The MacNeil/Lehrer NewsHour

Intro ROBERT MacNEIL: Good evening. Leading the NewsHour this Tuesday, the White House warned Panama's Noriega, ''There are limits to our patience. '' Robert Dole quit the presidential race and endorsed George Bush. Two top officials and four aides resigned unexpectedly from the Justice Department. We'll have details in our news summary in a moment. Jim? JIM LEHRER: After the news summary, Nina Totenberg of National Public Radio reports on the Justice Department's resignations at the top. We have an excerpt from Robert Dole's dropout statement. Developer James Rouse, Senator William Armstrong and Newport News Mayor Jessie Rattley look at ways to solve the nation's housing problems. And we close with a newsmaker interview with Brian Mulroney, the Prime Minister of Canada.News Summary MacNEIL: Panama's President in hiding Eric Arturo Delvalle today called on the United States to take any action to oust military ruler General Noriega. Speaking through his ambassador in Washington, Delvalle said a U. S. --led commando raid to arrest Noriega might be the best way. The White House said that there are limits to U. S. patience. Presidential spokesman Marlin Fitzwater said it had always been U. S. policy not to intervene militarily, but they were angry and outraged at the violence at opposition marchers in Panama City yesterday. Forces loyal to Noriega burst into the Marriott Hotel last night as opposition leaders were about to hold a news conference. Several Americans, including newsmen, were beaten by security forces, and detained, although later released. The White House said the Noriega regime is showing its true colors. It is desperate and afraid of its own people and a free press. Earlier, the authorities had attacked more than 3,000 anti government protestors with tear gas, irritant sprays, and shot guns firing birdshots. Today dozens of U. S. workers at the Panama Canal demonstrated their anxiety that they would be the next targets of Noriega's security forces. Many of them carried signs calling for protection by U. S. troops. In Caracas, Venezuela, 22 Latin American and Caribbean nations urged the U. S. to lift its sanctions against Noriega. They said they would consider Panama's request for economic assistance. Jim? LEHRER: Robert Dole threw in the towel today. The Kansas senator withdrew as a candidate for the Republican presidential nomination. Dole's departure makes Vice President Bush's inevitable nomination even more so. Dole made the announcement in the Senate Caucus room. He was joined there by many of his Republican Senate colleagues, as well as supporters and staff. He told the crowd he was beaten, but not defeated.

Sen. ROBERT DOLE, former presidential candidate: The one thing you learn how to do pretty well in our business is to count. You come to trust your instincts to tell you when it's over. And in my heart I know that that time is now. And so I congratulate George Bush. And wish him well in November, because as I have said many, many times, the bottom line is keeping the White House Republican, that's the bottom line. LEHRER: Dole's withdrawal leaves only Pat Robertson in the Republican race against Vice President Bush. Robertson is far behind in the delegate count. The Democratic contest appeared headed for another turn in Connecticut. Michael Dukakis is expected to score a decisive win over Jesse Jackson in that state's primary today. Turnout was light as voters went to the polls to elect 52 delegates to the Democratic convention. Jackson scored a big win over Dukakis last Saturday in Michigan. Today, Connecticut's Democratic Chairman said Dukakis needed to pull better than 50% to reassert his candidacy. MacNEIL: Two top officials resigned unexpectedly from the Justice Department today, taking four aides with them. The department denied any policy disputes or any connection with the Special Prosecutor's current investigation of their boss, Attorney General Edwin Meese. But the Associated Press said Meese's continuing legal problems were definitely a factor. Those leaving are Deputy Attorney General Arnold Burns, number two man at Justice, and Assistant Attorney General William Weld, in charge of all criminal investigations. They both said they wanted to return to private law practice. LEHRER: House leaders moved closer today to a deal on humanitarian aid for the Nicaraguan contras. The hangup has been a Republican insistence that it contain a mechanism for quick action on military aid if the current peace effort fails. Today, Republican leaders talked it over with President Reagan at the White House and afterward Congressman Richard Cheney said the word of House Speaker Jim Wright may be enough.

Rep. RICHARD CHENEY, (R) Wyoming: If he were to give his word we would find that acceptable. What we want is a commitment that if the President makes a request, it will receive time and consideration on the floor, that is, it won't be bottled up in committee -- and secondly that it will be treated in a fair fashion. We won't have a rule that is crafted in such a way as to deny us a vote on the President's package. REPORTER: (unintelligible) Rep. CHENEY: If we can work out an arrangement whereby the Speaker would permit in effect to give us timely consideration of such a vote, and that he would bring it up under a fair rule, I think that would solve our problem. LEHRER: The Senate met behind closed doors today to talk about alleged Soviet lies about nuclear missiles. Conservative Republican opponents to the intermediate range missile treaty called the session. They claim there is evidence the Soviets have deliberately falsified their missile data. Leaders of the Senate Intelligence Committee who saw the material earlier say there is nothing to it. The Senate is expected to vote on the new treaty sometime next month. MacNEIL: Israeli soldiers reportedly shot and wounded 11 Palestinians today and clamped an unprecedented three day off limits ban on the occupied territories. The ban applied to all outsiders including newsmen, and barred Arab residents from entering or leaving the West Bank and the Gaza Strip. Palestinian sources said a 13 year old girl was injured by rubber bullets in one incident near Nablus. Ten other protestors were wounded in the West Bank village of Zeita after they barricaded streets and threw firebombs at Israeli cars. In the Persian Gulf War, 30 residents of the Kurdish town of Halabja were flown to Vienna for treatment of the effects of chemical gas. Iran accused Iraq of killing 5,000 Kurds with poison gas bombs after Iranian troops overran the Halabja area. An Austrian physician said the 30 patients were suffering medium to severe injuries of the skin and lungs. LEHRER: There was some encouraging news about the U. S. economic future today. The Commerce Department said its monthly index of leading economic indicators was up . 9% in February. That is the largest increase since last June and follows mostly downward numbers since the stock market collapsed last October. The Commerce Department had further good news today about housing sales. They were up 20. 3% in February, the largest monthly jump in two years. MacNEIL: There was a medical summit meeting today between the United States and the Soviet Union. Cancer specialists from both countries participated in a teleconference linking Moscow with suburban Washington, D. C. The summit produced strong disagreement over whether to tell cancer patients that they have the disease. A leading Soviet expert said it was best not to tell in order to preserve the patient's peace of mind. But U. S. doctors disagreed, saying it would be impossible to give quality care without telling the patient the whole story. Also today, President and Mrs. Reagan took part in a White House event honoring people who faced cancer with courage. The President presented a 1988 Cancer Courage Award to actress Jill Ireland on behalf of the American Cancer Society. Another Courage Award was given to Mrs. Reagan, who underwent surgery for breast cancer last year. LEHRER: A former Conrail engineer was sentenced to five years in prison today for causing a train wreck in which 16 people died. Rick Gates had pled guilty earlier to manslaughter charges. He admitted he smoked marijuana before he failed to observe safety procedures that led to the collision in January 1987 between his freight engine and an Amtrak passenger train near Baltimore. The judge in Towson, Maryland, today gave Gates the maximum sentence allowed under a plea bargain arrangement between Gates and the prosecution. In addition to the prison time, he was fined $1,000. MacNEIL: A Federal Appeals Court ruled today that it was unconstitutional for Congress to make a special law barring publisher Rupert Murdock's ownership of newspapers and television stations in the same cities. The law was passed late last year as a last minute amendment to a massive spending bill. The appeals court ruled two to one today that the provision singled Murdock out, thus violating the equal protection clause of the Constitution. The ruling will not affect Murdock's recent sale of the New York Post, but means he does not have to see either the Boston Herald or the Boston TV station he owns. LEHRER: TV evangelist Jimmy Swaggart today was suspended from preaching for at least a year. The action was taken by the National Assemblies of God Church in Springfield, Missouri. Swaggart admitted publicly five weeks ago to unspecified moral failure. There were reports he had paid a prostitute for pornographic acts in a Louisiana motel room. Swaggart has 30 days to decide whether he will accept the church's terms. That's it for the news summary tonight. Now it's on to the Justice Department resignations, Robert Dole's goodbye, the Housing crisis, and the Prime Minister of Canada. Justice Shakeup MacNEIL: First, today's resignations at the Justice Department. As we reported, Deputy Attorney General Arnold Burns, second in rank to Attorney General Edwin Meese, and Assistant Attorney General William Weld, the man in charge of the Department's criminal division, submitted letters of resignation to President Reagan. Two assistants to each man also resigned. Along with the departure of Associate Attorney General Stephen Trott, who was confirmed last week as a federal judge, today's resignations leave the Justice Department with a significant leadership vacuum. They also come at a time when the Attorney General is himself being investigated by an independent counsel for his role in the Wedtech scandal and a million dollar Iraqi pipeline project. With us now to discuss the possible reasons and impact of today's resignations is Nina Totenberg, who covers the Justice Department for National Public Radio. Nina, first of all, what officials reasons did they give for resigning? NINA TOTENBERG, National Public Radio: They really didn't give any reasons. Arnold Burns in his resignation letter said the time had come for him to go back to private practice. Mr. Weld, the head of the criminal division, gave no reason, and this afternoon when reporters cornered Mr. Weld -- both men had been out of pocket -- this afternoon when reporters cornered Mr. Weld, he said there was no specific policy dispute, that he wouldn't go into the reasons, that his conversations with the Attorney General and with the White House Chief of Staff Mr. Baker were private and that he was going fishing. MacNEIL: Now, what do people you talk to at the Justice Department say they think are the reasons for the resignations? Ms. TOTENBERG: Weld, there seems to be some consensus as to what they think the reasons are. They believe that these two men have been very restive under the Attorney General's guidance, if you can call it that, at the Department of Justice. We know, for example, that both Burns and Weld met with the Attorney General this morning and told him quite bluntly that they were leaving because they thought it was inappropriate for him to remain as the Attorney General in view of the constant revelations about his financial ties to E. Robert Wallach, Mr. Meese's close friend, who has been indicted in the Wedtech affair and who was involved in the Iraqi pipeline deal. These constant revelations they feel have hurt the Justice Department. One top conservative Republican on Capitol Hill said to me, what this boiled to was the continuing deterioration and demoralization of the Justice Department, and they didn't want to be a part of it. Another Justice Department official, apolitical appointee, said to me this was a message to the White House to get them to understand what's going on here. What do they want? The Panamazation of the Justice Department? Comparing, I guess, the Attorney General, to Noriega. MacNEIL: Let's just spell this out a little bit more. You're saying these two senior men went in and told the Attorney General to his face that he ought to leave today? Ms. TOTENBERG: I think that's what they did. MacNEIL: And what was the message that they were sending according to your other informant to the White House do you believe? Ms. TOTENBERG: I guess the message that they were trying to send is that the Justice Department is in deep trouble, that it is demoralized, that there is a leadership vacuum, that the Attorney General is taken away from his duties by the many investigations involving him, that there are so many questions about him that he should not be the chief law enforcement officer of the country. Of course, these two men have only one constituent that they're really sending this message, and that constituent is Ronald Reagan, and whether he's willing to listen is something else entirely. MacNEIL: And he has on at least two public occasions recently reaffirmed his faith and support and trust in Attorney General Meese. Ms. TOTENBERG: And he did again today through his spokesman. The White House said the President continues to support Mr. Meese. The White House sought to portray these resignations as relatively normal, the kind of thing that we see at the end of any Administration in its waning months, with people leaving. But six people don't leave the Justice Department at once and have nobody notice. And this was done in an orchestrated manner, and even Mr. Meese's spokesman agreed that it was done in concert. And it leaves the Department without any hierarchy at all virtually except for Mr. Meese. All the top officials are gone. There's really only person left and that's Charles Fried, the Solicitor General. He will not become, when everybody's gone, the number two official, and I'm told that he's most unhappy about that, and one of Fried's friends said to me today, If Charles has to be number two to Meese, it'll be like standing under a lamp post infested with pigeons. MacNEIL: Do you -- the people you talk to expect there might be more resignations? Ms. TOTENBERG: Well, there's been a lot of talk about that today, that Fried might be next. I was told by sources in the Justice Department that Fried was surprised by these resignations today, that he was not part of this cabal, for want of a better word. And he went home with a flu this afternoon. He's arguing a case in the Supreme Court tomorrow, and there's some talk that he could resign next. MacNEIL: Is there anything imminent, any action imminent in the investigations of the Attorney General? Ms. TOTENBERG: Well, what we're talking about here are investigations by two independent counsels, one involving Wedtech and the Iraq pipeline deal and the other the Iran contra investigation. We know of nothing specific, but these are very secret investigations, and they have maintained their secrecy very well. The speculation is enormous. It ranges from could Meese have begun to sign off on a pardon in the Iran arms deal to -- is there something more about Wedtech to come out that we don't know about? I must say that I did all the checking I could today, and as far as I was able to learn, there is nothing new expected from the independent counsels in the coming days or even weeks. MacNEIL: Including a possible indictment of the Attorney General himself, which I think was another of the rumors going around. Ms. TOTENBERG: That was indeed one of the rumors -- I'm glad you said it instead of me, Robin! But I got no indication of that today. That doesn't mean -- that's not to say that it might not come sometime, but I got no indication of it being very soon, if at all. MacNEIL: Well, Nina, thank you very much for joining us. Bowing Out LEHRER: The end came for Robert Dole's presidential campaign today. The Senate Republican leader announced his withdrawal from the 1988 nomination race this afternoon in the Senate Caucus Room. He said he knew he could not beat George Bush and said he would help the Vice President win the general election in November. Here's an extended excerpt from his statement.

ROBERT DOLE, former presidential candidate: I know, and my friends know, that I'm a fighter. And I don't like to lose. And I make no apology for that. It's simply the way I am. They also know that I'm an optimist. If I weren't, I wouldn't be standing here today. And I've been beaten before and no doubt will again. But I've never been defeated, I never will be (applause). Today, here I am, bloody, but unbowed, as the poet says, reminding you that there was a special reason this year for those of us on the Republican side to walk, or in my case to run, the extra mile. And that reason is the national interests. I ran for my Party's nomination because I was determined to lead a dialogue on issues that matter, issues that I care passionately about involving the national defense, and fiscal integrity of this country. Profoundly interrelated issue I feared would get lost in the shuffle. I wanted these issues to be part of a crucial dialogue about this country's future. It matters if we have this hostile Soviet client state the Sandinistas are building in our own back yard. It matters if we have this monster deficit looming up like a tidal wave in our future. And it matters how we deal with these issues. Whether we mortgage our future to them or whether we make certain that the buck stops here. And future generations don't have to pay up because of our cowardice. My campaign has been an appeal for all Republicans to recognize and celebrate the diversity of America. No party can govern that is not truly representative of this nation of nations. And no president can succeed who promises competence but withholds compassion. I seek a party as strong in its commitment to equal rights as to its military and economic preeminence. For the defense of American freedom whether at home or abroad is ultimately indivisible. Its success depends on a house united, and leadership with the will to win. So today I've come to the end of one road. But the journey is far from over. When people ask me why I ran for President, I will say because I wanted to make a difference. And that desire will remain with me for as long as I live. Ronald Reagan has made an historic difference for America. He has set us on a renewed course to renewed prosperity, greater security, and more hope and more opportunity for each and every American. But there is much more work to do. So I return to the Senate as the Republican leader, eager to engage there the issues that confront America. And ready to do all I canto elect Republicans in November, and doing all I can for our nominee George Bush. Thank you very much. MacNEIL: Still ahead on the NewsHour, the crisis in affordable housing, and Canada's Prime Minister. Gimme Shelter LEHRER: Next, that part of the American dream called housing. Yesterday a major congressional commission came in with a jarring conclusion. For some Americans that dream will never come true, because there will never be housing available they can afford. The commission called on the Federal Government at a cost of $3 billion to lead a massive attack on the problem before it causes severe and potentially irresolvable frustration and division within the country. Commission chairman James Rouse is here, as are one each of two varieties of commission critics, Senator William Armstrong and Newport News, Virginia, mayor, Jesse Rattley. We will hear from them immediately following this report on the housing situation in one American city, Baltimore, Maryland. Kwame Holman is the reporter.

KWAME HOLMAN: Robin Peckoo and William Hazel of Baltimore are about to realize an American dream. Along with their families, each is about to buy a first home. WILLIAM HAZEL, Home Buyer: I'm tired of renting, because I want a house. I think this here is a deal if we do it right. ROBIN PECKOO, Home Buyer: We looked back at the eight years and really saw how much we spent in renting, and the rent is still escalating. And I said within two years we'll probably be paying almost the same amount of what this mortgage is going to be.

HOLMAN: A generation ago, Peckoo and Hazel's moderate incomes would have made buying good quality homes like these easy. Not today. A recent study said young home buyers will spend 50% more of their incomes on housing than their parents did. Many won't be able to buy at all. Ms. PECKOO: The housing market is very high, and unless your incomes are pretty well in the median, and you have a good amount saved, it's just very hard to go into it.

HOLMAN: Peckoo and Hazel say they are able to buy here only because of an unusual federal urban development program that will contribute $15,000 to the $70,000 cost of each house. Ms. PECKOO: No other place was willing to knock off that much, even if you went in with a loaner who's willing to finance.

HOLMAN: Project developer Dan Henson says because of the federal government's role here, his profit is limited to about half of normal. Still, he says he'd like to develop more such projects. DAN HENSON, Developer: What we're trying to do is to encourage the federal government and other people to provide more subsidies like this so the people of limited means can afford to buy. We're not talking particularly low income. But the fact is people who are making $20,000, $25,000 a year right now cannot afford to buy a house.

HOLMAN: It's not just first time homebuyers who are looking to the federal government for help. Low income renters are looking for assistance as well. Recent data say rents have risen faster than inflation. And while there are more rental vacancies, most are priced out of the reach of the poor. Baltimore resident Arsenia Tuggle now gets a rent supplement from the federal government. She says until her name was called from a list of people seeking housing assistance, all she could afford to live in was substandard rental housing. ARSENIA TUGGLE, My house was deplorable, but I had to live -- I stayed in one rental with no heat. Or I had a tiny (unintelligible) of oil. But the pipes are busted, the rats had ate the back door. There was a summer kitchen that none of us used. People were scared to even come in the back yard. Most of your decent housing they start from $350 up. And it goes according to bedroom sizes. It's $350 for a two bedroom, $400 to $500 for a three bedroom or up higher. And I know I wouldn't have been able to afford it.

HOLMAN: Although the number of low income people needing housing assistance has risen in recent years, the Reagan Administration has severely cut federal spending for housing. Here in Baltimore as in other cities the local government says it cannot make up the lost federal housing money. Thirty four thousand applicants are on Baltimore's waiting list for assisted housing. Meanwhile, over 5,000 houses in Baltimore stand vacant because neither the individual owners nor the city can afford to rehabilitate them. Michael Braswell heads a nonprofit housing group called Neighborhood Housing Services. MICHAEL BRASWELL, community developer: There are literally thousands of people who are -- thousands of families who are housed in substandard conditions. Substandard housing. On waiting lists, living with relatives, waiting for public housing units to come available. And they come available very, very infrequently.

HOLMAN: Braswell's and other Baltimore housing groups have been credited, along with the city government, with making progress in housing Baltimore's poor, who make up 25% of the city's population. Braswell says creating housing for the poor today means less federal funding and more federal red tape. Mr. BRASWELL: Federal resources have -- by all practical purposes have disappeared, and they have had different strings attached when they did reappear. For instance, some of the loan programs that were easy to use 8, 9 years ago, now they're very hard to use. Very, very hard to use. Almost impossible in some instances.

HOLMAN: And some experts foresee even more problems for housing low income people. Years ago the federal government made long term deals with the owners of houses like these to provide rental housing for poor residents. Many of those agreements are due to expire soon. The owners could decide to leave the federal program and put their houses into the private market. One study said if that happens the loss of rental housing available to the poor could exceed 200,000 units a year by 1991. Meanwhile, the lack of affordable rental housing has forced some families onto the street. In response, the city of Baltimore converted this school into a shelter for homeless families. But many say more comprehensive measures are needed. Mr. BRASWELL: -- raise housing as an issue, and make it a national agenda, have it become something that Congress looks at seriously and takes it on head on, because our future depends on it. LEHRER: And that brings us to our discussion. James Rouse is one of the country's best known real estate developers. He chaired the National Housing Task Force, the congressional commission which issued its report yesterday. Jessie Rattley is the mayor of Newport News, Virginia. She chairs the U. S. Conference of Mayors Task Force on Housing. Senator William Armstrong, Republican of Colorado, is a member of the Senate Housing Committee, and he's been a key player in all recent federal housing legislation. Mr. Rouse, to you first. What do you see as the worst case consequences of our not solving the housing problem? JAMES ROUSE, National Housing Task Force: Well, we're seeing that very vividly today in the homeless. And the homeless are performing a great service, really, for lots of poor people, by making clear how desperate this condition is. When you see families on the street looking for shelter. A third of the homeless are families. I don't know that this has ever happened in the history of this country before. And that's only the tip of the iceberg. The people living at the edge, millions and millions of families, who -- one illness, loss of a job for a month, and they're on the street, because they have -- families with incomes under $7,000 a year for example, 50% of them are paying over 70% of their income in rent. Think of this. Families under $10,000 a year of which there are 13 million in the United States, half of them are paying more than 50% of their income in rent. The available housing has gone down, and the incomes have not gone up. And we therefore have less and less housing for more and more people needing it. And that's the crunch. LEHRER: And at the crunch, well, you say we're already there and it's going to get worse. If it is allowed to get worse, what are the consequences for our society? Mr. ROUSE: I don't know. I think we have a -- I'm not an alarmist. But I think we have an awful lot of people who are living in resignation about circumstances they feel they can't do anything about, but which are miserable. And it only takes somebody to drop a match in that can of gasoline to have a real explosion in this country. I don't think we've ever asked so many people to live so miserably in the history of this country as we are today. And that's always tinder for people who want to cause great trouble. LEHRER: Senator Armstrong, do you see the problem in that crisis terms as well? Sen. WILLIAM ARMSTRONG, (R) Colorado: No, I think that exaggerates the problem. But the problem nonetheless is real. The question that I think thoughtful people are asking is this: The federal government has committed $300 billion to the housing problem. We now are providing subsidized housing for about 13 million people in this country. Now, why is it that the problems which Mr. Rouse has described -- and they are real, they're not imaginary -- how can this be? And the answer is very simple. Because a huge proportion of our subsidized housing money has gone to people who are not by any reasonable standards poor people. In other words, we have diverted that money, and we are diverting it every day to people who are middle and in some cases upper income families. Now, to me that's a scandal. And I understand the Rouse Commission suggests we spend another $3 billion. Well, that really isn't very much. We're going to spend over $13 billion this year. The question is how are we going to spend it. I believe we ought to target it for those who need it the most. LEHRER: Okay, we're going to get to some specifics on that in a moment. But let me go to the mayor. On just the severity of the problem as you see it, in sociological, any terms you want to say? JESSIE RATTLEY, Mayor, Newport News, Virginia: It is critical. The question is where will we house our children? When I see children and families in shelters and on the streets, sleeping under bridges and coming to my office saying, ''Miss Mayor, I need a place to live. and what are you going to do about it?'' I think it's time in this country that we set our priorities to take into consideration the concern of poor people. And I think it's time for us to really have a recommitment, because we have not had a housing policy really in over seven years. We were at $30 billion -- I don't know where your $300 something billion is coming from. We had $30 some billion seven years ago. LEHRER: $30 billion -- for the -- Mayor RATTLEY: For the HUD Program. LEHRER: I see. Mayor RATTLEY: All right. That was reduced to -- eight, I believe -- 80% cut in federal funds. Now the new housing bill that was signed in February says, Okay, the first year you have $52 million -- and that's not enough either. In this country we've invested more than $65 billion in public housing, physical housing, that we're letting just deteriorate. Yet we have people sleeping on the streets. That's not right. Not for this country. And it's time that we speak out and we make it very clear that wherever the money's coming from, find it. Because we must provide housing for our people. LEHRER: All right. Back to you, Mr. Rouse. You say that -- your commission says that the federal government must -- if something's going to be done about this, it can only be done if the federal government leads the way, financially and otherwise. What caused you to come to that conclusion? You heard what Senator Armstrong says, all this amount of money's already been spent by the federal government, and we still have a severe problem. Hasn't been administered properly, to paraphrase what he said. Mr. ROUSE: I think that's a terribly misleading figure. If you took almost any element of government funding or assistance and stretched it back over enough years it would come to a very big figure. We'll spend $300 billion this year on the military alone. So the big figures are not impressive until they're broken down to what they consist of. But this is a very modest increase. Our increases, if the -- there's $13. 6 billion now in the budget for '89. We're talking about a 3. 6 billion increase. In total it will only come to less than . 3 of 1% of the total budget that will be spent on housing. Now, when you see people living in the street and families seeking places to live, and people paying enormously more money than they can afford, that this is a very, very modest approach. We ought to be spending that amount of money on housing. And we're not going to get to the point of spending nothing on housing. Housing is a national requirement, just as food stamps are, or social security is. LEHRER: Do you disagree with that, senator, that it's a national requirement that the federal government be involved in a heavy way in housing, or do you just disagree -- do you disagree with that idea or do you disagree with the way it's spent? Sen. ARMSTRONG: First of all, I think it's important to keep our eye on the ball. Outlays for subsidized housing were $3 billion in 1977. They were $13 billion last year, and they're going to be even more this year. My concern, first for the direct federal expenditure is that it be spent on the poor. Because it is not reaching in the majority of cases people who by any reasonable standard are poor. Second -- and I'm concerned about the group that was reported on in your reporter's statement -- are people who are not poor but are working men and women who can't afford housing. Now, why is that? It's because of high interest rates. For almost every home buyer, young or old, the biggest cost of housing is not the house, it's the interest. And interest rates, though they have come down from 17% in 1980 to maybe 10% today, are still twice as high as what we thought of as normal only a few years ago. And that's why so many people in every age and income bracket can't afford housing. And the cost of that in the opinion of most economists, is the failure of the government to balance the budget. So in simple terms, if we really wanted to do something for housing, to bring interest rates back to the 5% and 6% that were normal when you and I bought our first house, we'd do something to put the government's fiscal house in order. So that's the two big issues -- LEHRER: So that would -- you're talking -- you mean indirect housing subsidies is the way to go rather -- in other words, do something about the federal budget, how to solve the -- Sen. ARMSTRONG: -- financial -- Mr. ROUSE: (crosstalk and unintelligible) subsidizing middle income families -- Sen. ARMSTRONG: No, I'm referring to the problem that the reporter brought up, and which you yourself mentioned. That most people can't afford housing today because the payments are so high. That's part of the problem. You've got to look to that. But then for people who are truly poor, and there are such people, we ought to spend the government's money on them -- LEHRER: Directly? Sen. ARMSTRONG: -- directly, rather than putting it into projects where 80% for example of the renters in many subsidized projects are not even income tested under our middle and in many cases even upper income people. LEHRER: Is that true in Newport News in the area that you're familiar with, Mayor? Mayor RATTLEY: No, it is not true. Mr. Rouse was at the meeting that the U. S. Conference of Mayors had down in Austin, and we had been talking about this problem. We had hundreds of people in attendance. And mayor after mayor from cities all across the country, they'd bring their stories to tell. We do not have adequate housing for poor people. We are not providing with federal money housing for middle income people either. We have almost no housing programs underway at the present time. The federal government sets the rules, they set the laws. And all we can do is follow those laws. Now, they had one program where they had a set aside, where you could build this housing development if you would permit X percent of low income people to live there. Nobody even checked on that. And it is my (unintelligible) that they're not living there. But as far as housing for the poor, money coming down for the poor and being used for someone else, that is not so in Newport News. LEHRER: Let me see if we can talk about a specific thing. How would you spend this $3 billion, Mr. Rouse? How do you think it should be spent? Mr. ROUSE: Well, we agree with Senator Armstrong in our report. We propose a very heavy targeting to the very poor. LEHRER: Through this three bill -- Mr. ROUSE: We propose that 50% of all that money be for families that are -- 50% of the families must be below 50% of median income. That gets down to about $7,000 or $8,000 a year. And 80% or an additional 30 must be under 80% of median income, which gets up to about $8,000 or $10,000 a year. LEHRER: Well, how would they be helped? What would this money be used -- Mr. ROUSE: Well, this is a brand new program that we proposed. We've proposed that instead of big federal programs, laid down on the cities, that the money go to the cities with their having great flexibility and little regulation on pushing that money out to nonprofit groups, to the -- all the new initiatives that have been springing up across the United States over the last half a dozen years, and that there's great hope in this. It's very scattered, it's very erratic, but there are -- Sen. ARMSTRONG: (unintelligible) Mr. ROUSE: -- hundreds and hundreds -- Sen. ARMSTRONG: And that they match it -- wasn't that part of your recommendation? Mr. ROUSE: Part of it is. Half of the billion five hundred million must be matched by the states. And must be matched by real money. This is an important part. We felt that the federal program must be more effective. The money just be -- must draw other money, and the money should go down to the localities, who should distribute it in the way that is most sensitive to the actual needs of those localities. LEHRER: And they decide how it goes for vouchers or goes to rehabilitative piece of property, or to build something new, it's their decision. Mr. ROUSE: And they state before they get the money what their program for it is. LEHRER: I see. Mr. ROUSE: And they must fulfill that -- LEHRER: Senator, can you support that? Sen. ARMSTRONG: You bet. In fact, I'd be happy to support it and I can show Mr. Rouse and anybody else who's interested where to save the $3 billion to make it possible to do it. We are shoveling money out into programs which are -- LEHRER: You mean out of existing housing -- Sen. ARMSTRONG: Out of existing housing programs, out of UDAG, which is a national disgrace of money -- LEHRER: That's the Urban Development -- Sen. ARMSTRONG: -- a program which is so bad that the senator who created it joins me in wanting to abolish it. And I believe in your report you called for replacing the HODAG program, the 235 rehab program, the Section 8 rehab program, so I really don't think that there's much difference of opinion between Mr. Rouse and me. I'd like to take the money we're now spending, and more than $3 billion, and target it to poor people. And if we did, we'd get a lot more bang for the buck, and solve a lot of human problems. LEHRER: What do you think, mayor? Mayor RATTLEY: I think it's a beginning. It's a drop in the bucket, however. We have worked together, Mr. Rouse's ideas are good, and he has been dedicated for many years in providing housing for lower and moderate income people. But that's not enough. We have houses, public housing units, that are just deteriorating. We have no money for modernization, to make those housing units usable. We can't throw away that type of investment. And I would estimate that we would need another $20, $21 billion in order to renovate a million three hundred thousand units of public housing. That would be helpful. Mr. ROUSE: The HUD estimate is $10 to $20 billion to do that. Mayor RATTLEY: To do that. LEHRER: That's existing public housing which needs to be brought up to snuff. Senator, what do you think of that idea? Sen. ARMSTRONG: Well, I think there's a lot to that. But the more important component of public housing is resident management. The real promise at the moment of getting not only much improved living conditions for poor people, but of fiscal responsibility. Because to let the people who live there manage the projects, the pilot experiments with that, have shown dramatic results in improving the quality of life and of saving money. I'm not against investing money to make this thing right. But I am against $300 billion later of just pouring money down the same old ratholes that we've been pouring it down all these years. Let's do something that's working. And that means tenant management, it means local control, it means targeting it to poor people, rather than the kinds of programs we've had. LEHRER: That make sense to you, Mr. Rouse? Mr. ROUSE: Yes, it does. We support tenant management. You can't -- there's some places where -- that are not the tenants ready to manage. But we think it's a very important part of public housing. LEHRER: What doyou think of that idea? Mayor RATTLEY: I think it's a good idea if the people had received training to make sure that they have the skills to manage the housing projects. Sen. ARMSTRONG: And after they've managed a while, then resident ownership. That's the next step. LEHRER: All right. And we'll take that with you all some other time. Thank you all three for being with us. Mulroney Interview MacNEIL: Finally tonight, we have a newsmaker interview with Canadian Prime Minister Brian Mulroney. Ever since he and President Reagan signed a free trade agreement in January to eliminate all trade barriers between the two countries over ten years, Mulroney has found himself in a pitched battle at home. Opponents of free trade argue it will mean the Americanization of Canada. Some even say that Canada as a distinct nation would cease to exist in a generation. Both of Canada's opposition parties oppose the deal. But Mulroney has staked his political fortunes and chance for reelection on the pact. He was in New York to accept an award from the Pan American Society when I talked with him yesterday. Mr. Prime Minister, you offer Canada in a supervisory role in Central America, to observe the peace there under the Guatemala Accord, if that is, if that's desirable. What exactly are you offering? You would be willing to give -- put Canadian troops there to supervise it? Or civilians? Or what? BRIAN MULRONEY, Canadian Prime Minister: If it were deemed to be helpful, Canada's tradition over many decades has to really to have been particularly helpful in the area of peace supervision and peace keeping. And inasmuch as the Peace Accord has been concluded, however fragile, in Central America, our government has been in touch over some period of time to indicate our willingness if it were deemed to be helpful to participate in that process, to maintain the peace in the area. MacNEIL: Has anyone asked yet? Mr. MULRONEY: There have been discussions for some time between our people and other governments of a more general nature. But because we're all encouraged by developments we wanted to convey, as Mr. Clarke has in other circumstances, our support of what has taken place, and our willingness to be helpful if we can. MacNEIL: That would mean Canadian troops observing the thing, or Canadian civilians? Mr. MULRONEY: However it came about. MacNEIL: You would wait to be asked by the -- or you would expect to be asked by the nations that signed the -- Mr. MULRONEY: Very much -- MacNEIL: -- Nicaraguan -- Mr. MULRONEY: -- you know, we're not volunteering for anything that the parties would not think necessary or helpful to the process. Ever since, well for 40 years, Canada for example initiated in many ways by Mr. Pearson, has played an especially helpful kind of role on the peace keeping side. And because the government is very supportive of what has transpired in Central America most recently, we wanted to signal our approval and our encouragement and our willingness to be helpful if we can. MacNEIL: Let's turn to acid rain, another subject. You've had a lot of talks with Mr. Reagan about acid rain, set up a mutual -- joint study commission between the two countries, as the result of your summit with Mr. Reagan. There was a conference on acid rain in California a couple of months ago. And Senator Mitchell of Maine, who is an ally of yours, so to speak, on acid rain, said there's a formidable obstacle in the president. Do you see it that way, that Ronald Reagan is a formidable obstacle on the acid rain issue? Mr. MULRONEY: No I don't. I think there are obstacles in a number of areas. Some in the Administration, some in the Congress. And some in the private sector. And a lot of it's indifference. The fact of the matter is that acid rain is killing our environment. It's damaging and killing our lakes and rivers and is unacceptable to Canada, is unacceptable -- it should be -- to the United States. We can't cure it ourselves, because 50% of the damage that is being visited upon us every day comes directly from the United States of America. So we've cleaned up our act. We're saying as a neighbor and friend of the United States you've got to have a treaty, with mandated objectives and targeted lower emissions, to assist us in the cleaning up of the North American environment. We have to go about this on a bilateral basis. And we haven't been successful so far. MacNEIL: And yet the representative of the U. S. Environmental Protection Administration, who was at that conference, Don Clay, who's the Assistant Deputy Administrator, said the Reagan Administration remains unconvinced that acid rain is largely responsible for damage to lakes, forests and public health. He also said the problem is not becoming more serious at a rate that requires us to take immediate action. Mr. MULRONEY: Well, he wouldn't get any serious prizes from anybody for a statement like that. A seven year old could tell you, I mean you have some Canadian roots, all you've got to do is go to watch what's happening, and it's coming down on us every day, it's ruining our lakes, it's killing our rivers. It's ruining our forests. It's damaging our environment, and it's going to impact negatively on our relationship. Now, I don't need in light of that -- and I don't think I'm a wildeyed kook -- I don't need some functionary in the Administration to tell me what's not happening. I can tell you it's happening right in my home area. And it's happening in Eastern Canada in a major way. And if the Administration and Congress are serious about the environment, they're going to pull up their socks very fast and deal with this matter. We are making it -- as we always have -- a matter of the highest importance. We've resolved some important areas with the United States, I'm happy to say. This one is a serious matter, unresolved, and I hope they're all going to get into this and deal with it. MacNEIL: Are you very disappointed by the relative low priority Mr. Reagan personally has given this after you have expended a certain amount of political energy pointing it out to him? Mr. MULRONEY: I'm not enchanted with the progress in this area, as much as I've been very pleased by the tremendous support that President Reagan has given the Canadian relationship in a number of important areas. This is not one where I am overwhelmed by what is taking place. Obviously. MacNEIL: Let's turn to one that you would consider a success in U. S. --Canadian relations, the successful negotiation of a free trade agreement between the two countries. Are you as a Canadian politician -- are you startled by the vehemence of the debate about this in Canada? Does it surprise you? Mr. MULRONEY: No, not really. It's -- on a good day it's pretty hard to get 50% of Canadians to agree on anything. And so I'm not at all surprised or concerned by the depths of the emotions that this kind of an important initiative would bring about. The question is do you want a little Canada? Do you want a Great Wall of China built around Canada? Or do you want Canada to be competing into the 21st Century with the United States, thereby creating new wealth and new prosperity? That's the challenge. I'm in favor of the free trade agreement because of that, others oppose it for reasons of their own. MacNEIL: Some of those who oppose it, for example the Canadian novelist Margaret Atwood, I've read -- you have described as intellectual terrorists. Why would you call them that? People who are exercising their free speech rights to oppose the policy? Mr. MULRONEY: Someone may have described some of the people that way, but not I. MacNEIL: You did not? Mr. MULRONEY: No, I did not. And I certainly wouldn't in regard to Ms. Atwood, or anybody else. I -- there are people on both sides of the issue, and some are very good at compelling reasons, heartfelt reasons, to be where they are. I take the view that it's a major step forward for Canada. It's an act of leadership by Canada and the United States. It's an act of leadership in regard to setting aside the trends towards protectionism. It's a reaffirmation of our belief in the liberalized trading system around the world. It takes some courage to want to do that -- to set aside protectionism. And so I'm in favor, strongly in favor of it. But if someone wants to oppose it, I understand that, and even though I don't share the view. MacNEIL: Can you make a move that is so momentous for the future of Canada -- at least according to many of the opponents -- and to you on the positive side -- without some kind of bipartisanship? At the moment your Conservative Party is strongly opposed on this issue by the two opposition parties, whom you will be facing sometime in the next year or so in an election. Can Canada enter into such an agreement without some kind of bipartisan understanding with something as important as this? Mr. MULRONEY: Yes, I think we have -- for example, we have the Progressive Conservative Party, with a large majority in the House of Commons, in support. But also you know, we have our ten provinces up there of different political stripes. And of the provinces, there are seven in favor, representing all political parties. And three opposed. Now that one of the governments opposed has fallen. And we may wind up with a party there in favor as well, so it could be as high as eight provinces out of ten supporting the free trade agreement. In which case that would be a very strong endorsement. Seven out of ten is already very -- and of those governments, some are of liberal persuasion. The governor of Quebec, the governor of New Brunswick, and so on. So I'm very encouraged by the kind of broadly based nonpartisan, or bipartisan support that we have received. MacNEIL: You say you would like to enter the next -- to run your next campaign, or your campaign for reelection on the free trade issue after it goes through Parliament. What is the timetable for presenting it to Parliament? When will the Canadian Parliament take that up? Mr. MULRONEY: I think we have to take it up in the fairly near future -- probably in the few weeks that follow Easter. I would think so. It's an important piece of legislation, requires I think thoughtful consideration by Parliament, and so Parliament has to be given time to do it. My guess is that it would be brought in then and hopefully passed by -- as quickly as we can. MacNEIL: At the end of January, there was a survey done by the Angus Reed Firm in Winnipeg. And it found that only 24% of the respondents thought that free trade would be an issue that would govern their vote in a coming election; 61% thought that integrity and honesty in government would be an issue. This followed a series of resignations from your cabinet, a couple of people you had to fire because they apparently violated conflict of interest rules, and so on. Is the free trade issue such a big issue? Is it -- could it be overshadowed by the issue of what is called the scandal issue in your government? Mr. MULRONEY: Well, I think that matter is being sort of -- as time goes on -- dealt with, I hope, effectively. And to the growing satisfaction of Canadians. Anything involving allegations of conflict of interest, which is the bane of the existence of any politicians these days in North America, in any jurisdiction, is a serious matter. And people will want to bear it in mind when they -- did the Prime Minister deal quickly and effectively with these questions? I think I did, but that'll be for Canadians to decide. In the longer haul, the larger picture I believe will have to do with constitutional unity, growth in our economy -- we're leading the OECD countries in terms of growth. Our job creation record's extremely high. Unemployment is now at a seven year low, and Canada's experiencing a boom of substantial proportions, and so trade is an important part of that. Not to the exclusion of everything else, but an important part. And I suppose the question that you raise is also an important part of the picture. And people are going to have to say how has the Prime Minister and his colleagues done? Have they done well enough or should we consider something else? This is what election's all about in Canada. MacNEIL: Let me ask you -- the Soviet Union has -- shares the Arctic with Canada across the top of the world -- has proposed, in other terms, a demilitarized, or the demilitarization of the Arctic. And they put it specifically to Canada. This would make it unnecessary to deploy the very expensive nuclear submarines which your administration has proposed there. What has been your reaction to that proposal? Mr. MULRONEY: Well, the demilitarization is essentially selective in character. And we see nothing in proposals like this that would deter us from doing our duty. That northern area to which you refer is ours. We own it, lock, stock and icebergs. And we have not been present up there. The only way that we can maintain sovereignty is by nuclear propelled, not equipped, nuclear propelled submarines, would have the range necessary to assure the assertion of Canadian sovereignty. We were left with a situation by the predecessor government where we couldn't even get up there. We didn't have an icebreaker large enough to ensure the presence of Canada on our own territory up there. And so these are steps that the government has taken, a)to ensure the proper and adequate defense of Canada, b)to fulfill our obligations, but also to ensure the assertion of sovereignty. But we see nothing in a proposal thus far anyway from the Soviet Union that would cause us to set that aside for that piece of paper. MacNEIL: Well, Prime Minister Mulroney, thank you very much for joining us. Recap LEHRER: Again, the major stories of this Tuesday, the deposed President of Panama called on the United States to mount a commando raid to oust General Noriega. White House spokesman Marlin Fitzwater said there is a limit to U. S. patience with Noriega. Robert Dole dropped out of the race for the Republican presidential nomination. And two top officials and four other aides resigned abruptly from the Justice Department. Good night, Robin. MacNEIL: Good night, Jim. That's the NewsHour tonight, and we will be back tomorrow night. I'm Robert MacNeil. Good night.