The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Tuesday, we preview President Bush's State of the Union Address, with a Paul Solman report on economic options, a Judy Woodruff conversation with voters in Denver, analysis by David Gergen & Mark Shields, and an essay on self-reliance by Roger Rosenblatt. NEWS SUMMARY

MR. LEHRER: This is the night President Bush reveals his plans for reviving the nation's economy. He'll do it in a State of the Union Address to a joint session of Congress. Mr. Bush has promised the speech will give the definitive word on his domestic agenda. Reporters tried to coax him into a preview during a White House photo opportunity this morning.

REPORTER: Is it going to be a good State of the Union Address tonight?

PRES. BUSH: What's so surprising about that?

REPORTER: A bell ringer.

PRES. BUSH: It's going to be all right.

REPORTER: Surprises?

PRES. BUSH: Yes.

REPORTER: On what? [reporter laughing]

MR. LEHRER: Programs outlined in the State of the Union ADdress will be paid for in a $1.5 trillion budget proposal. It is being printed tonight for release tomorrow morning. Senate Majority Leader George Mitchell spoke today about the Democrats' expectations for the State of the Union. He did so on the Senate floor.

SEN. GEORGE MITCHELL, Majority Leader: I hope the President will propose a significant tax cut for middle income families and will include other elements of an economic revival program to help turn the economy around. We welcome his attention to the need for economic stimulus at this time. A tax cut for middle income working Americans, a temporary investment tax credit to speed up business investment, programs to revive the housing and construction industries are all important, and achievable. We need immediate action to restore growth and confidence.

MR. LEHRER: The President's speech will be broadcast live at 9 PM Eastern Time on many of these public television stations. Robin.

MR. MacNeil: The latest round of Mideast peace talks began in Moscow today without the Palestinians. They decided to boycott the talks after a dispute over the make-up of their delegation. We have a report narrated by Vera Frankel of Worldwide Television News.

MS. FRANKEL: Defying Israel's ground rules, the Palestinians brought a delegation, including five members from outside the Israeli occupied territories. America and Russia barred their participation, saying they're unacceptable. So the Palestinians and others boycotted the talks.

JAMES BAKER, Secretary of State: We regret that three of the regional parties invited to attend, Syria, Lebanon and the Palestinians, are not here today. We continue to believe that these three parties could make a significant contribution to the work of these multilateral negotiations and we encourage them to participate as this process evolves.

MS. FRANKEL: Palestinian Hanan Ashrawi justified the protest.

HANAN ASHRAWI, Palestinian Spokeswoman: We found that the politics of fragmentation and exclusion was being practiced on the Palestinian people. We do not understand the rationale behind trying to bring countries together and yet, divide and fragment a nation.

MS. FRANKEL: Israeli Foreign Minister David Levy said any change in the agreed process could cause it to collapse. He warned that Palestinians opposed by Israel would only negotiate with themselves and called them sticks in the wheels of peace.

MR. MacNeil: Sec. of State Baker later said at future talks, the U.S. would allow a Palestinian delegation with members from outside the occupied territories. Russian President Boris Yeltsin today met with commanders of the Black Sea Fleet, which both Russia and Ukraine are claiming. A spokesman said Yeltsin was briefed about nuclear weapons security in preparation for his U.S. trip later this week. Yesterday, Yeltsin suddenly cancelled his appointments and left Moscow, causing speculation about where he'd gone and why. A helicopter carrying some 40 people was shot down in Azerbaijan today. All aboard were presumed dead. The incident occurred in the Caucasus Mountains, where Muslim Azares and Christian Armenians have been fighting for more than three years. An Azare spokesman said the chopper was attacked by Armenian militants. That was confirmed by an Armenian spokeswoman, who said the helicopter was presumed to be carrying weapons and ammunition.

MR. LEHRER: South African police today arrested 10 members of a militant white extremist group on charges of public violence. The group opposes the government move toward power sharing with blacks. Jeremy Thompson of Independent Television News reports from Johannesburg.

JEREMY THOMPSON, Southern Africa Correspondent, ITN: The arrests are a major blow to South Africa's white extremists, the police rounding up the entire leadership corps of the AWB, the Afrikaaner resistance movement which had been fighting against the government's democratic reforms. The charges arise out of violent clashes last August when the AWB tried to prevent state President F.W. DeKlerk from addressing a meeting at the Afrikaaner stronghold of Fentezdorf. Three AWB members died in an exchange of gunfire. The AWB claims the police fired first. Among those arrested today were the movement's powerful leader, Eugene Tarblanche and its secretary general, Piete Rudolph. Both men have been at the forefront of the sometimes violent struggle for a white boor homeland within a changing South Africa. In recent weeks, at least a dozen other AWB commandos have been arrested following a series of bomb attacks on public buildings and multiracial schools. The arrests of Tarblanche and his inner circle five months after the Fentezdorf incident suggests a tough new line by Mr. DeKlerk's government. It's clear they're now committed to cracking down on any extremist organizations to try to stand in the way of the transition to a nonracial government.

MR. LEHRER: And that's it for the News Summary tonight. Now, it's on to a State of the Union preview with Paul Solman on economics, Judy Woodruff in Denver, Gergen & Shields, and a Roger Rosenblatt essay. FOCUS - UPS & DOWNS

MR. MacNeil: We begin our preview of tonight's State of the Union Address with a look at the economic options. The President has promised to offer a plan to jumpstart the economy, but where do he and his advisers go for ideas? Business Correspondent Paul Solman of station WGBH in Boston looks at economic theories and practices of the past.

MR. SOLMAN: Economic ups and downs, it's the image of the business cycle, forever moving through periods of prosperity and recession, most recently the boom of the '80s to the bust of the moment.

PAUL TSONGAS, Democratic Presidential Candidate: My job as President is really very simple, present to the country in the first day, not the first week, a revival economic battle plan which George Bush has not done.

MR. SOLMAN: Presidential challengers, of course, like to think they have the answers to our economic problems; so does the incumbent.

PRES. BUSH: I think we've got to set common sense goals, stick with them, and then, as I say, in the State of the Union message I'll be making specific proposals as to how to help more rapidly achieve those goals.

MR. SOLMAN: But is there really a way for George Bush or his challengers to smooth out the bumps in the rollercoaster economy, or is the economy simply out of the President's hands? We thought that if today's candidates looked back at economic history, they might find some answers. Remember, back in the old days of Adam Smith, when economics first got going, the whole idea was laissez- faire, let the economy regulate itself, rather than have it messed up by kings, trading monopolies, and I suppose anyone who happened to be running for President back then. Smith said the invisible hand of a free market would carefully adjust supply and demand and do a generally better job than government of making the economy grow -- or so economists insisted until the great depression of the 1930s. Some 9,000 banks failed. The stock market fell by 80 percent. The total value of goods and services produced in the U.S. dropped from about 100 billion to 50 billion, and 1/4 of the work force was unemployed. Herbert Hoover, like any serious Presidential candidate in 1931, maintained a "hands off" policy toward the economy. Hoover believed that economic downturns were not only inevitable but helped build national character.

HERBERT HOOVER: [1931] The measure of passing adversity which has come upon us should deepen the spiritual life of the people, quicken their sympathy, the spirit of self-sacrifice for others, and strengthen their courage.

MR. SOLMAN: Even the challenger, Franklin Roosevelt, ran on a platform that conformed to the economic fury of the times, a balanced budget, and then along came English economist John Maynard Keynes, who blasted the laissez-faire policy of his day for getting the economy into deep depressions it just couldn't get out of. As economist Christina Rohmer, a consultant to the Federal Reserve Bank explains, a free market economy can stagnate in a situation where there just isn't enough spending.

CHRISTINA ROHMER, Economist: Both consumers and firms are not spending and not much gets produced, and so that that's Keynes's insight is that if you want the economy to be helpful, you need people out there buying cars and buying houses and firms building new plants, and that that is what keeps people working.

MR. SOLMAN: And how do you do that if they won't do it themselves?

CHRISTINA ROHMER: That's exactly what Keynes said is that if people won't spend and businesses won't spend, let the government spend, and that that's a way to get demand up, that someone's out there buying, even if it's the government, and if someone's buying, then someone has to make it, and put people back to work. Or Keynes would also, besides deciding that this government could spend, this notion turned around to say, well, maybe you can just give people more to spend. So that's where the idea of tax cuts in. If you cut taxes, give people more income, they'll spend more.

MR. SOLMAN: Keynes was the economist who got government and American Presidents to start fiddling with the economy, spending on work programs, cutting taxes, not worrying about a deficit in time of need. The invisible hand became the rather conspicuous open hand of government, openly feeding the economy with the New Deal and even more with the huge deficit spending programs of World War II. It worked like gangbusters, so the government spent on the cold war, on Vietnam, on poverty. When the economy threatened to dip, it spent some more. According to President Nixon's economic adviser, Herb Stein, the 1960s was the high water mark for Keynes's interventionist approach.

HERBERT STERN, Economist: In December 1965, Time Magazine ran an issue with a picture of John Maynard Keynes on the cover. First time they had ever put a picture of a person who was not alive on the cover, and it was to celebrate the victory of Keynesian economics over the problems of economic stability and growth. And since then, confidence in our ability to manage the economy with these Keynesian tools has diminished.

RICHARD NIXON: [1971] In 1969, inflation was roaring along at a rate higher than 6 percent a year.

MR. SOLMAN: What Stein means is that during the Presidency of his boss, Richard Nixon, the Keynesian approach of stimulating the economy just wasn't working anymore. Instead, it was leading to inflation.

WOMAN ON STREET: [1973] I was shocked when I heard on the radio that now oil is going up, cooking oil is going up, beef is going up. There's just too many things that are going up.

MR. SOLMAN: Now, at this point, conservative economists began to blame inflation on open-handed Keynesianism. Call this the era of the scolding hand, rejecting the policy of the past. The new approach was monetary policy, relying on the Federal Reserve here to rein in inflation by manipulating interest rates. But politicians were still trying to fine tune the economy, move out the ups and downs, until Ronald Reagan took office and said we could have it all.

RONALD REAGAN: [1980] As a matter of fact, by 1983, my program can bring about a balanced budget and begin to bring in surpluses so that we can have additional tax cuts beyond those that we have already suggested.

MR. SOLMAN: Call it the glad hand of Reaganomics, if you will, an economic boom of sorts, but largely for those atop the economy, a boom financed largely with borrowed money that America could otherwise have used to invest for the future. As a result, many economists think we're now hamstrung, that open-handed Keynesianism leads to inflation and really works only in a great depression. The other tool of intervention, monetary policy, getting the Federal Reserve to lower interest rates, has also failed thus far to get us out of the doldrums. And so you could call this the era of the praying hand.

HERBERT STEIN: Part of Mr. Bush's problem is that he's been abandoned by economics. He doesn't have a textbook to which he can turn to tell him just what to do.

MR. SOLMAN: Christina Rohmer, a little more optimistic than Stein, says economic theory does have some answers.

CHRISTINA ROHMER: The problem comes when you try to tinker with little changes because our tools are proof that you can step on the gas, but we can't step on the gas just a little bit, or that's very tough, and what you, what we run the risk of doing is getting on this roller coaster. We step on the gas too hard and we come out of this recession, but we're into this -- not a horrible boom, but a boom where there's a lot of inflation, we step on the brakes, and then we, we yo-yo back and forth.

MR. SOLMAN: One thing most economists do agree on, says Rohmer, is that you have to keep both today's jobs and tomorrow's growth firmly inmind.

CHRISTINA ROHMER: In the long run, what's going to matter is: Are we in a healthy position to grow? Are these people going to be thrown out of work again three years from now? That's not a healthy situation either, so -- but you want to end this recession, but in a careful, controlled kind of way that doesn't set us up for another recession very soon down the road.

MR. SOLMAN: But John Maynard Keynes said in the long run we're all dead.

CHRISTINA ROHMER: It's a debate about how long the long run is, that we care about 10 years from -- maybe you and I don't care about 100 years from now, but we're talking about, about 10 years from now, that a misguided policy now can cause problems not just after we're all dead, but in the not too distant future.

MR. SOLMAN: Well, I'm sure we all should be thinking about the long run, especially if it's only 10 years away, but when times are tough, we look for quicker fixes. And so when he delivers his State of the Union speech tonight, George Bush must try to address our short-term discontent. Once again, we're likely to hear even from a conservative Republican essentially open-handed Keynesian proposals, more government spending, more tax cuts, because if some candidate were to say you can't really manipulate the economy, it's the invisible hand that's actually in control, well, that's not a message most of us want to hear, especially not at the moment.

MR. MacNeil: Just what is the message that Americans want President Bush to deliver tonight? According to a CBS/New York Times Poll released today, the mood of the country is gloomier than it has been in 13 years. 73 percent of those polled said the country is in worse shape than it was five years ago. And support for President Bush continues to erode since the Gulf War, with now only 43 percent saying they approve of his performance as President. Now, we hear from some citizens of Colorado who are with Judy Woodruff in our Denver studio. Judy.

MS. WOODRUFF: Robin, we did invite a cross-section of Denver area residents to join us in the studio tonight to watch the President's speech. They're not a scientifically selected sample, but we did try to get a cross-section of men and women, different ages, different occupations, different interests, and, of course, different political leanings. And let's ask them what they think, and I want to begin with Fred Baker. Fred, you're a small businessman here in the Denver area. Are you one of those who is gloom? We just heard Robin cite this poll that's come out today that reminds us once again that Americans are not optimistic about the economy. What do you think?

FRED BAKER: Well, I would say I'd classify myself as gloomy, but not necessarily because I think the economy's in such a bad shape, but because I think that President Bush is not going to do a whole lot to change the way that's going to turn out.

MS. WOODRUFF: Why do you think not?

FRED BAKER: I think he's going to get bogged down in trying to out Democrat the Democrats and engage in a lot of minuscule tinkering with the economy that's not going to do a whole lot to get us into better shape.

MS. WOODRUFF: The sort of thing that Paul Solman was just referring to?

FRED BAKER: Right.

MS. WOODRUFF: Like what? What are you afraid that he may say that may do tonight?

FRED BAKER: Well, I think proposing a lot of tax cuts and incentives for various segments of the economy is going to do nothing but exacerbate the situation. A perfect example, without stealing the thunder of somebody else in the audience, is the luxury tax, which did nothing but worsen life for a segment of the economy.

MS. WOODRUFF: You mean luxury tax on boats?

FRED BAKER: On automobiles and boats, which put a lot of people out of work. And that's an example of the type of tinkering that doesn't do any good for the economy?

MS. WOODRUFF: Would you agree with that Tina Arapkoles? And I hope I got your last name right. You're with the Sierra Club. Do you think the President -- it would be a mistake for the President to talk about tax cuts for the middle class?

TINA ARAPKOLES: I think what we're really looking for in the President is some leadership. And without his leadership to take some strong stands, to bring us into the future, we're going to end up in the situation that this gentleman just described.

MS. WOODRUFF: Leadership. What do you mean by leadership? What are you looking -- what do you want him to say tonight?

TINA ARAPKOLES: I'd like for him to link the economy and the environment, because without a healthy environment, we don't have a healthy economy. He was talking about looking at common sense goals. We need more than common sense goals. We need goals that are going to take us into the future with a long-term look at not only a short -- you know, not only economic goals, but environmental goals that are going to take us into the future.

MS. WOODRUFF: Do you think, Andy Bain, you're an administrator, do you think that the President is going to be looking long-term, as Tina just said that he should?

ANDY BAIN: I sure hope so and I think he's got to, Judy. He's in a real pinch right now, trying to fine tune the economy, and I don't think that an economy this big can be fine tuned. So I hope he looks long-term.

MS. WOODRUFF: Why not? Why can't it be? I mean --

ANDY BAIN: Well, it's just, the nature of a capitalist economy is what we call creative destruction. And with the destruction, there's got to be creativity, and people are going to feel the pain, and every time people feel pain, you can't -- you can't tinker with fiscal or monetary policy to try and turn it around.

MS. WOODRUFF: What would you like to hear him say tonight? What is the most important thing that he could say in your mind?

ANDY BAIN: In my mind, I think that he's got to pick a fight with the Congress, not just the Democrats, but with the entire system. I think that there's a real opportunity to reform the political landscape in this country and I think one of the real problems he's got is that no matter what proposals he tries to put through the Congress it's going to get bogged down in the gridlock and the infighting that's happening in Washington. And I think he's got to come out and say, listen, it's time to change things in Washington, it's time for a new progressive era. We've got to limit terms as we do a number of things to get the system, get rid of the gridlock in the system.

MS. WOODRUFF: Do you think, Maurice Goodgane, accountant, we're identifying everybody what he or she does, do you think those are the sorts of things that President Bush is going to say tonight, and whether you do or don't, what do you think he should say?

MAURICE GOODGANE: I don't think he'll say those kind of things. I think he'll get caught up in some of the things that maybe make political sense, things that affect people immediately, but long- term building of the infrastructure, long-term commitment to education, things that are going to make us competitive on a global type of playing field, not something that is a $300 give-back that makes everyone feel good for awhile, but something that's going to be a long-term policy that gets us back into the game globally.

MS. WOODRUFF: Does anybody here disagree with that and think the President ought to be worried about the short-term, ought to be worried about unemployment and about some of the immediate fiscal problems facing this country? Alice Chavez Daily.

ALICE CHAVEZ DAILY: I think that he's got to be worried about both. I agree on long-term planning, but I work with people who need jobs and they don't care about tax rebates.

MS. WOODRUFF: You're a job training specialist, is that --

ALICE CHAVEZ DAILY: Mmm Hmm. And you've got to have money going in to paying taxes before you can get any back. And so I think that the President needs to be worried about the multitudes, the thousands of layoffs that we're seeing.

MS. WOODRUFF: So what should he do? What should he say tonight to satisfy you?

ALICE CHAVEZ DAILY: I think that there's got to be some planning around the production in this company -- in this country, the products that are being made and where they're going or where they're staying, and take a look at ways that particularly the larger companies that employ, you know, the thousands of people, how can they be helped to get better at what they're doing, rather than to be looking at bottom line as getting rid of heads.

MS. WOODRUFF: Dennis Coglin, you raised your hand when I asked if anybody disagreed a minute ago. What were you going to say?

DENNIS COGLIN: I think that the President has to relax the banking environment and encourage banks to make loans. Without those loans, new companies and now jobs can't be encouraged. And in today's environment, the banking industry is so highly regulated that they are literally not lending money.

MS. WOODRUFF: And why is that the most critical thing on your list? I mean, you know, people are worried about jobs, they're worried about education, environment and so on, but you're specifically talking about the banks. Why?

DENNIS COGLIN: If you don't have the capital, you are not going to be able to, to hire new people and create new products. So we must have the ability to raise capital for the American companies and industry today. And that's something the President can do something about immediately.

MS. WOODRUFF: All right. Let me move over here and talk to someone who was nodding her head just a minute ago and that's Jenny Escobel. Do you agree that it's the banks that the President ought to be focusing on?

JENNY ESCOBEL: No, Judy, I really don't agree with that. My personal view, what I'm expecting President Bush to say tonight - - I'm unemployed right now. I'm 45 years old. My husband retired on a medical five years ago. And I feel that President Bush has to come back and look -- I've done volunteer work now for 15 years - - I haven't gotten paid for it. And I'm not complaining. It's been a good experience. But I think now is the time when all America, with President Bush, let's get together, let's start looking at our backyards, let's really start cleaning up. Let's mow the lawns. Let's get rid of the poverty we're in right now.

MS. WOODRUFF: What do you mean -- mowing the lawn is going to do what -- what are you suggesting -- other than making the neighborhood look good?

JENNY ESCOBEL: What I mean by mowing the law is I really feel that okay, when people, business people, okay, sometimes as business people we tend never to see what's really behind in our communities. You know, we usually -- I belong to Organize Baker Residents, and I just want to share with you just a little bit -- usually the people that are in businesses or working, they always look at a small community and say that community is fine, the housing is great, but they don't really, when you get into the deep roots of that community, that's where the suffering lies, with people, with the poverty that goes in the United States.

MS. WOODRUFF: So are you saying that people could turn this around themselves, that they shouldn't be waiting for the federal government and for the President to do something? Is that what I hear you saying?

JENNY ESCOBEL: Yes. I feel that the Republicans and the Democrats and all of us together, we have to start looking, let's start focusing more in the United States, not out of the country right now. Let's really, really look at our economy and look at the job system that we need to change.

MS. WOODRUFF: Ed Jones, has there been too much focus outside of the country by this President? That's been one of the criticisms that's been leveled.

ED JONES: Well, I don't know if there's been too much focus outside of the country. I think that, you know, the world is smaller, and I think that a lot of things that he has done is because we are a humanitarian country. I agree with Dennis. I think that the problem now facing us is, and he has tried to do this, and I hope that he can still instill to the bankers and to the Federal Reserve, is that dropping the interest rates are great, but we've got people who can't qualify for loans in my industry.

MS. WOODRUFF: You're in real estate?

ED JONES: Right. Mainly because I think the banks are still, it's still the old theory is that the horse has already got out of the barn now and we're going to lock everything up.

MS. WOODRUFF: Well, what can the President say -- what should the President say tonight about what you're worried about?

ED JONES: Well, I think what he should say to, also to Congress, is that collectively they need to put the pressure on the private banks to open up more revenue in this country on a short-term and long-term, because normally once you open it up, you create more jobs, and people feel comfortable about their situation, so they'll spend more money.

MS. WOODRUFF: All right. Rene Lampshire, office manager, do you agree with that, that that's what the President ought to say tonight?

RENE LAMPSHIRE: To some extent. I agree wholeheartedly that somehow or other the President and the Congress are going to have to work together. I think it may be impossible, but if it doesn't happen, we're going to continue like we are. I'm afraid he's going to offer short-term, quick fix things simply to get reelected, and to try to get 'em through the Congress.

MS. WOODRUFF: How specific, Pierre Jimenez, is that correct, how specific does President Bush have to be tonight? Is it enough for him to say I care, I understand people are hurting, here's my program in a general way? How specific does he have to be to satisfy you?

PIERRE JIMENEZ: Well, he's going to have to do more than say he's going to be a kinder and gentler President, because the fact is we're in a recession. Two hundred and sixty million Americans understand that. And with a GNP of $5 trillion, there's no excuse for this country not to be able to address its domestic agenda.

MS. WOODRUFF: And you're saying that that's what the President has --

PIERRE JIMENEZ: Well, he had better come out very strong with talking about, just like in real estate, jobs, jobs, jobs, because there's a crisis of confidence in this country. It's reflected in the banking industry, real estate, and ripple effect throughout the country. People are not spending money because they have no faith in a government that spends $2 for every 1 that they take in on taxes.

MS. WOODRUFF: Dr. Lawrence Hergot, doctor, cardiologist, does that sound right to you?

DR. LAWRENCE HERGOT: We're talking a lot about what the President should say tonight, and I have to admit to you that I pay more attention to what he does, rather than what he says. And it's very often quite different. I sort of think economists are like the weathermen. They're about as good. And so I don't have the answers to the economy. I'd like to see him say, hear him say that there's a philosophical change in the way this administration operates, we're going to operate now out of principle and conviction, rather than pragmatism or ambition.

MS. WOODRUFF: Are you saying that's what they've been doing?

DR. LAWRENCE HERGOT: I think this is sort of a media event. He's talking now about prayer again and things like that that he talks about every four years. I think that the essence of what happens tonight is, we're going to know in six months where it all goes.

MS. WOODRUFF: You mean whether he lives up to --

DR. LAWRENCE HERGOT: Whether he really does it or is just trying to get votes.

MS. WOODRUFF: But is it mainly the economy that you want to hear him address tonight? Are there other issues that you think the President has got to touch on, or is it primarily --

DR. LAWRENCE HERGOT: I think as a medical person, the fact that, for instance, we have 50 percent of kids under two years of age in this country who are not adequately immunized is outrageous. And that problem has not just come up recently. I think he's going to give some money for immunizations. But those kids haven't been immunized for years. That's the kind of thing that bothers me mainly.

MS. WOODRUFF: Who has thought about the whole health care issue? I'm sure all of you have in one way or another, but to the extent that you have a specific preference for what you'd like to see the President and the Bush administration do? Dorothy Shore, Lonnie MacIntosh, let me come to either one of you. Health care, is that something that you think the President has got to be specific about tonight, or can we wait for specific?

LONNIE MacINTOSH: Judy, I agree with you. I think health care is very important in this country and I think that this country has not given it enough attention. The medical expenses nowadays are doing great damage to our citizens.

MS. WOODRUFF: I'm sorry, who is doing damage?

LONNIE MacINTOSH: Medical system as it stands today. And the country is getting older. More medical care is going to be necessary, and something is going to have to be done to put in a posture whereby everyone can benefit from it.

MS. WOODRUFF: Do you think the President may do that tonight, Rev. Sandra Wilson?

REV. SANDRA WILSON: I don't think he will necessarily and the health care crisis goes back to the economy again. People who don't have jobs cannot afford medical insurance. People who cannot afford medical insurance cannot afford to be sick. It only takes one illness with no medical insurance for a person to be at the pit of poverty, and I think we've got to address that and recognize that we are our brother and sister's keepers in this society or we're all going to go down the tubes. And you keep saying, is there anything we want to hear about besides the economy. Everything that we're talking about is directly related to the economy, whether it's the life of our children, whether it's how we inspire kids to stay in school when they don't have jobs to go to when they get out of school, whether we look at health care, it all goes back to the economy.

MS. WOODRUFF: Dan Winters.

DAN WINTERS: I think what the cardiologist said is particularly interesting in terms of a moral component we have brought into this discussion. As an example of one case, something we can do which costs absolutely nothing is that now we have in Iraq 1,400 children dying every week. Before the war, there were 277 dying. And this shows a lack of moral compassion, of understanding. So we can't only look at ourselves and what's in my pocket book and what's in it for me. We need to go beyond.

MS. WOODRUFF: You're saying we need to look outside the United States and at our responsibilities elsewhere?

DAN WINTERS: In addition, yes. We have two components. One is economic, the United States. The other one is also where is our compassion as one of the richest countries in the world.

MS. WOODRUFF: But when we think about foreign affairs these days, people think about the former Soviet Union and Russia, we think about the Middle East to a lesser extent, other parts of the world. Do you think Iraq is something that's going to be at the top of the President's agenda?

DAN WINTERS: Well, again, it's what the cardiologist said is what should be done. I was in Baghdad on this program last year, I came back and I saw some of that devastation and destruction and we can't just close our eyes because we're hurting. I understand the lady is unemployed and that's a problem. And that hurts. But I'm sure she would not say forget the children in Iraq, let the 1,400 die that only 300 were dying.

MS. WOODRUFF: Do you want to comment on that?

MAN IN AUDIENCE: Yes. I agree with what Dan is saying, however, I think the President's plan is going to have to be a short-term as well as a long-term situation. The President is going to be looking at trying to get himself elected and so, therefore, I feel as though he's going to spend his energies towards the jobs in this economy. That is the thing that is the most immediate --

MS. WOODRUFF: Is that what he should be doing?

MAN IN AUDIENCE: That is probably, yes, I feel that is what he should be doing as well as that's what he should gear up the -- go ahead.

MS. WOODRUFF: Go ahead.

MAN IN AUDIENCE: That is what he should be gearing up for.

MS. WOODRUFF: Excuse me. Mark Murray, car dealer, do you think that that's what the President ought to be -- we keep bringing it back -- it stays on the economy -- is that what the President ought to say tonight?

MARK MURRAY: I think that is the single most important thing. An element of the economy is as it bleeds into lack of consumer confidence, lack of being confident that the middle class is going to have a job in six months, and I think the great, one of the greatest problems that this nation's gotten into is this incredible deficit spending from one administration to the next to the next, to the next, and we continue to let it grow, and continue to do entitlements. We seem to be the only country in the world that has never been socialized that's creeping toward socialism. All the ones that are socialized have said, hey, we'd like to be like you guys.

MS. WOODRUFF: You talk about the deficit, but taking care of jobs, creating jobs, investing in the infrastructure to create jobs, paying for unemployment, extending unemployment benefits, those cost money, those add to the deficit.

MARK MURRAY: If they will let business do it, that's our job, is to be in the business of business. Their job is to be -- whatever - - cars -- I'll employ people if people will buy my cars, if we don't have a luxury tax. My business is down about 38 percent over last year. Last year was terrible compared to 1990. So it's an ongoing mess and I think the Peter Grace Commission, I'm a booster of Peter Grace.

MS. WOODRUFF: -- waste in government.

MARK MURRAY: Yeah. I even contribute my little money to it. It says that we can wipe out the whole deficit with proper control of what we get, so we don't need more taxes.

MS. WOODRUFF: Well, believe it or not, we're just down to a couple of minutes. Jim White, how important is this speech tonight? Does it matter what President Bush says tonight?

JIM WHITE: Well, I think it's very important what he says. I don't think it's quite as important as what the media has built it up to be, that it's a "do or die" speech. And I think when you get into that, you get into what this gentleman touched on, some of the theatrics, but people are a little scared right now in all walks of life, the haves, the have-nots, everybody's kind of walking on fragile ground. So we're all looking to him as Tina alluded to for some real leadership to kind of put us at ease and hopefully say a few things that we can all be proud of and get some confidence back.

MS. WOODRUFF: How important do you think this speech is, Ed Dawson?

ED DAWSON: Well, I think it's very important. And we always say that, well, we need to develop jobs, jobs. We ought to be specific. If it worked in the thirties and forties to build new highways and have people working spending money, why not try part of it again? I'm not saying that you got to go whole hog and do it all the way they did it back then, but we've got to get something where people are turning over money, buying things, have confidence in buying houses, have confidence in buying cars, have confidence in the economy, and have confidence in themselves. And if we as Americans cannot support ourselves, and we won't look out for ourselves, then if you can't clean out your own backyard, as the lady said, how are we going to support other people in the world? We can't be a global leader if we, as Americans, don't look out for ourselves and keep our economy strong and keep confidence in our economy strong.

MS. WOODRUFF: Tom Conway, do you think that's what the President's going to say tonight?

TOM CONWAY: No, I really don't think that's what he's going to say, but I think some of those are some of the issues that he ought to touch on, pulling back, controlling their own spending, restraining Congress from spending too much as we as Americans have had to.

MS. WOODRUFF: How important is this speech in your mind?

TOM CONWAY: I don't think it's going to have very far reaching ramifications. It's an election year. I think it's -- as many people say -- he's going to touch on his strengths. It's going to be a bit of theatrics to try and get reelected, perhaps try and grasp control of Congress through the Republican Party, but I don't think it's going to have very far reaching ramifications.

MS. WOODRUFF: Do you disagree with that, John Bachof?

JOHN BACHOF: No. In fact, I think he hit a good point. In order to create these jobs and confidence, you need to fix the machine first and whether or not anything large comes of this speech is irrelevant. If he doesn't do something to stimulate the business in this country, then it's going to die and then no one will have jobs. And frankly, that's, it's a moot point whether or not what he says tonight is of any relevance.

MS. WOODRUFF: Well, on that note we're going to stop it, not an uplifting point but one I think that's shared by several people here. We want to thank all of you for being with us tonight and we're going to ask this group to stay around to watch the President's speech tonight and we will have their reactions and comments on tomorrow night's program Back to you, Jim. FOCUS - GERGEN & SHIELDS

MR. LEHRER: Thank you, Judy. Now some preview thoughts about what's at stake politically for the President tonight. They are those of our regular analysis team of Gergen & Shields, David Gergen, editor at large of U.S. News & World Report, syndicated columnist Mark Shields. First, David, were you as impressed as I was with the scope and the depth of what those folks in Denver had to say?

MR. GERGEN: I was very impressed that they understood how deep the problems of the country were, they understood just what the problems of the country were, and they seemed to be very receptive, Jim, if there's a serious address tonight, if there's serious efforts in Washington to support that, to work on these problems. These people are looking for answers now. They're not expecting too much, which is also very interesting. I think they've been promised so much in the past and Washington's delivered so little, but I thought they were a remarkably good and reassuring group of people in a sense because you felt, you know, this is middle America, this is the strength of the country.

MR. LEHRER: But there were some people there, Mark, who would you consider I guess politically conservative. There were some people there you would consider politically liberal, and in their framework they were all talking about a radical idea or radical ideas, in other words, somebody said at the very beginning the President should pick a fight with the system tonight, and the other folks saying throw it all away and let's start all over again, that's interesting talk.

MR. SHIELDS: It was interesting talk. I agree with both you and David on the quality and the caliber of the arguments made and the way that they were expressed. I mean the people were really quite compelling in their presentation. Two things struck me. First of all, short-term political fixes are very unappealing to these people. I mean, anything that looks like a gimmick, it gets us through November, you know, we have three bucks here and just give me your vote in exchange, I think is going to run right into skepticism and resistance on these people's part. And the second thing is that they're fed up with sort of the finger pointing in Washington and the blame assignment and you know, Democrats on the Hill say, well, it's all the Republican President, and the Republican President says it's all the Democrats on the Hill and while everyone's kind of engaged in sort of a form of one- upmanship.

MR. LEHRER: They're kind of sick of that, aren't they?

MR. SHIELDS: I think they're really sick of it, and I think it's an inevitable product of a divided government. And I really do.

MR. GERGEN: And they also see through it all too?

MR. SHIELDS: Oh, yeah.

MR. GERGEN: They understand it. They get the drift.

MR. LEHRER: And while things were going fine, okay, go ahead and play, but now they're saying, hey, things aren't that fine, quit playing guys, boys and girls. David, it's been suggested in the last several days that this speech tonight is the single most important speech of George Bush's political life, true or false?

MR. GERGEN: It's an important speech, but I think that the conversation in Denver made it clear it's not "make or break" for the President. You know, what's make or break is whether this economy comes back and produces jobs. And if the economy doesn't come back, he could give the sermon on the mount tonight and it wouldn't make any difference. And I think that this is, I think that we in the press like to build these things up to make it the most significant event of his Presidency. Being President, he's got to give a good speech, but being President is producing results. And the question and the standard by which we ought to judge his speech is not just how well he delivers it, what he says tonight, but does it lead three months from now, six months from now, to more jobs, a faster recovery, and a stronger recovery?

MR. LEHRER: And yet, Mark, taking what David just said, there are many people who say really the problem is crisis in confidence, rather than crisis in legislative proposals, and that the President has to project, hey, look, I understand what the deal is, we're going to pull this thing together, and let's all do it together, and that's as important as specifics.

MR. SHIELDS: I respectfully disagree with my colleague. I think it is the most important speech that George Bush has faced for that very reason. John Sears, a very respected Republican strategist, said George Bush can't be a cheerleader tonight, he has to be a leader, and I think that's absolutely true. It's not a question of kind of ginning up confidence and making people feel good. The doubts are as to whether there is a core conviction there, and I think that has to come through tonight and it has to come through in a believable set of proposals that get us beyond, I mean, the sense, Jim, that America has lost control of its economic destiny. And I think that is what's underlying the pessimism in the country, the sense that it isn't going to be as good for the next generation of kids as it was for us, and George Bush has to address that, and he has to address it in a real way. I mean, I compare it, the analogy I would use is to George Bush, the summer of 1988, when he was 18 points behind Michael Dukakis. It's been obscured because of all the surrounding attention given to Gov. Bill Clinton's problems. But last week in New Hampshire, Bill Clinton was leading George Bush. I mean, George Bush was running 7 points behind Bill Clinton in New Hampshire. I mean, as Republican the state is for him not to respond tonight, I mean, his back is to the wall politically. He has to -- it's as bad as being 17 points behind Michael Dukakis in the summer of 1988.

MR. GERGEN: I think the speech is important in that it has to lay out a road map, some sense not only for this year but where he wants to go for the next five years as President, that he understands not only the ditch we're in, but he knows a way to get out of it, and by God, he's going to lead the charge out of the ditch. I think that's all very important, but it's equally important what he does when the speech is over, whether he goes up, rolls his sleeves up and gets a program passed, and he keeps persevering, this is not something -- you can't transform this economy in one night, with one speech. It requires leadership over time and that's what he's got to demonstrate.

MR. LEHRER: Well, the man in Denver said it. Watch what he does, not what he says.

MR. GERGEN: Absolutely.

MR. LEHRER: From the political point of view, Mark talks about the polls and all of that, but the fact of the matter is the President is in no political danger now because everything I have read, Pat Buchanan is not considered a viable Republican alternative, so his problem, Mr. Bush's problems still remain with the Democrats, and that's still many months away, correct?

MR. GERGEN: Many months away, and as Mark points out, the problems the Democrats are having right now have in some ways diverted the cameras, so to speak, from the President, travails at the moment. Had it not been for the Clinton story the last three or four days I think we would have had a ton of stories about disorganization, disarray in the White House, and you know, that they don't know quite what they're doing, that at the last minute they're pulling and tugging and hauling and shouting and I think that's helped the President. I also, Mark made a point just before we came on tonight to me privately. He said, you know, this is also taking the cameras away from Pat Buchanan. That's also helped George Bush.

MR. SHIELDS: Yeah. I mean, in other words, what I compare it to, Jim, is the 1988 primary results coming out of Iowa. Dick Gephardt, the now Democratic House Majority Leader, won the Democratic caucuses in Iowa. And he got no lift out of it because all the attention shifted to the Republican side, where George Bush, the favorite, had won third behind Rev. Pat Robertson, and Bob Dole had wanted to win New Hampshire, so here's Gephardt not getting a lift. Pat Buchanan has seen the cameras and the microphones moved away from him. Why? Because they moved, they're chasing Bill Clinton has he moves across the South and all the rest of it, and it's worked for George Bush because George Bush has been saying since Congress adjourned last November stay tuned, stay tuned. I mean, I was expecting the Magna Carte. And you had every right to expect the Magna Carte tonight. But now the last couple of days because of what's been going on and diverting attention, George -- they've been able to say, oh, you're raising expectations unreasonably, and even though the expectations had been raised by the White House, itself.

MR. LEHRER: Now, why didn't they do that, David? Why didn't they raise the expectations to Magna Carte level?

MR. GERGEN: Because they blew it. I mean, they made a mistake.

MR. LEHRER: They made a mistake?

MR. GERGEN: Well, you know, I think fundamentally, Jim, he had the opportunity back in November of December to put forward his economic program and say the country's in a recession, I need you to act rapidly, and by deciding to postpone the presentation of an economic plan until late January, he, in effect, said, he, in effect, gave to the country three months to build up to what he was going to say. So I think that was --

MR. LEHRER: And three months for things to get worse.

MR. GERGEN: Three months for things to get worse. His position deteriorated and the answer on the campaign trail was I can't tell you now what I'm going to do but stay tuned, so it just went way up and up. And then gradually, I think the second mistake they made was that they, pieces of the package started leaking out, so the White House --

MR. LEHRER: Intentionally, right?

MR. GERGEN: Some intentionally, some unintentionally. But the fact is that they now acknowledge they've taken the drama out of the speech so that I think a lot of it will be heard for the first time by the public at large but we in the press are going to not give it the kind of blare and trumpets that we might had it all been a surprise. And thirdly, I think there's some, there's some fundamental realities that are now at work that are making it difficult for this President in this situation. He doesn't have any money to play with, to help the economy out of a recession. Ordinarily in past recessions, the Presidents and the Congress have agreed on packages of about $50 billion in stimulus over one year to get the economy out of the recession. This administration apparently is going to put forward a program that's going to contain $50 billion of stimulus over five years. And it's one-fifth the size of what was done in the past. So that many people are saying, you know, economists are saying and others are saying, well, it may sound pretty interesting, but it isn't the lift, it isn't the bang, it isn't the bold, decisive step that you would like in this situation.

MR. LEHRER: But as a practical matter, Mark, isn't the President pretty much bottomed out politically? I mean, there's no other place for him to go, except up, and it's all up for him now because of the attention on the Democrats and all of that, right?

MR. SHIELDS: I --

MR. LEHRER: Disagree?

MR. SHIELDS: I disagree with two of 'em, my favorites tonight. No, there's nothing to catch George Bush. There isn't a Bush constituency in the country. There is nobody in a tavern with a shot and a beer in front of him saying, George Bush is my guy. There was with Ronald Reagan. There was with Jack Kennedy. There wasn't with Jimmy Carter. They live and die on how well the country's doing and how well they're seen as doing, Jim, and George Bush could go to 81 percent, Ronald Reagan never could run to 81 percent in the polls because there were 35 percent of the people in the country who thought he was Beelzebub and Lucifer. And for that reason, George Bush is going to catch him. I mean, if the economy continues down --

MR. GERGEN: Oh, sure.

MR. SHIELDS: I mean, I'm telling you.

MR. GERGEN: He could stop the hemorrhaging though. That could be very significant for him, if he gives a good speech.

MR. LEHRER: But you think he could even fall even further?

MR. SHIELDS: You know, he talks about the economy being in free fall. I don't see any idea right now that they have figured out exactly what they're doing in the White House. I mean, David is a lot closer to that than I am, but all the reports are that, are, continued to be disorganized, the relationship with the conservatives is prickly at best in the party and with the President, how he responds to them, how he handles them, and I guess the other thing you have to look at, I wouldn't write off Pat Buchanan at this point. I mean --

MR. LEHRER: He hasn't taken off on his own. All he is reflecting is the negatives of George Bush.

MR. SHIELDS: That's exactly it. He is. No question about that.

MR. LEHRER: There's no positive movement toward him. It's all negative at Bush.

MR. SHIELDS: Pat is not a happy warrior. I mean, I think that's fair to say. He's not an easy going, joke cracking -- he didn't put a smiling face on conservatism -- but I mean, I haven't seen any great erosion in Pat's support in New Hampshire.

MR. GERGEN: One last point, there is one poll that would suggest there has been an erosion, the last one I read.

MR. LEHRER: Nobody's for Buchanan, in a growing way they're all against Bush.

MR. GERGEN: One point Mark's made about the bottom, when Dukakis campaigned in '88, he said this is a campaign about confidence, not ideology. Bush said no, it's about ideology. Bush has made his Presidency rest on confidence. So when he's highly confident, his numbers go way up. When he doesn't appear confident or in control, there is no bottom, there is no ideological base of support for him.

MR. LEHRER: Gentlemen, I'll see you all later. Thank you very much. ESSAY - DO IT YOURSELF!

MR. MacNeil: Finally tonight, essayist Roger Rosenblatt, editor at large for Life Magazine, has some homespun ideas about weathering the recession.

MR. ROSENBLATT: Ralph Waldo Emerson relied on the self and I rely on Emerson. At least I find myself doing so these days, these dark days, recession days. I lean on Emerson every time I read of a plant closing, or a bank going out of business. The feeling evoked in me, perhaps you too, is not so much fear as melancholy and helplessness, as if we are watching a vast, tarpaulin descend on the entire country. Only the tarp does not protect the field. It shadows it with a kind of inexpressible sadness, the way winter shadows objects, concentrating our attention on the lead silver sky of late afternoons, the heart shrinking with the light down to the small, local things like the self, which is why I turned to old Emerson, because he had the value of self reliance pegged. He said, "Trust thyself. Every heart vibrates to that string." The language sounds preposterously elevated I know, but the man had something, a sense of exactly how much we need society and how much we don't. When an animal is ill, it goes off alone, either to get better or to die. It is no longer a social being, but simply a being. And it has retreated to this condition because it realizes it is in a weakened state, where it no longer trusts the structures of outer life and finds no solace in them. I feel precisely the same way in this recession, that is, at each further announcement of our economic shrinkage, I feel myself in retreat. I feel that especially whenever the White House denies that things are as bad as they obviously are. In our bones we know better or worse. We have eyes, as well as bones, after all. As General Motors goes, so goes American optimism. But then there is this Emerson fellow, to pull down from the shelf and draw upon. Society everywhere is in conspiracy against the manhood of every one of its members. Society is a joint stock company in which the members agree for the better securing of his bread to each shareholder to surrender the liberty and culture of the eater. The virtue in most requests is conformity. Self reliance is its aversion -- which situation might be tolerable as long as society, the conspirator, profits and flourishes. But when the joint stock company begins to crack open and people start lining up for their bread, where should the individual stockholder turn. Said Emerson, "Nothing is at last sacred but the integrity of your own mind. Absolve you to yourself and you shall have the suffrage of the world." What Emerson was saying, I think, is that if you would cast off the compelling power of society, be better than society, behave better alone than people do in the mass, act more honorably, more rationally, more prudently, more sympathetically. Avoid, if possible, the recession of your soul. Corny as such self instruction may sound, I find it a saving grace in circumstances where I can do absolutely nothing to reverse the direction of impending catastrophes. One of the reasons the Bush administration would be well advised to concede the reality of our national danger is that in the next Presidential election we are more likely to vote in the candidate who acknowledges our common plight and faces it squarely than the one who grins and hunts for foreign wars. But that is their business. I can direct me. If the heart shrinks down to small, local things this winter, I, by which I mean "we," can keep company with the lonely, support our friends, help those poorer than ourselves, embrace those we love, and with reasonable strain, even those we don't. Integrity, as the man said, if the country is falling to pieces, I can try to stay whole. I'm Roger Rosenblatt. RECAP

MR. LEHRER: Again, the major story this Tuesday is President Bush's State of the Union Address. He has billed it as the definitive word on his plans to revive the nation's economy and other aspects of his domestic agenda. He delivers it at 9 PM Eastern Time tonight. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour for tonight. We'll be back later on many public television stations with special live coverage of the President's speech, plus Democratic reaction from House Speaker Tom Foley and analysis from Gergen & Shields. That's our NewsHour for now. I'm Robert MacNeil. Good night.