The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Tuesday, the Saudi government denied it supported a land for withdrawal deal with Iraq. Iraq announced it would free all 330 French hostages, and Israel sealed off the occupied territories because of continuing violence. We'll have the details in our News Summary in a moment. Judy Woodruff is in Washington tonight. Judy.

MS. WOODRUFF: On the NewsHour tonight mixed signals from the Saudis [FOCUS - SHIFTING SANDS] is our lead focus. Three Middle East experts analyze whether the Saudis are softening their policy toward Iraq. Then the partisan storm brewing among Senators smeared in the S&L scandal. We'll hear what they're saying [UPDATE - ETHICS OR POLITICS?] to each other on the Senate floor. Next another in our series of conversations about the American political [SERIES - FOR THE PEOPLE?] process. Tonight former Colorado Gov. Richard Lamm. And finally essayist Jim Fisher looks for a national energy policy in Kansas [ESSAY - HOMEMADE ENERGY]. NEWS SUMMARY

MR. LEHRER: The Saudi ambassador to the United States had to clarify his country's position today on dealing with Iraq. He said Saudi Arabia would not support giving land to Iraq in exchange for withdrawing from Kuwait. Prince Bandar was called to the State Department this morning after the Saudi defense minister, Prince Sultan, suggested on television such a deal was possible. Prince Bandar spoke to reporters as he arrived for the meeting.

PRINCE BANDAR BIN SULTAN, Ambassador, Saudi Arabia: Saudi Arabia has not changed its position at all and we believe there should be unconditional implementation of the United Nations resolutions and Prince Sultan was talking about how disputes could be solved not by aggression which Iraq has committed, but by dialogue, which obviously the Iraqis did not choose. But there is no confusion in our mind.

MR. LEHRER: President Bush repeated the no compromise theme today while campaigning for Republican candidates in New England. He compared the actions of Iraqi troops in Kuwait with Hitler's SS. He said the Iraqis were dismantling Kuwait the same way the SS destroyed Poland. He spoke in Manchester, New Hampshire.

PRES. BUSH: We're dealing with Hitler revisited, a totalitarianism and a brutality that is naked and unprecedented in modern times, and that must not stand. We cannot talk about compromise when you have that kind of behavior going on this very minute, embassies being starved, people being shot, women being raped. It is brutal and I will continue to remind the rest of the world that this must not stand.

MR. LEHRER: More U.S. troops may be sent to the Gulf. Colin Powell, the Chairman of the Joint Chiefs of Staff, is in Saudi Arabia today. A Pentagon spokesman said today Powell will make a troop strength recommendation after his return to Washington Thursday. There are more than 210,000 American troops in the region now. Oil prices went up and down today all day. They finally closed in New York down more than a dollar a barrel. Yesterday they dropped a record $5 following reports that Saudi Arabia might be willing to accept less than a total Iraqi withdrawal. Judy.

MS. WOODRUFF: Iraq's parliament today voted to release all 330 French hostages. That apparently means they will be free to go once they get exit visas. Fourteen American hostages were released today. They were flown from Baghdad to Amman, Jordan. Some of them were ill or had sick relatives back home. About 1,000 other Americans remain trapped in Iraq and Kuwait. Britain has sent a plane to Baghdad to take home 33 British hostages who are either sick or elderly. Israel today sealed off all of the occupied territories after a series of revenge attacks by Arabs and Jews. A Palestinian truck driver stabbed two unarmed women soldiers. One is in serious condition. An Arab worker beat two Israeli men unconscious with a hammer and a group of Jewish civilians fired at a car full of Palestinians, killing one and injuring three. Police in Jerusalem continued to check the IDs of all Palestinians to keep out those who do not live there. The new order means that all 1.7 million Palestinians living in the West Bank and Gaza Strip will be kept out of Israel beginning tomorrow. The restrictions are expected to last for several days.

MR. LEHRER: In Washington, the never ending budget negotiations did not end again today. The current deadline is midnight tomorrow for there to be an agreement or a shutdown of the federal government. House Democrats came out of a morning meeting to tell reporters there was still much to overcome. Congressman Dan Rostenkowski, Chairman of the House Ways & Means Committee, said the Democrats were split 50/50 on how to tax the wealthy and to cut Medicare.

REP. DAN ROSTENKOWSKI, Chairman, Waysand Means Committee: Half of the membership is supportive not of all the ingredients in the compromise package that we're negotiating, but that's the way it always is when you get close to, to a hopeful agreement.

REP. RICHARD GEPHARDT, Majority Leader: While there certainly is not a lot of unanimity, there is a lot of continuing belief on the part of Democrats that in order for us to be able to get the votes we would need on the Democratic side for a possible package that it has to be a package that is fair to the American people in terms of tax fairness and progressivity, that is, the people that have the ability to pay should pay the highest taxes and secondly, that we, it is not a package that will be unduly hard on Medicare recipients.

MR. LEHRER: President Bush made the budget battle a central theme during his campaign trip today. He made these comments during the Manchester, New Hampshire, speech.

PRES. BUSH: Let me just say a word about the mess in Washington. Congress wouldn't, in my view, and I really mean this, would not be in the mess that it is in today if we had more Republicans in the United States Congress. [Applause] And now it is time, it's past time that Congress proves to the American people that it can learn to live within its means and that it can pass a budget that puts this nation on the path to long-term economic growth.

MR. LEHRER: The Senate Ethics Committee today announced hearings on the alleged connections between Charles Keating and five U.S. Senators. Keating is the former owner of the failed Lincoln Savings & Loan. He's under indictment for criminal wrongdoing. The five Senators are Alan Cranston, Dennis DeConcini, John Glenn, Don Riegle and John McCain. It is alleged they intervened with federal regulators on Keating's behalf after he gave them political contributions. The Ethics Committee hearings will begin November 15th. We'll have more on this story later in the program. The House Ethics Committee today began investigating new charges of sexual misconduct by Ohio Republican Congressman Donald Lukens. The new allegation said he made unwanted and unsolicited sexual advances to a Congressional employee. Last year, Lukens was convicted on misdemeanor charges of having sex with a 16 year old girl. He was defeated for re-election in the Republican primary last May.

MS. WOODRUFF: A piece of luggage filled with explosives was found at Los Angeles International Airport today. The police bomb squad safely removed the bag, which contained two grenades, a rifle, and 50 caliber ammunition. The bag had arrived at a United baggage claim area aboard a domestic flight two days ago. Nobody had claimed it and the contents were not discovered until today. A United spokesman would not comment when asked how the weapons got through security. That's it for our summary of the day's news. Just ahead on the NewsHour, mixed signals from the Saudis, Senators caught in the S&L scandal cry foul, a conversation with Richard Lamm, and essayist Jim Fisher has some fuel for thought. FOCUS - SHIFTING SANDS

MS. WOODRUFF: We begin tonight with the Saudi Arabia story with the questions raised when that country's defense minister seemed to say that the Saudis might be ready to soften their resolute opposition to the take over of Kuwait and start negotiating with Saddam Hussein. We'll examine that question after this report how the Saudi remark played to an international audience. The reporter is Lindsey Taylor of Independent Television News.

MR. TAYLOR: The Emir of Kuwait spent some 35 minutes in talks with Mrs. Thatcher discussing the future of his occupied country. No one is saying whether the perceived softening of their Saudi position was discussed but Mrs. Thatcher firmly intererated that Britain and America's line that Saddam Hussein must with draw his forces unconditionally. Those remarks reported made by Saudi Defense Minister Saltan seen here greeting Army Officers in his country that prompted concern about an apparent hint of concessions to Iraq. In Rhiad on Sunday he told Arab Journalists that they were ready to grant Iraq all its rights and went on we see no harm in any Arab Country giving a sister Arab Country land or a location by the Sea. That was thought by many observers as a possible reference to Iraq's claims on Kuwait's strategic Islands. Giving more access to the Gulf and its claims on an oil field which straddles the border with Kuwait. THis after noon the remarks were raised in the common.

SPOKESMAN: It is imperative that no signals are sent to Saddam Hussein. That the World coalition against him is losing its nerve.

MRS. THATCHER: We have been in touch this morning and our Ambassador to Saudi Arabia was given fully assurance that Saudi policy had not changed but Prince Sultan had been misquoted. That Saddam Hussein must with draw from Kuwait and the legitimate government be restored. The compensation must be paid for the damage done and then we will have to deal with problems like Chemical weapons and biological weapons and nuclear weapons so this does not ever rise again.

MR. TAYLOR: Misquoted or not Prince Sultan's comments produce panic in the oil markets yesterday falling by $5. The largest one day drop in history. Immediately the Saudi Defense Minister said that his comments had been misinterpreted and that any solution must provide for the unconditional Iraqi pull out from Kuwait.

MS. WOODRUFF:

MR. SICK: But was it a misinterpretation. Today in Saudi Arabia King Faud sounded a conciliatory note saying Saddam Hussein would not lose face, a badge of dishonor in the Arab world, if he with drew from Kuwait. Meanwhile Prince Bandar the Ambassador of Saudi Arabia and the son of the Defense Minister said his country had not changed its position.

PRINCE BANDAR: I have read the whole transcript of what Prince Sultan the Defense MInister had said. I have spoken to him personally and what was reported as him saying or meaning has nothing to do with what he said. We are just trying to correct the record of what was said and was intended.

REPORTER: He was not trying to send a signal of any kind?

PRINCE BANDAR: No there are no signals other than the consistent signal we have said constantly that we would like to see a peaceful solution to this conflict and the only way to talk peace is by implementation of the United Nations Resolutions and Arab League Resolutions. What we want is a total unconditional withdrawal of Iraq and the return of the legitimate government. You see you can not make aggression pay. If you let aggression pay this becomes the law of the jungle. The whole world has a lot of problems in it.

MS. WOODRUFF: To discuss whether the Saudis or any other Arabs are changing direction in the Gulf Crisis we have three views. James Akins was Ambassador to Saudi Arabia from 1973 to 1975. Before that he was a career foreign service officer and is currently an independent consultant. Fouad Ajami is Director of Middle East Studies at the John Hopkins School for Advanced Studies. Dr. Ajami was in Saudi Arabia recently and met with Saudi Government Officials. And Sam Zakhen Ambassador to Bahrain from 1986 to 1989. He was a former member of the Colorado Legislature, a businessman and lecturer. He currently heads the Coalition for America at Risk. A group formed to support U.S. policy in the Gulf crisis. He joins us from our Denver Bureau. Mr. Akins let me begin with you. We heard the statement from the Defense Minister of Saudi Arabia. We heard the denial from his son the Ambassador of the United States. And then we hear now the comment from King Faud saying that Saddam would not lose face if he were to withdraw. What is going on? Is there a change in the position or not?

AMB. AKINS: I don't think there is any change in the basic position that there has to be an unconditional withdrawal from Kuwait. The position taken by Saudi Arabia, taken by us and there is no change in that. That doesn't mean that he can't talk about things that happen after the withdrawal. President Mitteran of France, President Gorbachev of the Soviet Union said after withdrawal there are a lot of things that we can talk about. You can talk about implementing all the Security Council resolutions on the Middle East. Prince Sultan has said they can talk about border issues. This is extremely important to Iraq. It is a signal but may be it wasn't meant to be a signal but it was seen as a signal to many people around the world not least of all the oil market yesterday.

MS. WOODRUFF: Mr. Ajami what is going on from your perspective. Is there a split?

MR. AJAMI: I don't really think there is a split. You see I really don't take the American position very seriously about we are not going to negotiate. We are going to negotiate. Look where this story heads. We can either go to war or we can go to the bizarre. If we go tot he bazaar we have to talk about borders.

MS. WOODRUFF: You mean to trade?

MR. AJAMI: We are going to have to offer concessions. I don't really believe that war was the first option in the Bush Administration or the Saudis. I don't see a change. I always felt. look at the positions of the parties. Saddam is the one that is holding the posse together. The posse has not gone after him. The only reason the posse hangs in there is because Saddam has refused to make any concessions. Saddam makes concessions if he with draws from Kuwait. He hasn't been talking about annexation any more he has been talking about border disputes. That Kuwait really isn't the 19th province of Iraq but he is only talking about oil wells. Then I think the discussion would be joined.

MS. WOODRUFF: But that is a clear change in position for him and for us for that matter?

MR. AJAMI: You see I think the Bush Administration, the declared position of the Administration is that we are not going top negotiate. We are not going to allow negotiations. We are not going to allow a partial solution. This goes only as long as Saddam doesn't crack and he doesn't change. Mrs. Thatcher's position. Mrs. Thatcher wants to talk about trying Saddam for war crimes. You can not talk about trying Saddam Hussein for war crimes when you only have 6 or 7 thousand soldiers pitted against him. So there is a declared position that we are not going to negotiate and that aggression does not pay. That is the declared position. That holds only so long as Saddam does what he is doing.

MS. WOODRUFF: Mr. Zakhem do you see that is no change in the position that we are resolved in our position till we see a change in Saddam's position.

MR. ZAKHEM: I think the President is very extremely serious about that his warnings to Mr. Hussein to get out unconditionally out of Kuwait. The President has made it crystal clear that aggression will not pay and I think the President is very serious. As to the Saudi stand. You know that the Saudis are conciliatory by nature and non confrontational but whatever Prince Sultan said must have been misinterpreted because Saudi Arabia has frequently stated their position. They support the United Nations resolution to get Saddam HUssein out of Kuwait unconditionally and I don't think there is going to be any change in their position. They have publicly criticized Saddam Hussein which they rarely do in their political culture and they have burned their bridges. I don't think there is a return until and unless Saddam Hussein leaves Kuwait unconditionally. I don't think that we are going to be easy on him at all.

MS. WOODRUFF: But you pointed out that the Saudis have a history of being conciliatory but they are not being conciliatory here. Do I hear you correctly?

MR. ZAKHEM: Yes, because if you listen to public statements echoed by Prince Bandar ever since the 2nd of August on public television in the UNited States of America. If you have heard Saudi politicians speak so fiercefully and forcefully against Saddam Hussein you know there has been a tremendous change in the political culture of the Kingdom. I don't they can tolerate this kind of capabilities, nuclear, chemical, biological on their borders at the whim of a gentleman who does not hesitate to use them.

MS. WOODRUFF: But clearly Mr. Akins there are some second thoughts underway in Saudi Arabia?

AMB. AKINS: The second thoughts have been around for a long time. Prince Sultan said over a month ago that Saudi Arabia would not be used as a base for invasion against Iraq. The other Arabs that are there have also come out and said this. The Commanders of the Syrian and Egyptian Military forces said that they were there to defend Saudi Arabia not to invade Iraq. And then their statements were backed up by President Assad of Syria and by the Chief Aid to President Mubarack of Egypt. The alternative if there is no change in either side is, of course, war. And I think that war would be a catastrophe for the area, for the UNited States, for Saudi Arabia and certainly for Iraq. I think that people have been looking for a way out and by the way there has been a crack in Saddam's positions. On the 12th of August he said that the will of the people of Kuwait had to be consulted. THis tends to be forgotten. He also said that there has to be simultaneous Israeli withdrawal from Arab lands that it has conquered and Syria from Lebanon. Obviously that was a talking point, a bargaining position. That was picked up by the French and the Russians. So after the withdrawal we can talk about these other things. But there have been signs that he has given and other people have picked up. This is not new but I think that it was very significant I think but it wasn't new.

MS. WOODRUFF: But isn't all this a reflection of the restlessness because the situation does seem, despite the signs and the signals the situation does seem to, drag on and on and on?

MR. AJAMI: Well it drags on and tests the cohesion of this coalition, it tests the American resolve. It tests everything. Look in the end War is not the first option of any one in this coalition. Look war is not the Saudi first option, war is not the American first option. Now you take a look at the Saudi position. What the Saudis are really concerned about and that is for them the crux of that matter. They do not want Saddam on their border. If Saddam is going to stay on the Saudi, Kuwaiti border an area which Saudi Arabia can be invaded they will not live under his mercy and they will eventually have to go to war if that is a condition but if he retreats then many things are possible.

MS. WOODRUFF: But how can the KIng of Saudi Arabia say that Saddam doesn't lose face if he pulls out of Kuwait. How can that be, I mean, clearly he will have lost face?

MR. AJAMI: Well forget this little poetry. In the end Saddam is the claimant, he is the contender. He is the man who made a bid. He made a bid to dominate the politics of the region. He succeeded Khomani in this ambition to dominate the region. If he retreats from Kuwait he will lose any way. The bid will have been thwarted. He will have misjudged the resolve of his neighbors and the resolve of powers beyond.

MS. WOODRUFF: But getting back to what you and Mr. Akins said how can the Saudis live with the situation where Saddam Hussein remains on their border with all these weapons that we have heard cited tonight again and again that he has now?

MR. AJAMI: If Saddam stays on the Saudi, Kuwaiti border these are the conditions in which the Saudis will sanction the out break of war. They will have to because they will not live in his gun sight. They will live under the mercy of Saddam, however if Saddam goes back to the status quo, if he goes back to August 2, if he disgorges his gains in Kuwait, I think the willingness of this international coalition to go to war against him for the final objective to destroy Saddam's power base I don't think that the will is there.

MS. WOODRUFF: The most important question for this country Mr. Zakhem is what the United States would do if the Arabs were beginning to favor negotiation, if we were really beginning to see a split. Would we be forced to go alone. Would we have any choice. We I mean the UNited States?

MR. ZAKHEM: Judy this is a strong independent variable which nobody addressed so far, The Gulf Cooperation Council States have backed Mr. Bush and thanked him for his vision and his courage for the dispatch in which he deployed our troops there and that is saving Saudi Arabia and forcing Saddam to stop on the Kuwaiti border. They have a say in it too and I don't think the President would leave them vulnerable. They want us to act, they want us to get Saddam unconditionally out of Kuwait and those who doubt the President's resolve better think twice because Mr. Bush had said it very clearly and just look at his face, look at the tone of his voice. He means business and we have the troops there to do the job and I don't think that we are going to negotiate and give Saddam Hussein a way out by giving him more land and giving him more oil and what have you. He has to leave unconditionally otherwise I think that Mr. Bush will act as he has promised to do.

MS. WOODRUFF: Mr. Akins I realize this is hypothetical but if the Arabs were to back off and say we are ready to negotiate, to work out some deal. Can the UNited States stand its ground and say no we are not going to go along with that?

AMB. AKINS: IT would be very difficult. We can not be more Catholic than the Pope. If the Arabs themselves say we can find a negotiated solution to this the UNited States is in no position to say we will not tolerate any negotiated solution. I agree with other speakers and the statement made by President Bush, I guess, that if there isn't a withdrawal there will be war. I still think that it would be a catastrophe for all those involved but I think that this is something that we should recognize and the Iraqis should recognize. If there is no withdrawal from Kuwait there will be a war. I don't know exactly when but that is certain. President Bush has committed his Government, he has committed himself to the complete and unconditional withdrawal from Kuwait. That doesn't mean to say that we can't have quiet contacts and we can't talk about some things that could be done after the withdrawal and these are things that clearly have been done already.

MS. WOODRUFF: But Mr. Ajami the same question if Saddam is Hitler revisited like President Bush is calling him how do we let the Arabs work out a negotiated settlement?

MR. AJAMI: Well if Saddam is history revisited and Saddam is in retreat I think that it is taken for granted that we will have to go to war. The American position is cast in cement and the President has used very provocative language and he is on record for it. I mean clearly we know that people can break the promises, the public pledge that they make. I don't think the President has that much of a margin to maneuver. However, if Saddam retreats, it all hinges on Saddam. See he is the main player in this drama. Everybody has just stepped on stage to play second to Saddam. It is really Saddam's call. If Saddam retreats from Kuwait, if in fact he disgorges himself then I think the U.S. Administration, the Bush Administration regardless of what they are saying now if Saddam retreats they will declare victory and quite. It is not going out. The Administration will be here to tell us that they have won without firing a shot and that is what the real story will be. So it is really Saddam's call. If he retreats this coalition will have some hard questions to ask and this Administration will attempt to declare victory and quit.

MS. WOODRUFF: Well gentlemen we thank you for being with us. Mr. Akins, Mr. Ajami, and from Denver Mr. Zakhem. Thank you all three.

MR. LEHRER: Still to come on the Newshour tonight the latest on the Keating Five, A conversation with Richard Lamb, and a Jim Fisher essay. UPDATE - ETHICS OR POLITICS

MR. LEHRER: Next a savings and loan ethics update. The Senate Ethics Committee today announced hearings in November on the five Senators linked to the failed S&L operated by Charles Keating. The move follows some unusually bitter words. Roger Mudd reports.

MR. MUDD: During the twenty five years of the Committee always three Republicans and three Democrats and dominated by Southerners has been discreet and aloof and extraordinarily non political. But in the last 36 hours it has been subject to an uncharacteristic partisan pummeling with both parties accusing the other of trying to protect itself until after the election. At issue is why the Committee has taken so long to act on its special council's report on the KEating five. A report which is now six weeks old. Keating is Charles H. Keating Jr. a former savings and loan executive now under indictment for criminal fraud who used political contributions to try and protect himself from Federal regulators. The Keating Five are five United Senators who accepted Keating's money and who are now accused of improperly intervening with the regulators. Democrats Alan Cranston of California, Dennis DeConsine of Arizona, John Glenn of Ohio, Don Reigle of Michigan and Republican John Mc Cain of Arizona. The report by Committee special council finished on September 10th recommended that Democrat Glen and Republican Mc Cain be dropped from further investigation leaving Democrats Cranston, Deconsine and Reagle. On October 1, details of the report began leaking out but not until last Thursday did the Committee meet again. That meeting broke up with out a decision. Then yesterdays session was canceled because of an absent Committee member. Republican Senator Mc Cain convinced that the Democrats were refusing to exonerate him so the scandal can not be viewed as an all Democratic affair yesterday went to the Senate floor to accuse the Committee of jeopardizing his honor and his career.

SENATOR MC CAIN: There comes a time when you can not longer hold your tongue in the face of things that are wrong especially when those wrong can be righted. The Senate now faces this kind of problem and now is the time to fix it. I don't know what famous jurist said that sunshine is the nest detergent, who it was that said that Mr. President but sunshine remains the best detergent. The American people I believe have a right to know and have a right to inspect this special council's report and recommendation which millions of tax payers dollars were expended. Which took nine months to complete by one of the most reputable and experienced outside councils in America. Mr. President the ethics committee has had ample time to examine this report of the special council and now they must act.

MR. MUDD: Then what seemed to be by prior arrangement three of Mc Cain's Republican colleagues were ready with their support.

SENATOR DANFORTH: The night mare for the Senator from Arizona is that the year will end. The Congress will end. Perhaps there will be new members of the ethics committee for the next Congress. They will feel the need to start the process all over again. The biggest possible nightmare, I think, for the Senator from Arizona is that this investigation will never be brought to an end.

SENATOR GORTON: One week perhaps two weeks it seems to me Mr. President should have been sufficient for a decision by the Committee. During that period of time very little was written in the press about the contents of the report. Nevertheless at this point we are in the worst possible situation.

SENATOR DOLE: In the case of Senator Mc Cain he has been held hostage before under very difficult circumstances. So let's not keep him hostage here in the Senate.

MR. MUDD: With in an hour the Democrats were firing back, Majority Leader George Mitchell.

SENATOR MITCHELL: One aspect of this matter was not discussed by any of our colleagues this morning. It also involves fairness. It is unfortunate, indeed it is outrageous that the confidential work of the Committee has been consistently and prejudiously leaked to the press before any final decisions have been made by the Committee. It is note worthy and particularly disturbing to me that the leaks have limited to accusations against members of the Democratic party. Although the preliminary investigation underway involves members of both parties.

MR. MUDD: Mitchell was followed by the Chairman of the Ethics Committee itself Howell Heflin of Alabama. Who seemed to indicate that he for one does not favor dropping either Glenn or McCain.

SENATOR HEFLIN: I listened this morning to the statement of Senator Mc Cain, Danforth, Gorton and Dole. Each belonged to the same political party. It is interesting to note that most had prepared stated. Senator Gorton asked for a delay by calling a quorum in order that one Senator could come to the floor to make his statement. I do not believe that the ethics committee should be placed in the position of responding to pressure for a benefit of a friend or friends or to the disadvantage of enemies or a partisan position.

MR. MUDD: Democrat John Glenn at first put out a written statement, urging the committeeto act. But about midnight last night, he went to the Senate floor.

SEN. JOHN GLENN, [D] Ohio: Now I do not seek in any manner to influence the committee's decision insofar as the allegations relating to my conduct are concerned. I ask only that the committee not allow the Senate to adjourn and thus delay indefinitely whether for several months or perhaps even into next year a resolution of this matter without deciding what, if any, action to take concerning those allegations.

MR. MUDD: But the acrimony has not subsided. One of the Democratic Keating Five said today he thought Chairman Heflin was more concerned about his re-election campaign in Alabama than he was about our reputations. And the Washington Times today quotes a source close to the committee as saying it may have been Republican John McCain and/or his lawyer who leaked the report. Both men deny leaking anything to anybody. The committee's decision this afternoon to wait until after the elections to hold public hearings on all five Senators set off another round of angry comments from Glenn and McCain.

SEN. GLENN: I know what John Glenn did. I don't know what anybody else did. I have no idea. I haven't read all these depositions and things they sent out to all the lawyers. I didn't want to know what other people did. I don't today. I know what I did, I know what I did not do. I wanted to be treated as an individual and I'm happy to be judged on that.

SEN. JOHN MC CAIN, [R] Arizona: The committee's refusal, in my view, to decide is an outrage. That Special Counsel Bennett, it is common knowledge that Special Counsel Bennett has exonerated John Glenn and I; everyone knows that. We've never heard any questions about the quality of him or his work. For them to refuse to accept or release his report in my view is an act of political cowardice.

MR. LEHRER: Later in the afternoon, Warren Rudman, the co- chairman of the Ethics Committee, said the committee's decision to go forward was unanimous. Rudman praised the work of the Special Counsel but said there are still some questions that should be resolved by the committee in public hearings. SERIES - FOR THE PEOPLE?

MR. LEHRER: Now another in our special series of one on one conversations about the state of governing in Washington, particularly as it relates to the current crisis over the budget. Tonight's is with Richard Lamm, a Democrat who was governor of Colorado for 13 years. He's now director of the Center for Public Policy and Contemporary Issues at the University of Denver and he joins us tonight from Denver. Gov., welcome.

GOV. LAMM: Thank you.

MR. LEHRER: Meg Greenfield writing in this week's Newsweek says no matter how this budget mess is resolved, the government of the United States has forever lost more credibility with the American people. Do you agree with that?

RICHARD LAMM, Former Governor, Colorado: Yes, I think I agree with that, but I also am trying to look a little deeper than that. I think that, you know, Adlai Stevenson once said that government is a pump, and it pumps up into political office a pretty fair reflection of what we are as citizens, and I think that while there's a problem in Congress, I think we have a problem just simply as a nation trying to accept that we can't have everything that we want.

MR. LEHRER: So the problem is as much with the people as it is with the people they send here or send to Washington?

GOV. LAMM: I think the politicians mirror the people and I think there is no constituency in America for fiscal responsibility and I think when we complain,for instance, that well, the politicians are borrowing all this money, we look around and who's borrowing more money than the politicians, well, business through leveraged buyouts, an all time borrower of the last 15 years is the American consumer. I think we have a national sickness actually, that we want more government than we want to pay for, we want more health care than we want to pay for, and I think the real dilemma is that we no longer recognize that we have to sometimes in a great country's history make some sacrifices.

MR. LEHRER: Now why don't we recognize that? What's the problem?

GOV. LAMM: Well, that's an interesting question and I've been trying to think about that. The Roman historian Juvanal said luxury is more ruthless than war. That's something you look in all great nations that when things are going well, you know, when we were distributing the bounty of a plentiful and very rich continent, well, then there's no problem, but one of the dilemma's is that luxury is more ruthless than war. People get over indulged, they lose those stern virtues that made the great country in the first place, and then when you try to call for sacrifice, discipline, my own political platform for America would be, I'm going to raise your taxes and I'm going to cut your benefits. I think that's what running $300 billion deficits means. We're going to have to expect less from government and pay for what we get.

MR. LEHRER: But how would the people react to politicians who said that? The record's not very good on that.

GOV. LAMM: Exactly the point. Exactly the point. And I think that politicians do reflect the fact that we as a people don't want to make any sacrifice, but I do know this, Jim, with almost an Old Testament fervor, I say that no country can violate the laws of economic gravity too long, that you can't continue to borrow from our children and our grandchildren. When I graduated from high school, my mother and father who fought a war and a depression, the total national debt in 1953 only took about 5 cents out of every tax dollar we paid. Now it takes 19 cents out of every tax dollar we pay and my children are probably going to pay 25 cents out of every tax dollar that they pay just to pay the interest on the excesses that I ran up. So I think that no nation can exist in variance with economic reality and that's what we're trying to do.

MR. LEHRER: So it's got to be one of three things then, right? You've got to have almost a depression, you've got to have chaos, a crisis, or you've got to have leadership from the top or revolution from the bottom, is that it?

GOV. LAMM: I think that of those three that, yes, democracy seems to be a crisis activated system. I would love to see let's say George Bush say let's make the '90s a decade of renewal. You know, for 10 generations, American mothers and fathers left better educated children, a more competitive economy, until my generation, and let's spend the '90s getting America back in shape and redoing our infrastructure and revitalizing our industry and paying down our debt, and expecting less from government, and whether or not the leadership could do that I think is very much up in the air. I look at England and I look at Spain and I look at a lot of the other countries, and I find that it's very difficult for leadership to -- once a country has lost a lot of the stern virtues, I think it's awfully tough for leadership to call upon what is essentially gone. It's evaporated.

MR. LEHRER: So in other words, things have to get really bad, they have to get much worse before anything's going to happen?

GOV. LAMM: I mean, you know, England didn't turn to Churchill until Hitler was on the beaches of Dunkirk and I think a Churchillean message right now that no nation can get through its history without occasionally having to call for sacrifice on the part of its people, Churchill said, blood, sweat, and tears, and I guess that sort of my feeling is that America has to demand some discipline from its people. We have to no longer just look at rights and privileges, but we have to look at duties and responsibilities.

MR. LEHRER: But who makes those demands? I mean, are you and I and the ordinary folks on the street going to make the demands, or is somebody above is going to make -- where's it going to start?

GOV. LAMM: My own life experience is the great revolutions of my lifetime, the civil rights movement, the woman's movement, the environmental movement was not led by politicians. It did sort of spontaneously erupt from the people and my own best guess is because of this ying and yang between politicians and people where a politician can't literally ask for a sacrifice, I mean, I think it's going to have to come out of the people, it's going to have to come up from the bottom.

MR. LEHRER: But it won't happen until things get worse?l

GOV. LAMM: I mean, the future's always full of things that are going to surprise us, but I look at the civil rights movement and the woman's movement, and somehow they just, they came along, but --

MR. LEHRER: But they had leaders, they had leaders with ideas, did they not?

GOV. LAMM: They did, but they weren't politicians. Martin Luther King wasn't a politician; he was a great opinion molder, Gloria Steinem, Betty Friedan. I think that politicians are weather vanes, not compasses, and I think this country needs compasses.

MR. LEHRER: Where can we go and get some compasses?

GOV. LAMM: Well, my own best guess is the scenario is going to unfold like this, that we're going to continue to borrow from our kids, we're going to continue to let our economy deteriorate, we're going to sell more and more of our assets to foreigners until all of a sudden we reach a crisis, then I see that there's going to be a terrible sort of intellectual civil war in America between those people who are going to be looking for scapegoats and easy solutions and I hope a sizable amount of people say look, we've been borrowing money, we've been letting our economy deteriorate, we assumed somehow that God is in America and is going to watch over us no matter how inefficient and ineffective we got as a nation, so I would think this time of renewal is very important in America's future.

MR. LEHRER: Can, is it possible to lead the American people to that renewal? In other words, is the alternative between just sitting back and letting things get worse -- is there any alternative to that? Is it possible to get the American people to lead them to sacrifice, to tell them the truth and do it in a charismatic way or whatever? Can this process we now have work in that way?

GOV. LAMM: I'm not smart enough to know, but I think that my best guess is that, yes, it probably, if there was a charismatic enough person out there that can really articulate I think America underneath has got enough of the vigor. I think that it took Pearl Harbor to get us going during the Second World War, but I do think that if the right combination of leadership came along and said, look, dream no small dreams, this is a big dream, that by the year 2000 we can really be a competitive nation again and we can have good infrastructure and we could have a fine quality of life and our education system will be revitalized, I think that people would be willing to accept less from government, and work harder, tighten our belts, all those things that I think is going to be necessary.

MR. LEHRER: You mentioned the word "war" a couple of times. What do you say to those people who say, hey, what this country needs is a good war in the Persian Gulf that unites, that'll unite the country and help the economy, wars in the past have sometimes done that?

GOV. LAMM: Well, I think any crisis, I am very sobered by the Russian Roulette aspect of crisis. Crisis preceded Lenin's Russia, Hitler's Germany, Moussilini's Italy. I believe that anybody that wishes a crisis, whether that's a war or an economic crisis, even though I think that an economic crisis is sort of locked into our future, I don't see any joy in it, because I think we ought to be a self-reforming nation, I think we ought to be a revitalizing nation, so I'm very doubtful that a war is -- it's a Pandora's Box into which too many things could flow. I think your chances of coming off far worse is just as good as something coming out better for a nation. We may have to do it. I'm not saying that if a war is necessary, I think you have to fight a war, but I don't think you do that as a matter of revitalizing the national character.

MR. LEHRER: I hear you. Are you -- I'd hesitate to characterize what you've just told me here as pessimistic, optimistic about where all this could lead. Would you do it for me, please.

GOV. LAMM: Well, Arnold Toinby, the great historian, said all great nations commit suicide. And I guess that I'm an American and I love my country and I want particularly for my children to share some of the bounty that I've seen in this country but I am pessimistic in the short-term. I think that America is losing a lot of its ability to self-renew and to revitalize. I think our politicians are buying our votes. Neither political party can control the budget. The political pain is too large. So I think that we're going to be all right in the long-term, but there's a rough road let's say in the '90s, the way we're structured right now.

MR. LEHRER: And looking at Washington from Colorado, you think it's a mistake to look to Washington as a cause of all the problems?

GOV. LAMM: Well, I don't say there hasn't been a failure of leadership, and I don't say that we haven't failed there also, I think there's been a failure of leadership, but I think that a bigger failure is this idea that the American public just simply has lost some of the ability to sacrifice and self-discipline itself. Democracy, the cost accounting of democracy is very difficult. I think that it depends. One famous French philosopher said freedom is the luxury of self-discipline. Well, I don't see us we're a very disciplined people, so I think Washington has a problem, but I think we have a larger problem among just the American character.

MR. LEHRER: The American character is flawed?

GOV. LAMM: I don't think -- it served us well for 200 years, but luxury is more ruthless than war. I think there's a corrosive. I think that people have fully expected -- we just as a political ethic, we expect things from government, we don't want to pay our taxes, we don't want to do those things, we don't want to vote, and I think that can only be the American character. We are an over indulged people who don't recognize that every generation -- we're not asking people to fight in Vietnam, we're not asking them to risk their lives in Iwo Jima. What we're really saying is let's spend 10 years to get this country back together again, let's pay our way, let's quit borrowing from our children, quit putting it on our children's credit card. We've got to reform America's institutions, and that's politically very difficult, and economically necessary.

MR. LEHRER: Gov. Lamm, thank you very much. ESSAY - HOMEMADE ENERGY

MS. WOODRUFF: Finally, our Tuesday night essay. Tonight Jim Fisher, columnist for the Kansas City Times, goes searching for a national energy policy in Herkimer, Kansas.

MR. FISHER: If you want to know what happened to America's national energy policy, take a look at this old shed a mile North of Herkimer, Kansas. What's in it is rusting and cobwebbed, shut down and currently inoperable, basically junk. In fact, all that's publicly remembered about this place is a sign Sam Schmitz and his good friend, Tony Stoehr, carry around on the 1927 red Chevy fire engine they parade with at small town get-togethers and other reunions hereabouts. The sign is self-explanatory. It wasn't defunct 10 years ago.

SAM SCHMITZ: At that time the American ag movement was going strong and they was tryin' to get the price of grain up and there was a shortage of fuel in the country. People could remember the long gas lines, so they decided that we ought to be making alcohol, and if every farmer would be making alcohol to use on his own farm, that would bring the price of grain up and it would lower the price of fuel. So we decided we'd give it a try here.

MR. FISHER: That sounded good to Stoehr and Schmitz, middle aged farmers who channel their imagination toward how things work, not art, practicality, not dreams. So they built what they call this $35 shed on Stoehr's farm. Essentially it was a cooker and a bunch of tubes for converting crops and crop waste into alcohol, a distillery.

TONY STOEHR: We just built everything. There's about for or five us here that just sat down and started dragging iron off of the iron piles and just started building stuff. What one didn't have, the other one had in the junk pile and we just built all of our equipment out of scrap. This way if it didn't work, you didn't have a tremendous cash outlay on the thing and if it didn't work, throw it out the door or start building on something else, or modify it till it did work. And this cuts down on the overhead, because it was all experimenting. We didn't know what we was going to end up with when we started.

MR. FISHER: One of the first things they tried was wheat, but they put too much in.

MR. STOEHR: The thing expanded inside just like bread dough raising. They come up out of the top of that till. He was sitting on the lid and I think dad was sitting on it too, and it just raised them and the lid and everything up, just like a great big 500 gallon chunk of bread dough raising. Oh, what a mess.

MR. FISHER: Then they got a couple of pick-up loads full of watermelons. Watermelons were no good, too low in sugar. They tried all sorts of other things, sawdust for one. It didn't work either. But Stoehr and Schmitz are tinkerers. You have to be that to be a farmer in Kansas or anywhere else. What they settled on was this, milo. It's abundant here, least ways when the weather cooperates. It has a nice sugar content. They were getting 180, 190 proof grain alcohol, potent stuff.

MR. STOEHR: This here's our ethanol production records, what the mice didn't chew up. It's been nine years since we've had this thing open, and this will give you kind of a walk back through history. The AFT Division required us to keep records, and it is interesting to look back, kind of like looking through an old diary. Batch No. 1, the first one we cooked up, it took 80 hours to ferment it, gives a list of material in there, what did we have in there, 15 bushel of milo, 1 1/2 pints of yeast.

MR. SCHMITZ: Which was way too much yeast.

MR. STOEHR: Right. We ended up, we got 15 gallons of 160 proof, which is only a gallon to the bushel. That ain't bad for the beginning.

MR. FISHER: Eventually they were producing a gallon for maybe 50 cents, maybe a little more, and it was renewable. It was theirs. That wasn't the half of it. What was left over, the mash, was good cattle feed.

MR. STOEHR: Oh, the cows love that stuff. We'd make this stuff and at 4:30 in the afternoon when we'd throw out some feed, they was waiting. 4:30, you could count on it, the cows would come in off the weed pasture and when cattle come in off a weed pasture, it's got to be something pretty good, they really like it. And it'd smell good too, you know. It smelled just like hooch. Maybe they got a buzz off of it, maybe that's what they liked about it, but they come in right off the field and go after that stuff.

MR. FISHER: It was a neat package, and what Stoehr and Schmitz were doing was being done all over, wind electric machines, methane from manure, old oil wells being stimulated by electricity. Some of it was crackpot, some of it would have gone nowhere, but people were trying. From the vantage point of 1990, ask Schmitz and Stoehr what happened, how the package came apart. The government flat taxed them out of business, 500 here, 200 there. They wanted forms, reports, receipts, just drove them crazy.

MR. SCHMITZ: Now if it's $540,000 gross that you do, then it's $1,000 tax.

MR. STOEHR: Is that what it is?

MR. SCHMITZ: Yeah. Why should they tax a little outfit that experiments half as much as somebody that's selling $540,000 worth, or whether he's using that $540,000 worth? If they'd take that tax off of it, we could experiment out here.

MR. STOEHR: And sooner or later, experimenters are going to stumble onto it, I'm convinced. We're getting 10 percent of our oil, they said, from Iraq. We got 10 percent growing right out here in the fields in the form of alcohol. You could supplement that slicker than a whistle. The best part about it, it's America's renewable resource. It's something that we produce every year. When you get done pumping the oil out of the ground, she's gone, she's gone. It'll be a billion years before Mother Nature creates another oil field. But the milo and your grains to make fuel alcohol will be here this year, they're going to be here, and another crop of it's going to be ready to go next year.

MR. FISHER: It's a fuel that's now only a memory. And this milo, it's for cattle feed, the tank wagons that roll along the back roads probably full of foreign oil. And the shed, well, it's still here, a dream of two hard-headed farmers who thought they could do their bit and maybe make a buck or two on the side, but who were swallowed, not by inability or inexpertise or the lack of a market. What ate them alive was what the government just loves, taxes. I'm Jim Fisher. RECAP

MS. WOODRUFF: Once again the top stories of this Tuesday, the Saudi ambassador to the U.S. denied his government would accept anything less than a total Iraqi withdrawal from Kuwait. Iraq's parliament voted to free all 330 French hostages. Fourteen American hostages were allowed to leave today. And Israel said it would prohibit all Palestinians in the West Bank and Gaza Strip from entering Israel for several days because of the escalating violence between Arabs and Jews. Good night, Jim.

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