The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I`m Jim Lehrer. On the NewsHour tonight, Tom Bearden and Ray Suarez examine the deal for American Airlines to buy TWA, Defense Secretary William Cohen grants a "summing up" interview, Kwame Holman reports today`s confirmation hearing for Education Secretary- Designate Rod Paige, and Gwen Ifill talks with former President Jimmy Carter. It all follows our summary of the news this Wednesday.

NEWS SUMMARY

JIM LEHRER: American Airlines today agreed to buy Trans World Airlines for $500 million. TWA filed for Chapter 11 bankruptcy, paving the way for the sale. Separately, American will also buy some of US Airways` assets. That carrier is merging with United Airlines. If federal regulators approve the deals, American and United would then control half the nation`s air travel market. We`ll have more on this story right after the News Summary. Rod Paige won bipartisan praise at his Senate confirmation hearing today. The Education Secretary-Designate said he favors letting parents spend federal money on private education when public schools fail. But he declined to call his plan "vouchers," something Democrats generally oppose. And he said the issue would not be a priority. We`ll have more on his hearing later in the program tonight. NATO today announced it would cooperate with investigations into depleted uranium and its possible health effects. It was used in armor-piercing shells that U.S. and NATO forces fired in Bosnia and Kosovo. There have been claims that the slightly radioactive metal caused leukemia among peacekeepers and civilians there. The NATO Secretary- General addressed those concerns in Brussels.

SPOKESMAN: It is entirely legitimate that individual governments should want to know more and to get all the facts. And that is what NATO is committed to doing. Let me underline that there is no link of any kind that has been discovered between the very low levels of radiation found in depleted uranium and the contracting of leukemia. And this conclusion has been supported in the past few weeks by bodies like the World Health Organization and the United Nations environment program with whom NATO has cooperated fully on this issue.

JIM LEHRER: On Tuesday, the NATO ministers rejected the idea of a moratorium on weapons containing depleted uranium. In the Netherlands today, a former Bosnian Serb President surrendered to a W.N. War Crimes Tribunal at the Hague. Ilyana Plasic faced charges of war crimes and genocide. Her indictment said she planned and ordered ethnic-cleansing campaigns during the Bosnian war in the early `90s. She was the first woman brought before the tribunal. Most popular diets help people lose weight but fail to keep it off. That`s what the Agriculture Department has concluded in an ongoing review of weight-loss plans. The Associated Press and other news organizations reported those findings today. The full study will be released tomorrow. It says diets with moderate fat intake and high in complex carbohydrates are the most successful and nutritious. That`s it for the News Summary tonight. Now it`s on to the latest big airline deal, Defense Secretary Cohen, the Paige hearings, and former President Jimmy Carter.

FOCUS - DIVIDING THE SKIES

JIM LEHRER: Tom Bearden begins our airline report.

TOM BEARDEN: Today`s deal brings four major airlines together in a transaction that could change the entire shape of the airline industry. It would also mean the end of TWA, an airline with a glorious past dating back to the 1920s, but a troubled present. TWA, the nation`s eighth- largest carrier, failed to grow significantly in the deregulated era and went into bankruptcy twice in the 1990s. A series of management changes improved on- time operations and upgraded the aging fleet, but the airline lost money in the last nine months. American, in contrast, has been one of the success stories of the deregulated era, with the world`s largest fleet- more than 700 planes- a good profit record, and a large route network anchored by hubs in Chicago, Dallas/Fort Worth, Miami, and San Juan, Puerto Rico. But the arithmetic of the merger isn`t a simple case of addition. There`s also a complex asset shuffle involving United`s pending plan to take over US Airways. That merger would make the nation`s number one carrier, United, even bigger. When it was announced last spring, it set off fears that the new airline would dominate air travel in the U.S. So part of today`s deal is designed to address that. American will acquire some assets from USAir that otherwise would have gone to United. American will get 86 planes from US Air, and gates at Boston, Newark, Philadelphia, Washington, Atlanta, and LaGuardia. In another part of the deal, American would acquire 49% of DC Air, a regional carrier being created to help the United-US Air merger pass muster with regulators. They had expressed fears about DC Air`s lack of independence as a sole creation of United, In addition, American would share with United what is now the US Airways shuttle service between New York and Boston, and New York and Washington. The most important asset American gains from TWA itself is its efficient hub at St. Louis. It also gains nearly 200 TWA Aircraft and some gates at Boston, Los Angeles, and Kennedy. That would give American a new hub to complement its existing hubs. American`s CEO Donald Carty explained his company`s thinking.

DONALD CARTY: What we`re trying to do in consolidating is we`re not trying to eliminate competitors, we`re trying to build a network. Our desire is to be able to say to our customers, we can take you any place, any time in the world. And so we are looking for partners that provide our network with new destinations and new outlets. The size of the markets means that there can only be that many competitors given that number of airplanes and that size of market and that many flights. We are being driven by trying to serve our customers, individuals and big corporate accounts to try to do as comprehensive a job for them as we can.

TOM BEARDEN: The deal must now be approved by the Justice Department.

JIM LEHRER: Ray Suarez takes it from there.

RAY SUAREZ: For more, I am joined by three people who watch the airline industry closely: Darryl Jenkins is director of the Aviation Institute at the George Washington University in Washington, DC; Richard Copland is president and CEO of the American Society of Travel Agents, which represents a worldwide group of travel professionals; and Michael Levine, an adjunct professor of law at the Harvard Law School and former head of the Yale School of Management- he`s worked as an executive at three of the nation`s airlines. Richard Copland, if the deal goes through as it has been proposed today, what will the impact be?

RICHARD COPLAND: It will definitely be anti-consumer, it will be bad for consumers. The track record shows that prices will go up. And services will go down. Right now, we consider airline service and oxymoron -- there is none.

RAY SUAREZ: Well, how can you say that with such certainty when from the looks of things, one of the possible outcomes if this merger didn`t go through was that TWA would continue to move toward bankruptcy?

RICHARD COPLAND: They told us the same story ten years ago when both TWA and Pan Am were ready to go out of business. They controlled most of the European market. Despite what they said, both of those companies went into bankruptcy, the European market has grown and the European market has value because there is competition. Someone will take up TWA`s roots in the event that they are unfortunately required to continue this bankruptcy operation. So certainly their responses are very effective for them, but for the consumer, this is all negative. The consumer will be severely hurt if the government allows these mergers to go through as currently constructed.

RAY SUAREZ: Darryl Jenkins, all negative to the consumer?

DARRYL JENKINS: No. Not at all. There has only been one study conducted that I can remember about mergers and what happens to prices and anti- competitive effects. And, interestingly enough, that was done after the TWA-Ozark merger in the 1980s. It showed a small bump - a small increase in prices, but it was really not that significant and the authors could not determine that it had been due to the merger and it wasn`t just general economic conditions. TWA is on its last breath. At stake here now in terms of the public policy implications are 20,000 jobs in St. Louis that will be gone. That is really the public policy consideration with TWA. TWA doesn`t control any significant part of the market. In St. Louis where it has its one hub, it doesn`t even have the majority of the originating traffic in that market. So in terms of market power, TWA is not a player and hasn`t been a player in a long time. So the public policy implications again are certainly the 20,000 jobs there.

RAY SUAREZ: If St. Louis becomes an American had you been does it become, in effect, Chicago`s fourth airport?

DARRYL JENKINS: Well, I guess it does in the short run. American Airlines really wants another hub in the Midwest. They need one to grow because Chicago O`Hare is maxed out. You can`t get anything more into and out of there. So this gives American airlines a chance to grow in the Midwest that they currently don`t have.

RAY SUAREZ: Professor Levine, in our report, American was called one of the successes of the deregulation era? What is the incentive for them to take over a failing airline?

MICHAEL LEVINE: Well, American - remember that is in the regulated era it was one of the big four airlines with United, TWA and Eastern. Eastern is gone. TWA is a shadow of its former self and is likely to be gone. And since the mid 80s, United and American have each been jockeying on the one hand with each other to see if one of them can become bigger and more of a network - as you saw Don Carty say - and be able to offer more service to more customers and at the same time trying to figure out how to distance themselves from Delta and Continental and Northwest. United thought - with the USAir deal -that it had finally found a way to do that. Despite its very extensive political preparation, it is now looking like that deal will require substantial overhaul to get approval from the Justice Department. So what is clearly happened in my view is that American and United have decided that it`s better to be a big two than to be running with the pack and having the pack kind of gaining on you, American is a good airline. It`s a well-run airline, but it`s trying it achieve a level of dominance that it can`t possible get in the current environment. I think the key to the deal is not TWA, excuse me, TWA The key to this deal is the arrangement it has made with United to divide up USAir and the East Coast. The idea I believe is to develop a very strong position on the East Coast which will be buttressed by the fact that gates and slots and everything else are limited at the big East Coast airport then to hope that the Justice Department will keep Delta Airlines or anyone else, any of the other larger airlines from combining to form an airline big enough to compete with United and American,

RAY SUAREZ: Is it unusual as we see in this proposal for American to in effect help its main competitor, United, become as you say, one of the big two? It looks like they are trying to help them clear some of those regulatory hurdles you mention?

MICHAEL LEVINE: Well, it`s not an act of charity on either part. I think American and United have both decided that had a world in which their principal competitor is the other and, which is an airline they understand how to compete with and don`t use price competition with is a better world than a world in which they have to compete with pesky Delta and Northwest and Continental who have been growing, and who have through forming alliances and so on become more effective competitors to the big two.

RAY SUAREZ: Richard Copland, you`ve heard our other two guests lay out a scenario for rationalizing the skies, the slots, the routes. When a consumer walks into a travel agency or logs on to the web what is going to be different about the landscape they face?

RICHARD COPLAND: Well, basically speaking these two major airlines in my opinion have conspired together to divide up the pie. It`s like kids going behind the schoolyard taking their marbles and you take four marbles and I`ll take four marbles. Consumers will lose choose. These people will dominate and mandate what the traveling public does. The traveling public owns the airways. The airlines don`t own those airways, and this will only make those airlines stronger. They will attempt to get rid of travel agents because travel agents are the only source of unbiased information. Without the travel agent there is no one out there to protect the consumer. That`s basically the game plan. This merger makes them only bigger and stronger. It was my opinion at that the anti-trust trust laws were made to protect the small businesses not make the big businesses supreme.

MICHAEL LEVINE: Could I add -

RAY SUAREZ: Yes, go ahead.

MICHAEL LEVINE: - one comment that I think has been overlooked in the way these mergers are being looked at. Right now we have seen that when a big airline like United or American experience as labor disruption. The system has a great deal of difficulty absorbing the passengers who want to fly on that airline who can`t because of the disruption. If this deal were to go through, I really believe that the traveling public would be enormously vulnerable to United`s and American`s unions because if either of those experienced a job action, there would be no possible way for the rest of the system to absorb the passengers who are inconvenience.

RAY SUAREZ: Well, Darryl Jenkins, we saw just canceled flights and lack of overtime causing severe disruption. What do you think of Mr. Levine`s point?

DARRYL JENKINS: Well, certainly what Mike says about labor disruptions is clearly true, but it is true with or without a merger. We have labor problems now and they do exist. They exist, have existed for the last ten years. These things exist whether or not we have mergers. Now, the only thing I would disagree with is who is pesky on the East Coast. Delta Airlines, Northwest and Continental are not the pesky players on the East Coast. Southwest and Jet Blue are the pesky players. That is what is going to be interesting to watch in the next five years. We know in this year alone, Southwest Airlines has ordered enough planes to double the size of its fleet in the six seven years. As a matter of fact, seven years from now its fleet will be almost as big as American Airlines in terms of what it is using domestically. Now, we know they are going to put some of those planes in Las Vegas and we know the rest of those are coming to the East Coast so the dynamics of the East Coast are going to change significantly because of the role of Southwest. At the same time in JFK, we have Jet Blue, which is a very pesky startup. It has a lot of financing. And instead of going out and buying old tired DC-9`s, they brought brand new Airbus planes so the dynamics on the East Coast are going to be a lot different than they have been with or without mergers going on. That is what is going to be interesting. Now, if I were American and United on the East Coast, I would be more worried about Southwest and Jet Blue, what they are going to do to me than I would be about Delta, Continental and Northwest.

RAY SUAREZ: So you think that even in this era where we`re putting together some huge, huge routes and airlines, that small players can still make a big difference?

DARRYL JENKINS: Yes, first of all Southwest Airlines is not a small player. In terms of passengers carried domestically they are second behind Delta. Delta carries the most passengers. United Airlines flies bigger planes, longer mileage. That is why they are the biggest right now. They are bigger in that sense. Right now in the United States, Delta carries the most passengers. Southwest is the second biggest and United is behind them. So we will never get to the situation where we have just three major players. We will probably if we do go through and have consolidation it`s more likely that we`ll end up with five very large airlines, one of which will be like Northwest, which will be in a inferior position. And they will be competing very strongly against the others because they don`t want to give up any traffic. So whatever it is that will be different than we think it`s going to be.

RAY SUAREZ: Darryl Jenkins, guests, thank you very much.

JIM LEHRER: Still to come on the NewsHour tonight, Secretary Cohen, confirmation hearings for the Education Secretary, and former President Jimmy Carter.

SERIES - SUMMING UP

JIM LEHRER: Now, our summing up interview with Defense Secretary William Cohen, the only Republican to serve in the Democratic cabinet of Bill Clinton. He moved to that post four years ago after serving 24 years as a Republican Senator and Congressman from Maine. Mr. Secretary, welcome.

WILLIAM COHEN: Jim, great to be here.

JIM LEHRER: You met this morning with President-elect Bush and his national security team. How did that go?

WILLIAM COHEN: It went very long, quite long, we spent two hours and perhaps ten minutes during the briefing, but it was a good overview of our strategic position and some of our programs. He was intensely interested in the subject matter and asked very pointed questions and I was quite impressed with his pragmatic type of approach to what can be an exercise in lots of acronyms and some fairly esoteric subjects, but he went right to the heart of the matter on quite a few issues.

JIM LEHRER: And this was in what you all call the tank at the Pentagon, right? Tell us what that is.

WILLIAM COHEN: It started in my office for the first 45 minutes; then we moved to the tank, which is really the room where the joint chiefs meet to discuss issues on a daily basis.

JIM LEHRER: And it`s all - the wire stories said that you ail had prepared for Mr, Bush a file that was so secret you couldn`t even say what was on the outside of the file?

WILLIAM COHEN: He got a secret briefing. He certainly -

JIM LEHRER: Briefing about military commitments all around the world.

WILLIAM COHEN: Commitments, strategic relations, strategic capabilities, basically an overview of our military power and our commitments and looking at some of the hot spots that he will have to confront.

JIM LEHRER: Did he bring up the subject that he brought up during the campaign, that he believes the Defense Department needs a review from top to bottom?

WILLIAM COHEN: That didn`t come up but certainly every President who comes in needs to look at the Defense Department and other agencies, but certainly to see whether or not there are things that can be done differently or better or improved. He should do precisely that; I think that that is something that his team has been wanting to do and I certainly think that it`s a wise thing to do.

JIM LEHRER: If he does this, what he is going to find that he`s not going to like?

WILLIAM COHEN: Well, I think he will find a lot that he will like in terms of where we were just a few years and where we are today. When I took this job, I was told that the budget was fixed. It was fixed by the highest, at the highest member between the Executive Branch and the Congress, and that would be it for the foreseeable future. 18 months later I was able to work with President Clinton and his team to propose an increase of $112 billion over the future years defense spending, which is roughly a six-year period. Today I announced that we have actually doubled that number. So it`s roughly $227 billion that will be allocated to future years defense spending over and above where we were. So he`ll have much to say -that`s a pretty good gift to be looking at in terms of what we`ve been able to do. He will see a force that is highly trained, very well well-equipped and really ready to do the job that needs to be done. There will be some deficiencies, we have a big bough wave coming in terms of some of the -

JIM LEHRER: What`s a bough wave?

WILLIAM COHEN: A bough wave is the spending that is required to pay for the programs that are on the books right now that we are developing. It will have a very big bough wave coming. They have to pay for it. One of the way that is have to look at paying for it will be more base closures, which we were unsuccessful in getting.

JIM LEHRER: Did that come up today?

WILLIAM COHEN: No, it didn`t come up today. But there are many areas he will look at. He has indicated, for example, he wants to look at all of our tactical aviation programs. That is fair enough. He`ll have an opportunity to examine them, and other programs that are currently scheduled to be developed and he will have to make a decision based upon the recommendation of Don Rumsfeld and others what - on what he intends to do.

JIM LEHRER: As you know, during the campaign he said he was concerned about the readiness of the US military. How do you respond to that? What kind of military are you handing over to President-elect Bush and his Defense Secretary, Donald Rumsfeld, as far as its ability to cope with the military threats to our country?

WILLIAM COHEN: We are handing over the finest military in the world. There is no peer competitor - and unlikely to be a peer competitor anytime soon. We have a military that certainly is stretched, because the numbers have come down since the end of the Cold War rather significantly.

JIM LEHRER: Amount of money spent, right?

WILLIAM COHEN: The numbers in terms of the size of the war chest - they have come down fairly significantly. We had cut I think too deeply into the procurement budget and now that`s going to back up. One of the things we`ve been able to achieve was to go from $43 billion annually up to over 60 now and it`s climbing up to 70 in the near future. And we`ll have to go higher to pay for these new systems, but we have got a very highly educated, highly motivated, well led military and the first of the forces that are on the front lines, they are very ready. Some of the second tier, third tier we have to address those readiness problems there; we have to have more training, more equipment, more modernization. That will be pending down the line for him.

JIM LEHRER: Some of your critics - as I`m sure you know, Mr. Secretary - have said that what you still have over there is a defense establishment and a military that is all equipped and all ready to fight a war that isn`t going to happen, in other words, the Cold War, the kinds of things in Eastern Europe all of that has gone away.

WILLIAM COHEN: It`s simply untrue. The fact is we had to fight a wave in Kosovo - the most successful air campaign in the history of the world. We did that with our existing systems. We have to develop new systems in order to take into account the kind of new threats, no doubt, but you have to contend with a Kosovo. We still have to contend with a Saddam Hussein; he hasn`t gone away yet. We still have to be ready to deter any power that might want to challenge us. So we have to have a deterrent capability. We also have to modernize and anticipate what kind of threats we`re going to face in the future. Cyber warfare - that`s something that we are devoting a lot of-

JIM LEHRER: What is cyber warfare?

WILLIAM COHEN: Attempts - we know about computer hackers, teenage hackers who are going on joy rides on the Internet. Well, we also -

JIM LEHRER: How in the world will the US military get involved in that?

WILLIAM COHEN: Well, because we have had hackers who hacked into DOD systems and some of our secure systems. We have to protect these systems. The critical infrastructure that -- looking at not only DOD but certainly at all of our commercial enterprises as well, but the critical structure of the Department of Defense, which is linked to all of our private enterprises as well. But you have now dedicated professionals from various countries who you now training in order to be able to shut down our transportation system, our financial systems.

JIM LEHRER: Do you know this for a fact?

WILLIAM COHEN: Absolutely. So we have got to protect these critical infrastructure systems and we have devote resources to that. The spread of chemical and biological weapons as well as nuclear weapons, missile technology - all of those are continuing to spread. And so we are going to have to look at whether we need a missile defense system, which President- elect Bush has committed his administration to develop. What is it going to look like? How big? What is the scope? What is the purpose? So we have a number of things that we are doing but this is not a Cold War military. If you look at the Navy, the Marine Corps, the Marines with their urban warrior program looking for how to deal with urban conflicts. The Navy going to a smaller more capable type of force, fewer deployed, less manpower required - if you look, at the army now in its transition going to a lighter, more easily deployable - sustainable force, all of this is underway and President-elect Bush will have an opportunity to build upon that momentum that has been generated.

JIM LEHRER: You know, Rumsfeld is a supporter of a missile defense shield system as well. Are they wrong about this, Mr. Bush and Mr. Rumsfeld?

WILLIAM COHEN: Well, the threat is certainly there and growing.

JIM LEHRER: What is the nature of the threat, in simple terms?

WILLIAM COHEN: In simple terms we have countries who are acquiring a long range missile capability - countries such as Iran, North Korea. We still have Saddam Hussein should he ever get out from the sanctions without requiring the inspection requirements - could develop a long range missile capability as he tried to do before.

JIM LEHRER: Long range - it could hit targets in the United States?

WILLIAM COHEN: Absolutely. He can`t do it now, but he could were he unconstrained by the kind of sanctions that are in place now and the restrictions upon him developing his military capability. So that is, you have, you have proliferation of missile technology so you are going to have more and more players who have that capacity to put at risk some of our forces in the field but certainly also try to intimidate us from carrying out our conventional and global responsibilities.

JIM LEHRER: So it is a new world, is it not?

WILLIAM COHEN: It`s a grave new world in many situations, but I think that the new administration coming in is going to face up to it and they will look to see what kind of a national missile defense system is desirable and capable of being developed and deployed consistent with dealing with our allies as well. And that`s something he`ll have to take into account.

JIM LEHRER: If they ask you for your advice, what would you tell them about a missile defense system?

WILLIAM COHEN: Well, I would sit down and explain what I have supported in the past, I believe that President Clinton in supporting a limited defense capability against a limited type of attack is the way to go, but President-elect Bush has indicated he wants something more expansive.

JIM LEHRER: You made a speech today at the National Press Club here in Washington, and you spoke about your concerns about Russia reverting to the past? What`s that all about? What caused you to be concerned?

WILLIAM COHEN: Well, Russia is going through a very difficult transition period right now. According to some of the intelligence estimates, they are going to experience difficulties in terms of their economy, social problems that will continue to mount. The health situation has not been great in Russia. So there are many, many problems. You have a new President, President Putin, who has sent somewhat mixed signals in terms of what he seeks to do.

JIM LEHRER: I took it from your remarks today you are not too hot about him, am I right? Did I read that correctly?

WILLIAM COHEN: Well, I think that he, he certainly is a man with single- minded focus. I don`t at least in my meeting with him I didn`t see him as a great strategic visionary as such. I think he is coping with a very difficult situation. But I am troubled by the fact that it appears he is trying to curtail or shut down the media. The free and open discussion of ideas, I`m concerned about the control that he would seek to apply to countries like Georgia; that there may be an effort to apply a strong-armed tactic in supplying oil and gas and energy supplies to the former republics of the Soviet Union and bring them back into line. I think there is a mixed message there. We have to try to encourage him to pursue one of integration with Europe and a better relationship with the United States.

JIM LEHRER: Did you bring that up with Mr. Bush today?

WILLIAM COHEN: In passing, a number of issues yes.

JIM LEHRER: How difficult was it being a Republican in the cabinet of a Democratic President?

WILLIAM COHEN: It wasn`t difficult at all. President Clinton made it clear that my role was to focus on national security. And he and his entire administration never once attempted to inject politics into any of our deliberations, and so it was very easy for me. I had the ability to go back up on the Hill to my former colleagues and to talk to Republicans and to Democrats and they all understood that I was playing it straight down the line. There was only one issue with the national security. It was a great relationship that I have with President Clinton; Sandy Berger, Secretary Albright, the whole team it was a wonderful experience.

JIM LEHRER: Were you ever confronted with a situation where you had to make a decision that you felt might be good for a defense policy or whatever and for President Clinton and yet might be harmful to your party, the Republican Party?

WILLIAM COHEN: I never took party politics into consideration. I, the only thing I looked at what is good for the country, what is in the best interest of our national security? What obligation do I have I to the men and women who are serving us? That is only the consideration I had, not to my party and no political considerations.

JIM LEHRER: Was there any asset gained by your being a Republican in a Democratic cabinet, if they mentioned just the opposite in the incoming cabinet of President-elect Bush?

WILLIAM COHEN: I think so. Others will have to judge that but I found myself in a really unique position being able to go to my former colleagues on the Republican side and still having credibility with the Democrats being part of a Democratic administration. And there never was a question raised about my - whether I was playing it one way or the other. So it was a totally wonderful experience for me.

JIM LEHRER: What was it like working for Bill Clinton?

WILLIAM COHEN: I enjoyed it very much. He is truly a unique individual. He has an incisive mind - a curious mind. He is intellectually stimulating to be with. He has penetrating insight into issue that is I think is unique.

JIM LEHRER: How did he function as commander and chief of the military?

WILLIAM COHEN: Very well. On every issue that we presented to him, he had the ability to go right to the heart of the matter. He would ask penetrating questions. He would put us all on our toes, make sure that we had answers to questions. He was always well briefed. I think he did a splendid job and one that has served this country well.

JIM LEHRER: What are your plans immediately and in the long-term?

WILLIAM COHEN: Well, I plan to try to take advantage of 31 years of public service, to become a consultant, to start my own little group and try to give advice and insight to people who would be interested in doing that in terms of doing business internationally or nationally.

JIM LEHRER: Interested in reentering politics?

WILLIAM COHEN: No, my career in politics I think is, has come to an end. I`ve enjoyed every aspect of the mayor of my hometown to being an assistant county attorney and Congressman, Senator and now this. This has been the best for me, the most rewarding experience of my life and I`m grateful to President Clinton for giving me this opportunity and it`s something that I`ll never forget and I hope to continue to be able to provide support to my wife Janet, who will be serving in the USO that we can continue to support our men and women who are serving.

JIM LEHRER: Mr. Secretary, thank you very much. Good luck to you and thank you for coming on your program.

WILLIAM COHEN: Thank you, Jim.

SERIES - CABINET CHOICE

JIM LEHRER: Now, today`s confirmation hearings for Education Secretary- Designate Rod Paige. Kwame Holman reports.

PRESIDENT-ELECT GEORGE W. BUSH: Good afternoon.

KWAME HOLMAN: Within moments of being announced as George W. Bush`s choice to head the Department of Education, Houston School Superintendent Roderick Paige set out a vision of public education.

ROD PAIGE: Secretary of Education-Designate: When we set high standards for our schools and our children and we give our schools and our children the support they need and hold them accountable for results, public education can get the job done.

KWAME HOLMAN: The son of a Mississippi librarian and a school principal, Paige earned a bachelor`s degree from Jackson State University, and master`s and doctorate degrees in physical education from Indiana University. Moving to Houston, he coached the football team and served as athletic director at Texas Southern University. In 1984, he became dean of its School of Education. He was elected to Houston`s Board of Education in 1989, and five years later became superintendent of schools. During the 1980s, the former Democrat worked for Republican candidates, including George Bush, Sr.`s presidential campaign. He met and became friendly with Governor Bush when both men worked on a mentoring program in Houston. But Paige hasn`t always agreed with Governor Bush. He openly criticized Texas`s lack of assistance for construction projects and modernization plans for deteriorating schools. The Houston Independent School District Paige still oversees is the largest in Texas and seventh largest in the nation. It was in trouble when Paige took over, and he`s credited with helping turn it around. Paige ended the practice of promoting students despite failing grades. Under his leadership, the percentage of Houston`s students passing state achievement tests rose from 37% seven years ago to 73% now. Houston`s schools rank among the highest performing in Texas. Paige also added security measures in city schools, employing random metal detectors and video cameras. Violent crimes in schools have dropped 20%.

ROD PAIGE: The bottom line is our buildings are old, our space is limited, and we`ll have to address that at some point.

KWAME HOLMAN: Three years ago, voters showed enough confidence in Houston`s schools to back a $678 million school construction bond. But Paige also has drawn criticism. In 1996, he created a program that allowed students from overcrowded city schools to attend private, secular schools at school district expense. Critics labeled it a voucher program. Paige`s initiative to evaluate school administrators` performance based on their students` performance on statewide tests also drew fire. Critics say it encourages teachers to teach the tests rather than a substantive curriculum. This morning on Capitol Hill, Roderick Paige was questioned on those and other issues as he began the confirmation process with a hearing before the Senate`s Labor and Education Committee. The committee`s temporary chairman, Edward Kennedy of Massachusetts, quickly got to the education policy he and other Democrats most oppose: School vouchers.

SEN. EDWARD KENNEDY: Do you feel that taxpayer dollars should be spent on improving public schools, or will you make private school vouchers a priority?

ROD PAIGE: I am a passionate promoter of public education. My job as school superintendent in Houston was to make the point that urban public education- and through emphasis, rural public education- can get the job done given the right certain circumstances. The term "vouchers" presented, that I read in the papers... has acquired such a negative tone that I never use it.

KWAME HOLMAN: Paige went on to explain that partial payment of private school tuition is only part of providing a choice in Houston`s school system.

ROD PAIGE: I do believe in parental choice, and I think that parental choice is a necessary condition to effective public education. But choice has many forms. Magnet School Choice that we have in Houston... about 20% of our students choose to go to various magnet schools inside the Houston Independent School District. We have m-to-m choice. Transfers for 15% of the students take advantage this type of choice. This means that if you are attending a school where your ethnic membership is in the majority, you are free to attend the school where your ethnic membership is in the minority. Charter schools, the Houston Independent School District operates about 20 charter schools. There are about 10,000 students enrolled in those charter schools. Those schools are chartered by the Houston Independent School District. Although they are operated by independent operators, they are nonetheless a part of our system. And those 10,000 students are our students; although they are educated in these charter schools, we are still responsible for them. And we arrange for them to be provided services through these charter schools, but we do not shed ourselves of the responsibility of the education of these children. I think that there`s room for us to talk about this, and I`m willing to hear and eager to hear your views, because I know inside the interests of the common good, that we can find a way to make public schools work.

KWAME HOLMAN: New Mexico Democrat Jeff Bingaman noted that Paige supports George W. Bush`s call to give public schools a chance to improve before private school vouchers are offered to parents.

SEN. JEFF BINGAMAN: We haven`t had the commitment in Congress that is essential to put funding there, so that states can assist failing schools. You support doing that.

RODERICK PAIGE: Absolutely. May I give you an example -

SEN. JEFF BINGAMAN: Please.

RODERICK PAIGE: - of how we operate that in the Houston Independent School District? We have a budgeted fund called the Targeted School Fund, and this fund is there specifically to help students... I mean schools who are having some difficulty meeting their achievement targets. We bring those schools in and we talk to them and we ask them about their ideas about closing the gap. And when they provide for us strategies that might cost more than the normal funding, then they convince us that these are ways they are going to improve the operation, then we fund them. And that funding goes over and above the typical funding, the traditional funding they would get. So not only do we need to identify them as in need, but we need to also provide the technical assistance that they need in order to close that gap. If there is some specific time they are still unable to achieve, then we have to make some change at that point.

KWAME HOLMAN: But Minnesota Democrat Paul Wellstone was concerned about President-elect Bush`s call to withhold federal funds from schools whose students don`t perform well on national standardized tests.

SEN. PAUL WELLSTONE: I don`t know one study that comes from people that are doing testing that says anything other than you don`t rely on one test. You have multiple tests in order to have accountability. That`s what you need to do. I mean, there is all the debate about whether or not this has led to more drop out, there`s all debate about whether or not who passes these tests, who doesn`t pass these tests. But the other question is, it is an abuse of these tests to only use one test to determine whether a kid goes from third to fourth grade, eighth to ninth, or graduates. My question for you again is, because I told you about it earlier, will you make a commitment that the federal government will not tell a school in Minnesota or a school district in Minnesota, "if you don`t rely on... if you don`t use standardized tests to determine how you`re doing, we are going to cut off federal funding." Will you make a commitment you won`t leverage federal funds that way?

ROD PAIGE: Senator, I do agree that one test offers very little information. You need multiple tests to be... to make valid - to draw valid conclusions. I do agree with that. But I`m concerned a little about the negative tone that tests have generated across the country. And the purpose of the test is not to deny people things or to bring about negative impact. The purpose of the testing is to determine whether or not we`ve been effective in whatever efforts and methods that we`re using.

KWAME HOLMAN: Paige`s confirmation as Education Secretary seems almost a certainty. If so, he will be the first who actually has run a school system, as well as the first African American secretary.

CONVERSATION

JIM LEHRER: And finally tonight, a conversation with former President Jimmy Carter. Gwen Ifill talked with him yesterday.

GWEN IFILL: President Carter`s 15th book, "An Hour Before Daylight: Memories of a Rural Boyhood," tells the story of growing up as a Georgia farm boy during the Depression. He joins us today to talk about the book and perhaps, about a few more current events, as well. Welcome, President Carter.

PRESIDENT JIMMY CARTER: Good to be with you.

GWEN IFILL: Your 15th book, as I just mentioned. Why did you choose, this time, to write about your childhood?

PRESIDENT JIMMY CARTER: I really started taking notes on my memories of my childhood, maybe ten years ago. And as I had thoughts about an interesting event or person, I just typed it out on my computer. And my first thought was just to make it available to my children and grandchildren as kind of a family memoir. But later, I saw that there were some significant themes here that were really likely to be interesting to a broader audience. One was, how did people actually live during the Depression years? How did sharecropping come into being so favor? What was the aftermath of the Civil War? And secondly, how did white and black people live together on a farm, in such extreme intimacy? That would be very rare in these days. What was the devastating impact on African American families life of living, not only in abject poverty, but also under the restrictions of separate but equal ruling of the Supreme Court? And the third thing was that I came out of this environment, which will be strange to almost everybody in these modern days, and ultimately became President of the United States. And I wanted to think in my own mind and describe very clearly who were the people that shaped my life.

GWEN IFILL: But you write very candidly about how you live a separate but unequal life?

PRESIDENT JIMMY CARTER: Exactly.

GWEN IFILL: How did that prepare you for the life you have now, since then, lived?

PRESIDENT JIMMY CARTER: Well, the separate part was not accurate, because we lived as completely integrated, personally, as two people could be. I lived in an isolated community called Archery. I didn`t have any white playmates; all my playmates were black children. We worked together, we fought with each other, we wrestled, we made toys, we fished on the creeks together. My mother was a registered nurse who quite often had 20-hour duty, and my father was very busy and away a lot. So I spent a lot of nights with the nearest neighbors of ours, Rachel and Jack Clark, who were African American. So I was really raised by, and shaped by, my intimacy with the African American neighbors on our farm.

GWEN IFILL: You tell a story about your best friend as a child, AD. And it`s an interesting story about how you went to the movies together. Would you tell it for us?

PRESIDENT JIMMY CARTER: Sure. Well, AD and I were inseparable. We did everything together. And on a rainy day on occasion, two or three times in our early life, my father would let us off to go to the movie. The train - Seaboard Airline Railroad - was just 50 yards in front of my front door. So we would go up a half a mile up the railroad track and put down a little red flag, and an engineer would see it and stop to pick us up to take us Americus, ten miles away. And we would go there hand in hand, get on the train. He would go to the colored-only section, and I would sit in the white section. We would drive to Americus on the train and get off, walk down the street, side by side, hand- in-hand as buddies, get to the movie theater, go our separate ways. He would go way up on the third floor with the very steep aisles and very narrow seats, and I would go to the more luxurious part for white folks. Then after the movie was over, we`d get back together, separate ourselves on the train and go back home. So there was no doubt that we were the closest possible friends, but separated by the Supreme Court`s separate-but- equal ruling when nothing was indeed equal - because AD`s uncle and aunt, with whom he lived, couldn`t vote, and they knew it. They couldn`t serve on a jury, and they knew it. AD couldn`t go to the nice white schools, and he knew it. But still, outside of those legally restraining factors, AD was the closest friend I`ve ever had in my life.

GWEN IFILL: At some point, you all began to realize that your lives were not really on the same path. When did that dawn on you and how did that affect your friendship?

PRESIDENT JIMMY CARTER: You know, we never had any thought about that, any semblance of inequality, until I was about 14 years old and so was AD and another friend of ours whose name was Edmund Hollis, AD`s first cousin. One day we came out of the woods on our farm, and we walked out of the pastures to the pasture gate and AD and Edmund went first. They opened the gate and when I got there, they stepped aside to let me go through the gate first. And thought it was a trick. I thought they had a trip wire there or something that I would stumble and fall on the ground, and they would have a laugh at my expense. But it wasn`t. And I guess that their parents somehow had relayed to them that when you reach a certain age in a segregated society, that there should be some distinction between white people and African Americans. And we still played and fought with each other and played baseball and so forth, but from then on they deferred to me and treated me as in a superior way, which was really hard for to us comprehend. And then, by that time we were 14,1 guess we were approaching maturity in some ways. I mean, I had more of an interest in my white classmates, including, you know, girlfriends for parties and playing on the basketball team. So...

GWEN IFILL: And that`s when the separation began.

PRESIDENT JIMMY CARTER: That`s the separation, but it kind of drew a line between us based on race, I`m afraid.

GWEN IFILL: This book takes us as far as your going off to the Naval Academy. And of course, a lot of us are familiar with what happened in that big swath afterward: The statehouse, governor`s office, presidency. But you have made an incredible new life for yourself post- presidential. I understand you talked to President Clinton this weekend. What kind of advice do you give him leaving, as young as he is, from the White House?

PRESIDENT JIMMY CARTER: (Laughs) Well, he doesn`t need advice from me, of course. I`ve seen in the news reports that several times he has said that what we do at the Carter Center is a very good example of the kind of life that a former President should lead, which is a compliment to us. I`ve talked to him about it a couple of times, and I hope that when he does make a decision to set up some kind of an institute or center or foundation and has some interesting projects to undertake, that he might ask me to join him as a partner or that he might be willing to let me invite him to join me as a co- chairman, for instance, on some of the programs that the Carter Center has. We now are very active in 65 different nations in the world, 35 of which are in Africa. So we have a heavy investment in Africa. And I would be delighted if President Clinton, after he leaves office, would decide to help me in one of the projects.

GWEN IFILL: You`ve also made a reputation for yourself as an international election monitor, yet you said that you wouldn`t have even stepped into Florida. You wouldn`t have even touched that.

PRESIDENT JIMMY CARTER: No.

GWEN IFILL: Can the United States still be a beacon of democracy in this way, in the electoral process, after what we`ve been through?

PRESIDENT JIMMY CARTER: Well, I think as a matter of fact the United States still a beacon of democracy to most people in the world. This past year, the Carter Center monitored six elections in the world. Three were in Latin America and the others were in Asia and Africa. But we have certain minimal standards in a country before we will go in there at all. And we would not dream of going into a country that had election laws like ours, where there is such a vast chasm in some central nonpartisan or bipartisan agency deciding on election arguments. And also, where every precinct, every voting place can have a separate kind of voting mechanism, and where the interpretation of what is a good vote or a bad vote depends, almost exclusively, on local officials` prejudices. So we require uniformity in the type of voting and in the standardization of what is a good vote, and we also require that a central election commission be available, on a nonpartisan basis, in order to make judgments during a contest period immediately before, during, or after an election.

GWEN IFILL: I imagine you`ve also been watching with some personal interest the last-minute negotiations to try to come up with some sort of settlement in the Middle East.

PRESIDENT JIMMY CARTER: Yes, I have.

GWEN IFILL: You have made it clear that you feel like you your help in this matter had been shunned by the Clinton administration. Do you think there is a way that you could have contributed so we would not be at the impasse we are at today?

PRESIDENT JIMMY CARTER: Well it`s hard to go back in history. I don`t think there is any doubt that President Clinton has done the best he probably could, and he has elevated the issue of Mid East peace to a very high level. There were times all during President Bush`s administration that the Carter Center was called upon to do specific things that were suitable for a non-governmental organization to do. I went regularly to the Middle East. I met with all the leaders, including the PLO Leaders, Arafat, before the United States Government would do so. I met regularly with President Assad in Syria, and so forth. But I haven`t had a chance to do any of that in the last eight years. But I think there have been times, maybe during this past eight years, when I was actually asked by President Assad to explore the possibility for progress, but President Clinton and his negotiators were playing a full role in that, and there was really no place for us to act.

GWEN IFIEL: Assuming for a moment that a Republican President- elect would ask a Democratic ex- President for advice, especially in this transition period, what could you offer him? Have you talked to President- elect Bush since this election?

PRESIDENT JIMMY CARTER: Yes, I have.

GWEN IFILL: What would you offer to him as he walks into this brand new... two former southern governors, you-him, what do you think?

PRESIDENT JIMMY CARTER: First of all, not to interfere in his administration.

GWEN IFILL: Naturally.

PRESIDENT JIMMY CARTER: But I think the main thing, regardless of what we think about the procedure that was used in Florida, that he was declared by the Supreme Court to be elected, that he is now my President and the President of all Americans. And whether he realizes it or not- and he may not- I think almost unanimously, the American people wish him well. They want him to be successful, and I think if he reaches out to the American groups who did not give him any support, if he reaches out in a genuine fashion, I think they would respond positively, and that would include not only some alienated Democrats, but I think African American community, the Hispanic community and others... the working people of very low income, I think they want him to be successful as a President.

GWEN IFILL: But there seems to be so many bad feelings left over among Democrats, especially about this. How do you begin to paper over, to heal those wounds, do you think?

PRESIDENT JIMMY CARTER: Well, the question asked me is what I would do. What I would tell him, I would tell him what I just told you - that people want him to be successful, and I will get to the inauguration, by the way. Well, I think he still has a ways to go. Because his choice of Mrs. Chavez and of John Ashcroft, and two extremely sensitive people for poor people, working people and minority groups- I think have perhaps, unfortunately, been his most conservative choices - and I think they.,, their choice has not sent a signal yet that "I really want to be reconciled with you. I want you to realize that I am your President just as much as a Democrat would have been." But that is not an unsolvable problem. It`s just a first initiation before he becomes President, and I`m sure that after he is President, one of his main goals will be to reconcile himself with those groups that didn`t give him support in the election.

GWEN IFILL: 15 books down and the 16th you are already working on.

PRESIDENT JIMMY CARTER: Yes.

GWEN IFILL: Thank you so much for joining us, President Carter.

PRESIDENT JIMMY CARTER: I`ve enjoyed it very much.

RECAP

JIM LEHRER: Again, the major stories of this Wednesday: American Airlines agreed to buy Trans World Airlines for $500 million. Here tomorrow evening. I`m Jim Lehrer. Thank you and good night.