The NewsHour with Jim Lehrer

GWEN IFILL: Good evening. I'm Gwen Ifill. Jim Lehrer is on vacation. On the NewsHour tonight, a summary of the news this Labor Day; then a look at how the economy is affecting jobs; a Paul Solman encore discussion of business ethics; new rules for California's fishing industry; a second look at the history of interventions; and a Labor Day poem.

NEWS SUMMARY

GWEN IFILL: A Labor Day dispute is brewing at West Coast ports, after contract talks broke down between shipping lines and the dockworkers' union. An extension on the negotiations expired yesterday, and more than 10,000 workers at 29 ports are now threatening a labor slowdown. It could begin as early as tomorrow. The dispute focuses mainly on health benefits and labor-saving technology. Iraq suggested today it might allow renewed UN weapons inspections after all. Deputy Prime minister Tariq Aziz said they must be part of an overall settlement. He said he'd meet tomorrow with UN Secretary-General Kofi Annan. In response, White House spokesman Ari Fleischer played down the remarks, telling reporters on board Air Force One, "Iraq changes positions on whether it will let the inspectors in more often than Saddam Hussein changes bunkers." Fleischer also denied Secretary of State Colin Powell is at odds with President bush over Iraq. On Sunday, Powell told the BBS the U.S. does want new inspections as a "first step." Vice President Cheney has said otherwise. Former South African President Nelson Mandela warned today against taking unilateral action against Iraq. He said the U.S. must seek the approval of the United Nation. He spoke in Johannesburg at the world summit on Sustainable growth. .

NELSON MANDELA: What they can produce is chaos, in international affairs. And will condemn that in the strongest terms. No country must be allowed to take the law into their own hands. Unless they'll are saying we are super powers. What we do you have no right to imitate. Either way we condemn that.

GWEN IFILL: Mandela said he'd made his views known to both Secretary of State Powell and former President bush, but had tried and failed to reach the current President Bush by telephone. A Swedish court ordered a man held today for two more weeks on allegations he planned to hijack an airliner. Kerim Chatty is a Swedish citizen of Tunisian descent. He was arrested Thursday trying to board a flight to Britain with a gun in his bag. Police are investigating whether he had ties to terror groups. In the Netherlands today, prosecutors announced the arrests of seven men suspected of helping finance al-Qaida. A statement said they're also accused of recruiting fighters for the terrorist group. Their names and nationalities were not released. Israel's defense minister has ordered an investigation into the army's killing of 12 Palestinians in recent days. The minister's office said the chief of the army will report on how to prevent such killings. Eight of the recent deaths were civilians, including a six-year- old girl and a ten-year-old boy. Senior Palestinian officials said today the Israeli probe would yield nothing. Thousands of South Koreans began cleaning up today from a devastating storm. We have a report from Kevin Dunn of Independent Television News.

KEVIN DUNN: After the worst typhoon to hit South Korea for more than 40 years, much of the country is under water. Bridges, roads and railways were swept away by floodwaters, and rivers burst their banks and reservoirs overflowed. Officials fear that more than 100 people were swept to their deaths or left buried in mudslides. The torrential rains battered South Korea all weekend, with the East Coast the worst hit. But the reports of damage and destruction came from across the country. The storms devastated thousands of homes and cut off power and water supplies. When the waters receded, they revealed the extent of the wreckage. Thousands of people have to flee their homes and take refuge in emergency shelters. Others cued patiently for fresh drinking water. They are still trying to locate the missing, as the huge cleanup operation gets under way.

GWEN IFILL: Tropical Storm Edouard threatened the coasts of Florida and Georgia today. It formed early this morning off northern Florida, and began moving slowly northwest. The storm's top winds were only 40 miles an hour, but forecasters said it would bring heavy rain to the coasts of Georgia and South Carolina. That's it for this News Summary tonight. Now it's on to jobs and the economy; business and ethics; new fishing rules in California; the history of intervention; and a Labor Day poem.

FOCUS JOBS AND THE ECONOMY

GWEN IFILL: For starters on this holiday devoted to taking a rest from our labors, we talk about jobs. Terence Smith has that story.

TERENCE SMITH: The past year has seen mostly bad news, higher unemployment, corporate scandals, continued slow growth. How is that affecting the nation s workers and companies? What are the longer-term implications? We re joined by Christine Owens, director of public policy for the AFL-CIO, and by Martin Regalia, chief economist at the U.S. Chamber of Commerce.

Welcome to you both.

Martin Regalia, Labor Day is a suitable time to take a look at the economy, the state of the economy, and how it affects the American worker. How does it look to you?

MARTIN REGALIA: Well, I think it s really a dichotomy right now. What we seen in the long run are good fundamentals, good productivity growth, there s low inflation. There s a lot of potential in our economy. But in the short run, the cyclical economy is just not hitting on all cylinders yet. What we ve seen is a fast start in the first quarter, and we ve lost all momentum in the second. So we re looking at the second half of the year with a very careful eye, because on the one hand consumers are still spending, but on the other hand businesses are not yet investing. And so we don t have a lot of underpinnings to our growth; we don t have a lot of balance in the economy. And that s hurt workers because the thing that hasn t kicked back yet is job growth; there really hasn t been much in this recovery at all.

TERENCE SMITH: Not enough growth, growth for job growth?

MARTIN REGALIA: Exactly. We ve got to grow at better than 3 percent in order to create jobs. And we lost about 2 million jobs during the recession and the slower periods just before and just after, and the last couple of months we ve only been growing at about 23,000 jobs a month, and that s a pitiful slow rate.

TERENCE SMITH: Christine Owens, from Labor s point of view, how is the economy treating the American worker?

CHRISTINE OWENS: Well, I think Marty sort of hit on something when he said the fundamentals. At least from the standpoint of workers, the fundamentals couldn t be much worse. Unemployment is high. There are about 10 million workers who want jobs, who need jobs, and can t get jobs; a million and a half workers have been unemployed for at least six months; about million workers have completely run out of their unemployment insurance benefits. Forty million Americans don t have health insurance, and 80 percent of those are workers. Many more workers fear losing their health insurance either because they ll lose their job or because health insurance costs are just skyrocketing, and many employers are passing those costs on to workers, workers just can t afford to absorb those costs. And finally, workers are extremely worried about their pensions and their retirement security. I mean, obviously the corporate scandals have heightened those concerns and have exacerbated some of the problems, but there has been a long-term trend away from guaranteed pensions to 401K s, which workers have to invest in primarily and which are very risky inthe wake of Enron and WorldCom and some of those places, may workers have lost all of their retirement earnings, eight hundred thousand, a million dollars; these are folks who are ready to retire, and all of a sudden everything is gone. And all of us who have 401K s have lost something over the last couple of years. Over the last couple of years the average balance in 401K plans has declined by 20 percent, so that s a huge hit for anybody but especially for anybody who s close to retirement, it s just an enormous loss.

TERENCE SMITH: Martin Regalia, that s a long laundry list of serious problems.

MARTIN REGALIA: Well, I really think when you look at our economy right now, there are problems certainly in the labor markets. The unemployment rate peaked at about 6 percent; it s still at 5.9; that is a problem. You have to put it in perspective, though. 6 percent is the lowest peak in unemployment for a recession that we ve ever seen. So you kind of have to put everything in perspective. There s about 180 million workers that do get health insurance from their employers. The 40 (million) that don t is a problem; we ve go to address that, but don t lose sight of the fact that the businesses provide health coverage to 180 million workers. So, you know, it s always a glass half empty, glass half full, and right now I think that the best thing that we could do for American workers is to get them all employed, to get them back to work, to get the people the million and a half that have been unemployed for six months or more back to work, and in order to that, we ve got to get the economy moving.

TERENCE SMITH: Christine, what s your view of the Bush economic package, as laid out so far, the tax cuts, and the other principle elements, as it impacts on workers?

CHRISTINE OWENS: Well, the package that the President has talked about most recently, which is a series of tax cuts that would likely cut tax on corporate on capital gains, reduce some of the taxation with respect to some dividends expand 401k investments -- by and large is not going to have much impact on workers. Those tax cuts, by and large, benefit disproportionately the top 1 percent of wage earners. Average workers aren t going to see much benefit; very few average workers actually are able to invest as much as the limits on 401K s and IRA s right now, and so extending those limits isn t going to help them; very few have capital gains that they could actually benefit from a capital gains tax cut. So that s not going to help them. What will work what will help workers are steps that really are designed to help them. One is providing jobs, making sure that we get job growth back on target. You know, it was just a couple of years ago we had 3.9 percent unemployment. That was practically a full employment economy. Another is to to provide a real prescription drug benefit under Medicare, and to take steps that will rein in some of the spiraling health care costs, and particularly the prescription drug costs. A third is real pension reform, that does something to guarantee pensions for workers, to guarantee protections for workers in 401K plans and to give workers a voice in the decision making about their pension plans and how they re managed. Another is to raise the minimum wage numbers; another is to put workers first in line when it comes to bankruptcy. When their companies go belly up, they re at the bottom of the line when it comes to getting back wages and severance pay. They need to be brought up to the front of the line. These are all the kinds of steps that will help workers, and they ll help workers who are going to in turn invest in the economy. Martin a stable economy over the last several months so we need to give folks more the people who have to spend or that they can spend and that will be an important step in making the economy work for working families.

TERENCE SMITH: When you stand back and look at the economy and you look at the Bush economic package -- is it working?

MARTIN REGALIA: I think so. I think when you look at the data that we ve seen recently, when you see and we look at what was happening before Bush s first tax cut last year and before the tax cut earlier this year, what do we see we see an economy that was declining actually from the Clinton administration; it was in decline before Bush even took the oath of office. And what happened? He got a tax cut through, we increased disposable income. Spending in the fourth quarter grew rapidly and GDP grew; the first quarter we had the first phase-in of the last year s tax cut again, more spending. Consumers have, when they have money, when we increase their disposable income, they spend it. The tax cuts earlier this year that increased bonus depreciation and what did we get the second quarter of the year we grew at about 3.1 percent in investment and equipment and software, computers and the like; that was the first increase, a quarterly increase in six quarters, in a year and a half. So the tax cuts and the economic plan that was put in work. But now we have to go the next step And I think when you look back at the tax cuts and you look back and evaluate them, you say, well, why don t we do it again? I agree we ought to do tax cuts that do two things one, give people more money. If we accelerated and made permanent the tax cuts that were passed a year ago, that would put more money in people s hands, and they would spend it. And then we ve also got to encourage businesses, because this has been an enormous period of uncertainty. We ve got to encourage businesses to take risks; that s what they do they take risks and they create jobs. And in order to take those risks, we have to encourage them in our tax code. We did that earlier this year; they responded. I think we should do it again. We should also do things like passing terrorism insurance and passing an energy bill. These are two issues that both Business and Labor have worked together to get passed, because it would create more jobs and it would create more certainty and encourage investment and these are things that Business and Labor can do together to get the economy moving.

TERENCE SMITH: Let me ask you both what you think has been the impact so far of the corporate scandals on the economy on the confidence of investors, on the confidence of people in the economy, Christine.

CHRISTINE OWENS: Well, it s interesting. The Brookings Institute has actually just put out a study in which it tried to isolate the precise effect of corporate scandals on the economy not everything else that s going on and not what the impact of those scandals has been on the retirement savings of the employees of those companies, but rather isolate the effect on the economy itself, and they ve concluded that the corporate scandals that we ve had so far will cost the economy anywhere from twenty-eight to thirty-nine billion dollars this year alone. Now what we are seeing in our Labor Day polling, which we ve just released, is that these corporate scandals have had a tremendous effect on workers attitudes about business. Three out of five of the folks we ve polled said that they don t trust their CEO s. A couple of years ago the majority of respondents said they thought that businesses were out for workers and were out to do the right thing, and fewer a smaller percentage had a negative view; well that s completely flipped and people have a different view altogether. And then finally we asked, do you think companies are falling short or meeting the goal of providing certain things to workers and two out of three folks said that companies were falling short of meeting a number of important goals for workers most significantly providing benefits and job security and I think that s a direct result of these corporate scandals, which has heightened everyone s concern about the retirement security and whether they re going to have a job.

TERENCE SMITH: Martin Regalia, what do you think in terms of its impact on the economy and whether it s essential to get a change in mind set?

MARTIN REGALIA: Well, I think a couple of things: First, when you look at the corporate scandals, what occurred, occurred in the context of an economy that was softening and weakening. You look at something like the Wilshire 5000 Index, a broad measure of stock market value, it s declined about 6.1 billion dollars. Okay. Now all of that isn t due to corporate scandals, but the corporate scandals did work to exacerbate that loss. I don t know where you get something on the order of a 30 billion dollar number, I mean, that s just a pipe dream. But when you look at the corporate scandals in the context of the stock market loss, you could significantly interpret an impact on the stock market. I think we ve addressed that. That was a very small piece of business that was involved in that. And it did cause a crisis in confidence, but I think it s a crisis that we have addressed. There s been a legislation passed at changing corporate governance. The SEC has gotten new religion and also some new funds to go out and enforce it, and they re doing it aggressively, and this is the right thing to do and this is helping to restore confidence. But we have to move forward because the real issue here is risk in business. What business does is take risks; that s what they re there for. And as they re taking that risk, they create jobs and they get a return. If we criminalize risk and risk taking and therefore retard the incentives to take risks, we re going to get an economy that doesn t grow and doesn t create jobs and doesn t pull itself out of the current problems. And I think that would be a big mistake in the long run. So I would hate to see us criminalize and reduce the ability and the willingness for the business community to take those risks.

TERENCE SMITH: All right. We re going to have to leave it there. Thank you both very much.

MARTIN REGALIA: Thank you.

ENCORE MONEY & ETHICS WALL ST.

GWEN IFILL: And now, as workers who thought they had secure 401(k)s rethink everything, we look again at the connection between business and ethics. In June, our business correspondent Paul Solman of WGBH-Boston talked with five veteran journalists about cooked books and other corporate misdeeds. We now revisit that conversation.

PAUL SOLMAN: Thank you all for coming.

PAUL SOLMAN: First question: Has American business hit some kind of ethical ebb?

ADAM SMITH: Where are the sound of the tumbrels rolling through the cobblestone streets to the guillotines? Of course it has!

PAUL SOLMAN: Loyal PBS viewers will recognize the first journalist as the eponymous host of Adam Smith's Money World.

ADAM SMITH: Now we've seen famous firms eager to sell themselves out just tomake this year's numbers.

ALLAN SLOAN: There's an old line that the four most dangerous words on Wall Street are, "This time it's different."

PAUL SOLMAN: Next, Allan Sloan, financial writer for Newsweek.

ALLAN SLOAN: We're not at an ethical ebb. What you're seeing now is what's been going on for years. Now it's only surfaced. It's not that things are worse now than they were, it's that you're seeing how bad they were.

JAMES GRANT: Yeah, but the question is: What is the quality of our miscreants versus the miscreants of yesteryear, and I submit to you that ours are ever so much worse.

PAUL SOLMAN: Jim Grant was with Barron's in the 1970s and now writes and edits Grant's Interest Rate Observer.

JAMES GRANT: I'm not sure that people were nobler or more honest in the past. I daresay they were not. But

I think the standards of behavior were - were better on Wall Street and in finance.

ANDREW TOBIAS: One of my readers has suggested the wheel of misfortune

PAUL SOLMAN: ANDREW Tobias, personal finance writer since 1970.

ANDREW TOBIAS: white collar criminals would get the trials that they now get and every so often someone is convicted. But then they go to the wheel of misfortune, and if you're unlucky and you're the 10th or the 22nd or whatever number is it - you get the death penalty. Now I - or let's say to make it actually - a little bit less silly - you get some serious prison where you don't get to play tennis and you don't have a phone in your room and you don't have a double bed.

CAROL LOOMIS: I want to take it more back to executive compensation and stock options and that kind of thing

PAUL SOLMAN: Carol Loomis started covering business for Fortune Magazine in 1954.

CAROL LOOMIS: But I believe much of this bad behavior is tied to the- what I have called in the past "the madness of executive compensation" and to the arrogance that sort of comes out of that where the guys think they can do anything! And I say "guys" advisedly because there aren't many of my sex in this.

PAUL SOLMAN: The sense I get is that many people are outraged but the tenor of the public is, "everybody was doing it." Am I wrong?

ADAM SMITH: What I'm wondering is how -- why aren't the American people angrier?! Will we see some of this anger in the months to come? Where

CAROL LOOMIS: How do they exhibit the anger -- if they are angry? They can withdraw from the market, and I think we are indeed seeing some of that, but I don't think we have seen the kind of withdrawal from the market that yet says that the -- that we're going to burn everybody who's involved here at the guillotine or

ADAM SMITH: No, right. I think the anger is going to come from people who thought they had paid for their retirement! After all we had a big move to the 401Ks, we - and we had-- in order to get the pension obligations off the companies' expense sheet! So we moved the people in, and if you're in your own company's stock and the company is Enron, you've lost your pension. And even in those companies that are not Enron, many of them have very desiccated-looking 401Ks.

ANDREW TOBIAS: Well, but I mean people - on the up side - no one was complaining when things got so un--unrealistic and people thought they could retire young because the market was going to go up 15 percent a year. Maybe one of the reasons the outrage isn't quite what it will be if things keep going is that to a certain extent people somehow know that some of this wasn't real; that they knew some of this wasn't real. But I think, I think people will go to jail. I think people should go to jail. And I think a certain number of people-- are outraged enough that they would - they'd like to see that.

CAROL LOOMIS: I'm not quite as convinced that sending a few of these people to jail will-- will kill the wrongdoing out there. We saw Michael Milken go to jail, and that doesn't seem to have done much of-- at all.

ALLAN SLOAN: The question is -- well you don't have to shoot them -you have to scare the others! It takes a long time for people to go to jail. It takes a long time to get indictments. Look at this fellow Koslowski from Tyco. The company goes offshore a few years ago - ducks out on probably by now a billion dollars of federal income tax and nobody cares. New York State gets him for a million dollars of sales tax personally and he's criminally indicted!

JAMES GRANT: The likes of Koslowski are reminders that there, in any capital society there is, there is an implicit social contract between the rich and the others, and the idea is that the rich can get as rich as they like as long as the poor can also try to get rich. But when there is a breach of the contract, when the rich take what is not theirs-- there is-- there is a sense that something is wrong, and, and the result is that, that envy and avarice meet head on -- and that is what I think we're looking at socially with the current -with the contemporary crop of bad guys, it's, it's -- one wishes one had lived in the Coolidge boom. (laughter)

ALLAN SLOAN: Yeah, well it's, it's a lot easier to cheat now than it used to be I think. It used to be if you wanted to make up phony numbers, you had to sit - the numbers had to add up across and down. You needed imagination. Now with the spreadsheet you just push in your conclusions; you work backwards to your assumptions; you get the accountants to sign anything; and then it all gets disseminated in about three seconds, and what we're seeing now is not what's happening now -- we're seeing now what happened three and five and seven years ago

GUEST: A surface economy.

ALLAN SLOAN: A surface economy. Right! It's a new economy of fraud!

ADAM SMITH: And another factor is the multiplier in this - in the bubble economy was so much greater - that is everything went up so much more you could have a company - there are always little companies coming out that weren't worth very much - but you couldn't have them be worth 5 billion, 10 billion dollars the day they came out when they still had no earnings and no earning power. That didn't happen

GUEST: Or revenues.

ADAM SMITH: Or revenues! Or anything! You know. In other words there was - this was the biggest boom in fiction since-- Dickens and Thackeray in the mid 19th Century.

JAMES GRANT: The legacy of a boom is excess in all forms. During the Great Bubble Years in the late 90s - capital was virtually free to takers-- you signed up - investment bank and, and basically you funded your enterprise. People availed themselves of it. They built stuff. They built to excess. And the excess weighs on an economy. It, it -when there's too much investment-- people produce too much. They produce too much at, at uneconomic margins. They drive out competitors who haven't got free capital behind them. The result is a kind of a chronic low-level virus in the economy and people talk about -- you know stagnation. Japan has been sitting in the soup for about a decade. It too had a bubble. It refused to clear the debris. It wouldn't let markets work. It wouldn't mark things down. And lo and behold it's still struggling.

PAUL SOLMAN: But do you explain it the same way Jim does -- as a function of unprecedented euphoria - an unprecedented bubble that simply and inevitably brings with it weird, aberrant behavior?

ADAM SMITH: You don't see the bones on the beach till the tide goes out. And what you're seeing now is the bones on the beach. There's more, more to come.

CAROL LOOMIS: I've always heard that you never know who's swimming naked till the tide goes out which I like much better than the bones. (laughter) Ever since the SEC came into being, we've had an expectation that the markets supposedly are working well under a strong regulatory scheme. And so you don't expect the kind of thing that is happening today. And also, I think it's very broad. To borrow a line from Warren Buffett, the people who are engaging in bad behavior today are the, the people - are people that you would be willing to have marry your daughter. Or be a trustee of your trust. But there is a - these people are accepting that it's okay to do this managing the books and doing anything to produce the kind of earnings that- is desired.

ADAM SMITH: My question is: here are great firms like Morgan Stanley and Merrill Lynch, and they are paying people 15 million dollars a year for a product that they know is not really first class, and if they have any sense of history, is going to lose a lot of people a lot of money. But it will make money this quarter and so that's why they do it. It's a kind of myopia that is terrifying.

ANDREW TOBIAS: I don't know what the repercussions to some-- should be for someone like that, but--a lifelong of happy repercussion free retirement - I don't think so!

ALLAN SLOAN: Would, would, would you feel the same if they were making 200,000 dollars a year instead of 15 million?

ANDREW TOBIAS: Well, no. But if they're not being paid much you figure they're - maybe they're doing it to preserve their job or to try to somehow pay for their child's bad leg, you know, but, but, but for 15 million dollars you figure that they're doing it because they want to be rich beyond imagining.

PAUL SOLMAN: So it was just a question of a screwed up set of incentives?

ALLAN SLOAN: Well it - Wall Street has never been a holy place. Wall Street is always greedy. It's the nature of the beast. What happened was there was far more money around than ever; the boom was greater than ever, and largely because of the Internet and partly because certain members of my profession fell for this nonsense and promoted some of these people who shouldn't have been allowed out without keepers -- you, you had this irrational boom -this idea that everybody could get rich -- all of us here - all of us panelists knew this wasn't true. You'd raise your voice. It didn't make any difference. The -- it was like madness, and it burned out about 2,000 and now the hunt is on for villains!

ADAM SMITH: I don't want to, I don't want to step on your toes as the interrogator, but I wonder if there is the Calvinist notion that there has to be a certain amount of suffering before good times can come back.

JAMES GRANT: Yeah, there has to be a period, but not so much of chastisement or affliction but there has to be a period of, of marking to market -of, of, of recognizing values. And I submit to you that we are not there by any means; you know the, the, the stock market is, is, is this rarest bird of plumage. What we have is an overvalued bear market! You don't see those much.

PAUL SOLMAN: Do you think that we have an over-valued bear market?

ANDREW TOBIAS: Yes.

PAUL SOLMAN: Do you think we have an over-valued--

CAROL LOOMIS: Absolutely! I just can't find what they are out there to buy!

PAUL SOLMAN: I didn't pick you guys - I mean cause - for any bias

ALLAN SLOAN: Except that we're old.

ADAM SMITH: Allan has a point -- that is, this particular panel has seen several cycles. Bubbles always float higher than you think they will and they always last longer than you think they will--and they always take longer to recover from than you think they do, and that makes us sound very old.

PAUL SOLMAN: Well, thank you all very much.

GWEN IFILL: Still to come on the NewsHour tonight, new fishing rules in California; the history of intervention; and a Labor Day poem.

FOCUS FISHING RULES

GWEN IFILL: Jeffrey Kaye of KCET-Los Angeles, reports on the tough new fishing regulations roiling the waters off California.

JEFFREY KAYE: An already economically threatened West Coast fishing industry is facing some of the toughest regulations in U.S. History. New rules, which took effect July 1, ban both commercial and recreational fishing of dozens of species of rock fish in California ocean waters greater than 120 feet in depth. Government fishing regulators are trying to prevent the extinction of endangered fish populations. The rules cover commercially popular rock fish, such as Boccacoi and Yellow Eye, which are often sold to consumers as Red Snapper. But many struggling fishermen along California's 1100 mile long coastline are angered by the new rules.

FISHERMAN: If you cut slices in the side of the fish, then the meat will penetrate more evenly.

JEFFREY KAYE: Fisherman Bill Maertz fears his way of life and livelihood are threatened by government meddling. He spoke to NewsHour producer Saul Gonzalez.

BILL MAERTZ, Fisherman: The one species they don't figure in a lot of this factor when assessing fisheries is the human species, and I believe that the commercial fisherman is one of the most endangered species on the coast. It's hard for me to accept some of the regulatory actions that come down from people that don't spend the time on the water and see the environment, of someone that's inland 200 miles or 300 miles or even on the East Coast telling me what I should be doing on the West Coast 20 miles to sea.

JEFFREY KAYE: The new rules off the West Coast are part of increased government restrictions meant to rein in over fishing. In all a record 107 species of fish are now considered threatened. Declining fish populations, combined with government restrictions are causing a crisis in America's multi billion dollar a year fishing industry. But regulators and scientists say they have no choice if they are to save threatened species such as rock fish, which were once a staple of the West Coast fishing industry.

MILTON LOVE, Marine Biologist: Every port had fishermen who fish for rock fish, they weren't real expensive, they were sort of the bread and butter thing for a commercial fisherman or a recreational angler. They were just everywhere, they were very ubiquitous.

JEFFREY KAYE: Marine biologist Milton Love is one of the world's top experts on rock fish. For his research, Love regularly descends into pacific waters to conduct an ongoing rock fish census. He's not happy when what he's finding, waters that once teamed with rock fish are now nearly deserted.

MILTON LOVE: For a few species there are so few of them left that when I go down in an hour or two hours on a reef, if we see two of them, we come back up and we go, oh, I saw two big Boccacoi. And that's a sad commentary.

JEFFREY KAYE: Scientists estimate some species of rock fish have declined by as much as 98% over the last 30 years. The new West Coast fishing regulations are supposed to save the fish from complete extinction. But while the rules should help the fish, they'll harm already struggling fishermen.

BILL MAAERTZ: What it does is it means I have to put more work into the same result. It's obviously a dangerous fishery in some areas, a lot of risk of injury-- a lot of time and exposure in a rough environment on the ocean and in the weather. And what it means for me is instead of going out for two days, I gotta go out for three to five days.

JEFFREY KAYE: But regulators past concerns for the plight of fisherman have too often stymied the management says Milton Love.

MILTON LOVE: The managers are, they're loath to really lower quotas, because if there's a suggestion, well, why don't we allow the fishermen to catch half as many next year, the fishermen just trundle up and say we're going to go bankrupt. Our kids are going to live under bridges, and managers are just people, no one wants to drive someone to living under a bridge. So you sort of put it off and you put it off, and this has happened everywhere. And by the time you actually get around to doing something, it's often too late, and that's what's happened with some species of rock fish off the coast here.

JEFFREY KAYE: Many fishermen reject the idea that they are to blame for the plight of rock fish. They argue instead that environmental factors such as warming ocean temperatures brought by El Nino are responsible for the fish's near disappearance in California waters. Many also question the quality of the scientific evidence behind the fishing ban.

BILL MAERTZ: I can fish the same area the same day, each day for ten days straight and not catch a single fish, and on that 11th day I catch a lot of fish. So to be able to say how many fish under the ocean is very difficult. Rock fish are slow growing, the science on that is true. But the numbers out there, the rebounding factor of fish in wild populations, it's strong, it's incredibly strong.

JEFFREY KAYE: But authorities say it will take decades to rebuild decimated rock fish populations. In the meantime, regulators are considering even more drastic restrictions that would extend the fishing ban to waters off the States of Oregon and Washington early next year.

ENCORE INTERVENTION HISTORY

GWEN IFILL: With the President back in Washington and Congress returning tomorrow, the debate over whether the U.S. should strike first in Iraq is expected to take center stage. Bush Administration officials are expected to testify at a round of hearings, which were launched in the Senate in July. That's when Margaret Warner talked with a panel of historians about the history of the U.S. preemptive action. Here's a reprise of that discussion.

MARGARET WARNER: And for those perspectives, we're joined by two men who've written extensively on American diplomacy and the use of American power. James Chace, a professor of government at Bard College in New York. And Philip Zelikow, professor of history at the University of Virginia and director of the Miller Center of Public Affairs. And joining them is one of our regulars, Presidential historian Richard Norton Smith, director of the Dole Institute at the University of Kansas. Welcome to you all, and Richard beginning with you, has the United States taken this kind of action before -- that is a preemptive military assault, to force a change of regime, in a country that has not attacked us?

RICHARD NORTON SMITH: We have, although, you know, we were rather late for this whole business of empire. Remember we were more of an isolationist than an interventionist country. It was the Spanish American War at the end of the 19th century that ushered us somewhat reluctantly onto the world stage; even as it was going on, there was an enormous debate which involved President McKinley at the White House among others as to whether the United States would be a liberating or an occupying power. And in the end it was decided that we would keep the Philippines, we would not liberate them, in fact until 1946. Repeatedly in the first half of the 20th century, American Presidents of both parties sent Marines throughout the western hemisphere in particular, usually for economic interests. It was sometimes hard to tell whether American foreign policy was being made at the State Department or the United Fruit Company, which you know as the Octopus by Latinos. All of that began to change, intervention in fact was redefined with the advent of the Cold War, the creation of the CIA, instead of the Marines storming the beaches we had covert operations, Guatemala in 1953, in Iran we put the shah back on the Peacock throne. So I think when we're talking about intervention, we want to be very careful not to limit it to traditional military operations.

MARGARET WARNER: Professor Chace, given that we have a long and rich history of intervention, but what about really military invasion as opposed to covert operations, would you say there's a long history, even if you define it by the military, as a military assault?

JAMES CHACE: Of course there have been direct military assaults as well with the aim of changing regime. For example, Wilson sent in 1914, I believe, troops into Mexico to change the regime. He failed to do so, by the way, but he certainly tried to. Regime changes were made a number of times, in order to, by sending troops in, sending Marines in, in order to try to make a regime responsive to economic needs, to be, in other words, stable. More recently, however, of course, we have sent troops into Panama, roughly 30,000 troops out in the Panama Canal zone in to Panama itself to arrest Noriega, which we succeeded in doing and therefore to change the regime. We of course sent troops into Haiti, also to change the regime. And we might very well have kept troops in Somalia, also to change the regime. So we have used military action in order to do so. In fact, we also sent troops during the Gulf War under President Bush's father. And the aim really was to change the regime in Iraq -- to get Saddam Hussein out. However, we were unsuccessful in doing so.

MARGARET WARNER: Professor Zelikow, what would you add to that, first of all do you share that assessment that there is a real long history here, and what would you add to it?

PHILIP ZELIKOW: There is a long history here. What's different this time is that the reasons for considering American intervention are dramatically different. In the past, we've intervened for regional stability, for reasons of human rights, because we thought there might be an indirect threat of the United States. Here the rationale is that if we don't intervene, a country may develop weapons of mass destruction that might be used directly against America or one of its friends. Now, that's different. The only precedent I can think of that's directly on point is an invasion that didn't happen. It was President Kennedy's decision to invade Cuba if diplomacy failed to get Soviet missiles off that island. And he was quite prepared to first launch a major air strike and then if necessary invade that island rather than let America tolerate the threat he thought would be posed by weapons of mass destruction there. And in a way that's more analogous to the kind of threat that's motivating consideration of this possible intervention against Iraq. I'll add, differing with Professor Chace, President Bush in 1991, did not have the objective of overthrowing the Iraqi regime, they deliberately considered whether to make that one their objectives, and whether you disagree with it or not, they made a very considered decision not to make that one of their objectives.

MARGARET WARNER: Professor Chace?

JAMES CHACE: Well, I would say it was an implied objective. They were not certainly willing to go into Baghdad in order to get rid of Saddam Hussein. But I do believe that they would certainly have preferred Saddam Hussein to have abandoned the regime. And I think that the Administration at that time very much hoped that would happen. But it's also true, as Professor Zelikow points out, that President Bush at that time was very much worried about instability in the region. So it was a delicate balance that went on. And you can argue on either side, whether President Bush senior was actually successful in what he was trying to do.

MARGARET WARNER: Richard Smith, pick up on the point Phil Zelikow made about how different these rationale is, that is, it's to anticipate and head off a future threat, one that involves the nature of weaponry, rather than the litany of some of the other reasons, economic interests, ideological confrontation and so on?

RICHARD NORTON SMITH: Sure. Well, you know, we don't want to be prisoners of history. We want whatever perspective it affords, but there are unprecedented situations. And I think Professor Zelikow is quite right in his interpretation of this. I would add that the whole nature of intervention, as I said earlier, as it has evolved, and the weapons available to various Presidents have evolved, so has the justification. Interestingly enough, there has always been a Wilsonian strange of American foreign policy, an idealistic belief in self determination, and in some ways it was suppressed during the Cold War because everything was seen through the prism of US/Soviet rivalry, including intervention. Since the end of the Cold War, look what happened in Bosnia, for example. There was an enormous intervention by a coalition of western forces to try to remove a genocidal dictator, Slobodan Milosevic; earlier during the Cold War almost certainly that would not happened, because it would not have been defined as being in America's immediate national interest. So these unprecedented situations do arise; intervention is redefined in some ways as the threats are redefined.

MARGARET WARNER: Professor Chace, would you agree with that, that the reasons change as our definition of our national interest changes?

JAMES CHACE: Well absolutely. It's a question of how we see threat. There have not been military threats against the United States, except at that point, which Professor Zelikow referred to in Cuba when Soviet missiles were in place. But we do interpret threats differently. There is the question of what we perceive as an ideological threat. Are interventions covert especially in the western hemisphere against Guatemala, directed against Chile as well, and certainly against Castro in 1961 at the Bay of Pigs. These are essentially ideological threats. Our fear that communism would spread in the western hemisphere and ultimately perhaps undermine certain institutions in the United States, so it s the nature of threat that has changed over time. Now it is a question of possible military threat to the United States -- military in the sense that, in the case of Iraq, that we may be talking about the possession of nuclear weapons or other weapons of mass destruction. So we redefine the threat differently. Once again going back to the Gulf War of President Bush, Sr., the real reason that the United States went into that war was to assure the flow of oil and reasonable prices and that no country such as Iraq would have large control over the region. That was not what was usually given as the reason -- except when the Secretary of State James Baker, when asked why we went into Iraq at that time, said the reason was jobs, jobs, jobs. That was as close as he came to really speaking openly about the notion that a vital resource could be denied the United States.

MARGARET WARNER: Phil Zelikow, you began this colloquy about the nature of the threat and how different this was, except for the Cuban Missile Crisis. What are your thoughts on how that has evolved through history, in other words, why it evolves, why it changes?

PHILIP ZELIKOW: Well, it's changed with the nature of threats themselves. In an era where nations are battling for trade routes or colonies or commerce, and those are their most important interests, naturally conflicts are fought around that. In an era where the greatest threat to our country s safety is the weapons of mass destruction that confer the powers that used to belong to armies and fleets, to small groups of people, well, then our military defenses against those threats also must change. And Margaret, let me add that another big difference between the Iraqi case and some of the historical cases is that we're already in a state of open hostilities against Iraq. We've been in an open state of hostilities against Iraq for years. Now, they don't get on the front page very much, but the President knows because he has to prove them, we're engaged in military combat operations over Iraq almost every day. We're maintaining with our military power a protected zone of, in northern Iraq, where the Kurds are allowed to have a nation defended by the constant use of American force or threat of force. We are policing Iraq right now with planes flying patrols every day. So we're already in a state of low level war with Iraq at the moment. So if there's a transition, it won't be a transition from a nation with which we're at peace to a nation that suddenly we attack. This is a nation that is already in open hostilities against us, it's tried to kill President Bush, it's tried to do other things against Americans, and we're in operations against them every day.

MARGARET WARNER: Would you also say that a corollary difference or parallel difference is the open nature of this debate? Senator Biden and the Senate is now starting this huge open debate which they hope to continue. Is that unusual?

PHILIP ZELIKOW: Yes. There is almost a deliberate theatrical quality to the way this issue is being ramped up for national attention that also seems unusual historically. And maybe that's an artifact of our media age. In part it's an artifact of how much power America has, that we have the luxury to deliberate in a careful way about what may be an acute threat to the United States without being impelled to act on the force of events.

MARGARET WARNER: Richard Smith, your thoughts on that, the unusualness of this public debate?

RICHARD NORTON SMITH: Well, only in a democracy. I mean, that's a great irony is democratic values in the end that we and our allies are sworn to defend. And I said to someone earlier today, the only thing this week that's getting more publicity than our prospective invasion of Iraq is Bruce Springsteen. I think there goes our tactical surprise.

MARGARET WARNER: All right. And there goes our time. Thank you, gentlemen, very much.

FOCUS THE BOX

GWEN IFILL: Now, a poet's take on Labor Day. For that, we turn to NewsHour regular and former poet laureate, Robert Pinsky.

ROBERT PINSKY: Poet Mark Turnpin works as a carpenter. And sometimes Turpin writes about construction with a deep, wondering appreciation. Here for Labor Day is Mark Turpin's poem "The Box." "When I see driven nails, I think of the hammer and the hand, his mood, the weather, the time of year, what he packed for lunch, how built up was the house, the neighborhood. Could he see another job from here? And where was the lumber stacked, in what closet stood the nail kegs, where did the boss unroll the plans, which room was chosen for lunch, and where did the sun strike first, which wall cut the wind? What was the picture in his mind as the hammer hit the nail? A conversation, another joke, a cigarette, or Friday, getting drunk, a woman, his wife, his youngest kid, or a side job he planned to make ends meet. Maybe he pictured just the nail, the slight swirl in the center of the head and raised the hammer, and brought it down with fury and with skill, and sank it with a single blow. Not a difficult trick for a journeyman, no harder than figuring stairs or a hip and valley roof, or staking out a lot. But neither is a house. A house is just a box fastened with thousands of nails."

RECAP

GWEN IFILL: Again, the major developments of the day: Unionized dock workers threatened a work slowdown at 29 major West Coast ports after contract talks broke down. And Iraq suggested it might allow renewed UN weapons inspections after all, but a White House spokesman dismissed the statement as unreliable.

IN MEMORIAM

GWEN IFILL: And before we go tonight, remembering jazz great Lionel Hampton. He died Saturday in New York of heart failure. In the course of a six-decade career on his signature vibraphone, he collaborated with other jazz greats, including Charlie Parker, Quincy Jones, Louis Armstrong, and Charles Mingus. Hampton also broke through racial barriers, most notably as a member of the Benny Goodman quartet in the 1930s, and later playing himself in a movie about Goodman's life.

(music in background)

GWEN IFILL: In 1997, the "King of the Vibes," as he was known, received the National Medal of the Arts from President Clinton. Lionel Hampton was 94 years old. Happy Labor Day. We'll see you online, and again here tomorrow evening. I'm Gwen Ifill. Thank you, and good night.

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The NewsHour with Jim Lehrer Monday, September 2, 2002