The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Thursday, Pres. Bush proposed sweeping changes in the campaign finance law, the Supreme Court delayed its abortion decision, and the House ignored administration objections to vote new sanctions against China. We'll have the details in our News Summary in a moment. Robin.

MR. MacNeil: After the News Summary, we focus on the Bush proposals to reform campaign financing with excerpts from the President's speech and analysis by Congressmen Al Swift and Guy Vander Jagt, Common Cause Chief Fred Wertheimer and presidential counsel C. Boyden Gray, then excerpts from today's Congressional hearings on the Housing & Urban Development scandal, and we close with part four of our week long series on the hi-tech future. Tonight John Merrow reports on the shortage of engineers. NEWS SUMMARY

MR. LEHRER: Pres. Bush wants most Political Action Committees eliminated. That proposal was at the center of a campaign finance reform package he announced today. He would also set contribution ceilings for those PACS that remain in the current system. He said in a Washington speech special interest money threatens the political parties.

PRES. BUSH: Political Action Committees and their $160 million war chest overshadow the great parties of Thomas Jefferson and Abraham Lincoln. And as the strength of our parties erodes, so does the strength of our political system. Members of Congress engage in time consuming and often degrading appeals for money outside the party structure as vigorous competition between candidates and between ideas wanes the clear winner in the race for PAC dollars is incumbency.

MR. LEHRER: The chairman of the Democratic National Committee, Ron Brown, called the Bush proposal a fat cat protection act. He said it was designed to give Republicans the upper hand. In the same speech, Mr. Bush said he would also work with Congress on a pay raise for members of Congress and other top federal officials. We will have more on the proposal and the reaction right after this News Summary. Robin.

MR. MacNeil: Scores of abortion activists and opponents who waited all night for seats in the Supreme Court were disappointed today. The Justices put off until Monday all decisions remaining for this term. That means they may then decide the issue long awaited in the Missouri case in which one side seeks to overturn Roe V. Wade, the decision that legalized abortion. It is also possible the court could have the abortion issue reargued next fall.

MR. LEHRER: The House today voted new sanctions against China. The count was a unanimous 418 to 0 for suspending trade and development programs and for cutting or limiting the sale or transfer of police weapons, hi-technology and nuclear materials. It was a package the administration had rejected. Here's what Secretary of State Baker and House Majority Leader Richard Gephardt each said about the House action.

JAMES BAKER, Secretary of State: I thinkwe do recognize the desire of elected officials to speak to this issue and to vote on this issue. But we really firmly believe that the leadership in this instance should come from the executive branch and it should come from the President of the United States as commander in chief and as one who is thoroughly and completely versed in the affairs of China.

REP. RICHARD GEPHARDT, House Majority Leader: Someone in this government and today it's the House has to speak clearly on behalf of the American people and take a more forceful action than the President and the Secretary of State have been willing to date to make.

MR. MacNeil: In China, Premier Li Peng dismissed criticism of the repression of the pro democracy movement, saying it was carried out legally. In Beijing, there was a show of unity at the celebration for the 60th anniversary of the Chinese Communist Party. We have a report narrated by Louise Bates of Worldwide Television News.

LOUISE BATES: China's senior leaders turned out in force. The line up included the new party chief, Zang Zimen, until last week the low profile boss of the Shanghai party. Zang is one of the hard-liners. They've clearly consolidated their position. Their show of unity was given prime time on nationwide television. The presence of troops was designed that despite rumors the military is behind the leadership. The same day Juan Li opened a special session of China's parliament, the standing committee of the People's Congress. Juan is a moderate who apparently saved his job as chairman of the standing committee by siding with the hard-line leaders after the massacre in Tiananmen Square. As expected, he praised the party's decision to use force against the students. He told the delegates it was a necessary move.

MR. MacNeil: Boris Yeltsin, the outspoken Gorbachev critic in the new Soviet legislature, predicted in an interview shown today that poor living standards will lead to a revolution in the Soviet Union in two years. In an interview with Hungarian television, Yeltsin said that with 48 million people living on the poverty line, patients won't last longer than one or two more years, and then the people will take their destiny into their own hands in a grassroots, spontaneous revolution.

MR. LEHRER: America's foreign debt jumped 41 percent last year, the Commerce Department reported today. It rose to $532.5 billion. The figure is the difference between what foreigners own in U.S. assets and what Americans own abroad. The U.S. is the largest debtor nation in the world. In another report, the Commerce Department said the sale of new homes was up 2.7 percent in May. The report said the increase was caused mostly by the decline in interest rates.

MR. MacNeil: Fire fighters continued to battle forest fires in Southern California today. The largest one covering 6500 acres started Tuesday in the Cleveland National Forest, started 60 miles Southeast of Los Angeles. Thousands of people have been forced to leave their homes. The fire also caused the evacuation of a youth correctional facility and a nudist colony. Another fire North of Los Angeles has burned 3700 acres in the Antelope Valley.

MR. LEHRER: The drug scandal in the Cuban Government widened today. The country's interior minister was dismissed. A statement signed by Pres. Fidel Castro said Gen. Jose Abrantos had been replaced. The Cuban News Agency said Abrantos had allowed drug trafficking operations in his ministry for 2 1/2 years. Nine military officers from the ministry have been arrested this month on drug charges. One has been charged with treason and could be executed for his role in the drug business.

MR. MacNeil: The man who is slated to become South Africa's next president today outlined his pan for change in that country. We have a report from Kevin Dunn of Independent Television News in Pretoria.

KEVIN DUNN, ITN: F.W. DeKlerk unveiled his manifesto at a Congress which had claimed him as party leader, but which was boycotted by his predecessor, the ailing Pres. Botha. There was a brief word of thanks for him before Mr. DeKlerk outlined his vision of a new South Africa.

F.W. DE KLERK, National Party Leader: The National Party intends to create a new South Africa in which every South African can live in safety, prosperity and dignity as an individual and within a group.

MR. DUNN: That emphasis on groups or races means there's no pledge to repeal remaining apartheid laws. Meanwhile, more than a hundred prominent whites flew to LuSaka to talk directly to the banned African National Congress which wants nothing less than one man, one vote. That's out of the question for Mr. DeKlerk. He made clear that his new South Africa will stop far short of black majority rule.

MR. MacNeil: South African Archbishop Desmond Tutu said DeKlerk's reforms were designed to make apartheid more comfortable rather than dismantle it. He said, "We are not interested in reform, we want to see apartheid abolished.". That's our News Summary. Now it's on to the Bush Congressional finance reforms, the HUD scandal, and the shortage of engineers. FOCUS - CAMPAIGN FOR CHANGE

MR. LEHRER: Money and politics is our central focus tonight. Pres. Bush made his today with a proposal he said would produce special interest influence in elections. He particularly targeted the role of Political Action Committees or PACS, which last year alone were responsible for over 80 million dollars in contributions to incumbent members of Congress. We will give the President's plan a thorough going over after this set-up report by Judy Woodruff.

MS. WOODRUFF: In his speech to a group of Capitol Hill interns today, the President explained at the heart of his proposal is the banning of most Political Action Committees which now give 3/4 of their Congressional race contributions to incumbents.

PRES. BUSH: We need reforms that curtail the role of special interests, enhance the role of the individual, and strengthen the parties, so today I propose just that, a sweeping system of reform for our system. More than 90 percent of all PAC contributions come from PACS sponsored by corporations, unions and trade associations, so the cornerstone of this reform, of our reform, is the elimination of those Political Action Committees.

MS. WOODRUFF: The remaining Political Action Committees, so called unaffiliated or freestanding PACS, would be limited to a $2500 contribution per candidate, half what they can give now. In exchange for doing away with most PACS, Mr. Bush proposed to let the political parties more than double the amount of money they can contribute to each candidate for the House or Senate.

PRES. BUSH: Increasing federal donations to party candidates will allow legislators to spend more time legislating and less time raising money and will give challengers the means to compete with incumbents and to allow all candidates to avoid having to raise money from special interests.

MS. WOODRUFF: But Democratic Party Chairman Ron Brown who made his own speech on the subject of campaign reform today countered by accusing the President of favoring Republicans.

RON BROWN, Chairman, Democratic National Committee: They now seem outraged that PACS have the audacity to sometimes support Democratic candidates. The President's proposal to curtail some PAC funding comes straight from those Republicans in Congress who warned the PAC community just a year ago that if they didn't ante up for the GOP that they'd be put out of business.

MS. WOODRUFF: Brown said letting contributions be funneled through the political parties instead of PACS is a boon to Republicans.

RON BROWN: The President's campaign finance reform bill ought to be labeled "the Fat Cat Protection Act of 1989". He wants to make it easier to give to Republican candidates and to give them access to large donors. He wants to trade the current list of campaign contributors for one designed at the RNC.

MS. WOODRUFF: The President rejected the notion of any form of public financing of campaigns or of placing limits on the amounts candidates can spend, both of which many Democrats advocate. To curb the advantages that office holders or incumbents now enjoy, Mr. Bush proposed a package of reforms, cutting back on the free mailings by members of Congress by requiring them to pay postage for unsolicited mass mailings, prohibiting members from using campaign funds for their personal use which some can now do, banning the rollover of campaign contributions from one campaign to the next, and putting an end to the so-called gerrymandering of Congressional districts so that district lines are not drawn in an odd manner in order to favor one party over another. Finally the President proposed that large dollar amounts back-channeled to candidates be publicly disclosed.

PRES. BUSH: And so I call on the United States Congress today to join me in mandating full disclosure of all soft money contributions by the political parties, as well as corporations, unions, and trade associations.

MS. WOODRUFF: Without elaborating, Mr. Bush also planned to send a package of legislation to Congress soon to ban all honoraria or speech fees for members of Congress, to propose a 25 percent pay increase for federal judges and a select list of other executive branch employees, and finally perhaps the most sensitive proposal of all.

PRES. BUSH: And I'll also work with the Congress on the development of details for increasing the pay of those in the Congress as well as other senior employees of the executive branch.

MR. MacNeil: For the reaction to the President's proposals, we go to Capitol Hill to the co-chairmen of the House Bipartisan Task Force on Campaign Finance Reform, Democrat Al Swift from Washington State and Michigan Republican Guy Vander Jagt. Congressman Vander Jagt is also the chairman of the National Republican Congressional Committee. Also joining us in Washington is Fred Wertheimer, President of the public interest group Common Cause. Congressman Swift, in addition to what Ron Brown said, Speaker Foley said this would blatantly favor the Republican Party. Beryl Antony in your committee said it is a totally partisan package. Do you agree with that?

REP. AL SWIFT, [D] Washington: [Capitol Hill] It is a very partisan package. There are parts of it which I think have possibilities and will take a look at, most of them already included in Democratic proposals that have been made both at the beginning of this Congress and in past Congresses, but there is a very transparent quality to this that indicates first of all we're going to have to fight our way through the President's proposal on those things that he's doing solely to try and give a greater edge to tilt that playing field for Republicans.

MR. MacNeil: Congressman Vander Jagt, do you see that there is a transparent effort to favor Republicans in this proposal?

REP. GUY VANDER JAGT, [R] Michigan: [Capitol Hill] Absolutely not. There is an obvious effort to put challengers on a more equal footing with incumbents, to get elections more competitive and back to the districts that the contestants are going to represent. If that favors Republicans, then, indeed, it does. If returning elections to the people favors Republicans, then the President is guilty.

MR. MacNeil: Fred Wertheimer, before we go into the details, what's a general comment from you? How do you view this effort by Mr. Bush?

FRED WERTHEIMER, Common Cause: Two points. We very much welcome the fact that the President has recognized that we've got a terrible problem in Congress with campaign financing and that PACS are playing a very dangerous role. When the President recognizes something as a national problem, that makes a difference. And we find that very encouraging. We also believe his package by itself is not going to solve the campaign finance scandal. So the stage has been set but there is hard negotiations ahead to bring this to a satisfactory result.

MR. MacNeil: Okay, gentlemen, let's go through the points one by one. Congressman Swift, what's your reaction to the proposal to abolish all PACS formed by corporations, labor unions and trade groups, leaving only independent ones?

REP. SWIFT: I think it's important to remember that PACS didn't create special interest money. The PACS were designed originally to make those accountable, to bring them out where people could understand who's giving who what money. The Democrats have had in almost every proposal for 20 years significant limitations on PACS. We believe that they have gone too far, that they have become too influential. What is wrong with the President's proposal is he would take us back, not ahead to some kind of new perfection, but he would take us back to those dark old days when people were running around with bags and nobody quite knew who was paying what money to whom. We have to remember that there was a problem before and PACS were part of the solution to it. They need to be pulled back, they need to be limited somewhat, but abolishing them takes us back to a problem that was worse than the one we've got today.

MR. MacNeil: Congressman Vander Jagt, why is it a good idea to abolish 90 percent of the PACS?

REP. VANDER JAGT: Well, Al Smith, Fred Wertheimer and I are in agreement that PACS have become too influential and Congressional campaigns are awash in special interest PAC money, so therefore, in order to get elections back to the district, back to the people, make them competitive, I think it would be good to eliminate that special interest PAC money at least to reduce the impact that it has on campaigns today.

MR. MacNeil: And Fred Wertheimer, what do you think of that part of the proposal?

MR. WERTHEIMER: Well, we think you have to dramatically reduce the role of PACS in Congressional campaigns. But you also have to make sure the money doesn't show up in new forms of special interest money, because if that happens, we'll just be rearranging the chairs on the Titanic. So the key here is a system that brings special interest money under control. And in order to do that, we believe you have to deal with this arms race spending that goes on in Congress and there has to be alternative untainted resources that members can turn to, because if there isn't, special interest money is going to pop up in new ways. That's why we think the President's proposal by itself won't solve this problem.

MR. MacNeil: You want, let's pick that point up, the President came out firmly against a limit on campaign spending or on public financing of campaigns, both of which I think you were alluding to there, Mr. Wertheimer. But you support, the Democrats support, Mr. Smith, a limit on campaign spending, and support public financing, correct?

REP. SMITH: That is not only correct that we support a limit on campaign spending. We think it is absolutely essential if we are going to be able to deal with this problem. What happened when we did the reform before is we did three things. The Congress, first of all, established public financing for presidential campaigns, that's worked pretty well but it freed up a lot of money to go somewhere else. The second thing we did was create PACS, and those PACS turned out to be money machines, much more so than anyone anticipated, but Congress in its wisdom at that time also did something else; it limited the amount you could spend on a Congressional campaign. The problem that has brought us to today is that the Supreme Court struck down the last provision, so the balance that Congress built into reform was lost. We have to go back in and put in the balance, and we believe that's absolutely essential.

MR. MacNeil: Why isn't it a good idea to limit the spending, Congressman Vander Jagt?

REP. VANDER JAGT: Every single spending limitation proposal that I have seen, Robin, does nothing to equalize the competitiveness of the race. In other words, if two candidates have exactly the same amount to spend, the challenger and the incumbent, since the incumbent starts off with a million dollar spending advantage that he already has from taxpayers like unsolicited frank mail and those things, you don't address the problem of making the race competitive. You reduce the impact of special interest money like Common Cause would like to if you increase the amount that a political party can give and make a greater effort to get individuals to contribute, especially individuals contributing in the Congressional district where the race is taking place.

REP SMITH: The problem with that argument is very simply that under the present system the challenger rarely gets as much. I mean, the idea to suggest that this is not moving this towards more competitive races is ridiculous on the surface. The problem is that if you are going to expect the challenger and the incumbent to have exactly the same amount, it's almost impossible to determine how you would arrive at that. But the point is, and it's so central to this whole thing, is that if you make it possible for the challenger to get into the general range you are improving the advantages of the challenger. I have never understood that argument at all.

MR. MacNeil: Well, let's look at another advantage to incumbents that Mr. Bush proposes eliminating and that is the free postage on unsolicited mass mailings. Congressman Swift, what's wrong with eliminating that?

REP. SWIFT: I think there is nothing wrong with making some modifications in that. We were talking about that on the House Administration Committee in the last Congress and it's still very much alive. The President's proposal at this point I think is somewhat vague as to precisely what he would do, but that's something we can talk about; there's no problem there.

REP. VANDER JAGT: It's certainly important to address at the moment. The average Congressman sends out 100 pieces of mail for every 1 piece of mail that comes into his office. Now maybe some of those are in the pursuit of business, but I've got to say that 80 of those 100 are designed to enhance his reelection and that's subsidization of his reelection by the taxpayer and that's why 98.5 percent of incumbents who run for reelection are in fact reelected.

REP. SWIFT: You know that used to be true but we set up franking commissions and all kinds of things. I can remember when we used to send things out that in fact looked like our campaign brochures. You can't do that anymore.

REP. VANDER JAGT: Now instead of having your picture seven times, you can only have your picture three times, that's our reform.

MR. MacNeil: And Fred Wertheimer, I take it, you would approve of the ending the franking for mass mailings?

MR. WERTHEIMER: It's got to be ended or sharply curtailed. It's a major abuse in Congress today. I want to make one larger point however. At some point we're going to have to recognize that the interests here go beyond the particular interests of the Democrats or the Republicans to the larger interests of the American public. And that interest is in honest, fair, credible, competitive campaigns. Now in order to do that there is going to have to be a serious bipartisan negotiation with all issues on the table and this is the key I think for what the President did today. If the President is prepared to enter into serious negotiations, he can play an historic role in ending this campaign finance scandal and in changing the way of life on Capitol Hill?

MR. MacNeil: Do you agree, Mr. Wertheimer, that as the proposals stand now, do you agree with the Democrats that they appear stacked against the Democrats, in favor of the Republicans?

MR. WERTHEIMER: I look at it a different way. I don't think the proposals solve the problem we have and that's the goal here. There are going to be Democratic and Republican advantages in the proposals from either side. How do we get beyond that? I say the President has to get involved. If he's prepared to negotiate, we can solve this problem. If the President is proposing a take it or leave it package, then he's going to miss a golden opportunity to help bring us to a new ethics era.

MR. MacNeil: Congressman Swift, what is at the essence, what's the rationale that you Democrats are thinking about when you say that it's, the President is trying to stack the deck against you? Point to what exactly you say indicates that.

REP. SWIFT: The typical demographics of a standard Democratic voter and a standard Republican voter are different. The Republican Party has always been able to raise more money even while out on the hustings, it was losing races. What it wants to be able to do is to be able to pressure that campaign by shoveling in that money in a way that they know we simply can't compete with. So it moves it not closer to the grassroots, it moves it more to the money bags at the party level. That clearly is an advantage for the Republicans; they know it; we know it; and you know it.

MR. MacNeil: Congressman Vander Jagt.

REP. VANDER JAGT: Thank you, Robin, for giving me a chance to address that because the great great myth is that the Republican Party is the party of the fat cats and the Democrat Party the party of the little giver. As a matter of fact, at the National Republican Congressional Committee, of which I am the chairman, the campaign committee of the House of Representatives, 90 percent of the money that we raise comes in contributions under $100. The Democrat Committee, 70 percent of what they raise came in contributions of $500 or more. The source of their funding are the fat cats; the source of our funding is the little giver under $100.

REP. SMITH: That isn't what I said. I said the demographics are very different. We tend to be supported by people who for one reason or another aren't used to giving. For example, a small businessman who tends to be Republican may take home no more money than a guy that works down in a mill, but he's used to giving to the UGN and people come around and pound on his door all the time, he does that. The guy down at the mill is much less likely to make that kind of contribution. And, therefore, it's not a case -- of course you get small contributions, don't have any argument about that -- it's just harder for Democrats to get money out of the Democratic supporters. We can get their votes. It's getting the money that is more difficult. So we can't permit this kind of a change. It's a tipping of the field.

MR. MacNeil: We'd like to widen this out a little bit. Jim.

MR. LEHRER: Yes. Now to some reaction to that reaction from C. Boyden Gray, the White House Counsel, and one of the chief architects of the President's proposals. First, Mr. Gray, picking up the point that Mr. Wertheimer made, is the President prepared to go into serious negotiations over this, or is this a take it or leave it proposition?

C. BOYDEN GRAY, White House Counsel: I think he's prepared to negotiate, yes. But I think it's premature to discuss what the parameters might be. I think the first item on the agenda is to get these proposals fully aired and fully understood by the American public.

MR. LEHRER: Well, then lets go to some of the points that have been raised. When you and others at the White House sat down to draft these proposals, was the purpose of them to level the playing field for Republicans?

MR. GRAY: The purpose was to level the playing field between incumbents and challengers and to reduce, we can't eliminate, but to reduce the influence of economic special interests.

MR. LEHRER: But as a practical matter, because there are more Democrat incumbents than there are Republican incumbents, any proposal that diminishes the power of the incumbents automatically helps Republicans. You don't deny that?

MR. GRAY: That might be the outcome but no one can predict that Republicans will do better in a more free competition. One hopes they would, we'd like to think they would, but there's no guarantee that they would.

MR. LEHRER: All right. Let's go to some of the specifics. Why did you not, in the final analysis, why did you and the President not agree to try to set some limits on the amount of money that actually went into the campaign, regardless of the sources of the money to cut out the amount of money that went into these things?

MR. GRAY: Yes. There are very strict limits, as you know, on what individuals can contribute.

MR. LEHRER: But not how much the candidate can spend.

MR. GRAY: Not how much the candidate can spend. The President feels strongly that that would be to limit the competition, and ideas, if you had a limit, you would have the effect of limiting or prohibiting in some cases certain individuals from making contributions altogether to a candidate or to a cause or to an idea that had attracted widespread support. He believes very strongly that the competition could be unrestrained, assuming and not raising the limits on what individuals can themselves individually contribute.

MR. LEHRER: So as a fundamental precept, the President does not believe that there's too much money now being spent in these political campaigns?

MR. GRAY: His concern is less with the absolute amounts than how they are raised and where the amounts come from.

MR. LEHRER: So then when Speaker Foley says, and Robin quoted him as saying in a question, when Speaker Foley said what the President is actually proposing is just kind of rearrange how the money gets to the candidates more than restricting the amount of money, he's essentially correct?

MR. GRAY: The money may very well be less. One would like to hope that it would be somewhat less, but it isn't just simply rearranging to say that the public citizens outside the beltway, as we sometimes refer to it, in the districts should have more say. That is not simply rearranging. It is a fundamental change we think in the way the public will contribute and participate in the political process.

MR. LEHRER: Take me through that. How would this proposal, if enacted into law, how would that encourage more people to give money, more people outside the beltway to participate as contributors?

MR. GRAY: Today it is very, it is often perhaps too easy for an incumbent to call up or ask when a lobbyist is there in his office, I would like to have a fund-raiser, please can you raise X amount of money and the fund-raiser will often use some forms of pressure in his corporation to produce those funds. If these reforms are adopted, the incumbent or the candidate or the challengers will have to sell his or her ideas publicly in the district, at home, to try to raise the money in the market place of ideas and not count on a professional in Washington, D.C., to do the work for him.

MR. LEHRER: Judy Woodruff did a report here last night as kind of a preview to the President's proposals today and one of the points, there were many points, but one of the points was that the situation now is that members of Congress like Congressman Vander Jagt, Congressman Swift, and others, spend a tremendous amount of time raising money. In fact, they spend more time raising money than they do doing the business of the public. Is this going to require them to devote even more time to fund-raising do you think? In other words, did you consider that as a possibility?

MR. GRAY: Well the President said in his speech that he hopes that this will mean less time will be spent raising money and more time will be spent legislating. I think he believes that once the competition is opened up that it will not be that difficult for supporters of a candidate, whether he's an incumbent or a challenger to raise money at home if that is where he or she must look for support.

MR. LEHRER: Well, let's bring the two Congressmen in on that. Congressman Vander Jagt, do you agree with that? Is this going to, as just, talking about it just from a nuts and bolts point of view, are you going to have to spend more time raising money if these things went into effect or less?

REP. VANDER JAGT: The President's point in his speech that you showed was that if the political party can make more significant contributions, that will reduce the time the individual Congressman and candidate have to spend. That is correct.

MR. LEHRER: Congressman Swift.

REP. SWIFT: If you want to reduce the amount of time we spend raising money, you have to reduce the amount of money we have to raise. It's that simple and it's pretty obvious. I saw the President say that and I thought to believe that, you'd have to know nothing about campaigning. The President obviously knows a lot about campaigning.

MR. LEHRER: Mr. Wertheimer, what's your view of that, is that even a problem that -- is it a healthy thing that the Senators and the members of the House of Representatives spend a tremendous amount of their time out hustling money, or does that keep them close to the people?

MR. WERTHEIMER: No. It's very unhealthy the way it works now because they are spending too much time raising the money and their psyche is that they've got to constantly do it. In trying to deal with these issues, we always have to keep in mind I think what the problems are. The underlying problems are too much special interest money in Congress, unlimited spending means you've got to constantly be raising money, because you've got an arms race mentality, and the third thing is far too much money goes to incumbents. House incumbents had approximately $200 million available for the 1988 House elections. Challengers had $36 million. That is just totally out of line. Now any solution has to solve those three problems.

MR. LEHRER: Does the President's proposal solve those three problems, Mr. Gray?

MR. GRAY: Let me make this point. Part of the reason why so much money is spent today is because so much special interest money is available. In the 1970s even after the reforms, the so-called Watergate reforms, went into place, this kind of money was not there and it wasn't spent and the incumbency reelection rate wasn't as high, and the special interests didn't have as much influence. In 1978, for example, there was $35 million from PAC money even under a legal system that was the same as it is today. It's the dramatic increase from 35 ten years ago to 160 million today which is so corrosive in the public process and we must reduce that amount of money. Now one of the comments made earlier was this throws us back to the pre-Watergate days when we had bag men. That is simply not the case. The two fundamental reforms of the Watergate era will remain in place, that is, strict limits on what individuals can give individually and full disclosure.

MR. LEHRER: Do you agree that that will work, Mr. Wertheimer, on this particular issue?

MR. WERTHEIMER: I don't believe that the President's proposal will work; it won't solve these underlying problems. We need a more comprehensive approach that goes right at the heart of these three points and we're not there yet. But what has happened I think is the stakes have been dramatically raised on the need for everyone to find a solution. As I said, the President has declared this a national problem, and now the really hard work begins. The two gentlemen on Capitol Hill are in a critical position. They're going to be involved in negotiations. This has to be a real serious bipartisan negotiation and we can come back here next fall and talk about how one of the worst problems, the worst scandals in Washington, D.C., has been dealt with and ended. That's possible now.

MR. LEHRER: Do you agree, Congressman Swift, that the President has put it far enough up on the agenda that serious negotiations are now possible and a solution is now possible?

REP. SWIFT: Serious negotiations were going on before the President offered his proposal. I must say that the idea of saying that we're not going to go back to the bad old days is simply nonsense. This permission, this proposal permits bundling and that is going to make it --

MR. LEHRER: What's bundling?

REP. SWIFT: Bundling is when you go around and instead of doing it as a PAC, which is accountable, you get a series of individuals, put it altogether, and then send it in in the name of the PAC. The other proposal --

MR. LEHRER: Excuse me. In other words, 10 people could come together and each give $1,000, they give $10,000 and they don't have to be accountable?

REP. SWIFT: Exactly. And then in addition to that, the political party that is proposed here would be able to collect money and then a PAC could collect money and then launder that through the political party. They would have to report who contributed it but you'd never be able to follow those dollars down through the political party and back out to what candidate got it, so it really drives an enormous hole right through the middle of public disclosure.

MR. LEHRER: It doesn't sound to me then like you're in the mood to compromise very much on this.

REP. SWIFT: I'm not in the mood to compromise on that point or similar points in the proposal. I'm very very much in the mood to begin negotiations on a number of things in which we are very close and which we are going to have legitimate disagreements. Guy and I have already talked about the fact, we're going to have to sit down and begin negotiation on those.

REP. VANDER JAGT: The dialogue I think has been very helpful. For example, the President's proposal does call for an elimination of bundling, and so that's just an example of where we can negotiate and maybe solve the problem together. I agree with what Al Swift, my co-chairman of campaign reform, said earlier in the day. Since we do agree on somewhat the definition of the problem as Fred has outlined it, as Al has said, too much special interest PAC money, too influential in elections, that I believe Al and I have a historic opportunity together with the White House and with others to correct what Fred Wertheimer has described, the scandalous situation of campaign finance reform today and I know we're going to try to do it in a bipartisan way.

MR. LEHRER: Mr. Gray, I was hoping that we could negotiate a deal right here on television tonight. But I think we're going to have to pass. You said that would have to come later anyhow. But, gentlemen, all four of you, thank you very much for being with us.

MR. MacNeil: Still ahead on the Newshour, the HUD scandal and the link between hi-tech and education. FOCUS - BUILDING SCANDAL

MR. MacNeil: We return next to the contract steering and influence peddling in the Reagan Administrations Department of Housing and Urban development. The main Congressional Committee investigating the allegations heard today from Frederick Bush the U.S. Ambassador designate to Luxenborg. He is another in a growing list of prominent Republicans who appear to have garnered HUD Funds because of their links to the Reagan Administration. Kwame Holman reports.

MR. HOLMAN: Not related to the President though he was a major fund raiser for the President's 1988 Campaign but this Housing Sub Committee is looking at whether Bush traded on his relations with others in the Reagan Administration to get a half a million dollars in consulting fees for his work in securing lucrative HUD Contracts for private developers. The projects in question were in Puerto Rico.

CONGRESSMAN TOM LANTOS, [D] California: Is it your testimony Mr. Bush that it was your expertise in the field of Housing that succeeded that made you successful in obtaining these projects.

MR. BUSH: As I stated before Mr. Chairman my former colleagues had lived in Puerto Rico for three years. They were not unfamiliar with the Federal Programs and problems in the Commonwealth. One of those individuals knew and understood many of the housing programs. Not all of them and not in wonderful detail but enough to know how to work on these projects. I personally as I have said to you before did not have that expertise.

CONGRESSMAN LANTOS: The funding comes out of the discretionary budget of the Secretary and over ruling the objections of the professional staff let me repeat this overruling the objections of the professional staff which evaluated your project at is various drafts and redrafts. The political people approved your project. You have any comment on that.

MR. BUSH: I did not know and I still don't the internal system that HUD was using for the selection process of these projects.

CONGRESSMAN BARNEY FRANK, [D] Mass.: The process that the City of San Juan, I guess we are talking about, is to apply for this to HUD. What is a developer who theoretically has no claim on this at all until the City of San Juan does a bid procedure why did he quote need some one on the ground in Washington.

MR. BUSH: We were hired by the developer to advocate this project.

CONGRESSMAN FRANK: What were you going to do specifically?

MR. BUSH: Our job was--

CONGRESSMAN FRANK: Your job not our. We are talking about you individually now not Bush and Company. This is you no technical experts just you. Mr. Govan calls you and says will you take on this job of helping this developer get these units for the City of San Juan basically.

CONGRESSMAN FRANK: And what did you do.

MR. BUSH: Well I called Ms. Dean.

MR. HOLMAN: The Committee has tried to establish that it was Deborah Gore Dean, Executive Assistant to then HUD Secretary Samuel Pierce who decided which projects would receive HUD money. Fred Bush admitted that Dean was the first person at HUD he approached.

CONGRESSMAN FRANK: What did you tell Deborah Dean. What were you trying to do for the developer in that conversation.

MR. BUSH: To find out what the procedures were.

CONGRESSMAN FRANK: You went to the Executive Assistant to the Secretary to find out what the procedures were?

MR. BUSH: I said that before.

CONGRESSMAN FRANK: The is the most preposterous answer that I have ever gotten. You did not I just don't believe you. You did not say to Hunter Chushing. You did not ask Hunter Cushing to find out what the procedures were. Who you talk to this type of project and you go to the Executive Assistant to the Secretary to find out the procedures. No one will believe that Mr. Bush. No one at all.

MR. BUSH: Well Mr. Frank I was very used to the person at the top if I could get to that person.

CONGRESSMAN FRANK: To talk about the procedures?

MR. BUSH: To talk about anything.

CONGRESSMAN FRANK: If you go to mail a letter you go to the Postmaster. That is extraordinary and as a matter of fact Mr.Bush it demonstrates precisely the point that you were using your political influence because it would disarrange a department if every citizen who had a legitimate interest, if every developer went to the top to ask basic question, of course things wouldn't function. No one does that.

MR. BUSH: I did not feel nor do I feel today that I had political influence.

MR. HOLMAN: This afternoon a New Jersey Housing official detailed how the process of obtaining federal funding to rehabilitate low income housing became distorted. William Conely said Funding requests should have originated from local housing authorities. Instead politically connected developers instructed housing authorities to request specific amounts with the assurance the funds would be approved by HUD.

WILLIAM CONNOLY, New Jersey Director of Housing.: We indicated to them that because we did have a pipeline if we received additional units from HUD we were going to fund that pipeline first. Their response was that this was separate and apart, it was different it was Secretary's discretionary. I came of the top and it would not effect our ordinary application for ordinary units nor our pipeline if we were willing to undertake this project it would be additional funds to the state rather than in place of any projects that we already felt we had a commitment too. But let's not make any mistake about we were honoring the letter of the HUD rules because we felt that we needed to do that. There is absolutely no question that the process had already been stood on its ear by HUD and the following the letter of the HUD rules was a somewhat hallow exercise. There should be a lesson in this for all of this that we should never again permit an institution which was created to express how much we care for the least among us to be so decimated and to be treated in this way. We may need to talk about putting people in jail but let's also talk about recommitment to the ideal of a decent home for every American that HUD is supposed to stand for. Thank you Mr. Chairman. SERIES - HI-TECH FRONTIER - ENGINEERING - A SHORTAGE

MR. LEHRER: Next part four of our series on the High Tech frontier. Tonight the human factor in the high tech future. Correspondent John Merrow looks at this country's growing shortage of engineers and scientists.

MR. MERROW: At the end of World War II in 1945 American manufacturing was king. When these parts were being assembled into finished automobiles the United States was the World's undisputed economic leader and the American Work Force was the best educated in the World. Today the United States is facing stiff competition in its fight to hold its economic lead and America's schools which once provided the best educated workers are now supply workers who as students scored at or near the bottom in international comparisons of education achievement especially in math and science. It is not just the average that has gone down. The number of students taking math and science courses in high school and in college has also dropped and that in turn means that we are producing fewer engineers and scientists. For American manufacturers like this one which rely on engineers and other high skilled technicians that spells trouble, New Brunswick Scientific Company in Edison, New Jersey is a perfect case and point. New Brunswick Scientific manufacturers laboratory equipment for bio technology firms. Equipment like these shakers and fermentation vessels used to produce antibiotics, hormones and enzymes. The company has a real problem finding engineers. New Brunswick Scientific Vice President, Ezra Weisman:

EZRA WEISMAN: Well we have a broad spectrum of needs in terms of the technical people. We have mechanical engineers, electrical engineers, bio engineers, chemical engineers, electronics people. So we are frequently looking for a variety of those types of people. We have occasions where we have looked for a particular skill for years.

MR. MERROW: Does it hurt you competitively if you have to spend an awful lot of time looking.

MR. WEISMAN: Certainly it hurts us in several different ways. Our projects take longer to come to fruition, it makes us change plans for marketing new products and since we are in a competitive situation particularly internationally that is very difficult.

MR. MERROW: To remain competitive New Brunswick Scientific looks for technical expertise outside the United States. 25 percent of its technical staff are foreigners. Other companies go one step further and move their entiremanufacturing process abroad. The shortage of American born engineers and scientists threatens the competitiveness of all U.S. Industries especially fast developing high tech industries like bio technology. In Japan one out of every 6 college students is studying to be an engineer but here it is one on seventeen. Lester Thurow is Dean of the Sloan School of Management at M.I.T.

LESTER THUROW: We as a society are going to have to solve this problem because American firms have a way to solve it without employing Americans. They can just hire their engineering from somewhere else in the World.

MR. MERROW: As is that what they do?

MR. THUROW: That is what they do to a good extent if you take the Pontiac Leman's the engineering was done in Germany and you can find a lot of products where basically we are now hiring foreign expertise because it is better and cheaper.

MR. MERROW: Another response to the shortage hire your competitors engineers. Raiding goes on all the Time. The biggest raider of all is the Defense Department. 40 percent of scientists and engineers according to Lester Therow now work in defense.

MR. THUROW: During the 1980s we've been sucking scientific talent out of the civilian sector into the military sector to support the defense budget but that has left the civilian sector. I think the only way to honestly describe it grossly under engineer and grossly under scienced.

MR. MERROW: That is particularly true of manufacturing which suffers from a kind of negative image. It doesn't have the gee whiz appeal of product design or high tech weaponry. It doesn't pay as well and in many corporations manufacturing is the slow track that rarely leads to the top. The Vice President for Manufacturing operations at Digital Equipment Corporation in Massachusetts is William Hanson.

WILLIAM HANSON: Partly because of the image the Universities haven't been stressing manufacturing and stressing it not in the courses that it teaches but stressing it that it again an exciting, challenging, intellectual place to be working. So they haven't been producing. The industry itself hasn't been presenting their right image and therefore we have been limited in getting our fair share of the best and the brightest talent.

MR. MERROW: To help correct that problem Digital and ten other corporations are sponsoring a 30 million dollar graduate program at M.I.T. to attract bright young people into manufacturing. Students pend 18 months studying engineering and management at M.I.T. and six months at one of the sponsoring companies. Peter Moran is going to Hewlitt Packard.

PETER MORAN, M.I.T. Graduate Student: What we hope to do out there is help them improve the process by which they build these semiconductor chips in a new material called gallium arsenite. And so that they can do it with a little tighter control on their manufacturing process.

BERNARD LOYD, M.I.T. Graduate Student: I will be working at Eastman Kodak in Rochester specially in their apparatus division and I think I am interested in looking at the problem of tying in what you would call your social system that is your human resources with your technical system.

MR. MERROW: By itself M.I.T. program can't solve manufacturing problem. At best it will graduate only 20 engineer managers a year and the experimental program doesn't even attempt to address the fundamental problem. Not enough young people are turned on by math and science in elementary school the way these M.I. T. students were.

MR. MORAN; Second grade. My math teacher I think that for the first time that was thefirst time a teacher ever spent a lot of extra time with me and I remember that very fondly and it was studying math. And somebody said you are good at and ever since then I have allay been oriented towards both math and science.

JULIE SCHNEIDER, M.I.T. Graduate Student: In fourth grade I had to build a project something that you could make using a pulley, pull a little wagon up a hill and it was like my first design and I guess it was really exciting. I would rather do that then play kick ball at the time.

MR. MERROW: That is the key. capture their interest and imagination while they are young. The younger the better. Three year olds are naturally curious. eager to explore and rework the World around them. They take what adults call play very seriously. In the right atmosphere 5 years old build cities including skyscrapers. Their play can build a foundation for future careers. Four million first graders enter the educational pipeline every year alive with energy and curiosity but it doesn't last. In third grade 67 percent of the children say science is interesting and important but as they move through the pipeline their interest and the pool of potential engineers drop. In high school only 33 percent find science interesting and important. And only 18 percent are actually contemplating careers in math, science and engineering. One reason many high schools don't even offer physics, chemistry or earth and space science.

MR. THEROW: In places where we do have the course they are often staffed by people who don't have a science back ground themselves because if you have a math background why would you go to work for a public school. You can make a lot more money and go to work for any high tech science company in the country and so you would have to be an angel or an idiot to take a job as a high school science or math teacher and there are a few angels in the world and there are a few idiots in the World but not many.

MR. MERROW: By college the flow is down to a trickle. 1/4 of 1 percent of the four million children who started first grade will go on to earn PHd. in engineering or physical science. At that rate by 2006, seventeen years from now the United States will be short nearly 300,000 engineers. Unless the problem gets worse engineering has always been a white male profession but by the turn of the century only 15 percent of the entering work force will be white males. The fastest growing pool of potential engineers is minorities blacks and hispanics but they have always been under represented in engineering, math and science.

ERICH BLOCK , National Science Foundation: If you look at today participation of blacks and hispanics in the engineering work force it is very low. It is in the order of 2 percent. Something like that. It should be more like 8 or 9 or 10 percent.

MR. MERROW: Erich Block is Director of the National Science Foundation. An arm of the Federal Government which has been trying to rekindle interest in science and math.

MR. BLOCK: We have to make sure that our human resources are what we need in the future and in order to do that you have to start very early. No sense trying to take an individual who has never had a science or math course once he enters college and try to make an engineer out of him.

TERRY MC DONALD, IBM: One qualification of a mathematician is the ability to listen and listen well

MR. MERROW: NSF sponsors this Saturday Science Academy in Atlanta, Georgia as part of its effort to attract minorities. Terry MC Donald makes math exciting in ways that most classroom teachers do not. Mc Donald is not a classroom teacher. he works for IBM. Germane, James, Bryan, Edwanda and Latiffa may become engineers someday but they are only 3rd graders. Producing engineers takes years. The United States has faced this challenge before in 1958 when the Soviet Union orbited Sputnik. The first space satellite. Then America responded with a massive education program to produce enough scientists and engineers to win the space race. Experts say that it will require a national effort on the scale of that response to Sputnik to meet industry demand for engineers in the future. But those same experts questions whether the nation has the will or the resources this time around. RECAP

MR. MacNeil: Again the main stories of the day, Pres. Bush proposed sweeping changes in the campaign financing law, the Supreme Court delayed its abortion decision until Monday or later and the House voted new sanctions in China in spite of administration objections. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow. Thank you and good night.