we agree with the administration, and we're looking forward to working with the administration and having the President sign a bill that would be finally passed by both Houses of the Congress.

MS. WARNER: How do you see the politics of this with the public now?

SEC. SHALALA: Well, I think that it's more than just the administration pointing out the weak work requirements and beating up on kids. The Catholic Church has made it very clear that they oppose requirements, many strong parts of the bill. In fact, leaders of the Catholic Church have called parts of the bill that refuse cash assistance to, to children immoral. So it's not just the administration. There is a growing feeling in this country that this is an extremist proposal that doesn't do what the American people expected us to do. They want welfare reform. They want people moved into work as quickly as possible, but they don't want to beat up on children.

MS. WARNER: And before we go, the Congressman just said he looked forward to having the President sign something like this when it got through the Senate. Could the President sign something like this?

SEC. SHALALA: The President has made it very clear that he wants welfare reform, and that means work requirements, holding both parents responsible, and not beating up on kids.

MS. WARNER: So the answer is no?

SEC. SHALALA: The answer is no, that he will not sign a bill that beats up on kids.

MS. WARNER: Thanks very much, Madam Secretary. Congressman Shaw, thanks for being with us.

REP. SHAW: We'll see. Thank you.

MR. MAC NEIL: Still ahead on the NewsHour, Republicans dispute tax cuts, and Paul Solman reports on an advertising war against drugs. FOCUS - CONTRACT BREAKER?

MR. LEHRER: Now the Republicans' in-house debate about tax cuts. The House Republican Contract With America proposes a $500 per child tax cut for families with incomes up to $200,000. But 102 Republican members signed a letter this week urging that that cap be scaled back to $95,000. We hear what it's all about now from one who signed the letter and one who did not. Amo Houghton of New York is serving his fifth term in the House. David McIntosh is a freshman from Indiana. Congress Houghton, you signed the letter. Why?

REP. AMO HOUGHTON, [R] New York: Well, I thought it was moving in the right direction. I thought $200,000 was not appropriate, and when you take a look at all the other programs we're going to have to curtail.

MR. LEHRER: Inappropriate in what way?

REP. HOUGHTON: Well, the income level was too high. In other words, when you have to curtail and scrunch down costs in terms of a variety of programs -- right now we're talking about welfare - - and then to give a $500 per child tax credit to somebody making $200,000, I just thought it was way out of line.

MR. LEHRER: Way out of line in that it would, would, it would decrease the amount of money that would come into the federal treasury, or just out of line in terms of those people that shouldn't get that kind of cut?

REP. HOUGHTON: Yeah. The latter.

MR. LEHRER: People that make that much money don't deserve that kind of cut.

REP. HOUGHTON: Right.

MR. LEHRER: All right. Congressman McIntosh, what's the argument for the $200,000?

REP. DAVID McINTOSH, [R] Indiana: You know, I think the real argument for it is that we want to give every child in America a $500 tax cut. Inflation has eroded away the deduction for children since World War II incredibly, and parents are having a difficult time making ends meet. I also think that when I go home to Indiana, my constituents say, we don't think you're doing a good job of spending our money, and what this tax bill does is says we're going to let Americans keep more of their hard earned money rather than to have to send it to Washington and have us tell them how to spend it.

MR. LEHRER: So you don't think there should be any cap, is that what you're saying?

REP. McINTOSH: I think in an ideal world, that's right, it should apply to all children in America, because I think it's important that we let parents spend the money how they see best, raising their kids, saving for college, and why should we pick one group of kids and say you're not as important as another?

MR. LEHRER: How about that, Congressman Houghton?

REP. HOUGHTON: Well, I don't happen to agree with that. David has got a lot of good instincts, and he's doing a wonderful job down here. I don't agree with that. Furthermore, I think the whole tax cut concept right now is really up for grabs. I don't think it's a particularly good idea, and I think the timing is bad.

MR. LEHRER: And, you mean, if you had your way, in other words, you just heard Congressman McIntosh he would have this reply to everybody. You're saying as far as you're concerned, you'd apply it to nobody in the ideal world, is that true, Congressman?

REP. HOUGHTON: It's not just the $500 per child for people making each, for families who make either $200,000 or $95,000. I mean, I think that there's a whole burden that's going to be put upon the American people because of this tax cut which is going to be very, very difficult to shoulder.

MR. LEHRER: Congressman McIntosh.

REP. McINTOSH: Amo and I agree on a lot of things. Cutting the deficit is vitally important, and a lot of people who signed the letter felt it was important that we go through and make the spending cuts so that we could keep that promise with the American people. I think the, the new freshmen on the whole want to see us do both. They want to see us cut back on taxes that the American public has to pay and make sure that we balance the budget. But there's also been a change of thinking here in Washington. The old way of thinking was that this money really belonged to the government and we'll kind of doll out some of it to you either in spending programs or tax cuts. But I think the new way of thinking is this money belongs to the American people, and we haven't been very good custodians of it, andnow we're going to let them keep more of it, and what we take for the government, we're going to cut back on our spending and balance our budget.

MR. LEHRER: Congressman Houghton, are you a part of the old thinking?

REP. HOUGHTON: I guess I am. I guess I've been around cost cutting for many, many years, and I think it's a wonderful idea to have people keep as much money as they possibly can. I always feel I could invest my money better than the United States government. That's not the issue now. The issue is when we try to get to a balanced budget, which is in the year 2002, really not that far away, and we have to spend a trillion, one hundred billion just to do that or cut that out of our expenses, and then add because of this tax cut another $350 billion, I think it's almost impossible to do.

MR. LEHRER: Congressman McIntosh, do you think it is possible?

REP. McINTOSH: I do think it's possible, and I look forward to working with Amo on making sure we get those budget cuts, because the one thing that really is different around here is the Republican majority is committed to that balanced budget, and the Democratic leadership and President Clinton don't want to have a balanced budget. Their budget has us spending $200,000 each year for the next five years. So I think you'll see us working together to make sure that we get to that balanced budget proposal.

MR. LEHRER: Congressman McIntosh, all the opinion polls, I looked at all of them today that have been done recently on the issue of tax cuts, and the American people say, forget it for now, go ahead and -- in other words, they take Congressman Houghton's position, rather than yours. How do you explain that?

REP. McINTOSH: Well, when I go home, people say, I'd like you to make sure you keep your word and do all of the contract items. And a big part of that is the tax cut that we talk to people about. I also think there's something going on there where people in America have a good heart. They want to make sure that the country is going to be put on the right track, and so if they're asked, do you really think you should get a tax cut, they might say in a poll, no, I don't really need that, but come election time, I think the voters are going to say, did they keep their word, did they give us the tax cut that they talked about, and so I think the sentiment is stronger than maybe the polls reflect. And I'm glad that we're going to keep going and make sure we do give them that tax cut.

MR. LEHRER: In other words, the people in your district say we want the tax cut?

REP. McINTOSH: They do. And I go home each weekend and talk with them about it. They do want us to get to a balanced budget, but they also, particularly working men and women, say we need more resources to raise our family and save for college for our kids. And they're the ones that pay the taxes in this country. And so I think they're the ones that we really owe the most to to go ahead and have this tax cut.

MR. LEHRER: Congressman Houghton, what are your constituents in New York State telling you?

REP. HOUGHTON: Well, I don't hear quite what Dave does. I frankly don't hear it at town meetings and I don't hear through conversations on the phone or meeting people in the street or anything like that. I think the most important thing and the message that I get is if you're going to balance the budget, balance the budget, just don't take money away in one hand and give it in another. If you want to do that, do it later, but don't do it now. Frankly, this balancing the budget is not a theoretical issue anymore. I mean, you can see what happened in the Senate when the balanced budget amendment went down by one vote, there was a tremor in the international monetary markets. And if we do not balance this budget, I think we're crazy. And we've got a good plan on it, we've got a time schedule, and we ought to be about it, and not confuse it with tax cuts.

MR. LEHRER: Well, what about the promise part of this? You heard what Congressman McIntosh said, that the Republicans promised to, to vote a tax cut.

REP. HOUGHTON: I understand that, and we've all made a lot of promises in our lives, and they're very, very important. They're sacrosanct in many ways. But I do think when you take a look at the raw numbers and what has to happen in order to add this other $350 billion over the next seven years in terms of expense cuts, you have to say, listen, in terms of this overall thing, we've done nine out of the ten of these issues, we're on the way, we're doing the job that you wanted us to do, but we're going to have to put this off for a little bit, and we hope you'll bear with us.

MR. LEHRER: You don't think that'll work, Congressman McIntosh? The people in your district in Indiana won't buy that if you put it to them just that way?

REP. McINTOSH: I think they'd say couldn't you work a little bit harder, roll up your sleeves, and not only balance the budget with the spending cuts, but take some additional spending cuts and keep your promise and give us that tax cut. And the reason is that most of them really think Washington doesn't do a good job of spending their money, and they think they can do a better job with their $500 for their kids on buying food, saving for college, and so I think there'd be a strong support for that. It is going to make us work a little bit harder. We're going to have to find more budget cuts. We're going to have to trim down to the essentials here in Washington, but I think the country will be better off once we've done that. And the good thing is there's a lot of energy of, you know, we may be new kids on the block in the freshman class but we're committed to going in there and doing the work that it takes to get that done.

MR. LEHRER: In other words, make sure I understand what you're saying, Congressman McIntosh, you're more driven by the promise than you are about whether or not -- the concerns that Congressman Houghton and the other 101 raised -- those concerns do not concern you as much as the promise you made in the Contract With America? If you had to choose between the two, that's where you would go, is that right?

REP. HOUGHTON: It's not only the promise. I think it's good policy. I think we're telling to the American family we're going to let you keep more of your hard earned money. We've got capital gains tax cuts and other tax cuts that will stimulate the economy, create more jobs so that people can work and earn a living. So I think it's very good for the country, but then in addition, I think we should just work harder to get the additional budget cuts to also balance the budget. I guess I want to do both. I want to have the tax cuts and then let us go and balance the budget.

MR. LEHRER: And Congressman Houghton, you've looked at these numbers. You just don't think that's possible. You'd love to do it too, but you just don't think it's possible, is that what you're saying?

REP. HOUGHTON: Yeah. It's not so much us working harder. You know, we can work harder. As a matter of fact, we can balance the budget tomorrow. That's not a problem. It's the impact it has on this society. You know, this isnot an economic unit. This is a social unit, and we've got to be very, very careful how we handle it. I have been standing up for cuts for years, but when you do it, you've got to be careful of the impact, and when you take a look at balancing the budget, what would that have to be, plus this tax cut, you really, in effect, freeze everything for the next seven years. And that, in effect, is a 25 percent decrease. I, frankly, think that's a pill we don't need to swallow at this moment.

MR. LEHRER: Is that a pill we need to swallow now, Congressman McIntosh?

REP. McINTOSH: I do. I think for too long now Washington has really been spending beyond its means, and we need to tighten the buckle on our belts and say we're going to spend less. I think most people would say gosh, if you froze it at the current level, even if that means it doesn't go up 25 percent, that's a good thing. I'm sure that Amo and I are going to end up working together on almost all of these, because he and I are both committed to it. The real difficulty is going to be convincing some of the folks who are big spenders and actually want to have tax increases that that's a bad idea.

MR. LEHRER: But what about his point that this isn't just an intellectual exercise, that there's going to be a social impact from what you want to do, have you considered that? Are you aware of it, and you're not concerned about it, is that correct?

REP. McINTOSH: Well, I think there will be some real adjustments that need to be made in the time period between now and then. And I guess I think society will be better off if government is smaller, and we take less of people's pay check in taxes, and we spend less, and live within our means. So I guess I'm looking at the whole social impact and say that's a pretty good situation for us and something that I think we can all do.

MR. LEHRER: A good impact, Congressman Houghton, is what Congressman McIntosh is saying?

REP. HOUGHTON: The impact in terms of balancing our budget and cutting our cost is right, and I absolutely agree with it. But when you take a look at these figures, a look at it from every way, the impact on Medicare and Medicaid and children's programs, and, and veterans' pensions, and things like that, you know, these aren't things -- you can eliminate all of us up here, and that isn't the cause. The cause are the programs which are out there. And they've gotten out of hand. We've got to bring 'em back, but why make it even a third more difficult to do it when we're on the right course?

MR. LEHRER: Congressman Houghton, do you feel that what your 101 colleagues are doing is somehow disloyal to the Contract With America and the leadership of the House of Representatives?

REP. HOUGHTON: No, I do not, and I tell you why, because in this very provision, there have been five or six other changes since the original contract was developed.

MR. LEHRER: Do you feel he's being disloyal to the cause, Congressman McIntosh?

REP. McINTOSH: No, no, not at all. One thing that the Republican conference has done has made a commitment that we're going to consider all views, talk to each other about these things, and then work together on the major portions that we want to take forward to the American people. I think the letter that was sent out said we want to do it slightly different and have a tax cut but not quite the one that came out of committee. That's a legitimate view. I don't agree with it and don't share it. I think there's nothing disloyal about it. I think there's a strong effort for everybody to work together.

MR. LEHRER: All right. Gentlemen, thank you both very much. FOCUS - TARGETED ADS

MR. MAC NEIL: Finally tonight, Paul Solman reports on the effectiveness of commercials in the fight against drug use.

PAUL SOLMAN: This is the latest salvo in the war on drugs as it's being waged on Madison Avenue. Meet Paul Cappelli, the Ad Store, as he and his team work on an anti-marijuana campaign for the Partnership for a Drug Free America. The Partnership is a non- profit group of advertising professionals who donate their time and skills to create powerful anti-drug messages. The hottest ad firms in the country compete for the chance to do the work and of the more than 400 anti-drug ads that have been made, some have left an indelible impression.

COMMERCIAL SPOKESMAN: [frying an egg] This is your brain. This is drugs. This is your brain on drugs. Any questions.

MR. SOLMAN: But when Cappelli's team, documentary makers Bruce Sinofsky and Joe Berlinger, did market research on this ad, they found it was no longer working.

BRUCE SINOFSKY, Documentary Filmmaker: Because most of the kids when we asked them how they related to other commercials that dealt with the drug issue, they often would laugh. They'd say, oh, we used to get stoned and watch that thing about the eggs in the pan, and this is your brain on eggs, and they'd be laughing, and they'd just light up another joint.

SPOKESMAN: These are eggs on drugs. These are eggs on drugs.

BRUCE SINOFSKY: But the message, for some reason, there were only a few messages that seemed to get through, and they were the ones that were with younger people or seemed very, very credible, but some of them that were a little too slick they didn't buy.

MAN IN COMMERCIAL: Who taught you to do this stuff?

TEEN IN COMMERCIAL: You, all right? I learned it by watching you!

COMMERCIAL SPOKESMAN: Parents who use drugs have children who use drugs.

MR. SOLMAN: But over the past seven years, claimed sociologist Lloyd Johnston, who's tracked high school student's reactions, ads like these actually were effective.

LLOYD JOHNSTON, University of Michigan: A surprising number indicate that these ads do have effect on their behavior. Roughly a quarter to a third say it's had a great impact on their likelihood of using drugs, and roughly two thirds to three quarters say it's had some impact. Well, that's about all you can ask for from any advertising campaign.

MR. SOLMAN: In fact, for the past decade, drug use did decline. And during this same period, TV stations were giving more time to the Partnership's public service announcements. But lately, drug use, especially of marijuana, has turned up, just as air time has been going down. The media have become complacent, says the Partnership, pointing to music videos like this one on Cable Music VH-1, featuring Tom Petty.

TOM PETTY: [singing] So let's get to the point. Let's roll another joint.

LLOYD JOHNSTON: That's not a good message for young people. And the last thing in the world they need is another joint, but yet, it's a good video, and it sells, and, in fact, VH-1 is now promoting the national concert tour for Tom Petty. So it's getting even more air time than it might otherwise. Singlehandedly, he will probably contribute to the upturn in marijuana use in the younger generation.

MR. SOLMAN: The dangers of marijuana are still controversial, of course, and Tom Petty's powers of persuasion are easy to exaggerate, but increasingly, the drug has been seen as a gateway to more perilous substances, at least for some kids. So the team members, who not only smoked but inhaled in their youth, decided on a documentary approach, using real kids with real stories to show how marijuana can mess up your life. The team now has to make the ads and in just six weeks the Partnership will approve them or send Cappelli and company back to the story board. On this day, they were screening their raw footage.

JOE BERLINGER, Documentary Filmmaker: It cannot just be a straight marijuana is bad for you message because that's hypocritical to most of our backgrounds. I mean, it's more like marijuana, you know, marijuana can lead to other things if you have problems at home, if you have -- if you're smoking pot for the wrong reasons, you should watch out.

MR. SOLMAN: So for credibility, the team interviewed kids in treatment for drug use, marijuana in particular.

JOE BERLINGER: We looked for kids who were credible, who were like every kid. Kids aren't going to watch this and then all of a sudden say, no, no, no, that's not for me, you know, like Nancy Reagan thought you could say just say no and the world would, you know, listen. The reality is, is that this might sway somebody who's just tottering and maybe wants to go in and smoke pot with his friend, maybe he'll think twice about it. Maybe that's as much as we can expect from this message.

MR. SOLMAN: Even though they're working for free, the stakes are considerable. Since the Partnership's review board is made up of key ad executives, getting spots chosen is very prestigious. But the executives know how to just say no, as Cappelli learned when he pitched the Partnership on another campaign on dealing drugs.

PAUL CAPPELLI, The Ad Store: It was a close-up of a woman, Hispanic or black, tears coming down her eyes. It's a child's voice-over saying -- while the camera keeps pulling back, pulling back, pulling back as she cries harder and harder, and the kid's voice-over is saying, "My mom, she doesn't have much. As a matter of fact, she's always told me that all she really has is me. And that's why I thought that maybe if I dealt drugs, I could help her out, pay some of the bills, but things didn't go the way I thought, so now my mom doesn't even have me. Sorry, Mom." And you reveal that it's a coffin in the room, and it's a wake, and it's all these women crying as the camera pulls away.

MR. SOLMAN: What was wrong with that?

PAUL CAPPELLI: They thought that they were a little too melodramatic and -- does a kid have to die? And I said, yes, it's drugs. So -- so they said no.

MR. SOLMAN: With the marijuana campaign, Cappelli needs drama, not melodrama. It's now three weeks later, and they're screening the rough cuts.

PAUL CAPPELLI: [in meeting] The question in my mind is: Are we going to need to put some kind of a line at the end on some of the spots or on all of the spots, that basically somehow says, don't smoke pot?

JOE BERLINGER: I would hate for us to resort to having to put up that literal a message, don't smoke pot, because I think -- I don't know if we're trying to say blankly don't smoke pot. I think we're trying to say that, you know, if you have an addictive personality, or if you have problems at home, or if your life isn't going correct, correctly, or the way you envision it, that marijuana should be taken seriously as a drug and can mess up your life.

COMMERCIAL SPOKESMAN: Marijuana got me kicked out of my house - - homeless. I was growing about 37 plants in my closet.

MR. SOLMAN: Cappelli and company are walking a fine line. Adult finger-wagging can make drugs more alluring, but if the ads are too soft, they may be playing down the dangers.

PAUL CAPPELLI: I think just the tone of this stuff, there is no way in hell that you can mistake this for a positive, not in my estimation.

JOE BERLINGER: Well, I mean, we're overstating that we're saying it's a positive. I'm just saying there's no, there's no scare factor like, boy, look what could happen to me.

PAUL CAPPELLI: Scare is, we've tried scare, scare doesn't work. Scared kids say that's bullshit, I'm not scared, I'm a hard ass. I think what is more convincing and compelling is the fear of the life trailing up, trailing away, up in, you know, a puff of smoke.

MR. SOLMAN: It's now December 12th, four months after the campaign began, and Paul Cappelli's moment of truth is about to arrive. He's off to present the final cuts to the Partnership's creative review committee.

AMY MAXIMOV, Partnership For A Drug-Free America: Up next are Joe and Bruce and Paul Cappelli from The Ad Store here presenting on the same strategies we were just talking about, marijuana, thirteen to fifteen year olds, also on a project of real kids in treatment; they approached the issue very differently than the other creative team did, and Paul, take it away.

PAUL CAPPELLI: Joe Berlinger and Bruce Sinofsky, by the way, are two documentary filmmakers. They did "Brother's Keeper," which was a highly acclaimed movie at Sundance and other places, and that's why we thought it was appropriate to do this one in documentary style with these kids. None of these things were scripted. I should just let you know that ahead of time. We'd never wrote a single word down. These are just these kids telling us their stories of what hell marijuana created in their lives.

KID IN COMMERCIAL: I've burnt myself out on marijuana. I took a wood burning kit which is similar to a soldering iron and I burned the word "alone" into my arm. Part of me wanted to die because I imagined that if I was dead, I could somehow see out of my casket if anybody was at my funeral, if anybody was crying, who was there. That's how like sick I was. That's how lonely I felt. I loved marijuana. I did it every day and every night, all day and all night.

SECOND KID IN COMMERCIAL: I was a musician. I swore to myself that I would never sell any of my musical equipment, my guitar equipment, you know, my studio equipment, I would never sell that for anything, and when I was in Sam Ash on Route 4 in Jersey, selling, hawking guitar equipment so I could cross the GWB and go into Manhattan and cop marijuana, I knew I had a problem.

RESPONSE FROM AUDIENCE: It was great.

PERSON IN PARTNERSHIP GROUP: Fabulous.

[applause]

MR. SOLMAN: The last presentation of the day, and it turns out to be a revelation: Credibility sells.

ALLEN ROSENSHINE, Chairman, BBDO Worldwide: We need a media strategy on this. In my judgment -- no, really in my judgment, this is probably the best collection of marijuana spots that we've got, and what I fear --

SPOKESMAN: Absolutely.

ALLEN ROSENSHINE: -- what I fear is that if we send them out as a batch to the stations, that a lot of them will get lost.

DORIA STEEDMAN, Partnership For A Drug-Free America: We intend to launch this with a special press conference and coming off of the news that was released yesterday, there is a particular reason why the media should pay unusual attention to this. Here is their opportunity --

SPOKESMAN: This is what you give weight to.

DORIA STEEDMAN: Exactly.

MR. SOLMAN: Paul Cappelli's success should come as no surprise. He made his name by changing the attitudes of young people toward the new Coca-Cola back in 1985. Cyber spokesman Max Headroom -- a sensation in England, a cult character in the U.S. -- confirmed Cappelli's conviction that advertising can change what young people think is cool and uncool.

PAUL CAPPELLI: But all of a sudden we came out with Max Headroom with this what we called a brown bag strategy. We knew kids were drinking and liking it but were afraid to say so. So we gave them a champion who was sort of an underground counterculture champion who said it's okay to drink it, even though you're hiding it, but that's cool, because you are going against the establishment. And the kids all of a sudden started buying it, and the numbers started to increase almost overnight.

MR. SOLMAN: Now the Partnership's expectations are more realistic, and they're not working for an overnight success.

DORIA STEEDMAN: That campaign should change some people's attitudes about whether marijuana can ever really hurt you. And if the attitude changes, then the usage changes, and that's the sequence that the Partnership has always worked on. First you change attitudes and then usage changes.

SPOKESMAN: Does it change?

DORIA STEEDMAN: We've been tracking attitudes since the beginning of the Partnership, and until very recently, drug use has gone consistently down for years and years and years.

MR. SOLMAN: But the very morning of this meeting, newspapers were reporting drug use on the rise.

MR. SOLMAN: And you attribute the recent spurt to what?

STEVE FRANKFURT, Chairman, Frankfurt Balkind Partners: The dollars being spent to what Allen calls nag, nag, nag have been reduced significantly, and we have seen and I think we have numbers that back this up that when the media weight is there, the line goes this way [pointing down], and when the weight is released [pointing up], the line goes this way, and I think you can track that pretty accurately.

TONY ALGOTTI, Algotti, Thomas, Hedge, Inc.: We don't have the dollars to compete against all the different things that are coming after kids, and I don't think -- I think the drug lords have word of mouth through the media and through movies and through glamorization.

MR. SOLMAN: And so the Partnership is on the counteroffensive with one tangible result already. VH-1 now slurs the word "joint" when it airs the Tom Petty video. Just listen.

TOM PETTY: [video -singing] Let's get to the point. Let's roll another -- [slurring] --

MR. SOLMAN: Now radio stations mock this censorship, perhaps drawing even more attention to the "j" word, but the Partnership has kept pushing and called a major press conference in January with the spot's stars in attendance to air the campaign and convince the media to broadcast the new menace of marijuana.

ALLEN ROSENSHINE: As with all our work, we know ads will not solve the problem alone, but we also know from quantified tracking that we have done since the inception of the Partnership that they do make a difference.

MR. SOLMAN: Do make a difference if, if TV stations play the ads, if they play them often, and if this campaign really strikes a nerve.

MALE TEEN IN COMMERCIAL: If I hadn't stopped smoking pot, right now I'd probably be dead. Once I started smoking pot, I didn't care anymore. I didn't care about any consequences of what would happen to me, so I just started taking other drugs on top of it, you know, and I ended up, I was in the hospital, I overdosed. You know, I was -- I had an IV in my arm, strapped down to a hospital bed with a heart monitor. I said that night I'll never do drugs again, I'll never smoke pot, I'll never do nothing. I woke up. I sold my mother's VCR to go get pot. RECAP

MR. LEHRER: Again, the major stories of this Thursday, the House pressed on toward a vote tomorrow on welfare reform. The Senate votes tonight on the line-item veto bill, and California Gov. Pete Wilson announced a first step toward being a candidate for the 1990 Republican presidential nomination. Good night, Robin.

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