The MacNeil/Lehrer NewsHour

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

MR. MacNeil: And I'm Robert MacNeil in New York. After tonight's News Summary, we sample the growing debate over the President's plan to freeze government regulations to boost the economy. We continue our series of Presidential stump speeches for Paul Tsongas, and we have two reports on the cost of converting to capitalism, first, Nik Gowing in Ukraine, then Business Correspondent Paul Solman in Jamaica. NEWS SUMMARY

MR. LEHRER: President Bush sent his annual economic report to Congress today. His top economic adviser, Michael Boskin, talked at a White House news conference about the report's predictions for the year ahead.

MICHAEL BOSKIN, Chairman, Council of Economic Advisers: The American economy has obviously been struggling. The economy after growth, after contracting in the first quarter was quite modest in the second and third quarters of this year and the economy was essentially flat in the fourth quarter. Our outlook is that after a period of sluggishness early in the year, the economy will begin to improve as we head toward the middle of the year. There are many factors that could make the economy do better. There's ample room for the economy to do better, or there are some things that could buffet the economy, it could throw it off track.

MR. LEHRER: Worker productivity in the United States grew .2 percent last year, reported the Labor Department today. It was a slight improvement over 1990 and '89. Productivity is measured as the output per hour of non-farm workers. Robin.

MR. MacNeil: U.S. students lag behind students from other countries when it comes to learning math and science. A new study commissioned by the Department of Education and the National Science Foundation showed that 13-year-olds in this country scored lower on science questions than students from countries like Korea, Taiwan, Switzerland and the former Soviet Union. Japan and Germany didn't participate in the study. Math results were similar. Education Secretary Lamar Alexander interpreted the findings at a Washington news conference.

LAMAR ALEXANDER, Secretary of Education: This means that many children with families that care in schools that we think of as "good schools" simply aren't learning as much as they need to about math and science. It means that this is not just an inner-city problem or a rural poverty problem, it is a problem in the suburbs too and among middle class families and children all over this country. This is not the kind of report that an America that likes to be first should be happy about.

MR. MacNeil: The study found that countries with the best results had longer school years, gave more homework and students watched less television than students in the United States.

MR. LEHRER: The Chairman of the House and Senate Intelligence Committees todayproposed sweeping changes in the way the United States does its spying. Sen. David Boren and Congressman Dave McCurdy, both Democrats of Oklahoma, proposed a single agency for military and foreign intelligence gathering. It would coordinate work now done by the CIA and the Defense Intelligence Agency, among others. Sen. Boren explained the plan at a Capitol Hill news conference.

SEN. DAVID BOREN, Chairman, Intelligence Committee: Our plan would create a leaner but more effective intelligence community that would avoid duplication and more fully integrate intelligence assets of the entire government. We can no longer afford separate military and civilian empires that are costly and duplicative. Our principle objective is to pool all of the analytical assets of our government working on national intelligence questions. Our plan would create in one place a world class think tank to inform our policy makers and help attract the best and brightest in the country to the analytical field.

MR. LEHRER: Sec. of State Baker today urged quick ratification of the Strategic Arms Reduction Treaty known as START. There are U.S. and Russian proposals for deeper cuts than the treaty calls for, but Baker said ratification was still important. He spoke at a Senate hearing.

SEC. BAKER: First of all, the START verification regime increase transparency and openness at a time of great turbulence and great change. Secondly, it creates a legally binding regime which creates obligations that will make it easier for us to lock in substantial and stabilizing reductions and third, it provides a sound structure and ground rules within which further reductions can be quickly achieved. Lastly, Mr. Chairman, START encourages Ukraine, Belarus and Kazakhstan, to seek a non-nuclear future.

MR. LEHRER: Baker will go to Moscow this weekend to discuss further arms cuts with Russian President Boris Yeltsin.

MR. MacNeil: The United Nations Security Council decided today to maintain sanctions against Iraq. It issued a strongly worded statement saying Iraq had failed to cooperate with U.N. weapons inspectors. It also criticized Iraq for ignoring the humanitarian needs of its people by calling off talks on resuming oil export sales. The United Nations reviews the Iraqi sanctions every 60 days.

MR. LEHRER: The so-called "suicide doctor" was charged with murder today. Suicide machine inventor Dr. Jack Kevorkian was indicted in Pontiac, Michigan, in the deaths of two seriously ill women. They used his machines to kill themselves last October.

MR. MacNeil: In Northern Ireland, partisan extremists opened fire today on a betting parlor in a Catholic neighborhood. Five people were killed and nine wounded. The Ulster Freedom Fighters, a Protestant group, said it launched the attack to avenge an IRA bombing that killed eight Protestant construction workers last month. Political violence has claimed the lives of at least 25 people in Northern Ireland since the beginning of this year.

MR. LEHRER: The Venezuelan capital of Caracas was quiet today, one day after a failed coup. Some 80 people were killed yesterday when rebels stormed the Presidential palace. Most of the dead were civilians caught in the cross-fire. After the fighting, nearly 1100 military officers and enlisted men were arrested.

MR. MacNeil: That's it for the News Summary. Now, it's on to a debate about reducing government regulations, a Paul Tsongas stump speech and capitalism arrives in Ukraine and in Jamaica. FOCUS - HANDS OFF

MR. LEHRER: Turning back the government regulation clock is our lead story tonight. President Bush announced such a turn back in his State of the Union speech last week. He repeated his point today in a talk to a small business group in Washington.

PRES. BUSH: I have ordered major departments and agencies to put a 90-day "hold" on implementing new regulations. [applause] Regulations ought to foster economic growth, not crush it, and we're going to make sure that the days of overregulation are over once and for all. So we're going to take a fresh look at the rules and regulations Washington hurls your way. We'll get rid of those that do nothing more than destroy jobs and weigh down businesses. [applause] And in this, we will pick some that will speed up and foster growth and support jobs. We're going to emphasize those regulations.

MR. LEHRER: Now, four perspectives on what Mr. Bush has in mind, an explainer, the President's counsel, Boyden Gray, a supporter, Lawrence Hunter, acting chief economist of the U.S. Chamber of Commerce, and two critics, Michael Waldman of Congress Watch, the lobbying arm of Ralph Nader's public citizen group, and Christopher Flavin, vice president of the private research organization Worldwatch Institute. Mr. Gray, what kind of regulations does Mr. Bush have in mind?

MR. GRAY: Let me make clear at the outset that the point of this 90-day period is not just to look at regulations that are coming in the pipeline that might be harmful to growth, but rather, and really more importantly, to look at existing regulations to see which ones can be revised that have been on the books for a long period of time that may have been outdated by changes in the marketplace or in technology.

MR. LEHRER: Give me an example of the kind of thing he has in mind.

MR. GRAY: Well, the kind of thing that we have done in the past, for example, just several months ago is to revise the drug approval process to speed the introduction of new drugs into the marketplace for the benefit of the seriously ill. That is the kind of thing we want to do. Just recently, the President announced changes in access to capital under both banking regulations and SEC regulations so that small businesses will have an easier time raising money in a time of banking and credit crunch.

MR. LEHRER: Have you all already documented the cause and effect here between regulations and hindrances or the removal of regulations and being a help to business?

MR. GRAY: Well, we know on a macroeconomic level that regulations cost businesses many hundreds of millions of dollars a year. Now, not all of that is wasted. Much of that produces benefits, especially in the area of the environment. But a lot of it is wasteful and we want to make sure that we catch where the waste is not producing any public benefit.

MR. LEHRER: I guess what I'm really asking is, is there any doubt -- in other words, is it a loaded question? Are you moving into this -- and you're co-chair, as I understand it, of the President's --

MR. GRAY: That's correct.

MR. LEHRER: -- task force on it.

MR. GRAY: With Mr. Boskin.

MR. LEHRER: But are you going in there with certainty already that you're going to find some regulations that can be easily dispensed with?

MR. GRAY: Yes, I think we know, not easily dispensed with, nothing is easily dispensed with in Washington, but there are regulations on a broader range of issues that we are quite confident we can clean up for the benefit of the American consumer and American small businessman.

MR. LEHRER: Mr. Waldman, do you agree with that, that they're going to very easily find some regulations that can go because it hurts business and thus, hurts the consumer and the taxpayer?

MR. WALDMAN: Well, no doubt there are specific regulations that could be fixed or improved, but that's not what this moratorium, this 90-day freeze on all government regulation, more or less across-the-board, will do. This moratorium affects just about every government regulation. There are few exceptions. Those exceptions are determined by the regulators, but most importantly by the Council on Competitiveness chaired by Vice President Dan Quayle, which is about the most anti-regulatory part of the federal government. If you want to go after specific regulations, do it, but what this is going to do is affect not only paper work, but vital health safety, consumer and environmental protections.

MR. LEHRER: Give me an example of what you mean.

MR. WALDMAN: Well, just to start out with, Public Citizen and OMB Watch, two private groups, took a cursory look at the regulations that were in the pipeline. We found 44 consumer protection and environmental or health and safety regulations that would be frozen just like all the rest of them. One example would be OSHA. Many important OSHA --

MR. LEHRER: That's the Occupational Safety & Health Organization.

MR. WALDMAN: Worker safety rules to protect workers in the work place such as affecting cadmium and formaldehyde. If you look at the Bush administration's budget that they put out last week, even they estimate that in terms of the lives that would be saved by these standards, a three month delay could cost 289 workers their lives. Is it really necessary to have a blanket moratorium across- the-board to ferret out those few regulations that Mr. Gray says are unnecessary paper work, it's going to affect those as well?

MR. LEHRER: Mr. Gray, what about that? Sen. Glenn said today the same thing, that just by freezing the regulations that Mr. Waldman is talking about for 90 days could cause 288 deaths.

MR. GRAY: Well, I haven't seen the precise details on that, but the materials that the President has issued make it very clear that exempted from this moratorium are regulations under a statutory or judicial deadline and those which are necessary to protect against harm to the safety of workers or to the environment.

MR. WALDMAN: Mr. Gray, you know that isn't true. What it says is if there's an emergency, with an immediate danger to life. Now, if this counts as an emergency, that's news to the agencies and it's news to everybody who's followed this. Nobody believes that regular OSHA rule making, worker safety rule making, is going to be protected by this. Are you saying that it is?

MR. GRAY: If there's a single life at stake, believe me, we're not going to hold up anything that would affect a single life or even remotely jeopardize the health and safety of any worker in America. The focus of this is on jobs to make sure that we are not needlessly strangling primarily the small businessman.

MR. LEHRER: Mr. Flavin, what about that phrase, "needlessly strangling" small business through regulation, what's your view of what the President and Mr. Gray and his folks are going to find when they do this 90-day look?

MR. FLAVIN: Well, I think I agree with Jack Kemp. This is basically one of the givens in the President's State of the Union message.

MR. LEHRER: I guess you knew that was coming, did you not, Mr. Gray?

MR. FLAVIN: It is very clear according to a lot of very solid economic evidence that's out there, including a study by the Harvard Business School, which suggests that overall environmental regulation, many of these other regulations actually help the competitiveness of American business. It helps us make cleaner cars, better technology, safer technologies, that we're going to need to have to compete with the Germans and the Japanese and others.

MR. LEHRER: Give me an example of where a regulation has helped the competitive edge, rather than hurt it.

MR. FLAVIN: I'll give you an example of a regulation that should have gone forward but that was stopped by the Reagan administration.

MR. LEHRER: That's not -- give me one that they might find and want to eliminate that you think is helping business, rather than hurting it.

MR. FLAVIN: Well, I would call attention to a lot of the things under the Clean Air Act which may or may not be affected, depending on what the Quayle council decides to do. But if American industry is going to be competitive internationally and going to be able to sell its products abroad, we have to have clean manufacturing processes. There's rapid technological evolution going on, and as the Harvard Business School suggests, American industry needs to keep responding to those regulations. See, what this new proposal does is it basically adds a new layer of red tape to what the agencies have to deal with and with what the businesses have to deal with.

MR. LEHRER: How does it do that?

MR. FLAVIN: It's going to slow the rule making process. It's not even clear what 90 days mean. I mean, these, all of these regulations, hundreds of them, are in different tracts, moving by different schedules, suddenly everything freezes. Everybody has to stop. Businesses who are responding don't know what's going to happen next. The confusion, itself, is going to hurt American competitiveness more than anything else that they're trying to avoid.

MR. LEHRER: What are you going to do about the confusion? You concede there's some confusion now about what this all mean?

MR. GRAY: I don't think so. Ninety days is but a blink in the life of a regulation, a blink of an eyelash in the making of the regulation. What we're seeking to do is to use this 90-day period to focus attention on areas where change has made a regulation outmoded, and when we plan to make some changes. Take biotechnology, for example. This is not an area which is unregulated. We are not trying to eliminate regulation.

MR. LEHRER: When you say biotechnology, what do you mean?

MR. GRAY: I'm talking about all of the new products that science can make available both for agriculture and for the benefit of human health. They are complex products, but they have great promise. We are in this country still the leader in the world. We are the leader in part because our regulatory regime is the most efficient. We want to keep it that way so that this industry, which will be the largest in this country in 20 years, remains headquartered in this country.

MR. LEHRER: Mr. Hunter, to the broader point that Mr. Flavin mentioned, that regulation is actually good for business because it helps them produce products that can compete in the international market.

MR. HUNTER: Well, I think the entire nature of this conversation illustrates why it's so difficult to talk about regulation. It's an emotional issue, the health and safety of workers, and our citizens are concerned. But the fact of the matter is, regulation, as all political decisions, is a weighing process. It's a balancing process. One can always find something to do to save lives. And although we don't like to talk about that balancing process putting a figure on human life, in fact, that's the nature of everyday life. We engage in a balancing process. Congress engages in a balancing process whenever it legislates. The difference in the regulatory arena and the normal legislative arena is Congress has a budget and it is all open, and we make the trade-offs and we know what we're paying for and hopefully, throughout the debate we have some notion of what we're getting in return. What is happening with the large regulatory burden that is beginning to grow up is, in effect, government that is strapped for money is finding new ways to implement their programs with a large difference, the budget, the regulatory budget is being pushed on businesses. It's not being in the open and we don't go through a process where you balance the cost and the benefits.

MR. LEHRER: Have you got an example of that? What do you mean?

MR. HUNTER: The Clean Air Act is a very good example. This was an enormous bill, very complicated. The science that's involved is beyond the understanding of most of us. It was debated for a long time and passed. When you look at the Act, it's very general. Some areas are very specific but the goals are general. The regulators will have to make very important decisions. And the question of what the benefits are versus the cost will be made in the regulatory process. I think what the President --

MR. LEHRER: And you don't think that's the way to do it?

MR. HUNTER: I think if that is the way it has to be done, then it should be a rigorous process. And that's the reason I believe this moratorium is important because it permits us to think about where we are, to think about how you put in place a process, a systematic process by which to weigh the cost against the benefit.

MR. LEHRER: Let me ask Mr. Waldman and Mr. Flavin something as critics of what the Bush administration is proposing. The National Journal in a cover story on November the 30th, the headline was "The Regulatory President," said this, "Despite President Bush's anti-regulatory rhetoric, his first term has witnessed the broadest expansion of government's regulatory reach since the early 1970's."

MR. WALDMAN: Well, as that article pointed out that's kind of climbing out of the Grand Canyon. During the Reagan administration you had absolutely the most dramatic anti-regulatory period in recent history from the deregulation of the S&Ls, deregulation of worker safety and everything else. So while it's true that there has been some increase in the Bush administration in regulation, these people are not wild-eyed deregulators. You look at Mr. Gray and you know that he's not in there making all sorts of irrational regulations. And to me, that's one of the absurdities of this whole idea of a 90-day moratorium. It's like when Pogo said --

MR. LEHRER: Your point is that they've been slow to regulate in the first place?

MR. WALDMAN: They've been slow and they're the regulators. They're saying we've met the enemy, like Pogo said, and he is us. The big government red tape regulators that this moratorium is aimed at are appointees of Ronald Reagan and George Bush, and they already go through an extremely rigorous cost benefit analysis, very high standards, even at this point up to three cost benefit analyses per regulation, three separate times, and finally it's been going through the Quayle Council on Competitiveness, which it's kind of funny to hear people call for openness in regulation. The Clean Air Act, on the one hand, was debated for 10 years ad nauseam on the floor of Congress. The Quayle Council operates in secret. They won't tell the public who they're meeting with. They won't tell the public what regulations they're involved in. They won't tell the public what evidence they're using.

MR. LEHRER: Let me ask Mr. Flavin, this general point that the Bush administration and the Reagan administration before has created these regulations, now they're -- how do you see what Mr. Waldman just said, the Pogo analogy?

MR. FLAVIN: The whole argument is bizarre. They have been in control of this government for three years now. Despite the fact that they claim to be an environmental administration, kinder and gentler, they've been leaning over backwards through the Quayle Council and other mechanisms, leaning over backwards not to support the competitiveness of the country overall, but really to support special interests that in some cases come in the door and ask for changes, in some cases the Vice President's actually going out and soliciting recommendations, which regulations would you like us to slow down or stop.

MR. LEHRER: Is that the way the Chamber sees this?

MR. HUNTER: Let me see if I can put this in perspective. We're not talking about rolling back major regulations.

MR. LEHRER: Oh, I think that's what Mr. Gray's talking about.

MR. HUNTER: What we're talking about initially in the 90-day period is a stop and look. Remember why the President brought this up. The economy is struggling, as Mr. Boskin said earlier today. The economy is burdened every day by new regulations. What this offers is an opportunity to stop, give the economy a chance to begin reviving, and we're not talking about rolling back regulations, we're talking about delaying the implementation of new regulations. In fact, what we would like to see is we would like to see this go even a little further. Rather than getting into what is certain to develop a separation of powers battle over how much authority the President has, we would like to see legislation sent to the Hill where the President asks Congress to hold in abeyance new regulations that have a detrimental effect on the economy until such time as the economy revives to some measure of performance that perhaps would be measured in the legislation.

MR. LEHRER: Is that a likely, a likelihood, Mr. Gray?

MR. GRAY: I don't think at the moment, no, in part because one of the reasons we're doing this is because Congress has failed to act on many of our deregulatory initiatives, especially in the area of financial services, banking, and energy. We need to deal with the credit crunch. The President has sent up legislation now for some time that would alleviate the credit crunch, not completely but help, and achieve a bill that would help diversify our energy sources to reduce our vulnerability and clean up our environment. Congress has not acted. We must now, given the economy, move to do what we can internally.

MR. LEHRER: Which is by executive order.

MR. GRAY: Or by, through the administrative process to do what we can and then hope Congress will fill in what we cannot do later, but we cannot wait for them to ask.

MR. LEHRER: Mr. Hunter and I must have misunderstood. One of us has misunderstood you. I heard you to say that you were going to roll back some major regulations if it comes to that, you're prepared to do it, and that's one of the --

MR. GRAY: We are going to use this 90-day period to review existing regulations, to see where technology or the marketplace has rendered some parts of them obsolete, and if there is an opportunity to relieve the public of burdens that are not now producing benefits that we will do so.

MR. LEHRER: And the end result of that, Mr. Waldman, in a general way is going to be what?

MR. WALDMAN: Well, in a general way, I think it's going to have minimal positive impact on the economy. Nobody really thinks that it's government regulation under Reagan and Bush that's choking off the economy right now. If anything, if you look at the savings & loans, deregulation did more to hurt this economy and put us in this recession than regulation. But I think in a very specific way there are going to be lives lost and necessary protections for consumers or the environment or workers that are going to be on "hold," and that are going to be hurt in the future. It's really true that in some ways this 90-day moratorium, which, if anything may be overturned by the courts, we believe it's utterly illegal and in violation of statutes, this isn't as important as the review process which could turn into a regulatory witch hunt.

MR. LEHRER: Is it illegal?

MR. GRAY: No, absolutely not. As I said, we are not going to ignore by this process statutory judicial deadlines. But I want to respond to another point that was made about the S&L crisis. President Bush, when he was Vice President, set up through President Reagan legislation which would have headed off much of the S&L crisis that we face today. It was not acted on, parts of it, relevant, until five or six years later. Many of the regulatory problems were the result of Congress interfering in the oversight function of the regulatory agencies that did not belong to us but belonged to Congress. That is one of the things that we are trying to correct in this process.

MR. LEHRER: Fortunately, we're out of time, gentlemen, so we don't have to go through the S&L crisis, at least tonight, but thank you all four for being with us. Robin.

MR. MacNeil: Still ahead on the NewsHour, Paul Tsongas on the stump, Ukraine looks to capitalism, and Jamaica does the same. SERIES - '92 - MAKING HIS CASE

MR. MacNeil: Next tonight, another in our series of extended excerpts from the stump speeches of Presidential candidates. Tonight we hear from Paul Tsongas, the former Senator from Massachusetts. He spoke yesterday at a rally at his Alma Mater, Dartmouth College in Hanover, New Hampshire.

PAUL TSONGAS, Democratic Presidential Candidate: What I'd like to do tonight is something that I could only do on this campus and give you a sense of what got me to this particular place and why it's relevant to my candidacy. I grew up in Lowell, Massachusetts. I think some of you when you drive down have a sense of that city. I grew up in a very disadvantaged home. Both of my parents were Republicans. [laughter] The furthest I'd been from Lowell, Massachusetts when I graduated from Dartmouth was Annapolis, Maryland, and that student 30 years ago walking on this campus decides to join the Peace Corps. It is so improbable, so why did it happen? Because in those days there was a President who said to you there's a larger purpose, there's something beyond self that called you to a higher sense of what life is about. And so I and others in this campus were part of the first group that went into the Peace Corps. The fact is that I learned in the Peace Corps that there is more to this than just existing, that what is worthwhile in life is not the endless search for the next BMW, that there has to be purpose and meaning in the fact that we breathe and we live. And what I'd like to be is the President who brings that back. [applause] At some point there has to be a set of principles. At some point there must be a core of you and of this country that is inviolate; there are some principles so strong that you say I'd rather lose. That's not we have. Now, let me give you an example. Women's rights -- a woman's right to choose is fundamental. [applause] I'm the only candidate running for President on the Democratic side who does not have to explain away a prior statement or a prior position. I didn't evolve on this issue. I've been there. [applause] What about George Bush? He used to be for planned parenthood, but what he wanted was the Presidency. In order to get the Presidency, he had to placate the Reagan right. So George Bush made the journey to anti-choice. That was a Faustian bargain. The environment, the environmental President, they tried to wipe out half the wetlands in America till there was an outcry. How do you call yourself the environmental President and when they come in to you and say, Mr. President, we're going to get rid of half the wetlands, something inside of you does not say, I can't, I made a commitment, so when they said, yeah, go ahead, let's try it, it meant there's no core, there's nothing that says to you, enough, I believe in something. The reason I decided to run was because I've been out of government for seven years, I live in the private sector, the real world. And anybody who lives in that world knows clearly we're not competing. We are not competing. This is not a business cycle we're in. This is a business cycle on a down slope. And that down slope is our inability to compete with Japan, Germany, et cetera. And that down slope means eventually massive debt. Ronald Reagan and George Bush have given you a present. When he leaves a year from now, the two of them together will give you, your generation, $3 trillion more of American debt. We go from less than 1 to 4. And their attitude is well, gee that's a shame, isn't it? We're going to spend $200 billion this year to service the debt. You can imagine if we took that 200 billion -- did I say million or billion -- billion for things like scholarships or Head Start or basic science. We are now paying the price of the excess of the '80s, so my job was to make people understand the economic threat that this country faces. My second role is to change my party. The Democratic Party has got to get its act together. The Democratic Party, what is our history these last several years on the Presidential level? We have lost, we have lost, we have won, we've lost, we've lost, we've lost. You think eventually people would listen to that and say, hey, there's a pattern here. [laughter] Democrats are pro-jobs, anti-business, and never understand that they can't exist in the same world. Democrats love employment. It's employers they can't stand. They don't understand that you have to create wealth first, and then distribute it. It's like they think of themselves and the economy like an ATM machine. You show up and push the buttons, you know, and the money comes out, never thinking that someone had to put the money in the other side. That's why we lose. So what I'm saying to the Democratic Party is the definition of liberalism is the person who can expand the economic pot. And if someone cannot do that, they're not a liberal because a shrinking economic pie creates by definition an illiberal society. The truth is you put your resources into the engine that drives the economy, the manufacturing base. The manufacturing base, the industrial base of this country declines, there is no economy. So no middle class tax cut, not now, maybe not for another four years, no tax cuts for children, take all our resources, put it into providing jobs in the private sector where people get well paid, pay taxes and provide for their families. I want to be for your generation what President Kennedy was for mine. I want to call you to something larger, beyond self. You don't have to go into the Peace Corps, but in the lives that you live, there has to be meaning beyond getting up and breathing and going to bed. You know, we're all going to be laid into the ground some day and the question's going to be asked, what did you do, not what did you become. If you become President without principles, there's no value in that, but what have you all done and what have we all done in our lives, giving to others, reaching for something larger, more noble? That is what I want to infuse in our people. And if I do that beyond simply getting elected and turning the country around economically, I've done something very valuable, something almost sacred in its implications to the society and what holds those together. And if I can do that, some day even some of my classmates will say, not bad for a son of Dartmouth. [applause] Thank you very much.

MR. MacNeil: That was Paul Tsongas. Our stump series continues tomorrow night when we hear from Arkansas Governor Bill Clinton. FOCUS - COST OF FREEDOM?

MR. LEHRER: Now a report from a new country whose politicians would love to be making the kind of economic speeches being heard in the United States. Our report is from Ukraine, one of the former republics of the old Soviet Union. Last weekend, Ukraine leaders got some advice on free market economics from an international financial organization. Nik Gowing of Independent Television News reports.

MR. GOWING: Dawn over Ukraine. An executive jet flies the president of the new European Bank for Reconstruction, Jacques Attali, and his banking advisers on a whistle stop, one day mission to Kiev. By the time they return to London the same evening, they will have confirmed the bank's commitment to invest in modernizing the new sovereign Ukrainian state's crumbling infrastructure. The new government here has simply moved into the old centers of Communism like the old party headquarters, but in the corridors and offices, old attitudes are still in place, an apparatus flailing around, inertia masked by the euphoria of breaking free.

VITALY SKLYAROV, Minister of Power, Ukraine: I believe that we now completely independent, completely, in all questions, financial, technical, international relationships, everything now, everything we are completely independent of any country, including Russian, of course.

MR. GOWING: For the Ukraine, the new independence and national identity is carrying a high price. The replacement of rubles by these Ukrainian coupons is creating even more havoc than independence would have created anyway. It has also stalled the minimal privatization and reform plans the leadership had reluctantly begun to introduce here. Many Ukrainians have welcomed the new coupon system as a symbol of sovereignty and nationalism, a clean break from Russia, the ruble, and Boris Yeltsin. But it is also a symbol of the economic naivety and the financial tinkering in new states like Ukraine. Changing a currency is not economic reform. The coupon system has aggravated the shortages of food and consumer goods and pushed prices up still further. The new government failed to order enough coupons from the French princes so workers are receiving credit notes in their wage packets. Many Ukrainians travel to Russia to shop to use up surplus rubles.

WOMAN: [Speaking through Interpreter] It is terrible, both the coupon system and the monetary system.

WOMAN ON STREET: [Speaking through Interpreter] It would be better if we had our whole salary in coupons. The problem is there are not enough coupons.

MR. GOWING: But as the likes of President Ataly emphasized, Ukraine's prime minister, Vitold Fokin, among others, economic reform is not about a new currency; it is about creating new tax, banking and judicial systems, taxes which people cannot evade as they do now, which will provide the revenues needed to finance reform and the enormous social costs of axing tens of millions of jobs in factories with no future. But the question is: How much of the message has got through?

VITOLD FOKIN, Ukraine Prime Minister: [Speaking through Interpreter] As a result of our discussions we have concrete answers to our acute problems.

MR. GOWING: In the streets though patience is wearing thin. Some are beginning to call President Kravchuk a traitor. These are examples of the mounting social costs of independence, Ukrainians demonstrating outside parliament because they are homeless or jobless, lobbying a leading nationalist MP to get their cases heard.

LEVKO LUKYANENKO, Ukraine Republican Party: The people get a very small salary and this money is very short to buy food and some other necessary articles.

MR. GOWING: Have people begun to feel any reforms, any benefit from reforms here?

LEVKO LUKYANENKO: In practical word, the people did not feel any better these days.

MR. GOWING: Ukraine is now witnessing the same kind of scenes which forced the politicians of Eastern Europe to have second thoughts on the speed of reform. Ukraine must now find its own way.

JACQUES ATTALI, European Bank for Reconstruction: The problem is that it took in Western Europe seven centuries to organize a market economy and a democracy and we cannot ask them to do it in a fortnight. Then it will take a little bit of time, they understand perfectly what it is needed. Maybe there are somewhere in the public opinion some illusions about the fact that it will be quick. It's not going to be quick but the leaders understand it will take at least a decade, if not two decades, to organize it.

MR. GOWING: In Ukraine, the European Bank, backed by 7 billion pounds from 40 nations, is quietly looking to that long-term to renew the infrastructure, in the streets, the sewers and drinking water systems, the funding of a new digital telephone system without which business cannot develop, to bridge the chasm between the expensive private market and the failed state system, the funding of prototype wholesale distribution networks. There's also money to tackle the massive toxic pollution problems and the terrible legacy which still haunts 4 million Ukrainians like this engineer, who helped clear the debris of the Chernobyl disaster six years ago and who's now suffering from radiation sickness and is redundant. This is the price of reform, the price the new sovereign republics say the West must help them to bear.

MR. LEHRER: Next door to Ukraine, Poland has been trying for two years to convert from Communism to market economics, but in a speech to a European Organization yesterday, Polish President Lech Walesa said his people are growing disillusioned, and, in his words, the fruits of victory have turned sour. A poll published in Warsaw yesterday said only one in four Poles now favor free enterprise. FOCUS - PARADISE LOST?

MR. MacNeil: Finally tonight, a look at another government struggling to come to terms with capitalism. The country isJamaica. During the 1970s and '80s, Jamaica relied heavily on government intervention to run the economy and provide basic services. But not anymore. Business Correspondent Paul Solman of public station WGBH-Boston explains. Video portions of this report come from the forthcoming WGBH series on Latin America and the Caribbean called "Americas."

MR. SOLMAN: [music] Better must come. It was the upbeat refrain of the Jamaican economy during the 1970s. Today, it's meant as irony in this hit song of protest.

MR. BARUKA: I see the rich getting richer and the poor dying.

MR. SOLMAN: In the voice of a judge, Jamaican poet Muta Baruka is blasting his country's politicians for two decades of borrowing which have left Jamaica up to its eyeballs in debt.

MR. BARUKA: You keep borrowing money from the IMF and the World Bank in the people's name, continuing the oppression of black people by the colonialist masters. Why you can't learn?

MR. SOLMAN: The IMF Muta Baruka denounces is the International Monetary Fund, the lender of last resort to the third world. The IMF lends money. In return, economies like Jamaica's must adopt a free market approach. It can be bitter medicine, especially in Jamaica, a country with a proud history of caring for its poor. In fact, its dominant political figure, Prime Minister Michael Manley, made his name in the 1970s as a champion of the dispossessed with his theme song "Onward Christian Socialists."

MICHAEL MANLEY: Onward Christian Socialists.

MR. SOLMAN: In the '70s, Manley was a Socialist fire brand. Elected by the poor, he borrowed money from abroad to help them improve their services, create jobs for them through state-owned businesses. But foreign investors saw the specter of Communism and when Manley met with Fidel Castro, they began to pull out. Back home, the debts were mounting, the state businesses losing money. Michael Manley was voted out. The 1980s saw renewed social spending, renewed borrowing. The money created an economic boomlet, followed by a crash. In 1989, Michael Manley was back on the campaign trail. He won, only by this time he was a convert to capitalism, convinced that socialism hadn't work.

MICHAEL MANLEY, Prime Minister, Jamaica: So you begin to think back into how did the grit economic success stories of history arise, what did they arise from, from drove them, and have you perhaps tried to bypass history, and do something out of fez with history. Maybe that's a rather pompous way to put it, but it's something like that that went on in my mind during the '80s and really led me to turn my processes inside out. Sometimes I remember remarking to somebody about it the other day, that I now take market economics as a given and try to work back from that into the great objectives of social democracy, you know, which are about justice, opportunity, caring, and so on and so forth.

MR. SOLMAN: Today an older, some would say wiser Michael Manley reports regularly to the IMF on his country's economic reforms. Progress toward a free market is a condition for continued borrowing. Here he's meeting with Deputy Managing Director Richard Erb.

RICHARD ERB, International Monetary Fund: The kinds of reforms that we are encouraging Jamaica to implement and the World Bank are reforms that would increase the growth in the economy, increase its productive potential and in that way provide the domestic resources so that they can deal with the poverty that exists in that country.

MR. SOLMAN: Michael Manley and Jamaica are a good test case for the IMF approach developed here in Washington. It's being touted almost everywhere in the world these days as a solution to, among other things, the debt problem, the sort of free market fundamentalism whose basic tenets are nearly commandments in places like Jamaica. And IMF commandment No. 1, you could say, is get the state out of the economy by putting unprofitable state firms into private hands. In the tourist industry, for example -- [music] in Montego Bay on Jamaica's North Coast, American tourists and their dollars have the economy hopping. This is Sandals, a fashionable couple's resort. Michael Manley says that it shows the free market in action, employing 330 Jamaicans selling its services to tourists from all over the world. Butch Stewart, a former high school dropout, owns the Sandals chain.

BUTCH STEWART, Sandals Resorts: I'm a hard, hard believer that free enterprise is the only way. I've seen the aspects of it at work and I've seen the aspects of state operations and control that don't work.

MR. SOLMAN: Stewart took over a state-owned money losing hotel and is now turning a profit. He thinks private enterprise not only puts money in people's pockets, it also teaches them marketable skills, people like Lebert Bernard, age 27.

LEBERT BERNARD, Waiter: It's good pay and when I came here, I didn't know nothing. I sat in the corner here after breakfast in the morning for approximately two hours in the morning, and then I would just set the table, put down water glasses, what side to serve from, food from the left, beverage from the right, all those things.

MR. SOLMAN: It may not seem like much, but Manley and the IMF seem self-improvement, however modest, benefits everyone in the end.

LEBERT BERNARD: I don't want to work all the days of my life working for people, you know. I want to work so I can employ people. More business is better so you can employ more people, less unemployment.

MR. SOLMAN: The IMF would love Lebert Bernard to start his own business because unemployment is a huge problem in Jamaica, a problem made worse in the short run when bloated state firms are privatized and workers laid off. Okay. On to IMF commandment No. 2, as we'll call it, reducing government subsidies, including those to the poor. The benefits are obvious. You have more money to revive the economy and to pay off your debts, but there are also costs to reducing government subsidies. Kingston, Jamaica's capital, a city of a million plus with massive unemployment. In crime-ridden West Kingston for 15 years, the poorest of the poor have been ministered to by Father Richard Albert.

REV. RICHARD ALBERT: You're Tony Mosco's sister. Yeah, come Thursday and we'll talk, yeah. You have to remember that the vast majority of these people are terribly, terribly poor and survival's the name of the game. And this whole problem of the debt crisis, the whole struggle of the debt is lived out on this street. Well, when the government doesn't have enough money to pay the debt, they take it from social services and so that housing, health, employment opportunities, all of those are almost non-existent, when we have to put almost 50 cents of every dollar to pay back the banks of Northern America.

MR. SOLMAN: To the good Father and others, the price of IMF austerity, cutting subsidies, repaying the debt, is social meltdown, crime and violence, as Jamaican TV makes clear.

JAMAICAN TV ANNOUNCER: What police said appears to be a robbers' spree by four gunmen started at 7 Mandela Avenue when 42 year-old businessman Glenn White was left dead in his living room, the victim of a bullet to the head.

MR. SOLMAN: So the IMF austerity approach is even harder to live by than getting the government out of the economy and even the IMF admits it.

RICHARD ERB, International Monetary Fund: Yes, there will be criticisms of people who are living in dire poverty but the reality is the only way that you're going to help them is to begin and accelerate the reforms that are underway.

MR. SOLMAN: For all of the criticism, Richard Erb is sticking to his guns. Cutting subsidies can be painful in the short run, but the IMF believes it's in for the long haul in trying to turn around the economy. And so that leads us to what we'll call IMF commandment No. 3, encourage exports so you can get money into your economy and help pay off your debts. So back in Jamaica, the IMF wants them to keep exporting the commodities of the past, bauxite, the ore for aluminum, sugar and bananas. But even more, it wants Jamaicans to export goods and services by exploiting its huge pool of unemployed labor. One way that Jamaica's found is by creating tax free zones. Exporters get a tax break, Jamaica gets jobs, and dollars from abroad to pay its debts. A U.S. firm called Oneida found the tax deal so attractive it helped build this Jamaican T- shirt factory.

MR. SOLMAN: How's the money?

SPOKESPERSON: It's okay. It could be better, but it's okay.

MR. SOLMAN: Workers in both the factories and the service sector make about 70 cents an hour here to enter data. Market surveys are key punched, the data is then sent back via satellite to the United States. But there's a problem. With the IMF pressing every other third world country to push exactly the same sorts of exports in both goods and services, it's questionable whether these businesses will ever bring the prosperity the IMF promises. Finally, we get to what we'll call IMF commandment No. 4 for turning around the economy and paying off the debt, discourage imports. One way to do that is obviously to devalue the Jamaican currency so that goods from abroad will cost more, people will buy fewer of them. Another way to do it is to raise taxes on imports. But there's been a lot of resistance to raising taxes on imports in Jamaica, especially from the working class entrepreneurs known as the "higlers." For years, these so-called "informal importers" have traveled to duty free Caribbean ports and the U.S., brought back consumer goods tax exempt. Now, Manley, under the influence of the IMF, is taking away those exemptions and the people are angry.

SPOKESPERSON: [Speaking through Interpreter] Their speaker boxes were playing Muta Baruka's People's Court and Jamaica's politicians were again being tried and found guilty of forcing poor people to carry more than they could bear.

MAN: We are the poor people in this country and we should get special contraband here because we are the poor people.

MR. SOLMAN: It's true, says Manley, that the higlers show admirable enterprise, but what the country needs today is Jamaicans who make their own clothes, process their own food, and the higlers aren't helping.

MICHAEL MANLEY: One of the things that it presents is to destroy the local shoe industry. They just destroyed it when they walked through without custom duty, things that they picked up somewhere as second goods, and then flood them on the market, thus ended the local shoe industry. How are you going to operate a country that way?

MR. SOLMAN: The problem is it's not just shoes. There's a deep negative bias against any goods made in Jamaica. If there was the same dress made in Jamaica and made coming from the states, same, exact dress.

WOMAN: They would prefer to buy the one from the states.

MR. SOLMAN: Why?

WOMAN: They look at it and they say it don't say where it's come from; I say it's local made, they say they don't want it. They say I don't want it.

MR. SOLMAN: When you boil it all down, the IMF strategy is in the end to turn the Jamaican economy around slowly but surely. But in the global village of the 1990s, Jamaicans or any other third world people for that matter have seen the future and they want it now.

ORLANDO PATTERSON, Caribbean Scholar: The fact that we're so close to America, the fact that America is our reference group, the fact that we're swamped by American mass media and the fact that a large proportion of the population has traveled to the United States means that the things we want are determined by America, which creates real havoc for a country and the middle class looks at "Dallas" every week and says, that's what we want we can't get in a poor country. So the way they do is to go to America and, in fact, create these colonies.

MR. SOLMAN: Those colonies are now as much a part of the Jamaican economy as the tax free zones or tourist hotels. Little Jamaica, for example, here in Brooklyn, New York, at the local record store, Muta Baruka is again condemning the policies of Michael Manley and the IMF. Jamaicans come here in droves as nannies, nurses, migrant workers, admiring a small portion of America's wealth and ship it back home. The money they earn doesn't show up in IMF statistics, but it helps support thousands of Jamaican families. It also buys Manley and the IMF time for their free market programs to kick in. For many Jamaicans who come to the states though, making a buck is a lot tougher than they expected.

JAMAICAN: Well, I heard about New York and I heard about the honey and the milk, you know, that they are there. I wanted to get some of the honey and milk too.

MR. SOLMAN: Did you get any honey and milk?

JAMAICAN: No.

MR. SOLMAN: What have you gotten?

JAMAICAN: Bills, bills, that's all I got, bills.

MR. SOLMAN: So why do you stay?

JAMAICAN: Because I want to make some money before I left, because I ain't got nothing much in Jamaica. So I just want to make a lot of money here and then go back to Jamaica, buy me a house, get me a minibus and stuff.

MR. SOLMAN: For centuries, Jamaicans who wanted stuff like minibuses had to look elsewhere for them. Michael Manley and the IMF are trying to change that. Optimists, they believe better will come, reviving the economy, reducing the debt, and so Michael Manley's plea to Jamaicans is for patience. His plea to people like you and me, American tourists with our Yankee dollars, let's get together and feel all right. [music] RECAP

MR. MacNeil: Again the main stories of this Wednesday, President Bush sent his annual economic forecast to Congress, it predicted that after a sluggish start the economy would pick up by mid-year. A new study found U.S. students trailing students from other countries in math and science. Sweeping changes were proposed in U.S. spy agencies by the chairmen of the Congressional Intelligence Committees. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night with full coverage of President Bush's planned announcement of his health insurance reform proposal. I'm Jim Lehrer. Thank you and good night.