The NewsHour with Jim Lehrer

RAY SUAREZ: Good evening. I'm Ray Suarez. Jim Lehrer is on vacation. On the NewsHour tonight: A summary of today's news, a look at the President's economic forum in Texas and a discussion of the state of the American economy, a newsmaker interview with Iraq s ambassador to the United Nations, and a report on a battle over contraception in the Pacific Northwest.

NEWS SUMMARY

RAY SUAREZ: President Bush held a major forum in Waco, Texas, today, in hopes of boosting confidence in the economy. Mr. Bush gathered about 250 business executives, top government officials, and others at Baylor University. He heard concerns about corporate responsibility, jobs and market volatility. We'll have more on this story in just a moment. In Washington today, the Federal Reserve left a key interest rate unchanged. It's the rate banks charge one another for overnight loans. The Federal Funds rate remained at 1.75%, a 40-year low. In a statement, the Fed said the risk of slower growth outweighed the risk of higher inflation. Wall Street reacted to the Fed's decision today with more losses. The Dow Jones Industrial Average closed down 206 points, about 2%, at 8482. And the NASDAQ was down 37 points, nearly 3%, at 1269. American Airlines announced new restructuring plans today. The world's largest airline said it will cut 7,000 jobs-- 6% of its workforce-- by next March, and it will reduce flights by 9%, among other moves. CEO Donald Carty said the aim was to get costs down and make the airline, based in Dallas/Fort Worth, more competitive amid a slump in air travel since September 11. Across Europe today, at least 88 people were reported dead in the worst flooding in decades. In the Czech capital of Prague, the rain-swollen Vltava River poured into the historic city center. We have a report from Gaby Rado of Independent Television News.

GABY RADO: These latest pictures show vast parts of this medieval city already under water. Rain has been falling for ten days or more. With levels expected to reach their peak around now, other historic areas will certainly be flooded. (Sirens wailing) The sirens started early, police ordering residents in the lower parts of the city to leave. Firefighters desperately erected barriers, packing up sandbags along streets and up against houses as the river began to overspill its banks. Many of the 50,000 residents asked to evacuate ignored the order at first. They seemed content to watch from some of the city's many bridges. In an address on Czech Radio, the city's mayor asked everyone to avoid traveling to the capital. The famous Charles Bridge was closed. Emergency services were having to use cranes to pick up fallen debris and trees. Outside the capital, the authorities have all day long been doing what they can to move people away from stricken areas. There were successes and there were failures. Life was grinding to a halt, with shops and offices losing power as the hours wore on. This afternoon we saw Czech army helicopters hovering helplessly over the Vltava. The authorities announced the river was flowing at 4,500 cubic meters per second, and that rate was increasing by the hour. Ominously the waters were creeping into the riverside streets, where some of the most historic buildings of this medieval city stand. As evening wore on with the river still rising, one of the anxieties was that the flotsam on the turbulent waters would crash and damage bridges built centuries ago.

RAY SUAREZ: Officials in Prague ordered 50% of the city's electric power switched off, and they closed the underground rail system. The president of Iran had strong words for the United States today. During a visit to Kabul, Afghanistan, President Mohammad Khatami said the U.S. had "taken an angry approach to foreign policy" since September 11. He said "fighting terrorism should not mean imposing the will of one country unilaterally on other countries." And he rejected U.S. criticism Iran was not doing its part to fight terrorism. He said Iran had already deported a number of suspected al-Qaida members. In Washington, Defense Secretary Rumsfeld responded to that claim.

DONALD RUMSFELD: With respect to the terrorists that they say they've turned in, they've turned none in to us. There is no question but that they have permitted al-Qaida to enter their country. They are permitting al-Qaida to be present in their country today, and it may be that they have turned over some people to other countries, but they have not turned any to us.

RAY SUAREZ: Khatami was the first Iranian head of state to visit Afghanistan in 40 years. Rumsfeld said that was "probably a useful thing." That's it for the News Summary tonight. Now it's on to the state of the economy as the president's economic forum begins, Iraq's ambassador to the UN, and who pays for contraception?

FOCUS STATE OF THE ECONOMY

RAY SUAREZ: What is happening to the U.S. economy, and what should be done about it? Those and other questions were part of today's economic forum in Texas. Spencer Michels begins our report.

SPENCER MICHELS: President Bush spent about 15 minutes at each of four small discussion groups this morning at the one-day economic forum in Waco, Texas. He shook hands and listened to comments from CEO s to senior citizens. Vice President Dick Cheney visited four other sessions. Some 250 people, including top Bush administration officials, corporate executives, economists, and ordinary Americans, joined the President at Baylor University. The message from the President and his team was simple: Although the U.S. economy is on the mend, more work is needed.

PRESIDENT GEORGE W. BUSH: I have great confidence in the future of our country, because I understand America. I know what we're made out of. And obviously we've got some problems we've got to address. But one problem we don't have to address is the fundamental character of the country. The fundamental nature of the American people are resilient and strong. We talked a little in these other seminars about how some have let us down, cheated and didn't tell the truth when it comes to their numbers on their balance sheets, and we'll fine those and hold them to account. But by far the vast majority of Americans are really decent honorable people.

SPENCER MICHELS: In the summer of last year, President Bush signed into law a $1.35 trillion tax cut, the centerpiece of his economic plan. But since the IRS began sending out tax rebate checks in July of 2001, totaling $36 billion last year, there have been a series of blows to the U.S. economy: High unemployment, especially in the high-tech sector; a dramatic stock market slide; a string of corporate scandals; and the return of budget deficits. Add to that a series of weak economic indicators: Consumer spending is down and economic growth remains slow. The administration has responded by signing new rules on corporate accounting practices and corporate responsibility. And last week, President Bush signed a new trade bill intended to open more markets to U.S. goods. Today in Texas, the President heard from, among others, investment counselor Charles Schwab.

CHARLES SCHWAB: There are ups and significant down periods, and some are quite painful as they are right now. The bear market we're suffering right now is probably one of the worst I've ever gone through, and it's not a comfortable place to be to say the least. But we have great confidence about our future. Investors also need to know that government is on their side.

SPENCER MICHELS: The owner of a grocery story chain told the President how the economy has affected his business.

LARRY JONSTON, CEO, Albertsons: Consumer confidence is weakening, there's no doubt about that. Consumers are gun shy. We see it in their buying behavior. We see it in them buying private-label products instead of branded products. We see them buying things like hamburger instead of steak.

SPENCER MICHELS: And a senior citizen raised concerns about rising drug and insurance costs.

FLORA GREEN: Why can't we have tax credits for the premiums that we are paying for our Medigap insurance? Why can't we have tax credits for the... over a certain benchmark of prescription costs? These are things that seniors need and need now. They need to cut in the paperwork. I have a woman bring me a stack of papers like that. I said, "Don't show it to me because I don't know how to do it either." And it's really true. They just get confused.

SPENCER MICHELS: The forum just before lunchtime ended with all the participants gathered together. The president got a summary of what had been said. During his closing remarks, Mr. Bush announced he's refusing to spend $5.1 billion in emergency funds set aside by Congress.

PRESIDENT GEORGE W. BUSH: At the end of the session, the Congress passed an emergency spending bill to strengthen our military, to protect the homeland, and to complete the commitment of $20 billion I made to the citizens of New York. But they also sent along more than $5 billion in extra spending I didn't ask for. Some of that $5 billion I've endorsed and will work to secure through amendment to the '03 budget, like AIDS prevention money and support for Israel and Palestine. But a lot of that money has nothing to do with national emergency. And I'll give you one example: A new facility for storing the government's collection of bugs and worms. I made my opposition clear. We were pretty plainspoken about the supplemental. But those who wrote the bill designed it so I have to spend all five of the extra billion dollars or spend none of it. That's how they wrote the supplemental. Those are the rules they placed upon my administration. I understand their position. And today, they're going to learn mine. We'll spend none of it. (Applause)

SPENCER MICHELS: Before the forum started, Democrats labeled it a cheerleading session filled with Republican donors. And afterwards House Minority Leader Richard Gephardt said: I am disappointed that the White House has chosen to listen to the special interests that supported this administration s failed economic program and has turned a deaf ear to those who have diverse views. The White House defended today's forum in Texas, saying the President believes the best solutions are to be found outside Washington.

RAY SUAREZ: Gwen Ifill samples views on the economy and the President's approach.

GWEN IFILL: And now we convene our own roundtable on the state of the nation's economy, and the President's handling of it. Joining me are William Dunkelberg, professor of economics at Temple University and chief economist at the National Federation of Independent Business, which represents small business owners. Nancy Kimelman, chief economist at SEI Investments, a management firm. Jeff Madrick, contributing economics columnist at the "New York Times," and editor of "challenge" magazine, an economics journal. And Kim Wallace, chief political analyst at Lehman Brothers, a global investment bank.

So Professor Dunkelberg, what is your sense on whether the President can handle what's happening with the economy right now, based on what you've seen going on so far?

WILLIAM DUNKELBERG: Well, I think we should begin with the fundamental perspective on how much power the President has. One of the real strengths of our economic system here is that we have a weak CEO, and it's hard for the President to get anything done unless Congress goes along with him. Then we have to look philosophically at what the President had in mind, that was a little less government, lower taxes, more incentive for investment, and we started off on the right foot. The President got lucky, gave us a well-timed tax cut. And that certainly will help the economy going forward. Some of the other changes more recently are more questionable, but hopefully we'll get back on track.

GWEN IFILL: Less take them one at a time. But first to Mr. Madrick, is this something over which the President has very little control like the professor just said?

JEFF MADRICK: No, I don't believe that at all. Don't tell john F. Kennedy that in the 1960s or LBJ or FDR or Woodrow Wilson. There seems to be some mythology around that Presidents can do nothing about economies. Well, that fits a certain kind of ideology. An ideology which suggests less government is the best government. Well, sometimes that's true. And I think we've made some needed reforms. But the fact of the matter is, government has always been important to economic growth, in America back to the order 1800's in fact integral, and government is needed again now. The President's tax cut policy was entirely fortuitous, but remember, it was sold to the American public first as a political effort to beat Steve Forbes in the primaries and then because we had big surpluses in the economy was blooming. Now the President turns around and says, what luck we had a tax cut just in time. The people understand that this is not a Presidential economic policy. And the people don't have confidence, I don't think, it's quite sad, it's very days pointing that this administration doesn't seem to be able to admit it made a mistake, that it has to go back. We all make mistakes, in fact that's the side of courage, and I'd love to see some of that from the administration, I think so would the American people.

GWEN IFILL: Nancy Kimelman, what was the point of the meeting today in Waco; why was that useful?

NANCY KIMELMAN: Well, I think it was useful because frankly the economy has fallen flat. We saw in the second quarter numbers that there really was very little growth if at all. And so the economy needs some stimulus at this point in time, or so it would seem. The question was whether the federal government, the administration and Congress should take that step, or whether it should be the Federal Reserve. But the economy is looking very sluggish here, the market is having a very definite affect on consumer confidence, on business confidence. It's holding back consumers from spending. It's holding back businesses from putting in new orders. And so the economy looks to be very much at a crossing point, a turning point here. So the question is should the government or should the Fed really take that step and do what it can to avoid a far worse situation, as we begin the next year.

GWEN IFILL: Kim Wallace, what's your answer to that question?

KIM WALLACE: My answer is really all of the above. Basically the President has been successful in convincing people that the tax cuts he pushed through last year has staved off a worse economy than we have now that may be true. But we have to recognize that the Fed cut rates eleven times in calendar 01 and the Congress put out historic fiscal stimulus as well. We still have some time to go to judge whether or not that's going to work. It seems that people are rushing to judgments about where we are in the economy before the results are in.

GWEN IFILL: What did the President need to hear today at Baylor from the couple of hundred people he gathered?

KIM WALLACE: I think he needed to hear they they've he is still engaged and they have some trust in his economic problem and leadership overall. I think he needed to hear from other people as to which actions he could take as President to further the economy.

GWEN IFILL: And Professor Dunkelberg, what are those actions, what should they be?

WILLIAM DUNKELBERG: On the business side we certainly need to do something to help capital expenditures, lower taxes, increase profits, that heeds to higher capital spending. Of course having the economy pick up with private individual tax cuts will also help on the profit side. And that will help us get capital spending under way. It's going to take a little time because we spent five years building lots of capacity with lots of capital outlays. And now we have excess capacity. So we have to use a little of that up.

GWEN IFILL: Is that Mr. Madrick trying to get in?

Mr. Madrick, is that you?

JEFF MADRICK: I would love to get in at this point if I may.

GWEN IFILL: Okay, go ahead.

JEFF MADRICK: I severely disagree. Tax cuts are not what we need. We've had our tax cuts. Let's not forgets, this tax cut was totally accidental, as a stimulus to this economy. It's worked, thank goodness, it came fortuitously, as others have said here, but it was accidental. There are many better ways to stimulate an economy. And it needn t be the federal government fiscally or the federal reserve monetarily by lowering interest rates. It can be both working together, and in fact historically that's when government policies have had the most potency. In facts the other way around when we raise taxes in 1993, and the Fed reduced interest rates, finally there was some kind of credibility, there was some kind of bite. So I think we need to -- both engines working, and there are far better stimuluses than tax cuts. We could extend unemployment insurance, people need it badly and they would spend it right away. That's a very good example. The state and local governments are hemorrhaging; they need some federal support. There are needs out there. We can solve some of those needs, help needy people and stimulate the economy. I don't think we can sit around and wait. You can sit around and wait if you have a job, I guess.

GWEN IFILL: Nancy Kimelman, you mentioned the role of the Fed today. Of course the Fed decided not to act on interest rates, left them unchanged. Was that something that would be helpful to this economy as it stands right now, or is it a wash?

NANCY KIMELMAN: Well, I think it's a wash at this point. But the Federal Reserve is in a very difficult position. It has lowered interest rates as was mentioned earlier eleven times last year, and interest rates were already at extremely low levels. So the Fed only has a few more arrows left in its quiver, it can't spend those unwisely. So the Fed really had no choice but to stand pat. But we talked about combining monetary as well as fiscal policy to really get the economy moving. It's unclear to me how much more the Fed really can do. Interest rates are at very low levels. The housing market is strong. Consumer spending on durables, as we've seen in the auto sector just recently, consumer spending for durables is up there. It's not clear to me that lower interest rates are the solution. And so really we're at the point of having the federal government either expand its spending, whether it be for defense or national security or elsewhere, or for cutting taxes. But you know, there's a limited tolerance in our nation now for running up a budget deficit. It's okay to do so in an economic environment like we have. But to think about cutting taxes that are going to be very difficult to reverse down the road puts us in a situation in the long run when Bush stands to be reelected that could be very difficult for him. So we have to remember that whatever policies we undertake, they're to be under taken for the short run, but we have to live with them in the long run. And that makes President Bush's position and the chairman of the Federal Reserve Alan Greenspan's position a very difficult one.

GWEN IFILL: So Mr. Wallace, what is there left for the Bush administration to do to jump start this economy?

KIM WALLACE: Not just the administration but most policy makers, that's to try to bill confidence. That's a fact that's missing not only in the markets but in the economy across the country. People after the September 11 a tax of last year, the bear market which has affected two out of three households in the country for the first time we have that many people invested directly or incorrectly in the markets, and the ongoing economic softness, have really hit the psyche of the American investor and consumers, along with business investors. We need to see some restoration of confidence and some of those people will come back into the economy, and over time some of the steps that have been taken on the fiscal and monetary side will begin to work.

GWEN IFILL: Does the President have the right people on his economic team to be the kind of cheer leaders you're suggesting you need to build that confidence?

KIM WALLACE: The markets and many voters and surveys will tell you that they don't. What looks to have happened is that the administration came in with a plan to run economic policy out of the White House, and to have a Treasury Department that was slightly less active than we have been accustomed to for the last 20 years or so in Washington -- came a couple of crises, that have really forced the administration to become more flexible, they haven't shown that deftness yet, in the last month I would argue they are getting around to getting reenergized and coming up with new ideas. Some of those ideas will pay off over the long term, but basically the markets didn't believe right now in a lot of the decision making that goes on inside the Bush economic policy team.

GWEN IFILL: Let me just get back to Professor Dunkelberg on that question -- whether there is confidence all across the board on this question of who is actually leading and formulating the President's economic policy.

WILLIAM DUNKELBERG: Let me share some numbers with you. Every month we ask a sample of our 600,000 member firms what they feel about the economic policies of the President and of Congress. And of course when we had a change in leadership at the Presidential level, the percent giving an excellent or good rating for economic policies rose from 11 up to 55% -- and then after the 9/11 event from 55 to 73%, a stunning vote of confidence on the behalf of small business owners. It has slid a bit since then, we're down to around 58%. But that's still an exceptionally high approval rating. So small business owners who account for most of the job growth and over half the private sector GDP do think that the economic policies are philosophically correct and headed in the right direction.

GWEN IFILL: And that the economic spokesmen are also fundamentally the right people?

WILLIAM DUNKELBERG: Well, compared to whom. We're not given a choice of people. The President comes in and he picks his tee. If they don't work too well he'll have to make some changes, but we do have Greenspan and the full voting cadre at the Fed -- the first since 1998. And we have a good staff at the Council of economic Advisors, some very sharp people there. So I think overall we probably have a pretty good team in place.

GWEN IFILL: Mr. Madrick, you wanted to get in on the point about economic leadership?

JEFF MADRICK: I do. I think, if anybody thinks cheer leading is going to help, they are absolutely wrong. What will help are actions that work. The President again today gave a pep talk, with almost no change in policy. In fact to quote him, he said we need focus and patience. In other words, wait it out. He's ideologically committed to this kind of thing, to reduce government. And in fact one of the TV stations, one of the cable TV stations took a straw poll on their web page, and 54 or 55% of those responding said they thought the President was doing a somewhat poor or very poor job. So you see there isn't confidence, and there isn't confidence for lack of cheer leading, my gosh, that's all this President does. There's confidence for lack of concrete action, lack of a sense the administration has a real plan. Lack of a sense they should be willing to admit there was a mistake in this tax plan, we need some stimulus now, but not big deficits down the road.

GWEN IFILL: Nancy Kimelman, one of the things which has happened which has been concrete is increased spending on the anti-terrorism campaign. Has that been good for the economy?

NANCY KIMELMAN: It has been good for the economy, but I think for when youtake a look at the numbers, what you see is that the administration's economic policy is largely an anti-terrorist and national security policy. There hasn't been, aside from the first tax cuts, there really hasn't been in the last year a real effort to devise an economic strategy for the economy. But, you know, I think part what was we're seeing in the economy right now with the loss of confidence among businesses and consumers, we can say that it's related to Bush and we can say he might not have the right team of advisors and might not have the right cheer leaders on his staff, but a lot of it has to do with the market. It's really the market's plunge that has destroyed business and consumer confidence. And the administration, like the rest of us, is something of a by-stander at this. If they could turn the market around, they'd be thrilled to could so. My suspicion is that the turnaround in the market, in the equity market is probably going to be far more important to restoring business and consumer confidence than initiatives announced by the President, whether today or tomorrow.

GWEN IFILL: And speaking of tomorrow, I just want to direct this question to Mr. Wallace. There is, tomorrow is the deadline for CEOs to be able to file these forms at Wall Street that attest to the financial statement which is they are submitting and say they believe them to be true and signing their John Hancock next to that. Will that have an effect on consumer confidence, or is that another show?

KIM WALLACE: No, it should have an effect on consumer confidence, because 947 publicly traded companies are going to come forward and say that their books are clean, are at least they are as they have been stated as of today or tomorrow. That should be a confidence builder. I disagree a little bit with Jeff in that there's been no action taken. Clearly, the passage of the corporate accountability law that the President was slow to embrace but finally got around to embracing, that Congress had been pushing for the past eight months was a confidence builder. The market had one of its best days on that day. So if we can string together a few more of these confidence builders we may see that the macroeconomic fundamentals though soft now may be getting better and we ll have confidence returning to the economy that could turn out to be a little bit better in six months, down the road.

GWEN IFILL: Okay, we're going to have to leave it there for tonight. Thanks so much for joining us.

RAY SUAREZ: Still to come on the NewsHour tonight, a Newsmaker interview with Iraq s ambassador to the UN, and a report from Washington State on a fight over insurance coverage.

NEWSMAKER

RAY SUAREZ: Contradictory signals have come from Iraqi leaders in recent days over the future of arms inspections there, as the debate over removing Saddam Hussein from power continues in the United States. Last week we interviewed two Iraqi opposition leaders. Two weeks ago we reported on the senate hearings that focused on the Iraqi threat and what the U.S. might do about it. Tonight, we get Iraq's perspective from Mohammed Aldouri, Iraq's ambassador to the United Nations.

Mr. Ambassador, thanks for joining us.

MOHAMMED ALDOURI: Thank you very much.

RAY SUAREZ: The United States has based its idea that Iraq is a threat to other countries on the assumption that it either possesses or is developing weapons of mass destruction. Does Iraq possess chemical, biological, or nuclear weapons of mass destruction?

MOHAMMED ALDOURI: Well, I think Iraq declared officially, by the president of Iraq and by others responsible, that Iraq is clear of any kind of mass destruction weapons. So we defied everybody, we extend invitation to everybody to come to Iraq-- to Mr. Blair, to the Congress here in the United States-- to come with their own inspectors, with their own expertise, to go to Iraq, wherever they want to go, and to show... to know by themselves that there is nothing forbidden in Iraq; there is nothing hidden in Iraq; there is no mass destruction weapons at all.

RAY SUAREZ: The United States Congress has turned down that invitation, but will Iraq allow United Nations weapons inspectors into the country?

MOHAMMED ALDOURI: We are still hoping that we can continue a dialogue with the United Nations. We extended, two weeks ago, invitations to Mr. Blix and his team go to Iraq to discuss, to have a dialogue with their homologue technicians in Iraq to know exactly what are the next steps toward finalize all problems which might met in the future, eventually when those inspectors return back. They... unfortunately they denied this... they didn't accept this invitation, and this is unfortunate.

RAY SUAREZ: But it is the position of Iraq, if I understand you correctly, that you would allow weapons inspectors once the two sides work out the terms under which those inspectors would work?

MOHAMMED ALDOURI: I think with dialogue we can overcome all kind of problems, and this is the main goal for Iraq, to have these kinds of discussions, a dialogue and very thorough discussions, technical discussions, to overcome all the problems ahead. You know we have a long experience with inspector of UNSCOM, and we want to overcome all these problems. And also, we would like to have overwhelming discussion on all resolutions of United Nations, of Security Council resolutions, to know exactly what is remaining issues we have to implement, and also what United Nations have to implement from their side.

RAY SUAREZ: I think there's been some confusion in the West in general, but certainly in the United States, over quotes coming from senior Iraqi officials. Yesterday in Baghdad, Mr. Mohammed Saeed al-Sahaf, who is a minister in your government, responded to earlier accusations from weapons inspectors that they weren't allowed to see everything, that it's a lie and as far as he was concerned, inspections have finished in Iraq. What does he mean by that?

MOHAMMED ALDOURI: Well, this is not a new position, not a new stand for Iraqi government... of Iraqi government. This is our position. We feel always that they finished all their jobs in Iraq. All what have to do in Iraq, they did, over more than seven years and seven months. They did thousands and thousands of inspections, thousands and thousands of sites. And we think-- this is our position-- that there is nothing still to be inspected in Iraq. This is the Iraqi position. Now, we offered this invitation for Mr. Blix, and we know who is Mr. Blix and who is the team of Mr. Blix, to come to Iraq to have the dialogue for two or three days in August, to continue what we have started already in New York and in Vienna. So the purpose is clear. That means if you have something, Mr. Blix, you have to demonstrate to us what are the remaining tasks to do in the future in Iraq, and also, as I told you from the beginning, to overcome all the problems which have been seen in the past.

RAY SUAREZ: And when you refer to Mr. Blix, that's Hans Blix, the head of the United Nations weapons verification program?

MOHAMMED ALDOURI: Of course, of course. He is very well-known.

RAY SUAREZ: Now, the Iraqi overtures, the Iraqi counterproposals have not been very well received by the United States Government. Secretary of State Colin Powell, for one, said, "The Iraqis have constantly tried to find a way around inspections. They understand what's required of them. Inspections aren't the issue, disarmament is."

MOHAMMED ALDOURI: Well, this is unfortunate, too, because we came to the dialogue here in New York and there in Vienna with a good faith to start full cooperation with all these bodies to find solution for the future. You know, we are suffering from sanctions for more than 12 years, so we would like to see an end for this sanction. It was a catastrophical sanctions for Iraqi people, so we would like to see these sanctions lifted, but nobody can assure us right now that these sanctions will be lifted once they would find nothing in Iraq-- I mean the UNMOVIC team, the UNMOVIC inspections. So we are proposing to the United States, to the United Nations, to Britain-- because only Britain and United States have these very extremist positions -- we propose to them to come to Iraq directly, not through UNMOVIC, to see themselves with their expertise to know exactly what is going in Iraq. But unfortunately they would like to have any justification to prepare the ground to attack Iraq. This is unfortunate, and we are of course very sorry for that.

RAY SUAREZ: So do you get the feeling that no matter what kind of response Iraq makes, that the United States government will not find it sufficient to avoid war?

MOHAMMED ALDOURI: This is... have been in the past... I think Mr. Butler gave a very good justification to the United States to attack Iraq, and they did that in 1998. And we are worried about that. And certainly it has been said by responsible in the administration, in the American administration, that "whatever would be the situation with inspections, we will do what we have in our mind." So we would like the Secretary General, the Security Council, assure us that there is no... there will not be a threat to Iraq, and certainly we will have to continue that dialogue and to reach a ground, mutual ground for both parties.

RAY SUAREZ: United States officeholders have talked about wanting a disarmed Iraq; Iraq has talked about wanting the sanctions lifted. What would Iraq need to be appropriately armed at the end of this process? What would you need to be able to defend yourself and also be no threat to your neighbors?

MOHAMMED ALDOURI: Well, first of all, there is... we... I defy anybody, any responsible say that Iraq threats any one of his neighbors. If there is any threat, I think those neighbors have to talk, have to say something to the Security Council, to the general assembly, to the Secretary General, that Iraq did that. So I never heard that Iraq threats anybody in the area. So this is just a creation, an American creation. This is one of justifications of the United States to attack Iraq. This is unfortunate, too.

RAY SUAREZ: But sir, in the past 15 years you've had wars with Iran, invaded Kuwait, attacked the Kurds in the north of your own country. Are you saying Iraq is a different country today from the one that engaged in those wars?

MOHAMMED ALDOURI: First of all, there is a lot of wars in the world. United States launch a lot of wars in the past, in the near past. So we know everything about the history. This is not only Iraq, not only the area. Israel is there attacking Palestinians. Nobody talk about that. Now Iraq, yes, this is a new Iraq. We would like to have a peaceful life for our people, for our neighboring countries, and for the whole area. So this is our goal, and we are working on that. And we have now very, very, very good relations with our neighbor countries. I can even nominate these countries.

RAY SUAREZ: Ambassador Mohammed Aldouri, thanks a lot for being with us this evening.

MOHAMMED ALDOURI: Thank you very much.

FINALLY PAYING FOR BIRTH CONTROL

RAY SUAREZ: Finally tonight: Requiring insurers to pay for contraception. Lee Hochberg of Oregon Public Broadcasting has the story.

PEGGY PAPSDORF: Pick up my prescription?

RAY SUAREZ: Peggy Papsdorf of Seattle has health insurance, but like most American women, she knew she'd have to dig into her purse to pay for her birth control pills.

PEGGY PAPSDORF: How much are they?

LEE HOCHBERG: The 43-year-old mother of one was out of work, paying almost $300 a month for health insurance. But the pills were extra.

PEGGY PAPSDORF: My insurance doesn't cover birth control pills.

SPOKESPERSON: Okay, so that will be $38.

LEE HOCHBERG: In Washington State, 59% of women have no contraceptive coverage in their health plans. Other states are similar.

PEGGY PAPSDORF: Your doctor recommends something for your health, but then the same... you know, the insurance company won't pay for it. So, what's the sense in that?

LEE HOCHBERG: Nationally, while almost all health plans cover prescription drugs, fewer than half cover the most common forms of prescription contraceptives-- birth control pills, the Depo-Provera injection, the IUD, and the Norplant implant. Each is used solely by women. Last summer, a federal court in Seattle ruled excluding them from prescription drug benefits discriminates against women. The court ordered Seattle-based Bartell Drugs, which self- insures its employees, to add contraceptives to its coverage. Bartell pharmacist Jennifer Erickson had filed the case.

JENNIFER ERICKSON, Pharmacist: Here I was, my own pills aren't covered, and I'm telling women all day long that theirs aren't covered either, and they'd get very frustrated with that. Men's needs are covered and yet women's aren't. Women's health needs aren't.

LEE HOCHBERG: Erickson's attorney argued without contraception the average woman would become pregnant 15 times in life, with enormous health consequences.

ROBERTA RILEY, Attorney: How is it that we created a system that covers so many other needs, but yet singles out the one most fundamental basic need that women have for 20 years of their lives?

LEE HOCHBERG: Women's advocates say the system forces low-income women to use less expensive and less reliable methods of birth control. Peggy Papsdorf said she might stop using the pill to save money.

PEGGY PAPSDORF: I am 43 and might want to risk it for a while until, you know, just to alleviate that stress of all the financial pressures.

ROBERTA RILEY: We hear those stories all the time, and we know it's true, that the lack of access, the lack of insurance attorney coverage does, in fact, harm women and lead to unplanned pregnancies.

LEE HOCHBERG: Bartell has appealed the court ruling and refused to be interviewed. But the insurance industry says there's no proof that covering the pill will reduce pregnancies. James Reed an insurance industry consultant, Milliman USA.

JAMES REED, Insurance Industry Consultant: These drugs cost $21 to $32 locally per month. I mean, that's the cost of a movie and a dinner out once a month. It's a small amount of money to pay. If they're concerned about the pregnancy, they're buying it out of their own pockets already.

LEE HOCHBERG: He questions why insurers should cover such an expense.

JAMES REED: Most women could budget for this. The purpose of insurance is to cover events that are random, that are not budgetable, that you're... that you have little or no control over. When you buy car insurance and you're buying it for accidents, but you're not usually buying your car insurance to change your oil, and so it's the same analogy.

LEE HOCHBERG: Businesses say full contraceptive coverage would cost them $15 a year per employee, an amount some say they can't afford. Betty Neighbors is president of a Seattle-area temp agency with 25 mostly female employees.

BETTY NEIGHBORS, Employer: What I see is the government intruding into are area, or making a decision that is going to be cost... be costly to everyone. I don't believe the government or the courts know what's best for my employees; I do.

LEE HOCHBERG: The federal ruling in the Bartell case is the first of its kind and will set precedent in other states. But it only applies to businesses that operate their own insurance plans. It doesn't cover the big insurance companies that provide most health insurance. Another Seattle court case seeks to go farther. Psychiatrist Shulamit Glaubach is suing Washington's largest health insurance company, Regence BlueShield. She alleges companies like Regence also must provide contraceptives.

DR. SHLUMAIT GLAUBACH, Plaintiff: For me, I'm a physician, and, yes, I can afford it. But there are a lot of people out there that can't afford it, and they shouldn't have to pay for it. They're paying a premium, and they should be covered.

LEE HOCHBERG: And another lawsuit filed in October goes after the world's largest retailer, Wal-Mart. More than 600,000 female employees of the company joined a class-action suit alleging the company discriminates by covering birth control for only some of its female workforce. Some state governments also have joined the fight. Washington insurance commissioner Mike Kriedler imposed a rule that does the same thing the women are trying to accomplish in court.

MIKE KREIDLER, Washington State Insurance Commissioner: The simple fact is that if it was men who had to take contraception as opposed to women, contraception would have been covered a long time ago. We wouldn't even be having this debate.

LEE HOCHBERG: 14 states already require insurance companies to cover contraceptives; and six, including Washington State, are starting this year. Glaubach will go ahead with her suit anyway, trying to establish a permanent legal precedent. Her suit also asks Regence to reimburse women who've had to spend their own money on non- covered contraceptives.

SPOKESPERSON: Clerk will call the roll.

LEE HOCHBERG: Congress has considered a national law to require insurers to cover contraceptives, but the bill hasn't made it out of committee.

RECAP

RAY SUAREZ: Again, the major developments of this day: President Bush held a major forum in Texas, in hopes of boosting confidence in the economy. The Federal Reserve left a key interest rate unchanged. The markets reacted with losses. The Dow Jones Industrial Average closed down 206 points, the NASDAQ 37 points. American Airlines announced it will lay off 7,000 workers and cut flights, in a new restructuring plan. And on the NewsHour tonight, the Iraqi ambassador to the UN reaffirmed Iraq's desire to negotiate and show the country has no weapons of mass destruction. Before we go, a clarification on a story we covered last night. We left the impression that a Walgreen's pharmacy in Florida worked with drug companies to market pharmaceuticals to its clients. A Walgreen's spokesman said today the company does not release patient information. We'll see you online, and again here tomorrow evening. I'm Ray Suarez. Thanks for watching and good night.