The MacNeil/Lehrer NewsHour

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

MR. MAC NEIL: And I'm Robert MacNeil in New York. After our summary of the news on the eve of a historic vote we debate Republican Medicare reforms with representatives from Congress, the AARP, and the American Medical Association. Next, we have excerpts from today's hearing on Ruby Ridge. Correspondent Jeffrey Kaye has a report on banks and their lending efforts in poor communities. And finally baseball writer Roger Angell talks about the Cleveland Indians getting to the World Series. NEWS SUMMARY

MR. LEHRER: The Senate Finance Committee began debate today on the Republican tax cut plan. There was strong disagreement between Republicans and Democrats about what it would mean for American families. Senator William Roth of Delaware said the $500 per child tax credit would help families.

SEN. WILLIAM ROTH, Chairman, Senate Finance Committee: 70 percent of our tax cuts for individuals will go to Americans earning less than $75,000 a year. Most families with children under age 18 will get a $500 per child tax cut. That's the average American family has two children, most families will end up with an extra thousand dollars in their pocket, instead of sending it to Washington.

MR. LEHRER: Democrats disagreed. Sen. Daniel Patrick Moynihan of New York said the Republican plan would help wealthy families and force low-income families to pay more taxes by the year 2000.

SEN. DANIEL PATRICK MOYNIHAN, [D] New York: All families with incomes under $30,000 will find their taxes increased by this bill. The increases are 9.6 [percent] for under dead, 2.2 [percent], and then .5 [percent]. Every family with income under $30,000 will find their tax goes up and in the matter of these things their taxes increase in order that taxes of family incomes above $30,000, including those above $200,000, may be cut.

MR. LEHRER: A vote on the $245 billion tax cut plan is expected tonight or tomorrow. It is also expected to pass because Republicans outnumber Democrats on the committee.

MR. MAC NEIL: The administration once again made its case in Congress for sending troops to Bosnia. Secretary of State Warren Christopher testified today at the House National Security Committee. He said the President did not want to send troops to Bosnia without full support from Congress.

WARREN CHRISTOPHER, Secretary of State: We're here to cooperate with the Congress, Congressman. We're not here to try to thwart the will of Congress. We want to work with you on this problem, because we know at the end of the day that you have the power of the purse, which is very significant, and we also will comply with all of the existing laws of the Republicans. Of course, we do that, and the reason we've come here is to find a proper basis to consult to gain your support if we can.

MR. MAC NEIL: Sec. Christopher was responding to some lawmakers' concerns about the War Powers Act, which require the President to get approval from Congress before sending troops overseas. Also today, a State Department spokesman said Cuban leader Fidel Castro would be granted a visa to enter the United States. Castro plans to travel to New York City this weekend to address the General Assembly of the United Nations.

MR. LEHRER: New rules on the use of deadly force were issued to federal agents today. Armed law enforcement officers can now only shoot when they have a reasonable belief they or someone else is in imminent danger. The change follows criticism of the FBI's rules of engagement at the fatal 1992 shootout in Ruby Ridge, Idaho. Deputy Attorney General Jamie Gorelick announced the new rule today at a Senate hearing on Ruby Ridge.

JAMIE GORELICK, Deputy Attorney General: No one can undo what happened at Ruby Ridge in 1992, but we can take, and we must take the steps necessary to ensure that the flaws in the structure of the FBI and in the Department of Justice that existed in that year and that contributed to that tragedy do not continue into the future. And these steps I hope and believe will be the true legacy of Ruby Ridge.

MR. LEHRER: We'll have extended excerpts from those hearings later in the program.

MR. MAC NEIL: There was more budget wrangling between Republicans in the White House today, this time over the national debt ceiling. Treasury Sec. Robert Rubin warned yesterday the U.S. government was quickly nearing its borrowing capacity. House Speaker Newt Gingrich has first offered to raise the debt limit for two weeks. He later withdrew the office, accusing Rubin of playing politics with the numbers. White House Spokesman Mike McCurry and Republican Senator Pete Domenici spoke at separate news conferences.

MIKE McCURRY, White House Press Secretary: This is serious business. This involves international financial markets, the liquidity of the United States, the solvency of the United States government, and everybody in this country knows that the Secretary of the Treasury is an expert on those matters, and for anyone to suggest that we are not basing these decisions on what's in the correct interests of the United States are just wrong.

SEN. PETE DOMENICI, [R] New Mexico: The truth of the matter is we're not going in default. They know we're not. They know they have plenty of authority to avoid default, and what we need to do is we need to do our dead level best to get this administration to understand that we have a real balanced budget, and they don't.

MR. MAC NEIL: The U.S. trade deficit narrowed sharply in the month of August. It dropped more than 21 percent to just under $9 billion. That's the smallest imbalance this year. The Commerce Department attributed the drop to an increase in sales of commercial aircraft, computers, and computer chips. Even with the improvement, this year's trade deficit is running higher than last year's.

MR. LEHRER: There was rare baseball joy in Cleveland last night. The Cleveland Indians won the American League pennant for the first time in 41 years. They did so by defeating the Seattle Mariners four to nothing in Seattle. In Cleveland, fans celebrated in the downtown streets and around the Indians' new ball park. The Indians will play the Atlanta Braves in the World Series beginning Saturday in Atlanta. And we'll have more on Cleveland and those upcoming World Series later in the program, following the debate on Medicare reform, excerpts from the Ruby Ridge hearings, and a report on bank lending in four communities. FOCUS - MEDICARE REFORM

MR. MAC NEIL: First tonight, the Medicare debate on the eve of a historic vote in the House of Representatives. The Republican majority in Congress has pushed for overhauling the nation's health program for seniors, and tomorrow, their plan is expected to be put to its first major test. Kwame Holman begins our coverage.

MR. HOLMAN: Speaker Newt Gingrich stayed on the floor of the House of Representatives this afternoon just long enough to gavel in today's legislative session.

REP. NEWT GINGRICH, Speaker of the House: The House will be in order. The prayer will be offered by the chaplain.

MR. HOLMAN: Soon after the chaplain offered the day's prayer, and North Carolina's Walter Jones led the House in the Pledge of Allegiance, Gingrich left the House chamber to resume last-minute negotiations aimed at holding together support for the Republicans' Medicare reform plan. The Medicare Preservation Act, as it is called, would save $270 billion in Medicare spending over the next seven years. Seniors would pay gradually higher monthly premiums, and affluent seniors would pay even more, while hospitals and doctors would receive less in Medicare reimbursements. Seniors would be given the option of keeping their current Medicare coverage, or joining private managed care programs. They also would have the option of opening so-called medical savings accounts. But there were reports at the beginning of the day that 20 or so Republicans still were withholding support for the Medicare reform plan. That kept Speaker Gingrich on the run most of the day, shuffling from one meeting to another, reassuring some members and trying to appease others. He has agreed to several late changes in the bill, including an increase in Medicare payments to hospitals in rural areas. Chiropractors lost the right to refer Medicare patients directly for X-rays without a doctor's approval, and a provision to make Medicare pay for certain anti-nausea drugs for cancer patients also was dropped. Gingrich's efforts to compromise today follow his decision last week to restore $300 million in Medicare reimbursement payments to doctors. The American Medical Association responded by endorsing the Republicans' Medicare reform plan. This is how Democrats responded today.

REP. NYDIA VELAZQUEZ, [D] New York: Mr. Speaker, let me tell you how the Republicans write Medicare legislation. When wealthy doctors are dissatisfied with how the Medicare bill will affect them, they negotiate a back-door deal with Republicans and suddenly they get a deal worth millions and do not have to share the burden of the $270 billion cut with seniors.

MR. HOLMAN: It was a preview of tomorrow's Medicare debate. Democrats remain united in their opposition to the Republicans' reform plan, particularly the size of the plan.

REP. ALBERT WYNN, [D] Maryland: The real deal is this. According to the Medicare trustees, we do need to make some adjustments in Medicare. How much? We need to make about $90 billion in adjustments so that we could ensure the solvency of the trust fund for about 10 years, for the next 10 years. The Democrats say, well, that will only cost $90 billion. So why do the Republicans say that costs $270 billion?

REP. GEORGE MILLER, [D] California: What has become clear is this is the means by which they can provide the tax cut, the predominant benefits of which go to the wealthiest people in this country and still balance the budget. They cannot afford a tax cut. This country cannot afford a tax cut. You can only make room for that tax cut if you take an additional $170 billion out of Medicare.

MR. HOLMAN: The Republican majority appears equally determined to get its plan through and can pass it without the help of Democrats.

REP. J.D. HAYWORTH, [R] Arizona: Let's get away from the mythical mathematics of Washington, D.C.. Fact: Medicare spending per beneficiary increases from $4800 this year to $6700 in the year 2002. That is an increase of almost $2,000. That's reality; that's real math. Fact No. 2: We provide choice to seniors through Medicare Plus. Only the guardians of the old order, who put their trust not in individual initiative but in an overgrown gigantic federal bureaucracy dictating to the American people would say otherwise.

REP. STEVE CHABOT, [R] Ohio: Our plan offers real solutions to the real problems facing Medicare. I urge my Democrat colleagues to stop the scare tactics, stop listening to the special interest groups, stop playing politics, and do what they know is right, help us save Medicare now.

MR. HOLMAN: The House Rules Committee will be meeting late into the evening, trying to work the late changes into tomorrow's Medicare reform debate. It's expected to limit debate to one day, with a final vote expected tomorrow afternoon.

MR. MAC NEIL: Now, we take up the debate over the House Republican Medicare bill with two members of the House and two leaders of major organizations that have been lobbying Congress. Joining us from Capitol Hill are Congressman Bill Thomas, Republican of California, one of the lead authors of the GOP bill, and Congressman Jim McDermott, Democrat of Washington State, sponsor of one of two alternate Democratic bills. Morris Deets, the executive director of the American Association of Retired Persons, is in Washington. Dr. Lonnie Bristow, the president of the American Medical Association, is in Chicago. Congressman Thomas, your side's been making some last-minute changes in this bill. Some Republicans are saying there are still enough doubters, something like 20, to block it. How do you see it?

REP. BILL THOMAS, [R] California: [Capitol Hill] Well, obviously, on any major piece of legislation that is as complicated and affects as many Americans as changing a program like Medicare everyone is concerned about what happens to them. We are explaining the bill the way in which it's going to work, and there are individuals who are expressing to us concerns in various areas. What we're doing is making adjustments within the various structure of the bill as long as it meets those basic parameters that we indicated were essential not only to save Medicare from bankruptcy but to preserve, protect it, strengthen it so that people who are paying taxes now are going to have a program available to them.

MR. MAC NEIL: So this radical reform, major reform, depending on which way you look at it, has, has created enough anxiety even in your own ranks to threaten your majority, which has been impregnable up to now, is that true?

REP. THOMAS: I wouldn't say it threatens our majority. It requires us to explain in detail to more people than is ordinarily the case. This is something that's very, very sensitive, and as you've seen in terms of the folks who are opposing this, they use rather extreme language to misrepresent a number of things that we're doing and they're hoping on creating enough fear among seniors that they'll panic our members. What we're doing is providing them with facts, and we're moving forward to the vote tomorrow.

MR. MAC NEIL: Congressman McDermott, despite your Democratic efforts, which you've just heard described as sowing fear, have the Republicans got this sewn up, do you think?

REP. JIM McDERMOTT, [D] Washington: [Capitol Hill] Well, they are tomorrow going to try and pass 900 pages worth of legislation, that probably two people besides Bill Thomas have read. They are going to ram it through, telling people that it's all right, it's going to make everything all right, but, in fact, you cannot cut $270 billion from the Medicare program without hurting people, particularly when you're using it for a tax break. There is no justification for more than $90 billion in adjustments. We offered that. They rejected that. They need the money for the tax break.

MR. MAC NEIL: That is your proposal, isn't it, the $90 billion proposal?

REP. McDERMOTT: Yes.

MR. MAC NEIL: And I'll come back to that a little bit later in the program. Mr. Bristow, after the AMA's deal with the Republican leadership to save the doctors' threatened $300 million in cuts, are you now fully behind the Republican reforms?

DR. LONNIE BRISTOW, American Medical Association: [Chicago] Well, in the first place, there was no deal in the sense that you've described it. What occurred is the American Medical Association went to the authors of the bill and explained a deep concern that we have about a threat to accessing care for our senior citizens. That threat is because of the proposed further cuts in pay that physicians will receive on top of what they have received over the last 10 years. As a result of those cuts over the last 10 years, doctors today receive 63 cents on the dollar for care that would be paid by a private insurance company as $1 of care. Now, that coupled with the fact that most physicians have an overhead of 50 percent, while simple math tells you that if you're only getting 63 cents on the dollar and 50 cents is already going to overhead, paying for rent, et cetera, that the margin that physicians have is very narrow. And if you cut too close to that 50 cents, then you will threaten access to care for our senior citizens, because physicians simply won't be able to afford to take care of them. We explained that to the GOP leadership, and we were very pleased to see that they responded, they listened, and they said, we are still going to have a cut for you, but we're going to try our best to make sure that that cut will not endanger access to care. That was what we were seeking, protection for access to care for the senior citizens.

MR. MAC NEIL: Well, can you and the hundreds of thousands of doctors you represent--thousands of doctors you represent--now tell your Medicare patients in good conscience that this is going to be good for them, this Republican reform?

DR. BRISTOW: You bet. We believe that this proposal--proposed legislation will constitute a true reform of the system, and it will result in patients having more choice and control over their health care decisions than they've ever had before. We think that's the way it should be. Choice and control should be in the hands of patients, not government.

MR. MAC NEIL: Do you think, Mr. Deets, that your ARRP members, do you and your members think that doctors are justified in that confidence, that they can in good conscience say this is good for their patients?

HORACE DEETS, American Association of Retired Persons: Well, I can't act as Dr. Bristow's conscience or that of the AMA, but I disagree with Dr. Bristow as to whether or not this is going to guarantee access for seniors. I think that the size of the reduction is too much in too quick a period of time, and all it's going to do is buy a few more years than a lesser amount would buy, and we still haven't resolved the problem of what to do in the long-term about Medicare reform for when the baby boomers start turning 65.

MR. MAC NEIL: Well, tell me in specifics why would it threaten access, as you see it, in terms we can understand.

MR. DEETS: Well, in--what's happening is costs will continue to go up over the next seven years. Federal payments will come down. Federal payments will be about 6 percent a year for the next seven years. Costs will be at 10 percent. That 4 percent differential isn't being reduced; it's just being shifted. It's being shifted to doctors, to hospitals, and ultimately to beneficiaries as well. As you cut back, as Dr. Bristow pointed out, on how much you pay doctors and hospitals for care, you do run the risk of jeopardizing access, as well as the quality of care.

MR. MAC NEIL: Well, how do you run the risk of jeopardizing access? You're a senior citizen. You were entitled to Medicare, and you had a condition, and what would happen under these reductions? What do you fear might happen under these reductions?

MR. DEETS: Well, I think increasing numbers of doctors will not want to take Medicare--Medicare patients, and they will be full. They will take no new patients. We've already had anecdotal evidence of this, that people have had difficulty when they've moved getting in to see a physician, because the doctor says we only get 63 cents on the dollar from Medicare right now, we can't afford to take any Medicare patients. And so Medicare patients will not be as welcome because of that.

MR. MAC NEIL: Let's ask Dr. Bristow about that. It's true. We've seen the same anecdotal evidence. Doctors are already refusing to take Medicare patients. What about Mr. Deets's fear that more of them will refuse, and, therefore, reduce access?

DR. BRISTOW: Well, that's the beauty of the proposed legislation. What the legislation does is it reforms the program, rather than simply apply a bandaid to it. It will change the incentives for both patients and doctors and hospitals to be--to help them become more cost-conscious, more price-sensitive than they've ever been before. We believe those forces of competition will actually slow the rate of growth of the cost of this, this system, in a natural way, and in a better way, but at the same time, end up giving patients more choices and more control over their health care decisions.

MR. MAC NEIL: But will it--do you think in the AMA, just looking at doctors' concerns now, that it will reduce the number of doctors who want to serve Medicare patients?

DR. BRISTOW: If we have the proposed legislation passed, as it's been drafted thus far, no, we don't believe that that's going to result in fewer doctors taking care of Medicare patients. In fact, we think that there will probably be more doctors because there will be positive incentives created for them to be able to participate in this program. It'll--it'll get much of the governmental administrative hassles that are currently burdening the program out of our hair, so that we can be much more efficient, much more effective in taking care of patients.

MR. MAC NEIL: Congressman McDermott, how do you--what's your comment on that?

REP. McDERMOTT: Well, what they have done in this bill, the doctors cut a deal not only for more money, but they also cut a deal for the right to set up what are called Provider Service Organizations that operate under no rules. They will not be regulated by state insurance laws. The doctors will be able to balance bill, and what Dr. Bristow is saying is they will force the seniors out of the Medicare system as we know it and gradually all the doctors will be in the PSO's, and there they can go after the patient for as much as they want.

MR. MAC NEIL: PSO's?

REP. McDERMOTT: Provider Service Organization. No one knows what it is.

MR. MAC NEIL: You mean not like an HMO but a group of doctors who come together to provide--

REP. McDERMOTT: Exactly. A group of doctors, it may be a hospital, it's not clear what they are, but the doctors cut that deal so that they would have the ability to balance bill. And that's--they say they're getting rid of the regulations.

MR. MAC NEIL: What is balance bill, what does that mean?

REP. McDERMOTT: Balance bill means when Medicare pays your bill for a senior citizen the doctor can only bill another 15 percent above; he can't just go for whatever he wants. There's a limitation in the law today. In the legislation that's before us, they are going to take away that restriction, and doctors will be able to go after whatever they want from the patients.

MR. MAC NEIL: So Congressman Thomas, is that the increased incentive for doctors?

REP. THOMAS: Robin, as I said earlier, there are some folks peddling fear. That's back up and look at the facts and what's really going on in the bill. Jim McDermott said that there were no rules over these people. They're totally controlled by the Secretary of Health & Human Services. She structures the rules to make sure these people offer what is necessary. They have to offer the full service structure. You can't just have doctors organizing. It is a combination of doctors and hospitals. What's the problem, and why are we trying to respond to it? Today, doctors are afraid of becoming employees of large corporate organizations coming in and raiding in various towns.

MR. MAC NEIL: HMO's and things?

REP. THOMAS: Yes. Corporate managed care operations. Local hospitals are going under because they can't compete with the kind of structures. What the provider-sponsored organizations, hospitals and doctors locally, can now do with the removal of some antitrust provisions that are frankly antiquated or 19th century manufacturers and shouldn't be applied to professionals trying to offer service at a reasonable price, under the Secretary's structure, communities will be able to get the benefits of managed care savings, but it'll be the local doctors and the local hospitals providing it, community-based managed care, and they will be doing it under a defined contribution structure. They will be moving from the cost plus fee-for-service to the defined contribution structure.

MR. MAC NEIL: Mr. Deets, let's go back to you, and let's go back to the individual, man or woman, who's of Medicare age listening to this and perhaps a bit confused by all the technical terms being used. What is the difference you fear it will make to an individual that makes you worried about this bill?

MR. DEETS: I think the big fear I have is that the ramifications of these changes are going to take place in about five, six, seven years. The kind of alternatives being set up will be attractive to the people who are younger, who are healthier, and who have money.

MR. MAC NEIL: So it's good for them, for people over 65 who are reasonably healthy and so on, it'll be good for them, you're saying?

MR. DEETS: Well, it will be attractive for them.

MR. MAC NEIL: Attractive.

MR. DEETS: What remains to be seen is if it will be good. For example, we can attract them by offering more benefits to this new program. A year down the road, if our costs get tight, we may cut back on those benefits. At the same time, there's going to be a cap, which is called a fail safe, on the traditional Medicare fee- for-service program, which is going to be left with the oldest, the sickest, and the poorest people. And if those costs exceed a certain amount, that cap comes into play, which is going to further exacerbate the problem of controlling costs to physicians, hospitals under that fee-for-service plan. I think what people need to know is, is this going to cost me more, am I going to have the same level of benefits?

MR. MAC NEIL: It is going to cost more for the Part B part, is it not? I mean, the fees are going to go up for that.

MR. DEETS: The fees will go up. The Part B premium will go up. In fact, it will double over about seven years. And then there's the affluence test, and I'm not sure exactly where that number will end up. It's $75,000 for an individual in the House, I think $50,000 in the Senate. And here again is a question, why are we applying a principle that the government should not subsidize health care for seniors if they are wealthy? Why not apply that across-the-board? The government supplies a subsidy for health care for you and me and everyone else who has an employee benefit, because our health benefits are not taxed. That's a form of subsidy. So I have a question on the equity of that part.

MR. MAC NEIL: Let's get a quick answer from Congressman Thomas on that. Why is that principle which, which he's just outlined very clearly, why is that not being preserved?

REP. THOMAS: Rather than preserve it, I think he said it exactly correctly. It makes no sense whatsoever in today's world to have government subsidize millionaires for what is a voluntary program.

MR. MAC NEIL: But as he said, it does that now for people who have very good health benefits in their employment.

REP. THOMAS: You get a 100 percent tax write-off from corporations. Horace I'm with you. As I move into the incremental health care reform area, I'm going to try to make sure that the hard-working American taxpayer doesn't subsidize other people who should otherwise pay for their health care.

MR. MAC NEIL: Okay. That's that point.

REP. THOMAS: We're going to move forward to try to change that philosophy of the way in which taxpayers' dollars are used. You shouldn't subsidize rich people.

MR. MAC NEIL: Okay. Let's go back to Dr. Bristow here a moment. What about Mr. Deets's fear that the young and healthy people over 65 will take the inducements to go into health maintenance organizations, managed care organizations, which may have better benefits for them, and leave Medicare stripped and, and diminished for the really sick people?

DR. BRISTOW: Well, I think that fear is misplaced, because what we're saying is that those patients who want to stay in the traditional Medicare program may certainly do so. It will be there and provide the security of having no change. But those who wish to try something different, who believe that they, in fact, may be able to make better decisions about their own health care than the government, will have a different set of options that they can choose from. But let me--let me point out that the discussion that you've had almost suggests that we have an alternative of doing nothing, and we do not have an alternative of doing nothing. The status quo will not suffice. The Social Security commissioners, themselves, have said that Part A of this program is going to go bankrupt by the year 2002. Something must be done. The argument that you hear evolving is over whether we should do a little something or a lot of something. What the AMA is saying is, let's correct the underlying flaws in this system, let's save Medicare now, let's not simply throw another life preserver to it and then sail away, the way we've done so many times during the last ten years.

MR. MAC NEIL: That brings us back to Congressman McDermott's alternative, which is to spend--which is to cut only $90 billion now.

DR. BRISTOW: You're absolutely right.

MR. MAC NEIL: And let's go back to the Congressman.

DR. BRISTOW: But that's throwing a life preserver and sailing away, saying, we'll be back in a few years to take a look at this.

MR. MAC NEIL: Congressman McDermott.

REP. McDERMOTT: You've got to remember that the AMA opposed Medicare in the first place, and they're trying to gut it today, so you can't--you've got to take everything Dr. Bristow says with a grain of salt. The $90 billion stabilizes the program to 2006, and our program also sets up a commission that says we will come back with a way to deal with the problem that even Bill and I agree on, and that is the baby boomers. The year 2010 is going to be a real problem for Medicare, and we must do as we did in 1983, with Social Security, come up with a way to finance it, or there will be no Medicare after 2010. So we agree on the need for a commission.

REP. THOMAS: Robin--

MR. MAC NEIL: I'm afraid--

REP. THOMAS: --the difference in the bill is that we stay in the black through the period; they produce an $800 billion problem right when we're trying to solve the baby boomer.

MR. MAC NEIL: All right.

REP. THOMAS: That's the difference.

MR. MAC NEIL: We have to leave it there, gentlemen, and we'll see tomorrow in, in the House how--who succeeds. Thank you both--thank you all.

MR. LEHRER: Still to come on the NewsHour tonight, the Ruby Ridge hearings, investing in poor neighborhoods, and the Indians of Cleveland. UPDATE - UNDER FIRE

MR. LEHRER: Now, excerpts from today's Ruby Ridge hearings before the Senate Subcommittee on Terrorism. Elizabeth Farnsworth reports.

MS. FARNSWORTH: This morning suspended deputy director of the FBI Larry Potts reappeared before the Senate Subcommittee. He was called again because the subcommittee had received crucial documents about the Ruby Ridge case from the Justice Department. Those documents were not available when Potts first appeared before the subcommittee a few weeks ago. The information concerned the controversial rules of engagement that Potts and FBI agent Dick Rogers worked out during the federal siege of white separatist Randy Weaver's house in 1992. Potts says that he never approved of the "can and should" language that appeared in the final operations plan at Ruby Ridge, where a federal agent and two members of the Weaver family were killed. Today, Sen. Dianne Feinstein told Potts that based on the documents, she now believes Potts was telling the truth.

SEN. DIANNE FEINSTEIN, [D] California: Mr. Potts, I have a small confession to make. When you testified last time, I must tell you I thought, I don't believe him. Since then, I've had an opportunity to review your notes, and I want to correct my thoughts. I do believe you. I think I know how it happened, that there was a difference of opinion, but I have included--concluded in my mind that you did not sign off on the language "can and should."

LARRY POTTS, Suspended Deputy Director, FBI: It was my impression that we were--that he was reading from what he had prepared, and he had asked at the end of the conversation, "Larry, would you mind making a record of that there," and I said, "I'll be glad to."

SEN. DIANNE FEINSTEIN: A record of--

LARRY POTTS: Of our, of our agreed rules.

SEN. DIANNE FEINSTEIN: Right.

LARRY POTTS: And I said, "I'll be glad to," which I did. I mean, if I--if I had it to do over again now, once Rogers arrived in Idaho, I would have faxed this to him, and--

SEN. DIANNE FEINSTEIN: So, bingo, that was the problem right there.

LARRY POTTS: Well--

SEN. DIANNE FEINSTEIN: In other words--

LARRY POTTS: --it certainly was.

SEN. DIANNE FEINSTEIN: --he and you apparently had a miscommunication.

MS. FARNSWORTH: But other members of the subcommittee remained strongly skeptical of Potts' story and the way the entire operation was conducted. Sen. Larry Craig asked Potts whether Agent Horiuchi, who was responsible for Vicki Weaver's death, was under the impression that he should operate on a "shoot on sight" policy.

SEN. LARRY CRAIG, [R] Idaho: It is interesting to me that when the rules of engagement say "could and should," and his responses to that line of question are absolutely consistent with those heightened rules of engagement--

LARRY POTTS: Right.

SEN. LARRY CRAIG: --that he understood them to mean it was his job to shoot on sight armed adult males. And he did.

LARRY POTTS: You know, these things are not given or received in a vacuum. And that--I just want to make sure that you talked about the training and I do think that that's an important--I mean, I'm very sincere in believing that that's an important factor.

SEN. LARRY CRAIG: And you should be.

LARRY POTTS: I also believe that the mission concept is an important factor, that, you know, they understood that the mission was to secure that inner perimeter so we could begin to negotiate. The rules of engagement are not just handed to people and say, here's your rules, there's, hopefully, with the on-scene commander and the HRT commander discussion of those rules within the context of what we're trying to accomplish.

SEN. LARRY CRAIG: Yes.

LARRY POTTS: I don't see how you could have a rule of engagement interpreted as "shoot on sight" when what we're trying to accomplish is secure a perimeter and negotiate.

MS. FARNSWORTH: In the afternoon session, the subcommittee heard from Deputy Attorney General Jamie Gorelick. She announced new policy guidelines that were developed as a result of the shootings at Ruby Ridge.

JAMIE GORELICK, Deputy Attorney General: We have revamped dramatically the way in which our law enforcement agencies and the department responds to crisis. The FBI has created a Critical Incident Response Group, or a CIRG, for managing crises like Ruby Ridge, and the CIRG establishes a clear chain of command within the FBI. It ensures that the FBI's senior leadership, including the director, himself, has responsibility for crisis management. In 1992, as you have heard, the then director was only peripherally involved in the incident. The second major area is the deadly force policy. In 1992, the Department of Justice did not have a uniform written deadly force policy applicable to all law enforcement agencies. We do now. Under the new policy, law enforcement and corrections officers may use deadly force only when the officer has a reasonable belief that the subject of such force poses an imminent danger of death or serious physical injury to the officer or another person. Deadly force may not be used if an alternative reasonably appears to be sufficient to accomplish the law enforcement purpose. Moreover, the FBI director has abolished the use of rules of engagement altogether. As I have noted before, the rules of engagement adopted for Ruby Ridge were so poorly worded that they could have been interpreted to direct agents to act contrary to the Bureau's deadly force policy.

MS. FARNSWORTH: Gorelick was asked if this new definition of deadly force could have prevented the death of Mrs. Weaver by FBI sharp shooter Horiuchi.

SEN. HERB KOHL, [D] Wisconsin: Was Lon Horiuchi's second shot reckless?

JAMIE GORELICK: Again, according to the Civil Rights Division, whose analysis I credit, that shot was not unreasonable, and that is the standard, the applicable standard.

SEN. HERB KOHL: Would that shot be unreasonable under your new standard force?

JAMIE GORELICK: I believe that under the new policy, he certainly--we would train people certainly to hesitate much more with regard to that second shot.

SEN. HERB KOHL: So, under the new policy, which was basically the standard policy which was always in effect, absent rules of engagement, under the new policy, he would not take--in your judgment--he would not take that shot?

JAMIE GORELICK: Under the new policy, I would--I would like to think, given the training and the wording of the new policy, including the emphasis on imminence, that he would not take that second shot.

MR. LEHRER: Tomorrow's Ruby Ridge hearing is the last one scheduled. FBI Director Louis Freeh will testify. FOCUS - COMMUNITY REINVESTING

MR. MAC NEIL: Next, banks and their communities. The tumult in the banking industry continued today as one large California bank, First Interstate, announced it had received a hostile takeover bid from another large California bank, Wells Fargo. Under a 1977 law, such mergers and takeovers require federal approval, including proof that the banks are lending to low-income communities. However, that law is now under fire from Republican lawmakers. Correspondent Jeffrey Kaye of KCET-Los Angeles reports.

MR. KAYE: One thousand federal agents from around the country are in the process of signing up for law enforcement training. The agents are bank examiners, armed only with pens, calculators, and the law they enforce, the 1977 Community Reinvestment Act, the CRA.

SPOKESPERSON: Good afternoon. I'm pleased to welcome you all to Dallas for our first interagency CRA training session.

MR. KAYE: The sessions are to teach bank examiners new procedures for evaluating banks under the CRA. The CRA requires financial institutions to lend in poor communities if they lend in rich. It directs regulators to consider the lending records before allowing banks and savings and loans to expand, and it allows the public to comment on the lenders' CRA performance. New CRA rules, which take effect next year, require examiners to evaluate the lending activities of financial institutions. The previous CRA guidelines were more vague. Trade groups, such as the American Bankers Association, the ABA, fought the CRA's passage in 1977. In recent years, they have complained that the law is too burdensome. Jim McLaughlin represents the ABA.

JIM McLAUGHLIN, American Bankers Association: Well, we support the goals of the CRA. We just don't like the paper work, and the burden. That's the expense on the part of the institutions. What's happening is that bank employees who could be lenders, could be out in the community making loans, are stuck back at their desks, filling out forms, paper work, and providing more information to the government.

MR. KAYE: With a Republican majority in Congress, complaints by lenders about the CRA are falling on receptive ears. Republican Senator Richard Shelby of Alabama, a member of the Senate Banking Committee, says the Act goes too far.

SEN. RICHARD SHELBY, [R] Alabama: I don't know anybody today, other than some of the liberal activists, that would tell you that the Community Reinvestment Act, as implemented today by the regulators and the protesters, is good for banking or good for the consumer. It might be good for certain groups who get money from the banks by extorting money out of them basically, by threatening them.

MR. KAYE: Shelby supports pending legislation that would exempt small banks from the Community Reinvestment Act and would limit public comment on banks' CRA performance. Under the proposal supported by the ABA, community groups would be prevented from filing protests during applications for bank mergers. The legislation takes on particular urgency with the current wave of merger applications. The largest is the recently-announced planned marriage of Chase Manhattan and Chemical Banks. Banks don't want public comments to bog down the merger process.

JIM McLAUGHLIN: It's kind of like somebody with a valid driver's license, and having to go retake that driver's test every time he wants to take a trip.

MR. KAYE: What's the best example that you can provide me of where this has been a problem during a merger?

JIM McLAUGHLIN: Well, a significant example of lengthy delay was the Bank of America-Security Pacific merger a couple of years ago.

MR. KAYE: Because of the CRA, that 1992 merger of two major California banks resulted in four public hearings held by the Federal Reserve Board. The chairman of Bank of America, which took over the smaller bank, was forced to defend B of A's record.

RICHARD ROSENBERG, Chairman, Bank of America: Historically, Bank of America has been a leader in integrating its perceived social responsibilities into the daily business of banking.

MR. KAYE: When the Federal Reserve approved the merger ten months after the bank filed its application, the approval was conditioned on a long list of commitments the bank made to community groups.

JIM McLAUGHLIN: Some banks have considered it extortion, where as a result of a protest they are forced into a negotiation to try to avoid delays and lengthy hearings and to reach an accommodation, and they have felt that it's been extortion.

MR. KAYE: And was there an extra cost that attached to that merger because of the delay?

JIM McLAUGHLIN: Oh, just the delays alone and the hearing cost was significant.

MR. KAYE: Ironically, B of A doesn't agree.

DONALD MULLANE, Bank of America: Did it add substantially to the cost? The answer to that is that it did not add substantially to the cost.

MR. KAYE: It didn't add substantially to the cost?

DONALD MULLANE: No.

MR. KAYE: Bank of America Vice President Donald Mullane is far less critical of the CRA than is his trade association. During merger hearings three years ago, Mullane sounded sympathetic to the concerns of community groups.

UNIDENTIFIED MAN: [January 1992] We ought to be more aggressive in seeking applications for real estate loans and expanding access to credit in lower income and minority communities.

MR. KAYE: Do you feel that you were held hostage by the community groups?

DONALD MULLANE: No, no. We worked diligently with community groups in every state trying to maintain a relationship with them, trying to satisfy their needs. Some we could reconcile, some we could not. But to be held hostage is a pretty harsh term.

MR. KAYE: During the merger process, Bank of America pledged to make available $12 billion in CRA-related lending in 10 years. One commitment was to keep open branches like this one in minority neighborhoods, such as South Central Los Angeles. Another was to invest in neighborhood economic development groups such as the Community Financial Resource Center in Los Angeles. The center is housed in what used to be a bank branch, one of many who have abandoned the inner city over the years.

UNIDENTIFIED WOMAN: This is the kind of loan program that you're really making the credit decision off of projected operations--

MR. KAYE: The center, funded by a consortium of B of A, 30 other local banks, and the city of Los Angeles, makes loans to businesses that have trouble finding access to capital.

UNIDENTIFIED SPOKESMAN: Even though she's starting a new business, she has been very active in the greeting card business for more than 14 years. She has demonstrated working for other companies the ability to generate sales.

MR. KAYE: One loan applicant is a much-photographed greeting card model.

SPOKESPERSON: Her business is a non-traditional one. She's not somebody who can walk into a bank and probably get funding today, but it's a good start-up in our target area.

MR. KAYE: Billi Gordon says she was unable to qualify for a traditional bank loan because she's an artist.

BILLI GORDON: For the last 20 years I've been an artist, and artists' income is very sketchy at best. You know, sometimes you make $50,000; sometimes you make nothing. And so it's very hard to show an income history, and also too, you don't get involved with credit situations, because you don't know that you make those monthly payments, so what you do is you always pay cash for things. And so I didn't have any credit history.

UNIDENTIFIED MAN: She is going to create jobs?

MAN: Yes.

UNIDENTIFIED MAN: Okay. And those jobs will need to be demonstrated by I guess projected salaries, and they will be actually filled by persons of low to moderate income.

ANOTHER MAN: Yeah. When you look at the credit and you look at what Billi has done in her life, you know, she is a perfect prospect for this kind of lending, as far as I'm concerned, and I vote "yes."

WOMAN: All in favor?

GROUP: Aye.

WOMAN: All opposed? Okay. So it's approved.

FORESCEE HOGAN-ROWLES, Community Financial Resource Center: I don't think that without CRA, the center would thrive.

MR. KAYE: Forescee Hogan-Rowles is the center's executive director.

FORESCEE HOGAN-ROWLES: This is the largest entity in the city that has a combination of bank support, city support, and community support, and those three parties would not have been driven had it not been for CRA, I don't think.

MR. KAYE: Supporters of the Act say CRA-related lending has also helped rebuild neighborhoods by steering four to six billion dollars a year nationally into low and moderate income communities.

RALPH LIPPMAN, Local Initiatives Support Corp.: When the CRA first came into existence, the banks were in foreign territory.

MR. KAYE: Ralph Lippman is with the Local Initiative Support Corporation, which assists non-profit groups, obtain funding and develop low cost housing, like this apartment complex in LA's Westlake district.

RALPH LIPPMAN: This is not the type of neighborhood in which one might be prone to invest, but the incentive of the Community Reinvestment Act and the fact that it's proven to be good investment enabled this group to bring in a construction lender and a permanent lender.

MR. KAYE: CRA advocates have mustered supporters to urge Congress to preserve the Act in its current form. At a recent Washington, D.C. press conference, Seattle Mayor Norm Rice, chairman of U.S. Conference of Mayors, handed over a petition signed by 200 of the nation's mayors. Support for the CRA is also coming from the Secretary of the Treasury Robert Rubin. Rubin has advised President Clinton to veto legislation that would weaken the CRA. Rubin says the proposal to exempt small banks is a big mistake.

ROBERT RUBIN, Treasury Secretary: And what you're basically doing is creating something in the nature of an exemption for 90 percent of all banks, and that means most banks in small communities where there are, after all, distressed communities, remember, this refers to distressed--this covers distressed neighborhoods both in cities and in rural areas. So this, in effect, will remove the benefits of CRA from most rural areas and also reduce them in the big cities where there are, after all, smaller banks.

MR. KAYE: But the ABA's McLaughlin argues that the institutions which do the lion's share of the nation's banking would still be governed by the CRA.

JIM McLAUGHLIN: What it does is allow banks under $100 million to be exempted. This still includes under CRA 91 percent of the deposits in banks, 89 percent of the branches. Typically, the bank under $100 million has 16 employees, and Congress has had a long history of alleviating the big regulatory burden on small businesses.

MR. KAYE: Some CRA opponents would like to alleviate the regulatory burden on all banks and see current legislative proposals as a first step towards eventual repeal of the Community Reinvestment Act. FINALLY - WORLD SERIES

MR. LEHRER: Finally tonight, the joy in Cleveland, because their American League Baseball team, the Indians, won the pennant and thus a spot in the World Series, for the first time in 41 years. Here with some thoughts about it all is "New Yorker" writer, Roger Angell, the author of many books about baseball's victories and defeats. Roger, good evening, sir.

MR. LEHRER: Explain to non-baseball fans what it means to win a pennant after 41 years.

ROGER ANGELL, The New Yorker: Well, I think it's the heart of baseball, because for me, after watching baseball for so many years, it's come to seem clear that what baseball's all about for fans is suffering, and your hopes get up ever year. Spring comes, and you think you're going to win, and you look at your pitching, you look at your defense, and your power and your veterans, your rookies. You say, well, we got a shot. And now it seems as if you do, but mostly you don't. You lose, and then lose again, and terrible things happen. I mean, with Cleveland, the great tragedy, all Cleveland fans remember, as Herb Score, the wonderful young pitcher, great right-handed pitcher at just the beginning of his career won 23 games the year before and suddenly is hit in the face with a line drive, and his career virtually ended. He's hung on for a few years, never as much after that. They haven't come--really come very close in 41 years--the truth be told.

MR. LEHRER: And there are some teams that have suffered just as much as the Cleveland Indians, have they not, in fact, worse.

MR. ANGELL: That's right. When you think of the Cubs and think of the Red Sox, the curse of the bambino, the Red Sox haven't won a World Series since 1918, and then they got rid of Babe Ruth, and that was the end of it for them.

MR. LEHRER: Yeah. Well, for the Indians, the last time was in 1954, and that didn't end happily for them, you know, either. I mean, they won the pennant and they got in the Series.

MR. ANGELL: It was a great shock. That team won 111 games, which is still a record, I believe, in modern baseball, and they had great pitching, and they're facing a pretty good Giants team, and they lost in no time--they lost in five games, mostly because of a reserve Giants hitter named Dusty Rhodes, who killed them with three pinch hits. You had two homeruns came in and destroyed them, and that great pitching staff had two winners, the Indians had two winners of twenty-three games that year, and you have twenty runs in four games, it's unbelievable. I'm sure all the old Indian fans remember all those figures.

MR. LEHRER: And as long as the old Indian fans also remember what Willie Mays did too, that famous catch, which we happen to have.

MR. ANGELL: That was in the first game.

MR. LEHRER: Yeah. We have it on Newsreel tape. Let's take a look at that.

NEWSREEL ANNOUNCER: The climax spectacle of Big League Baseball, the World Series underway at New York--upwards of 52,000 under a bright canopy of bright sunshine watched the Giants play host to the Cleveland Indians. Moving now to the Cleveland Eighth, Score 2-2, with Mantle being replaced by lefthander Don Little. Again, powerful Vic Werz batting. [music] Two men are on base. The Cleveland bench and the crowd are tense. [music] Boom! Out towards straight center! Willie Mays catches it--450 feet. Say hey, Willie, was that a catch! [crowd cheering]

MR. LEHRER: What a catch, right?

MR. ANGELL: Well, it was a great catch, and Jim, I have to confess, I'm an old Giants fan, so I remember that catch very well, and I'm still--

MR. LEHRER: For different reasons.

MR. ANGELL: Yes. I'm still sorry for the Indians, but not too sorry.

MR. LEHRER: You know, it's been widely written and said now, Roger, that this particular Cleveland Indians team, the one that's going to the World Series, is the best team in baseball. What does that mean?

MR. ANGELL: Well, offensively, the--all the power numbers belong to them. They won a hundred games out and out of a hundred forty- four, which is quite extraordinary, they have a great hitter in Albert Bell, who for the first time since 1948 has over 100 extra base hits, which is amazing--had 50 homeruns this year--and this covers the fact that--which we learned in the playoffs that just concluded, that their pitching is also the best in the League.

MR. LEHRER: How do they measure up against the Atlanta Braves?

MR. ANGELL: Well, I think the Braves may have a little bit of an edge. I don't know who's going to win. Nobody knows. There's no way of telling, but most of the Braves' power is lefthanded, and the all the starting pitchers of Cleveland are righthanded, which on the books anyway, that gives you an advantage to the Braves, and the Braves have their own impelling force, which is they've been- -this is their Third World Series in four years, and they haven't won yet, so they're equally anxious to do something.

MR. LEHRER: Going into the World Series, what's your diagnosis of how baseball, Major League Baseball, has recovered from its terrible beginning, the strike, the greed problem, all of that, the fans didn't care, where are we? What's your diagnosis?

MR. ANGELL: Well, I think these recent sets of games, even the added games that I really don't quite approve of yet--

MR. LEHRER: You're talking about the playoff games?

MR. ANGELL: The extra playoff games.

MR. LEHRER: The extra playoff games.

MR. ANGELL: And I think the season ended well, and we've seen some wonderful extended dramas, and a lot of people who were against the playoffs said, well, you have to admit that they did give you some great moments, which is true. I think that these playoff series and the championship series are the best thing that could happen to baseball right now. The bad taste is gone, at least for the moment, and the terrible television setup, which actually has blocked most of the games from most fans in the country, is going to be done away with next year, so in that sense, things are looking up.

MR. LEHRER: Here in Washington all we could see were the Mariners and the Indians. We were never able to see the National League playoff games.

MR. ANGELL: It was a senseless arrangement. I don't know how it was done, and baseball is now apologizing, backing down, and they're bowing and scraping and said they're terribly sorry, next year, every game, every post-season game will be available to all fans.

MR. LEHRER: Do you go into this World Series as excited as you have gone into other World Series?

MR. ANGELL: Well, not quite. I'm not--but I think that my heart went out to the, of course, the Yankees, because they played so well and the Mariners, so I'm a little disappointed as far as the immediate drama, but it's going to be--it actually matches up the two best teams in baseball, so it could be quite remarkable, and it's happened in the past that teams that the country didn't know very well because they weren't the Yankees or the Dodgers or something like that said who are these people and if they play well, then suddenly it catches you up and you have sort of a national drama, and that happened with the Braves last played. It was--we had some amazing games, terrific games.

MR. LEHRER: Okay. Roger Angell, thanks again for being with us.

MR. ANGELL: Thank you.

MR. LEHRER: We'll see what happens. RECAP

MR. MAC NEIL: Again, today's major stories: Republicans in the Senate Finance Committee pushed ahead with their big tax cut bill, despite opposition from Democrats. A vote is expected late today or tomorrow. A Justice Department official announced new stricter guidelines on the use of deadly force by federal agents, and a State Department spokesman said the U.S. will issue a visa to Cuban leader Fidel Castro. He'll address the United Nations General Assembly this weekend. Good night, Jim.

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