The NewsHour with Jim Lehrer

MR. LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, a Newsmaker interview with Ross Perot; a report and a discussion about sweatshop labor conditions here and elsewhere; "Where They Stand," candidates Dole and Clinton address the nation's governors; and Susan Kuhn of "Fortune" Magazine explains the last two days on Wall Street. It all follows our summary of the news this Tuesday. NEWS SUMMARY

MR. LEHRER: Wall Street rebounded today from yesterday's huge loss. At closing, the Dow Jones Industrial Average was up 9 1/4 points at 5358.76. It had lost 161 points yesterday. Analysts said today's recovery was caused partly by some good news economic numbers. The Federal Reserve reported industrial production was up .5 percent last month, and the Labor Department said the Consumer Price Index rose only .1 percent in June. An increase in food prices was offset by a sharp decline in energy costs. We'll have more on the stock market later in the program. President Clinton today allowed a Cuba sanctions law to go into effect, but he delayed the right to file lawsuits against foreign companies in Cuba. At issue are properties owned by Americans that were seized by the Cuban government after the 1959 revolution and then re-sold. The new law would allow the U.S. claimants to sue their current owners. Deputy National Security Adviser Sandy Berger explained why the President wants to suspend the lawsuits until next year.

SANDY BERGER, Deputy National Security Adviser: During the next six months we will work vigorously with allies and with foreign companies to build support for a series of steps to promote democracy in Cuba. At the end of this six months, the President will decide whether or not to renew the suspension on filing suits either in whole or in part based upon progress that has been made and steps that have been taken by companies and countries to join in helping to promote democracy in Cuba.

MR. LEHRER: Some members of Congress did not like the President's decision. Congressman Dan Burton, Republican of Indiana, co- sponsored the Cuba sanctions bill.

REP. DAN BURTON, [R] Indiana: President Clinton has, in effect, caved in to foreign interests, foreign companies, who have bought stolen and traffic in stolen American property. We think this is a terrible message to send. We think it gives aid and comfort Fidel Castro. In the bill, it says very clearly in the report language that the President could not suspend it unless it was in our national interest and unless it was going to promote democracy in Cuba. We do not believe that what he has done in any way promotes democracy in Cuba, and it certainly does not help the national interests of the United States, or those people who had their property stolen by Fidel Castro.

MR. LEHRER: Britain's foreign secretary today welcomed President Clinton's delayed decision, but a spokesman for the European Union said it did not go far enough. President Clinton and Bob Dole each talked to the nation's governors today by satellite. Both spoke of welfare reform in addresses to the National Governors Association Meeting in Puerto Rico. Dole criticized the President, saying he had taken too long to approve state experiments with welfare benefits. Mr. Clinton announced the issuance of an executive order to link work and welfare benefits. It would take effect if Congress does not act on welfare reform this session. We'll have excerpts from both speeches later in the program. At a Whitewater trial in Little Rock today senior White House aide Bruce Lindsey denied concealing illegal cash withdrawals to help re-elect then Gov. Bill Clinton in 1990. Lindsey was treasury of the Clinton campaign. Two Arkansas bankers are on trial for financial violations in that campaign. Lindsey testified today as a defense witness. He has been named as an unindicted co-conspirator in the case. Vice President Gore met with Boris Yeltsin today. Gore said the Russian president looked very good. A meeting scheduled for yesterday was postponed because Yeltsin said he was tired. The two talked for 45 minutes today at a health resort near Moscow, where Yeltsin is resting. Gore said they discussed Yeltsin's re-election and the renewed fighting in the republic of Chechnya. And that's it for the News Summary tonight. Now it's on to Ross Perot, sweatshop labor, "Where They Stand," and the stock market. NEWSMAKER

MR. LEHRER: We go first tonight to a Newsmaker Interview with Ross Perot. Last week, he said he was running for President again, this time, if selected, as the nominee of the party he created, the Reform Party. Mr. Perot, welcome.

ROSS PEROT, Reform Party Presidential Candidate: How are you, Jim?

MR. LEHRER: Just fine, sir. And you are definitely running for President, or at least for the nomination of your party, the Reform Party, is that correct?

MR. PEROT: Yes. The people who have created this party will make that decision. They wanted me to participate. I'm glad to participate. I've worked night and day on this since 1992. And the thing that I am determined to do with everything I can do to contribute is to make sure we pass on a better country to our children. And right now, we're spending their money, as you know, and as I mentioned before, if I ever have a really bad day, all I have to do is go to page 25 of President Clinton's 1995 budget and read that the next generation to be born, a little baby born tonight, will pay an 82 percent tax rate, and that's a forecast by the President of the United States after the largest tax increase in history.

MR. LEHRER: And you believe, you as President of the United States can erase that page or erase that notation or do something about that?

MR. PEROT: I believe that the people, if they will reassert themselves as the owners of this country, if they will not allow themselves to be manipulated by little one-minute sound bites, if they will not cave into free candy just before elections, if they will act as the owners of this country, and if they will carefully vote their consciences based on hard facts and information, as opposed to sound bites, then in our party we will endorse in every House and Senate race in the country the candidates from the Democrats or Republican Party or other candidates who are committed to the reforms that are necessary to put our country's house back in order. We can be the swing vote in about 100 percent of those races. If we do this properly, in 1997, we can have a House, a Senate, and a White House carefully, thoughtfully, and rationally working together as a united team to solve our country's problems, and that will be a big step forward over government shutdowns, train wrecks, fights on the floor of the House, and the kind of stunts that we've been watching for the last year or two.

MR. LEHRER: Where do you stand now on your personal desire to be President of the United States?

MR. PEROT: My desire is to do whatever I can to leave a better country for our children. I'm probably the luckiest man alive in this country when you look at where I came from, when you look at the parents I was lucky enough to have, when you look at the opportunities I've had, the family I had, the great children I have, the business success I've been fortunate enough to have, if anybody should work night and day during the critical period before we go over the edge of a financial cliff, and that day is coming, Jim, if you drink too much, your liver goes. You don't know when. If you smoke too much, your lungs go, you don't know when, and if you spend too much and Lord knows, we are binge drinkers on spending, then sooner or later, you will pay the price and millions of people will be devastated. I lived in the Depression as a child. The Depression I lived through will be a cake walk compared to the next economic meltdown because our government was in good financial shape when we went into the Depression and could be a positive force for getting us through it. This time around with a $5 trillion debt, with spending out of control, with the OMB forecasting one year increases in the deficit of $1.4 trillion by the year 2020 and up to $4.1 trillion increase in the debt annually by the year 2030, it's obvious we have got to take careful, thoughtful, rational action now to solve these problems. Stunts don't do it.

MR. LEHRER: Yeah.

MR. PEROT: Jim--

MR. LEHRER: What do you--

MR. PEROT: Excuse me.

MR. LEHRER: Well, I was just going to say, what do you say to those like say Senator Dole and the Republicans in Congress and President Clinton and the Democrats in Congress who say, wait a minute, Ross, we heard you in 92, we passed deficit reduction, we've cut back on federal spending on all of that, what do you-- how do you--what do you say to that?

MR. PEROT: I say, well, why do the numbers that you print that are the official government numbers, if they were on the instrument of an airplane, you would eject immediately because these numbers are so catastrophic, if you've solved all the problems, then why do all your numbers show that it's only a temporary solution, that after the year 2000, the debt takes off like a rocket, and literally, when you've got a forecast in the year 2050, you'll need 40 percent of the worker's paycheck just for Social Security from the federal government? It's obvious we've got major problems that must be solved now. Our core problem, Jim, is that you get elected in America by being a good actor. It has nothing to do with substance, has nothing to do with results. But if you're a really good actor, you have a good chance of getting elected. That's the- -the real bad news, though, is after you get elected at acting, you tend to just keep on acting after you get into office, instead of- -

MR. LEHRER: Well--

MR. PEROT: --solving problems. We need action now, and it can't be this hit and miss sort of emotional thing they do. It's got to be carefully, thoughtfully, and rationally engineered, pilot tested, de-bugged, optimized, and these programs this time around have to work in a cost effective manner.

MR. LEHRER: Well, how would you solve these problems if you were President of the United States?

MR. PEROT: First, educate the American people with the facts, explain to them what the problems are. For example, when I go into Home Depot, folks will stop me and say, Ross, what's wrong with Social Security, and I say, well, what do you think it is? They say, every two weeks I send money out of my paycheck, my employer sends money to match it, it goes to Washington, goes into a retirement fund for me, they invest it, and when I retire, I get it. And say, no, when that money hits Washington, faster than Domino's can deliver pizza, it goes out the door to people who are retired now. And then they ask me a very logical question, say, how did it ever work? When we put Social Security into law, we had retirement at 65, but life expectancy was 63. Let's go up to 1940. We had 40--'45--we had 40 people at work for every person retired. In 1950, we had 16 people at work for every person retired. So we had to raise the rates. We had expanded the benefits. Now today we have three people at work and in the year 2020, we will only have two people working for each person retired. We've got to transition from the program we have to a new program. We will--

MR. LEHRER: A new Social Security?

MR. PEROT: Nobody would consider not protecting the retirees, then re-transition it, but the longer you delay that transition, the tougher it is to make.

MR. LEHRER: So you need a new program of Social Security?

MR. PEROT: You have to.

MR. LEHRER: You can't fix the one we have?

MR. PEROT: The existing program cannot work because the increase in life expectancy, which is wonderful, but when you only have two people at work for each person retired and it's pay-as-you-go, it doesn't work. But in Washington, they keep talking about the Social Security Trust Fund. Let me--watch my lips, folks--there is no money in the Social Security Trust Fund. If you go up there, there's a piece of paper. They've borrowed all the money to make the deficit look smaller, and they don't even pay the interest. They roll the interest forward, and you pay interest on the interest. But you say, well, it has the full faith and credit of the U.S. Government. Sure, it does, but where does the government get its money--from you. So every time they do something really dumb like this, you finally have to pay for it. We've got to stop this. I want to make sure the American people understand it. Neither party will explain it to them in plain language. We will, and I am convinced that there are millions of people who love this country, who are dedicated to their children and grandchildren, and they will do what it takes to make the 21st century the greatest in our country's history. That's what we were trying to do.

MR. LEHRER: Richard Lamm, a former governor of Colorado, also wants to run as a Reform Party candidate. He says that what the Reform Party needs is a fresh face, and you're not a fresh face. What do you say to that?

MR. PEROT: Well, that's--he's certainly entitled to his point of view. I will not ever say a critical word about Gov. Lamm. I'm thrilled that he is participating in helping us build a party. It takes great courage for him to come in and do this. There are a lot of people who want to sit on the sidelines. They'll encourage you, but they don't want to get in the ring and get cut up, and I certainly commend him for his courage. We're delighted to have involved. And I just--

MR. LEHRER: Are you really delighted?

MR. PEROT: --want to thank him publicly.

MR. LEHRER: Are you really delighted to have in the ring?

MR. PEROT: Yes, I am. Ask him if he doesn't think so.

MR. LEHRER: Most of the conventional wisdom--we--everybody has their opinion of the conventional wisdom--is that he doesn't stand a chance of getting this--because you've created this party, you financed this party, this is your baby. There's no way in the world Richard Lamm is ever going to be the nominee of the Reform Party.

MR. PEROT: Your problem is you're in the box, Jim.

MR. LEHRER: Okay.

MR. PEROT: You're in conventional wisdom, see.

MR. LEHRER: I got you. I got you. I hear you.

MR. PEROT: Conventional--inside the beltway wisdom--

MR. LEHRER: Okay.

MR. PEROT: --which is a total disconnect from the real world.

MR. LEHRER: I hear you. I hear you.

MR. PEROT: Did you ever hear of anybody in politics trying-- working night and day and spending money so that he could transfer $32 million to another candidate? Did you ever hear that before?

MR. LEHRER: Never.

MR. PEROT: I'm working on that night and day. You're aware of that, aren't you?

MR. LEHRER: Yes, sir. I mean--

MR. PEROT: Okay. The point being--

MR. LEHRER: Excuse me--

MR. PEROT: The point being--

MR. LEHRER: Excuse me one minute. Wait a minute. Let me explain to the audience who doesn't follow the federal election laws very carefully, $32 million is what you're entitled--what you're entitled to under federal matching funds because of where you scored four years ago as a presidential candidate. The issue is there was no Reform Party then, so now you're trying to make sure that that money could get transferred if--whether it's you or anybody else who's a Reform Party candidate. Okay. I just wanted to make sure we explained that.

MR. PEROT: Here's the fun part.

MR. LEHRER: All right. Okay.

MR. PEROT: Clearly under the law we're supposed to be able to do that, but another thing the American people don't know is the Federal Election Commission commissioners are half Democrats and half Republicans. Our biggest problem in being successful in what we're doing is that it's human nature to try to protect the status quo even if it's not working. That's just as old as man. It's human nature. We're trying to make constructive change for the future of our country, so the FEC commissioners are trying to protect the Democrats and Republicans. They don't want change. I think if you talk to Gov. Lamm, he will tell you that we have done everything we can do to be helpful and supportive to him, to give him a voice, and to make sure that he can have as much as visibility and as many appearances with the people in this party as possible.

MR. LEHRER: Are you all--I noticed that the two of you are going to be over the weekend, this coming weekend, you're going to be at the Augusta, Maine convention of the Reform Party in Charlottesville, Virginia, at the Virginia Reform Party Convention. Are you all going to have a debate, a joint appearance of any kind?

MR. PEROT: Each one of us will make a speech.

MR. LEHRER: Are you going to have a debate at all during the, during the--between now and your party conventions?

MR. PEROT: Not to my knowledge. If that's a good idea, we'll consider it.

MR. LEHRER: Do you think it's a good idea?

MR. PEROT: Well, I really haven't thought about it. The main thing I want to do is try to get information out and I know Gov. Lamm is deeply committed to educating the American people. He has done a lot of work in this area for years, and I expect that he will make a huge contribution in making sure that when people go to the polls this time, they have the facts. One of the best kept secrets in America are the exit polls from the 1992 election. The big media paid for all of it, and then when they saw it, they never wanted to announce it. Go to the library, folks. Get the exit polls, and you will find that they asked the voters a question, they said, who would you have voted for had you voted your conscience? Leaving the polling booth, 40 percent of the people said they would have voted for me, 31 percent for President Clinton, and 27 percent for George Bush. Then they said, well, why didn't you vote your conscience? They said, we were talked out of it by non-stop propaganda during the last few weeks of the campaign saying, don't waste your vote on Perot, he can't win. That has nothing to do with solving problems. That has everything to do with playing emotional games and sadly enough, that's how we got in this mess. We're going to have to go back to careful, thoughtful, rational action to assure a bright future for our children.

MR. LEHRER: You raised the subject. Let me ask you--do you believe you can win this time?

MR. PEROT: That's up to the American people.

MR. LEHRER: No. But do you believe you can win?

MR. PEROT: I know--the point is we are working night and day for our country. If the American people want these things, we will work night and day to make these things happen. If the American people want free candy, they've got two great choices. They've got a 5 cent gasoline tax reduction which has nothing to do with anything, or they can get something on the other side which has nothing to do with anything, but guess what? We've got a $5 trillion debt. We're going to have to pay it, and these little nickel and dime reductions just to get the people's votes just before a campaign- -or during a campaign are American politics at its worst, and we're dedicated to changing that.

MR. LEHRER: Mr. Perot, what about the negatives that turn up? You mentioned polls. The opinion polls show a lot of negatives about you now.

MR. PEROT: What would you expect, Jim? Night and day they spew all this stuff out.

MR. LEHRER: Yeah. Are--

MR. PEROT: The point being--the point being Hitler's propaganda chief, Goebbels, said that if you tell an untruth often enough, it becomes the truth. Now you just get a steady stream to this stuff. We ignore it. We stay on the issues, and I--one of the things we've decided to do in our party is we're not doing any negative campaigning. We're not going to attack other people. You wait till this fall, the personal attacks that they'll make one another and whoever else gets in their way--you see, one of your problems with politics is if your mother got in your way, you'd run over her with an 18-wheeler. See, war has rules. Mud wrestling has rules. Politics has no ethical rules. Politics desperately needs those. If what we had worked, after spending $5 trillion in debt and having the huge taxes that our people pay, we would all be living in utopia and the only problem we would have is too much debt. In fact, the standard of living is down for two out of three working Americans. Big government has not benefited the people, and we have got to change that now before we have a financial crisis. You watch the stock market in the last couple of days--in plain talk, folks, you got too much money chasing too few stocks because interest rates are down, and you got goofy stuff happening in the stock market. Interest rates are down because when you run interest rates down, you can finance the $5 trillion debt cheaper. Now, only in America would you have 70 percent of the $5 trillion debt financed five years or less short-term, short-term, 70 percent. That's like financing a house mortgage short-term--you wouldn't think about it. These are the kind of unbelievably stupid things our country does, and guess who picks up the tab--the American people. The end result, as Paul Harvey would say, the end of the story, Jim--I have some interesting news for the American people--we've got a new No. 1 growth industry in America today. The number one growth industry in America today is government. Well, the first reaction is, gee, it's great to have a big new growth industry. Then the second question is: What is the product? There is no product. Where does it make the money? You and I have to pay for it. There is the trap. And until the American people understand that all of these problems are interrelated like pieces of a puzzle and have to be solved that way, we won't get them fixed. And finally, even though we redesigned, reengineered everything, did it right, had a growing, expanding job base, we then have to look at the foundation of who we are as a people because that will determine the future of our country. If we are a strong, loving, caring people, our country will have a great future. If we're a selfish people, we won't.

MR. LEHRER: Is this message that you have just given us tonight, is this one that you feel strongly about, that you are going to do anything that it takes to get this message out over the next several months between now and November and hang in there till the very end, then--I mean, is this a serious matter for you this time?

MR. PEROT: I'm amazed you'd ask the question. Who else do you know that night and day has worked on this and these very issues since 1992? That's--this is all I do. And I do it because I feel an obligation to do it, because this country has been so good to me, and I feel so fortunate to be here. I could be starving on the streets in India, right? But I'm here. And I--I couldn't force that. That just happened. I feel an enormous obligation to do everything I can to make sure we pass on a better country to our children and grandchildren--all of us love our children and grandchildren--most all of us would live under a bridge or sleep in the snow for them. That's--we don't have to do that, but we cannot continue to mindlessly spend their money.

MR. LEHRER: All right. Mr. Perot, thank you very much.

MR. PEROT: A privilege to be with you, Jim. FOCUS - HARD LABOR

MR. LEHRER: Still to come on the NewsHour tonight, sweatshop labor, "Where They Stand," and the stock market. Charlayne Hunter- Gault has the sweatshop story.

SPOKESMAN: How many hours did they have to work at these machines in this garage?

MAN: Well, we were told cases of 7 AM to midnight.

MS. HUNTER-GAULT: In March 1995, Labor Department officials raided this apartment complex in El Monte, California, just East of Los Angeles. Here more than 70 Thai immigrants toiled for 17 hours each day, earning 60 cents an hour, producing garments that were eventually sold to national chains. Sweatshops have been a part of America's industrial landscape for more than a hundred years. At the turn of the century, European immigrants provided the cheap labor. Many of those shops vanished in the 1920's after a deadly fire at Chicago's Triangle Shirt Factory prompted reforms. But the emergence of a global economy, where low-skilled labor is readily available for low wages, has allowed sweatshops to proliferate again in the United States and around the world. And some of America's leading retailers, J.C. Penney, Walmart, and Eddie Bauer, to name a few, have been accused of exploiting workers. The National Labor Committee, an advocacy group which gets its money from foundations and labor unions, has targeted numerous American companies, among them the Disney Company. They say Disney contracts with a Haitian company which pays its workers just 28 cents an hour to make Pocahontas and Mickey Mouse pajamas. NIKE Shoes has come under fire for its Asian factories, where employees are allegedly forced to work 60-hour weeks, paid $2.20 a day, and sometimes physically beaten on the job. Basketball star Michael Jordan, who gets paid $20 million a year to promote the company's sneakers, demurred when asked about the controversy last month.

MICHAEL JORDAN: [June 6] I think that NIKE's position to try to, you know, do what they can to make sure that everything is correct--correctly done.

MS. HUNTER-GAULT: Star power has catapulted the sweatshop story into the headlines. In April, talk show celebrity Kathie Lee Gifford became the target of allegations. First, Capitol Hill testimony revealed that her clothing, sold in Walmart stores, is made by under-paid teenagers in Central America. A stunned Gifford, who is herself an advocate for children's issues, was teary-eyed on her program the next morning.

KATHIE LEE GIFFORD: [May 1] Millions of dollars have gone to help children, and I truly resent this man impugning my integrity.

MS. HUNTER-GAULT: And then came the charge that some of her line was actually being made at Seo Sewing, a New York City sweatshop just a few blocks from her midtown studios. Gifford and her husband, former NFL star Frank Gifford, were quick to deplore the decrepit working conditions. Frank Gifford went to Seo Sewing and handed out hundred dollar bills to their unpaid workers.

FRANK GIFFORD: [May 23] We hopefully are going to cause a little stir and change things. We need to change it.

MS. HUNTER-GAULT: And in testimony yesterday before a House subcommittee, Kathie Lee Gifford said all the negative publicity had given her a moral imperative to crusadefor better working conditions in garment factories around the world.

KATHIE LEE GIFFORD: And at the time, I was so stunned I felt like I'd been hit by a truck because we didn't want all kinds of applause or accolades for what we were doing but we certainly didn't feel that we should be, ump, uh, crucified for trying to do the right thing as well. But I got over that so quickly, sir, when I realized that I am not the victim at all in any of this. I still go home to a beautiful home and a loving husband and two healthy children. The victims are those who are exploited on a daily, hourly basis, in factories around this world, and the saddest of those victims are the children who have been denied a childhood.

MS. HUNTER-GAULT: Secretary of Labor Robert Reich said a strategy of publicly naming companies that sell apparel produced by sweatshops grew out of the deplorable conditions even in this country.

SEC. REICH: Just last week on Thursday, I walked up 7th Avenue in New York City with some investigators from the Department of Labor, and we randomly went into cutting and sewing shops in the garment industry, and one out of three that we saw was violating the laws, minimum wage, overtime, unsanitary conditions, unsafe conditions. It is not that different from what we saw at the turn of the century. And If we have embarrassed some members of the industry, I am sorry, but maybe that is necessary in order to get their cooperation.

MS. HUNTER-GAULT: Today, Reich held a forum for members of the industry, consumer groups, human rights, activists, and others to look for solutions to the sweatshop problem.

MS. HUNTER-GAULT: By the way, that shirtwaist fire was in New York and not Chicago. For more on sweatshops and what can be done now, we have three people who attended the secretary's meeting here in Washington today. Larry Martin is president of the American Apparel Manufacturing Association, Bud Konheim, CEO of Nicole Miller, a design retailer and manufacturer based in New York, and Jeff Balinger, a director of Press for Change, a labor watchdog group. Thank you all for joining us. Starting with you, Mr. Balinger, the star-studded cast that we--some of whom we saw just a few moments ago--has put the sweatshop issue into the headlines. Is it beyond the headlines, as big as all that?

JEFF BALINGER, Press or Change: Oh, I think we're, we're in a position now to really talk about this issue, whereas, before, there wasn't enough entry level knowledge by enough people to really address it. Now consumers and advocacy groups are starting to get an idea where these factories are, what the conditions are like, now that a couple of celebrities have spoken out, there's--there's a beginning. We've turned a corner in understanding this question, and I think it's--now we can set things right. It's going to take a long time.

MS. HUNTER-GAULT: But how big is the problem?

JEFF BALINGER: Oh, it's huge, and these sweatshops are not little mom and pop operations anymore. They're one factory in Indonesia making shoes for NIKE's 14,000 workers, and it doesn't look like a sweatshop. It's well lit. It's very clean. You don't get white shoes out of a dirty basement somewhere, so this is--it's a different kind of problem, but workers are being abused, and it's in a global economy where it's almost like this factory is just 12 miles down the road, instead of 12,000 miles away, because we have people over there that we're in touch with.

MS. HUNTER-GAULT: So the biggest part of the problem is abroad and not here in the United States?

JEFF BALINGER: Oh, we still have problems here. I remember taking some foreign trade unionists around the garment district in New York 20 years ago and talking with the New York State Department of Labor and they had a task force at the time, and they were trying to find these places and unite--the union has always had-- you know, as soon as they go down the block, you know, somebody moves in and moves out. It's a very fluid situation. You're always going to have those, those little guys operating and evading you, but now we've got another situation where there are big operators out there that we should be able to clean up.

MS. HUNTER-GAULT: Mr. Martin, do you agree with that assessment of the size of the problem and the scope?

LARRY MARTIN, American Apparel Manufacturing Association: Well, nobody knows exactly how large the problem is because of by the very nature of the business they're underground and they're difficult to find. We know it exists. We think the government--we want to cooperate with the government and do what we can to help shut em down. They're bad for the industry. They give us a bad name, and they're unfair competition for legitimate operators.

MS. HUNTER-GAULT: Mr. Konheim, do you have anything to add to that, the scope and size of the problem?

BUD KONHEIM, CEO, Nicole Miller: Yeah. I think it's as big as they say it is, and I don't see it going away because you've got the western world right now is saturated with goods, and the big retailers of those goods are killing each other for--over price, and price is their god and as long as price is their god, they are going to, whatever they said at the panels today, when it comes up to Walmart fighting Kmart, fighting J.C. Penney, it comes and their only consideration is price, they are going to take the manufacturer and say, hey, your price is too high, we're not going to buy from you, and the manufacturer is going to be squeezed into an untenable position. That basis thing has got to change before any of this other stuff changes.

MS. HUNTER-GAULT: So that's what's driving the whole issue as far as--

BUD KONHEIM: Price is driving the issue, and the answer to, to unraveling it is, is [a] make the punishment so severe that nobody wants to get, get caught doing this stuff , and the other thing is to make an incentive that is beyond price, where people make a quality decision at the customer's level.

MS. HUNTER-GAULT: Do you agree with that, Mr. Martin, that price is driving all of this?

LARRY MARTIN: Well, price is exacerbating the problem that's always been here. There's no question that there is this terrific price pressure these days. There's been terrific consolidation in the retail industry, and there are very large entities buying huge amounts of clothing and, and forcing prices down.

MS. HUNTER-GAULT: And so how does that actually contribute to the sweatshop?

BUD KONHEIM: Well, I go to Walmart, let's say, not to pick on Walmart, but everybody knows the retailer, and I say, I've got something--I want to sell you this blouse, what's your price--my price is $3--but I can get it from the other guy for $2.50--let me go back and refigure it--go back and refigure it--I call my contractor in, who is not a sweatshop. You cannot do basic business with sweatshops because just like he said, they're on their way out anyhow. You wouldn't dare put your goods in a sweatshop to begin with, because you're afraid they're going to get padlocked because they don't pay their taxes. So you go to your original contractor. Listen, I've got a chance to get 50,000 blouses but I've got to come down 50 cents from $3.00 to $2.50, or else they're not going to buy them, we're going to lose the whole order, can you do it? What does the contractor say? Yes. He wants the business. He's already taken a position that he can't do it under his--in the situation he's in--he takes the order because nobody wants to turn down an order of that size. Now we have the order. Now the thing is how the hell do we fill the order--how do you fill the order-- he starts to scramble--he goes out and finds subcontractors to use that will shave the price--he fills up his own factory--he does whatever he can to fill that order. He can't even make the 50,000 units and say he can make it anyhow because there is not a contractor in this world that will ever turn an order that's too big. They'll just find a way to get it made, and that's where the sweatshop comes in. It comes in in the subcontractors. Nobody knows about them. It's impossible to police them. As he says, you could walk into factories and find one out of three or whatever proportion you can find in the sweatshops, but go back next week, they're not there, that space is occupied by somebody else, they haven't paid their taxes, there's a padlock on the door, all that type--that's the situation.

MS. HUNTER-GAULT: Is that how you see it, what's driving this whole thing, Mr. Balinger?

JEFF BALINGER: Well, I don't see a lot of price competition in the footwear industry, for example. These people have money to give away huge amounts of money, obscene spending for the Olympics, NIKE's not even an official sponsor, will spend $65 million, and, uh, it seems to me that price doesn't drive them to, to operate with contractors that are breaking a law. What's operating--what's happening there is they've given over control of these factors to contractors, to these South Koreans and Taiwanese that they got hooked up with in, in the 70's and then when democracy came to, to China, to Taiwan and South Korea, they moved to China and Indonesia, you see, to avoid higher wages, and--but they took their contractors with them, and so we have to differentiate between western-run factories in Asia and the factories that are run by Asians.

BUD KONHEIM: And domestic factories.

JEFF BALINGER: And domestic factories, of course, absolutely. And so, you know, a Harvard business professor went over to Indonesia, and she, uh, wrote a paper about the impact of western investment on labor standards, in fact, found that they were raising labor standards, western investors. Well, we're not complaining about western investors. We're talking about western buyers like the big shoe companies that aren't in control of these factories and these- -these contractors are pushing wages down below a subsistence level and, you know, this is really the situation that we're complaining about, not the western--you know, Gillette goes over there and pays triple the minimum wage. Batashu's producing cheap Indonesian shows for the Indonesian market is paying triple the minimum wage to western-run factories. That's the difference.

MS. HUNTER-GAULT: So when you're--in your conference today I know you talked about some solutions both in the government sector, in the corporate sector, as well as among consumers. Where do you start dealing with an issue like this, Mr. Balinger?

JEFF BALINGER: Well, I think we're just, as I said, there's an entry level knowledge that the consumers are now being aware of through the Kathie Lee controversy, and that's been a long time coming. I've been talking about these factories--shoe factories in Indonesia for a long time.

MS. HUNTER-GAULT: But it is a governmental--I mean, do you start at the government level?

JEFF BALINGER: No, no. This is, this has got to be a market solution to this. I think consumers are going to want to have some answers, and, uh, you know, we tried to improve labor laws in different countries by using trade, you know, pressure. It didn't really go very far, and maybe we shouldn't use that- -I think educated consumers can, can do this if they demand, you know, real, um, information from these companies. I just want to point out this movement to codes of conduct by companies to adopt codes to control the contractors, well, you know, NIKE tried this in 1992, adopted, you know, said that all their contractors were going to be, uh, using a code of conduct, but, you know, two years later, this author who wrote a very sympathetic book about NIKE went to Indonesia and he called it "Management By Terror," these shoe factories in Indonesia, so these codes had no impact, because there wasn't enough public pressure behind it to say, okay, a code isn't enough, we want regular inspections by independent organizations that we can then put some faith in and not just a PR facade.

MS. HUNTER-GAULT: Mr. Martin, from the manufacturer's standpoint, what do you think about that? I mean, do you think that codes of conduct do work, or do you think that manufacturers, retailers, the industry has to do more?

LARRY MARTIN: By themselves, they don't work, but our members are in their contractors' plants continually. They're there for quality control and, and they can inspect for labor conditions at the same time. Many of them also hire third, third party auditors that audit the books and make certain that they're obeying the law. I think that it ought to be pointed out that the federal government, I think, can do a better job if there were a more cooperative effort. The Labor Department, for instance, when it finds a sweatshop, which is almost always involved with undocumented aliens, doesn't notify the Immigration & Naturalization Service. These companies that aren't paying proper wages are cheating on their income taxes. It strikes me that it would be very proper for Labor, INS, and IRS to jointly work on these, on these efforts in the United States.

MS. HUNTER-GAULT: What do you think about that, Mr. Konheim?

BUD KONHEIM: There's only one way to solve the problem, and I think you have it right. In the end, the boss is the customer at the table. The debt is--if they keep buying merchandise that's made in sweatshops, they'll keep having sweatshops, so the thing is how do you inform and educate that customers? You either label the merchandise--now, nobody says proudly made in a sweatshop, I mean, nobody is going to say that, but how about the reverse, how about if there's a label out that has passed all of the inspections for quality and for value and for good working conditions, and that label is on the merchandise and customers can then pick between unlabeled stuff and labeled stuff? This was a Japanese idea of the 70's when they turned the country around from having a perception of making garbage to making this high-class merchandise that the Organization of Japan was called MITI, M-I-T-I, and they put a gold seal on everything that was exported and before you knew it, we were into quality--buying quality Japanese things.

MS. HUNTER-GAULT: But isn't this going to make the price go up, and are consumers going to want to make that trade-off, Mr. Martin? LARRY MARTIN: Yeah, it's going to be an expensive project but even more important than that is a company or a businessman who stoops to cheat his laborers won't hesitate to counterfeit a tag. You'll wind up with the bad guys putting the tags on the garments.

MS. HUNTER-GAULT: What do you think about that--

JEFF BALINGER: Oh, I'm glad he brought up counterfeiting because this is one thing the shoe companies got after immediately in Asia, they're contractors were doing it, were hurting them, you see, and they ended piracy. They created whole departments back home, they hired former military intelligence people to put spies in different contractors to see how many shoes were being made. They dealt with this, but if something is hurting the workers out there, 12, 000 miles away, nobody cares about it, and nobody knows about it, well, four and a half years it took strikes by these workers in Indonesia who get fired and interrogated by the military to get the minimum wage paid there, you see--after lots of publicity and a lot of pressure--

MS. HUNTER-GAULT: But is this going to be sustained, though, because you said that if Kathie Lee Gifford and some of the other celebrities hadn't gotten involved, the public wouldn't have been involved--is this going to be sustained?

BUD KONHEIM: No. That's the problem. The problem is you need this type of attention to keep it up, and I don't think it's going to be sustained. I think that the issue is going to be out there and you're going to have people fighting the issue. And the other thing is, is he's talking about an international problem which to me is mind boggling. You're talking about 12,000 miles away. I'm worried about the United States. I mean, we've got these conditions going on right here and our factories are across the street. So--and it's because of quality. We're in there every day and we're inspecting them, and we want all of those conditions for those workers because it's good business. That's what we want. But to keep it up is going to be the problem.

MS. HUNTER-GAULT: All right. Well, gentlemen, we have to leave it there. Thank you. SERIES - WHERE THEY STAND

MR. LEHRER: Now, "Where They Stand," our weekly look at policy speeches by presidential candidates. Tonight we hear back-to-back remarks by President Clinton and Bob Dole. Both spoke this morning by satellite to the National Governors Association Meeting in Puerto Rico. They focused on welfare reform, and they were introduced by Tommy Thompson, the Republican governor of Wisconsin, chairman of the NGA.

SEN. BOB DOLE, Republican Presidential Candidate: I hope that Congress will pass a tough welfare reform bill, not just any welfare reform bill, and I challenge the President to finally sign a welfare bill and make those waivers a thing of the past. I wish we had the bill that passed the Senate by a vote of 87 to 12 when I was a Majority Leader, 87 to 12. Fifty-four, I think, fifty-three Republicans and some Democrats, bipartisan, a good, strong welfare reform bill that the President vetoed--so I would again say to the President--he's going to speak, I understand, following my remarks, give the states the power and authority to chart their own paths from dependence to hope. And I think there are goals that Republicans and Democrats can share. We must confront the forces of chaos, and we must strengthen the sources of hope--families and communities and neighborhoods. We need a federal government that embraces the diversity of your reforms. We need a federal government that trusts your compassion and your competence. And let me just pause here, if I can, for a second. I remember Gov. Thompson, who's been one of the leaders in welfare reform, as many others have in the audience have there, speaking to a group of Republicans one day in my Majority Leader's office and some of our Republicans were having difficulty turning loose because the government had the control so long they wanted to keep the entitlement, they wanted to do this, they wanted to do this, they wanted a maintenance effort which is probably all right, but it was much too high at the time. I remember what Gov. Thompson said to them I think in a moment of frustration. He said, "Who do you think I am? I get elected by the same people you do. Nobody is going to go without medical care in the state of Wisconsin. Nobody is going to go without food in Wisconsin. Nobody is going to be left out in the state of Wisconsin, as long as I'm governor of that state." And I think he could talk for any, speak for any succeeding government. So I've always felt that governors were closer, closer to the people, they better understood the problems, the legislators in both parties are closer to the people, and this is the clear case where I think the 10th Amendment ought to apply. We ought to send this back to the states. And I think the federal government understands and encourages the vast and untapped promise and energy and the wisdom of American life. We'll make it work. So I would just say finally I, again, as a private citizen, appreciate your kind invitation and thank all of you for what you do on a daily basis to renew this country. And I know this is--we're in the political season--and I know it's difficult for some to understand that we can do anything in a non-partisan or bipartisan way, but I believe there is still time if we all agree and all have pretty much the same goal. We don't want watered down welfare programs going back to the states that will have to be corrected next year and the next year and the next year. We want to give you the opportunity you deserve. We want to give you the opportunity your constituents deserve.

PRESIDENT CLINTON: For too long the welfare issue has been marred by partisanship. It's been mired by gridlock. But in recent weeks up here all this seems to be changing. I think we've now reached a real turning point, a breakthrough for welfare reform. The new leadership of the Senate, along with the leadership of the House of Representatives, has now indicated that they want to move forward with bipartisan welfare reform and are dropping their insistence that welfare be linked to the block-granting of Medicaid. They've said that they want to work to pass legislation I can sign, rather than sending me legislation they know that I would reject. As you know, Congress sent me a welfare reform bill last year that fell short of my principles, as well as those expressed by the NGA in your February resolution. After my veto and unanimous resolution, I am pleased that the congressional leadership has made several significant improvements that have made this a much better bill. They've added $4 billion in child care, included a $1 billion work performance bonus to reward states for moving people from welfare to work. They removed the spending cap on food stamps so states don't come up short in tough times. Their original bill made cuts in structural changes that were tough on children, a school lunch block grant, a 25 percent cut in SSI for disabled children, cuts in foster care. The current bill drops all these provisions. Congress has taken long strides in the right direction. Now as we approach the goal line, we do have a chance to make history and make this bill even better. We can give all our people a chance to move from welfare to work, to transform our broken welfare system once and for all. So I hope that Congress will continue to improve the bill along the lines that you and I have long advocated and along the lines of the strong bipartisan bills introduced by Senators John Breaux and John Chafee and Representatives John Tanner and Mike Castle, another former colleague of ours. We must not let this opportunity slip from our grasp, as it has too many times before. Let's put politics aside. Let's give the American people the best possible welfare reform bill, and let's do it before the August congressional recess. I'm determined that this bill--that this will be the year that we finally transform welfare across America. If Congress doesn't act, we still have to continue to act to make responsibility a way of life and not an option. Today I am taking the steps that I can take as President to advance the central premise of welfare reform, one that is invited in all the proposed welfare bills, that anyone who can go to work must do so. We'll say to welfare recipients within two years you'll be expected to go to work and earn a paycheck, not draw a welfare check. Here's how we'll do that. I'm directing the Department of Health & Human Services to require everyone who takes part in the jobs program to sign a personal responsibility contract and commit to going to work within two years. States can then take away the benefits if they fail to live up to that commitment.

MR. LEHRER: President Clinton and Bob Dole speaking today by satellite to the National Governors Association Meeting in Puerto Rico. UPDATE - UPS & DOWNS

MR. LEHRER: Finally tonight, to a stock market update and to Elizabeth Farnsworth.

ELIZABETH FARNSWORTH: Is one of the great stock market runs in history coming to an end? That's the question for Wall Street and for many on Main Street after recent large drops in the market, including yesterday's Dow Jones loss of 161 points. Today saw wild swings, with the Dow rising more than 45 points early, then falling more than 167 points during the afternoon, and coming all the way back up 50 points before closing up 9 1/4 points. What's going on? To help us understand, we're joined by Susan Kuhn of "Fortune" Magazine. Thanks for being with us, Susan. SUSAN KUHN, Fortune Magazine: [New York] You're welcome, Elizabeth.

MS. FARNSWORTH: Why the wild swings today, what was going on?

MS. KUHN: Well, Wall Street is having another one of its fun days this summer. Basically the market hasn't been doing very well in both June and July. This comes after a long spectacular run, so I think it's catching many people by surprise.

MS. FARNSWORTH: So today was--it was something of a correction over yesterday, but it, it's been dropping so much. Why?

MS. KUHN: Well, I think there's a lot of concerns. The first is we really haven't had a break in the market. It's been going straight up, and you have to wonder, boy, when are people going to start to get nervous, when are they going to take a break? The cause for this one appears to be corporate earnings. Many companies have been reporting earnings for the second quarter that are not matching investor expectation. That seems to be the excuse for people to sell. I was talking to people at Fidelity Investments today, and they're finding that the volume of calls from individuals and stock funds was up 30 percent over the past few weeks. So clearly many individuals who may be in stocks for a variety of reasons are starting to get nervous.

MS. FARNSWORTH: And this has been particularly true though. The decline has been particularly marked in technology, high technology stocks, computer companies, that sort of thing, is that right?

MS. KUHN: That's true. And technology, Elizabeth, really has been the story of the 90's. All of us can see we're getting new computers shipped to our desks. Our children are learning how to play computer games, and if we don't know how to surf the Internet, we sure feel guilty about not knowing it. Wall Street hasn't missed that story. In fact, it likes a good story, so it's been bidding technology stocks up. But, of course, what goes up--what must come down, and that's what we've really been seeing in, in the last couple of weeks. Technology has been taking it pretty hard.

MS. FARNSWORTH: It used to be that General Motors or some other Blue Chip was the indicator, but I noticed a company called Allied Materials had some bad sales and that sort of started this, or at least it was a factor in all this, is that right?

MS. KUHN: Well, you could point to a single company. You could point to a couple of companies. Texas Instruments, for example, also reported weaker than expected earnings. But the big story, the whole sector seems to be disappointing people, though there are individual companies that are doing well. Many of these stocks were pretty richly priced, and they didn't necessarily deserve to sell so high and now they're selling off.

MS. FARNSWORTH: Well, looking at the whole situation, here's the big question, is this a correction, or are we looking at the beginning of a bear market, a major decline over the next years?

MS. KUHN: Well, if you can tell me, then we'll both make a lot of money.

MS. FARNSWORTH: [laughing] What are the analysts saying I'm saying?

MS. KUHN: There's a fair amount of debate and there always will be, because that's actually the whole joy of the stock market. We really never know what's going to happen to it next. I think that for individuals we have to take a step back. It's really a gamble to say will stocks be up tomorrow, or will they be down, and the question we all have to ask ourselves is how long can we be invested in the markets, when do we need money? If it's a 10-year horizon or even longer, then we certainly can save in stocks and ride out these daily movements up and down. But if we need to make a bet in a year, if say we want to buy a house 12 months from now, it may not be wise to make a bet on stocks, because as you've seen today, they can really go down. There's no reason they have to continue to go up.

MS. FARNSWORTH: And this really does affect more ordinary Americans than ever before, doesn't it, because for various reasons more people, whether they know it or not, are involved in the stock market through their pension plans or through one thing or the other.

MS. KUHN: That's true. The key word here is retirement. I think all of us get a little bit nervous, will we have enough money to retire on. We can't count on our companies anymore. We can't count on the government anymore. So as a result, more and more of us are saving on our own, and we're investing in stocks through 401K plans. That means we do have exposure to the stock market, whether we like it or not.

MS. FARNSWORTH: And, in fact, I've read in some articles that one reason for the high rise has been the number of baby boomers, the high rise in stock prices, entering the market in recent years. Now are we seeing a correction in that?

MS. KUHN: We are right on target. The story of the 1990's in the stock market has been individuals investing in stock funds. They've been the primary buyers of stocks, bigger than institutions and pension funds and insurance companies, you can go on and on with the list. The question is most of us appear to need to save more money so the idea is that we'll continue to invest in stocks for years to come. That's the bullish case. That's the reason why stocks have been going up, and it certainly could continue to go up. The only question is when people stop investing in stocks and start withdrawing money at some point we'll reach 50's or 60's and we might need some income, in which case we could be selling stocks instead of buying them, and that would be bad news.

MS. FARNSWORTH: Do you think, though, or do the analysts say that this upward movement which has been going on for, what, six years, with just no, no drop bigger than 10 percent, am I right about that--

MS. KUHN: Right.

MS. FARNSWORTH: --which is historic.

MS. KUHN: Since 1990, it's been pretty much--

MS. FARNSWORTH: Yeah.

MS. KUHN: --straight up. But you could even go back to 1982. That's really the beginning of this long rising stock market.

MS. FARNSWORTH: And do you believe that it just had to stop at some point, at least temporarily or, or are the analysts saying-- I mean, is that what analysts are saying--this was inevitable basically?

MS. KUHN: A lot of people were expecting the market to fall this summer. I think that's what you're getting at here. And it, it sort of is inevitable that stocks go up and they go down. The question is how far are they going to go down, but tomorrow will be another down day. I mean, today turned out to be positive. There's a couple of benchmarks you can take a look at. If the market falls less than 5 percent, people tend to call that a dip. It's just a down day. The market's going--continues to rise. If it falls 5 to 15 percent, people like to call that a correction, which is just a fancy word for saying the market really fell here. If stocks fall more than 15 percent, then you may have heard the term "bear market." That's a pretty prolonged or deep downturn. That's the kind of risk that people are a little bit afraid of. That may be happening right now. It may not happen for five or ten years, but you can make a bet that with stocks going up in the 80's and so far in the 90's sometime after the turn of the century, if not before, we really could have a severe downturn in the market.

MS. FARNSWORTH: Well, Susan Kuhn, thank you very much.

MS. KUHN: You're welcome. RECAP

MR. LEHRER: Again, the major stories of this Tuesday, as we just heard, Wall Street rebounded from yesterday's plunge. The Dow Jones Average closed up 9 1/4 points at 5358.76. The federal government reported the nation's industrial production increased last month, while consumer prices rose only slightly, and President Clinton allowed a Cuba sanctions bill to go into effect but delayed a key provision for six months. We'll see you tomorrow night with a Newsmaker interview with Defense Secretary Perry, among other things. I'm Jim Lehrer. Thank you and good night.