The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, Elizabeth Farnsworth interviews the chief executive of Hong Kong and then runs a discussion about Taiwan and other China problems. Mark Shields and Paul Gigot analyze the tax-cut debate and similar matters. Fred de Sam Lazaro reports on college athletics' delicate balance between grades and games. And Kwame Holman updates our special emphasis E-mail on what the 2000 presidential election should be about. It all follows our summary of the news this Friday.

NEWS SUMMARY

JIM LEHRER: John F. Kennedy, Jr., and his wife, Carolyn, were memorialized in New York today. President and Mrs. Clinton and daughter Chelsea were among the 350 people at the private service. It was held at St. Thomas More Roman Catholic Church on the upper East side of Manhattan. Senator Edward Kennedy eulogized his late nephew, calling him a "man of great promise, who, like his father had every gift but length of years." The media and hundreds of bystanders were kept behind police barricades. The Bessette family has scheduled a separate memorial service tomorrow evening in Greenwich, Connecticut, for Carolyn's sister Lauren. She also died in the crash of Kennedy's plane last Friday. Space Shuttle Columbia finally made it to space early this morning, the first mission to be commanded by a woman. Two earlier attempts were halted by a technical glitch and bad weather. Seven hours from the launch -- after the launch from Cape Canaveral, Florida, Commander Eileen Collins and her crew deployed a four-story X-ray telescope known as Chandra. It will spend five years studying black holes that are invisible to optical telescopes. Columbia will return to earth next Tuesday. Taiwan officials told a U.S. envoy today the government never meant to make trouble by calling itself a state. Taiwan and China have argued for two weeks over comments by Taiwan's President Lee. He suggested the two were equals. China strongly disagreed. Also today, Chinese authorities rounded up members of an exercise and meditation sect known as Falun Gong. The government outlawed it yesterday, declaring it a threat. The group staged a large protest in April in Beijing, and other demonstrations this week after its leaders were arrested. We'll have more on China right after the News Summary. King Hassan of Morocco is dead. His eldest son and chosen successor delivered the news to the North African nation in a televised speech late today. He said the cause of death was a heart attack. King Hassan was 70 years old. He promoted better Arab-Israeli relations and was friendly with the United States. And that's it for the News Summary tonight. Now it's on to Hong Kong and other China stories, Shields and Gigot, grades and games and our Agenda 2000 E-mail.

FOCUS - WAR OF WORDS

JIM LEHRER: Spencer Michels begins our China stories.

SPENCER MICHELS: After three days of protests, the Chinese government yesterday banned a popular spiritual sect known as Falun Gong. Hundreds of demonstrators who lined the pavement near a government compound were arrested by police. The crackdown follow demonstrations that began last April, when more than 10,000 people gathered at the government leader's compound known as Jing Nanhai. Founded in 1992, Falun Gong bases its doctrines on martial arts, Buddhism, and Taoism. Many of its followers -- and there may be up to 70 million of them-- gather in parks to meditate and exercise. But such gatherings are now illegal in the eyes of the Chinese government, which views the sect as a threat to political order. The Chinese ban the Falun Gong sect comes at a time when there is tension on another front. In Taipei, President Lee Tenghui has repeated several times in the past few weeks that Taiwan wants to deal with China on a special state-to-state basis. China views Taiwan as a breakaway province, not an independent state, and so those remarks angered the Chinese government, which interpreted them as a sign that Taiwan was moving closer to declaring independence. The sides split amid civil war in 1949, but China has always pushed for Taiwan's reunification with the Mainland. China's defense minister said his military is ready to smash and attempts to separate the country. Tension in the region has been fluctuating up and down since Taiwan's first democratic election in 1996. The Taiwanese voted overwhelmingly for Lee, and since then, the President has been trying to expand Taiwan's ties with the rest of the world. This week, President Clinton reiterated his hope for a peaceful solution to the growing crisis.

PRESIDENT CLINTON: I think the important thing is to let -- they need to take the time necessary to work this out between themselves in a peaceful way. That is clearly in both their interests. And I am still not entirely sure -- because I have read things which seem to resonate both ways on this -- exactly what the Lee statements were trying to convey, but I think that both sides are now quite aware of the fact that they need to find a way to pursue their destinies within the framework that we have followed these last several years.

SPENCER MICHELS: That framework, the Taiwan Relations Act of 1979, supports a one-China policy and has been the backbone for decades of U.S. dealings with China and with Taiwan. The act makes clear that the U.S. decision then to establish diplomatic relations with the People's Republic of China rested upon the expectation that the future of Taiwan will be determined by peaceful means. At the State Department yesterday, Spokesman Jamie Rubin discussed how the U.S. can try to defuse the situation. The first step, he said, was President Clinton's cancellation of a scheduled visit to Taiwan by Pentagon officials, because, Rubin said, it might excite one side or the other.

JAMIE RUBIN: Obviously, at a time when the situation is as fluid as it is, we're measuring each of our steps very carefully-- not that we don't in normal times, but it seems particularly important to measure the impact and perceived impact of any step.

SPENCER MICHELS: One model for Taiwan's future that is often discussed is the one-country, two-systems arrangement Hong Kong has had with China following the return of the former British colony to Chinese rule two years ago. Under the plan, for 50 years, Hong Kong's British-style legal system and freewheeling capitalism will remain separate from Mainland China's legal and economic institutions. In the last two years, the Hong Kong government headed by Tung Qihua has retained a dynamic political culture, with frequent demonstrations and a mostly free press. But some changes have occurred. In a legal case, Beijing overruled Hong Kong's highest court, and in response to economic recession last year, the government intervened massively to prop up the stock market.

JIM LEHRER: Hong Kong's chief executive was in San Francisco this week and spoke earlier today with Elizabeth Farnsworth.

NEWSMAKER

ELIZABETH FARNSWORTH: Tung Chee-Hwa was born in Shanghai but left China in 1947, just before the Communists took over. He studied in England, worked in the United States and then helped manage his family's Hong Kong-based shipping business, one of the world's largest. He became chief executive of Hong Kong in 1996, after being elected by a committee of 400 people representing different sectors of the community and after being confirmed by Beijing.

ELIZABETH FARNSWORTH: Thank you very much for being with us.

TUNG CHEE-HWA: Thank you. Good morning.

ELIZABETH FARNSWORTH: Now, before we get to Hong Kong, I need to ask you about some of these items that have been in the news this week, first on Taiwan.

TUNG CHEE-HWA: Yes.

ELIZABETH FARNSWORTH: How serious do you think this disagreement between Taiwan and China is?

TUNG CHEE-HWA: Well, I think the situation is serious. You know, the one-China principle was the very foundation of the informal discussion that was being conducted by the central government of China and Taiwan authorities. And this one-China principle was also very much accepted internationally by all the nations around the world and by Chinese people everywhere. So I think really it is important that this one-China principle should be stuck to in all the future discussions.

ELIZABETH FARNSWORTH: When you say it's serious, how serious?

TUNG CHEE-HWA: Well, it is serious, and from Hong Kong's point of view, that NED stability in that region would obviously not be good for Hong Kong.

ELIZABETH FARNSWORTH: It's already had an economic effect, hasn't it, on the stock market and other things?

TUNG CHEE-HWA: Yes. There are some temporary effects on the stock market already, not just in Hong Kong, in Taiwan also.

ELIZABETH FARNSWORTH: You have close ties, I think, with both Taiwan and Beijing. Do you have a role to play in ironing this out?

TUNG CHEE-HWA: No, Elizabeth. My responsibility is Hong Kong and I am really very busy dealing with Hong Kong already, but I would hope that, you know, given the fact that one-country, two systems, which is now being implemented in Hong Kong, has been a success and continues to be a success, will be a good example for Taiwan to see that, you know, that things can be worked out.

ELIZABETH FARNSWORTH: Okay. Good. I want to get to that in one second. Before we do, what about the - Falun Gong - some people call it Buddhist law or wield of law group that's been outlawed and some people have been arrested - how serious do you think that could be? They say that there could be millions of members in China. There are some in Hong Kong. Now, I know this doesn't apply to Hong Kong. Your government has already said that it will not be banned in Hong Kong. But how serious do you think that could become?

TUNG CHEE-HWA: Well, you know, as far as Hong Kong is concerned, of course, we are working under one country, two systems. You know, and in Hong Kong we have our own set of laws, and so long as the societies or organizations, they function within the framework of law, they're perfectly all right. So if Falun Gong is working in Hong Kong within the framework of law, you know, we have our set of laws and we go by our way forward. Insofar as China is concerned, of course, I'm not very well versed with what is happening in detail, but I think it's important to recognize that China is moving forward very rapidly in its economic reform - it's going through many ambitious but very important reform programs for the country as a whole, the standard of living of the country has been improved enormously, and throughout all this social stability is very important for the country.

ELIZABETH FARNSWORTH: And that's the main - their main concern - stability?

TUNG CHEE-HWA: That's right. That's right.

ELIZABETH FARNSWORTH: Okay. Now, to the Hong Kong model for Taiwan, do you think it is a kind of model that could be applied -- I understand with some differences. I think China has already said, for example, that Taiwan could have its own military. But is it working? Is it an important model?

TUNG CHEE-HWA: Well, it is really working in Hong Kong and working very well. It's now been two years since the reunification of Hong Kong with China, and one-country, two-systems is no longer a slogan; it's no longer a concept; it is, in fact, a reality. We are working at it every day, you know, and I wish you come to Hong Kong to see for yourself how well it is working. And, you know, the one-country, two-systems concept is, in fact, institutionalized by a piece of legislation, which the National People's Congress in China passed in 1990, which is called a basic law, and then the basic law, you know, prescribes that Hong Kong will have a different social, economic, and political system from that of the Mainland, and that, you know, our way of life will be the freedom we enjoy. We'll all be guaranteed the judiciary independence, which is so important to Hong Kong's success, will be guaranteed. The fact is that we have separate monetary authority to manage our own monetary affairs. And all this is now working in Hong Kong, and working very well.

ELIZABETH FARNSWORTH: Okay, now, let me put a couple of questions to you. As you know, there have been some incidents which have raised some questions among your critics, both inside Hong Kong and even in the U.S. Government, about how well it's working on judiciary separation. There was a recent immigration case. The Chinese People's Congress in Beijing overruled your highest court. Explain that very briefly, because we don't have a lot of time, and you asked for this; you asked for the intervention of Beijing, which is what I think most upset say Martin Lee and other critics inside of Hong Kong; he's the head of the Democratic Party there. Why? Why did you ask for a ruling from Beijing on something your highest court had already ruled on involving who could immigrate into Hong Kong?

TUNG CHEE-HWA: Well, Elizabeth, you know, Hong Kong's population has been growing at about over 2 percent per annum, double than any other community or nation of the world, so we are already absorbing a lot of people into Hong Kong, and the court of final appeals' ruling on January 29th would have permitted another 1.6 million people, a good 25 percent of people to come to Hong Kong, within a frame of 10 years. It is just like --

ELIZABETH FARNSWORTH: Although some people did dispute those figures. They were wrong?

TUNG CHEE-HWA: No. They were pretty well scientifically tested, and we were quite confident that they were the right figures, so we already have a population problem, and this is what comes on top of that. It's just like America suddenly in 10 years having another 65 million immigrants coming into America socially from housing point of view, education point of view, it's not something we can handle. And, don't forget, Hong Kong has very limited resource on land. But let me say to you one thing, Elizabeth, that whatever we did, we did within the framework of law, because to me and to the Hong Kong government nothing is more important to us than the rule of law, you know. And I also want to tell you that in doing so we have enormous support from the people of Hong Kong that this needs to be done.

ELIZABETH FARNSWORTH: So when critics like Martin Lee or even the U.S. Consul General at the time said that the U.S. concern was that this would become too easily a precedent, that Beijing could overrule what happened in Hong Kong. What's your response to that?

TUNG CHEE-HWA: Well, when we first approached Beijing, Beijing said to us, you know, under one-country, two systems, will you try to sort out your own problems, because we really don't want to get involved in the argument, but we can't handle the problem, and this is why we had to do it in Beijing. And, remember, the interpretation which the People's Congress Standing Committee rendered was to give us the original intent in the legislation. What was the original legislative intent, and they made a clarification of this, which was very helpful, and, in fact, the law which is now in the books is exactly the same, is what Britain and China agreed to in immigration before July 1, 1997.

ELIZABETH FARNSWORTH: Okay. And finally, how are you dealing with the fact that problems between the U.S. and China now become problems between the U.S. and Hong Kong? For example, because of the bombing of the embassy, China has decreed that no U.S. military ships would visit ports, and that includes Hong Kong, since China does have control over that sort of thing, and that takes money away from your coffers, right, not to have the Navy come, and also this matter of the congressional committee, which has said that military-related technology is getting into secret technology to China via Hong Kong, so they -- there is some move in Congress to limit technology to Hong Kong? I mean, this is a whole problem for you, you wouldn't have had if you weren't part of China.

TUNG CHEE-HWA: Well, let me put it this way, that obviously U.S.-China relationships -- the ups and downs -- impact Hong Kong very much. China, of course, is our sovereign. The United States is our largest partner in trade, in commerce. Forty thousand Americans live in Hong Kong. I think good Sino relations, a good Sino-U.S. relationship is important to Hong Kong. It is important to China, but in my own view it is also very important to the United States of America. The United States of America is the superpower in the world, China, an emerging economic powerhouse, which will offer tremendous opportunity to American business, create more American jobs. So I think it is really important, not just for Hong Kong, for America, for China to work out the problems, because there is so much national interest involved.

ELIZABETH FARNSWORTH: Well, Mr. Chief Executive, thank you very much for being with us.

TUNG CHEE-HWA: Thank you very much, Elizabeth.

FOCUS - WAR OF WORDS

ELIZABETH FARNSWORTH: And now we turn to two China watchers for more on some of the points raised in that interview which I did earlier today with Hong Kong's chief executive. Michael Oksenberg is senior fellow at the Asia Pacific Research Center at Stanford University. He was a senior staff member for Asian affairs at the National Security Council during the Carter administration. And David Brown is associate director of the Asia Studies Department at Johns Hopkins University's School of Advanced International studies. From 1986 to 1989 he oversaw U.S.-Taiwan relations at the State Department. Michael Oksenberg, let's start with Taiwan. You heard Mr. Tung say this could be a very serious situation. Do you agree?

MICHEL OKSENBERG: It certainly has that potential and was already beginning to be so. I was very struck by the chief executive's remarks that the Hong Kong model suggests that deep problems can be worked out. In that sense what happened in Hong Kong has more general validity. How do you work things out through dialogue, through discussion? But Taiwan, primarily, I think due to their own internal political situation, has altered the framework within which the two places, Taipei and Beijing, could try to work out relations between them.

ELIZABETH FARNSWORTH: Explain that. Explain what was said exactly.

MICHEL OKSENBERG: Yes. Well, let's go to the background. Until early 1992, Taipei, the capital of Taiwan, and Beijing said that each was the government of all of China. Then in 1992, Taiwan said, "no, we're no longer the government of all of China, but there is still one China that has two equal political entities." Now they've changed the formula, and they say, "no, we are two separate states and we will only deal with China , the mainland, on the basis of being its equal as a state." That's tantamount to declaring independence.

ELIZABETH FARNSWORTH: Even though they have backed off a little bit of some of that, you still think that this is a potentially serious situation?

MICHEL OKSENBERG: Yes, it is because it comes close to saying, "we are independent. We no longer accept the notion that today there is one China. Maybe at some point in the future there will be one. Today is not that. It's not the case." And China has made very clear that under those circumstances, it is prepared to go to war. This is very serious because for the United States, we're in the middle of it.

ELIZABETH FARNSWORTH: Okay. We're going to come back to the U.S. Mr. Brown, how do you see this? Do you have anything to add just on this question of whether this is serious and why?

DAVID BROWN: I certainly agree with what Mike has said. What President Li has done is to challenge the basis on which discussions across the Taiwan straits have been conducted and also the basis upon which American policy has rested.

ELIZABETH FARNSWORTH: Okay. So, expand on the implications for U.S. policy.

DAVID BROWN: Well, U.S. policy has been to try and persuade Taiwan and Beijing to work their relationships out peacefully. By taking a stance that is saying that the relations have to be conceived as those between states rather than between two parts of a China, Li is doing just as Mike has said: Challenging something that is very fundamental to Beijing and which Beijing could easily see as a threat to the prospect of eventual reunification.

ELIZABETH FARNSWORTH: Which then, Mr. Brown, puts the U.S. in a very difficult position?

DAVID BROWN: Yes.

ELIZABETH FARNSWORTH: Explain that.

DAVID BROWN: We have been for 50 years the primary political support for the regime in Taiwan. We have a Taiwan Relations Act, which you mentioned at the beginning of your program, which obligates the U.S. Government to take any threats to Taiwan's security seriously. It's very much in the American interest to see good relations across the Taiwan straits and to promote dialogue, and Li has done something which has, contrary to American interest, raised tensions and at least temporarily, I think, created some barriers to the kind of dialogue which we in Washington and the United States want to promote.

ELIZABETH FARNSWORTH: Michael Oksenberg, why do you think this is happening now? Why is this happening in Taiwan?

MICHEL OKSENBERG: Four reasons. First, as I stated Taiwan domestic politics, presidential election is in the offing. It's going to be a three-corner race. Li Deng Hua's preferred candidate is now in third place by public opinion; they're going to have to eat into the support of number two, who is a Taiwan independence-oriented person. And I think Li is trying to capture the initiative on behalf of his anointed successor. Second major reason, the highest emissary from China was scheduled to go Taiwan in September, October, for very serious talks. I think that this is an indication that the Taiwan wants to either a alter the basis on which those talks would go forward or don't want to have them. Third, Taiwan erroneously believes that when Sino-American relations are strained they have more room for maneuver. And, fourth I think Li Deng Hua, as he approaches the end of his era of rule, wants to leave some kind of a political legacy.

ELIZABETH FARNSWORTH: David Brown, is it coming at a particularly bad time for China?

DAVID BROWN: China has many problems -- economic; they've got social -- significant social instability which is why they're concerned-- the regime in Beijing is concerned about the Falun Gong. And so, yes, this is a difficult time, not exceptionally so, I don't believe.

ELIZABETH FARNSWORTH: Michael?

MICHEL OKSENBERG: Well, I think it is a very difficult time. The leaders confront almost an overloaded agenda indeed. I sometimes think -- wonder how the Jiang Xemin, the president of China, gets out of bed in the morning. Right now, Taiwan is an issue for him, as we've discussed. Economic difficulties, dealing with the legacy of the Belgrade bombing and dealing with the problems of his relationship with the U.S., World Trade Organization issues. And now he's dealing with problems of social challenge in some respects -- to some of the fundamental assumptions about the rule of the state.

ELIZABETH FARNSWORTH: How serious do you think that challenge is from the Falun Gong group?

MICHEL OKSENBERG: It's too early to judge. It's a subtle challenge but it's very important to note. In Chinese history, there have been movements that have spread like wildfire at a time when the populous decides that perhaps their rulers have lost the way, "way" being here very important translated in the Chinese as the "dow" the way. And in Chinese there's an old saying when in dealing with strategies of how one deals with opponents that of the 36 strategies, withdrawal is best. This is a group that, in effect, is withdrawing from social engagement through physical exercise, meditation, self-cultivation -- in effect is saying there is something wrong with the external world in which we live: Too materialistic. Our spiritual yearnings are not being met. And for a state that is based on social engagement , in effect, this passivity is of the most profound challenge -- in some respects more profound than the democratization movement itself if it catches fire.

ELIZABETH FARNSWORTH: Mr. Brown, do you agree with that?

DAVID BROOKS: Yes, I think this is also a reflection of the fact that in the past decade, there has been a tremendous revival in China of interest in religion, interest sparked by the fact that they have lost any sense of values coming from Marxism, from a revolutionary land that the Chinese had in the early '50s. And in the more open environment in which religion has been possible, a lot of groups have grown up. And this is one which clearly the leader -- the Communist party leadership in Beijing sees as threatening for a number of reasons. One, it's got a lot of members within the party hierarchy and the security services itself. Two, it's got unusual -- or not unusual but from Beijing's perspective contacts with outside groups which is worrisome to them. And, third, it's able to organize large numbers of people for peaceful demonstrations right in the heart of Beijing. This is something which goes beyond what the leaders in Beijing are willing to permit at this time.

ELIZABETH FARNSWORTH: Mr. Brown, finally in the time we have left, given everything we've been talking about and going back to Mr. Tung's point, the chief executive of Hong Kong's point, that he thinks Hong Kong is a model for dealing with the Taiwan problem, what do you think about that?

DAVID BROOKS: Hong Kong has worked out much better than people had expected under one country, two systems. But beauty is in the eye of the beholder. The people in Taiwan do not see beauty in this formula. They think Taiwan's situation is very different from that of Hong Kong. It was not a colony. It has its own army. It's a state of some 22 million people, a successful democracy. And they don't see this formula as being attractive or adequate for their needs.

ELIZABETH FARNSWORTH: All right. Thank you both very much for being with us.

DAVID BROOKS: My pleasure.

JIM LEHRER: Still to come on the NewsHour tonight, Shields and Gigot, grades and games, and an update on our agenda 2000 E-mail.

FOCUS - POLITICAL WRAP

JIM LEHRER: Now it's time for some political analysis by Syndicated Columnist Mark Shields and "Wall Street Journal" columnist Paul Gigot. Paul, the tax cut bill finally passed the House and that was a big win for the Speaker, was it not?

PAUL GIGOT: A big win for the Speaker. A big win for the Republicans in the House, Jim. I think no question about it. It gets them on offense for a change. You know, they've been playing defense on an awful lot of bills, on the Patient's Bill of Rights, gun control, a variety of things. This gets them back fighting on an issue where they can dictate the terms of discussion. They can get the President to have to meet them halfway, and a very big victory for Speaker Hastert, I think, because he put his speakership on the line here. He said, "This was one for me, fellows." And he corralled an awful lot of moderates who - Dick Armey and Tom DeLay and some other leaders couldn't speak to; he couldn't get them, but, Denny Hastert, the Speaker said, "Look, some of you needed my votes in the past. I gave them to you. You want me to succeed as Speaker, you have got to do it." And he got them.

JIM LEHRER: Why was it so difficult for him, Mark? Why did this thing come down to this?

MARK SHIELDS: I think there's couple of factors, Jim. I mean, there are obvious fault lines. I agree with Paul that the alternative would have been unacceptable to the Speaker. The Speaker had to win.

JIM LEHRER: I mean, he would have been out of there?

MARK SHIELDS: Well, I mean, --

JIM LEHRER: I don't mean literally - but -

MARK SHIELDS: -- the tax cuts are the signature idea of the Republican Party. I mean, if you can't get Republicans to vote for tax cuts, and that's a little bit like inviting a college freshman to a free kegs night on Thursday. They do show up. That's the bonding, galvanizing idea that holds the party together. There's a lot of our different sub colonies in the Republican galaxy, but that's the key. And I think he had problems with moderates who were concerned about the size of the tax cut. He did modify them and modified the cut and mollify them personally. Personally, I think Paul is right. The personal relationship there was key and indispensable.

JIM LEHRER: By Hastert, you mean?

MARK SHIELDS: By Hastert. I think the conservatives or the social conservatives are particularly upset that there was no full elimination of what is called the marriage penalty, the tax that falls on some married couples more heavily than it does upon people living together without benefit of clergy or marriage. So, he had to walk that -- and made it an issue that this is my speakership that's hanging and he's a popular man within the Republican Party. After he won, Chris Shays, who's a moderate and a maverick and an iconoclast within for the Republican Party, started leading cheers, "coach, coach, coach." I mean, there was a real feeling of victory and satisfaction for him.

JIM LEHRER: So, but does this create a situation where the very conservative House Republican House is suddenly being controlled by a few moderates?

PAUL GIGOT: Well, I think that they are the dominating force in the Congress now, Jim, and particularly in the House. It was only a five-vote majority first of all. So, any six people can blackmail. But you've got those twenty to thirty members who say, "Look, they can control anything." There are a lot of ideas that Dick Gephardt has and Bill Clinton has-- patients protection, campaign finance reform, the minimum wage-- where these members are going to go over to the other side and create a lot of problems for the Republican leadership because they're going to vote with the Democrats. So every vote is going to be a struggle. I mean, you haven't seen, other than this tax bill, you haven't seen an awful lot of new conservative agenda items moving through the House, have you? And I think that's because a lot of moderates say no.

JIM LEHRER: So when they say no, that means no to a vote which is what -- this thing almost didn't come to a vote for that reason. It goes to the Senate next week. What is going to happen there, Mark?

MARK SHIELDS: Well, I think the Senate, Bill Roth, the chairman of the Senate Finance Committee has a different idea; the same dollar sign.

JIM LEHRER: About $800 billion.

MARK SHIELDS: That's right. But with - he reached out -- the Republicans passed it in the House with Republican votes. They would have done it without any Democratic votes, if no Democrats had voted for it. No Democrat voted for the Republican bill in the House until they had a majority of those voting.

PAUL GIGOT: Right. That was the deal.

JIM LEHRER: Was that the deal? So nobody could say the Democrats -

PAUL GIGOT: Democrats said we might vote for it, half a dozen of them said, but you better have the votes first. Show us the money.

MARK SHIELDS: Well, I mean, and then knowing full well -- I mean the shrewdness of it was that the Republicans would not bring up the bill unless they did have the votes.

JIM LEHRER: Unless they had the votes.

MARK SHIELDS: And that was the escape clause. The Senate takes a little different approach. Bill Roth crafted a bill consulting people -- Democrats on the committee - like John Breaux of Louisiana, Bob Kerrey of Nebraska - he got them aboard. But it's more middle class seemingly. And it lowers the lowest tax rate for the least wealthy Americans from 15 percent down to 14 percent. And it extends or expands that group. That's the principle difference.

JIM LEHRER: Across the board -- the House thing has a 10 percent across the board -

MARK SHIELDS: Across the board -

JIM LEHRER: -- cut in the tax rate, and that is not in the Senate's version.

MARK SHIELDS: That's right, that's right.

JIM LEHRER: Okay. Now, Mark, the Democrats and the President, how are they playing this? And how well do you think they're playing it from their side?

MARK SHIELDS: Well, I think that the President has said and assured the Democratic leadership that he would not go above $295 billion. We're talking about 792 - Paul's talked about splitting the difference. I don't think they have that kind of move, that kind of wiggle room to go that high, quite frankly. The $295 -- the Democrats offered an alternative plan in the House which was defeated which would have cut taxes by $250 billion over the next ten years. So I think the Democrats are immediately starting with the charge that this is a tax bill, the distribution of which goes disproportionately to the wealthiest Americans, that some 78 percent of the benefits, when it's fully implemented according to the Secretary of Treasury Larry Summers, go to Americans earning over $100,000 a year.

JIM LEHRER: And the politics of this, Paul, some people have said-- in fact it's been said on this program a couple times this week-- that this is a core division issue between Republicans and Democrats. You cut taxes or you don't cut taxes. And no matter how this thing turns out it's going to be a major debate subject in the 2000 election. Do you see it that way?

PAUL GIGOT: I do see it that way. I don't think there's any question about it. I think every Republican presidential candidate-- George bush hasn't proposed one yet but I think he will-is going to propose a substantial tax cut. There aren't that many issues left where there are real divisions within the party. And a lot of Republicans -

JIM LEHRER: Between the parties.

PAUL GIGOT: Between the parties - I'm sorry. And this is one issue that I think for Republicans they need it because, as Mark suggested, they need something that can unify economic and social conservatives and reach out to independents, and they think on some of these issues like - that giving families more disposable income, you can get some of the soccer moms who say, you know, you're taking two of our two incomes to make it go. We want to have a little bit easier time.

JIM LEHRER: But do the polls and history support that idea?

PAUL GIGOT: Well, tax cuts -- the polls suggest that the tax cuts aren't as popular now as they were ten or fifteen years ago. I think part of that is the good times. People don't feel -- I mean incomes are rising, so they don't feel as urgent a need. But I think the polls still show that people will take a tax cut if it is delivered. They don't trust politicians to deliver it.

JIM LEHRER: Any politics attached?

MARK SHIELDS: I think there is nothing more enduring in American politics than an idea, or a slogan that once captured the White House. And that's what Republicans go back to. I mean, Democrats play Social Security. I mean, that worked for them once.

JIM LEHRER: They keep playing, keep playing, keep playing.

MARK SHIELDS: It worked for him at a time of economic chaos. I mean the great thing about supply siders -- I love them - is if things are good, cut taxes. If things are bad, cut taxes. I mean, it's the all-time reliable formula.

JIM LEHRER: Ronald Reagan - you're talking about when Ronald Reagan ran, that's what he ran on.

MARK SHIELDS: That's right. Ronald Reagan in 1980 when the country was at 25.9 percent inflation two years and facing unemployment and uncertainty, that really -- it really captured the imagination. Four years later people felt a hell of a lot better about their own lives and about their country. That Jim -- add to that this: I don't think it can be ignored in this case. The reality with the Republicans right now is that they are now a tax-cutting party and they're no longer a deficit party. I mean that's history.

PAUL GIGOT: Because there is no deficit.

JIM LEHRER: There is no deficit. Well --

MARK SHIELDS: There is a deficit. I mean, we are spending $243 billion this year in interest on the national debt. That's more than we're spending on education, the environment, national parks, FBI, police, education. The only thing we spend on is defense. Now, that's every penny of income tax paid by every American living West of the Mississippi, every waitress, investment banker, small businessperson, anything, now that's what I think people are aware of. They understand that if interest rates go up, that is going to affect them a lot more than a little bitty tax break.

JIM LEHRER: And the federal -

MARK SHIELDS: And that's Alan Greenspan.

JIM LEHRER: Alan Greenspan, the Federal Reserve Chairman, went right before on the day of the vote and said, "hey, wait a minute, be careful cutting taxes, reduce the national debt first." He kind of went against the Republican grain, did he not?

PAUL GIGOT: Historic moment: Mark Shields invoking Alan Greenspan -- like me invoking Fred Wertheimer of Common Cause. He did do that. But I did look up what he said. And what Alan Greenspan said was, my first choice would be to reduce the debt. But if it's going to be spent, if that money, that surplus is going to be spent it's much better to cut taxes because spending it would be worse. And I think one of the reasons Republicans want to cut taxes is because if they don't cut it, that money is going to be spent one way or another by the politicians here.

MARK SHIELDS: Great, great tap dance. Let's get one thing straight. Bill Clinton did a tough thing in 1993; he raised taxes; he didn't cut them. I mean, Denny Hastert is a hero because he cut taxes. Bill Clinton raised taxes on the richest 1.2 percent of Americans, raised gasoline taxes, and the country prospered ever since. Democrats said it's because Clinton did it; Republicans said, no, it isn't because Clinton did it, it's because Alan Greenspan was chairman of the Federal Reserve. He's the wise man. Now, as Alan Greenspan says, no, no, don't cut taxes, not now, wait. This is not the time. We should not do it. What do we say? Alan Greenspan is not really saying that?

PAUL GIGOT: No. Alan Greenspan also said ideally he would like to see a zero capital gains tax rate. and cuts in marginal tax rates.

MARK SHIELDS: He'd like to see the debt cut.

PAUL GIGOT: But timing - well - but if it's spent, then cut taxes first -- it's going to be spent if they're not returned in taxes.

JIM LEHRER: I've had a really good time talking to you tonight. Thank you both very much.

FOCUS - GRADES AND GAMES

JIM LEHRER: Next, balancing games and grades. The National Collegiate Athletic Association met this week to consider eligibility standards. The latest grade scandal occurred early this year in the big ten. We have a report from Fred de Sam Lazaro of KTCA-St. Paul-Minneapolis.

FRED DE SAM LAZARO: Until a few months ago, the University of Minnesota's men's basketball team was enjoying some of its headiest years. In 1997, for example, the team entered the Final Four at the prestigious NCAA Tournament.

SPORTSCASTER: And for the first time in 15 years the Big Ten basketball championship will come to Minnesota!

FRED DE SAM LAZARO: The Minnesota Gophers and especially Coach Clem Haskins made legions of fans across the state and with millions of dollars from TV rights and ticket sales, Minnesota has been one of the most profitable teams in the Big Ten. But now Coach Haskins is out and his team is in disgrace. It began with news that Minnesota's team has the lowest grade point average in the big ten. For example, not one of the five starters on the 1997 team went on to graduate. Academic performance has long been an issue in the big-money college sports like football and basketball. Nationally only 41 percent of college basketball players ever graduate. A few years ago the National Collegiate Athletic Association began to mandate that players take all the required core courses toward a degree in order to play.

SPOKESMAN: More defense.

FRED DE SAM LAZARO: It turns out a number of Minnesota athletes may have had help remaining eligible from this woman.

JAN GANGLEHOFF, Former University of Minnesota Office Manager: It was understood that whatever needed to be done to keep the kid eligible, it was okay with him.

FRED DE SAM LAZARO: Jan Ganglehoff, university office manager, claims she wrote about 400 papers for 20 basketball players during a four-year period in the early '90s. Samples of the work were put on display at a news conference that she held with her attorney. Coach Haskins, she said, had direct knowledge of the scheme.

JAN GANGLEHOFF: He would say things like, "student X got a D, in such-and-such class. Now he'll have to get a B, in this class or he might not be eligible."

SPOKESPERSON: Implying what?

JAN GANGLEHOFF: Implying," do whatever it took to see that he got a B in that class so he would be eligible."

FRED DE SAM LAZARO: Ganglehoff claims she was paid from Coach Haskins' pocket through an intermediary. She also got perks like trips to games in Hawaii. Ganglehoff's claims were first revealed in a newspaper article published one day before this year's NCAA play-offs. Haskins did not respond to the allegations but several team alumni came to his defense. Bobby Jackson is now with the Minnesota Timberwolves' NBA team.

BOBBY JACKSON: I mean, I know Coach Haskins. I know his dignity. I know what type of man he is. So I know he wouldn't allow none of that in his program.

FRED DE SAM LAZARO: For their part, university officials ordered an investigation, and they also dropped four players for their next playoff game. Each was named in the cheating scandal. Minnesota lost a game it was expected to win, which only fueled public anger at the turn of events -- anger Governor Jesse Ventura aimed at the newspaper.

GOV. JESSE VENTURA: It just showed me another example of pioneer press, sensational journalism of their timing. I think it's despicable and they felt the need to release this story the day before the NCAA tournament. It couldn't have waited until after? It's just another example of sensational journalism.

FRED DE SAM LAZARO: However, to Dr. Elayne Donahue, whose job was to supervise the team's academic counselors, it was just another example of improprieties in Clem Haskins' basketball program, problems she claimed she reported as far back as 1991 to her supervisor.

DR. ELAYNE DONAHUE: He said, "I have spoken to the president and we have decided to do nothing." And then his whole manner changed and our relationship changed forever. And he became very, very stern. And he said, and you are to get along with Clem Haskins. You are to make him happy. And then I don't ever want to hear again that you're not a team play in the Beerman Building.

ETTORE INFANTE, Former University of Minnesota Vice President: She did bring to me concern. There were no specific allegations. There were concerns on her part.

FRED DE SAM LAZARO: Former Vice President Infante says there's often tension between academic counselors and coaches since each makes competing demands on an athlete's time. But Infante, now at Vanderbilt University, he provided memos that he said showed he strongly supported Donahue.

ETTORE INFANTE: At the same time, I must say, that I was rather insistent in telling to her that the well being -- academic and athletic -- of the student athletes depended on a necessary level of cooperation and collaboration between her and the coaches.

FRED DE SAM LAZARO: However, critics say it's hard for anyone to go up against coaches, often major public figures, earning huge salaries, in Haskins' case some $700,000 a year, about three times the university president's pay. Nick Coleman is a columnist for the St. Paul Pioneer Press.

NICK COLEMAN, Columnist, St. Paul Pioneer Press: Coaches have tyrannized and terrorized their campuses and even their presidents. They have too much power and they're out of control. Sometime a university president is going to have to say, "you know, the coach is not in charge of this university." And the university stands for something more than academic or rather than athletic performance or how much the coach gets paid. We have lost our perspective on this and I think the kids have been failed from one end to the other end in the spectrum.

FRED DE SAM LAZARO: President Mark Yudof, who came to the University of Minnesota just a year ago, says it is possible to have winning teams and a high graduation rate, to provide a free college education to youth who would otherwise not get one. But Yudof admits the pressure is huge to win at all costs.

MARK YUDOF, President, University of Minnesota: We have enormous stadium renovations going on in this country -- hundreds of millions of dollars. Well, if those teams don't win, they're not going to fill those stadiums. And if they don't fill those stadiums, and they don't fill those boxes, they're not going to be able to pay off those bonds. But there's no doubt in my mind that the driving force of money has an impact on this area. And it's not an accident that you don't see this in the women's volleyball team or you don't see it as muchin wrestling and so forth.

FRED DE SAM LAZARO: For his part, Haskins denied any wrongdoing. The coach made only one media appearance on a radio station he had served before as a commentator.

SPOKESMAN: Are you going to make it through all of this?

CLEM HASKINS, Coach, University of Minnesota Gophers: Yeah, I'll get through it. When you have God on your side and if you believe in God, you don't worry about your enemies, he fights your enemies for you.

FRED DE SAM LAZARO: Haskins left the University of Minnesota in June with a $1.5 million severance package. The university has yet to find a new coach. That already difficult job could be further complicated if the investigation results in NCAA sanctions against Minnesota. These findings are expected sometime in September.

JIM LEHRER: The Minnesota case and others like it have spurred a move for reform among some in the NCAA. This week, a special panel recommended rewarding colleges with high graduation rates for basketball players and tightening rules on freshman athletes. The NCAA's executive committee will consider the proposals next month.

EMPHASIS - ELECTION 2000 - CAMPAIGN AGENDA

JIM LEHRER: And finally tonight, our special emphasis on what the 2000 presidential campaign should be about. We started asking individuals and groups that question four weeks ago. And we also invited viewers to participate via the online NewsHour. Kwame Holman has our report on that response thus far.

KWAME HOLMAN: Since last month, when the NewsHour first asked viewers to send in their ideas via the Internet, nearly 4,000 have responded. Some people sent a quick list of the topics they'd like presidential candidates to address. Floyd Keller of Bayport, Minnesota, wrote: "The coming and continuing problems all start with 'p'-- population explosion; power-- use and abuse of; pollution; poverty." Jane Lego of Norfolk, Virginia, said her main interests were: "The three 'e's'-- education, ecology, and election reform." In fact, election reform, especially changing the system of financing political campaigns, was the issue cited most often as needing to be addressed. The NewsHour asked several respondents to read their E-mail. Michael Murrell of Pensacola, Florida, said:

MICHAEL MURRELL, Pensacola, Florida: While there are my critical issues facing our nation on both domestic and international fronts, I would have to choose as the most important issue campaign finance reform. It goes to the heart of so many of our domestic woes. The solution would need to be multifaceted, but elements would include increased public funding of campaigns and much more free air time for political debate by the candidates.

KWAME HOLMAN: Bob Johnson is from Olathe, Kansas.

BOB JOHNSON, Olathe, Kansas: In the past few years, we have an instance of a foreign government trying to buy favoritism from the President; we have obvious and gross influence over Congress by the National Rifle Association, and now a blatant attempt by wealthy individuals and corporations to buy and elect a presidential candidate. When will this all end?

KWAME HOLMAN: Some, however, were wary of calls for campaign reform. Mack Rollie from Tucson, Arizona, wrote: "It is interesting to me that any politician who supports campaign finance reform is lauded with praise and recognition from the press. Upon reflection, it seems obvious that the effect of laws restricting campaign contributions and spending will be to increase the power of the major media, not the people." Frustration with the current political process was cited by many writers. Some said more attention should be paid to third parties in the next election. Ian Roberts of San Francisco wrote: "Is it democracy for a country of nearly 300 million people to have only two presidential candidates to choose from, both of which are chosen by big money, not the party faithful?" Nancy Erreca is from Santa Cruz, California.

NANCY ERRECA: The year 2000 should be a time to act on our beliefs that all people can contribute and have value. Open up the 2000 presidential debates to third-party candidates. The American people deserve to hear ideas from all qualified candidates. We need solutions. Let's expand where we look and not reject ideas because they are not labeled "Republican" or "Democrat."

KWAME HOLMAN: Health care was another frequently cited issue for the 2000 campaign. Barbara Coit is from Oxford, Maryland:

BARBARA COIT: Basically, the health care system in this country is a hodgepodge of uneven quality, serving some of us well and some of us hardly or not at all. Piecemeal reform of the system to date has not only not worked, but brought us to this current impasse, where large insurance companies have the greatest voice. A country with the strongest and the largest economy in the world must, and certainly can, do better. Are the candidates interested in more piecemeal reform, or broad-based reform that would provide health care service for everyone?

KWAME HOLMAN: Larry Sibelman is from Port Angeles, Washington.

LARRY SIBELMAN: Medicare needs to be expanded to become a universal system for all Americans, from the cradle to the grave. Income disparities should not open and close gateways to health care. Life, liberty, and the pursuit of happiness in the modern world must include equal access to health care.

KWAME HOLMAN: Many viewers also said they want to hear candidates talk about strengthening families or communities. Janet Neidhardt is from Branchville, New Jersey.

JANET NEIDHARDT: I'd like the candidates to discuss ways to strengthen the family. Instead of putting more money into day care, let us find ways to help families meet financial obligations so that mothers can stay home to raise their children. Also, the candidates should discuss ways to influence the entertainment industry to produce uplifting and positive products for our youth. Our country should not be molded by violence and other negative influences.

KWAME HOLMAN: Dan Lewis is from Norfolk, Virginia.

DAN LEWIS: I believe the issue of community should be an important topic of debate in the next presidential campaign. Increasingly in our society, Americans are focusing on meeting their own individual needs instead of thinking about how they can participate and contribute as citizens in the communities in which they live. The erosion of civility in our public schools, on our roads, in the political arena and elsewhere, stem from our loss of civic identity.

KWAME HOLMAN: And James Ellard wrote from Newburgh, Indiana: "Our nation is in a moral and ethical free fall that can only be halted by a return to the Christian principles upon which our nation was founded." But for Elias Walsh of Mt. Vernon, Iowa, the most important issue candidates need to address is equality. He wrote: "An issue that cannot be ignored is the growing civil rights battle that is occurring in the nation today. The candidates must make it clear on which side they stand. Will they continue to allow gay and lesbian Americans to be discriminated against?"

JIM LEHRER: Our emphasis and our questions will continue for several more months, and you can participate by visiting our web site, at pbs.Org/newshour, and also by regular mail, by the way. Our address is: The NewsHour, Box 2626, Washington, DC, 20013.

RECAP

JIM LEHRER: And, again, the major stories of this Friday. John F. Kennedy, Jr., and his wife, Carolyn, were memorialized at a mass in New York, City, and the first space shuttle mission commanded by a woman deployed a four-story x-ray telescope. We'll see you online and again here Monday evening. Have a nice weekend. I'm Jim Lehrer. Thank you, and good night.