The MacNeil/Lehrer NewsHour

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

MR. MAC NEIL: And I'm Robert MacNeil in New York. After tonight's News Summary, two reporters on the media scene discuss the Time Warner deal with Turner Broadcasting, then we sample today's Medicare debate in Washington with analysis by Susan Dentzer of "U.S. News & World Report." Mark Shields and Paul Gigot analyze the week's politics, and we have excerpts from today's Ruby Ridge hearings. NEWS SUMMARY

MR. LEHRER: The world's largest media and entertainment company was born today. Time Warner announced plans to buy Turner Broadcasting in a deal worth $7.5 billion. The merger will combine Turner's cable holdings, including Cable News Network and Turner Broadcasting, with Time Warner's cable systems, publishing, music, and movie operations. Ted Turner will become vice chairman of Time Warner, and its largest stockholder, Turner and Time Warner chairman Gerald Levin, spoke at a news conference this afternoon in New York.

GERALD LEVIN, Chairman, Time Warner: I think what you're going to see--and it's already happening--the cooperation between Time- -and that's Magazine--and Time Inc. and CNN in many different ways, starting with coverage of the '96 campaign and then moving into the kind of neutral support that's necessary when we go into this interactive future with text, still pictures, and video--

TED TURNER, Chairman, Turner Broadcasting: I'm going for like a 23 percent owner of Turner Broadcasting, the 10 percent owner of a lot bigger, more powerful, stronger company, and I'm tired of being little all the time. I'm nearing the end of my career, and I want to see what it's like to be big for a while.

MR. LEHRER: Opposition to the merger surfaced immediately. The U.S. West Telephone Company, a Turner stockholder, said it was suing to block the merger, citing a conflict of interest. And the Consumers Union said it would ask the Justice Department to look at the merger's impact on cable rates. The deal will not be final until it's approved by federal regulators and the shareholders of both companies. We'll have more on the story right after this News Summary. Robin.

MR. MAC NEIL: The chairman of the Federal Reserve Board said today that inflation pressures appeared to be under control, and the outlook for economic growth remained positive. Alan Greenspan told the Senate Banking Committee there was little reason to expect higher inflation in the near future. He offered a generally upbeat assessment of the U.S. economy but said some caution remained in order.

ALAN GREENSPAN, Chairman, Federal Reserve Board: On the whole, the near-term prospects for the United States economy have improved in recent months in part because the strong increases in financial market values this year are likely to provide substantial support to household and business spending. But the outlook is not without concern. Firms' desired inventory levels areextremely difficult to gauge, and the remaining adjustment process could play out more negatively than we anticipate.

MR. LEHRER: Democrats and Republicans wrestled over Medicare again today. Senate Republicans issued a plan that resembled the House version. The House Ways & Means Committee held a hearing on its proposal. Chairman Bill Archer said reforming Medicare must be done to keep the system from going bankrupt.

REP. BILL ARCHER, [R] Texas: When the issues are important, they're not easy. That is why in this new day and age of the American government it is important to keep our word and face our problems head on. The Republican plan to save Medicare empowers seniors with the ability to choose the health plan they like best, and it breaks the government's monopoly over health care for seniors. It's exciting; it's bold; and it preserves and protects and strengthens Medicare.

MR. LEHRER: More than a dozen senior citizens disrupted the proceedings later. They taped their mouths to protest Republicans' decision not to hear from more witnesses. Outside the capitol in the rain, Democratic leaders held an alternative Medicare hearing. Minority Leader Richard Gephardt said the Republican reform plan would hurt elderly Americans.

REP. RICHARD GEPHARDT, Minority Leader: We know that no matter how you slice it, no matter how you spread these cuts, each and every senior on Medicare will pay we estimate an average of $6700 per person over seven years. If they don't pay through a higher cost, they'll pay through worse care or more sickness or disease. And we know that not one red cent of the Republican premium increases will go into the Medicare trust fund. They will go to pay for a tax break for the privileged few.

MR. LEHRER: We'll have much more on all of this later in the program.

MR. MAC NEIL: The director of the FBI at the time of the fatal shootout at Ruby Ridge, Idaho, testified at a Senate hearing today. Former Director William Sessions said the FBI marksman who shot and killed the wife of white separatist Randy Weaver was not justified in firing. Sessions made his comments before the subcommittee investigating the 1992 siege at Weaver's cabin. FBI agents at the scene said the shooting had been justified because armed members of the family posed a threat to law enforcement officers. Sessions disputed that claim.

WILLIAM SESSIONS, Former FBI Director: I do not see that his life, that is the agent who fired, the sniper who fired, a very difficult responsibility, was himself endangered, nor had a reasonable reason from what I've seen or read which is not the official reports that somebody else's life was in danger. So I would have to say that in the constitutional sense the Supreme Court has guided us to let us know that we have to be extremely careful, extremely cautious, and there has to be a compelling circumstance.

MR. MAC NEIL: We'll have extended excerpts from the hearing later in the program.

MR. LEHRER: Magazine publisher Malcolm Forbes, Jr., today became the tenth candidate for the 1996 Republican presidential nomination. The 48-year-old multi-millionaire is heir to the publishing empire founded by his late father. Forbes, Jr., known as "Steve," said the other Republican candidates had a narrow and cramped vision of how to run the country. He said he would revamp the nation's tax system to foster an economic boom. Forbes made his announcement at the National Press Club in Washington.

MALCOLM S. FORBES, JR.: I think a lot of people would agree that there is an empty feeling to this campaign so far. One of the reasons is that none of the candidates is raising high the banner of economic expansion and opportunity. The career politicians here in Washington are unaware of the fantastic growth waiting to burst forth in our economy. America needs to take a new road, one towards an expansive future that is bigger and better than our past. The first element is dramatic, pro-growth tax cuts. I'm not talking about revenue neutral fiddling with the tax code, the usual game in Washington that pretends to cut some taxes, while raising others. I'm not talking about fiddling around the margins, cutting taxes that only help the well-to-do. I am talking about across-the- board tax cuts that are deep and wide and permanent that reach down to all Americans and get the suffocating weight of the IRS off their backs.

MR. MAC NEIL: An AWACS aircraft carrying 24 military personnel crashed today at Elmendorf Air Force Base near Anchorage, Alaska. Nineteen people were confirmed dead. Five were reported missing. Air Force officials said the military surveillance plane was heading off on a training mission. It went down in a wooded area shortly after takeoff. It was the first crash of an AWACS plane since they were deployed in 1977.

MR. LEHRER: The O.J. Simpson trial went into its final stages today. Both the defense and prosecution rested their cases. Judge Lance Ito instructed the jurors on the laws applying to the case. Closing arguments will begin Tuesday. The former pro football star and television personality addressed the court today in waiving his right to testify. He's been on trial since January for the murder of his ex-wife and her friend.

MR. MAC NEIL: That's our summary of the news. Now it's on to the Time Warner-Turner deal, the Medicare debate, Shields & Gigot, and Ruby Ridge. FOCUS - BIG DEAL

MR. MAC NEIL: First tonight, another media mega-deal. The buyer this time is Time Warner. The bought is Turner Broadcasting, and the company emerging from their partnership would be the world's largest media and entertainment company. The top executives of the two merging companies have both been running big entertainment and information conglomerates for years. Now they'll be sitting aside the biggest of them all. Time Warner is itself the product of a mega-merger between the giant publisher and an equally big entertainment company in 1989. Today, the firm's major assets include the familiar line of Time Inc. Magazine: "Time," "Life," "Fortune," "People," "Money," and "Sports Illustrated," plus a pair of cable TV networks, HBO and Cinemax, and cable systems serving 11 million viewers. It also owns the Warner Brothers Studio whose recent releases include the "Batman" series and the "Bridges of Madison County," as well as such recent prime time TV series as "Friends" and "E.R.". Turner Broadcasting's most famous asset is either CNN, its all-news cable network founded 15 years ago, or its flamboyant founder himself, Ted Turner. But the company under Turner has also acquired or created other media properties, including additional cable networks like Turner Network Television, Turner Classic Movies, or the Cartoon Network. It also owns the rights to many classic films from Warner Brothers and MGM, cartoon studio Hanna Barbera, creator of the Flintstones and the Jetsons, independent film studios like New Line Cinema and Castle Rock, and baseball and basketball teams in Atlanta. In the deal announced today, Turner's shareholders will receive about 3/4 of a share of newly-issued Time Warner stock for each share of Turner stock they now own. That newly-issued Time Warner stock will be worth about $7 1/2 billion. Time Warner Chairman Gerald Levin will remain in that job, with Turner taking on the new post of vice-chairman. AT their news conference, Levin promised that the assets of the two companies would add up to more than the sum of their parts.

GERALD LEVIN, Chairman, Time Warner: Essentially, what this is all about is the simple words that this is in an exquisite way what Ted has been doing with his colleagues for so many years, taking the concept of valuable content creation with libraries, refreshing those libraries with current production, and then linking it to what we'll call quality cable distribution. And when you create all that material, you can then take it worldwide in all media for as far into the future as we can see.

MR. MAC NEIL: Now two journalists with insight into the two companies. Robert Goldberg covers television and the media for the "Wall Street Journal." He's the author of the book Citizen Turner, the Wild Rise of an American Tycoon. Richard Clurman is the former chief of correspondents for "Time" Magazine and author of To the End of Time, a study of the merger of Time Incorporated and Warner Brothers. Bob Goldberg, why does this make sense? What will happen to prove Levin right if it happens, that the total value will be worth more than the sum of the parts, as they are now?

ROBERT GOLDBERG, The Wall Street Journal: Well, it's that word "synergy" that we've been hearing so much about. But I think why it comes about is, is because of the egos of the people involved. Ted Turner has always been about being biggest, being an empire builder. And that's what he's trying to do now. He's trying to build an empire. Jerry Levin needs to prove that his leadership of Time Warner is not anemic, you know, that something's going on. So how it actually plays out, I'm not convinced that those synergies are as great as they may believe they are.

MR. MAC NEIL: Dick Clurman, do you think there are synergies there that are going to prove the total value worth more than the sum of the parts as they are now?

RICHARD CLURMAN, Author: If that does happen, it will be the first time. There have been no synergies in the Time-Warner merger in the past six years that amount to anything. I think it's a vast exaggeration to say that "Time" Magazine and CNN will have a compatibility that will make a big difference since, as we know, print journalism and television journalism are two very different things. I think the real potential problem here that was alluded to by Mr. Goldberg--namely that these three partners--Ted Turner, Jerry Levin, and John Malone--have been adversaries for a long, long time, they've been at each other's throats, and for Jerry Levin to say today, very cheerfully, as I would expect him to, that Ted Turner's his best friend even evoked a peculiar expression on Ted Turner's face. And to say this is a dream team and it's a serene relationship is gilding a lily that may not exist that way. And getting these companies together, and reorganize, is going to be a very difficult thing.

MR. GOLDBERG: One of the great stories, if I can just jump in, is that when Levin and Malone came on board Ted Turner's board in 1987, they became partners.

MR. MAC NEIL: Malone, John Malone, is the head of TCI, Telecommunications Inc.

MR. CLURMAN: The third leg of the stool.

MR. MAC NEIL: The third leg of the stool whose Liberty subsidiary is the big shareholder in Turner and had to be consulted on this deal.

MR. GOLDBERG: That's right.

MR. MAC NEIL: We should also declare our own interest here. MacNeil/Lehrer Productions in its other activities outside the NewsHour has a partnership with Liberty Media.

MR. GOLDBERG: That's interesting.

MR. MAC NEIL: But outside the scope of this program. But, anyway, you were about to say--

MR. GOLDBERG: I was going to say that when Ted Turner did his big MGM deal, he didn't have enough money. He had to be bailed out. These two guys came on board, his board, to give him money to bail him out. Ted Turner had this, in his, in his conference room, had this big conference table, this long oval conference table, and all of Ted Turner's people sat at one end, and Jerry Levin and John Malone and all of those people sat at the other end, and it was a sort of confrontational relationship that Mr. Clurman alludes to. Ted Turner quickly replaced that conference table with a round one, and perhaps today we're seeing the fruit of that round table.

MR. MAC NEIL: He didn't take a chain saw to it and join it up. Well, we've been reading a lot--I've been reading a lot, as new to some of the parts of this story, about how--you used the word "anemic"--how lackluster Time Warner's performance has been in terms of its value to shareholders and so on since their big previous merger. What's going to change that? It's the same boss. They have the same amount of debt--$15 billion--accumulated from their previous merger. What is going to change all that?

MR. CLURMAN: Well, this is an exciting development for them, and they were dead in the water, really. Their stock has not appreciated in the past six years. The two companies combined are worth no more than Time Inc. alone was. And none of the things financially that were supposed to happen happened. So this is an injection of a new ingredient, and they're doing it without paying any money. They, in effect, by issuing new stock, they're printing money and not increasing their debt. The assumption is that the value of the new company will increase the value of the joined company. That didn't happen before, and Wall Street so far hasn't given the stock a big boost. In fact, it's gone down a couple of points and then gone up. So we'll have to see about that.

MR. MAC NEIL: In fact, if this deal had been--I read today on the wires--if this deal had been consummated a couple of weeks ago, the value of Time Warner would have been much higher than it is today.

MR. CLURMAN: Half a billion more.

MR. GOLDBERG: 8 billion.

MR. MAC NEIL: 8 billion, instead of 7.2 [billion]. Come back to what you were talking about in a moment. The cultures of the two companies that are joining and the men are very, very different. Turner has never been No. 2. He's going to be the biggest shareholder in this. Are there rumbles ahead in all this, do you see?

MR. GOLDBERG: I think there are going to be some very interesting rumbles, you know. Ted Turner has always been a skipper. You know, you go back to when he was eleven and twelve and he had his first sailboat, he wasn't crewing on anybody else's sailboats. He was always skippering his own boat. He's never--he hasn't been a No. 2 since he was a No. 2 to his father 30 years ago. So Ted Turner is congenitally, you know, a leader and not a follower. The question is: Does he have enough autonomy as this deal is structured to pursue his visionary quest, and how does that merge with the really button-down culture, as Mr. Clurman knows, of Time Inc. as one of the most button down of button-down cultures?

MR. CLURMAN: Well, I'd also ask a very big question having very little to do with the business aspectof it. Where will the company be led, i.e., what does it stand for now? The--this is a company now that enters more minds of more people every place in the world than any single company and is one unit now. It's a cultural company. What is it's--to have all that in one hand, in one company--

MR. MAC NEIL: It makes movies; it publishes books; it publishes many magazines; it runs many cable systems; it runs television programs on cable systems; it produces music CD's.

MR. CLURMAN: Children's programs.

MR. MAC NEIL: Pop, rap, some very controversial rap.

MR. CLURMAN: You can't turn around--no consumer, unless he lives in the woods someplace, can turn around without in the course of the day coming into contact with some product produced by this company--

MR. MAC NEIL: How do you imagine the people who buy those tickets and those CD's and magazines and books and things are going to feel this merger?

MR. CLURMAN: The company is so vast now that most people don't even know the book they're reading is published by Time Warner. I mean, did they know a reader or a buyer that the Madonna book was published by Time Warner? They do know that the uproar over the rap music and the dirty records is Time Warner, because that became an issue, but, again, I say, one has to ask, what kind of standards and personality is going to dominate this company, and what does it stand for?

MR. MAC NEIL: Do you have an answer to that question?

MR. GOLDBERG: Well, Ted Turner is such a, he's such a character, you know, he's almost just a fictional character, and he's--he's come to fit better into the corporate framework. I think--what I'm very interested to see is he's always been a leader of men, a leader of men and women, leading his troops into battle. My question is: What's the next battle, and is it go after a network still, because they still lack distribution, is that one thing?

MR. MAC NEIL: Something that the ABC-Disney combination, while slightly smaller, I guess, in annual gross--

MR. GOLDBERG: Is more efficient.

MR. MAC NEIL: --is more efficient.

MR. GOLDBERG: They--could it be to turn the WB, this fledgling network that sort of appears on Channel 9's and 11's around the country, to turn that into more of a powerhouse like a Fox? Is Ted angling for Jerry Levin's seat eventually? It's interesting--it'll be interesting to see--people have been talking about that.

MR. MAC NEIL: You don't know the answers to all those questions.

MR. GOLDBERG: My crystal ball is out of order right now.

MR. CLURMAN: By the way, at the news conference today, he did say, as if he were waving to his mother, "I want to say hello to Bob Wright and Jack Welsh," meaning NBC. He was playing around.

MR. MAC NEIL: The--to come back to Turner for a moment about the whole content thing, Turner, you're very familiar with Henry Luce and the whole Luce empire, for which you used to work, Turner has been a real visionary whose own vision, even though it may have been arrived at partly accidentally, has transformed our business.

MR. CLURMAN: Absolutely.

MR. MAC NEIL: CNN has totally transformed not just television news but the way everybody else sees and writes about the news nowadays. Is that vision in your view expired? Is there more vision there, or is there more that can be done?

MR. GOLDBERG: Oh, I think there's definitely more vision, and I think--

MR. MAC NEIL: I mean, if you compare him with Levin, is Levin a visionary too?

MR. CLURMAN: He's a philosopher. He's an accumulator. He's a strategist, and he's a thinker. He's not a mundane, traditional kind of businessman. Now, it hasn't been working terribly well for him, but it may be working better now that he has put together what is being read as an exciting deal. How long it will stay excited and how long it will hold together is the question.

MR. MAC NEIL: Is all this going to breeze through the regulators? I mean, Jim mentioned in the opening report on this, in the News Summary, that U.S. West has already filed a suit trying to block this. The Consumer Federation of America says it is going to try and stop it, because it fears it will raise cable rates and, and telephone, long distance telephone rates. Are the--and also, there is the element of TCI, whom we mentioned, or Liberty being a--which is already the largest cable company in the country, being a major stakeholder in the second largest cable company.

MR. GOLDBERG: There are primary places it could be blocked. One has to do with antitrust, this big sort of monopoly. And that's the Justice Department. And the other is the FCC, which is just as you alluded to, John Malone and Time Warner. I think today we're seeing these kinds of mergers going through the way we saw in the Reagan era. I think the mood of the country is going to be--

MR. MAC NEIL: And, therefore, the mood of the regulators?

MR. GOLDBERG: Right. Exactly. Is going to be to let it fly. And I think we're going to see a new biggest news media, entertainment conglomerate in the world now.

MR. MAC NEIL: Do you have any reason to differ from that?

MR. CLURMAN: Just anecdotally. I was in the elevator in the Time- Life building. I heard a young Time Warner person say, "Gee, we own the whole world now." Well, that's quite an exaggeration, but I agree with you, that beginning, in fact, with the Reagan administration, the control of broadcast, fairness doctrines and things like that, were all rolled back, and there hasn't been any antitrust prosecution, although the new attorney general has been more active than in past years.

MR. MAC NEIL: And there's a big move in Congress to deregulate all these industries.

MR. CLURMAN: But I would agree with you that it'll go through, there will be wrangling and lawsuits and whatnot, but--

MR. GOLDBERG: And eventually it goes through, and Ted Turner becomes the biggest shareholder, the biggest owner of this biggest company in the world.

MR. MAC NEIL: Okay. We have to leave it there, gentlemen. Thank you both.

MR. GOLDBERG: Thanks.

MR. CLURMAN: Thank you.

MR. LEHRER: Still to come on the NewsHour tonight, the Medicare debate, Shields & Gigot, and the Ruby Ridge hearings. FOCUS - MEDICARE REFORM

MR. LEHRER: The political hammering over Medicare is where we go next tonight. It was another rough day in a rough week of combat over how to overhaul the nation's health program for seniors. Kwame Holman begins our look.

MR. HOLMAN: Republican Bill Archer, chairman of the House Ways & Means Committee, opened a hearing on Medicare this morning he said as part of the effort to save Medicare.

REP. BILL ARCHER, Chairman, Ways and Means Committee: In April this year, the board of trustees from Medicare reported that the trust fund that supports our nation's Medicare program would go broke in the year 2002. These hearings mark another important milestone in the efforts of this Congress to do two things: No. 1, to keep our word, because we said that we would save Medicare from bankruptcy. And we have offered a plan that does, indeed, save it. No. 2, conventional wisdom said it was political suicide to touch Medicare. It's been called the third rail of American politics, touch it and you will die. But leadership requires us to challenge conventional wisdom to rise above politics and to do what is right.

MR. HOLMAN: House Republicans say their plan would reduce federal spending on Medicare by $270 billion over seven years. They called on Roland King, former chief actuary of the Health Care Financing Administration, the agency that runs the Medicare program, to analyze their plan and determine if it would, indeed, save Medicare.

REP. BILL THOMAS, [R] California: Would you say then that the Republican plan meets those tests as determined by the President's appointed trustees?

ROLAND KING, Medicare Analyst: If the Republican plan were to achieve savings of approximately $160 billion over the next seven years, it would achieve the financial requirements by the board of trustees.

REP. BILL THOMAS: So based upon the information on the tables you have in front of us, as a career civil servant and an actuary of HCFA, the Republican plan with its target figure will meet the criteria for soundness, the President's plan does not, and you await any kind of a plan that the Ways & Means Democrats might present to you so you'll do an analysis on that as well. Is that where we are?

ROLAND KING: Yes, sir.

MR. HOLMAN: But Sam Gibbons, the ranking Democrat on the committee, says the Republicans would destroy Medicare and called their plan nothing more than a "press release."

REP. SAM GIBBONS, [D] Florida: How can anyone be expected to analyze or to score a press release in place of legislation? It's just impossible. Can you assure us that your limit on payments, which are far below anything that anybody has ever dreamed of, will not encourage doctors to turn Medicare patients away from their offices, or the hospitals to put up signs "no more Medicare patients?"

MR. HOLMAN: And it wasn't long before Roland King found himself caught in the middle of a political tug-of-war.

REP. CHARLES RANGEL, [D] New York: Did I understand you correctly to say that your testimony that you're giving this morning is not based on any legislation, is that correct?

ROLAND KING: Yes.

REP. CHARLES RANGEL: You said, in part, it's based on reports that you read in the newspaper?

ROLAND KING: Yes. The $270 billion goal is, is a goal that I read in the newspaper and was confirmed by staff.

REP. CHARLES RANGEL: So the Republican leadership have given you nothing really to read.

ROLAND KING: That's right.

REP. CHARLES RANGEL: I have no further questions.

MR. HOLMAN: While the Republican majority held its official Medicare hearing indoors, House Democratic leaders convened what amounted to a protest version of Medicare hearings 100 yards away under a light rain on the Capitol lawn. The dramatic setting symbolized Democrats' anger that Republicans had allowed only one formal hearing on their plan to overhaul the Medicare system.

REP. RICHARD GEPHARDT, Minority Leader: We wish that the majority in the Congress would have a normal set of hearings on this proposal which we've, to this date, never seen yet. But that is not their choice. They seem to want to jam it through without anybody knowing what it is.

MR. HOLMAN: To no one's surprise, this alternative hearing featured witnesses sympathetic to the Democrats' position.

ROBERT REICH, Secretary of Labor: We are witnessing, if we're not careful, one of the greatest redistributions of income from the working people of this country to the very rich and to corporations that we've ever witnessed in this country.

MR. HOLMAN: Tension between Democrats and Republicans over Medicare first boiled over on Wednesday.

REP. SAM GIBBONS: [Wednesday] Grabbing document and throwing it This is just a railroad. You can keep it!

MR. HOLMAN: Sam Gibbons stormed out of a committee meeting in the Capitol when he wasn't allowed to debate a procedural point.

REP. SAM GIBBONS: Nobody can talk. Nobody can make any motions. There can be no discussion. You're a bunch of dictators; that's all you are.

MR. HOLMAN: The emotions spilled over into the hallways outside as House Democrats and Republicans seemed close to blows over the Medicare issue.

REP. CHARLES RANGEL: You haven't had a hearing! You're taking $270 billion away from the poor! Because we don't have the majority--

UNIDENTIFIED PERSON: No, because you don't have a plan.

REP. CHARLES RANGEL: --the American people--

UNIDENTIFIED PERSON: No. Where is your plan? Where is your plan?

SECOND UNIDENTIFIED PERSON: The issue is: Where is the hearing?

MR. HOLMAN: House Ways & Means Chairman Bill Archer answered that question this morning by presenting 2500 pages of transcripted testimony taken from 230 witnesses during 17 previous hearings the committee has held on the Medicare issue.

REP. BILL ARCHER: This is the stack of testimony that has been heard by this committee throughout all of those hearings.

MR. HOLMAN: But that answer didn't satisfy Sam Gibbons.

REP. SAM GIBBONS: This pile of material that you see here is absolutely useless. All the words that are stacked up here were uttered before there was any legislative piece or plan together. So I'd ask the staff to please remove these words. [pause] Well, if the staff won't remove 'em, I guess I'll have to remove 'em. [grabbing stack of documents and removing them]

MR. HOLMAN: Chairman Archer didn't try to prevent Gibbons from removing the stack of testimony. There was a brief protest against the Republicans' Medicare plan at the start of today's Ways & Means hearing. Capitol police succeeded in removing the protesters quietly. Some 20 health care professionals were scheduled to testify, but with only an outline of the Republican plan available, they found it difficult to provide answers to many of the members' questions.

STUART ALTMAN, Health Care Analyst: It is fair to say that it's difficult to completely understand all aspects of the plan from that document.

MR. HOLMAN: And so much of the day was spent with Republicans assuring that reform is well on its way and Democrats warning the worst is yet to come.

MR. LEHRER: And for more on all of this, Susan Dentzer, chief economics correspondent for "U.S. News & World Report." Susan, what's going on?

SUSAN DENTZER, U.S. News & World Report: A lot of theatrics, Jim, as you saw. Never let it be said that those of us who cover this issue lead dull lives these days. But I think also what's going on is the sense that the drumbeat is rolling, that we're going to see next week some real legislative language, and that's really where the rubber is going to hit the road. As anybody who covers health policy knows, the devil is always in the details. You can talk all you want about concepts, about ideas, about people moving into managed care, or not. It's really when you get to see specific legislative language you get to see how one part of a plan would affect another part of a plan, that's when you get a sense of what's really in store, and that's in particular what happened last year with the Clinton health care reform plan. When that was out, that's when people started to focus.

MR. LEHRER: But why has the debate started before the specific plan is actually on anybody's table? How did that happen?

MS. DENTZER: Well, for two reasons. The one big political reason being that this is the debate, this is the Waterloo of the Republicans' budget balancing plan. Most of the savings, the biggest single chunk of savings, comes out of federal health care programs, in particular out of Medicare. If the Medicare savings don't fly, their plan doesn't really fly in a fundamental sense. They have to go back to the drawing board and work up another way to make this work--stretch out the length of time, get savings out of other programs, et cetera. That's one level. Another serious reason, though, I think is that people are contemplating the notion that this is really an effort to re-make in a very fundamental sense the second largest entitlement program run by the largest government in the world. It isn't chump change. There are serious changes here that impact a very large part of our economy, our $1 trillion health care system. When you look at the changes that are being contemplated in both Medicare and Medicaid, we're really talking about 40 percent almost of the dollars flowing through the health care system are going to be affected by these changes. It's a serious time to look closely at the details.

MR. LEHRER: So the--but the strategy apparently was then to kind of prepare the way in a general way, kind of join the debate in a general way and say just what you just said, hey, we are about to propose a major reform of the way we do things on these two programs, and then come in with the specifics, hoping that--it's kind of preparation bombing in a way, is that right?

MS. DENTZER: That's right. I mean, in a certain sense, the Republicans learned a lot from the way the Clinton health reform plan was introduced and baked in the hot sun and deteriorated last year. They learned that if you bring something out, the longer it sits, the more people look at the details, the more they get suspicious and leery of things that are being proposed, and, frankly, the more they start to pick apart the financing of the plan, and that's--it's certainly going to be clear that the Republican plans are going to be vulnerable on all of those scores.

MR. LEHRER: Speaking of vulnerabilities here, have the--have the interest groups been heard from in a very resounding way, or a way that's resonating yet?

MS. DENTZER: So far, they have largely held their fire for one important reason for one important reason. First of all, Speaker Gingrich listened very closely to their complaints and took them- -and their hopes and dreams--and took them into account in formulating the plan, so a lot of the provider groups, in particular, a lot of the interest groups, got things that they wanted in the House plan.

MR. LEHRER: You're talking about specifically the Medical Society, the hospital--

MS. DENTZER: The doctors in spades, the hospitals, the teaching hospitals, for example, got something they wanted very badly in this, which is a separate trust fund to help compensate them for the fact that managed care providers don't want to pay for research and teaching and biomedical research in the nation's hospitals. In addition, even the senior citizens groups felt that they were listened to by the House even more so in a way than the Senate. So they've held their fire up until now. I think that will begin to change next week when we get actual numbers. As one lobbyist put it, he feels as if he's shown up and had a delicious meal in a restaurant where he's about to be handed the bill. And whenthe bill comes in, I think you'll start to hear a different set of concerns voiced by providers.

MR. LEHRER: But isn't--and isn't the whole Democratic strategy based on that--on rousing, rousing the groups?

MS. DENTZER: The strategy, and I should say at this point, even more as a hope, that all of these groups, and in particular, the whole set of--60 percent of the savings is going to have to come out of hospitals. Hospitals are large employers in congressional districts. Hospitals in this country are going to shrink anyway over the next 10 years. We know that. But the question is: How fast are they going to shrink, where are they going to shrink, and when those groups, those laborers start to talk to their representatives in Congress about the impact on them, in addition to the senior citizens that they will be hearing from, keep in mind that 3/4 of Medicare beneficiaries are in $25,000 a year or less. These are people who when told that they might be paying $100, $200 a year more on Medicare, that's, that's something that they think seriously about before signing into a deficit reduction plan. When you start to hear from all of those kinds of groups, I think that the momentum behind this is going to slow considerably.

MR. LEHRER: Yeah. Okay. Susan, don't go away. FOCUS - POLITICAL WRAP

MR. LEHRER. We want to see now how Medicare, Medicaid, and other things look to our analysis team of Shields & Gigot, syndicated columnist Mark Shields, Wall Street Journal Columnist Paul Gigot. Are the politics of this still yet to come, and are they going to be as ferocious as they appear to be? I mean, are we going to have- -are the theatrics just beginning politically do you think, Mark?

MARK SHIELDS, Syndicated Columnist: I think Susan is absolutely right on the dynamic at work here, Jim. We are going to see a political--Waterloo was the word she used--Corregidor, Bataan, choose your term, it's going to be big. It's big. This is big casino for the Republicans. For it to work for them, and I think they've shown remarkable discipline thus far, I think "they've stayed on message" as the term goes. They've all been consistent. They're trying to save Medicare. They haven't been able to convince people of that, but they continue to say it, but it's going to be an enormous, enormous struggle.

MR. LEHRER: Yeah. How do you read the politics as of--we talked about it last week, and has it changed in a week, Paul?

PAUL GIGOT, Wall Street Journal: I don't think it's changed, and the stakes are enormous. This is the great middle class entitlement, and it's the--Medicare is the citadel, really, the centerpiece of a great society. And for 30 years, Democrats have believed that only--and Republicans have really believed that only Democrats could touch it, because they have the credibility. They founded the program. This was only something that they could do. It would be--

MR. LEHRER: Going back to when Barry Goldwater--of course, he was talking about Social Security, but, I mean, wham, he was, he was hammered, and he never brought it up again?

MR. GIGOT: Well--

MR. LEHRER: Nobody else has either.

MR. GIGOT: Sure. And what the Republicans--Newt Gingrich--kind of the audacity of what they're doing is they're saying we can go onto your side of the field, play on your home field, and we can steal the ball.

MR. LEHRER: Yeah.

MR. GIGOT: And if they can do this, it will, I think, represent a monumental political achievement, if they could do it and survive.

MR. LEHRER: Yeah.

MR. GIGOT: And so far I think they're doing reasonably well.

MR. SHIELDS: This is the grapefruit league. I mean, we haven't even had--I mean, we're looking at a 162 game season in terms of who's going to be--we had Al D'Amato, Senator from New York, this week, chairman of the Senate Finance Committee, principal supporter of Bob Dole in the state of New York, the man behind the governor of New York, he and the governor saying that they're objecting to the formula. D'Amato is a swing voter.

MR. GIGOT: This is on Medicaid.

MR. SHIELDS: No. That's on Medicaid.

MR. GIGOT: Right.

MR. SHIELDS: But I'm talking about--I'm talking about the whole thing holding together. You've got to keep everybody together. You've got to keep everybody inside on this one, and I think Susan's point about hospitals are large employers, I think you have to give Gingrich credit. What Gingrich has done, the Speaker, he came in and said we're going to be a lot more democratic and a lot more open than were the Democrats, that one has quickly been forgotten in the heat of battle. Now they're going to do--they had 10 days of hearings--this is a party that had 10 days of hearings on Waco. They're going to have one day of hearings on the--as Paul put it--and this is a universal coverage for everybody in America over the age of 65. I mean, it's an enormous, enormous change.

MR. LEHRER: What's that all about, Paul? Why one day of hearings? Is that--I mean, do you agree with Susan what they're trying to do- -they've learned from the, from the Clintons' experience with health care reform, they just want to get it going if they can get away with it, or what's going on?

MR. GIGOT: Look! It's impossible to slip this one past somebody. You can't. I mean, nobody is going to let 'em do it. The provider groups aren't going to let them do that. They're going to want this exposed if they don't like it. The elderly and the AARP are not going to let it slip by 'em and certainly the President is not going to let it slip by him. So I think that the one day of hearings is sort of a red herring. There have been a lot of hearings on Medicare. The problems with the system are well known. They were debated frankly last year when the President had his plan on the table. So, I mean, I think this is going to get vetted more than enough.

MR. LEHRER: Susan, what are the specific plans? When this plan, the real plan, as you say, actually the details come out, are then- -are there then going to be detailed hearings on it?

MS. DENTZER: They're going to be just a very short discussion and basically the market, the legislative market, takes off right away, because they've got to get this done. But I want to say that I agree with Paul. The notion that this is going to slip past us quickly in the night is fallacious. We know that the President has already vowed to veto this plan, any kind of the Medicare changes that have been discussed. That means, in effect, he could well be talking about vetoing reconciliation, the reconciliation budget balancing legislation. That means it would then have to go back to both Houses, who would then have to vote to override it, so they have to go on the record again saying that they wanted to do all these things that make beneficiaries nervous and providers nervous. It's very clear that this is going to play out over a much longer time frame than anybody is anticipating.

MR. LEHRER: Well, Paul, then why--what are the politics of the Republicans trying to do it so quickly? In other words, they're taking heat on this. The Democrats are making great hay out of this. That's what the whole thing was about out in the rain today.

MR. GIGOT: But it's a process argument; it is not a substance argument. And I don't think ultimately process arguments win. I mean, you cannot beat a horse without your own horse. That's one of the fundamental rules of politics. For 30 years, Republicans were rightly criticized by Democrats, saying, where's your plan for health care, where's your program? We have an answer, you don't. The tables are turned this time, and the Republicans are saying and getting applause from the "Washington Post," which is not known as a Republican organ, for having a plan to do something about Medicare and about entitlements about which we know something has to be done. The Democrats in the House don't have an answer for that.

MR. LEHRER: Okay. Susan, thank you very much. I want to move on to these guys and talk a little bit about some presidential politics. Steve Forbes announced today, No. 10 candidate, No. 10 man who says he wants to be the Republican nominee for President. What do you think of this?

MR. SHIELDS: Trying to fill a void. The void is on the Republican side this year at a time when budget balancing has taken total precedent over any growth, optimism, pitch. Steve Forbes is trying to fill that, that void, the void left by Ronald Reagan, by, by Jack Kemp. The biggest problem he faces, Jim, is the two parties live with popular public perceptions of them by the American people. The Democrats are seen as sort of a disreputable, rabble group, uneducated, down-scale demographically, so the Democrats have--

MR. LEHRER: We'll get some mail on that one.

MR. SHIELDS: No. No. Democrats--I say this as a proud member.

MR. LEHRER: I got you.

MR. SHIELDS: But historically, Democrats, to compensate for that, have nominated and welcomed Ivy League-educated, to the manor-born, Franklin Roosevelt, Adlai Stevenson, Jack Kennedy, could speak in complete sentences. Republicans, by contrast, were the party to the rich, big business, comforter to the comfortable, so they've answered by nominating the sons of America's working class, Dwight Eisenhower, Ronald Reagan, Richard Nixon, Herbert Hoover, and they've stayed away from anybody who would reinforce that stereotype. Steve Forbes reinforces it--I mean, that's a messenger, that's his biggest problem going in. He comes in riding his--is it his boat or his plane--he calls it a capitalist tool. I mean, it's going to be tough in "People" Magazine for him.

MR. LEHRER: Tough in "People" Magazine for him, Paul?

MR. GIGOT: Well, I can't deny that. There's no question that that's a--that that is a burden he's going to have to carry but what he does have is a message, I think, that does fill a void in the Republican Party. I mean, this is not a--

MR. LEHRER: Define what his message is.

MR. GIGOT: Well, I think his message is--there are two Presidents he quoted today in his statement--John F. Kennedy, get the country moving again; Ronald Reagan, city on a hill, hope and optimism, something that is lacking, frankly, from the Republican field. It's a pretty dower group.

MR. SHIELDS: Hey, come on.

MR. GIGOT: Somebody asked him today about Phil Gramm's famous line that says, you know--the line he uses everywhere--that says the people in the wagon got to get out and pull the wagon--and they said, well, what do you think about that, and he said, Steve Forbes said, "Look! The American answer is not to have people pulling the wagon; it's to invent a tractor to pull the wagon." And that's sort of the spirit of hope and optimism and inventiveness that he wants to appeal to the entrepreneurial spirit. That's a part of the Republican message that worked for Reagan in the 80's. We haven't seen a lot of it in the 90's.

MR. LEHRER: Is the fact that he's willing to spend 25 million of is own bucks, Mark, mean that he's going to get a hearing for his position that others might not get?

MR. SHIELDS: Sure. I mean, it means that he's going to be in your living rooms and available to you, whether, you know--for goodness sake, we've had Susan Powter telling us, you know, in our living rooms, and telling us about madness and all of the rest. Sure, he'll get a hearing, Jim, but I think, I think really that the messenger and the message here are not a perfect fit. I think if it were a message any other Republican candidate in the field who could have picked it up would have been further advanced.

MR. LEHRER: Does he--what impact is he going to have on the race, if any?

MR. GIGOT: We don't really know what impact $25 million can have. He can get on the air. What he doesn't have to do is he doesn't have to make 20,000 phone calls to get $1,000 peace from people. He can devote his time to getting out that message. So we don't know how well that will play. We'll see how well the primary voter field feels he fills that voice.

MR. LEHRER: Yeah. Colin Powell is--remains on the big--on the book tour. I read a story today that his book is already probably going to outsell all books that have ever been written in the history of time.

MR. GIGOT: Except for the Bible.

MR. LEHRER: Except for the Bible. And he's only--he's only been to four cities. People are lining up in the rain and the snow.

MR. SHIELDS: In Chicago, they were lined up in the rain.

MR. LEHRER: Yeah, and the snow in Milwaukee.

MR. SHIELDS: That's right.

MR. LEHRER: What does this say about, if anything, at this stage about the probability of his running for President? Give us an update of your feelings.

MR. SHIELDS: There was a time in America when people wrote books when they left. Remember, Dwight Eisenhower wrote--

MR. LEHRER: Or just wrote 'em, period.

MR. SHIELDS: That's right. Now, it's the antecedent to the international figure. Newt Gingrich writes a book and Colin Powell. I think more important than the books probably is what Colin Powell has said this week. Colin Powell has basically answered questions or asked them and said some pretty controversial things answering them.

MR. LEHRER: We ought to explain that. Every place he goes he has a little press availability--

MR. SHIELDS: That's right.

MR. LEHRER: --in the bookstore, I think it is in the bookstore wherever he is.

MR. SHIELDS: Yeah. And one that just caught me was he said, he really was dispirited, upset with Republicans who demonize the single mother on welfare, at the same time walk up from their K Street here in Washington, the lobbyists, and ask for corporate welfare, and that's perfectly okay. I mean, he's been critical of icons in the party like Jesse Helms and Al D'Amato.

MR. GIGOT: Great icon, Al D'Amato. [laughing]

MR. SHIELDS: I think Al's an icon. But the reality is, Jim, what he's been is candid. He's just answered questions. And I think two things emerge: One, if he does decide to run in six weeks, he's doing it on his own terms. I mean, you know who he is, this is what he believes, he's not being cute, he's not being coy, he's not being cozy. If anything, his popularity has gone up. In Paul's paper's poll it showed him 48 to 30 running ahead--

MR. LEHRER: NBC/Wall Street Journal poll.

MR. SHIELDS: --NBC/Wall Street Journal poll. But the second thing is hemakes Bob Dole look bad.

MR. LEHRER: Bad or good?

MR. SHIELDS: Makes Bob Dole look bad, because I think he's a guy who obviously in the first week out is not contorting himself to win the broadest support or to win a constituency.

MR. LEHRER: What's your Powell report?

MR. GIGOT: If the press corps elected a president, Colin Powell would already be inaugurated. I mean, he's had some of the best press you can possibly ask for this past week. No wonder his poll numbers are up, and he also doesn't have to--this is something in defense of Bob Dole--involve himself, dip himself in this messy world of governing in Washington.

MR. LEHRER: Medicare and Medicaid and all that stuff.

MR. GIGOT: He soars right over. He actually said this week, he said, you know, Republicans want $270 billion in Medicare reductions, Democrats want $180 billion, why can't they just sit down and settle it, I mean, as if there were no philosophical issues involved, and there are those kinds of issues involved, and that's what he can soar right above.

MR. SHIELDS: Two quick things. Bob Dole is in trouble politically not because of what he's done on Medicaid or Medicare over the years. He's a masterful legislator. It's what he's done in the campaign, which has appealed to caress the erogenous zones of the body politic on its right side. And secondly, it wasn't the press getting those crowds standing in the rain in Milwaukee and Chicago. Those were real people standing out there wanting to hear this guy.

MR. GIGOT: Sure. People are fascinated by the man. He's got a great story to tell.

MR. LEHRER: But we're not going to tell it tonight. We're going to go. Thank you both very much. See you next week. FOCUS - UNDER FIRE

MR. MAC NEIL: Finally, the Ruby Ridge hearings. For three weeks, a Senate subcommittee has tried to pin down who authorized the rules of engagement that left three people dead in Northern Idaho. Those rules instructed federal agents that they could and should use deadly force against armed adults. Correspondent Betty Ann Bowser reports on today's proceedings.

MS. BOWSER: George Terwilliger, the man who was No. 2 at the Justice Department in August of 1992, told the subcommittee he didn't know about Ruby Ridge until it was over, because he was on vacation. But, he said, he believes now the rules of engagement were a mistake.

GEORGE TERWILLIGER, Former Deputy Attorney General: The "could and should" language is clearly in error. There may well be a legitimate question as to whether it was an exercise in good judgment to express these considerations in the manner in which they were formulated in the rules of engagement at Ruby Ridge. It is relatively easy, especially with the benefits of time and expertise in drafting documents to second guess on that point. But whatever one's judgment on the level of articulation contained in the draft of the rules, I believe there was no intention to counsel use of excessive force.

MS. BOWSER: Yesterday, former Assistant FBI Director Larry Potts denied he approved those rules of engagement and said documents being withheld by the Justice Department could prove he was right. Today, Barbara Berman, who authored the Justice Department's task force report on Ruby Ridge, was asked what she knew about those documents.

SEN. PATRICK LEAHY, [D] Vermont: Why was a task force not able to resolve the question of who approved the rules of engagement?

BARBARA BERMAN, Former Assistant Counsel, U.S. Department of Justice: Senator, we found insufficient documentation to make a final conclusion on who approved what rules of engagement. Until, I believe, yesterday, we were unaware of the written communication by Mr. Potts in which he recorded his approval of some form of rules of engagement on August 21st.

SEN. PATRICK LEAHY: Why were you unaware until yesterday?

BARBARA BERMAN: I can't explain that, Your Honor, other than we requested all documents be provided to us for purposes of our investigation, and in February of 1994, even had through a letter from Mr. Shaheen a request for the Bureau to do another sweep of all records to see if there were any official or unofficial documents available on the subject.

SEN. PATRICK LEAHY: Do you have any sense of what documents are the ones that Agent Cahill has reportedly admitted shredding and were unavailable for your review?

BARBARA BERMAN: No personal knowledge.

SEN. PATRICK LEAHY: In preparing your task force report, did you speculate or hypothesize what might be in those documents?

BARBARA BERMAN: Senator, my experience with the FBI is that they are very meticulous note takers, they are very thorough. They are very conscientious of the record-keeping that they make of things. There was a significant absence of corrections to the records when there were errors in the Strategic Information Office records, in the logs, and things of that nature. We could not explain why there were no records available for us to look at that talked about when the rules of engagement were approved by headquarters, what rules of engagement were in effect. The rules of engagement were in effect, as has been noted by this body, from the 22nd of August until the 26th of August, and yet, inexplicably no one at headquarters admits to having been aware of what the rules were or having read them.

MS. BOWSER: Berman's task force concluded the rules of engagement were not only unconstitutional but led to an excessive use of force. Former FBI Director William Sessions told the subcommittee he does not believe one of his agents, Lon Horiuchi, should have fired the second shot that killed Vicki Weaver, and he disagreed with previous witnesses on another point.

SEN. LARRY CRAIG, [R] Idaho: We've heard of a lot of situations in which FBI and HRT have been involved, and yesterday we heard that this was the most dangerous. To your knowledge, during your tenure, how was this elevated, or how was it viewed as an episode or an event compared with others?

WILLIAM SESSIONS, Former FBI Director: I know it's a very serious and was a very serious circumstance, but I do not think about it as being the most dangerous that the Bureau has ever encountered.

SEN. LARRY CRAIG: I believe that was in reference both to the Bureau or the experience of the agents involved and HRT, I believe. It's been said in those contexts.

WILLIAM SESSIONS: HRT has been in extremely difficult circumstances for extremely long periods of time, and certainly this is, this is a high category of difficulty, but I would not think it was the most difficult they had ever encountered.

MS. BOWSER: Sessions also told the committee he was in South Carolina when the Ruby Ridge incident took place, and does not recall ever being asked to approve any rules of engagement. RECAP

MR. MAC NEIL: Again, today's major stories, Time Warner announced plans to buy Turner Broadcasting in a deal worth $7 1/2 billion. The merger will create the world's largest media and entertainment company. An AWAC's reconnaissance aircraft carrying 24 military personnel crashed today at Elmendorf Air Base near Anchorage, Alaska. There were no reports of survivors. And former FBI Director William Sessions said the fatal shooting at Ruby Ridge, Idaho, had not been warranted. Good night, Jim.

MR. LEHRER: Good night, Robin. An editor's note before we go. We had planned to continue our series of presidential candidate interviews tonight with Congressman Robert Dornan as the guest but because of time problems it will be broadcast next week instead. We'll see you on Monday night. Have a nice weekend. I'm Jim Lehrer. Thank you and good night.