The MacNeil/Lehrer NewsHour

MS. WOODRUFF: Good evening. I'm Judy Woodruff in Washington.

MR. MacNeil: And I'm Robert MacNeil in New York. After the News Summary this Wednesday, we have a Newsmaker interview with President Clinton's trade representative, Mickey Kantor, then a report on Oregon's search for federal approval of its health care rationing plan, next an update from Yugoslavia, and finally remembering Helen Hayes. NEWS SUMMARY

MS. WOODRUFF: At least six people died and fifteen were injured in Florida today when an Amtrak passenger train slammed into a gasoline tanker truck. It happened at a Fort Lauderdale crossing in mid-afternoon. All of the dead and injured were in vehicles at the crossing which was engulfed in flames after the crash. The train was carrying 108 passengers and 10 crew from New York City. All on board were safely evacuated. Robin.

MR. MacNeil: Consumer prices rose moderately in February. The Labor Department said inflation was up .3 percent, following 1/2 percent gain in January. In a separate report, the Federal Reserve said industrial production rose .4 percent in February, the fifth straight monthly increase. On Capitol Hill a debate began on President Clinton's economic plan. Members of the House argued over the need for a short-term stimulus package.

REP. RICHARD DURBIN, [D] Illinois: I hope that this economy is in recovery. I hope that this recession is over. I hope that this economic stimulus and investment package is unnecessary, but if the other side of the aisle is as wrong today as they'd been for the last four years about the state of the American economy, I say let's stand behind the President. Let's make this investment in America.

REP. JOHN PORTER, [R] Illinois: We have a $6 trillion economy, a $1.5 trillion federal budget. We are already stimulating this economy this year to the extent of $330 billion. Will $16 billion more of spending grow the economy faster than it is already growing? Of course not, Mr. Chairman.

MR. MacNeil: Votes are expected on the stimulus package and a budget resolution tomorrow. U.S. trade negotiators sat down with their Canadian and Mexican counterparts today in Washington. They're trying to work out side agreements to the treaty creating a North American free trade zone. The so-called "NAFTA Agreement" was negotiated by the Bush administration. President Clinton has said he will support it of Mexico and Canada accept side deals to protect worker rights and the environment. We'll have more about Clinton trade policy and an interview with his trade representative, Mickey Kantor, right after the News Summary.

MS. WOODRUFF: Officials in India said today that two people had been detained in a massive bombing in Calcutta but it remained unclear exactly who was behind the fatal blast and whether it was a terrorist attack. Richard Vaughan of Worldwide Television News narrates this report.

RICHARD VAUGHAN: Closely associated with India's ethnic tensions, the sight of the blast was not an obvious terrorist target. So far no group has claimed any responsibility for this, the second bombing outrage in less than a week. Late into the day, bodies were still being hauled out of the rubble, the buildings mainly used as cheap lodgings. The victims were mostly poor, itinerant laborers and homeless street vendors. Police have ruled out any connection with last Friday's massive string of blasts in Bombay. This time the criminal underworld is suspected and arrests have been made. Hospital sources put the death toll at around 60 and likely to rise as search operations continue. At least another 100 people have been injured, many seriously. Most of the dead were close to the center of the blast. Many of the injured were in nearby buildings which, weakened by age, just collapsed. Possible clues to the bomber's identity may lie in the area's proximity to both the police headquarters and a major underworld-run red light district.

MS. WOODRUFF: Two men were indicted today for the World Trade Center bombing in New York. Twenty-five-year-old Mohammed Salameh and Nidal Ayyad, also twenty-five, were arrested earlier this month and are being held without bail. The Wall Street Journal said today that three other suspects fled the country 48 hours after the first arrest. The bombing killed six people and injured more than 1,000. Cleanup at the Trade Center is ahead of schedule. Officials said that tenants will begin returning tomorrow, two weeks earlier than anticipated. An immigration judge in New Jersey has ruled that a controversial Muslim cleric can be deported. Sheikh Omar Abdel- Rahman has links to at least one of the Trade Center bombing suspects. He is also a spiritual leader for Islamic fundamentalists in his native Egypt. He was charged but later acquitted in the 1981 assassination of Egyptian president Anwar Sadat. In Egypt today, at least 10 Muslim extremists were killed when police attacked their hideout in a southern city. The raid followed the bombing of several empty tourist buses outside a museum in Cairo yesterday. Extremists have waged a yearlong terror campaign aimed at overthrowing the Egyptian government.

MR. MacNeil: There was more unrest in the Israeli-occupied territories today. At least 40 Palestinians were wounded in the Gaza Strip during clashes with Israeli troops. Two Palestinians died and eighty were injured in Gaza fighting yesterday. In the West Bank, Jewish settlers attacked an Arab-owned gas station. The settlers were angry over the killing of two Jews Monday when they were struck by a van driven by an Arab. The United States ordered a rapid reaction force to a southern Somali city today because of new fighting. A military spokesman said the 500- member force would be deployed in Kismayu within 24 hours. One of two warlords vying for control of the town broke a cease-fire Tuesday, attacking his rival's forces. The United Nations suspended Somali reconciliation talks today until it obtained more information on the situation.

MS. WOODRUFF: In Bosnia, Serb forces allowed three aid convoys to enter the country today, but another convoy meant for the town of Srebrenica remained stuck at the border where it has been for the past week. Thousands of Muslim refugees are in the town, many of whom are seriously injured. U.S. officials said today that Serb planes bombed several towns in the region over the weekend, violating the U.N. no-fly zone. We'll have more on the Bosnia story later in the program.

MR. MacNeil: The death toll from yesterday's fire at a hotel in Chicago rose to 16 today. This morning, work crews found another body in the charred rubble of the residential hotel. There were about 130 people living in the building, many of them poor and elderly. Fourteen people are still missing. The hotel recently passed its fire inspection. Officials said a space heater may have started the blaze.

MS. WOODRUFF: Gay rights demonstrators protested their exclusion from New York City's St. Patrick's Day Parade today by staging a counter march on the parade route. At least 135 people were arrested. Many sat down in the middle of the street shortly before the official parade began. It has been sponsored for 139 years by a Catholic organization known as the Ancient Order of Hyperbians. They refuse to allow the Irish gays to march.

MR. MacNeil: Defense Sec. Les Aspin was back in the hospital today. Doctors at Georgetown University Hospital said he will have a heart pacemaker implanted tomorrow. He spent five days in the hospital late last month being treated for a heart ailment. Helen Hayes, the actress known as the first lady of the American stage, died today at the age of 92. She passed away at a hospital near her home in Nyack, New York. She was admitted last week suffering from congestive heart failure. We'll have more about Helen Hayes later in the program. Also ahead on the NewsHour, President Clinton's trade representative, Mickey Kantor, the Oregon health care rationing plan, and a Bosnian town under siege. NEWSMAKER

MR. MacNeil: First tonight, Bill Clinton's trade policy. The President, who rode into office talking about the economy, now faces a broad and tough agenda of trade negotiations that will greatly impact his domestic plans as well as the nation's relations with the rest of the world. Today, as a new round of trade talks began with Mexico and Canada, we'll hear from the administration's point man on trade, Mickey Kantor. But first, Correspondent Charles Krause has some background.

MR. KRAUSE: There's no more politically charged issue than trade, exports versus imports, duties versus quotas, free trade versus protectionism, the dollar versus the deutschemark and Japanese yen. Trade policy touches every segment of the U.S. economy, but the bottom line is jobs, how many cars, computers and airplanes American workers produce here at home versus how many cars, computers and airplanes the country buys from abroad. It's a tricky issue, one that President Clinton is evidently still grappling with. Should the United States push for more free trade, or should it attempt to protect American workers? The President's most definitive statement on trade was not entirely definitive. It came during a speech to students at American University in Washington.

PRESIDENT CLINTON: The truth of our age is this. Open and competitive commerce will enrich us as a nation. It spurs us to innovate. It forces us to compete. It connects us with new customers. And so I say to you, in the face of all the pressures to do the reverse, we must compete, not retreat. But to do so, we have to confront the obstacles that stand in our way. Many of our trading partners cling to unfair trading practices. Protectionist voices here at home and abroad call for new barriers, and different policies have left too many of our workers and communities exposed to the harsh winds of trade without letting them share in the sheltering prosperity trade has also brought and without helping them in any way to build new ways to work. Cooperation among the major powers toward world growth is not working well at all today. And most of all, we simply haven't done enough to prepare our own people and to produce our own resources so that we can face with success the rigors of the new world.

MR. KRAUSE: The President's concern about trade is understandable. He and the new administration are faced with a series of important trade decisions in the year ahead. The General Agreement on Tariffs & Trade called GATT, these crucial talks on world trade are designed to open markets and increase the amounts of goods and services bought and sold among more than 100 countries around the world. But the talks are now stalled in their sixth year. Japan, the administration clearly wishes to reduce the $50 billion a year trade deficit. Should Washington insist on opening up the Japanese market to American companies or protect American workers and companies from Japanese imports? So far, the administration has sent mixed signals, talking about its commitment to free trade, on the one hand, getting tough on the other. Just last week, Mickey Kantor, the President's special trade representative, threatened to scuttle the North American Free Trade Agreement with Mexico and Canada.

MICKEY KANTOR, U.S. Trade Representative: [March 10] As a member of the cabinet and as USTR, I'm prepared to, as you say, walk away from the table if we can't a satisfactory supplemental agreement.

MR. KRAUSE: In many ways, the North American Free Trade Agreement, called NAFTA, best illustrates the administration's approach to the politically difficult trade issues it faces. Negotiated by President Bush, NAFTA would link the United States and Canada to Mexico, creating the largest single market in the world. During the campaign, President Clinton said he would support the NAFTA accord but only with special side agreements to the treaty.

BILL CLINTON: [October, 1992] If it is done right, it will create jobs in the United States and in Mexico. If it is not done right, however, the blessings of the agreement are far less clear.

MR. KRAUSE: Specifically, during the campaign, Candidate Clinton said that if elected, he would insist on special commissions with Mexico to enforce environmental and labor laws. There should be no incentives, he said, for U.S. companies to relocate to Mexico to avoid stricter enforcement of environmental laws in the U.S. or to take advantage of unsafe and unhealthy working conditions south of the border. Mexico's President Salinas recently set his own conditions. He said the side agreements must respect the sovereignty of each country.

MR. MacNeil: Now to the new United States Trade Representative, Mickey Kantor. He joins us from a studio at the Old Executive Office Building in Washington. Amb. Kantor, thank you for joining us.

AMB. KANTOR: Thank you for having me. I appreciate it.

MR. MacNeil: As it stands, one reads that NAFTA's in real trouble in Congress. You need real progress on these talks that opened today and effective side agreements to get congressional approval, is that right?

AMB. KANTOR: Absolutely, Robert, and that's where the President in a speech in North Carolina, on October 4, 1992, was so prescient. He understood that the NAFTA standing alone without supplemental agreements protecting labor standards and safety, protecting the environment, safeguarding surges of imports into this country, would not fly politically and frankly, won't fly substantively, and so he was right then. He was right when reiterated on January 26th at American University, and that's what we're aboutright now and those talks began today.

MR. MacNeil: What will be to you a satisfactory, what will be in satisfactory supplemental agreements?

AMB. KANTOR: First of all, we have to make sure we harmonize up standards in North America, not harmonize standards down, whether it be the environment or workers' standards. Second, we have to protect against disruption of industries through unusual surges of imports which might result from the agreement. Third, we have to close this economic disparity between Mexico and the United States in order to protect jobs here. Let me indicate to you, as you know, this is the largest disparity between two economies that have ever entered into any free trade agreement in history, and so we face the daunting task but an important one. Frankly, the question, Robert, is not whether or not NAFTA standing alone is good or bad, or whether or not NAFTA with supplemental agreements can fly, not fly politically. The question we face is: Can we make it better, substantially better than it is now, with the NAFTA and supplemental agreements than the situation now exists?

MR. MacNeil: And if you can't, you'll walk away from it?

AMB. KANTOR: If we can't, we will. The President has made it clear he will not send the NAFTA to Congress without good, solid supplemental agreements that have teeth and that are serious in their commitments.

MR. MacNeil: You told the Senate Environment Committee, yesterday I think it was, you saw the, one of the things that might come out in a supplemental agreement, the North American Economic Environmental Commission as a forum for reviewing complaints and reporting on findings. Where would be the teeth in such a forum? Where would be the enforcement teeth in such a commission?

AMB. KANTOR: One of the interesting parts of the role that I play for the President in working with the Congress and representing the American people is I've not only enunciated administration policy in an attempt to coordinate the administration working with the National Economic Council and my colleagues of the cabinet, I also have to negotiate these treaties, so without going any further than saying we want these commissions, we want them to have review powers, we want them to have professional staffs, we want them to have real teeth, we won't go any further than that right now. We're having discussions, as you indicated quite clearly, with the Mexicans and the Canadians, and we'll go forth from there and come back with something that's meaningful and serious.

MR. MacNeil: Would it be fair to say that what you're really talking about is avoiding the situation, as Charles Krause said in that report, where an American company could move down to Mexico, abandon workers here, and get away with pollution and workers' rights behavior they couldn't get away with in the United States? Is that accurate?

AMB. KANTOR: Frankly, what we're trying to do, and that is accurate, that's already happening. You know, capital and production are mobile. Companies have already moved to Mexico, not just American companies, in order to avoid either higher wage rates or harmonizing up standards in worker safety or, in fact, to avoid certain environmental regulations, at least the enforcement in environmental regulations. We need to change that situation. Now the NAFTA with these supplemental agreements can do that, and that's what I mean by making the situation substantially better with these supplemental agreements.

MR. MacNeil: What do you say to critics of the NAFTA and skeptics in the environmental movement and in the unions and in Congress who might suspect that what the administration really needs is a kind of face saving formula in these supplemental agreements to satisfy the campaign rhetoric but that doesn't really force Mexico to do anything?

AMB. KANTOR: We're dead serious about this. We're dead seriously about unilaterally, of course, worker training and adjustment here at home. We're dead serious about border cleanup. We're dead serious about these commissions. We're dead serious about trying to make sure there are some changes in the Mexican court system to ensure citizen access and the ability to appeal administrative decisions to tribunals there. We're dead serious about safeguards against surges. These are not save face types of agreements. The President wouldn't stand for that, and those are my instructions, to go out and get agreements that make a difference.

MR. MacNeil: Is all this supplemental negotiating aimed at Mexico, or are there issues with Canada too?

AMB. KANTOR: There'll be some issues that deal with the Canadians. It's a three-party negotiation, but most of the issues relate to the Mexican border, trade with Mexico, and so on. I might note that in the last few years we had a trade deficit with Mexico just a few years ago. We now have a trade surplus. Our exports to Mexico have increased threefold over the last two or three or four years. We're doing quite well with trade with Mexico and with Canada. Our trade deficit with Canada has been substantially reduced. We could create the largest expanded trade zone in the world, which would be good for workers here in this country, and hopefully for workers in Mexico and Canada. This should be a win/win for everyone if it's done right.

MR. MacNeil: You talk about leveling up instead of leveling down. Some argue that Canada, for instance, has stricter enforcement of workers' rights and standards than the United States does. Is there going to be leveling up there?

AMB. KANTOR: Well, we're going to, what's sauce for the goose is sauce for the gander, and these commissions are going to apply to all three countries. You can make your own decision as to what we're doing here. The fact is that we need to harmonize up all through North America in all the areas that I've been discussing.

MR. MacNeil: Let's turn to more general aspects of trade. There's a frequent complaint, it was echoed again in Charles's piece, that the administration hasn't made its policy that clear, that while talking free trade, you're also sending what some read as protectionist signals, the good cop/bad cop accusation that's been leveled at the President. What is the message you are trying to send to the world?

AMB. KANTOR: Well, I think the message is quite clear, frankly. The President made it quite clear to American University, and he's made it clear in the campaign. We want to open markets and expand trade. As you do that though, what you have to do sometimes is say, take tough action to open those markets, to pry them open. You know, not all countries in the world have as open markets as we do. We have the largest open markets in the world here in this country. We have to insist that our trading partners come along with us. There's been substantial changes in the world economy, as you know well, since the Second World War, and we have to recognize those changes. We have to play a leadership role, as the President enunciated at American University. We have to expect our trading partners to come along with us, for their markets to be comparably open to our markets.

MR. MacNeil: Well, what does the President mean, for example, in blasting the European nations for subsidizing the Airbus, the airliner the consortium creates, which is a competitor of Boeing? Are you going to subsidize Boeing? Are you going to raise a tariff so that the Airbus costs more for American airlines to buy? What does it mean? Was it just said to make Boeing workers feel good in Seattle?

AMB. KANTOR: It's said because we have an agreement that was signed by the previous administration which built in a 33 percent subsidy to Airbus, which is a consortium, as you know, of four nations, for development, not for production but for development. That gives an unfair advantage to Airbus and their competition with Boeing, McDonnell Douglas around the world. What we're trying to say is we do not want to shut down the United States and shut down our markets or to close down competition. We want to compete, not retreat, as the President said. What we want to do is open up these markets, and what subsidies do, as European agricultural subsidies do, they create an unfair situation which closes markets and doesn't open markets.

MR. MacNeil: So, how are you going to respond to that 33 percent --

AMB. KANTOR: Well, we're having a meeting in, we're having a meeting in late March in, in Brussels with our European counterparts to discuss parts of the agreement which allow us to look at the books and determine whether or not they're adhering to the features of the agreement which give us a right to insist that the money is paid back as you would any commercial loan. If they're not, if they're not adhering to the agreement, then we'll take action.

MR. MacNeil: The administration talks of a level playing field, but other administrations have said that too and tried to get it. What can you do differently to make the playing field level that President Bush, for example, and Carla Hills, your predecessor tried to do -- did not do, I mean, what are you going to do differently?

AMB. KANTOR: I think it's a serious question. First of all, I think you have to look at trade as just part of our integrated economic plan the President has set forth, whether it's long-term investment, education, health care reform, doing something about the structural deficit in order, of course, to create more investment capital, to grow the global economy, and trade is a part of that. Once you see trade is a part of that, what we want to do, as I said before, is open markets and expand trade. And in doing that, you take every action necessary, whether it's bilateral agreements, multilateral agreements, whether it's enforcing existing agreements, to make sure those markets are open. That is a coordinated, consistent, integrated plan which is realistic and pragmatic and looks at the world as it is, not as we want it to be.

MR. MacNeil: Taking the case of Japan, some of the things you mentioned would address what they've referred to as the structural -- I've forgotten the other term for it.

AMB. KANTOR: SII talks, the Structural Impediment Talks.

MR. MacNeil: Structural Impediment Talks, which would be something they've wanted to do like attacking the American deficit. What are you going to insist differently from the Bush administration the Japanese do?

AMB. KANTOR: Well, that's exactly what I'm referring to, and it's obviously an appropriate question. For years, the Japanese and other trading partners have implored the United States to do the following: do something about our failure to invest and save; do something about our educational system; do something about our structural deficit. This President is doing something about that. Now we can turn around and say to our trading partners, we're taking the lead, now you need to respond. Japan, you need to stimulate your economy. The Germans need to lower their interest rates. We need to open trade. We need to have market access barriers lifted in the, in the Uruguay Round. That's the kind of thing we need to do to grow the global economy, to grow our economy, and to create jobs here at home.

MR. MacNeil: You mean you think you are creating moral capital which you can then go and spend with the Japanese and say now we've done what you've been, or trying to do what you've been urging us to do?

AMB. KANTOR: Absolutely.

MR. MacNeil: Now, here's what you're going to do.

AMB. KANTOR: Moral and political capital. We can't tell them what to do but we certainly can now insist, we have, this President has bitten the bullet. He's taken the bull by the horns. We are moving in this country with the help of the Congress, and I think the Congress's help will be there. Now it's time for our partners to come along with us. If we're going to take the lead, they have to become true trading partners and take care of their problems as well. As you know, the Japanese economy is in, somewhat in free fall. There is no growth in Europe right now. The U.S. is going to have to lead global growth. We can only do it with the help of our trading partners.

MR. MacNeil: Fortune Magazine predicts the trade deficit will rise this year to $110 billion. Does this administration agree with that figure?

AMB. KANTOR: I don't know what the figure will be. It is quite likely the trade deficit, merchandise trade deficit, let me distinguish that from services and investment, will likely rise this year because of the weak economies with our major trading partners, but if you set the right tone and standards through a NAFTA with supplemental agreements that truly grows jobs here in this country and leads to growth too, we can reach a solid Uruguay round with solid market access provisions and we can reach some accommodation with the Japanese and some serious bilateral issues, I think we can make some real progress in the out years of '94 and '95, '96.

MR. MacNeil: You mentioned the Uruguay Round of the General Agreement on Tariffs & Trade. What do you plan to do to rescue or finish or restart those talks? I mean, the President's fast track authority has expired now. Are you going right back to Congress to ask for fresh fast track authority?

AMB. KANTOR: Yes, we are. The President then asked for a renewal of fast track authority for the Uruguay Round. I'm going to Brussels on the 28th of March and be there the 29th. With my counterparts in Brussels representing the European Community we'll begin to talk about market access. We'll talk about subsidies. We'll talk about the so-called "draft final agreement" and some problems we have with that, especially intellectual property concerns. The language in there, "intellectual property," is not adequate at the moment.

MR. MacNeil: Do you think -- I'm sorry, I'm forcing you a bit but we only have half a minute. Do you think an agreement is now possible in GATT, a quick agreement is possible?

AMB. KANTOR: We don't want a quick agreement. We want a good agreement.

MR. MacNeil: Do you think that's possible?

AMB. KANTOR: I think that's possible.

MR. MacNeil: Would you reopen the agricultural agreement that was reached last year?

AMB. KANTOR: We've taken a close look at that. We've not made a decision. It has some good points. I has some bad points. As you know, European agriculture is subsidized heavily, much more heavily than American agriculture. They have unfair advantage. They were the greatest net importer of agricultural goods in 1975. Now they're one of the great net exporters, and it's because of variable levies and export subsidies and internal supports in the European Community. We need to do something about that.

MR. MacNeil: Well, Mr. Kantor, thank you very much for joining us.

AMB. KANTOR: Thank you very much. I appreciate it.

MS. WOODRUFF: Still ahead on the NewsHour, Oregon's controversial plan to ration health care, a report from one town in Bosnia where few Muslims are left, and remembering Helen Hayes. FOCUS - OPTIONS FOR CHANGE

MS. WOODRUFF: A controversial plan to ration health care is next tonight. President Clinton has set the month of May as the deadline for his task force on health care to make its recommendations. But there is another health care deadline facing the administration this week. The fate Oregon's sweeping proposal to ration health care is to be decided by Friday. In Washington today, 70 organizations concerned with health care sent a letter to the White House urging the President to reject the Oregon plan. They said the Oregon plan would "establish a dangerous precedent for American health care policy." But in Oregon, the plan's enthusiastic supporters are hoping that it does set a precedent. Lee Hochberg of Oregon Public Broadcasting has this report.

BOB MANOLIS, Father: [talking to nurse practitioner about his small daughter] She did say that she had a pain right back here.

MR. HOCHBERG: When six-year-old Sarah Manolis's fever shot up last week, she did not go to a doctor. Her father took her to a nurse practitioner. Like 16 percent of Oregon residents, the family is uninsured and unable to pay customary doctor and hospital fees.

BOB MANOLIS: You want her to be healthy but you got to think about what it's going to cost, the money. You know, the money situation as far as health insurance or anything like that, we don't even try, can't afford it.

MR. HOCHBERG: Nurse Practitioner Mariah Taylor runs the Clinic of Last Resort in Portland. She says as the debate over Oregon's proposed health plan drags on, more uninsured patients than ever are streaming in.

MARIAH TAYLOR, Nurse Practitioner: It's increase of the uninsured, those families who are hurting and scared in Portland.

MR. HOCHBERG: They just --

MARIAH TAYLOR: Because they don't have access, they just keep coming in, and we keep hoping for a break.

MR. HOCHBERG: Oregon lawmakers thought they had given that break to most of the state's 450,000 uninsured residents two years ago. They passed and the governor signed into law the Oregon health plan. The three part plan required Oregon businesses to provide insurance for 280,000 uninsured employees. It also created a fund to insure 20,000 Oregonians with pre-existing medical conditions who cannot get insurance, and it relaxed Medicaid rules so that 120,000 additional low income Oregonians would be eligible for the government funded health service for the poor. To pay for all of this, the state planned to impose a strict health care rationing program. It itemized almost 600 sicknesses that it would pay to treat and more than 100 that it would not. But the Bush administration, leery of health care rationing, rejected the plan.

JEAN THORNE, Oregon Medicaid Director: I don't think the Feds got what we were trying to do, and it didn't matter how much we explained to them what we were trying to do and how we didit. I mean, it was very clear to us that they didn't want to hear that, that they had their minds made up.

MR. HOCHBERG: State Medicaid Director Jean Thorne accuses the federal government of being unwilling to let Oregon take the tough steps needed to contain medical costs.

JEAN THORNE: We're not willing to just put our heads in the sand and say we can do everything for everyone. We know we can't. What we should do is try to concentrate our resources on those services that do the greatest good.

MR. HOCHBERG: The rationing plan was based on a survey of Oregon residents. In public meetings, they rated quality of life for people with various ailments. Then the State Health Commission considered the cost and effectiveness of treating those ailments and ranked medical services from most to least important. The top 587 were funded. Those under the line were not. The Bush administration argued that the quality of life assessment was subjective and discriminated against some people with disabilities. Oregon's governor denies the charge.

GOV. BARBARA ROBERTS, Oregon: I have a husband who's in a wheelchair and a son who's disabled. I would not have supported a program that I believe left people with disabilities behind.

MR. HOCHBERG: Democratic Governor Barbara Roberts says the former President actually torpedoed the plan to avoid being associated with health care rationing during the difficult re-election campaign. Dr. Paul Kirk was part of the 11-member commission that spent a year and a half ranking the 700 plus sicknesses. He chides the Bush administration for ducking the health care debate.

DR. PAUL KIRK, Oregon Health Commission: They were not willing to confront, to have us confront these difficult questions. They wanted to soften the issues.

MR. HOCHBERG: Kirk says the boldness of the Oregon approach is exactly the part Bush didn't like, Oregonians facing up to which medical treatments they can do without.

COMMERCIAL SPOKESMAN: Guts and determination helped Paul Tsongas beat the odds and go on to beat cancer.

MR. HOCHBERG: For example, the Oregon plan as submitted to the federal government would not cover the expensive bone marrow transplant presidential candidate Paul Tsongas received in his fight against Non-Hodgkin's Lymphoma. Tsongas's cancer has reappeared, but even if it had not, paying for such treatment is bad policy says former Health Commission Member Dr. Rick Wopat.

DR. RICK WOPAT, Oregon Health Commission: You can always bring up the case and say, well, here's one person that was supposed to be dead in a year and still alive ten years, but for every one of those, I can show you ninety that died within that year, and we can't treat ninety people. We can't afford to treat every, you know, ninety people to get one person to live.

MR. HOCHBERG: The plan also did not cover treatments for chronic conditions like chronic bronchitis, considered incurable but treatment. Nor did it cover care of low birth weight babies weighing under 1.1 pounds. The state has now restored those treatments to the list in hopes of getting the federal government to approve.

DR. PAUL KIRK: The new list that we came up with wasn't as well considered list as the previous list. It's a much cruder analysis of effectiveness of care.

MR. HOCHBERG: Even so, Oregon leaders say the new list still reflects the spirit of the old one and advances the national health care debate by establishing that limits to services have to be instituted.

[DEMONSTRATION]

MR. HOCHBERG: But the delay in approval has put money for the plan in jeopardy. Advocates for education and crime prevention are clamoring for state dollars, and with the Oregon budget in its worst shape since the Depression, there's not enough money to go around. The state might not have the $100 million it needs to pay for the new health coverage.

GREG WALDEN, Oregon State Representative: And we've got parents and teachers and kids protesting on the steps of the capitol about our inability to adequately fund schools. You have to take care of education. You have to make sure your streets are safe, and then you've got to take care of these issues like health care, so I put it down the list a little bit.

MR. HOCHBERG: Gov. Roberts has proposed a new tax be levied on receipts of doctors, dentists and hospitals to fund the health coverage. It's generated a predictable response.

DR. JAMES CROSS, Oregon Medical Association: We're already taxed through corporate income tax, personal income tax, business license taxes, so there are already several different ways that any health care provider is taxed.

MR. HOCHBERG: The Oregon Medical Association supports the health plan but urges a different tax be levied to pay for it, 25 cents per pack of cigarettes. But that's politically unlikely. For Oregonians awaiting the plan, the first hurdle is federal approval. State leaders are lobbying the Clinton administration hard. They insist their plan could contain costs and improve access to medical care, two things the new President has vowed to do. UPDATE - HOSTAGES TO HATRED

MR. MacNeil: We turn now to eastern Bosnia. The Muslim population there is becoming increasingly isolated by Serb forces, and thousands of Muslims have fled. In the town of Bijeljina, there has not been heavy shelling or fighting, but most of the town's Muslims have left anyway. Correspondent Gaby Rado of Independent Television News explains why in this report from the town.

MR. RADO: The people of Bijeljina gathered in the town's main square to bask in the first spring sunshine. Their enjoyment is marred by the noise of bulldozers. They're leveling the site where the town's main mosque used to stand. It was still there last Friday night. Now there's nothing left. These pictures were taken from a moving car because we were strictly forbidden from filming the demolished mosque site. We were not even allowed to get close to where the town's other four mosques stood. They were also destroyed in the early hours of last Saturday. This is what the main square used to look like, the mosque a prominent feature of the multi-ethnic town. That chapter of Bijeljina's history has been wiped out. Two hours before the mosques were blown up all telephone lines from Bijeljina were cut. Bulldozers have to finish the demolition job at this mosque because it was only partially blown up to spare surrounding buildings. It was allegedly the work of an extreme Serb nationalist militia we encountered on the streets called the panfers. Their commander, not seen here, is called the Ubesa Savage, better know as Major Malzer. He wants all Muslims out of Bijeljina by April the 15th. The Serbian mayor of Bijeljina apparently knew beforehand and opposed the plans to destroy the mosques. With the sound of bulldozers behind him, he talks of his helplessness.

JOVAN VOJNOVIC, Mayor of Bijeljina: [speaking through interpreter] Speaking as mayor, my feelings about this are ones of sorrow and sadness, and I'm trying to come to terms with it, because I think this act will do nobody any good, least of all the Serbian people who have always lived with the Muslim population quite normally.

MR. RADO: The sound of gunfire is often heard on the streets of Bijeljina, and people pretend not to notice. There's been no fighting in the town since last May. The firing from the guns of the paramilitaries is purely to create fear among Muslims. Of some fifteen thousand Muslims who originally lived here, around four thousand remain. And many of those are now leaving too. These Muslim families are bound for Vienna. The armed militia men who put them on these coaches out of sight of our cameras say these people are leaving voluntarily. And it's true that they want to go to flee. They're too afraid to say they've been driven out by acts such as the destruction of the mosques. This old man was one of the few Muslims willing to risk being seen talking to us.

SENAD MEDANOVIC, Muslim Prisoner: [speaking through interpreter] This lady was not born in Serbia. She's not Serbian, only Bosnian, a Bosnian Orthodox, but not Serb. I am Muslim, but I'm not Arabian or Turkish. I'm a Bosnian Muslim. This man is a Catholic, not from Rome or Germany, but a Bosnian Catholic. And what now? Somebody forced us to hate each other and is still forcing it.

MR. RADO: We met outside the local Red Cross office where families divided by war try to contact each other. This Serbian woman's older sons are fighting somewhere on the front line. She thinks her husband and younger son are still at their home in Muslim-held territory.

WOMAN: [speaking through interpreter] If I could only hear the voice of my child. I want to know if they're alive or not. They have to surrender because they're with the minority. I'm always asking for someone to put us in touch with each other. I would even pay for it, just to know that they're still alive.

MR. RADO: Most local Serbs appeared shocked by what had happened to the mosques.

WOMAN ON STREET: [speaking through interpreter] This is just propaganda to get us to fight each other. Everybody's against it. The army officers have been asking each other who was responsible, someone who really wants Serbs and Muslim people to fight. I was in church today and the priest was crying, saying how sorry he was, asking what's happening to us.

MR. RADO: There are small islands of normality in Bijeljina, such as the schools where children of the Serbs and the depleted Muslim population mix as before. This school has managed to keep teaching staff from both ethnic groups. But life outside has changed so utterly no one expects to see their town return to how it used to be.

LAZAR MANOJLOVIC, Principal, Sveti Sava School: [speaking through interpreter] Bijeljina is never going to be what it used to be. It used to be a center of culture, of agriculture, a calm, peaceful place, a place of flowers and beauty. But we will stay together, except there won't be so many of us.

MR. RADO: The destruction of the mosques here in Bijeljina and the fear under which the Muslim population now has to live are an inevitable result of the lawlessness created by war. People on both sides of the community have confirmed to us that the local Serbs are generally disgusted by what's happened. But here, as elsewhere in eastern Bosnia, the local warlords are out of control, and they have a sinister agenda all of their own. They try to keep the destruction of Bijeljina's mosques a secret from the world. Every day eastern Bosnia's being cleansed of more of its Muslim heritage and of its Muslim population, because what happened here has taken place in other towns and will go on elsewhere unrecorded until something is done to end the war. RECAP

MS. WOODRUFF: Again, the main stories of this Wednesday, at least six people were killed after an Amtrak train struck a gasoline truck in Florida. Consumer prices rose a moderate .3 percent last month, and two suspects held in the bombing of the World Trade Center were indicted by a federal grand jury. Three other suspects have reportedly fled the country. FINALLY - LEADING LADY

MS. WOODRUFF: Finally tonight, the passing of Helen Hayes, fondly known as this country's first lady of the stage. She died this afternoon in a New York hospital of heart failure. The 92-year-old actress won three Tonies, an Emmy and two Oscars for achievements on the stage, screen and television. Her screen appearances ranged from such classics as "A Farewell to Arms" to the modern day thriller "Airport." In this 1991, American Masters Documentary, Helen Hayes talked about her career and gave a reading from her role as Queen Victoria in the 1935 play "Victoria Regina."

HELEN HAYES: To have some physical or vocal key, and then, then the heart and then the spirit of the person begins to take form in me. And I was always a little embarrassed about it because I thought this was going from the outside. I should go to the soul and spirit of this character, and then let the performance expand from that, from the heart. But I'm concerned about the, about the, the way of behaving, the voice and so on, the outside things. For instance, I could not get with Queen Victoria until I got her walk. The thought might have been that for a queen, empress, one should walk with dignity, but I just suddenly realized that she bounced and she walked into a room with great authority, bounced in there.

HELEN HAYES: [reading from "Victoria Regina" by Laurence Housman in role of Queen Victoria] To think after all these years they do appreciate all that I have tried to do for them for their good and for this dear country of ours. We have been so near together today, they and I, all my dear people of England and Scotland and Wales - - and Ireland. [laughter in audience] And the dear colonies, and -- [sighing] -- from all over the world I've had messages. You know, it's extraordinary, most extraordinary. And it was very gratifying, very gratifying. It was like at Hyde Park, and a lot of rough-looking men, of course it never should have happened, but it didn't matter really, broke right through the lines of the police and the troops guarding the route, and they ran along beside the carriage shouting and cheering me! And I heard one of them say, "Go it all girl, you've done it well!" [laughter in audience] Of course they were very unsuitable, the words, but very gratifying. And I hope it's true. I hope it's true. [applause] RECAP

MS. WOODRUFF: Good night, Robin.

MR. MacNeil: Good night, Judy. That's the NewsHour for tonight. We'll be back tomorrow night. I'm Robert MacNeil. Good night.