The NewsHour with Jim Lehrer

MR. LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, the new turns on the budget impasse and the First Lady's problems as seen in Washington by Mark Shields and Paul Gigot, and from afar by our regional commentators. Then economic winners and losers, Paul Solman reports. It all follows our summary of the news this Friday.NEWS SUMMARY

MR. LEHRER: President Clinton left on his trip to Bosnia tonight. He said he wanted to boost the spirits of American troops there. Mr. Clinton boarded Air Force One in Nashville for his first stop, the U.S. air base in Aviano, Italy. For security reasons, his exact itinerary after that was secret. The President was making a political fund-raising swing through Tennessee today. At a truck factory in Nashville, he stressed the importance of the U.S. role in Bosnia.

PRESIDENT CLINTON: With our help, the people of Bosnia who for four long years were denied the simple chance to go to work and raise their children in peace now have an opportunity to rebuild their lives and their country. Bosnia is a country where World War I began. Bosnia is a country that's so closely tied to others that if that war were to spread, it could cause many Americans and many other people from freedom-loving countries around the world to lose their lives trying to stop it. So we have worked hard not to try to fight a war but to bring a peace.

MR. LEHRER: The President will also visit American forces in Hungary and Croatia. He's expected to return to Washington early Sunday. Another winter storm hit the East Coast today. Charlayne Hunter-Gault has our report.

MS. HUNTER-GAULT: The week ended much as it began, with heavy snow, hazardous driving, and people shoveling out up and down the East Coast. There was less snow than earlier in the week. But the mix of snow and freezing rain made for dangerous conditions. In Pittsburgh, two commuter buses collided head on, killing one of the drivers and critically injuring several passengers. At Dulles Airport outside Washington, a passenger plane skidded on an icy runway and slid into a snow bank. No one was injured, but the airport was then shut down. Washington's National Airport also closed. Federal government workers in the nation's capital who finally made it into work Thursday were home again today. One of the few places open for business in Washington was the Supreme Court. Chief Justice William Rehnquist, who is from Wisconsin, ordered the court to stay in session all week. Most schools were closed, and there was heavy sledding in New York's Central Park. Snow plow operators were earning overtime pay but seemed weary from the week's record snowfall.

SPOKESMAN: We have piles, as you can see around here, five, six, twelve foot high, and we're just running out of room.

SPOKESMAN: I've been pushing about four days now. I'm tired. I'm ready for it to quit.

MR. LEHRER: The Federal Emergency Management Agency will provide money to areas of the East Coast hardest hit. The director of FEMA, James Lee Witt, said several cities and states have been overwhelmed.

JAMES LEE WITT, Director, FEMA: A disaster declaration by the President will free up federal funds for state and the most significantly impacted communities to cover the cost of clearing one lane in each direction for emergency snow routes and select other critical roadways. This has been done to allow for the passage of emergency vehicles and provide access to hospitals, nursing home, and other critical facilities.

MR. LEHRER: Witt said the President approved federal disaster aid for Delaware at New York today. Yesterday, it was for Maryland and the District of Columbia. The Justice Department is preparing for the traditional post-holiday surge in illegal immigration. Attorney General Janet Reno said today she was beefing up security along the Southwestern border with Mexico. She spoke at a Washington news conference.

JANET RENO, Attorney General: Beginning on January 16th, we will further the deployment of new personnel and resources, including 200 detailed border patrol agents, 40 detailed inspectors, and 60 special agent investigators to further deter illegal crossings into California and Arizona.

MR. LEHRER: The attorney general said it is now harder for illegal aliens to cross the border with Mexico than at any time in history but she added there is no quick fix. On the hostage story in Southern Russia today, separatists from the breakaway Republic of Chechnya released up to 10 Russian hostages. They are still holding 100 more civilians in a small town near the Chechen border, where they are surrounded by Russian forces. We have more in this report from Lawrence McDonnell of Independent Television News.

LAWRENCE McDONNELL, ITN: Throughout the day, the build-up of troops around the village of Pervomayskaya continued. The Russian side now appears determined that whatever, the convoy stops here. It is completely surrounded. The army is not taking any chances on the ground or in the air. As the net around the rebels was tightened, people were evacuated from neighboring villages. Too many innocent civilians have already been caught up in the Chechen rebels' desperate bid to return to their base. According to latest reports, the Chechen fighters have released some women and children, but it appears they're still holding around 100 people, including local police and militia they seized when they entered the village. The rebels' last offer to the Russians is to take their captives with them just across the Chechen border, where they're prepared to let them go. So far, the Russians have demanded all hostages be released unconditionally. Tonight, negotiators leaving the village on the Dagastan-Chechen border said the rebels' priority now was to simply escape from the Russian army, but they were keenly aware that this was looking increasingly unlikely.

MR. LEHRER: Russian troops entered Chechnya 13 months ago after separatists there declared independence. Thirty thousand people have been killed in the resulting conflict. In the Middle East today, Secretary of State Christopher continued his peace shuttle between Israel and Syria. He met with Syrian President Assad in Damascus. He had talked Israeli Prime Minister Peres yesterday. Christopher said the two countries have crossed an important threshold in their attempt to reach a peace accord. They have agreed to bring military experts to the negotiating table when they resume talks next week outside Washington. And that's it for the News Summary tonight. Now it's on to Shields & Gigot and our regional commentators, and a Paul Solman report on economic winners and losers. FOCUS - UNFINISHED BUSINESS

MR. LEHRER: We begin tonight with a one-two NewsHour combination, Shields and Gigot, and our regional commentators. They are here on this Friday night to explore two major running stories: The stalled budget negotiations and the developments concerning First Lady Hillary Clinton. Both have been accompanied by new spurts of hot rhetoric.

VICE PRESIDENT GORE: [Nashville] Tipper and I have worked with the President and the First Lady very closely for three years plus the campaign. These individuals are courageous, principled, decisive, knowledgeable, and they care deeply about what happens to the future of this country. I want to challenge the candidates on the other side to disavow the efforts at character assassination aimed at the First Lady. They should have nothing to do with this campaign!

REP. NEWT GINGRICH, Speaker of the House: [Walnut Creek, California] We spent hours this afternoon trying to figure out what's going on here. How can you explain it when the President of the United States in one press conference is factually wrong eight times about Medicaid? One of my friends said to me finally, you know, it is not his fault; maybe the President is factually challenged. [laughter]

MR. LEHRER: We'll take these stories one at a time, getting the Washington view, and then the one from out in the country. First, the budget and to Shields and Gigot, syndicated columnist Mark Shields, "Wall Street Journal" columnist Paul Gigot. Mark, the President kept saying that he and the Republicans are close to an agreement on the budget. How do you read what he means when he says that?

MARK SHIELDS, Syndicated Columnist: Well, the President, I think, wants to project optimism. I think the President at the same time sees a responsibility to reassure the financial markets, and I think he's also trying, Jim, to isolate the House Republicans and the Speaker of the House, Newt Gingrich, as the obstructionist and extremist to any--to the reaching of a deal. He's gone so far as to say I'm checking with Bob Dole for a reality check, so it's almost a form of triangulation on the President's part to sort of- -and attempt, I think, politically to isolate the House Republicans.

MR. LEHRER: So Newt Gingrich, when he hears the President say that yesterday and he repeated it again today, Mr. Gingrich did, that this is not the case at all--in fact, he, as we just heard, is essentially accusing the President of misleading the American public and telling stories, lies.

PAUL GIGOT, Wall Street Journal: Well, he hears the President saying what, what--trying to reassure the markets, trying to project optimism, trying to take credit for being for a balanced budget, which he understands is popular, but then in the negotiations, he also sees, I think, that Bill Clinton has taken, in a sense, my colleague's, esteemed colleague's advice. There was a couple of months ago, Margaret Warner said, what would you--asked us, what would you advise the President, and Mark said, stick to the congressional Democrats, your fates are entwined. I think that's what's been happening here.

MR. LEHRER: What the President's been doing.

MR. GIGOT: What the President's been doing. He wants to be for a balanced budget, but when you look at the specific policy actions, he wants to be--to do it in a way that doesn't endorse or doesn't give his signature to the policy reforms that the Republicans feel are so important.

MR. LEHRER: And that, of course, is where the other part of the President's message is when he says the budget, we can balance the budget in seven years, no big deal there; however, let's put off the discussions, these big policy debates over Medicare, Medicaid, restructuring Medicaid, Medicare, the environment, and education. What's he talking about?

MR. SHIELDS: Well, the President is drawing profound philosophical differences. He's making the case, laying the predicate to take this to the nation. This is what government's about, that the hidden agenda of the other side, says the President, is to dismantle, to de-legitimize government's involvement in these areas.

MR. LEHRER: It isn't really just to balance the budget?

MR. SHIELDS: It isn't, no, and I think, Paul, let me agree with Paul on a point at the risk of losing part of his constituency, the gender is a consensus now on balancing the budget. The mainstream Republicans, from Bob Taft of Ohio in 1950 to Bob Dole from Kansas in 1990, have argued that we had to balance the budget in this country. For 40 years, they have been ignored largely by conservative Republicans like Ronald Reagan, by liberal Democrats like Lyndon Johnson, who's incidentally the last President to balance a budget, but basically Democrats. Let's use the federal government's spending to create jobs, to build dams, to build schools, to build hospitals, to put people to work. Let's be quite frank about it. Main Street Republicanism has triumphed and prevailed. The argument now, in my judgment, is over that branch, the newer branch of the, the Republicanism, easy street Republicans, who say, okay, we can balance the budget and we can also cut taxes at the same time. And I think that's where--that's the fault line right now.

MR. GIGOT: Easy street, Main Street, you know, dead end street- -

MR. SHIELDS: Wall Street.

MR. GIGOT: I mean, it's, it's--there's no question that there is a fundamental debate here not just over taxes, because the Republicans who came, but also reforming the entitlement programs. I mean, the Republicans think, look, we're going to give the President--they're being asked by Bill Clinton to give him credit for balancing the budget without having to change the government. You cut a little bit on the edges, you round off the program, but you're asking us to ratify essentially that the programs that are already here, spend a little less on them, then we'll have a vote in November. If we're out, nothing has changed. We came here not just to balance the budget but to change Washington, to shake it up to make the government work better.

MR. LEHRER: And that is really what, what is on the table now, right? That's the reason that they broke up this week, and they, and they say, hey, we can't bridge this gap, because that is the gap. You just described the gap, did you not?

MR. GIGOT: Sure. I mean, the President decided--he vetoed welfare reform this week, for example. He says we can't devolve power to the states. That's the essence of what the Republicans want to do on welfare reform so you can have 50 state experiments. If you can't agree on that policy reform, then you're just not going to agree on a budget.

MR. LEHRER: But what--what is this about taking it to the voters in November? What's wrong with that from the Republican point of view, Paul?

MR. GIGOT: Well, the Republicans would like to get something for having had this big election victory last year. I mean, this would be one of the first Congresses in my lifetime for which nothing happened.

MR. LEHRER: Not even a balanced budget agreement doesn't count?

MR. GIGOT: Well, a balanced budget agreement that gives Bill Clinton and the Democrats rhetorical credit for balancing the budget without anything happening, with Henry Waxman's Medicare policies in place, is not something that Republicans can go back to their constituents and say, boy, we changed Washington. They wouldn't have.

MR. LEHRER: You just brought a smile to Shields' face.

MR. SHIELDS: No. I think, I think there has been a resistance, a strong resistance on the part of most Republicans--Paul would agree--to take this to November, because there was a fear that the Democrats would come in and they had the popular side of the argument on their side. We're fighting for those who are less fortunate. The other side want to throw widows and orphans into snow banks. But there's a real philosophical difference here on something like welfare. I mean, does a six-year-old kid in Mississippi or Massachusetts or Minnesota, is that kid an American citizen and there by definition of being an American citizen guaranteed, guaranteed a certain level of housing, of food, of shelter, of medical care, and that's it, or should it be just turned over to the states and not be a federal guarantee? And I think that's a real significant difference.

MR. LEHRER: And the Republicans take the position that they got a mandate to change all of that in '94?

MR. GIGOT: Well, the President's already agreed he wasn't going to fight the federal guarantee until he changed his mind about three weeks ago when he got a bolt of lightning from his left wing and decided that maybe--

MR. SHIELDS: Pat Moynihan.

MR. GIGOT: Pat Moynihan, Marian Wright Edelman, and that letter she wrote, the Children's Defense Fund and Hillary Clinton mentor wrote, so I think partly there's also politics going on here with the President and his base. He thinks it's dangerous, and he may be right about that, to separate himself now from his liberal wing, from his congressional constituency, because I think he thinks if he separates too far, they're going to turn on him and he's a weaker candidate in November.

MR. LEHRER: How effective is he, Mark, do you believe, partisanship aside, in making his case for, hey, we're that close to a balanced budget agreement, we could in 15 minutes--what he said in his news conference yesterday--15 minutes we could get in and do it--that's no longer the issue, he says. It's all these other things.

MR. SHIELDS: I think, I think there's--I don't know how effective he is, Jim. I mean, I think that the President understands one thing. Paul's right. He has to have the credential of being for a balanced budget. He has a balanced budget now that has been scored by the Congressional Budget Office, which is what the Republicans have insisted on, says, yes, it does balance in seven years. He wants to get off that debate. Okay. As long as we're debating about a balanced budget, the Republicans win. I mean, Republicans stand longer and stronger. If we're going to talk about who's for Medicare, who really thinks that old folks in this country are entitled, that one category in all the world where the United States leads in health coverage, all right, and life expectancy is for Americans over the age of 65, now you think it's an accident that 99.9 percent of Americans over the age of 65 have guaranteed health care? That's the only place where we lead the rest of the world, and so this--this--Democrats making that case, that's where they want the case to be, is on those issues, rather than on balanced budgets.

MR. LEHRER: And how do the Republicans fight that?

MR. GIGOT: Well, I think the Republicans will have to, on Medicare, they're going to say, yeah, we have this program that Mark is extolling and the President extolling, is careening towards bankruptcy, and if the--all the President wants to do is go with the same old, same old, it's not going to be there for Mark's kids and for mine, and that's why we have to change it, and that's why the President stands for the status quo. He doesn't want to change the Washington establishment. And that would be the argument the Republicans take to the voters in November.

MR. LEHRER: All right. Let's see how this is playing out in the country and to Elizabeth. Elizabeth.

MS. FARNSWORTH: Now, the perspective of our regional commentators on the budget standoff. Clarence Page of the "Chicago Tribune," Lee Cullum of the "Dallas Morning News," William Wong of the "Oakland Tribune," Patrick McGuigan of the "Daily Oklahoman," and Mike Barnicle of the "Boston Globe." Cynthia Tucker of the "Atlanta Constitution" is off tonight. Thank you all for being with us. Lee Cullum, let's start with you. What do you think about this, this last twist on the budget, the President saying he's so optimistic that a deal can be made, and Newt Gingrich saying that there's--I think he said that the odds for success are no more than one in five?

LEE CULLUM, Dallas Morning News: [Dallas] Well, Elizabeth, the Speaker may turn out to be right, but I certainly hope not. It appears to me, and I hear other people down here saying the same thing, that an agreement really is possible. I don't think they're that far apart on Medicare, for example. Now, I do think that the President is going to have to approach the Republican position on increasing premiums. Now, Medicaid is a philosophical difference. I certainly agree with that. I happen to think that the President is right on this; that Medicaid should remain a federal, a federal guarantee, and for those who are poor. I think the states should be allowed to run the program and be as creative as they want to be. On taxes, there certainly is a philosophical difference. It seems to me that both sides are going to have to give, and I hear others saying the same thing. We should have taxes that encourage savings and encourage investment and let the others wait, but I believe an agreement is possible. Whether we'll get it or not is another matter.

MS. FARNSWORTH: Pat McGuigan, how does it look to you?

PATRICK McGUIGAN, Daily Oklahoman: [Oklahoma City] I think it's very important for the Republicans to stick to their guns in terms of a tax cut for their constituency and the middle class people of America, the productive people of America, the people that produce jobs, create other jobs that are their investments. If they don't do that, they're making a political error, and frankly, I think they've already moved far enough, perhaps too far politically, to protect that base. The shift is something around $400 billion that they've already made in terms of their expectations when you combine their lower desire for tax cuts and the spending projections. In contrast, the President has shifted about $40 billion, and everybody is acting like this is some--something to celebrate. I think they are relatively close, but I would probably lean more towards Gingrich's point of view because I don't think the Republicans can go any further, and I'm afraid Clinton won't go any further in their direction.

MS. FARNSWORTH: Clarence, do you think the President is right when he says the issue is no longer balancing the budget, that it's now ideology?

CLARENCE PAGE, Chicago Tribune: Oh, absolutely. It's not balancing the budget. First of all, the President and Mr. Gingrich agree that the budget should be balanced in seven years. The question is over how. They both agree that we should have a tax cut. The question is: How much: They agree we should reduce spending in Medicare, Medicaid, and welfare. The question again is: How much? They agree on a reduction on the earned income tax credit. The question is: How much? They are not that far apart. What both sides are doing right now is waiting to see how the public in opinion polls and how Wall Street is going to respond, Elizabeth. What we've got is an ironic situation where Bill Clinton, Democratic President, it's in his interest to have a stable and prosperous Wall Street that is booming along right now. Newt Gingrich is trying to spook the markets by saying that we've got a one in five chance of a deal. We're going to have a deal. Mark my words. By the end of this year, we're going to have a deal. Wall Street is going to be happy. The question is: How are low income taxpayers going to feel? How are those who are losing earned income tax credit going to feel? How is that base constituency of the Democratic Party going to feel? That's where these moderate blue-dog Democrats who have a budget plan that's very close to the Republicans, that's why you're not going to see them both, in my view, from Bill Clinton right now. The Democrats see that their interests are with their constituency, just like Newt Gingrich fairly sees his interests are with his constituency and the argument is definitely philosophical.

MS. FARNSWORTH: Mike Barnicle, how does it look to you?

MIKE BARNICLE, Boston Globe: [Boston] Well, I think that much of this--much of the intricacies of the budget talk and the negotiations, that many people are too busy to pay attention to it, and it goes beyond them. But I think a lot of people know that the gas company doesn't have the sense of humor that Dick Gephardt has about money and that Newt Gingrich isn't going to take care of their 84-year-old mother if something happens to those social programs, and they also look around and they see that they have a ten-year-old son, and in seven years--he's in Little League now-- in seven years, God willing, he'll be in college. And seven years seems like a long time to balance a budget and you have to do it by the month here at home, or you can't use your ATM card. So I think they look at Washington, they look at the Congress, they even look at the President, and they say if you can't add and you can't subtract, and you can't do it in seven years, then get out of the way.

MS. FARNSWORTH: Bill Wong, do you think that's true? Do you hear that in Oakland?

WILLIAM WONG, Oakland Tribune: [San Francisco] I think we hear- -certainly we hear some of that, but I think what the latest round of rhetoric is, is some pretty clever politics on the part of the President. He looks to be the optimist. Gingrich for some reason has turned pessimistic. And even today in our own backyard in a Republican fund-raiser for Congress Dill Baker, Gingrich repeats the note of pessimism. So in terms of tone, Clinton certainly is playing better, I think. And from my perspective, I think that it's right--I would agree with my fellow commentators, who say this goes beyond balancing the budget. It's a matter of philosophy at this point, and I think that the President is right to hold firm on things like a federal guarantee for Medicaid. And he's trying his best to make sure that Medicare remains a viable program. I've talked to some elderly people who are very concerned about proposed changes and whether or not they will get good treatment under HMO alternatives. So I think it's playing better for, for the President politically out our ways.

MS. FARNSWORTH: Lee Cullum, does this issue seem stuck, or do you have the feeling that these new twists have added something new to the debate? From Texas, how does it seem?

MS. CULLUM: I hope it's not stuck, Elizabeth. I would like to take a little bit of an issue with Paul Gigot. He said that the Republicans fear that nothing will have changed, they will have gone through this revolution for nothing. I don't think that's the case. Regardless of the outcome of this budget, health care is changing dramatically. The managed care revolution is occurring. It's occurring because of this debate. It's occurring because of the debate in Washington, which is amounting to action, so I don't think the Republicans have to feel that concerned. I hope it's not stuck. I don't think the country's stuck. I think the country is moving in the direction that the Republicans desire. What is needed now is a reasonable adaptation of the Republican revolution to real life.

MS. FARNSWORTH: Okay. We'll be back in a few minutes to talk about the First Lady. Jim.

MR. LEHRER: Yes. The other major running story of the week was Hillary Clinton, and now back to Mark Shields and Paul Gigot. Mark, has this story about the First Lady gotten more serious, or has it gotten more political? What's happening?

MR. SHIELDS: Both. I mean, the fact is that the story has had legs to it because of the unfolding drama. First of all, it wouldn't be a story absent a suicide. All right. There's nothing else that makes it a story. I mean, people compare it to Watergate. It's not Watergate. There's no breaking and entering. There's no suspension of the Bill of Rights. There's no crimes being committed or alleged, but what there is, Jim, is ineptitude raised to a new level in how to handle, how to respond to questions and inquiries. And I think the President yesterday raised a legitimate point when he said how much of this is ideologically driven. And the very same folks who stood mute when, when Nancy Reagan fired the chief of staff, Don Regan at the White House, have all of a sudden, have charged her with intruding in personnel policies, as though she's the first First Lady to do that. The same people who, who have stood mute when Ronald Reagan's interior decorator stayed with his gay lover in the Lincoln bedroom, I didn't hear Pat Robertson or Jerry Falwell or the "Wall Street Journal" editorial page talking about what a terrible moral offense this was. So I mean, there is an ideological level to it, but the Clintons have brought so much of it on themselves by their failure to heed the advice of Paul's predecessor here, David Gergen, when he went there as counselor, to say, bring all the documents, bring 'em to the "Washington Post," lay 'em out there, and let everybody see it, and they didn't do it, and I think they're paying dearly for it.

MR. LEHRER: How much ideological, how much real, Paul?

MR. GIGOT: I think it's more than ineptitude. I think at this stage it may have started with the fear of embarrassment, taking some responsibility for firing the Travel Office, for example. It may have started with--

MR. LEHRER: What is the charge--what is wrong with what Hillary Clinton did, if, in fact, she did--if she did say to somebody, get those people out of here, this is a terrible thing, what's wrong with that?

MR. GIGOT: If she had just fired the people and said, you know- -

MR. LEHRER: She didn't fire him. In other words, she said to somebody--

MR. GIGOT: Said to somebody--

MR. LEHRER: --you ought to get out of here.

MR. GIGOT: --we want to clean this up, we don't think the office is working very well. Nobody would have cared. But when she said, but when it turned out that they were firing these people in order to give the contract to one of their cronies, one of their friends, when it turned out that then they denied responsibility, that they seemed to want to cover it up, they brought in the FBI to intimidate the people, they took one of the people who was running the Travel Office, who spent two years of his life, 1/2 million bucks, defending himself against justice charges, that's like firing a chief of staff, and then when you don't take responsibility but you claim that you are pure of heart, that you came to Washington to fight greed, when you wanted to clean up Washington, people see hypocrisy, and that's what I think has come back to bite her so hard in this case.

MR. SHIELDS: Five weeks of hearings and hypocrisy. I mean, you know, if hypocrisy were a disqualification for holding high office in the United States, we wouldn't have a quorum in the Senate next week. I mean, let's be quite frank about that. I don't argue with the fact that not unlike Michener's congregationalists, he's head of the congregationalists in Hawaii, they came to do good, did very, very well, I mean, I think Mrs. Clinton would prefer to be known as national chairman--national chair of the Children's Defense Fund rather than as the, the counsel for James McDougal and, and Madison Guaranty. I mean, I think there's no question about that, and I think that is part of it, but, Jim, it can't be overlooked that part of this, a good part of it's ideological. Most First Ladies have an issue, they have an issue that's a safe issue- -literacy, mental health, children, nutrition. Who the hell is against nutrition or literacy or mental health? Nobody. Mrs. Clinton took an issue that was a tough, divisive issue that had strong feelings and strong interest and powerful groups on both sides of it, national health and national health insurance, and she made a lot of enemies. She did not handle it expertly. She made serious mistakes. I think her selection of personnel was open to question at every turn but, I mean, the fact of the matter is I think she's taken an awful lot of hits to this very moment because she was out front on a very controversial issue.

MR. GIGOT: This is the President's defense, he said yesterday, and he did it instinctively, and it came right to him. Eleanor Roosevelt took some hits too. This is sort of the First Lady, a secular saint; she has a cause, and this is--and so a lot of mean people who disagree with her are going after her. But Hillary Clinton has never said that she is merely Eleanor Roosevelt. She's always been tied to this President as not just Eleanor Roosevelt, the First Lady with a cause, but also Harry Hopkins, the political adviser, the confidante, the political operative, somebody who appoints people. I mean, she was responsible for naming the attorney general in this administration. She has been responsible for taking on the biggest policy--Mark is right--the biggest policy development in this administration, cutting deals. She was the hard-boiled corporate attorney in Little Rock. You play by those rules; you play that game; you've got to suffer the scrutiny.

MR. SHIELDS: What is the charge? What is it? I mean, that she was--that she was a pushy dame, that she did things that other First Ladies hadn't done, that she was making decisions, that she- -what is the charge? I mean, what is this cover-up all about?

MR. GIGOT: Well, it's a question of did she tell the truth--I mean, about what happened in the Whitewater affair, what happened in Travelgate, there's an issue of credibility. There's also an issue of whether or not she allowed these items to be investigated, whether or not her colleagues at the Rose Law Firm who came to Washington were somehow trying to obstruct justice. That's what it's come down to. That's what Ken Starr is looking into. That's the real serious problem, I think, that they still have as a legal matter.

MR. SHIELDS: You're talking about--it alludes me--it alludes me.

MR. LEHRER: Do you think the President's going to get hurt by this? I mean--

MR. SHIELDS: I think there's no question it hurts the President. I mean, first of all, as long as the charge is out there that you're not being totally forthcoming and they haven't been and you're not being totally candid, then it weakens yourdefense on the budget. Okay.

MR. LEHRER: And everything else.

MR. SHIELDS: Your opponents can then say--plus, it preoccupies you.

MR. LEHRER: You said here the other night you think it really seriously hurts the President, right?

MR. GIGOT: Well, I think--I think the two of them are intimately connected politically. There's no separating one from another, so that to the extent that the First Lady has credibility problems, they were down to the President's difficulty as well.

MR. LEHRER: Okay. Let's go back to Elizabeth and back out into the country. Elizabeth.

MS. FARNSWORTH: Okay, now we'll talk to our regional commentators again. Clarence, is this all smoke and no fire?

MR. PAGE: I personally think it's transparently political, Elizabeth, and this is why I have serious disagreements with my own editorial board at my paper, as well as the "New York Times" and "Washington Post," papers that have sharply criticized Mrs. Clinton this week. I think we editorialists, when we fall into that, are falling into what is a transparently political game right now. Look, we just heard my good friend, Paul Gigot, admit that Mrs. Clinton is not accused of anything illegal. We just heard Alfonse D'Amato on TV last night admit she's not accused of anything illegal. What are they trying to find out? Well, it's hypocrisy. Did she tell that truth? Look, Sen. Alfonse D'Amato does not want to sit in front of a Senate Committee--everybody knows that--and have every allegation ever made against him investigated, and if Democrats were still running Congress, we wouldn't be sitting in these hearings right now, looking at so-called "Hillarygate." Look, the Republicans see a chance to play the stereotypes of Hillary Clinton that they've been playing to from the beginning of the Clintons' campaign back in '92 and '91 even, and they see a chance to get some advantage here, and they're doing it. I see no reason for us editorial writers to play into that. My colleagues agree with me, that's fine, but I think our readers out there see what's happening, and I think right now, when I talk about the heat going on up on Hillary Clinton, it's going up in editorial board rooms, but not with most Americans.

MS. FARNSWORTH: Patrick McGuigan, something tells me you're going to disagree with this.

MR. McGUIGAN: Well, at least somewhat. Let me take issue in this sense. I think that on Travelgate it is now inarguable that the White House has a significant problem. I mean, you've got seven human beings here. It's always kind of interesting to remember that the people with whom this started who were canned really for no reason, other than as was pointed out by Paul, you know, political cronyism, seeking some advantage for friends back home in Arkansas, on the part of the Clintons.

MR. PAGE: And sloppy bookkeeping.

MR. McGUIGAN: That is not what the Clintons said they were coming to Washington to do. You know, it kind of reminds me of some of the stories from early in the Clinton--back in the Reagan years when some of the young people went to Washington thinking that it was really kind of cesspool; before too long they decided it was more like a hot tub. These people went to Washington telling mainstream Americans they were going to change the way it operated when they got there, and it looked an awful lot like politics as usual. That's before you even get to Whitewater, where as Bill Safire as pointed out, I think there's a great chance that the President's interests and the First Lady's interests may begin to diverge. Before we even get to that, the Travelgate, I think, is a meaningful little contra tone. I'm not sure it rises to the level of going beyond where we already are in this discussion.

MS. FARNSWORTH: William Wong, is this something that people are paying attention to in Oakland, is this important there?

MR. WONG: I think it's--it doesn't approach the level of O.J. Simpson, but I think there are people who are interested in the issue because of who Hillary Clinton is, and but I would--I'm on board with Clarence on this one. I think it is quite political, and I'll even go beyond by saying that Hillary Clinton, because of the kind of First Ladyship, if you will, that she's trying to create, a dual merging of the traditional with the career woman, and a very strong presence, has been a target of Republicans for a long time, and here she has left herself open, no doubt, for some criticism. Our editorial board asked her to come clean. I would, I would concur with that, but I would also point out that there's a lot of politics involved, and the Republicans want to take some advantage of this, and I think that's really at the heart of this dispute.

MS. FARNSWORTH: And Bill, William Safire in the "New York Times" this week called Mrs. Clinton a congenital liar. Is that something that got any play out there?

MR. WONG: Yes, it did. Our newspaper reran the Safire column with some front page things to it. But I might say this; that, if Hillary were the first liar in public life, that would be a news story. I think a lot of politicians get where they get because they are not fully candid with the public.

MS. FARNSWORTH: Mike Barnicle, what do you think about this? Is there more fire here than smoke?

MR. BARNICLE: Oh, I don't think there's either fire or smoke. I think there's just Hillary Clinton. That's what the issue is now. It has very little to do with whatever happened down at some savings & loan or the people in the Travel Office. The issue now is her. I think you find more people tonight who could name the mayor of Tuzla than could tell you what the whole thing is about, whether any crime has been committed. The interesting thing about it, at least around here, is that it has created a real gender split--guys, as opposed to men--guys, you know, cops, fire fighters, people making in-between I'd say forty and seventy-five thousand dollars a year despise her. Women tend to support her I think for a couple of reasons. They think she's being picked on because she's a strong professional woman with, as Mark pointed out, you know, legitimate, substantive controversial issues that she's championing. That's one segment of women that are for her because of that, and I think a lot of women are for her saying cut her some slack; she's been married to a cheating philanderer for 25 years, let her do what she wants to do. But the problem is that if the two of them are linked up together in character again comes the issue with both of them as a couple, rather than him as a candidate, and I think they might be looking to call Allied Van Lines to get right back there to Hope, Arkansas, because that's a loser for them.

MS. FARNSWORTH: Lee Cullum, do you agree with that? Do you think the issue is not what Mrs. Clinton did, but Mrs. Clinton, that she's a symbol of something that some people just can't stand?

MS. CULLUM: That's possible, Elizabeth. I certainly don't want to line up with the guys in Mike Barnicle's newsroom, but I have to say I have questions about her. I have admired Hillary Clinton. I certainly like the role that she's tried to play. I was glad that she took on the health care challenge. I have to say that tragically I think that health care destroyed her effectiveness politically. I also have to add that I think that if, indeed, she did what Watkins said she did in the Travelgate matter, that was pretty brutal. To get the FBI after some of these people and get one of them indicted, it's pretty hard--that's a hard thing to do. That's hard ball. And I don't think she need be surprised when it comes back upon her. As far as Whitewater is concerned, she was certainly present at the creation of a messy situation. I don't know the full facts. I don't know that any of us do at this point. I have to say I think she's become a political liability to the President, and there's a tragedy there, because I think she wanted to do good things.

MS. FARNSWORTH: What do you think was driving this? Do you think Republicans smell something at the end of the tunnel, Lee?

MS. CULLUM: Oh, I think that Republicans certainly see an opportunity to embarrass the President. It's an election year. I don't know that they necessarily care whether there's anything at the end of the tunnel, and there doesn't really have to be as long as we keep the issue alive through the election. And that's a fairly limited objective, and it's the only necessary objective for them.

MS. FARNSWORTH: Clarence, Lee thinks she's a liability. Do you?

MR. PAGE: What we do, impeach the First Lady? I mean, the fact is she's a plus and a minus. Both Clintons bring-they're both lightning rods. Their polling all along has been very polarized, like Mike Barnicle says. It's got the guys on one side, the feminists on the other, and all the rest of us scattered in- between, but the fact is to some degree that shows that they're doing something. Eleanor Roosevelt was not a shrinking violent. For her time she was a Hillary Clinton of her time. She was taking on a very non-traditional role for a woman then. Hillary Clinton right now is advocating some unpopular positions. It's unpopular to talk about a strong safety net in this country. But these are very real issues. And I think most Americans today see some real issues out there. It's because of those real issues that the phony issues are raining down on Hillary Clinton right now, and this will all be decided.

MS. FARNSWORTH: Okay. Well, thank you all for being with us. Jim.

MR. LEHRER: Now, back to Mark and Paul for some final words. Do you agree with what Clarence just said, Paul, that because there are some real things that really matter, then things that don't matter get a lot more attention because you can't beat her on the real ones, you beat her on the ones that don't matter.

MR. GIGOT: Well--

MR. LEHRER: I don't mean you. I mean the big you. Okay.

MR. GIGOT: You can--I think that the budget, something that matters, is also getting a lot of attention, but how our government operates and the credibility and the character and the political character, the behavior in public life of our officials in the White House, especially those that, that want to exercise power in a big way is very important, and that's vital, and that gets to issues of whether you tell the truth. And yeah, a lot of people lie. A lot of people in politics lie, but that doesn't mean it isn't important when the people who currently hold office lie.

MR. LEHRER: He's right about that, is he not? I mean, character does matter.

MR. SHIELDS: Character does matter. There's no question about it, Jim. I mean, character is destiny as the Greek poet said several centuries ago, and I guess I'm--what I'm missing is character matters if you see somebody's character fail and a policy results. I think that Patrick raised a very key point when he said that-- and Lee backed him up--that is that the people in the Travel Office were treated shabbily. There's no question about it. I mean, the human beings who worked there were summarily dismissed. I mean, we discussed it on this show when it happened, and it was really--it was badly--

MR. LEHRER: You came on very hard--

MR. SHIELDS: I did, because, you know, this was a terrible way. It was a kangaroo court, but there is--there is a problem when you are sort of the noble reformer. Mike Barnicle covered a fellow named Billy Bulger, who was president of the Massachusetts State Senate for 20 plus years, now president of the University of Massachusetts. He once said that Mike's paper, the "Boston Globe," had a headline endorsing Elliott Richardson, which read with a tongue-in-cheek, "Vote for Elliott, he's better than you are." And I--that is a little bit, comes through with liberal reforms.

MR. LEHRER: Yeah. Okay. I think that's a good place to leave this, don't you?

MR. GIGOT: Fine. [everyone laughing]

MR. LEHRER: Okay.

MR. SHIELDS: As opposed to conservative revolutionaries who want to change the whole world by attacking a woman.

MR. LEHRER: Oh, my goodness. Good night, Paul. Good night, Mark. FOCUS - WINNERS TAKE ALL

MR. LEHRER: And finally tonight, who wins and who loses in the economy of the 1990s. Our business correspondent, Paul Solman of WGBH-Boston, has some answers.

MR. SOLMAN: Disney's Michael Eisner prompts the 1994 Businessweek chart of America's highest paid executives, his $203 million in earnings, roughly 10,000 times that of the lowest paid Disney employee, Hollywood's Sylvester Stallone $20 million a picture, the average member of the Screen Actors Guild $12,500 a year. Now, admittedly, there have always been high paid superstars and moguls, but listen to this. In German and Japanese companies, the CEO is paid about 30 times what the bottom worker makes. Two decades ago in the U.S. the ratio was also thirty to one. By 1990, it had reportedly shot up to a hundred and forty to one in the United States. It seems as if something has changed. To understand the stratospheric salaries of our era, the best place to start might be Cornell University. To paraphrase Cornell's alma mater, we forayed far above Cayuga's waters to learn the hows and whys of our winner-take-all society. For that is what economics Prof. Robert Frank says we are becoming as incomes diverge between the haves and have nots.

PROF. ROBERT FRANK, Cornell University: There's been not only a change in the disparity of incomes between the people at the top of the pyramid and those at the bottom, between the most skilled and the less skilled, but also within each category that we have the data to measure. So within the category of medical practitioners, the incomes of the highest earners have grown relative to the incomes of the lowest earners. The same is true in law.

MR. SOLMAN: And says Frank in virtually every profession. You can even see it here at Cornell.

SPOKESMAN: Well, each of these hoods, for instance, glove boxes, cost $200,000.

MR. SOLMAN: Chairman of the world class Cornell Chemistry Department, Bruce Ganem has one main job, keeping superstar faculty from leaving for higher offers. Prof. Frank Disalvo is currently considering a seven-figure offer from Princeton to set up a lab just for him.

MR. SOLMAN: Why do you suppose there is a bidding war for your services? I mean, you must have thought about it.

PROF. FRANK DISALVO, Cornell University: Well, I think it has to do with being able to attract other good faculty that have already proven that they can do research that's both of interest to the scientific community and receives awards and things of that sort, and can attract federal money to keep doing it.

MR. SOLMAN: So is it a case of the rich getting richer, or the more excellent getting even more excellent?

PROF. FRANK DISALVO: I think there's some truth to that statement. The idea is that you put your money on proven winners, I think.

MR. SOLMAN: Cornell isn't always on the defensive. In 1987, it wooed polymer chemist Jean Frechet away from the University of Ottawa.

PROF. JEAN FRECHET, Cornell University: At the time, they offered me $2 million to start my lab, and that was a significant amount of money then.

MR. SOLMAN: So just between us now, is anybody coming after you now, trying to recruit you?

PROF. JEAN FRECHET: Yes, yes. I mean, it's every year.

MR. SOLMAN: The point is, for every Jean Frechet or Frank Disalvo, there are hundreds, maybe thousands, of perfectly good chemistry professors getting no offers at all, losers, so to speak, in a winner-take-all contest. It's a race among students as well. At Cornell, one out of every three undergraduates takes basic organic chemistry. The course is oversubscribed, the competition furious, at least for most. But few of these students intend to become chemists. This course is prerequisite to a clearly rewarding profession in which nearly everyone wins.

MR. SOLMAN: How many of you are in this class because you're pre- med and want to go to med school? Every single one, except you up there? Every single person.

MR. SOLMAN: Now, part of the drive to become a doctor is surely a desire to be useful, but Bruce Ganem thinks winner-take-all is at work, and it's at work throughout the chemistry curriculum.

BRUCE GANEM, Cornell University: When you and I were in college, we talked and our parents talked about doing your best, about the good old college try. And when Vince Lombardi said winning isn't everything, it's the only thing, we chuckled and we thought, well, maybe in football. But today, the good old college try isn't good enough. To be successful, you have to be at the top, you have to come home with the goods, you have to have the job after the interview, or you haven't succeeded.

MR. SOLMAN: Small wonder then that in the last two decades students with the highest SAT scores have increasingly clustered at Ivy League schools, jostling for position on the trip to the top. But to Prof. Frank, a winner-take-all society is a recipe for ruin.

PROF. ROBERT FRANK: We've never seen an era like the one we're in now. I think Lester Thurow has written that short of a war or a revolution there's never been a time when inequality between the top earners and the bottom earners has grown so sharply as in the last 20 years, and it's very difficult to maintain a well-ordered society when you've got that kind of growing income gap.

MR. SOLMAN: And winner-take-all is a contributor?

PROF. ROBERT FRANK: We argue that the spread of winner-take-all markets is really the driving force behind growing income inequality. It's not just between the highly skilled and the unskilled; it's within the most skilled workers we can identify, the rich getting richer and the poor getting poorer.

MR. SOLMAN: In a new book, Frank and co-author Philip Cook of Duke The Winner-Take-All Society by Robert H. Frank and Philip J. Cook spell out their thesis and their worries as to how far winner-take-all is spreading. To be fair, not all economists share their concerns. In a "New York Times" column, Stanford's Paul Krugman was quoted as saying, "Most people don't try to become Michael Jordan or Michael Eisner," and Chicago's Sherwin Rosen said, "I don't think this applies to the butcher, baker, and candlestick maker." The critique then, winner-take-all only applies to a few high-profile fields but not all the rest. But co-author Philip Cook thinks winner-take-all is truly pervasive. At Bob McMath's new products showcase and learning center in Ithaca, Cook explained that winner-take-all is true even of products. Sure, there have always been losers like Licorice Oat Bran and Touch of Yogurt Shampoo, but the point is there are more losers these days and bigger winners. To Philip Cook, that's partly because more products and people are competing for the same limited shelf space, both the physical kind in stores and the mental shelf space in the minds of us consumers.

PHILIP COOK, Duke University: It's fascinating to see these products here because what they're all playing for is the jackpot, and like the Lotto Game, many play, very few win.

MR. SOLMAN: Why has it gotten worse?

PHILIP COOK: I think one reason it's gotten worse or more intense and more pervasive has to do just with the changes in technology that we're all very familiar with. It's the technology of transportation, of international communication, of data processing, and one of the consequences of that, obviously, has been the globalization of the economy.

MR. SOLMAN: Now, a global market brings global payoffs, but only if you can get yourself on everyone's mental shelf. And since we can keep only so many restaurants, products, or people in our heads, name recognition becomes everything. Modern communications technology has made the celebrity king.

PHILIP COOK: The key point here is that distributing, you know, a Mike Tyson fight costs no more because of the technology than to distribute a fight by some no-name thug that is boxing locally in Brooklyn somewhere, so that when you have a technology like that, where the distribution is essentially free, it's a public good, then why not the best?

MR. SOLMAN: Prof. Frank has a more PBS-appropriate example.

PROF. ROBERT FRANK: The real market for music now is in recorded form, and if the critics decide that Kathleen Battle is the one who does that best, then we hire her, she records the master disk, and we stamp out as many copies as we wish from her disk. No need to listen to the second best soprano any longer.

MR. SOLMAN: But, says Frank, it's not just that today's top people get more because fame is now worth more; an extra key ingredient is deregulation, open bidding that now takes place for the most productive entertainers, athletes, executives, driving their incomes even higher.

PROF. ROBERT FRANK: And in today's world, we have a market in which everyone is, in effect, like a free agent in baseball. It used to be that people stayed with the same company for their whole careers, much more than now. It used to be that authors stayed with the same publisher for their entire writing careers. Now everyone's a free agent. Everyone sells his or her services to the highest bidder, and that competition is the other major factor that's driven salaries to run-away levels at the top.

MR. SOLMAN: Now, a bit of balance here. There are some benefits to winner-take-all. Most people prefer a Mike Tyson fight to a local slugfest, Kathleen Battle to a second-best warbler, and closer to home, if you get sick, no matter where you are, you can now be electronically diagnosed, even treated, by a world class expert instead of the doctor down the road. But clearly, there are also costs to winner-take-all markets, when, to quote Coach Lombardi, winning becomes the only thing. In big-time football, if not the Cornell brand, steroid use is escalating as athletes try to out-bulk each other. Steroids are dangerous. The game is no better because everyone is now bigger.

PROF. ROBERT FRANK: But from an individual point of view, it's compellingly attractive to take the drug because, otherwise, you don't land a spot on the team, you don't have a shot at the NFL roster.

MR. SOLMAN: Here in the Ivy League, of course, the ticket to the top is not in sports but in academics. Still, says chemistry chairman Bruce Ganem, you can see the waste in the classroom too. Cheating is up dramatically.

BRUCE GANEM: Cheating will take place for the smallest number of points, two or three points on an exam, and often with a very good student. There's just no correlation with the quality of student and who is or isn't cheating.

MR. SOLMAN: When I think back on my academic career in the 60's, the idea of really good students cheating is frankly unimaginable.

BRUCE GANEM: You're right, but think of pressure again. Pressure is very egalitarian.

MR. SOLMAN: There's so much pressure because there's so much competition; the limited number of med school spots for the top jobs that Frank's students, when we polled them, thought his economics course might help them get, and there's so much competition because the prizes are so great at the top in business, or as is often noted in basketball, where one in twelve thousand hoop dreams pays off big-time and the rest, despite all their hard work, never make a penny from the sport. And that's the other great cost of winner-take-all, the misallocation and disappointment of talent as too many people vie for the handful of spots at the top. Now, call us obsessed, if you like, but we thought we could even see this problem at an annual Ivy event we happened on just before we left town. "Playboy Magazine's" women of the Ivy League issue had just come out, and some men of the Ivy League had queued up for signed copies amid grim signs of protest. For their part, the pin- ups said they'd had a good time posing, were paid, of course, and here's the point, wouldn't mind at all if this exposure led to a modeling contract, or would they, we asked?

WOMAN: Oh, definitely not, and I don't think any of us would turn it down if someone called.

MR. SOLMAN: But to quote Robert Frank, modeling is a winner-take- all market of the most extreme sort. The typical annual income, zero; the top superstars, ever more eye-poppingly remunerated. And perhaps most significant, very little to distinguish the cover girls from the also-rans. In fact, in the end, the most disturbing aspect of winner-take-all may be its apparent injustice; that modest, if not arbitrary differences in talent, can result in yawning differences in pay, in jobs in modeling, in sports, in business, maybe even in TV news. Add to that the growing income gap between jobs, between those that demand marketable skills and those that don't, and you can see how America's multitude of non-winners might feel that economic life is simply unfair, getting more unfair, and that some might even feel the game, itself, isn't worth playing at all. RECAP

MR. LEHRER: Again, the major stories of this Friday, President Clinton left for Bosnia tonight. He said he wanted to boost the morale of the American troops there. Another winter storm hit the East Coast. The Federal Emergency Management Agency will provide money to areas that were hard hit by this week's storms. And 10 Russian hostages were released by Chechen rebels. They are still holding one hundred civilians in a small town near the border of Chechnya. Have a nice weekend. We'll see you on Monday night. I'm Jim Lehrer. Thank you and good night.