The NewsHour with Jim Lehrer

JIM LEHRER:Good evening. I'm Jim Lehrer. On the NewsHour tonight some perspective on the new and ever changing world of a corporate CEO, reports on the big transportation bill also known as ISTEA, two Asia stories, the North Korean famine as witnessed by a U.S. congressman, and the financial turmoil in Southeast Asia as seen by an American correspondent. It all follows our summary of the news this Monday. NEWS SUMMARY

JIM LEHRER: Attorney General Reno today asked a federal court to fine Microsoft a million dollars a day. She said the computer software company was violating a 1995 court order. It banned Microsoft from requiring computer manufacturers to license and distribute Microsoft's Internet browser, along with its software package. She made the announcement at the Justice Department.

JANET RENO, Attorney General: Forcing PC manufacturers to take one Microsoft product as a condition of buying a monopoly product like Windows 95 is not only a violation of the court order but it's plain wrong. Microsoft is unlawfully taking advantage of its Windows monopoly to protect and extend that monopoly and to undermine consumer choice. The Department of Justice will not tolerate that kind of conduct.

JIM LEHRER: A Microsoft spokesman said the company was in full compliance and called the Justice Department action "unfortunate and misguided." A U.S. team of food and medical experts will go to North Korea this week to evaluate the extent of the famine there. Observers from food aid organizations and some journalists have expressed concerns that food has not been fairly distributed. State Department Spokesman James Rubin announced the trip.

JAMES RUBIN, State Department Spokesman: I would expect further consultations with the North Korean side about a crucial monitoring system and why our ability to give assistance to the world food program for the world food program to give assistance to children is dependent upon an adequate monitoring system. We would like to see the North Koreans understand that the more people understand what's going on there, the more willingness people will be--the more willing people will be to try to help them.

JIM LEHRER: In Bangkok, Thailand, today some 2,000 protesters marched on the capital's financial district, demanding the resignation of the prime minister. The value of Thailand's currency, the bot, has plunged 30 percent since July, and the Thai stock market fell more than 3 percent today, after the finance minister announced he would resign. We'll have more on both Korea and Thailand later in the program. The U.S. Supreme Court today refused to reinstate a Louisiana law requiring parental consent for under-age abortions. The court upheld earlier rulings that said the law imposed an undue burden on the abortion rights of young girls. Most states have a one-parent consent requirement for unmarried girls under 18. The Supreme Court has upheld them as long as judges may authorize abortions without parental consent in certain circumstances. The Louisiana law did not have that provision. It's kooky to suggest White House fund-raising videotapes were altered. That was White House Spokesman Mike McCurry's response to such a suggestion by Republican Congressman Dan Burton. He's chairman of the House Committee investigating campaign fund- raising. Burton said videotapes of White House coffees with campaign contributors may have been edited or tampered with. He said he will have experts examine them. McCurry said the Justice Department should check out Burton's concerns, however wild they are. He spoke to reporters at his daily briefing.

MIKE McCURRY, White House Spokesman: If he has any evidence to that effect, he should produce it. And I suspect it'll be like suggestions he's made in the past that are completely baseless.

REPORTER: Can you say affirmatively, Mike, that the tapes were provided in their whole, in their entirety, with no editing?

MIKE McCURRY: Of course they were. I mean, there wouldn't be any reason to provide them in any other fashion. For practical purposes--I think in some cases since you're dealing with a large volume of tapes--they've dubbed them off onto a master, but the originals are available for inspection.

JIM LEHRER: The White House has now released more than 100 hours of tapes to various federal officials investigating Democratic fund-raising practices. Two major accounting firms announced plans to merge today. Ernst & Young and KPMG Peat Marwick would become the nation's largest accounting firm with an estimated $18.3 billion in annual revenues. Specific terms of the deal were not disclosed. AT&T today named C. Michael Armstrong its new chairman and chief executive. He ran Hughes Electronics, the communications and aerospace company owned by General Motors. It followed the weekend word that Douglas Ivestor will likely replace Roberto Goizueta as chairman and chief executive of Coca-Cola. Goizueta died Saturday of lung cancer after leading Coke for 16 years. We'll have more on these CEO stories in just a moment. Also coming up, an ISTEA story, the famine in North Korea, and foreign correspondence about Thailand. FOCUS - TOP GUNS

JIM LEHRER: The CEO's. Betty Ann Bowser begins our look.

BETTY ANN BOWSER: After a year of fallen stock prices decreased in net income and earnings AT&T announced a new management team today. Ma Bell will be led by C. Michael Armstrong, currently head of Hughes electronics. At today's press conference in New York City Armstrong called his new job "the chance of a lifetime."

C. MICHAEL ARMSTRONG: It's a fantastic opportunity to make a significant contribution, so it is and will be the global leader in the communications industry. And we will deliver on our commitments with the quality and the excellence that earns AT&T its reputation with every single call and each and every day.

BETTY ANN BOWSER: For the past nine years the nation's largest telecommunications company has been led by 62-year-old Robert Allen, a veteran with forty years service at AT&T. Both the company and the industry have gone through a tumultuous several years as increases in technology and deregulation have brought fierce competition. Allen was responsible for cutting 100,000 jobs at AT&T. Also, during his tenure, the company spun off its equipment and research arm, Lucent Technologies and National Cash Register. There's also a turnover at the top of another American institution, Coca-Cola. CEO Roberto Goizueta died Saturday of lung cancer. He was 65 years old.

ROBERTO GOIZUETA: When my family and I left our native land and came to this country with just a few dollars in our pockets--

BETTY ANN BOWSER: Goizueta, a Cuban immigrant, had worked for the Atlanta-based company since 1954 and was named CEO sixteen years ago. He was credited with turning Coke around--tripling sales, vastly increasing profits and helping Coke's stock value to soar to nearly $150 billion. He expanded the company to include markets in nearly every corner of the world. Today, Coke's red and white trademark is the second most widely recognized symbol in the world after the religious cross.

CHILD ON COMMERCIAL: Want my Coke? It's okay. You can have it.

BETTY ANN BOWSER: During Goizueta's tenure Coke used aggressive advertising to win market share from rival Pepsi-Cola. [Commercial - Music in Background] Among Goizueta's greatest successes was the introduction of Diet Coke in 1982. And his biggest failure was the short-lived New Coke in 1985. During Goizueta's three year illness, the company was run by president and Chief Operating Officer Douglas Ivestor. Many analysts expect Ivestor to succeed Goizueta. Coke and AT&T are only two of the many corporate giants that have been received extensive public attention in recent years. Sometimes the publicity has been negative. CEO's have been criticized as corporate killers who slash the rank and file while drawing huge salaries and compensation packages for themselves. But there has also been positive press coverage. CEO's have been portrayed as saviors of their industries and superstars of the business world.

JIM LEHRER: More on all this now from Michael Useem, a professor of management at the Wharton School at the University of Pennsylvania and Philadelphia, and John Byrne, a senior writer at Business Week, who covers management changes in corporate America. First, on the AT&T story, Mr. Byrne, why was Armstrong brought in?

JOHN BYRNE, Business Week: AT&T needed someone from the outside to take a clear look at the business, its strategy, and to get things done. What A&T more than ever needed was credibility. Bob Allen had lost it on Wall Street. He had lost it in the marketplace. And I think Armstrong immediately brings credibility to the company.

JIM LEHRER: Why.

JOHN BYRNE: For one thing many people were very disappointed with Allen, not only his--the miscues in strategy that occurred--but he was viewed as someone who couldn't get things done. Earlier in the segment it was announced, for example, that he had cut 100,000 jobs from AT&T. In fact, he had announced plans to cut 100,000 jobs but at the end of last year, for example, AT&T's payroll was 2,000 more than it was in the previous year. AT&T had 450 people in public relations alone, 2,000 in human resources. It was still a big giant that was incredibly bureaucratic and couldn't really keep up competitively, and Allen was a person who was just basically someone who was trying to hang onto his job.

JIM LEHRER: Well, Professor, you seem--years ago it would have been unheard of for AT&T to have the number one person be announced--bring somebody in from the outside, correct?

MICHAEL USEEM, Wharton School: That is correct. They've had insiders there for years, and so this is quite a remarkable event to go not only outside the company but to go outside the industry.

JIM LEHRER: Now, what is that philosophy now, that--if you're a CEO of say of a bank or of a car company or in this case an electronics company, you can also be CEO of a telephone company. What is the new characteristic of a CEO that's so transferable?

MICHAEL USEEM: Well, what you need first of all is strategy and vision, and that's what AT&T has needed for a couple of years. Michael Armstrong has proven he can bring that to the top office where he's been. And I think the board at AT&T, quite correctly here, has gone for a person who can articulate a vision; he knows where the company ought to go and then take several hundred thousand people in that direction.

JIM LEHRER: But how would he know that? He hasn't been working at AT&T.

MICHAEL USEEM: He will know it. He knows how to know. He has the sense as people at that level in the world develop how to look at the problems, how to understand what's out three and five years, put that together with a realistic strategy. There's a fine line between strategy and fantasy, it's got to get the strategy, not the fantasy part, and then he's got the skills, as he should have, to take the several hundred thousand people, get 'em lined up the same way, and walking in the same direction. That's the key leadership skill which AT&T in my view has been missing, and I think he's going to bring it to the office.

JIM LEHRER: Yes.

JOHN BYRNE: Oddly enough, if I might add here--

JIM LEHRER: Sure.

JOHN BYRNE: Armstrong has had an unusual opportunity to kind of have an apprenticeship outside the company, and it was over a year ago that Armstrong was originally contacted by the headhunters to become president of AT&T. He refused the job because Allen insisted on staying around. And instead Allen went to someone else who agreed to take the presidency with Allen sticking around. Of course that guy didn't work out. It was John Walter of RR Donnelly. But Armstrong has had over a year to look at AT&T, to think about it. In his head he did seriously consider it over a year ago. He's also in a business that overlaps to a great extent with AT&T in the satellite business. He's had a partnership with AT&T. His corporation has at least, so I think he's very well suited for the job.

JIM LEHRER: All right. Mr. Byrne, Coca-Cola's story--very different, is it not?

JOHN BYRNE: Total contrast; in AT&T you have a CEO who's leaving--who leaves--not with a mixed record, but leaves a bit of--with a bit of a sort of goat status--in Goizueta--Coca-Cola, you have a CEO leaving who was a tremendous success, who was probably one of the most successful CEO's in a generation--also I might add one of the most highly paid CEO's in the history of business. In fact, his departure, his death, will unleash about 1.1 to 1.3 billion dollars in income that had been deferred that will now go to his estate and will actually result in a huge corporate tax deduction for Coca-Cola this year.

JIM LEHRER: But Professor, you're saying the new CEO of Coca-Cola has an entirely different mission than the new CEO of AT&T, right?

MICHAEL USEEM: He does. As John has said the Coca-Cola story has been a very positive story. Goizueta has done a pretty amazing job in recent years. New man coming in I think is going to carry on a tradition, a strategy, a way of operating that his boss developed and presumably mentored in. I think the key thing here to keep in mind is that a turnover in the CEO position is a very significant event. These are the people who are going to shape the experience of thousands of lives, billions of dollars of investment and results the next couple of years, and I think what's happened in the last several years, this is probably why we're talking about this, is the role of the chief executive has become all that more critical to how a company is going to do one, three, and five years out.

JIM LEHRER: Why has that happened? What's caused this?

JOHN BYRNE: I think the media has helped it in part. The media has paid much more attention to business news since probably the mid 1970's, when OPEC occurred, and to make business news more palatable to greater numbers of people we have personalized corporations by writing stories, making it seem as if the CEO's do everything. CEO's are of course incredibly important; they do create a vision, articulate a mission for a company, and a strategy, but we've made companies, people, and we've done that to make business news more palatable to greater numbers of people.

JIM LEHRER: Do you agree with that, Professor?

MICHAEL USEEM: I agree with the media attention. I would go on to say that I think it's well deserved in that as companies have faced increasingly competitive markets what the leader is doing, what he or she is saying, much more critical now I think than say 10 years ago, if it's a period of competitive change, if you think about the telecommunications industry, and the amazing events, the mergers, the global developments there, critical now for the chief executive to get it right. I think 15 years ago much less critical as to who was in that office, essential at this point.

JOHN BYRNE: Another issue is the pay.

JIM LEHRER: I was just going to ask about that.

JOHN BYRNE: The pay has become so extraordinary and so monumental and it's so much above anyone else in a corporation that it immediately elevates the CEO to some sort of unusual status.

JIM LEHRER: I read this afternoon that in the case of Armstrong it hasn't been confirmed officially but that the word is he has a three-year contract worth $25 million. Now, how in the world could he be worth that?

JOHN BYRNE: Well, if you look at Goizueta in the 16 years he was at Coke he added to Coca-Cola over $140 billion to the stock market value of that company, so he probably made I don't know 2/3 billion dollars, but it's pocket change compared to the 140 plus billion dollars he added to shareholder wealth.

JIM LEHRER: Professor, do you agree with that--cheap at the price?

MICHAEL USEEM: In fact, I was hearing in the early 90's when Mr. Goizueta had an $80 million year that from the standpoint of the money manager, the stock analyst he had added so much value to their portfolio they said fine, they would go with that. We may not agree with the amount up there, but I think the general point stands, which is that the pay of the chief executive has grown rapidly in recent years, the gap between the CEO and number 2 is larger, and one way of thinking that illustrates the point or in a sense confirms the point that the CEO as viewed by the board is all that more critical to how that company--how these two kinds of companies are going to do in the future.

JIM LEHRER: Professor, are they not also--moved around a lot quicker than they used to be--if you go in-- somebody doesn't perform--you're out of there?

MICHAEL USEEM: That's, again, a last five or six year history as the money managers, the pension fund managers have become more powerful, the assets they sit on that much larger, they have been quicker to pull the plug or to tell the board to get an under-performing chief executive out of there and that's happened at many companies. It happened at General Motors; it happened at IBM, so the pay is up but the insecurity is up too for the top executive. They've got to produce or they can't last.

JIM LEHRER: Mr. Byrne.

JOHN BYRNE: You can't really feel too insecure if you fail and you walk away with 10, 20, 30 millions of dollars. John Walter at AT&T, for example, who left the company after nine months walked away with over $23 million for that nine-month period.

JIM LEHRER: But isn't there also a price beyond the money--for instance, you just--Mr. Byrne, you were talking about Robert Allen--the kinds of negative comments that you just made and that have been printed about this man in the last several months--last several weeks--last few days in particular--would be unheard of in the old corporate world, would they not be?

JOHN BYRNE: I think that's true. I think we're in a much less forgiving marketplace. I think Wall Street is much less forgiving and I think the media is much more critical performance, and what's happened to Allen is a good reflection of that.

JIM LEHRER: Now, Professor, you seem also--the involvement now of the fund managers, of the markets in deciding who's a good CEO or not--that's a new angle too, is it not?

MICHAEL USEEM: That is new, would not have even been thought about 10 years ago but head hunters tell me that when they get down to a short list, they've got two or three really great looking people that they're beginning to focus in on. They at certain times will call up the half dozen major stockholders and they'll say what do you think of this person, does he have--she have the kind of record that's going to make for the shareholder value you're looking for? They would not have been anywhere in the picture ten years ago.

JIM LEHRER: Mr. Byrne, does your reporting reflect whether or not Armstrong was run by some major AT&T stockholders before he was hired?

JOHN BYRNE: I don't know if in fact he was but you know his name has been out in the media for quite some time. He has done wonders at Hughes Electronics. He is considered a very credible leader. And I think today's market in fact reflected that--AT&T's stock--although there is also earnings announcement--was up over 250 or $2.50 a share.

JIM LEHRER: But that's also part of the new stardom, would you not agree?

JOHN BYRNE: Oh, yes, absolutely because when John Walter was named president of AT&T almost a year ago on October 23rd of last year, in fact, AT&T's stock fell by 4 1/2 percent.

JIM LEHRER: Just by naming the man.

JOHN BYRNE: Yes, because there wasn't a lot of confidence in the marketplace about his leadership ability and he was basically an unknown quantity, unlike Mike Armstrong who is well known and who is widely respected as a leader.

MICHAEL USEEM: In fact, just to add to that, that stock price drop took off $6 billion in the market capitalization of AT&T and so by one calculus here the appointment of John Walter back there October 23rd a year ago cost the value of that company, as viewed by investors and money managers, that was a negative $6 billion addition.

JIM LEHRER: Okay. You just made the point, did you not? Gentlemen, thank you both very much. FOCUS - ROUGH ROAD AHEAD

JIM LEHRER: Congress is about to vote on a major transportation bill. We have two reports. Kwame Holman from Congress, Tom Bearden from the road.

TOM BEARDEN: It gets more looks than a flashy sports car as it cruises down the highway. This is an automatic road analyzer that measures and records cracks, potholes, and rough pavement, using video cameras, lasers, video recorders, and an elaborate computer system. Gary Hoffman is the chief engineer for the Pennsylvania Department of Transportation.

GARY HOFFMAN, Pennsylvania Department of Transportation: What we're doing with the data we're collecting--the roughness data and also the pavement distress data that you see here in the background--we're looking at cracking patterns, and faulting and rutting, different distress types that you would see on the pavement. We're using that data now to best program the projects and best utilize the monies that we have available to us.

TOM BEARDEN: About 55 percent of those monies come from the federal government under a law called the Intermodal Surface Transportation Efficiency Act--usually called by its acronym: ISTEA. The $155 billion program was signed into law by President George Bush in 1991 and was intended to fundamentally change the way transportation projects were funded. One of the biggest changes was that it gave much more authority to local transportation officials. Previously, state agencies pretty much called the shots. Brad Mallory is Pennsylvania's Transportation Secretary.

BRAD MALLORY, Pennsylvania Transportation Secretary: It's broadened decision-making and it's grown local support for our decisions. It's no longer the big bad state coming in and saying this is where the money's going; this is where the highway goes. But rather it's all of us cooperating together to say here's what's going to be done. And I also think that the breadth of categories, the focus on broader issues than just highway issues has been important. We're a transportation department, not a highway department now.

TOM BEARDEN: ISTEA set aside 24 billion dollars to encourage local officials to explore alternative transportation projects--like light rail and bike paths. Nevertheless, Pennsylvania didn't build many bike paths. The state has over 40,000 miles of older roads and more than double the national average of truck traffic. So officials still spent the vast majority of ISTEA funds for highway maintenance and construction. But halfway across the country in Colorado planners reacted differently. Rapid growth in and around Denver has meant very congested highways during rush hour. ISTEA allowed Colorado officials to shift more than $18 million out of highway projects and into light rail and bicycle trails in hopes of relieving some of the pressure. Cal Marsella is the manager of the Denver Regional Transit Department.

CAL MARSELLA, Denver Regional Transit: We can't continue to build additional highways because it'll simply spur more pollution, more congestion and doesn't solve the problem. So I found it very refreshing here, quite honestly, that there's been a recognition and acceptance of the fact that a multi-modal approach is the most intelligent approach to solving congestion and growth problems here in the area.

TOM BEARDEN: Kelly Wark is an environmentalist with the Colorado Public Interest Research Group who rollerblades or bikes to work most days. Although she says cars are still the largest source of pollution in Denver, she says ISTEA has started to make a difference.

KELLY WARK, Colorado Environmentalist: We've seen tremendous benefits. We're starting to clean up our air, provide a more balanced system that includes transit, bike paths and pedestrian facilities, things that really provide people with choices, not just more traffic.

TOM BEARDEN: But skeptics say ISTEA hasn't done much to improve the rush hour or the nation's transportation system. Now ISTEA is up for re-authorization, and a host of competing interests-- from truckers to environmentalists--are arguing over how it could or should be changed. The Highway Users Alliance is a lobbying organization which represents motorists and truckers. The organization's president, William Fay, told a recent news conference that the nation's highways have deteriorated badly under ISTEA.

WILLIAM FAY, Highway Users Alliance: 28 percent of our roads are in poor to mediocre condition. And 32 percent of our bridges are deficient. It's no wonder that despite more of us wearing seat belts, fewer of us driving drunk, and safer cars on the road, our nation's highway death toll has climbed in each of the past five years.

TOM BEARDEN: Members of the alliance are most angry about the $2.1 billion designated for so-called enhancement projects. Like the four million dollars spent to fix up a cemetery in Austin, Texas, or the $300,000 spent to repair the capitol dome in Charleston, West Virginia; or the $36,000 spent to restore the mural at the civic center in Helena, Montana. The regulations have been tightened, and such projects probably would not be approved today. But Fay says the mere segregation of funds for "enhancement" keeps the money from being spent on more important needs.

WILLIAM FAY: They don't allow those state officials to do things like straighten Dead Man's Curve or fix a train crossing that's been the site of a number of accidents.

TOM BEARDEN: What about the argument that it is not a lot of money and that even if you did spend it on road improvements, it wouldn't amount to much?

WILLIAM FAY: Well, you hear a lot of people say that it isn't a lot of money. It's $2.1 billion. Now only in Washington would two thousand, one hundred million dollars not be a lot of money. But to put this in perspective, that $2.1 billion is more than 36 states around the country got for their entire highway program.

TOM BEARDEN: Many truckers are angry that some of their gas tax dollars are being spent on bike paths and light rail projects. Lenny Yokum has been driving a tractor trailer for more than two decades.

LENNY YOKUM: Over the years, the fuel tax that I pay, and the highway user tax that I pay, was originally designated to go back into the highways. Over the years that has varied and all the money doesn't come back here. There's nothing I can do about that, but I'd like to see them get their priorities with the money that they tax you for, back to where it's supposed to be spent.

TOM BEARDEN: And money is what the argument over ISTEA is all about. As Congress considers how to re-authorize ISTEA, not just interest groups but also regions of the country are fighting over the spoils. Northeastern states tend to get more money back than they collect. Pennsylvania, for example, gets about a $1.16 for every dollar they send to Washington. Southern and Midwestern states are known as "donor" states, because they get back less, and they very much want to change that situation.

KWAME HOLMAN: On Capitol Hill new Republican voting strength, representing Southern and Midwestern states almost guarantees those regions will get a greater percentage of federal money in any new highway legislation at the expense of the Northeast.

SEN. TRENT LOTT, Majority Leader: The result is that New Jersey is number 50 among states, last in getting a return on the tax dollars it sends to give to Washington. And I hear about it from all of my constituents. Let me tell you.

KWAME HOLMAN: Whatever Congress does has to be done quickly. ISTEA, the six-year Intermodal Surface Transportation Efficiency Act, expired on September 30th. There still is money in the project pipeline but Congress is under pressure to approve a new highway and mass transit bill before that money runs out and before time runs out on the current legislative session.

SEN. TRENT LOTT: I think this is perhaps the most important bill left that we need to get done before we go out for the year sometime later on this month or early in November.

KWAME HOLMAN: And most members of Congress are anxious to get it done because a new transportation bill will mean hundreds of thousands--even millions of dollars in public works projects for their states and districts.

REP. RAY LaHOOD, [R] Illinois: The reason that every member of the House of Representatives wanted to be on the Transportation Committee this year is because we're writing the ISTEA bill. Seventy-three members serve on this committee, the largest number in the House of Representatives.

KWAME HOLMAN: The chairman of the House Transportation Committee is 13-term Republican Bud Shuster, regarded as the undisputed champion of federal highway projects, including the Bud Shuster Highway--a four lane stretch of road through his hometown of Everett, Pennsylvania. Shuster's authority over millions of dollars in highway projects has made him one of the most popular committee chairmen on Capitol Hill and one of the most powerful.

REP. JAMES OBERSTAR, [D] Minnesota: Thank you very much, Mr. Chairman. You have been a champion and a leader as we move forward to shape the future for transportation in America.

KWAME HOLMAN: And last month that kind of support turned into votes. Shuster' s committee unanimously approved the new transportation bill he wrote, even though it contained so much spending it threatened to collapse the five-year balanced budget deal Congress and the President had signed on to just weeks earlier. But Shuster said he was well within his rights.

REP. BUD SHUSTER, Chairman, Transportation Committee: I was told in meetings with the Republican leadership during the budget negotiations that if there were more revenue coming in we would be "first in line."

KWAME HOLMAN: Indeed, recently revised projections show there could be 135 billion dollars more in federal revenues over the next five than the budget deal anticipated. So in mid September Chairman Shuster and his committee drew up an aggressive three-year transportation bill that exceeded the spending limits set by the budget negotiators by more than 16 billion dollars--34 billion if projected through the life of the five-year budget deal.

REP. BUD SHUSTER: We need to build infrastructure for America. The good news is the money is there to do it.

KWAME HOLMAN: The budget negotiators couldn't have disagreed more.

SEN. PETE DOMENICI: It seems to me that every time some group or some committee wants more money than we had in the budget, the first thing they start talking about is there's plenty of money in the budget to spend because we have a small surplus in the year 2002

REP. JOHN KASICH: I think we ought to slow down. I think we ought to maintain the integrity of the balanced budget that passed, and I think rather than licking our chops and trying to figure out how to expand government, what we ought to do is hold our breath and work everyday to convince people that this agreement is not some house of cards.

KWAME HOLMAN: And so a stand off developed. On one side were the Republican leaders of Congress who negotiated the balanced budget deal with the president. On the other side was the powerful chairman and his committee, along with a solid block of rank-and-file members who appeared ready to support Shuster in the event of a floor fight.

REP. JAMES OBERSTAR: We are, as the chairman said, going to see this bill through subcommittee and through full committee, and we're going to get it to the House floor because America deserves it.

KWAME HOLMAN: But before Chairman Bud Shuster could bring his transportation bill to the floor, House Speaker Newt Gingrich stepped in and convinced him not to. Gingrich reportedly told Shuster a floor fight over the transportation would cause an embarrassing split among Republicans. Shuster refused to reduce the size of his bill but did agree to hold it until next spring and in the meantime support a six month extension of the original ISTEA bill.

REP. BUD SHUSTER: The committee will come to order--

KWAME HOLMAN: Shuster then went back and sold the idea to his committee.

REP. BUD SHUSTER: One of the reasons we should pass a short term bill now rather-- and fight our battles in the spring is because there will be a debate on how we spend or what we do with the additional revenues flowing into the federal government. If we were to pass a long term bill now at the lower levels, we would be frozen out of the debate that is going to take place as to how we spend and use the additional revenues coming in.

KWAME HOLMAN: And, judging by their response, members of the committee did not need much convincing.

REP. JAMES OBERSTAR: Thank you very much, Mr. Chairman, that deserves an applause. [applause]

KWAME HOLMAN: But the House's decision to put of action on new transportation bill for six months leaves the Senate unsure of what it should do.

SPOKESMAN: At 2:30 the Senate will resume consideration of S1173--the ISTEA legislation.

KWAME HOLMAN: Senators returned from a one week recess today to continue work on their highway bill--written by Republicans and Democrats on the Senate's Environmental and Public Works Committee--the bill would re-authorize and expand the original ISTEA bill but with only modest increases in spending. Unlike the Shuster bill in the House, the Senate bill does fall within the parameters of the balanced bud get agreement. Rhode island Republican John Chafee is the committee's chairman.

SEN. JOHN CHAFEE: I'm committed to living within the budget. And whether there's money to be found in some fashion--who knows. That would be splendid if there was. But again I am committed to staying within the budget.

KWAME HOLMAN: Today, Sen. Chafee still was holding out hope the Senate would approve his new highway bill before the November recess. But unless he gets the cooperation of the House, it's likely Chafee will have to follow the lead of Chairman Shuster, accept a six-month extension of the current highway bill and work out a long-term bill in the spring.

JIM LEHRER: Still to come on the NewsHour tonight, two stories from Asia. FOCUS - NORTH KOREA FAMINE

JIM LEHRER: The first Asian story, the famine in North Korea. Margaret Warner has that.

MARGARET WARNER: Amid conflicting reports over the extent of the famine in North Korea the Clinton administration announced today it would send its own team today to assess the situation there. North Korea's state-controlled economy has had trouble feeding its 23 million people ever since the collapse of its major benefactor, the Soviet Union, six years ago. A string of natural disasters, including floods and a drought, made the situation worse. Last spring dire warnings of impending famine produced an increase in international food assistance to North Korea. The UN's world food program has provided 700,000 tons of food alone this year. But there are contradictory reports on exactly what that aid has accomplished. Here for an update is Congressman Tony Hall, who just returned from his third visit to the country. Welcome. How does the situation there compare today to what you've seen in your earlier visits this year?

REP. TONY HALL, [D] Ohio: Well, the capital looks better, the capital Pyongyang. But the capital always did look pretty good. It has trees. The people are a little bit--they're fed a little bit better. There's even some bicycles on the street. But once you get out of the capital, you go into the hills, you go into the rural countryside, the people are still very thin. There are no factories working. There's virtually no power on. Hospitals are without medicines and certainly without food.

MARGARET WARNER: All right. Where exactly did you go, and what did you see? Give us a sense of what you saw. And we do have some photographs taken by some members of your staff which we're going to try to coordinate as you tell us about it.

REP. TONY HALL: I went to Hamhung, which is over on the Eastern part of Korea. And we visited a food distribution center that had no food. We went to a hospital and there was no antibiotics. As a matter of fact, they had just operated on a man who--there was no anesthesia--there was no pain medication. And there was no antibiotics to deal with the situation. I said, can you take me to your pharmacy, and they took me to a pharmacy that pretty much looked like a--I would say like a barn because it had roots in there and cow horns that they grind up. And this was their medicine. And--

MARGARET WARNER: And what do the people look like that you saw in Hamhung?

REP. TONY HALL: Well, the people that I saw--except for some of the children--they looked very thin. They looked--every person that I saw that was in a hospital, every orphan that I saw that was ill was a result of malnutrition. The children--I must say the good news is--if there's any good news coming out--is that the food that we have targeted for children under the age of six years of age and younger, the food is getting through, and it is saving some lives. But everybody beyond that, except for the government of Pyongyang, is suffering. The country is slowly going down. They're slowly starving. I mean, it's like they're hanging on by their fingernails.

MARGARET WARNER: Where did you go after Hamhung?

REP. TONY HALL: Then I went up to--right into the start of the mountains, in the Northeast part. It's a place called Tongsin. And we visited a hospital that had been--it was a new hospital--it had been wiped away-- the old one had been wiped away because of floods. We saw, for example, three children--three--

MARGARET WARNER: I think we may have a picture of this.

REP. TONY HALL: Yes. These are three young girls. They maybe look like they're eight or nine but they're really fifteen and sixteen years of age. They were standing on a bed when this was taken. All three of them are from different families. There was no--absolutely no heat in the hospital. They were there because of malnutrition. They came up to about my--oh, I'd say a little bit over my--just right underneath my chest. And the whole population, it seems, outside of the capital Pyongyang, is stunted.

MARGARET WARNER: Explain that, because the man who's head of the World Food Organization-- World Food Program has also said that the government, which is distributing all this food, seems to be giving a lot more to people in the capital than in the country side. Why is that?

REP. TONY HALL: Well, I think there's probably three or four different distributions types of groups. There's the military and I suspect they get their--theirs from China and probably from the harvest. They get it right up front. Then there's the government, Pyongyang, and that's another group. And then there's the people in general, which is the rest of the people, and then there's another group that's way up in the mountains that nobody's ever seen.

MARGARET WARNER: Now this is way up in the Northeast part of the country.

REP. TONY HALL: Right.

MARGARET WARNER: And there have been reports that up there--there have even been reports coming out of China along that border of even cannibalism up there. What did you hear about that?

REP. TONY HALL: Well, I think that's rather confusing. I hear a lot of reports that a million people died. There's a lot of reports about that, a lot of reports about cannibalism. I cannot authenticate those reports. All I can tell you is that people are sick. Some of the orphans are being fed, and that's good news, but a lot of orphans have to be left outside. I was told by one of the keepers of the orphanage that, you know, the people are just so weak, they have such little food, that they have to, you know, once their child is born put him outside in hopes that an orphanage will pick him up, and oftentimes they can't pick him up.

MARGARET WARNER: But they hope that they'll get better care--

REP. TONY HALL: Right.

MARGARET WARNER: --than theycan at home. So what do you think has to be done now?

REP. TONY HALL: Well, it's beyond food now. I mean, it's not just a food problem. It's--they need medicines. I mean, you know, they're operating on people. They don't have any anesthesia. They have no antibiotics, at least in the areas that I was in, and North Korea, you know, they have to change their policies. Their policies of agriculture are sort of archaic. I mean, the collective farming, it just doesn't work. They're not getting help from the old Soviet Union. And as a result of the country being 80 percent mountainous and 20 percent tillable, the country is slowly sliding down the hill.

MARGARET WARNER: Do you think this is something that at least in the short-term the international community can do a lot about and should do more about?

REP. TONY HALL: I think that they can, and I saw with my own eyes our own food feeding some children, and our food that is getting through is monitored, is saving some lives. But we need a lot more food for the average person above the age of six. We need medicines, and we need to really push the North Koreans in changing their agricultural practices. And hopefully through the four-party talks we can do that.

MARGARET WARNER: I was going to say this picture is of some children in an orphanage who were getting fed.

REP. TONY HALL: This is a picture that we took. And I wanted to show this picture because these kids were being fed and being fed with American food.

MARGARET WARNER: All right. Now, explain, Congressman Hall, though, why the U.S. has decided they have to send their own team into North Korea now to assess the situation.

REP. TONY HALL: Well, there's so many confusing reports about the harvest that has just come out in the past two weeks. They expect a harvest to probably lose 50 percent, probably the same--50 percent of the harvest will be lost as a result of drought. There's confusing reports as to how many people have died and how much food is really needed. And so we do need an assessment team, but I can tell you that the UN plus the United States need to call for more food aid and more medicines to this country.

MARGARET WARNER: We heard Jamie Rubin, the State Department spokesman, though saying today that the North Korean government has to do more to let enough monitors get in there to make sure the aid's going where it's supposed to go. I mean, did you talk to government leaders there about that? Are they willing to be more open and more flexible?

REP. TONY HALL: They are.

MARGARET WARNER: They are?

REP. TONY HALL: And I talked to government leaders, and they are willing to be. If you send more food, we'll have more monitors. I talked to NGO's, private volunteer organizations that are in the country. There have been no incidents, no major incidents of any kind of any of our food being diverted to the military. It's going to the people it's supposed to go to.

MARGARET WARNER: But do you think that it's--I mean, should the U.S. and the international community, for instance, support this system in which more of the food goes to the capital and less to the outlying areas and maybe in this Northeast part none at all?

REP. TONY HALL: No. We should not support that. What we support is targeted aid. And the only food aid that's going into the country now goes to children under the age of seven. That's the only kind of food that's ever been going in there. We need to increase it, to go beyond that. And we can monitor our food. We're doing a good job. As we increase the food, we can have the monitors not only of the private voluntary organizations-- I've assured that--but the government in North Korea assured that to me.

MARGARET WARNER: All right. Well, thanks, Congressman, very much.

REP. TONY HALL: Thank you. FOCUS - FOREIGN CORRESPONDENCE

JIM LEHRER: Asian story number two is about the financial troubles in Southeast Asia. Our view comes in another of our "foreign correspondence" conversations with U.S. reporters about the stories and places they cover. Phil Ponce is in charge.

PHIL PONCE: For the past decade the economies of Southeast Asia, Thailand, Malaysia, Singapore, and Indonesia had been booming. But this summer the boom for the so-called Asian tiger economies abruptly stopped, especially in Thailand, where the currency tumbled and banks were overwhelmed by bad loans. Michael Zielenziger, the Asia correspondent for the "San Jose Mercury News," has been covering the story. He was in Washington last week, and I talked to him then. You and other reporters have written about the so-called economic miracle in Southeast Asia with Thailand, the Philippines, Malaysia, Indonesia. In Thailand, for example, what was that miracle like for the average person? How did the average person benefit from that?

MICHAEL ZIELENZIGER, San Jose Mercury News: Well, you saw enormous opportunities for economic development for growth, for jobs, high rise buildings, incredible rush of traffic, Mercedes Benzes, and literally you had kids who grew up in rice paddies going to graduate school, coming back, working for high price foreign companies and driving around BMW's and Mercedes Benz. So the pace of development was sort of unbelievable. And now, in fact, they're paying some of the consequences of it.

PHIL PONCE: But during the life of the miracle, itself, during those 10 years, what kinds of things would you see on the street that would reflect that miracle?

MICHAEL ZIELENZIGER: Well, you saw, kampongs, little neighborhoods where houses used to be on stilts suddenly torn down to make thirty- and fifty-story hotels or office buildings or condominiums. Bangkok now is littered with thousands of condominiums that look very nice but are completely empty. On the streets of Bangkok now you see dozens and dozens of high-rise offices half finished that are still going to be finished, but everybody around town knows no one will ever at least in the next five or ten years actually go work in them. They will be empty buildings, sort of empty kind of symbols of what's gone wrong.

PHIL PONCE: And is the miracle, in fact, over?

MICHAEL ZIELENZIGER: Well, why was the miracle? I mean, the period of 15 percent growth is probably over for a while. Will eventually the countries grow faster than say America is growing? Absolutely. But there is a large amount of undigested problems that have to be worked through before we'll see normal times return. I think if we talked about the miracle as being a period of excessive, huge, impressive growth, I think that period's probably over for a while, yes.

PHIL PONCE: And what caused that period to end?

MICHAEL ZIELENZIGER: Well, number one, times were too good. People took money and didn't spend it on factories and didn't spend it on job training. They spent it on building boutiques for high end clothing and building shopping centers, buying fancy cars, going on fancy vacations. Instead of saving and investing, there was a real rush to consumption. There was too much capacity. There are now too many people building too many cars in Thailand for the Thai people to buy. And so there's a glut in the market. Andthere was a lot of corruption. When money is so easy you don't have to really make sure that every dime is spent appropriately. In all of these Southeast Asian nations there are--to one extent or another--political corruption problems, political succession problems. And that feeds into the financial problem.

PHIL PONCE: And to what extent has this crisis or this new economic bump in the road--however way you want to describe it--to what extent has that had an impact on the national conscience? For example, you wrote about this religious ceremony involving Buddhist monks. What was that?

MICHAEL ZIELENZIGER: Well, first, Thailand was the darling of international investors for years and years and years. It was a democracy, more or less, even though not always stable. It had wonderful growth rates. The Thai people are wonderful. And all of a sudden boom, the bot fell from 25 to 35 almost overnight.

PHIL PONCE: The bot being the unit of currency.

MICHAEL ZIELENZIGER: The Thai currency, meaning that all of a sudden all of these imports became more expensive. Suddenly people were losing their jobs. Suddenly the costs of all the imported goods was going up. So this is a major psychological crisis. There's also political turmoil in Thailand over a new constitution, over a prime minister who may or may not understand economics. He's a former general. And it was so psychologically taxing on the people that the supreme patriarch of the Thai Buddhist community, and, of course, Thailand's heavily Buddhist, said, you know, we need to have a prayer service, a nationally televised service to rid the demons and clear our minds so that we can get on with the job at hand. And thousands of people, some barefoot, some in Mercedes Benzes, came to the main temple in downtown Bangkok, the King's temple, to pray for sort of national salvation. It was quite a spectacle really because people left the event saying after an hour of Sanscrit prayer thinking, well, we may not have solved the problems but my mind is clearer about what lays ahead and the struggles I have to face, a very Thai kind of answer I think.

PHIL PONCE: You give one example in one of the articles about your experience, your encounter with a storekeeper who is trying to sell computers.

MICHAEL ZIELENZIGER: If the Asian miracle is over, this was sort of the scene from hell. You go into a shopping center in Bangkok that's strictly devoted to high technology goods. And since my whole newspaper is in the Silicon Valley, where they produce all these computers and printers and things, I was very interested to see what's going on. And there's this poor salesman in a massive showroom where the air conditioning has been turned off to save money, so there's sweat pouring on his brow. He's standing in front of 35 HP Hewlett Packard laser printers that he's not going to sell, saying, what have we done, what has gone wrong; I'm not going to get commissions anymore; I have no customers because no one has the money to invest in imported computers; my salary has been cut; my gasoline prices are going up; and I have a new three-year-old kid; what am I going to do, and how could these good times have gone bad so quickly? Those are the kind of things you hear all over Bangkok. And you hear a sense that the country has been let down by the country's own managers, as well as its own people, who didn't make some of the hard choices.

PHIL PONCE: Something you just said as to how quickly things changed. A few months ago you noted in one of your pieces that you would walk into a boutique and see what--andwhat do you see now?

MICHAEL ZIELENZIGER: There are I think four now Johnny Versace boutiques in Bangkok. I only point this out because I think this average Johnny Versace suit is probably twelve or fifteen hundred dollars. And the GDP of Thailand--I mean, the per capita income is about $3,000. So there's a big gap there. But there are four of these boutiques. And I interviewed the store manager, and he says, yes, six months ago, three months ago this place was really crowded on the weekends. It's called a high-so center--high society shopping center, where the swell Wazi would come to buy new clothing.

PHIL PONCE: The swell Wazi?

MICHAEL ZIELENZIGER: You know, the bourgeoisie who--

PHIL PONCE: Oh, I see. Thank you.

MICHAEL ZIELENZIGER: He said, now, it's like a museum. People come and stand outside my store and stare through the glass panes and point at things, as if to say, I can't believe people used to pay that much for these clothes. And his store is empty, and no one is buying these things.

PHIL PONCE: So now it's more like a museum.

MICHAEL ZIELENZIGER: Exactly. He said it's more like a museum than it is a store because I have--the only customers I have are foreigners on vacation who think they can find this Versace clothing here more cheaply than in London or Hong Kong. So--

PHIL PONCE: There's a sense of nationalism, perhaps, as reflected by subtitles that one can see on television, Thai television during the soap operas.

MICHAEL ZIELENZIGER: Well, we've seen it in Korea, and we're seeing it in Thailand too. One reaction of a financial crisis is to say let's pull ourselves up by our own bootstraps; let's have more self-reliance. So now in the daytime soap operas in Bangkok you see crawls, these little characters that run across the bottom of the screen, kind of like what public television does during fund-raising time, I guess, and it says, you know, "Buy Thai rice. Eat Thai products. Buy Thai clothing," as if to say, if we don't buy those Versace clothes, if we buy Thai-produced goods, we can help give our colleagues and our neighbors jobs and help the economy grow and restore our self-pride and self-reliance.

PHIL PONCE: Is there any anger or resentment towards any party in particular that the average person might be feeling now?

MICHAEL ZIELENZIGER: Oh, there's tremendous anger. There's a lot of corruption in these Southeast Asian stories. There have been a lot of bank loans that went to the wrong places, and there are a lot of politicians who were able to line their own pockets. That's a part of the problem. The Thai people know that there was a lot of money that went to waste. They are trying to reform the political infrastructure of the nation even as they try to dig themselves out of the financial turmoil. Those are two very difficult challenges. But, yes, there has been a whole constitutional battle in Thailand about making politics cleaner. Thai elections are won by people who go into the provinces and pay massive amounts of money to the voters, kind of like old Chicago- style politics. There's a real effort to clean that up because without cleaning that up, you can't get to the root problems and put the economy on a stronger foundation in the future.

PHIL PONCE: And at this point is there any expectation that things might be going back to where they were anytime soon?

MICHAEL ZIELENZIGER: Well, Japan, which is the largest investor in Thailand, for instance, much larger than the United States, has been a real prime motivator of an IMF, of an International Monetary Fund bailout to the tune of $16 billion. You're seeing the IMF now coming to the aid of Indonesia. There is a sense that like Mexico, the international community will come to the aid of Thailand, Indonesia, Malaysia, and that over time things will get better, but is it going to be one year, is it going to be three years, is it going to be five years? And, of course, in the interim the little people, people who are, you know, driving the cabs in the streets, or working in stalls, they're the ones who are going to be suffering in the meantime.

PHIL PONCE: Michael, I thank you for being here.

MICHAEL ZIELENZIGER: Thanks, a pleasure. RECAP

JIM LEHRER: Again, the major stories of this Monday, Attorney General Reno asked a federal court to fine Microsoft a million dollars a day for violating an antitrust order. Microsoft denied that charge. And a team of U.S. experts will go to North Korea this week to evaluate the extent of the famine there. We'll see you on-line and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.