The MacNeil/Lehrer NewsHour

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

MS. FARNSWORTH: And I'm Elizabeth Farnsworth in New York. After our summary of today's news, we go first to an update on the U.S.- Russian rift over Bosnia with Deputy Secretary of State Strobe Talbott. Then health policy experts diagnose the Republican Medicare reform plan, and finally, we evaluate the Colin Powell book. NEWS SUMMARY

MR. LEHRER: There was more fighting in Bosnia today. A Bosnian government and Croat advance continued in Central and Western Bosnia, displacing thousands of Serbs. They flooded into the Serb stronghold of Banja Luka in Northern Bosnia. We have more in this report from Terry Lloyd of Independent Television News.

TERRY LLOYD, ITN: Vast swathes of territory have now been captured by the Muslim and Croat allies as they push ever closer to Banja Luka. The Bosnian Serbs, for so long the aggressors, are on the run. Today, President Milosevic of Serbia warned that he would be forced to take action if Banja Luka was threatened, but still the allies pushed westward, taking advantage of an army weakened by the recent NATO air strikes. To the North, around Divulje, the Bosnian and Croat armies have ruthlessly taken more ground, leaving homes ablaze and seizing Serb weapons, tanks, and ammunition. The aim there is to cut the vital corridor which links Serbia with Banja Luka. As concern grew in the West that the allies were brutally capitalizing on the NATO action, the Bosnian government announced to Britain's visiting secretary a new peace initiative to halt the fighting.

MUHAMED SACIRBEY, Foreign Minister, Bosnia: We have proposed that the Bosnian government would be prepared to engage in political dialogue with responsible dealers--with responsible leaders of the Banja Luka region in allowing the current population of Banja Luka to stay in their homes and not to have Banja Luka become a battleground.

TERRY LLOYD: A blood bath it may prevent, but already, Banja Luka is on the verge of a humanitarian catastrophe, according to the UN. Tens of thousands of refugees fleeing from the advancing forces have headed there, and many more are on the way.

MR. LEHRER: A UN spokesman said the government offensive could jeopardize the peace process. Meanwhile, a pause in NATO air strikes against the Serbs continued for a fourth day. NATO said the Serbs have withdrawn about half their heavy weapons around Sarajevo. We'll have more on Bosnia after the News Summary. Elizabeth.

MS. FARNSWORTH: Relief supplied poured into the U.S. Virgin Islands today as residents tried to recover from the devastation of Hurricane Marilyn. The island of St. Thomas bore the brunt of the storm this weekend. Six people were killed, and at least fifty others are reported injured or missing. Nearly 80 percent of the homes on the island were damaged or destroyed. The Federal Emergency Management Agency, or FEMA, is on the ground overseeing relief efforts. Officials said about a hundred U.S. marshals are in St. Thomas to prevent looting. The hurricane is currently about 435 miles Southeast of Bermuda. Forecasters said it is moving North at 13 miles per hour and packing 100 mile an hour winds. It is expected to pass near Bermuda sometime tomorrow.

MR. LEHRER: The space shuttle "Endeavour" landed at the Kennedy Space Center in Florida today. The five-member crew completed an 11-day flight that was plagued by equipment problems, especially with two science satellites that failed to perform properly. Two of the astronauts conducted a space walk on Saturday that went off without a hitch. They tested heated gloves and other thermal wear for using during the construction of a space station.

MS. FARNSWORTH: Democratic Senators introduced their own version of a farm bill today aimed at preserving federal subsidies for American farmers. Congressional Republicans in both Houses want to eliminate the current system of price supports for crops. They say that would save more than $13 billion in farm spending and help balance the federal budget by the year 2002. The Democrats said they'd cut agriculture by $5 billion but keep subsidies in place, so U.S. farmers could remain competitive in world markets.

SEN. KENT CONRAD, [D] North Dakota: Some in this country say phase out farm programs. That would leave Europe with a significant edge, one that would allow them to become dominant in world agricultural trade. Unilateral disarmament in a trade battle makes no more sense than unilateral disarmament in a military confrontation. We'd never do it in military confrontation. Why would we ever do it in a trade fight? If we do pursue that course, I predict to you that we will find happening to America in agriculture what has already happened to us in automobiles and electronics. We'll be wondering why we didn't stand up and fight.

MR. LEHRER: There was another of those overflow book crowds today for Colin Powell. It was at a Capitol Hill bookstore in Washington, where the former chairman of the Joint Chiefs of Staff signed books and continued to fuel speculation that he may run for President next year. Powell said in his book that he supports abortion rights, and that brought out today demonstrators who feel differently. We'll have more on the Powell book later in the program, but first Sec. Talbott and a Medicare reform discussion. UPDATE - PEACE UNDER FIRE

MR. LEHRER: We do begin tonight with an update on the situation in Bosnia. Charlayne Hunter-Gault has the story. Charlayne.

MS. HUNTER-GAULT: Joining us tonight is the No. 2 man in the State Department, Deputy Secretary of State Strobe Talbott. He's just back from a diplomatic mission to Russia which has been protesting against the NATO air strikes on the Bosnian Serbs. Mr. Secretary, welcome. I want to get to Russia in a minute, but first, can you give us a little bit of an update on what's happening in Bosnia, the continued Bosnia and Croat offensive in Northern Bosnia? What's happening? Is that about to jeopardize the peace process?

STROBE TALBOTT, Deputy Secretary of State: Well, it's certainly not welcomed. All of the parties in the Balkan conflict have to realize that a military solution is simply not available to them. They have got to take advantage of the opportunity that they now have under the sponsorship of the contact group, the international community, and the American diplomatic initiative that President Clinton won some weeks ago to return to the negotiating table. That's where the answer to this conflict is, not on the battlefield.

MS. HUNTER-GAULT: But if this continues, I mean, what is the U.S. response to it, and how strong can you urge the Bosnians and the Croats to, to stop pressing this offensive?

SEC. TALBOTT: Very strongly. There's been a lot of speculation, as you know. You've reported on it yourself on this show about different colored lights flashing. The light here is red. It's a red stoplight--stop the fighting, go back to the negotiating table. That is very much on the agenda of Assistant Secretary of State Holbrooke's mission in the region right now, and we've been using all of our contacts with all of the parties here to get them to stop the violence, stop the war making, and go back to the negotiating table. There's a lot of danger if this offensive continues. And by the way, there's also a huge humanitarian catastrophe involved, which you depicted at the top of the show.

MS. HUNTER-GAULT: Is part of the danger we just heard in this report that the president of Serbia has said that the Serb army might have to take action if, if this continues, is that part of the danger that you see, and what would be the implications of that?

SEC. TALBOTT: Yes, of course, that's a danger. Now, one of the parties with whom we are using our influence to make sure that they're restrained is Serbia, the former Republic of Yugoslavia and President Milosevic. But one of the several strategic interests that the United States has in the Balkans and one of the reasons that we're as intensively involved there as we are is to stop the spread of this fighting. If Serbia proper were to come into the fighting in Bosnia, that would risk a spread of the fighting in several directions.

MS. HUNTER-GAULT: And are you worried about that threat that he's made? How worried are you?

SEC. TALBOTT: Well, we have made very clear that it would be contrary to everybody's interest, including Belgrade's, if it were to get into the fighting, but we are--that's also a message that we're delivering very strongly in Zagreb, the capital of Croatia, and Sarajevo, the capital of Bosnia.

MS. HUNTER-GAULT: Sec. Holbrooke said earlier that he thought that the peace initiative could be wrapped up in a matter of days and hours. What can you give us in terms of his progress right now?

SEC. TALBOTT: Well, I speak to Sec. Holbrooke with some frequency, as you can imagine, Charlayne, and he has been very careful in expressing optimism on this. We are at a hopeful point. There has been substantial progress, but there is an immense amount of hard work still to do. I would not say by any stretch of the imagination that we're out of the woods yet here.

MS. HUNTER-GAULT: Does the Bosnian Croat capture of territory make the settlement which gives that federation 51 percent of the territory less appealing, the fact that they're getting the territory now on their own?

SEC. TALBOTT: I would say the fact that the--some of the parties are still waging war is contrary to the interests of the peace process and contrary to the interests of the parties that are undertaking the offensive. One of the things that we've seen here over the last several years is that this is a seesaw. One warring faction or warring party might be up today and down tomorrow, and just because one group is doing well at the moment doesn't mean that they won't have military problems in the near future. The Bosnian Serb army is still a very formidable military force, and what all of them have to realize is that that is not the answer. The answer is in the negotiations.

MS. HUNTER-GAULT: But they don't--haven't realized it yet.

SEC. TALBOTT: Well, I think--I think that even in the brief interview that you had with Foreign Minister Sacirbey, you saw a willingness to get them to discussions here, rather than fighting it out.

MS. HUNTER-GAULT: All right. Let's turn to Russia, from which you've just returned, I think, last Friday. Late today, there were reports of a summit scheduled in October between Presidents Yeltsin and Clinton. You're a former reporter. Who, what, when, where, how, why?

SEC. TALBOTT: Well, let me see if I can remember all of those questions. President Clinton and President Yeltsin have been meeting with some frequency, as you know, every six months or so, and they will be meeting again when President Yeltsin comes to the United Nations in October. They will almost certainly be meeting in the area of, of New York City.

MS. HUNTER-GAULT: With Bosnia at the top of the agenda?

SEC. TALBOTT: Well, I would think Bosnia will certainly be quite properly on the agenda, because let's remember, you've just referred to my recent trip to Moscow, which, of course, did deal with the fact that the Russians have been very unhappy about the NATO air strikes, but more fundamentally than that, the United States and Russia and the other members of the so-called contact group, the principal Western European powers, are working towards the same objective. We and the Russians and virtually everybody else in the international community shares an interest in bringing peace to the Balkans, so President Clinton and President Yeltsin will certainly talk about that, but they're going to talk about European security issues more generally.

MS. HUNTER-GAULT: Well, before you left on your trip, I mean, you said the Russians were upset. I mean, they were pretty angry. They were accusing this bombing campaign of, of genocide against the Serbs. Did your trip deal with that and assuage them in any way?

SEC. TALBOTT: Well, my purpose wasn't to assuage them. My purpose was to talk about the facts and the common interests we have, and I might add, I made a point of underscoring how unhelpful it was to have spokesmen for the Russian government using words like genocide in the context of the NATO air strikes, particularly when NATO air strikes have been very, very carefully calculated andexecuted in order to minimize civilian casualties.

MS. HUNTER-GAULT: And what was their response? Are they still as angry as they were, or--

SEC. TALBOTT: Well, I--I saw Foreign Minister Kozyrev shortly after the current suspension of the bombing campaign was announced, and we looked forward to ways in which we can work together during the weeks and months to come. There's no--there's no question that we and the Russians have a disagreement on the efficacy of the air strikes. It's our view, which I think is borne out by the way the facts have unfolded on the ground that force is a necessary component of diplomacy in a situation like that.

MS. HUNTER-GAULT: What about--Russia's complaints against America were getting a lot of press, but America has a few against Russia, notably the sale of nuclear weapons to Iran, Russia's behavior in Chechnya. Did you deal with any of that?

SEC. TALBOTT: Well, this was a very brief trip. I was on the ground for less than 24 hours, and I was very focused on the Bosnia issue, but we have regular contacts with the Russians. We're having some fairly high-level talks with them this week. Sec. Christopher is meeting with Foreign Minister Kozyrev next week, and as you alluded to earlier, President Clinton will be meeting with President Yeltsin in October, and I promise you that in those meetings we're dealing with a wide range of issues, including some where we sharply disagree with Russian policy. And you've mentioned a couple of them.

MS. HUNTER-GAULT: Sharply disagree. I mean, some have speculated that we might be entering a resumption of the Cold War.

SEC. TALBOTT: I don't think so, and it--the important thing is it's not in the interest of Russia to risk entering a new Cold War, and of course, it's not in the interest of the United States and the West. The Cold War is over, and I think we see in the Balkans today both the dangers that have come about as a result of the end of the Cold War, namely, these ethnic tensions coming to the surface in countries that for a long time had been communist dictatorships. That's the down side of the end of the Cold War. But we've also seen the positive side, which is that the United States and Russia and the major Western countries are able to work together to try to bring a solution to the problem, and now there's one in sight.

MS. HUNTER-GAULT: Well, on, on the Balkan situation in Colin Powell's new book, which, as you can imagine, everybody's--that you know--everybody's talking about, An American Journey, he charges that President Clinton's vacillation in the 41 months of the war has made signals, U.S. signals, worthless, and, therefore, he says, we are weakened and cheapened in the eyes of the world. What's your reaction to that?

SEC. TALBOTT: My reaction is one of puzzlement, but I should also say it's the reaction of somebody who hasn't had a chance to read the book yet, but--

MS. HUNTER-GAULT: Why puzzlement?

SEC. TALBOTT: Well, puzzlement because you have right now in what we're talking about, I think, a vindication of American commitment to use its leadership in the Balkans, in the international community, to bring this terrible situation to a peaceful halt. Now, that doesn't mean that any of us, whether we're associated with the present administration or the previous one, feel that we've been infallible in this. Obviously, it would have been much better had we been able to resolve this problem much earlier. But there is no question that with the United States taking the leadership under the banner of President Clinton's initiative that we are now moving in the right direction. So at a minimum, Gen. Powell's observation doesn't seem to me to be consistent with the drift of events right now.

MS. HUNTER-GAULT: What about his vigor observation, though, that- -I mean, he was highly critical of the U.S. foreign policy team in general, saying that it was much too tactical, judging from week to week, that it was, in effect, and I'm paraphrasing now in, in shambles, which is what has made the foreign policy ineffective in general. Is he right about that?

SEC. TALBOTT: Well, no, he's not, but let me first of all say that I have great respect for Gen. Powell. And it was certainly a good experience for me to overlap with him for a few months at the beginning of this administration, but remember that it's been two years since he's been on the inside of, of this administration, and as I understand his critical observations--and I only have them, of course, secondhand because I haven't read the book yet--it sounds to me as though they are very focused on process. And I think what the American people really care about is results. And in terms of results and substance, there is a lot that this administration has done, including recently in the Balkans that the American people can be justly proud of.

MS. HUNTER-GAULT: Well, Mr. Secretary, thank you for joining us.

SEC. TALBOTT: Thank you, Charlayne. Always good to be here.

MR. LEHRER: Still to come on the NewsHour tonight, Medicare reform and the Colin Powell book. FOCUS - MEDICARE

MS. FARNSWORTH: Next, the Medicare debate. The health system that now serves 37 million Americans is currently embroiled in budget politics. Republicans say they can save $270 billion in Medicare costs over the next seven years through gradually higher premiums, having affluent beneficiaries pay more, giving hospitals and doctors less in reimbursements, and offering managed care alternatives to seniors. As the details just begin to come out, we turn to four health policy experts for their views of the debate so far. Gail Wilensky ran the Medicare program under the Bush administration. She is the chair of a non-partisan commission which advises Congress on Medicare. Stuart Altman, an early adviser to President Clinton on health reform, also chairs a non-partisan commission which advises Congress on Medicare. Joining us from Boston is Arthur Flemming, who was secretary of Health, Education, and Welfare in the Eisenhower administration. Flemming, who has held many other government posts, chairs Save Our Security, a national coalition that supports strengthening social insurance programs. And Rashi Fein is a professor of the Economics of Medicine at the Harvard School of Medicine. He joins us from Albany, New York. Thank you all for being with us. Before we get into the specifics of the Republican plan, as we know it, I'd like to hear what you think--let's start with you, Gail Wilensky--what you think of the Republican plan in general so far. Does it go far enough? Does it go too far? The Republicans had promised a very bold restructuring here. Have they achieved that?

GAIL WILENSKY, Health Economist: Well, there are parts of it I like very much. They are opening up a lot of choices for seniors that haven't existed before, and they are asking the question of how fast does Medicare need to grow in order to be able to promise our seniors the benefits that they've said they've had to deliver on those promises. I'm a little disappointed that it isn't even further in having the government pay a fixed amount that would buy a package from a low-cost provider and have that payment be the same no matter where the senior goes to. That, to me, would have been a step bolder and further. They're going to, in fact, go after classic Medicare if the spending is too high by taking it out of the hides of providers. I would have preferred a little cleaner approach in terms of making the choices--not the governments, but strictly up to the senior, themselves.

MS. FARNSWORTH: Arthur Flemming, you've been looking at these matters for many years. What do you think of the Republican plan as we know it so far? I know we don't know all the details.

ARTHUR FLEMMING, Former Secretary, Health, Education & Welfare: [Boston] I think the proposals regarding Medicare confront the nation with two basic issues. The first issue started with the Roosevelt administration, where the national community, public sector and private sector, decided to become partners with the state and local government in meeting the needs of our people. The second issue is--goes out of the fact that we are not aware of the details of the Republican proposal, and we are told that that proposal is going to be to discuss one day in the Ways & Means Committee, one day on the floor of the House, and is not going to have any hearing in the Senate. This brings into question whether or not we are a government of the people, for the people, and by the people, because the people are being cut out of the discussion of this proposal.

MS. FARNSWORTH: To the extent that you know about what's in it, do you think it goes too far or not far enough?

MR. FLEMMING: I think it goes way too far.

MS. FARNSWORTH: Okay. Stuart Altman, what do you think about the proposal, what you know about it so far?

STUART ALTMAN, Health Economist: Well, I've been trying to find out, and I, like Gail, am getting increasingly concerned that while the plan isn't bold enough with respect to structural changes, it's still holding on to trying to save $270 billion. And while I support many aspects of it, I'm getting concerned that what the plan will ultimately wind up is a gigantic price control system on hospitals and physicians, and I think that isn't where the Republicans started. That isn't where I thought we should be going, so while I haven't seen the specifics of the plan, I think the, the concept of saving all that money isn't matching up with the rhetoric that I'm now hearing about what the plan looks like.

MS. FARNSWORTH: Prof. Fein, what's your view?

RASHI FEIN, Health Economist: [Albany] I think if this plan were enacted, it would be disastrous and not simply for the aged and disabled, who are well served by Medicare, but for anyone who thinks that they might intersect with the medical care system in the coming years, i.e., a person who would go to the hospital, almost any hospital, or visit a physician, because, in fact, you cannot pull that kind of money out of the health care system at a time when Medicaid is also threatened and at a time when the private sector is cutting back without destroying the fabric of that medical care system, so that I think that this kind of a plan which goes far too far, if enacted, would be the beginning of the end of the one universal program, and I might say the beginning of the end of a very, very strong health care system, which would be weakened and which would come down in a spiral.

MS. FARNSWORTH: Okay. Mr. Altman, let's go into some specifics now. Let's start with what's known as Part A of the--of the Medicare process, the hospital insurance fund. This is what I'm told could go broke if it's not reformed. The plan would reduce the growth of fees paid to hospitals, doctors, and other care givers by an estimated $110 billion over seven years. What do you think of that?

MR. ALTMAN: I think that's not an unreasonable amount of money. I think the way they've designed it, from what I've been able to understand, if hospitals keep their costs under control the way they've been doing over the last couple of years, I think the level of cuts that are in Part A now, that part of it I think is--will not bring our hospital system to its knees. My concern is in the so-called "look back" provision. That's where I get very nervous.

MS. FARNSWORTH: Explain that please.

MR. ALTMAN: Well, what the proposal says, as I understand it, is that if they haven't reached their goals, the $270 billion, the secretary is to come in with mandatory cuts by sector to make sure that they reach those goals. And given the fact that the first set of cuts are tough--don't get me wrong--they are tough--but I think they're doable. But if they then come back with 80, 90, 100 billion dollars further of cuts, which are distributed between the hospitals and the doctors, that's where I get very nervous.

MS. FARNSWORTH: Okay. Professor Fein, what do you think about this plan to reduce the growth of fees paid to hospitals and to doctors? What do you think the effect could be?

PROF. FEIN: Well, I think the effect of cutting that much out will leave hospitals, particularly those hospitals which are in the forefront of research or alternatively those hospitals which are serving parts of the population who don't have health insurance and the number of individuals in the United States without health insurance is growing at about a million a year, it will weaken those hospitals. As those hospitals get weaker and as hospitals are pushed into managed care situations, all Americans will confront a medical care system that has been weakened and that is full of providers who are angry, unhappy, and so forth. I don't think that you can have a revolution, and I think this is a revolutionary program that is being put forth, and call oneself a conservative. I don't understand how this kind of a revolution can be supported by individuals who claim to be conservatives.

MS. FARNSWORTH: Gail Wilensky, some critics have said that doctors will refuse to take Medicare patients with these new fees. What do you think about that?

MS. WILENSKY: Well, there's certainly no indication that that has happened in the past. It's being carefully monitored, and when I go out and speak with physician groups and listen to them, it's clear that there are many places where Medicare is now the best payer around. Now, let's be clear. This plan and what's going on in the private sector is trying to reduce the rates of spending in health care. In Medicare, we're spending at 10 1/2 percent growth per year. That's a very high rate of growth. So there will be pressure on hospitals, some of which are running at 60 percent capacity, some of them aren't even that high--30, 40 percent of their beds are all that are being used. And we have a lot of physicians, especially specialty physicians. There is going to be pressure on downsizing some of the system. We need to make sure that we've got some safeguards in place, that we don't lose hospitals where they're the only hospital around, but the notion that if we try to slow down spending, that's going to bring our great health care system to its knees, that just doesn't make any sense to me at all.

MS. FARNSWORTH: Okay. Arthur Flemming, I want to move on now to Part B, which is the medical insurance part covering doctors' bills and medicines. The House plan would allow beneficiaries to shift from the traditional fee-for-service system to Health Maintenance Organizations, the HMO's. And then there are some other things they could do--medical savings accounts. We'll get into that in a minute. What do you think about this? What do you think about the encouraging of HMO's?

MR. FLEMMING: One of the great things about Medicare is that we do give the Medicare beneficiaries the choice of their own doctor or of an HMO plan. I believe that that system should continue. I would not favor any plan or proposal that forced people into HMO's and denied them the choice of their own doctors and other parts of a medical service. So I personally look askance at the suggestion that we are going to possibly force people into HMO's. Of course, I don't know the details of the plan. That's another thing. If we actually had those details, we could debate them and discuss them out in the field and so on, so the Congress could find out what the people are thinking about them. I've had the opportunity the last few days, visiting quite a number of communities and listening to real people with real problems. And they cherish this privilege of choosing their own doctor, or if they want it, choosing an HMO.

MS. FARNSWORTH: Mr. Altman, do you think there aren't enough incentives so far in what has been revealed about the plan to go into HMO's? It looks like the Republicans have backed off of an earlier plan to really push people into HMO's.

MR. ALTMAN: Well, they have backed off in the sense that they have changed--they used to--were going to provide financial incentives, and in a way that if an individual wanted to stay in the fee-for-service, they would have to pay more. But I don't think those people understand what's going on currently. There are significant incentives today in many parts of the country to join HMO's. HMO's get very high payments in Southern Florida, in Southern California, in New York, in Boston, and these HMO's can take these higher payments and provide prescription drugs, they can provide no deductibles in co-insurance. They could provide extra eyeglasses in cataracts, so the current system is growing unfair against the fee-for-service. Now, to the extent that it puts incentives to push people towards HMO's, I think that's good. And I support it. My concern, though, is that the current system does not let the government save any of the efficiencies from HMO's, except for a small piece, this little 5 percent. And if for some reason, the less sick wind up in the HMO's, the government could lose money. So what I thought the Republican plan was going to do was to change the way these areas would be paid. If they would do that, then I would encourage the current system to continue.

MS. FARNSWORTH: Mr.--Prof. Fein, what about the plan to increase the premiums? I think all enrollees would have an effective increase in premiums, because the percentage they're currently paying would stay the same, and that would mean an increase to quite a bit by the year 2002. What do you think the effect of that will be?

PROF. FEIN: Well, at the present time, beneficiaries pay 31 percent of the true costs of Part B. That was scheduled to go down to 25 percent. The plan says let's keep it at 31 percent. There's nothing magic about 31 or 28 or 25. So that if the program is in difficulty, it is not an unreasonable thing to say let's look at that issue, and let's increase it. Note, however, that the program's difficultyis in the trust fund, and the trust fund is Part A, not Part B, where the premium increase occurs. Therefore, it follows that this premium increase is designed to help reduce the federal deficit or alternatively to help finance at the time that we're reducing the federal deficit the tax cut that the Republicans also favor. So that whether this is a fair increase or not depends in part on what you're going to do with that money. If you're going to reduce the federal deficit, perhaps seniors, disabled, and other Americans should be making sacrifices to accomplish that. If it's going to finance a tax cut, then your answer about whether this is fair might be different.

MS. FARNSWORTH: What do you think about that, Gail Wilensky, using the, the higher premiums to essentially finance the tax cut?

MS. WILENSKY: Well, I think we need to understand what the growth rate in the spending is. Prof. Fein said that it was out of Part B. What people need to understand is though we don't hear so much about that part of Medicare, it's been growing at 12 1/2 percent for a year, which is just an unbelievable rate of growth, the overall program at 10 1/2 percent, and what is being proposed is that Medicare should grow at 5 percent per person, 6 1/2 percent in the aggregate if you don't count the growth in the number of people on, and that's really what the debate should be. How fast does Medicare need to grow in order to provide the benefits we've promised? The fact is that the tax cut that was talked about and that is being talked about now was talked about as part of this Contract With America. However it was going to be financed was part of that contract discussion. This really is a separate discussion, but the focus should be: Is 6 1/2 percent growth in Medicare enough for us to get the job done, or do we need something faster? That's really something we have to focus on. We have to have people in this country understand that's the relevant question, how fast does the program need to grow?

MS. FARNSWORTH: Arthur Flemming, let's talk about that for a minute, the context of this debate. It's being done very much in the context of the budget debate. Is it really separate, or are these savings aimed at fixing budget problems and helping with the tax cut, or is this really about Medicare reform?

MR. FLEMMING: It is really being carried on in the context of the budget debate. There's no doubt in my mind that they are seeking $270 billion savings out of Medicare in order to make it possible for them to pay the cost of reduced taxes for the wealthy.

MS. FARNSWORTH: Okay. I want to move on to one last part of the bill, the raising premiums for people who have more money. House Minority Leader Richard Gephardt argued on this program last week that if the upper middle classes have to pay more, it will cut down support for Medicare, because it will look like a welfare program and entitlement program, it won't be something everybody pays for, and everybody gets. What do you think of that, Arthur Flemming?

MR. FLEMMING: Well, I think that that would be a very poor step, and it seems to me that if people are worried about people in the upper class getting too much out of Medicare, they can tax the benefits under Social Security benefits, including Medicare, and achieve part of their objective through IRS, rather than setting up a new bureaucracy in order to apply a means test.

MS. FARNSWORTH: Gail Wilensky, what do you think about that?

MS. WILENSKY: Well, I think this is an issue we're going to have to take on more seriously as we go into the next decade and we get ready for the boomers to retire. Again, I think most people think that having a smaller subsidy in Part B, not the full 70 percent or 75 percent subsidy from the federal government, from the budget that now goes on, to have it be less for the most affluent people of the country, those with incomes of over a hundred and twenty- five or a hundred and fifty thousand dollars, I don't think most people think that's inappropriate. Again, what we need to focus on is: How can we try to get spending at a sustainable level per person now and as we go into the baby boomer be able to take on that problem? But I think that for most people in this country a little smaller subsidy for the wealthiest people, I don't think they'll find that difficult to take.

MS. FARNSWORTH: And just briefly, Ms. Wilensky, in the brief time we have, I want to ask you a couple of this. Will the plan, as currently conceived, save money? Are you convinced it will?

MS. WILENSKY: Oh, I think it's got the mechanisms in place. Now, the look back that Stuart Altman mentioned is a little bit complicated because you're chasing last year's spending and trying to get reimbursement to match the spending you want. But I think the mechanisms, as we understand it, and there are a lot of details that haven't been released, will keep the choice plans at the spending per person that is being projected, and that there is enough enforcement in the look back. Whether or not it's the best kind of enforcement, that's another question.

MS. FARNSWORTH: Stuart Altman, what do you think about that?

MR. ALTMAN: Well, there are a lot of aspects to this plan we didn't talk about that I really found very positive. For example, they are trying to cap a bit the growth in home care and in skilled nursing. That's where the real growth in spending--I think in some sense, the hospitals and physicians have taken a bum rap. It's not their growth rate that's pushing this thing out. It's been an unbelievable growth rate--50 percent a year, 30 percent a year in home care and skilled nursing. And these plans do try to slow that down, not stop it, because I think these are needed benefits, so that's a real plus. I also believe that some of the cuts in the rate of growth in hospital and physician make sense. My concern, as I said, is when you start looking at that extra money. So there's a lot of good aspects of this plan. And I would like to see and hope that we will get a plan that perhaps is a little more scaled back, but I do believe they are moving in the right direction.

MS. FARNSWORTH: Okay. Ms. Wilensky and gentlemen, thank you very much for being with us. FOCUS - GENERAL INTEREST

MR. LEHRER: Finally tonight, the book of the hour, My American Journey by Colin Powell. There are few precedents for the attention the former army general and potential presidential candidate is getting for his memoirs. We explore the book itself now with four people who have read it and written about it. Richard Reeves is a syndicated columnist who reviewed the Powell book in yesterday's "Washington Post." Michael Gordon is a "New York Times" correspondent. He's the co-author of The General's War, The Inside Story of the Conflict in the Gulf. Henry Louis Gates is a professor of humanities and chair of the Department of Afro-American Studies at Harvard University. He wrote about Powell in this week's "New Yorker" magazine. Juan Williams is a "Washington Post" reporter who has written frequently about Powell, including on Sunday. Richard Reeves, does the book live up to its advance attention?

RICHARD REEVES, Syndicated Columnist: [Los Angeles] I think it does. I think it's a pretty good book about a, about a very interesting fellow who lived in interesting times. And I found him to be much more complicated than I expected. And I've met him, but I--there are things--Colin Powell's description of military life and of the way the army works and of a certain kind of careerism I think was a terrific piece of work. You have to be drawn to the story of the immigrant kid from Jamaica in this case making it in the country, and he also writes about the difference between blacks in America who came from the West Indies and those who were born here. And he does that in a very revealing way, about the differences and tensions between people, and also he reveals something that can't lose with me. Colin Powell and I are the same age exactly, and we grew up within 10 miles of each other. And though he is seen as something of a great Republican hero, to me, there were complications or contradictions in that kind of thing, because Colin Powell is a New Yorker. He sounds like a New Yorker. He has the tolerance for the behavior of a New Yorker, and speaks Yiddish, plays stick ball. That stuff goes with me.

MR. LEHRER: Does that stuff go with you, Prof. Gates, and if so, what, or if not, what does?

HENRY LOUIS GATES, Harvard University: Well, I like the book, particularly the early chapters, more than I did the beltway stuff, which is much more familiar, I think, to you. It was a combination of Benjamin Franklin and Booker T. Washington's Up From Slavery. And I particularly liked the way he valued African-American culture, the way he showed how he was only successful because of the strength of his nurturing and the strength of the culture that raised him. That was particularly effective to me. And he also has a great sense of wit. I like the book very much. And I think that the American people like the book as well.

MR. LEHRER: Did you get the feeling after having read the book that you knew this man, you knew who this guy was?

PROF. GATES: I got the feeling that I knew him after I interviewed him for the second time much more than I did in the book. I felt very sympathetic to me, but I felt that it was a carefully crafted image designed to, designed to be compelling. But after I interviewed him, after I got to know him, I really saw his wit. Some of the things he said to me in my interview, which he had excised from the book, showed how deeply imbued in African-American culture he was, a sense of signifying, a sense of playing the dozens, a sense of the love for the culture. It was quite exciting to me.

MR. LEHRER: Yeah. Was it exciting for you to read, Michael Gordon?

MICHAEL GORDON, New York Times: Well, I have a little bit of a different take on it. I focused on the beltway stuff.

MR. LEHRER: Okay.

MR. GORDON: Because I'd written a book on the war and because as a correspondent, I covered Gen. Powell with relation to crises in Bosnia and Somalia, and so I was very interested what he would actually say about it. And I don't personally have a position on whether Powell should or should not be President, but as someone who's interested in history, I was a little disappointed in the book in this sense: I found that Gen. Powell's discussion of the Gulf War and of, of the Bosnia and Somalia crises was pretty much what you would expect from a would-be politician who had higher aspirations in that it played down controversies in which he was a part. It minimized his responsibility for certain questionable decisions. And in the life of any important figure, there are questionable decisions, as well as things that go right. And--

MR. LEHRER: You mean, he put, you think, too much of a spin from his own perspective on what happened, or do you think he didn't reveal everything, or what?

MR. GORDON: I know he didn't reveal everything, but, no, he played down the extent of his opposition to the Gulf War and made it sound as if he was only trying to get the civilians to better define their objectives, when, in reality, it went deeper than that. He played down the implications of his recommendation that the war could be brought to what I think is a premature close. But at the same time, the book was revealing in another, another way, in a way that hasn't been remarked on very much. In this book, it reveals Powell's--while at the same time he's shaping things and spinning things as any politician would, it really reveals the extent of his emotional as well as intellectual commitment to the Powell doctrine, which is that force is really only to be used in almost ideal circumstances, and people hardly remarked on this, but if you go read the book and you read his discussion of the Bosnia crisis, for example, he says rather categorically how he advised two presidents against doing what the United States is doing exactly now in Bosnia, using the--

MR. LEHRER: Which is limited warfare--

MR. GORDON: Limited warfare in a way that seems to be having a positive effect on the Serbs, and he explains why he was against it, and it comes out of his Vietnam experience, but the fact of the matter is he advocated a policy with relationship to that crisis and other post Cold War crises that's almost neo-isolationist, and this has not gone remarked on, even though we're talking about a man who might become the commander in chief.

MR. LEHRER: Juan Williams, what's your overview of the book?

JUAN WILLIAMS, Washington Post: I guess I take a little bit of a more political stance than the others in their discussion here and look at the book really as an introduction to Powell's presidential campaign.

MR. LEHRER: Is that the way it should be read?

MR. WILLIAMS: I think that's right. I think it's really adaptation, if you will, of Powell's very successful venture into the lecture market, where he goes forward and really gives an inspirational presentation. It says that here I am as an immigrant child, as a black immigrant child, and I go forward, and I am successful in American society, despite great odds, and that just in the title, My American Journey, he makes it into by the end of the book, the last line, "our American journey," and I think it is really the beginning, if you will, of the sense that we are continuing this journey, and the journey will lead to the presidency and the idea that a black man can be President of the United States, and a child of immigrants can rise to such astounding heights.

MR. LEHRER: Did you have the feeling as you were reading the book that, hey, wait a minute, if he were not interested in being President of the United States, he might have told us a little more about this, he might have revealed a little more about himself, I mean, did you see it as a campaign autobiography in a way?

MR. WILLIAMS: Oh, absolutely. I think if he was really being more revealing, I think that there would be a larger sense of discussion, and I think he has said this in some interviews about the book, where he might have been hurtful of others, where he might have been--

MR. LEHRER: Taking shots, you mean?

MR. WILLIAMS: Well, not taking shots necessarily but been more critical in his perspective. He's seen a lot. People have been critical about the cooperation he's given to other writers in his assessments of Presidents, like President Reagan, and thought that maybe he was a little bit cold-hearted about the President's analytical skills. In this book, I think that's more glossed over, and I think that what you see also in terms of his relations with black leaders in the country, his ability to talk about what happened during the civil rights years, which is a key time, given his age, in his life, and the role that his wife's father played in Birmingham as a principal of a school while Martin Luther King was there, there were opportunities here for him to really stand out and say, here's how I see the revolution, and I wasn't a participant, which is something quite different for people who are in leadership positions and black of my generation.

MR. LEHRER: Sure.

MR. WILLIAMS: But he didn't do that, and I think he didn't do it, because he realizes if he did, he would have had a very nasty fight on his hands in terms of the black community in this country.

MR. LEHRER: Richard Reeves, did you read it as a campaign autobiography?

MR. REEVES: No. I think it's a better book than most campaign autobiographies. And I think--I don't think that Colin Powell is going to be President of the United States, and I would even bet on a close bet that he won't run at all, but this, in fact, is the peak, and that he stands now at the apex of his life before if he goes into politics he will be nibbled to death, death by a thousand cuts, and I find it--I found it more frank and revealing than say wanted. I mean, he talks about the fact that when the riots began in the 60's, that he was no, "Burn, baby burn," black. He didn't want to burn the country down because he was doing real well in it, and I think that you can't ask him to say more than that, and I think that the phenomenon we're seeing in a way is beyond politics. The problem is that the country is a problem. The timing, I think, was marvelous for a company--for a country that's losing confidence in himself, suddenly this guy comes along, and he validates America. He affirms the rhetoric of the country and what we believe in. If a guy can go from Harlem to the head of the biggest military force in the world, America can't be the worst place in the world. And I think that's the back and forth we're seeing now between the nation and Colin Powell.

MR. LEHRER: Prof. Gates, do you agree that this book is beyond politics, or above politics?

PROF. GATES: I think the book is very political, but I think that he had to walk this tight rope between the "my" and the "our," between showing the particularity of his experience, yet representing or creating an experience that the average American could identify with. People didn't want him to be a Clarence Thomas. People wanted him to be authentically black, as Tony Lewis puts it, in today's "Times," yet, they didn't want him to be too black, as it were. They wanted him to be someone they could sympathize with, feel comfortable with, and that is the stuff that he crafts in that book. He--

MR. LEHRER: Do you think he did that intentionally?

PROF. GATES: Sure.

MR. LEHRER: Or is that just an accurate reflection of who this man is?

PROF. GATES: Well, I think that he did it intentionally with his co-author, but I also think it's who the man is, without a doubt. Colin Powell is a very, very savvy, intelligent man. And he also is a very cosmopolitan person. I think that he doesn't see ethnicity as something that creates barriers or a box that he lives in. It's something that allows him to communicate with other people, to express himself through, and I think that's what most of us want. No one wants someone who's milk toast, but, on the other hand, you don't want someone who is too ethnic, as it were.

MR. LEHRER: Michael Gordon, you were troubled a little bit by, as you said, by some of the things you read when he was at the Pentagon, because--involving things that you were covering at the time. Is it a serious concern that you got up from when you put that book down, said this man didn't, wasn't straight, or he didn't--what--characterize your concern.

MR. GORDON: Well, I'm--I guess I think it would be naive to expect that this book was divorced from Powell's political aspirations. And I think he, indeed, does have political ambitions. What he will finally decide and how he will pursue them I can't say and perhaps he can't say. But I very much agree with Juan that when you read this book, you see a man who's contemplating a political future, who's very conscious of how this book may play into this political future, and that it will be read by a lot of Americans. But what I mean is that, you know, it's like any book by a figure tends to short-peddle and play down decisions and things that went wrong. I don't know. The Bosnia crisis was one of the most serious crises during the Bush administration following the Gulf War. This crisis is described in maybe three to four pages in the six hundred plus page book, but there's page after page about Gen. Powell's machinations with the press and how he placed an op-ed article in the "New York Times" which otherwise would have been a letter, and his reaction to a piece in the "New York Times" written by a colleague of mine, and how he went on to three television networks to put that to rest. In other words, the book I think plays down things that didn't turn out that well. It's not, by any stretch of the imagination, a no-holds-barred look at the national security establishment, and it also reveals that Powell really is a kind of an inside-the-beltway figure who is very skillful at dealing with the media and constituencies in Washington, because he writes a lot about that.

MR. LEHRER: Is that good thing or a bad thing, speaking from inside-the-beltway, as you are? In other words, is that--does that come over in the book as something that is a positive thing or a negative thing?

MR. GORDON: I'm an inside-the-beltway person perhaps myself even though I live outside the beltway now, but I don't think it's a bad thing, but it's at variance with the public persona of Powell. The public persona of Gen. Powell is as an outside-the-beltway figure who's going to change business as usual in Washington. The reality is that he's an inside-the-beltway figure who's pretty much been a defender of the status quo and of a centrist position. I'm not saying whether that's good or bad. I'm saying there's a gap between these two perceptions.

MR. LEHRER: Is there any question in your mind, Juan Williams, after reading this book and based on interviews you had with him through the years that he wants to be President of the United States?

MR. WILLIAMS: No. I think the man wants to be President of the United States, and I think that he feels that he's fully prepared to do that job. He's had exposure to several Presidents now, been very close to them, been not only the chairman of the Joint Chiefs but National Security Adviser, been--functioned in many roles now in Washington and done very well in most of them, and in this latest role maybe done best of all, which is as the man who's on this book tour really working for Random House for his $6 million book advance, and part of this huge publicity machine which really surrounds this book, and puts it into the campaign mode. I think the book was written not only, of course, by Gen. Powell but by Joe Perseco.

MR. LEHRER: Who's a real pro. Joe Perseco is one of the best there is.

MR. WILLIAMS: Right. And done in such a way I think in terms of a Random House campaign to make the idea of the presidential aspiration part of the impetus that any buyer would have for walking into the bookstore and picking up the book. I think Richard's right when he says it's a good book, but it's a good book in the context of 1996.

MR. LEHRER: Richard, is there any doubt in your mind--well, I'll just ask you straight. Somebody picks up this book, reads every word of it, puts it down, would you say, this man wants to be President of the United States?

MR. REEVES: Well, I would say this man wants to be asked. I'm not sure that he--I don't know how naked his ambition is, but it's clothed a little bit in here. I mean--and after all, he is a political general. The thing he most hates being called is a political general, but of course, so was Dwight Eisenhower. Dwight Eisenhower was the army's lobbyist to Congress for most of his career, for a good part of his career before the war. So there's no doubt that Powell is an operator in that mold. But when you talk about--I don't see that as a negative politically. No one wants George Patton or Norm Schwarzkopf to be President of the United States. They want someone who knows their way around, knows how to manipulate a system, which he's quite brilliant at. And I wonder--I don't know the man that well--I've met him--it--he takes some tough shots at things like Reagan, describing the fact he walked out of talking to the man and talked to each other about what did he say or a scene he describes with George Shultz yelling at Reagan during a meeting with Gorbachev, saying, you know, this guy is tough and he's prepared. You can't sit there like a clown telling jokes, which is what Reagan was doing, and then he--I don't know what his gripe with Schwarzkopf is directly, but he--

MR. LEHRER: It's there, isn't it?

MR. REEVES: That conversation that he reports where Schwarzkopf says, "I'm losing it, Colin, I'm losing it, I feel like my head's in a vice. What should I do?", I mean, clearly, I took that to mean that he blames Schwarzkopf for some of the things that Michael has talked about, that feels Schwarzkopf was the source of the reluctant warrior stories.

MR. LEHRER: Let me--yes.

MR. GORDON: That's actually a conversation, by the way, that's reported in Schwarzkopf's book, and so for Powell to include that particular conversation in his book, it's already been in Gen. Schwarzkopf's book, that's not really a new disclosure.

MR. LEHRER: You all touched on some of that too in your book?

MR. GORDON: That's what I mean, but it's very careful. Schwarzkopf had already laid that bare, so he has to deal with it, but what he doesn't deal with is the--and I think frontally--is the decision to end the war. He expresses a lot of opinion on it, and he's very emotional on it, but he doesn't talk about the extent of the Iraqi escape.

MR. LEHRER: I want to--we just lost Los Angeles and Richard Reeves, but Henry Louis Gates is still with us in New York, and I want to end with you, and what is your answer to the question? Reading this book, based on your conversations with him, does this man want to be President of the United States?

PROF. GATES: Undoubtedly. I think every day of his life Colin Powell is awakened by a little voice that says you could be the first black man to the be the President of the United States. And I think that that mantra is going to be irresistible to him.

MR. LEHRER: All right. Thank you, gentlemen, very much, all four. RECAP

MS. FARNSWORTH: Again, the major stories of this Monday, a Bosnian government and Croat advance continued in Central and Western Bosnia, displacing thousands of Serbs. On the NewsHour tonight, Deputy Secretary of State Strobe Talbott said the U.S. and other countries had given a strong red light to the Croats and Bosnians to stop their offensive before it triggered a wider war. And aid poured into the U.S. Virgin Islands and Puerto Rico as residents tried to recover from the devastation of Hurricane Marilyn. Nine people were killed there over the weekend and at least fifty are still missing. Good night, Jim.

MR. LEHRER: Good night, Elizabeth. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.