The NewsHour with Jim Lehrer

MR. LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, the China-Taiwan problem as seen by State Department official Winston Lord; Wall Street rebounds after its dark Friday, an analyst explains; tomorrow's Super Tuesday vote, three reporters offer a preview; and American exceptionalism, David Gergen talks with political scientists Seymour Martin Lipset. It all follows our summary of the news this Monday.NEWS SUMMARY

MR. LEHRER: The United States sent more ships to the waters off Taiwan today. Defense Sec. Perry said the aircraft carrier, the U.S.S. Nimitz, a submarine, and six support ships will be in place within the next two weeks. Another carrier, the U.S.S. Independence, and four other ships are already there. They are being deployed in response to Chinese war games and missile exercises in the area. The People's Republic of China considers Taiwan a rebel province and has threatened to invade if the island declares independence. Sec. Perry said he does not believe China will attack Taiwan. He said the U.S. measures are precautionary. We'll have more on this story right after the News Summary. In economic news today, new home sales jumped 4.2 percent in January. The Commerce Department reported it was the strongest posting in five months, despite recent bad weather in the Northeast. And the stock market rebounded from its loss of 170 points last Friday. At the close of trading today, the Dow Jones Industrial Average was up more than 110 points. We'll have more on this story later in the program. Four more General Motors plants closed today. They did so because of a strike at two brake plants in Ohio that supply parts to nearly all of GM's 29 auto assembly facilities. Up to 14 of them have been affected by the strike so far. Forty-nine thousand GM workers have been idle. In the Republican Presidential race today, the attention was on tomorrow, Super Tuesday, the biggest day of the primary season. Seven states will choose a total of 362 delegates to the Republican National Convention. Bob Dole was in Florida this morning, Texas this afternoon. Pat Buchanan went to Oklahoma. Steve Forbes campaigned in Florida. Dole has 392 of the 996 delegates needed to clinch the nomination. He said today he could virtually lock it up if he swept the Super Tuesday primaries. We'll have more on Super Tuesday later in the program. President Clinton today toured a superfund clean-up site in New Jersey. He used the visit to announce a plant to grant $2 billion in tax incentives. They would go to companies that clean up areas called "brown fields," lightly polluted industrial waste sites located in or near poor communities. The President spoke at Fairly Dickinson University in Hackensack, New Jersey.

PRESIDENT CLINTON: Today I'm proposing the next step in revitalizing these communities, a brown fields tax initiative for those who clean up and redevelop contaminated, abandoned properties, a $2 billion tax incentive targeted specifically to areas where the poverty rate is 20 percent or higher, to make it possible for brown field investors to deduct their clean-up expenses immediately and cut the cost for this type of investment in half. That will bring jobs to the places that have missed out on this recovery.

MR. LEHRER: The President urged Republicans to make the effort bipartisan. And that's it for the News Summary tonight. Now it's on to a China-Taiwan update, the WallStreet rebound, Super Tuesday, and a David Gergen dialogue. UPDATE - WAR GAMES

MR. LEHRER: The China-Taiwan problem is our lead tonight. Charlayne Hunter-Gault has the story.

MS. HUNTER-GAULT: Tension between Mainland China and Taiwan has been simmering for weeks. It went up a few more notches over the weekend. Tomorrow, China begins eight days of military exercises in the Taiwan Strait. The United States has a Navy cruiser South of Taiwan and an aircraft carrier group North of the island, and more ships are on the way. We start with a report from Taiwan from Ian Williams of Independent Television News.

IAN WILLIAMS, ITN: The United States has rarely deployed this much naval fire power in the region since the Vietnam War. The aircraft carrier Independence and her battle fleet now steaming towards Taiwan, will be joined by the nuclear-powered Nimitz and five of or six of her support ships. Their fire power is formidable. Elsewhere in Taipei, where the crisis is dominating the Presidential election campaign, officials stressing that the role of the fleet is to watch not intervene, though they welcome it as a stabilizing factor. The markets didn't see it that way, though. Across the region, they tumbled. Green represents a sell. Red is a buy. Taiwan stocks fell by 2 percent, in spite of heavy government intervention, while neighboring Hong Kong, influenced also by a fall on Wall Street, finished 7 percent down.

ANNIE HAI, Grand Cathay Securities: People feel that it looks like war is imminent with the fleet present because it's, umm, interpreted, at least by close friends of mine, as a negative factor to the security, rather than a positive factor.

MR. WILLIAMS: Taipei city officials trying to reassure a nervous population are reopening massive air raid shelters and an emergency control center built inside the hills at a secret location outside the city. They explained to us how the bunker has fallen into despair over the past decade, while relations with China have been improving. They're now moving rapidly to re-equip both the bunker and air raid shelters which together, they estimate, can hold up to 4 million people. For the past 20 years, this bunker was the responsibility of Lin Chu Rong and his family, who are somewhat taken aback by the sudden activity.

LIN CHU RONG, Caretaker: [speaking through interpreter] The best thing would be if we didn't have to use it at all, isn't that right?

MR. WILLIAMS: The Chinese war games beginning tomorrow will be far bigger than last year, covering 17,000 square kilometers and virtually closing the Southern mouth of the Taiwan Strait. Taipei insists they'll show restraint.

ADM. DUN HWA GO, Presidential Defense Adviser: We are not trying to provoke anything, so this time we have decided to wait until they start first, because we do not want to be blamed on the starting of the situation.

MR. WILLIAMS: It was reported today that Hong Kong shipping companies are telling their vessels to keep clear of Taiwan during the eight days of exercises, while airlines are preparing to reroute their flights, a move that will hit services on the busy Hong Kong route. New opinion polls show that China's actions are increasing support for independence, precisely what they claim to be trying to prevent, while officials here believe China's aim now is to force the winner of the Presidential election to accept a firm timetable for unity, something that may be politically impossible to accept. The pressure will be racked up tomorrow when China begins its latest war games, this time using live ammunition. Officials here believe they'll take the form of a mock attack on Taiwan and will involve warships, fighter aircraft, and 150,000 troops. Those same officials now concede they might have been wrong in their early description of the exercises as merely show. NEWSMAKER

MS. HUNTER-GAULT: And now to the Clinton administration's point man on the China-Taiwan crisis, Assistant Secretary of State for East Asia and the Pacific, Winston Lord. Mr. Secretary, thank for joining us.

WINSTON LORD, Assistant Secretary of State: Nice to be here.

MS. HUNTER-GAULT: The largest show of U.S. force in the Taiwan Strait since Vietnam, why?

SEC. LORD: It's there as a precautionary measure. It's there to make sure there's no miscalculation in Beijing. It's there to reassure our friends in the area that we have a big stake in the stability and peace of that region. So it is there to make sure this current dangerous situation does not escalate further. Now, I'd like to make a couple of other quick points. It is a serious situation. We have conveyed that in unmistakable terms to China, including in recent days at the highest levels that what they're doing is reckless and provocative and designed toward intimidation of Taiwan, particularly after the election. We've also not only in our public and private statements indicated our concerns with the movement of these military assets. At the same time, we are not on the brink of war. The whole purpose of the movement of these assets is to make sure there is no miscalculation, to underline our interest, and to try to get this situation under control, so we're urging Beijing, as well as Taiwan, but, of course, in recent days particularly Beijing, that it's time to reduce tensions and get back to a direct dialogue. So we don't take this matter with any casualness. Obviously, you've seen our movements, but I don't want our listeners to think that we should exaggerate where we are at this point.

MS. HUNTER-GAULT: But, of course, the escalation is bigger than it's been before. I mean, there was a presence there last week--

SEC. LORD: Right.

MS. HUNTER-GAULT: --when they were firing off the missile-- missiles.

SEC. LORD: That's correct. The Chinese have continued provocative actions, and we've made very clear that we think this could have grave consequences if it escalated into military force. But the whole purpose of our movements, in addition to being precautionary and reassuring, is to make sure there is no miscalculation in Beijing.

MS. HUNTER-GAULT: Well, are they listening? I mean, there was a high-level Chinese official here this weekend--

SEC. LORD: Right.

MS. HUNTER-GAULT: --who met with the National Security Adviser, Anthony Lake. Are they listening, any indication?

SEC. LORD: Well, so far, they have not adjusted their policies. We haven't seen any more firing of missiles since Friday. I don't know whether that's significant or not, but they are planning to go ahead with these live ammunition exercises. We'll have to see. I think we would like to see tensions reduced immediately. I want to make that clear. I think we're more apt to see Chinese restraint perhaps after the election in Taiwan than before it, but we want to see it right away.

MS. HUNTER-GAULT: But today, Defense Secretary Perry said that he had already received some indication--or some reaction from China to the U.S. stance. I mean, what was he referring to?

SEC. LORD: I didn't see his exact quotes. The Chinese officials in private and publicly have reaffirmed that they still are striving to resolve this issue peacefully, but they have not ruled out the use of force. They have not, however, given us any guarantees yet on reducing their provocative actions, but I think we have made it very clear to them that the whole premise of our China policy and our Taiwan policy is based on a peaceful resolution of this issue, so we'd like to think that the message will sink in, but we'll have to wait and see.

MS. HUNTER-GAULT: Is the American build-up going to stop here, I mean, the troop build-up, the ships in the Straits, or does it stop there?

SEC. LORD: Well, I don't want to comment on where we go from here, and I would, in any event, leave that to the Pentagon.

MS. HUNTER-GAULT: But how would the U.S. respond if, if--you say that you were there to make sure that China didn't have a miscalculation--

SEC. LORD: Right.

MS. HUNTER-GAULT: --but what kind of miscalculation can they have, and then how would the U.S. respond?

SEC. LORD: Well, if there was any doubt in Beijing's eyes that we didn't have great interest in the area, and there shouldn't be any doubt, or that we wouldn't fulfill our obligations under the Taiwan Relations Act, in close consultations with the Congress, we would like to think that our actions and our rhetoric have removed those doubts. We cannot spell out in advance precisely what we would do. That would depend on the circumstances, how a conflict was provoked. We would want to consult with the Congress. Indeed, when the Taiwan Relations Act was passed in 1979, the Congress explicitly said at the time that they wanted any administration to consult with this before taking specific action. So we think it's inappropriate to try to spell these out in advance. What we have done is relay to the Chinese that there would be grave consequences if they resorted to force. But I'd like to add that we have no clear evidence now and Taiwan--and we are in very close tough with Taiwan--agrees with us that China does not intend to launch military actions. What they're doing is reckless and could lead to miscalculation or accidents, but so far, it is still psychological warfare directed at Taiwan's voters and Taiwan's leaders.

MS. HUNTER-GAULT: Who believe that there--as you heard in the ITN piece--that war--some of whom believe that war is imminent.

SEC. LORD: Again, I don't want to underestimate the seriousness of the situation. We wouldn't be moving ships if we didn't think it was serious, but I don't think we should exaggerate. We're not on the brink of war. The Chinese do not have the capability for all out attacks certainly. We see no intention of even more modest military moves, but in order to reduce even that possibility, we're taking these prudent, cautionary actions.

MS. HUNTER-GAULT: I understand your, your prudence and your care in the words that you've chosen, but let's just say for the sake of argument that there is some miscalculation or some accident-- because we had someone on the program last week who talked about China's missile firings before this one, and one of them went awry- -

SEC. LORD: Sure.

MS. HUNTER-GAULT: --and blue up. I mean, is the U.S. prepared to engage or fight a war with China, or what? What would be the extent of what we could do?

SEC. LORD: I have to go back to the language of the Taiwan Relations Act, and what we've been saying recently, grave consequences, uh, and I won't be more specific in that for reasons I mentioned, but there's no ambiguity in the minds of Beijing that we would react strongly, and I think our friends in the region are reassured by what we're doing. But I want to stress that I think China understands that they would suffer great damage if they resorted to force. And I want to repeat, there's no evidence they plan to do that. In fact, they told us that they still hope for peaceful resolution. The impact on their economy, on their relationship with us, Japan, and the whole region, the impact on Hong Kong, which returns to China in 500 days, would be devastating, so we don't believe China has the motive or the incentive to resort to force but we want to make sure there's no calculation.

MS. HUNTER-GAULT: Well, what is the motive for what they're doing now? I mean, you heard Ian Williams' analysis in the piece. How do you read what they're up to?

SEC. LORD: Well, they're trying to attract perhaps the vote in the election, but I think it's more trying to have an impact on Mr. Lee or whoever is elected, and I think won't comment on that, who will be, but to make sure that whoever is elected pursues what they consider a one China policy and doesn't flirt with independence, so that you want to have that kind of impact. I think, frankly, that they're probably increasing Mr. Lee's votes. I'd like to add one other point, however. In addition to stressing to the Chinese the serious consequences in the Straits, we've also made it clear that it complicates our bilateral relations, obviously, and can see the congressional and domestic, as well as the administration's reaction to what they're doing. But the fact is--and we've conveyed this message as well to Beijing--we still would like to pursue a policy of engagement. It's in both countries' long-term security, political, and economic interests to do that. We're determined to do that, but the Chinese have got to show restraint and reasonableness on this and some other issues.

MS. HUNTER-GAULT: You were instrumental in drafting what they call the Shanghai Communique in 1972 that recognized one China. How legitimate is the Chinese concern that Taiwan is not going along with one China, that they really do want independence?

SEC. LORD: Well, again, I think I'll let Taiwan leaders speak for themselves, but they have said that--and Mr. Lee, in particular, has said that he is not for independence. He's for eventual reunification. Beijing professes not to believe him. I think the important thing is get these tensions down and resume direct dialogue between Taiwan and Beijing. We're urging both sides to do that. We're urging both sides to refrain from any provocative actions. We're urging both sides to resolve this issue peacefully. We will not get in the middle in terms of the terms of the resolution or what the future relationship should be. That is up to Taiwan and Beijing. However, we do insist the process be peaceful.

MS. HUNTER-GAULT: You don't have any concerns that the U.S. positioning itself that way and talking to China that way gives the impression that the U.S. is tilting toward the Taiwan side?

SEC. LORD: No. We've also made clear to Taiwan that we don't think it should take any actions that are provocative to give Beijing any pretext to escalate tensions. Obviously, our tension in recent days has been with Beijing, but we've also made clear to Taiwan we think it's in Taiwan's interest to resume dialogue with Beijing, and we hope both sides will move in this direction, at least after the election.

MS. HUNTER-GAULT: The ITN piece suggested that Beijing may have overplayed its hand and forced the pro-independence people into a tougher, stronger attitude about independence. What's your reading of that, or do you have a sense of that?

SEC. LORD: That's possible. It's still a very fluid situation. As I said earlier, I think there's a sense that it might strengthen Mr. Lee's hand, but he has said he is not for independence. There are also some pro-unification forces running for office. They're being hurt by Beijing's action. The impact on the pro-independence vote I can't judge. Some of those may rally behind Lee to strengthen his mandate, even though Lee is not for independence.

MS. HUNTER-GAULT: And just briefly, how is all this going to affect U.S.-China relations? We've had other problems recently.

SEC. LORD: That's right. Well, I want to stress it remains despite this current tension in our interest to have a constructive relationship with China. We've had intensive talks again recently and this process will continue at high levels in coming weeks and months to try to maintain a productive relationship. We have problems not only in Taiwan but trade, human rights, and non- proliferation, but we cooperate in various areas like Korea, Cambodia, the environment, fighting narcotics traffic, et cetera, and, therefore, our mutual challenge is to navigate the various difficulties we have, particularly over the next year, to maintain a constructive relationship for the long run. But what they're doing in the Strait is complicating this issue, and we've made that very clear.

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

SEC. LORD: Thank you.

MR. LEHRER: Still to come on the NewsHour tonight, the stock market story, a Super Tuesday preview, and a David Gergen dialogue. FOCUS - UPS & DOWNS

MR. LEHRER: Now, why the stock market is doing what it's doing, and to our economics correspondent, Paul Solman of WGBH-Boston.

MR. SOLMAN: Friday, down 171 points, today, up 110. The end of one week and worries of a crash, the beginning of the next week, and it seems as if the bull market charges on. What's going on and what's the connection between Wall Street and Main Street? Well, for these and other questions, we turn to David Hale, chief economist of Kemper Financial Companies, an investment and insurance group. And, Mr. Hale, welcome. So it looks to most of us or many of us like wild swings or huge swings, big swings at least. Why the swings?

DAVID HALE, Kemper Financial Companies: Well, there's elements of both schizophrenia and hypochondria in the market right now. We had a month ago many investors believing the U.S. economy was heading into a period of recession or very slow growth, which would ensure that the Federal Fund's rate, the key money market yield in our financial markets, would fall from 5 1/2 percent down to maybe 4 1/2 or even 4 percent.

MR. SOLMAN: That is--to see if I'm with you--the Federal Reserve would then lower interest rates.

MR. HALE: Yes.

MR. SOLMAN: Because of a slow economy?

MR. HALE: That's right, to revive the economy.

MR. SOLMAN: Right. Okay.

MR. HALE: The data over the last month has been very mixed. We had clear evidence of weakness in the industrial sector, but we also had evidence that retail sales was were beginning to recover after a poor Christmas and a very depressed January because of severe weather and also the government shutdown. But yesterday's numbers suggested the economy might be entering a boom. We had employment growth twice as high.

MR. SOLMAN: Not yesterday. You mean on Friday.

MR. HALE: On Friday.

MR. SOLMAN: Right. Okay.

MR. HALE: Twice as high as most economists expected. Now there's explanations for this. Because of the government shutdown, we've had distortions in the survey week; in addition because of the government shutdown and the severe winter weather in January, a lot of business was delayed, and the major source of employment growth last month was temporary help agencies. There were gains in construction, gains in manufacturing, but temporary help agencies boomed.

MR. SOLMAN: So that means it wasn't amazing as it might have seemed.

MR. HALE: I think with the advantage of hindsight after the weekend, the market reflected and decided these numbers were so extreme that we should be discounted somewhat.

MR. SOLMAN: Now, so but do you mean that interest rates are the sole determinant or the major determinant of these swings up and down in the stock market?

MR. HALE: No. The market's a function of earnings growth and interest rates, and what we've had over the last year has been reasonably good growth in corporate profits and modest gradual Fed easing. The market might have had a correction for a few weeks and still rallied later in the Spring because the market began to focus on profits again, but in recent weeks, we've had bond yields in the United States rise by almost 100 basis points.

MR. SOLMAN: That means that it costs more money to borrow--

MR. HALE: That's correct. The interest rate on long-term government bonds got down to about 5 3/4 percent in early January, hoping for a deficit reduction breakthrough, a slow economy, lower foreign rates, but over the course of January, February, those hopes were disappointed, and then last week, we had a further shattering of those hopes in the markets because of the strong employment number.

MR. SOLMAN: Is this how the market always moves? I mean, it's either earnings or it's interest rates, is that it?

MR. HALE: Well, those are the two primary determinants of stock market value over time, but from day to day, week to week, you can have policy events. This news in China tonight could be threatening to the market tomorrow, depending on what happens, concern about the primaries and what it might do to trade policy, but over time, the market historically is heavy influenced by the interaction of profit and interest rates.

MR. SOLMAN: Okay. Now, here's a question. Do swings like this matter, or is this something that the news media in our infinite wisdom blow out of proportion time and again?

MR. HALE: Well, it matters in the sense that one in three Americans now owns a mutual fund. We now--

MR. SOLMAN: Owns a share--

MR. HALE: Owns a share of stock in a mutual fund. Thirty million Americans own equity directly, and the value of the stock market has a big influence on the cost of capital from business. So if this turns into a trend, where the market becomes strong or weak over a period of several days or several weeks, it would influence the economy. But one- and two-day volatility, we've been accustomed to that.

MR. SOLMAN: How does it influence the economy, I mean, just people feel richer, I get that, because if lots of people are invested--

MR. HALE: If we have a sustained movement in the market over a few months, with prices rising or falling by say 10 or 20 percent, that would affect consumer perceptions of wealth. It would affect the business cost of capital.

MR. SOLMAN: So what would consumer--then people would spend more money, you mean?

MR. HALE: Well, last year, even though we had sluggish growth in employment and income, we did have benefits for the economy from rising share prices. Some consumers spent more than they earned because they had stock market gains.

MR. SOLMAN: But does it matter if it's 170 up and 110 down? I mean--

MR. HALE: Day-to-day volatility has no significant impact on the economy. This would have mattered on Friday. If it would have been confirmed by further weakness on Monday, then you would have had discussion about maybe we're in a more protracted consolidation.

MR. SOLMAN: One thing you hear a lot of talk about is the disconnect between the economy and the market, i.e., we hear good news in the economy, jobs are created, then the market goes down. AT&T lays people off, AT&T's stock goes up. What's going on? Is there a disconnect, and, if so, is that the first time this has happened?

MR. HALE: No, no, there's very much a connect. But what's different are the time lags involved. Right now, the stock market is focusing on where the U.S. economy will be in six months or nine months. And basically, the market a month ago was discounting further monetary easing to revive the economy later this year and certainly in 1997. Now, suddenly the market has to confront the risk that interest rates are going to stall or might even go back up again at some point. That changes the timing of things. Day to day we have swings in sentiment in response to many factors, election news, foreign policy news, a surprise economic number, but over time, the market does correlate with the economy and does influence the economy, but day to day, we can all have mood swings, and the financial markets aren't any different because they're a reflection of human behavior.

MR. SOLMAN: So the disconnect is a short-term phenomenon?

MR. HALE: Yes.

MR. SOLMAN: But overall, you say the stock market goes up, that means the economy is doing well.

MR. HALE: That's right.

MR. SOLMAN: All else equal.

MR. HALE: Over a period of six months to a year, there is a very strong correlation between the stock market and the economy, with the only caveat being the stock market is always looking forward six months. So the strength of the stock market is telling us a lot in the last few months about the economic outlook for later this year.

MR. SOLMAN: Well, we'll see if you're right. Thank you very much for joining us.

MR. HALE: Okay. FOCUS - CAMPAIGN '96 - HEADING SOUTH

MR. LEHRER: Now, a Super Tuesday preview. Tomorrow, 362 delegates of the Republican National Convention will be chosen in seven states, including Texas and Florida. We look at the prospects now with three political reporters, Elizabeth Arnold of National Public Radio, Ron Brownstein of the "Los Angeles Times," and Tom Fiedler of the "Miami Herald." Elizabeth, conventional wisdom is that Bob Dole is going to sweep all seven states tomorrow. Can you add or subtract from the conventional wisdom?

ELIZABETH ARNOLD, National Public Radio: You're always asking us to predict. This is a pretty safe prediction, I think. What's interesting to me is everything that his rivals and all of us said was going against him, his age and his experience, he's not so hard-line on conservative issues, they're all turning out to be things the voters say they like about him, so, no, I don't see anything that's going to upset tomorrow.

MR. LEHRER: Ron.

RON BROWNSTEIN, Los Angeles Times: Well, the three-way squeeze that we talked about before New Hampshire really has broken down. Forbes--Alexander is out of the race, on the one hand--Forbes has really not much appeal left to the moderate part of the party, and Dole has successfully cut into Buchanan's base among very conservative and religious conservative voters, and this has propelled them, I think, far out of their reach in most states. In aperfect world, many of these states would be good for Pat Buchanan, but at this point in the race, when people see Dole as the presumptive nominee, his floor is really falling out from under him.

MR. LEHRER: What about in Florida, Tom, Dole, Dole going to win? That's what the polls say.

TOM FIEDLER, Miami Herald: [Miami] I think there's no question that Dole is going to win. There is only, I guess, the slightest possibility that Pat Buchanan could put something together, perhaps bad weather in the Florida Panhandle, a very low turnout, complacency on the part of Dole supporters that could create a situation where Pat Buchanan could do well in the First and Second Congressional District. I think the probability of that is fairly low, and the likelihood that Bob Dole will come out here with all 98 delegates is fairly high.

MR. LEHRER: What's the basis of the Dole support in Florida? Why is he going to do so well?

MR. FIEDLER: Organization. I think, No. 1, he really does have everybody in this state who is able to move large numbers of people. Secondly, Pat Buchanan--

MR. LEHRER: You mean move them politically or move them physically to the polls, or both?

MR. FIEDLER: I suppose both. Elizabeth touched on this a moment ago, the idea of experience in government. I mean, a lot of us, I think, discounted that a year ago. This was going to be a year when the outsider was supposed to do well. The electorate, certainly the electorate in Florida is having none of that. I think one of the most important factors that Republicans here are looking for is somebody who can go in and actually make deficit reduction a reality and any number of other things. The Florida--the Florida voters, from what I can tell here, do not want to roll the dice and try a Steve Forbes, or they're not angry enough to go for a Pat Buchanan.

MR. LEHRER: Do you agree with Elizabeth's analysis too of why Buchanan has not caught on? Does that work in Florida as well?

MR. FIEDLER: It does. It does. And I think you can add to that the factor of organization. Pat Buchanan has not been able to put together the kind of infrastructure here that I think would help. Just one example, he's, he spent a little better than one day here since the Junior Tuesday a week ago, and he chose to spend that day in Miami, which is probably the single least friendly area of him in the entire state. The area where he might have done something, up in North Florida, he's completely ignored. I think that's just a function of a less than sophisticated operation.

MR. LEHRER: Yeah. Elizabeth, let's move around a little bit. Texas is another big state tomorrow. The polls there show also this same result, in fact, even stronger terms, do they not, than Florida. Buchanan was expected to do well there. Why not?

MS. ARNOLD: He has pockets of support in Texas. By contrast, I should say that Sen. Dole has only spent two days in Texas, because he feels so secure about it. In fact, the first day he didn't even meet a single voter. He met with President George Bush and his son, who's the governor. I think that Sen. Dole has neutralized a lot of Buchanan's issues, protectionism, just like he did with the flat tax, sort of coopted the flat tax by saying, I'm interested in that idea. With protectionism, he's come out and talked about trade in every single state, and I think he's dampened Buchanan's, a certain constituency Buchanan has. He has a certain--he's got pockets in Texas, and those folks are going to come out and vote for him. He doesn't really need organization for those folks, but it's, it's definitely a Dole state.

MR. LEHRER: And the big issues that Buchanan has raised, which a lot of people who don't know Texas but only from the outside, oh, well, that'll be a big issue--it's just the opposite.

MR. BROWNSTEIN: Texas historically is very different from California on this issue. A much higher percentage of the Mexican- Americans in Texas are citizens. They've had a lot more political influence. You have a governor in George W. Bush who's very hostile to the anti-immigration message, unlike Pete Wilson. But a lot of this, Jim, is the process, itself. You know, what we're seeing here is the fruit of the compression of the primary calendar to the point that it has been compressed. It is very difficult for any of these candidates to launch an independent effort in any of these states, in Florida or Texas, or Mississippi. The main piece of information voters are getting about these candidates is who won Georgia and Colorado and Connecticut. And the--

MR. LEHRER: They can only go in for winners.

MR. BROWNSTEIN: They can only--the thought that you're going to influence Texas or Florida with a day or two of campaigning and a week of media is ludicrous. You can run media for six months as a Gubernatorial candidate in Texas or Florida, and on election day, 40 percent of the people still don't know--know really much about you. So it's really instead of rolling along, this is what the party leaders said they wanted, but I think now even many of them are really uncertain, whether this is too much.

MR. LEHRER: Tom, would you agree with that, that we got--we meaning the national political reporting types--got all fixated on Iowa and New Hampshire because it was retail, because it was very intense, and then the expectation was, oh, well, the same thing will happen in all these states, and it's impossible, right?

MR. FIEDLER: I think voters did anticipate that they would get a bigger slice of this than they did, although Floridians shouldn't complain because we had this Republican Party straw poll in November that actually drew a great deal of participation by the candidates down here. I'd like to mention, to pick up on what Ron was also saying, is the two pillars of Pat Buchanan's campaign, trade and immigration, work against him badly here. The Cuban- American community in South Florida certainly doesn't want to hear Pat Buchanan talk about cutting off immigration for, for five years, and this is an economy that is generating literally 500,000 jobs because of our foreign trade. So those things, I think, are devastating to him.

MR. LEHRER: Elizabeth, back to the "big picture" here for a moment. The expectation here again, conventional wisdom expectation is that the results don't matter tomorrow to Pat Buchanan or Steve Forbes; they're still going to be in on Wednesday. Is there anything happened that I don't know about that would make you think otherwise?

MS. ARNOLD: I think that's what Sen. Bob Dole believes as well, so I think they are in it for the duration. I don't necessarily think either of them are in it because they think they're going to be the nominee. I think they're in it to influence the process and to get their issues on the table. I think that the supply-siders have their man in Steve Forbes and Patrick Buchanan has his appeal as well, and Sen. Dole talks about this. He says it could be a messy convention.

MR. LEHRER: But, Ron, there's been speculation in the last 48 hours or so that the Buchanan strategy to hang in there means he gets beaten seven times on a Tuesday, and then another four times on another Tuesday and whatever, that he might, in fact, lose his influence at the convention, rather than gain it, if he stays in. What's your reading of that?

MR. BROWNSTEIN: Both of them. I think Forbes--even more ironic, Forbes has put 25--who knows how much--30 million by now into this race. He's not only not going to be President, he has buried the idea that drove him into this race. The flat tax, as he's proposed it, is really interred at this point. Bob Dole has walked away from the central provisions of it, and nothing like it is going--nothing like it, as Forbes proposed it, is going to be in the Republican platform. And Buchanan, obviously, risks--runs the same risk. If he shows himself to be nothing more than really a niche candidate, to some extent his influence as diminished, with one exception. I think he has shown the continuing power of the anti-abortion issue to motivate an important part of the Republican constituency, the Republican coalition, and I think he's raised some fears among Republicans about having a pro-choice Vice President, much less changing a platform.

MR. LEHRER: Well, that was--Sen. D'Amato, Republican of New York, co-chairman of the Dole campaign nationally, suggested very forcefully today in a newspaper interview that Colin Powell would be the dream Vice-Presidential candidate for--running mate for Sen. Dole, and of course, brought down all kinds of protests and, and firmed up Buchanan in a way, did he not?

MS. ARNOLD: And I also think Buchanan is going to, is going to cause problems in the primaries ahead in Michigan, in Ohio, and Illinois, just like Jerry Brown did in 1992. Even if--even if his influence diminishes, he's still a problem, I think.

MR. LEHRER: But a major problem?

MR. BROWNSTEIN: Well, there's a long tradition of buyer's remorse in the Presidential elections. Once somebody seems to have the nomination sewn up, they often start losing primaries. It happened to Gerald Ford and Jimmy Carter both in '76. It happened to Walter Mondale in '84. It's--even as you mentioned, in '92, when Bill Clinton seemed to have it sewn up, he lost to Jerry Brown in Connecticut, so there could be surprises down the road. But, ultimately, I think, you know, if Bob Dole does as well as it looks like he's going to do tomorrow night, by Wednesday, people are going to be saying this thing is effectively over.

MR. LEHRER: And Tom, as you said earlier, that has an influence on voters, does it not? I mean, the people of Florida were influenced by what happened a week ago and what happened in New York on Thursday, and all of these things, right?

MR. FIEDLER: Oh, absolutely. Not only does it narrow the choices, but the arguments become very constrained. You know, Ron, you're citing what had happened in previous campaigns. I don't know what that applies to this. There almost isn't time for much buyer's remorse to settle in here. There was a time when California's qualifying date was very late, and you could see a Jerry Brown jump in and do something. This is really going to be all over in two weeks, and then if people have buyer's remorse, I think they'll just have to go home and sulk about it.

MR. LEHRER: Yeah.

MR. FIEDLER: Nobody else is going to elbow their way in.

MR. LEHRER: Elizabeth, is there any lesson to be learned from the way the Bush folks handled the Buchanan challenge?

MS. ARNOLD: Well, I think it depends--

MR. LEHRER: In '92?

MS. ARNOLD: I think that Sen. Dole has said several times that perhaps after what happens tomorrow, somebody, not him, should reach out to Patrick Buchanan, but I think it sort of depends on who's got the most leverage. And as you're saying, maybe after a few more defeats, he doesn't have as much leverage.

MR. LEHRER: Yeah. So you agree with that, that he's losing--he may--it's possible, at least, that he may lose power as he stays in, rather than gain it?

MS. ARNOLD: I agree that it's possible but I think that he's very capable of causing a lot of problems for Sen. Dole.

MR. LEHRER: Yeah.

MS. ARNOLD: But I think--

MR. BROWNSTEIN: To me, a large, unanswered question is how important a relationship with Buchanan is to ultimately winning back Buchanan's voters. You know, at least half of his vote in most states come from religious conservatives, and they are the most-- they are a very solid Republican group now. No matter what Buchanan says, they're going to vote for Bob Dole.

MR. LEHRER: You're nodding, Tom.

MR. FIEDLER: Yeah. I think there is a peacemaker there, and it's Ralph Reed or its Pat Robertson. I think when the appropriate time comes, Ralph Reed or Pat Robertson will come in and say to those anti-abortion voters primarily that it's time to come to Bob Dole, and I think that would leave Pat Buchanan very much off on the sidelines, unless he's ready to go in himself.

MR. LEHRER: All right, Tom, Ron, Elizabeth, thank you very much. DIALOGUE

MR. LEHRER: Finally tonight, a Gergen dialogue: David Gergen, editor-at-large of "U.S. News & World Report," engages Seymour Martin Lipset, professor of public policy at George Mason University, author of American Exceptionalism: A Double-Edged Sword.

DAVID GERGEN, U.S. News & World Report: Marty, you've written a book about how and why America is different from many other industrialized countries, and you had an example that helped illustrate that I thought very well about the American experience, the Canadian experience. Twenty-five years ago, both governments announced to the people of their countries that they were going to move to the metric system. What happened, and what does that tell us about America?

SEYMOUR MARTIN LIPSET, Author: Oh, it's a wonderful example, I think. The, both countries, as you say, were told to go metric, to drop miles and inches and go to meters and kilograms and the like, and after 15 years, both countries were supposed to be only metric. Well, you know, if you go to Canada, you see you can drive 100 an hour, that means kilometers, not miles. Canadians--and it's very simple--Canadians were told to go metric, and they did. Americans were told to go metric, and they didn't, you know, under identical, almost identical, conditions. And you know, Canadians respect the state, are obedient. They're the country in a counterrevolution, the country which preserved the monarchy. The United States is the country which overthrew the state and which is anti-statist and disobedient and, and much more lawless.

MR. GERGEN: That's part of the American creed, that the values that came out of the American Revolutionary Period.

SEYMOUR MARTIN LIPSET: Right.

MR. GERGEN: And those values, essentially, as you describe them in the book, were those of liberty, egalitarianism, equality of opportunity, individualism, populism, laissez-faire--I think you identify the five values--

SEYMOUR MARTIN LIPSET: Right. Those are the values.

MR. GERGEN: That's right. But what I was struck by, I think a lot of us are familiar with the fact that these values grew out of the American Revolution but you, you argue in your book that it's more than the American Revolution, it's also the Protestant experience.

SEYMOUR MARTIN LIPSET: Yeah. Well, the two, I think, key things that affect our values are the Revolution and the institutions that flowed from it, the Constitution and Bill of Rights, but also something which we rarely think about or realize. We are the only Protestant sectarian country in the world, i.e., the overwhelming majority of Americans belong to the Protestant sects, the Methodists, the Baptists, and the hundreds of others. European-- Christianity in Europe, what religious sociologists call churches, as distinct from sects--the Catholics, the Anglicans, the Lutherans, the Orthodox--the churches are state-related. They were all state churches. They're hierarchical, and the relationship of the parishioner to the church is that he's supposed to be obedient. He's supposed to listen to the bishop and the priest and so on. American sectarians are congregational. The minister is an employee of the members, and the sectarianism requires that the members read the Bible, study the Bible, make their own decisions, and, and whatever they come to the conclusion is moral, they're morally obligated to, to do it. So we're a much more moralistic country.

MR. GERGEN: More individualistic in the sense you make your own decisions--

SEYMOUR MARTIN LIPSET: Right.

MR. GERGEN: --of what your own beliefs are. But once you've reached those, it, it also makes us more moralistic as well.

SEYMOUR MARTIN LIPSET: Right.

MR. GERGEN: I was interested in that. You know, if you see that in our politics, the flak we went through over the allegations about President Clinton and Jennifer Flowers back in his campaign, and you compare that to the picture of President Mitterrand's funeral in France--

SEYMOUR MARTIN LIPSET: Where his mistress was present with his illegitimate daughter.

MR. GERGEN: Right. Standing there next to his widow.

SEYMOUR MARTIN LIPSET: Right.

MR. GERGEN: And, and his children by his widow. And that was just part of what French culture was accepting.

SEYMOUR MARTIN LIPSET: And it also flows, you know, continue in a sex-related area, abortion is a terrible issue with the United States, and it's moralistic and people on both sides feel it is a death issue, life and death issue, and we burn down abortion clinics, or some people do. Now, you can go to Rome, where the Pope sits, and get an abortion. Have you ever heard an abortion clinic being burnt in Rome or in Spain? Italy has one of the lowest birth rates in the world. Quebec has the lowest birth rate in North America. These are all Catholic areas, and you--and they--many-- most of these people are Catholics, go to church, but they don't- -they don't get moralistic about the whole thing.

MR. GERGEN: Because they, they have this system in which there's more obedience but there's also sense of perfectibility.

SEYMOUR MARTIN LIPSET: Right. The Church believes and the Christian churches in, in original sin, that human institutions and human beings are inherently imperfect.

MR. GERGEN: And therefore, when they--and therefore when they sin, you shouldn't take it that seriously, because that's the way they are.

SEYMOUR MARTIN LIPSET: Right.

MR. GERGEN: Whereas the Protestant sects--

SEYMOUR MARTIN LIPSET: Insist on perfection, on perfectibility, that you don't, that you don't sin, and, and, of course, the United States as a country has reflected this in all sorts of ways in its foreign policy. You know, we, we have--we don't recognize evil countries. We didn't recognize the Soviet Union for a long time, China. We still don't recognize Cuba, which is obvious. We just recognized Vietnam. Well, Franco recognized Cuba six months after Castro came to power, and he was hardly a Com Symp. DeGaulle and Churchill, both of whom come out of church religions, dealt with the Communists, dealt with the Russians, didn't have the same kind of feeling, because sure Russia was an evil country, but no country's good.

MR. GERGEN: One of your central arguments, I wonder if you could explain it a bit more, is about the double sword quality of our values, that on one hand, our values seem to produce all this dynamism and the innovation and creativity that comes from an individualistic country, but you say there's a double-edge to that sword.

SEYMOUR MARTIN LIPSET: Yeah, because, you know, we're outliers. If you compare all the countries, developed countries, behavior, or the behavior attitude, we're at the extreme. But we're at the extreme in, in many good ways, and we're at the extreme in many bad ways. For example, crime rates, violence rates, whether we have-- we have the largest crime rate. We have more people incarcerated. You know, we're a very large divorce rate, and I think the--we have the lowest rate of people voting, and I think these negative aspects are inter-linked with the positive ones. You know, I develop the argument in the book that they come out of the same kinds of things. For example, if you take crime, we place this great emphasis on opportunity, on getting ahead, and getting ahead regardless of social origin, regardless of family background. Well, that means if you don't get ahead, it's your fault, because we assume that this is an open society. Societies which come out of a feudal tradition, where there's more emphasis on inherited stratification family don't place the same feeling of failure, don't put the same onus of failure on individuals who don't get ahead. Hence, in a certain sense, one, the American society tells you to get ahead by hook or by crook and if you can't do it by hook, then do it--then you do it by crook.

MR. GERGEN: Yeah. I understand the argument about why some of the bad trends we see in the society, the high divorce rates, the high crime rates and so forth, are inherently linked to the same values that produce all the dynamism in the country. What that doesn't explain for me is why some of these rates are getting so much worse.

SEYMOUR MARTIN LIPSET: Well, there I think one has to note that, and I think in almost all of them it's happening all over the Western world. It's not just--it's--and, and America has changed in all sorts of ways the way other countries have changed, where we've all moved from having once been overwhelmingly rural, small town societies, to metropolitan, complex societies, and high-tech societies. We all have increased immigration rates, and we all have--we're going through a technological revolution, which forces many people to change their jobs and social relations. All of these produce increased disruption, and since in our case, as in the Canadian case, or the German case, these negative features defeats the quality of a more--less stable society--are going on, so that--but these are not--I think there are very few of these which are uniquely American.

MR. GERGEN: In looking for solutions, it was interesting to me what you seemed to be arguing was we should look for solutions that are consistent with our values, we should not try to go to become a communitarian sort of nation, a nation that tries to serve some of these things through group efforts, but, rather, you spoke of moral individualism.

SEYMOUR MARTIN LIPSET: Yeah. I think this is true, i.e., I think efforts to change us in directions which go against our--you know, the American creed--just won't work.

MR. GERGEN: Yeah. So change is important, but don't try the metric system?

SEYMOUR MARTIN LIPSET: Right.

MR. GERGEN: Okay. Fine. Thank you very much.

SEYMOUR MARTIN LIPSET: Thank you. RECAP

MR. LEHRER: Again, the major stories of this Monday, the United States Navy sent more ships to the waters off Taiwan, China is scheduled to begin war games tomorrow in the Straits of Taiwan. On the NewsHour tonight, Assistant Secretary of State Winston Lord said the United States is not on the brink of war over Taiwan, and the stock market rebounded from its loss last Friday. The Dow Jones Industrial Average was up 110 points. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.