The MacNeil/Lehrer NewsHour

INTRO

JIM LEHRER: Good evening. In the headlines this Friday, the World Court said U.S. actions against Nicaragua violate international law. The U.S. Supreme Court said airlines are not bound by handicapped discrimination laws. And the European community threatened sanctions against South Africa. We will have the details in our news summary in a moment. Robin?

ROBERT MacNEIL: After the news summary, we focus on new arguments over sanctions against South Africa. We have reports from the European summit and South Africa, then interviews with the head of the Commonwealth Task Force and South Africa's U.N. ambassador. Then Elizabeth Brackett reports from Wisconsin on how taxpayers see tax reform. And we have the next in our special series on the new American immigrants -- tonight, a Cuban with a taste for politics. News Summary

MacNEIL: The World Court in the Hague ruled today that the United States violates international law by supporting the contras in Nicaragua. By a majority of 14 to 3 the justices asked Washington to halt all anti-Sandinista military activities. The court also ruled that the U.S. must pay reparations to Nicaragua, the amount to be set later. The court's decision was read by its president, Nagendra Singh of India.

NAGENDRA SINGH, president, World Court: The court decided that the United States of America, by training, arming, equipping, financing and supplying the contra forces and otherwise encouraging, supporting and aiding military and paramilitary activities in Nicaragua has acted against the public of the Republic of Nicaragua in peace of its obligation and the government international law not to intervene in the affairs of another state.

MacNEIL: The United States, which had boycotted the court's proceedings, rejected the decision. State Department spokesman Charles Redman said, "The opinion demonstrates what we have stated all along. The court is simply not equipped to deal with a case of this nature involving complex facts and intelligence information.

CHARLES REDMAN, State Department spokesman: The United States and Nicaragua essentially agree on the international law relevant to this case. The entire question fundamentally turns on the facts. That it, whether one accepts Nicaragua's denial that it is -- that it has attached its neighbors, or the facts repeatedly found and confirmed by the U.S. executive branch, Congress, the National Bipartisan Commission on Central America and others having full access to the full range of intelligence information on this subject. Those bodies have repeatedly concluded that Nicaragua is engaged in a substantial, unprovoked and unlawful use of force against its neighbors.

LEHRER: Nicaraguan officials praised the World Court decision. Foreign Minister Miquel Descoto said he hoped it would have a sobering effect on the United States. The Nicaraguan ambassador in Washington said the United States will have a hard time ignoring the decision.

CARLOS TUNNERMANN, Nicaraguan ambassador to U.S. [through interpreter]: The government of the United States may say that, but we will have to ask them too, what are the American people going to say? And what will all the law professors think of this situation? And what is international world opinion going to think of this?

LEHRER: In Nicaragua, the Sandinista government shut down La Prensa, the country's only opposition newspaper, and said new internal security measures would be enforced soon. President Daniel Ortega said they were in response to the U.S. House vote in favor of aid to the anti-Sandinista guerrillas in Nicaragua.

MacNEIL: The Supreme Court ruled today that airlines are exempt from a federal law prohibiting discrimination against the handicapped. By a six to three vote, the court said airlines may not be penalized under the 1973 law which authorizes a cutoff of federal aid to those who discriminate. Handicapped rights groups said discrimination is not widespread among airlines, but the absence of strict federal enforcement power makes the situation unpredictable.

In San Rafael, California, Stephen Bingham was acquitted of charges that he smuggled a gun into San Quentin Prison. The gun was used in a prison riot that cost six lives.The state charged that Bingham slipped it to George Jackson, a leader of the Black Panthers, during a visit. Bingham's lawyer contended the state was trying to make Bingham a scapegoat for the violence.

LEHRER: The federal government will begin funding some heart transplants. Health and Human Services Secretary Otis Bowen made that announcement today. He said the funding will be done through the Medicare system, and about 65 might be covered the first year, at a cost of $5 million. Bowen said Medicare payments will go only to selected hospitals.

OTIS BOWEN, Health and Human Services Secretary: Heart transplantation is a technology which should only be applied where an exacting set of clinical criteria have been fulfilled. We expect to propose soon in the federal register the criteria that facilities would have to meet to be eligible to perform Medicare covered heart transplants. The proposed criteria are aimed at identifying facilities with the necessary experience and expertise.

LEHRER: That hoped for slow down in the U.S. foreign trade deficit did not materialize last month. The Commerce Department reported today the deficit grew $14.2 billion in May. Most experts had expected that figure to drop because of the decrease in the value of the dollar abroad. The bad news comes the day after the Congress passed a 1987 budget resolution. It will spend $995 billion with a $142 billion deficit. The House-Senate conference committee agreed on the compromise bill last night, and both houses then passed it with assurances President Reagan would go along with it too.

MacNEIL: The 12 nations of the European community called on South Africa to release jailed black leader Nelson Mandela and lift its ban on the African National Congress. The EEC chief executives did not impose the economic sanctions some had urged, but threatened to do so in three months time if South Africa does not respond to the demands made today.

Meanwhile, Sir Geoffrey Howe, the British foreign secretary, will visit South Africa and try to open a dialogue between white and black leaders.

LEHRER: The United States and New Zealand remain at odds over U.S. ships in New Zealand ports. Secretary of State Shultz met today in Manila with New Zealand Prime Minister David Lange. At the end of that meeting, Shultz said, "We part company as friends, but we part company." New Zealand has a policy of refusing port access to ships believed to be nuclear armed. The U.S. has a policy of refusing to reveal the armaments on a ship. The issue came to a head last year when New Zealand refused permission for a U.S. ship to berth.

MacNEIL: In Ireland the reformist government of Prime Minister Garret Fitzgerald appears to be in trouble politically, after an overwhelming defeat of its proposal to permit divorce. It was defeated by a three to two margin in a referendum. We have a report from John Thorne of the BBC.

JOHN THORNE [voice-over]: The overwhelming defeat was evident from the first ballot box. The excuses have already begun -- a combination of the Catholic church's corporate influence and the traditional conservatism of rural Ireland. In the cities, the unpopularity of the government decimated the young vote it counted on. Political tally men soon reported the heavy trend as high as three to one against.

MARGARET GEAREY, divorce action group: The effect of the news is that the majority of Irish people have said to their own, "I don't care a damn what problems you have. We will not change the law to accommodate you." And that's terrible indictment. It's terrible thing for any nation to say to a number of the people within their own nation -- "We are not going to look after you."

THORNE [voice-over]: As the results built up, the government had to assess the political damage -- not only domestically, but to the Angloized agreement. The weekend will be spent on damage limitation. The unexpected rejection has rocked an administration facting a general election in the new year.

MacNEIL: The government of Italy resigned today, ending the longest period in office of any of Italy's 43 postwar governments. Socialist Premier Bettino Craxi submitted the government's resignation after his five party coalition was defeated in a series of votes in parliament. News of the resignation sent share prices tumbling, and the stock index on the Milan exchange fell 3%. Craxi, who'd been attending the European summit in the Hague, told reporters, "Whenever I'm away, something like this happens."

LEHRER: And that's it for the news summary tonight. Now it's on to more on the continuing European debate about sanctions against South Africa; to a report on how tax reform looks from Oshkosh, Wisconsin; and finally to part four of our series on the new immigrants. South Africa: Pressuring Pretoria

LEHRER: South Africa received another threat on its economic life today. It came from the leaders of the 12 nations of the European common market, meeting at the Hague in the Netherlands. We have a report on the meeting from special correspondent Larry Pintak.

LARRY PINTAK [voice-over]: Even as they assembled here yesterday, it was clear the European leaders were miles apart on how to deal with South Africa. About all they agreed on was that apartheid must go. How to achieve that was, and still is, the point of contention.The first sign of trouble came when West Germany boycotted yesterday morning's foreign minister's meeting, because sanctions were on the agenda. Britain's prime minister, Margaret Thatcher, and Germany's Helmut Kohl are firmly opposed to any economic measures against South Africa. Both countries have strong trading ties with the white ruled state. Portugal backs their position. With an estimated half million Portuguese living in South Africa, the Lisbon government is worried they'll all come home if the economy there collapses.

As anti-apartheid demonstrators gathered outside the conference center, first country Holland pushed to front a compromise that still had teeth. There weren't many smiles at this morning's family portrait. Resentment was growing among the nine countries that favored sanctions. Their hopes of imposing a ban on the import of South African fruits and vegetables, wine, metals and gold coins were eventually abandoned to avoid an open split in the community. The final compromise worked out this afternoon contains little that's concrete beyond stepped up economic aid to South African blacks.

It calls for the incoming EEC president, British Foreign Secretary Sir Geoffrey Howe, to visit South Africa and try to promote a dialogue among the races. And it sets a deadline. South Africa has three months to free Nelson Mandela and other political prisoners and legalize the ANC and its sister organizations. The only trouble is, the European leaders seem to disagree on just what it is they agree to do if Pretoria defies them. The Dutch prime minister interprets the final communique to mean economic measures will be imposed even if, in his words, "one or two countries still oppose them."

RUUD LUBBERS, prime minister, Netherlands: All individual member states -- that means also Great Britain, that means also Germany -- have sat around the table. We shall not say after two to three months, "Yes, we were committed in the Hague, but today we have a different opinion, and I am against it, so I am going to block such measures."

PINTAK [voice-over]: Margaret Thatcher reads the agreement quite differently.

MARGARET THATCHER, prime minister, Britain: They are not automatic. There is no ultimatum. What we have said is that in the meantime we shall consult with other countries on further measures which might be needed covering the things which are indicated. That seems a reasonable contingency plan, eh?

PINTAK [voice-over]: But Thatcher didn't pull any punches. Even though her foreign secretary apparently disagrees, she's adamant that her approach is the right approach.

Prime Minister THATCHER: It's very easy in life to go on hitting out. It's much slower but more positive and more worthwhile to take measured steps to try to achieve the results you want. That is the message of this communique. Don't hit out. Try to get negotiations going. Try to be positive. Try to be constructive.

PINTAK: The compromise reached here gives a boost to President Reagan's efforts to avoid sanctions. But there's a bigger fight in store for Mrs. Thatcher at the commonwealth conference in August. Led by Britain's former African colonies, many in the 49 member group are demanding sanctions and threatening the breakup of the commonwealth if they're not imposed.

LEHRER: That report by special correspondent Larry Pintak. Harsh unified sanctions have yet to come to South Africa, but the threat and the anticipation of them are there, as we see in this report from Michael Buerk of the BBC.

MICHAEL BUERK [voice-over]: Camparis on the terrace of the Johannesburg country club, for the republic's most worried businessmen. They're members of the South African-British Trade Association -- a luncheon club worth 15 billion pounds. That's what Britain's invested here -- twice as much as any other country -- most, as it happens, while apartheid was being cemented into place. With pressure for economic sanctions on South Africa almost unstoppable, the businessmen have invited a black homeland leader, who's telling them what's been happening to his people.

ENOS MABUSA, chief minister, Kangwane: Effects that my people have been the victims of social engineering, and treated not as individuals -- individual human beings with feelings -- but as automized units, wherefore being shovelled and shunted around like gravel.

BUERK [voice-over]: Mr. Mabusa is not a radical. His talk of blacks' despair is not new. That of the whites here is. They're really worried now.

MURRAY HOFFMEYER, South African-British Trade Association: Extremely.I don't think you can live in South Africa except you're desperately worried. Have you met South Africans who are not worried? It's -- there's never been so worrying a time. And let's at least agree on that if we can agree on nothing else.

BUERK: The business community here now regards international sanctions as inevitable, but it's hoping they'll be merely token measures. Token or not, the South African economy is no push over.

[voice-over] The month, South Africa has started a huge new platinum mine and a platinum refinery. It's a wonderful and vital metal that can be spun and woven like thread. Eighty percent of the West production comes from South Africa. Half the world's gold comes out of South African mines -- five billion pounds a year of liquid wealth. Like so many minerals, South Africa has an abundance -- impossible to stop reaching their markets, short of a naval blockade. The only result of trying would be to put the price up. Fruit from South Africa can be stopped.The trade is worth 100 million pounds, but seems a likely target. South Africa has been preparing for isolation for more than a quarter of a century. Its plans to make oil -- the only mineral it has not got -- from coal are the most advanced and easily the most well developed in the world. The G-6 self-propelled gun, a show piece of an arms industry that grew out of an embargo. South Africa makes more than 90% of its own weapons now, and exports them to dozens of other countries. Occasionally it uses them on its neighbors. But those neighbors would likely collapse without South Africa.Today there were 7,000 South African railway wagons scattered throughout the subcontinent. The only way much of black Africa can move their goods in on South African railways through South African ports.

WIM HOLTES, Foreign Trade Association: South Africa is the locomotive that keeps the whole of Southern Africa going. And I've just told you that South Africa, with its less than 30 million people, are directly responsible for another 45 or 48 million people in the rest of Africa. And that interdependence is going to be threatened by any ill considered option or sanctions. It's the gravest economic absurdity, affecting the whole of Africa, which is already such a -- probably such disaster country.

BUERK [voice-over]: Sanctions would hurt but not destroy. The economy, though, is already faltering -- whites as well as blacks queuing at soup kitchens. If sanctions were 20% effective, it's thought 100,000 whites and 300,000 blacks would be joining them.

MacNEIL: There has already been a strong call for sanctions by the group of eminent persons from British commonwealth countries who visited South Africa to try to get talks going between the government and black leaders. The group's leader was former Australian Prine Minister Malcolm Fraser. Charlayne Hunter-Gault talked with him this week in New York.

CHARLAYNE HUNTER-GAULT: So far the British government, as well as the U.S. government, has refused to endorse more stringent sanctions called for, by the way, by your group. They say sanctions just don't work. How do you respond to that?

MALCOLM FRASER, former premier, Australia: The South African government believes in economic sanctions. They are a daily instrument of national policy in their dealings with their neighbors, like Lesotho and Botswana and other states. And the South African government, in their discussions with us, made it quite plain that they fear the imposition of sanctions on the part of the West.

HUNTER-GAULT: Foes of sanctions say that sanctions will hurt the very people that they are designed to help -- that is, the blacks. What's your view of it?

Mr. FRASER: I think that's an impertinent argument for white people to use, or for people from other countries to use. There is 60% to 70% black unemployment in Crossroads. Blacks are hurting every day of the year in South Africa. In the homelands, their standard of living is as bad as anywhere in Africa. You know, the perception that blacks in South Africa are better off is really nonsense. If there are not sanctions from the West, and if that doesn't result in a change in the attitude on the part of the South African government, the country will degenerate into greater and greater violence. And that's going to hurt everyone much, much more than economic sanctions.

HUNTER-GAULT: Chester Crocker has said that the international community, the United States, can only affect things in South Africa, at best, at the margins. Is it outside or inside where the --

Mr. FRASER: Well, most of the pressure comes from inside. But quite certainly quiet diplomacy, under whatever name you call it, does not work. And the --

HUNTER-GAULT: We call it constructive engagement. That doesn't work, in your view?

Mr. FRASER: It's been tried for five years. And there is a worse situation in South Africa now than there has ever been. And one of the reasons is that the South African government believes that the attitude of the United States and of Britain will protect them from the effective imposition of sanctions. Let's put it this way: if there is no action from the United States, if Britain does not join the rest of the commonwealth, then the African leadership will be saying, "We're on our own." We have no support -- no substantive support from the West. We know that diplomacy won't work. The commonwealth genuinely tried to establish a negotiation in which we would -- the black leaders would have participated, but the government wouldn't. Therefore, we're on our own. We have to fight it out.

HUNTER-GAULT: You mean --

Mr. FRASER: That means going to a long term guerrilla warfare, Asian style, in which soft targets are going to be the prime targets of attack.

HUNTER-GAULT: You mean people?

Mr. FRASER: People, yes. People, children, hospitals, milk bars. Because this is what happens in this kind of conflict.And then you have the circumstance where every white family wants a platoon of soldiers to protect it 24 hours a day. The strength of the army is dissipated, and numbers will win in the end.

HUNTER-GAULT: Your predictions of a blood bath in South Africa, in terms of the numbers, reached Holocaust proportions.

Mr. FRASER: Yes, they do.

HUNTER-GAULT: Is that an inappropriate analogy?

Mr. FRASER: No. Well, if there's a direct analogy with what happened in Europe in the '30s, '40s, maybe. But I think we were using that word in terms of the numbers who could be killed. We really do believe that three or four million people could be killed in that kind of contest.

HUNTER-GAULT: Is there any sliver of a silver lining in any of your pessimistic assumptions?

Mr. FRASER: Before I answer that, can I make just one point, because it's important for the United States. The kind of government that will emerge from that sort of guerrilla contest will owe allegiance to its source of violence. It will be Marxist. And it would nationalize the totality of Western commercial interests. And that's what's going to happen if Britain and America do nothing.

HUNTER-GAULT: Is it an appropriate characterization that the eminent persons group threw up its hands on South Africa after its visit?

Mr. FRASER: Towards that end of our last visit, it was quite clear that the government was backtracking, that they were having reservations about attitudes which they'd expressed earlier. And we left certain views with -- at our last meeting with ministers, when we met all the ministers concerned with constitutional development. And if they'd wanted to press on with the possibility of negotiations, they had to give us a forthcoming response to that meeting. And that just didn't materialize. Again, a very negative response. One didn't say yes, but in the South African way, didn't say no. But, you know, they primarily use these tactics just to dangle people on so that you never come to any conclusion.

HUNTER-GAULT: How much do you think that has to do with increasing agitation on the part of the nationalist party's right wing?

Mr. FRASER: I wouldn't have thought it's the right wing that deterred the government. But negotiation for them has a very, you know, limited meaning. They talk about a negotiation with an open agenda.But I think they want to use a negotiation to get their own decisions accepted or to give the appearance of acceptance by at least, some black leaders. And the government has done much to try and establish a sense of disunity amongst different black groups and leaders.

HUNTER-GAULT: Are you saying that the government is actively fomenting violence between blacks by using the vigilantes -- there've been those allegations inside of South Africa.

Mr. FRASER: Yes, I'm sure this is happending. And white organizations like Black Sash or Parent Detainees Support Organization claim that they have documented circumstances in which common criminals have been let out of jail on condition that the person goes and fixes this -- you know, a black leader here or a black person there who's been particularly active in the fight against apartheid. I hate term black on black violence, but it's the term that's used. They try and promote that.

HUNTER-GAULT: Are you saying that the black on black violence, in your view, is not as big a problem as it is widely said to be?

Mr. FRASER: Certainly not as big a problem as the government says it to be.

HUNTER-GAULT: What do you make of Britain's foreign ministry representative meeting with Oliver Tambo, head of the ANC? Is that some sort of breakthrough or a signal to South Africa?

Mr. FRASER: I hope it sends a signal. It is a breakthrough, because formerly the British government said it wouldn't meet with Oliver Tambo unless the ANC renounced violence. Now, that's the South African government's line. But our report states quite clearly -- and the report's unanimous -- that this is unreasonable when people have no political rights, no protection under the law. You can not ultimately deny people's right to defend themselves. And if in current circumstances the ANC renounced violence, they're totally defenseless.The government could continue apartheid forever and a day.

MacNEIL: With us now to comment on Malcolm Fraser's remarks and the decision by the European leaders in the Hague is South Africa's ambassador to the United States, Kurt von Schirnding.

Mr. Ambassador, to go through some of these things, that is a grim prediction we just heard -- guerrilla war in which three to four million people could be killed. What is your response?

Amb. KURT VON SCHIRNDING, South Africa: Well, it firstly is also a highly irresponsible prediction, and it's not the first time that Mr. Fraser has done this. He did this -- he made a similar prediction when he came out with his report. It's very easy to sit in comfort in New York and to make predictions of this nature would could affect millions of blacks, cause sanctions, and to make allegations that have no foundation, such as, for instance, that the South African government is fostering black on Black violence. All that is simply untrue.

MacNEIL: What about the point that he made that unless there are concerted sanctions with the U.S. and Britain joining in, your government simply will not enter into realistic negotiations with black leaders?

Amb. SCHIRNDING: Once again, that is completely untrue. The government has been trying for a long while precisely to enter into meaningful negotiations with the chosen leaders of the various communities in order to get them to the conference table to hammer out a constitutional dispensation with which everybody will be happy. They haven't been able to do so because they have been intimidated by other blacks, by representatives and followers of the ANC, which is committed to violence. Now that Mr. Fraser conveniently ignores.

MacNEIL: Well, he also gave something like a justification for their being committed to violence. Did you not find it remarkable that the former prime minister of a democratic commonwealth country would say that the ANC has no course but violence, because it has no rights.

Amb. SCHIRNDING: I do. I find it very remarkable indeed. I think it's, once again, a highly irresponsible statement.The African National Congress is Moscow dominated. It is a terrorist organization. It's killing and maiming innocent people -- women and children -- in South Africa. Now, that's no way, surely, to march towards the future.

MacNEIL: How would you anticipate your government is going to react to the call from the Hague today from the 12 European nations first of all for the release of Mandela?

Amb. SCHIRNDING: Well, I think the question of the release of Nelson Mandela has really been answered a number of times by the South African government and by the state president; namely, that if he were to renounce violence, we would be prepared to release him. Which, I think, is not unreasonable. We've said we will talk to the ANC if they renounce violence.

MacNEIL: And what about the ban on the ANC itself?

Amb. SCHIRNDING: Well, the ban on the ANC is a different matter that would have to be considered, but certainly we would be prepared to enter into negotiations with anyone, including members of the ANC, if they would renounce violence as a goal.

MacNEIL: As I read the report of the commonwealth eminent persons group, they came very close to negotiating the release of Nelson Mandela and had actually obtained from him a guarantee that he would not pursue violence. But then your government backed out of that negotiation.

Amb. SCHIRNDING: No, that -- that -- I've seen this report, and it's absolute hearsay.

MacNEIL: I mean, that is what they said in the report.

Amb. SCHIRNDING: Yes. But we -- there is nothing that I can recall in the report which actually stated that Nelson Mandela had renounced violence.

MacNEIL: I see. In other words, in response to this, you do not see any need for your government to change the grounds on which it would release Mandela or recognize the ANC because of this call today from European nations.

Amb. SCHIRNDING: I think it is absolutely essential, I think, for an organization that wants to have a part in negotiating the future of South Africa for it to renounce violence. I think that, surely, is not an unreasonable demand for a government to make.

MacNEIL: What do you feel about that official in the British Foreign Office seeing Oliver Tambo, the head of the ANC, after having refused to do so?

Amb. SCHIRNDING: Well, that is, of course -- it's naturally a decision for the British government to make, but the point remains that the ANC is a terrorist organization, and in our view it is not very farsighted to talk to representatives of terrorist organizations.

MacNEIL: But do you see Britain thereby sending some kind of signal to your government that its position may be changing?

Amb. SCHIRNDING: Well, it would be very hard for me to interpret that as that sort of signal. Clearly they felt that at this point they wanted to discuss matters with a representative of the ANC, and they've done so.I wouldn't like to second guess what they were trying to do.

MacNEIL: Let's come back to sanctions. Malcolm Fraser said your government fears sanctions. We had some evidence in the report from the BBC correspondent that certainly the business community fears sanctions. I mean, what is your government's attitude to the effect sanctions would have?

Amb. SCHIRNDING: Well, we're obviously against sanctions. Clearly we don't -- we would not welcome sanctions. That is clear. But if it comes to the point where we have to put national security above the threat of sanctions, we would have to do so. But what Mr. Fraser conveniently didn't mention was the effect on our neighboring countries -- Lesotho and Botswana and further afield -- Zambia, Zaire. I mean, these countries are dependent on South Africa to a large extent. I mean, it's not even -- I don't -- often this is really recognized that South Africa provides Lesotho with 99% of its imports.

MacNEIL: Well, what do you see as the answer, Mr. Ambassador? The commonwealth group has evidently decided after its own investigations that unless something drastic is done to put pressure on your government, that it's going to degenerate into open civil war with, as he said, people as targets, with the prospect of a very -- you know, with the army being called to defend whites, dissipating its strength, and numbers winning in the end, he said.

Amb. SCHIRNDING: Well, you know, I almost have the impression that he -- that this was wishful thinking -- that this is what he was almost hoping for in a strange, macabre sort of way. I mean, this is the very opposite, I would have thought, that one would like to see and what one hopes for in South Africa. Now, pressure on South Africa will certainly not achieve those ends. On the contrary, it will put back the pressures for reform. Because you need funds. You need investment. How are we going to provide for education?Enormous costs in South Africa for black education. How -- what's going to happen to the more than two million foreign blacks who found their livelihood in South Africa if you try to destroy the South African economy?

MacNEIL: Well, Mr. Ambassador, thank you for joining us.

Amb. SCHIRNDING: Pleasure.

MacNEIL: Jim?

LEHRER: Still to come tonight, tax reform as seen from Oshkosh, Wisconsin; and the political success story of a Cuban immigrant. Taxpayers' View

LEHRER: In Washington, they're calling it the tax reform miracle. The Senate passed a proposal by an overwhelming 97 to 3 vote to a chorus of cheers and praise. It now goes to a House-Senate conference committee, back to both houses, then to the President's desk, and the miracle will be complete. Correspondent Elizabeth Brackett went to Oshkosh, Wisconsin, to see how the Washington miracle looks from there.

STEVE LABUS: I'm counting on a face lift. I don't see it as a true reform, but I think it'll be a nice face lift.

CHARLES HULESBOSCH: Well, to take the high road, I have to say it's positive. But personally it's affecting me very negatively.

ELIZABETH BRACKETT [voice-over]: While the politicians in Washington were congratulating themselves on shepherding a tax reform bill through both houses of Congress, voters in places like Oshkosh, Wisconsin, were trying to figure out just how much their lives would be affected by this new legislation.

EDITH COLLINS: We probably will pay a little more tax. It's my understanding that maybe 25% of middle income families will pay more taxes, and my guess is that we probably will be in that 25%.

BRACKETT: Why do you think that?

Ms. COLLINS: Because the rate may be about the same, and the deductions will be reduced. We won't have as many deductions. I don't know for sure, but that's my guess.

BRACKETT [voice-over]: There is a lot of guessing going on in Oshkosh and some worrying, though this largely Republican town of 50,000 is the town the President's advisors picked to introduce the administration's tax reform package last year.

PAT BUCHANAN, White House: Oshkosh represents the middle America component of the program -- the American family. It could have been St. Louis, it could have been Green Bay, it could have been another town like that. But Oshkosh, I think, hits it just perfectly.

BRACKETT [voice-over]: President Reagan took the advice of White House Communications Director Pat Buchanan, and one year ago he stood on the steps of the county courthouse and lambasted the present tax system.

Pres RONALD REAGAN: Our system of taxation has turned into something completely foreign to our nature -- something complicated, unfair and, in a fundamental sence, un-American. Well, my friends, the time has come for a second American revolution.

BRACKETT [voice-over]: The President then proposed a new tax plan which would drastically cut deductions and dramatically lower rates.

[on camera] Ronald Reagan and his plan for tax reform were received with enthusiasm last year here at the county courthouse in Oshkosh, but few who heard the President then thought tax reform would be this close to reality one year later.

[voice-over] We talked with four Oshkosh residents -- the same four we spoke with before and after the President's speech a year ago. And they were surprised at the progress the tax bill had made.

Mr. LABUS: Okay, got it.

BRACKETT [voice-over]: Steve Labus is a construction workers in Oshkosh. A year ago he found the President's plan interesting, but didn't think tax reform had a chance of getting through Congress.

Mr. LABUS: I didn't believe it would get this far. I thought that they were going to use it as a, I don't know, campaign fodder to keep the people at home happy.

BRACKETT [voice-over]: Whilethe tax reform has gotten this far, Labus, like many Americans, has begun to work the numbers. Labus is married and has a 14-year-old son. He brings home about $27,000 a year from his work in construction.

Mr. LABUS: It's going to affect me only marginally. If the rate is 15%, I paid a little less than that on my taxes last year. I paid just under 12%. So I guess you could say for last year the net effect would have been I would have lost a little money on the deal. I don't know about next year.

BRACKETT [voice-over]: Labus says he wants to reserve final judgement until the bill emerges from the conference committee set up to reconcile the differences between the House and Senate bills. But he is beginning to believe the final product will mean a fairer tax code.

Mr. LABUS: I think that the final product will be more fair than the previous tax bill. I think it will have to be, or people will just get upset with them and, you know, they just won't take it anymore. They'll be as cynical as the most cynical person on the hill right now, you know.

BRACKETT: Well, has this improved your cynicism?

Mr. LABUS: It's made me less skeptical of their power to get things done. I don't know if it's made me less cynical or not.

BRACKETT [voice-over]: Cynicism would not seem to be a part of Edith Collins' make up. The wife of a university pastor, she enjoys practicing the music she plays at Sunday services in the Oshkosh Methodist church. But she has never quite believed the politicians when they said tax reform would mean a fairer tax system.

Ms. COLLINS: But I am a little cynical about the impact overall, because I think middle income people will continue to pay a large amount of the income tax. I'm concerned also about the progressive nature of the tax system, because it seems to me that, at least under the Senate bill, a person earning $30,000 and a person earning $300,000 will pay the same rate. And that doesn't sound very progressive to me. And in my way of looking at it, that isn't fair.

BRACKETT [voice-over]: When we spoke with her last year, Collins, a teacher, was worried about losing the deduction for state and local taxes. Now that both the Senate and House bill retain those deductions, Collins is worried about the loss of other deductions the family has used. She and her husband bring home about $35,000 a year and send three children to college. They pay no mortgage, because their home is supplied by the church.

Ms. COLLINS: I think we probably will lose the two wage earner deduction which we now use. It's a necessity in our family for both my husband and myself to work. We make considerable charitable contributions. I don't know whether some or all of those will be allowed.

BRACKETT [voice-over]: Presidential advisor Pat Buchanan was right when he said Oshkosh represents an America that has held on to traditional values. Oshkosh residents still drink root beer floats while the carhop's skates stay in time with sounds from the '50s. But Buchanan may have forgotten that many middle Americans, like Labus and Collins, maintain a healthy skepticism of politicians' promises -- even promises that their taxes will go down while taxes on corporations go up.

Mr. LABUS: You pay for it in the end. You know, sooner or later you all pay for it. Either I'll pay for it in my taxes or I'll pay for it at the store, you know, or marketplace or wherever I go. It's -- they're duty bound to pass on any added expenses. I think that both bills,by the time they get out of the conference, they'll have a compromise that will help business out.

BRACKETT [voice-over]: Stephanie Gregory makes less money than either Collins or Labus. This mother of three has gotten a promotion since we spoke with her last year. She's now a quality control inspector in this Oshkosh plant that manufactures electrical transformers. She makes about $13,000 a year. A solid Reagan supporter, she was enthusiastic about the President's plan for tax reform last year, and is even more enthusiastic now. She says with the increase in the personal exemption and the standard deduction, she and her husband may pay no taxes. But Gregory likes the House version of tax reform a lot better than she likes the Senate's version.

STEPHANIE GREGORY: With the House's it seems like it will be a little more evenly distributed and take more of a burden off the middle class, where the Senate bill doesn't seem to do that.

BRACKETT: What do you think will happen to those two bills when they go into the conference committee?

Ms. GREGORY: It's going to be a fight. I wish I could be there to see it. But I have a feeling that it's going to come out for the best. Because whenever -- that's she way this country's set up. It seems like whenever you have the most fighting over something in our legislative bodies, that's when things work out to be the best.

BRACKETT [voice-over]: Charles Hulesbosch is not at all things will come out for the best. At the other end of the income scale from Gregory, Hulesbosch is vice president of Oshkosh Truck, the largest employer in Oshkosh. Hulesbosch earns well over $100,000 a year in salary, separate from his substantial stock holdings in the company. Hulesbosch listened to the President in Oshkosh last year and liked what he heard then.

Mr. HULESBOSCH: I'm convinced that what comes out of the program ultimately is going to be better than what we have now.

BRACKETT [voice-over]: One year later, Hulesbosch is no longer convinced that the final tax bill will be fairer or simpler than what exists now.

Mr. HULESBOSCH: You know what fair is -- fair is what Senator Long said: "A fair tax is one that don't tax you, don't tax me, tax the guy behind the tree." In this case, I happen to be the guy behind the tree.

BRACKETT [voice-over]: Hulesbosch is the guy behind the tree because of the proposal to tax long term capital gains at the same rate as ordinary income.

Mr. HULESBOSCH: It wasn't until October of last year that we went public and I was put in the position where there was some wealth created for me. And so that puts me in a different position.

BRACKETT: So you finally got a tax shelter, and now they're taking it away.

Mr. HULESBOSCH: That's right. That's right. Exactly. But it is the result of an investment made years ago in a productive manufacturing company, and the only shelter that we were talking about was capital gains.

BRACKETT [voice-over]: But Hulesbosch says his company will benefit from the lower tax rate for corporations. Another famous Oshkosh company, Oshkosh B'gosh work clothes, said their company too will come out ahead with the new tax rate. But many of the customers who shop at the Oshkosh outlet store are worried about losing a deduction they think is very important -- the deduction for their IRAs. Hulesbosch does not have an IRA, but he would like to see the tax lifted on 401K Plan -- another plan for saving retirement income. But he's no longer countingon lobbyists to push for the changes he would like.

Mr. HULESBOSCH: I frankly think that the lobbyists aren't going to have an awful lot to say from here on in.

BRACKETT [voice-over]: So middle Americans in Oshkosh are waiting and worrying over the final form of the tax reform bill. But, unlike a year ago, all here are convinced that tax reform will be a reality within the next year. The New Immigrants

MacNEIL: Finally tonight, part four of our series on the new immigrants. Tonight it's the story of a refugee from Cuba who has chosen politics as the way to fight for his beliefs. The immigrants who have arrived since the 1960s are just beginning to register to vote and to participate in politics in any numbers. Preliminary trends indicate an increasingly Republican vote -- no more so than in Miami's Cuban precincts. They voted for President Reagan by margins of nine to one in 1984. Cuban Americans are also electing their own people. A decade ago only three Cuban born politicians held office in Dade County, Florida. By 1984, 30 had been elected. One of them was Javier Souto, and June Cross has his story.

JUNE CROSS [voice-over]: Forty-six-year-old Javier Souto, Cuban born, former CIA man, first term member of the Florida state House.

JAVIER SOUTO: Yes, this is my country. It's -- but I -- at the same time, I never forget I'm a Cuban.

CROSS [voice-over]: The Cuban network is tight in Miami. Souto went to school with some of these supporters, fought Castro with others. The Bay of Pigs veterans wear these pins as a badge of honor. Souto is a Republican. Most Cuban-Americans are, driven by their hatred of Castro and communism. Souto's even been to Honduras to treat wounded Nicaraguan contras. He is also known in Florida for saying there are communists inside the state office building in Tallahassee.

Mr. SOUTO: I do believe that there are guys who work for the enemy inside that building. You know, I don't mean to say elected officials. It could be secretaries, it could be staff directors or analysts. Florida has important military bases also -- Pensacola, Jacksonville, others. There are many reasons -- many reasons why the enemy should have people working for them here. And if they work for them, they're working against us.

CROSS [voice-over]: The majority of the Cuban-American community in Miami share these beliefs. They support the President's policy in Central America. Last month a pro-contra aid demonstration was littered with anti-communist slogans. Many demonstrators were from the 2506 Brigade -- the Bay of Pigs veterans association. They're avid supporters of President Reagan. And, like Representative Souto, they are getting more involved.

Mr. SOUTO: If you don't get involved, somebody will get -- another person will take your place. And then who knows what the other person might do.

CROSS [voice-over]: Souto understands how one person change the political landscape. He witnessed Fidel Castro's takeover in Cuba.

Mr. SOUTO: Castro was a guy with a -- you know, kind of a sneaky guy that -- he always knew -- I grew up in a sugar mill where we had a lot of communists around us. Some of the labor leaders were communists. And to me, from what I heard in my home and with my grandparents and all that, communists were the same as, you know, really bad guys -- sneaky guys -- dirt. You know, bad people really.

CROSS [voice-over]: In 1960 Souto was recruited by the CIA to help topple Castro's government. He ended up in Guatemala, was trained as a radio operator, then smuggled back to Cuba. He lived under a false identity, and a pretty courier helped him out.

Mr. SOUTO: I met my wife in Cuba when -- in the underground. I was 20 or -- yeah, about 20. She was 15, 16.

BERTA SOUTO: He was hiding all the time, so I used to be like the messenger. I used to take messages from one place to the other.

CROSS [voice-over]: Souto and his comrades had worked over a year, but the CIA trained underground was never alerted when the invasion was launched on April 17.

Mr. SOUTO: My code name was Servando -- Servando Acosta. Servando, I'd say, "Yeah, yeah, what's happening? What's going on?"

CROSS [voice-over]: It was a fiasco. Nearly 1,200 prisoners, 114 dead.

Pres. JOHN KENNEDY: I think from the beginning the operation was a failure, and the responsibility rests with the White House.

CROSS [voice-over]: Souto blamed President Kennedy, a Democrat, and says that's why he's a Republican today. After the Bay of Pigs, Souto spent 18 months hiding in a garage at the Equadorian embassy. Finally, he made his way to Miami.

Mr. SOUTO: In Miami in those days, I mean, if you had a job you were lucky -- any kind of job.

CROSS [voice-over]: His underground messenger, Berta, had arrive in Miami a year earlier -- one of a quarter million Cuban refugees. These immigrants were doctors, lawyers, engineers -- an elite class disenfranchised by Castro. Used to vacationing in Miami, they were now ready to call it home. Berta married Javier Souto in July, 1963. They raised three children.

Mr. SOUTO: I was helping very little, because I was in school -- going to school at night, working daytime. It was kind of rough to raise these guys, and it's still rough.

CROSS [voice-over]: The Souto children consider themselves Americans. The youngest son, Frankie, seems to have taken after his father. He's enlisted in the army and wants to be a ranger.

Mr. SOUTO: That's Frank -- General Souto they call him.

CROSS [voice-over]: Twenty year old Laura is an insurance clerk who now lives on her own. And Javier Jr. is the age his father was when he worked in the Cuban underground. He's a premed major with top grades, but he's more interested in parties and girls.

JAVIER SOUTO, Jr. [on phone]: You going to pick me up? Sure.

CROSS [voice-over]: Berta and Javier Souto agree that coming from a strict Catholic society like Cuba's and adapting to the more permissive society of the United States has caused some problems.

Ms. SOUTO: For example, very easy. When my daughter started dating, it was a hassle. Because this man didn't want her to go without a chaperone. And it was ridiculous for me to go and -- I mean, I didn't feel like, you know, chaperoning her. So it was very difficult.

CROSS [voice-over]: Most Cuban wives don't work, so one of the first things Javier Souto had to adjust to was his wife's desire to get out of the house. Berta Souto is an administrative assistant at the University of Miami School of Medicine.

Mr. SOUTO: To tell the truth, I was -- I wasn't really enthused for the idea beginning.

CROSS [voice-over]: Like many American two career couples, the Soutos have little time for each other. Representative Souto works a 15 hour day, fueling himself with endless cups of Cuban coffee. He works two jobs -- one as the state legislator, the other as a pharmaceutical representative. In an election year, however, there's no separating the candidate from the salesman.

Mr. SOUTO: Oh, I'm always campaigning. You know how it goes.I work and campaign at the same time.

CROSS [voice-over]: Health care professionals have been among Souto's strongest supporters. He's on the board of this hospital, and believes government should insure health care for all. That's typical of the politics of Cuban immigrants -- more progressive on social issues, and staunchly conservative on foreign policy. Souto's office is decorated with reminders of how close he is to the powers that be in the Republican party. He cherishes an eight minute conversation he once had with President Reagan.

Mr. SOUTO: I had the chance to talk to him once. I think he realizes that if they take over Nicaragua completely and if they take over some of the countries in Latin America, eventually they will make a tremendous impact on the lifestyle of this country that will affect your life and my life and the life of all Americans.

CROSS [voice-over]: This visceral anti-communism has led to a partnership in Dade County between Cuban-Americans and the Republican Party -- all under the stewardship of the Vice President's son.

JEB BUSH, GOP county chairman: We have been the party that has really opened ourselves up to allowing and encouraging Cuban-Americans to run for office.

CROSS [voice-over]: Jeb Bush says Cuban-Americans have made the GOP a growing force in the Florida state House.

Mr. BUSH: I can perceive a day in the near future where that could be a majority Republican. You look back 15 years ago, and that's a pretty remarkable achievement, since Dade County has always been considered the Democratic stronghold in this state.

CROSS [voice-over]: Cuban-Americans may be a political success in Miami, but their obsession with one issue -- anti-communism -- has led to criticism from their colleagues in Tallahassee. Mike Friedman is a liberal Democrat who represents Miami Beach.

MICHAEL FRIEDMAN, state representative (D): The city of Miami does not have a foreign policy, nor does the state legislature have a foreign policy. But they feel the need to take it home, to get reelected, to make strong statements by way of resolutions and memorials that really have no effect at all, other than to play well back in your district.

CROSS [voice-over]: Souto insists he's more interested in local issues. At a monthly town meeting, he was especially proud of two bills he had offered to reduce drug trafficking. Souto also spent much time this year guarding the interests of his Spanish speaking constituents. Souto wants to block any attempt to make English the official language in Florida -- a movement that is popular among the state's conservative Anglo majority. It's the one issue that divides conservatives along ethnic lines.

Mr. SOUTO: The Hispanics feel more at ease speaking Spanish than speaking English most of the time, I would say. And they feel that this is an encroachment on their way of living, and what can you do to the reality of South Florida -- South Florida, and particularly Miami. It is a capital for all Latin America. And they come here to do business.

CROSS [voice-over]: Economists estimate $7 billion a year comes into Florida from Latin American trade. It's trade conducted almost entirely in Spanish, and that's what Souto wants to protect.

Mr. SOUTO: How about TV stations? What about channel 23 or channel 51? It's all Spanish. Are you going to say you can't do that or you have to do it 50% in English? You know, you can't really go and take my freedom of speech.

CROSS [voice-over]: Many Anglos in Miami have accused Souto and the Cuban-American community of blocking their freedom of speech whenever Central American policy issues come up. The conflict was highlighted March 22.

Man: You don't deserve to carry that flag. Only free people can carry an American flag.

JACK GORDON, state senator: Our media needs to help us to Americanize the people in our community to understand what free speech and what the First Amendment really means.

Mr. SOUTO: These guys were screaming and yelling, and these guys were screaming and yelling, you know. They were exercising their freedom of speech, and the other guys were exercising their freedom of speech too, you know. So what's so bad about that?

CROSS [voice-over]: It got so bad that those favoring nonintervention had to be bused to safety after being pelted with rocks and eggs.

Mr. BUSH: What people have to understand is if you lost all the money and came with the shirt on your back, basically, and it was because of a communist dictator, you've got to be sensitive to the fact that these people undestand what communism is, and it's a personal thing. It's not just a theoretical textbook thing like you and I would feel it if we read it in a book.

CROSS [voice-over]: After 23 years in Miami, Javier Souto is part of the Cuban-American political leadership. He says he likes politics and may run for state-wide office. To do so, he'll have to contend with Anglo voters, increasingly resentful of Latin political and economic power. He'll have to preserve his base in the Cuban community while reaching out to others -- a balancing act required of all ethnic leaders who aspire to the mainstream of American politics.

MacNEIL: Next week we conclude this series with the story of Sydney Maree, an immigrant from South Africa, now America's fastest mile runner.

LEHRER: Again, the major stories this Friday. The World Court ruled the United States actions against Nicaragua are in violation of international law. The U.S. Supreme Court said federal anti-discrimination laws concerning the handicapped do not apply to airlines.And the European common market countries warned South Africa to release jailed black leader Nelson Mandela or face economic sanctions. Good night, Robin.

MacNEIL: Good night, Jim. Have a nice weekend. That's our News Hour. We will be back on Monday night. I'm Robert MacNeil. Good night.