The NewsHour with Jim Lehrer

MR. LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, a Newsmaker interview with King Hussein of Jordan by the Middle East summit, excerpts from Senate hearings on U.S. troops in Bosnia, an issue and debate on the tax cut issue, and a conversation with Dr. Michael DeBakey, one of Boris Yeltsin's consulting heart doctors. It all follows our summary of the news this Thursday. NEWS SUMMARY

MR. LEHRER: There was relative calm in the Middle East today. Israeli Prime Minister Netanyahu received a warm welcome home from the two-day emergency summit in Washington. Conservative leaders met him at Tel Aviv Airport. Peace activists demonstrated against him along his motorcade route. Palestinian President Arafat stopped in Morocco before returning to his headquarters in the Gaza Strip. Arafat told Morocco's Hing Hassan peace depended on how the Israelis deal with past agreements. And near the West Bank town of Hebron, Palestinian protesters mobilized after Friday prayers. They threw stones at Israeli troops and burned posters of Netanyahu and effigies of the United States flag. Back in Washington, Secretary of State Christopher urged all sides to stay the course.

WARREN CHRISTOPHER, Secretary of State: A week ago today, we had the bloodiest day on the West Bank that was in anybody's memory how things are somewhat better now. I think the conversation that took place, the re-commitment to a nonviolent future, the commitment to have intensive, indeed, continuous negotiation, is a step forward. In that sense, everyone comes out a winner, but we've got a long ways to go. There are difficult times ahead, and I think we need to see some results flowing from those negotiations.

MR. LEHRER: We'll have an interview with King Hussein of Jordan right after this News Summary. Seventy-five hundred U.S. soldiers will remain in Bosnia until mid March, instead of a complete pullout by December 20th. That word came today from chairman of the Joint Chiefs of Staff, General Shalikashvili, at a Senate Committee hearing. The 7500 include an additional 5,000 member covering force now being deployed. They will protect U.S. peacekeeping troops as they withdraw in December. The general said even the new March target date would slide.

GENERAL JOHN SHALIKASHVILI, Chairman, Joint Chiefs of Staff: The most likely to affect a date I believe is the weather, as I mentioned. A disintegration of the security situation could also affect it. But I think, more likely, it will be the weather. We were frankly surprised by--

SEN. JOHN WARNER, [R] Virginia: Let's put weather to one side and dwell on the disintegration of the security, What is your definition of a level of disintegration?

GENERAL SHALIKASHVILI: I think if the fighting becomes such that it interrupts the orderly withdrawal, it would have an impact on the, on a schedule because you obviously need to first of all deal with that fighting, if for no other reason than to provide proper protection for the force.

MR. LEHRER: We'll have more from the hearings later in the program. Bosnian and Serbian leaders agreed today to establish full diplomatic relations. President Izetbegovic of Bosnia and President Milosevic of Serbia met for a one-day summit in Paris. It was their first private meeting since the Balkan war began four years ago. In Russia today, President Yeltsin assured his country he's still a working president. He did so in a radio address. He also met with security chief Aleksander Lebed in the Moscow hospital where Yeltsin is awaiting heart bypass surgery. We'll have an interview with Dr. Michael DeBakey, one of Yeltsin's consulting doctors, later in the program. In the presidential campaign today, President Clinton began his day with a ceremony in the White House Rose Garden. He signed a series of anti-crime bills into law. Later, he stopped off at a rally in Buffalo, where he described a drugs bill he had just signed.

PRESIDENT CLINTON: Just before I left, I signed a bill which stiffens the penalty for trafficking in methamphetamine. That's hard to say. Meth is the shorthand. You may not even know what it is, but in some parts of our country it is in danger of becoming what crack was in the 1980's. And we are determined to stop it before it becomes an epidemic. That's what I'm trying to do, folks, in all of our problems. I'm trying to identify them, get ahead of the curve, and keep America growing and going together.

MR. LEHRER: The President then to the Chitaqua retreat in New York State to prepare for Sunday's presidential debate in Hartford, Connecticut. Bob Dole headed South to his apartment in Bal Harbor, Florida, for his debate rehearsals. He made campaign stops in Tennessee and Georgia along the way. At a business luncheon, he attacked the President for failing to release an FBI memo about the administration's drug-fighting record.

SEN. BOB DOLE: Since Bill Clinton has been there in the last 44 months, drug use has doubled, drug use has doubled, and they don't tell you anything. In fact, they won't even release the letter. They've got a report from the FBI director that tells how bad it was, and President Clinton claimed executive privilege, so you won't find out how bad it is. And I say, Mr. President, Mr. President, you ought to release, release the study, Mr. President. Tell the American people you've been a failure when it comes to fighting the war on drugs. [applause]

MR. LEHRER: The Senate concluded its major legislative business today. Senate leaders Lott and Daschle called President Clinton, who congratulated them on a productive session. The House finished its work last weekend. But the Senate was delayed by a bill to fund the Federal Aviation Administration. Today, Senators voted to cut off debate and then pass that bill ninety-two to two. It included money for airport improvements in anti-terrorism equipment. Both Houses of the 104th Congress will officially adjourn tomorrow. In Stockholm, Sweden, today, Polish poet, Yiswawa Shimbosa, was awarded the Nobel Prize for Literature. The 73-year-old poet said she is happy and honored by the award but fears she will not have a quiet life for a while. She resides in the Polish city of Krakow. The Nobel Academy described her as the "Mozart of poetry who shows the fury of Beethoven in her creative work." The award carries a $1.1 million cash prize. And that's it for the News Summary tonight. Now it's on to King Hussein of Jordan, Senate hearings on Bosnia, an issue & debate on taxes, and Boris Yeltsin's American heart doctor. NEWSMAKER

MR. LEHRER: This was the day after the emergency Middle East summit in Washington. I talked earlier this evening with one of the key participants, King Hussein of Jordan.

MR. LEHRER: Your Majesty, welcome.

KING HUSSEIN, Jordan: Thank you very much, indeed.

MR. LEHRER: The "Washington Post" said in an editorial this morning that the summit was a disaster. Do you agree?

KING HUSSEIN: I disagree. I don't think it was a disaster. I think the disaster was the situation we faced just before this meeting. I believe if it hadn't taken place, we would have been in much more serious difficulty, and I am very grateful to the President and to the administration for inviting us over. I think it helped create an atmosphere and it brought about a commitment as well to have talks in the area between the Palestinians and the Israelis with the American participation as of next Sunday, and that these talks will continue until conclusions and results are forthcoming.

MR. LEHRER: How serious was the situation? You said it was--the disaster was over there. Describe the nature of that disaster as you looked ahead to where it might be leading.

KING HUSSEIN: I think it came about as a result of people feeling that--in fact what I thought was impossible might have been possible. In other words, I always thought and believed that the peace process was irreversible, yet, unfortunately, over the recent past we have seen a deterioration in our region and particularly with regard to the Palestinians and the Israelis, it was very frightening, and very sad and very distressing, and we kept hearing that whatever Israeli governments before had committed to would be respected and implemented. Lack of progress towards implementation, particularly in the case of Hebron and Ezra, also contributed to a situation which brought things to almost a boil. In fact we have lost as you know Israelis and Palestinians alike in these recent clashes, and conditions on the ground became even worse with troops surrounding cities, and so, uh, I believe that this was arrested at least with the meeting here, and with the hope that's generated for the future.

MR. LEHRER: Did you personally believe that they were on the verge of an all out war, and, and great, great magnitude?

KING HUSSEIN: I firmly, I believe that we were on the verge--were looking at--and in my case my life's work--that of my dead grandfather's--that of my dead colleague--Rabin--so many others-- that all that was in jeopardy, and I was very, very distressed and very sad about it.

MR. LEHRER: The "New York Times" said this morning that you spoke with elegant anger to Mr. Netanyahu at these meetings, is that true?

KING HUSSEIN: I think I spoke with honesty and candor, and I don't think he would have accepted anything--or expected anything less than that, nor would I have done anything other than that. I pointed out my views regarding what was happening, the challenge, its magnitude, and what I thought would have come out of that meeting, in particular, reaffirmation of all the commitments with a time limit to their translation into, into facts on the ground, maintaining the status quo as far as the West Bank and Jerusalem were concerned.

MR. LEHRER: Specifically on the tunnel.

KING HUSSEIN: On anything.

MR. LEHRER: On anything?

KING HUSSEIN: That upset the situation. And we had many suggestions. I have not suggested getting the UNESCO involved. After all, I think Jerusalem is part of the, of the world's heritage. I don't think that was such a good idea. I suggested an international group--I suggested in particular, and I hope that this will be examined very carefully--a group representing the three great religions and un, the religious group--we have been encouraging and we have been working very hard for many years now on dialogue, uh, on trying to see where we have the same view on matters, on trying to bring us closer together, and I thought maybe the introduction of such a group to oversee that nothing is done which is wrong, and to bring us closer together would have been a good idea, but again they're closely felt. Hebron, of course, was on top of the list and that needed to be addressed.

MR. LEHRER: And that's the withdrawal of the Israeli troops--

KING HUSSEIN: The implementation of the agreement.

MR. LEHRER: --implementation of the agreement. Right. And none of this came off, though. There was no agreement on any of the things that you asked, is that not correct?

KING HUSSEIN: This is quite correct, sir. As we stand, nothing was done, except to commit to movement as rapidly as possible beginning next Sunday. So that's let's hope that--

MR. LEHRER: Was that--it must have been--I won't put words in your mouth--was that a terrible disappointment to you? Did you want more to come out of this than--

KING HUSSEIN: Of course, I wanted more to come out of it, sir. I'm not thinking of Arabs, nor am I thinking of Palestinians, nor am I thinking of Israelis. I'm thinking of all the barriers that were brought down, of young people's hope that you could see in their eyes, the coming together of children, of orphans of terrible wars, of, of all the hopes of the people coming to realize that without these barriers, they're one and the same and they suffer the same difficulties and face the same challenges and have the same hopes and aspirations. All this to be placed in jeopardy

MR. LEHRER: Did you leave there yesterday convinced that both Prime Minister Netanyahu and President Arafat understand the gravity with which you looked upon this? Do they understand that?

KING HUSSEIN: I believe they did, and President Netanyahu in parting said I promised I would surprise you, so I really hope it will be a pleasant surprise and that it will come soon. Arafat I think has shown great courage to have moved the way he has, to have committed to peace, and I had been saying for a long period of time, and my messages to the Israeli government had been to try to give him all the help he needed. So let's hope that yesterday was a turning point, and we are grateful to the President for all he has done. It's a matter of history. I think that without belittling the efforts of others, it is a fact that in the late 40's, it was a Democrat administration where a cease-fire was brought about in the war in the region and the beginning of negotiations. And it was in the Carter administration, as well, that we saw the peace--

MR. LEHRER: Camp David--

KING HUSSEIN: --between Egypt and Israel, and it is with President Clinton that we worked so hard to achieve not only toward an Israeli peace but to begin the process on the Palestinian tracks.

MR. LEHRER: Netanyahu and the President said yesterday, Mr. Arafat did not speak, so we don't know, but that, that there was an understanding, at least, of the intensity of the other's feeling about why the Arabs felt so strongly about the opening of the tunnel, why the Israelis felt so strongly about the use of the weapons by the Palestinian security force against the Israelis and so forth and so on. Do you agree with that?

KING HUSSEIN: I think that they had enough time to discuss all these matters very frankly and openly together and we'll gave them the time to talk to each other, and I hope that this is the case.

MR. LEHRER: Do you agree with those who say the Palestinians went home empty-handed, with nothing, they got nothing out of this summit?

KING HUSSEIN: They got this commitment which they undertook upon themselves as well to begin these talks on Sunday. I think they have gained the understanding of a great many people in the world, and for example, in the press conference yesterday, when the President represented all of us, and saved us a lot of difficulty in trying to express our feelings adequately. The questions that were asked were the questions that were on the mind of the world and they're all relevant, and they all need answers.

MR. LEHRER: Are you going to stay involved in this?

KING HUSSEIN: Of course, I'm going to do whatever I can to help.

MR. LEHRER: Do you believe that the violence is now temporarily ended, or do you think it could start up again tomorrow or the next day? Is it that fragile?

KING HUSSEIN: It is, unless progress is made, and that is where I think that for even some in the United States to suggest that-- do not pressure Israel--I want all the friends in the United States, or the Jewish lobby in particular with whom I've had so many contacts in the recent months, uh, and in Israel and the Arabs and all the peace camp, to have a say to come out and be counted and not to let extremists and extremism gain after all that we have done and destroy our hopes.

MR. LEHRER: Did--when you talked to Prime Minister Netanyahu, what did you ask him to do specifically about--did you ask him specifically to close that tunnel?

KING HUSSEIN: I did speak of the tunnel, and I expressed my, uh, disappointment in the fact that were not told about it, although I had an emissary from the prime minister who was with me only 24 hours before its opening, and, uh, it is a problem. It's created a problem. I don't think that it comes in isolation of a lot of other problems that were there, so that had been, as they say, the straw that broke the camel's back.

MR. LEHRER: Now the prime minister said that there was a terrible misunderstanding on the Arab side, that to interpret that as an anti-Islamic move was just not fair, and just not accurate.

KING HUSSEIN: This is not the case. I think the case is one of the status quo that existed in the city and exists in the city, and to tamper with it is something that obviously creates a reaction. That's where we need two things. We need to concentrate on the religious damage and on getting the followers of three great religions, the descendants of the children of Abraham to sit together, to work together, to try to elevate Jerusalem, which is already in my eyes elevated above the questions of the sovereignty of this or the other. It is, it is our city, all of us, in terms of the whole city, in terms of the holy city, and hopefully the rest of it will also be a symbol of peace between the Palestinians and the Israelis in the times ahead.

MR. LEHRER: You used the word hopefully. Are you hopeful? Are you--you're very emotional about this for understandable reasons- -is it an emotional hope, or an emotional pessimism at this time?

KING HUSSEIN: I'm always hopeful, and I'm always optimistic, but it really shook me to see things deteriorate so rapidly after so much that looked so promising. But, nonetheless, we will do whatever we can. We have to do it.

MR. LEHRER: Your Majesty, thank you very much.

KING HUSSEIN: Thank you so much. UPDATE - TROOPS IN BOSNIA

MR. LEHRER: Now today's Senate hearings on Bosnia and to Elizabeth Farnsworth.

SEN. STROM THURMOND: The committee will come to order.

MS. FARNSWORTH: For the Senate Armed Services Committee, the question was whether U.S. forces may be in Bosnia past the December 20th deadline promised by the Clinton administration when troops were deployed last year. Today's opening statements featured a blast at the administration from the Republican side. Sen. John McCain of Arizona said recent Pentagon statements about new troop deployments were at odds with earlier promises. He quoted statements made by Secretary of Defense Perry and Joint Chiefs Chairman Shalikashvili last year.

SEN. JOHN McCAIN, [R] Arizona: Gen. Shalikashvili says there's no doubt by the time we leave in 12 months our mission will be completed. Twelve months is the right time to set to bring the force home, and I think you knew better at the time. Sec. Perry, I was the one that recommended to the President that this be a 12- month mission. I believe firmly that approximately 12 months this force can withdraw. The last three months of the twelve-month appointment is the phasing out of the force and they will come down gradually over those last three months.

MS. FARNSWORTH: Committee Democrats urged their Republican colleagues to hold their fire, given the success of the Bosnian mission.

SEN. JOSEPH LIEBERMAN, [D] Connecticut: We can be extremely proud today of the dedication and performance of our soldiers. There, under the leadership of the two gentlemen before us today, Sec. Perry and Gen. Shalikashvili, we can be proud also of the work of our diplomats and volunteers that have brought about this result which was by no means guaranteed when this all began.

MS. FARNSWORTH: The committee members were trying to get specifics on NATO or Pentagon plans to deploy U.S. forces beyond December. At present, some 15,000 Americans serve in the 52,000 member international protection force called IFOR. The Pentagon announced this week that 5,000 more U.S. soldiers will leave for Bosnia soon and stay until mid March. The primary job of this covering force, as it's called, is to help the U.S. peacekeepers now in Bosnia safely withdraw. Today Sec. Perry and Joint Chiefs Chairman Shalikashvili described this force in more detail.

GENERAL JOHN SHALIKASHVILI, Chairman, Joint Chiefs of Staff: Starting in a few days, after Sec. Perry signed the deployment order, we will deploy approximately 5,000 troops to Bosnia whose function it will be to assist our forces in the orderly withdrawal and to be part of the mission ready force during the municipal elections and throughout the redeployment period. By the time the IFOR mission ends on the 20th of December. We expect to be down to a force of approximately 10,000 Americans, with 7,500 dedicated to the covering force operation, and 2,500 involved in a process of withdrawal. By 1 February '97, it is our hope that approximately 7,500 will only be left with that covering force, and our current plan is for the remainder of this covering force to be out of Bosnia by mid March.

MS. FARNSWORTH: More controversial still are reports of plans for a so-called follow on force of Europeans and Americans who might remain past March to help keep the peace between ethnic groups. Committee Chairman Strom Thurmond raised questions about both the covering and the follow-on forces.

SEN. STROM THURMOND, Chairman, Armed Services Committee: Mr. Secretary, there's a problem of an additional 5,000 U.S. troops for up to six months is a surprise and a concern to this committee. It appears that the deployment of the 5,000-man covering force may be a pretense to a further extension of the U.S. military presence in Bosnia which this administration is unwilling to admit because of the U.S. elections in November. Can you assure us that this is not so, and that there are no plans or commitments for U.S. forces in Bosnia beyond the March 1, 1997, withdrawal date for the covering force.

WILLIAM PERRY, Secretary of Defense: Mr. Chairman, the covering force is for the purpose that was described by Gen. Shali. It is the exact symmetrical position to the force we put in to cover up forces when they entered Bosnia. It is for that purpose and no other purpose. On the question of whether there will be a follow- on force, I would be--like to discuss that with you in some detail what is actually being considered, but I can assure you, the short answer to your question is, I can assure you I have made no recommendation to the President on the follow-on force. He has made no decision ongoing to support a follow-on force at this time.

MS. FARNSWORTH: Sec. Perry said NATO would make a decision about the need for a follow-on force while Congress is adjourned for the elections. He suggested that some members be available for consultation during that time.

MR. LEHRER: Still to come on the NewsHour tonight, an issue and debate on tax cuts and Dr. Michael DeBakey. SERIES - ISSUE & DEBATE

MR. LEHRER: Now to that tax cuts issue and debate and to Margaret Warner.

MS. WARNER: Every American, no doubt, would like a lower tax bill, but is a tax cut a good idea for the economy, and, if so, what kind of cut? That is one of the major debates of the current presidential campaign and a debate that we will have in a moment with two prominent economists. First we get some background on tax politics from Kwame Holman.

MR. HOLMAN: Bob Dole has substantially staked his presidential campaign on tax reform, most notably on a promise to cut income taxes by 15 percent across the board.

SEN. BOB DOLE: [Aug. 5] My program follows two principles: No dollar should be taxed that would go to providing the basics for a family, No. 1, and No. 2, no dollar should be taxed that would go to creating a job.

SEN. BOB DOLE: [Sept. 10] Our pro-growth plan has a tax cut 15 percent across-the-board for every American taxpayer, 15 percent across-the-board. [applause] And if you have children under 18, a $500 tax credit because we believe in families and we believe in children, and we believe in opportunities.

SEN. BOB DOLE: [Sept. 24] Under our plan a family making $30,000 a family of four will save $1261 on their tax bill, a lot of money to some here, no, not a lot of money--a lot of money to people making $30,000. This tax cut is designed for Main Street, not Wall Street.

MR. HOLMAN: Not only would Dole cut personal income taxes, he also proposes giving families a $500 tax credit for each child under 18, cutting the top capital gains tax rate by half to 14 percent, and repealing the 1993 tax increase on Social Security benefits instituted by President Clinton. Dole estimates his tax package would cost the U.S. Treasury $551 billion over six years. Nonetheless, he vows to balance the federal budget by the year 2002.

SEN. BOB DOLE: I will reduce taxes while I'm balancing the budget. It can be done, and it will be done.

MR. HOLMAN: Until this year, Dole's major focus was on reducing the deficit, even if that meant raising taxes.

SEN. BOB DOLE: [August 1993] I have said for many years--and I'll back it up with tough votes--that reducing the national deficit must be our No. 1 priority.

MR. HOLMAN: For example, Dole voted in 1983 to increase the Social Security tax on all workers in order to save the fund from insolvency. But Dole insists his current push for tax cuts is more of a change of taste than of policy reversal. Still, the Clinton campaign is using Dole's record on taxes against him.

COMMERCIAL SPOKESMAN: [Clinton Campaign Ad] Dole voted to raise payroll taxes, Social Security taxes, the '90 income tax increase, $900 billion in higher taxes, and to help pay for his risky tax scheme, experts say Dole and Gingrich will have to cut Medicare, education, environment. Bob Dole, raising taxes, trying to cut Medicare, running from his record.

MR. HOLMAN: But four years ago, it was Bill Clinton who used a promise to cut taxes on the middle class to help win his party's nomination.

BILL CLINTON: [Dec. 1991] If you want to have more equality, what you should do is lower middle class tax rates and increase tax rates on people who made all the money in the 80's and whose taxes went down.

MR. HOLMAN: Some of Clinton's Democratic rivals mocked the promise as pure political pandering.

PAUL TSONGAS, Presidential Candidate: [Dec. 1991] The middle class tax cut did not come out of economists or people striving to compete, came out of polling data because the polls show that was- -that had support.

MR. HOLMAN: But once Clinton secured the nomination in July of 1992, he began backing away from his tax cut promise in the face of a rising federal budget deficit. Clinton, instead, offered another plan dubbed "The New Covenant."

BILL CLINTON: [July 1992] That's what "The New Covenant" is all about--an America in which middle class incomes, not middle class taxes are going up, an America, yes, in which the wealthiest few--those making over $200,000 a year--are asked to pay their fair share--[applause]--an America in which the rich are not soaked but the middle class is not drowned either. [applause]

MR. HOLMAN: Within a year and without a single Republican vote, President Bill Clinton got Congress to raise the top income tax rate on the wealthiest taxpayers, increase the tax on a gallon of gas by 4.3 cents, and raise the business income tax rate, but there was no middle income tax cut.

SPOKESMAN: Ladies and gentlemen, the President of the United States, William Jefferson Clinton.

MR. HOLMAN: This year, President Clinton proposed a modest set of new tax breaks including a $500 per child tax credit, a reduction in the capital gains tax on the sale of a home, up to a $1500 tax credit for the first year of college tuition, and a tax credit for businesses that hire welfare recipients. The Clinton package is estimated to cost $152 billion over six years.

PRESIDENT CLINTON: [Sept. 27] What I want to see us do now is to give the American people tax credits for child rearing. I want to see tax cuts for education. I want to see tax cuts for home buying. We can afford the right kind of tax cut, but we should not have a tax cut that is a big, across-the-board tax cut that goes to people like me who don't need it, and that will increase the deficit again.

MR. HOLMAN: But the Dole campaign has focused its attacks where they think the President is most vulnerable, on a slow-growing economy and the President's 1993 tax hike.

COMMERCIAL SPOKESMAN: [Dole Campaign Ad] Under Clinton, stagnant wages, the largest tax increase in history, two incomes needed to make ends meet. Americans deserve better.

SEN. BOB DOLE: [Dole Campaign Ad] Make no mistake about it. My economic program is the right policy for America.

MR. HOLMAN: Meanwhile, economists from the rival camps have sparred over how the Dole tax cuts would be paid for.

LAURA TYSON, National Economic Adviser: [September 12] I do not believe that you can balance the budget and we can give a $550 billion tax cut, 70 percent of which is paid for by just assuming economic growth and interest rate reductions. There's no assumption that it will occur, and it seems to me, what are they going to cut?

JOHN TAYLOR, Dole Campaign: The key here is a growth program like Sen. Dole has put on the table, and the, the budget balance is a key part of his program, balancing the budget and reducing taxes, and the numbers do stand up.

MR. HOLMAN: The tax debate is likely to continue throughout the campaign, including when the candidates, themselves, face off on Sunday night.

MS. WARNER: Now two economists on the candidates' tax proposals. Robert Barro of Harvard and Paul Krugman of MIT. Welcome, gentlemen. Robert Barro, let me start with you. In its broadest terms, it seems to me there's one major difference between the two, and I want to ask your opinion of which is preferable for the economy, across-the-board tax cuts, or the kind Dole is proposing, or targeted tax cuts, smaller ones of the kind Clinton is proposing?

ROBERT BARRO, Harvard University: [Boston] I like the idea of an across-the-board tax cut, which I think will help economic growth in the long run. The 15 percent cut is not my most preferred plan. I would have preferred a more basic movement to a flat rate system, more of a consumption tax, but I like the general thrust of the across-the-board program.

MS. WARNER: And why?

MR. BARRO: I think that will cut the rates that matter for people when they're deciding about how much to work, how much to invest, what kind of productivity enhancements to have. I think it will help economic growth. I think the overall Dole plan is focused on that issue. I think it's the right place to put the emphasis.

MS. WARNER: Mr. Krugman.

PAUL KRUGMAN, MIT: [New York] I think the word for the Dole plan is irresponsible. Even before you can start to talk about whether these plans will or will not help economic growth, you have to ask, what does it do for the solvencyof the federal government, because everybody who's looked at it realizes that the federal government is in very serious trouble. Even if we really do balance the budget by 2002, if you look a few years beyond that, and you realize that the aging of the American population is going to have a devastating effect on the federal budget deficit. If we were responsible at all, we would be running budget surpluses now to build up reserves for that, so this is not a good time to go offering a $550 billion tax cut, even if you had a plausible way to pay for it. And the fact is that the Dole plan does not have a plausible way to pay for it. I just picked up a copy of the Dole campaign book, "Trusting in People," and I wanted to flip to the chapter that tells us what programs he's going to cut, you know, what interest groups is he going to take on, because that's what, you know, he's about downsizing government, fighting the special interests. You know, there isn't any chapter on that. Dole hasn't proposed a single substantive cut in federal spending. There's just nothing there. It's an empty plan, and, therefore, it's a disaster if we cannot afford such a thing.

MS. WARNER: And then are you saying that the Clinton tax cut is preferable to this because it's smaller, or preferable also in its concept?

MR. KRUGMAN: Preferable because it's smaller. I don't have any grief with the Clinton plan. It's not much of a plan, but it's $400 billion better than the Dole plan.

MS. WARNER: All right. Mr. Barro, respond to the critique that was just offered there by Mr. Krugman in terms of how the Dole tax cut will be paid for.

MR. BARRO: The Dole plan recognizes that in order to be effective you have to have not only tax cuts, you have to have spending cuts. And I think the general philosophy is you have to have the tax cuts basically to keep the revenue from the federal government to put on the pressure to cut the expenditures. I think the opponents of the plan like it not--dislike the plan not because they think it's going to fail and lead to budget deficits, but, rather, because they think it's going to succeed and force a cut in the federal government, force a cut in particular in various types of federal social expenditures which a lot of opponents really don't want to happen.

MS. WARNER: And what do you see in the Dole plan specifically in the way of cuts? Is it a realistic plan to pay for it?

MR. BARRO: The current plan is not so specific in terms of where the cuts are going to come. I think there are many places in the federal budget where one could have desirable cuts, and I wrote an article sometime ago outlining $100 billion in cuts that I thought would be perfectly fine. I think, in fact, it's going to put some pressure on entitlement programs, including Medicare, and I think you'd find that if you had the tax cut, you'd see spending cuts in a lot of different areas.

MS. WARNER: Paul Krugman, what about that argument, just put in the tax cut, the spending cuts will follow?

MR. KRUGMAN: Uh, that didn't happen in the 80's when Reagan put in tax cuts and the result was $4 trillion of debt that we didn't have before. You know, I think Dole deserves to be judged on the program he's actually presenting, not on what we might hope he might do. And his actual program contains new specific spending cuts. I can't find anything in it. It's--it's, you know, it's all counting, counting chickens-counting your chickens not only before they've hatched but before you even have a hen to lay the eggs. It's an amazing thing that he's presenting.

MS. WARNER: Robert Barro, in presenting this tax cut plan, both Sen. Dole and many of his aides said no Medicare, no Medicaid, no Social Security cuts at all to pay for it, and then during the convention he also took defense off the table. Could you pay for a tax cut of that magnitude if you took those items off the table?

MR. BARRO: If you ask me for a prediction, I would say if you had a federal tax cut of this sort, that it would, in fact, force some restraint on entitlement programs, particularly Medicare, Medicaid. I think Social Security is a different situation. I think you want to think about moving to a more privatized system in the long run of the sort that's been very successful in Chile. That won't really lead to expenditure cuts in the short run, but in the long run, it'll create a much more productive environment.

MS. WARNER: But are you saying you don't think it's possible to pay for a tax cut of that size unless you go into at least Medicare and Medicaid?

MR. BARRO: I think it's possible to do it. I think if you're asking me to predict, I would predict that pressure on Medicare and Medicaid would be part of what would occur. I also think the reading about the 1980's was really not correct. I think if we hadn't had the tax cuts in the 1980's, in fact, we would have had a much bigger growth in federal spending than we actually saw. So I think the tax cuts in the 80's were successful to some degree in holding down federal expenditure. I think we got into trouble only in 1990 when George Bush moved toward a different regime, and I think the proposal here is to move back to the Reagan 1980's, and I think that's basically a good idea.

MS. WARNER: Paul Krugman, let me ask you about the other arguments that the Dole campaign makes on behalf of this tax cut. They say, and he says that Americans are just being taxed at a higher rate now than at any time in history, and that that is impeding economic growth, that you need tax cuts for growth. What about that argument?

MR. KRUGMAN: Well, let's not try to argue. The statement about how high taxes are is not really true. And America is actually the lowest taxed country in the industrial world, but the main point is, look, somebody comes along and offers you a miracle cure for arthritis, and you say, look, I've read the medical research on this, and it doesn't actually help arthritis, and it has undesirable side effects, and his response is, what's wrong with you, don't you understand how bad arthritis is? To say that we don't have the economic growth we'd like and, therefore, we have to go for this wildly irresponsible plan just doesn't make sense. It's only going to aggravate the problems we've got.

MS. WARNER: So you don't think it would help growth at all?

MR. KRUGMAN: If you really were prepared to find the spending cuts to pay for these lower taxes, then lower taxes would have some effect, probably a small one, but some effect in accelerating the rate of economic growth. But if you have a huge tax cut which is really not paid for, then what you're talking about is something that's going to lead to a large increase in the deficit and that drag on the economy from the deficit is going to exceed any favorable impact from this plan. So now this is--this is, in fact, an anti-growth plan.

MS. WARNER: Mr. Barro, where are you--where do you come down on this growth question?

MR. BARRO: I agree with some of what Paul said there. I don't think you'll have a long run benefit for the economy unless the tax cuts are accompanied by spending cuts. I think as a political argument,the tax cutting way at the outset is the way to get the spending cuts. And I think if you had the tax and spending cuts together, you will get a boost to economic growth. That will be strengthened if in addition to having tax cuts, you have a shift to a more efficient tax system, strictly a system that doesn't penalize saving, as our current system does, and a system that has lower marginal tax rates. I've estimated that the overall effect of the Dole plan, including not only the tax part but some of the other reforms, could conceivably raise the long-term growth rate by about + percentage point a year, which is a pretty significant effect.

MS. WARNER: Do you agree with that, Mr. Krugman?

MR. KRUGMAN: That seems to me to be a very, very high estimate, but the--the important point is that's not the plan that's been announced. The title of the Dole campaign book is, is "Trusting in People." Now, what Bob Barro is saying, which is a much better plan, is not the plan they're selling. So if that was the truth, what they're actually doing is they're selling the American people a plan which is tax cuts with no spending cuts that are actually going to hurt anybody. And then only after they're in office, are they actually going to go out there and, and really tell us the truth about how they're going to pay for I. I don't think that's what they're even planning to do, but if it is, what they're planning to do, they certainly don't trust in people.

MS. WARNER: Let's turn for a minute to the Clinton plan, which is much smaller, but Mr. Krugman, do you think that as the President just said in this tape we heard that if you give targeted tax cuts to encourage, she said, child bearing or education or home buying, does it have that effect?

MR. KRUGMAN: No, not really. You know, I'm not going to--I'm not going to try and defend the Clinton program.

MS. WARNER: Now we're not asking you to. I'm really asking for your analysis.

MR. KRUGMAN: No. The reality is that what the Clinton program is doing is throwing a few goodies here and a few goodies there. There are a few things, maybe education support, that might actually do a bit to increase the rate of growth, but basically it's a program of trying to stay on track for a balanced budget by the year 2002, uh, while winning as many political points as possible for as little money as possible. It's not great. If I could have a bumper sticker, it would say Clinton-Gore in '96, things could be worse.

MS. WARNER: Mr. Barro, your view of the Clinton plan.

MR. BARRO: Well, on the child credit side, I think both political parties are equally bad. That's not the kind of tax cut that's going to spur our economic growth.

MS. WARNER: This is the $500 per child credit which both are offering.

MR. BARRO: Right. That's not the way to get productivity increased. Some of the other proposals of Clinton are okay, but they're not very important, and they're sort of too targeted rather than being across-the-board, basic structural changes. The reason I like the Dole plan is I think it has some hope of being a more effective pro-growth plan, whereas I see none of that on the other side.

MS. WARNER: But the President isn't really saying this will stimulate growth. He is saying that the government should use the tax code to make it easier for families to have children or send them to college. What about that argument? Does it work? Does it make it easier for families?

MR. BARRO: I think it's a good idea. It's part of an overall program to change the treatment of college tuition expenditures. There's some rationale for treating that in the same way you might want to treat physical investment.

MR. KRUGMAN: I think the public has to eventually grow up and realize that taxpayers and recipients of government benefits are basically the same people, and if you try to give something to everybody, that means you're going to take something from everybody. This stuff is not really doing anybody much, much good.

MS. WARNER: Before we go, I want to ask you both, you've both been around these public policy and political arguments about taxes for a long time. Why do you think this year if all the polls are correct the public for the most part doesn't believe in these tax cuts, Mr. Krugman? Doesn't--in other words, doesn't believe they're really going to happen.

MR. KRUGMAN: I don't really think that the public was ever all that sold on tax cuts. I think the public voted for Ronald Reagan the first time because he was a more appealing character than his opponent. They voted for him the second time because the economy was experiencing a strong recovery, which wasn't Reagan's doing, but happened on his watch. And I think the public is going to vote for Bill Clinton in a big way because the economy is in the middle of a strong recovery, which isn't Bill Clinton's doing but happened to happen on his watch, and that's--that's I think end of story.

MS. WARNER: Mr. Barro.

MR. BARRO: I think Reagan pretty much delivered on his promises overall. I think George Bush caused a lot of damage by not following through on his tax cut promise and in particular by raising taxes in 1990. I think that led to a lot of skepticism. I think President Clinton has contributed to that by not following through on his promise of a middle class tax cut. I think that's a lot of the reason why people are skeptical about Dole's promises, but I agree that the key thing is that the economy has been doing quite well. It's one of the stronger overall economic performances in the post war period, something like fourth or fifth if you do some of the conventional rankings of presidential terms. I think people are basically happy about the economy. I think that's the key matte.

MS. WARNER: Rather than tax cuts. Well, thank you both very much. Thanks for being with us.

MR. KRUGMAN: Thanks.

MR. BARRO: Thanks. FINALLY - DOCTOR'S OPINION

MR. LEHRER: Finally tonight, a conversation with one of Russian President Yeltsin's doctors and to Charlayne Hunter-Gault.

MS. HUNTER-GAULT: In a six-minute radio address taped at the Kremlin hospital where Boris Yeltsin is awaiting heart bypass surgery, the ailing president said today he was still a working president and there was no need to switch the portraits at the Kremlin yet. The Russian people haven't seen much of Yeltsin since he was sworn in as the first democratically elected president of Russia in August. Amid the rampant speculation about their leader's visibly weak health, the Kremlin first played down the seriousness of Yeltsin's medical condition. That all changed in late September, when his doctors' revealed that the 65-year-old leader has suffered a third heart attack just before the presidential election in July and needed a heart bypass operation. What was not clear was when Yeltsin would be healthy enough to undergo the surgery.

RENAT AKCHURIN, Yeltsin's Surgeon: About 98 percent of success if you are dealing with uncomplicated generally healthy patient. If you have some problems with other systems and organs, the percentage of success might decrease.

MS. HUNTER-GAULT: To help determine when Yeltsin would be ready for by-pass surgery, the team of doctors turned to pioneering heart surgeon Dr. Michael DeBakey. Last week, DeBakey traveled to Russia to examine Yeltsin and meet with his team specialists. After examining the Russian president, DeBakey told Russian journalists that Yeltsin should not be considered a risky candidate for surgery, but he said Yeltsin would need to remain hospitalized for six more weeks before he could undergo the bypass.

MS. HUNTER-GAULT: Joining us now from New York is Dr. Michael DeBakey, head of the DeBakey Heart Center at Baylor Methodist Hospital in Houston. Dr. DeBakey, thank you for joining us. Tell us briefly what is the state of Boris Yeltsin's health.

DR. MICHAEL DE BAKEY, Baylor Methodist Hospital: Well, in general, his general health is reasonably good. It's simply that he has a very sick heart. Now, there are a few problems with his general health that took place relatively recently. One is rather severe anemia, probably from blood loss, at least the best I could make out of it of the data, it looked to me like it was blood loss, probably from the gastrointestinal track.

MS. HUNTER-GAULT: Does that have anything to do with his heart?

DR. DE BAKEY: No.

MS. HUNTER-GAULT: Or is that a separate problem?

DR. DE BAKEY: That's a separate problem.

MS. HUNTER-GAULT: Mm-hmm.

DR. DE BAKEY: And also there is some evidence of some hypothyroidism, very mild, however, and easily correctable.

MS. HUNTER-GAULT: Well, the doctor just on the tape said that there's a 98 percent success rate for this kind of operation--we're going to talk about that in a minute--if the surgery is uncomplicated by other things. But if there are other issues present, it gets--the percentage gets reduced, how reduced is Yeltsin's success potential now?

DR. DE BAKEY: Well, if the operation had to be done now, uh, there's no question that the success rate wouldn't be as high as 98 percent, probably closer to 90 percent. But I think that with a little more time and the correction of some of these other problems that can, I think, be easily corrected, and given a little more time during which I think the heart will improve, and that's based on the evidence that within the last month it has improved, then I think the risk can, can be very close to the 2 percent risk rate that has previously been stated.

MS. HUNTER-GAULT: Is that why you recommended--

DR. DE BAKEY: Yes.

MS. HUNTER-GAULT: --six weeks before he could undergo the bypass?

DR. DE BAKEY: Yes. That's exactly why I recommended it. This would provide us with a little window of, of time during which he could be put into a little better condition for the operation, and thus reduce the risk, and increase the chances of success.

MS. HUNTER-GAULT: Well, he said today--we just heard that on the tape too--he was a working president. How much work is he able to do right now, and is that a good thing, or a bad thing?

DR. DE BAKEY: No. I think it's a good thing psychologically. And the kind of work that he's going to do, um, is really reasonably sedentary. There will be people bringing him material to review and discuss, uh, decisions that he can make, and, uh, I, I told him frankly that I'd like for him to stay in the hospital, rather than go to the Kremlin, which is what he wanted to do. I strongly suggested he stay where he is in the hospital and that he could, he could devote several hours of work a day.

MS. HUNTER-GAULT: And you saw him doing this?

DR. DE BAKEY: Yes, yes. And there's no reason why he can't do that.

MS. HUNTER-GAULT: Tell us briefly about this bypass surgery. What kind is he going to have and why?

DR. DE BAKEY: Well, the reason for the bypass surgery is the obstruction to the coronary arteries that supply blood to the heart. And the type of obstruction that he has is, I would say, a fairly common form of obstruction for which coronary bypass surgery is applied. He has blockages in the right coronary artery, and in three branches of the left, so that he's probably going to need three or four bypasses.

MS. HUNTER-GAULT: And how risky is that for him?

DR. DE BAKEY: Well, I think--I think with the correction of these problems that I've already indicated and with a little time, I think the risk is going to be reasonably satisfactory and very acceptable.

MS. HUNTER-GAULT: There were also reports that he'd had a stroke and that a drinking problem had caused some of these complications.

DR. DE BAKEY: Well, I--

MS. HUNTER-GAULT: Is any of that true?

DR. DE BAKEY: I know I'd heard those reports, and I must tell you that before seeing him, I, I thought I was going to see a very sick man. The truth of the matter is that when I saw him, he obviously was not a sick man, he looked reasonably good. He was alert, had a good attitude, even joked a little bit, uh, was a little bit restless by, as he said, being cooped up like he was.

MS. HUNTER-GAULT: But what about the pictures that we saw on television of him looking, appearing to be barely able to stand up?

DR. DE BAKEY: Yes. I saw those pictures myself. That's what I'm saying. That's why I'm saying I was surprised when I walked in to see this man who certainly didn't look like a sick man at all.

MS. HUNTER-GAULT: Mm-hmm.

DR. DE BAKEY: I don't know what happened at that time, to be perfectly honest with you. So it's hard for me to explain that picture in contrast to the picture that I saw. And I did a full, thorough physical examination on him, and I can tell you that the examination, the physical examination really, uh, provided normal findings.

MS. HUNTER-GAULT: Why

DR. DE BAKEY: He never had a stroke.

MS. HUNTER-GAULT: Mm-hmm.

DR. DE BAKEY: That, that I can be sure of, and he had no liver, uh, problems because his liver function studies are perfectly normal. His kidney function studies were perfectly normal-- pulmonary functions studies were perfectly normal. And the only thing I found really was the fact that he had a sick heart and a little lower than normal thyroid function, and that's about all.

MS. HUNTER-GAULT: Why exactly were you called in? I mean, what's your role going to be?

DR. DE BAKEY: Well, the medical team that, that's taking care of him, and I'd like just to comment briefly and say that I was very impressed with this medical team, with the resources they have, the facilities they're using, really are very modern, and it's a very able group of cardiologists too.

MS. HUNTER-GAULT: Even though they haven't done that many bypasses of this type?

DR. DE BAKEY: Well, I'm talking about the cardiologists now. Of course, cardiologists are not surgeons. Now, the surgeon who is scheduled to do the operation I know very well because he trained with me for two years about twelve years ago, and I've seen him operate. I've seen the institution in which he operates, and I can tell you that he, he does very, very good work.

MS. HUNTER-GAULT: And will you be working with him? Will you return for the surgery?

DR. DE BAKEY: I will be there for the surgery. I will not--I don't plan to participate in the operation, itself, because he has a good team, and I don't want to interfere with that team. You know, you have to have good teamwork in an operation of this time, but I'll be there, yes.

MS. HUNTER-GAULT: And briefly, how soon do you think after the surgery will the president be able to resume his normal duties, just very briefly?

DR. DE BAKEY: Yes. Well, he asked me that, and I told him between six weeks and two months he could do most anything he wanted to do.

MS. HUNTER-GAULT: He asked you that? Is he a good patient?

DR. DE BAKEY: Yes. I must tell you that I was very impressed with his attitude too. In fact, he said to me, said, I'm ready for the operation now, but I'll, I'll do what you tell me to do--

MS. HUNTER-GAULT: All right.

DR. DE BAKEY: --but let's get it done.

MS. HUNTER-GAULT: Well, Dr. DeBakey, thank you so much for joining us.

DR. DE BAKEY: A pleasure. RECAP

MR. LEHRER: Again, the major stories of this Thursday, there were some protests but relative calm in the Middle East the day after the emergency peace summit in Washington. King Hussein of Jordan said on the NewsHour the summit may have prevented a major collapse of the peace process. And Joint Chiefs Chairman Shalikashvili said U.S. soldiers will remain in Bosnia until mid March, instead of a complete pullout by December 20th. We'll see you on-line and again here tomorrow evening with Shields & Gigot, among other things. I'm Jim Lehrer. Thank you and good night.